(D) Terms / Rights attached to Equity Shares
a) The Company has only one class of Equity Shares having par value of Rs 10 each. Each share holder is eligible for one vote per share held.
b) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.
28. Financial Risk Management
The Company's operational activities expose to various financial risks i.e. market risk, credit risk and risk of liquidity. The Company realizes that risks are inherent and integral aspect of any business. The primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. This note explains the sources of the risk which the entity is exposed and how the entity manages the risk and the related impact on the financial statements.
(a) Market Risk
Market Risk is the risk of potential adverse change in the Company's income and the value of the net worth arising from the movement in foreign exchange rates, interest rates or other market prices.The Company recognises that the effective management of market risk is essential to the maintenance of stable earnings and preservation of shareholder value. The objective of market risk management to manage and control market risk within acceptable parameters, while optimising the overall returns.
(b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the long-term debt obligations with floating interest rates.
The Company manages its interest rate risk by having a balanced portfolio of borrowings and equity.
(c) Price Risks
Price risk is the risks that the fair value of a financial instrument will fluctuate due to changes in the market traded price. It arises from the financial assets such as investment in equity instruments such as bond , mutual funds etc. The Company is exposed to price risk mainly from investments carried at FVOCI whcih are valued using quoted prices in active markets . A sensitivity analysis demonstrating the impact on change in the market prices of these instruments from the prices existing as at reporting date is given below:-
Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Company's exposure to the credit risk is influenced mainly by cash and cash equivalents , trade receivables and financial assets measured at cost. The Company continously monitors defaults of customers and their counterparties and incorporates this information into credit risk controls. Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits. Other financial assets measured at amortised cost excluding deposits of rent. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continously, while at the same time internal control system in place to ensure the amounts are within the defined limits.
Assets are written off when there is no reasonable expectation of recovery, such as debtor declaring bankruptcy or litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in Statement of Profit and Loss.
(i) Trade Receivables:-
The Company establishes an allowance for impairment that represents its estimates of incurred losses in respect of trade receivables . The allowance account in respect of trade and other receivables is used to record impairment losses unless the Company is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverables and the amount charged to the allowance account is wriiten off against the carrying amount of the impaired financial asset.
As the Company does not hold any collateral , the maximum expense to credit risk for each class of financial instrument is the carrying amount of that class of financial instrument presented on the statement of financial position. Impairment of trade receivables is based on expected credit loss model ( simplistic approach) depending upon the historical date, present financial conditions of customers and anticipated regulatory changes. Company does not hold any collateral in respect of such receivables
(ii) Financial Instruments and Cash Deposits:-
Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits. Other financial assets measured at cost excluding deposits on rent. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure amounts are within specified limits.
(iii) Credit risk exposure:-
This risk is common to all investors who invest in bonds and debt instruments and it refers to a situation where a particular bond/debenture issuer is unable to make the expected principal payment interest rate payment, or both. Similarly, a lender bears the risk that the borrower may default in the payment of contractual interest or principal on its debt obligation, or both. The entity continuously monitors defaults of the customers and other counterparties and incorporates this information into its credit risk control.
Liquidity risk is the risk that the Company will face in meeting its obligation associated with its financial liabilities. The Company's approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses.
The Company maintained a cautious liquidity strategy , with positive cash balance through out the years ended 31 March 2024 and 31 March 2023. Cash flow from operating activities provides funds to service the financial liabilities on a day-to day basis. The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an going basis to meet operational requirements . Any short term surlpus cash generated over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and other highly marketable instruments with appropriate maturities to optimise the returns on the investments while ensuring the sufficient liquidity to meet its liabilities.
(f) Capital Management
For the purpose of the Company's capital management , capital includes issued equity share capital, share preimum and all other equity reserves attributable to equity share holders of the Company. The primary objective of the capital management is to maximise shareholder value's.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial convenants. To maintain or adjust the capital structure , the Company may adjust the dividend payment to shareholders , return on capital to shareholders or issue of new shares.
29. Segment Reporting
As per the requirments of IND AS-108, " Segment Reporting" , no disclosures are required to be made since the Company activities consists of a single business segment i.e. Information & Technology.
30. Corporate Social Responsibility is not applicable to the Company.
c) Fair value Hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used, in determining the fair value , the Company has classified its financial instruments into three levels prescribed under the accounting standard . An explanation of each level follows underneath:
Level 1:- Quoted prices (unadjusted) in active markets for identical assets and liabilities
Level 2:- Inputs other than quoted prices included in Level 1 that are observable for the asset or liability , either directly or indirectly
Level 3:- Inputs for assets or liabilities that are not associated on observable market date (unobservable input).
(ii) The following methods and assumptions were used to estimate the fair value:-
(a) Long term fixed rates receivables/ borrowings are evaluated by the Company based on the parameters such as interest rates and credit worthiness of the customers and the risk characteristic of the financed project. Based on the evaluations , allowances are taken into account for the expected losses of these receivables.
(b) The fair value of the loans from banks and financial liabilities as well as other non-current financial liabilities is estimated by discounting future cash flows using the rates currently available for debt on similar terms , credit risk and remaining maturities. Their valuation requires managment to use observable inputs in the model , management regularly assessses a range of reasonably possible for those significant unobservable inputs and determines the imapct on the total fair value.
The Sensitivity analysis above have been determined based on reasonably possible changes of the respective assumption occurring at the end of the reporting period & may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumption constant. when calculating the sensitivity to the assumption, the method (Projected Unit Credit Method) used to calculate the liability recognised in the balance sheet has been applied. The methods & types of assumptions used in preparing the sensitivity analysis did not change compared with the previous period.
34. Other Additional Regulatory Information as per Schedule III
(a) Disclosure in relation to undisclosed income : The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the period ending 31 March, 2024 and also for the period ending 31 March, 2023 in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(b) Relationship with Struck off Companies : The Company do not have any transactions with Company's struck off during the period ending 31 March, 2024 and also for the period ending 31 March, 2023.
(c) Details of Benami Property held : The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company during the period ending 31 March, 2024 and also for the period ending 31 March, 2023 for holding any Benami property.
(d) Registration of charges or satisfaction with Registrar of Companies (ROC) : The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period, during the period ending 31 March, 2024 and also for the period ending 31 March, 2023.
(e) Details of Crypto Currency or Virtual Currency : The Company have not traded or invested in Crypto currency or Virtual Currency during the period ending 31 March, 2024 and also for the period ending 31 March, 2023.
(f) Utilisation of Borrowed Fund & Share Premium :
I. The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
II. The Company have 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: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
35. Figures of the year are regrouped / rearranged in order to confirm with current year classifications.
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