Notes to Accounts of K&R Rail Engineering Ltd.

Mar 31, 2025

32 Contingent liabilities and commitments

The company has given bank guarantees which are outstanding as on 31.03.2025 is Rs.598.24 Lakhs and Rs.11315.00 Lakhs as on 31.03.2024.

The Company has claimed GST input in the FY 2022-23 and the GST Dept has contended that the Supplier from whom the Company has taken services is in default for discharging the GST liability and accordingly the GST Authorities demanded for reversal of GST ITC and required to pay the ITCaclaimed in cash. In response to the same the Company has paid an amount of Rs 150 lakhs under protest. Since the case is not yet concluded and pending out come of the case, the impact of the out come has not been considered in the books of accounts

The Service Tax Dept has preferred an appeal before the Hon''ble Customs Excise and Service Tax Appellate Tribunal (CESTAT) against the order passed by the Commissioner (Service Tax), Secunderabad. The demand in the said appeal is Rs

3800 lakhs. Pending out come of the case, the impact of the same has not been considered in the financial statements.

33 Related party disclosures

a) The following table provides the name of the related party and the nature of its relationship with the Company: c) Terms and conditions of transactions with related parties:

The transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free.

34 Segment information

Ind AS 108 âOperating Segmentâ (âInd AS 108â) establishes standards for the way that public business enterprises report information about operating and geographical segments and related disclosures about products and services, geographic areas, and major customers. Based on the âmanagement approachâ as defined in Ind AS 108, Operating segments and geographical segments are to be reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM).The CODM evaluates the Companyâs performance and allocates resources on overall basis.

36 Dues to Micro, small and medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2025 has been made in the financial statements based on information received and available with the Company. Further in view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (âThe MSMED Actâ) is not expected to be material. The Company has not received any claim for interest from any supplier.

37 Earnings per share

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity Shares.

The Companyâs principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support Company''s operations. The Companyâs principal financial assets include inventory, trade and other receivables, cash and cash equivalents and refundable deposits that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below.

a) 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 risk comprises two types of risk: interest rate risk and other price risk, such as commodity risk. Financial instruments affected by market risk include loans and borrowings and refundable deposits. The sensitivity analysis in the following sections relate to the position as at March 31, 2025 and March 31, 2024. The sensitivity analyses have been prepared on the basis that the amount of net debt and the ratio of fixed to floating interest rates of the debt.

The analysis excludes the impact of movements in market variables on: the carrying values of gratuity and other post retirement obligations; provisions.

The below assumption has been made in calculating the sensitivity analysis:

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2025 and March 31, 2024.

Interest rate 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 relates primarily to the Company''s short-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of variable rate borrowings. The Company does not enter into any interest rate swaps.

b) Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions and other financial instruments.

Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom credit has been granted after obtaining necessary approvals for credit. The collection from the trade receivables are monitored on a continuous basis by the receivables team.

The Company establishes an allowance for credit loss that represents its estimate of expected losses in respect of trade and other receivables based on the past and the recent collection trend. The maximum exposure to credit risk as at reporting date is primarily from trade receivables. The movement in allowance for credit loss in respect of trade and other receivables during the year was as follows:

There is no concentration of revenue as there is no customer which accounts for more than 10% of the revenue.

Credit risk on cash and cash equivalent is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.

c) Liquidity risk

The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank deposits and loans. The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments:

39 Capital management

For the purpose of debt to total equity ratio, debt considered is long-term and short-term borrowings. Total equity comprise of issued share capital and all other equity reserves.

41 Legal cases:

The Compny had signed an agreement with Paradip Port Trus under the name K.V.R. Rail Infra Projects Private Limited for ''Railway Work for Deep Draught berths at Paradip Port'' for the Contract price of Rs.98.67 Crores. The Letter of Intent (LOI) was issued on 06.06.2011 by the Paradip Port Trust. Susequently by the order dated 13.10.2014of Hon''ble High Court of Andhra Pradesh, Hyderabad, the Company has merged with ''Axis Rail India Limited''. Subsequently the name of the Company has been changed from ''Axis Rail India Limited'' to ''K&R Rail Engineering Limited''.

