(i) Securities Premium
Securities premium represents premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
(ii) General reserve
General reserve is created and utilised in compliance with provisions of the Companies Act, 2013.
(iii) Retained earnings
Retained Earnings are the profits that the Company has earned till date, less any transfer to general reserve, dividends or other distributions to shareholders.
(iv) Equity instruments through OCI
The Company has elected to recognise changes in the fair value of all investments in equity securities in other comprehensive income. These changes are accumulated within the FVOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
Notes:
(a) Secured by first charge on pari passu basis by way of hypothecation of the Company's entire current assets and movables fixed assets. Secured by extension of first charge on pari passu basis by way of mortgage of the immovable properties of the company, situated at P.S. Bauria, Dist- Howrah.
(b) Loans from banks comprises of cash credit facilities and working capital demand loans which are payable on demand. The interest rate of such loan ranges from 0.15% to 1.10% spread over MCLR per annum and from 1.50% to 2.08% spread over 3 months T-Bill.
(c) Loans from banks has been utilized for the purpose for which it was taken.
The Company makes Pension Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
(ii) Defined benefit plan
(a) Gratuity:
The employees' gratuity fund scheme is managed by a Trust and is a defined benefit plan. The funds of the trust are managed by approved insurance companies. Every employee is entitled to a benefit equivalent to fifteen day's salary last drawn for each completed year of service in line with Payment of Gratuity Act,1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. Gratuity benefit vests after five year of continuous service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors.
The expected return on plan assets is determined after taking into consideration composition of the plan assets held, assessed risks of assets management, historical results of the return on plan assets, and other relevant factors.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied while calculating the defined benefit liability recognised in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
Major categories of plan assets
The defined benefit plan is funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies. Thus the composition of each major category of plan assets has not been disclosed.
Risk exposure
Through its defined benefit plans the Company is exposed to a number of risks, the most significant of which are detailed below:
Investment risk:
The defined benefit plans are funded with insurance company of India. The Company does not have any liberty to manage the funds provided to insurance company. The fund is managed by the insurance company and the assets are invested in their conventional group gratuity product. The fund is subject to market risk as the price of units may go up or down. The present value of the defined benefit obligation is calculated using a discount rate determined by reference to the Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.
Interest rate risk:
The defined benefit obligation is calculated using a discount rate based on government bonds. If the bond yields fall, the defined benefit obligation will tend to increase.
Demographic risk:
This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting
criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.
Salary growth risk
The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. Higher than expected increases in salary will increase the defined benefit obligation.
Defined benefit liability and employer contributions
Expected contributions to post-employment benefits plans for the year ending 31 March 2025 is Rs. Nil.
The weighted average duration of the defined benefit obligation is 8 years ( 31 March 2023 - 9 years ).
(b) Provident fund
The Provident fund is managed by the Company in the line with the Employee's Provident Fund and Miscellaneous Provision Act, 1952. The Fund is exempted under section 17 of Employees' Provident Fund and Miscellaneous Provision Act, 1952. Condition for grant of exemption stipulate that the employer shall make good deficiency, if any, in the interest declared by the trust vis-a-vis statutory rate. The contribution by the employer and employees together with the interest accumulated there on are payable to the employees at the time of their separation from the company or retirement, whichever is earlier. In view of the Company's obligation to meet the interest shortfall, this is a defined benefit plan.
The Contribution made by the Company and the shortfall of the interest, if any, are recognised as an expense in the statement of profit & loss under employee benefit expense in accordance with an actuarial valuation of provident fund liabilities based on guidance issued by Actuarial Society of India and based on the assumptions as mentioned below. Also refer note 21.
(B) Other long term employee benefit plan '
The Company provides benefits in the nature of compensated absences which can be accumulated. The compensated absences are other long term employee benefits plan. Accumulated Compensated Absences which are expected to be availed or encashed within the 12 months from the end of the year are treated as short term employee benefits and the balance expected to be availed or encashed beyond 12 months from the year end are treated as long term liability. Expenses recognised in the Statement of Profit and loss towards compensated absences includes re-measurement gains and losses.
The investments in equity instruments are not held for trading. Instead, they are held for medium or long term investment. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments at FVOCI as the management believe that this provides a more meaningful presentation for medium or long-term investments, than reflecting changes in fair value immediately in profit or loss.
(i) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. 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. An explanation of each level follows underneath the table.
