2.12 Provisions, contingent liabilities & Assets:
A Provision is recognized when an enterprise has a present obligation as a result of past event, it is probable
that an outflow of resources will be required to settled the obligation and a reliable estimate can be made of the
amount of the obligation. Provisions are not disclosed to its present value and are determined based on best
management estimate required to settle the obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to reflect the current best estimates.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the Company or a present obligation that arises from past events where it is either
not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be
made. Information on contingent liability is disclosed in the Notes to the Financial Statements. Contingent assets
are not recognized in financial statements but are disclosed, if any.
A contingent asset is a possible asset that arises from past events the existence of which will be confirmed only
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
enterprise.
2.13 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. A financial asset or a liability is recognised when the Company becomes a
Party to the contractual provision of the instrument.
(a) "Financial Assets are measured at amortised cost or fair value through Other Comprehensive Income or fair
value through Profit or Loss, depending on its business model for managing those financial assets and the assets
contractual cash flow characteristics. Subsequent measurements of financial assets are dependent on initial
categorisation. For impairment purposes significant financial assets are tested on an individual basis, other
financial assets are assessed collectively in groups that share similar credit risk characteristics. The company
derecognizes a financial assets when the contractual rights to the cash flows from the financial assets expire or it
transfers the financial assets and the transfer qualifies for the derecognisition under Ind AS 109."
Investment in subsidiaries, associate and Joint venture
Investments in shares of Subsidiaries, Joint Venture & Associates are measured at cost subject to impairment
losses, if any.
Investment in Equity Instruments (other than Investment in Subsidiaries, Associates & Joint Venture)
Investments in Equity Instruments (Other Than Investment in Subsidiaries & Joint Venture) are initially measured
at fair value. Any subsequent fair value gain or loss is recognized through Other Comprehensive Income.
The company assesses impairment based on expected credit loss (ECL) model to all its financial assets measured
at amortized cost.
Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with
an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the
purpose of the statement of cash flows, cash and cash equivalents consist of cash and short term deposits, as
defined above.
(b) All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs. The Company's financial liabilities include trade and other
payables, loans and borrowings including bank overdrafts.
Loans & Borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost
using the EIR method. Gains and losses are recognized in the statement of profit and loss when the liabilities are
derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and
loss.
Trade & Other payables
A payable is classified as 'trade payable' if it is in respect of the amount due on account of goods purchased or
services received in the normal course of business. 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
presented as current liabilities unless payment is not due within 12 months after the reporting period. They are
recognized initially at their fair value and subsequently measured at amortized cost using the effective interest
method."
2.14 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. Chief operating decision maker review the performance of the Company according to
the nature of products traded and services provided, with each segment representing a strategic business unit
that offers different products and serves different markets. The analysis of segments is based on the activities
performed by each segment.
The Company prepares its segment information in conformity with the accounting policies adopted for preparing
and presenting financial statements of the Company as a whole.
2.15 Earnings per Share
Earnings considered in ascertaining the company's earning per share comprises the net profit after tax
attributable to equity shareholders.
Basic earnings per share is computed using the weighted average number of equity shares outstanding during the
period. Diluted earnings per share are computed using the weighted average number of equity and dilutive
equivalent shares outstanding during the period.
3. Critical judgments and estimates
In the process of applying the Company's accounting policies, management has made the following estimates,
assumptions and judgments, which have significant effect on the amounts recognized in the financial statement.
Uncertainty about these assumptions and estimates could result in outcome that require a material adjustment
to assets or liabilities affected in future periods.
i) Property, plant and equipment
Property, Plant and equipment represent a significant proportion of the asset base of the company. The useful
lives and residual value of the company's asset are determined by the management at the time the asset is
acquired and reviewed at each reporting date.
ii) Contingencies
In the normal course of business, contingent liabilities may arise from litigation and other claims against the
Company. Potential liabilities that are possible but not probable of crystallizing or are very difficult to quantify
reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognized.
iii) Income Tax and Deferred Tax
The Company's tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the
purpose of paying advance tax, determining the provision for income taxes, including amount expected to be
paid/recovered for uncertain tax positions.
iv) Allowance for uncollected accounts receivable and advances
Trade receivables do not carry any interest and are stated at their normal value as reduced by appropriate
allowances for estimated irrecoverable amounts. Individual trade receivables and advances are written off when
management deems them not to be collectible. Impairment is made on the expected credit losses, which are the
present value of the cash shortfall over the expected life of the financial assets.
v) Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any
indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's
recoverable amount. An asset's recoverable amount is the higher of an asset's or CGU's fair value less costs of
disposal and its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable amount.
vi) Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss
rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment
calculation, based on Company's past history, existing market conditions as well as forward looking estimates at
the end of each reporting period.
vii) Fair value measurement of financial instruments
viii) When the fair values of financials assets and financial liabilities recorded in the Balance Sheet cannot be
measured based on quoted prices in active markets, their fair value is measured using valuation
techniques, including the discounted cash flow model, which involve various judgments and assumptions.
