3.14 Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will
be required to settle the obligation. If the effect of the time value of money is material, 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. Where discounting is
used, the increase in the provision due to the passage of time is recognized as a finance cost.
3.15 Contingent liabilities and contingi Assets
A disclosure for a contingent liability is made when there is a possible obligation or a present
obligation that may, but probably will not, require an outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likelihood of outflow of resources is
remote, no provision or disclosure is made.
Contingent assets are not recognised in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the
asset and related income are recognised in the period in which the change occurs.
3.16 Financial instruments
a. Recognition and initial recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the
contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on
initial recognition, except for trade receivables which are initially measured at transaction price.
Transaction costs that are directly attributable to the acquisition or issues of financial assets and financial
liabilities that are not at fair value through profit or loss, are added to the fair value on initial recognition.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value
through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
b. Classification and Subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at amortised cost;
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the
Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash
flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
All financial assets not classified as measured at amortised cost as described above are measured at
FVTPL. On initial recognition, the Company may irrevocably designate a financial asset that otherwise
meets the requirements to be measured at amortised cost at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is
held at a portfolio level because this best reflects the way the business is managed and information is
provided to management. The information considered includes:
- the stated policies and objectives for the portfolio and the operation of those policies in practice. These
include whether management’s strategy focuses on earning contractual interest income, maintaining a
particular interest rate profile, matching the duration of the financial assets to the duration of any related
liabilities or expected cash outflows or realising cash flows through the sale of the assets;
- how the performance of the portfolio is evaluated and reported to the Company’s management;
- the risks that affect the performance of the business model (and the financial assets held within that
business model) and how those risks are managed;
- how managers of the business are compensated - e.g. whether compensation is based on the fair value
of the assets managed or the contractual cash flows collected; and
- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales
and expectations about future sales activity.
3.17 Financial
instruments
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not
considered sales for this purpose, consistent with the Company’s continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair
value basis are measured at FVTPL.
Financial assets: Assessment whether contractual cash flows are solely payments of principal and
interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on
initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit
risk associated with the principal amount outstanding during a particular period of time and for other
basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the
Company considers the contractual terms of the instrument. This includes assessing whether the
financial asset contains a contractual term that could change the timing or amount of contractual cash
flows such that it would not meet this condition. In making this assessment, the Company considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including variable interest rate features;
- prepayment and extension features; and
- terms that limit the Company’s claim to cash flows from specified assets (e.g. non- recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the
prepayment amount substantially represents unpaid amounts of principal and interest on the principal
amount outstanding, which may include reasonable additional compensation for early termination of
the contract. Additionally, for a financial asset acquired at a significant discount or premium to its
contractual par amount, a feature that permits or requires prepayment at an amount that substantially
represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also
include reasonable additional compensation for early termination) is treated as consistent with this
criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Financial assets: Subsequent measurement and gains and losses
Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and
losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets at amortised cost: These assets are subsequently measured at amortised cost using
the effective interest method. The amortised cost is reduced by impairment losses. Interest income,
foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss
on derecognition is recognised in profit or loss.
Financial liabilities: Classification, Subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held- for- trading, or it is a derivative or it is designated
as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains
and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities
are subsequently measured at amortised cost using the effective interest method. Interest expense
and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss.
c. Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction
in which substantially all of the risks and rewards of ownership of the financial asset are transferred
or in which the Company neither transfers nor retains substantially all of the risks and rewards of
ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet,
but retains either all or substantially all of the risks and rewards of the transferred assets, the
transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows
under the modified terms are substantially different. In this case, a new financial liability based on
the modified terms is recognised at fair value. The difference between the carrying amount of the
financial liability extinguished and the new financial liability with modified terms is recognised in
profit and loss statement.
3.18 Recent pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing
standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31
March 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules,
2023, as below:
Ind AS 1- Presentation of financial statements: This amendment required the entities to disclosure
their material accounting policies rather than thir significant accounting policies. The effective date
for adoption of this amendment in annual periods beginning on or after 1 April 2023.
