Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals, or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing, and financing activities of the Company are segregated. The Company considers all highly liquid investments that are readily convertible to known amounts of cash to be cash equivalents.
a) Recognition and measurement
Property, Plant & Equipment have been stated at cost, net of GST Input tax credit, but inclusive of import duties and other non-refundable taxes or levies, freight, and any directly attributable costs of bringing the assets to their working condition for their intended use and estimated cost of dismantling and restoring onsite less depreciation and impairment loss, if any; any trade discounts and rebates are deducted in arriving at the purchase price.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably.
The costs of repairs and maintenance are charged to the statement of profit and loss account during the reporting period in which they are incurred.
b) Subsequent Expenditure
Subsequent expenditure is recognized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably.
c) Derecognition
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain and loss upon disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized in the statement of profits and loss account.
d) Impairment of Assets
Management periodically assesses using external and internal sources whether there is an indication that an asset may be impaired. Impairment occurs where the carrying value of future cash flows expected to arise from the continuing use of the assets and its eventual disposal. The impairment loss to be expensed is determined as the excess of the carrying amount over the higher of the asset’s net sales price or present value as determined above.
Depreciation is provided on straight line basis on the original cost/ acquisition cost of assets or other amounts substituted for cost of property, plant and equipment as per the useful life specified in Part ‘C’ of Schedule II of the Act, read with notification dated August 29, 2014 of the Ministry of Corporate Affairs, except for certain classes of property, plant and equipment which are depreciated based on the internal technical assessment of the management.
Depreciation on property, plant and equipment is provided on straight line basis using the lives as mentioned below:-
Based on technical parameters/assessments, the management believes that useful lives currently used fairly reflect its estimate of the useful lives and residual values of Property, plant, and equipment, though these lives in certain cases are different from lives prescribed under Schedule II.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Depreciation on additions/(disposals) is provided on a prorata basis i.e., from/up to the date on which asset is ready or use/disposed off.
Depreciation on leasehold land is provided over the lease period and only on leasehold cost paid by the Company. Any unearned increase not attributable to lessor when the asset is sold is valued at Fair Value and no amortization is provided on the same. Leasehold improvements are depreciated over a period of the lease agreement or the useful life, whichever is shorter.
Accounting Policies
Cost of property, plant, and equipment not ready for use as at the reporting date are disclosed as capital work-in-progress. Capital work in progress is stated at cost, net of accumulated impairment loss, if any.
31. Intangible Assets
During the year, the Company incurred an amount of ' 143.56 million (Previous Year ' 153.17 million) on product development, product approval and such other related development expenses, recognized as Intangible Assets in the books of accounts and the same is amortized on straight line basis over a period of next seven years.
Intangible assets that are acquired are recognized only if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Company and the cost of assets can be measured reliably. The intangible assets are recorded at cost less accumulated amortization and impairment losses, if any.
The research costs are expensed as incurred. Development expenditure including regulatory cost and professional expenses leading to product registration/ market authorization relating to the new and/or improved product and/or process development is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use the asset. The development costs capitalized include the cost of materials, direct labour, and overhead costs that are directly attributable to preparing the asset for its intended use.
Subsequent costs are capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure on intangible assets is recognized in the Statement of Profit and Loss account, as incurred.
c) Amortization
Amortization is calculated to write off the cost of intangible assets using the straight-line method over their estimated useful lives and is generally recognized in depreciation and amortization expense in the Statement of Profit and Loss account. Intangible assets are amortized on straight line basis over a period of next seven years.
The estimated useful life of an identifiable asset is based on several factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
d) Derecognition
An item of intangible assets is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss Account when the asset is derecognized.
32. Current and non-current classification Accounting Policies
All assets and liabilities are presented in the Balance Sheet based on current or non-current classification as per the Company’s normal operating cycle and other criteria set out in Schedule III of the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization into cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/non-current classification of assets and liabilities.