The Paradip Port Trust (PPT) has terminated the contract and issued letter dated 26.09.2013 on the ground that the Company had sublet the contract to third party. Aggreived by this termination of the Contract, the Company had filed a petition before the Arbitral Tribunal of Hon''ble DR.Justice A.K.Rath, Former Judge, High Court of Orissa (Sole Arbitrator) vide Arbitration Proceeding No. 3 of 2020. The Company had claimed the following in the petition filed.

(i) Refund of Rentention Money:

The Company claimed Refund of Retention Money for an amount of Rs 4.34 Crores with interest @9% p.a. with effect from 26.09.2013. Thus total Rention Money claimed with interest is Rs.8.64 Crore.

(ii) Refund of the invoked Bank Guarantee

The Company had furnished a Peformance Bank Guarantee for a sum ofRs.97.67 lakhs . The PPT had issued a show cause notice on 18.06.2013. In response to the show cause notice the Company through it''s Lawyer replied on 27.06.2013. However, the PPT had encashed the Bank Guarantee on 24.07.2013. Hence the Company filed petition before the Arbitral Tribunal of Hon''ble Dr Justice A.K.Rath, Former Judge, High Court of Orissa (Sole Arbitrator) vide Arbitration Proceeding No.3 of 2020 and claimed for refund of the Bank Gurantee of Rs. 97.67 lakhs with interest @9% p.a with effect from 24.07.2013. Thus the total claim under this head is Rs.150.42 lakhs.

Legal Cses (Contd..)

(iii) Idling Charges:

The Company had incurred additional expendture towards equipment hiring charges for the period from February 2013 to August 2013 amounted to Rs.700 lakhs. Hence the Company claimed towards idling charges for an amount of Rs.700 lakhs with interest @9% p.a. with effect from 01.09.2013. Thus the total claim under this head is Rs. 11.09 Crore with interest.

(Iv) Claim for Final Bill:

The Company raised final bill for Rs.95.37 lakhs on 07.06.2013 towards the work done and materials supplied. The PPT has not paid the same. Hence the

Company claimed for Rs.95.37 lakhs with interest @9% p.a. with effect from 01.09.2013. Thus total claim under this head is Rs.1.51 Crore.

The case is still under process. Pending the out come of the petition the claims for idling charges were not recognised in the financial statements as at 31.03.2025. The case is not posted yet for hearing.

42 Prior year comparatives

The figures of the previous year have been regrouped/reclassified, where necessary, to conform with the current yearâs

Mar 31, 2024

3.16 Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

3.17 Contingent liabilities & contingent assets

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

³-¹⁸ Financial instruments

a. Recognition and Initial recognition

The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issues of financial assets and financial liabilities that are not at fair value through profit or loss, are added to the fair value on initial recognition.

A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.

b. Classification and Subsequent measurement Financial assets

On initial recognition, a financial asset is classified as measured at

- amortised cost;

- FVTPL

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; 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.

All financial assets not classified as measured at amortised cost as described above are measured at FVTPL. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets: Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

- the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether managementâs strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

- how the performance of the portfolio is evaluated and reported to the Companyâs management;

- the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

periods, the reasons for such sales and expectations about future sales activity.Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Companyâs continuing recognition of the assets. Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.Financial assets: Assessment whether contractual cash flows are solely payments of principal and interestFor the purposes of this assessment, âprincipalâ is defined as the fair value of the financial asset on initial recognition. âInterestâ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:- contingent events that would change the amount or timing of cash flows;- terms that may adjust the contractual coupon rate, including variable interest rate features;- prepayment and extension features; and- terms that limit the Companyâs claim to cash flows from specified assets (e.g. non- recourse features).A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount is treated as consistent with this criterion if the fair valueof the prepayment feature is insignificant at initial recognition.

