(P) Provisions, Contingent Liabilities and Contingent Assets:
Provisions: Provisions are recognised when there is a present obligation 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 there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.
Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Contingent Assets: Contingent Assets are neither recognised nor disclosed in the financial statements.
(Q) Segment reporting:
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resources and assessing performance of the operating segments of the Company.
(R) Cash and cash equivalents:
Cash and cash equivalents for the purposes of cash-flow statement comprise cash at bank and in hand and short-term investments with original maturity of three months or less.
(S) Earnings Per Share:
The company reports basic and diluted earnings per share (EPS) in accordance with the Indian Accounting Standard specified under Section 133 of the Companies Act read with Rule 7 of the Companies (Accounts) Rules, 2014. The Basic EPS has been computed by dividing the income available to equity shareholders by the weighted average number of equity shares outstanding during the accounting year. The diluted EPS has been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the end of the year.
1.4 Key accounting estimates and Judgements
The preparation of the Company's financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Depreciation/amortisation and useful lives of property, plant and equipment/intangible assets
Property, plant and equipment/intangible assets are depreciated/amortised over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/ amortisation to be provided during any reporting period. The useful lives and residual values are based on the Company's historical experience with similar assets and take into account anticipated technological changes. The depreciation/ amortisation for future periods is revised if there are significant changes from previous estimates.
b) Provisions
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
c) Defined benefit obligation
The costs of providing pensions and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 ‘Employee benefits' over the period during which benefit is derived from the employees' services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates.
The same is disclosed in Note 40, ‘Employee benefits'.
d) Income Tax:
The Company's tax jurisdiction is India. Significant judgements are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (Refer Note 36).
e) Impairment of financial assets:
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
1.5 Recent Indian Accounting Standards (Ind AS)
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 March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
1 Borrowings are measured at amortised Cost
Nature of security and terms of repayment for borrowings:
2 Rupee loan from HDFC Bank Ltd of ? 191.22 lakhs (Net of processing charges) (31-Mar-2023: ? 477.72 lakhs) for Capex.
First exclusive charge by way of hypothecation of plant & machinery which are funded through this loan and by way of extension of equitable mortgage on office at 510, Kohinoor City, Kurla (West), Mumbai.
Repayable in 54 equal monthly instalments beginning from 08-Jun-2020 along with interest @ 10.00% p.a. (FY 22-23 : 10.10% p.a.)
3 Rupee loan from HDFC Bank Ltd of ? 404.39 lakhs (Net of processing charges) (31-Mar-2023: ? 597.79 lakhs) for Working Capital.
Second pari passu charge by way of hypothecation of entire current assets, both present and future at par with other banks. Second pari passu charge on entire property, plant and equipment located at Ankleshwar & Panoli plant of the company at par with other banks.
Repayable in 48 equal quarterly instalments beginning from 01-Apr-2022 along with interest @ 8.00% p.a. (FY 22-23 : 7.95% p.a.)
4 Rupee loan from HDFC Bank Ltd of ? 1054.56 lakhs (Net of processing charges) (31-Mar-2023: ? 1404.80) for Capex.
First exclusive charge by way of hypothecation of plant & machinery which are funded through this loan and by way of extension of equitable mortgage on office at 510, Kohinoor City, Kurla (West), Mumbai.
Repayable in 54 equal quarterly instalments beginning from 02-Oct-2022 along with interest @ 9.68% p.a. (FY 22-23 : 9.74%)
(' in lakhs)
5 Rupee loan from HDFC Bank Ltd of ? 493.56 lakhs (Net of processing charges) (31-Mar-2023: ? 492.47 lakhs) for Working Capital.
Second pari passu charge by way of hypothecation of entire current assets, both present and future at par with other banks. Second pari passu charge on entire property, plant and equipment located at Ankleshwar & Panoli plant of the company at par with other banks.
Repayable in 48 equal quarterly instalments beginning from 01-Apr-2024 along with interest @ 9.00% p.a. (FY 22-23 : 9.00% p.a.)
