3.13 Provisions, Contingent Liabilities and Contingent
Assets
Provisions are recognized when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that the Company will be
required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation.
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. When a provision is measured using the
cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows
(when the effect of the time value of money is material).
Contingent assets are disclosed in the financial
statements by way of notes to accounts when an inflow
of economic benefits is probable.
Contingent liabilities are disclosed in the Financial
Statements by way of notes to accounts, unless
possibility of an outflow of resources embodying
economic benefit is remote.
3.14 Financial instruments
Financial assets and financial liabilities are recognized
when Company becomes a party to the contractual
provisions of the instruments.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets
and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognized immediately
in profit or loss.
3.15 Financial assets
• All recognized financial assets are subsequently
measured in their entirety at either amortized cost
or fair value, depending on the classification of the
financial assets.
The Company considers all highly liquid financial
instruments, which are readily convertible into
known amounts of cash that are subject to an
insignificant risk of change in value and having
original maturities of three months or less from the
date of purchase, to be cash equivalents. Cash
and cash equivalents consist of balances with
banks which are unrestricted for withdrawal and
usage.
• Financial assets at amortized cost
Financial assets are subsequently measured at
amortized cost using the effective interest method
if these financial assets are held within a business
whose objective is to hold these assets in order to
collect contractual cash flows and the contractual
terms of the financial asset give rise on specified
dates to cash flows that are solely payments of
principal and interest on the principal amount
outstanding.
• Financial assets at fair value through other
comprehensive income
Financial assets are measured at fair value
through other comprehensive income if these
financial assets are held within a business whose
objective is achieved by both selling financial
assets and collecting contractual cash flows, the
contractual terms of the financial asset give rise
on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
• Financial assets at fair value through profit or
loss
Financial assets are measured at fair value through
profit or loss unless it is measured at amortized
cost or at fair value through other comprehensive
income.
• Impairment of financial assets
The Company assesses at each balance sheet
date whether a financial asset or a group of
financial assets is impaired. Ind AS109 requires
expected credit losses to be measured through
a loss allowance. The Company recognizes
lifetime expected losses for trade receivables
that do not constitute a financing transaction. For
all other financial assets, expected credit losses
are measured at an amount equal to 12 month
expected credit losses or at an amount equal to
lifetime expected losses, if the credit risk on the
financial asset has increased significantly since
initial recognition.
• De-recognition of financial assets
The Company derecognises a financial asset
when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial
asset and substantially all the risks and rewards of
ownership of the asset to another party.
On de-recognition of a financial asset in its entirety,
the difference between the asset’s carrying
amount and the sum of the consideration received
and receivable is recognized in the Statement of
Profit and Loss.
3.16 Insurance Claims
In case of total loss of asset, on intimation to the insurer,
either the carrying cost of the asset or insurance value
(subject to deductible excess)whichever is lower is
treated as claims recoverable from insurance company.
In case insurance claim is less than the carrying cost of
the asset, the difference is charged to statement of profit
and loss.
In case of partial or other losses, expenditure incurred
/ payments made to put such assets back into use, to
meet the third party or other liabilities(less deductible
excess) if any, are accounted for as claims receivable
from insurance company. Insurance Policy deductible
excess are expensed in the year in which corresponding
expenditure is incurred.
As and when claims are finally received from the
insurance company, the difference, if any, between the
claim receivable from insurance company and claims
received is adjusted to statement of profit and loss.
All other claims and provisions are booked on the merits
of each case.
4 Critical Accounting Judgments, Assumptions and
Key Sources of Estimation Uncertainty
Inherent in the application of many of the accounting
policies used in preparing the financial statements is the
need for management to make judgments, estimates
and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported amounts of revenues
and expenses. Actual outcomes could differ from the
estimates and assumptions used.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are
revised and future periods are affected.
Key source of judgments, assumptions and estimation
uncertainty in the preparation of the financial statements
which may cause a material adjustment to the carrying
amounts of assets and liabilities within the next financial
year, are in respect of useful lives of property, plant and
equipment, employee benefit obligations, provision for
income tax and measurement of deferred tax assets.
4.1 Assumptions and key sources of estimation
uncertainty
Information about estimates and assumptions that have
the significant effect on recognition and measurement
of assets, liabilities, income and expenses is provided
below. Actual results may differ from these estimates.
• Useful lives of property, plant and equipment and
intangible assets
Defined benefit obligation (DBO)
Management’s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates
of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may
significantly impact the DBO amount and the annual defined benefit expenses.
Provision for income tax
Significant judgments are involved in determining the provision for income taxes, including amount expected to be
paid/recovered for uncertain tax positions.
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the
Company’s future taxable income against which the deferred tax assets can be utilized. In addition, significant
judgment is required in assessing the impact of any legal or economic limits or uncertainties.
Note :
a) These leasehold lands are long term leases hence are considered as finance lease. Being mortgaged with banks, all the
original documents are in custody of banks.
b) Property, Plant and Equipment mortgaged as security.
c) Working Capital borrowings availed from Union Bank of India is secured by first charge over immovable property, plant and
equipments and movable property, plant and equipments both present and future. Working Capital borrowings availed are
secured by way of hypothecation of company’s stocks of raw material, finished goods, stock-in-process, stores, spares,
components, trade receivables, outstanding money receivables, claims, bills, contract, engagements, securities both
present and future.
d) CWIP represent ongoing construction costs at Digha Factory. No depreciation has been charged during the construction
period.