Financial assets: Subsequent measurement and gains and losses

Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Financial liabilities: Classification, Subsequent measurement and gains and losses Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held- for- trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

Financial liabilitiesThat substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profitd. OffsettingFinancial assets and financial liabilities are offset and the net amount presented in the balance sheet when and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.e. ImpairmentThe Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost; At each reporting date, the Company assesses whether financial assets carried at amortised cost and debt securities at fair value through other comprehensive income (FVOCI) are credit impaired. A financial asset is âcredit- impairedâ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.Evidence that a financial asset is credit- impaired includes the following observable data:- significant financial difficulty of the borrower or issuer;- the restructuring of a loan or advance by the Company on terms that the Company would not consider otherwise;- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or- the disappearance of an active market for a security because of financial difficulties.The Company measures loss allowances at an amount equal to lifetime expected credit losses, except for the following, which are measured as 12 month expected credit losses:- debt securities that are determined to have low credit risk at the reporting date; and

- other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses.

Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.

12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Companyâs historical experience and informed credit assessment and including forward- looking information.

Measurement of expected credit losses

Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).

Presentation of allowance for expected credit losses in the balance sheet

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the trade receivable does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write- off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of amounts due.

(b) Terms / rights attached to the equity shares

Equity shares of the Company have a par value of ? 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

During the year the Company has converted 53,91,224 Share Warrants into equity Shares @ Rs 71.60/- per share. The face value of the shares so converted into equity is Rs 10/-and the premium on such issue is Rs 61.60/- per Share. The Shareholders so allotted during the year has ranked pari pasu with the existing shareholders.

Terms / rights attached to the Preference shares

Preference shares carried a fixed non cumulative dividend of 7% Optionally Convertible Redeemable Preference Shares of Rs. 10/- each. The Preference shares were issued on 15/12/2015 and the same should be converted or edeemed by 15/12/2020. However, as per the Board of Directors Meeting held on 18.12.2020, the Optionally Convertible Redeemable Preference Shares were extended for a period of 05 years from the due date of redemption. ie. by a period upto 18.12.2025. The preference share holders shall get a right over the equity shareholders in case of right to dividend as well as repayment of capital in case of winding up of the company. The preference share holders shall have limited voting right, which shall be confined to the rights to vote on those matters affecting their interest.

During the year the Company has redeemed 8,16,388 Optionally Convertible Redeemable Preference Shares @ Rs 796.19/- per share. Accordingly the Company has transferred an amount of Rs 81,63,880/- being the face value of the shares so redeemed to ''Capital Redemption Reserve'' account.

35 Segment information

37 Dues to Micro, small and medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2024 has been made in the financial statements based on information received and available with the Company. Further in view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (âThe MSMED Actâ) is not expected to be material. The Company has not received any claim for interest from any supplier.

38 Earnings per share

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity Shares.

3 Financial risk management objectives 9 and policies

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 risk comprises two types of risk: interest rate risk and other price risk, such as commodity risk. Financial instruments affected by market risk include loans and borrowings and refundable deposits. The sensitivity analysis in the following sections relate to the position as at March 31, 2024 and March 31, 2023. The sensitivity analyses have been prepared on the basis that the amount of net debt and the ratio of fixed to floating interest rates of the debt.

The analysis excludes the impact of movements in market variables on: the carrying values of gratuity and other post retirement obligations; provisions. The below assumption has been made in calculating the sensitivity analysis: The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2024 and March 31, 2023.

Interest rate risk

The Company manages its interest rate risk by having a balanced portfolio of variable rate borrowings. The Company does not enter into any interest rate swaps.

Interest rate sensitivity

b) Credit risk

4 Capital management 0

The Companyâs policy is to maintain a stable capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors capital on the basis of return on capital employed as well as the debt to total equity ratio. For the purpose of debt to total equity ratio, debt considered is long-term and short-term ^ borrowings. Total equity comprise of issued share capital and all other equity reserves.

The Company has converted 53,91,224 Share Warrants of face value of Rs 10/-at an issue price of Rs 71.60 into Equity shares during the 1st and 2nd quarters of the FY 2023-24 and 4 a certificate in this regard has been obtained from the then statutory auditors M/s.

1 Chowdary & Rao, Chartered Accountants

The Company has originally passed a Resolution in their EGM dated 10th February, 2023 for objects of the preferential issue/particulars of the offer.Subsequently, the Company has passed resolution for Modification of the objects of the preferential issue in the EGM dated 4 6th July, 2024 to include the utilisation of proceeds of Share warrants for Redemption of

2 optionally convertible Redeemable Preference Shares.

