The Dividend amount of Rs. 20.57/- Lakhs excluded from total dividend payment as it was deposited into RSL bank account which has been merged in the Company account.
Nature & purpose of reserves
i) General Reserves :
General Reserve represents the statutory reserve, this is in accordance with Indian Corporate Law wherein a portion of profit is apportioned to general reserve. Under Companies Act, 1956 it was mandatory to transfer the amount before a company can declare dividend. However under Companies Act 2013 ("the Act"), transfer of any amount to general reserve is at the discretion of the Company.
ii) Retained Earnings :
Retained Earnings represents undistributed profits of the Company which can be distributed to its equity shareholders in accordance with the requirement of the Act.
iii) Other Comprehensive Income (OCI) Reserves :
Other Comprehensive Income (OCI) Reserve represent the balance in equity for items to be accounted in OCI. OCI is classified into (i) items that will not be reclassified to profit and loss, and (ii) items that will be reclassified to statement of profit and loss.
iv) Foreign Curreny Translation Reserve :
Exchange differences relating to the translation of results and net assets of the Company's foreign operations from their functional currencies to the Company's presentation currency (i.e. Rupees) are recognised directly in the other comprehensive income and accumulated in foreign translation reserve. Exchange difference previously accumulated in the foreign currency trnslation reserve are reclassified to profit or loss on the disposal of the foreign operation.
Company has taken office & residential premises on lease. These are accounted as per IND AS 116 & the Management has considered all relevant facts and circumstances to classify some of the leases into short term and recognise the lease payments associated with those leases on straight-line basis over the lease term.
The Company along with Tridhaatu Realty Infra Private Ltd (Tridhaatu) formed an Association of Persons (AOP) namely Panchtatva Realty for constructing a residential building in Chembur, Mumbai and made an investment of Rs. 2,000 Lakhs in the AOP. Out of its entitlement of 64,000 square feet, the Company sold 10,795 square feet to the AOP member - Tridhaatu vide Deed of Modification dated December 17, 2015. The Company's entitlement is limited to above mentioned built up area only and no other economic benefits and hence not construed asJoint Venture. The valuation of the capital contribution in Panch Tatva Realty had been conducted by an independent valuer as on January 2024 and the market value estimated at Rs.4,360 Lakhs. Till the construction/ development of the property, no rental income shall accrue to the Company other than disposal of the entitlement. There is no restriction on the realisability of investment property or the remittance of income and proceeds of disposal. Investment property is not subject to any depreciation till construction / development of the said property.
(iv) Rights, preferences and restrictions attached to equity shares
a) The Company has one class of equity shares having par value of Rs 10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the equity shareholders will be entitled to receive any of the remaining assets of the company in proportion to the number of equity shares held by the sharholders, after distribution of all preferential amounts.
b) During the year ended March 31,2024 the amount of dividend per share distributed to equity shareholder was Rs. 5/- For the year ended 31 March, 2023. (FY2022-23 Rs. NIL for the year ended 31 March 2022.)
c) Pursuant to the Scheme of Arrangement the Company has issued shares to the shareholders of the merged entity against cancelled share as per the Scheme for consideration other than cash. Apart from this no others share was issued for consideration other than cash in the preceding five years.
(v) As per the Scheme of Arrangement, the authorised share capital of the Company has been increased by 70,00,000 equity shares of Rs 10/- each totalling Rs. 700 Lakhs vide board resolution dated 10-07-2023. Necessary forms have been filed and approved by ROC. The Memorandum of Association and Articles of Association of the Company will be amended accordingly.
(vi) Note:- Due to non- Dematerialisation of shares of the shareholders of Renaissance Advanced Consultancy Limited (RACL) by National Security Depository Limited(NSDL), the NSDL portal shows RACL as Promoter and shareholder of the Company. However as per the Scheme of Arrangement, RACL which holds 22,25,953 shares (72.57%)of the Company, cease to exist w.e.f. 1st April,2022 However, the Company has submitted the list of shareholders along with their respective shareholding to the Registrar of Companies as on 15-02-2024, but these shares have not been dematerilised by the National Security Depository Limited(NSDL) as on 31st March 2024. As on date, some of the shares held by the shareholders are still pending for Dematerialisation due to some operational reason. Information about the above Promoter Shareholding and shareholders holding more than 5% has been extracted from the list of shareholders submiited to the ROC.
