(w) Contingent liabilities
A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodyingeconomic benefitswiU be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the standalone financial statements.
(x) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. The effects of anti-dilutive potential equity shares are not considered in calculating dilutive earnings per share.
(y) Segment reporting
In accordance with Ind AS 108, Operating segments, segment information has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.
New and amended standards
Ministry of Corporate Affairs ("MCA") has notified the following new amendments to Ind AS which the company has applied beginning April 1,2023:
Amendment to Ind AS 1 "Presentation of Financial Statements"
The amendment requires the Company to disclose material accounting policies rather than significant accounting policies. Accounting policy information is material if, together with other information can reasonably be expected to influence decisions of primary users of financial statements. The amendment had an impact on the Company’s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Company’s standalone financial statements.
Several other amendments and interpretations apply for the first effective April 1,2023, but do not have an impact on the standalone financial statements of the Company. There are no standards that are notified and not yet effective as on the date.
Nature and purpose of reserves
17.1 Capital reserve
The Company recognised capital subsidy received (T 4.58 Million) prior to April 1,2017 alongwith profit on forfeiture of the Company's own equity instruments (T 0.55 Million) to capital reserve.
17.2 Capital redemption reserve
The Company recognised capital redemption reserve on redemption of Preference shares of erstwhile Phoenix Lamps Limited and upon merger of Phoenix Lamps Limited with the Company, the balances have been brought as such to the Company. Further, duringtheyear ended March 31,2022, the Company recognised capital redemption reserve (T 1.50 Million) on buy back of equity shares.
17.3 Securities premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
17.4 General reserve
Under the erstwhile Companies Act, 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of the Companies Act, 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements ofthe Companies Act, 2013.
17.5 Share based payments reserves
Share based payments reserves represents employee share based expense recognised in fair valuation of option expenses on ESAR.
37. The Company has entered into ‘International transactions’ with ‘Associated Enterprises' which are subject to Transfer Pricing regulations in India. The Company is in the process of carrying out transfer pricing study for the year ended March 31,2024 in this regard, to comply with the requirements of the Income Tax Act, 1961. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at arm’s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the standalone financial statements, particularly on account of tax expense and that of provision for taxation.
38. Employee benefit plans
(a) Defined contribution plans
The Company makes contributions to Provident Fund, Employee State Insurance scheme contributions which are defined contribution plan for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.
42. (iii) Valuation technique used to determine fair value
a) The Company holds derivative financial instruments such as foreign currency forward and options contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace. Hence, the valuation is considered Level 2 by the management.
b) The Company has investment in quoted mutual funds/ bonds. The investments other than investment in subsidiaries are carried at fair value through profit and loss using quoted prices in active markets and accordingly classified within Level 1 of the valuation hierarchy.
43. Capital managem ent
The primary objective of the Company's capital management is to ensure that it maintains a strong credit rating and capital ratios in order to ensure sustained growth in the business and to maximise the shareholders value.
(i) The Company is predominantly equity financed as evident from the capital structure table above. Further the Company has sufficient cash and cash equivalents, current investments and financial assets which are liquid to meet the debts.
(ii) 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 borrowings that define capital structure requirements. The breaches in meeting the financial covenants would permit the bank to immediately call borrowings. There have been no breaches in the financial covenants of any borrowings in the current year.
44. Financial risk management Objective and policies:
"The Company’s principal financial liabilities comprise borrowings, lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include loans, Investment in mutual funds and bonds, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:"
(i) 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. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, fair value through profit and loss investments and derivative financial instruments.
The sensitivity analysis in the following sections relate to the position as at March 31,2024 and March 31,2023.
The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant and on the basis of hedge designations in place at March 31,2024.
(i) (a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash Hows of the Company's financial instruments will fluctuate due to change in the market interest rates. The Company's exposure to the risk of changes in market interest rate relates primarily to the Company's borrowings with floating interest rates.
