A Oneindia Venture
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Notes to Accounts of Dangee Dums Ltd.
Mar 31, 2025
Contingent Liabilities
As at March 31, 2025 the company has Rs. Nil Lakhs as Contingent Liabilites ( Rs. Nil Lakhs as at March 31, 2024).
Note:
The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At year end the Company has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts has been made in the books of accounts.
The Company has also reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.
46. Details of Employee Benefits:
(a) Defined Benefit Plan - Gratuity:
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
The following table summarizes the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and the amounts recognized in the Balance Sheet for the plan:
F. Characteristics of defined benefit plans and risks associated with them:
Valuation of defined benefit plan are performed on certain basic set of pre-determined assumptions and other regulatory framework which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit plans which are as follows:
a. Acturial Risk:
It is a risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase is Obligation at a rate that is higher than expected.
Variability in mortality rates : If actual mortality rate are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.
Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
b. Investment Risk:
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
c. Liquidity Risk:
Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cash flows.
d. Market Risk:
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
e. Legislative Risk:
Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/-regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.
47. Segment Reporting
The Company''s operations pre-dominantly relates to manufacturing and trading of bakery and confectionery products. The Company has considered the only one reporting segment in accordance with the requirement of Ind AS 108 - Operating Segments.
The Board of Directors ("BOD") evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators of this single operating segment. The BOD reviews revenue and gross profit as the performance indicator for this single operating segment. Accordingly, it constitutes as a single reportable operating segment.
All the operations of the company are carried out in india, hence no separate disclosure has been given for geographical segment.
The company sells its products through its retail outlets & Food Delivery apps and hence there is no single customer contributing 10% or more of the total Revenue of the company.
The above fair value hierarchy explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost for which fair values are disclosed in the financial statements. To provide the indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments in to three levels prescribed is as under:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilties
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liabilty, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3 - Inputs for the assets or liabilties that are not based on observable market data (unobservable inputs)
There were no transfers between the levels during the year Valuation process
The finance department of the Company includes a team that performs the valuations of financial assets and liabilties required for financial reporting purposes, including level 3 fair values. The fair valuation of level 1 and level 2 classified assets and liabilties are readily available from the quoted pricies in the open market and rates available in secondary market respectively.
The carrying amount of trade receivable, trade payable, cash and bank balances, short term loans and advances, statutory/ receivable, short term borrowing, employee dues are considered to be the same as their fair value due to their short-term nature.
49 Financial risk management
The Companyâs activities expose it to a variety of financial risks, including credit risk, market risk and liquidity risk. The Company''s primary risk management focus is to minimize potential adverse effects of market risk on its financial performance. The Companyâs risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same.
The Companyâs risk management is governed by policies and approved by the board of directors. Company''s identifies, evaluates and hedges financial risks in close co-operation with the Company''s operating units. The company has policies for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.
The audit committee oversees how management monitors compliance with the company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
I. 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. Credit risk is managed through credit approvals, establishing credit limits, and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The history of trade receivables shows a negligible provision for bad and doubtful debts. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect of trade and other receivables and investments. The company has adopted simplified approach of ECL model for impairment. The Company has assessed that credit risk on investments. Cash & Bank Balance, loans given & other financial assets is insignificant based on the empirical data.
i. Trade Receivables:
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. The Company with various activities as mentioned above manages credit risk. An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. Ageing of trade receivables is as under. The Company does not hold collateral as security.
The Company reviews trade receivables on periodic basis and makes provision for doubtful debts if collection is doubtful. The Company also calculates the expected credit loss (ECL) for non-collection of receivables. The Company makes additional provision if the ECL amount is higher than the provision made for doubtful debts. In case the ECL amount is lower than the provision made for doubtful debts, the Company retains the provision made for doubtful debts without any adjustment.
The provision for doubtful debts including ECL allowances for non-collection of receivables and delay in collection, on a combined basis, was Rs. 6.64 Lakhs as at March, 2025 and Rs. 1.07 Lakhs as at March, 2024. The movement in allowances for doubtful accounts comprising provision for both non-collection of receivables and delay in collection is as follows:
ii. Financial assets that are neither past due nor impaired
The company has assessed that credit risk on investments, loans given & other financial assets is insignificant based on the empirical data. Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s assessment of credit risk about particular financial institution. None of the Company''s cash equivalents, including term deposits (i.e., certificates of deposit) with banks, were past due or impaired as at each balance sheet date.
II. Liquidity Risk
Liquidity risk is the risk that the company would not be able to meet its financial obligations when they become due. The company is financed primarily by bank loans, loans from directors, and other operating cash flows.
The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lender. As of March 31, 2025 and March 31, 2024; the Company had unutilized credit limits from banks of Rs. 339.60 Lakhs and Rs. 19.60 Lakhs respectively. The tables below analyze the company''s financial liabilities into relevant maturity groupings based on their contractual maturities.
III. Market Risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt.
a) Interest Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Companyâs debt obligations with floating interest rates.
