Impairment testing of goodwill and intangible assets with indefinite lives
Lloyd Consumer business is a single Cash Generating Unit (“CGU") engaged in the business of manufacturing, trading and distribution of consumer electronics products under the ‘Lloyd’ brand. Goodwill and Trademarks having indefinite useful lives, pertains to the acquisition of Lloyd Consumer business, and have accordingly been allocated to the said business. As the Lloyd Consumer business has incurred losses, considering the requirements of Indian Accounting Standard (Ind AS) - 36 'Impairment of Assets, the Company has performed an impairment test to ascertain the recoverable amount of goodwill, intangible assets as well as other non-financial assets, viz., property, plant and equipment, capital work-in-progress etc. of Lloyd Consumer business. The recoverable amount is determined based on value in use calculation. This calculation uses management assumptions and pre-tax cash flow projections, based on financial budgets approved by management, covering a 5 year period. Cash flow projections beyond 5 years’ time period are extrapolated using the estimated growth rate which is consistent with the forecasts included in industry reports specific to the industry in which the CGU operates.
The management has determined budgeted gross margin based on past performance and its expectations of the future market scenario. The revenue and profit growth rates used are consistent with the forecasts included in industry reports. Management has performed a sensitivity analysis on the above mentioned key assumptions, based on which the management believes that the recoverable amount of the above-mentioned assets of the CGU is more than the carrying amount and a reasonably possible change in the assumptions would not cause the carrying amount to exceed its recoverable amount.
(a) Trade Receivables represent the amount of consideration in exchange for goods or services transferred to the customers that is unconditional.
(b) During the earlier years, the Company had entered into agreements with customers wherein the Company had identified multiple performance obligations as per Ind AS 115 “Revenue from contracts with customers”. The Company’s right to receive consideration is conditional upon satisfaction of all performance obligations. Accordingly, the Company has recognised contract assets in respect of performance obligations satisfied during the year. The contract asset arises when the Company satisfies a performance obligation but does not have an unconditional right to consideration. Contract assets have decreased in the current year due to change in the time frame for a right to consideration to become unconditional (i e. for a contract asset to be reclassified to trade receivable).
(c) The Company has entered into the agreements with customer for sale of goods and services. The Company has identified these performance obligations and recognised the contract liabilities in respect of contracts, where the Company has obligation to deliver the goods and perform specified services to a customer for which the Company has received consideration. There has been no significant change in the contract liabilities.
(a) The deposits maintained by the Company with banks comprise of the time deposits, which may be withdrawn by the Company at any point of time without prior notice and are made for varying periods between one day to twelve months depending on the immediate cash requirements of the Company and earn interest at the respective short-term deposit rates.
(b) Fixed deposit with original maturity of more than twelve months but remaining maturity of less than twelve months have been disclosed under other bank balances.
(c) The Company can utilise the balance towards settlement of unclaimed dividend.
(d) Includes Fixed Deposit amounting ' Nil (March 31, 2023'4.34 crores) related to Unspent CSR amount kept in separate bank account as per provision in section 135(6) of Companies Act, 2013.
(e) Includes Fixed Deposit amounting ' 12.31 crores (March 31, 2023'5.93 crores) related to Havells Employees Welfare Trust.
(f) Includes Fixed Deposit amounting ' 0.69 crores (March 31, 2023'0.52 crores) related to Havells Employees Welfare Trust.
e) Terms/rights attached to equity shares
The Company has only one class of issued share capital i.e. equity shares having a par value of '1/- per share (March 31,2023 : '1/- per share). Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.
g) Shares reserved for issue under Employee stock purchase plan
I nformation relating to Employee stock purchase plan, including details of options issued, exercised and lapsed during the financial year and options outstanding as at the end of the reporting period are set out in note 33 (7).
(a) Capital reserve
During amalgamation/ merger approved by honourable court, the excess of net assets taken over the consideration paid, if any, is treated as capital reserve. This capital reserve has arisen as a result of scheme of amalgamation in the past periods.
Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations adjusted by utilisation of reserve in accordance with scheme of Amalgamation in earlier years. The requirement to mandatorily transfer a specified percentage of the net profit to general reserve before declaration of dividend has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.
