(ii) Rights and preferences attached to equity shares :
The Company has only one class of equity shares issued and subscribed of face value of INR 5 per share. Each holder of equity share is entitled to one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of the Company remaining after settlement of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders. In the event of declaration of dividend by the Company, approval of shareholders will be required in its Annual General Meeting.
Nature and purpose of Reserves
(i) Securities Premium
Securities Premium represents amount received in excess of per value of issue of shares. The Premium is utilised in accordance with the provisions of the Companies Act.
(ii) Revaluation Reserve
Revaluation Reserve was created under previous GAAP on upward revaluation of land and building.
Based on the information/documents available with the Company, there are no Micro, Small and Medium Enterprises as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, as amended, to whom the Company owes any dues.
(a) Fair value
The fair value of the financial assets and liabilities approximates their carrying amounts as at the Balance Sheet date.
(b) Fair valuation Techniques
The fair value 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 transactions between market participants at the measurement date.
The following method of assumption were used to estimate the fair values:
(i) The fair value of cash and cash equivalents, trade receivables, trade payables, current financial liabilities/ financial assets approximate their carrying amount largely due to the short term nature of these instruments. The management considers that the carrying amounts of financial assets and financial liabilities recognised at nominal cost /amortised cost in the financial statements approximate their fair falue.
(ii) A substaintial portion of the Company's long-term debts has been contracted at fixed rate of interest. Fair value of variable interest borrowings approximates their carrying value subject to adjustments made for transaction cost.
32. FINANCIAL RISK MANAGEMENT
The Company's risk management is carried out by a treasury department under policies approved by the Board of Directors, Company Treasury identifies, evaluates and hedges financial risks in close co-operation with the Company's operating units. The board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, liquidity risk and investment of excess liquidity.
(A) Market Risk
(i) Foreign currency risk
The Company does not operate internationally. The Company does not have significiant foreign currency exposure.
(ii) Interest rate risk
The Company does not have borrowing as at 31st March 2024. As such there is no interest rate risk.
(iii) Price risk
The Company does not have a practice of investing in market equity securities with a view to earn fair value changes gain. At the reporting date Company does not hold quoted securities. Accordingly, Company is not exposed to significant market price risk.
(B) Credit Risk
The Company is exposed to credit risk from its activities and from its financing activities including deposits with banks.
(C) Liquidity Risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unexpectable loses.
33. CAPITAL MANAGEMENT - RISK MANAGEMENT
The Company's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Management believes that the outcome of the above will not have any material adverse effect on the financial position of the company. Against the above claims/demands, payments have been made under protest and/or debts have been withheld by the respective parties, to the extent of INR 73.39 Lakhs (INR 73.39 Lakhs).
Included in the above are contingent liabilities to the extent of INR 875.65 Lakhs (INR 875.65 Lakhs) relating to the pre transfer period of the erstwhile Power Unit Plant and Power Product Division of the Company, which were transferred to AVTEC Limited in June 2005, INR 471.16 Lakhs (INR 471.16Lakhs) relating to the pre-transfer period of the erstwhile Earthmoving Equipment division of the Company,which was transferred to Caterpillar India Private Limited in February 2001 and INR 569.80 Lakhs (INR 603.14 Lakhs) relating to the pre transfer period of the erstwhile Chennai Car Plant of the Company, which has been tranferred to Hindustan Motor Finance Corporation Limited in March 2014. However, demands to the extent of INR 667.29 Lakhs (INR 667.29 Lakhs) in case of erstwhile Power unit Plant are covered by counter guarantees by the customers.
b) Bonus for the years 1963-64 to 1967-68 at Uttarpara unit is under adjudication (amount undetermined). The Company contends that no liability exists in this regard under the Payment of Bonus Act,1965, as amended.
38. DESCRIPTION OF PLANS i) Description of Plans
A. Defined benefit plans
a) Provident Fund
The Company also has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and neither it has further contractual nor any constructive obligation.
b) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972.
