2.17 Provisions
Provisions are recognised when, as a result of a past event, the Company has a legal or constructive obligation, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The amount so recognised is a best estimate of the consideration required to settle the obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. In an event when the time value of money is material, the provision is carried at the Present Value of the cash flows estimated to settle the obligation.
2.18 Operating Segments
Operating Segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM is responsible for allocating resources and assessing performance of the Operating Segments. Based on such, the Company operates in one Operating Segment, viz. Specialised Refractories and Ceramics.
Segments are organised based on business and geographies which have similar economic characteristics as well as exhibit similarities in nature of products and services offered, the nature of production processes, the type and class of customer and distribution methods. As per Ind AS 108, if a Financial Report contains both the Consolidated Financial Statements of a Parent that is within the scope of this Indian Accounting Standard as well as the Parent's Standalone Financial Statements, Segment Information is required only in the Consolidated Financial Statements. Accordingly, the Company has presented segment only for Consolidated Financial Statements.
2.19 Borrowings
Borrowings are initially recognised at Fair Value, net of Transaction Costs incurred. Borrowings are subsequently measured at Amortised Cost using Effective Interest Method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in Profit or Loss over the period of the borrowings using the Effective Interest Method. Fees paid on the establishment of loan facilities are recognised as Transaction Costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are derecognised from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.
Borrowings are classified as Current and Non-Current Liabilities based on repayment schedule agreed with Banks.
Borrowing Costs
Borrowing Costs that are directly attributable to the acquisition, construction or production of a Qualifying Asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying Assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Borrowing Costs consist of
interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing Cost also includes Exchange Differences to the extent regarded as an adjustment to the Borrowing Costs.
Other Borrowing Costs are expensed in the period in which they are incurred.
2.20 Cash and Cash Equivalents
Cash and Cash Equivalent in the Balance Sheet comprise Cash at Banks and on Hand and Short-Term Deposits with an original maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.
2.21 Earnings per Share
Basic Earnings per Share is calculated by dividing the Net Profit or Loss attributable to Equity Holders of the Company by the Weighted Average Number of Equity Shares outstanding during the period.
For the purpose of calculating Diluted Earnings per Share, the Net Profit or Loss for the period attributable to Equity Shareholders of the Company and the Weighted Average Number of Shares outstanding during the period are adjusted for the effects of all dilutive potential Equity Shares.
2.22 Contingent Liabilities
A Contingent Liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A Contingent Liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a Contingent Liability but discloses its existence in the Financial Statements.
2.23 Dividend Income
Dividend is recognised in Profit or Loss only when the right to receive payment is established, it is probable that the economic benefits associated with the Dividend will flow to the Company, and the amount of the Dividend can be measured reliably, which is generally when Shareholders approve the Dividend.
2.24 New and Amended Standards
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated March 31,2023 to amend the following Ind AS which are effective for Annual Periods beginning on or after April 1,2023. The Company applied for the first time these Amendments.
a. Definition of Accounting Estimates - Amendments to Ind AS 8
The Amendments clarify the distinction between changes in Accounting Estimates and changes in Accounting Policies and the correction of errors. It has also been clarified how entities use measurement techniques and inputs to develop Accounting Estimates.
The Amendments had no impact on the Company's Standalone Financial Statements.
b. Disclosure of Accounting Policies - Amendments to Ind AS 1
The Amendments aim to help entities provide Accounting Policy Disclosures that are more useful by replacing the requirement for entities to disclose their 'Significant' Accounting Policies with a requirement to disclose their 'Material' Accounting Policies and adding guidance on how entities apply the concept of Materiality in making decisions about Accounting Policy Disclosures.
The Amendments have had an impact on the Company's Disclosures of Accounting Policies, but not on the measurement, recognition or presentation of any items in the Company's Financial Statements.
c. Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12
The Amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases.
The Company previously recognised for Deferred Tax on Leases on a Net basis. As a result of these Amendments, the Company has recognised a separate Deferred Tax Asset in relation to its Lease Liabilities and a Deferred Tax Liability in relation to its Right-of-Use Assets. Since, these balances qualify for offset as per the requirements of Paragraph 74 of Ind AS 12, there is no impact in the Balance Sheet. There was also no impact on the opening Retained Earnings as at April 1, 2022.
Apart from these, consequential amendments and editorials have been made to other Ind AS like Ind AS 101, Ind AS 102, Ind AS 103, Ind AS 107, Ind AS 109, Ind AS 115 and Ind AS 34.