33. Segment Reporting:
(a) Primary Segment: Business Segment
Based on the guiding principles given in “Ind Accounting Standard -108 Operating Segment” notified
under Companies (Accounting standard) Rules 2006, the Company's operating business are organized
and managed separately according to the nature of the product of Trading and services provided. The two
identified reportable segments. One is automobile segment in which trading of vehicles and servicing
(including Heavy Commercial Vehicle) and other which includes retail outlet of Petroleum Products
(bpcl).
Secondary Segment: Geographical segment:
The analysis of Geographical segment is based on the geographical location i.e. domestic and overseas
markets of the customers.
Secondary Segment Reporting (By Geographical segment)
The following is the distribution of the company's revenue from operation (net) by Geographical markets,
regardless of where the goods were produced:
• Segment accounting polices:
In addition to the significant accounting policies applicable to the business segment as set in note 2, the
accounting policies in relation to segment accounting are as under:
i) Segment revenue & expenses:
Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other
segment revenue and expenses are directly attributable to the segments.
ii) Segment assets and liabilities:
Segment assets include all operating assets used by a segment and consist principally of operating cash,
receivables, inventories and fixed assets, net of allowance and provisions, which are reported as direct off
sets in the balance sheet. Segment Liabilities include all operating Liabilities and consist principally of
trade payables & accrued liabilities. Segment assets and liabilities do not include deferred income taxes
except in the segment of the Commercial Vehicle. While most of the assets/liabilities can be directly
attributed to individual segments, the carrying amount of certain assets /liabilities pertaining to two more
segments are allocated to the segments on a reasonable basis.
iii) Inter segment sales:
Inter segment sales between operating segments are accounted for at market price. These transactions
are eliminated in consolidation. The main segment is Commercial vehicles and funds provided by the
Commercial Vehicle Segments to other segments and interest on such balances are not charged.
The assumption of future salary increase takes into account the inflation, seniority, promotion and other
relevant factors such as supply and demand in employment market. The above information is certified by
the Actuary.
A. Actuarial Risk: It is the risk that benefits will cost more than expected. This can arise due to one of the
following reasons:
Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will
result into an increase in Obligation at a rate that is higher than expected.
Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate
assumption than the Gratuity benefits will be paid earlier than expected. The impact of this will depend
on whether the benefits are vested as at the resignation date.
B. Investment Risk: For funded plans that rely on insurers for managing the assets, the value of assets
certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the
present value of the assets is independent of the future discount rate. This can result in wide fluctuations
in the net liability or the funded status if there are significant changes in the discount rate during the inter¬
valuation period.
C. Liquidity Risk: Employees with high salaries and long durations or those higher in hierarchy,
accumulate significant level of benefits. If some of such employees resign/retire from the company there
can be strain on the cashflows.
D. Market Risk: Market risk is a collective term for risks that are related to the changes and fluctuations of
the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount
rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit
Obligation of the plan benefits & vice versa. This assumption depends on the yields on the
corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields
as at the valuation date.
E. Legislative Risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan
assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity
Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the
present value of the Defined Benefit Obligation and the same will have to be recognized immediately in
the year when any such amendment is effective.
35. Financial instruments
35.1 Fair Valuation Techniques
The Company maintains policies and procedures to value financial assets or financial liabilities using the best and
most relevant data available. The fair values of the financial assets and liabilities are included at the amount that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurment date.
There is no instruments like preference shares measured at fair value using level iii technique so no
sensitivity analysis and reconciliation are not given.
35.2 Financial Risk Management
The Company's activities are exposed to a variety of financial risks from its operations. The key financial risks
include market risk (including interest rate risk etc.), credit risk and liquidity risk. The company's overall risk
management policy seeks to minimize potential adverse effects on company's financial performance.
(A) Market Risk: Market risk is the risk that the fair value of future cash flow of financial instruments will
fluctuate because of change in market prices. Market risk comprises mainly of interest rate risk.
(a) Interest rate risk: Interest rate 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. Any change in the interest rates environment may
impact future rates of borrowing. The company mitigates this risk by regularly assessing the market scenario,
finding appropriate financial instruments, interest rate negotiation with the lenders for ensuring the cost-
effective method of financing.
(b) Interest Rate Sensitivity: The following table demonstrates the sensitivity to a reasonable possible change in
interest rate on financial assets affected. With all other variable held constant, the company's profit before tax is
affected through the impact on finance cost with respect to our borrowing as follows:
A change in 25 basis points in interest rates would have following impact on profit after tax calculated on the
outstanding amount of long term and short-term borrowings at the year end.
