3.11 Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a legal or constructive obligation as a result of past events and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are not recognised for future operating losses. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
Contingent liabilities are not recognized and are disclosed by way of notes to the standalone financial statements when there is a possible obligation arising from past events, the existence of which 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 when there is a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the
same or a reliable estimate of the amount in this respect cannot be made.
Contingent assets are not recognised but disclosed in the Standalone Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
3.12 Employee Benefits
Employee benefits are accrued in the year in which services are rendered by the employees. Short term employee benefits are recognized as an expense in the statement of profit and loss for the year in which the related service is rendered.
(i) Gratuity (Defined Benefit Plan) : The Company has a Gratuity Fund administered by the Trustees, which is independent of the Company's finance. The liability in respect of Gratuity has been determined by actuarial valuation following Projected Unit Credit Method.
(ii) Leave Encashment : According to the prevailing practice of the Company, the employees are allowed to enjoy the leave within the year. No encashment of leave is allowed.
iii) Provident Fund (Defined Contribution Scheme) : Accounted for on accrual basis based on the monthly contribution made to the appropriate authorities.
3.13 Recognition of Dividend and Interest Income
"Revenue is recognised to the extent it is probable that the economic benefits will low to the Company and the revenue can be reliably measured. Dividend Income is recognised when the Company's right to receive the payment is established. Under Ind AS 109, interest income is recorded using the Effective Interest Rate (EIR) method for all financial instruments measured at amortised cost. The EIR is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument or, when appropriate, a shorter period, to the net carrying amount of the financial asset. The EIR (and therefore the amortised cost of the asset) is calculated by taking into account any discount or premium on acquisition, fees and costs that are an integral part of the EIR."
3.14 Leases As a lessee
"A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company's lease asset class primarily consist of leases
for Land. At the inception of the contract, Company assess whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) Company has substantially all of the economic benefits from the use of the asset through the period of the lease and
(iii) Company has the right to direct the use of the asset.
At the date of commencement of the lease, Company recognizes a right-of-use asset (""ROU"") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low-value leases. For these short-term or low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date of the lease plus any initial direct cost less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses. Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities include these options when it is reasonably certain that they will be exercised. The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option. On the Balance Sheet, ROU assets have been included in property, plant and equipment and lease liabilities have been presented separately."
3.15 Taxes on Income
Income tax expense representing the sum of current tax expense and the net charge of the deferred taxes is recognized in the income statement except to the extent that it relates to items recognized directly in equity or other comprehensive income.
Current tax is provided on the taxable income and recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates
and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Standalone Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
3.16 Earnings Per Share
Basic earnings per share are computed by dividing the net profit attributable to the equity shareholders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit attributable to the equity shareholders of the company by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
4 Critical accounting judgments, assumptions and key sources of estimation and uncertainty
The preparation of the standalone financial statements in conformity with the measurement principle of Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the standalone financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are
made as management becomes aware of changes in circumstances surrounding the estimates. Differences between the actual results and estimates are recognized in the year in which the results are known / materialized and, if material, their effects are disclosed in the notes to the financial statements.
Application of accounting policies that require significant areas of estimation, uncertainty and critical judgments and the use of assumptions in the financial statements have been disclosed below. The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below:
4.1 Depreciation and impairment on property, plant and equipment and investment property
Property, plant and equipment are depreciated on straight-line basis over the estimated useful lives in accordance with Schedule II of the Companies Act, 2013, taking into account the estimated residual value, wherever applicable.
The company reviews its carrying value of its Tangible Assets and Investment Property whenever there is objective evidence that the assets are impaired. In such situation Asset's recoverable amount is estimated which is higher of asset's or cash generating units (CGU) fair value less cost of disposal and its value in use. In assessing value in use the estimated future cash lows are discounted using pre-tax discount rate which reflect the current assessment of time value of money. In determining fair value less cost of disposal, recent market realisations are considered or otherwise in absence of such transactions appropriate valuations are adopted. The Company reviews the estimated useful lives of the assets regularly in order to determine the amount of depreciation and amount of impairment expense to be recorded during any reporting period. This reassessment may result in change estimated in future periods.
