L. Provisions, Contingent Liabilities and Contingent Asset
Provisions are recognised when there is present obligation (legal or constructive) as a result of a past event, it is probable that company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognized as expenses for legal claims, service warranties and other obligations are the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no disclosure is made.
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 Company.
Contingent Assets are not recognised but are disclosed in financial statements when economic inflow is probable.
M. Interests in Joint Operations
A joint operation is a Jointly controlled arrangement whereby the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. When an entity undertakes its activities under joint operations, the Company as a joint operator recognises for the assets, liabilities, revenues, and expenses relating to its interest in a joint operation in accordance with the Ind AS applicable to the particular assets.
When a Company transacts with a jointly controlled operation in which a Company is a joint operator (such as a sale or contribution of assets), the Company is considered to be conducting the transaction with the other parties to the jointly controlled operation, and gains and losses resulting from the transactions are recognised in the Company's financial statements only to the extent of other parties' interests in the jointly controlled operation.
N. Financial instruments
Financial instrument is a contract that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments. Financial assets except trade receivable and financial liabilities are initially measured at fair value.
Trade receivables are initially measured at transaction value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities [other than financial assets and financial liabilities at Fair value through Profit or loss (FVTPL)] are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
Classification and Measurement of Financial Assets
a) Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms
of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
b) Financial assets at fair value through profit or loss (FVTPL)
Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. Gains or losses arising on remeasurement are recognised in the Statement of Profit and Loss.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party and does not retain control of the assets. The Company continues to recognises the assets to the extent of Company's continuing involvement.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by a Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a company are recognised at the proceeds received, net of issue costs.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using effective interest method. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
Derivative Contracts
The Company enters into derivative financial instruments to hedge foreign currency / price risk on unexecuted firm commitments and highly probable forecast transactions. The Company formally establishes a hedge relationship between such forward currency contracts ('hedging instrument') and recognised financial instrument ('hedged item') through a formal documentation at the inception of the hedge relationship in line with the Company's risk management objective and strategy.
Such derivatives financial instruments are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Statement of Profit and Loss depends on the nature of the hedging relationship and the nature of the hedged item.
Amounts previously recognised in other comprehensive income and accumulated in equity relating to effective portion as described above are reclassified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by a the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
• the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
• the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 115.
O. Property, Plant and Equipment & Intangible assets
Property, Plant and Equipment (except Freehold Land) are stated at cost or deemed cost applied on transition to Ind AS, less accumulated depreciation / amortization and impairment loss if any. Cost of acquisition / construction includes all direct cost net of recoverable taxes and expenditures incurred to bring the asset to its working condition and location for its intended use. All costs, including finance costs and adjustment arising from exchange rate variations attributable to Property, Plant and Equipment till assets are ready to use, are capitalized.
P. Depreciation and Amortisation
Depreciation is provided on all depreciable Property, Plant and Equipment over the useful life prescribed under schedule II to the Companies Act, 2013 except that:
a) Depreciation on plant and machinery of bio-mass energy plants is provided considering the useful life of plant as 20 years, as specified in Central Electricity Regulatory Commission and Rajasthan Electricity Regulatory Commission Regulations.
b) Depreciation on assets of overseas projects is provided at the rates and methods as per the best estimates of the management which is also in accordance with requirement of laws of respective foreign countries as detailed below:
c) Depreciation on Furniture & Fixtures and certain plant and machinery at construction sites is provided considering the useful life of 3 years and 5 years respectively based on past experience.
Depreciation is provided on Straight Line Method (SLM) except on assets pertaining to Research and Development Centre and one Unit (erstwhile Export Oriented Unit) which are provided on the basis of written down value method.
Intangible assets are amortized over a period of five years on straight line basis.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of Property, Plant and Equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.
