Rights, preferences and restrictions attached to equity shares
The Company has one class of equity share having a par value of '10 per share. Each holder of equity share is entitled to one vote per share. The dividend when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting, 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. Repayment of capital on liquidation will be in proportion to the number of equity shares held.
17.5. Information regarding issue of shares in the last five years
The Board of Directors at its meeting held on October 15, 2020, approved a proposal to buy-back upto 266,667 number of equity shares of the Company for an aggregate amount not exceeding INR 22 Crores, being less than 10% of total paid up equity share capital and free reserves as on March 31,2020 at ' 825/- per equity share. The buy back was from the open market through the stock exchanges. The Company bought back 185,109 number of equity shares out of the shares that were tendered by eligible shareholders and extinguished during the immediately preceeding five years. The Company has not issued any shares without payment being received in cash / any bonus shares during the immediately preceeding five years.
17.6. Capital management
For the purpose of the Company's capital management, capital includes issued equity capital and equity reserves attributable to the equity holders of the Company. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and its capital requirements. 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. There are no externally imposed capital requirements. In order to maintain / 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 18 : Other Equitya. General reserve
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss except to the extent permitted as per Companies Act, 2013 and rules made thereunder.
b. Capital redemption reserve
The Companies Act, 2013 requires that where a Company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to a capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet. The capital redemption reserve account may be applied by the Company, in paying up unissued shares of the Company to be issued to shareholders of the Company as fully paid bonus shares. The Company established this reserve pursuant to buy-back of equity shares in FY 2020-21 and FY 2021-22.
c. Retained earnings
Retained earnings represents profits generated and retained by the Company post distribution of dividends to the equity shareholders in the respective years. The balance in retained earnings can be utilized for distribution of dividend by the Company considering the requirements of the Companies Act, 2013.
In respect of the year ended March 31,2024, the directors proposed a dividend of INR 30 per share be paid to all holders of fully paid equity shares. This equity dividend is subject to approval by shareholders at the ensuing Annual General Meeting and has not been included as a liability in these financial statements. The total estimated equity dividend to be paid is INR 23.19.
d. Remeasurement of defined benefit obligations
Remeasurement of defined benefit obligations comprises of actuarial gain or losses and return on plan assets (excluding interest income).
21.1. Dues to micro enterprises and small enterprises
The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated August 28, 2008, which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after fling of the Memorandum in accordance with the Micro, Small and Medium Enterprise Development Act, 2006 ('the MSMED Act'). In view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet dates.
31.3. Other statutory information
a. The Company has not traded or invested in Crypto currency or virtual currency during the financial year.
b. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961)
c. The Company does not have any transactions with struck off companies under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956 during the year.
d. The Company has not advanced or loaned or invested funds to any persons or entities, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:
1) 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
2) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
e. The Company has not received any fund from any persons or entities, 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.
f. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
g. The Company does not have any borrowings from banks or financial institutions. The Company has not been declared as a wilful defaulter by any bank or financial institution or other lenders.
h. The Company does not have any subsidiaries. Hence, compliance with the number of layers prescribed under clause 87 of section 2 of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017, is not applicable.
i. The Company has not entered into any scheme of arrangement as per sections 230 to 237 of the Companies Act, 2013. Also refer note 35.
j. The Company does not have any charges or satisfaction which is yet to be registered with Registar of Companies beyond the statutory period.
k. Quarterly returns or statements of current assets filed by the Company for the sanction of working capital loans with banks or financial institutions are in agreement with the books of accounts.
In addition to the above, the Company from time to time is also engaged in proceedings pending with various authorities in the ordinary course of business. Judgement is required in assessing the range of possible outcomes for some of these matters, which could change substantially over time as each of the matters progresses depending on experience on actual assessment proceedings by the respective authorities and other judicial precedents. Based on its internal assessment supported by external legal counsel views, as considered necessary, the Company believes that it will be able to sustain its positions if challenged by the authorities and accordingly no additional provision / disclosures are required for these matters.
Management is of the view that above matters will not have any material adverse effect on the Company's financial position and results of operations.
The Board of Directors of the Company in their meeting held on February 09, 2024, considered and approved the proposed scheme of amalgamation ("scheme”) of the Company and Rane Engine Valve Limited with and into Rane (Madras) Limited, with effect from April 01, 2024 ('the appointed date') under sections 230 to 232 of the Companies Act, 2013, and other applicable sections and provisions of the Companies Act, 2013 read together with the rules made thereunder.
The aforesaid scheme is subject to the approval of shareholders and creditors of the respective companies, Stock Exchanges, National Company Law Tribunal and such other approvals as may be required.
Exceptional item represents the amount of INR 1.22 during the year ended March 31,2024, relating to proposed scheme of amalgamation.
Note 37 : Employee Benefit Plans
A. Defined contribution plans
The Company participates in a number of defined contribution plans on behalf of relevant personnel. Any expense recognised in relation to these schemes represents the value of contributions payable during the period by the Company at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior months contributions that were not due to be paid until after the end of the reporting period.
(a) Provident fund
I n accordance with the Employee's Provident Fund and Miscellaneous Provisions Act, 1952, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees salary.
The contributions, as specified under the law, are made to the Government.
