A Provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflowof resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions aredetermined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed ateach balance sheet date and adjusted to reflect the current management estimates. Contingent Liabilities are not recognizedbut are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.
The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates. Theuse of these foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use theforeign exchange forward contracts for trading or speculation purposes. The Company records the gain or loss on effectivehedges in the Statement of Profit and Loss of that period when they arise
M Gratuity and other post-employment benefits
Retirement benefit in the form of provident fund and pension fund is a defined contribution scheme. The Company has noobligation, other than the contribution payable to the provident fund and pension fund maintained by Government’s EmployeeProvident Fund Organisation. The Company recognizes contribution payable to the provident fund and pension fund scheme asan expense, when an employee renders the related service. If the contribution payable to the scheme for service receivedbefore the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as aliability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for servicesreceived before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to,for example, a reduction in future payment or a cash refund.
Gratuity and Leave Encashment which are defined benefits are accrued based on actuarial valuation as at the Balance Sheetdate. The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separatelyadministered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit creditmethod.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in netinterest on the net defined benefit liability and the return on plan assets of gratuity (excluding amounts included in net intereston the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit toretained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss insubsequent periods.
Past service costs are recognized in profit or loss on the earlier of:
• The date of the plan amendment or curtailment, and
• The date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.
The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profitand loss:
• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routinesettlements; and
• Net interest expense or income.
The company determines whether an arrangement contains a lease by assessing whether the fulfilment of a transaction isdependent on the use of a specific asset and whether the transaction conveys the right to use that asset in return for payment.
Ind AS 116 “Leases” is effective for annual periods beginning on or after 1st April, 2019. Ind AS 116 sets out the principles for therecognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a singleon Balance Sheet model similar to the accounting for finance lease under Ind AS-17. The standard includes two recognitionexemptions for lessees- leases of “low - value” assets and short-term leases (i.e. for 12 months or less term). At commencementdate of Lease, a lessee will recognise a liability to make lease payments (i.e. the lease liability) and an asset representing theright to use the underlying asset during the lease term (i.e. the right-of-use asset). Lessees will be required to separatelyrecognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
There are no identifiable material leases to be reported and there will be no significant impact on financial statement in respectof Leases
O Earnings Per Share
Basic earnings per share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company
- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements inequity shares issued during the year and excluding treasury shares.
Diluted earnings per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion ofall dilutive potential equity shares.
The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptionsoccurring at the end of the reporting period and may not be representative of the actual change. It is based on a change inthe key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, themethod (Projected Unit Credit Method) used to calculate the liability recognised in the balance sheet has been applied. Themethods and types of assumptions used in preparing the sensitivity analysis did not change as compared with the previousperiod.
Financial Instrument by category and hierarchy
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
i. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities,short term loans from banks and other financial institutions approximate their carrying amounts largely due to short termmaturities of these instruments.
ii. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such asinterest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to accountfor expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from theircarrying amounts.
In line with the overall risk management framework and policies, the treasury function provides service to the business,monitors and manages through an analysis of the exposures by degree and magnitude of risks. It is the Company’s policy thatno trading in derivatives for speculative purposes may be undertaken. The company uses derivative financial instruments, ifrequired, to hedge risk exposures in accordance with the Company’s policies as approved by the board of directors.
a) Market Risk - Interest rate risk:
Interest rate risk is risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inmarket interest rates. The company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floatinginterest rates. In order to optimize the Company’s position with regards to interest income and interest expenses and tomanage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing theproportion of fixed rate and floating rate financial instruments in its total portfolio.
The Sensitivity analysis below has been determined based on the exposures to interest rates at the end of the reportingperiod. For floating rate liabilities, the analysis is prepared assuming that the amount of the liability as at the end of thereporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interestrate risk internally to key management personnel and represents Management’s assessment of the reasonably possiblechanges in interest rates.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes inforeign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to itsoperating activities. The Company manages its foreign Currency risk, if required, by hedging transaction that are expectedto occur within a maximum 12 month periods for hedge of forecasted sales and purchases in foreign currency.
The hedging is done, if required, through foreign currency forward contracts. In past year, the company has not muchimports, but has exports which are more, hence foreign exchange exposure for exports proceeds due cover the liability ofimport dues, thus hedging was not required to cover foreign exchange exposure of the Company.
Equity price risk is related to the change in market reference price of the investments in quoted equity securities. The fairvalue of some of the Company's investments exposes the company to equity price risks. At the reporting date, the companydo not hold any equity securities. Investment in Mutual Funds are taken at fair value.
d) Credit Risk
Customer credit risk is managed by each business unit subject to the Company's established policy, procedures andcontrol relating to customer credit risk management. Credit quality of a customer is assessed based on customer profiling,credit worthiness and market intelligence. Trade receivables consist of a large number of customers, spread acrossgeographical areas. Outstanding customer receivables are regularly monitored.
The average credit period is in the range of 01 -90 days. However in select cases credit is extended which is backed bysecurity deposit/bank guarantee/letter of credit and other forms. The Company's Trade receivables consist of a largenumber of customers, across geographies hence the Company is not exposed to concentration risk.
The Company has provided for expected credit loss as per predetermined percentage of outstanding more than the creditperiod based on historical credit loss experience, industry practices and the business environment in which the entityoperates and adjusted to forward looking information. Further, the debts are examined and assessed party wise individuallyby respective department head and top management, for doubtful recovery, if any. As a final result of the above exercisethe expected credit loss is determined that allowance as required for Credit Loss is being provided.
Financial Assets are considered to be of good quality and there is no significant increase in credit risk.
e) Liquidity Risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity riskmanagement is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. TheCompany has obtained fund and non-fund based working capital limits from bank. Furthermore, the Company access tofunds from debt markets and also short-term working capital loans.
The table below summarises the maturity profile of the Company's financial liabilities based on contractual undiscountedpayments.
b. Dividend paid during the year ended March 31, 2025 include an amount of Rs. 5.00 per equity share of Rs. 10 towardsinterim dividend for the year ended March 31, 2025 aggregating to Rs. 807.74 Lacs (previous year Rs. 3/- per equityshare, being final dividend for year ended March 31, 2023 and Rs. 6/- towards interim dividend for the year ended March31,2024 aggregating to Rs. 1,453.932 Lacs during the year 2024-25). Dividends declared by the Company are based onthe profit available for distribution
c. The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by thecompany towards Provident Fund and Gratuity. The Ministry of Labour and Employment had released draft rules for theCode on Social Security, 2020 on November 13, 2020, and invited suggestions from stakeholders which are underconsideration by the Ministry.
The Company will assess the impact and its evaluation once the subject rules are notified. The Company will giveappropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules todetermine the financial impact are published.
In Accordance with our Report of even date For and on behalf of the Board
For VRCA & ASSOCIATES
Chartered Accountants
Firm number: 104727W
(CA V.K.SHASTRI) (AJAY DESAI) (AJAY PARIKH) (PRERNA BOKIL) (RAJENDRA BHAVSAR)
Partner/M.No. 042774 Executive Director Executive Director Company Secretary Chief Financial Officer
Date: 13.05.2025 Date: 13.05.2025
Place : Vadodara Place : Vadodara