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MANUGRAPH INDIA LTD.

21 January 2025 | 12:00

Industry >> Engineering - General

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ISIN No INE867A01022 BSE Code / NSE Code 505324 / MANUGRAPH Book Value (Rs.) 26.21 Face Value 2.00
Bookclosure 27/09/2024 52Week High 35 EPS 0.00 P/E 0.00
Market Cap. 65.30 Cr. 52Week Low 18 P/BV / Div Yield (%) 0.82 / 0.00 Market Lot 1.00
Security Type Other

NOTES TO ACCOUNTS

You can view the entire text of Notes to accounts of the company for the latest year
Year End :2024-03 

1.18 Provisions and Contingent Liabilities

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. These are reviewed at each year end and reflect the best current estimate. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provision for product-related warranty costs is based on the claims received up to the year end as well as the management estimates of further liability to be incurred in this regard during the warranty period, computed based on past trend of such claims.

Provisions are measured at the present value of Management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as an interest expense.

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 nonoccurrence 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 the obligation or a reliable estimate of the amount cannot be made.

1.19 Employee benefits

1.19.1 Short term employee benefits

All Employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and they are recognized in the period in which employee renders the related service except leave encashment.

1.19.2 Other long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the defined benefit obligation at the Balance Sheet date, determined based on actuarial valuation using Projected Unit Credit Method. The discount rates used for determining the present value of the obligation under the defined benefit plan are based on the market yields on Government Securities as at the Balance Sheet date.

1.19.3 Defined contribution plans.

Defined contribution funds are government-administered provident fund scheme, employee state insurance scheme for all employees. The Company also contributes towards a Superannuation fund administered by the Employees Welfare trust. This scheme is funded by an insurance Company in the form of a qualifying insurance policy and other permissible securities. The Company's contribution to defined contribution plans are recognized in the Statement of Profit and Loss in the financial year to which they relate.

1.19.4 Defined benefit gratuity plan.

The Company's gratuity benefit scheme is a defined benefit retirement plan covering eligible employees. The Company's net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value and the fair value of any plan assets is deducted.

The present value of the obligation under such a defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under the defined benefit plan are based on the market yields on Government Securities as at the Balance Sheet date.

Actuarial gains and losses are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Past service cost is recognised in the statement of profit and loss in the period of plan amendment.

1.20 Earnings per share (EPS)

Basic EPS is computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares outstanding during the period. Diluted earnings per share are computed by dividing net profit attributable to the equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares unless the results would be anti-dilutive. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e., the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.

1.21 Exceptional items

Certain occasions, the size, type, or incidence of an item of income or expense, pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the Company, such income or expense is classified as an exceptional item and accordingly, disclosed in the notes accompanying to the financial statements.

1.22 Fair value measurement

In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized.

1.23 Research and development expenditure

Research and Development expenditure is charged to revenue under the natural heads of account in the year in which it is incurred. Research and Development expenditure on property, plant and equipment is treated in the same way as expenditure on other property, plant, and equipment.

1.24 Events after the reporting date

Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the Financial Statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.

1.25 Non-current assets held for sale

The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale only if the management expects to complete the sale within one year from the date of classification. Noncurrent assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell. Non-current assets are not depreciated or amortized.

1.26 Key accounting estimates and judgements

Preparation of the Financial Statements requires the use of accounting estimates, judgements, and assumptions, which, by definition, will seldom equal the actual results. Appropriate changes in estimates are made as the management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in Financial Statements in the period in which changes are made and if material, their effects are disclosed in the notes to the Financial Statements. This note provides an overview of the areas that involved a higher degree of judgments or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the Financial Statements.

The areas involving key accounting estimates or judgments are:

• Estimation of useful life of tangible and intangible assets.

• Estimation of defined benefit obligations.

• Fair value measurement.

