k) Provisions and contingent liabilities
Provisions for legal claims, volume discounts and returns
are recognised when the Company has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation and the amount can be reliably estimated. Provisions
are not recognised for future operating losses. The carrying
amounts of provisions are reviewed at each balance sheet date
and adjusted to reflect the current best estimate.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to
any one item included in the same class of obligations may be
small.
Provisions are measured at the present value of management's
best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate
used to determine the present value is a pre-tax rate that reflects
current market assessments of the time value of money and the
risks specific to the liability. The increase in the provision due to
the passage of time is recognised as interest expense.
A disclosure for contingent liabilities is made where there is a
possible obligation or a present obligation that may probably
not require an outflow of resources or an obligation for which
the future outcome cannot be ascertained with reasonable
certainty. When there is a possible or a present obligation where
the likelihood of outflow of resources is remote, no provision or
disclosure is made.
l) Revenue recognition
i) Sale of goods:
Revenue from the sale of goods is recognised when
the control of the goods passes to the buyer either at
the time of dispatch or delivery or when the risk of loss
transfers. Export sales are recognized based on the
shipped on board date as per bill of lading, which is when
substantial risks and rewards of ownership are passed to
the customers.
Revenue from sale of goods is net of taxes and recovery of
charges collected from customers like transport, packing
etc. Provision is made for returns when appropriate.
Revenue is measured at the fair value of consideration
received or receivable and is net of price discounts,
allowance for volume rebates and similar items.
ii) Rendering of services:
Revenue from sale of services are recognized when the
services are rendered.
iii) Investment Income:
Dividend income on investments is recognised when the
right to receive dividend is established.
Interest income is recognized on a time proportionate
basis taking into account the amounts invested and the
rate of interest. For all financial instruments measured
at amortised cost, interest income is recorded using the
Effective interest rate method to the net carrying amount
of the financial assets.
iv) Other operating Income:
Export incentives are accounted in the year of export.
v) Variable Consideration:
If the consideration in a contract includes a variable
amount, the company estimates the amount of
consideration to which it will be entitled to in exchange
for transferring goods to the customer. The variable
consideration is estimated at contract inception and
constrained until it is highly probable that a significant
reversal of revenue will not occur once associated
uncertainties are resolved. Some contracts with the
customers provide them with a right to return and volume
rebates. The right to return and volume rebates gives rise
to variable consideration.
The amount of variable consideration is calculated
by either using the expected value or the most likely
amount depending on which is expected to better predict
the amount of variable consideration. Consideration is
also adjusted for the time value of money if the period
between the transfer of goods or services and the
receipt of payment exceeds twelve months and there
is a significant financing benefit either to the customer
or the Company. If a contract contains more than one
distinct good or service, the transaction price is allocated
to each performance obligation based on relative stand¬
alone selling prices. If standalone selling prices are not
observable, the Company reasonably estimates those
revenue is recognized for each performance obligation
either at a point in time or over time.
m) Employee Benefits:
The Company provides following post-employment plans:
(i) Defined benefit plans such as gratuity
(ii) Defined contribution plans such as Provident fund
a) Defined-benefit plan:
The liability or asset recognised in the balance sheet in
respect of defined benefit gratuity plan is the present
value of defined benefit obligations at the end of the
reporting period less fair value of the plan assets. The
defined benefit obligations is calculated annually by
actuaries using the projected unit credit method.
The Company recognises the following changes in
the net defined benefit obligation as an expense in the
statement of profit and loss:
(a) Service costs comprising current service costs,
past-service costs, gains and losses on curtailment
and non-routine settlements; and
(b) Net interest expense or income.
The net interest cost is calculated by applying the
discount rate to the net balance of the defined
benefit obligation and fair value of the plan assets.
This cost is included in employee benefit expenses
in the statement of the profit & loss.
