(k) Provisions and Contingencies
a) Provisions
Provisions are recognized in statement of profit and loss when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognized for future operating losses.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provisions.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Unwinding of the discount is recognized in the Statement of Profit and Loss as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed.
b) Contingencies
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. Information on contingent liability is disclosed in the Notes to the Financial Statements. Contingent assets are not recognized. However, when the realization of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognized as an asset.
(l) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
i. Financial assets
a) Initial recognition and measurement:
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a period established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
b) Subsequent measurement:
For purposes of subsequent measurement, financial assets are classified in to two categories:
(a) Equity instruments measured at fair value through Profit and Loss.
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognized by an acquirer in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other equity instruments, the group may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are
recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
(b) Debt instruments at amortized cost:
A 'debt instrument’ is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
c) De-recognition:
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily de-recognized (i.e. removed from the Company’s balance sheet) when:
a) The rights to receive cash flows from the asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset, and
c) The Company has transferred substantially all the risks and rewards of the asset, or
d) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
ii. Financial liabilities
(A) Initial recognition and measurement:
Financial liabilities are initially recognized at fair value through profit or loss.Loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
(B) Subsequent measurement:
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss:
Financial liabilities at fair value through profit or loss include financial liabilities held for trading. The Company has not designated any financial liabilities upon initial measurement recognition at fair value through profit or loss. Financial liabilities at fair value through profit or loss are at each reporting date at fair value with all the changes recognized in the statement of profit and loss.
(C) De-recognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
iii. Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.
Impairment of Financial assets
The Company recognizes loss allowances using the Expected Credit Loss (ECL) model for the financial assets which are not fair valued through profit or loss.
The Company follows “Simplified approach” for recognition of impairment loss allowance on trade receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in profit or loss.
As a practical expedient, the Company evaluates individual balances to
determine impairment loss allowance on its trade receivables. The evaluation is based on historically observed default rates over the expected life of trade receivables.
• Financial liabilities
Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans,borrowings and payables, net of directly attributable transaction costs.
The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.
(m) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company’s cash management.
(n) Earnings per share
Basic Earnings per Share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For calculating Diluted Earnings per Share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
D. Rights attached to the Equity Shares:
Disclosure pursuant to Note no. 6(A)(e) of Part I of Schedule III to the Companies Act, 2013
a The company has only one class of equity shares having a face value of Rs. 10/-per share with one vote per each share.
b The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
c In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(A) Significant observable inputs used in estimating the fair values.
Long Term Fixed rate and Variable rate receivables/borrowings are evaluated by the company based on parameters such as interest rates, specific country risk factors, individual credit worthiness of the customers.
(B) Fair valuation techniques
The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the fair
values:
(i) Fair value of cash and deposits, trade receivables, staff advances, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments
The following table provides the fair value measurement hierarchy of Company's asset and liabilities, grouped into Level 1 to Level 3 as described below:
(i) Quoted prices / published NAV (unadjusted) in active markets for identical assets or liabilities (level-1): It includes fair value of financial instruments traded in active markets and are based on quoted market prices at the balance sheet date and financial instruments like mutual funds for which net assets value (NAV) is published mutual fund operators at the balance sheet date.
(ii) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). It includes fair value of the financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on the company specific estimates. If all significant inputs required to fair value an instrument are observable then instrument is included in level 2.
(iii) Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
The following table provides the fair value measurement hierarchy of Company's asset and liabilities, grouped into Level 1 to Level 3 as described below:
During the year ended March 31, 2024, March 31, 2023 there were no transfers between Level 1 and Level 2 fair value measurements, and no transfer into and out of Level 3 fair value measurements.
26. Capital Management
For the purpose of the Company's capital management, capital includes issued equity capital, and all other equity reserves attributable to the equity holders. The primary objective of the Company's capital management is to maximize the shareholder value.During the reporting period, Company has not obtained any loans from external financial institutions or from any of its related entities. Hence, company is not subject to any financial covenants.
No changes were made in the objectives, policies or processes for managing capital during the financial year ended March 31,2024.