The share option outstanding account is used to recognise the grant date fair value of options issued to employees under Employee stock purchase plan.
Nil number of share (March 31,2023: 41,960 shares) is held by employee welfare trust included in the financial statements
Retained Earnings are profits that the Company has earned till date less transfer to General Reserve, dividend or other distribution or transaction with shareholders.
(i) The Company has unabsorbed capital loss of ' 171.09 crores as on March 31, 2024 (March 31, 2023: ' 390.84 crores) out of which capital loss of ' 122.30 crores will expire in financial year 2025-26, capital loss of ' 27.51 crores will expire in financial year 2029-30 and capital loss of ' 21.28 crores will expire in financial year 2030-31, on which no deferred tax asset has been created by the management due to lack of probability of future capital gain against which such deferred tax assets can be realised. If the Company were able to recognise all unrecognised deferred tax assets, the profit after tax would have increased by ' 39.15 crores (March 31, 2023: ' 89.28 Crore). The capital losses of '211 crores has been expired during the year.
(i) Trade Payables include due to related parties ' 24.87 crores (March 31, 2023 : '16.00 crores) {refer note 33(6)(D)}
(ii) The amounts are unsecured and non interest-bearing and are usually on varying trade term.
(iii) For terms and conditions with related parties. {refer to note 33(6)}
(iv) The amounts falling in the category of more than 1 year are related to pending obligations on the part of the supplier as per agreed terms and conditions mentioned in respective contracts.
a) Information as required to be furnished as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) for the year ended March 31, 2024 is given below. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.
(a) Investor Education and Protection Fund is being credited by the amount of unclaimed dividend after seven years from the due date. The Company has transferred ' 0.24 crores (March 31,2023 : '0.26 crores) out of unclaimed dividend to Investor Education and Protection Fund of Central Government in accordance with the provisions of section 124 of the Companies Act, 2013.
A provision is recognized for expected warranty claims and after sales services on products sold during the last one to seven years, based on past experience of the level of repairs and defective returns. It is expected that significant portion of these costs will be incurred in the next financial year and all will be incurred within seven years after the reporting date. Assumptions used to calculate the provisions for warranties are based on current sales levels and current information available about defective returns based on one to seven years warranty period for all products sold and are consistent with those in the prior years. The assumptions made in relation to the current year are consistent with those in the prior year.
Provision for litigation amounting to ' 9.10 Crores (March 31,2023: '6.70 Crores) is created against demands raised in various ongoing litigations in ordinary course of business. Based on the facts of the case and legal precedents, the management believes there would be a probable outflow of resources and accordingly, has created a provision in books of account.
Sale of products: Performance obligation in respect of sale of goods is satisfied when control of the goods is transferred to the customer, generally on delivery/ despatch of the goods as applicable and payment is generally due as per the terms of contract with customers.
Sales of services: The performance obligation in respect of maintenance services is satisfied over a period of time and acceptance of the customer. In respect of these services, payment is generally due upon completion of maintenance period based on time elapsed and acceptance of the customer. In certain non-standard contracts, where the Company provides warranties in service of consumer durable goods, the same is accounted for as a separate performance obligation and a portion of the transaction price is allocated based on its relative standalone prices. The performance obligation for the warranty service is satisfied over a period of time based on time elapsed.
Note: The remaining performance obligation expected to be recognised in more than one year relates to amounts received from customers against which performance obligation is to be satisfied over a period of one to four years. All other remaining performance obligations are expected to be recognised within one year. During the year ended March 31, 2024, revenue recognised from amount included in contract liability at the beginning of year is ' 82.53 crores (March 31, 2023: ' 54.30 crores).
The Company was awarded a contract for replacement of existing conventional street/ park lights with LED street/ park lights by a Municipal Corporation in April 2017. As per the agreement, the Company shall also be responsible for the operation and maintenance of LED street/ park lights for a period of 7 years after installation. The consideration received by the Company under the contract is based on the energy savings resulting from the LED street/ park lights. The revenue recognised during the year and the contract assets balance as at year-end from such contract amounts to ' 46.02 Crores (March 31,2023: ' 45.89 crores) and ' 30.32 Crores (March 31,2023: ' 43.57 crores) respectively.