Any gain or loss arising on the disposal or retirement of an item of Property, Plant and Equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
Q. Impairment
a) Financial asset
The Company recognizes loss allowances on a forward looking basis using the expected credit loss (ECL) model for all the financial assets except for trade receivables. Loss allowance for all financial assets is measured at an amount equal to lifetime ECL. The Company recognises impairment loss on trade receivables using expected credit loss model which involves use of a provision matrix constructed on the basis of historical credit loss experience and adjusted for forward-looking information as permitted under Ind AS 109.
The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date is recognized as an gain or loss in the Statement of Profit and Loss.
b) Non-Financial asset
The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets / cash generating units is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount.
For the purpose of assessing impairment, assets are grouped at the lowest level, for which there are separately identifiable cash inflows, which are largely independent of the cash inflows from other assets or group of assets (cash-generating unit).
Intangible assets with indefinite life are tested for impairment at every period end. Impairment is
recognized, if the carrying amount of these assets exceeds their recoverable amount.
The recoverable amount is the higher of the fair value less cost of disposal and their value in use. Value in use is arrived at by discounting the future cash flows to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset for which the estimates of future cash flows have not been adjusted.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
R. Business combination under common control
Business combinations involving entities or businesses under common control are accounted for using the pooling of interest method. Under pooling of interest method, the assets and liabilities of the combining entities or businesses are reflected at their carrying amounts after making adjustments necessary to harmonize the accounting policies. The financial information in the financial statements in respect of prior periods is restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. The identity of the reserves is preserved in the same form in which they appeared in the financial statements of the transferor and the difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve.
S. Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are carried at cost / deemed cost applied on transition to Ind AS, less accumulated impairment losses, if any. Investment in subsidiaries, associates and joint ventures are carried at cost and are tested for Impairment in accordance with Ind AS 36, 'Impairment of assets'.
T. Earnings Per share
Basic earnings per share are computed by dividing profit or loss for the period of the Company by dividing weighted
average number of equity shares outstanding during the period. The Company did not have dilutive potential equity shares in any period presented.
U. Investment in subsidiary
Investment in equity shares of subsidiaries are measured at cost. Investments in equity instruments are measured at fair value through other Statement of Profit and Loss. The Company classifies its financial assets in the measurement categories as those to be measured subsequently at fair value (through other comprehensive income or through profit and loss) and those measured at amortised cost. The classification depends on the Company's business model for managing the financial asset and the contractual terms of the cash flows.
Determining whether the investments in subsidiaries are impaired requires an estimate in the value in use of investments. The Company reviews its carrying value of investments carried at cost annually, or more frequently when there is an indication for impairment. The carrying amount of investment is tested for impairment as a single asset by comparing it's value in use with its carrying amount, any impairment loss recognised reduces the carrying
amount of investment. In considering the value in use, the Company has anticipated the future market conditions and other parameters that affect the operations of these entities including operating results, business plans, future cash flows and economic conditions and key assumptions such as estimated long term growth rates, weighted average cost of capital and estimated operating margins. Cash flow projections consider past experience and represent management's best estimate about future developments.
V. Exceptional item
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.
W. M inistry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31st March, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
Notes
(i) During the FY 2020-21, the Company has completed the transfer of 49% stake along with the transfer of control of Alipurduar Transmission Limited (ATL) to the Buyer with effect from 26nd November, 2020 and accordingly it ceased to be a subsidiary in accordance with the Indian Accounting Standards (Ind AS). Subsequently, during previous year, the Company has completed transfer of additional 25% of total equity shares on 13th October, 2022. Remaining 26% stake will be transferred after obtaining requisite approval. Investment in Equity Instruments amounting to H 99.01 Crores (Previous year H 90.84 Crores) represents fair value of retained equity stake in ATL.
