vt¥ Provisions. Contingent liabilities and Contingent Assets
Provisions are revised when the Company has a present legal or constructs obligation as a result of past event
it is probable that ^outflow of resources will be required to settle the obligation and the amount can be^j^ . ^
estimated. Provisions are not recognised for future operating losses. 'w
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Provisions are measured at the present value of management’s best estimate of the expenditure require
present obligation at the end of the reporting period. A present obligation that arises from past events we neither probable that an outflow of resources will be required to settle nor a reliable estimate of the amount be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there p obligation arising from past events, the existence of which will be confirmed only by the occurrence occurrence of one or more uncertain future events not wholly within the control of the Company. Conting are not recognised in financial statements since this may result in the recognition of income that may realised. However, when the realisation of income is virtually certain, then the related asset is not a continge and is recognised.
XIII. Foreign currency translation
Items included in the financial statements of each of the Company"s entities are measured using e curre cy primary economic environment in which die entity operates ("the functional currency"). The financial state presented in Indian rupee (INR), which is Garg Furnace Limited functional and presentation currency.
Foreign currency translations are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from e translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss.
XIV. Revenue recognition ..
The Company has adopted Indian Accounting Standard 115 (Ind AS 115) - "Revenue from contracts with
customers’.
Revenue from sale of products is recognized upon transfer of control to customers. Revenue is measured at the amount of consideration which the Company expects to be entided to in exchange for transferring distinct goods to a customer as specified in a contract, excluding amounts collected on behalf of third parties (for example, notes and duties collected on behalf of the Government). A receivable is recognized upon satisfaction of performance
obligations as per the Contracts.
"To determine whether to recognise revenue, the Company follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation® are satisfied.
Use of significant Judgement* in Revenue Recognition
ludgemen! is required to determine the transaction price for the contract The transaction price could be either a fixed amount of consideration or variable consideration with elements such as volume discounts, price concessions, incentives etc The estimated amount of variable consideration is adjusted in the transaction pace only to the extent that is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and
is reassessed at the end of each reporting period.
The Company assesses its revenue arrangements against specific recognition criteria’s like exposure to the significant risks and rewards associated with the sale of goods. When deciding the most appropriate basis for presenting revenue or costs of revenue, both the legal form and substance of the agreement between the Company and its customers are reviewed to determine each party’s respective role in the transaction.
Other Operating Revenue
Dividend income is recognized when the right to receive payment is established.
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable. : *
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Claims receivables on account of insurance are accounted for to the extent the Company is reasonably certain of their ultimate collection.
XV. Income Tax
Income tax expense represents the sum of the tax currendy payable and deferred tax.
Current tax
The tax currendy payable is based on taxable profit for the period. Taxable profit differs from 'profit before tax as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company's current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences and incurred tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the period
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the income taxes are also recognised in other comprehensive income or directly in equity respectively.
XVI. Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash in hand, demand deposits held with banks, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
XVII. Financial instruments
Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments.
Initial Recognition:
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss and ancillary costs related to borrowings) are added to or deducted &om the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in Statement of Profit and Loss.
Classification and Subsequent Measurement Financial Assets ya]ue ^ugh other
TT>e Company classifies financial assets as subsequently the te^of following:
comprehensive income (“FVOCI”) or fair value through profit or loss f FVTF )
• The entity’s business model for managing the financial assets and
• The contractual cash flow characteristics of the financial asset
Amortised Cost: .
A financial asset shall be classified and measured at amortised cost if both of the following conditions are met
• The financial asset is held within a business model whose objective is to hold financial assets in o
collect contractual cash flows and . .
• The contractual terms of the financial asset give rise on specified dates to cash flows at are so y payments of principal and interest on the principal amount outstanding.
Fair Value through OCI: . •
A financial asset shall be classified and measured at fair value through OCI if both of the following conditions are
. The fin.nri.1 asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Fair Value through Profit or Loss:
A finonri,! asset shall be classified and measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through OCI.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
Classification and Subsequent Measurement: Financial liabilities:
Financial liabilities are classified as either financial liabilities at FVTPL or ‘other financial liabilities .
Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL:
Gains or Losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
Impairment of financial assets:
Financial assets, other than those at FVTPL, ate assessed for indicators of impairment at the end of each reporting period. The Company assesses on a forward looking basis the expected credit losses associated with its assets. The impairment- methodology applied depends on whether there has been a significant increase in credit risk.
