7. Provisions and Contingent Liability: -
a) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, and 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 obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation, at the Balance Sheet date.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
b) Contingent Liabilities
A disclosure for a contingent liability is made 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 arising because of past event that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made.
For detailed contingent assets and liabilities refer to note 32. (Notes to the accounts)
8. Tangible Assets & Capital Work-In-Progress: -
Tangible Assets are stated at cost less Depreciation. Cost includes taxes, duties, freight and other incidental expenses related to acquisition, improvements and installation of the assets.
9. Property, Plant & Equipment (PPE): -
Property, Plant & Equipment, except the land, which is carried at its fair value, are accounted for on historical cost basis (inclusive of the cost of installation and other incidental costs till commencement of commercial production) net of recoverable taxes, less accumulated depreciation, and impairment loss, if any. It also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs are added to the existing asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit and Loss during the period in which they are incurred.
Depreciation on property, plant & equipment is provided on pro-rata basis, on written down value basis in the case of Plant & Machinery, Buildings and Data Processing Equipment, over the useful life of the assets estimated by the management, in the manner
prescribed in Schedule II of the Companies Act, 2013. The asset's residual values, useful lives and method of depreciation are reviewed at the end of each reporting period and necessary adjustments are made accordingly, wherever required. The useful lives in the following cases are different from those prescribed in Schedule II of the Companies Act, 2013. The Useful Life of Various assets are mentioned in the Chart below.
11. Financial Instruments: -
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
1) Financial Assets
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
a) Initial recognition and measurement
At initial recognition, all financial assets are recognized at its fair value, in the case of a financial asset not carried at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
b) Classification and subsequent measurement
For subsequent measurement, financial assets are classified in the following categories:
I. Financial assets measured at amortized cost.
II. Financial assets measured at fair value through other comprehensive income (FVTOCI); and III.Financial assets measured at fair value through profit and loss (FVTPL)
Where financial assets are measured at fair value, gains and losses are either recognized entirely in the Statement of Profit and Loss (i.e. fair value through profit and loss), or recognized in other comprehensive income (i.e. fair value through Other Comprehensive Income).
The classification of financial assets depends on the Company's business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition.
I. Financial assets measured at amortized cost:
A financial asset is measured at amortized cost if both the following conditions are met:
• Business Model Test: The objective of the business model is to hold financial asset in order to collect contractual cash flows (rather than to sell the asset prior to its financial maturity to realize its fair value changes); and
• Cash Flow Characteristics Test: Contractual terms of the financial 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 most relevant to the Company. After initial measurement, such financial asset is subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of EIR. EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. The EIR amortization is included in interest income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit or loss. This category generally applies to trade receivables, deposits with banks, security
deposits, investment in debt instruments, cash and cash equivalents and employee loans, etc.
II. Financial instruments measured at Fair Value Through Other Comprehensive Income fFVTOCP:
A financial instrument shall be measured at fair value through other comprehensive income if both of the following conditions are met:
• Business Model Test: The objective of the business model is achieved by both collecting contractual cash flows and selling financial assets; and
• Cash Flow Characteristics Test: The Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on principal amount outstanding.
Financial instruments included within FVTOCI category are measured initially as well as at each reporting period at fair value. Fair value movements are recognized in Other Comprehensive Income (OCI) except for the recognition of interest income, impairment gains and losses and foreign exchange gain and losses which are recognized in the Statement of Profit and Loss. This category generally applies to non-current investments in un-quoted equity instruments.
III. Financial instruments measured at Fair Value Through Profit and Loss (FVTPL)
Fair Value Through Profit and Loss is a residual category. Any financial instrument, which does not meet the criteria for categorization as at amortized cost or fair value through other comprehensive income is classified as FVTPL. Financial instruments included in FVTPL category are measured initially as well as at each reporting period at fair value. Fair value movements i.e., gain or loss and interest income are recorded in Statement of Comprehensive Income.
a. Impairment of financial assets
The Company assesses impairment based on expected credit losses (ECL) model to the following:
• Financial Assets measured at amortized cost.
• Financial Assets measured at FVTOCI.
