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Notes to Accounts of Servotech Renewable Power System Ltd.
Mar 31, 2025
2.16 Provisions
A provision is recognised when the Company has a
present obligation (legal or constructive) as a result of
past event, it is probable that an outflow of resources
embodying economic benefits will be required to
settle the obligation and a reliable estimate can be
made of the amount of the obligation.
a) Warranty Provisions
Provision for assurance type warranty-
related costs are recognised when the
product is sold or service is provided to
customer. Initial recognition is based
on historical experience. The Company
periodically reviews the adequacy of
product warranties and adjust warranty
percentage and warranty provisions
for actual experience, if necessary. The
timing of outflow is expected to be with in
one to five years.
b) Decommissioning Liability
Decommissioning costs are provided at
the present value of expected costs to
settle the obligation using estimated cash
flows and are recognised as part of the
cost of the particular asset.
c) Contingent Liabilities
A contingent liability is a possible
obligation that arises from past events
whose existence will be confirmed by the
occurrence or non-occurrence of one
or more uncertain future events beyond
the control of the Company or a present
obligation that is not recognised because it
is not probable that an outflow of resources
will be required to settle the obligation. A
contingent liability also arises in extremely
rare cases, where there is a liability that
cannot be recognised because it cannot
be measured reliably. The Company
does not recognize a contingent liability
but discloses its existence in the financial
statements unless the probability of
outflow of resources is remote. Provisions,
contingent liabilities, contingent assets
and commitments are reviewed at each
Balance Sheet date.
2.17 Retirement and other employee benefits
a) Defined benefit Plan
The liability or asset recognised in the balance
sheet in respect of defined benefit gratuity
plans is the present value of the defined benefit
obligation at the end of the reporting period less
the fair value of plan assets. The defined benefit
obligation is calculated annually by actuaries
using the projected unit credit method. The
present value of the defined benefit obligation is
determined by discounting the estimated future
cash outflows by reference to market yields at
the end of the reporting period on government
bonds that have terms approximating to the
terms of the related obligation.
The net interest cost is calculated by applying the
discount rate to the net balance of the defined
benefit obligation and the fair value of plan
assets. This cost is included in employee benefit
expense in the statement of profit and loss.
Remeasurement gains and losses arising
from experience adjustments and changes in
actuarial assumptions are recognised in the
period in which they occur, directly in other
comprehensive income. They are included in
retained earnings in the statement of changes
in equity and in the balance sheet.
Changes in the present value of the defined
benefit obligation resulting from plan
amendments or curtailments are recognised
immediately in profit or loss as past service cost.
b) Defined Contribution Plan
The Company pays provident fund contributions
to publicly administered provident funds as per
local regulations. The Company has no further
payment obligations once the contributions have
been paid. The contributions are accounted for as
defined contribution plans and the contributions
are recognised as employee benefit expense when
they are due. Prepaid contributions are recognised
as an asset to the extent that a cash refund or a
reduction in the future payments is available.
c) Short-term Obligations
Liabilities for wages, salaries and bonus,
including non-monetary benefits that are
expected to be settled wholly within 3 months
after the end of the period in which the
employees render the related service are
recognised in respect of employees'' services
up to the end of the reporting period and are
measured at the amounts expected to be paid
when the liabilities are settled. The liabilities
are presented as current employee benefit
obligations in the balance sheet.
d) Post-Employment Obligations
The Company operates the following post¬
employment schemes:
- defined benefit plans for gratuity, and
- defined contribution plans for
provident fund.
2.18 Investment in Subsidiaries
The investment in subsidiaries, associate and Joint
venture are carried at cost as per Ind AS 27.
2.19 Segment Reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the management. The Management monitors
the operating results of all strategic business units
separately for the purpose of making decisions about
resource allocation and performance assessment.
Segment performance is evaluated based on profit
and loss and is measured consistently with profit
and loss in the financial statements.
