XV Provision, Contingent Liabilities and Contingent Assets:
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. 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. Contingent Liabilities are not recognised but are disclosed in the
notes. Contingent Assets are not recognised but disclosed in the Financial Statements when economic inflow is probable.
XVI Earnings per share:
i Basic earnings per share: Basic earnings per share is calculated by dividing:
1 the profit attributable to owners of the Company;
2 by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements
in equity shares issued during the year.
ii Diluted earnings per share: Diluted earnings per share adjusts the figures used in the determination of basic earnings
per share to take into account:
1 the after income tax effect of interest and other financing costs associated with dilutive potential equity shares; and
2 the weighted average number of additional equity shares that would have been outstanding assuming the
conversion of all dilutive potential equity shares.
3.3 Equity Shares of E Complex Private Limited are pledged with Lenders for loan facilities availed by the Company. However the
amount of investment in E Complex Pvt Ltd has been fully impaired.
3.4 The Company has impaired investments considering the following indicators; Subsidiaries have consistently incurred losses over
the years and thereby Net Worth has fully eroded. There is no existing operating business being carried out in these subsidiaries
because of changes in market, economic and legal environment conditions. These Material changes in working conditions are
impacting the current business of the subsidiaries.
3.5 During the Financial Year 2019 - 2020 (before the commencement of CIRP), Reliance Underwater Systems Private Limited (RUSPL)
ceased to be subsidiary and also associate company of Reliance Naval and Engineering Limited, by virtue of allotment of additional
equity shares (49.99%) to Reliance Corporate Advisory Services Limited, and assigning the voting rights to Reliance Capital Limited.
3.6 As per the applicable accounting framework the entity shall also submit consolidated financial statements for the year ending
March 31, 2024. There are three subsidiaries of the Company and one associate. The subsidiaries of the Company are separate
legal entities, also currently few companies are under CIRP Process, under liquidation and non-operational and the Company is not
able to obtain relevant data from the available contact details of the subsidiaries. In view of the above, the Company has prepared
Consolidated Financial Statements incorporating only Conceptia Software Technologies Private Limited, an associate company. The
following wholly-owned subsidiaries are not considered in the consolidation of the financials statement.
3.7 E-Complex Private Limited, a wholly-owned subsidiary of the Company was admitted during FY 2020-21 for Corporate Insolvency
Resolution Process (CIRP) with NCLT Ahmedabad. The CIRP process for E-Complex Private Limited is completed as per the NCLT
order dated December 4, 2023 which has been set aside by NCLAT by its order dated July 25, 2024. E-Complex Private Limited, a
wholly-owned subsidiary of the Company was admitted during FY 2020-21 for Corporate Insolvency Resolution Process (CIRP) with
NCLT Ahmedabad. The CIRP process for E-Complex Private Limited is completed as per the NCLT order dated December 4, 2023
which has been set aside by NCLAT by its order dated July 25, 2024. The COC of ECPL has filed an appeal before the Supreme
court of India which is pending admission. The impairment created in the earlier years against this investment is still carried in the
books of accounts.
Note - 4
Deferred Tax Liabilities/(Assets) (Net)
4.1 Reconciliation of tax expenses and the accounting profit multiplied by domestic tax rate:
Since the Company has incurred loss during the year ended March 31, 2024 and previous year, no tax is payable for these years as
per provisions of Income Tax Act, 1961, the calculation of effective tax rate is not relevant and hence not given.
4.2 The Company has not recognised net deferred tax assets as Company is not certain that sufficient future taxable income will
be available against which deferred tax assets can be realised considering its present order book and anticipated orders and
opportunities in the defence sector as evidences.
vii) Risk Exposure :
1 Investment Risk: The Present value of the defined benefit plan laibility is calculated using a discount rate which is
determined by reference to market yeilds at the end of reporting period on Government bonds.
2 Interest Risk: A decrease in the bond interest rate will increase the plan liability: however, this will be partially offset
by an increase in the return on the plan debt investment.
3 Liquidity Risk: The present value of the defined plan liabilty is calculated by refrence to the best estimate of the
mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan
participants will increase the plan’s liability.