Nature & purpose of reserves
i) General Reserve :
General reserve represents the statutory reserve, this is in accordance with Indian Corporate Law wherein a portion of profit is apportioned to general reserve. Under Companies Act, 1956 it was mandatory to transfer the amount before a company can declare dividend. However under Companies Act 2013 ("the Act"), transfer of any amount to general reserve is at the discretion of the Company.
ii) Retained Earnings :
Retained earnings represents undistributed profits of the Company which can be distributed to its equity shareholders in accordance with the requirement of the Act.
iii) Other Comprehensive Income (OCI) Reserves :
Other comprehensive income (OCI) reserve represent the balance in equity for items to be accounted in OCI. OCI is classified into (i) items that will not be reclassified to profit and loss, and (ii) items that will be reclassified to statement of profit and loss.
iv) Foreign Curreny Transaltion Reserve :
Exchange differences relating to the translation of results and net assets of the Company's foreign operations from their functional currencies to the Company's presentation currency (i.e. Rupees) are recognised directly in the other comprehensive income and accumulated in foreign translation reserve. Exchange difference previously accumulated in the foreign currency trnslation reserve are reclassified to profit or loss on the disposal of the foreign operation.
v) Capital Reserve :
Created pursuant to a Scheme of Amalgamation between the Company and Renaissance Advanced Consultancy Limited, (RACL), Renaissance Stocks Limited (RSL) and Semac Consultants Private Limited ("SCPL") with the Company wide order of the Honourable National Company Law Tribunal (NCLT) on June 21, 2023. (Refer note 42)
vi) Capital Redemption Reserve :
Capital Redemption Reserve is created for an amount equivalent to the nominal value of shares redeemed during the year (Due to schemes of amalgamations / mergers with the Company). (Refer note 42)
The Working Capital Limits (Overdraft of ' 50 lakhs and Non Fund based of ' 2,950 lakhs) were sanctioned from ICICI Bank Ltd and (Overdraft of ' 1,000 lakhs and Non Fund based of ' 5,400 lakhs) were sanctioned from HDFC Bank Ltd.
Security
1. Paripassu charge on the entire current asset of the Company both present and future.
2. Created a charge on FDR amounting to ' 1500 lakhs in case of ICICI Bank (50% of 3000 Lakhs i.e. Rs. 25 lacs FD against Overdraft & Rs. 1475 lakhs FD for Bank Guarantee - Financial & Performance and FDR of ' 1348 Lakhs (50% ) in case of HDFC Bank.
Terms of repayment of loan, repayment of loan and rate of interest thereon
Working Capital loan from ICICI Bank and HDFC Bank is repayable on demand and it carries interest rate of 10.50% (Repo rate 6.50% plus Spread 4% ) and 9.18% (Repo rate 6.50% plus Spread 2.68% ) respectively.
There is no default in payment of interest during the year. Since, as at March 31, 2024 the overdraft accounts have debit balances therefore classified under Cash & Cash Equivalents.
Note - M/s Atotech Development Center P. Ltd had filed an application under section 9 of the Arbitration and Conciliation Act, 1996 against the work order no ATO/GUR/FEE/1516/076 of Rs. 1,17,37,823/-, seeking interim protection against Semac Consultants Private Limited.
In View of the Management, based on legal advice, there is no possible liability other than above. Any claim / liability to the Company will be recognized on ascertainment / finality of order.
We have deposited 50% margin money against BG to bank.
34. Segment Information
(i) General Disclosure
The company operates mainly in one business segment viz. engineering, consultancy for commercial and industrial projects being primary segment and all other activities revolve around the main activity.The company operates in India, so there is only one geographical segment.
The above reportable segments have been identified based on the significant components of the enterprise for which discrete financial information is available and are reviewed by the Chief operating decision maker (CODM) to assess the performance and allocate resources to the operating segments.
(ii) Information about major customers:
Out of total revenue the 75% of revenue earned from major four customers
35. Employee Benefits - Refer note no 15 & 17
Defined Contribution Plan :
The Provident Fund is a defined contribution scheme whereby the Company deposits an amount determined as a fixed percentage of basic pay with the Regional Provident Fund Commissioner.
Defined Benefit Plans
Gratuity (being partly funded) is computed as 15 days salary, for every recognized retirement/ termination / resignation. The Gratuity plan for the Company is a defined benefit scheme where annual contributions as per actuarial valuation are charged to the Statement of Profit and Loss.
The Company also has a Leave Encashment Scheme with defined benefits for its employees. The Company makes provision for such liability in the books of accounts on the basis of year end actuarial valuation. No fund has been created for this scheme.
For summarizing the components of net benefit expense recognized in the Statement of Profit And Loss and the funded status and amounts recognized in the Balance Sheet for the respective plans, the details are as under
38. Financial Risk Management Financial Risk Factors
The Company's operational activities are exposed to various financial risks i.e. market risk, credit risk and risk of liquidity. The Company realizes that risks are inherent and integral aspect of any business. The primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Company's senior management oversees the management of these risks and devises appropriate risk management framework for the Company. The senior management provides assurance that the Company's financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives.
A. Market Risk :
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed to the risk of movements in interest rates and foreign currency exchange rates that affects its assets, liabilities and future transactions. The Company is exposed to following key market risks:
i Interest Rate Risk :
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's borrowing obligations.
ii 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 to the Foreingn trade receivables and payables.
B. Credit Risk:
Credit Risk is the risk that a counter party 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 and from its financing activities, including deposits and other financial instruments
To manage this, Company periodically assesses the financial reliability of customers, taking into account factors such as credit track record in the market and past dealings with the Company for extension of credit to customer Company monitors the payment track record of the customers. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each quarter end on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets as discussed below. The Company evaluates the concentration of risk with respect to trade receivables as low, the trade receivables are located in several jurisdictions and operate in largely independent markets.
