Valuation technique used to determine fair value:
Specific valuation techniques used to value financial instruments include:
- Company has invested in equity share of “The Gandhinagar Urban Co-op Bank Ltd.” as it is requirement for bank account operation. Therefore, the amount invested is considered as fair value.
Fair Value of Financial Assets & Liabilities measured at amortisedcost
- The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature.
- The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk. They are subsequently measured at amortised cost at balance sheet date.
33. Financial Risk Management
The Company’s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to.
Credit Risk Management
Company assesses and manages credit risk based on internal credit rating system. The finance function consists of a separate team who assesses and maintains an internal credit rating system. Internal credit rating is performed on for each class of financial instruments with different characteristics.
The Company has entered into contracts for construction of roads, resurfacing, widening repairs of roads and minor bridges with government authorities on an installment basis. The installments are specified in the contracts.
The Company is exposed to credit risk in respect of installments due. For disputed dues with Ahmedabad Municipal Corporation, The sole arbitrator had passed total 51 order in the matter and granted the award of Principal amount of claim Rs. 62.34 Crore and Rs.23.04 Crore aggregating to 85.38 Crores in favor of the company. Hence, company evaluates the concentration of risk with respect to trade receivable as low.
Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at local level in the operating companies of the Company in accordance with practice and limits set by the Company. These limits vary by location to take into account the liquidity of the market in which the entity operates. In addition, the Company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
Market Risk Management Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company does not exposure outstanding on receivables or payables at the end of the reporting period but is exposed to foreign exchange risk as investment in subsidiary. Investment in subsidiary is measured at cost, so no impact on profit or loss and total equity.
Price Risk
The Company’s exposure to equity securities price risk arises from investments held by the Company and classified in the balance sheet at fair value through profit or loss.
The Company has not invested in any equity shares except that of “The Gandhinagar Urban Co-op Bank Ltd.”, that is as part of mandatory requirement for bank account operation.
Cash flow and fair value interest rate risk
The Company’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31 March 2025 and 31 March 2024, the Company’s borrowings at variable rate were mainly denominated in INR.
The Company’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
34. Capital Management
The Company’s objectives when managing capital are to
- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
- Maintain an optimal capital structure to reduce the cost of capital.
Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio:
Net debt (total borrowings net of cash and cash equivalents) divided by Total ‘equity’ (as shown in the balance sheet).
35. Segment information
In line with Ind AS 108 operating segments and basis of the review of operations being done by the senior management, the operations of the group falls under civil construction business which is considered to be the only reportable segment by the management. The Company is principally engaged in a single business segment viz., “civil construction” which is also the major revenue generating product.
Defined Benefits Plan Gratuity:
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The following table sets out the amounts recognised in the company’s financial statements based on actuarial valuations being carried out as at 31st March 2025
40. Contingent Liabilities and Assets
i. Contingent Liabilities not provided for are Rs. 1020.67 Lacs (Previous year-Rs. 1352.34 Lacs), being bank guarantees issued by Punjab National Bank, Gandhinagar on behalf of the company.
ii. The company has been claiming Income Tax benefit under section 80IA(4) of the Income Tax Act,1961 from year to year. The Income Tax Assessing officer has disallowed the company’s such claim from A.Y. 200304 to 2011-12 till date but for AY. 2003-04 to 2007-08 income tax Order has been received in favor of company during the FY 2022-23 and Refund for AY2004-05 to AY2007-08 has been received in FY2023-24. For assessment 2008-09- to 2013-14 the company’s claim u/s 80IA(4) is allowed by the Income Tax Department.
A.Y-2012-13 & 2018-19 the cases were reopened by income tax department under section 147 of the Income Tax Act. The company has filed the petition with honorable Gujarat High Court. The honorable Gujarat High Court has stayed this matter.
iii. The sole arbitrator had passed total 51 order in the matter and granted the award of Principal amount of claim Rs. 62.34 Crore and Rs.23.04 Crore aggregating to 85.38 Crores in favor of the company.The said order has been challenged by AMC in the Commercial Court of Ahmedabad. The Company has also contested the same and also filed suit for recovery of additional amount. The said matter is pending before the court.
iv. The Company has MAT credit entitlement of Rs. 325.24 Lacs (PY: Rs. 310.10 Lakhs ) available for set-off against future income tax liabilities. Based on management assessment of future taxable profits, the recognition criteria under Ind AS 12 are not met, and accordingly, the MAT credit entitlement has not been recognised as a Deferred Tax Asset in the financial statements.
45. Previous year’s figures have been rearranged and reclassified wherever necessary to correspond with the current year.
46. 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. There are no transactions with Companies Struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
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 Funding Party (Ultimate Beneficiaries) or
b) Provide any guarantee, security or the like 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:
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 surveyor any other relevant provisions of the Income Tax Act, 1961).
viii. The provision of section 135 of the Companies Act 2013 in relation to Corporate Social Responsibility are not applicable to the company during the year.
ix. The Company has not been declare willful defaulter by any bank or financial institution or government or any government authority.
x. In the opinion of Board of Directors:-
a) Current assets, non-current loans and advances are realizable in the ordinary course of business, at the value at which they are stated.
b) The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.
xi. Balance of Trade receivables, Trade payables, loans and advances are subject to confirmation from the respective parties
xii. The title deeds of immovable properties, disclosed in the financial statements included under Property, Plant and Equipment are held in the name of the company as at the balance sheet date.
37. Authorization of Financial statements
The financial statements for the year ended 31 st March, 2025 were approved by the Board of Directors on 30th May, 2025.