(ii) The Company was holding 74% equity stake in Kohima Mariani Transmission Limited (KMTL), a joint venture between the Company and Techno Electric & Engineering Company Limited (TEECL). The Company and TEECL have entered into a Share Purchase and Shareholders Agreement dated 3rd July, 2019 ("the Agreement") with Buyer to sell their respective equity stake in KMTL. Pursuant to the Agreement, the Company has sold 23% stake and transferred the control of KMTL to the Buyer on 20th December, 2021 and ceased to be Joint Venture of the company w.e.f 20th December, 2021 in accordance with IndAS 28 "Investments in Associates and Joint Ventures”. Subsequently, during previous year, the Company has completed transfer of additional 25% of total equity shares on 24th February, 2023. Remaining 26% stake will be transferred after obtaining requisite approval. Investment in Equity Instruments amounting to H 154.56 Crores (Previous year H 143.11 Crores) represents fair value of retained equity stake in KMTL.
(iii) The Company initiated identification and evaluation of potential buyers for its subsidiary Vindhyachal Expressway Private Limited ("VEPL"). Accordingly Investment amounting to H 2750 Crores related to VEPL has been classified under held for sale as management is committed for sale of the asset which is highly probable.
11. OTHER ASSETS (CONTD..):
11.2 The contract assets represents amount due from customer, primarily relate to the Company's rights to consideration for work executed but not billed at the reporting date.The contract assets are transferred to receivables when the rights become unconditional, that is when invoice is raised on achievement of contractual milestones. This usually occurs when the Company issues an invoice to the customer. The contract liabilities represents amount due to customer, primarily relate to invoice raised on customer on achievement of milestones for which revenue to be recognised over the period of time and it is not considered as a significant financing component since it is used to meet working capital requirements at the time of project mobilization stage.
11.3 Increase in contract assets is mainly due to increase in business activities and in certain contracts on account of contractual milestones not achieved. During the year ended 31st March, 2024 H 4,852.10 Crores (Previous year H 3,423.80 Crores) of contract assets as of April 1, 2023 has been reclassified to Trade receivables upon billing to customers on completion of milestones.
11.4 In case of EPC contracts, amount upto 20% of the contract value is paid as an advance and upto 20% amount is retained and released at the end of project and balance amount is paid progressively based on the agreed milestones in the contract.
11.5 There are no reconciliation items of revenue recognised from contracts with customers and contract price.
11.6 Revenue recognised for the current year includes H 1425.45 Crores (Previous year H 951.64 Crores), that was classified as contract liabilities at the beginning of the year.
18 (i) NON-CURRENT BORROWINGS (CONTD..) :
18.2 Term Loans from Banks and Other Loans
(a) H 0.09 Crores (Previous Year H 0.40 Crores) carries interest in range of 740% - 9.25% p.a. and is repayable in range of 1 to 38 equal monthly instalments along with interest. The Loan is secured by hypothecation of specific Vehicles.
(b) H 15.00 Crores (Previous Year H 75.00 Crores) carries interest of 8.95% p.a, linked to RBI repo rate secured by pari passu charges on movable and immovable fixed assets of transmission & distribution and infrastructure division of the Company to the extent of 1.25 times of outstanding facility. It is repayable in 16 quarterly instalments ending on 01 June, 2024.
(c) Term loan from a bank amounting to H 85.00 Crores (Previous Year: H 100.00) is secured exclusive charge on movable fixed assets funded out of the said facility. Term loan is repayable in 17 unequal quarterly instalments with 29 July 2027 as maturity date with varying interest rate linked to 3M MCLR of bank from time to time.
(d) Term loan from a bank amounting to H 7778 Crores (Previous Year: H 100.00 Crores) is secured exclusively by first charge on movable fixed assets (excluding assets been already charged on specific basis to exiting term lenders). Term loan is repayable in 18 equal quarterly instalments ending in 07 September, 2027 as maturity date with varying interest rate linked to 1 Month T-bill from time to time
(e) Term loan from a bank amounting to H Nil Crores (Previous Year: H 1.18 Crores) is secured exclusively by first charge on movable Property, Plant and Equipment funded out of the said facility.
(f) Term loan from a bank amounting to H Nil Crores (Previous Year: H 17.50 Crores) is secured by first pari passu charge on entire movable fixed assets to the extent of 1.10 times of security cover of outstanding facility.