32. Commitments and Contingencies
As At March 31,2024
(' in crores)
As At March 31,2023
A Contingent liabilities (to the extent not provided for)
a Claims / Suits filed against the Company not acknowledged as debts (Refer point (i))
6.67
6.83
b Disputed tax liabilities in respect of pending litigations before appellate authorities {Amount deposited under protest ' 10.20 crores (March 31, 2023: ' 13.04 crores), included in “Deposit with Statutory and Government authorities” in note no. 8) {refer point (ii)}
110.25
54.74
Notes:
i) Claims / suits filed against the Company not acknowledged as debts which represents various legal cases filed against the company. The Company has disclaimed the liability and defending the action. The Company has been advised by its legal counsel that its position is likely to be upheld in the litigation process and accordingly no provision for any liability has been made in the financial statement.
ii) The various disputed tax litigations are as under:
Sl. Description {refer note below} Period to which
relates
Disputed amount As At March 31,2024
Period to which Disputed amount relates As At March 31,2023
a) Excise / Customs / Service Tax
Demands raised by Excise and 1994-97, 2007-08 to Custom department. 2009-10, 2015-16 to
2020-21
24.13
2007-08 to 2009-10, 16.32 2015-16 to 2017-18 and 2019-20
b) Income Tax*
Disallowances / additions made by 2008-09 the income tax department. to
2014-15 and 2016-17
27.52
2005-06, 2008-09 35.17 to
2014-15, 2016-17 to 2017-18 and 2019-20
c) Goods and Service Tax
Demands raised by GST 2017-18, Department 2019-20 and
2022-23
56.58
2017-18 1.23 and
2019-20
d) Sales Tax / VAT
Demands raised by Sales tax / VAT 2003-04, 2005-06 department to 2011-12 and
2016-17
1.87
2003-04, 2005-06 to 1.87 2011-12 and 2016-17
e) Others
Demand of local area development 2001-02 tax by the concerned authorities
0.12
2001-02 0.12
Demand of octroi along with 2010-11 penalty in the state of Maharashtra by the concerned authorities
0.03
2010-11 0.03
The above figures are net of provisions made by the Company. The Company is contesting these demands and the management believe that its position is likely to be upheld in the appellate process. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company’s financial position and results of operations.
* Based on favourable decisions in similar cases, the Company does not expect any liability against these matters in accordance with principles of Ind AS -12 ‘Income taxes’ read with Ind AS -37; Provisions, Contingent Liabilities and Contingent Assets’ and hence no provision has been considered in the books of accounts except for provision created in respect of few years {refer note 20(ii)}.
The above amounts contain interest and penalty where included in the order issued by the department to the Company.
B. Commitments
As at
March 31,2024
March 31,2023
Estimated amount of capital contracts remaining to be executed and not provided for (Net of Advances amounting to ' 131.98 crores (March 31,2023: ' 52.52 crores))
268.86
476.73
During the Year, the company has availed fund and non fund based unsecured working capital limit amounting to ' 1,142.50 Crores (March 31, 2023: 1,382.50 Crores) under multiple banking arrangements from IDBI Bank Limited, Yes Bank Limited, Standard Chartered Bank Limited, HSBC Bank, ICICI Bank Limited, IndusInd Bank Limited, HDFC Bank Limited, DBS Bank Limited and CITI Bank N.A. An amount of ' 836.75 crores (March 31, 2023: 1,102.86 Crores) remain undrawn as at March 31,2024. Drawn amount is related to non fund based bank guarantee and letter of credit.
The company has taken provisions amounting ' 9.10 Cr (March 31, 2023 : ' 6.70 Cr) against the income tax and other sales tax related litigations. These provisions represent estimates made where liability has been assessed as probable. The probability and the timing of the outflow with regard to these matters depend on the final outcome of the litigations/disputes. Hence, the Company is not able to reasonably ascertain the timing of the outflow.
E The Company has outstanding obligation amounting to ' 0.72 crores (March 31,2023: ' 0.51 crores) in respect of bonds given to central tax department against import of goods at concessional rate of basic custom duty. The Company expects to fulfil the obligation in due course of time.