The Company enters into contracts with financial institutions in nature of interest rate swap, to mitigate the risk of changes in interest rates in respect of its borrowings.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant. The impact on entity's profit before tax due to change in the interest rate/ fair value of financial liabilities are as
hpIruA/*
(i) (b) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash Hows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exchange risk arises from its foreign operations and foreign currency revenues and expenses . The Company has exposures to United States Dollars ('USD'), Great Britain Pound (‘GBP’), Euro ('EUR') and other currencies. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities.
(ii) Credit risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract leading toa financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from itsfinancing activities including deposits with banks and financial institutions, investments, loan to subsidiary, foreign exchange transactions and otherfinancial instruments.
a. Trade receivables
Credit risk is managed by each business unit as per the Company’s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored.
The impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogeneous 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. The Company does not hold collateral as security.
b. Credit risk exposure
The Company’s credit period generally ranges from 0-365 days. The credit risk exposure of the Company is as bel ow:
The Company evaluates the concentration of risk with respect to trade receivables as low, since majority of its customers are reputed automobile companies and are spread across multiple geographies.
c. Financial instruments and cash deposits
Credit risk is limited, as the Company generally invests in deposits with banks with high credit ratings assigned by international and domestic credit rating agencies. Investment primarily includes investment in liquid mutual fund units and bonds. Counterparty credit limits are reviewed by the Company periodically and the limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.
(iii) Liquidity risk
The Company’s principal sources of liquidity are cash and cash equivalents, investment in mutual funds, bonds and the cash How that is generated from operations. The Company believes that the cash and cash equivalents is sufficient to meet its current requirements. Accordingly no liquidity risk is perceived.
45. Employee Stock Appreciation Rights ('ESAR') (Equity Settled):
Employee Stock Appreciation Rights Plan-2017 (the ESAR 2017 Plan): effective june 26,2018, the Company instituted the ESAR 2017plan. The Board of directors of the Company and shareholders approved the ESAR 2017 plan at its meeting held on September 13, 2017 and November 11, 2017 respectively. The ESAR 2017 Plan provides for the issue of stock appreciation rights (SARs) to certain employees of the Company and its subsidiaries.
The ESAR 2017 Plan is administered by the Nomination and Remuneration Committee. As per the ESAR 2017 Plan, the stock appreciation rights are granted at the exercise price of ^ 1 /-. The equity shares covered under these stock appreciation rights vest over five years from the date of grant. The exercise period is five years from the respective date of vesting.
Note:
a) Increase in interest rate on loan to subsidiary and yield on investment in mutual funds.
47. Events after the reporting period
Subsequent to the year ended March 31,2024 Suprajit USA Inc has set up its wholly owned subsidiary in Germany for meeting the operational requirements. The Company is in the process of registering the change name to Suprajit Germany GmbH.
48. The Board of Directors of the Company have proposed final dividend of ^ 1.40 per share after the balance sheet date which is subject to approval by the shareholders at the annual general meeting.
49. Other statutory information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Group for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,
(iv) The Company has not traded or invested in Crypto currency orVirtual Currencyduringthe financial year.
(v) Except as disclosed in note 10 to the standalone financial statements, 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 anyguarantee, security orthe like to or on behalf ofthe Ultimate Beneficiaries"
(vi) 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 Group shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Party (Ultimate Beneficiaries) or
(b) provide anyguarantee, security orthe like on behalf ofthe Ultimate Beneficiaries,
vii)The Company has used 3 accounting software for maintaining its books of account which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the accounting software, except that audit trail feature is not enabled for certain changes made using privileged/ administrative access rights to the aforesaid accounting software i.e. Oracle, SAP and Peopleworks. Further no instance of audit trail feature being tampered with was noted where audit trail has been enabled.
The management is taking steps to ensure that the books of account are maintained as required under the applicable statute.
(viii)The Company has no such 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).
As per our report of even date For and on behalf of the Board of Directors of
Suprajit Engineering Limited
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
K Ajith Kumar Rai Mohan Srinivasan Nagamangala
Chairman Managing Director &
per Rajeev Kumar Din: 01160327
Partner DIN: 01916468
Membership No.: 213803
Medappa Gowda J Chief Financial Officer &
Company Secretary
Place : Bengaluru Place : Bengaluru
Date : May 29, 2024 Date : May 29, 2024
|