Ind AS 8- Accounting policies , changes in Accounting Estimates and Errors: This amendment
has introduced a definition of "accounting estimates" and included amendments to Ind As 8 to help
entities distinguish changes in accounting policies from changes in accounting estimates. The
effective date for adoption of this amendment in annual periods beginning on or after 1 April 2023.
Ind AS 12- Income taxes: The amendment has narrowed the scope of the initial recognition
exemption so that it does not apply to transactions that give rise to equal and offsetting temporary
differences . The effective date for adoption of this amendment its annual periods beginning on or
after 1 April 2023.
The Company evaluated the aforementioned amendments and there is no impact on its standalone
financial statements.
(b) Terms / rights attached to
the equity shares
Rights, preferences and restrictions attached to equity shares having face value of ?10 each.
Each shareholder is eligible for one vote per share held and each share carries a right to
dividend. The dividend proposed by the Board of Directors is subject to approval by the
shareholders at the ensuring Annual General Meeting , except in case of interim dividend.
In the event of liquidation, the equity shareholders are eligible to receive the remaining
assets of the Company after distribution of all preferential amounts in the proportion to
their shareholding.
c. Terms and conditions of transactions with
related parties:
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 interest free except
loan to Subsidiary company.
34 Segment information
Ind AS 108 “Operating Segment” (“Ind AS 108”) establishes standards for the way that public
business enterprises report information about operating and geographical segments and related
disclosures about products and services, geographic areas, and major customers. Based on the
“management approach” as defined in Ind AS 108, Operating segments and geographical segments
are to be reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker (CODM).The CODM evaluates the Company’s performance and
allocates resources on overall basis. The Company’s sole operating segment is therefore
‘Electromechanical components and systems and allied components and services’ and the sole
geographical segment is ‘India”. Accordingly, there are no additional disclosure to be provided
under Ind AS 108, other than those already provided in the financial statements.
40 Earnings per share
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity
holders by the weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the
weighted average number of equity shares outstanding during the year plus the weighted
average number of equity shares that would be issued on conversion of all the dilutive potential
equity shares into equity shares.
43 Financial risk management
objectives and policies
The Company’s principal financial liabilities comprise loans and borrowings, trade and other
payables. The main purpose of these financial liabilities is to finance and support Company's
operations. The Company’s principal financial assets include inventory, trade and other
receivables, cash and cash equivalents and refundable deposits that derive directly from its
operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior
management oversees the management of these risks. The Board of Director reviews and agrees
policies for managing each of these risks, which are summarized below.
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. Market risk comprises two types of risk: interest
rate risk and other price risk, such as equity price risk and commodity/ real estate risk. Financial
instruments affected by market risk include loans and borrowings and refundable deposits. The
sensitivity analysis in the following sections relate to the position as at 31 March 2024 and 31
March 2023. The sensitivity analyses have been prepared on the basis that the amount of net debt
and the ratio of fixed to floating interest rates of the debt.
The analysis excludes the impact of movements in market variables on: the carrying values of
gratuity and other post retirement obligations; provisions.
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 31 March 2024
and 31 March 2023.
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 Company's long-term debt obligations with
floating interest rates.
The Company manages its interest rate risk by having a balanced portfolio of fixed and variable
rate loans and borrowings. The Company does not enter into any interest rate swaps.
Interest rate sensitivity:
The following table demonstrates the sensitivity to a reasonably possible change in interest rates
on that portion of loans and borrowings affected. With all other variables held constant, the
Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:
b) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial
instrument or customer contract, leading to a financial loss. The credit risk arises principally
from its operating activities (primarily trade receivables) and from its investing activities,
including deposits with banks and financial institutions 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 continuous basis by the
receivables team.
The Company establishes an allowance for credit loss that represents its estimate of expected
losses in respect of trade and other receivables based on the past and the recent collection
trend and based on the analysis has not provided any provision for expected credit losses on
trade receivables.