Re-measurement comprising of actuarial gains
and losses arising from experience adjustment
and changes in actuarial assumptions, the effect
of asset excluding amounts included in net interest
on the net defined benefit liability and the return
on plan assets (excluding amounts included in net
interest on the net defined benefit liability) ceiling
are recognised in the period in which they occur
directly in Other comprehensive income. Re¬
measurement are not reclassified to profit or loss
in subsequent periods.
b) Defined-contribution plan:
Under defined contribution plans, provident fund, the
Company pays pre-defined amounts to separate funds
and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions
to the employees' provident fund with the government,
superannuation fund and certain state plans like
Employees' State Insurance and Employees' Pension
Scheme. The Company's payments to the defined
contribution plans are recognised as expenses during the
period in which the employees perform the services that
the payment covers.
c) Other employee benefit:
Compensated absences which are not expected to occur
within twelve months after the end of the period in which
the employee renders the related services are recognised
as a liability at the present value of the obligation as at the
Balance sheet date based on an actuarial valuation.
n) Foreign Currency Transaction
The financial statements are presented in Indian rupee (INR),
which is company's functional and presentation currency.
Foreign exchange differences regarded as an adjustment to
borrowing costs are presented in the statement of profit and
loss, within finance costs. All other foreign exchange gains and
losses are presented in the statement of profit and loss as other
income / miscellaneous expenses.
At the end of each reporting period, monetary items denominated
in foreign currencies are retranslated at the rates prevailing at
that date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates
prevailing at the date when the fair value was determined.
o) Income tax
Income tax expense comprises current tax expense and the
net change in the deferred tax asset or liability during the year.
Current and deferred taxes are recognised in Statement of Profit
and Loss except when they relate to items that are recognised
in other comprehensive income or directly in equity, in such
case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity, respectively.
Current tax is measured at the amount of tax expected to be
payable on the taxable income for the year as determined in
accordance with the provisions of the Income Tax Act, 1961.
Deferred income tax is recognised using the Balance Sheet
approach. Deferred income tax assets and liabilities are
recognised for deductible and taxable temporary differences
arising between the tax base of assets and liabilities and their
carrying amount, except when the deferred income tax arises
from the initial recognition of an asset or liability in a transaction
that is not a business combination and affects neither accounting
nor taxable profit or loss at the time of the transaction.
Deferred tax assets are recognised only to the extent that it is
probable that either future taxable profits or reversal of deferred
tax liabilities will be available, against which the deductible
temporary differences and the carry forward of unused tax
credits and unused tax losses can be utilised.
The carrying amount of a deferred tax asset shall be reviewed at
the end of each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available
to allow all or part of the deferred income tax asset to be utilised.
Deferred tax assets and liabilities are measured using the tax
rates and tax laws that have been enacted or substantively
enacted by the end of the reporting period and are expected
to apply when the related deferred tax asset is realised or the
deferred tax liability is settled.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation
authority.
Minimum Alternative Tax (‘MAT') credit is recognised as an asset
only when and to the extent there is convincing evidence that
the Company will pay normal income-tax during the specified
period. In the year in which the MAT credit becomes eligible to
be recognised as an asset, the said asset is created by way
of a credit to the statement of profit and loss. The Company
reviews the same at each balance sheet date and writes down
the carrying amount of MAT credit entitlement to the extent there
is no longer convincing evidence to the effect that Company will
pay normal income-tax during the specified period.
p) Segment Reporting
The Company has identified its Managing Director as the Chief
Operating Decision Maker. Operating segments are reported
in a manner consistent with the internal reporting provided to
managing director of the Company. The Managing Director
evaluates the Company's performance and allocates resources
as a whole.
q) Research and Development
Research costs are expensed as incurred. Product development
costs are expensed as incurred unless technical and commercial
feasibility of the project is demonstrated, further economic
benefits are probable, the Company has an intention and ability
to complete and use or sell the product and the costs can be
measured reliably.
r) Earnings Per Share
Basic EPS is arrived at based on net profit or (loss) after
taxation available to equity shareholders to the weighted
average number of equity shares outstanding during the year.
The diluted EPS is calculated on the same basis as basic EPS,
after adjusting for the effects of potential dilutive equity shares
unless impact is anti-dilutive.
s) Contract balances
i) Trade Receivables:
A receivable represents the Company's right to an
amount of consideration that is unconditional (i.e. only
a passage of time is required to before payment of the
consideration is due).
ii) Contract liabilities:
A contract liability is the obligation to transfer goods
or services to a customer for which the company has
received consideration (or an amount of consideration is
due) from the customer. If a customer pays consideration
before the company transfer goods and services to the
customer, a contract liability is recognised when the
payment is made or the payment is due, whichever is
earlier. Contract liabilities are recognised as revenue
when the company performs under the contract.