50 Capital Management:
The Company''s capital management is intended to maximise the return to shareholders and benefits for other stakeholders for meeting the long-term and short-term goals of the Company; and reduce the cost of capital through the optimization of the capital structure i.e. the debt and equity balance.
The Company monitors the capital structure on the basis of Net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.
56. Leasing arrangements
The Company has entered into various leave and license agreements for taking commercial shops on rental basis for selling its products from the outlets ranging from 61 to 108 months. The Company has given refundable, interest free security deposits under certain agreements. Certain agreements contain provision for renewal and further there are no sub-leases.
58. Subsequent Events:
Subsequent to Balance Sheet Date, there are no events occurred which require disclosure or adjustments in the financial statements.
59. On periodical basis and as and when required, the Company reviews the carrying amounts of its assets and found that
there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss have been provided in the Financial Year 2024-25 (Financial year 2023-24 Rs. Nil Lakhs)_
60. Additional Regulatory Information (Non Ind AS)
The disclosures required by amendment to Division II of Schedule III of the Companies Act,2013 are given only to the extent applicable:
i. Title deeds of immovable property other than proper taken on lease by duly executed lease agreement are held in the name of the company.
ii. During the year there has been no change in the aggregate of the net carrying value of assets on account of revaluation in respect of Property, Plant & Equipment and intangible assets.
iii. There are no intangible assets under development in the Company during the current reporting period._
iv. No proceedings have been initiated or pending against the company for holding any benami property under the Benami transactions (Prohibition) Act,1988 (45 of 1988) and the rules made thereunder.
v. The Company has not been declared as a willful defaulter by any bank or financial institution or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
vi. The company has not entered in to any transaction with companies struck off under section 248 of the Companies Act,2013.
vii. There are no charges or satisfaction of charges yet to be registered with Registrar of Companies beyond the statutory period.
viii. There are no transactions that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 which have not been recorded in the books of account.
61. The financial statement are approved for issue by the Board of Directors & Audit Committee at their meeting on 27th May, 2025.
Mar 31, 2024
xv) Provisions :
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
xvi) Earnings per equity share:
Basic earnings per share is calculated by dividing the profit or loss for the period attributable to the equity holders of the Company by the weighted average number of ordinary shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
xvii) GST:
GST credit on materials purchased for production / service availed for production / input service are taken into account at the time of purchase and GST credit on purchase of capital items wherever applicable are taken into account as and when the assets are acquired.
The GST credits so taken are utilized for payment of GST on goods sold. The unutilized GST credit is carried forward in the books.
(xviii) Statement of Cash flows
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
(xlx) Operating cycle
The Operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle. Accordingly, all assets and liabilities have been classified as current or non-current as per the Company''s operating cycle and other criteria set out in Ind AS 1- ''Presentation of Financial Statements'' and Schedule III to the Companies Act,2013.
4.2. Standards issued but not yet effective:
Till the date of approval of these financial statements, no notification issued in respect of amendments to Ind AS that would be effective in future periods have been notified by the Ministry of Corporate Affairs. <
44. Contingent Liabilities
As at March 31, 2024 the company has Rs. Nil Lakhs as Contingent Liabilites ( Rs. Nil Lakhs as at March 31, 2023).
Note:
The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At year end the Company has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts has been made in the books of accounts.
The Company has also reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.
45. Details of Employee Benefits:
(a) Defined Benefit Plan - Gratuity:
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
The following table summarizes the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and the amounts recognized in the Balance Sheet for the plan:
E. Characteristics of defined benefit plans and risks associated with them:
Valuation of defined benefit plan are performed on certain basic set of pre-determined assumptions and other regulatory framework which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit plans which are as follows:
a. Acturial Risk:
It is a risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase is Obligation at a rate that is higher than expected.
Variability in mortality rates : If actual mortality rate are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.
Variability in withdrawal rates : If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
b. Investment Risk:
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
c. Liquidity Risk:
Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cash flows.
d. Market Risk:
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
e. Legislative Risk:
Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/-regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.
46. Segment Reporting
The Company''s operations pre-dominantly relates to manufacturing and trading of bakery and confectionery products. The Company has considered the only one reporting segment in accordance with the requirement of Ind AS 108 - Operating Segments.
The Board of Directors ("BOD") evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators of this single operating segment. The BOD reviews revenue and gross profit as the performance indicator for this single operating segment. Accordingly, it constitutes as a single reportable operating segment.
All the operations of the company are carried out in india, hence no separate disclosure has been given for geographical segment.
The company sells its products through its retail outlets and hence there is no single customer contributing 10% or more of the total Revenue of the company.