(g) Term loan from a bank amounting to H Nil Crores (Previous Year: H 0.38 Crores) is secured exclusively by first charge on movable equipment funded out of the said facility.
(h) Term loan from a bank amounting to H Nil Crores (Previous Year: H 5.00 Crores) is secured exclusively by first charge on movable fixed assets funded out of the said facility.
(i) Term loan from a bank amounting to H 1.95 Crores (Previous Year: H 2.84 Crores ) is secured exclusively by first charge on
movable equipment funded out of the said facility. Term loan is repayable in unequal monthly instalments with 28 February,
2026 as maturity date with fixed interest rate.
(j) Term loan from a bank amounting to H 8.71 Crores (Previous Year: H 11.92 Crores) is secured exclusively by first charge on
movable equipment funded out of the said facility. Term loan is repayable in unequal monthly instalments with March, 2027 as maturity date with fixed interest rate.
(k) Term loan from a bank amounting to H Nil Crores (Previous Year: H 4750 Crores) is secured exclusive charge on specific movable fixed assets funded out of the said facility and DSRA of 10% of facility amount.
(l) Term loan from a bank amounting to H Nil Crores (Previous Year: H 36.75 Crores) is secured exclusive charge on specific movable fixed assets funded out of the said facility and DSRA 10% of facility amount.
(m) Term loan from a bank amounting to H Nil Crores (Previous Year: H 9.19 Crores) is secured exclusive charge on specific movable fixed assets funded out of the said facility and DSRA of 10% of facility amount.
(n) Term loan from NBFC amounting to H Nil Crores (Previous Year: H 1.52 Crores) is secured by exclusive charge by way of hypothecation for equipment financed by them.
(o) Term loan from NBFC amounting to H Nil Crores (Previous Year: H 6.25 Crores) is secured by first pari passu charge on entire movable fixed assets (excluding capital expenditure assets charged exclusively to corresponding capital expenditure lender) of the borrower providing minimum FACR of 1.25 times.
(p) Term loan from NBFC amounting to H Nil Crores (Previous Year: H 6.25 Crores) is secured by first pari passu charge on entire movable fixed assets (excluding capital expenditure assets charged exclusively to corresponding capital expenditure lender) of the borrower providing minimum FACR of 1.25 times.
(q) Other Loans of H 338.44 Crores (Previous Year H 233.95 Crores) are interest free and secured by pledge of Equity shares of Alipurduar Transmission Ltd and Kohima Mariani Transmission Ltd. The loans are repayable in 1 to 5 years.
38. DISCLOSURES PURSUANT TO IND AS 19 EMPLOYEE BENEFITS
(a) Defined contribution Plans
The Company made contributions towards provident fund, a defined contribution retirement benefit plan for qualifying employees. The provident fund plan is operated by the Regional Provident Fund Commissioner. The Company recognized H 3717 Crores (Previous Year H 32.68 Crores ) for provident fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the company are at rates specified in the rules of the scheme.
The Company makes contribution towards Employees State Insurance scheme operated by ESIC Corporation. The Company recognized H 0.12 Crores (Previous Year H 0.26 Crores ) for ESIC contribution in the Statement of Profit and Loss. The contributions payable to these plans by the company are at rates specified in the rules of the scheme.
(b) Defined benefit plans
The Company offers the following employee benefit schemes to its employees.
(i) Gratuity
The company made annual contributions to the Employee's Group Gratuity cash accumulation scheme's of IRDA approved agencies, a funded defined benefit plan for qualifying employees. The Scheme provides for payment to vested employees at retirement/death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service as per the provisions of the Gratuity Act, 1972.
(ii) Compensated absences
The Scheme is non-funded.