B. Nature and purpose of reserves
(a) Capital Redemption Reserve: The Company has recognised Capital Redemption Reserve on buyback of equity shares from its
General Reserve. The Capital Redemption Reserve can be utilised for issue of bonus shares.
(b) General Reserve: The Company has transferred a portion of the net profit before declaring dividend to general reserve.
(c) Retained Earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve,
dividends or other distributions paid to shareholders and realised gain on equity instrument transferred from Other Comprehensive Income.
(d) Debt Instruments through Other Comprehensive Income: The fair value change of the debt instruments measured at fair value through
other comprehensive income is recognised in Debt instruments through Other Comprehensive Income. Upon derecognition, the cumulative
fair value changes on the said instruments are reclassified to the Statement of Profit and Loss.
(e) Equity Instruments through Other Comprehensive Income: This represents the cumulative gains and losses arising on fair valuation
of equity instruments measured at fair value through other comprehensive income and subsequently not reclassified to the Statement of
Profit and Loss, net of amount reclassified to retained earnings when such assets are disposed of.
(f) Re-measurements of Net Defined Benefit Plans: Differences between the interest income on plan assets and the return actually
achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the
plans, are recognised subsequently not reclassified to the Statement of Profit and Loss.
33 Contingent Liabilities:
The Company's litigations comprises of claims related to property disputes and proceedings pending with Tax and other Authorities. The
Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required.
34 Commitments:
(a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance, unsecured
considered good), as at 31st March, 2025 for ' 279.45 Lakhs (net of advance of ' 46.40 Lakhs); Previous Year (' 269.20 Lakhs (net
of advance of ' 33.05 Lakhs)).
(b) In respect of investments made with private equity funds / debt funds, the Company is further committed to invest as at 31st March,
2025 for ' 5547.81 Lakhs; Previous Year (' 2,567.15 Lakhs).
35 (I) Secured Loans:
(a) Interest Rate on Working capital loans as at 31st March, 2025 is Repo Rate 6.50% plus Spread 3.50% (Previous Year Repo
Rate 6.50% plus Spread 3.50%). Fund based limit is utilised as at 31st March, 2025 of ' Nil Lakhs (Previous Year ' Nil ) and
Non-Fund based limit is utilised as at 31st March, 2025 of ' 391.44 Lakhs (Previous Year ' 293.94 Lakhs) are secured by lien
over investment of ' 1,949.36 Lakhs (Previous Year ' 2,093.69 Lakhs) - Refer note no. 40.
(b) Vehicle loan (repayable within one year) is secured by way of hypothecation of vehicles purchased thereagainst and carry
Interest in the range of 7.10% (Previous Year 7.10%).
Operating Segments: - The chief operational decision maker (CODM) has identified 2 operating segments viz., Composite products and
Investments.
Identification of Segments
The chief operational decision maker monitors the operating results of its Business Segments separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is
measured consistently with profit or loss in the financial statements.
Segment revenue and results
The expenses and incomes which are not directly attributable to any business segment are shown as unallocable expenditure (net of
unallocated income).
Segment assets and liabilities
Segment assets include all operating assets used by the operating segment and mainly consist of property plant and equipment, trade
receivables, cash and cash equivalents, Investments and inventories. Segment liabilities primarily include trade payables and other
liabilities. Common assets and liabilities which cannot be allocated to any of the segments are shown as a part of unallocable assets /
liabilities.
Geographical Information
The Company has all the manufacturing facilities which are located in India only hence there is no grographical segment applicable.
42 Employee Benefits
(a) Defined contribution plan
The Company has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate
of 12% of basic salary and other allowances as per regulations. The obligation of the Company is limited to the amount contributed
and it has no further contractual nor any constructive obligation. The expenses recognised during the period towards defined
contribution plan is ' 179.59 Lakhs (March 31,2024: ' 162.98 Lakhs).
(b) Defined benefit plan
In accordance with the Payment of Gratuity Act, 1972, the Company provides for gratuity for employees who are in continuous
services for a period of 5 years are eligible for gratuity. The amount of gratuity payable on termination/retirement is employees last
drawn salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity is a
funded plan and the Company makes contributions to recognised funds in India.