Expected credit losses are measured through a loss allowance at an amount equal to:
• the 12 months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
• full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
The Company follows 'simplified approach' for recognition of impairment loss allowance on:
• Financial assets that are debt instruments, and are measured at amortized cost i.e. trade receivables, deposits with banks, security deposits and employee loans etc.
• Financial assets that are debt instruments and are measured at FVTOCI. The Company as at the Balance Sheet date is not having any such instruments.
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
The trade receivables are initially recognized at the sale/recoverable value and are assessed at each Balance Sheet date for collectability. Trade receivables are classified as current assets, if collection is expected within twelve months as at Balance Sheet date, if not, they are classified under non-current assets.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 months (Expected Credit Loss) ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12-months ECL.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on timely basis.
b. Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the Company's Balance Sheet date) when:
a) The rights to receive cash flows from the asset have been expired/transferred, or
b) The Company retains the contractual right to receive the cash flows of the financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, it evaluates whether it has substantially transferred all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. When the Company has not transferred substantially all the risks and rewards of ownership of a financial asset, the financial asset is not derecognized.
Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. When the entity retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
2) Financial Liabilities
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
a) 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 loans, borrowings, trade payables, security deposits and other payables etc.
b) Subsequent measurement
All the financial liabilities after initial recognition at fair value, are subsequently measured at amortized cost using EIR method. Amortized cost is calculated by considering any discount or premium on acquisition and costs or fee that is an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
c) Financial Guarantee Contract
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative amortization.
d) Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.
e) Offsetting of financial instruments:
Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet, if there is enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
13. Investments: -
Non-Current/ Long-term Investments are stated at fair value as per IND AS 32 and 109 except investment in subsidiaries are stated at cost. Provision is made for diminution in the value of the investments, if, in the opinion of the management, the same is considered to be other than temporary in nature. On disposal of an investment, the difference between it carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.
Current investments are carried at lower of cost and fair value determined on an individual basis. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.
Investments are either classified as current or non-current based on management's intention. Long Term Investments includes investment made in the share capital of Subsidiary Company which are carried at cost.
14. Foreign Currency Transactions: -
a. Initial recognition
Transactions in foreign currency are accounted for at exchange rates prevailing on the date of the transaction.
b. Measurement of foreign currency monetary items at Balance Sheet date
Foreign currency monetary items (other than derivative contracts) as at Balance Sheet date are restated at the year End rates.
c. Exchange difference
Exchange differences arising on settlement of monetary items are recognized as income or expense in the period in which they arise.
Exchange difference arising on restatement of foreign currency monetary items as at the year End being difference between exchange rate prevailing on initial recognition/subsequent restatement on reporting date and as at current reporting date is adjusted in the Statement of Profit & Loss for the respective year.
Any expense incurred in respect of Forward contracts entered into for the purpose of hedging is charged to the Statement of Profit and loss.
1 5. Inve n tori es: -
The Inventories are carried in the Balance Sheet as follows:
A. Raw materials and stores & spares: At lower of cost and net realizable Value
B. Finished goods and stock-in-process: At lower of cost, and net realizable value. Cost includes cost of inputs, conversion costs and other costs incurred in bringing finished goods and stock-in-process, to their present location and condition.
The net-realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated costs necessary to make sale.
16 Duty Drawback: -
Duty Drawback is recorded on Receipt basis. Management is not able to estimable the amount of Claim receivable, therefore the duty drawback is recorded on receipt basis rather than on Accrual basis.
17. Prior Period Expenses: -
Prior Period Expenses for previous years have been expensed out during the current year and it is disallowed as per Income Tax Act.
18. Management Remuneration: -
Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of Companies Act, 2013 and Rule 5 (1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been provided in the below mentioned table: -
19. Cash and Cash Equivalents: -
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand, fixed deposits with banks which are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
20. Segment Reporting: -
The activities of the company are such that the According to IND AS-108 "Operating Segment”: is not applicable in the company.
21. Lease: -
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company. The Company allocates the consideration in the contract to the lease based on their relative stand-alone prices. However, for leases of real estate for which the Company is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include net present value of the following lease payments:
• Fixed payments (including in substance fixed payments), less any lease incentives receivable,
• Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date,
• Amounts expected to be payable by the Company under residual value guarantees,
• The exercise price of a purchase option if the Company is reasonably certain to exercise that option, and
• Payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The
lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for lease in the Company, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in similar economic environment with similar terms, security, and conditions.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the following:
• The amount of the initial measurement of lease liability,
• Any lease payments made at or before the commencement date less any lease incentives received,
• Any initial direct costs, and
• Restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.
