I. NOTES TO ACCOUNTS
1. In the opinion of Directors, the Current Assets, Loans & Advances, and Investments have a value on realization in the ordinary course of business, which is at least equal to the amount at which they are stated in the Balance Sheet.
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2. Contingent Liabilities
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(' in Crores)
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Particulars
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March 31, 2024
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March 31, 2023
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a)
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Unutilized Letters of Credit with Bankers
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1.81
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4.27
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b)
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Bank Guarantee
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0.12
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0.02
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c)
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Labour cases in the court for reinstatement and/or higher compensation, which in the opinion of the management demand no provision of liability than what is recorded in accounts.
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0.07
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0.07
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d)
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Excise Department has rejected the appeal filed by the Company and has raised demand as regards inter-unit transfers. The Company has filed appeal against the said order in CESTAT and has made payment of '0.05 Crores for stay order. Stay order against recovery of the dues has been granted. In the opinion of Company's Consultant, since there is no suppression of facts by the Company, penalty imposed will be quashed. In case, if the case is decided against the Company, there will be no actual outflow to the Company due to availability of Cenvat credit. Further, in similar cases, the Commissioner of Central Excise has ruled in favour of the Company and has set aside the show cause notices.
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Duty Demanded
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0.32
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0.32
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Penalty
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0.32
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0.32
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e)
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Interest on Central Excise loan (Operated through ICICI).
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In 1995-96, Company has taken interest free loan under the Excise relief scheme as approved by the Government of India and said loan was disbursed by designated financial institutions.
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ICICI, the Operating Agency raised certain demands towards the installments repaid with delay. The Company has provided simple interest on repayment of these delayed installments, which may be reversible if the Central Government doesn't demand during settlement. Additional interest if claimed by the government, will be payable. However, the management does not expect any liability on that account.
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Company had approached ministry of finance, government of India for instruction of settlement of account as one time settlement, and as per information, same is under consideration. Disbursing agency ICICI, has also forwarded Settlement proposal to the ministry on July 30, 2013 vide letter bearing reference no SSG/NA/2013-14/324 for seeking the directions.
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22.011
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22.011
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In view of the above situation, management does not feel any extra liability towards interest on the interest free excise loan. Management of PML is providing simple interest on outstanding dues of above loan even though this was interest free. Loan Principal Amount repaid on during FY 17-18
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f)
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Corporate guarantee issued for subsidiary Company for EPCG license (export obligation)
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0.83
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-
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3. Honorable Bombay High Court has passed winding up order on the petition of M/s Savino Del Beno "Petitioner” (Freight forwarder agent & CHA of Company).
Facts of the case: During the year 2010, Petitioner has raised bills for their services but failed to submit Original EP copy to the Company which is essential documents to claim Excise rebate, and accordingly Company withheld their payment. Subsequently, petitioner has filed winding up petition against the Company of dues of '0.13 Crores. Honorable Mumbai High Court has passed an order allowing the petition and issued direction for appointment of official liquidator in winding up order.
On the appeal against this order made by the Company before Honorable Bombay High Court, Honorable Bombay High Court has given interim stay order against the winding up order passed (against the Company) dated April 15, 2015. Company has deposited '0.19 Crores with interest as per direction of honorable Bombay High Court. Matter is pending before Bombay High Court. Next hearing in this matter shall come up as per listing of the court.
Amount deposited of '0.19 Crores with court is shown in Balance sheet under Current Assets.
4. Balance under the head 'Trade Receivables', 'Trade Payables', 'Loan and Advances Receivable and Payable' are shown as per books of accounts subject to confirmation by concerned parties and adjustment if any, on reconciliation thereof. Balance Confirmation e-mails have been issued to parties for confirmation of balances with the request to confirm or send/comments by the stipulated date failing which the balances as appearing in the letter would be taken as confirmed. Confirmation e-mails have been received in very few cases; however, no adverse communication has been received from the parties.
5. Interest on outstanding balances of MSME creditors not provided in the books as contractual terms with the parties are more than 60/90 days and parties are also agreed upon the terms of payment. Now, Company is developing the procedure for compliance the relevant act and will provide interest, if payable as per act.
6. During the year '2.17 Crores (P Y '3.69 Crores credit) has been credited to the Statement of Profit and Loss in respect of the Foreign Exchange Differences.
7. Segment Reporting
The Chief Operational Decision Maker identifies and monitors the operating results of its business segments separately for purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the Standalone Financial Statements. The Operating segments have been identified on the basis of the nature of products/services.
8. Leases: Effective Date and Transition
Effective April 01,2019, the Company has adopted Ind AS 116 Leases. Company applies retrospectively with the cumulative effect of initially applying the Standard recognized at the date of initial application. Company measure lease liability at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate at the date of initial application, and measure that right-of-use asset an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the balance sheet immediately before the date of initial application. Company is following SLM method for depreciation on Right of use assets over lease terms.
10. Disclosure as required by Ind AS-19, Employee Benefits
I. Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The Company contribution "on the basis of actuarially ascertained by the Independent Actuaries” is charged to profit and loss account. The amount debited to profit, and loss account is '0.685 Crores.
Other long-term employee benefits:
11. Leave encashment
The Company provides for the expected cost of accumulating paid leave which can be carried forward and used in future periods by the employees. The obligation for accumulating paid leaves has been recognized at the end of the reporting period.
In respect of Gratuity & Leave Encashment, provision is made based on the actuarial valuation by an independent actuary. The following information as required under Ind AS-19 is based on the report of the Actuary:
11. Component Accounting for Fixed Assets
In opinion of the management, based on internal verification of the assets of the Company, there is no major part, in case of any asset, which is significant to total cost of the asset and whose useful life is different from the useful life of the asset. Hence, there is no change in accounting of fixed assets and depreciation thereon as required under Ind AS 16: Property, Plant and Equipment.