An asset is treated as current when:
a) It is expected to be realized or intended to be sold or consumed in a normal operating cycle.
b) It is held primarily for the purpose of trading.
c) It is expected to be realized within twelve months after the reporting period.
d) It is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
The company classifies all other assets as non-current.
A liability is treated as current when:
a) It is expected to be settled in a normal operating cycle.
c) It is due to be settled within twelve months after the reporting period.
d) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (‘the functional currency’). The financial statements are presented in Indian Rupee ('), which is the Company’s functional and presentation currency.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at that date. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous period are recognized in the Statement on Profit and loss Account in the period.
Investments in foreign entities are recorded at the exchange rate prevailing on the date of making the investment. Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies, as at the balance sheet date, not covered by forward exchange contracts, are translated at year-end rates.
Exchange differences arising on the settlement of monetary items or on reporting Company’s monetary items at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognized as income or expense in the year in which they arise and as per Ind AS 21, exchange differences arising on account of consolidation with foreign operation, are recognized in Other Comprehensive Income. The Company has opted for voluntary exemption given in Ind AS-101, which allows first time adopter to continue its Indian GAAP policy for accounting of exchange difference arising on translation of long-term foreign currency monetary items recognized in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period.
Goods are valued at “Cost” or “Net Realizable Value” whichever is lower. Cost of inventory comprises all cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
Finished goods and work in process are valued at “Cost” or “Net Realizable Value” whichever is lower. Cost includes direct material, labour and proportionate manufacturing overheads.
Traded goods are valued at “Cost” or “Net Realizable Value” whichever is lower. Cost includes the purchase price and other associated costs directly incurred in bringing the inventory to its present location.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. The Company uses the first in first out (FIFO) method to determine costs for all categories of inventories.
b) Fair value hierarchy
The fair value of financial instruments as referred to in note (A) above has been classified into three categories depending on the inputs used in valuation technique. The hierarchy gives the highest priority to quoted price in active markets for identical assets or liabilities [Level 1 measurements] and lowest priority to unobservable inputs [Level 3 measurements].
The categories used are as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included in 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 asset or liability that are not based on observable market data (unobservable inputs).
Financial assets and liabilities measured at fair value as at 31.03.2024:
The Company is exposed to various types of financial risks in conduct of its business activities. The main risks to which it is exposed includes market risk, liquidity risk and credit risk. The Company’s Board of Directors has overall responsibility for the establishment and oversight of the company’s risk management framework. The company maintains a core focus on the strategic management of financial risks to mitigate their potential detrimental impact on its fiscal performance. These risks are systematically governed by an approved policy, ensuring a comprehensive and robust approach to risk mitigation within the organization.
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. The carrying amounts of financial assets represent the maximum credit exposure.
the counterparties on regular basis. These security deposits carry very minimal credit risk based on the Company’s historical experience of dealing with the parties.
Credit risk in insurance claim receivables refers to the uncertainty surrounding the timely and full payment of claims by the insurance company. The company has filed insurance claims with the reputable insurers with strong financial ratings and track records of prompt claims settlement.
Expected credit losses for trade receivables:
Credit risks related to receivables is managed by Company’s management by implementing policies, procedures and controls relating to customer credit risk management. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on trade receivables by using lifetime expected credit losses as per simplified approach wherein the weighted average loss rates are analysed from the historical trends of defaults. Such provision matrix has been considered to recognize lifetime expected credit losses on trade receivables (other than those where defaults criteria are met).
The Company evaluates the concentration of risk with respect to trade receivables low since its customers are mainly reputed manufacturer and operate in independent markets. These receivables are written off when there is no reasonable expectation of recovery. There are no receivables which are in default as at period end, but the management allows for the impairment of trade receivables based on its historical experience of collection from its customers.
Investments in equity shares and mutual funds are measured at mark to market hence, the credit risk associated with these investments already considered in valuation as on reporting date.
Company maintains its cash & cash equivalents and bank deposits with reputed banks. The credit risk on these instruments is limited because the counterparties are bank with high credit ratings assigned by domestic credit rating agencies. Hence, the credit risk associated with cash & cash equivalent and bank deposits is relatively low.