4.2 Current Tax and Deferred Tax
"Significant judgment is required in determination of taxability of certain income and deductibility of certain expenses during the estimation of the provision for income taxes.
Deferred tax assets are recognised for unused losses (carry forward of prior years' losses) and unused tax credit to the extent that it is probable that taxable profit would be available against which the losses could be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies."
4.3 Defined Benefit Obligations (DBO)
Critical estimate of DBO involves a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate, anticipation of future salary increases, etc as estimated by Independent Actuary appointed for this purpose by the Management. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
4.4 Provisions and Contingencies
"Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change.
Management judgment is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/litigations/ against the Company as it is not possible to predict the outcome of pending matters with accuracy.
The carrying amounts of provisions and liabilities and estimation for contingencies are reviewed regularly and revised to take account of changing facts and circumstances."
7.3 Loans given to wholly owned subsidiary, Alfred Herbert Limited, had been considered as a loss asset as per the prudential guidelines issued by the Reserve Bank of India ("the Guidelines") and accordingly written off during the previous year. The equivalent amount of provision for doubtful assets made in this respect in earlier years had been written back and disclosed under the head "Other income (note no. 24) in the standalone financial statements. Further, no interest has been accrued against the said loan considering the above Guidelines.
During the current year, the Company has given further loan of ? 0.55 Lakhs to the said subsidiary company which, as per the above Guidelines, has been written off during the year and disclosed under "Impairment on financial instruments (note no. 26)" in the standalone financial statements.
e) The Company has elected an irrevocable option to designate its investment in equity instruments (other than investment in subsidiary companies) through FVTOCI, as these investments are not held for trading and the Company continues to invest in these securities on long-term basis. This includes investments made in equity of the companies which are leaders in their respective sectors and the Company believes that these investments have potential to remain accretive over the long-term.
f) The Company's investments in unquoted equity shares have been valued based on latest available audited financial statements.
g) Out of the total dividend recognised during the year from investment in equity instruments designated at FVTOCI, Nil (March 31, 2023- Nil) is relating to investments derecognised during the period and ? 35.13 Lakhs (March 31, 2023- ? 35.39 Lakhs) pertains to investments held at the end of the reporting period (Also refer note no. 22).
h) During the year, equity shares of Nestle India Limited have been split in the ratio of 1:10 resulting in increase in number of shareholding in the said company from 540 equity shares of ? 10 each in the previous year to 5,400 equity shares of ? 1 each as on March 31,2024.
32. Contingent Liabilities and Commitments (to the extent not provided for)
(a) Contingent Liabilities
The Company has since received a demand towards increase in rent (including applicable duties and taxes) aggregating to ? 49.47 Lakhs from Syama Prasad Mookerjee Port Kolkata- Estate Division in respect of one of its premises taken on lease from them. The liability towards rent as invoiced as per the lease agreement has been recognised and paid by the Company. The matter has been taken up with the Port Trust Authorities and pending final resolution of the matter, no further liability in this respect is expected to materialise.
The Company did not have any pending litigations as on March 31, 2023.
(b) Commitments
(i) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance)- Nil (March 31,2023- Nil)
33. Disclosures as required by Indian Accounting Standard 37 "Provisions, Contingent liabilities and Contingent assets" Contingent Asset
A contingent asset is a possible asset 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 entity. During the normal course of business, unresolved claims remain outstanding. The inflow of economic benefits, in respect of such claims cannot be measured due to uncertainties that surround the related events and circumstances.
(ii) Risks related to defined benefit plans:
The major risks to which the Company is exposed in relation to defined benefit plans are:
(a) Interest rate risk
The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability.
(b) Salary risk
Higher than expected increases in salary will increase the defined benefit obligation.
40. Financial instruments- Accounting, Classification and Fair value measurements
(B) Fair value hierarchy
The fair value of the financial assets and financial liabilities are included at an amount at which the instrument could be exchanged in an orderly transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
(i) Fair value of cash and cash equivalents, other bank balances, other financial assets and other financial liabilities approximate their carrying amounts due to the short-term maturities of these instruments.
(ii) Investments (other than investments in subsidiary companies) which are quoted in active market are fair valued at the reporting date based on the prevailing quote. Investment in unquoted equity shares have been valued based on the latest available audited financial statements. Investment in mutual fund are measured using NAV at the reporting date.
