T) Provisions, Contingent Liabilities and Contingent Assets
Provision is recognized in the accounts when there is a present obligation as a result of past event(s) and it is probable that there will be an outflow of resources required to settle the obligation and a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimate.
Contingent Liabilities are disclosed in the financial statements unless the possibility of outflow of resources is remote. Contingent Assets are neither recognized nor disclosed in the financial statements.
U) Cash & Cash Equivalents
The Company considers all highly liquid investments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
35 Defined Benefit Obligation
GRATUITY - The Company has a defined benefit gratuity plan for its employees. Every employee who has completed five years of service or more gets a gratuity on resignation or death or retirement at 15 days of last drawn salary for each completed year of service. 100% of the Plan Asset(Gratuity) is entrusted to ICICI Prudential Life Insurance Co. Ltd. under their Group Gratuity Scheme.
COMPENSATED ABSENCES - The Compensated Absence Scheme of the Company is not funded, but the appropriate liability is provided in the Balance Sheet. On retirement or resignation every employee gets the amount of last drawn salary for the total accumulated leave as that date.
The following tables summarize the components of net benefit expense recognized in the Statement of profit and loss and the funded status and amounts recognized in the Balance sheet for the respective plans.
Segment Composition :
Manufacturing Segment includes Manufacturing and Marketing of Lubricating Oils, Greases etc. Trading Segment includes trading activities through Base Oil, Fuel Oil and Bitumen.
As per Ind AS 108 paragraph 34 requires entities to disclose information about its major customers i.e. those contributing 10% or more of its total amount of revenue. The details are mentioned below:
In the FY 2023-24, there is no single customer with whom the Company had a revenue of more than 10% of the Company's total Revenue.
In the FY 2022-23, there is no single customer with whom the Company had a revenue of more than 10% of the Company's total Revenue.
38 Capital Management Risk Management
For the purpose of company’s capital management, equity includes equity share capital and all other equity reserves attributable to the equity shareholders of the company. The Company manages its capital structure and makes adjustments in light of changes in economic conditions or its business requirements. The Company's objectives are to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth and maximise the shareholders value. The Company funds its operations through internal accruals. The management and the Board of Directors monitor the return on capital as well as the level of dividends to shareholders.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents.
As at March 31,2024 and March 31,2023, the Company has only one class of equity shares and has debt, consequent to such capital structure, there are no externally imposed capital requirements. In order to maintain or achieve an optimal capital structure, the company allocates its capital for distribution of dividend or re-investment into business based on its long term financial plans.
40 Details of dues to Micro and Small Enterprises as defined under the MSMED Act, 2006
As per the information available with the Company, the dues to Micro and Small Enterprises, as defined in the Micro, Small, and Medium Enterprises Development Act, 2006, as on 31st March 2024 and 31st March 2023 amount to INR 259.83 Lakhs and INR 226.22 Lakhs on account of principal. There is no interest outstanding as on 31st March, 2024 and 31st March 2023.
The above information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.
42 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 Risk Management Committee.
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 deposits and loans and borrowings.
The company manages market risk through Risk Management committee, which evaluates and exercises independent control over the entire process of market risk management. The committee recommends risk management objectives and policies, which are approved by Risk Management and Board.
a Market Risk
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 Commodity Risk. Financial Instruments affected by Market Risk include Loans and Borrowings, Deposits and FVTOCI Investments.
The sensitivity analysis in the following sections relate to the position as at 31 March 2024 and 31 March 2023.
The following assumptions have been made in calculating the sensitivity analysis:
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 24 and 31 March 2023.
The sensitivity of equity is calculated by considering the effect of any associated cash flow hedges at 31 March 2024 for the effects of the assumed changes of the underlying risk.
i) Interest Rate Risk
Interest Rate Risk is the risk that the Fair Value or Future Cash Flow of a financial instrument will fluctuate because of changes in market interest rates. In order to balance the company's position with regards to interest income and interest expense and to manage the interest rate risk treasury performs a comprehensive interest rate risk management.
The company is not exposed to significant interest rate risk as at the respective reporting dates.
ii) Foreign Currency Risk
Foreign currency risk mainly arises from transactions undertaken by an operating unit denominated in currencies other than its functional currency. The Company is exposed to currency risk mainly on account of its import payables and export receivables in foreign currency. The major exposures of the Company are in U.S. dollars. The Company hedges its import foreign exchange exposure partly through exports and depending upon the market situations partly through forward foreign currency covers. The Company has a policy in place for hedging its foreign currency exposure.
The Company does not use derivative financial instruments for trading or speculative purposes.. The Company manages its foreign currency risk by converting the foreign currency exposure into INR on the date of entering into the transaction.
The carrying amounts of the Company’s financial assets including Other Current Assets and financial liabilities denominated in foreign currencies at the reporting date are as follows:
The following table details the Company’s sensitivity to a 1% increase and decrease in the functional currency against the relevant foreign currencies of all the companies in the Company.
1% is the sensitivity rate used when reporting foreign currency risk and represents management’s assessment of the reasonably possible change in foreign exchange rates.
The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 1% change in foreign currency rates. A positive number below indicates an increase in profit and other equity where the respective functional currency strengthens by 1% against the relevant foreign currency. For a 1% weakening of the functional currency against the relevant currency, there would be an equal and opposite impact on the profit and other equity, and the balances below would be negative:
Credit Risk
Credit Risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the company periodically assesses the financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information.
Financial Assets are written off when there are no reasonable expectations of recovery, such as a debtor failing to engage in a repayment plan with the company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. When such recoveries are made, these are then recognized as income in the statement of profit and loss.
The company measures the expected credit loss of trade receivables based on historical trend, industry practices and the business environment in which the entity operates.
Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. The Company assessed the
50 Transfer Pricing :
As per the Transfer Pricing rules prescribed under the Income Tax Act, 1961, the company did not have any international or specified domestic transactions with any of its related/associated enterprises during the year. Hence, the provisions of transfer pricing are not applicable to the Company.
As per our Report of even date.
For PNG & Co. For and on behalf of Board of Directors
Chartered Accountants
Firm Registration No. : 021910N Ayush Goel Arjun Verma
Chairman Executive Director & CFO
Neeru Goyal DIN :02889080 DIN :10102249
Partner
Membership No. : 096095
Kanika Sehgal Sadana
Mumbai, May 28, 2024 Company Secretary
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