4 Salary Risk: The present value of the defined plan liability is calculated by reference to the future salaries of plan
participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.
viii) Details of Asset-Liability Matching Strategy: Gratuity benefits liabilities of the Company are funded. There are no
minimum funding requirements for a Gratuity benefits plan in India and there is no compulsion on the part of the Company
to fully or partially pre-fund the liabilities under the Plan. The trustees of the plan have outsourced the investment
management of the fund to an insurance company. The insurance company in turn manages these funds as per the
mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in
the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it may not be
possible to explicitly follow an asset-liability matching strategy to manage risk actively in a conventional fund.
b) Leave Encashment (Unfunded)
During the FY 2020-21, The Company changed its leave policy wherein accumulation of leave is restricted and encashment of
leave facility was withdrawn.
Consequently as there is no liability towards the leave encashment actuarial valuation has not been carried out
Note : Above details are captured from the Actuarial report. The company had certain gratuity liability Pre-CIRP and also
making certain provision for the Post-CIRP basis the calculation done by HR department of the company.
As per the Actuarial valuation report there is net assets position. However, company had continued the gratuity liability on
conservative basis. Accordingly outstanding liability towards gratuity and leave enacshment in note no. 18 will not match
with above disclosure.
Note - 28
The Company has issued a Bond cum legal undertaking for ' 64,400 lakhs (Previous Year: ' 64,400 lakhs) in favour of President of
India acting through Development Commissioner of Kandla Special Economic Zone for setting up a SEZ unit for availing exemption
from payment of duties, taxes or cess or drawback and concession etc. a General Bond in favour of the President of India for a sum of
' 15,300 lakhs (Previous Year :' 15,300 lakhs) as Security for compliance of applicable provisions of the Customs Act, 1962 and the Excise
Act, 1944 for EOU unit, a bond cum legal undertaking for ' 1,350 lakhs (Previous Year: ' 1,350 lakhs) in favour of President of India acting
through D.R.I. Ahmedabad, Zonal Unit as security of compliance under Central Excise Act, 1944.
Note - 29
Going Concern
The new management has been granted full control of the affairs of the company with effect from January 4, 2024, the financial statement
for the period and year ended March 31, 2024 have been prepared on going concern assumptions by the Board of Directors of the
Company. This has been further explained in “General Information” stated in note 1.
Note - 30
Fair Value Measurements
The fair value of the financial assets and liabilities are included at the amount that would be received on sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date.
This section explains the judgements 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. To
provide and indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments
into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have
quoted price and financial instruments like Mutual Funds for which NAV is published by the Mutual Fund Operator. The fair value of all
equity instruments which are traded in the stock exchanges is valued using the closing price as at the last working day of the closing
period period and Mutual Fund are valued using the Closing NAV.
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 all Material inputs required to fair
value and instruments are observable, the instrument is included in level 2. Instruments in the level 2 category for the Company include
forward exchange contract derivatives.
Level 3: If one or more of the Material inputs is not based on observable market data, the instrument is included in this level. Instruments
in level 3 category for the Company include unquoted equity shares and FCCDs, unquoted units of mutual funds and unquoted units of
venture capital funds.
Financial Liabilities
The Preference shares are classified as a financial liability. The liability in case of Preference Shares and Non Convertible Debentures are
initially recognised on fair value and the difference between fair value and transaction price is considered as Other Income. Subsequently
the liability is measured at amortised cost using the effective interest rate. The impact on this account has been recognised as other
income on the transaction date and subsequent impact are recognised as finance cost in the Statement of Profit and Loss.
The carrying amount of all other Financial Liabilities is reasonably approximate to its fair value. The fair values disclosed above are based
on discounted cash flows using current borrowing rate. These are classified at level 2 fair values in the fair value hierarchy due to the use
of observable inputs.
During the years mentioned above, there have been no transfers amongst the levels of the hierarchy.
Note - 31
Segment Reporting
The Company is engaged only in the business of Ship-building and repairs. As such, there are no separate reportable segments.
Segment information as per Ind AS 108 on Operating Segment :
Information provided in respect of revenue items for the year ended March 31, 2024, and in respect of assets/liabilities as at
March 31, 2024.