3 Legal cases:

The Compny had signed an agreement with Paradip Port Trus under the name ''K.V.R. Rail Infra Projects Private Limited for ''Railway Work for Deep Draught berths at Paradip Port'' for the Contract price of Rs.98.67 Crores. The Letter of Intent (LOI) was issued on 06.06.2011 by the Paradip Port Trust. Susequently by the order dated 13.10.2014of Hon''ble High Court of Andhra Pradesh, Hyderabad, the Company has merged with ''Axis Rail India Limited''. Subsequently the name of the Company has been changed from ''Axis Rail India Limited'' to ''K&R Rail Engineering Limited''.

(i) Refund of Rentention Money:

The Company claimed Refund of Retention Money for an amount of Rs 4.34 Crores with interest @9% p.a. with effect from 26.09.2013. Thus total Rention Money claimed with interest is Rs.8.64 Crore.

(ii) Refund of the invoked Bank Guarantee

The Company had furnished a Peformance Bank Guarantee for a sum of Rs.97.67 lakhs . The PPT had issued a show cause notice on 18.06.2013. In response to the show cause notice the Company through it''s Lawyer replied on 27.06.2013. However, the PPT had encashed the Bank Guarantee on 24.07.2013. Hence the Company filed petition before the Arbitral Tribunal of Hon''ble Dr Justice A.K.Rath, Former Judge, High Court of Orissa (Sole Arbitrator) vide Arbitration Proceeding No.3 of 2020 and claimed for refund of the Bank Gurantee of Rs. 97.67 lakhs with interest @9% p.a with effect from 24.07.2013. Thus the total claim under this head is Rs.150.42 lakhs.

Legal Cses (Contd..)

(iii) Idling Charges:

The Company raised final bill for Rs.95.37 lakhs on 07.06.2013 towards the work done and materials supplied. The PPT has not paid the same. Hence the Company claimed for Rs.95.37 lakhs with interest @9% p.a. with effect from 01.09.2013. Thus total claim under this head is Rs.1.51 Crore.

The case is still under process. Pending the out come of the petition the claims for idling charges were not recognised in the financial statements as at 31.03.2024. The case is not posted yet for hearing.

4 Prior year comparatives

The figures of the previous year have been regrouped/reclassified, where necessary, to conform with the current yearâs classification.

The accompanying notes are an integral part of the financial statements.

As per our report of even date

for and on behalf of the Board P.MURALI & CO., of Directors of

K&R RAIL ENGINEERING

Chartered Accountants LIMITED

ICAI Firm Registration CIN:

Number: 007257S L45200TS1983PLC082576

Amit Rabindra K Maniza

A.KRISHNA RAO Bansal Barik Khan

Direct

Mem No. 020085 CEO or Director

PAN:ACFP

Partner B7608E DIN: 08773785 DIN: 07146123

Place: Hyderabad

Kulkarni Prahlada

Date: 13.07.2024 rao

Chief Financial Officer

PAN: AKMPR1779B

Mar 31, 2023

Provisions And Contigent liabilty

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. Where discounting is used,
the increase in the provision due to the passage of time is recognized as a finance cost.

3.17 Contingent liabilities & contingent
assets

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a
present obligation in respect of which the likelihood of outflow of resources is remote, no provision or
disclosure is made.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed
continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related
income are recognised in the period in which the change occurs.

³.¹⁸ Financial instruments

b. Recognition and Initial recognition

The Company recognizes financial assets and financial liabilities when it becomes a party to the
contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on
initial recognition, except for trade receivables which are initially measured at transaction price.
Transaction costs that are directly attributable to the acquisition or issues of financial assets and financial
liabilities that are not at fair value through profit or loss, are added to the fair value on initial recognition.

A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value
through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
a. Classification and Subsequent measurement
Financial assets

On initial recognition, a financial asset is classified as measured at

- amortised cost;

- FVTPL

(All amounts Lakhs in Indian Rupees (?), except share data and where otherwise stated)

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the
Company changes its business model for managing financial assets.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL:

- the asset is held within a business model whose objective is to hold assets to collect contractual cash
flows; 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.

