i. The Company has Authorised Capital of Equity and Preference Shares, however the Company has no outstanding Non-Convertibf Redeemable Preference Shares.
ii. Rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of Capital.
Each Shareholder is eligible for one vote per share. The dividend proposed by the Board of Directors is subject to the approval of Shareholders, 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 proportion of their shareholding.
iii. During the year under review the Company have converted 1,970,540 Compulsory Convertible Preference Shares (CCPS) of Rs.10/- each into equal number of Equity Shares
1) -Rupee Term Loan from banks comprises of Loan taken for expansion project and Car loans.
-Term loan for expansion of project is secured by way of first charge, having pari-passu rights, on factory - land and building (Save and except stock and book debts), situated at one of the Company's location.
-Car loan from bank is secured against hypothecation of Car.
-Rate of Interest are in the range of Base Rate plus 0.00% to 2.65% p.a. and repayable on quarterly basis with last in March 2027[Refer Note 30.1]
2) -Rupee Term Loan from Other comprises of Loan taken for expansion of project and Long-term augmentation of working capital and is secured by way of first charge, having pari-passu rights, on factory - land and building (Save and except stock and book debts), situated at separate locations of the Company.
-Rate of Interest for FIs are in the range of Base Rate plus 0.00% to 2.65% p.a. and repayable on quarterly basis with instalments payable until March 2027[Refer Note 30.1]
-Borrowings from Others are repayable as per agreed terms in single tranche along-with accrued Interest at the end of 10 years ie. Mar-2030. In accordance with contractual terms, interest has commenced from FY20-21.
3) Liability on account of claim of a Guarantor arising out of right of subrogation due to wrongful invocation of pledge shares of the Promoters.
During the prior period certain Lenders had initiated formal legal communication, with a view to protect their interest. The Company has contested and continues to defend such action by the Lenders. Meanwhile the Company also continued to engage with lenders with a view to arrive at a resolution to ongoing matters. Due to ongoing dispute with the lenders in relation to their failure to comply with committed lending obligations, the Company has, basis of legal advice, not provided for interest costs on certain loans outstanding, amounting to INR 2,336.39 Lacs in respect of Operating Assets and INR 6,641.69 Lacs in respect of Project Assets. The Company continues to believe in the merits of the litigation, however there continues to remain material uncertainties in relation to the outcome of the said litigations. The Promoter in Aug-21 had entered into a settlement agreement with S C India Credit Fund thought its Manager S. C. India Manager Pvt. Ltd in relation to the settlements of Amounts pertaining to the NCD's raised by the Company. The Company has been complying with the settlement terms and due payments are being made as per agreed terms. The Company has availed certain loans in relation to which the Company has not provided for interest cost on such borrowings. In the event the Company would have provided the interest as per contractual terms on such borrowings, the total liability in respect of such borrowings would be INR 77,503.86 as on 08th Nov-2023.
30.2. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006
There are no Micro and Small Enterprises, to whom the Company owes dues which are outstanding as at the Balance Sheet date. The information has been identified to the extent such parties have been identified on the basis of information available with the Company.
30.3. Financial Instruments
The Company has negligible exposure in Foreign Currency during the year and hence has not availed any financial instrument, viz. Derivatives and Forward Contract Instruments for hedging its risks and exposure to foreign currency fluctuations.
30.4. Value of imports calculated on CIF basis: 'NIL (Previous Year: NIL)
30.5. Expenditure in Foreign Currency: 'NIL (Previous Year: NIL)
30.6. Amounts remitted in foreign currency during the year on account of dividend: NIL (Previous year: NIL)
30.9. Disclosure under IND AS-19: Employee Benefits Obligations 30.9.1. Defined Benefit Plan
During the Period under review Company has made contribution towards Employees' Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India. Both are funded defined benefit plans for qualifying employees. The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment as per the Company's Gratuity Scheme. Vesting occurs upon completion of Five years of services. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Compensated Absences is recognised in the same manner as gratuity.
30.9.2. The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.
30.9.3. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, Increments and other relevant factors.