B. Other Employee Benefits Leave Encashment
The amount of the provision of INR 19.22 Lakhs (March 31, 2023 INR 20.73 Lakhs) is considered as current and the accumulated leave expected to be carried forward beyond twelve months as long term employee benefit for measurement purpose.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method i.e. projected unit credit method has been applied as that used for calculating the defined benefit liability recognised in the balance sheet.
* Gratuity trust pays contribution to Life Insurance Corporation of India (LICI) which inturn invests the amount in various instruments. As it is done by LICI in totality basis along with contributions from other participants, the Company wise investment in planned assets - category / class wise is not available.
vi) Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:
Description of Risk Exposers :
Valuations are based on certain assumption which are dynamic in nature and vary over time. As such Company is exposed to various risk as follows:
Interest rate risk : Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.
Salary Inflation risk : Higher than expected increases in salary will increase the defined benefit obligation.
Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria.
Withdrawls : Actual withdrawls providing higher or lower than assumed withdrawls can impact plan's liability.
Discount Rate : Reduction in discount rate in subsequent valuations can increase the plans liability.
vii) Defined benefit liability and employer contributions
Expected contribution to post employment benefit plan for the year ending March 31, 2024 is INR 253.92 Lakhs (INR 279.90 Lakhs)
The weighted average duration of the defined benefit obligation is 10 years in case of Gratuity and 10 years in case of Leave encashment in all the two years.
40. SEGMENT REPORTING
As the Company's business activity falls within a single primary business segment viz "Automobiles" and there is no reportable secondary segment i.e. geographical segment, the disclosure requirement of IND AS 108 - "Operating Segments " is not applicable.
41. The Company has been continuously rationalising the cost post "suspension of work" at Uttarpara plant. It has reduced the fixed cost including employee cost considerably and continuously working on further reducing its fixed cost. The accumulated losses of the Company was brought down to Rs.12308.32 Lacs as on 31st March, 2024 as compared to Rs.25218.07 Lacs as on 31st March, 2017. The net worth of the Company has also turned positive, and the value is Rs.904.69 lacs as on 31st March, 2024 as compared to negative net worth of Rs.1632.50 lakhs as on 31st March, 2023. The Company is presently debt free (Financial debt) barring few liabilities which stand mainly on employee account, trade payables & other liabilities. At present, the current asset of the Company exceeds the current liabilities resulting in favourable current ratio and reflects that Company has sufficient liquidity to meet its liabilities. The Company is considering various measures including alternative use of Fixed Assets to generate revenue. The Company has started to monetize its old and obsolete assets including equipment during the year.
The long awaited eco-friendly electric vehicle project is stalled at the moment due to Notice from Government of West Bengal on resumption of Uttarpara Land.
The Company has alternate plans to facilitate and generate additional revenue and realize adequate fund required, after the resumption issue is resolved.
Thus, the Company will facilitate and generate additional revenue and realize further fund required and hence, the Company continues to prepare its accounts on a going concern basis.
42. Due to low productivity, growing indiscipline, shortage of funds and lack of demand of products, the management declared "Suspension of work" at Company's Uttarpara Plant with effect from 24th May 2014.
Based on legal opinion obtained, the employees and workmen, falling under the purview of "Suspension of work" at Uttarpara plant, are not entitled to any salary & wages during that period and accordingly the Company has not provided for such salary & wages.
43. The Government of West Bengal issued an order for resumption of HM Uttarpara land. Application filed before West Bengal Land Reform and Tenancy Tribunal (WBLRTT) and after conclusion of final hearing, an appeal filed by the Company before Hon'ble Calcutta High Court against the order passed by WBLRTT, which is pending for hearing.
44. The wholly owned immaterial foreign subsidiary of the Company namely Hindustan Motors Limited, USA was already dissolved on 16th February, 2017 as per the laws appliacble in USA and as such not in existence since after dissolution. Further, the application made by the Company to Reserve Bank of India seeking permission for writing off its entire investment in Hindustan Motors Limited, USA (Capital, Loan and other receivables/payables) for which necessary provision has been made in the accounts of the Company, is under consideration.
46. a) Figures in brakets represent figures for the previous year.
b) Previous year's figures have been regrouped / rearranged wherever necessary.
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