Interest risk:- A decrease in the bond interest will increase in plan liability; however, this will be partially offset by an increase in the return
on the plan's debt investments.
Longevity risk: The present value of the defined benefit plan liability is calculated by reference to best estimate of the mortality of plan
participants both during and at the end of employment. An increase in the life expectancy of the plan participants will increase the plan
liability.
Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As
such an increase in salary of the plan participants will increase the plan liability.
The Code on Social Security:
The Code on Social Security, 2020 (‘Code') relating to employee benefits during employment and post-employment benefits has been
published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess
the impact of the Code and recognise the same when the Code becomes effective.
43 Financial instruments
The details of significant accounting policies, including criteria for recognition, the basis of measurement and the basis on which income
and expenditure are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 40
and 41.
Financial assets and liabilities
The accounting classification of each category of financial instruments, and their carrying amounts are set out as below:
ANNUAL REPORT 2 0 2 4 - 2 0 2 5
NOTES OF THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2025
| |
As at March 31, 2025
|
As at March 31, 2024
|
| |
Carrying value
|
Fair value
|
Carrying value
|
Fair value
|
|
Loans
|
1,377.47
|
1,377.47
|
375.00
|
375.00
|
|
Other financial assets
|
1,165.40
|
1,165.40
|
1,039.92
|
1,039.92
|
| |
8,026.74
|
8,026.74
|
5,303.13
|
5,303.13
|
|
Financial liabilities
|
|
|
|
|
Borrowings
|
2.98
|
2.98
|
11.52
|
11.52
|
|
Trade payables
|
5,051.33
|
5,051.33
|
4,482.71
|
4,482.71
|
|
Other financial liabilities
|
83.06
|
83.06
|
65.30
|
65.30
|
| |
5,137.37
|
5,137.37
|
4,559.53
|
4,559.53
|
The Management assessed that fair value of cash and cash equivalents, trade receivables, investments in term deposits, loans, other
financial assets (except derivative financial instruments), trade payables, and other financial liabilities (except derivative financial
instruments) is considered to be equal to the carrying amount of these items due to their short-term nature.
There were no significant changes in classification and no significant movements between the fair value hierarchy classifications of financial
assets and financial liabilities during the year.
Income Tax
(b)
|
Components of Income tax Expense
|
|
(' in Lakhs)
|
|
Particulars
|
Year Ended
31St March, 2025
|
Year Ended
31St March, 2024
|
|
Tax expense recognised in the Statement of Profit and Loss
|
|
|
|
i) Current tax
|
|
|
|
Current year
|
901.11
|
923.64
|
|
Total current tax
|
901.11
|
923.64
|
| |
|
|
|
ii) Deferred tax
|
|
|
|
Relating to origination and reversal of temporary difference
|
69.66
|
(144.19)
|
|
Total deferred income tax expense/(credit)
|
69.66
|
(144.19)
|
|
Total i) ii)
|
970.77
|
779.45
|
|
Tax on Other Comprehensive Income
|
|
|
|
i) Tax relating to items that will not be reclassified to profit or loss
|
|
|
|
Tax on reliazed gain of equity instruments
|
484.82
|
215.02
|
|
Tax on remeasurements of net defined benefit plans
|
(13.93)
|
(195)
|
|
Tax on equity instrument through other comprehensive income
|
713.63
|
1,179.52
|
|
Deferred Tax liability of earlier periods on equity instrument through other comprehensive
income*
|
-
|
-
|
| |
1,184.52
|
1,392.59
|
|
ii) Income tax on items that will be reclassified to profit or loss
|
|
|
|
Tax on debt instrument through other comprehensive income
|
62.30
|
(35.72)
|
|
Deferred Tax liability of earlier periods debt instrument through other comprehensive
income*
|
-
|
-
|
| |
62.30
|
(35.72)
|
|
Total i) ii)
|
1,247.32
|
1,356.87
|
44
A.
(a)
45 Risk Management
Financial risk management objective and policies
The Company's financial risk management is an integral part of how to plan and execute its business strategies. The Company's financial
risk management policy is set by the Managing Board. The risk management policies aims to mitigate the following risk arising from the
financial instruments: (a) Market risk; (b) Liquidity risk and (c) Credit risk.
