Company has taken a flat in Mumbai for a period of 99 years lease from M/S MEC International Pvt. Ltd. (Lessor) on monthly lease rent of Rs.2500/- which will be increased by 10% after the expiry of every 36 months from the date of agreement and company has deposited Rs.95,00,000/- as interest free security deposit with right to purchase the property on further payment of Rs.5,00,000/-. In the year 2018-19 the Lessor has sold above mentioned lease property to Mr. Shahil P Shah. Company has executed a new lease agreement for unexpired period of lease with Sahil P Shah at same terms and coditions of as mentioned old lease agreement.This lease agreement has not been registered. The unexpired period to said lease is 80 years.
(i) Balances with government includes a sum of Rs.6.00 Lacs was deposited by the company as pre-deposit of penalty as per directions given by the Custom Excice & Gold (control) Appellate New Delhi by order dated 03.02.2003 against total amount of penalty of Rs.25 lacs to be deposited by Shri Pankaj P Shah(Managing Director) and Shri Ashok P Shah(Ex-Director) of the company,the appeal has been dismissed by the tribunal.The company has filed an appeal before High Court. Matter is still pending.
(i) Trade Receivables with a carrying value of Rs. 7565.87 Lacs and Rs. 4748.08 Lacs have been given as collateral towards borrowings as at 31st March 2024 and 31st March 2023 respectively (refer note 19 on borrowings)
(ii) The Credit period given to customers range from 30 Days to 100 Days. For the existing customers based on their past records, the company fixes the credit limit as well as credit period. For new Customers, company generally supplies the good against advances.
(*) NOTE: Percentage of shareholding as on 31st March 2024 is calcuted in accordance with new capital structure 11795000 Shares
(**) 922000 warrants was converted into equity shares on dated 16th May, 2023.
The aforesaid disclosure is based upon percentages computed separately for class of shares outstanding, as at the balance sheet date. As per records of the company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
14.1 Terms/rights attached to paid up equity shares
The company has only one class of equity shares having a par value of Rs 10/-. Each holder of equity shares is entitled to one vote per share. 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.
Nature and Purposes of Reserves:
a) Securities Premium: Securities premium is used to record premium on issue of shares i.e. amount received in excess of face value of share . The reserve can be utilised only for limited purpose in accordance with the provisions of Companies Act, 2013.
b) General Reserve: The General Reserve is a free reserve which is used from time to time to transfer profit from/ to retained earning for approprite purpose. As the general reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income , items including in general reserve will not be re-clasified subsequently to statement of profit and loss
c) Retained Earnings: This Represents undistributed earnings accumulated by the Company as at Balance Sheet date.
d) Capital Reserve: Capital Reserve represnts capital profit and is not available for distribution as dividend to equity shareholders.
e) Money Received against Share Warrant: This represents money received against share warrant account pending allotment due to non receipt of balance payment from applicant and will be adjusted subsequently upon forfeiture or confirmation for reissue of shares.
The information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 ("the Act") has been determined to the extent such parties have been identified by the company, on the basis of information and records available with them. This information has been relied upon by the auditors.
37 CONTINGENT LIABILITIES AND COMMITMENTS NOT PROVIDED FOR:
CONTINGENT LIABILITIES:
(a) Guarantees/ TCBG given by bank in favour of buyers/suppliers, & Central Excise for Rs. NIL Lac (previous Year Rs. 69.45 Lac)
(b) Letter of Credit of Rs. 7329.56 Lac (previous Year Rs. 405.03 Lac) opened in favour of Raw Material Suppliers
(c) Personal Guarantee by the Managing Director and Whole Time Director have been given to IDBI bank Limited,
HDFC Bank Ltd., Barcklays Bank PLC and Kotak Bank Ltd. against Credit facilities sanctioned to company.
(d) Uncompleted/reopened assessments of sales tax, Excise,Custom, GST and income tax etc.
(e) Suit filed by NECLO for Sum of Rs. 227085/- against which a sum of Rs.25,000/- has been deposited in the city Civil Court Ahmedabad.
*Matter pending since more than 20 years and company does not expect any liability
(f) Bonus Liability for the year 2014-15 as per new amendment issued by Ministry of Labour on which stay granted by Hon'ble High Court in company favour.
(g) Total penalty of Rs. 25.00 Lacs is raised on Shri Pankaj P Shah (Managing Director) and Shri Ashok P Shah (Ex. Director) of the company by custom department and company has paid Rs. 6,00,000/- as per direction of Custom Excise & Gold (control) Appellate, New Delhi through order dated 03.02.2003 and company has filled appeal before Hon'ble High Court.
