20. Provisions and Contingencies:
a) A provision is recognised when there is a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.
b) If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
c) A disclosure for a contingent liability is made when there is a possible or present obligation that may but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
d) Contingent assets: A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent assets are not recognized but disclosed only when an inflow of economic benefits is probable.
21. Segment Reporting
Operating segments are reported in a manner consistent with internal reporting provided to chief operating decision maker. The Board of Directors of the Company has been identified as chief operating decision maker which assesses the financial performance and position of the Company, and makes strategic decisions.
22. Exceptional items
Exceptional Items include income/expenses that are considered to be part of ordinary activities, however of such significance and nature that separate disclosure enables the users of financial statements to understand the impact in more meaningful manner. Exceptional Items are identified by virtue of their size, nature and incidence.
23. Rounding off amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lacs as per the req ui rement of Schedule III, unless otherwise stated.
24. Critical estimates and judgements
In the application of the Company's accounting policies, the Management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may 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.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that has the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are included in notes no.34:
a) Measurement and likelihood of occurrence of provisions and contingencies.
b) Carrying value of receivables, loans and advances and their respective impairment.
c) Measurement of Provision required for Defect Liability Period and Liquidated Damages Payable as per Contracts.
d) Charging/ recognizing as receivables of Bank Guarantees invoked by banks.
e) Estimation of current tax expenses and Payable.
f) Financial Instruments.
g) Valuation of Inventories
h) Amount of liabilities recognized in the financial statements in respect of unrecognized claims preferred by financial and operational creditors.
25. Fair value measurements
The Company applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with the market participants to price the instrument. The Company's assumptions are based on observable data as far as possible, otherwise on the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.
26. Employees Stock Option Scheme
Stock Options are granted to eligible employees under the JSL Employee Stock Option Scheme 2021 (“JSL ESOS 2021”) as may be decided by the Nomination & Remuneration Committee. Under Ind AS, the cost of JSL ESOS 2021 is recognised based on the fair value of Stock Options as on the grant date. The fair value of Stock Options granted is recognized in the Statement of Profit and Loss over the period in which the performance and / or service conditions are fulfilled for employees of the Company (other than those out on deputation).
7 The Company investment, in the equity share capital of Jyoti Structures Africa (Pty) Limited (JS Africa) a subsidiary company, as on 31st March, 2024 and as on 31st March 2023 was Rs. 419/-. The Company has also advanced loan of Rs.3,258.85 Lacs (P.Y. Rs. 3,258.85 Lacs) to JS Africa and the outstanding receivable from that company is Rs. 2,731.16 Lacs (P.Y. Rs. 2,712.18 Lacs) against advances and receivables. Though the net worth of the subsidiary has been eroded, the Company has not provided for diminution in value of investment of Rs. 419/- and no provision is made against outstanding loans and dues of the said company. Considering the implementation of the approved resolution plan for the Company to begin with which turnaround of the subsidiaries is also expected to happen, the management is of the opinion that these accumulated losses of that company are temporary in nature and will be recovered in the near future. However, the audited financial statements and / or other details are not available and there is no activity.
8 The Company investment, in the equity share capital of Jyoti Structures FZE,) a subsidiary company, as on 31st March, 2024 and as on 31st March 2023 was Rs. 317.04 lacs. Though the net worth of the subsidiary has been eroded, the Company has not provided for diminution in value of investment of Rs. 317.04 lacs Considering the implementation of the approved resolution plan for the Company to begin with which turnaround of the subsidiaries is also expected to happen, the management is of the opinion that these accumulated losses of that company are temporary in nature and will be recovered in the near future. However, the audited financial statements and / or other details are not available.
The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
(c) Financial Risk Management - Objectives and Policies
The Company's financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company's financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.
The Company's business activities are exposed to a variety of financial risks, namely liquidity risk, market risks and credit risk. The Board of Directors (‘Board’) oversee the management of these financial risks through its Risk Management Committee. The Risk Management Policy of the Company formulated by the Risk Management Committee are established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly.
A) 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 three types of risks: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk include borrowings, investments, trade payables, trade receivables and loans.
i) 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.
According to the Company interest rate risk exposure is only for floating rate borrowings. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point (bps) increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.
• Exposure to interest rate risk:
ii) Foreign Currency Risk:
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates.
The Company has obtained foreign currency loans and has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk. Certain transactions of the Company act as a natural hedge as a portion of both assets and liabilities are denominated in similar foreign currencies. For the remaining exposure, the Company does not enter into any forward exchange contract or into any derivative instruments for trading or speculative purposes.
The Company is mainly exposed to changes in USD and EUR. The below table demonstrates the sensitivity to a 5% increase or decrease in the above-mentioned currencies against INR, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents the management's assessment of a reasonably possible change in the foreign exchange rates.
iii) Other Price Risk:
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price.
The Company is mainly exposed to the price risk due to its investment in mutual funds. The price risk arises due to uncertainties about the future market values of these investments.
At 31st March 2024, the investment in mutual funds amounts to Rs. 82.56 Lacs (Rs. 63.00 Lacs as on 31st March, 2023)
A 5% increase in market prices would have led to approximately an additional gain of Rs. 4.13 Lacs in Other Comprehensive Income.
5% decrease in prices would have led to an equal but opposite effect.
B) Credit Risk
Credit risk refers to risk that a counter party will default on its contractual obligations resulting in financial loss to the Company.