2.20 Cash and cash equivalent
Cash and cash equivalents in the Balance Sheet
comprise cash at banks and on hand and shortterm
deposits with an original maturity of three months or
less, that are readily convertible to a known amount
of cash and which are subject to insignificant risk of
changes in value.
2.21 Cash flow statement
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the
effects of transactions of a non-cash nature, any
deferrals or accruals of past or future operating
cash receipts or payments and item of income or
expenses associated with investing or financing cash
flows. The cash flows from operating, investing and
financing activities of the Company are segregated.
2.22 Finance costs
Borrowing costs are recognised in the statement of
profit and loss using the effective interest method.
The associated cash flows are classified as financing
activities in the statement of cash flows.
2.23 Rounding of amounts
All amounts disclosed in the financial statements
and notes have been rounded off to the nearest
INR as per the requirement of Schedule III, unless
otherwise stated.
2.24 Earning Per share
A) Basic EPS
Basic earnings per share is calculated by
dividing the net profit or loss for the period
attributable to equity shareholders of the
Company (after deducting preference
dividends and attributable taxes) by the
weighted average number of equity shares
outstanding during the period.
B) Diluted EPS
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.
2.25 Approval of Financial Statements
The financial statements were approved for issue by
the board of directors on May 6, 2025.
Note:
During the year the Board of the Directors of the company has recommend the payment of final dividend of Re
0.05 per equity shares of face value of Rs 1 each , on 3rd June 2024. The Dividend was paid to those members whose
name was appears in the register of members as on Record date 20th September 2024. Such final dividend was
paid out of General Reserve.
Proposed Dividend
After Reporting Date, the Board Directors of Company has recommended a final dividend of Rs 0.05 per equity
share for the financial year 2024-2025 (Rs 0.05 per share for the financial year 2023-2024)
The final dividend proposed by the Directors are subject to approval at the annual general meeting and has not
been accounted as liability in these standalone financial Statements. The same will be recognised as a liability
and deducted from shareholder''s equity in the period in which the final dividends are approved by the equity
shareholders in the general meeting.
Secured borrowings and assets pledged as security
1) ICICI Bank had sanctioned Term loan of Rs. 600.00 Lacs on 01.12.2022, 360.50 Lacs on 13.04.2023, 185.30 Lacs on
26.04.2023, 154.20 Lacs on 14.06.2023 & 300 Lacs on 30.11.2023. Out of above Rs 600 Lacs against Property and 1000
Lacs towards Machineries. The said loan is repayable in upto 84 equal monthly installments.Outstanding balance
as on 31.03.2025 was Rs. 1136.63 Lacs (Previous year 1363.25 Lacs) , Payable within one year Rs 227.29 Lacs (Previous
year 227.29 Lacs) .
2) Punjab National Bank had Disbursed term loan of Rs. 325 Lacs on 20.05.2024 toward Machineries. The loan
is repayable in 52 installments. Oustanding Balance as on 31.03.2025 Was Rs 260.56 Lacs ,Payable within one
year Rs 75 Lakhs
3) Punjab National Bank had Disbursed term loan of Rs. 120.24 Lacs on 30.10.2024 toward Machineries. The loan is
repayable in 30 installments. Oustanding Balance as on 31.03.2025 Was Rs 100.21 Lacs , Payable within one year
Rs 46.15 Lakhs
4) Punjab National Bank had sanctioned working capital term loan of Rs. 247 Lacs on 18.07.2020 under GECL Scheme
to meet operational liabilities and restart the business effected due to COVID-19. The loan is repayable in 36
installments after one year moratorium period. Loan has been fully repaid during the year (Previous year Balance
Rs. 20.58 Lacs)
5) Punjab National Bank had sanctioned working capital term loan of Rs. 172.96 Lacs on 15.12.2021 under GECL Scheme
to meet operational liabilities. The loan is repayable in 36 installments after 2 years moratorium period. Outstanding
as on 31.03.2025 was Rs. 96.08 Lacs (Previous year Rs. 153.74 Lacs) payable within one year Rs. 57.65 Lacs (Previous
year Rs. 57.65Lacs)
6) Various banks had sanctioned vehicle loans on different dates of Rs. 345.47 Lacs (Previous year Rs. 231.79 Lacs)
secured against hypothecation of vehicles . The said loans are repayable upto 63 installments of different
amounts and payable on different dates. Outstanding balance as on 31.03.2025 was Rs. 243.38 Lacs (Previous year
Rs. 111.50.00 Lacs) , Payable within one year Rs. 74.03 Lacs (Previous year Rs. 33.33 Lacs) .