3. USE OF ESTIMATES AND JUDGEMENTS
The preparation of Standalone Financial Statements in conformity with Ind AS requires Management to make estimates and assumptions that affect the reported amounts of Assets and Liabilities and disclosure of Contingent Liabilities at the date of the Standalone Financial Statements and the results of operations during the reporting period end. Although these estimates are based upon Management's best knowledge of current events and actions, actual results could differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised 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.
Judgements in applying Accounting Policies
The judgements, apart from those involving estimations (see Note below), that the Company has made in the process of applying its Accounting Policies and that have a significant effect on the amounts recognised in these Standalone Financial Statements pertain to useful life of Intangible Assets acquired in merger. Refer Notes to the Standalone Financial Statements.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of Assets and Liabilities within the next Financial Year.
3.1 Useful lives of Property, Plant and Equipment and Intangible Assets
As described in the Material Accounting Policies, the Company reviews the estimated useful lives of Property, Plant and Equipment and Intangible Assets at the end of each reporting period and any changes are accounted for prospectively.
3.2 Fair Value Measurements and Valuation Processes
Some of the Company's Assets and Liabilities are measured at Fair Value for Financial Reporting purposes. Fair Value measurements are categorised into Level 1,2 or 3 based on the degree to which the inputs to the Fair Value measurements are observable and the significance of the inputs to the Fair Value measurement in its entirety, which are described as follows :
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the Asset or Liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the Asset or Liability. The Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the Fair Value of various Assets and Liabilities are disclosed in the Notes to the Standalone Financial Statements.
3.3 Defined Benefit Plans (Gratuity Benefits)
The cost of the Defined Benefit Gratuity Plan and other Post Employment Medical Benefits and the Present Value of the Gratuity obligation are determined using Actuarial Valuations. An Actuarial Valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a Defined Benefit Obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the Discount Rate. In determining the appropriate Discount Rate for plans operated in India, the Management considers the Interest Rates of Government Bonds where remaining maturity of such Bond correspond
to expected term of Defined Benefit Obligation.
The Mortality Rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about Gratuity Obligations are given in Note 29.
3.4 Claims, Provisions and Contingent Liabilities
The assessments undertaken in recognising Provisions and Contingencies have been made in accordance with the applicable Ind AS. The Company has ongoing litigations with various regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on Management's assessment of specific circumstances of each dispute and relevant external advice, Management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in Note 33 to the Standalone Financial Statements.
3.5 Provision against obsolete and slow-moving Inventories
The Company reviews the condition of its Inventories and makes provision against obsolete and slow moving Inventory items which are identified as no longer suitable for Sale or Use. Company estimates the Net Realisable Value for such Inventories based primarily on the latest invoice prices and current market conditions. The Company carries out an Inventory review at each Balance Sheet date and makes provision against obsolete and slow moving items. The Company reassesses the estimation on each Balance Sheet date.
3.6 Impairment of Financial Assets/Provision for Bad and Doubtful Debts
The Company assesses impairment based on Expected Credit Losses (ECL) model on Trade Receivables. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of Trade Receivables. The provision matrix is based on its historically observed default rates over the expected life of the Trade Receivable and is adjusted for forward looking estimates. At every reporting date, the historically observed default rates are updated and changes in the forward looking estimates are analysed.
3.7 Taxes
Deferred Tax Assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses including unabsorbed depreciation can be utilised. Significant Management estimate and assumptions is required to determine the amount Deferred Tax Assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
3.8 Leases - Estimating the Incremental Borrowing Rate
The Company does not determine the Interest Rate implicit in the Lease, therefore, it uses its Incremental Borrowing Rate (IBR) to measure Lease Liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the Right-of-Use Asset in a similar economic environment.
3.9 Impairment of Non-Financial Asset
Impairment exists when the carrying value of an Asset or Cash Generating Unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm's length, for similar assets or observable market prices less incremental costs for disposing off the asset. The value in use calculation is based on a DCF model.