40. RELATED PARTY DISCLOSURES AS REQUIRED BY IND AS 24 ARE GIVEN BELOW: List of Related Parties
(a) Subsidiaries
Shree Shubham Logistics Limited
Energy Link (India) Limited
Amber Real Estate Limited
Kalpataru Power Transmission (Mauritius) Limited
Kalpataru Power Transmission USA Inc
Adeshwar Infrabuild Limited
LLC Kalpataru Power Transmission Ukraine
Kalpataru Metfab Private Limited
Kalpataru IBN Omairah Company Limited
Kalpataru Power Transmission Sweden AB
Kalpataru Power Senegal SARL
Kalpataru Power DO Brasil Participacoes Ltda
Kalpataru Power Chile SpA
JMC Mining and Quarries Limited
Brij Bhoomi Expressway Private Limited
Wainganga Expressway Private Limited
Vindhyachal Expressway Private Limited
(b) Indirect Subsidiaries
Saicharan Properties Limited
Punarvasu Financial Services Private Limited
Kalpataru Power DMCC
Linjemontage i Grastorp Aktiebolag
Linjemontage Service Nordic AB
Linjemontage AS
Fasttel Engenharia S.A
(c) Enterprises under significant influence, which are having transaction with the Company
Kalpataru Properties Private Limited Kalpataru Retail Ventures Private Limited Gurukrupa Developers Property Solution (India) Private Limited
40. RELATED PARTY DISCLOSURES AS REQUIRED BY IND AS 24 ARE GIVEN BELOW (CONTD..):
Kalpataru Limited
Kalpataru Construction Private Limited
K C Holdings Private Limited
Kalpataru Viniyog LLP
Kalpataru Holdings Private Limited
Argos Arkaya Power Solutions LLP
Kalpataru Foundation
Kiyana Ventures LLP
Kalpataru Urbanscape LLP
Agile Real Estate Private Limited
Abacus Real Estate Private Limited
Dynacraft Machine Company Limited
Kalpataru Business Solutions Private Limited
(d) Key Management Personnel
Manish Mohnot Managing Director and CEO
(e) Individuals having significant influence and their relatives
Mofatraj P Munot Promoter Director & Non-Executive Chairman
Parag Munot Promoter Director
Sunita Choraria Relative of Promoter Director
Sudha Golechha Relative of Promoter Director
(f) Joint Ventures
Kurukshetra Expressway Private Limited
Financial Risk Management Financial Risk factors
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. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures.
Market Risk
The Company operates internationally and a major portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and services and purchases from overseas suppliers in various foreign currencies. The company holds derivative financial instruments such as foreign exchange forward and commodity contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the rupees and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company's operations are affected as the rupee appreciates/depreciates against these currencies.
42. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT (CONTD..):
Loan and Borrowings: Financial Covenants
The company is required to comply with the few financial covenants as per terms of respective sanctions. In case of breach of financial covenants, there can be adverse impact.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers , investment securities and other receivables . Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
During the financial year 21-22, Kurukshetra Expressway Private Limited ("KEPL" or "Concessionaire'), a Joint venture (49.57%) of the Company, issued a notice of termination of Concession Agreement ("CA") vide letter dated October 7 2021 to the National Highway Authority of India ("NHAI") on account of continuous disruption and blockade of traffic on National Highway-71 due to farmer agitation with stoppage of toll collection. The provisions of Concession Agreement provides for termination where events which are not in control of KEPL, and obliges NHAI paying KEPL for repayment of Debt Due along with Adjusted Equity after necessary adjustments. The Company made provision for impairment of H98.27 Crores against equity investment in KEPL, Expected credit loss of H 311.21 Crores against loans given to KEPL / others and H39.77 Crores towards potential loss due to shortfall undertaking.
Trade and other receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. Credit risk in respect of other receivables mainly comprises of loan to components which are managed by the Company, by way of assessing financial condition, current economic trends and ageing of other receivables . The Company considers the probability of default and whether there has been a significant increase in the 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 financial assets as on the reporting date.
