a) Vehicles having a written down value of ?180.61 Lakhs as at March 31,2024 (?221 Lakhs as at March 31,2023 & as at April 1,2022 ?132 Lakhs) have been secured against loan from banks / financial Institutions.
b) Title deeds of immovable property are held in the name of the company except as referred to in Note no. 34 (a).
c) Revaluation of Property, Plant, and Equipment:
1. The Company has changed its accounting policy w.e.f. April 1, 2022 with respect to Revaluation model from deemed cost model for the entire class of asset related to free hold and leasehold land.
2. Revaluations of class of asset related to free hold and leasehold land are performed by Independent valuers.
3. The free hold and leasehold land revalued resulting to increase of ?1,666 Lakhs, resulting in a revaluation surplus of ?1,666 lakhs. This surplus has been credited to the revaluation reserve under other Equity.
4. Carrying amount of revalued assets as of March 31,2024 ?4,662 lakhs (under cost model: ?2,651 lakhs), March 31,2023: ?4,120 lakhs (under cost model: ?2,471 lakhs) April 1,2022: ?4,161 lakhs (under cost model: ?2,494 lakhs)
5. Depreciation on the revalued amount for the year ended March 31, 2024, March 31, 2023 and April 1, 2022 amounted to ?17 lakhs respectively.
(ii) Rights, preference and restrictions attached to shares:
Equity shares:
The Company has only one class of equity shares having par value of ?10/- per share. Each holder of the 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 remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Nature and purpose of other reserves:
Securities premium
Securities premium reserve is used to record premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
Capital reserve
Capital reserve includes amounts realised on forfeiture of shares and reserves acquired on previous amalgamations. General reserve
General reserve consists of reserve created on account of the difference between the fair valuation of assets and liabilities acquired by Company vis-a-vis the share capital it issued on amalgamation with its subsidiary companies vide Amalgamation Scheme approved by the Honorable High Court of Bombay.
(ii) Unsecured preference shares
The 8% non-cumulative, redeemable preference shares amounting to ?207 lakhs were allotted on February 11,2016. The terms of redemption have been extended to February 10, 2025, and the company is expecting a further extension with the necessary approval.
(iii) Unsecured loans from financial institutions
Loans from financial institutions are secured against pledging of investments held by promoters in personal capacity. It carries a rate of interest ranging from 9% to 19% p.a.
(iv) Unsecured loans from related parties
Unsecured loans from related parties do not have any specific repayment schedule. Hence it has been classified under Short Term Borrowings.
Note 23 : Financial instruments (i) Capital management
For the purpose of the Company's capital management, equity includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company's capital management is to maximise the shareholder value. The Company's capital management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximise shareholders' value. The Company is monitoring capital using debt equity ratio as its base, which is debt to equity. The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of debt which includes the borrowings , cash and cash equivalents including short term bank deposits, equity comprising issued capital, reserves and non-controlling interests. The gearing ratio for the year is as under:
Fair Value Hiearchy :
The fair value hierarchy is based on the inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels :
Level 1- Level 1 heirarchy includes financial instruments measured using quoted prices and mutual funds are measured using the closinge net asset value (NAV)
Level 2 - The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs are required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3 - if one or more of the significant inputs is based on observable market data, the instrument is included in Level 3.
The fair value hierarchy of assets and liabilities measured at fair value as of March 31,2024 is as follows :
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
Cash and cash equivalents, other bank balances, trade and other receivables, trade and other payables and other financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities or nature of these instruments.
The fair value of Company's interest bearing borrowings are determined using amortised cost basis using a discount rate that reflects issuer's borrowing rate as at the end of reporting date.
Financial risk management objectives:
The Company's activities exposes it to a variety of financial risk viz. market risks, credit risks and liquidity risks. In order to manage the aforementioned risks, the Company has a risk management policy and a program that performs close monitoring of and responding to each risk factors.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates and other market changes.
Foreign currency risk:
Foreign currency risk mainly arises from transactions undertaken by an operating unit in currencies other than its functional currency. The carrying amount of Company's financial assets and financial liabilities denominated in foreign currencies at the reporting date are as follows : 5% appreciation / depreciation of the respective foreign currencies with respect to the functional currency of the Company would result in decrease / increase in the Company's profit before tax by approximately ?63.48 lakhs (net) for the year ended April 1,2022
Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not have significant floating interest rate borrowings during the year ended March 31, 2024, March 31, 2023 and April 1, 2022. Hence, the Company is not exposed to significant interest rate risk as at the respective reporting dates.
Credit risk:
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables. Trade receivables are typically unsecured and are derived from revenue earned from customers located in India. Credit risk has always been managed by the Company through continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain.
The responsibility for liquidity risk management rests with the Board of Directors, which has an appropriate liquidity risk management framework for the management of the Company's short, medium and longterm funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities by regularly monitoring forecast and actual cash flows.
II. Defined benefit plans A) Gratuity
The Gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the plan, qualifying employees are entitled to Gratuity depending upon the number of years of service rendered by them subject to minimum specified number of years of service and the salary at time of retirement / resignation.
B) Compensated absences
Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits for measurement purpose. The Company's liability is actuarially determined by an independent actuary using the Projected Unit Credit Method at the end of each year. Actuarial losses / gains are recognised in the Statement of Profit and Loss in the year in which they arise.
