3.8 Provisions (other than for employee benefits)
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Expected future operating losses are not provided for.
Where the Company expects some or all of the expenditure required to settle a provision will be reimbursed by another party, the reimbursement is recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as separate asset.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
Warranties
A provision for warranties is recognised when the underlying products or services are sold, based on historical warranty data and a weighting of possible outcomes against their associated probabilities.
Onerous
A provision for onerous contract is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract, which is determined based on the incremental costs of fulfilling the obligation under the contract and an allocation of other costs directly related to fulfilling the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.
3.9 Revenue from contracts with customers
Revenue is recognized when a performance obligation in a customer contract has been satisfied by transferring control over the promised goods to the customer. Control over a promised good refers to the ability to direct
the use of, and obtain substantially all of the remaining benefits from, those goods. Control is usually transferred upon shipment, delivery to, upon receipt of goods by the customer, in accordance with the individual delivery and acceptance terms agreed with the customers. The amount of revenue to be recognized (transaction price) is based on the consideration expected to be received in exchange for goods, excluding amounts collected on behalf of third parties such as applicable taxes directly linked to sales. If a contract contains more than one performance obligation, the transaction price is allocated to each performance obligation based on their relative stand-alone selling prices.
For contracts that permit the customer to return an item, revenue is recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Therefore, the amount of revenue recognized is adjusted for expected returns, which are estimated based on the historical data of sales returns. In these circumstances, a refund liability and a right to recover returned goods asset are recognized. The right to recover returned goods asset is measured at the former carrying amount of the inventory less any expected costs to recover goods.
3.10 Recognition of interest income or expense
Interest income or expense is recognized using the effective interest method.
The 'effective interest rate' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:
- the gross carrying amount of the financial asset; or
- the amortized cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.
3.11 Income tax
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination or to an item recognized directly in equity or in other comprehensive income. The Company has determined that interest and penalties related to income taxes, including uncertain tax treatments, do not meet the definition of income taxes, and therefore accounted for them under Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable reflects the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
ii. Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognized in respect of carried forward tax losses and tax credits. Deferred tax is not recognized for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and at the time of transaction (i) affects neither accounting nor taxable profit
or loss; and (ii) does not give rise to equal taxable and deductible temporary differences.
- temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognize a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans of the Company. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
3.12 Earnings per share Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit (or loss) attributable to the owners of the Company by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares), if any.
Dilluted Earnings Per Share
Diluted earnings per share is computed by dividing the profit (considered in determination of basic earnings per share) after considering the effect of interest and other financing costs or income (net of attributable taxes) associated with dilutive potential equity shares by the weighted average number of equity shares considered for deriving basic earnings per share adjusted for the weighted average number of equity shares that would have been issued upon conversion of all dilutive potential equity shares.
3.13 Contingent liability
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets
Contingent asset is not recognized in consolidated financial statements since this may result in the recognition of income that may never be realized. However, when the realization of income is virtually certain, then the related asset is not a contingent asset and is recognized.
13.3 Rights, preferences and restrictions attached to equity shares
The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the company's residual assets on winding up. The equity shareholders are entitled to receive dividend as declared from time to time, subject to preferential right of preference shareholders to payment of dividend. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to his/its share of the paid-up equity share capital of the company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable has not been paid. Failure to pay any amount called up on shares may lead to their forfeiture.
On winding up of the company, the holders of equity shares will be entitled to receive the residual assets of the company, remaining after distribution of all preferential amounts, in proportion to the number of equity shares held.
For aeTons odout me reiaTea employee oenefiT expenses, see note 20..
The Company has also certain defined contribution plans. Contributions are made To provident fund in India for employees at The rate of 12% of wages as per regulations. The contributions are made To registered provident fund administered by Government. The obligation of The Company is limited To The amount contributed and it has no further contractual nor any constructive obligation. The expense recognized during The year Towards defined contribution plan is Rs. 4,796.33 (March 31, 2023: Rs. 4,583.67).
The Company has a defined benefit gratuity plan in India ("The plan"), governed by The Payment of Gratuity Act, 1972. The plan entitles an employee, who has rendered at least five years of continuous service, To gratuity at The rate of fifteen days wages for every completed year of service or part Thereof in excess of six months, based on The rate of wages last drawn by The employee concerned. The defined benefit plan for gratuity is administered by a single gratuity fund (Life Insurance Corporation of India) That is legally separate from The Company.
A. Funding
The Plan is fully funded by The Company with Life Insurance Corporation of India. The funding requirements are based on The gratuity fund's actuarial measurement framework set out in The funding policies of The plan. The funding of The plan is based on a separate actuarial valuation for funding purposes for which The assumptions have been set out in (E). Employees do not contribute To The plan.
The Company expects To pay INR 3,413.50 in contributions To its defined benefit plans in FY 2024-25.