All financial assets not classified as measured at amortised cost as described above are measured at
FVTPL. On initial recognition, the Company may irrevocably designate a financial asset that otherwise
meets the requirements to be measured at amortised cost at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.

Financial assets: Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is
held at a portfolio level because this best reflects the way the business is managed and information is
provided to management. The information considered includes:

- the stated policies and objectives for the portfolio and the operation of those policies in practice. These
include whether managementâs strategy focuses on earning contractual interest income, maintaining a
particular interest rate profile, matching the duration of the financial assets to the duration of any related
liabilities or expected cash outflows or realising cash flows through the sale of the assets;

- how the performance of the portfolio is evaluated and reported to the Companyâs management;

- the risks that affect the performance of the business model (and the financial assets held within that
business model) and how those risks are managed;

- how managers of the business are compensated - e.g. whether compensation is based on the fair value of
the assets managed or the contractual cash flows collected; and the frequency, volume and timing of sales
of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not
considered sales for this purpose, consistent with the Companyâs continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair
value basis are measured at FVTPL.

Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, âprincipalâ is defined as the fair value of the financial asset on initial
recognition. âInterestâ is defined as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company
considers the contractual terms of the instrument. This includes assessing whether the financial asset
contains a contractual term that could change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the Company considers:

- contingent events that would change the amount or timing of cash flows;

- terms that may adjust the contractual coupon rate, including variable interest rate features;

- prepayment and extension features; and

- terms that limit the Companyâs claim to cash flows from specified assets (e.g. non- recourse features).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the
prepayment amount substantially represents unpaid amounts of principal and interest on the principal
amount outstanding, which may include reasonable additional compensation for early termination of the
contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual
par amount, a feature that permits or requires prepayment at an amount treated as consistent with this
criterion if the fair value of the prepayment feature is insignificant at initial recognition.

Financial assets: Subsequent measurement and gains and losses

Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses,
including any interest or dividend income, are recognised in profit or loss.

Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the
effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign
exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.

Financial liabilities: Classification, Subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held- for- trading, or it is a derivative or it is designated as such
on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses,
including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently
measured at amortised cost using the effective interest method. Interest expense and foreign exchange
gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in
profit or loss.

b. Derecognition
Financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of the financial asset are transferred or in
which the Company neither transfers nor retains substantially all of the risks and rewards of ownership
and does not retain control of the financial asset.

If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but
retains either all or substantially all of the risks and rewards of the transferred assets, the transferred
assets are not derecognised.

Financial liabilities

That substantially represents the contractual par amount plus accrued (but unpaid) contractual interest
(which may also include reasonable additional compensation for early termination) is
The Company derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire.

The Company also derecognises a financial liability when its terms are modified and the cash flows under
the modified terms are substantially different. In this case, a new financial liability based on the modified
terms is recognised at fair value. The difference between the carrying amount of the financial liability
extinguished and the new financial liability with modified terms is recognised in profit

D. Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet
when and only when, the Company currently has a legally enforceable right to set off the amounts and
it intends either to settle them on a net basis or to realise the asset and settle the liability
simultaneously.

E. Impairment

The Company recognises loss allowances for expected credit losses on financial assets measured at
amortised cost;

At each reporting date, the Company assesses whether financial assets carried at amortised cost and
debt securities at fair value through other comprehensive income (FVOCI) are credit impaired. A
financial asset is âcredit- impairedâ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit- impaired includes the following observable data:

- significant financial difficulty of the borrower or issuer;

- the restructuring of a loan or advance by the Company on terms that the Company would not
consider otherwise;

- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or

- the disappearance of an active market for a security because of financial difficulties.

The Company measures loss allowances at an amount equal to lifetime expected credit losses, except
for the following, which are measured as 12 month expected credit losses:

- debt securities that are determined to have low credit risk at the reporting date; and- other debt
securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected
life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables are always measured at an amount equal to lifetime expected
credit losses.