Financial risk factors
The Company's principal financial liabilities comprise borrowings, deposits from dealers and trade and other payables. The purpose of
these financial liabilities is to finance the Company's operations and to provide to support its operations. The Company's principal financial
assets include investments, loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
(c) Credit risk
Credit risk arises from the possibility that the counterparty may not be able to settle their obligations as agreed. To manage this, the
Company periodically assess financial reliability of counterparty, taking into account the financial condition, current economic trends,
and analysis of historical bad debts and ageing of accounts receivable. The Company considers the probability of default upon initial
recognition of assets and whether there has been a significant increase in credit risks on an ongoing basis throughout each reporting
period.
To assess whether there is a significant change increase in credit risk the Company compares the risks of default occurring on the
assets as at the reporting date with the risk of default as at the date of initial recognition. It considers the reasonable and supportive
forward looking information such as:
(i) Actual or expected significant adverse changes in business.
(ii) Actual or expected significant changes in the operating results of the counterparty.
(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty's ability to meet
its obligations
(iv) Significant increase in credit risk on other financial instruments of same counterparty
(i) Expected credit loss for trade receivables under simplified approach ( Refer Note 9 for ageing of Trade Receivable)
Commodity Risk
The Company is exposed to the risk of price fluctuation of raw materials proactively managed through forward booking,
inventory management and proactive vendor development practices.
46 Capital Risk Management
(a) 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 Company sets the amount of capital required on the basis of annual business and long-term operating plans which includes
capital and other strategic investments. The Company's intention is to maintain a stable and strong capital structure with a focus on
total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business.
Note:
a) No amount pertaining to related parties has been written off / provided for as doubtful debts except diminution in value of
investment in Compo Advics (India) Pvt. Ltd. of ' 980 Lakhs (Previous year ' 980 Lakhs). Also no amount has been written
off/back.
b) Related party transactions have been disclosed on basis of value of transactions in terms of the respective contracts.
c) Aforesaid transactions with the related parties are in the ordinary course of business based on normal commercial terms,
conditions, market rates with the related parties.
d) Managerial remuneration/KMP remuneration does not include post-employment benefits and other long-term benefits
(Gratuity and Leave entitlement) based on actuarial valuation as these are done for the Company as a whole.
53 Other Disclosures
a) No proceeding has been initiated or pending against the Company for holding any Benami property under the Benami Transactions
(Prohibition) Act, 1988, as amended, and rules made thereunder in the current or previous financial years.
b) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
c) The Company has not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.
d) There were no transactions relating to previously unrecorded income that have been surrendered and disclosed as income during
the year in the tax assessments under the Income Tax Act, 1961 during the current and previous financial year.
e) The Company has not advanced or loaned to or invested in funds to any other person(s) or entity(is), including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:
(i) directly or indirectly lend to or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
company (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
f) The Company has 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:
(i) directly or indirectly lend to or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Party (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
g) The Company has not been declared wilful defaulter by any bank or financial Institution or other lender in the current and previous
financial year.
h) The Company does not have any subsidiary as defined in Section 2(87) of the Companies Act, 2013 in the current and previous
financial years.
I) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial years.
J) There are no loans or advances in the nature of loan granted to promoters, directors, KMP and / or their relatives in the current or
previous financial years which are repayable on demand or without specifying any term or period for repayment.
55 The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies
(Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules, 2021 requiring companies, which uses accounting
software for maintaining its books of accounts, shall use only such accounting software which has a feature of recording audit trail of
each and every transaction, creating an edit log of each change made in the books of accounts along with the date when such changes
were made and ensuring that the audit trail cannot be disabled. The Company uses ERP accounting software for maintaining its books
of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant
transactions recorded in the accounting software except for certain transactions, changes made through specific access and for direct
database changes where no audit trail was enabled at the database level to log any direct data changes.
56 Previous year's figures have been regrouped/reclassified wherever necessary to conform to current year's classification.
Signatures to Notes 1 to 56 which form an integral part of the financial statements.
For and on behalf of the Board of Directors of
Hindustan Composites Limited
P. K. Choudhary Lalit Kumar Bararia
Managing Director Independent Director
(DIN: 00535670) (DIN: 00204670)
Sunil Jindal Arvind Purohit
Place: Mumbai Chief Financial Officer Company Secretary
Date: 7th May, 2025 Membership No. A33624
|