(o) Contingencies and Provisions
A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate of the expenditure required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimate.
A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote. Contingent liabilities are disclosed after careful evaluation of the facts and legal aspects of matter involved.
Contingent assets are neither recognised nor disclosed. However, where an inflow of economic benefits is probable, the Company discloses the same in financial statements.
(p) 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.
2. Other Accounting Policies
(a) Intangible assets
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and provision for impairment of losses, if any.
(b) Impairment of assets
The carrying amounts of property, plant and equipment, investment property and intangible assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors.
An impairment loss will be recognised wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the asset's net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognised impairment loss is further provided or reversed depending on changes in circumstances.
(c) Borrowing Cost
The borrowing cost is capitalised, when the cost is incurred and is directly attributable to either construction or acquisition or production of qualifying assets. It is capitalised as part of cost of the qualifying asset. Other borrowing cost, not directly attributable to qualifying asset is recognised as expenses in the period in which it incurs.
Effective Interest Rate method as enumerated under Ind AS 39:Financial Instruments: Recognition and Measurement, is applied to calculate amount of interest cost eligible for capitalisation. Qualifying assets are those, which take substantial amount of time for construction or production either for ready to use or intended to ready to use.
Capitalisation of the borrowing cost is commenced when
a) expenditure is incurred on qualifying assets which has resulted in payment of cash
b) borrowing cost is incurred and
c) necessary activities are undertaken to prepare the asset for intended use.
Capitalisation of borrowing cost is ceased, when substantially all the activities necessary to prepare the qualifying asset for its intended use are complete. When the construction of a qualifying asset is completed in parts and each part is capable of being used while construction continues on other parts, capitalisation of borrowing costs is ceased when it completes substantially all the activities necessary to prepare that part for its intended use.
(d) Research and Development
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product's technical and economic feasibility and marketability has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Property, plant and equipment utilised for research and development are capitalised and depreciated in accordance with the policies stated for property, plant and equipment.
(e) Leases
(i) As a Lessor
The each lease is analysed and based on the substance of contract is classified as either finance lease or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
Lease payments from operating leases are recognised as income on a straight line basis. Cost, including depreciation which is incurred in earning lease income is recognised as expenses. (refer note 2.2). Depreciation expenses applied on underlying asset is as per the policy of depreciation of the Company.
(ii) As a Lessee
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
1 the contract involves the use of an identified asset - this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the lessor has a substantive substitution right, then the asset is not identified.
2 the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3 the Company as a lessee has the right to direct the use of the asset. The Company has this right when it has the decision-making
rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how
and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:
a) the Company as a lessee has the right to operate the asset; or
b) the Company as a lessee designed the asset in a way that predetermines how and for what purpose it will be used
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use assets are subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at amortised cost at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using the incremental borrowing rate.
It is re -measured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Trade receivables includes retentions ' 40167.03 lakhs (March 31, 2024'40541.24 lakhs)
Trade Receivables are hypothecated as security by creating 1st pari passu charge for securing working capital facilities loans from banks (refer note no. 2.15)
In accordance with Ind AS 109, the Company has used the practical expedient by computing the expected credit loss allowance for trade receivables by following simplified approach. The expected credit loss model takes into account historical credit loss experience and adjusted for forward looking information.
The Company's customer profile includes government departments and large private corporates. Accordingly, the Company's customer credit risk is low. The Company's average project execution cycle is around 36 to 60 months.
General payment terms include mobilisation advance, monthly progress payments and certain retention money to be released at the end of the project. In some cases retentions are substituted with bank guarantees.
The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation.
There are no trade receivables due from any director or any officer of the Company, either severally or jointly with any other person, or from any firms or private companies in which any director is a partner, a director or a member.
(a) The Company had signed Development Agreement with M/s. Kalpataru Ltd., for development of real estate project on its land situated at Sinhagad Road, Vadgaon, Pune, in the previous year. In pursuance of compulsory acquisition by Pune Municipal Corporation (PMC) as per development plan, the Company has transferred part of its land admeasuring around 11921.59 Square Meters reserved for DP Road to PMC vide agreement dated May 30, 2024. As a consideration of this transfer, the Company has opted for Transferable Development Rights (TDR) equivalent to two times the area of land transferred. During the year ended March 31, 2025, revenue of '3136.57 lakhs from this transfer is considered as fair value of consideration and is measured on the basis of ready reckoner value of land transferred. The TDR admeasuring 23843.18 Square Meter receivable on transfer of land and valued at '3136.57 lakhs is shown under the head of “Stock-in-trade” under current assets. As per the terms of development agreement, the Company has to provide FSI/TDR, which will be utilized in development of real estate project being developed by M/s. Kalpataru Ltd., on this land.
(b) During the year ended March 31,2024, the Company commenced development of real estate project on Company's land situated at Hadapsar, Pune, Maharashtra. In terms of development regulations, Company transferred part of its land admeasuring around 14010.57 Square Meter, to Pune Municipal Corporation, vide agreement dated January 10, 2024. The consideration for the transfer of such land is received in the form of FSI equivalent to two times the area of the land transferred. The revenue of ' 4577.25 Lakhs from such activity is measured on the basis of ready reckoner value of the land transferred, (14010.57 Square Meter). The FSI admeasuring 28021.14 Square Meter received as a consideration on transfer of land is valued at '4577.25 Lakhs and shown under the head “Stock-in-trade” under current assets. As per the terms of development agreement, the Company has to provide FSI/TDR, which will be utilized in development of real estate project being developed by Dosti Realty Ltd., on this land.