F The Company has export obligation of ' 236.44 crores (March 31, 2023: ' 158.68 crores) on account of import duty exemption of ' 12.56 crores (March 31, 2023: '8.72 crore) on capital goods under the Export Promotion Capital Goods (EPCG) and ' 0.79 crores (' 0.15 crores March 31,2023) Advance Authorisation scheme laid down by the Government of India. The Company expects to fulfil the obligation in due course of time.
i The Company's lease asset primarily consist of leases for land and buildings for branch offices and warehouses having the various lease terms. The Company also has certain leases of with lease terms of 12 months or less. The Company applies the ‘short-term lease' recognition exemption for these leases. Payment made towards leases of low value assets (lease of assets worth less than ' 2 Lakhs) other than building and warehouse are recognized in the statement of Profit and Loss as rental expenses over the tenure of such leases.
Disclosures pursuant to Ind AS - 19 “Employee Benefits” (notified under the section 133 of the Companies Act 2013 (the Act) read with Companies (Indian Accounting Standards) Rule 2015 (as amended from time to time) and other relevant provision of the Act) are given below :
The employees' Gratuity Fund Scheme, which is a defined benefit plan, is managed by the trust which maintains its investments with Bajaj Allianz Life Insurance Co. Ltd. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure at 15 days of last drawn basic salary for each completed year of service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
j) The average duration of the defined benefit plan obligation at the end of the reporting period is 21.80 years for on-roll employees (March 31,2023: 21.87 years).
k) The Company expects to contribute ' 28.14 crores (March 31,2023 : ' 29.08 crores) to the plan during the next financial year.
l) The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.
m) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.
n) The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in an assumptions occurring at the end of the reporting period while holding all other assumption constraint. In practice it is unlikely to occur and change in some of the assumption may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
o) The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
The segment reporting of the Company has been prepared in accordance with Ind AS-108, “Operating Segment” (specified under the section 133 of the Companies Act 2013 (the Act) read with Companies (Indian Accounting Standards) Rule 2015 (as amended from time to time) and other relevant provision of the Act). For management purposes, the Company is organized into business units based on its products and services and has six reportable segments as follows:
Switchgears : Domestic and Industrial switchgears, electrical wiring accessories and capacitors.
Cables : Domestic cables and Industrial underground cables.
Lighting and Fixtures : Energy Saving Lamps (LED, Fixtures) and luminaries.
Electrical Consumer Durables : Fans, Water Heaters, Coolers, and Domestic Appliances Lloyd Consumer : Air Conditioner, Television, Refrigerator and Washing Machine
Others : Industrial motors, Pump, Water purifier, Solar, Personal Grooming
Operating segments have been identified on the basis of the nature of product / services and have been identified as per the quantitative criteria specified in the Ind AS. The Board of Directors monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.
c) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as “unallocable”.
d) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets, borrowings and other assets and liabilities that can not be allocated to a segment on reasonable basis have been disclosed as “unallocable”.
e) There is no transfer of products between operating segments.
f) There are no customers having revenue exceeding 10% of total revenues
g) No operating segments have been aggregated to form the above reportable operating segments.
a) The transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year-end are unsecured and interest free. The settlement for these balances occurs through payment. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31,2024, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31,2023: ' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
b) As at March 31,2024, the Company has not granted any loans to the promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person (March 31,2023: Nil).
c) Transactions with related parties are reported gross of Goods and Service Tax.
The Company has in place following employee stock purchase plan approved by shareholders of the Company in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) regulations, 2021 :
(a) Havells Employee Long Term Incentive Plan 2014 : In accordance with this scheme, 51,376 (March 31,2023 : 41,817) share options of ' 1 each were granted, out of which 50,945 (March 31,2023: 41,415) share options of ' 1 each were vested and allotted on June 08, 2023 (March 31,2023 : June 03, 2022) to eligible employees at ' 1,230.20 (March 31, 2022: ' 1,289.85) per share as contributed by these employees. As per the scheme, 50% of the shares are under lock in period of 13 months and balance 50% for 2 years. Also as per the scheme, the Company is obliged to pay 50% of the
contribution made by eligible employees as retention bonus over a period of two years in equal instalments. Accordingly, a sum of ' 2.53 crores (March 31,2023 : ' 2.23 crores) has been recognised as employee stock purchase plan expense (refer note 28).