(h) LER - Loan Equivalent Risk of Rs. 6005.16 Lacs (Previous Year Rs. 4455.29 Lacs ) given by bank towards potential fluctuation in the contractual currency of foreign exchange transaction.
(i) Total Demand of Rs. 214.55 Lacs for Income tax along with interest is raised by Income Tax department for various years and company has file appeal for the same.
(j) Total Demand of Rs. 38.61 Lacs for GST along with interest is raised by GST Department and company has file appeal for the same
k) The Income Tax Authorities had conducted search activity during the month of December 2023 at Head office of the Company. The Company extended full corporation to the Income Tax Officials during the search & provided required details, clarifications and documents. As on the date of financial statement, the company has not received any return communication from the Department regarding the Outcome of search, therefore, the consequent impact of any demand/penalty if any has not been given impact in the financial statement as same is not ascertainable. The managment after considering all available records and facts known to it, is of the view that there is no material adverse impact on the financial position of the company and no material adjustment are required to in financial statement for the year ended 31 March,2024 in this regards.
COMMITMENTS
(l) Estimated amount of contracts on Capital Accounts remaining to be executed and not provided for (net of advances) USD 0.70 Lakh (PY- NIL)
(m) The Company has entered into derivative contracts during the year in the nature of Forward Contracts for hedging currency risk for export made. The Forward Contracts outstanding as on 31st March 2024 amount to Rs. 6005.16 Lacs (USD 72.00 Lacs) (PY Rs. 5772.14 Lacs (USD 70.00 Lacs))
(n) The Company has entered into derivative contracts during the year in the nature of Forward Contracts for hedging currency risk for import. The Forward Contracts outstanding as on 31st March 2024 amount to Rs. NIL (USD Nil & EURO Nil), (PY Rs. Nil (USD Nil & EURO NIL)
(o) The Company has entered into derivative contracts during the year in the nature of Forward Contracts for hedging currency risk for FCY Loans. The Forward Contracts outstanding as on 31st March 2024 amount to Rs. Nil Lakh (USD Nil & EURO Nil ), (PY Rs. 1316.85 Lakh (USD Nil & EURO 15 Lakh)
(p) The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:
38 As per IND AS-19 “ Employee Benefits”
As per Ind AS - 19 "Employee Benefits", the disclosures are as under:
Defined Benefit Plan
The company has formed a employees gratuity trust which is administrated by Life Insurance Corporation of India (LIC). The company makes contribution towards funding the defined benefit plan pertaining to gratuity to LIC. The Leave Encashment liability is not contributed to any fund and is unfunded. The present value of the defined benefit obligation and related current cost are measured using projected unit credit method with acturial valuation being carried out at balance sheet date. The amount recognised are as under:
Note: In respect of Employees Gratuity Fund, composition of plan assets is not readily available from LIC of India. The expected rate of return on assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year.
Attrition rates are the company's best estimate of employee turnover in future determined considering factors such as nature of business & industry, retention policy, demand & supply in employment market, standing of the company, business plan, HR Policy etc as provided in the relevant accounting standard.
The above sensitivity analysis is based on a change in assumption while holding all the other assumptions constant. In practice, this is unlikely to occur, and change in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in balance sheet.
fxiii) Risk exposure
The gratuity scheme is a final salary Defined Benefit Plan that provides for lump sum payment made on exit either by way of retirement, death, disability, voluntary withdrawal. The benefits are defined on the basis of final salary and the period of service and paid as lump sum at exit. The plan design means the risk commonly affecting the liabilities and the financial results are expected to be:
a) Salary Increases: Actual salary increases will increase the Plan's liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
b) Investment Risk: If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
c) Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan's liability.
d) Mortality & disability: Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
e) Withdrawals: Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan's liability.
B) Leave Encashment fUnfunded)
The Leave Encashment liability of ? 65.89 lacs form part of long term provision ? 43.90 Lacs (PY ? 42.17 Lacs) and short term provision ? 22.00 Lacs (PY ? 16.69 Lacs) and is unfunded and does not require disclosures as mentioned in para 158 of Ind AS 19.
C) Provident Fund
An amount of Rs 24.63 Lacs (2023-24 Rs 26.14 Lacs) as contribution towards defined contribution plans is recognized as expenses in statement of Profit & Loss.
The companies risk management is carried out by finance department, accordingly, this department identifies, evaluation and hedges financial risk
A) 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, and arises principally from the company's receivables. To manage this, the Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets.
Credit Risk Management
The main source of credit risk at the reporting date is from trade receivables as these are typically unsecured. This credit risk has always been managed through credit Approvals, establishing credit limits and continuously monitoring the creditworthiness of customer to whom credit is extended in normal course of business. The company estimates the expected credit loss on the basis of past Data and experience. Expected credit losses of financial assets receivable in next 12 months are estimated on the basis of historical date provided the company has reasonable and supportable date. On such an assessment the expected losses are nil or negligible.
