General Reserve: This is used from time to time to transfer profits from retained earnings for appropriation purposes.
Investment Revaluation Reserve: This reserve represents the cumulative gain or loss arising on revaluation of equity instruments measured at fair value through OCI net of amounts reclassified if any to retained earnings when those investments are disposed off.
Actuarial Gain/Loss Reserve: This reserve represents the cumulative gain or loss on account ofremeasurement of defined benefit plans net of amounts reclassified if any to retained earnings.
Capital Redemption Reserve: This is created on redemption of redeemable preference shares issued. This can be utilised for issuing fully paid bonus shares in accordance with the provisions of Companies Act 2013.
Retained Earnings: This represents the accumulated earnings net of losses if any made by the company over the years. This reserves can be utilised for the payment of dividend and other purposes in accordance with the provisions of the Companies Act,2013
Capital Management: Equity share capital and other equity are considered for the purpose of Company’s capital management. The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management’s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence. The management and the Board of Directors monitors the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure
Note 50. Details on Statements of Current Assets submitted to the Banks:
The Company has to submit the monthly statements on stock and debtors’ positions to the bankers. During the current year, the variation between the statements submitted by the company to bank and actual balance on quarterly basis has been disclosed hereunder.i) With respect to Raw Materials (incl. stores&spares), the variations are Rs.1.78 crores, Rs.1.60 Crores, Rs.1.67 Crores, Rs.1.42 Crores in Q1, Q2, Q3 and Q4 respectively. ii) With respect to Work-in-Progress, the variations are Rs.-0.20 Crores, 3.90 Crores, Rs.-0.75 Crores, Rs.0.14 Crores in Q1, Q2, Q3 and Q4 respectively. iii) With respect to Finished Goods, the variations are Rs.-0.02 Crores in Q4. iv) With respect to Debtors (incl.Creditor Advances), the variations are Rs.-0.09 Crores, Rs.-0.21 Crores, Rs.-3.57 Crores, Rs.-0.77 Crores in Q1, Q2, Q3 and Q4 respectively. v) With respect to Creditors (incl. Debtor Advances), the variations are Rs.0.90 Crores, Rs.1.65 Crores, Rs.0.81 Crores, Rs.0.97 Crores in Q1, Q2, Q3 and Q4 respectively. These variations are due to the adjustments considered in the books post submission of statements to the bankers. Note: The Negative sign denotes that the amount submitted to bank is higher than the amount as per books of accounts.
Note 54 B. Financial instruments - Fair values and risk management Financial risk management objectives and policies
The Company’s activities exposed it to market risk (including interest rate risk and price risk), credit risk and liquidity risk. The Company’s risk management is carried out by the Board of Directors The board supervises overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk and use of financial instruments. The financial authority limits or seek to limit and mitigate transactional risks by setting out the threshold of approvals required for entering into contractual obligations.
a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices, such as foreign exchange rates, interest rates and equity prices.
b) Interest rate risk
The Company’s exposure to market risk for changes in interest rate environment relates mainly to its debt obligations.
The Company’s policy is to maintain an efficient and optimal interest cost structure using a mix of fixed and variable rate debts and long-term and short-term borrowings.
The Company’s borrowings majorly consists of project funding loans, working capital loans having variable rate of interest.
ii) Fair value
The following methods and assumptions were used to estimate the fair values:
- The carrying value of financial asset approximates fair value
iii) Credit risk
Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, leading to financial loss. The credit risk arises principally from its operating activities (primary trade receivables) and from its investing activities, including deposits with banks and other financial instruments. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom credit has been granted after obtaining necessary approvals for credit. The collection from the trade receivables are monitored on a continous basis by the receivables team.
There is no significant concentration of credit risk.
Credit risk on cash and cash equivalent is limited as the company generally transacts with banks and financial instituitions with high credit ratings assigned by international and credit rating agencies.
Note 54 C Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its obligations associated with its financial liabilities that are settled by delivering cash or another fianncial asset as they fall due. The Company is expected to this risk from its operating activities and financial activities. The Company’s approach to managing liability is to ensure, as far as possible that it will have sufficient liquidity to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. Liquidity requirements are maintained within the credit facilities established and are available to the company to meet its obligations.
The table below provides details regarding the contractual maturities of significant financial liabilities as of the reporting date.
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