27. Note on Agricultural Lands
The company has acquired land in the name of individuals. The rules in Karnataka State do not permit the companies to hold agricultural land in their names (During the earlier years) However, the company has entered into agreement with the respective individuals for execution of necessary legal documents in respect of the title of the land. The consideration for purchase of said land has already been paid out of the company's funds, hence treated as an asset of the company.
28. Sale of Company’s Assets
1. The company has sold major portion of land in the current financial year. Owing to the agreement/MoA entered into with the parties in the sale, the company had to sell the clear land after removal of all the Assets there in. Hence, the company has done the below activities
- dismantled the Green Houses, Machinery
- demolished the existing room/guest house
- removed all the existing bearer plants
Accordingly, for bearer plants and buildings where there is no financial value for scrap value are written off in the books
Further, the scrap from Greenhouses, plant and machinery etc., are sold.
2. After the sale of the Land that is executed in the current financial year, the remaining land constitutes to 5 acres.
The company has entered into agreement with a party for the sale of remaining land excluding the land under dispute as mentioned in Note 29A below.
29. Commitments and Contingencies
A. Contingent Liabilities:
1. The title of 3.00 acres of land own by the company is under dispute. The company was not aware at the time of purchase of land, that the sellers of the land belong to Scheduled Casts and Scheduled Tribes. As per Karnataka Scheduled Casts and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act, 1978 they have no right to dispose / sell the land.The seller of the land claims that they belongs to Scheduled Casts and Scheduled Tribes. The matter is pending before Assistant Commissioner, Doddaballapur Sub-Division, Bangalore. The Company is pursuing the matter and trying its best to protect the interests of the Company and its Members.
The actual cost of 3.00 acres land is Rs. 1,50,000/- based on the Registration documents.
B. Commitments:
1. Estimated Value of contracts remaining to be executed on capital account is Rs. NIL, provided for (Net of Advances): ? Nil March 31, 2024(? Nil, March 31,2023 ?Nil)
2. As the Company's business activities falls within single segment the disclosure requirement of Accounting Standard 17 “Segment Reporting” is not applicable.
3. Balances under sundry creditors, deposits, Investment in share application money, advances, amounts payable / receivable are subject to confirmation and reconciliation. The Creditors are bifurcated between MSME and Non MSME based onthe MSME Registration details of the vendors available with the management.
30. Under the Micro, Small and Medium Enterprises Development Act, 2006 and in accordance with the notification issued by the Ministry of Corporate Affairs, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises as defined in the said Act. The company is in the process of compiling the relevant information from its suppliers about their coverage under the said Act and hence required disclosures made to the extent available.
31. Additional Regulatory Information:
1. The Company has not granted any loans or Advances in the nature of Loans to Promoters, Directors , KMPs and other related parties
2. The Company is not holding any Benami property and no proceeding has been initiated or pending against the company.
3. The Company has no transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961(such as search or survey or any relevant provisions of Income Tax Act, 1961)
4. (A) The Company has not advanced or loaned or invested any fundsin 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) .
5. The Company is not declared as willful defaulter byany Bank or Financial Institutions orRBI.
6. The Company has no borrowings from Banks or Financial Institutions.
7. There are no charges registered withRegistrar of Companies.
8. The company has no transactions and no relationship with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956.
9. The company has no subsidiaries.
10. There are no Schemes of Arrangements approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.
11. The Company has not invested or traded in Crypto currency or Virtual Currency during the financial year 2023-24.
32. Previous year figures have been regrouped and /or re-arranged wherever necessary to conform to those of the current year.
As per our report of even date For and on behalf of the Board
For SMV & Co
Chartered Accountants Sd/- Sd/-
Firm's Regn.No.015630S Dr. K. V. L. N. RAJU K. SOMA RAJU
Managing Director Director
R Vamsi Krishna DIN : 00116664 DIN : 00018539
Partner
Membership No.229292 Sd/- Sd/-
N. VISWANADHA RAJU Chandni Vardani
Place: Hyderabad Director Company Secretary
Date: 30.05.2024 DIN : 00119584 Mem No: A45557
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