Review of outstanding trade receivables and financial assets is carried out by management each quarter. The company do not have any doubtful debts hence, no provision for bad and doubtful debts have yet been made in accounts.
COVID-19: The Company do not envisage any financial difficulties resulting in additional credit risks higher than usual credit terms due to COVID-19 outbreak.
B) LIQUIDITY RISK
The companies principle source of liquidity are cash and cash equivalent and cash flows that are generated from operation. The company believes that its working capital is sufficient to meet its current requirement.
The table below summarises the company's liquidity position and its preparedness for likely variations in lquidity
C) Market Risk
COVID-19 related risk
The Company being engaged in manufacture of Aluminium Foil and related items (being essential item), hence, there is no major market risk.
Foreign Currency Risk
The company operates significantly in international markets through imports and exports and therefore exposed to foreign exchange risk arising from foreign currency transaction primarily with respect to USD/Euro. The risk is measured through sensitivity analysis. In order to minimize any adverse effect on the financial performance of the company, derivative financial instrument such as foreign exchange forward contracts are used exclusively to mitigate currency risk and not as trading or speculative instrument.
Depreciation on right of use asset is Rs 0.52 lacs and Interest on lease liability for year ended 31st March 2024 is Rs 1.69 lacs Lease Contracts entered by the company majorly pertains to building taken on lease to conduct the business activites in ordinary course.
The company do not forsee liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligation related to lease liabilities as and when they fall due.
43 a) The lease deed regarding land at Jaisalmer where Enercon Make wind mill is installed has not been executed.
b) The lease deed regarding land at Pipalia Kalan, where Bunglow in the name of company is situated, has been executed for 35 year and unexpired portion of said lease holds lands is 31 years and the lease deed is not registered
44 Balances of Trade Receivables, Trade Payables, Loans, Amount Received against FDR's & Advances and Unsecured Loans as on 31.3.2024 are subject to reconciliation & confirmation by the parties.
45 Company has invested Rs. 900 Lacs in NCD of Earthon Infracon Pvt. Ltd. in year 2017-18. As per terms of investment, repayment is to be done by Earthon till December,2019 but due to recession in realstate sector and Covid-19 pendamic problem the repayment along with interest for the year 2019-20, 2020-21, 2021-22, 202-23 and 2023-24 not done by the Earthcon and provision for dimiunition in value of investment of 50% of total investment i.e. Rs 450 Lacs has been booked in financial statements till 31st March'2022. Based on recent discussion between M/s Earthcon Infracon Private Limited and management of the company during financial year 2023-24, management is of the view that amount will be realised in next financial year, hence, further provision for dimunition in value of investment is not required to be booked in financial statement.
However, Company has not booked interest on these NCD's for the period 01st July,2019 till 31st March, 2024 due to uncertanity of payment.
46 In 2017-18 company has paid a sum of Rs 500 Lacs to HDFC Life insuarance company Ltd towards single premium of policy taken under employee empolyer plan. This policy has been taken for related parties in March 2018 for 10 years. Regarding this the company has taken the undertaking form Life Assured persons who are covered up under this policy for non claiming of end benefits of the policy on maturity.Out of which company has surrended policy of Veenit Chordiya of which premium of Rs. 100 Lacs paid due to resigation of employee.
47 Company has installed one Wind Mill of 0.6 MW capacities at Soda Bandan District Jaisalmer with agreement with Rajastahn Rajya Vidhut Vitran Nigam Limited & other and Enercon Wind Form for wheeling of Energy for captive consumption. The agreement is expired in September 2023 and company has filled application for renewal of the same but till March 2024 company has received short term approval w.e.f. February 2024 from Rajastan Rajya Vidhut Vitran Nigam Limited & others. On the basis of short term approval company booked genration income for the month February and March 2024. Company during the year 320711 units (Previous year 587383 units) Generated amounting to Rs 26.07 Lacs (Previous Year Rs. 53.18 Lacs). Profit after depreciation earned from above wind mill is Rs. 36.40 Lacs)
Company has installed one Wind Mill of 1.5MW capacities at Aakal, Jaisalmer with agreement with Jodhpur Vidhut Vitran Nigam Limited & Suzlon Suzlon Infrastructure Service Limited for generation power. During the year 1799818 units (Previous Year 1852118 units) generated and sale to Jodhpur Vidhut Vitran Nigam Limited amounting to Rs. 7379254/-(Previous Year Rs. 7593683/-). Profit after depreciation earned from above wind mill is Rs 4042614/-.