The Company uses the following fair value hierarchy for determining and disclosing the fair value of financial instruments: 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 or indirectly.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
The following table provides the fair value hierarchy of the Company's assets and liabilities measured at fair value on a recurring basis:
Financial assets measured at fair value on a recurring basis
41 Financial risk management- objectives and policies
The Company's principal financial liabilities includes lease liabilities and other financial liabilities and principal financial assets include investments, cash and cash equivalents, other bank balances and other financial assets.
The Company is exposed to credit risk, liquidity risk and market risk. The Company's senior management under the supervision of Board of Directors oversees the management of these risks. The Company's financial risks 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 or uncertainty arising from possible market fluctuations resulting in variation in the fair value or future cash lows of a financial instrument. The major components of market risks are currency risk, interest rate risk and other price risk. Financial instruments affected by market risk includes investments, other receivables and payables.
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash lows of an exposure will fluctuate because of changes in foreign exchange rates. The Company does not have any foreign currency and accordingly, is not subjected to such risk.
(ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash lows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company does not have any financial assets or financial liabilities bearing floating interest rates, any change in the interest rates at the reporting date would not have any significant impact on the standalone financial statements of the Company.
(iii) Other price risk
The Company is exposed to equity price risk arising from investments held by the Company and classified in the Balance Sheet at fair value through other comprehensive income.
To manage its price risk arising from investment in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.
The majority of the Company's equity investments are listed on the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE) in India.
Sensitivity analysis- equity price risk
The table below summarises the impact of increase/ decrease of the index on the Company's equity and total comprehensive income for the year. The analysis is based on the assumption that the equity/ index had increased by 2% or decreased by 2% with all other variables held constant, and that all the Company's equity investments moved in line with the index.
Other components of equity would increase/ decrease as a result of gain/ losses on equity securities classified as fair value through other comprehensive income.
The Company's exposure in subsidiary companies are carried at cost and these are subject to impairment testing as per the policy followed in this respect.
(b) Credit Risk
Credit risk is the risk that a customer or 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 loans). The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Company periodically assesses the financial reliability of amounts outstanding, taking into account the financial conditions, current economic trends.
The carrying amount of respective financial assets recognised in the standalone financial statements represents the Company's maximum exposure to credit risk.
The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of doubtful loans. Receivables are reviewed/ evaluated periodically by the management and appropriate provisions are made to the extent recovery there against has been considered to be remote.
The credit risk on cash and cash equivalents are insignificant as counterparties are banks with high credit ratings.
(c) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company's objective is to maintain optimum level of liquidity to meet its cash and collateral requirements at all times. The Company relies on internal accruals to meet its fund requirement.
Liquidity Risk Tables
The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash lows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash lows as at balance sheet date:
42 Capital management (a) Risk management
The primary objective of the Company's capital management is to ensure that it maintains a healthy capital ratio in order to support its business and maximise shareholder value. The Company's objective when managing capital is to safeguard their ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stake holders. The Company is focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings.
47. The Company, neither had any transactions during the years ended March 31, 2024 and March 31,2023 with companies, which have been struck off by the Registrar of Companies nor any balance is outstanding from such companies as at the end of respective reporting period.
48. No funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly, lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
49. In respect of the year ended March 31,2024, the Board of Directors has proposed a final dividend of ? 4 (40%) per share to be paid on fully paid equity shares. The said dividend is subject to approval by shareholders at the Annual General Meeting and accordingly, has not been included as a liability in these standalone financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares.
50. The standalone financial statements have been approved by the Board of Directors of the Company on May 24, 2024 for issue to the shareholders for their adoption.
As per our report of even date attached
For A L P S & CO. For and on behalf of the Board of Directors
Chartered Accountants
Firm's Registration No.: 313132E
A. K. Khetawat V. Matta A. V. Lodha
Partner Chief Executive Officer Chairman
Membership No. 052751 PAN- ADMPM4399R DIN- 00036158
Shobhana Sethi P. K. Madappa
Place: Kolkata Company Secretary & Chief Financial Officer Director
Date: May 24, 2024 PAN- DLBPS7691G DIN- 00058822
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