(b) Havells Employee Stock Purchase Plan 2015 : In accordance with this scheme, 93,040, which will be transferred to eligible employees together with the 41,960 Shares lying in the Trust, against the Exercise of 1,35,000 share options (March 31,2023: 150,000) of ' 1 each were granted, vested and allotted on June 08,2023 (March 31,2023: June 03, 2022) at ' 1,230.20 (March 31,2023: ' 1289.85) per share to eligible employees as contributed by the Company. As per the scheme, 78% of the shares are under lock in period of 13 months and remaining 22% are under lock in period for 2 years. Accordingly, a sum of ' 16.61 crores (March 2023 :' 19.35 crores) has been recognised as employee stock purchase plan expenses (refer note 28).
(c) Havells Employee Stock Purchase Plan 2016 : In accordance with the said scheme, 34,303 (March 31,2023: 24,942) share options of ' 1 each were granted to eligible employees with graded vesting in three years starting from 2022. During the year, 20,627 equity shares of ' 1 each (March 31,2023 : 13534 equity shares) were allotted at ' 1,230.20 (March 31,2023 : '1,289.85) per share on June 08, 2023 (March 31,2023 : June 03, 2022). Accordingly, a sum of '3.88 crores (March 31,2023: 2.69 crores) has been recognised as employee stock purchase plan expense refer note 28 and balance outstanding of ' 2.81 crores (March 31,2023 : 1.48 crores) (refer note 14).
(d) Havells Employee Stock Purchase Plan 2022 : In accordance with the said scheme, 65,628 (March 31,2023: 17,733) share options of ' 1 each were granted to eligible employees with graded vesting in five years starting from 2022. During the year, 8680 equity shares of ' 1 each (March 31,2023 : 1722 equity shares) were allotted at ' 1,230.20 (March 31, 2023 : 1348.55) per share on November 01,2023 (March 31,2023 : November 03, 2022). Accordingly, a sum of '3.98 crores (March 31,2023: 1.06 crores) has been recognised as employee stock purchase plan expense refer note 28 and balance outstanding of ' 3.75 crores (March 31,2023 : 0.82) (refer note 14).
The fair value at grant date of options granted during the year ended March 31, 2024 was within range of ' 1,211.83 to ' 1,222.64 per share (March 31,2023 was within range of ' 1,271.53 to ' 1,348.16 per share). The fair value at the grant date is determined using Black Scholes valuation model which takes into account the exercise price, the terms of the options, the share price at grant date and expected price volatility of the underlying shares, the expected dividend yield and the risk free interest rate for the term of the option.
The management assessed that cash and cash equivalents, trade receivables, trade payables, other current financial assets and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the other 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:
1) The fair value of unquoted instruments, other non-current financial assets and non-current financial liabilities is estimated by discounting future cash flows (DCF model) using rates currently available for debt on similar terms, credit risk and remaining maturities. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.
2) The fair values of the Company's interest-bearing borrowings are determined by using DCF method using discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period. The own non-performance risk as at March 31,2024 was assessed to be insignificant.
3) Long-term receivables/payables are evaluated by the Company based on parameters such as interest rates, risk factors, individual creditworthiness of the counterparty and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: The fair value of financial instruments traded in active markets is based on quoted (unadjusted) market prices at the end of the reporting period for identical assets or liabilities
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 significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.
There are no transfers among levels 1,2 and 3 during the year.
This section explains the judgement and estimates made in determining the fair value of financial assets that are:
a) Recognised and measured at Fair value
b) Measured at amortised cost and for which fair value is disclosed in financial statements
The Company's principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include trade and other receivables, and cash and cash equivalents that are derived directly from its operations.
The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company is exposed to market risk, credit risk and liquidity risk.
The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors and Audit Committee. This process provides assurance to Company’s senior management that the Company’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective.