• Impairment

Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

End of Significant Accounting Policies

Nature and purpose of other equity

a) Capital reserve

The capital reserve represents excess/short of net assets acquired in a business combination. It is not available for distribution to shareholders as a dividend. Rs. 20 lakhs taken over from Manuweb International Limited (Manuweb) during the year ended March 31, 1995. Rs. 50 lakhs is the Capital Subsidy received from the State Government and Rs. 2 lakhs on the amalgamation of Constrad Agencies (Bombay) Private Limited with the Company.

b) Capital reserve - on amalgamation.

Capital reserve represents the excess of net assets acquired in past amalgamation. It is not available for distribution to shareholders as a dividend. Taken over from erstwhile Manuweb on amalgamation: Pursuant to the Scheme of Amalgamation of Manuweb with the Company, sanctioned by the Bombay Hon'ble High Court vide order dated 30th March, 1995, the assets and liabilities of Manuweb were transferred to and vested in the Company with effect from 1st April, 1994. Accordingly, effect has been given to the scheme in the accounts.

c) Capital redemption reserve.

In accordance with Section 69 of the Companies Act, 2013, the Company has created the capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from general reserve. Created by transfer from General Reserve during the year ended March 31, 2002, pursuant to the buyback of equity shares.

d) Securities premium

The securities premium account is used to record the premium on the issue of shares. The reserve will be utilised in accordance with the provision of the Companies Act, 2013 for issue of bonus shares, for writing of preliminary expenses, buy back of shares etc.

The issue expenses of securities which qualify as equity instruments and are written off against securities premium.

e) General reserve

The General reserve has been created in accordance with the requirements of the Companies (Transfer of Profit to Reserve) Rules, 1975. General reserve represents the amount appropriated out of retained earnings pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.

f) Retained earnings

Retained earnings are the profits that the Company has earned till date, less, any transfers to general reserve, any transfers from or to other comprehensive income (loss), dividends or other distributions paid to shareholders.

Gratuity

The company provides gratuity to all employees. The benefit is in the form of lumpsum payments to vested employees on resignation, retirement, death while in employment or on termination of employment of an amount equivalent to 15 days basic salary and dearness allowance for each completed year of service. Vesting occurs upon completion of five years of service. The company makes annual contributions to fund administered by trustees and managed by Life Insurance Corporation of India, for amounts notified by it. The gratuity benefit is a defined benefit plan.

Compensated absences

The Compensated absences cover the liability for earned leave. Out of the total amount disclosed above, the amount of Rs. 64.37 lakhs (March 31, 2023: Rs. 70.65 lakhs) is presented as current since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

(i) Actuarial risk

It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse salary growth experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the gratuity benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cashflow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption then the gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

(ii) Investment risk

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

(iii) Liquidity risk

Employees with high salaries and long durations 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 cashflows.

(iv) 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 a decrease in defined benefit obligation of the plan benefits and 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.

(v) 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 and the same will have to be recognized immediately in the year when any such amendment is effective.

b Disclosure on CSR activities

The Company is not required to spend money on CSR activities during the current financial year and the previous year. Amount spent by the company during the year is Rs. Nil (Previous year Rs. Nil)

28 Exceptional items

28.1 Gain on disposal of property

During the year ended 31st March 2023, the Company has disposed of office premises located at Mumbai resulting in gain on disposal of Rs. 698.52 lakhs.

28.2 Gain on disposal of subsidiary

The Company received full and final amount on 29th November 2022 from the Court appointed Attorney against closure of Chapter XI filing of the Company's Wholly Owned Subsidiary viz. Manugraph Americas Inc., USA. The gain on disposal of investment in subsidiary is Rs. 1.43 lakhs.

29 Current and deferred tax

The major components of income tax expenses for the year ended March 31, 2024, and March 31, 2023 are:

a. No aggregate amounts of current and deferred tax have arisen in the reporting periods which have been recognised in equity.

The earning per share before exceptional item has been computed after considering the current and deferred tax effect on the exceptional item.

