Terms and rights attached to equity shares
The Company has a single class of equity shares having a par value of Rs. 10 each. Accordingly, all equity shares rank equally with regard to dividends and share in the Company's residual assets. The voting rights on a poll (not on show of hands) are in proportion to an equity shareholder's share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.
On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.
Nature and purpose of other reserves Securities premium reserve
Securities premium reserve represents the amount received in excess of par value of securities (equity shares). The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
General reserve
The General Reserve is created from time to time on transfer of profits from retained earnings. General reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income, items included in general reserves will not be subsequently reclassified to profit and loss.
Retained earnings
Retained earnings represent the undistributed profits of the Company.
During the year a dividend of Rs 27.5 per share , total dividend Rs. 2,789 lakhs (Previous Year Rs 16.50 per share, total dividend 1,674 lakhs) was paid to equity shareholders. The board of directors recommended the final dividend of Rs. 21.50 per share (Nominal value of Rs. 10/share) for the financial year 2024-25. The dividend is subject to approval of shareholders in the ensuing Annual General Meeting.
(i) Information about warranty provisions and significant estimates
Warranties: Provision is made for warranty claims in respect of products sold which are still under warranty at the end of reporting period. The Company offers warranty for a period ranging from one year to two years to domestic and export customers. The warranty provision is expected to be utilised within the normal warranty period. The provision has been created based on management's estimates and past trends of actual claim received.
Note 25 : Employee benefits
(i) Compensated absences
The Compensated absences cover the Company's liability for accumlated earned leave and sick leave.
The entire amount of the provision of INR 1643 lakhs (March 31, 2024: INR 1521 lakhs) is presented as current since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to avail the full amount of accrued leave or require payment for such leaves within the next 12 months.
(ii) Defined contribution plans Superannuation Fund
The expense recognised during the period towards defined contribution plan is INR NIL lakhs (March 31, 2024: 72 lakhs).
Employee State Insurance
The expense recognised during the period towards defined contribution plan is INR 12 lakhs (March 31, 2024: 11 lakhs).
Employer Contribution to National Pension Scheme
The expense recognised during the period towards contribution to national pension scheme is INR 164 lakhs (March 31,2024: 71 lakhs ).
(iii) Post-employment obligations
(a) Gratuity
Balance sheet amounts - Gratuity
The amounts recognised in the balance sheet and the movements in the net defined benefit obligation over the year are as follows:
(d) Changes in defined benefit obligation of Gratuity plan and Provident fund due to changes in mortality and withdrawal rate, are negligible.
The above sensitivity analysis 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 assumption the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period. Brackets represents gain.
(vii) Risk exposure
Through its defined benefit plan, the Company is exposed to a number of risks, the most significant of which are defined below:
Investment risk If plan is funded then assets and liabilities mismatch and actual investment return on assets is lower than the
discount rate assumed at the last valuation date can impact the liability.
Discount rate Reduction in discount rate in subsequent valuations can impact the plan's liability.
Mortality and disability Actual deaths and disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
Salary increases Actual salary increases will increase the plan's liability. Increase in salary increase rate assumption in future valuations
will also increase the liability.
Withdrawals Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent
valuations can impact plan's liability.
(viii) Defined benefit liability and employer contributions
Expected provident fund contribution for the year ended March 31, 2026 is INR 420 lakhs.
Expected contribution to post-employment benefit plan i.e. gratutiy for the year ended March 31,2026 is INR 274 lakhs.
The weighted average duration of the defined benefit obligation of Gratuity plan as at March 31, 2025 is 15.62 years (March 31, 2024: 16.01
years). The expected maturity analysis of gratuity is as follows:
(a) Fair value of financial assets and liabilities measured at amortised cost
The following summarizes the financial instruments at fair value and classification of financial instruments into the three levels prescribed under the Indian Accounting Standards:
There are no financial assets and financial liabilities in a category measured at fair value-recurring fair value measurements.
The carrying amounts of trade receivables, cash and cash equivalents, other bank balances, trade payables, employee benefits payables, lease liabilities, interest accrued, unpaid dividends, capital creditors and security deposits received are considered to be the same as their fair values, due to their short-term nature.
The fair values for long - term deposits with banks with remaining maturity period more than 12 months were calculated based on cash flows discounted using a current interest rate.The carrying amount is considered to approximate the same to fair value as at the reporting date based on evidence obtained from banks to support the valuation.
There is no transfer of financial assets and liabilities between the levels 1,2,3 during the year.
Note 27: Financial risk management
The Company's activities expose it to market risk, liquidity risk and credit risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize the potential adverse effects on the Company's financial performance. This note explains the sources of risk which the entity is exposed to and how the entity manages such risk.
The Company's senior management oversees the management of these risks. The Company's risk management policies are established to identify and analyse the risks faced by the Company to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities.
(A) Credit risk
Credit risk arises from cash and cash equivalents, financial assets carried at amortised cost and deposits with banks, as well as credit exposures to customers, including outstanding receivables.
(i) Credit risk management
Trade receivables and other financial assets
A default is when the counterparty fails to make contractual payments within 30 days of when they fall due in case of trade receivables and for other financial assets as prescribed by relevant terms of the contract. This definition of default is determined considering the business environment in which the Company operates and other macro-economic factors. Assets are written-off when there is no reasonable expectation of recovery, such as a trade receivables declaring bankruptcy or failing to engage in a repayment plan with the Company. Where financial assets have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized in the statement of profit and loss.
The Company extends credit to the customers considering factors such as credit track record in the market and past dealing with the Company. The Company monitors the payment track record of the customers. The Company's third party export customers are secured through letter of credit and majority of the Company's export trade receivables are outstanding but not due with its related entities, which mitigates the risk to an extent. Cash and cash equivalents and deposits with banks
Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits accounts in different banks across the Country.