The above fair value hierarchy explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost for which fair values are disclosed in the financial statements. To provide the indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments in to three levels prescribed is as under:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilties
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liabilty, either directly (i.e. as prices ) or indirectly (i.e. derived from prices)
Level 3 - Inputs for the assets or liabilties that are not based on observable market data (unobservable inputs)
There were no transfers between the levels during the year Valuation process
The finance department of the Company includes a team that performs the valuations of financial assets and liabilties required for financial reporting purposes, including level 3 fair values. The fair valuation of level 1 and level 2 classified assets and liabilties are readily available from the quoted pricies in the open market and rates available in secondary market respectively.
The carrying amount of trade receivable, trade payable, cash and bank balances, short term loans and advances, statutory/ receivable, short term borrowing, employee dues are considered to be the same as their fair value due to their short-term nature.
48. Financial risk management
The Company''s activities expose it to a variety of financial risks, including credit risk, market risk and liquidity risk. The Company''s primary risk management focus is to minimize potential adverse effects of market risk on its financial performance. The Company''s risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same.
The Company''s risk management is governed by policies and approved by the board of directors. Company''s identifies, evaluates and hedges financial risks in close co-operation with the Company''s operating units. The company has policies for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.
The audit committee oversees how management monitors compliance with the company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
I. 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. Credit risk is managed through credit approvals, establishing credit limits, and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The history of trade receivables shows a negligible provision for bad and doubtful debts. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect of trade and other receivables and investments. The company has adopted simplified approach of ECL model for impairment. The Company has assessed that credit risk on investments, Cash & Bank Balance, loans given & other financial assets is insignificant based on the empirical data.
i. Trade Receivables:
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. The Company with various activities as mentioned above manages credit risk. An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. Ageing of trade receivables is as under. The Company does not hold collateral as security.
The Company reviews trade receivables on periodic basis and makes provision for doubtful debts if collection is doubtful. The Company also calculates the expected credit loss (ECL) for non-collection of receivables. The Company makes additional provision if the ECL amount is higher than the provision made for doubtful debts. In case the ECL amount is lower than the provision made for doubtful debts, the Company retains the provision made for doubtful debts without any adjustment.
The provision for doubtful debts including ECL allowances for non-collection of receivables and delay in collection, on a combined basis, was Rs. 1.07 Lakhs as at March, 2024 and Rs. 0.83 Lakhs as at March, 2023. The movement in allowances for doubtful accounts comprising provision for both non-collection of receivables and delay in collection is as follows:
ii. Financial assets that are neither past due nor impaired
The company has assessed that credit risk on investments, loans given & other financial assets is insignificant based on the empirical data. Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s assessment of credit risk about particular financial institution. None of the Company''s cash equivalents, including term deposit''Liquidity risk is the risk that the company would not be able to meet its financial obligations when they become due. The company is financed primarily by bank loans, loans from directors,
and other operating cash flows.s (i.e., certificates of deposit) with banks, were past due or impaired as at each balance sheet date.
II. Liquid Risk
Liquidity risk is the risk that the company would not be able to meet its financial obligations when they become due. The company is financed primarily by bank loans, loans from directors, and other operating cash flows.
The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lender. As of March 31, 2024 and March 31, 2023; the Company had unutilized credit limits from banks of Rs. 19.60 Lakhs and Rs. 109.29 Lakhs respectively. The tables below analyze the company''s financial liabilities into relevant maturity groupings based on their contractual maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
III. Market Risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt.
a) Interest Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.
The exposure of the company''s borrowing to interest rate changes at the end of the reporting period are as follows:
b) Price Risk
The company''s exposure to price risk arises from investments in equity shares of other companies (Refer Note 8 and 47). The company has not undertaken any risk mitigation measures to reduce the price risk. The table below summarises the impact of increases / decreases of share price of the investments and profit for the period. The analysis is based on the assumption that the market price of those investments in equity shares of other companies move by 5% point on either side with all other variables held constant.
49. Capital Management:
The Company''s capital management is intended to maximise the return to shareholders and benefits for other stakeholders for meeting the long-term and short-term goals of the Company; and reduce the cost of capital through the optimization of the capital structure i.e. the debt and equity balance.
The Company monitors the capital structure on the basis of Net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.
57. Subsequent Events:
Subsequent to Balance Sheet Date, there are no events occurred which require disclosure or adjustments in the financial statements.
58. On periodical basis and as and when required, the Company reviews the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss have been provided in the Financial Year 2023-24 (Financial year 2022-23 Rs. Nil Lakhs)
59. Additional Regulatory Information (Non Ind AS)
The disclosures required by amendment to Division II of Schedule III of the Companies Act,2013 are given only to the extent applicable:
i. Title deeds of immovable property other than proper taken on lease by duly executed lease agreement are held in the name of the company.
ii. During the year there has been no change in the aggregate of the net carrying value of assets on account of revaluation in respect of Property, Plant & Equipment and intangible assets.
iii. There are no intangible assets under development in the Company during the current reporting period.
iv. No proceedings have been initiated or pending against the company for holding any benami property under the Benami transactions (Prohibition) Act,1988 (45 of 1988) and the rules made thereunder.
v. The Company has not been declared as a willful defaulter by any bank or financial institution or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
vi. The company has not entered in to any transaction with companies struck off under section 248 of the Companies Act,2013.
viii. There are no transactions that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 which have not been recorded in the books of account.