Level 1 [Quoted prices in an active market]
Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and debentures that have quoted price available. 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.
Level 2 [Fair values determined using valuation techniques with observable inputs]
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives), Portfolio Management Scheme (PMS) and Alternate Investment Fund (AIF), is determined using valuation techniques which maximise 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 [Fair values determined using valuation techniques with significant unobservable inputs]
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is generally the case for unlisted equity securities and certain Alternative Investment Funds (Equity & Debt ), wherein undelying investments are mainly real estate / investment in equity shares of unlisted entities.
There are no transfers between Level 1, Level 2 and Level 3 during the year.
(ii) Valuation techniques used to determine fair value
Specific valuation techniques used to value financial instruments include:
• the use of quoted market prices for quoted equity shares and debentures.
• the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date.
• Investments in PMS and AIF carried at fair value, are generally based on available NAVs. The fair value of the unquoted equity shares is determined using valuation technique that maximises the use of relevant observable inputs and minimises the use of unobservable inputs.
• The carrying amounts of trade receivables, loans, cash and cash equivalents, other bank balances, other financial assets, security deposits, trade payables and other financial liabilities are approximate to their fair values.
• Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.
• For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to their fair values.
2) Determination of NAV based on the underlying investments of Alternative Investment Fund.
iv) Fair value of financial assets and liabilities measured at amortised cost: the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximates their fair values.
v) Derecognition of Investment in equity instrument designated at FVOCI:
The Company has derecognised the Investment in equity instrument designated at FVOCI amounting to Rs 2,679.96 Lakhs ( 31 March 2023 : Rs 504.62 Lakhs ) and the gain/(loss) on such disposal (net of tax) amounting to Rs 891.97 Lakhs ( 31 March 2023 : Rs 136.35 Lakhs ) has been transferred to Retained Earnings.
The company has disposed certain investments designated as OCI since management does not see any significant appreciation in investments in medium / long-term.
c) Valuation processes
The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team reports directly to the Chief Financial Officer (CFO). The Company also involves external valuation expert, who presents a report that explains the reasons for the fair value movements, Discussions of valuation processes and results are held between the CFO, external valuation expert and the valuation team at least once every year, in line with the company's reporting periods.
The main level 3 inputs for unlisted equity securities and certain Alternative Investment Funds used by the company are derived and evaluated as follows:
1) Cost or assets approach is used to derive the adjusted Net Asset Value which involves determining the value per share based on the respective assets and liabilities.
(A) Credit risk
Credit risk is the risk that 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 trade receivables) including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments carried at amortised cost and fair value through Profit & Loss.
i) Trade receivables
Customer credit risk is managed by the Company through established policy and procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying 30 to 90 days credit terms. The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation. Trade receivables are consisting of a large number of customers. Where credit risk is high, domestic trade receivables are backed by security deposits. Export receivables are backed by letters of credit. Financial assets are considered to be of good quality and there is no significant increase in credit risk.
Provision for expected credit loss
The requirement for impairment is analysed at each reporting date. For impairment, individual debtors are identified and assessed specifically. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets. There has been no material default history in the past and accordingly no provision is considered necessary. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables.
ii) Financial instruments and cash deposits
Credit risk from balances with banks and investments is
managed by the Company's finance department in accordance with the Company's policy. Investments of surplus fund in portfolio management services, alternative investment funds, direct equity, debentures and in private companies are made only with approved counterparties and within credit limits assigned to each counterparty, if any. Counterparty credit limits are reviewed by the Company's Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Company's Board of Directors. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.
Balances with banks and deposits are placed only with highly rated banks. The Company's maximum exposure to credit risk for the components of the balance sheet is the carrying amounts as disclosed.
(B) Liquidity risk
Liquidity risk is 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.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Management monitors rolling forecasts of the Company's liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows.
(i) Maturities of financial liabilities
The tables below analyse the Company's financial liabilities into relevant maturity group based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
(C) Market risk
(i) Foreign currency risk
The Company undertakes transactions (e.g. sale of goods and purchases of raw materials or capital goods) denominated in foreign currencies and thus is exposed to exchange rate fluctuations. The Company evaluates its exchange rate exposure arising from foreign currency transactions and
manages the same based upon approved risk management policies which inter-alia includes entering into forward foreign exchange contracts.