In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 - Financial Instruments for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
Derecognition of financial instruments:
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognizes a collateralized borrowing for the proceeds received.
A financial liability is derecognized when the obligation specified in the contract is discharged or canceUe'd;or^xpifes
XVIII. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
XIX. Employee benefits
(i) Short term obligations
Liabilities for wages and salaries, short term compensated absence and ex-gratia including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefits obligations in the balance sheet.
(ii) Post-employment obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligations at the end of the reporting period less the fair value of plan assets (if any). The defined benefit obligation is calculated annually as per Valuation report given by Actuary on the basis of Guidance issued by The Actuarial Society of India.
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 or loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost
(iii) Defined contribution plans
The Company pays provident fund contributions to publicly administered provident funds as per local regulations.
The Company has not further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due.
XX Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker [CODM]. The managing committee is considered to be the ‘Chief Operating Decision Maker’
(CODM) as defined in IND AS 108. The Operating Segment is the level at which discrete financial information is available. The CODM allocates resources and assess performance at this level. In the context of Ind AS 108 on 'Segment Reporting', the results are considered to constitute a single reportable entity/ business segment for which the operating results are regularly reviewed by the company's Chief Operating Decision Maker.
XX3. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability,becomes:^ payable on demand on the reporting date, the entity does not classify the liability as current, if the lende^ee^Jfi^\
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consequence of the breach.
XXII. Earning* per share
weighKdav^ige -b. of oqoit, d»cedingdomg the feual ,«*,fbc bo«o> dcm in equity shares issued during the year and excluding treasury shares
(if) Diluted earnings per share , .
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
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 been outstanding assuming the conversion of all dilutive potential equity shares.
XXIII. Asset* Held for Sale;
Non-current assets or disposal groups comprising of assets and liabilities are classified as “held for sale when all o the following criteria’s are met (i) decision has been made to sell, (ii) the assets are available for immediate sale in its present condition, (iii) the assets are being actively marketed and (iv) sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.
Subsequendy, such non-current assets and disposal groups classified as held for sale are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortised.
In view of the management, the current assets (financial & other) have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet
XXIV. Events occurring after balance sheet date
There are no major events which have occurred after the balance sheet date requiring disclosure in the financial statements.
(b) Basil of Fair value of Financial anew and liabilities
(i) Fair Value hierarchy
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40 Financial Risk Management
The financial assets of the company include investments, trade and other receivables and cash and bank balances that derive directly from its operations. The financial liabilities of the company include loans and borrowings, trade payables, and other payables, and the main purpose of these financial liabilities is to finance the day to day operations of the company.
The company is mainly exposed to the following risks that arise from financial instruments:
Q Market risk (u) liquidity risk (ui) Credit risk
The Company’s senior management oversees the management of these risks and that advises on financial risks and the appropriate financial risk governance framework for the Company.
This note explains the risks which the company is exposed to and policies and framework adopted by the company to manage these risks:
(i) Market Risk
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 comprise two types of risk: foreign currency risk and interest rate risk.
(a) Foreign currency risk
The company during the year is not exposed to any foreign currency risk as there are no dealings in foreign exchange
(b) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a Snancial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the nsk of changes in market interest rates relates primarily to the Company's long-term debt obligations with floating interest rates. The Company’s total long-term debt obligations (including current matum.es) as at 31st March, 2024 is ? 149.54 Lakhs (previous year 8 475.89 Lakhs) out of which are borrowings amounting to X 89 54 Lakhs (previous year ? 152.19 Lakhs) is interest bearing and with variable rate of Interest. The balance borrowings amounting to 7 60.00 Lakhs (previous year ? 323 71 Ukhsl is interest free loan repayable on demand. ' '
(ii) Liquidity Riak
cash Dow that i> generated from operationi. to maintain sufficient cash to meet the
The company motors it, nsk of .hostage of fund, to meet the financial liabilities using a liquidity planmng tool The company plan,
S0^ “rSoftSal maturities of the finandal liabilities of the company a. the end of each repotting period: _____
(iii) Credit Risk
bank, and financial institution, with high credit ratings assigned by credit rating agencies, is defined in accordance with this assessment
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