Payments associated with short-term leases of equipment and all leases of low value assets are recognised on a straight-line basis as an expense in profit or loss. Short term leases are leases with a lease term of twelve months or less.
22. Impairment of Non-Financial Assets: -
The Company assesses at each reporting date, using external and internal sources, whether there is an indication that a non-financial asset may be impaired and whether there is an indication of reversal of impairment loss recognised in the previous period/s. If any indication exists, or when annual impairment testing for an asset is required, the Company determines the recoverable amount and impairment loss is recognised when the carrying value of an asset exceeds its recoverable amount.
The recoverable amount is determined:
• in the case of an individual asset, at the higher of the asset's fair value less cost of sell and value in use; and
• in the case of cash generating unit (a group of assets that generates identified, independent cash flows) at the higher of the cash generating unit's fair value less cost to sell and value in use.
In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that effects current market assessments of the time value of money and the risks specific to that asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
An impairment loss for an asset is reversed, if and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized, the carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss being recognized for the asset in prior year/s.
23. Employee Benefits: -
a. Short Term Employee Benefits
All Employee benefits payable within twelve months of rendering the services are classified as short-term benefits. Such benefits include salaries, wages, bonus, awards, ex-gratia etc. and the same are recognized in the period in which the employee renders the related services.
b. Defined contribution plan:
The Company's approved provident fund scheme, pension scheme, employees' state insurance scheme, and employees' superannuation scheme are defined contribution plans. The Company has no obligation, other than the contribution paid/payable under such schemes. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
c. Defined Benefit Plan
The employees' Gratuity fund scheme is the Company's defined benefit plan and is partly funded / managed by a Trust. The liability with respect to gratuity is determined based on the actuarial valuation on projected unit credit method as at the balance sheet date. The difference, if any, between the actuarial valuation and the balance of the funds maintained by the
Trust, is provided for as liability / assets in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to Statement of Profit and Loss in subsequent periods.
d. Other Long-Term Benefit
The liability towards encashment of the employees' long term compensated absences, which are partly en-cashable during the service period and balance at the time of retirement / separation of the employees is determined based on the actuarial valuation on projected unit credit method as at the balance sheet date. Re-measurement, comprising of actuarial gains and losses, are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to Statement of Profit and Loss in subsequent periods.
C. Others Accounting Policies
1. The financial statements including financial information have been prepared after making such regroupings and adjustments, considered appropriate to comply with the same. As result of these regroupings and adjustments, the amount reported in the financial statements / information may not necessarily be same as those appearing in the respective audited financial statements for the previous year.
2. The Micro Small and Medium Enterprise registered under The Micro small and Medium Enterprise Development Act 2006 have been taken based on the list of MSME creditors provided by the management. However, as the Company has not received any claims in respect of such interest and as such, no provision has been made in the books of accounts.
Note 14.3 Details of securities and Terms of repayment
I. Secured (A). Term Loans
a) . From Banks
1. HDFC Bank Limited
Secured by hypothecation of Volvo car as specified in the schedule annexure to the loan agreement executed on 19.05.2022. The loan is repayable in 60 monthly installments is amount of Rs. 124,249/- and The period of maturity w.r.t balance sheet date is 40 months.
b) From other financial institutions
I. SIDBI
Company has taken loan amount of Rs. 40.00 Lakhs (Including Fixed Deposit amount of Rs. 5.00 lakhs) from SIDBI. Secured by hypothecation of all equipment, plants, machineries, and other assets of company acquired from the assistance sanctioned by SIDBI. The loan agreement executed on 29.06.2020 and repayment shall commence from 10.01.2021 with 54 monthly installments, for 53 months amount of Rs. 74,000 and for last month is Rs. 78,000. The period of maturity w.r.t balance sheet date is 17 months.
