(c) Terms/rights attached to equity shares
(i) The Company has only one class of equity shares having a par value of Rs. 10 per share. Each shareholder is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity
Note: Pursuant to approval given by its Shareholders in Annual General Meeting held on 19th July 2023, the company have issued 59,46,326 fully paid up bonus equity share of Rs 10/- each in the ratio of 1(one) equity share of Rs. 10/- for every 1 (One) existing equity shares of Rs. 10/- each. Consequent to the allotment of shares dated 25th July, 2023, the issued, subscribed and paid up capital of the Company has increased to a sum of Rs. 1,189.27 lakhs by capitalising a sum of Rs. 594.63 lakhs from free reserves.
b. Defined Benefit Plan
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with the Life Insurance Corporation of India in the form of a qualifying insurance policy.
The following tables summarize the components of net benefit expense recognised in the other comprehensive income in the statement of the profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans:
x) The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.
xi) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.
xii) The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefits obligation as a result of reasonable changes in key assumption occurring at the end of the reporting period.
xiii) The plan assets are maintained with Life Insurance Corporation of India (LIC). c. The Company has also provided for leave encashment which is unfunded.
The following table summarize the amount recognised as expense in the statement of profit or loss and the total outstanding
balance of and sick leaves as at 31st March, 2024
The transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year - end are unsecured and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31,2024 the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
e. Segment Information
1. In line with the provision of Ind AS 108- Operating Segments and on the basis of review of operations being done by the board of directors of the Company (which has been identified as the Chief Operating Decision Maker (CODM) who evaluates the Company's performance, allocates resources based on the analysis of the various performance indicator of the Company as a single unit), the operations of the Company falls under manufacturing of auto component parts, which is considered to be the only business reportable segment. further, the Company operates only in one geographical segment - India. (Refer to note no. 28.1)
2. Major Customer: Revenue from two customers of the Company's manufacturing business are Rs. 54,964.51 lakhs (31st March 2023 Rs. 37,982.87 lakhs) which is more than 10 percent of the Company's total revenue. No other single customer contributed 10% or more to the Company's revenue during the period.
f. Expenditure on corporate social responsibility
As per provisions of section 135 of the Companies Act, 2013, the Company has to incur at least 2% of average net profits of the preceding three financial years towards Corporate Social Responsibility ("CSR"). The Company has contributed a sum of Rs. 35 lakhs (31st March, 2023: Rs. 15 lakhs) towards education . The same is debited to the Statement of Profit and Loss.
II) Measurement of fair value
Level 1: Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market.
Level 2: Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly.
Level 3: Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data.
The fair value of the financial assets are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:
(i) Unquoted equity and other investments: Fair value of same has not been derived as in the opinion of directors the carrying amounts of these investments approximate their fair values.
(ii) Fair value of trade receivables, other current financial assets, trade payables, other current financial liabilities approximate their carrying amount, largely due to the short-term nature of these instruments.
III) Discount rate used in determining fair value
The interest rate used to discount estimated future cash flows, where applicable, are based on the incremental borrowing rate of borrower which in case of financial liabilities is average market cost of borrowings of the Company and in case of financial asset is the average market rate of similar credit rated instrument. The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
h. Capital management
The Company's policy is to maintain a strong capital base so as to maintain confidence of investors, bankers, customers and vendors and to sustain future development of the business. The management monitors the return on capital and also monitors capital using a ratio of 'adjusted net debt' to 'equity' For this purpose, adjusted net debt is defined as total debts (including lease liability) less cash and cash equivalents. Equity comprises all components of equity.
i. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Market risk
- Credit risk
- Liquidity risk
Risk management framework:
The Company's principal financial liabilities other than derivatives comprise trade and other payables, employees related payables, interest accrued, security deposit and others. The main purpose of these financial liabilities is to finance the Company's operations and to provide guarantees to support its operations.
The Company's principal financial assets includes security deposits, trade receivables, cash and cash equivalents, deposits with banks, interest accrued in deposits, receivables from related and other parties and interest accrued thereon.
The Company's senior level management assess these risks and is supported by Treasury department that advises on the appropriate financial risk governance framework.
All derivative activities for risk management purposes are carried out in line with the policy duly approved by board of directors. The execution of the policy is done by treasury department which has appropriate skills, experience and supervision.
A. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates - will affect the Company's financial position or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimizing the return. The Company uses derivatives to manage market risks. All such transactions are carried out within the guidelines set by the Company.
B. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivable from customers, foreign exchange transactions, deposits with banks and other financial instruments. The carrying amount of financial assets represent the maximum credit risk exposure.
i) Trade receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate.
The Company primarily has the exposure from following type of customer:
- Original equipment manufacturers (OEMs)
Company has established a policy under which each new OEMs are analysed individually for creditworthiness before goods are sold to them. The Company's review includes due diligence by analysing financial statements, industry information,
promoter's background and in some cases bank references. In case of sales, the Company has limited its credit exposure to OEMs and dealers by providing a maximum payment period up to 60 days.
The Company's expected probability of default is nil and all major payments are received on due dates without any significant delays.
The ageing analysis of trade receivables as of the reporting date is given in note no. 12
The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade receivables, loans and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, their geographical location, industry and existence of previous financial difficulties.
The impairment provisions for financial assets disclosed are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
However, Company need not required to provide for any risk allowance on account of trade receivable being bad and not recoverable as the amount of outstanding pertaining to trade receivables which exceeds the credit period allowed by the Company is less than 2% of the total outstanding from them.