Notes :
a) Securities Premium is used to record the Premium on Issue of Shares. The same is utilised in accordance with the provisions of Section 52 of the Companies Act, 2013.
b) Retained Earnings represents the Profits that the Company has earned till date, less any dividends or other distributions to the Shareholders.
c) Special Economic Zone Reinvestment Reserve had been created out of the Profit for the Financial Year 2022-23 of the eligible SEZ Unit in terms of the provisions of Section 10AA (1)(ii) of Income Tax Act, 1961 under the old tax regime. The Company has elected to exercise the option permitted under Section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Act, 2019 "New Tax Regime" at the time of filing of Income Tax Return for Financial Year ending March 31, 2023. Accordingly, the amount transferred to Special Economic Zone Reinvestment Reserve has been transferred to Retained Earnings in the Financial Year ended March 31,2024.
16.1 The Board of Directors, at its meeting on May 18, 2024, have proposed a Final Dividend of ' 7.00 (70 %) per Equity Share for the Financial Year ended March 31, 2024 subject to the approval of Shareholders at the forthcoming Annual General Meeting, and following Policy on Dividend Distribution of the Company. Proposed Dividend is accounted for in the year in which it is approved by the Shareholders.
The Board of Directors, at its meeting on May 27, 2023, had proposed a Final Dividend of ' 7.00 (70 %) per Equity Share for the Financial Year ended March 31,2023. The total amount of ' 2,522.75 has been paid out during the year ended March 31,2024, with approval of Equity Shareholders obtained at the Annual General Meeting.
17.1 Rupee Term Loan from a Bank is secured by the first pari-passu charge over all Movable Fixed Assets of the Company, both present and future, first pari-passu charge over Land and Building of the Company situated at Visakhapatnam, both present and future, and second pari-passu charge over Current Assets of the Company, both present and future. The interest rate on such term loan is 150 bps over 3 months Treasury Bill and is repayable in 20 equal quarterly instalments after one year of moratorium period from the date of first disbursement.
17.2 Rupee Term Loan from another Bank is secured by the first pari-passu charge over all Movable Fixed Assets of the Company, and second pari-passu charge over Current Assets of the Company. The interest rate on such term loan is 190 bps over RBI Repo Rate and is repayable in 20 equal quarterly instalments after one year of moratorium period from the date of first disbursement.
The Company has also satisfied all Debt Covenants prescribed in terms of Bank Loans. The Company has not defaulted on any loans payable.
17.3 For Current Maturities of Term Loan from Banks (Refer Note 20)
29.2 Provident Fund (Funded)
Provident Fund contributions in respect of employees upto August 2017 of erstwhile IFGL Refractories Limited are made to a Trustee managed exempted fund and interest paid to member thereof is not lower than that declared annually by the Central Government. Shortfall if any is made good by the Company. Membership to said fund has been closed on and from September 1, 2017, subject to necessary approvals and/or permissions. Provident Fund in respect of remaining employees are made to Statutory Provident Fund established by the Central Government. Based on the final guidance for measurement of Provident Fund liabilities of the Trustee managed fund issued by the Actuarial Society of India, the Company's Liability at the year ended March 31,2024 is ' 1.94 (March 31,2023 : ' Nil) has been actuarially determined by an Independent Actuary using the Projected Unit Credit Method and provided for. Provident Fund in respect of remaining employees of the Holding company are made to Statutory Provident Fund established by the Central Government as stated above.
29.3 Gratuity (Funded)
The Company provides for Gratuity benefit to its Employees. Gratuity entitlement of the employees is as per the provision of the Payment of Gratuity Act, 1972. However in case of employees joining before April 1, 2003 of erstwhile IFGL Refractories Limited, they are entitled to Gratuity as per scheme framed by that Company or as per the Payment of Gratuity Act, 1972, whichever is higher. Liability with regard to Gratuity Plan are determined by the Actuarial Valuation as set out in Note 2.14 (v), based on which the Company makes contribution to the Fund using Projected Unit Credit Method. The most recent Actuarial Valuation of the Fund was carried out as at March 31,2024. Refer Note 29.6 for Actuarial Valuation.
29.4 Superannuation (Funded)
Certain employees joined before March 31, 2004 of erstwhile IFGL Refractories Limited are member of Trustee managed Superannuation Fund. Said Fund provides for Superannuation benefit on retirement/death/incapacitation/termination and was amended from the Defined Benefit to Defined Contribution Plan effective April 1, 2004. Defined Benefit Plan was frozen as on March 31, 2004. Necessary formalities/approvals have been complied with and obtained. Refer Notes 2.14 (iii) and (v) for Accounting Policy relating to Superannuation and Refer Note 29.6 for Actuarial Valuation.