(ii) Terms / Rights attached to equity shares
The Company has one class of equity share having at par value of Rs.10 each per share. Equity share holder are
entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed
by the Board of Directors, if any is subject to the approval of the shareholders in the ensuing Annual General
Meeting.
The Company also has one class of preference share at par value of Rs.10 each per share, which are Compulsory
convertible preference share.
During the period ended 31 March 2025, the amount of Rs. Nil (31st March 2024 Rs. Nil) per share dividend
recognized as distributions to shareholders.
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.
(iii) No shares are held by the holding company, the ultimate holding company, their subsidiaries and associates.
(iv) The company has not issued any bonus shares or for consideration other than cash and had not bought back
any shares during the period of five years immediately preceeding the reporting date.
(v) Details of shares held by each shareholder holding more than 5% shares in the company:
Nature and purpose of reserve :
Securities Premium Reserve
Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions
of the Companies Act, 2013.
Capital Reserve
Capital reserve pertains to acquisitions in the earlier years.
Retained Earnings
Retained earnings is a free reserve. This is the accumulated profit earned by the Company till date, less transfer to general
reserve, dividend and other distributions made to the shareholders.
General Reserve
General reserve is a free reserve which can be utilised for any purpose after fulfilling certain conditions in accordance with the
provisions of the Companies Act, 2013.
The management assessed that the fair values of cash and cash equivalents, bank balances, trade receivables, other financial
assets, trade payables and borrowing approximate their carrying amounts largely due to the short-term maturities of these
instruments.
Fair value hierarchy
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments
and mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is
valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV and listed equity
instruments are being valued at the closing prices on recognised stock exchange.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the
counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as
little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the
instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This
is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.
There are no transfer between level 1,2 and 3 during the year.
Note 35 Financial Risk Management Objectives and Policies
The Company’s principal financial liabilities comprise loans and borrowings, 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, current
investments, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The Company’s business activities are exposed to a variety of financial risks, namely liquidity risk, market risk and credit risk. The
Company’s senior management has the overall responsibility for establishing and governing the Company’s risk management
framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company,
to set and monitor controls, periodically review changes in market conditions and reflect the changes in the policy accordingly.
The key risks and mitigating actions are also placed before the Board of Directors and Audit Committee of the Company.
A. Management of Liquidity Risk
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company’s
approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring
unacceptable losses. In doing this, management considers both normal and stressed conditions.
The Company maintained a cautious liquidity strategy, with a positive cash balance throughout most of the year ended March
31,2025 and March 31,2024. Cash flow from operating activities provides the funds to service the financial liabilities on a day-
to-day basis.
The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational
needs. Any short term surplus cash generated, over and above the amount required for working capital management and other
operational requirements, is retained as cash and cash equivalents (to the extent required).
B. Management of Market Risk
The Company’s size and operations result in it being exposed to the following market risks that arise from its use of financial
instruments:
1. Currency Risk
2. Interest Rate Risk
The above risks may affect the Company’s income and expenses, or the value of its financial instruments. The Company’s
exposure to and management of these risks are explained below.
1. Currency Risk
The Company is subject to the risk that changes in foreign currency values impact the Company’s exports revenue and imports
of raw material and property, plant and equipment. The Company is exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to US Dollar, Euro and YEN.
2. Interest Rate Risk
Interest rate risk results from changes in prevailing market interest rates, which can cause a change in the fair value of fixed-rate
instruments and changes in the interest payments of the variable-rate instruments. To hedge interest rate risk, a mix of variable
and fixed instruments is judiciously applied for financing the Company’s requirement.
Trade Receivables
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.
Concentration of credit risk with respect to trade receivables are limited, due to the Company’s customer base being large and
diverse. Further majority of the Company’s customers are Companies with strong financial stability. All trade receivables are
reviewed and assessed for default on a quarterly basis, through detailed review with the business teams.
Credit to be given to a customer is assessed based on credit quality of the customer and individual credit limits are defined in
accordance with this assessment.
Our historical experience of collecting receivables is that credit risk is low. Hence, trade receivables are considered to be a single
class of financial assets.
Note 36 Capital Management
The Company’s capital management objective is to ensure that a sound capital base is maintained to support long term business
growth and optimise shareholders value. Capital includes equity share capital and other equity reserves.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend
payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using the debtequity
ratio, which is net debt divided by total equity. Net debt is computed as the sum total of all outstanding balances of loans and
borrowings net of cash and cash equivalents, bank balance other than cash and cash equivalents.
Note 37 Other Statutory Information
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company
for holding any Benami property.
(ii) There are no transactions and outstanding balances with companies struck off under section 248 of the Companies Act,
2013 or section 560 of Companies Act,1956.
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have 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 any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vi) The Company have 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 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,
(vii) The Company have not entered in any 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.
For R. Bhargava & Associates For and on behalf of the Board of Directors of
Chartered Accountants Aplab Limited
FRN : 012788N
Anuj Aggarwal Amrita P. Deodhar Rajesh K. Deherkar
Partner Chairperson and Managing Director CFO & Company Secretary
M. No. :- 525040 DIN No :- 00538573 M.No. A10783
Place :- Navi Mumbai Place : Navi Mumbai
Date :- 30/05/2025 Date : 30/05/2025
|