B. Reconciliation of the net defined benefit (asset)/liability
The following Table shows a reconciliation from The opening balances To The closing balances for The net defined benefit (asset) liability and its components:
Notes to the financial statements for the year ended 31st March 2024
(All amounts are in thousands of INR except share data, unless otherwise stated)
Note: a) In above table, the Company has disclosed the fair value of each class of financial assets and financial liabilities in a way that permits the information to be compared with the carrying amounts. In addition, it has reconciled the assets and liabilities to the different categories of financial instruments as defined in Ind AS 109.
b) The Company has not disclosed fair values of financial instruments such as trade receivables, loans, cash and cash equivalents, Bank balances other than cash and cash equivalents, other financial assets, trade payables and other financial liabilities, since their carrying amounts are reasonable approximates of fair values.
c) The Company groups financial instruments into classes that are appropriate to the nature of the information disclosed and that take into account the characteristics of those financial instruments. Although Ind AS 107 does not define 'classes', as a minimum instruments measured at amortized cost should be distinguished from instruments measured at fair value.
B. Financial risk management
The Company has exposure to the following risks arising from financial instruments:-
a. credit risk (see (B)(ii));
b. liquidity risk (see (B)(iii))
c. market risk (see (B)(iv)).
i. Risk management framework
The Company's Board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The board of directors have established the risk management committee, which is responsible for developing and monitoring the Company's risk management policies. The committee reports regularly to the board of directors on its activities.
The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Company's audit committee oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
ii. 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 receivables from customers and loans. The carrying amounts of financial assets, contract assets represent the maximum credit risk exposure.
Impairment losses on financial assets and contract assets recognized in statement of profit and loss for the year ended 31 March 2024 is Nil (31 March 2023: Nil)
Cash and bank balances
The Company held cash and cash equivalents and other bank balances of INR 9,232.93 thousands as at 31 March 2024 (31 March 2023: INR 14,450.31 thousands). The cash and cash equivalents and other bank balances are held with the banks. Impairment on cash and cash equivalents and other bank balances has been measured on a 12 month expected loss basis and reflects the short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties.
Loans
All of the Company loans at amortized cost are considered to have low credit risk and the loss allowance, if any, is limited to 12 months' expected losses. Management considers instruments to be low credit risk when they have a low risk of default and other party has a strong capacity to meet its contractual cash flow obligations in the near term.
This balance primarily constitute of loan given to employees. The Company does not expect any losses from non-performance by employees as principal and interest repayment has been regular on these loans.
Other financial assets (current and non-current)
Other financial assets comprises fixed deposits, interest accrued on fixed deposits and export incentives receivable. These fixed deposits are held with credit worthy banks and financial institutions. The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be good with low credit risk. Export incentive receivable pertains to duty drawback and rebate income receivable from Customs authorities. The Company does not expect any losses from non-performance by these counter parties.
iii. 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 objective when managing when 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 uses a costing methodology to cost its products and services, which assist in monitoring the cash flow requirements and optimizing its cash return on investments.
The Company aims to maintain the level of its cash and cash equivalents, other bank balances and other financial assets at an amount in excess of expected cash outflows on financial liabilities (other than trade payables) over the next six months. The ratio of investments to outflows was 267.98 as at 31 March 2024 (31 March 2023: 223.41)
The Company also monitors the level of expected cash inflows on trade receivables together with expected cash outflows on trade payables. As at 31 March 2024, the expected cash inflows from trade receivables are INR 37,511.68 thousands (31 March 2023:INR 28,467.50 thousands) and expected cash outflows from trade payables are INR 28,884.23 thousands (31 March 2023: INR 21,265.41 thousands). This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments and exclude the impact of netting agreements.
36 Segment information
a. Basis of segmenting
An operating segment is a component of the entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity) for which discrete financial information is available. All operating segments' operating results are reviewed regularly by the Managing Director (MD) to make decisions about resources to be allocated to the segments and assess their performance.
The Company has a single operating segment, namely, carbon rods and services. The operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Managing Director (MD) of the Company has been identified as the chief operating decision maker who assesses the financial performance and position of the Company, and makes strategic decisions.
38 Additional Regulatory Information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions during the year with companies struck off.
(iii) The Company has not revalued its property, plant and equipment during the current or previous year.
(iv) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond
the statutory period.
(v) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(vi) The Company has 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
(vii) The Company has 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,
(viii) 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 year 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.
(ix) The Company does not have any borrowings from banks and financial institutions on the basis of security of current assets. Accordingly, it is not required to file any quarterly returns or statements of current assets with banks and financial institutions.
(x) The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.
(xi) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(xii) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
39 The Indian Parliament has approved the Code on Social Security, 2020 ('Code') which would impact the contributions made by the Company towards Provident Fund, Gratuity and Leave encashment. The Ministry of Labour and Employment has released the draft rules for the Code on 13 November 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact once the subject rules are notified and will give appropriate impact in the financial statements in the period in which the Code becomes effective and the related rules to determine the financial impact are published.
40 Events after the balance sheet date
The Board of Directors have recommended a final dividend of INR 12/- per share amounting to INR 57,600,000 on equity shares of INR 10/- each for the year, subject to approval from shareholders.
As per our report of even date
for B S R & Co. LLP for and on behalf of the board of directors of
Chartered Accountants Panasonic Carbon India Co. Limited
Firm Registration No: 101248W/W-100022 CIN: L29142TN1982PLC009560
R. Senthil Kumar S. Kalyanaraman
R Kalyana Sundara Rajan Managing Director Director
Partner DIN: 02170079 DIN: 08317984
Membership No.: 221822
Vinayagam Sume Shivaprasad Padhy
Chief Financial Officer Company Secretary
Place: Chennai Place: Chennai
Date: 16 May 2024 Date: 16 May 2024
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