Foreign currency risk exposure
The Company's exposure to foreign currency risk at the end of the reporting period expressed in Rs Lakhs (foreign currency amount multiplied by closing rate), are as follows:
(ii) Interest rate risk (All amounTS ln ' LaKns, unless otherwise stated)
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 debt obligations with floating interest rates.
The Company's fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
(iii) Security price risk
The Company's expense to equity securities price risk arises from instruments held by the Company and classified in the Balance Sheet either as fair value through Other Comprehensive Income (OCI) or at fair value through Profit or Loss (Refer Note 33).
To manage its price risk arising from investments in equity securities the Company diversifies its portfolio.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company monitors capital on the basis of the following gearing ratio:
• net debt (total borrowings and lease liabilities net of cash and cash equivalents)
• divided by total equity Loan covenants
Under the terms of the major borrowing facilities, the Company is required to comply with certain financial covenants. The Company has complied with the debt covenants throughout the reporting period.
Note: 35 Capital Management (a) Risk management
The company's objectives when managing capital are to:
• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and
• benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital.
The capital structure of the Company is based on management's judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. 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, long term borrowings and short term borrowings.
Note: 36 Segment information
(a) Description of segments and principal activities
Gloster Limited is primarily engaged in the business of manufacture and sale of jute and jute allied goods. Gloster Limited exports to various countries spread over the world and is having its manufacturing facilities located in India. In accordance with Ind-AS 108 -"Operating Segment", the Company has presented segment information only on the basis of Consolidated Financial Statements.
Notes:
(a) Fort Gloster Industries Limited, has issued Zero Coupon Secured Convertible Debentures of Rs. 7,600.00 lakhs in lieu of advance against securities amounting to Rs. 7,530.30 Lakhs and balance amount of Rs. 69.70 lakhs has been paid by the Company during the year. Subsequently, the said debentures have been converted to equity shares of Rs. 7,600.00 Lakhs (7,60,00,000 equity shares of face value Rs. 10/- each) during the year [refer note 5(a) & (b)].
(b) The security deposit balance represents the amount actually paid by the Company without impact of fair valuation. (fair value of security deposit is Rs. 5.27 Lakhs (31 March 2023 - Rs. 4.94 Lakhs).
(c) The Company has entered into a lease arrangement with The Oriental Company Limited pertaining to which finance cost amounting to Rs. 23.71 Lakhs ( 31 March 2023 - Rs. Nil) & depreciation amounting to Rs. 65.47 Lakhs (31 March 2023 - Rs. Nil) has been recognised in the statement of profit and Loss. The closing balance of lease liabilities as on 31st March, 2024 is Rs. 173.79 Lakhs ( 31 March, 2023 - Rs. Nil) (Non current) and Rs. 69.12 Lakhs (31 March, 2023 - Rs. Nil) (Current) [refer note 42]
(d) The Company has entered into a lease arrangement with its subsidiary Network Industries Limited pertaining to which finance cost amounting to Rs. 16.74 Lakhs ( 31 March 2023 -Rs. 16.58 Lakhs) & depreciation amounting to Rs. 9.10 Lakhs (31 March 2023 - Rs. 9.10 Lakhs) has been recognised in the
statement of profit and Loss. The closing balance of lease liabilities as on 31 March, 2024 is Rs. 238.95 Lakhs ( 31 March, 2023 - Rs. 237.21 Lakhs) (Non current) and Rs. 14.08 Lakhs (31 March, 2023 - Rs. 14.08 Lakhs) (Current) [refer note 42]
(e) For contribution to Gloster Jute Employees' Gratuity Fund please refer note no 28 (A) (ii) (a).
(f) For corporate guarantees given during the year and outstanding as at 31 March 2024 - refer note 39.
(g) Maximum amount outstanding at any time during the year are Rs. Nil (31 March 2023 - Rs. 1,250.00 Lakhs ) for Shri Vasuprada Plantations Ltd. (Formerly Joonktollee Tea & Industries Limited), Rs. Nil ( 31 March 2023 - Rs. 500.00 Lakhs) for Keshava Plantations Private Limited, Rs. Nil ( 31 March 2023 - Rs. 600.00 Lakhs ) for Network Industries Limited, Rs. 1,600.00 Lakhs (31 March 2023 - Rs.1,900.00 Lakhs ) for Gloster Nuvo Limited and Rs. 14,300.00 Lakhs ( 31 March 2023 - Rs. 6,100.00 Lakhs ) for Fort Gloster Industries Limited. For loans outstanding as at 31 March 2024 & 31 March 2023 - refer note 5(d).
