A contingent liability is a possible obligation that arises from a past event, with the resolution of the contingency dependent on uncertain future events, or a present obligation where no outflow is probable. Major contingent liabilities are disclosed in the financial statements unless the possibility of an outflow of economic resources is remote. Contingent assets are not recognized in the financial statements but disclosed, where an inflow of economic benefit is probable.
Earnings per share is calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
Other Information
i) The Company has common assets for producing goods for domestic market and overseas market.
ii) Sales of the Company is evently distributed, disclosure of major customer could not be made.
(g) Trade & other receivable / Payables
The management assessed that Trade Receivables, Cash and Cash equivalents, Bank Balances, Deposits, other non derivative current financial, assets, Short term borrowings, Trade payables, Non derivative Current Financial Liabilities approximate their carring amount largely due to the short-term maturities of these instruments.
NOTE 27 - CAPITAL MANAGEMENT
The Company manages its capital to ensure to continue as a going concern while maximizing the return to the equity holders through optimization of the debt to equity balance. In order to achieve this, requirement of capital is reviewed periodically with reference to operating and business plans that take into account capital expenditure and strategic investments.Apart from internal accrual, sourcing of capitalised one through judicious combination of equity and borrowings, both short and long term.
The Company monitors capital using a ratio of adjusted net debt to adjusted equity. For this purpose, adjusted net debt is defined as total liabilities, comprising interest bearing loans and borrowings, less cash and cash equivalents and current investment. Adjusted equity comprises all components of equity.
of the Company, derivative financial instruments, such as foreign exchange forward contracts, foreign currency option contracts are entered to hedge certain foreign currency risk exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
(b) Credit Risk
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, and arises principally from the Company's receivables from customers and investments in financial instruments.
The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The Management impact analysis shows credit risk and impact assessment as low.
Investments are reviewed for any fair valuation loss on periodically basis and necessary provision/fair valuation adjustments has been made based on the valuation carried by the management to the extent available sources, the management does not expect any investment counterparty to fail to meet its obligations.
(c) Liquidity Risk management
Ultimate responsibility for liquidity risk management rests with the board of directors. The Company manages liquidity risk by maintaining adequate reserves, 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.
Liquidity risk table
The following table provides details of the remaining contractual maturity of the Company's financial Liabilities. It has been drawn up based on the undiscounted cash flows and the earliest date on which the Company can be required to pay.
(d) Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices mainly comprise three types of risk: currency rate risk, interest rate risk and other price risks. 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. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. This is based on the financial assets and financial liabilities held as at March 31,2024 and March 31,2023. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Company uses derivatives like forward contracts to manage market risks on account of foreign exchange.
Currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company's functional currency (Rupees). Currency risks related to the principal amounts of the Company's foreign currency payables, have been partially hedged using forward contracts taken by the Company.
Sensitivity analysis
A Reasonably possible strengthening/(weakening) of the Indian Rupees against US dollars at March 31 would have affected the measurement of financial instruments denominated in US dollars and affected equity and profit or loss by the amounts shown below. This analysis assmumes that all other variables, in particular interest rate remain constant and ignores any impact of forecast sales and purchases.
The Company's main interest rate risk arises from long-term borrowings with variable rates, which exposes the Company to cash flow interest rate risk. During 31st March 2024 and 31st March 2023, the Company's borrowings at variable rate were denominated in India
Rupees. Currently the Company's borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.
Exposure to Interest Rate Risk
The Company's Interest Rate Risk arises from borrowings obligations. Borrowings issued exposes as fair value 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.
Cash flow Sensitivity Analysis for Variable -Rate Instruments
A reasonably possible change of 50 basis points in 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 rate, remain constant.
Credit risk is the risk that a customer may default or not meet its obligations to the company on a timely basis, leading to financial losses to the Company. The management has an advance collection /credit policy criteria in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. Before accepting a new customer, the Company uses an internal credit system to assess the potential customer's credit quality and defines credit limits separately for each individual customer. The gross carrying amount of trade receivables as at 31st March 2024
The company has stopped merchant trade activity since FY 19-20 till the balance sheet date, however management is hopeful to explore some business activity to be carried out in coming year, hence accounts are prepared on going concern basis.
Company has neither paid any interim dividend during the year nor any dividend has been proposed as at the close of the year. NOTE:37
Certain debit / credit balances are subject to confirmations and reconciliations.
i) Forensic Audit:
Forensic Audit got conducted by the banks for FY 12-13 to 17-18 by an independent firm of Chartered Accountants and who submitted their report in Dec-2018; The management not being satisfied with the contents got a transactional audit conducted and then sought legal opinion, the contents of both the transactional audit report and opinion supported the management view. Case was filed by the company with the Apex court and matter remains Sub-judice.
ii) SFIO AND CBI :
SFIO office and CBI have instituted enquiries against the company on grounds of its promotors association with the promotors of Frost International Limited, being group company and with similar bank defaults. Their requirements are being serviced on a continous basis. No penalty/ Show Cause Notice has yet been initiated.
The Company has not recognised Defferred Tax Assets during the year in view of losses and ultimate uncertainty of future profits. NOTE : 40
The previous year figures have been regrouped/ reclassified, wherever necessary to confirm to the current year presentation.
The Financial Statements were approved for issue by the Board of Directors on 30.05.2024.
As per our report of even date
Chartered Accountants For and on behalf of Board
FRN: 131411W
Partner Director Director
M.No. 411226 Din : 02923423 Din : 07099937
Date: 30.05.2024 Company Secretary