From December 2022, the Company is not effecting payment of contributions in respect of its employees and Member of Company's Income Tax recognised Superannuation Fund, IFGL Refractories Ltd Employees Superannuation Fund following approval by the Principal Commissioner of Income Tax, Kolkata-2 that surplus lying in Plan-A of the Fund can be adjusted against contributions receivable from the Company under Plan-B thereof. Amount involved for the year ended March 31,2024 is ' 35.46 (December 2022 to March 2023 is ' 13.15).
29.5 Compensated Absence (Unfunded)
The Company provides for accumulated leave benefit for eligible employees. Liabilities are determined by Actuarial Valuation as set out in Note 2.14 (vi) using Projected Unit Credit Method.
29.6 Following are the further particulars with respect to Defined Benefit Plans of the Company for the year ended March 31, 2024 :
The above Sensitivity Analysis is 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 (Present Value of the Defined Benefit Obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied while calculating the Defined Benefit Liability recognised in the Balance Sheet.
The methods and types of assumptions used in preparing the Sensitivity Analysis did not change compared to the prior period.
Risk Exposure :
Through its Defined Benefit Plans, the Company is exposed to a number of risks, the most significant of which are detailed below :
a. Investment Risk : The Defined Benefit Plans are funded Government Securities and Units of Insurers. The Company does not have any liberty to manage the funds provided to Insurance Companies.
b. Interest Risk : A decrease in the interest rate on Plan Assets will increase the Plan Liability.
c. Life Expectancy : The Present Value of the Defined Benefit Plan Liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the Plan Liability.
d. Salary Growth Risk : The Present Value of Defined Benefit Plan Liability is calculated by reference to the future salaries of plan participants. An increase in Salary will increase the Plan Liability.
Defined Benefit Liability and Employer Contributions
Expected contributions to post employment benefit plans for the year ending March 31,2024 is ' 51.03 ( March 31,2023 : 13.84)
The Weighted Average Duration of the Defined Benefit Obligation (Gratuity) is 8 years for the year ended March 31,2024 (March 31,2023 : 7 years). The expected maturity analysis of Undiscounted Gratuity is as follows :
b) The Company challenged vires of Explanation to Section 10AA(1) of the Income Tax Act, 1961 (the Act) inserted on and from Assessment Year beginning April 1,2018, on grounds that such Explanation denies the benefit intended to be provided under the said Section, by filing a Writ Petition before Hon'ble High Court at Calcutta (Hon'ble High Court). During the year ended March 31, 2024, the said Writ Petition was dismissed by the Single Bench of the Hon'ble High Court. Being aggrieved, the Company preferred an Appeal before the Division Bench of the Hon'ble High Court which has admitted the same on January 10, 2024. Tax amount involved is ' 831.53 (March 31,2023 : ' 922.50) and it has been considered as possible in nature, basis a legal opinion obtained by the Company. In the opinion of the Management, outcome of aforesaid proceedings will not materially impact Company's financial position and result of operations.
c) During the year ended March 31, 2023, the Company's claim for AY 2020-21 for ' 2,815.91 (tax impact of ' 983.99) towards deduction on account of Depreciation on Goodwill arising on Amalgamation was disallowed under Income Tax Assessment proceedings and being aggrieved thereby, the Company has filed an Appeal. Recently, Income Tax Authorities have issued Notices under Section 148 of the Act for Assessment Years 2018-19 and 2019-20 thereby reopening assessments for said Assessment Years on the ground that similar claims of ' 5,006.06 (tax impact of ' 1,732.50) and ' 3,754.55 (tax impact of ' 1,311.99) in the Assessment Years 2018-19 and 2019-20 respectively escaped Assessment as Income. The Company supported by legal opinion, continues to believe that aforesaid deductions claimed are sustainable on merit and remain unaffected.
The Management assessed that Cash and Cash Equivalents, Other Bank Balances, Trade Receivables, Trade Payables, Other Financial Assets and Other Financial Liabilities approximate their Carrying Amounts largely due to the Short-Term Maturities of these instruments.
The Fair Value of Lease Liabilities is estimated by Discounting Future Cash Flows using rates currently available for debt on similar terms, credit risk and remaining maturities. In addition to being sensitive to a reasonably possible change in the forecast cash flows or the discount rate, the Fair Value of the Equity Instruments is also sensitive to a reasonably possible change in the growth rates. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total Fair Value.