30.9.4. The expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risk of assets management and historical result of the return on plan asset.
30.9.5. In absence of specific details of plan assets from LIC, the details of plan assets have not been furnished. The details of experience adjustment relating to Plan assets are not readily available in valuation report and hence are not furnished.
30.9.6. The following table set out the funded status and amounts recognised in Company's financial statements as at March 31, 2024 for Defined Benefit Plan. (Disclosure as per IND AS-19)
Sensitivity Analysis
Significant Actuarial Assumptions for the determination of the defined benefit obligation are discount trade, expected salary increase and employee turnover. The sensitivity analysis below, have been determined based on reasonably possible changes of the assumptions occurring at end of the reporting period, while holding all other assumptions constant. The result of Sensitivity analysis is given below:
In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as and when calculating the defined benefit liability recognised in the Balance Sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change as compared to the prior year.
30.10. Capital Management
The key objective of the Company's capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor, and customer confidence and to ensure future development of its business. The Company focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company. For the purposes of Capital Management, the Company considers the following components of its Balance Sheet to manage capital.
(B) Fair Value Hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. An explanation of each level are follows
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
There are no Financial Assets which are required to be carried at Fair value using Fair value hierarchy
30.16. Financial Risk Management Objectives
The Company has adequate internal processes to assess, monitor and manage financial risks. These risks include market risk (including interest rate risk and other price risk), credit risk and liquidity risk.
(A) Market Risk
Market Risk is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, and other price risks. Financial instruments affected by market risks, primarily include loans, borrowings and Trade receivables.
(i) Interest Rate Risk
The Company borrows funds in Indian Rupees, to meet both the long term and short-term funding requirements. Interest on term borrowings is subject to Base rate / MCLR and is fixed for at least one year. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the average outstanding amounts due to bankers over a year. [Refer Note 30.1] If the interest rates had been 25 BPS higher / lower and all other variables held constant, the company's profit for the year ended March 31, 2024, would have been decreased/increased by '0.50 Lakhs.
(ii) Price Risk
100% of Company's revenues are generated from Local Markets and the raw materials are procured through local purchases where local purchases track import parity price. The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities, the Company enters into contract with the customers that has provision to pass on the change in the raw material prices. The Company has a risk management framework aimed at prudently managing the risk arising from the volatility in commodity prices and freight costs.
(iii) Foreign Currency Risks
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from future commercial transactions and is recognised as financial assets and liabilities, denominated in a currency that is not its functional currency. The exposure to foreign currency risk of the Company at the end of the reporting period was NIL.
(B) Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (primarily trade receivables). The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer.
Though the Customer credit risk is managed by the Company's established policy, procedures and control relating to the customer credit risk management, the impact arising from above on its trade receivables needs to be closely monitored on case to case basis and allowance if any should be appropriately considered. The Company uses financial information and past experience to evaluate Outstanding receivable in terms of credit worthiness, credit quality, individual credit limits of majority of its customers which are periodically monitored. The historical experience of collecting receivables of the Company is supported by low level of past default, however the impact of the on-going situation needs continuous evaluation by the management. The credit risk as at balance sheet date is perceived to be moderate, however expected to improve going forward.
(C) Liquidity Risk
The Company manages liquidity risk by maintaining adequate surplus and financing facilities by continuously monitoring forecasts and actual cash flows. The Company monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility. The company faces acute liquidity risks on account of pandemic induced factors. The table below provides details regarding the contractual maturities of financial liabilities as at March 31, 2024
1. The construction of the Mega Greenfield Expansion project undertaken by the Company has been temporarily kept on hold predominantly due to failure of Lenders in fulfilling their committed lending obligations. Also, the Management has taken several actions like (i) reduction in unit operating costs (ii) increasing liquidity by making its operations more efficient and nimbler (iii) putting on hold discretionary expenses and (iv) deferring certain capital expenditures, etc.
