5.13 Provisions
Provisions are recognized when the Company has a present obligation
as a result of past events, for which it is probable that an outflow of
resources will be required to settle the obligation and a reliable
estimate of the amount can be made. Provisions required to settle
are reviewed regularly and are adjusted where necessary to reflect
the current best estimates of the obligation. Provisions are discounted
to their present values, where the time value of money is material.
5.14 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the Basis of preparation.
The financial statements have been prepared on going concern basis
in accordance with generally accepted accounting principles in India.
Further, the financial statements have been prepared on a historical
cost basis except for following items:
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 are neither recognised nor disclosed except when
realisation of income is virtually certain, related asset is disclosed.
5.15 Earnings per share
Basic earnings per share are 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
are adjusted for the effects of all dilutive potential equity shares.
5.16 Derivative financial instruments and hedge accounting
Derivative financial instruments are accounted for at fair value through
profit and loss (FVTPL) except for derivatives designated as hedging
instruments in cash flow hedge relationships, which require a specific
accounting treatment.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify
as fair value hedges are recorded in the statement of profit and loss,
together with any changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk. The Company only
applies fair value hedge accounting for hedging foreign exchange
risk on recognised assets and liabilities.
Cash Flow Hedge
The Company has designated certain derivative contracts as hedging
instruments in cash flow hedge relationships.
The Company applied hedge accounting requirements in Ind AS 109
prospectively from 1 April 2019 to derivative instruments which could
be designated as effective cash flow hedges. These arrangements
had been entered into to mitigate foreign currency exchange risk and
interest rate risk arising from highly probable forecasted sales and
debt instruments denominated in foreign currency, in accordance with
the Company’s risk management policy.
To the extent that the hedge is effective, changes in the fair value of
derivatives designated as hedging instruments in cash flow hedges
are recognised in other comprehensive income and included within
the cash flow hedge reserve in equity. Any ineffectiveness in the hedge
relationship is recognised immediately in profit or loss.
At the time the hedged item affects profit or loss, any gain or loss
previously recognised in other comprehensive income is reclassified
from equity to profit or loss and presented as a reclassification
adjustment within other comprehensive income.
5.17 Government Grant
Government grants are not recognised until there is reasonable
assurance that the Company will comply with the conditions attached
to them and that the grants will be received. Government grants are
recognised in the Statement of profit and loss on a systematic basis
over the periods in which the Company recognises the related costs
as expenses, if any, for which the grants are intended to compensate.
5.18 Significant management judgement and estimates
When preparing the financial statements, management makes a
number of judgements, estimates and assumptions about the
recognition and measurement of assets, liabilities, income and
expenses.
Significant management judgements
The following are significant management judgements in applying
the accounting policies of the Company that have the most significant
effect on the financial statements.
Recognition of deferred tax assets - The extent to which deferred
tax assets can be recognized is based on an assessment of the
probability of the Company’s future taxable income against which the
deferred tax assets can be utilized.
Evaluation of indicators for impairment of assets - The evaluation
of applicability of indicators of impairment of assets requires
assessment of several external and internal factors which could result
in deterioration of recoverable amount of the assets.
Contingent liabilities - At each balance sheet date basis the
management judgment, changes in facts and legal aspects, the
Company assesses the requirement of provisions against the
outstanding contingent liabilities. However, the actual future outcome
may be different from this judgement.
Significant estimates
Information about estimates and assumptions that have the most
significant effect on recognition and measurement of assets, liabilities,
income and expenses is provided below. Actual results may be
substantially different.
Government grants - Grants receivables are based on estimates
for utilisation of grant as per the regulations as well as analysing
actual outcomes on a regular basis and compliance with stipulated
conditions. Changes in estimates or non-compliance of stipulated
conditions could lead to significant changes in grant income and are
accounted prospectively over the balance life of asset.
Defined benefit obligation (DBO) - Management’s estimate of the
DBO is based on a number of underlying assumptions such as
standard rates of inflation, mortality, discount rate and anticipation of
future salary increases. Variation in these assumptions may
significantly impact the DBO amount and the annual defined benefit
expenses.