60. The financial statement are approved for issue by the Board of Directors & Audit Committee at their meeting on 28th May, 2024.
In terms of our report attached. For and on behalf of the Board of Directors of
For, J. T. Shah & Co Dangee Dums Limited
Chartered Accountants (Firm Regd. No. 109616W)
Nikul J. Patel Foram Patel
Chairman & Managing Director Non executive Director
(DIN: 01339858) (DIN: 02017816)
(A. R. Pandit) Ketan J Patel Twinkle Chheda
Partner Chief Financial officer Company Secretary &
(M.No. 127917) Compliance Officer
Place : Ahmedabad Place: Ahmedabad
Date : 28/05/2024_Date : 28/05/2024
Mar 31, 2023
xvii) Provisions :
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
xviii) Earnings per equity share:
Basic earnings per share is calculated by dividing the profit or loss for the period attributable to the equity holders of the Company by the weighted average number of ordinary shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
xix) Dividend:
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the company''s Board of Directors.
xx) Cenvat, Service Tax, Vat & GST:
GST credit on materials purchased for production / service availed for production / input service are taken into account at the time of purchase and GST credit on purchase of capital items wherever applicable are taken into account as and when the assets are acquired.
The GST credits so taken are utilized for payment of GST on goods sold. The unutilized GST credit is carried forward in the books.
(xxi) Segment reporting
The Chief Operational Decision Maker (CODM) 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. Operating segments are reported in a manner consistent with the internal reporting to the CODM.
(xxii) Statement of Cash flows
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
(xxiii) Operating cycle
The Operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle. Accordingly, all assets and liabilities have been classified as current or non-current as per the Company''s operating cycle and other criteria set out in Ind AS 1- ''Presentation of Financial Statements'' and Schedule III to the Companies Act,2013.
4.2. Standards issued but not yet effective:
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
Ind AS 1 - Presentation of Financial Statements:
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
Ind AS 12 - Income Taxes:
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors:
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
E. Characteristics of defined benefit plans and risks associated with them:
Valuation of defined benefit plan are performed on certain basic set of pre-determined assumptions and other regulatory framework which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit plans which are as follows:
a. Acturial Risk:
It is a risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase is Obligation at a rate that is higher than expected.
Variability in mortality rates : If actual mortality rate are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.
Variability in withdrawal rates : If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
b. Investment Risk:
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
c. Liquidity Risk:
Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level
of benefits. If some of such employees resign/retire from the company there can be strain on the cash flows.
d. Market Risk:
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
e. Legislative Risk:
Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.
47. Segment Reporting
The Company''s operations pre-dominantly relates to manufacturing and trading of bakery and confectionery products. The Company has considered the only one reporting segment in accordance with the requirement of Ind AS 108 - Operating Segments.
The Board of Directors ("BOD") evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators of this single operating segment. The BOD reviews revenue and gross profit as the performance indicator for this single operating segment. Accordingly, it constitutes as a single reportable operating segment.
All the operations of the company are carried out in india, hence no separate disclosure has been given for geographical segment.
The company sells its products through its retail outlets and hence there is no single customer contributing 10% or more of the total Revenue of the company.
The above fair value hierarchy explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost for which fair values are disclosed in the financial statements. To provide the indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments in to three levels prescribed is as under:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabiltiesLevel 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liabilty, either directly (i.e. as prices ) or indirectly (i.e. derived from prices)
Level 3 - Inputs for the assets or liabilties that are not based on observable market data (unobservable inputs)
There were no transfers between the levels during the year Valuation process
The finance department of the Company includes a team that performs the valuations of financial assets and liabilties required for financial reporting purposes, including level 3 fair values. The fair valuation of level 1 and level 2 classified assets and liabilties are readily available from the quoted pricies in the open market and rates available in secondary market respectively.
The carrying amount of trade receivable, trade payable, cash and bank balances, short term loans and advances, statutory/ receivable, short term borrowing, employee dues are considered to be the same as their fair value due to their short-term nature.
Notes to financial statement for the year ended March 31, 2023
49. Financial risk management
The Company''s activities expose it to a variety of financial risks, including credit risk, market risk and liquidity risk. The Company''s primary risk management focus is to minimize potential adverse effects of market risk on its financial performance. The Company''s risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same.
The Company''s risk management is governed by policies and approved by the board of directors. Company''s identifies, evaluates and hedges financial risks in close co-operation with the Company''s operating units. The company has policies for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.
The audit committee oversees how management monitors compliance with the company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
I. 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. Credit risk is managed through credit approvals, establishing credit limits, and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The history of trade receivables shows a negligible provision for bad and doubtful debts. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect of trade and other receivables and investments. The company has adopted simplified approach of ECL model for impairment. The Company has assessed that credit risk on investments, Cash & Bank Balance, loans given & other financial assets is insignificant based on the empirical data.
i. Trade Receivables:
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. The Company with various activities as mentioned above manages credit risk. An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. Ageing of trade receivables is as under. The Company does not hold collateral as security.
