i) Provisions and Contingencies:
A provision is recognised, if as a result of a past event the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured at the present value of the 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 the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are not recognised but disclosed in the Financial Statements when economic inflow is probable.
j) Segment Reporting:
Operating segments have been identified on the basis of the nature of business activities from which the Company earns revenues or incurs expenses and for which discrete financial information is available. The Management monitors the operating results of its business segments for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. The Operating segments have been identified on the basis of the nature of products / services.
1. Segment revenue includes sales and other income directly identifiable with/ allocable to the segment including inter-segment revenue.
2. Expenses that are directly identifiable with/ or allocable to segments are considered for determining the segment result. Expenses which relate the Company as a whole and not allocable to segments are included in un-allocable expenditure.
3. Income which relates to the Company as a whole and not allocable to segments is included in unallocable income.
4. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker.
k) Revenue Recognition:
Revenue is measured at the fair value of the consideration received or receivable. The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Company's activities as described below.
Recognition of revenue from major business activities:
1. Revenue from Industrial Capital Goods Division operations includes sale of manufactured machines and capital equipment, engineering fees, services, and other charges. Revenue from sale of goods is recognised when all the control on the goods have been transferred to the buyer as per the terms of the contracts and no significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods.
2. Revenue from Bombay Exhibition Center operations includes income from renting of halls for exhibitions, events and providing other related services to the organisers. Revenue from such renting activity and the related services is recognised in the accounting period in which the event occurs.
3. Revenue from IT Park operations includes income of renting of office space in IT park and providing related services to IT /ITES companies.
4. Revenue from Nesco foods includes catering at the Social/Corporate Events, running food court at exhibition centre and operations at restaurants. Revenue from such activity is recognised in the accounting period in which services are rendered.
5. Interest income is recognised using Effective Interest Rate (EIR) method and dividend income is recognised when the right to receive the payment is established.
l) Income tax:
Income tax expense comprises current tax and deferred tax. It is recognised in statement of profit and loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
1. Current tax:
Current tax comprises of the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of the previous years. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if, the Company:
• has a legally enforceable right to set off the recognised amounts; and
• Intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
2. Deferred tax:
Deferred tax is recognised for the future tax consequences of deductible temporary differences betweenthe carrying valuesofassetsandliabilities and their respective tax bases at the reporting date, using the tax rates and laws that are enacted or substantively enacted as on reporting date. Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses and credits can be utilised. Deferred tax relating to items recognised in other comprehensive income and directly in equity is recognised in correlation to the underlying transaction.
Deferred tax assets and liabilities are offset only if:
• Entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
• Deferred tax assets and the deferred tax liabilities relate to the income taxes levied by the same taxation authority.
m) Cash and cash equivalents:
Cash and cash equivalents include cash on hand, Balances with Banks, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
n) Trade Receivables:
Trade receivables are non-interest bearing and receivable in normal operating cycle. Trade receivables are recognised initially at fair value (that is transaction price on initial recognition) and subsequently measured at amortised cost using effective interest method, less provision for impairment.
o) Leases
The Company's lease asset classes primarily consist of license for land for office premises. The Company, at the inception of a contract, assesses whether the contract is a lease or not lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a time in exchange for a consideration. This policy has been applied to contracts existing and entered into on or after 01 April 2020.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company's incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right of-use asset has been reduced to zero.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets (assets of less than H1,00,000 in value). The Company recognises the lease payments associated with these leases as an expense over the lease term.
Leases as lessor
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers
substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for a major part of the economic life of the asset. When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease. The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term as part of 'Revenue From Operation'.
p) Earnings Per Share:
Basic Earnings per share is calculated by dividing:
• the profit attributable to owners of the Company.
• by the weighted average number of equity shares outstanding during the financial year.
q) Employee Benefits:
1. Short term obligations:
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and they are recognised in the period in which the employee renders the related service. The Company recognises the undiscounted amount of shortterm employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
2. Other long term employee obligations:
Entitlements to annual leave are recognised when they accrue to employees. Annual leave can either be availed or encashed at the time of separation or retirement subject to a restriction on the maximum number of 42 days of accumulation of leave. The Company determines the liability for such accumulated leaves using the Projected Unit Credit method with actuarial valuations being carried out at each Balance Sheet date.
3. Post-employment obligations:
The Company operates the following postemployment schemes.
i) Defined benefit plans (gratuity):
The Company has unfunded defined benefit gratuity plan for employees.
Recognition and measurement of Defined Benefit plans:
The cost of providing defined benefits is determined using the Projected Unit Credit method with actuarial valuations being carried out at each reporting date.
The defined benefit obligations recognised in the Balance Sheet represent the present value of the defined benefit obligations.