Loans comprise loans given to employees & director, which would be adjusted against salary and retirement benefits of the employees and hence credit risk associated with such amount is also relatively low.
Security deposits given for operational activities of the Company which will be returned to the Company as per the contracts with respective parties. The Company monitors the credit ratings of
Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities. The Company consistently generates sufficient cash flows from operations and has access to multiple sources of funding to meet the financial obligations and maintain adequate liquidity for use. The Company manages liquidity risk by maintaining adequate reserve, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
Maturity profile of financial liabilities
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk namely: currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
• Foreign Currency Risk
Currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Exposure arises primarily due to exchange rate fluctuations between the functional currency and other currencies from the Company’s operating, investing and financing activities.
The Company undertakes transactions denominated in foreign currency (mainly US Dollar) which are subject to the risk of exchange rate fluctuations. Considering the low volume of foreign currency transactions, the Company’s exposure to foreign currency risk is limited hence the Company does not use any derivative instruments to manage its exposure.
Foreign currency risk exposure in USD:
The Company’s exposure to foreign currency risk at the end of the reporting period expressed in rupees, are as follows:
The Company’s interest rate risk arises from debt borrowings. Company’s borrowings are issued at variable rates that expose the Company to cash flow interest rate risk.
Exposure to interest rate risk:
The interest rate profile of the Company’s interest-bearing financial instruments as reported to the management of the Company is as follows.
The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
A reasonably possible change of 50 basis points (bps) in variable interest rates at the reporting date would have increased/ (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
A Financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
A reasonably possible strengthening (weakening) of the US dollar against ' at March 31 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.
The Company recognizes all financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition.
ii. Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
A ‘debt instrument’ is measured at the amortized cost if the asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset or the amortized cost of the financial liability. Amortized cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in other income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the Statement of Profit and Loss. This category generally applies to trade and other receivables.
A ‘debt instrument’ is classified as at the fair value through other comprehensive income (FVTOCI) if it is held within a business model whose objective is achieved both by collecting contractual cash flows and selling the financial assets, and the asset’s contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). On derecognition of the asset, cumulative gain or loss previously recognized in Other Comprehensive Income is reclassified to the Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Fair value through Profit & Loss (FVTPL) is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as amortized cost or as fair value through other comprehensive income, is classified as at FVTPL. In addition, at initial recognition, the Company may irrevocably elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL (Refer Note 5).
However, such an election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ‘accounting mismatch’).
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss Account. Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss Account. Dividend income from investments is recognized in the Statement of profit and loss account on the date that the right to receive payment is established.
• Equity instrument at fair value through Other comprehensive income FVTOCI:
If the Company decides to classify an equity instrument as at fair value through other comprehensive income (FVTOCI), then all fair value changes on the instrument, excluding dividends, are recognized in the other comprehensive income (OCI). There is no recycling of the amounts from OCI to the Statement of Profit and Loss Account, even on sale of investment. However, the Company may transfer the cumulative gain or loss to retained earnings.
iii. Impairment of Financial Assets
The Company recognizes loss allowance using the expected credit loss (ECL) model for financial assets which are not fairly valued through profit or loss account. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all financial assets with contractual cash flows other than trade receivable, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECL (or reversal) that is required to adjust the loss allowance at the reporting date is recognized as an impairment gain or loss in the Statement of Profit and Loss Account.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Company’s balance sheet) when:
• The rights to receive cash flow from the asset have expired, or
• The company has transferred its rights to receive cash flow from the asset or has assumed an obligation to pay the received cash flow in full without material delay to the third party under a ‘pass-through’ arrangement and either (a) the Company has transferred substantially all the risk and rewards of the assets, or (b) the Company has neither transferred nor retained substantially all the risk and rewards of the asset, but transferred control of the assets.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company’s continuing involvement. In that case, the Company also recognizes an associated liability.