The Company reviews trade receivables on periodic basis and makes provision for doubtful debts if collection is doubtful. The Company also calculates the expected credit loss (ECL) for non-collection of receivables. The Company makes additional provision if the ECL amount is higher than the provision made for doubtful
debts. In case the ECL amount is lower than the provision made for doubtful debts, the Company retains the provision made for doubtful debts without any adjustment.
The provision for doubtful debts including ECL allowances for non-collection of receivables and delay in collection, on a combined basis, was Rs.0.83 Lakhs as at March, 2023 and Rs. 0.20 Lakhs as at March, 2022. The movement in allowances for doubtful accounts comprising provision for both non-collection of receivables and delay in collection is as follows:
ii. Financial assets that are neither past due nor impaired
The company has assessed that credit risk on investments, loans given & other financial assets is insignificant based on the empirical data. Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s assessment of credit risk about particular financial institution. None of the Company''s cash equivalents, including term deposits (i.e., certificates of deposit) with banks, were past due or impaired as at each balance sheet date.
II. Liquid Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages liquidity risk by maintaining adequate reserves, banking facilities including approved borrowing facilities sanctioned by the Parent Company, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Long-term borrowings generally mature between One to Ten years. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. The Company''s policy is to manage its borrowings centrally using mixture of long-term and short-term borrowing facilities to meet anticipated funding requirements.
The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lender. As of March 31, 2023 and March 31, 2022; the Company had unutilized credit limits from banks of Rs. 109.29 Lakhs and Rs. 265.13 Lakhs respectively. The tables below analyze the company''s financial liabilities into relevant maturity groupings based on their contractual maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
III. Market Risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt.
a. Interest Risk
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. The Company''s exposure to the risk of changes in market interest rates related primarily to the Company''s short-term borrowings with floating interest rates.
Long-term borrowings expose the company to risk of changes in interest rates as the Company had External Commercial Borrowings (ECB) carrying a variable interest rate. In order to hedge interest rate risk arising out of variable interest rate ECBs, company has entered into Interest Rate swaps.
For other borrowings, Company''s treasury department monitors the interest rate movement and manages the interest rate risk based on its policies.
The exposure of the company''s borrowing to interest rate changes at the end of the reporting period are as follows:
59. Subsequent Events:
Subsequent to Balance Sheet Date, there are no events occurred which require disclosure or adjustments in the financial statements.
60. On periodical basis and as and when required, the Company reviews the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss have been provided in the Financial Year 2022-23 (Financial year 21-22 Rs. Nil Lakhs)
61. Additional Regulatory Information (Non Ind AS)
The disclosures required by amendment to Division II of Schedule III of the Companies Act,2013 are given only to the extent applicable:
i. Title deeds of immovable property other than proper taken on lease by duly executed lease agreement are held in the name of the company.
ii. During the year there has been no change in the aggregate of the net carrying value of assets on account of revaluation in respect of Property, Plant & Equipment and intangible assets.
iii. There are no intangible assets under development in the Company during the current reporting period.
iv. No proceedings have been initiated or pending against the company for holding any benami property under the Benami transactions (Prohibition) Act,1988 (45 of 1988) and the rules made thereunder.
v. The company does not have any borrowings from banks against the security of current assets.
vi. The Company has not been declared as a willful defaulter by any bank or financial institution or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
vii. The company has not entered in to any transaction with companies struck off under section 248 of the Companies Act,2013.
viii. There are no charges or satisfaction of charges yet to be registered with Registrar of Companies beyond the statutory period.
ix. The borrowing taken by the company from the banks has been used for the specific purpose for which it was taken at the balance sheet date.
x. There are no transactions that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 which have not been recorded in the books of account.
62. The financial statement are approved for issue by the Board of Directors & Audit Committee at their meeting on 30th May, 2023.
In terms of our report attached. For and on behalf of the Board of Directors of
For, J. T. Shah & Co Dangee Dums Limited
Chartered Accountants (Firm Regd. No. 109616W)
Nikul J. Patel Foram Patel
Chairman & Managing Director Non executive Director
(DIN: 01339858) (DIN: 02017816)
(A. R. Pandit) Ketan J Patel Nilam Makwana
Partner Chief Financial officer Company Secretary &
(M.No. 127917) Compliance Officer
Place : Ahmedabad Place: Ahmedabad
Date : 30/05/2023_Date : 30/05/2023
Mar 31, 2021
In accordance with Ind-AS transitional provisions, the company opted to consider previous GAAP carrying value of intangible asstes as deemed cost on transition date owing to exemption given in Para D7AA of Ind AS 101 -First time adoption of Indian Accounting Standards. (refer Note 45 to financial statement)
i- "Effective April 1, 2019, the Company adopted Ind AS 116 "Leases" and applied the standard to all lease contracts existing on April 1, 2019 using the modified retrospective method as per para C8(c)(ii) of standard.
