A. 17. Provisions
Provisions are recognized in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, which is expected to result in an outflow of resources embodying economic benefits which can be reliably estimated. Each provision is based on the best estimate of the expenditure required to settle the present obligation at the balance sheet date. When appropriate, provisions are measured on a discounted basis.
Constructive obligation is an obligation that derives from a Company's actions where:
(a) by an established pattern of past practice, published policies or a sufficiently specific current statement, the Company has indicated to other parties that it will accept certain responsibilities; and
(b) as a result, the Company has created a valid expectation on the part of those other parties that it will discharge those responsibilities.
A. 18.Leases
The Company's lease asset classes primarily consist of leases for land and buildings. 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 April 1, 2019.
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 long term 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 INR 5,000 in value). The Company recognises the lease payments associated with these leases as an expense over the lease term.
A.19. Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, demand deposits with bank, and other short term highly liquid investments, with original maturities of 3 months or less.
Cash flow Statement:- Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities are segregated.
i) Cash Credit facilities are secured by hypothecation of Inventories & book debts of the company
ii) The company has taken a term loan during the year.The first drawal of Rs.40 Mn was received during the year. Term Loan is repayable in 54 installments. It carries an interest rate of Repo plus 3.5% p.a.with interest being reset at quarterly intervals and is secured by -
a) Primary Security: Hypothecation of fixed assets purchased using the term loan.
b) Collateral Security: Equitable Mortgage of Leasehold land situated at Baddi, Himachal Pradesh. The final instalment is payable in February 2029.
Hi) Term loan obtained under ECGLS amounting to Rs 1.79 Crores in December 2020 repayable in 36 monthly instalments commencing from November 2021. It carried an interest rate of 9.25% and was secured by hypothecation of current assets on second charge basis with 100% credit guarantee by NCGTC. The final instalment was payable in October, 2024. However, the term loan was fully repaid ahead of repayment schedule in March 2024. iv) There is no breach of Loan Agreements.
Performance Obligations:
a) The performance obligation is satisfied by transferring the promised good or service to a customer and the customer obtains controls over it.
b) The Company payment terms range from advance to 60 days.
c) The Company earns revenue primarily from Managed Printing Solutions and Services, Manufacturing and Distribution of Retail Billing Products as well as multi-functional printers and providing Digital Services like facilitation of GST return filing etc. to both enterprise and retail customers, across India.
d) The Company generally offers Standard warranties of 3 months to 12 months for its products sold.
e) The Company has applied the practical expedient given in Ind AS 115 available for performance obligation which is part of contract that has an original expected duration of one year or less with regard to disclosure of remaining performance obligation.
Note 24: Employee Benefit Plans
The Company provides to its employees following retirement benefits:
i) Leave Accrual
ii) Gratuity
Leave Accrual: The Company allows accumulation / encashment of leave. Such accumulation can be utilized by obtaining leave in the subsequent period employment or encashment at the time of separation. The obligation as on the balance sheet date is provided on the basis of actuarial valuation and is Rs 55.82 lakhs (Rs 45.86 lakhs as on 31 st March 2023)
Gratuity: The Company provides for gratuity for employees as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary for each completed year of service. The company accounts for gratuity benefits payable in the future based on the actuarial valuation and the company has taken out a policy with LIC of India in this regard to mitigate actuarial and liquidity risks.
The Company generally offers 3 months to 12 months warranties for its products. Management estimates the related provision for future warranty claims based on historical warranty claim information, as well as recent trends that might suggest that past cost information may differ from future claims. Provision is made for estimated warranty claims in respect of products sold which are still under warranty at the end of the reporting period.The Company has taken a specific contract where in addition to the regular warranty support, the Company has to replace the product during the life of the contract. Accordingly, an additional sum has been provided during the current year for the replacement
(ii) The Company is contesting claims under erstwhile Service Tax Law before Appellate authorities. The Company has disclosed these claims as contingent liabilities as it not practicable to assess the outcome of the proceedings. The company has made adequate provisions for all ascertained liabilities and the contingent claims does not have any adverse impact on the financial statement as at 31 st March 2024.
(iii) The E-Waste (Management) Rules 2022 and the erstwhile E-Waste (Management) Rules 2016 requires the Company to fulfill the Extended Producer Responsibility(EPR) targets which are measured based on sales made in the preceding years, if it is participant in the market during a financial year. Thus, participation in the market in a year constitutes the obligation event. The Rules permit the Company to purchase extended producer responsibility certificate from registered recyclers for the purpose of meeting the EPR targets and it is not practical for the company to estimate the timing of cash outflows, if any, in respect of such purchases in the future.