II. Unsecured
(A) From NBFC and other financial institutions
1. Aditya Birla Finance Limited
Company has taken Loan from Aditya Birla Finance Limited amounting of Rs. 75 Lakhs which is used to augment net working capital. The Loans carries ROI of 17.00% pa. The Loans is sanctioned for 36 months. The repayment shall commence from 05.09.2022 in 36 monthly insttalement of Rs. 2,65,533. The period of maturity w.r.t balance sheet date is 17 months.
2. Ambit Finvest Private Limited
Company has taken Loan from Ambit Finvest Private Limited amounting as for Rs. 2 5 Lakhs which is used to augment net working capital. The Loans carries ROI of 18.00%. The Loans is sanctioned for 12 months. The repayment shall commence from 05.03.2022 in 12 monthly insttalement of Rs. 2,29,200. The loan amount is fully paid during the previous year.
3. Axis Finance Limited
Company has taken Loan from Axis Finance Limited amounting as for Rs. 23.08 Lakhs which is used to augment net working capital. The Loans carries ROI of 15.65%. The Loans is sanctioned for 36 months. The repayment shall commence from 05.03.2022 in 36 monthly insttalement of Rs. 82,303. The period of maturity w.r.t balance sheet date is 11 months.
4. Cholamandalam Investment and finance company limited
Company has taken Loan from Clix Capital Services Private Limited amounting as for Rs. 35.00 Lakhs which is used to augment net working capital. The Loans carries ROI of 16.50%. The Loans is sanctioned for 36 months. The repayment shall commence from 05.10.2023 in 36 monthly insttalement of Rs. 123,916. The period of maturity w.r.t balance sheet date is 30 months.
5. Clix Capital Services Private Limited
Company has taken Loan from Clix Capital Services Private Limited amounting as for Rs. 50.25 Lakhs which is used to augment net working capital. The Loans carries ROI of 17.00%. The Loans is sanctioned for 31 months with 4 months moratorium. The repayment shall commence from 02.09.2022 in 36 monthly insttalement of Rs. 179,160.
The period of maturity w.r.t balance sheet date is 30 months.
6. Fedbank Financial Services Limited
Company has taken Loan from Fedbank Financial Services Limited amounting as for Rs. 30.00 Lakhs which is used to augment net working capital. The Loans carries ROI of 17.00%. The Loans is sanctioned for 24 months. The repayment shall commence from 02.03.2022 in 24 monthly insttalement of Rs. 148,327. the loan amount fully paid during the previous year.
7. Growth Source Financial Technologies Private Limited
Company has taken Loan from Growth Source Financial Technologies Private Limited amounting as for Rs. 30.00 Lakhs which is used to augment net working capital. The Loans carries ROI of 16.50%. The Loans is sanctioned for 18 months. The repayment shall commence from 05.11.2023 in 30 monthly insttalement of Rs. 189,280. The period of maturity w.r.t balance sheet date is 13 months.
8. Hero Fincorp Limited
Company has taken Loan from Hero Fincorp Limited amounting as for Rs. 25.30 Lakhs which is used to augment net working capital. The Loans carries ROI of 17.00%. The Loans is sanctioned for 36 months. The repayment shall commence from 03.03.2022 in 36 monthly insttalement of Rs. 90,184. The period of maturity w.r.t balance sheet date is 11 months.
9. ICICI Bank Limited
Company has taken Loan from ICICI Bank Limited amounting as for Rs. 50.00 Lakhs which is used to augment net working capital. The Loans carries ROI of 16.50%. The Loans is sanctioned for 36 months. The repayment shall commence from 05.11.2023 in 36 monthly insttalement of Rs. 1,78,543. The period of maturity w.r.t balance sheet date is 31 months.
10. IDFC First Bank Limited
Company has taken Loan from IDFC First Bank Limited amounting as for Rs. 35.91 Lakhs which is used to augment net working capital. The Loans carries ROI of 16.50%. The Loans is sanctioned for 40 months. The repayment shall commence from 02.01.2020 in 40 monthly insttalement of Rs. 1,2 3,916. The loan amount is fully paid during the previous year.