*Punjab National Bank had renewed fund based limit of Cash Credit Rs 5552 Lacs & Term Loan Rs 448 Lacs (Previous year Rs 4600 Lacs towards
Cash Credit and Term Loan of Rs 1000 Lacs) and non fund based limit of Rs.1500 Lacs (Previous year Rs 1500 Lacs) towards Bank Guarantee/Letter
of Credit on 04.01.2025. These limit are secured against hypothecation of inventories, books debts, other current assets, fixed deposits, Plant and
machineries and all other fixed assets of the company, besides equitable mortgage of properties of company and its directors. Current assets
are having pari passu charge with HDFC Bank and ICICI Bank.
*HDFC Bank had renewed Fund Based Limit of Cash Credit Rs.3500 Lacs including WCDL of Rs. 1800 Lacs and Bank Guarantee of Rs 500 Lakhs
being sublimit of Cash Credit facility(Previous year Cash Credit Limit of Rs 2000 Lacs Including WCDL of Rs 1800 Lacs being sublimit of Cash Credit
facility) and Non Fund Based Limit of Rs 3500( Previous year Rs 2000 Lacs) towards Bank Guarantee/Letter of Credit on 24.10.2024. These limits are
secured by exchange of Pari passu charge on current assets with ICICI Bank and Punjab National Bank
*ICICI Bank had renewed Fund Based Limit of Rs.2400 Lacs including WCDL of Rs. 1900, Letter of Credit Rs 400 Lacs and buyer credits of 400 Lacs
being sublimit of Cash Credit (Previous Year Cash Credit Limit of Rs 1400 Lacs Inclding Working Capital Demand Loan of Rs 800 Lacs, Letter of
Credit of Rs 200 Lacs and Buyer Credits of Rs 200 Lacs which is sublimit of Cash Credit), Non Fund Based Limit of Rs 2000 Lacs towards Bank
Guarantee/Letter of Credit ( Previous Year Rs 1000 Lacs) and Rs 1283.40 ( Previous year Rs 1600 Lacs) towards Term Loan of on 18.09.2024. These
limit are secured by Exchange of Pari passu charge on current assets with Punjab National Bank & HDFC Bank.
Performance obligation
The performance obligation for sale of products and scrap are satisfied upon delivery/dispatch of goods depending
upon terms with customers and payment is generally due within 15 to 90 days from delivery. Some contracts provide
customers with a right of return, volume discount, rebates and other promotion incentive schemes, which gives rise
to variable consideration subject to constraint. The contracts do not have a significant financing component. The
company offers standard warranty on selected products. The company makes provisions for same as per principles
laid down under Ind AS-37. The performance obligation for the product repair services is satisfied over the period of time
and payment is generally due upon completion of service and acceptance of the customer. There are no unsatisfied
or partially satisfied performance obligation as at March 31, 2025 and March 31, 2024. During the year ended March 31,
2025, revenue recognised from amount included in contract liability at the beginning of the year.
This section 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 and for which fair values are
disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair
value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that
have quoted price and are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter
derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as
little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable,
the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level3.