ii- On transition, the adoption of the new standard Ind As 116 "Leases" from 01 April, 2019, resulted in recognition of ''Right-of Use'' asset amounting to Rs. 2228.15 Lakhs as on 01 April, 2019.
iii- Depreciation has been charged on ROU Assets on Straight line method based on the lease term and is included under depreciation and amortization expense in the Statement of Profit and Loss.
iv- The adpotion of this standard has resulted in Statement of Profit and Loss for the current period, operating lease expense charged from rent to depreciation charge for Right-of-use assets and finance cost for interest accrued on lease liability and recognition of Other Income on Lease Deposits. Adpotion has also resulted in an increase in cash flows from operating activities and increase in cash outflows from financing activities on account of lease payments Rs. 349.25 Lakhs (Previous year Rs. 584.10 Lakhs)
a) Inventory of Raw Material includes material in transit- as on 31-03-2021 of Rs. Nil Lakhs (as on 31-03-2020 Rs. 3.15 Lakhs, as on 01-04-2019 Rs. Nil Lakhs)
b) The cost of inventories recognized as an expenses includes Rs. Nil Lakhs (during 2019-20 Rs. Nil Lakhs ) in respect of write-down of inventory to net realizable value, and has been reduced by Rs. Nil Lakhs (during 2019-20 : Rs. Nil Lakhs) in respect of the reversal of such write-down.
c) Inventories pledged as Security with bank for borrowing as on 31-03-2021 of Rs. Nil Lakhs (as on 31-03-2020 Rs. Nil Lakhs, as on 01-04-2019 Rs. Nil Lakhs)
Each of the share holders has right give one vote per share. In the event of liquidation of the Company, the equity shareholders shall be entitled to proportionate share of their holding in the assets remaining after distribution of all preferential amounts.
The company has not issued any shares in pursuant to a contract without receiving the payment in cash during the last five years. The company has also not issued any bonus share during last five years.
Equity Security Premium: The amount received in excess of face value of the equity shares is recognised in equity security premium. Being realised in cash, the same can be utilised by the company for issuance of bonus shares.
Retained earnings: Retained earnings can be utilised by the company for distribution to its equity shareholders of the company. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the requirements of the Companies Act, 2013. Thus, the amounts reported above are not distributable in entirety.
i. The company has availed the secured term loan from Bank which is secured against mortgage of Residential Property registered in the name of Relative of Directors & personal gurantee of Director & their relatives.The loan is payable in 84 monthly instalment. Interest on said loan shall be payble at MCLR-1Y 0.80% p.a.
ii. Vehicle Loan includes loans from bank and finance companies.The Repayment period of these loans ranges from 36 to 66 months & Rate of interest ranging from 8.50% To 12%. These loans are secured against the asset under finance.
iii. The company has received Working Capital term Loan(WCTL) under Guranteed Emergency Credit Line(GECL) from Banks aggregating to Rs. 304.94 Lakhs during the year 2020-21, which is secured by creating second charge on the corresponding assets mortgaged to the respective banks & by 100% gurantee by National Credit Gurantee Trustee Company Limited (NCGTC).
i Dues to Micro and Small enterprises have been determined to the extent such parties have been identified on the basis of the information collected by the Management. This has been relied upon by the Auditors.
ii Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED) which came in to force from 02.10.2006, certain disclosers are required to be made relating to Micro, Small and Medium enterprises. On the basis of the information and records available with management, outstanding dues to the Micro and Small enterprise as
Disclosure of payable to vendors as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" is based on the information available with the Company regarding the status of registration of such vendors under the said Act, as per the intimation received from them on requests made by the Company and the same has been relied by the Auditor.
42. The company does not have any Contingent Liabilities as at March 31, 2021(as at March 31, 2020 Rs. Nil Lakhs & as at April 1 2019 Rs. Nil Lakhs)
43. Details of Employee Benefits:(a) Defined Benefit Plan - Gratuity:
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
The following table summarizes the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and the amounts recognized in the Balance Sheet for the plan:
F. Characteristics of defined benefit plans and risks associated with them:
Valuation of defined benefit plan are performed on certain basic set of pre-determined assumptions and other regulatory framework which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit plans which are as follows:
a. Acturial Risk: It is a risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase is Obligation at a rate that is higher than expected.
Variability in mortality rates : If actual mortality rate are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.
Variability in withdrawal rates : If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
b. Investment Risk:
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cash flows.
d. Market Risk:
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.
The Company''s operations pre-dominantly relates to manufacturing and trading of bakery and confectionery products. The Company has considered the only one reporting segment in accordance with the requirement of Ind AS 108 - Operating Segments.
The Board of Directors ("BOD") evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators of this single operating segment. The BOD reviews revenue and gross profit as the performance indicator for this single operating segment. Accordingly, it constitutes as a single reportable operating segment.