All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit liability / (asset) are recognised in the Statement of Profit and Loss. Re-measurements of the net defined benefit liability / (asset) comprising actuarial gains and losses are recognised in Other Comprehensive Income. Such re-measurements are not reclassified to the Statement of Profit and Loss in the subsequent periods.
The Company presents the above liability/(asset) as current and non-current in the Balance Sheet as per actuarial valuation by the independent actuary.
ii) Defined contribution plans such as provident fund:
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expenses when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
r) Proposed Dividend:
The final dividend recommended by the Board of Directors is accounted in the financial year in which it is approved by the shareholders in the Annual General Meeting.
s) Recent Accounting pronouncements:
The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the preparation of the Company's annual financial statements for the year ended March 31 2023. Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
Note 3- Key Accounting Estimates and Judgements:
The preparation of the Company's financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
This note provides an overview of the areas that involved a higher degree of judgement 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 judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
Critical accounting estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:
a) Income Taxes:
The Company's tax jurisdiction is India. Significant judgements are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
b) Property, Plant and Equipment and Investment Property:
Property, Plant and Equipment and Investment Property represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset's expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company's assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.
c) Defined Benefit Obligation:
The costs of providing other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 'Employee benefits' over the period during which benefit is derived from the employees' services. The costs are assessed since assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates.
d) Fair value measurement of Financial Instruments:
When the fair values of financials assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques, including the discounted cash flow model, which involve various judgements and assumptions.
Note 34-Financial Risk Management:
Financial Risk Factors:
The Company's financial liabilities comprises mainly of trade payables and other payables. The Company's financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.
The Company's activities are exposed to Market risk, credit risk and liquidity risk. The Company has set up Risk Management Committee to minimise any adverse effects of the risk exposure on the financial performance of the Company.
1. Market Risk:
Market risk comprises of three types of risk: Currency Risk, Interest rate Risk and Other Price Risk.
a. Foreign Currency Risk:
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate due to changes in foreign currency exchange rates. The carrying amounts of the Company's foreign currency denominated monetary items are as follows:
b. Interest Rate Risk:
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company has NIL interest bearing borrowings, the exposure to risk of changes in market interest rate is NIL. The Company has not used any interest rate derivatives.
c. Other Price Risk:
Other Price risk is the risk that fair value of a financial instrument will fluctuate due to changes in market traded price. Other price risk arises from both financial assets such as investments in equity instruments and bonds.
The Company invests in units of mutual funds including Fixed Maturity Plans, various debt Funds and Equity funds, and hence exposed to Other Price risk. Company's Treasury department manages investments portfolio diversification in order to minimise risk and ongoing monitoring of market prices of investments.
2. Credit Risk:
Credit risk refers to the risk of default on its obligation by the counterparty resulting in financial loss. Trade receivables are typically unsecured and are derived from customers from four operations Nesco IT Park lease, Bombay Exhibition Center (BEC) revenue, sale of Industrial Capital Goods and Nesco Foods.
The maximum exposure to credit risk on account of trade receivables, at the reporting date is ? 1,213.04 lakhs and ? 2,262.23 lakhs as on 31 March 2024 and 31 March 2023 respectively.
The Company minimises credit risk relating to IT Park lease and BEC business as follows:
- The Company obtains security deposits from IT Park lessees and entitled to terminate lease agreement in case lessee makes defaults in payment of lease for a period of two consecutive months.
- BEC customers are required to pay advance and place refundable security deposit with the Company.
- Hospitality customers are required to pay advances to the Company.
Whereas, in case of trade receivables from Industrial Capital Goods division for sale of machineries, credit risk is managed through credit approvals, establishing credit limits, and continuously monitored by creditworthiness of customers to whom, credit terms are granted in normal course of business.
The Company takes into account available credit risk factors as Company's historical experience for customers, customers' standing for credit defaults in market.
The allowance for lifetime expected credit loss on customer balances as on 31 March 2024 and 31 March 2023 was ? 159.20 lakhs and ? 165.77 lakhs respectively.
Credit risk of financial assets other than Trade receivables:
• Investments in mutual fund schemes are marked to market on ongoing basis, which is major part of total Non-current and current investments.
• Long term loans and advances include deposits with local authorities, electricity Board, electricity companies etc.
• Cash and Cash equivalents are balances with Public and Private Banks.
• Other current assets include lease rentals receivables and deposits with more than 12 months maturities with Public and Private Banks and Earnest Money Deposits with Government customer.
Credit risk arising from investment in mutual funds, financial instruments and other balances with banks is limited and there is no collateral held against these because the counterparties are banks and recognised financial institutions with high credit ratings assigned by the international credit rating agencies.
The allowance for lifetime expected credit loss on current license and other fees receivables as on 31 March 2024 and 31 March 2023 was ?97.64 lakhs and ?218.31 lakhs respectively.
