(Q) Provisions, contingent liabilities and contingent assets
(i) Provisions:
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the statement of profit and loss.
(ii) Contingent liabilities:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements.
(iii) Contingent Assets: Contingent Assets are disclosed, where an inflow of economic benefits is probable.
(R) Investments
On transition to Ind AS, equity investments are measured at fair value, with value changes recognised in Other Comprehensive Income, except for those mutual fund for which the Company has elected to present the fair value changes in the Statement of Profit and Loss.
(S) Trade receivables
Trade receivables are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
(T) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are recognised, initially at fair value, and subsequently measured at amortised cost using effective interest rate method.
(U) Operating Cycle
Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non current.
(V) Foreign Exchange Risk Management Policy
Foreign exchange risk refers to the losses that an international financial transaction may incur due to currency fluctuations. Exchange rate volatility is unpredictable since there are many factors that affect the movement of the exchange rates i.e. economic fundamentals, monetary policy, fiscal policy, global economy, speculation, domestic and foreign political issues, market psychology, being some of them. The exchange rate volatility poses a risk, called foreign exchange risk or currency risk, to business sector, in particular, the importers and exporters or those ones who associate with international businesses. Although businesses cannot control the fluctuation of the exchange rates but they can manage the risk by using proper hedging tools e.g. Forward, Futures, and Options, in order to manage their revenues and costs, assets and liabilities, more efficiently.
The company exports Automotive Components to known customers in the overseas market and take forward booking keeping in view the forward markets. In certain position exports are kept in open position, however, the position is reviewed at regular intervals and decision with regard to the hedge is taken based on situation and factors prevalent at the time. For long term commitments, e.g., forex commitments in the nature of term loans, the company has a policy to completely hedge the total exposure.
(W) Government Grants/Subsidy:
Government Grants are recognised only when there is reasonable assurance that the entity will comply with the conditions attaching to them and grant will be received.
Subsidy/Grants related to assets are presented in the Balance Sheet as Deferred income which is recognised in the Statement of profit & loss under the head " other income' on systematic basis over the useful life of the asssets.
Subsidy/Grants related to the expenses are treated in the Statement of Profit & Loss under the head for which the grants are intended to compensate.
(X) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest rupees lakhs , unless otherwise stated as per the requirement of Schedule III (Division II).
38 CONTINGENT LIABILITIES
i. In respect of Bank Guarantee : Rs.115.92 lakhs (Previous year Rs.262.61 lakhs)
ii. Bills Discounted with Banks Rs. 1484.47 lakhs (Previous year Rs. 1568.75 lakhs)
(These represents Bills discounted against confirmed Letters of Credit issued by the customers and no liability is likely to arise against the same)
iii. In respect of Capital commitments Net of Advances : Rs. 317.05 lakhs (Previous year Rs. 1658.40 lakhs)
iv. Sales tax liability in respect of matters in appeal - Rs. 152.80 lakhs (Previous Year Rs. 152.80 lakhs)
v. VAT/Sales Tax Liability in respect of matters in appeals - Rs.0.21 lakhs (previous year Rs.0.21 lakhs) against which Rs. Nil have been deposited.
(vi)(a) Income Tax for AY 2020-21 Rs. 35.84 Lakhs (Previous Year Rs. 35.84 Lakhs) : Matter under appeal with CIT (Appeals), the liability, if any, arises will be adjusted against the MAT Credit Entitlement available.
(vi)(b) Income Tax for AY 2017-18 Rs. 7.96 Lakhs (Previous Year Nil) : Matter under appeal with ITAT, the liability, if any, arises will be adjusted against the MAT Credit Entitlement available.
vii) Goods & Service Tax (GST)- As per the Order of Additional Commissioner, Central Goods & Service Tax Commissionerate, Shimla a Demand of Rs. 42.62 Lakhs (Previous Year NIL) including interest & penalty of Rs. 24.86 Lakhs pertaining to Goods & Service Tax matters for the period July, 2017 to March, 2020 relating to wrong/ excess availment of ITC, Interest on delayed payment of GST, etc. is raised. The Company disputes the alleged demand of Rs. 42.62 Lakhs and is in the process of filing Appeal against the Order with the Appellate Authority under the Goods & Service Tax Act.
viii. Disputed liability of power expenses demanded by H.P.S.E.B. Rs. 7.10 lakhs (Previous year Rs. 7.10 lakhs)
* Rs. 7.10 lakhs pertains to late payment surcharge erroneously levied by HPSEB in the Power Bill, the company has made the payment under protest. The amount has been shown under the head "Other Current Assets" in the balance sheet.
ix) Claims against the company not acknowledged as debt- Rs. 6.29 lakhs (Previous year Rs. 6.29 lakhs)
x) Export Obligations against EPCG Licences :The Company has obtained licenses/authorization under the Export Promotion Capital Goods (EPCG) scheme for importing capital goods at a concessional rate of custom duty against submission of bonds. Under the term of the respective license authorization, the Company is required to export goods of FOB value equivalent to six times duty saved in respective licenses/authorization where export obligation has been fixed by the office of DGFT, Ministry of Commerce and Industry, as applicable. Balance obligation as on 31.03.2024 is Rs. 922.53 Lakhs (Previous Year 1460.20 Lakhs).
