K Provisions, contingent liabilities and contingent assets Provisions
Provisions are recognized 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. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets
Contingent assets are not recognised but disclosed in the financial statements when an inflow of economic benefits is probable.
L Government grants
Effective from 01st April 2018, the Company has adopted and opted Ind AS 20 policy for ‘Accounting for Government Grants and Disclosure of Government Assistance’ from ‘Deferred Income recognised in Statement of Profit and Loss on a systematic basis over the useful life of the assets’ to ‘Option of deducting the same from carrying value’.
M Non-current assets held for sale
Non-current assets comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets are remeasured in accordance with the Company’s accounting policies. Thereafter generally the assets are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on initial classification as held for sale and subsequent gains or losses on re-measurement are recognized in the statement of profit and loss. Gains are not recognized in excess of any cumulative impairment loss.
Where a disposal group represents a separate major line of business or geographical area of operations, or is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, then it is treated as a discontinued operation. The post-tax profit or loss of the discontinued operation together with the gain or loss recognized on its disposal are disclosed as a single amount in the statement of profit and loss, with all prior periods being presented on this basis.
N Income taxes
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in the statement of profit and loss except relating to items recognized directly in equity or in other comprehensive income.
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of Income Tax Act, 1961.
Deferred tax assets and liabilities are recognised for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilised business loss and depreciation carry-forwards and tax credits. Deferred tax assets are recognised to the extent it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured based on the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Current and deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carryforwards can be utilised.
O Revenue
Revenue is recognized at the amount of transaction price (net of variable consideration) when the performance obligations under contract are fulfilled and there are no unfulfilled obligations and amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company.
The specific recognition criteria described below must also be met before revenue is recognized:
Goods Sold: Revenue from sale of goods are recognized when controls of the product are transferred in accordance with the terms of sale, and there is no unfulfilled obligation that could affect the customers’ acceptance of the products and is net of trade discounts, sales returns, where applicable. accordingly export and domestic revenue is recognized when the performance obligations in our contracts are fulfilled.
Rendering of services: Revenue recognition is based on the terms and conditions as per the contracts entered into / understanding with the customers and the service is performed and there are no unfulfilled obligations. All revenues from services, as rendered, are recognised when persuasive evidence of an arrangement exists, the sale price is fixed or determinable and collectability is reasonably assured and are reported net of sales incentives, discounts based on the terms of the contract and applicable indirect taxes.
When two or more revenue generating activities or deliverables are provided under a single arrangement, each deliverable that is considered a separate unit of account is accounted for separately. The allocation of the consideration from revenue arrangement to its separate units of account is based on the relative fair value of each unit.
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable.
Dividend Income is recognized when the company’s right to receive the payment has been established.
Export Benefits: Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
Expenditure
Expenditure is accounted on accrual basis.
P Foreign currency
Items included in the financial statements of the Company are recorded using the currency of the primary economic environment (INR) in which the Company operates (the ‘functional currency’).
Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date. Exchange differences arising on foreign exchange transactions during the year and on restatement of monetary assets and liabilities are recognized in the Statement of profit and loss of the year.
Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currency are not translated.
The transactions like receipt or payment of advance consideration in a foreign currency are translated at the rates on the date of transaction . The date of transaction for the purpose of determing exchange rate is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt.
Q Finance income and finance cost
Finance income comprises interest income on funds invested and dividend income. Interest income is recognized as it accrues in the statement of profit and loss, using the effective interest method.
Finance costs comprise interest expense on borrowings and lease liabilities, unwinding of the discount on provisions, impairment losses recognized on financial assets, interest expense and penalties related to income tax.
R Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
S Segment reporting
Each of the reportable segments derives its revenues from the main products and hence these have been identified as reportable segments by the Group’s chief operating decision maker (“CODM"). Segment revenue, result, assets and liabilities include the respective amounts identifiable to each of the segments and amount allocated on a reasonable basis. Unallocated expenditure consists of common expenditure incurred for all the segments and expenses incurred at corporate level. The assets and liabilities that cannot be allocated between the segments are shown as unallocated corporate assets and unallocated corporate liabilities respectively.