3. Liquidity Risk:
The Company's principal sources of liquidity are cash and cash equivalents, Balances and cash flows that are generated from business. The Company does not have any borrowings. The Company believes that their working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
The Company manages the liquidity risk by maintaining adequate cash and cash equivalent ? 2,208.80 lakhs and ? 1,189.15 lakhs as on 31 March 2024 and 31 March 2023 respectively.
Note 35-Contingent Liabilities and Commitments:
1 Income tax and GST demand disputed by the Company ? 299.25 lakhs (Previous year ? 157.14 lakhs).
2 Claims against the Company not acknowledged as debts ? 5,361.51lakhs (Previous year ? 4,499.59 lakhs).
3 Estimated value of contracts remaining to be executed on capital account and not provided for is ? 5,372.97 lakhs (Previous year ? 3,439.20 lakhs) against which an advance of ? 2,171.51 lakhs (Previous year ? 128.06 lakhs) has been paid.
4 Domestic Bank Guarantee given by bank on Company's behalf ? 962.01 lakhs (Previous year ? 756.98 lakhs) secured by lien of Mutual Fund (Fixed Maturity Plan) of value ? 1,346.12 lakhs (Previous year ? 1,093.77 lakhs) and Bank Fixed Deposit of ? 402.34 (Previous year ? 50.04 lakhs).
Note 36-Disclosure under the MSMED Act, 2006:
Disclosure under the MSMED Act, 2006 is provided as under for the year 2023-24, to the extent the Company has received intimation from the "Suppliers" regarding their status under the Act.
4. Capital Management
For the purpose of the Company's capital management, capital includes issued capital, and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value.
As of 31 March 2024, the Company has only one class of shares referred to as Equity Shares and has NIL debt. Consequent to such capital structure, there are no externally imposed capital requirements. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or re-investment into business based on its long-term financial plans.
Note 38 - Disclosure as per Section 186 of the Companies Act, 2013
The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows:
a) Details of Investments made are given in Note 7.
b) There are no loans given to any related party during the year.
c) There are no guarantees issued by the Company in accordance with Section 186 of the Companies Act, 2013 read with rules issued thereunder.
Note 40-Leases:
Pursuant to Ind AS 116 - Leases, following information is disclosed:
Company as Lessor:
Ind AS 116 "Leases" requires the lessor to recognise income from operating leases on a straight-line basis over the lease term which includes rent free period. Thus, contracted lease rental income including future escalation is straight lined over the lease term. This has resulted in derecognising unearned lease income amounting to ?2,299.71 lakhs (Previous year derecognising ?712.95 lakhs) for the year ended 31 March 2024.
The Company has entered into operating leases on its Investment Property located at Byculla and Goregaon IT Park premises.
Company as Lessee:
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The Company has taken factory land at Karamsad, Gujarat under non-cancellable Operating Lease. These lease rentals are payable by the Company on a monthly basis. Company recognises this lease as right-of-use assets and lease liability.
The Company recognises the lease payments associated with these leases as an expense over the lease term. There is no contingent rent payable to lessors under the lease agreements.
The following is the carrying amounts of Company's Right-of-use assets (ROU), Movement in liabilities, amount recognised in Profit and Loss and Cash outflow for ROU assets: -
Note 49-Additional Regulatory Information required by Schedule III to the Companies Act, 2013.
(i) The Company does not have any benami property held in its name. No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
(ii) The Company has not been declared wilful defaulter by any bank or financial institution or other lender or government or any government authority.
(iii) The Company has complied with the requirement with respect to number of layers as prescribed under section 2(87) of the Companies Act, 2013 read with the Companies (Restriction on number of layers) Rules, 2017.
(iv) Utilisation of borrowed funds and share premium:
I The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
II The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(v) There is no income surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961 (such as search or survey), that has not been recorded in the books of account.
(vi) The Company has not traded or invested in crypto currency or virtual currency during the year.
(vii) The Company does not have any charges or satisfaction of charges which is yet to be registered with Registrar of Companies beyond the statutory period.
(viii) During the year, the Company had no transactions with struck off companies.
Note 50 - Previous year's figures have been regrouped / reclassified wherever necessary.
Note 51 - The financial statements are approved for issue by the Audit Committee and thereafter by the Board of Directors at its meeting held on 20 May 2024.
Notes forming part of the financial statements 1 to 51
As per our report of even date For and on behalf of the Board
For Manubhai & Shah LLP Krishna S. Patel Sudha S. Patel
Chartered Accountants Chairman and Managing Director Non-executive Director
FRN. 106041W/W100136 DIN- 01519572 DIN - 00187055
Ashish Shah Dipesh R. Singhania Shalini D. Kamath
Partner Chief Financial Officer Company Secretary and
Membership No : 103750 Compliance Officer
Mumbai, 20 May 2024 Mumbai, 20 May 2024 Mumbai, 20 May 2024
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