31 Disclosure as required by Ind AS 116 "Leases”.

a. As a Lessee

The Company has taken the residential and office premises under operating lease, having the lease term of less than 12 months and has no obligation for renewal. These leases are considered by the Company as short leases in accordance with Ind AS 116 “Leases”, consequently these lease payments are recognised in the statement of profit and loss under “Rent” in note 27.

b. As a Lessor Operating Lease

The Company has entered into operating leases of its office premises. Rents received are recognised in the statement of profit and loss as rent income in note 21 'Other income”.

32 Disclosure as required by Ind AS 108 "Segment Reporting.”

Based on the “management approach” as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates the Company's performance. In accordance with Ind AS “Operating Segment”, The Company has only one reportable operating segment i.e. Engineering.

There are two s major customers to whom more than 10% of the sales are affected and the total sales affected from such customers is Rs.1,961.53 lakhs, (previous year Rs. 1,991.00 lakhs).

33 Disclosure in accordance with Ind AS 24 "Related Party Disclosures”

A List of related parties

This section explains the judgement and estimate made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the Financial Statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments in to three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have a quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing net assets value (NAV).

Level 2: The fair value of financial instruments that are not traded in an active market (for example over- the-counter derivatives) 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 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 not based on observable market data, the instrument is included in level 3.

b Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

(i) The use of quoted market prices or dealer quotes for similar instruments

(ii) The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.

(iii) the fair value of forward foreign exchange contracts are determined using forward exchange rates at the Balance Sheet date

(iv) The fair value of foreign currency option contracts is determined using the Black Scholes valuation model.

(v) The fair value of the remaining financial instruments is determined using discounted cash flow analysis.

(vi) All of the resulting fair value estimates are included in level 1 and 2.

The carrying amounts of trade receivables, trade payables, other receivables, short-term security deposits, bank deposits with more than 12 months maturity, capital creditors and cash and cash equivalents including bank balances other than cash and cash equivalents are considered to be the same as their fair values due to the current and short-term nature of such balances.

The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk. For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

37 Financial risk factors

The Company's activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company's primary risk management focus is to minimize potential adverse effects of market risk or its financial performance. The Company's risk management assessment, policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company's activities. The Board of Directors and the Audit Committee is responsible for overseeing the Company’s risk assessment and management policies and processes.

The Company has exposure to the following risks arising from financial instruments:

(i) Credit risk

(ii) Liquidity risk

(iii) Market risk

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. This exposure is principally from the Company’s receivables from customers. 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 has established norms for stage-wise payments to lower the exposure. International transactions are backed by letters of credit, confirmed by reputable banks, wherever found necessary. 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.

The Company takes a significant advance for its machine and has no history of any significant defaults from the customers end in payment of the sale consideration. And therefore, has no history of expected credit loss.

Trade 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.

Cash and cash equivalents

The Company held cash and cash equivalents and other bank balances with creditworthy banks and financial institutions of Rs. 43.63 lakhs (31 March 2023 Rs. 158.49 lakhs). The creditworthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be good. In both the years these figures are net of unpaid dividend.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company's reputation.

As of 31st March 2024, the Company has a working capital of Rs. 317.64 lakhs (31 March 2023: Rs. 2177.27 lakhs) which is calculated as current assets less current liabilities.

Investment Risk

The Company's investment in its wholly owned US subsidiary viz. Manugraph Americas Inc. had been considerably impaired due to the business risk faced by the subsidiary resulting in the erosion of its value. During FY 2022-23, i.e. on 29th November, 2022, Manugraph Americas Inc had been liquidated. Presently, the Company do not have any subsidiary, associates or joint venture.

Market Risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short-term and non-current.

The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of its investments. Thus, the Company’s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Currency Risk

The fluctuation in foreign currency exchange rates may have potential impact on the profit and loss account, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the entity.

Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in the USD and EURO against the respective functional currency of the Company.

The Company does not use any derivative financial instruments to hedge foreign exchange and interest rate exposure. The company continuously monitors the foreign currency exposures and considering the natural hedge, selectively contracts for plain forward covers whenever found necessary.

38 Financial risk management

a) Management of liquidity risk

The Company's principal sources of liquidity are cash and cash equivalents, borrowings and the cash flow that is generated from operations. The Company believes that current cash and cash equivalents, tied up borrowing lines and cash flow that is generated from operations is sufficient to meet requirements. Accordingly, liquidity risk is perceived to be low.

39 Capital management Risk management

The primary objective of the Company's Capital Management is to maximise shareholder value. The Company monitors capital using debt-equity ratio, which is total debt divided by total capital plus total debt.

For the purposes of the Company’s capital management, the Company considers the following components of its Balance Sheet to be managed capital:

Total equity as shown in the Balance Sheet includes General reserve, retained earnings, Share capital, Security premium. Total debt includes current debt plus non-current debt and subtracting cash and cash equivalents.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is total capital divided by net debt.

40 The financial statements were authorised for issue by the Board on May 21, 2024

41 EVENTS AFTER THE REPORTING PERIOD

The Company evaluates events and transactions that occur subsequent to the balance sheet date but prior to approval of financial statement to determine the necessity for recognition and/or reporting of any of these events and transactions in the financial statements. As of May 21, 2024, there were no material subsequent events to be recognised or reported that are not already disclosed.

42 Previous period figures have been re-grouped / re-arranged / reclassified wherever necessary to make them comparable with those of the current period. The standalone financial statements were drawn up in Rupees, amounts are rounded off to the nearest Lakhs. Adding the individual figures may therefore not always tally with the total figure.

43 ADDITIONAL REGULATORY INFORMATION

(i) Title deeds of all the immovable properties are in the name of the Company. (Refer sub-note 2.3)

(ii) The Company follows cost model for the subsequent measurement of Property, Plant and Equipment and consequently has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets during the current financial year or the previous financial year.

(iii) The Company has not made any Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person, that are:

a. repayable on demand or

b. without specifying any terms or period of repayment

(iv) There is no Capital Work in Progress ('CWIP') or Intangible Assets Under Development ('ITAUD'), hence no ageing schedule and other relevant details concerning completion or overdue.

(v) No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

(vi) The Company has borrowed from banks or financial institutions on the basis of security of current assets, quarterly returns of inventory and trade receivables filed by the Company with banks are in agreement with books.

(vii) The Company has not been declared a willful defaulter.

(viii) The Company has no relationship with any struck-off Company\companies.

(ix) All the charges or the satisfaction of the charges have been registered with the registrar of companies within the stipulated time limit.

(x) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

(xi) The Company has no subsidiary during the current financial year.

(xii) The Company has not made any application for Scheme of Arrangements.

(xiii) Utilisation of borrowed funds and share premium:

A. The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity (ies), including foreign entities (Intermediaries).

B. The Company has not received any funds from any person(s) or entity (ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise).

(xiv) The Company has not entered into 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.

(xv) The Company is not covered under Section 135 of the Companies Act 2013.

(xvi) The Company has not traded or invested in crypto currency or virtual currency during the financial year.

As per our report of even date attached.

For Desai Shah and Associates For and on behalf of the Board of

Directors Chartered Accountants Manugraph India Limited

ICAI Firm Registration No. 118174W CIN: L29290MH1972PLC015772

Anand Yagnesh Desai Sanjay S. Shah Pradeep S. Shah

Partner Chairman and Vice Chairman and

M. No. 145560 Managing Director Managing Director

UDIN: (DIN: 00248592) (DIN: 00248692)

23145560BGTUFZ4444

Mumbai, Date: May 21, 2024

Mihir V. Mehta

Company Secretary and Chief Financial Officer Mumbai, Date: May 21, 2024