T Borrowing costs
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
U Dividend declared
The Company recognizes a liability to make cash distributions to equity holders when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders, a corresponding amount is recognized directly in equity.
V Exceptional Items
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Company. These are material items of income or expense that have to be shown separately due to their nature or incidence.
34.3 Other commitments:
i) Granite processing units of the company situated at Aliabad and Toopronpet village are registered as a 100% export oriented units (“EOU"), and are exempted from customs and central excise duties, GST and levies on imported & indigenous capital goods and stores & spares. The company has executed a bond cum legal undertaking to pay customs duty, central excise duty, GST, levies and liquidated damages payable, if any, in respect of imported and indigenous capital goods and stores & spares, consumed duty free, in the event that certain terms and conditions are not fulfilled. As on 31st March,2024, the company has a positive net foreign exchange earning, as defined in the foreign trade policy 2023 wherever applicable.
ii) Obligations towards environmental protection measures in respect of quarry leases H 359.15 lakhs (previous year H 308.63 lakhs)
iii) The company is also involved in other lawsuits, claims, investigations and proceedings, including trade mark and commercial matters, which arise in the ordinary course of business. However, there are no material claims on such cases.
iv) The date of implementation of the Code of Wages 2019 and Code on Social Security, 2020 is yet to be notified by the Government. The Company is in the process of assessing the impact of these Codes and will give effect in the financial results when the Rules/Schemes thereunder are notified.
35. Discontinued operations
The Board of Directors (“Board") in their meeting held on 23rd March, 2024 approved the transfer, sale, lease, exchange, hive-off or otherwise disposing off of Apparel Business on a going concern basis. In the opinion of the Board, all assets of Apparel Business are realizable in the ordinary course of business at the value at which they are stated in the Financial Statements. The transfer, sale or otherwise disposing off of Apparel Business is subject to finding the buyer / investor and receipt of acceptable offer and which is subject to such other requisite approvals, consents and clearance from the Company’s Bankers, Company’s Shareholders and other Institutions or bodies and statutory authorities if and wherever necessary, and as may be required. The Company has initiated necessary steps and expects to complete the process in next twelve months. The financials of Apparel Division is considered as ‘Assets held for sale and discontinued operations’ as per Ind AS 105 and corresponding previous year figures of Statement of Profit and loss account has been restated accordingly.
36. In accordance with IND AS-108 "Operating segment", segment information has been given in the consolidated financial statements of Pokarna Limited and therefore no separate disclosure on segment information is given in these financial statements.
37. Capital management
i) The board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The board of directors monitors the return on capital, which the company defines as result from operating activities divided by total shareholders’ equity.
ii) The board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.
iii) The company's adjusted net debt to equity ratio is as follows:
I. Overview
The company has exposure to the following risks from its use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk
• Operational risk
This note presents information about the company’s exposure to each of the above risks, the company’s objectives, policies and processes for measuring and managing risk, and the company’s management of capital. Further quantitative disclosures are included throughout these financial statements.
II. Risk management framework:
The Board of Directors has overall responsibility for the establishment and oversight of the company’s risk management framework. The Board is responsible for developing and monitoring the company’s risk management policies.
• Credit risk
i) 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 customer.
iii) Cash and cash equivalents: The company held cash and cash equivalents of H 61.95 lakhs (previous year H 63.71 lakhs). The cash and cash equivalents are held with public sector banks. There is no impairment on cash and cash equivalents as on the reporting date and the comparative period.
iv) In respect of financial guarantees provided by the Company to banks and financial institutions, the maximum exposure which the Company is exposed to is the maximum amount which the Company would have to pay if the guarantee is called upon. Based on the expectation at the end of the reporting period, the Company considers that it is more likely than not that such an amount will not be payable under the guarantees provided.