The transferred assets and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Write off of financial assets the gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Group expects no significant recovery from the amount written off.
Investments are classified into Current and Non-current Investments. Non-Current Investments are stated at cost and provision for diminution in value is made if decline is other than temporary in the opinion of the management. Current Investments are valued at market rate at the year end.
b) Financial Liabilities
Financial Liabilities are classified, at initial recognition, as financial liabilities at fair value through the Statement of Profit or Loss Account and financial liabilities at amortized cost, as appropriate.
All Financial Liabilities are recognized initially at fair value and, in the case of liabilities subsequently measured at amortized cost, they are measured net of directly attributable transaction cost. In the case of Financial Liabilities measured at fair value through Profit or Loss, transactions costs directly attributable to the acquisition of financial liabilities are recognized immediately in the statement of Profit or Loss Account.
The company’s Financial Liabilities include trade and other payables, loans and borrowings including financial guarantee contracts and derivative financial instruments.
• Financial Liabilities at Fair Value through Profit or Loss:
Financial Liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through the Statement of Profit and Loss. Financial Liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
Financial Liabilities that are not held for trading and are not designated as at fair value through profit & loss (FVTPL) are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Gains and losses are recognized in the Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by considering any discount or premium on acquisition and fees or cost that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss Account.
Financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender
on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss Account.
c) Off-setting of Financial Instruments
Financial assets and financial liabilities are offset, and the net amount presented in the Balance Sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
In the opinion of the management of the Company, the current assets, loans and advances are approximately of the value as stated, if realized in the ordinary course of business and are subject to confirmation/reconciliation.
Ageing schedule of Trade Receivables for the year ended March 31, 2024
In compliance with Indian Accounting Standard (Ind AS 12) relating to “Income Tax” issued under Companies (Indian Accounting Standards) Rules, 2016 as amended up to date, the Company has provided reversal of Deferred Tax Asset during the year aggregating to ' 68.59 million (Previous Year deferred tax asset amounting to ' 251.30 million) and it has been recognized in the Statement of Profit & Loss. In accordance with Indian Accounting Standard (Ind AS 12) Deferred Tax Assets and Deferred Tax Liabilities have been set off.
FDRs with Banks reflects amount on account of FDRs held as Margin Money.
Cash and cash equivalents include cash in hand, demand deposits with banks and other short-term highly liquid investments with original maturities of three months or less.
For cash flow statement, cash and cash equivalent includes cash in hand, in banks, and other short-term highly liquid investments with original maturities of three months or less, net of outstanding bank overdrafts that are repayable on demand and are considered part of the cash management system.
The Company has only one class of equity shares having a par value of ' 1 each. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. The company doesn’t have any holding company.
Provision for Current Income Tax has been made as per Income Tax Act, 1961, based on legal opinion obtained by the Company from its income tax consultant and the statutory auditors have relied upon the said legal opinion for the purpose of current income tax.
c) Working Capital Limits are secured by way of First Pari Passu Charge on all the current assets of the Company and further secured by way of Second Pari Passu Charge on all the fixed assets of the Company, personal guarantee of Sh. Sanjiv Goyal, Chairman & Managing Director & Sanjeev and Sons HUF (HUF of Sh. Sanjiv Goyal) and pledging of their 100% shares.
Note:
Since, the equity shares underlying GDRs are held by Deutsche Bank Trust Company Americas being depository of GDRs, hence disclosed per se.
All the equity shares held by the promoter group i.e., Mr. Sanjiv Goyal and Sanjiv (HUF) are pledged with bankers (except vehicle loan providers) of the company.
41. Borrowings a) Secured Loans
Long Term Loans from various banks are secured by way of First Pari Passu Charge on all the fixed assets of the Company (both present & future) and further secured by way of Second Pari Passu Charge on all the current assets of the Company, personal guarantee of Sh. Sanjiv Goyal, Chairman & Managing Director & Sanjiv HUF (HUF of Sh. Sanjiv Goyal) and pledging of their 100% shares.