Lifetime expected credit losses are the expected credit losses that result from all possible default events
over the expected life of a financial instrument.

12-month expected credit losses are the portion of expected credit losses that result from default events
that are possible within 12 months after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months).

In all cases, the maximum period considered when estimating expected credit losses is the maximum
contractual period over which the Company is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating expected credit losses, the Company considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Companyâs historical experience
and informed credit assessment and including forward- looking information.

Measurement of expected credit losses

Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured
as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the
Company in accordance with the contract and the cash flows that the Company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that
there is no realistic prospect of recovery. This is generally the case when the Company determines that
the trade receivable does not have assets or sources of income that could generate sufficient cash flows
to repay the amounts subject to the write- off. However, financial assets that are written off could still
be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of
amounts due.

Mar 31, 2014

1. Share Capital

Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of' 10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution wilt be in proportion to the number of equity shares held by the shareholders.

2. Contingent Liabilities not provided for: NIL (NIL)

3. In the Current Financial year i.e 2012-13, the name of the Company has been changed from M/s Gupta Carpets International Limited to M/s Axis Rail India Limited and the main objects of the Memorandum of Association of the Company has been altered to include the new line of business i.e. Rail Infra Projects.

4 There are no separate reportable segments under Accounting Standard -17- "Segment Reporting".

5. The company had been providing for the Sales tax liability as per the return filed with the Sales Tax Department Additional Liability, if any, arising at the time of assessment, shall be provided at the time of arising of such liability. However, as per the information & explanations given to us, no sale or purchase was undertaken by the company during the year on which sales tax / vat laws are applicable.

6 Gratuity and other post Employment Benefit Plans(AS-15):

According to the information and explanations given to us, the company did not employ any worker/ staff during the year under consideration & hence company is not at all required to make any provision for leave encashment, gratuity & other retirement benefits on acturial basis as required under section 211(3A), 211 (3B) AND 211(3C) of the Companies Act read with Accounting standards issued by the ICAI.

In terms of Accounting Standard (AS 22), Accounting for Taxes on Income the Company had determined deferred tax asset as on 31 03.2014. However same has not been recognized in view of uncertainty of future taxable income.

8 In view of the administrative and functional activities confirmation of Balances are obtained from all the debtors & creditors and also for loans and advances.

9 As per the Accounting Standard -18 ''Related Party Disclosures'' issued by the institute of The Chartered Accountants of India, The names of the related Parties are given below:

a) Subsidiaries' NIL

b) Joint Ventures : NIL

c) Details of Related Parties Key Management Personnel :

10 Investments :

The company has made investments amounting to NIL (previous year Nil) during the year.

11. Figures are rounded off to the nearest of Rupees and the previous year

figures are regrouped/recasted and rearranged wherever considered necessary.

12. The company has forfeited 33,00,000 fully convertible warrants issued earlier to the persons belonging to non promoter group at an exercise price of Rs. 10 each convertible into equal number of Equity shares within a period of 18 months during the financial year.

Mar 31, 2013

1 average number of equity shares outstanding during the year.

For calculating the diluted earning per share the net profit or loss for the period attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted to the effect of all dilutive potential equity shares.

2. Contingent Liabilities not provided for: NIL (NIL)

3. In the Current Financial year i.e. 2012-13, the name of the Company has been changed from M/s Gupta Carpets International Limited to M/s Axis Rail India Limited and the main objects of the Memorandum of Association of the Company has been altered to include the new line of business i.e. Rail Infra Projects.

4. There are no separate reportable segments under Accounting Standard -17- "Segment Reporting".

5. The company had been providing for the Sales tax liability as per the return filed with the Sales Tax Department. Additional Liability, if any, arising at the time of assessment, shall be provided at the time of arising of such liability. However, as per the information & explanations given to us, no sale or purchase was undertaken by the company during the year on which sales tax / vat laws are applicable.

6. Gratuity and other post Employment Benefit Plans(AS-15):

I According to the information and explanations given to us, the company did not employ any worker/ staff during the year under consideration & hence company is not at all required to make any provision for leave encashment, gratuity & other retirement benefits on acturial basis as required under section 211(3A), 211 (3B) AND 211(3C) of the Companies Act read with Accounting standards issued by thelCAI.