The Board of Directors reviews and agrees policies for managing each of these risks which are summarized as below:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits, investments, and foreign currency receivables and payables. The sensitivity analysis in the following sections relate to the position as at reporting date. The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets and liabilities. The sensitivity of the relevant Profit and Loss item and equity is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31,2024 and March 31,2023
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in foreign currency). Foreign currency exchange rate exposure is partly balanced by purchasing of goods from the respective countries. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
The following tables demonstrate the sensitivity to a reasonably possible change in USD,EUR,CNY and other currencies including JPY,KES,NPR, CHF, LKR, MWK,AED,SLL and GBP exchange rates, with all other variables held constant. The impact on the Company profit before tax and equity is due to changes in the fair value of monetary assets and liabilities. Foreign currency exposures recognised by the Company that have not been hedged by a derivative instrument or otherwise are as under:
Interest rate is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long term debt obligation at floating interest rates. The Company's borrowings outstanding as at March 31, 2024 and March 31,2023 comprise of long term loans.
The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of industrial and domestic cable and other electronic items and therefore require a continuous supply of copper and aluminium being the major input used in the manufacturing. To mitigate the risk of supply and price fluctuations, Domestic and overseas sources are bench-marked to Optimize the allocation of business share among various sources. The Company's Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. The Company mitigated the risk of price volatility by entering Long Term & Short term contracts for the Purchase of these commodities basis estimated annual requirements.
Credit Risk is the risk that the counter party will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by Trade Receivable buyout facility without recourse, letters of credit and other forms of security.
An impairment analysis is performed at each reporting date on trade receivables by lifetime expected credit loss method based on provision matrix. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables and contract assets as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
Credit risk from balances with banks and financial institutions is managed by the Company's treasury department in accordance with the Company’s policy. Investments of surplus funds are made in bank deposits and other risk free securities. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.
The Company’s maximum exposure to credit risk for the components of the balance sheet at March 31,2024 is the carrying amounts. The Company’s maximum exposure relating to financial instrument is noted in liquidity table below.
Trade Receivables and other financial assets are written off when there is no reasonable expectation of recovery, such as debtor failing to engage in the repayment plan with the Company.
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company's objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate source of financing through the use of short term bank deposits, short term loans, short term commercial papers and cash credit facility. Processes and policies related to such risks are overseen by senior management. Management monitors the Company's liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.
The table below provides the details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
For the purposes of Company's capital management, Capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Company's capital management is to safeguard its ability to continue as going concern and to ensure that it maintains an efficient capital structure and maximize shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. 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.
During the financial year ended March 31,2023, an amount aggregating to '112.52 crore has been accounted for in the books and disclosed as “Exceptional items” against the fire incident at Neemrana location in July, 2022. As of year ending March 31,2024, balance claim amounting ' 15.79 crore is receivable towards Property Plant and Equipment from insurance company, which will be received in due course.
16 The Company has not been declared as a Wilful Defaulter by any bank or financial institution or government or any government authority.
(i) Details of Benami property: No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
The Company, other than mentioned below, 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:
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
The relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and Companies Act has been complied with for such transactions and the transactions are not violative of the Prevention of Money-Laundering Act, 2002 (15 of 2003).
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:
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
(iii) Compliance with number of layers of companies: The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(iv) Compliance with approved scheme(s) of arrangements: The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(v) Undisclosed income: There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
(vi) Details of crypto currency or virtual currency: The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
(vii) Valuation of PP&E and intangible asset: The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(viii) The company has not granted any loans or advances in the nature of loans either repayable on demand.
20 The figures have been rounded off to the nearest crore of rupees upto two decimal places. The figure 0.00 wherever stated represents value less than ' 50,000/-.
21 The Company has used accounting software for maintaining its books of account which have a feature of recording audit trail (edit log) facility that have operated throughout the financial year for all relevant transactions, except: (a) for modification, if any, made by certain users having debug access for troubleshooting; and (b) that the audit trail, which was enabled at database level in the last month of the financial year, contains only the modified values. The audit trail feature was not tampered with for the aforesaid period. There was no instance of audit trail feature being tampered with for the period the audit trail was enabled.
22 Note No.1 to 33 form integral part of the Standalone Balance Sheet and Standalone Statement of Profit and Loss.