48 a) A Misappropriation / Fraud of FDR Deposit Comes to the knowledge of the Management during Financial Year 2014
15. Company had filed a complaint with Economic Offence Wing, Mumbai and FIR with Police station Nariman Point on 14.07.2014 against various parties including Dhanlaxmi Bank, Mumbai & their officials for Misappropriation of FDR's of Rs. 69 Crores given to Dhanlaxmi Bank Ltd., Goregaon Branch. Company has also filed a legal case with National Consumer Court at Delhi for early justice in the matter due to delay in decision against EOW complaint. Company recovered amount Rs. 68.93Cr. From accused through account of various parties against repayment of FDR's which shown under head Cash & Cash Equivalent against FDR amount.
b) Company has not booked interest on these FDR's for Financial Year 2018-19 due to disputed matter and uncertainty and also not made provision of interest on amount recovered from various parties against maturity value of FDR's. The matter is pending with competent court for trial.
49 Lease rent in respect of leasehold land for factory building and township are accounted for on accrual basis. The unexpired portion of said lease holds lands are 42 and 43 years respectively.
50 a) Bank balances are subject to bank reconciliations. Bank statement and balance conformaiton certificate of Dhan
Laxmi Bank not available.
b) Balances of Fixed Deposits are subject to verification & reconciliation.
51 There is no agriculture produce from the Agriculture land.
52 SEGMENT REPORTING
Description of segment and principal activity.
The company is primarily in the business of manufacture and sale of Aluminium Foil in the various form. Operating segments are reported in the manner consistent with internal reporting to Managing director of the company. The company has regular reviews procedures in place and Managing director reviews the operations of the company as a whole, Hence there are no reportable segments as per Ind AS 108 Operating segment.
Information about Geographical areas
The following information discloses revenue from customers based on geographical areas.
53 The Indian parliament has approved the Code of Social Security, 2020 which would impact the contribution by the company toward providend fund and gratuity. The Ministry of Labour and Employment has relesed draft rules for the Code on Social Security, 2020 on November 13, 2020. The company will asses the impact and its evaluation once the subject rules are notified. The conmpany will give appropriate impact in its financial statement in the period in which, the code become effective and the related rules to determine the financial impact are published.
54 CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Gross amount required to be spent by the Company during the year ended March 31, 2024 on CSR is Nil, as average net profit of the Company for the purpose of determining the spending on CSR activities computed in accordance with the provisions of section 135, excluding of items given under Rule 2 (1)(h) of Companies (CSR Policy) Rules 2014 read with section 198 of Companies Act 2013 is Nil, however, company has made voluntary contribution of Rs 5.50 Lacs during the year as per following details:
(i) Details of Benami property: No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami tansactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
(iii) No funds have been advanced/loaned/invested (from borrowed fund or from share premium or from any other sources/ kind of fund) by the company to any other person(s) or entity(ies), including foreign entities(intermediaries), with the understanding (whether recorded in writing or otherwise) that the intermediary shall (i) directly or indirectly lend or invest in other peron or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or like to or on behalf of the Ultimate Beneficiaries.
No funds have been received by the company from any person(s) or entity(ies), including foreign entities (funding Parties), with the understanding (whether recorded in writing or otherwise) that the company shall (i) 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 (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(iv) Compliance with number of layers of companies: The Company has complied with the number of layers prescribed under section 2(87) of the Companies Act, 2013 read with companies (Restriction on number of layers) Rules, 2017.
(v) Compliance with approved scheme(s) of arrangements: The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(vi) Undisclosed income: There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
(vii) Details of crypto currency or virtual currency: The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
(viii) Valuation of PP&E, intangible asset and investment property: The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(ix) The company has not granted any loans or advances in the nature of loans either repayable on demand or without specifying any tenure or period of repayment.
(x) There are no charges or satisfaction of charges which are yet to be registered/satisfied with Registrar of Companies.
(xi) The Company has not entered into any transaction with companies struck off under section 248 of Companies Act, 2013/ Section 560 of Companies Act, 1956.
(xii) The title deeds of immovable properties are held in the name of Company.
(xiii) The Company has not been declared willful defaulter by any bank or financial institution or any other lender.
(xiv) The quarterly return or statement of current assets filed by the company with bank are generally in agreement with book of accounts.
(xv) Audit Trail : The company has used an accounting software for maintaining its books of accounts for the financial year ended 31 March 2024, which has a feature of recording audit trail (edit log) facilities and the same has been operating for all relevant transactions recorded in the software. Although the accounting software has inherent limitations, there were no instances of audit trail feature been tempered
56 Previous year figures have been re-grouped and re-arranged wherever necessary to conform to current year classification.
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