I The risk - return profile of the Company’s business is determined predominantly by the nature of its products. The Company is
engaged in the business of Shipbuilding, Repair and Fabrication. Further based on the organisational structure, internal management
reporting system, nature of production process and infrastructure facilities used, there are no separate reportable segments.
II Revenue from Major Customers :
Revenue from operations includes Nil (Previous Year: ' 316.12 lakhs) from one customer (Previous Year: one customer) having more
than 10% of the total revenue.
Note - 34
Financial Instruments - Evaluation of risks
Due to non availability of required information/ documents, the new magamenet of the company is not in a position to assess fair value
hierarchy, evolution on capital management, credit risk, currency risk, and interest risk.
Note - 35
Capital Management
For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity
reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to safeguard
continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to
shareholders through continuing growth.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of
the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, long term borrowings and short
term borrowings. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.
In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial
covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
Note - 37
Ind AS 115 - Revenue from Contracts with Customers Disclosure:
The Company has not recognised any revenue during the current year and hence not disclosed.
Note - 38
Other Statutory Information
(a) The Company has not revalued its Property, Plant and Equipment (including Right-of-Use Assets) and intangible assets during the
year.
(b) The Company has not given any loans or advances in the nature of loans either repayable on demand or without specifying any
terms or period of repayment granted to promoters, directors, KMPs and related parties.
(c) The Company has not used borrowings for purpose other than specified purpose of the borrowing. Further, there is no delay in
creation of charges with ROC beyond the statutory period.
(d) The Company does not have any Benami property. Further, there are no proceedings initiated or are pending against the Company
for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(e) The company has not conducted any exercise to identify the transactions with any struck-off companies during the year.
(f) The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year.
(g) 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:
(i) 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
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(h) 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:
(i) 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
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(i) 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.
(j) The Company has not been declared as a wilful defaulter by any bank or financial institution or government or any government
authority.
(k) The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies
(Restriction on number of Layers) Rules, 2017.
(l) The company has not filed any Scheme of Arrangements in terms of sections 230 to 237 of the Companies Act, 2013 with any
Competent Authority.
(m) All the charges of the company as appearing on the MCA portal are in the process of being satisfied /modified to give effect of the
approved resolution plan as entered into with the financial creditors.
Note - 40
Other
Previous year figures have been regrouped and rearranged, wherever necessary to make them comparable with those of the current
year.
The current year’s Finance Cost includes ' 16.36 lakhs as interest on Interim Funding received during the CIRP Period, it has been treated
as CIRP Cost.
The order pronounced on December 23, 2022, by the Ahmedabad bench of the National Company Law Tribunal has approved the
Resolution Plan submitted by Hazel Mercantile Limited (the Resolution Applicant) for the corporate insolvency resolution of the Company
under Section 31 of the Code. Accordingly an amount of ' 5,188.85 lakhs is payable to India Infrastructure Finance Company (UK) Limited.
As per the approved plan the amout of liability is capped at ' 5,188.85 lakhs however the amount payable would be coverted into USD
on the date of payment.
As per regulatory compliance, the company is required to conduct an internal audit but the same has not been done for the period ending
March 31, 2024.
Net amount of ' 4,211.91 lakhs was payable to various overseas parties. The amount to be paid as per approved resolution plan against
these amount is NIL. Hence the same is written back and the company is in proceess of doing necessary compalince with RBI and FEMA.
As per our report on even date for and on behalf of the Board of Directors
For N.N. Jambusaria & Co. Reliance Naval and Engineering Limited
Chartered Accountants
Firm Reg. No. 104030W
Nimesh N. Jambusaria Mr. Nikhil Merchant Mr. Paresh Merchant
Partner Chairman & Managing Director Director
Membership No. 038979 DIN : 00614790 DIN : 00660027
Place : Mumbai Mr. Rishi Chopra Mr. Vishant Shetty
Date : November 11, 2024 Chief Financial Officer Company Secretary
UDIN: 24038979BKBNXR6383 Place : Mumbai
Date : November 11, 2024
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