4 Provisions and contingencies
Provisions: A provision is recognised when the Company has a present obligation as a result of past events 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.
The amount recognised as a provision is 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.
Contingent liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which 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 or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Contingent Asset: 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 disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
5 Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months
or less from the date of acquisition) and highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits (with an original maturity of three months or less from the date of acquisition) with banks.
6 Trade receivables
Trade receivables are recognised initially at fair value unless they do not carry a significant financing component, in which case they are recognized at the transaction price. The Company generally determines the allowance for expected credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company considered current and anticipated future economic conditions relating to industries the company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future.
7 Trade Payables
For trade and other payables maturing within one year from the balance sheet date, the carrying
amounts approximate fair value due to the short maturity of these instruments.
8 Cash Flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. Cash and cash equivalents include cash on hand, cash with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the company.
9 Earning Per Share
Basic earnings per share have been computed by dividing the net income by the weighted average number of shares outstanding during the year. Diluted earnings per share has been computed using the weighted average number of shares and diluted potential shares, except where the result would be anti-dilutive
10 Dividends
Final dividends on shares are recorded on the date of approval by the shareholders of the Company.
(c) Rights, Preferences and restrictions attached to Shares
The company has only one class of equity shares having a par value of ? 100/- per share. Each share holder is entitled for one vote. As per the terms of the share issued, dividend is payable to the share holders in proportion to the respective equity shares held by them on a fully diluted basis. Repayment of share capital on liquidation will be in proportion to the number of equity shares held.
The CEO of the company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 Operating Segments. The CODM evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by industry classes. Accordingly, segment information has been presented.
The Company is structured into two reportable business segments - “Warehousing Rental Services” and “Engineering Services”. The reportable business segments are in line with the segment wise information which is being presented to the CODM.
Each segment item reported is measured at the measure used to report to the chief operating decision maker for the purposes of making decisions about allocating resources to the segment and assessing its performance. Geographic information is based on business sources from that geographic region. Accordingly the geographical segments are determined as Domestic ie., within India and External ie., Outside India.
Income and direct expenses in relation to segments are categorized based on items that are individually identifiable to that segment, while the remainder of costs are apportioned on an appropriate basis. Certain expenses are not specifically allocable to individual segments as the underlying services are used interchangeably. The management therefore believes that it is not practicable to provide segment disclosures relating to such expenses and accordingly such expenses are separately disclosed as “unallocated” and directly charged against total income.
(a) Defined Contribution Plan:
The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs towards the benefits. The Company has recognised ? 19.31 Lakhs (for the year ended March 31, 2023 ? 15.87 Lakhs) as contribution to Provident Fund, and ? 4.49 Lakhs (for the year ended March 31,2023 ? 4.17 Lakhs) as payment under Employee State Insurance Scheme in the Statement of Profit and Loss. These contributions have been made at the rates specified in the rules of the respective schemes and has been recognised in the Statement of Profit and Loss under the head Employee Benefits Expense.
(b) Defined Benefit Plans:
Gratuity and Leave encashment
The gratuity obligation is funded. The following table sets out the status of the defined benefit schemes and the amount recognised in the financial statements as per the Actuarial Valuation done by an Independent Actuary:
Longevity Risk: The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of the participants during their employment. An increase in the life expectancy of the participants will increase the obligation.
Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of the participants. As such, an increase in the salary of the participants will increase the obligation.
Market risk: Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate / government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
Legislative risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation /regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation. The new labour code is a case in point and the same will have to be recognized immediately in the year when any such amendment is effective.
Liquidity risk: Employees with high salaries and long durations of service or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign / retire from the company there can be strain on the cash flows.
NOTE 30 - RELATED PARTY DISCLOSURES
List of related parties where control exists and also related parties with whom transactions have taken place and relationships
Fair values of the Company’s interest-bearing instruments are determined by using Effective Interest Rate (EIR) method. The own non- performance risk as at March 31, 2024 was assessed to be insignificant.
B. Fair value hierarchy
The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
31.3 - Financial risk management objective
The Company’s activities expose it to certain / reasonable financial risks. The Company’s primary focus is to foresee the unpredictability of such risks and seek to minimize potential adverse effects on its financial performance.
The Company has a risk management process and framework in place. This process is coordinated by the Board, which meets regularly to review risks as well as the progress against the planned actions. The Board seeks to identify, evaluate business risks and challenges across the Company through such framework. These risks include market risks, credit risk and liquidity risk.
The risk management process aims to:
- improve financial risk awareness and risk transparency
- identify, control and monitor key risks
- identify risk accumulations
- provide management with reliable information on the Company’s risk situation
- improve financial returns
This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements:
Market Risk - Foreign Exchange
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to Euro. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company’s functional currency. Exposures to foreign currency balances are periodically reviewed to ensure that the results from fluctuating currency exchange rates are appropriately managed.