All the operations of the company are carried out in india, hence no separate disclosure has been given for geographical segment.
The company sells its products through its retail outlets and hence there is no single customer contributing 10% or more of the total Revenue of the company.
Notes to financial statement for the year ended March 31, 202145 Transition to Ind-AS
These financial statements, for the year ended March 31, 2021, are the first financials of the Company being prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2020, the Company has prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013 read together with relevant rules of the Companies (Accounts) Rules, 2020 (Indian GAAP). Therefore, comparative information is reclassified / remeasured so as to comply with Ind AS.
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2021, together with the comparative period data as at and for the year ended March 31, 2020, as described in the summary of significant accounting policies. The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2019 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities.
An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s Balance sheet, Statement of Profit and Loss, is set out here-in-after.
However, this principle is subject to the certain mandatory exceptions and optional exemptions availed by the Company in line with principles of Ind AS 101 as detailed below:
45.1 Exemptions and exceptions availed I Optional exemptions
I Property, Plant and Equipment (PPE) :
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for decommissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets Accordingly, the Company has elected to measure all of its property, plant and equipment at their previous GAAP carrying value.
II Mandatory Exceptions1 Estimates
The estimates as at April 1, 2019 and as at March 31, 2020 are consistent with those made for the same dates in accordance with the Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the impairment of financial assets based on the risk exposure and application of ECL model where application of Indian GAAP did not require any estimation.
The estimates used by the Company to present these amounts in accordance with Ind AS, reflect conditions at April 1, 2019, the date of transition to Ind AS and as at March 31, 2020.
2 Classification and measurement of financial assets
Ind AS 101 provides exemptions to certain classification and measurement requirements of financial assets under Ind AS 109, where these are impracticable to implement. Classification and measurement is done on the basis of facts and circumstances existing as on the transition date. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the transition date.
3 De-recognition of financial assets and liabilities:
The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
1. Adoption of IND AS 116 - Leases:
The Company has adopted IND AS 116 effective 1 April 2019 which replaced the previous standard IND AS 17 and specifies a new lease accounting model, where lessees are required to recognize a right of use assets, lease liability & Lease deposit arising from a lease on its balance sheet. The Company adopted the modified retrospective approach as per para C8(c)(ii) of IND AS 116-''Leases'' as on the date of transition.
As a result, the Company recognized Assets & Liabilities as at 01 April 2019, which are as under:
Right of use asset of Rs. 2228.15 Lakhs Lease deposits of Rs. 82.72 Lakhs
Non current Lease Liabilities of Rs. 2263.92 Lakhs Current Lease Liabilities of Rs. 295.57 Lakhs
and further the company recognized Assets & Liabilities as at 31st March, 2020, which are as under:
Right of use asset of Rs. 2688.41 Lakhs
Lease deposits of Rs. 144.96 Lakhs
Non current Lease Liabilities of Rs. 2685.30 Lakhs
Current Lease Liabilities of Rs. 377.08 Lakhs
2. Change in fair value of Non-current investments classified through FVTPL:
Under previous GAAP, the company accounted for investments in equity shares measured at cost. As per Ind AS, investments investments in equity shares have been revalued at fair value. The resulting fair value changes of these investments have been recognised in profit and loss.
3. Accounting of other financial assets and liabilities on amortised cost method under effective rate of interest:
Financial assets and liabilities have been valued by applying amortised cost method using Effective Interest Rate as per requirements of Ind AS 109 ''Financial Instruments''. Subsequent to the transition date, such valuation difference on financial assets and liabilities has been recognized in statement of profit & loss resulting in increase in interest income by Rs. 6.70 Lakhs and increase in finance cost by Rs. 6.70 Lakhs for the year ended 31 March, 2020.
4. Change in fair value of Current investments classified through FVTPL:
Under previous GAAP, the company accounted for investments in Mutual Funds measured at cost. As per Ind AS, investments investments in Mutual Funds have been revalued at fair value. The resulting fair value changes of these investments have been recognised in profit and loss.
5. Remeasurement of employment benefit obligations:
Under previous GAAP, the company recognised actuarial gains and losses on defined benefit plans in profit or loss. Ind AS 19 requires the same to be recognised in Other Comprehensive Income. This has resulted in decrease in retain earning and increase in Provision as on 1st April,2019 by Rs. 0.56 Lakhs. Further for the year ended 31st March,2019-20 increase in employee benefit expense of Rs.5.89 Lakhs and other comprehensive income for the year ended 31st March, 2017 by Rs. 6.48 Lakhs. The impact of tax on the same is also adjusted to "Other Comprehensive Income" only.
6. Deferred Tax Adjustments:
Tax adjustments include deferrred tax impact on account of differences between previous GAAP and Ind AS which mainly includes employee benefit obligations.