Credit risk on cash and cash equivalent is limited as the Company generally transacts with
banks and financial institutions with high credit ratings assigned by international and
domestic credit rating agencies.
c) Liquidity risk
The Company's objective is to maintain a balance between continuity of funding and
flexibility through the use of bank deposits and loans.
The table below summarises the maturity profile of the Company’s financial liabilities based
on contractual undiscounted payments:
44 Capital management
The Company’s policy is to maintain a stable capital base so as to maintain investor, creditor and
market confidence and to sustain future development of the business. Management monitors capital
on the basis of return on capital employed as well as the debt to total equity ratio.
For the purpose of debt to total equity ratio, debt considered is long-term and short-term
borrowings. Total equity comprise of issued share capital and all other equity reserves.
46 Additional Regulatory
Information:
The MCA vide notification dated March 24, 2021 has amended Schedule III of Companies Act.
2013 in respect of certain disclosures. Amendments are applicable from April 1, 2021. The
Company has incorporated the changes as per the said amendment in the financial statements
and has also changed comparative numbers wherever applicable.
(1) The Title Deeds of the immovable property of the company are held in the name of the
company.
(2) The property Plant and Equipment held with the company are not subjected to any
revaluation during the year.
(3) The Intangible assets held with the company are not subjected to any revaluation during the
year
(4) The Company has not granted any loans or Advances inthe nature of Loans to Promoters,
Directors, KMPs and other related parties excluding Subsidiary company.
(5) The Company is not holding any Benami property and no proceeding has been initiated or
pending against the companyfor the year ended 3 1 March 2023.
(6) The Company has no transaction which is not recorded in the books of accounts that has
been surrendered or disclosed as income during the year in tax assessments under the Income
Tax Act, 1961 (such as search or survey or any relevant provi sions of Income Tax Act, 1961)
(7) (A) The Company has not advanced or loaned or invested any funds in any other person(s) or
entity(ies), including foreign entities (intermediaries) with understanding that the intermediary
shall be directly or indirectly lend or invest in other person or entities on behalf of the company
or provide any guarantee or security or the like to or on behalf pf the company.
(B) The Company has not received any funds from any person(s) or entity(ies), including foreign
entities (funding party) with the understanding that company shall lend or invest in other person
or entity identified in any manner by or on behalf of the funding party/ Ultimate beneficiary or
provide any guarantee or security or the like on behalf of the funding party/ Ultimate
beneficiary.
(8) The Company has borrowings from Banks or Financial Institutions on the basis of security of
Current Assets. Quarterly returns or Statement of Current Assets filed by the company with
Banks or Financial Institutions are in agreement with the Books of Accounts.
(9) The Company is not declared as willful defaulter by any Bank or Financial Institutions or
RBI or other lenders.
(10) There are no charges or satisfaction of charges yet to be registered with Registrar of
Companies beyond the statutory period.
(11) The company has no transactions and no relationship with companies struck off under
Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956.
(12) There are no Schemes of Arrangements approved by the Competent Authority in terms of
sections 230 to 237 of the Companies Act, 2013.
(13) The Company has not invested or traded in Crypto currency or Virtual Currency during the
financial year.
47 Prior year comparatives
Figures have been rounded off to nearest lakhs and previous year figures have been regrouped
wherever necessary, to correspond with the current period classification/disclosure and there is
no impact on total income and net profit.
Approval of Standalone
48 Financial Statements
These standalone financial statements were approved for issue by the Board of Directors
in their meeting held on 30 May 2024.
As per our report of even date attached
For and on behalf of the Board of
For Samudrala k & Co LLP, Directors
Chartered Accountants
Firm Registration Number: S200142
Sd/- Sd/- Sd/-
Pulla Amresh Sujana
(Karunasree Samudrala) Kumar Kadiam
Partner Managing Director Director
DIN: DIN:
Membership No.: 220150 01641079 07167872
Sd/-
Place: Hyderabad Srimanthula Harish Place: Hyderabad
Chief Financial
Date: 30 May 2024 Officer Date: 30 May 2024
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