The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component since it is usually intended to provide customer with a form of security for Company's remaining performance as specified under the contract, which is consistent with the industry practice.
42. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT (CONTD..):
Expected credit loss assessment for customers
There has been no credit loss on account of customer's inability to pay i.e. there has been no material bad debts in past and therefore, no provision is generally made on this account. Provision for expected delay in realisation of trade receivables beyond contractual terms. The company has used a practical expedient by computing the expected credit loss allowance for trade receivables on a provision matrix. The expected credit loss on the ageing of the days the receivables are due and the rates as given in the provision matrix.
On the above basis, the company estimates the following provision matrix at the reporting date:
Security Deposits given to Lessors
The Company has given security deposit to lessors for premises leased by the Company as at 31 March, 2024 and 31 March, 2023. The Company monitors the credit worthiness of such lessors where the amount of security deposit is material.
Credit risk on derivative financial instruments is limited because the counterparties are banks with high credit rating assigned by rating agencies.
Cash and Cash Equivalents
The cash and cash equivalents are held with bank and financial institution counterparties with good credit rating.
In addition, company is also exposed to credit risk in relation to corporate guarantee/letter of comfort (LOC) given to banks by the company. The company's exposure in this respect has been disclosed in Note 30.
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's exposure to the risk of changes in market interest rates relates primarily to the Company's long-term debt obligations with floating interest rates.
Interest Rate Sensitivity Analysis
For the year ended 31st March, 2024 and 31st March, 2023, a 100 basis point increase / decrease in interest rate on floating rate liabilities would impact company's profit before tax by approximately 1.56% and 2.9 % respectively.
Commodity Price Risk
The Company is affected by the price volatility of certain commodities like Steel, Zinc, Copper and Aluminium. Its operating activities require the on-going purchase or continuous supply of these materials. The Company holds derivative financial instruments such as commodity future contract to mitigate the risk of changes in Zinc, Copper and Aluminium prices.
The sensitivity analysis have been determined based on the exposure to changes in commodity prices. The analysis is prepared assuming the quantity of exposure outstanding at the end of the reporting period was outstanding for the whole year. A 5% increase or decrease is used when reporting commodity price risk internally to key management personnel and represents management's assessment of the reasonable possible changes in commodity prices and the impact of the possible change on the company's profit before tax is 9.23% for FY 2023-24 and 11.84% for FY 2022-23.
48. UTILISATION OF BORROWED FUNDS OR SECURITIES PREMIUM OR OTHER SOURCES OF FUNDS (CONTD..):
The Company has complied with relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and Companies Act 2013 and the transactions are not violative of the Prevention of Money-Laundering act, 2002 (15 of 2003).
c) 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.
49. The company has following transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956
50. Company has taken borrowings from banks on the basis of security of current assets and quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of accounts.
51. OTHER DISCLOSURES:
a) No proceedings have been initiated on or are pending against any of the entities in the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
b) None of the entities in the Company have been declared wilful defaulter by any bank or financial institution or government or any government authority.
c) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
d) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
e) There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
f) 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.
g) The borrowings obtained by the Company from banks and financial institutions have been applied for the purposes for which such loans were taken.
52. BUSINESS COMBINATION
During the previous year, the Ahmedabad bench of Hon'ble National Company Law Tribunal (NCLT) approved the Scheme of amalgamation ('the Scheme') of JMC Projects (India) Limited ('JMC'), an engineering, procurement and construction company, with the Company and their respective shareholders vide its Order dated December 21, 2022. A certified copy of the Order was filed with the Registrar of Companies on January 04, 2023 and the scheme became effective. The appointed date as per the Scheme was April 1, 2022.
Post approval of the scheme, on January 16, 2023, 13,536,944 equity shares were issued to eligible shareholders with an exchange ratio of 1 (one) equity shares of H 2/- each credited as fully paid up shares of the Company for every 4 (four) equity shares of H 2/-each to shareholders of JMC, except to the Company, whose names were recorded in the register of members on January 11, 2023 ('Record date').