(ii) Provision for expected credit losses
The Company provides for expected credit loss based on the following:
(a) Financial assets for which loss allowance is measured using 12 month expected credit losses
The 12-month expected credit loss is a portion of the lifetime expected credit losses which results from default events that are possible within 12 months after the reporting date. At initial recognition, financial assets are considered as having negligible credit risk. The Company monitors whether there is any significant increase in credit risk since initial recognition.
(b) Financial assets for which loss allowance is measured using life time expected credit losses
Lifetime expected credit loss are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. Management believes that the unimpaired amounts that are 6 months past due date are still collectible in full. The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forward-looking information. Considering the above factors the trade receivables continue to have a negligible credit risk on initial recognition and thereafter on each reporting date.
Impairment of financial assets
The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
(B) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash. The Company's approach to managing liquidity is to ensure, that it will have sufficient liquidity to meet its liabilities when they are due. The Company aims to maintain the level of its cash and cash equivalents at an amount in excess of expected cash outflows on financial liabilities.
Maturities of financial liabilities
The tables below analyse the Company's financial liabilities into relevant maturity groupings based on their contractual maturities for all financial liabilities:
(C) Market risk
(i) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, JPY,THB,CNY and EUR . Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company's functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The Company does not have any debt other than leases in its financial statements. Therefore there is no exposure to interest risk.
Note 29: Operating Segment
The Company is primarily engaged in the business of "Power Products". The Chief Executive Officer is the Company's Chief Operating Decision Maker (CODM) within the meaning of Ind AS 108 'Operating Segments'. CODM examines the Company's performance, reviews internal management reports, allocates resources based on analysis of various performance indicator of the Company as a single unit. Therefore, there is no reportable segment for the Company as per the requirements of Ind AS 108 "Operating Segment".
(i) In respect of the matters above, the amount represents the demands received under the respective demand/ show cause notices/ legal claims, wherever applicable.
(ii) Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities.
(iii) The Company does not expect any reimbursements in respect of the above contingent liabilities.
(iv) The Company has received a show cause notice dated May 30, 2018, from Regional Commissioner - Noida under section 7A of the Employees' Provident Fund and Miscellaneous Provisions Act 1952 challenging the salary structure used for determining the liability under the act in case of international workers. Presently the proceedings subsequent to the notice are in data collection and verification stage and no demand has been raised on the Company.
The Company has filed a writ petition against the show cause notice and proceedings thereto, in Allahabad High court, wherein the Hon'ble High court in their order dated April 30, 2019, directed that any final order passed by the Provident Fund authorities will be subject to the disposal of the present writ petition.
Based on the opinion obtained from external legal expert, the management has assessed that the Company has a good case in the said matter.
(v) The Company will continue to assess the impact of further developments relating to retrospective application of Supreme Court Judgment in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees' Provident Fund Organisation on non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management which is supported by legal advice, the aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements.
(vi) In view of the judgement of honourable supreme court in the case of M/s Northern operating system private limited(NOS) on manpower supply services, the Company has consulted a reputed lawyer and got its opinion. Based on the opinion the Company is of the view that the Company has no liability in this regards as the facts of the Company are different from NOS. However the Company has discharged the GST without admitting liability.
(vii) The results of product line testing done during the financial year 2021-22 were not in confirmation with required norms in case of USA, Canada, Australia, UK, countries in EU /EFTA. In case of USA and Canada, testing results exceeded the declarations on the products but same were within the required norms in respective countries. During the year ended 31 March 2023, based on management estimate, the Company has provided a sum aggregating to Rs 1,750 lakhs towards repair and reimbursement of expenses towards inventory holding of non-confirming stock out of the sale made by the Company during financial year 2021-22 to its fellow subsidiaries in USA and Canada. During the previous year all the activities related to repair has been completed. No further action is necessitated in this regard.
The total expenditure incurred by the company in this regard is Rs 1352 lakhs, consequently Rs 398 lakhs being the excess provision made during year ended 31 March 2023 has been written back and shown under "Exceptional Items” in the financial statements in the previous year.
(viii) The Company has received order amounting to Rs 4,441.69 lakhs from Customs Department regarding classification of three parts at the time of importation. The Company has filed the appeal in CESTAT, Allahabad against the order.
Based on the opinion obtained from external legal expert, the management has assessed that the Company has a good case in the said matter.
The amount of interest paid by the buyer as per the Micro, Small and Medium Enterprises Development - -
Act, 2006 (MSMED Act, 2006)
The amounts of the payments made to micro and small supplier beyond the appointed day during each - -
accounting year
The amount of interest due and payable for the period of delay in the making payment (which have been - -
paid but beyond the appointed day during the year) but without adding the interest specified under MSMED Act, 2006
The amount of interest accrued and remaining unpaid at the end of each accounting year - -
The amount of further inrterest remaining due and payable even in succeeding years, until such date - -
when the interest dues as above are actually paid to small enterprise for the purpose of disallownace as a deductible expenditure under the MSMED Act, 2006
Note 37: Additional regulatory information required by Schedule-III
(i) Details of Benami Property:
No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
(ii) Borrowing secured against current assets:
The Company does not have any borrowings from banks and financial institutions on the basis of security of current assets.
(iii) Wilful Defaulter:
The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
(iv) Compliance with number of layers of companies The Company does not have any subsidaries.
(v) Utilisation of borrowed funds and share premium
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
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:
- 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
- provide any guarantee, security or the like on behalf of the ultimate beneficiaries
(vi) Undisclosed income
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
(vii) Details of crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
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