Note 25 : Operating leases
The Company has taken office, factory spaces and warehouses under cancellable operating leases for periods ranging from 11 months to 3 years. Lease arrangements are usually renewable on mutually agreed terms and are cancellable by written notice.
Note 26 : Segment reporting Business Segment:
The Company operates in two segment viz. textile dyes and chemicals and electrical capacitors, however the segment reporting for electrical capacitors is not disclosed separately, as the same does not qualify for separate disclosure as per Ind AS 108 on operating segments.
Note 27 : Deferred tax
Deferred tax asset on carry forward of unused tax losses and unused tax credits has not been recognised because it is not probable that future taxable profit will be available against which the Company can use the benefits therefrom.
Details of business loss and unabsorbed depreciation carry forward in future till assessment year 2023-24 is as follows.
Note 29 : Expenditure on Corporate Social Responsibility (CSR)
There is no amount required to be spent by the Company during the year towards Corporate Social Responsibility in terms of Section 135 of the Companies Act, 2013.
Note 30 : Managerial Remuneration
In view of inadequacy of profits of the year 2023-24 the total remuneration paid by the Company to its Directors including Managing Director (MD) was in accordance with the limits prescribed under section 197 read with Schedule V of the Companies Act, 2013.
Note 31: (A) Additional Disclosures
The Company has changed its accounting policy w.e.f. April 1,2022 with respect to Revaluation model for the entire class of asset related to free hold and leasehold land and Provisioning for its recoverable financial assets. Under existing accounting policy, the company had opted for deemed cost model for entire class of asset related to free hold and leasehold land. Under the new accounting policy, the company has changed from deemed Cost model to Revaluation model for the entire class of asset related to free hold and leasehold land and has modified its provisioning for its recoverable financial assets. The aforesaid change, being in line with the Generally Accepted Accounting Principles, will result into reporting for such obligations on a more realistic basis.
As required by Ind AS - 8 “Accounting Policies, Changes in Accounting Estimates and Errors”, the Company has retrospectively restated its Balance Sheet as at March 31,2023, as at April 1,2022 and Statement of Profit and Loss for the year ended on March 31,2023 to give impact for change in accounting policy.
The impact of said changes in the accounting Policy on this financial results are as under:
Note 31: (B) Scheme of Arrangement and Amalgamation
In terms of the Scheme of Arrangement and Amalgamation (“the Scheme”) under sections 230 to 232, read with the Companies ( Compromises, Arrangements and Amalgamations ) Rules 2016 or any other provisions of the Companies Act 2013, sanctioned by the order dated September 25, 2023 of The National Company Law Tribunal ( NCLT ) Mumbai Bench, effective from September 29, 2023. The Appointed date of the Scheme being April 1,2021, the previous years' ( F.Y. 2021-22 ), figures of Balance Sheet, Statement of Profit & Loss ( including Other Comprehensive Income ) & Statement of Cash Flows have been restated.Since the amalgamated entities are under common control, the accounting of the said amalgamation has been done applying Pooling of Interest method as prescribed in Appendix C of Ind AS 103 ‘Business Combinations'.
1. Refnol Resins and Chemicals Limited (Refnol ) and hereinafter referred to as Transferor company is amalgamated
with Indokem Limited ( Company ) under the “Pooling of Interest Method” from the appointed date April 1, 2021.
Transferor company (“Refnol”) is engaged in the Texitle and other chemicals business.
2. In accordance with the Scheme and as per the approval granted by the Hon'ble NCLT , Mumbai Bench Court II :
i. The assets, properties, liabilities, rights and obligations of the Transferor company have vested in the Company with effect from the appointed date.
ii. Inter corporate investments / deposits / loans / advances outstanding between the Company and the Transferor company have been cancelled.
iii. The sales / purchases / income / expenses arising between the Company and the Transferor company have been cancelled.
iv. In terms of the Scheme of Amalgamation, 1153 shares of ?10/- each fully paid-up of Indokem Limited would be issued for every 1000 shares held in Refnol Resins and Chemicals Ltd. Accordingly 35,62,654 shares of Indokem Limited will be issued to shareholders of Refnol Resins and Chemicals Limited.
v. As required by the Scheme, Capital Reserve of Indokem Limited has been adjusted to the extent of ?47.28 lakhs towards difference between net value of assets and liabilities and reserves of the Transferor Company over the face value of the shares to be allotted.
vi. The authorised share capital of the Company has been increased at the time of issue of shares.
d) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
e) The Company has not traded or invested in Crypto currency or Virtual Currency during the year.
f) 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:
(i) 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
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
g) 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:
(i) 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
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
h) 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.)
i) The Company is not declared as willful defaulter by any bank or financial institution or other lender.
j) The Company does not have subsidiary in India. All the subsidiaries are incorporated outside India and therefore section 2(87) of the Companies Act read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable to the Company.
Note 36:Additional Disclosure
With reference to maintaining its books of accounts using audit trails (edit log) feature, in terms of the Scheme of Arrangement and Amalgamation, the company “Refnol Resins and Chemicals Limited” (Transferor company) is amalgamated with Indokem Limited with effect from September 29, 2023. In case of above transferor company, the said company has not used accounting software which has a feature of recording audit trails (edit log) facility for the period April 1,2023 to September 29, 2023.
Note 38 : Figures for previous year have been regrouped, wherever necessary.
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