30.17. Investor Education and Protection Fund
In view of the moratorium u/s 14 of the Insolvency & Bankruptcy Code, 2016 being in force against the Company, the action of transferring funds lying in the Unpaid Dividend Account of the Company to Investor Education and Protection Fund, as per the provisions of sub-section (5) of Section 124 of the Companies Act, 2013, has been kept in abeyance and shall be subject to orders of the Hon'ble NCLT.
30.18. Corporate Social Responsibility:
During FY 2023-24, the CSR provisions were not applicable, since the Company did not meet the criteria as stipulated u/s. 135(1) of the Companies Act, 2013.
30.19. In the opinion of the Board of Directors / Interim Resolution Professional, except as otherwise stated, the Current Assets, Loans and Advances have value on realisation in the ordinary course of business, at least equal to the amount at which they are stated in the foregoing Balance Sheet and adequate provision for all known liabilities on the Company has been made.
30.20. The Balance Sheet, Statement of Profit and Loss, Cash Flow Statement, Statement of Changes in Equity, Statement of Significant Accounting Policies and the Other Explanatory Notes for the year ended March 31, 2024, forms an integral part of the financial statements of the Company.
30.21. The Operations of the Company were severely impacted materially due to Covid-19 pandemic and its resurgence during previous years. However, the Company continued to incur committed expenditure with respect to its Employees, Plant & Other related expenditures. While the pandemic situation, Russia-Ukraine conflict and now the economic landscape cross the world and more particularly in US and European countries has adversely affected the economy at large, the chemical industry has also been affected in segments. This has significantly impacted Company's profitability. The Management is evaluating all the possible effects resulting from such situation in relation to the carrying amounts of Trade receivables, Inventories, its assets comprising Property, Plant and Equipment, Intangible assets, Financial assets but has not yet concluded on adjustments required to be made to the carrying values of such assets as at March 31, 2024, accordingly, the management has not accounted for any Impairment/Write-off on account of Loss of certain receivables of the company and certain Non-current liabilities, under exceptional item. The same however are not affecting continuing operations. The impact assessment is a continuing process given the uncertainties associated with its nature and duration. In developing such assumptions and estimates relating to the uncertainties in relation to the recoverable amounts of these assets, the management is using internal and external sources of information to the extent available. The Impact of the same may be evident at a future date, however the same may not affect continuing operations.
Several actions have been taken by the Company Management to mitigate the effects of Covid-19, Russia-Ukraine conflict & Challenging economic Landscape on Company's business by reducing unit costs and increasing liquidity by making operations more efficient and nimbler, putting on hold discretionary expenses, deferring certain capital expenditures, etc. In order to sustain operations, actions to cut employee costs through pay cuts, leave without pay and reduction in workforce have also been taken during the period under review. The Management continues to carry out the impact assessment on Company's assets and closely monitor any material changes to future economic conditions.
30.22. Previous Year's figures
Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure and to conform to Ind AS presentation requirements.
30.23. Other Statutory Information
(i) There are no proceedings which have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
(ii) The Company has not been declared a wilful defaulter by any bank or financial institution.
(iii) The Company has not identified any transaction with Companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956 and has no balances outstanding from struck of Companies.
(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 have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(vi) The Company have 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 have 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 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) Title deeds of all the Immovable Property are held in name of the Company.
(x) The Code on Social Security, 2020 and Code of wages, 2019 relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020. The Codes have been published in the Gazette of India. However, the date on which the Codes will come into effect has not been notified. The Company will assess the impact of the Codes when it comes into effect and will record any related impact in the period the Codes become effective.
(xi) The National Company Law Tribunal ("NCLT"), Mumbai Bench, vide order dated 2nd November 2023 passed in CP (IB) 446 MB 2023 has initiated corporate insolvency resolution process ("CIRP") against the company. Mr. Bhavesh Rathod, IP Registration No. IBBI/IPA-001/IP-P01200/2018-2019/11910 has been appointed as Interim Resolution Professional ("IRP") to manage affairs of the Company in accordance with the provisions of the insolvency and bankruptcy Code 2016 ("Code). In line with the provisions of the Code, the powers of the Board of Directors stand suspended and the same are being exercised by IRP.
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