~~ a. The Company has incurred CSR expenditure of ' 165.54 lakhs (March 31, 2024'141.52 lakhs) .
b. The areas for CSR activities undertaken by the Company are health, medical aid, and education grants etc. The Company has formed its CSR Committee as per the Companies Act, 2013 and Rules thereon.
c. The contribution for CSR activities to corpus of Ratanchand Hirachand Foundation, a Section 8 Company promoted by the promoters of the Company for undertaking CSR activities on behalf of the Company as per CSR Policy read with schedule VII of the Companies Act 2013.
As per Section 135 of the Companies Act, 2013 (the Act) a company meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years (calculated in accordance with the provisions of section 198 of the Companies Act, 2013 ) on corporate social responsibility (CSR) activities/programs in terms of its CSR policy and schedule VII of the Act. The report on CSR activities and CSR expenditure incurred by the Company for the financial year 2024-25 is given in the Directors' Report.
d. For the year 2024-25 the Company could spend '165.04 lakhs (March 31, 2024 '139.90 lakhs) out of the committed CSR obligations of '164.43 lakhs (March 31, 2024 '141.52 lakhs). During the year 2024-25, the Company has spent excess amount of '0.61 lakhs on CSR activities of the Company. As per the provision of section 135(5) of the Companies Act, 2013 and Rules thereunder, the Company witll carry forward and utilise the excess CSR contribution to immediate succeeding three financial years. The unspent CSR expenditure of '1.62 lakhs for previous year 2023-24 was contributed to the specified fund.
For the purpose of the Company's capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The Company strives to safeguard its ability to continue as a going concern so that it can maximise returns for the shareholders and benefits for other stake holders. The aim is to maintain an optimal capital structure and minimize cost of capital.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may return capital to shareholders, issue new shares or adjust the dividend payment to shareholders (if permitted) consistent with others in the industry.
The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.
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 mainly of risk such as interest rate risk and currency risk. Major financial instruments affected by market risk includes loans and borrowings.
(i) Interest rate risk
The Company is working capital intensive and is rated in “A” band category due to which it is in a position to negotiate competitive pricing for its working capital requirement from Consortium member banks and also from outside consortium banks.
With regard to Term Loans, exposure of the Company is not very significant and hence does not pose much threat towards unforeseen and unprecedented & volatile interest risk.
The exposure of the Company's borrowing to interest rate changes at the end of the reporting period are as follows:
If the change in rates declined by similar percentage, there will be opposite impact of similar amount on profit before tax and pre-tax equity effect.
(ii) Foreign currency risk
The Company has insignificant transactions in foreign currency and hence the Company is not exposed to significant foreign exchange risk. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
Sensitivity analysis
The Company's exposure in foreign currency is not material and hence the impact of any significant fluctuation in the exchange rates is not expected to have a material impact on the operating profits of the Company.
2 Credit Risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure of the financial
assets are contributed by trade receivables, unbilled work-in-progress and cash and cash equivalents.
a Credit risk on trade receivables and unbilled work-in-progress is limited as the customers of the Company mainly consist of government entities having a strong credit worthiness. For other customers, the Company normally secures recoverability of dues by means of getting Letters of Credits established on first class banks in favour of the Company if the material is sold on credit or against receipt of advances from the customers for such supplies and unbilled work-in-progress.
b Credit risk on cash and cash equivalents is limited as the Company invests in deposits with banks mainly for the purpose of offering EMDs for the tenders floated by prospective customers.
The Company makes contributions towards Provident Fund, Superannuation Fund, Employee's State Insurance Corporation (ESIC) for qualifying employees. The Company has recognised ' 837.32 lakhs (March 31, 2024'750.29 lakhs) for the year being Company's contribution to Provident Fund, Superannuation Fund and ESIC, as an expense and included in Employee Benefit Expenses in the Statement of Profit and Loss.
C Through its gratuity fund the Company is exposed to a number of risks, the most significant of which are detailed below :
Interest risk
A decrease in the bond interest rate will increase the plan liability; however, in case of gratuity fund, this will be partially offset by an increase in the return on the fund's assets
Longevity risk
The present value of Gratuity fund and leave plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan's liability.
Salary risk
The present value of the Gratuity fund and leave plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan's liability.
Investment risk
Funded plans being managed by insurers, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
2.42 Research and Development Expenditure
The revenue expense on research and development during the year under various heads amounts to ' 575.00 lakhs (March 31, 2024'516.17 lakhs). Assets for research and development capitalised during the year under various heads amounts to '227.33 lakhs (March 31, 2024'0.19 lakhs)
2.49 Additional regulatory information
i No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other source or kind of funds) by the Company to or in any other person or entities, including foreign entities (“Intermediaries”) with the understanding that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any parties (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
ii The Company did not have any charges or satisfaction which were yet to be registered with ROC beyond the statutory period.
iii The Company did not have any transaction which had not been recorded in the books of account that had 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).
iv The Company has not been declared wilful defaulter by any bank or financial institutions or government or any government authority.
v 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.
vi The Company does not have any layers as prescribed under clause (87) of section 2 of the Act read with Companies (restriction on number of layers) Rules, 2017.
vii The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
viii The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
ix The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets during the current or previous year.
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