7. In terms of Accounting Standard (AS 22), ''Accounting for Taxes on Income '', the Company had determined deferred tax asset as on 31.03.2013. However same has not been recognized in view of uncertainty of future taxable income.

8. In view of the administrative and functional activities confirmation of Balances are obtained from all the debtors & creditors and also for loans and advances.

9 The Unsecured loan of bank of Maharashtra is settled in OTS (One Time Settlement) Scheme by payment as evidenced by No Due Certificate issued by Bank vide letter dated 19.09.2011

10 As per the Accounting Standard -18 "Related Party Disclosures" issued by the institute of The Chartered Accountants of India, The names of the related Parties are given below:

a) Subsidiaries: NIL

I)) Joint Ventures : NIL

c) Details of Related Parties Key Management Personnel :

11 Investments :

The company has made investments amounting to NIL (previous year Nil) during the year.

12. I Figures are rounded off to the nearest of Rupees and the previous year figures are regrouped/recasted and rearranged wherever considered necessary.

13. Vs/ith effect from August 23, 2012, the Register Office of the Company gets shifted from the State of Punjab to the State of Andhra Pradesh.

14. On July 18, 2012, the Company has made allotment of 33,00,000 Fully Convertible Warrants to the person belonging to non-promoter category at an exercise price of Rs. 10/- each convertible into equal number of equity shares within a period of 18 months.

15. The allotment was made with the objective of meeting working capital requirements for the new line of business

Mar 31, 2008

1. Contingent Liabilities not provided for: NIL (NIL)

2. Despite huge loss resulted in complete erosion of worth of the Company, resulting in business of the company having suffered irreparably the accounts for the year have been prepared on the assumption of "Going Concern". This reflects adversely upon the true & fair view of the accounts. The company did not have any significant involvement in the operations of its main object i.e manufacturing of Carpets. No significant business activity was carried out during the year. There are no separate reportable segments under Accounting Standard -17 - "Segment Reporting".

3. Sales tax liability has been provided for as per the return filed with the Sales Tax Department. Additional Liability, if any, arising at the time of assessment, shall be provided at the time of arising of such liability.

4.Income, the Company had determined deferred tax asset as on 31.03.2008. However same has not been recognized in view of uncertainty of future taxable income.

5 In view of the administrative and functional constraints confirmation of Balances are not obtained from debtors /creditors and also for loans and advances In the opinion of Board of Directors "Current Assets, Loans and Advances" have been Valued on realization in ordinary course of business, at least, equal to the amount at which they have been stated in the Balance Sheet.

6 a) Interest upto the financial year ended 31.03.2008 (from 1.04.1997) remains unprovided for and unchanged in respect of the credit facilities availed from Bank of Maharastra, Amritsar on account of the fact the account has been classified as NPA by the Bank. The amount of Interest not so provided by the Company remains unascertained. The Bankers have initiated legal proceedings against the Company but efforts are being made to arrive at a Settlement with the Bankers.

b) No provision has been made for Liability arising in respect proportionate Special Import Licence Valuing Rs. 20.02 Lacs. (Last Year Rs. 20.02 Lacs) to be surrendered to Asstt. Director of Foreign Trade consequent on Discount/rebate given to the foreign buyers. The same is unascertained.

7 An amount of Rs. 3.56 Lacs (Last Year Rs. 3.56 Lacs) received as duty drawbacks from the Govt in respect of exports made in earlier years is not shown as income but is being shown as liability in view of the company being obliged to refund the same on account of Discounts/rebates allowed to the foreign buyers.

8 As per the Accounting Standard -18 "Related Party Disclosures" issued by the institute of The Chartered Accountants of India, The names of the related Parties are given below:

Names of Related Parties Key Management Personnel:

i) Sh. Raman Gupta

ii) Sh. Rajesh Gupta

However, during the year, no transactions were carried out with them.

9. Figures are rounded off to the nearest of Rupees and the previous year figures are regrouped/recasted and rearranged wherever considered necessary.

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