Other financial liabilities include ' 0.17 million (Previous year ' 0.27 million) which relates to unpaid/ unclaimed dividend. During the year ' 0.10 million (Previous year ' 0.05 million) was deposited relating to unclaimed dividend with the Investor Education and Protection Fund.
a) Defined Benefit Plans (Unfunded)
In accordance with the Payment of Gratuity Act, 1972, the Company provides for gratuity, as defined benefit plan. The gratuity plan provides for a lump sum payment to the employees at the time of separation from the service on completion of vested year of employment i.e. five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of each financial year. The liabilities are unfunded.
Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and attrition rate. The sensitivity analysis below has been calculated by varying one assumption at a time and recalculating the present value of the obligation. All assumptions, other than the one being varied, were left unchanged from their base values.
The leave obligations cover the Company’s liability for sick and earned leaves. The Company does not have an unconditional right to defer settlement for the obligation shown as current provision. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months, therefore based on the independent actuarial report, only a certain amount of provisions has been recognized in the statement of profit and loss.
c) Define Contribution Plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards provident fund and employee state insurance scheme which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognized as an expense towards contribution to provident and other funds for the period aggregated to ' 38.08 million (Previous year ' 36.35 million).
Liabilities in respect of employee benefits to employees are provided for as follows:
a) Current Employee Benefits:
i) Short-term employee benefits are measured on an undiscounted basis and expensed as the related service is provided. A liability is recognized for the amount expected to be paid under shortterm cash bonus if the Company has a present legal or constructive obligation to pay this amount because of past service provided by the employee and the obligation can be estimated reliably.
ii) Contribution to the Provident Fund & Employee's State Insurance (ESI), which is a defined contribution scheme, is recognized as an expense in the statement of profit and loss account in the period in which the contribution is due.
iii) The Company has adopted a policy on compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using projected unit credit method on the additional amount expected to be paid / availed as a result of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.
iv) Expense in respect of other short-term benefits is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.
b) Long Term Employee Benefits
i) Post-Employment Benefits (Defined Benefit Plans)
Gratuity liability accounted for based on actuarial valuation as per Ind AS 19 ‘Employee Benefits'. Liability recognized in the Balance Sheet in respect of gratuity is the present value of the defined benefit obligation at the end of each reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method. The present value of defined benefit is determined by discounting the estimated future cash outflows by reference to market yield at the end of each reporting period on government bonds that have terms approximate to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expenses in the Statement of Profit and Loss Account.
Actuarial gain / loss pertaining to gratuity, post separation benefits and PF trust are accounted for as Other Comprehensive Income. All remaining components of costs are accounted for in the statement of profit and loss account.
ii) Post-Employment Benefits (Defined Contribution Plans)
A defined contribution plan is a post-employment benefit plan where the Company legal or constructive obligation is limited to the amount that it contributes to a separate legal entity. The Company makes specified monthly contributions towards the Government administered provident fund scheme.
Contribution to the Provident Fund is made in accordance with the provision of Employees Provident Fund Act, 1952, and is recognized as an expense in the statement of Profit and Loss in the period in which the contribution is due.
44. Deferred Income
Deferred income from government grants pertains to capital subsidy of ' 10.00 million received from the Government of India towards installation of power plant to be written off through profit and loss account over the period of life of power plant i.e., ' 0.25 million over a period of 40 years.
Grants and Subsidies are recognized when there is a reasonable assurance that the grant or subsidy will be received and that all underlying conditions will be complied with. Government grants are recognized in the Statement of Profit and Loss on a systematic basis over the years in which the Company recognizes as expenses the related costs for which the grants are intended to compensate or when performance obligations are met.
Government grants, whose primary condition is that the Company should purchase, construct or otherwise acquire noncurrent assets and nonmonetary grants are recognized and disclosed as ‘deferred income' under non-current liability in the Balance Sheet and transferred to the Statement of Profit and Loss on a systematic and rational basis over the useful lives of the related assets.