The Fair Values of the Company's interest bearing borrowings are determined by using DCF method using discount rate that reflects issuer's borrowing rate as at the end of the reporting period. The own non performance risk as at March 31, 2024 was assessed to be insignificant. The discount for lack of marketability represents the amounts that the Company has determined that market participants would take into account when pricing the Investments.
35.3 Financial Risk Management Objectives
The Company's activities expose it to a variety of Financial Risks, including Market Risk, Credit Risk and Liquidity Risk. The Company continues to focus on a system based approach to Business Risk Management. The Company's Financial Risk Management process seeks to enable the early identification, evaluation and effective management of key risks facing the business. Backed by strong Internal Control Systems, the current Risk Management System rests on policies and procedures issued by appropriate authorities; process of regular reviews/audits to set appropriate risk limits and controls; monitoring of such risks and compliance confirmation for the same.
The Company's Financial Instruments are exposed to market changes. The Company is exposed to following significant Market Risk :
i. Foreign Currency Risk
ii. Interest Rate Risk
iii. Price Risk
Market Risk Exposures are measured using Sensitivity Analysis. There has been no change to the Company's exposure to Market Risks or the manner in which these risks are being managed and measured.
Fair Value Hierarchy
The following table provides an analysis of Financial Instruments that are measured subsequent to initial recognition at Fair Value, grouped into Level 1 to Level 3, as described below :
Quoted/Repurchase prices in an active market (Level 1) : This level of hierarchy includes Financial Assets that are measured by reference to Quoted Repurchase Prices (unadjusted) in active markets for Identical Assets or Liabilities. This category consists of Investment in Quoted Equity Shares, and Mutual Fund Investments.
Valuation techniques with observable inputs (Level 2) : This level of hierarchy includes Financial Assets and Liabilities, measured using inputs other than Quoted Prices included within Level 1 that are observable for the Asset or Liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level of hierarchy does not include any instrument.
Valuation techniques with significant unobservable inputs (Level 3) : This level of hierarchy includes Financial Assets and Liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair Values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
There have been no transfers between Level 1 and Level 2 during the years ended March 31,2024 and March 31,2023.
In determining Fair Value Measurement, the impact of potential climate related matters, including legislation, which may affect the Fair Value Measurement of Assets and Liabilities in the Financial Statements has been considered. These risks in respect of climate related matters are included as key assumptions where they materially impact the measure of recoverable amount. These assumptions have been included in the Cash Flow forecasts in assessing value in use amounts.
At present, the impact of climate related matters is not material to the Company's Financial Statements.
i. Foreign Currency Risk
The Company undertakes transactions denominated in Foreign Currency which results in Exchange Rate fluctuations. Such Exchange Rate Risk primarily arises from transactions made in Foreign Exchange and reinstatement risks arising from recognised Assets and Liabilities, which are not in the Company's functional Currency (Indian Rupees).
Interest Rate Risk refers to the risk that the Fair Value or Future Cash Flows of a Financial Instrument will fluctuate because of changes in market interest rates. The objectives of the Company's Interest Rate Risk Management processes are to lessen the impact of adverse Interest Rate movements on its earnings and Cash Flows and to minimise counter party risks.
The Company is exposed to interest rate volatilities primarily with respect to its Term Borrowings from Banks as well as Financial Institutions, Export Packing Credit Facilities and Cash Credit Facilities. Such volatilities primarily arise due to changes in money supply within the economy and/or liquidity in banking system due to Asset/Liability mismatch, poor quality assets etc. of Banks. The Company manages such risk by operating with banks having superior Credit Rating in the market as well as Financial Institutions.
c) Credit Risk
Credit Risk is the risk that counter party will not meet its obligations leading to a Financial Loss. The Company has its policies to limit its exposure to Credit Risk arising from outstanding Trade Receivables. Management regularly assess the credit quality of its customer's basis which, terms of payment are decided. Credit limits are set for each customer which are reviewed on periodic intervals.
38. AMALGAMATION WITH ERSTWHILE IFGL REFRACTORIES LIMITED (ERSTWHILE HOLDING COMPANY)
Hon'ble National Company Law Tribunal, Kolkata Bench (Tribunal) by passing an Order on August 3, 2017 under Sections 230 and 232 of the Companies Act, 2013 sanctioned a Scheme of Amalgamation (Scheme) for merger of erstwhile IFGL Refractories Ltd ("IFGL") with the Company on and from April 1,2016, being the Appointed Date. Scheme had become effective from August 5, 2017 following filing of Order of Hon'ble Tribunal with the Ministry of Corporate Affairs (Registrar of Companies) by the Company and IFGL on that date. The Scheme was accordingly given effect to in the Financial Year 2016-17 Financial Statements.