11. Kotak Mahindra Bank Limited
Company has taken Loan from Kotak Mahindra Bank Limited amounting as for Rs. 40.00 Lakhs which is used to augment net working capital. The Loans carries ROI of 17.00%. The Loans is sanctioned for 24 months. The repayment shall commence from 10.02.2022 in 24 monthly insttalement of Rs. 1,97,193. The loan amount is fully paid during the previous year.
12. Oxyzo Financial Services Private Limited
Company has taken Loan from Oxyzo Financial Services Private Limited amounting as for Rs. 75.00 Lakhs which is used to augment net working capital. The Loans carries ROI of 17.00%. The Loans is sanctioned for 24 months. The repayment shall commence from 05.03.2022 in 24 monthly insttalement of Rs. 3,70,817. The loan amount fully paid during the previous year.
13. Tata Capital Financial Services Limited
Company has taken Loan from Tata Capital Financial Services Limited amounting as for Rs. 30.00 Lakhs which is used to augment net working capital. The Loans carries ROI of 16.50%. The Loans is sanctioned for 24 months. The repayment shall commence from 05.11.2023 in 24 monthly insttalement of Rs. 1,47,607.The period of maturity w.r.t balance sheet date is 19 months.
14. Tata Capital Financial Services Limited
Company has taken Loan from Tata Capital Financial Services Limited amounting as for Rs. 36.99 Lakhs which is used to augment net working capital. The Loans carries ROI of 17.00%. The Loans is sanctioned for 43 months with 4 months moratorium (from 05.05.2020 to 05.08.2020). The repayment shall commence from 05.02.2020 in 43 monthly insttalement of Rs. 1,25,141. The loan amount fully paid during the previous year.
15. Unity Small Finance Bank Limited
Company has taken Loan from Unity Small Finance Bank Limited amounting as for Rs. 40.21 Lakhs which is used to augment net working capital. The Loans carries ROI of 18.00%. The Loans is sanctioned for 24 months. The repayment shall commence from 04.03.2022 in 24 monthly insttalement of Rs. 2,00,722. The loan amount fully paid during the previous year.
16. Unity Small Finance Bank Limited
Company has taken Loan from Unity Small Finance Bank Limited amounting as for Rs. 40.80 Lakhs which is used to augment net working capital. The Loans carries ROI of 16.50%. The Loans is sanctioned for 24 months. The repayment shall commence from 04.10.2023 in 24 monthly insttalement of Rs. 2,00,746. The period of maturity w.r.t balance sheet date is 18 months.
17. KISETSU Saison Finance India Private Limited
Company has taken Loan fromKISETSU Saison Finance India Private Limited amounting as for Rs. 40.80 Lakhs which is used to augment net working capital. The Loans carries ROI of 16.50%. The Loans is sanctioned for 24 months. The repayment shall commence from 04.10.2023 in 24 monthly insttalement of Rs. 2,00,746. The period ofmaturity w.r.t balance sheet date is 18 months.
Note - 32 - Financial Instruments 1. Capital Management
The Company's capital management objectives are to ensure the company's ability to continue as a going concern, to provide an adequate return to share holders
The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet. Management assesses the Company's capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Company's various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
The Company has complied with the covenants as per the terms and conditions of the major borrowing facilities throughout the Reporting Period.
2. Financial Risk Management - Objectives and Policies
The Company's financial liabilities mainly comprise the loans and borrowings in domestic currency, money related to capital expenditures, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's financial assets comprise mainly of investments, security deposits, cash and cash equivalents, other balances with banks, trade and other receivables that derive directly from its business operations.
The Company is exposed to the Market Risk, Credit Risk and Liquidity Risk from its financial instruments.
The Management of the Company has implemented a risk management system which is monitored by the Board of Directors of the Company. The general conditions for compliance with the requirements for proper and future-oriented risk management within the Company are set out in the risk management principles. These principles aim at encouraging all members of staff to responsibly deal with risks as well as supporting a sustained process to improve risk awareness. The guidelines on risk management specify risk management processes, compulsory limitations, and the application of financial instruments. The risk management system aims to identify, assess, mitigate the risks in order to minimize the potential adverse effect on the Company's financial performance.
(*) Investment in subsidiaries are measured at cost as per Ind AS 27, “Separate financial statements”, and hence not presented here.
B. Market Risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. There are no material market risk affecting the financial position of the Company.