12. Segment Reporting
As the Company operates mainly in one Business Segment i.e. Engineering and Current Sensing applications hence are considered to be a single primary business segment. There have been no other reportable segments identified by Chief Operating Decision Maker and hence no segment reporting is presented under IND AS 108.
13. Impairment of Assets
In accordance with Ind AS 36 "Impairment of Assets" Company has recognized impairment loss of ' Nil during year.
16. Corporate Social Responsibility (CSR)
As per Section 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, healthcare, women empowerment, measures for the benefit of war widows and contributions to incubators has been formed by the Company as per the Act. The funds were primarily allocated to a corpus and utilised through the year on these activities which are specified in schedule VII of the Companies Act, 2013.
17. Financial Instruments and Risk Management
Fair values
1. The carrying amounts of trade payables, other financial liabilities (current), borrowings (current), trade receivables, cash and cash equivalents, other bank balances and loans are considered to be the same as fair value due to their short-term nature.
2. Borrowings (non-current) consists of loans from banks and government authorities, other financial liabilities (non-current) consist of interest accrued but not due on deposits other financial assets consists of employee advances where the fair value is considered based on the discounted cash flow.
The fair value of 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.
Set out below, is a comparison by class of the carrying amounts and fair value of the Company's financial instruments, other
than those with carrying amounts that are reasonable approximation of fair values:
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques, which maximise the use of observable market data and rely as little as possible on entity specific estimates. If significant inputs required to fair value instruments are observable, the instrument is included in Level 2.
Level 3: If one or more of the significant inputs are not based on observable market data, the instruments is included in level 3.
Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date. In respect of investments as at the transaction date, the Company has assessed the fair value to be the carrying value of the investments as these companies are in their initial years of operations obtaining necessary regulatory approvals to commence their business.
18. Financial Risk Management
The Company is exposed to market risk (fluctuation in foreign currency exchange rates, price and interest rate), liquidity risk and credit risk, which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.
(A) Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of currency risk, interest rate risk and price risk. Financial instruments affected by market risk include loans and borrowings, trade receivables and trade payables involving foreign currency exposure. The sensitivity analyses in the following sections relate to the position as at March 31,2023 and March 31, 2024.
The analysis excludes the impact of movements in market variables on the carrying values of financial assets and liabilities.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31,2023 and March 31,2024.
(i) Foreign currency exchange rate risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the trade/other payables, trade/ other receivables assets/liabilities. The risks primarily relate to fluctuations in US Dollar & EURO against the functional currencies of the Company. To mitigate the Group's exposure to foreign currency risk, cash flows are monitored and natural hedge is used. (Amounts to be paid and received in a specific currency are expected to largely offset one another). The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.
(ii) 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 change in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's debt obligations with floating interest rates. As the Company has certain debt obligations with floating interest rates, exposure to the risk of changes in market interest rates are dependent of changes in market interest rates. Management monitors the movement in interest rate and, wherever possible, reacts to material movements in such rates by restructuring its financing arrangement.
As the Company has no significant interest-bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.
(B) Credit Risk
Credit risk is the risk arising from credit exposure to customers, cash and cash equivalents held with banks and current and non-current held-to maturity financial assets.
With respect to credit exposure from customers, the Company has a procedure in place aiming to minimise collection losses. Credit Control team assesses the credit quality of the customers, their financial position, past experience in payments and other relevant factors. Cash and other collaterals are obtained from customers when considered necessary under the circumstances.
The carrying amount of trade receivables, loans, advances, deposits, cash and bank balances, bank deposits and interest receivable on deposits represents Company's maximum exposure to the credit risk. No other financial asset carries a significant exposure with respect to the credit risk. Bank deposits and cash balances are placed with reputable banks and deposits are with reputable government, public bodies and others.
The credit quality of financial assets is satisfactory, taking into account the allowance for credit losses.
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 default risk associate with the industry and country in which customers operate. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment.
An impairment analysis is performed at each reporting date on an individual basis for major receivables. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company also holds deposits as security from certain customers to mitigate credit risk.
19. Event Occurring after the Balance Sheet date
The Board of Directors has recommended an Equity dividend of '1.80/- per share on face value of '10/- each,
for the financial year 2023-24. The proposal is subject to the
approval of shareholders at the Annual General Meeting.
20. Commitments
Company has commitment to pay for the acquisition
of plant and machinery (net of advances) is
'0.33 Crores (Previous year 3.93 Crores).
21. Other Disclosures
(a) Relationship with Struck off Companies - The Company does not have any transactions or relationships with any companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.
(b) There are no transactions that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 which have not been recorded in the books of account.
(c) There are no charges or satisfaction of charges yet to be registered with Registrar of Companies beyond the statutory period.
(d) There is no Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(e) There is no transaction in Crypto Currency or Virtual Currency.
(f) The Company is not declared wilful defaulter by any bank or financials institution or lender during the year.
(g) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was obtained.
(h) The title deeds of all the immovable properties, (other than immovable properties where the Company is the lessee and the lease agreements are duly executed in favour of the Company) disclosed in the Standalone Financial Statements included in property, plant and equipment and capital work-in progress are held in the name of the Company as at the balance sheet date.
(i) 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.
(j) 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.
22. The previous year's figures have been regrouped, rearranged and reclassified wherever necessary to conform to the current year presentation.
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Management has tried to resolve the issues of Central Excise Loan with higher authorities of Ministry of Finance, Government of India and made various representations, but did not get proper response as above scheme has been over and no proper documents are available with ministry of finance, Government of India. Management of PML is providing simple interest on outstanding dues of above loan even though this was interest free. The Company has been repaid balance Principal Amount of the loan during FY 17-18.
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