In accordance with the provisions of aforesaid Scheme -
a. The amalgamation was accounted under the 'Purchase Method' as prescribed by Accounting Standard 14 - Accounting for Amalgamation under the previous GAAP.
b. The excess of the Value of Equity Shares issued by the Company over the Book Value of Assets and Liabilities taken over by the Company and cancellation of Equity Shares held by erstwhile IFGL Refractories Limited in the Company, amounting to ' 26,699.46 was recorded as Goodwill arising on Amalgamation.
c. The Goodwill recorded on Amalgamation is being amortised and the Company has estimated its useful life of 10 years. Accordingly, amortisation for the year amounting to ' 2,669.95 has been recognised in the Standalone Statement of Profit and Loss.
39. TAX EXPENSE
This note provides an analysis of the Company's Income Tax Expense, shows amounts that are recognised directly in Equity and how the Tax Expenses is affected by non assessable and non deductible items. It also explains significant estimates made in relation to tax positions.
40. The Company has elected to exercise the option permitted under Section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Act, 2019 "New Tax Regime" at the time of filing of Income Tax Return for Financial Year ending March 31,2023. Accordingly, the Company has re-measured Current Tax Liability and Deferred Tax Liability basis the lower rate prescribed. Consequently, the Current Tax Liability and Deferred Tax Liability for the year ended March 31,2023 has decreased by ' 62.99 and ' 870.88 respectively, resulting into reduction in tax charge by ' 933.87 during the year ended March 31,2024.
Tax charge for the Current Financial Year (Financial Year 2023-24) has also been recomputed during the year ended March 31,2024 based on New Tax Regime.
41. The Company has used accounting software for maintaining its books of account which has a feature of recording the audit trail (Edit Log facility) and the same has operated throughout the year for all relevant transactions recorded in the software except that the audit trail feature is not enabled at the database level for certain changes using privileged/administrative access rights insofar as it relates to SAP Accounting Software. For "SARAL" Payroll Software, the audit trail was neither operated nor was enabled during the year. Further, no instance of audit trail feature being tampered with was noted in respect of the accounting software except for SARAL application as audit trail was neither operated nor enabled during the year.
43. OTHER STATUTORY INFORMATION
i. No proceedings has been initiated or are pending against the Company for holding any Benami Property under the Benami Transactions (Prohibition) Act, 1988 and Rules made thereunder.
ii. There are no charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
iii. The Company has not traded or invested in Crypto Currency or Virtual Currency during the Financial Year.
iv. The Company has not advanced or loaned or invested funds to any other persons or entities, 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.
v. The Company has not received any fund from any persons or entities, 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.
vi. The Company does not have any 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).
vii. The Company does not have balance with the companies struck off under Section 248 of Companies Act, 2013 or Section 560 of Companies Act, 1956.
viii. The Company has not been declared as wilful defaulter by any Bank or Financial Institution or Other Lender.
ix. There are no exceptional items for the year ended March 31,2024.
44. One of the customers of the Company has opted for Preventive Restructuring under laws of Czech Republic. In the opinion of Company Management, realisability of dues from said customer is uncertain and doubtful in foreseeable future. As a matter of abundant precaution and prudence, the Company has made Provision for Trade Receivables aggregating to ' 3,169.42, goods sold but in Transit aggregating to ' 784.73 and Reversed Commission aggregating to ' 147.85 accrued in respect of the said Sales, during the year ended March 31,2024.
45. The Code on Social Security, 2020 ('Code') relating to Employee Benefits during employment and post employment benefits received Presidential Assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final Rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
In terms of our Report attached.
For S. R. Batliboi & Co. LLP For and on behalf of the Board of Directors of
Chartered Accountants IFGL Refractories Limited
ICAI Firm's Registration Number : 301003E/E300005
per Sanjay Kumar Agarwal S K Bajoria James L McIntosh
Partner Chairman Managing Director
Membership No. : 060352 (DIN - 00084004) (DIN - 09287829)
Arasu Shanmugam Amit Agarwal Mansi Damani
Kolkata Director and Chief Executive Officer India Chief Financial Officer Company Secretary
May 18, 2024 (DIN - 02316638) (FCS - 6769)
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