C. Liquidity risk
Liquidity risk is the risk that 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 managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities, when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company's primary sources of liquidity include cash deposits, short term investments in mutual funds, borrowings, undrawn committed credit facilities and cash flow from operating activities. The Company seeks to increase income from its existing operations by maintaining quality standards for its goods and services while reducing the related costs and by controlling operating expenses.
Consequently, the Company believes its revenue, along with proceeds from financing activities will continue to provide the necessary funds to cover its short term liquidity needs. In addition, the Company projects cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans. However, material changes in the factors described above may adversely affect the Company's net cash flows.
*Carrying amount of borrowing is the sum of outstanding principal of loan (refer note no. 18 & 22) and interest accrued but not due (refer note no. 24). While contractual payment is the loan installments remaining to be paid as at reporting date. Carrying amount of lease liabilities is the discounted present value of principal of lease liabilities (refer note no. 19(i) & 19(ii)), while the contractual maturities represents the rental payments to be made over the remaining life of lease
j. Lease
The Company has entered into leases for its commercial premises, duration of such leases is for 0-9 years. These lease agreements are normally renewed on expiry. At the date of commencement of the lease, the Company recognize lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. The rental expense charged to statement of profit and loss is Rs. 6.90 lakhs (31st March 2023: Rs. 6.17 lakhs).
The weighted average incremental borrowing rate applied to lease liabilities recognized in the balance sheet at the date of initial application is 8.30%.
m. Pursuant to approval given by its Shareholders in Annual General Meeting held on 19th July 2023, the company have issued 59,46,326 fully paid up bonus equity share of Rs 10/- each in the ratio of 1(one) equity share of Rs. 10/- for every 1 (One) existing equity shares of Rs. 10/- each. Consequent to the allotment of shares dated 25th July, 2023, the issued, subscribed and paid up capital of the Company has increased to a sum of Rs. 1,189.27 lakhs by capitalising a sum of Rs. 594.63 lakhs from free reserves. Accordingly, the earning per share has been adjusted for previous periods/ year and presented in accordance with IND AS-33 Earning Per Share.
n. Overdraft Facility
(i) During the year, the Company has taken Working Capital Dropline Overdraft Credit Facility from HDFC Bank with sanctioned amount of Rs 2,000 lakhs for aperiod of 5years (valid up to November 2028) repayable in 20 quarterly instalment installment of Rs.100 lakhs. The rateo finterest is 9% linked to T-Bill (variable) and payable at monthly rests. The overdraft limit is secured by the way of (i) First charge on entire current assets including stock of RM, WIP, FG & Stores and Spares & book debt(ii) First Pari-passu charge on Movable Fixed Assets of the Company (iii) Negative Lien on property of Plot no. C506/526, NDR Auto Components Ltd, Pioneer Industrial Park, Pathredi, Gurgaon, Haryana 123413.
Note :
a) The company has undrawn cash credit facility of Rs. 500 lakhs from ICICI bank Ltd and Rs. 2,000 lakhs from HDFC Bank Limited as on 31st March 2024.
b) The monthly stock statement filed by the Company during the year with banks are in agreement with the books of accounts.
c) The Company has not defaulted on Overdraft amount payable.
d) The Company has utilized its overdraft facility for section purpose.
e) The Company has capitalised interest amounting to Rs. 17.06 lakhs from HDFC Bank Limited and Nil from ICICI Bank Limited
(ii) During the year, the Company has renewed Over draft Facility from ICICI Bank Limited with sanctioned amount of Rs 500.00 lakhs valid up to16th July 2024. The rate of Interest is highest interest rate on Fixed Deposit given by ICICI Bank plus 1% available at the time of availing facility and it shall be payable on monthly basis. The Overdraft Facility is secured by the way of Fixed Deposits amounts equivalent to sanctioned facilities.
o. In view of the management, the current assets (financial & other) have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet.
p. During the month of May 2023, the Income Tax Department ('the department') conducted a search under section 132 of the Income Tax Act, 1961 at certain premises of the Company including manufacturing locations and residence of few of its employees/key managerial personnel. The business and operations of the Company continued without any disruptions.
No demand notice has been raised on the Company as on date. And company is making the required submissions pursuant to the details of certain transactions and documents sought by the department. Based on the aforesaid and having regard to the matters of inquiry during the search proceedings stated above, management is of the view that no material adjustments are required to these financial results in this regard.
q. The company had received intimation dated February 12, 2024 for tax ascertained as being payable amounting to Rs 3,587 lakh under section 74 (5) of KGST Act, 2017 from Bengaluru, Karnataka, GST Authority, due to misclassification of goods under wrong HSN for the period June 2021 to December 2023. The Management has submitted reply on January 10, 2024 that the company has made classification of goods under correct HSN, hence, liability of tax payable under the aforesaid section is incorrect. The Management is of the view considering the previous antecedents and the underlying issues involved, the company has an defendable case on merits.
r. The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (editlog) facility and the same has been operated throughout the year for all relevant transactions recorded in the software. The audit trail (editlog) feature is not enable datdatabase level due to space/ performance-time constraints. Further, there were no instance of audit trail (editlog) feature being tampered with at transaction level, in respect of the software. Currently the company is exploring the options to enable the audit trail feature (editlog) at database level with the software provider.
s. Events occurring after balance sheet date:
There are no major events which has occurred after the balance sheet date.
t. Note no. 1 to 37 pertaining to balance sheet and statement of profit and loss form an integral part of the financial statements.
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