7. Prior Period Expenses:
Under Previous GAAP, prior period items were reflected as part of current year expense or income in the statement of profit & loss. Under Ind AS, material prior period items are adjusted to the period to which they relate and in case they relate to the period earlier than period presented, these are adjusted against opening equity of the earliest period presented.
i. Prior period expenses (expenses which relate to earlier period):
The prior period expenses of Rs. 0.86 Lacs have been adjusted against opening equity resulting in to decrease in other equity as on the transition date i.e. 1 April, 2019 and increase in profit before tax for the year ended 31st March, 2020 by Rs. 0.62 Lakhs & for the year 31st March 2021 by Rs. 0.24 Lakhs.
In the similar way, the company has charged Rs. 0.22Lakhs to statement of profit and loss for the year ended 31 March, 2020 resulting in to decrease in profit before tax (under the previous GAAP, the same reflected as prior period expenses in the statement of profit and loss for the year ended 31st March, 2021).
The above fair value hierarchy explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost for which fair values are disclosed in the financial statements. To provide the indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments in to three levels prescribed is as under:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilties
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liabilty, either directly (i.e. as prices ) or indirectly (i.e. derived from prices)
Level 3 - Inputs for the assets or liabilties that are not based on observable market data (unobservable inputs)
There were no transfers between the levels during the year Valuation process
The finance department of the Company includes a team that performs the valuations of financial assets and liabilties required for financial reporting purposes, including level 3 fair values. The fair valuation of level 1 and level 2 classified assets and liabilties are readily available from the quoted pricies in the open market and rates available in secondary market respectively.
The carrying amount of trade receivable, trade payable, cash and bank balances, short term loans and advances, statutory/ receivable, short term borrowing, employee dues are considered to be the same as their fair value due to their short-term nature.
47 Financial risk management
The Company''s activities expose it to a variety of financial risks, including credit risk, market risk and liquidity risk. The Company''s primary risk management focus is to minimize potential adverse effects of market risk on its financial performance. The Company''s risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same.
The Company''s risk management is governed by policies and approved by the board of directors. Company''s identifies, evaluates and hedges financial risks in close co-operation with the Company''s operating units. The company has policies for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.
The audit committee oversees how management monitors compliance with the company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
I 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. Credit risk is managed through credit approvals, establishing credit limits, and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The history of trade receivables shows a negligible provision for bad and doubtful debts. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect of trade and other receivables and investments. The company has adopted simplified approach of ECL model for impairment.
i) Trade Receivables:
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. The Company with various activities as mentioned above manages credit risk. An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. Ageing of trade receivables is as under. The Company does not hold collateral as security.
ii) Financial assets that are neither past due nor impaired
Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s assessment of credit risk about particular financial institution. None of the Company''s cash equivalents, including term deposits (i.e., certificates of deposit) with banks, were past due or impaired as at each balance sheet date.
II Liquid Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages liquidity risk by maintaining adequate reserves, banking facilities including approved borrowing facilities sanctioned by the Parent Company, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Long-term borrowings generally mature between One to Ten years. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. The Company''s policy is to manage its borrowings centrally using mixture of long-term and short-term borrowing facilities to meet anticipated funding requirements.
The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lender. As of March 31, 2021, March 31, 2020 and April 1, 2019; the Company had unutilized credit limits from banks of Rs. 298.61 Lakhs, Rs. 334.59 Lakhs and Rs. 262.04 Lakhs respectively. The tables below analyze the company''s financial liabilities into relevant maturity groupings based on their contractual maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
III Market Risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt.
a) Interest Risk
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. The Company''s exposure to the risk of changes in market interest rates related primarily to the Company''s short-term borrowings with floating interest rates.
Long-term borrowings expose the company to risk of changes in interest rates as the Company had External Commercial Borrowings (ECB) carrying a variable interest rate. In order to hedge interest rate risk arising out of variable interest rate ECBs, company has entered into Interest Rate swaps.
For other borrowings, Company''s treasury department monitors the interest rate movement and manages the interest rate risk based on its policies. The exposure of the company''s borrowing to interest rate changes at the end of the reporting period are as follows:
53. The company is not liable to make any CSR expenditure according to Section 135 of the Companies Act, 2013
54. Subsequent Events:
Subsequent to Balance Sheet Date, there are no events occurred which require disclosure or adjustments in the financial statements.
55. On periodical basis and as and when required, the Company reviews the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss have been
56. The financial statement are approved for issue by the Board of Directors & Audit Committee at their meeting on 30th June, 2021.
57. Due to outbreak of COVID-19 globally and in India, the Company has considered the possible effects that may result from COVID-19 on the carrying amounts of financial and non financial assets as well as liabilities accrued. The actual impact of the global health pandemic may be different from that which has been estimated, as the COVID 19 situation evolves in India and globally. Having reviewed the underlying data and based on current estimates the Company expects the carrying amount of these assets will be recovered and there is no significant impact on liabilities accrued. However, the Company will continue to closely monitor any material changes to future economic conditions.
58. Previous Periods'' / Years'' figures have been re-grouped / re-classified where necessary to make it comparable with the current period.
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