Useful lives of depreciable/amortisable assets - Management
reviews its estimate of the useful lives of depreciable/amortisable
assets at each reporting date, based on the expected utility of the
assets. Uncertainties in these estimates relate to technical and
economic obsolescence that may change the utilisation of assets.
Provisions - estimate for provisions recognised is based on
management best estimate of the expenditure required to settle the
present obligation at the year end and is based on historical
experience, expected changes in economic conditions, changes in
exchange rates.
The management assessed that cash and cash equivalents, trade receivables, other receivables, trade payables and other current financial
liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the 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. The following methods and assumptions were used to estimate the fair values:
(i) The fair values of the Company’s interest-bearing borrowings, loans and receivables are determined by applying discounted cash flows
(‘DCF’) method, using discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period.
(ii) The use of quoted market prices for quoted equity instruments.
(iii) Fair value of unquoted equity shares was determined based on the fair market value per share by the registered valuer for the year ended
March 31,2025.
(iv) Investment in subsidiaries are classified as equity investments have been accounted at historical cost less accumulated impairment, if any,
since these are scope out of Ind AS 109 for the purposes of measurement, the same have not been disclosed in the tables above.
(v) The use of quoted market prices for derivative contracts at balance sheet date. For hedge related disclosures, refer note 44.
During the financial year 2024-25 and 2023-24, there were no transfer between Level 1, Level 2 and Level 3 fair value measurements.
C) Market risk
i) Foreign exchange risk
The Company has international transactions and is exposed to foreign exchange risk arising from foreign currency transactions (imports and
exports). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency
that is not the Company’s functional currency. The Company does not hedge its foreign exchange receivables/payables.
ii) Derivative financial instrument
The Company uses derivative instruments as part of its management of exposure to fluctuations in foreign currency exchange rates. The
Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The Company does not enter into
complex derivative transactions to manage the risks. The derivative transactions are normally in the form of forward contracts and these are
subject to the Company guidelines and policies.
The fair values of all derivatives are separately recorded in the balance sheet within current financial assets. Derivatives that are designated
as hedges are classified as current depending on the maturity of the derivative. The use of derivatives can give rise to credit and market risk.
The Company tries to control credit risk as far as possible by only entering into contracts with reputable banks and financial institutions. The
use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities
and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in
the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.
Note - 44
Derivative financial instruments and hedge accounting
The Company is exposed to foreign currency risk from foreign currency borrowings and highly probable forecasted sales, primarily denominated in USD
and EURO. The Company has a risk management policy which aims to hedge foreign currency and interest rate arising from its borrowings denominated
in a currency other than the functional currency of the Company. The Company uses cross currency swap and interest rate swaps to hedge its exposure
to foreign currency and interest rate risk. The Company designates certain derivatives as hedging instruments in respect of foreign currency risk and
interest rate risk in cash flow hedges.
Hedge ineffectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure
that an economic relationship exists between the hedged item and hedging instrument. The Company uses dollar offset method using a hypothetical
derivatives, dollar offset method is a quantitative method that consists of comparing the change in fair value or cash flows of the hedging instrument
with the change in fair value or cash flows of the hedged item attributable to the hedged risk.
The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk and notional amount of the hedging instruments
are identical to the hedged items.
Note - 48
OTHER STATUTORY INFORMATION
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami
property.
(ii) The Company do not have any transactions with companies struck off.
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) 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.
(vi) 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,
(vii) The Company have not 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 (such as, search or survey or any other relevant provisions of the Income
Tax Act, 1961).
(viii) The Company has borrowings from banks and others on the basis of security of current assets. The quarterly returns or statements of current
assets filed by the company with banks and others are in agreement with the books of accounts.
* The loan given to the subsidiary was unsecured and carried an interest @ 5.90% p.a. (monthly cumulative) during the previous year.
For YAPL & Co. For and on behalf of
Chartered Accountants The Hi-Tech Gears Limited
Firm Registration No. 017800N
CA. Sakshi Garg Deep Kapuria Pranav Kapuria
(Partner) Executive Chairman Managing Director
Membership No. 553997 DIN 00006185 DIN 00006195
UDIN: 25553997BMGXMC8263 Place: New Delhi Place: New Delhi
Kapil Rajora Naveen Jain
Place: Ludhiana Chief Financial Officer Company Secretary
Date: May 29, 2025
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