To manage this, the Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information. 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 through each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:
I) Actual or expected significant adverse changes in business,
ii) Actual or expected significant changes in the operating results of the counterparty,
iii) Financial or economic conditions that are expected to cause a significant change to the counterparty's ability to meet its obligations,
iv) Significant increase in credit risk on other financial instruments of the same counterparty,
v) Significant changes in the value of the collateral supporting the obligation or in the quality of the third -party guarantees or credit enhancements.
Financial assets are written off when there are no reasonable expectations of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables 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 as income in the statement of profit and loss.
The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends.
C) Liquidity Risk
Liquidity Risk is defined as the risk that the Company will face in meeting its obligations associated with its financial liabilities. The processes and policies related to such risks are overseen by the management. The management monitors the Company's net liquidity position through rolling forecasts on the basis of expected cash flows.
Maturity profile of financial liabilities:
18. Engineering Procurement Construction (EPC) Contracts provide for levy of liquidity damages (LD) to the extent of 10% of the contract value for delay in execution of the contracts. As a trade practice, on completion of the contracts such delay is generally condoned by granting time extension. It is not possible to ascertain the quantum of the LD for the projects where execution is delayed, as the proposals for time extension are pending with the customer sand in the past, time extensions have been granted in similar circumstances. However, considering recurring/persisting delays it is not possible to assess the amount for which the company would be liable. Hence, the same has not been provided for.
19. Previously, the Company had a process whereby periodically all long-term contracts are assessed for material foreseeable losses. At the year end, the Company reviewed and ensured that adequate provision as required under any law /accounting standards for material foreseeable losses on such long-term contract has been made in the books of accounts. The Company has not entered into a derivative contract during the year.
26. During the year, the Company has not transferred unclaimed dividend amounts to Investor Education and Protection Fund as per the requirement of the Companies Act, 2013. as the Company is in midst of shareholder details' collation. The company is under process of transferring an amount of Rs 17.70 Lacs to investor education protection fund.
27. Under the Approved Resolution Plan, Company has the right to prepay the restructured debt owed to the Financial Creditors at any time, at the net present value (NPV) of the principal outstanding. With respect to the assenting Secured FCs, as part of restructuring, secured Non-Convertible Debenture (NCD’s) at face value of Rs. 1 Lac each, were issued. The value of NCD’s including redemption premium as on March 2024 was Rs. 1,73,014.45 Lacs (P.Y. Rs. 1,60,198.57 Lacs) is reflected in Note no 15 under Financial Liabilities - Long Term Borrowings. The assenting secured financial creditors were to be paid their dues over a period of 12 years. Towards this, Non-Convertible Debentures (NCDs) were issued at a face value of the NPV as on November 9, 2021. These NCDs are payable at the Net Present Value which is reflected in Financials. The increase in net present value due to passage of time is shown as the NCD Remeasurement effect due to increase in net present value of these NCDs.
28. In FY 2021-22, a Debenture Redemption Reserve of Rs. 1,81,337.86 Lacs was created for redemption premium payable on Non-Convertible Debenture (NCD’s). The NCD’s are repayable at any point of time at Net Present Value as per Resolution Plan. In FY 2023-24, a sum of Rs. 12,815.88 Lacs (Preceding financial year Rs 11,866.57 Lacs) being changes in remeasurement of NCD at NPV fair value was transferred from Debenture Redemption Reserve to Financial Liabilities Long Term Borrowings Account.
29. The Financial Creditors of Rs.18,569.57 Lacs (Preceding financial year Rs. 20,082.37 Lacs) as per Note No 15 & 19 includes amount payable to Dissenting Financial Creditors, various financial creditors under IDBI Trusteeship and amount payable to unsecured financial creditors.
30. The financial statements include the assets, liabilities, income and expenditure in respect of seven branches. The company has included the figures / amounts for the year ended on March 31, 2024 in respect of its five branches (management certified) at Bhutan I, Kenya, Tanzania, Georgia, South Africa and two branches (Audited) at Uganda and Tunisia.
31. The Company did not have any transactions with Struck of Companies u/s 248 of the Companies act 2013 in FY 2023-24 nor in Preceding financial year 2022-23. The Balance Outstanding with Companies Struck off is as under:
32. The Company does not have any benami property, where any proceeding has been initiated 32.The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property under the benami transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
33. The Company has not traded or invested in Crypto currency or Virtual Currency during the current / Preceding financial year.
34. 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.
35. 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:
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 to or on behalf of the ultimate beneficiaries
36. There is no income surrendered or disclosed as income during the current year or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account
37. The resolution plan stood implemented on November 9, 2021 with the infusion of equity by the investors, issuance of securities to financial creditors and transfer of control to the present management, in terms of the resolution plan. The payments to the financial creditors, operational creditors and employees' dues are set out in resolution plan. In this regard, on account of the delay by MIDC to execute the tripartite agreement and non-release of the NFB Limits by the lenders in terms of the resolution plan, the company has filed an application with the Hon’ble NCLT seeking exclusion of time. The application is currently sub judice.
38. The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
39. The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
40. The Company is not declared wilful defaulter by any bank or financials institution or lender during the year.
41. Previous year’s figures have been re-arranged, re-grouped and re-classified, wherever necessary.
In terms of our report attached For and on behalf of the Board of Directors
For G.P.SHARMA & CO.LLP
Chartered Accountants
Firm Registration No: 109957W/W100247 sd/- sd/-
sd/- Abdul Hameed Khan Monica Akhil Chaturvedi
Chief Executive Officer & Independent Director
Utkarsh Sharma Whole time Director DIN: 02193359
Partner DIN: 09508070
Membership Number : 147906 sd/- sd/-
Place : Mumbai Sonali K Gaikwad Kumar V Balan
Date : 29th May, 2023 Company Secretary Chief Financial Officer
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