(ii) Defined Benefit Plan
(a) Gratuity:
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary last drawn for each completed year of service depending on the date of joining. The same is payable on termination of service, retirement or death, whichever is earlier. The benefit vests after 5 years of continuous service.
(b) Leave encashment:
The Company has a policy on compensated absences which is applicable to its executives joined upto a specified period and all workers. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each Balance Sheet date using projected unit credit method on the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the Balance Sheet date.
The plans of the Company exposes to acturial risks such as Investement Risk, Interest rate risk,salary risk and longitivity risk. Theses risks may impact the obligation of the Company
(c) The following tables set out the funded status of the gratuity and leave encashment plans and the amounts recognised in the Company's financial statements as at 31 March 2024 and 31 March 2023.
(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. Credit risk encompasses the direct risk of default, risk of deterioration of creditworthiness as well as concentration risks. The Company is exposed to credit risk from its operating activities (primarily trade receivables), deposits with banks and loans given.
Credit Risk Management
For financial assets the Company has an investment policy which allows the Company to invest only with counterparties having credit rating equal to or above AAA and AA. The Company reviews the creditworthiness of these counterparties on an ongoing basis. Another source of credit risk at the reporting date is from trade receivables as these are typically unsecured. This credit risk has always been managed through credit approvals, establishing credit limits and continuous monitoring the creditworthiness of customers to whom credit is extended in the normal course of business. The Company estimates the expected credit loss based on past data, available information on public domain and experience. Expected credit losses of financial assets receivable are estimated based on historical data of the Company. The company has provisioning policy for expected credit losses. There is no credit risk in bank deposits which are demand deposits. The creditors risk is minimum in case of entity to whom loan has been given.
(B) Liquidity Risk
The Company's principal sources of liquidity are "cash and cash equivalents" and cash flows that are generated from operations. The Company has outstanding term borrowings. The Company believes that its working capital is sufficient to meet its current as well as long term borrowing repayment requirements. The company has significant high receivables & liquid inventory compared to payable, hence significantly low liquidity risk.
(C) Market risk Foreign currency risk
The Company significantly operates in domestic market. Though part of the sales is from Exports, however foreign currency risk towards export is insignificant considering the timely realisation thereof.
50 SEGMENT REPORTING
50.1 The Board of Directors of the Company, who have been identified as being the Chief Operating Decision Maker (CODM) evaluate the Company's performance and allocate resources based on the analysis of various performance indicators of the Company as a single unit since the company is primarily engaged in the business of Automotive Parts and the basic nature of these activities are governed by the same set of risk and returns. Accordingly, these constitute and have been grouped as a single segment as per Ind-AS 108 dealing with Segment Report.
50.2 Disaggregation of revenue by Geography
The revenue of the Company from external customers are attributed to (i)the Company's country of domicile i.e India and (ii) all foreign countries in total from which the Company derives its revenue.
56 Additional regulatory information required by Schedule III to the Companies Act, 2013 :
(i) The Company does not have any Benami Property held in its name. No proceedings have been initiated on or pending against the Company for holding Benami Property under the Banami Transactions (Prohibition) Act,1988 and rules made thereunder.
(ii) The Company has not traded or invested in crypto currency or virtual currency during the year.
(iii) The Company has not been declared wilful defaulter by any bank or financial institution or other lender or government or any government authority.
(iv) Utilisation of Borrowed Funds and share premium
No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, 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 any other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiary") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
No funds (which are material either individually or in the aggregate) have been received by the Company from any persons or entities, including foreign entities ("Funding Parties") with the understanding, whether recorded in writing or otherwise, that the Company shall whether directly or indirectly lend or invest in any other persons or entities identified in any manner whatsoever by or on behalf of the funding party ("Ultimate Beneficiary") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(v) There is no income surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961 (such as search or survey), that has not been recorded in the books of accounts.
The company has used accounting software for maintaining its books of accounts for the financial year ended March 31, 2024 which has
57 a feature of recording audit trail (edit log) facility and the same has operated throuhout the year for all relevant transactions recorded in the software
5„ The previous year figures have been regrouped/reclassified, wherever necessary to conform to the current presentation as per the schedule
III of Companies Act, 2013.
As per our report of even date
For PRA ASSOCIATES On behalf of the Board
Chartered Accountants
Firm Registration Number: 2355N Sd/- Sd/-
Harsh Khurana Vijay Aggarwal
Chief Financial Officer Managing Director
Sd/- DIN: 00094141
Praveen Kumar Aggarwal
Partner Sd/- Sd/-
Himanshu Kalra Rajiv Aggarwal
Membership No. 81526 Company Secretary Jt. Managing Director
Place: Chandigarh DIN: 00094198
Date: 30.05.2024 Date: 30.05.2024
UDIN: 24081526BKLTGU8032
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