(h) Above loans are repayable on demand and interest rate for said loan ranges from 9.65% to 11.15%.
Terms and conditions of the transactions
All outstanding balances are unsecured excluding outstanding
balance of investment made in Shri Vasuprada Plantations
Ltd. (Formerly Joonktollee Tea & Industries Limited), which is
secured.
Disclosure pursuant to section 186(4) of the Companies Act, 2013, regarding investments/loans made in subsidiaries/group companies and other investments are mentioned in note 5(b) ,note 5(c) and note 9(a). For Guarantee & Loans - refer point (f), (g) & (h) above.
All transactions are made in ordinary course of business and are done on arms length basis.
Consequent to approval of the shareholders at the Extra Ordinary General Meeting held on 02nd December, 2022, the Company has allotted Bonus Shares in the ratio of 1:1 i.e. one new equity share for every one existing equity share to the eligible shareholders of the Company. Accordingly, a sum of Rs. 547.16 lakhs has been capitalised and transferred to Share Capital Account on allotment of fully paid Bonus Shares. The earnings per share for previous year presented is based on current capital after issue of Bonus Shares in accordance with Ind AS - 33 on "Earnings per Share".
Note : 42 Lease
The Company as a Lessee
(a) The Company has entered into three lease agreements as below: Lease agreement for a term of thirty years commencing from 09 March 2021 for land situated at Bauria, West Bengal with it's wholly owned subsidiary. The lease payments are on fixed rental basis along with an incremental clause every 5 years with an option to renew at the end of lease period.
Lease agreement for a term of five years commencing from 01 April 2023 for Office Building situated at 21 Strand Road, Kolkata - 700 001 with M/s. Oriental Company Limited. The lease
payments are on fixed rental basis without any incremental clause with an option to renew at the end of lease period. Lease agreement for a term of thirty years commencing from 01 March 2024 for land situated at Budge Budge, West Bengal with Syama Prasad Mookerjee Port. The lease payments are on fixed rental basis along with an escalation of 5% every year without any =option of renewal.
The Company has certain lease premises with lease term of 12 months or less . The Company applies short-term recognition exemption for these leases.
Note: 44
The Company had opted for the new tax regime under section 115BAA of the Income Tax Act, 1961 w.e.f. April 01,2022 which provides a domestic company with an option to pay tax @ 22.00% (effective rate of 25.17%) and accordingly remeasured deferred tax balances based on the revised applicable tax rate.
Note: 45
The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment received Indian Parliament approval and Presidential assent in September 2020. The Code has been published in the Gazette of India and subsequently on November 13, 2020 draft rules
were published and invited for stakeholders' suggestions. However, the date on which the code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
Note: 46
The Board of Directors of the Company has at its meeting held on May 30, 2024, approved amalgamation of Gloster Lifestyle Limited and Gloster Specialities Limited ('Transferor Companies') both wholly owned subsidiaries of the Company with Gloster Limited, ('Transferee Company') subject to necessary statutory and regulatory approvals.
Note: 48
Additional Regulatory Information required by Schedule III
(i) No proceedings have been initiated on or are pending against the company for holding benami property under the Prohibition of Benami Property Transactions Act, 1988 (as amended in 2016) [formerly the Benami Transactions (Prohibition) Act, 1988 (45 of 1988)] and Rules made there under.
(ii) The Company has been sanctioned working capital limit in excess of Rs. 5 crores, in aggregate, from banks on the basis of security of current assets. The Company has filed quarterly returns or statements with such banks, which are in agreement with the unaudited books of accounts. Further, the returns for the quarter ended March 31,2024 would be appropriately filed by the company within the extended due date.
(iii) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
(iv) The Company has no transactions with the companies struck off under the Companies Act, 2013 or Companies Act, 1956.
(v) The Company has complied with the number of layers as prescribed in section 2(89) of the Companies Act read with Companies (Restriction on number of layers) Rules, 2017 .
(vi) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year. Also refer note 46.
(vii) I. The Company has not advanced or loaned or invested
funds to any other persons or entities, 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.
II. The Company has not received any fund from any persons or entities, 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 entity 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
(viii) There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
(ix) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
(x) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(xi) There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.
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