45. Trade Payable
The information as required to be disclosed pursuant under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) has been determined to the extent such parties have been identified based on information available with the Company.
The principal amount remaining unpaid as at 31st March 2024 in respect of enterprises covered under the “Micro, Small and Medium Enterprises Development Act, 2006” are ' 108.62 million (Previous year ' 15.90 million). The interest amount computed based on the provisions under Section 16 of the MSMED Act of ' 0.96 million (Previous year ' 1.36 million) remains unpaid as at 31st March 2024. The principal amount that remained unpaid as at 31st March 2023 was paid during the year. The list of undertakings covered under MSMED Act was determined by the Company based on information available with the Company and has been relied upon by the auditors.
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. If the effect of the time value of money is material, 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. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, considering the risks and uncertainties surrounding the obligation. When some or all the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received, and the amount of the receivable can be measured reliably.
A contract is considered to be onerous when the expected economic benefits to be derived by the Company from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before such a provision is made, the Company recognizes any impairment loss on the assets associated with that contract.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
i) Primary Segment (Business Segment)
The Company operates only in the business segment of “Pharmaceuticals Products”, and in the opinion of the management the inherent nature of activities in which it is engaged are governed by the same set of risks and rewards. As such the activities are identified as single segment in accordance with the Indian Accounting Standard (Ind AS 108) issued under Companies (Indian Accounting Standards) Rules, 2016 as amended up to date.
In view of the interwoven/intermix nature of business and manufacturing facility, other segmental information is not ascertainable.
iii) Revenue from Major Customers
Revenue from one customer of the company pharmaceutical segment represented approximately ' 2,274.08 million (Previous year 2,765.31 million) of the company’s total revenue.
Other Borrowing Costs include gain on account of foreign exchange fluctuation (net) amounting to ' 97.50 million (Previous Year ' 98.78 million).
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.
49. Leases
Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancellable at mutual consent. There are no restrictions imposed by lease arrangements. There are no sub leases. Lease payments recognized in the Statement of Profit & Loss are ' 18.89 million (Previous Year ' 18.26 million).
As per Section 135 of the Companies Act, 2013 read with Schedule VII thereof, the Company is required to spend 2% of its average net profit of the immediately three preceding financial years on CSR.
Gross amount required to be spent by the Company during the period based on 2% of average net profits by the Company during the year is ' (7.70) million (Previous Year ' 0.08 million).
Expenditure incurred during the year related to Corporate Social Responsibility is ' 2.24 million (Previous Year ' 2.11 million). Amount recognised as expense in profit or loss is “Nil” (Previous year ' 2.11 million).
The Company has an excess CSR spent of ' 2.24 million for the year which it proposes to offset against future obligations and has recognised the same as an asset in the balance sheet.
52. Contribution to Political Party
Contribution to political party amounting to ' 0.50 million (previous year “Nil”) paid to “Bhartiya Janta Party”.
iii) Joint Ventures and Associates
• None
iv) Relatives of the Key Management Personnel*
• Mrs. Raman Goyal
v) Entities over which key management personnel/their relatives are able to exercise significant influence*
• Nectar Lifesciences Charitable Foundation (CSR vehicle of the company)
• With whom the Company had transactions during the year.
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.
Diluted 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 year after adjusted for the effects of all dilutive potential equity shares.
54. Related Party Disclosures
Related party disclosures as required under Indian Accounting Standard (Ind AS 24) on “Related Party Disclosures” issued under Companies (Indian Accounting Standards) Rule 2016, as amended up to date, are given below: -
a) Relationship
i) Subsidiary Companies
• Neclife PT, Unipessoal LDA - Portugal (Inoperative during the year)
• Nectar Lifesciences USA, LLC (dissolved w.e.f. 09.02.2023)
• Nectar Lifesciences UK Limited, United Kingdom (dissolved w.e.f. 31.01.2023)
ii) Key Management Personnel
• Mr. Sanjiv Goyal, Chairman & Managing Director
• Dr. Dinesh Dua, Executive Director (upto 09.07.2022)
• Mr. Puneet Sud, Whole-time Director (w.e.f. 24.09.2022)
• Mr. Amit Chadah, Chief Executive Officer
• Mr. Sandeep Goel, Chief Financial Officer (upto
14.11.2022)
• Mr. Sushil Kapoor, Chief Financial Officer (w.e.f
• Ms. Anubha, Company Secretary (upto 15.11.2022)
• Ms. Neha, Company Secretary (w.e.f. 14.02.2023)
55. Contingent Liabilities and Commitments
(' in million)
|S. No.