Note 30 : Accounting for Leases
The carrying value of the Right of Use assets and changes in the carrying value along with the depreciation are given in Note 2 relating to Property Plant and Equipment. The liabilities in respect of lease are reflected in Note 10(d).
Note 31 : Segment Reporting
For management purposes, the Company is organised into business units based on its products and services and has two reportable segments, as follows:
a) Partners business segment which is into distribution of traded and manufactured products and allied services through the Channel Partners/Dealers.
b) Enterprise business segment which serves the Enterprise customers for all their workplace productivity enhancing products and services.
This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet terms that contain financial instruments.
The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument is disclosed in Note 1 to the financial statements.
(i) Classification of Financial Assets and Liabilities
All financial assets and financial liabilities are valued at amortised cost.
(ii) Fair Value Hierarchy
There are no financial assets or liabilities of the Company, which, after their initial recognition, have been fair valued either during the year or in the previous year.
(iii) Financial Risk Management Policies and Objectives
The Company, in the course of its business, is exposed to a variety of financial risks, viz., market risk, credit risk and liquidity risk which can adversely impact the financial performance. The Company's endeavour is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The Company has a risk management policy that not only covers the foreign exchange risk but also other risks such as interest rate risk and credit risk which are associated with financial assets and liabilities.
A. Market Risk
Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from a change in the value of financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
B. Foreign currency exchange rate risk:
The fluctuations in foreign currency exchange rate may have a potential impact on the statement of profit and loss and equity. This arises from transactions entered in foreign currency and assets/liabilities which are denomindated in a currency other than the functional currency of the Company.
The Company imports raw materials, traded goods, consumables etc and such transactions are denominated in US Dollars. The Company does not take major exposure in any other foreign currency. The Company also exports goods which are billed in US dollars.The Company has a hedging policy approved and reviewed by the Board of Directors to mitigate its risks. As part of the hedging policy, the Company concludes forward contracts at regular intervals to mitigate the risk. Details of foreign currency exposure in USD are as follows:
C. Credit risk
Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk covers both the direct risk of default and the risk of deteroriation of creditworthiness as well as concentration risks.Trade receivables constitute the financial instruments that are exposed to credit risk. The Company's policy is to deal only with creditworthy counterparts. The Company management considers that all the financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due. None of the Company financial assets are secured by collateral or other credit enhancements.
The Company's capital management is intended to maximise the return to shareholders for meeting the long-term and short-term goals of the Company through the optimization of the debt and equity balance.
The Company determines the amount of capital required on the basis of annual and long-term operating plans and strategic investment plans. The funding requirements are met through equity and long-term/short-term borrowings. The Company monitors the capital structure on the basis of Net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.
For the purpose of capital management, capital includes issued equity capital, securities premium and all other reserves attributable to the equity shareholders of the Company. Net debt includes all long and short-term borrowings as reduced by cash and cash equivalents.
i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property
ii) The Company has not traded or invested funds in Crypto currency of Virtual currency.
iii) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of 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.
iv) The Company has not received any fund from any person(s) or entity(ies), including foreign entities(Funding Party) with the understating (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) The Company has not declared wilful defaulter by any bank of financial institution of other lender.
vi) The Company does not have any such transaction which is not recorded in books of account that has been surrendered or disclosed as income during the year in the tax assessments (such as, search or survey or any other relevant provisions) under Income Tax Act, 1961.
vii) The Company is in compliance with the requirement of Section 2(87) of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017.
viii) Disclosure as per section 186 of 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:
(i) There are no investments made by the Company
(ii) There are no loan given by the Company and guarantees issued as at March 31, 2024
(ix) The Company does not have any balances with companies struck off under section 248 of The Companies, 2013 to the best of knowledge of Company's Management excepting for one transaction given below:-
Note 39 :Previous Year figures have been regrouped / rearranged wherever necessary to conform to the current year presentation.
As per our report of even date attached For and on behalf of the Board of Directors of WeP Solutions Limited
For Guru & Jana
Chartered Accountants
ICAI Firm Registration No.006826S Shankar Jaganathan AshokTripathy
Director Managing Director & CEO
DIN:02121024 DIN:09564236
Heena Kauser A P Sandeep Kumar Goyal
Partner Executive Director & CFO
Membership No.: 219971 DIN: 03023842
Place: Bengaluru Place: Bengaluru
Date : May 25, 2024 Date : May 25, 2024
UDIN : 24219971BKCLQ11298
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