As per guidance on accounting for common control transactions contained in Ind AS 103 "Business Combinations" the merger was accounted for using the pooling of interest method. The Company recorded the assets and liabilities pertaining to amalgamated entity vested in the Company at their respective carrying values appearing in the books. The difference between the net identifiable assets acquired and consideration paid on amalgamation was accounted as capital reserve.
52.1 Goodwill
Goodwill is acquired under the scheme of amalgamation of JMC Projects (India) Limited with the Company and their respective shareholders as explained in Note 52.
Goodwill is tested for impairment annually or based on an indicator and provides for impairment if the carrying amount of goodwill exceeds it's recoverable amount.
55.1 Revenue from major customers - Public sector undertakings in India, is H 7350.57 Crores (Previous year H 6,372.42 Crores). Revenue from other individual customer is less than 10% of total revenue.
56. (i) Exceptional Items for the year ended 31st March, 2024 includes
Provision of H 35 crores towards impairment in value of its investment in one of its subsidiary company namely Energylink (India) Limited due to changes in market conditions.
(ii) Exceptional Items for the year ended 31st March, 2023 includes
1. H 109 crores (net) in respect of an award obtained by an erstwhile power transmission subsidiary and is contractually receivable by the Company.
2. Provision of H 55 crores towards impairment in value of its investment in two wholly owned subsidiaries namely Kalpataru Power Transmission (Mauritius) Limited and Shree Shubham Logistics Limited due to changes in market conditions and demand forecasts.
57. Performance obligations unsatisfied or partially satisfied amounts to H 54,875 crores (Previous Year H 43,769 crores)as at 31st March, 2024 for which revenue is expected to be recognized in future over the period of 1 to 6 years.
58. During the year, the Income Tax Department carried out search under section 132 of the Income Tax Act, 1961 at certain premises of the Company and residence of some of its directors and an executive. Pursuant to search proceedings, notices under section 148 of the Income Tax Act, 1961 for the Assessment years from 2013 - 14 to 2020 - 21 have been received by the Company. Pursuant to these notices, the Company is in the process of submitting the return of Income and does not expect any material adjustments to these audited financial statements at this stage.
During the year, Directorate General of GST Intelligence, Ahmedabad has initiated search at certain premise of the Company in Gujarat. During the search proceedings, the Company provided required documents, data, information and explanations to the GST authorities and continues to do so. The Company has not received any order raising demand. Pending such order and/or communication, no adjustments are required to these financial statements at this stage.
60. Advance taxes paid, including tax deducted at sources are shown as assets net of provision of tax including foreign tax. Provision for tax (including foreign tax) is made after considering depreciation, deductions and allowances as per applicable tax statutes and regulations there under.
61. The Company is executing projects in Afghanistan, which are currently on hold due to Force Majeure event. The Company is closely monitoring the situation and expect to resume work once the geopolitical environment in Afghanistan is resolved. The Company does not expect any material financial impact due to this event as the projects are funded by multilateral funding agencies and the company has covered the exposure of credit risk through insurance cover. Further, the bank guarantee issued for the aforesaid ongoing projects cannot be enforced as per the terms and conditions of the underlying contracts.
62. The Board of Directors have recommended a dividend of H 8 per equity share for the financial year 2023-24, subject to approval by shareholders at the Annual General Meeting and if approved, would result in cash outflow of H 129.96 Crores, which has not been included as liability in these standalone financial statements.
For and on behalf of the Board of Directors
For B S R & Co. LLP Ram Patodia Manish Mohnot
Chartered Accountants Chief Financial Officer Managing Director & CEO
Firm Registration No : 101248W / W-100022 DIN : 01229696
Bhavesh Dhupelia Shweta Girotra Shailendra Kumar Tripathi
Partner Company Secretary Deputy Managing Director
Membership No : 042070 DIN: 03156123
Mumbai : May 08, 2024 Mumbai : May 08, 2024
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