• Liquidity risk
i) 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 always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company’s reputation.
ii) The company aims to maintain the level of its cash and cash equivalents and investments at an amount in excess of expected cash outflows on financial liabilities (other than trade payables) over the next six months. The company also monitors the level of expected cash inflows on trade receivables and loans together with expected cash outflows on trade payables and other financial liabilities. This excludes potential impact of extreme circumstances that cannot be reasonably predicted, such as natural disaster.
ii) Currency risk: The company is exposed to foreign exchange risk arising from foreign currency transaction. The company also imports and the risk is managed by regular follow up . The company has a policy which is implemented when the foreign currency risk become significant.
A 10% appreciation/depreciation of the foreign currencies with respect to functional currency of the Company would result in an increase/decrease in the Company’s net profit before tax by approximately H 11.20 lakhs (previous year H 34.25 lakhs).
iii) Interest rate risk : Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates, in cases where the borrowings are measured at fair value through the statement of profit and loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.
A reasonably possible change of 100 basis points in interest rate at the reporting date would have increased or decreased profit or loss by H 25.96 lakhs ( previous year H 28.84 lakhs). This analysis assumes that all other variables remain constant.
• Operational risk
i) Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the company’s processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the company’s operations.
ii) The Company’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the company’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
iii) The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management within each business unit. This responsibility is supported by the development of overall company standards for the management of operational risk in the following areas:
• Requirements for appropriate segregation of duties, including the independent authorization of transactions
• Requirements for the reconciliation and monitoring of transactions
• Compliance with regulatory and other legal requirements
• Documentation of controls and procedures
• Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified
• Requirements for the reporting of operational losses and proposed remedial action
• Development of contingency plans
• Training and professional development
• Ethical and business standards
• Risk mitigation, including insurance when this is effective.
iv) Compliance with company’s standards is supported by a programme of periodic reviews undertaken by internal audit. The results of internal audit reviews are discussed with the management of the business unit to which they relate, with summaries submitted to the audit committee and board of the company.
42. Additional Regulatory Information
a) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it has taken at the balance sheet date and quarterly returns or statements of current assets filed with banks are in agreement with the books of accounts.
b) The Company has not revalued its Property, Plant and Equipment and its intangible assets.
c) The Company is not holding any Benami Property and there are no proceedings initiated or pending against the Company.
d) The Company has not been declared wilful defaulter by any bank or financial institutions.
e) The Company does not have any relationship with Struck off Companies.
f) There are no transactions 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.
g) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
h) Other than in the normal and ordinary course of business there are no funds that have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities (“Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever (“Ultimate Beneficiaries") by or on behalf of the Company; or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
Proposed Dividend:
The Board of Directors at its meeting held on 16th May 2024 have recommended payment of final dividend of H0.60 ( rupees sixty paisa only) per equity share of face value of H2 each for the financial year ended 31st March 2024. The same amounts to H186.02 lakhs.
The above is subject to approval at the ensuring Annual General Meeting of the Company and hence is not recognised as a liability.
46. Previous year figures are regrouped, rearranged and reclassified wherever considered necessary in order to conform to the current year's presentation.
47. The financial statements for the year ended 31st March 2024 have been reviewed by the Audit Committee and approved by the Board of Directors at their meetings held on 16th May 2024.
In terms of our report attached For and on behalf of Board of Directors
For S.Daga & Co.
Chartered Accountants Gautam Chand Jain
(F.No.000669S) Chairman & Managing Director
(D.No: 00004775)
Shantilal Daga Rahul Jain
Partner Managing Director
Membership No. 11617 (D.No: 00576447)
Place : Hyderabad M Viswanatha Reddy
Date : 16th May, 2024 Chief Financial Officer
UDIN : 24011617BKCRPF2474
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