6 Foreign currency loan from Kotak Mahindra Bank Ltd of ? 695.55 lakhs (Net of processing charges) (31-Mar-2023: Nil) for Capex.
First pari passu hypothecation charge to be shared with Citi Bank & HDFC Bank on all existing and future receivables/ current assets/moveable fixed assets at par with other banks. Exclusive charge of Kotak Mahindra Bank Ltd on Movable Fixed Assets funded through Kotak Mahindra Bank Ltd Term Loan. First pari passu charge on land & building located at Ankleshwar & Panoli plant of the company at par with other banks.
Repayable in 60 equal quarterly instalments beginning from 25-Mar-2024 along with interest @ 5.12% p.a. (FY 22-23 : Nil)
7 Deferred Payment Liability
a Vehicle loan of ? 4.33 lakhs (31-Mar-2023: ? 8.68 lakhs) is secured by vehicles under hypothecation with Bank.
Loan is repayable in 60 monthly instalments from Mar-2020 along with interest @ 8.50% p.a.
b Vehicle loan of ? 16.44 lakhs (31-Mar-2023: ? 24.09 lakhs) is secured by vehicles under hypothecation with Bank.
Loan is repayable in 39 monthly instalments from Dec-2022 along with interest @ 7.90% p.a.
c Vehicle loan of ? 22.17 lakhs (31-Mar-2023: ? Nil) is secured by vehicles under hypothecation with Bank. Loan is repayable in 60 monthly instalments from Feb-2024 along with interest @ 9.20% p.a.
d Vehicle loan of ? 94.91 lakhs (31-Mar-2023: ? Nil) is secured by vehicles under hypothecation with NBFC. Loan is repayable in 60 monthly instalments from Feb-2024 along with interest @ 10.25% p.a.
Nature of security and terms of repayment for secured borrowings:
1 Working Capital Loan from HDFC Bank Ltd of ? 4,382.40 lakhs (31-Mar-2023: ? 3,746.77 lakhs)
First pari passu charge by way of hypothecation of entire current assets, both present and future at par with other banks. First pari passu charge on entire property, plant and equipment located at Ankleshwar & Panoli plant of the company at par with other banks.
2 Working Capital loan from Citi Bank N. A. of ? 1,977.76 lakhs (31-Mar-2023: ? 746.37 lakhs)
First pari passu charge in favour of Citi Bank N.A. by way of hypothecation of entire Fixed assets both movable and immovable, both present & future of the company located at Manufacturing unit at Ankleshwar & Panoli Plant, Gujarat at par with other banks.
3 Working Capital loan from Kotak Bank Ltd of ? 1,554.79 lakhs (31-Mar-2023: ? 941.41 lakhs)
First pari passu charge by way of hypothecation of entire current assets, both present and future at par with other banks. First pari passu charge on entire property, plant and equipment located at Ankleshwar & Panoli plant of the company at par with other banks.
4 For explanation on the company's Interest risk and foreign currency risk refer Note 50.
5 The company has borrowings from bank and financial institution on the basis of security of current asset and in following instances.
B Defined Benefit Plans
Disclosure Statement as Per Indian Accounting Standard 19 Para 139 (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.
Para 139 (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 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.
Para 139 (c) Characteristics of defined benefit plans
During the year, there were no plan amendments, curtailments and settlements.
Para 147 (a)
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.
43 SEGMENT REPORTING:
As per Indian Accounting Standard (Ind AS) -108 on Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the Company's performance and allocates resources based on an analysis of various performance indicators of business segment/s in which the company operates, ‘Reclaim Rubber' has been identified as reportable segment and smaller business segments not separately reportable have been grouped under the heading ‘Others'.
The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional policies for segment reporting.
a) Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and Expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as “Unallocable”.
b) Segment Assets and Segment Liabilities represent Assets and Liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as “Unallocable”.
50 financial risk management - objectives and policies
The Company's financial liabilities comprise mainly of borrowings, trade payables and other payables. 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 Board of Directors (‘Board') oversee the management of these financial risks through its Risk Management Committee. The Risk Management Policy of the Company formulated by the Risk Management Committee and approved by the Board, states the Company's approach to address uncertainties in its endeavour 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.
