Nature of Security:*
All the banking facilities sanctioned by the Bank are primarily secured by extension of charge over all existing and future
current assets/ moveable Fixed assets of the company and also further collaterally secured by:
i) . Collateral Security over residential properties located at Plot no 78, Peenya Industrial area, 3rd Stage ,Bangalore owned
by Hindustan Tools Corporation for which Surendra Bhandari is the proprietor.
ii) . All the banking facilities are further personally guaranteed by two directors (Surendra Bhandari and Siddharth Bhandari)
Note : A Case has been filed with 1st Addl.Labour court by S V Govindraju against the company. Another case is filed with the
labour office 1 by the union employees for protected workmen case. Apart from that one Writ Petition filed by Govindaraju for
full back wages is pending before the Hon'ble High Court and the said case not listed for hearing from almost 2 years. No
provision has been made in the books relating to this cases as the management is confident that matter will be decided in its
favour.
The details required under Ind AS 19 - Employee Benefits are as follows;
The Employees' Gratuity Fund Scheme managed by the Hittco Tools Employees Group Gratuity Fund Trust is a defined benefit
plan. The present value of the 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 employees benefit entitlement and measures each unit
separately to build up the final obligation.
29.2 (ix) SEGMENT REPORTING
The Company is primarily engaged in one segment of manufacture and sale of Machine tools , accordingly there is only one
operating segment. Hence disclosoures for operating segment, as envisaged in Ind AS 108 on segment reporting as notified under
section 133 of the companies act, is not applicable.
29.2 (xii) Disclosure of dues/payments to Micro and Small enterprises to the extent such enterprises are identified by the company.
The company has not received any intimation from the suppliers regarding status under Micro, Small and Medium Enterprises
29.2 (xiv) In the Opinion of Board of Directors, Advances to related parties,security deposits have atleast the realizable value as stated in
29.2 (xv) Confirmation of balances - balances of Trade receivables, Advances from Customers , Advances to suppliers and other advances if
29.2 (xv) Pursuant to IND AS 109- Impairment of assets, the Company assessed its fixed assets for impairment as at 31st March 2022 and
29.2 (xvii Company has not provided any provision for current tax as the company are not liable to pay tax u/s 115BAA after considering
bought forward unabsorbed depreciation.
29.2 (xvii Previous period figures have been regrouped / reclassified wherever necessary to conform to the current period classification /
disclosure.
Default and Breaches
There are no defaults with respect to payment of principal, interest and no breaches of the terms and conditions of the Loans taken from Banks and financial institutions.
There are no breaches during the year which permitted lender to demand accelerated payment.
31 Fair Value Heirarchy
Management considers that the carrying amounts of those financial assets and financial liabilities that are not subsequently measured at fair value in the financial statements
approximate their fair values
For financial instruments that are subsequently measured at fair vale, their fair value measurement is grouped into Levels 1 to 3 based on the following fair value hierarchy
Level 1 :quoted prices (unadjusted) in active markets for identical assets or liabilites
Level 2 :inputs other than quoted prices included within level 1, that are observable for the asset or liability,either directly (i.e as a price) or indirectly (i.e derived from prices)
Level 3:derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs)
There are no financial instruments measured at Level 1, Level 2,Level 3 of Fair Value Heirarchy as at reporting date
The carrying amounts of financial instruments carried at amortized cost i.e Trade receivables, Cash and Cash equivalents, other financial assets, Borrowings, other financial
liabilities and trade payables are considered to be the same as their fair values, due to their short term nature
Fair Valuation techniques
Fair value of financial assets and liabilities measured at amortized cost
Trade receivables, cash and cash equivalents, borrowings, trade payables, other financial assets, other financial liabilities are financial instruments with carrying values that
approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as level 3 in the fair value hierarchy
Notes:
1) The Banking facilities sanctioned by the ECL Finance Ltd on Security of Pledge of the assets was fully repaid
during the Previous Year and the Closing letter also received from the concerned financial institution by
discharging the Pledge against the Financial and Non Financial Assets of the Company.
33 Financial Risk Management
The company's activities expose its variety of financial risks: Market risk, Credit risk and Liquidity risk. The company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse
effects on its financial performance. The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Board of Directors has established a risk
management policy to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management systems are reviewed periodically to
reflect changes in market conditions and the Company's activities. The Board of Directors oversee compliance with the Company's risk management policies and procedures, and reviews the risk management framework.
A) Market risk
The market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Market risk comprises three types of risk: Foreign currency risk, interest
rate risk and other price risk.
i Foreign Currency Risk
The company is not exposed to foreign currency risk as it has no borrowings in foreign currency and also the company doesn't have any receivable or payable amounts in foreign currency.
ii Cash flow and fair value Interest rate risk
Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Interest risk arises to the company mainly from Long term borrowings,bank overdrafts with variable rates. The company measures risk through sensitivity analysis.
iii Price risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk).
The company is not exposed to price risk as there are no investments .
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 assets.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding to meet obligations when due.
Liquidity risk arises in situations where the company has difficulties in obtaining funding
The company manages its liquidity risk by continuously monitoring rolling forecasts of the company's liquidity requirements, actual cash flows avaialble and the due date of financial assets and liabilities
The company is exposed to liquidity risk due to bank borrowings, trade payables, other financial liabilities
The following are the contractual maturities of Financial liabilities
The amounts disclosed in the tables are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying amount as the impact of discounting is not significant
C) Credit risk
Credit risk is the risk that a counter party will default on its contractual obligations resulting in financial loss to the company. Credit Risk encompasses of both the direct risk of default and the risk of deterioration of
creditworthiness as well as concentration risks.
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutons, as well as credit exposure to Trade receivables.
The maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented in the financial statements
The company's major class of financial assets are cash and cash equivalents, term deposits and trade receivabels
For Banks and financial institutions, only high rated banks/Financial institutions are accepted.
Company's Credit Risk arises principally from Trade Receivables.
Trade Receivables:
Trade receivables are primarily shortterm receivables from customers which arise in the normal course of business.
Credit worthiness of Customers are being assessed before making sales to the customers
The outstanding Trade receivables are regularly monitored and appropriate action is taken for collection of overdue receivables.
The history of trade receivables shows a negligible allowance for bad and doubtful debts.
As per the informations and explanations given to us, the company does not have any MSME debtors during the year
d) Capital management
(a)Risk management
The company's objectives when managing capital are to safeguard the company's ability to continue as a going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure , the company may issue new shares or sell assets to reduce debt
The company periodically reviews and manages its capital structure to ensure optimal capital structure and shareholder returns, taking into consideration the future capital requirements and capital efficiency of the
company, prevailing and projected profitability , projected operating cash flows, and projected capital expenditures.
In order to maintain or adjust the capital structure , the company may use internal funding to reduce debt.
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