(d) Commodity price risk: The Company is affected by the price volatility of certain commodities. Its operating
activities require the purchase of trading goods therefore, requires a continuous supply of certain raw materials.
To mitigate the commodity price risk, the Company has an approved supplier base to get competitive prices for
the commodities and to assess the market to manage the cost without any comprise on quality.
(B) Credit Risk:
Credit risk arises from the possibility that counter party may not be able to settle their obligation as agreed. Credit
risk primarily arises from financial assets such as trade receivables, other balance with banks, loans and other
receivables.
Trade Receivables: - The maximum exposure to credit risk is primarily from trade receivables. The company
periodically assesses the credit quality of counter parties, taking into the financial condition, current economic
trends, past experiences and other factors.
The company has a well-defined sale policy to minimize its risk or credit defaults. Outstanding receivables are
regularly monitored and assessed. Impairment analysis is performed based on historical data at each reporting
date on an individual basis.
Financial assets are written off when there is no reasonable expectation of recovery, such as customer failing to
engage in a repayment plan with the company.
Ageing of the trade receivable is given at Note 13.
(C) Liquidity Risk
Liquidity risk is the risk, where the company will encounter difficulty in meeting the obligations associated with
its financial liabilities that are settled by delivering cash or another financial asset. The company's approach to
ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due.
The table below summarizes the maturity profile of company's financial assets and liabilities based on contractual
undiscounted payments.
Collateral
The Company has mortgaged/ hypothecated of its Intangible assets, trade receivables, cash and cash equivalents
(details as specified in note no. 19 and 20) in order to fulfill certain collateral requirements for the banking/ Other
Financial Institutions (NBFC) facilities extended to the Company. There is obligation to return the securities to
the Company once these banking facilities are surrendered.
(D) Capital risk management
The Company's policy is to maintain an adequate capital base so as to maintain creditor and market confidence
and to sustain future development. Capital includes issued capital, share premium and all other equity reserves
attributable to equity holders. The primary objective of the Company's capital management is to maintain an
optimal structure so as to maximize the shareholder's value. In order to strengthen the capital base, the company
may use appropriate means to enhance or reduce capital, as the case may be.
The Company is not subject to any external imposed capital requirement. The company monitors capital using a
gearing ratio, which is net debt divided by total capital. Net Debt is calculated as borrowings less cash and cash
equivalents.
44. No funds 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 person(s) or entity(ies), including foreign
entities (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the
Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The
Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company
shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the
Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate
Beneficiaries.”
45. The company has called for complete information from all the vendors regarding their status as Small scale /
Micro industrial undertaking. Based on information received regarding the status of the vendors are prepaid the
financial statements.
46. Other Additional information related to financial statements.
a. i. The details of Trading goods opening, purchases, sales and closing stock are given as under.
c. No proceedings have been initiated or pending against the company under the Benami Transactions
(Prohibitions) Act, 1988,
d. Borrowing:
The Company has borrowed from banks or financial institutions (see note 20) on the basis of security of current
assets and also filed quarterly returns or statements of current assets of by the Company with banks or
financial institutions are in agreement with the books of accounts
e. Willful Defaulter: *
The company is not a willful defaulter by any bank or financial Institution or other lender:
* “willful defaulter” here means a person or an issuer who or which is categorized as a willful defaulter by any
bank or financial institution (as defined under the Act) or consortium thereof, in accordance with the guidelines
on willful defaulters issued by the Reserve Bank of India.
f. Relationship with Struck off Companies:
The company has not any transactions with companies struck off under section 248 of the Companies Act, 2013
or section 560 of Companies Act, 1956,
g. Registration of charges or satisfaction with Registrar of Companies:
1. Satisfaction of following charges are still in the process and have not been satisfied with ROC:
j. No scheme of Arrangements has been approved by the competent Authority in terms of section 230 to 237 of
the Companies Act , 2013 , therefore this clause is not applicable to company .
k. The company has not surrendered or disclosed any income during the year. Accordingly, this clause is not
applicable to company .
l. Corporate social Responsibility activities are not applicable to the company . Accordingly, this clause is not
applicable to company.
m. The company has not traded or invested in Crypto currency or virtual currency during the financial year .
therefore this clause is not applicable to company.
47. Figures for previous year have been re-arranged/regrouped wherever necessary to make them comparable.
SIGNED FOR IDENTIFICATION
For K. Prasad & company. For and behalf of board of director of KALYANI
CHARTERED ACCOUNTANTS COMMERCIALS LTD.
Firm Registration No. 002755N)
S.L. Agarwal
M. Director
DIN:01341113
CA MANMOHAN MAHIPAL
PARTNER Sourabh Agarwal
M.N.: 507113 Whole Time Director
DIN:02168346
PLACE: New Delhi Suranjan Upadhyay
DATE : 29.05.2024 CS M.No.: A-16537 '
UDIN: 24507113BKEIF5173
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