(b) Superannuation fund
The Company has a superannuation plan for the benefit of its employees. Employees who are members of the superannuation plan are entitled to benefits depending on the years of service and salary drawn.
The Company contributes up to 15% of the eligible employees' salary to Life Insurance Corporation of India ('LIC') every year. Such contributions are recognised as an expense as and when incurred. The Company does not have any further obligation beyond this contribution.
The total expense recognised in profit or loss of INR 4.59 (for the year ended March 31, 2023 : INR 3.85) represents contributions payable to these plans by the company at rates specified in the rules of the plans. As at March 31,2024, contributions of INR 0.78 (as at March 31,2023 : INR 0.65) had not been paid. The amounts were paid subsequent to the end of the respective reporting periods.
B. Defined benefit plans
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees upon resignation, retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to Life Insurance
The current service cost and the net interest expense for the year are included in the 'Employee benefits expense' line item in the statement of profit and loss.
The remeasurement of the net defined benefit liability is included in other comprehensive income.
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate and expected salary increase. The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
Defined benefit liability and employer contributions
The Company expects to contribute an amount of INR 2.19 towards defined benefit plan obligations funds for year ending March 31,2025 in view of deficit in plan assets as at March 31,2024. The weighted average duration of the defined benefit obligation is 8.6 years (March 31,2023 - 9.4 years). The expected maturity analysis of undiscounted gratuity is as follows:
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components, and for which discrete financial information is available. All operating segments' operating results are reviewed regularly by the Company's Board of Directors who are considered to be Chief Operating Decision Maker ('CODM') to make decisions about resources to be allocated to the segments and assess their performance.
The Company is engaged in manufacture of brake linings, discpads, clutch facings, clutch buttons, brake shoes and railway brake blocks for transportation industry and CODM reviews the operating results as a whole for the purpose of making decision about resources to be allocated and assess its performance. The entire business operations are classified as a single business segment, namely components for transportation industry.
Entity wide disclosures:
The Company's revenues are attributed to the Company's country of domicile and other countries from where the Company derives revenues. Revenues have been disclosed based on the geographical location of customers. The Company has only one geographical location based on location of assets and hence information relating to carrying amount of segment assets and cost to acquire property, plant and equipment and other intangible assets based on location of assets have not been disclosed.
Note 1: The Company has not disclosed fair values of financial instruments such as investments in equity instruments, trade receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, other financial assets, trade payables and other financial liabilities, since their carrying amounts are a reasonable approximation of their fair values.
Note 2: Fair value of investment in mutual fund is determined based on Net Assets Value published by respective funds (Level 2 - Fair value hierarchy).
Note 3: Fair value of derivative instruments (forward contracts) is determined using quoted forward exchange rates at the reporting date and present value calculations based on high credit quality yield curves in the respective currencies.
There has been no transfers between level 1, level 2 and level 3 for the year ended March 31,2024 and March 31,2023.
Fair value measurement hierarchy
The company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data
B. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
a) Credit risk (see (ii) below);
b) Liquidity risk (see (iii) below); and
c) Market risk (see (iv) below).
i. Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring the Company's risk management policies. The committee reports regularly to the board of directors on its activities.
The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Company's audit committee oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
ii. Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily from trade receivables, investments and other financial assets.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of the Company's trade receivables and other financial assets. The Company enters into long term contracts with its customers whereby it mitigates the risk exposure on high risk customers. Outstanding customer receivables are regularly monitored and reviewed by the Audit committee periodically.
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate. The Company's trade receivables consists of a large number of customers, across geographies, hence the Company is not exposed to concentration risk.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. The Company has adopted a practical measure of computing the expected credit loss allowance for trade receivable which comprise large number of small balances, based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information including consideration for increased likelihood of credit risk. Further, the Company also makes an allowance for doubtful debts on a case to case basis.
(b) Investments
Investments include investments in power generation companies and mutual funds. The company maintains its investment in mutual funds with reputed banks. The credit risk on these instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.
(c) Cash and cash equivalents and bank balances other than cash and cash equivalents
The Company holds cash and cash equivalents and bank balances other than cash and cash equivalents with credit worthy banks and financial institutions as at the reporting dates. The credit risk on these instruments is limited because the counterparties are banks and financial institutions with high credit ratings assigned by international credit rating agencies.
(d) Other financial assets
Other financial assets comprises of deposits with statutory authorities, interest receivables, long term deposits, advances recoverable in cash and security deposits. The credit risk on these instruments is limited because the counterparties are predominantly Government.
iii. Liquidity risks
Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company's short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
iv. Market risks
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity, and other market changes. The Company's exposure to market risk is primarily on account of foreign currency risk.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily towards import payments and receipt of trade receivables.
Interest rate risk
The Company has only fixed rate financial assets (refer note 15). There are no variable rate instruments held by the Company. Offsetting financial assets and financial liabilities
The Company does not have any financial instruments that offset or are subject to enforceable master netting arrangements and other similar agreements.
Note 42 : Approval of Financial Statements
The financial statements were approved for issue by the Board of Directors on May 03, 2024. Material accounting policies 2
See accompanying notes forming part of the financial statements 2 - 42
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