(a) Interest Rate Risk
Interest risk is the risk or uncertainty arising from possible interest rate movements and their impact on the future obligations or cash flows of
a business. There are no material interest risk affecting the financial position of the Company.
(b) Currency Risk
Interest risk is the risk or uncertainty arising from possible interest rate movements and their impact on the future obligations or cash flows of
a business. There are no material interest risk affecting the financial position of the Company.
(c) Other Price Risk
Other Price Risk is the Risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. The Company is exposed to price risk arising mainly from investments in equity/equity-oriented instruments recognized at FVTPL/FVTOCI.
C. Credit Risk
Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Company's exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and other Financial assets measured at amortized cost. The Company continuously
monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.
The Company assesses and manages credit risk based on internal credit rating system. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets. (i) Low credit risk, (ii) Moderate credit risk, (iii) High credit risk.
(i) Cash and cash equivalent and bank balance:
Credit risk related to cash and cash equivalents and bank balance is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks.
(ii) Loans and Other financial assets measured at amortized cost:
Other financial assets measured at amortized cost includes Security Deposit to various authorities , Loans to staff and other receivables. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.
(iii) Trade receivables:
Life time expected credit loss is provided for trade receivables. Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions. Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognized in statement of profit and loss.
(A) Expected credit losses:
Expected credit loss for trade receivables under simplified approach:
D. Liquidity Risk
Liquidity Risk is the risk that the Company will encounter difficulty in raising the funds to meet the commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. Management monitors rolling forecasts of the Company's liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.
Additional Regulatory Information as per Schedule II of The Companies Act,2013
1. The company does not own any immovable property.
2. The Company does not have any investment property; hence company has not required to disclose whether investment property is valued at fair value is based on the valuation by a Registered valuer as defined rule 2 of the companies (Registered Valuers and Valuation) Rules 2017.
3. The Company has not revalued its Property, Plant and Equipment (including Right of use Assets), hence the company has not required to disclose whether the valuation is based on the valuation by a registered valuer as defined under rule 2 of the company (Registered Valuers and Valuation) Rules 2017.
4. The Company has not revalued its Intangible Assets; hence the company has not required to disclose whether the valuation is based on the valuation by a registered valuer as defined under rule 2 of the company (Registered Valuers and Valuation) Rules 2017.
5. The disclosure of the Loans and Advances in the nature of the loans granted to promoters, directors, KMPs and the related parties (as defined in Companies Act, 2013) either severally or jointly with any other persons that are
6. There are no Capital Work in Progress as at Balance Sheet date.
7. There are no intangible assets under development as at Balance Sheet date.
8. Benami Property
No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transections (Prohibition) Act, 1988 (45 of 1988) and the rules thereunder
9. Returns and filing to Banks and financial institutions
The company has availed borrowings from banks and financial institutions on the basis of the security of its current assets. The quarterly returns and statements filed with them are in agreements with the books of accounts
10. Wilful Defaulters
The company is not declared as wilful defaulter by any bank or financial institutions or other lender
11. Relationship with struck of companies
The company has not entered into any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
12. Registration or satisfaction of charges with Registrar of Companies
There are no charges or satisfaction which are yet to be registered with Registrar of Companies beyond the statutory period.
13. Layers of the company
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, The company have a subsidiary company i.e. Desi Fusion India Private Limited as at the balance sheet date.
14. Corporate Social Responsibility (CSR)
The Company has not been required to constitute CSR committee and to make expenses towards CSR activities as per the requirements of Section 135 of the Companies Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014.
15. Crypto Currency or Virtual Currency
The Company has not been traded or invested in Crypto Currency and Virtual Currency during the financial year.
17. Compliance with approved schemes of arrangements
There is no scheme approved by competent authority as at balance sheet date.
18. Utilisation of Borrowed Funds and Share Premium
The company has not advanced or loaned or invested funds to any other persons or entities with the understanding that, that person/entity should invest in any other person or entity identified in any manner whatsoever by or on behalf of the company or provided any guarantee, security, or like to or on behalf of the company.
The company has not received any amount from any other persons/entity with the understanding, whether written or oral, that the company shall directly or indirectly invest in any other person or entity.
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