The Company does not have any foreign currency receivable or payable exposures as at 31.03.2024 and 31.03.2023. Market Risk - Interest Rate (i) Liabilities:
The Company’s policy is to minimise interest rate cash flow risk exposures on long-term financing. At March 31, 2024, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. Below is the overall exposure of the Company to interest rate risk:
(ii) Assets:
The Company’s financial assets are carried at amortised cost and are at fixed rate only. They are, therefore, not subject to interest rate risk since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
Credit Risk
Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or pay amounts due to the Company causing financial loss. It arises from cash and cash equivalents, deposits with banks, security deposits, loans given and principally from credit exposures to customers relating to outstanding receivables. The
Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at reporting date.
In respect of trade and other receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any company of counterparties having similar characteristics. The Company has very limited history of customer default, and considers the credit quality of trade receivables, that are not past due or impaired, to be good.
Therefore, the Company does not expect any material risk on account of non performance by any of the Company’s counterparties. The Company uses a simplified approach of estimated credit losses for trade receivables which provide for expected credit loss on lifetime expected losses. The credit risk for cash and cash equivalents, bank deposits, security deposits and loans is considered negligible, since the counterparties are reputable organisations.
Liquidity Risk
The Company requires funds both for short-term operational needs as well as for long-term expansion programmes. The Company remains committed to maintaining a healthy liquidity ratio, deleveraging and strengthening the balance sheet. The Company manages liquidity risk by maintaining adequate support of facilities and by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
The Company’s Finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management.
The Company’s financial liability is represented significantly by long term and short term borrowings from banks and trade payables. The maturity profile of the Company’s short term and long term borrowings and trade payables based on the remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect the contractual undiscounted cash obligation of the Company.
(i) Financial Arrangements
The company had access to the following undrawn borrowing facilities at the end of the reporting period:
(ii) Maturities of Financial Liabilities
The tables below analyse the company’s financial liabilities into relevant maturity groupings based on their contractual maturities for :
a) all non-derivative financial liabilities, and
b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.
Other disclosures under Schedule III of the Companies Act, 2013
32.2 The Union Ministry of Labour issued draft rules under Section 67 of the Code on Wages Act on July 7th, 2020 in the Gazettee and the Act is yet to be effective. The three Labour Courts, the Occupational Health, Safety and Working Conditions Code 2020, The Industrial Relations Code 2020 and The Code on Social Security 2020 have been passed by the Parliment and have also received the ascent of the President of India on 28th September 2020. However, the date on which these Codes will come into effect has not been notified. The Company would assess the impact of these Codes and would record any related impact in the period these Codes become effective.
32.3 Additional disclosures under Schedule III of the Companies Act,2013
i The Company did not undertake transactions that were not recorded in the books of accounts and which have 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).
ii The Company has not made investments in any body corporate and hence disclosure regarding compliance 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 does not apply.
iii The Company has not been declared a Wilful Defaulter by its lenders.
iv The Company does not hold any benami property and hence no proceedings have been initiated against the company under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
v The Company has not traded in cryptocurrencies or virtual currencies during the year.
vi The Company has not entered into transactions with Companies that have been struck off the Register of Companies.
vii The Company has not (which are material either individually or in the aggregate) advanced or loaned or invested any funds (either from borrowed funds or share premium or any other sources or kind of funds) in any other person or entity, including foreign entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
viii The Company has not (which are material either individually or in the aggregate) received any funds from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
ix No scheme of arrangement has been approved by the competent authority in terms of Section 230 to 237 of the Companies Act,2013.
x The Company has not availed any fresh borrowings during the financial year and hence disclosure as to whether the borrowings have been used for the specific purposes for which they were availed is not applicable.
xi The Company does not have any charges or satisfaction thereof which are yet to be registered with the Registrar of Companies (ROC) beyond the statutory period.
Dividend declared by the company are based on the profits available for distribution.
The Board of Directors have recommended a Dividend of ' 12/-(12%) each per equity share of the face value of ' 100/- each, subject to the approval of the shareholders at the ensuing Annual General Meeting. This will result in a total Dividend outgo of ' 80.25 Lakhs.
35 All figures have been rounded off to Lakhs unless stated otherwise. Discrepancies, if any, in between the totals and the sum of the items forming part of such totals are due to rounding off in the financial statements. Wherever, figures are indicated as 0.00 lakhs, it represents value less than T 0.01 lakhs due to rounding off to the nearest lakhs.
For and on behalf of the Board of Directors
(Sd0 S. PATHY (Sd0 R. SANTHARAM In terms of our report attached
Chairman (DIN:00013899) Director (DIN:00151333) For SUBBACHAR & SRINIVASAN
Chartered Accountants
(Sd.) R.D. ANANDAKUMAR (Sd.) K.F*. KRISHNAKUMAR Firm Registration No. 004083S
Chief Executive Officer Chief Financial Officer
(Sd.) ABHINAV VENKATESH
Coimbatore (Sd.) R. MUTHUKUMAR Partner
23-05-2024 Company Secretary Membership No. 263357
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