The following disclosures summarize the Company's exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks. Quantitative sensitivity analysis have been provided to reflect the impact of reasonably possible changes in market rates on the financial results, cash flows and financial position of the Company.
1) 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 of interest rate risk and currency risk. Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables, loans and derivative financial instruments.
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. In order to optimize the Company's position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.
b) Foreign Currency Risk
The company's business objective includes safe-guarding its earnings against foreign exchange rate fluctuation. The company has adopted a structured risk management policy to hedge all these risks within an acceptable risk limit and an approved hedge accounting framework which allows for Fair Value and Cash Flow hedges. Hedging instruments include forward/options instruments to achieve this objective.
(i) Exposure in foreign currency - Hedged
The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes.
The forward exchange contracts used for hedging foreign currency exposure and outstanding as at reporting date are as under:
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. Other price risk arises from financial assets such as investments in equity instruments. Company has invested in unquoted Equity Instruments and hence its exposure to change in market value is minimal.
2) Credit Risk:
Credit risk refers to a risk that a counterparty will default on its contractual obligation resulting in a financial loss to the Company. Credit risk primarily arises from financial asset such as trade receivables and Derivative financial instruments and other balances with banks, loans and other receivables. The Company exposure to credit risk is disclosed in note 6, 7, 8 and 9. The Company has adopted a policy of only dealing with counterparties that have sufficient credit rating. The Company's exposure and credit ratings of its counterparties are continuously monitored and the aggregate value of transaction is reasonably spread amongst the counterparties.
Credit risk arising from investment in derivative financial instrument and other balances with bank is limited and there is no collateral held against these because the counterparties are banks and recognised financial institution with high credit ratings assigned by international credit rating agencies.
3) Liquidity Risk:
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.
The Company has an established liquidity risk management framework for managing its short term, medium term and long term funding and liquidity management requirements. The Company's exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Company manages the liquidity risk by maintaining adequate funds in cash and cash equivalents. The Company also has adequate credit facilities agreed with banks to ensure that there is sufficient cash to meet all its normal operating commitments in a timely and cost-effective manner.
The table below analysis non-derivative financial liabilities of the Company into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
53 OTHER STATUTORY INFORMATION
(i) The Company does not have any Capital-work-in progress or intangible assets under development, whose completion is overdue or has exceeded its cost compared to its original plan except items reported in note 2F - 3
(ii) 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:
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.
(iii) 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.
(iv) The Company have not any such transaction which is not recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income-tax Act, 1961.
54 The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of accounts, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of accounts along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Company uses the accounting software SAP for maintaining books of account. During the year ended 31 March 2024, the Company had not enabled the feature of recording audit trail (edit log) at the database level for the said accounting software SAP to log any direct data changes on account of recommendation in the accounting software administration guide which states that enabling the same all the time consume storage space on the disk and can impact database performance significantly. Audit trail (edit log) is enabled at the application level.
55 The figures for the corresponding previous year have been regrouped / reclassified wherever necessary, to make them comparable.
56 APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved for issue by the board of directors on 17th May, 2024.
57 EVENTS AFTER THE REPORTING PERIOD
The Board of Directors have recommended dividend of ? 37.50 (375%) per fully paid up equity share of ? 10/- each, aggregating ? 500.00 lakhs (subject to deduction of tax at applicable rates), for the financial year 2023-24, which is based on relevant share capital as on 31st March, 2024. The same is subject to the approval of the shareholders at their ensuing Annual General Meeting.
As per our Report of even date For and on behalf of the Board of Directors
For Rajendra & Co.
Chartered Accountants Rajendra V. Gandhi Harsh R. Gandhi
Firm Registration No. 108355W Managing Director Joint Managing Director
DIN: 00189197_DIN: 00133091_
Apurva R. Shah Shilpa Mehta Jyoti Sanoheti
Partner Chief Financial Officer Company Secretary
Membership No. 047166
Mumbai, 17th May, 2024 Mumbai, 17th May, 2024
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