Particulars
31.03.2024
31.03.2023
a)
Contingent Liabilities
i)
Claims not acknowledged as debts: - *
• Income Tax matters**
889.95
122.50
• Excise & GST matters @
1,049.74
598.96
• Service Tax matters *
7.22
• VAT & CST matters *
13.76
32.98
ii)
Bank Guarantees
9.24
9.61
iii)
Bills Discounted
47.64
22.33
iv)
Letter of Credit (Foreign / Inland)
123.86
773.88
v)
Others"
-
62.69
b)
Commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance)
20.45
17.82
# The matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, legal proceedings for cases, when ultimately concluded, will not have a material effect on the results of operation or financial position of the company.
** MAT credit entitlement would be reduced by ' 660.03 million, in case of adverse judgment and ' 219.95 million will be adjusted against the MAT credit entitlement already lapsed in the books of accounts.
@Amount deposited under protest ' 155.62 million.
# Amount deposited under protest ' 0.52 million.
# In case demand is confirmed, penalty up to equivalent amount may be imposed.
$ Amount deposited under protest ' 3.44 million.
Interest and claims by customers, suppliers, lenders, and employees may be payable as and when the outcome of the related matters is finally determined and hence have not been included above. Management based on legal advice and historical trends, believes that no material liability will devolve on the Company in respect of these matters.
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 recognised 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 recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent liabilities and commitments are reviewed by the management at each balance sheet date.
Contingent assets are neither recognised nor disclosed in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.
The Company uses foreign currency forward contracts and currency options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts and currency options is governed by the Company’s strategy. The Company does not use forward contracts and currency options for speculative purposes.
As per the information available with the company, the Company did not have any material transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
For the purpose of the Company’s capital management, capital includes issued equity capital, 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 the Company’s ability to remain as a going concern and maximize the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions, annual operating plans and long-term and other strategic investment plans. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The current capital structure of the Company is equity based with no financing through borrowings except through leasing. The Company is not subject to any externally imposed capital requirements.
No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2024 and March 31,2023.
The following table presents an analysis of the credit quality of debt securities issued by the Parent Company and its subsidiary. Rating has been obtained from credit rating agency CARE Ratings Ltd (Pervious year from Brickwork Ratings India Private Ltd). The details of which are as below:
No transactions to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III:
a. Crypto Currency or Virtual Currency
b. Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder
c. Registration of charges or satisfaction with Registrar of Companies
d. Compliance with number of layers of companies
e. Relating to borrowed funds:
i. Willful defaulter
ii. Utilization of borrowed funds & share premium
iii. Borrowings obtained on the basis of security of current assets
iv. Discrepancy in utilization of borrowings
v. Current maturity of long-term borrowings
f. Title deeds of immoveable properties not held in name of company.
g. Relationship with Struck off Companies.
h. Revaluation of property, Plant and equipment as no such revaluation taken place during the year.
1. The company has earned profits during FY 2023-24 whereas the company incurred losses during FY 2022-23 leading to improvement in ratio of debt service coverage ratio, Return on Equity (ROE), Net profit ratio and Return on capital employed (ROCE).
2. During FY 2023-24, Gross sales of the company have increased to ' 19,258.32 million as compared to ' 17,465.57. This increase in gross sales has resulted in an improvement of inventory turnover ratio.
62. The Company has re-grouped the previous year’s figures to confirm the current year’s classification.