Credit risk from balances with Banks and Financial Institutions is managed by the Company's treasury department in accordance with the Company's policy. Investments of surplus funds are made only with approved authorities. Credit limits of all authorities are reviewed by the management on regular basis. All balances with Banks and Financial Institutions is subject to low credit risk due to good credit ratings assigned to the Company. The Company's maximum exposure to credit risk for the components of the Balance Sheet at March 31, 2024 and March 31, 2023 is the carrying amounts.
C. Liquidity Risk:
The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company's cash flow is a mix of cash flow from collections from customers on account of engineering services. The other main component in liquidity is timing to call loans/ funds and optimization of repayments of loans installment, interest payments.
Following are the maturities of financial liabilities of the Company for the year end.
Contractual maturities of financial liabilities as at March 31, 2024
39. Financial Instrument - Disclosure
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at fair value. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard.
Fair value Hierarchy
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
40. Capital Management
For the purpose of the Company's capital management, equity includes issued equity capital, securities premium and all other equity reserves attributable to the equity shareholders and net debt includes interest bearing loans and borrowings less current investments and cash and cash equivalents. The primary objective of the Company's capital management is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, non-current borrowings and current borrowings. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.
In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
42 Composite Scheme of Arrangement
The Board of Directors ("Board") of the REL, RACL, RSL, RCSL,RCCL & SCPL at their respective board meetings considered and taking on record the Composite Scheme of Arrangement (the "Scheme") approved by the Hon'ble National Company Law Tribunal,Chennai Bench (NCLT) on June 21,2023 under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules thereunder. The appointed date is April 1, 2022 as per scheme.
As per the Composite Scheme of Arrangement, the Authorised Share Capital of the Company has been increased by 70,00,000 equity shares of Rs 10/- each totalling Rs. 700 Lakhs vide board resolution dated 19-07-2023 being the authorised share capital of RACL, RSL and SCPL. The Memorandum of Association and Articles of Association of the Company has been amended accordingly.
In accordance with the terms of the Scheme, the minority shareholders of the company will receive 1 equity share of the Company (face value of 10 each) for every 1 equity share (face value of 10 each), held by them as on record date. Allotment of 50365 equity shares to the minority shareholder will be made. As a result, paid up capital of the Company will get increased by 50365 equity shares. (Refer note 12.1)
In accordance with the Scheme, all assets, liabilities, employees and the business undertaking of SCPL and the remaining business of RACL and RSL were vested and transferred to the Company w.e.f. the appointed date and RACL, RSL and SCPL cease to exist from the date of filing of the approved NCLT order with respective Registrar of Companies.
The amalgamation of RACL (post demerger of commodity business), RSL & SCPL has been recorded in the financial statements using the pooling of interest method as specified by Appendix C to Ind AS 103 'Business Combination', common control Business combination regarding transfer of certain assets, liabilities and businesses, between entities within the group.. The accounting treatment followed by the Company is in accordance with the accounting treatment specified in the approved Scheme. For the purpose of the financial statements, the amalgamation has been recorded from the appointed date of April 1, 2022. The accounting treatment followed by the company is as follows:
a) Assets, liabilities and reserves relating to RACL,RSL & SCPL as appearing in the financial statements of these companies have been transferred and vested in the Company and has been recorded at the book values. The financial information in the financial statements in respect of previous year has been Revised as per the scheme of arrangement from the beginning of the previous year in the financial statements, irrespective of the actual appointed date as per scheme.
b) The amount of any inter-company balances between RACL,RSL & SCPL and the Company stand cancelled.
c) The accounting policies followed by RACL, RSL & SCPL are aligned and have been adjusted for any differences, wherever applicable.
d) In accordance with Appendix C to Ind As 103 "Business Combination" the merger has been given effect as if it has occurred from the beginning of the preceding period (i.e. 1st April 2021) in the revised standalone financial statements after restating the comparative figures.
e) The surplus/ deficit arising i.e. the net assets transferred being more/less than general reserve or retained earnings, has been reflected as capital reserve for the followings:
(i) the book values of assets over the values of liabilities and reserves taken over on amalgamation;
(ii) Face value of equity shares to be issued to the minority shareholders of SCPL; and
(iii) after considering adjustments for elimination of intercompany balances
43 Compliance with approved Scheme(s) of Arrangements
The Board of Directors ("Board") of RACL, RSL ,RCSL, RCCL & SCPL and of the Company at their respective meetings held on November 12, 2021 considered and approved a Composite Scheme of Arrangement (the "Scheme") in relation to RACL,RSL,RCSL,RCCL & SCPL with the Company under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules thereunder. The Scheme was approved by the National Company Law Tribunal (NCLT) on 14th June 2023 with appointed date as 1st April 2022 and the Company has received certified copy of final order dated 21st June 2023. (Refer note 42)
44 Pursuant to the Composite Scheme of Arrangement, Managerial remuneration and compliances relating to drilling business, if any, has been vested with the demerged undertaking in the previous year.
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