Note 24.2 Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices
Note 24.3 Fair value of financial assets and liabilities measured at amortised cost
The carrying amounts of financial assets comprising trade receivables, cash and cash equivalents, fixed deposits with
banks, security and other deposits and carrying value of financial liabilities comprising borrowings and trade paybles
and other payables are considered to be the same as their fair values, due to their short-term nature and covered
under level 3 category.
Note 25 Financial risk management
The Company''s activities expose it to market risk, liquidity risk and credit risk. In order to minimise any adverse effects on
the financial performance, derivative financial instruments, such as foreign exchange forward contracts and commodity
forward contracts, are entered to hedge certain foreign currency risk exposures and commodity price risk exposures.
The Company''s risk management is carried out by a central treasury department under policies approved by the
board of directors. The Company treasury identifies, evaluates and hedges financial risks in close co-operation with
the Company''s operating units. The board provides written principles for overall risk management, as well as policies
covering specific areas, such as foreign exchange risk, commodity price risk, credit risk, use of derivative financial
instruments and non-derivative financial instruments, and investment of excess liquidity.
Note 25.1 Credit risk management
The risk of financial loss due to counterparty''s failure to honour its obligations arises principally in relation to transactions
where the Company provides goods on deferred terms.
The Company''s policies are aimed at minimising such losses, and require that deferred terms are granted only to
customers who demonstrate an appropriate payment history and satisfy creditworthiness procedures. Individual
exposures are monitored with customers subject to credit limits to ensure that the Company''s exposure to bad debts
is not significant. The maximum exposure to credit risk regarding financial assets is the carrying amount as disclosed
in the balance sheet. With respect to credit risk arising from all other financial assets of the Company, the Company''s
exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the corresponding
carrying amount of these instruments.
On account of the adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss
or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables.
The provision matrix takes into account available external and internal credit risk factors such as historical experience
for customers. The Company''s receivable are high quality with negligible credit risk and the counter-party has strong
capacity to meet the obligations and where the risk of default is negligible or nil. Accordingly, no provision for expected
credit loss is recognised.
Note 25.2 Liquidity risk management
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability
of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out
market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in
funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing
facilities below) and cash and cash equivalents on the basis of expected cash flows. In addition, the Company''s
liquidity management policy involves monitoring balance sheet liquidity ratios against internal and external regulatory
requirements and maintaining debt financing plans.
Maturities of financial liabilities
The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual
maturities for:
- all non-derivative financial liabilities, and
- net settled derivative financial instruments for which the contractual maturities are essential for an understanding
of the timing of the cash flows.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12months equal
their carrying balances as the impact of discounting is not significant.
Note 25.3 Market risk management
Interest rate risk
The Company''s main interest rate risk arises from borrowings with variable rates, which expose the Company to cash
flow interest rate risk. During 31 March 2025 and 31 March 2024, the Company''s borrowings at variable rate were mainly
denominated in INR.
The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk
as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change
in market interest rates.
The long term variable interest rate borrowings are not significant and accordingly, no such sensitivity for interest rate
cash flow has been disclosed.
Price risk
The Company''s significant exposure for price risk is relating to commodity forward contracts. However, no open
commodity forward contract is outstanding as on the reporting date and accordingly, doesn''t have related price risk.
Note 26 Capital management
Note 26.1 Risk management
The Company''s objectives when managing capital are to
- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders
and benefits for other stakeholders, and
- Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company issue new shares. Consistent with others in the industry,
the Company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and
cash equivalents) divided by Total ''equity'' (as shown in the balance sheet.
Note 26.2 Loan covenants
The Company has complied with all loan covenants required under borrowing facilities.
Note 27 Related party transactions
Note 27.1 Controlling shareholders
Mr. Raman Bhatia
M/s Raman Bhatia HUF
Ms. Sarika Bhatia
Note 27.2 Fellow Subsidiaries
Rebreathe Medical Devices India Private Limited
Techbec Industries Limited
Techbec Green Energy Private Limited
Servotech EV Infra Private Limited
Servotech sports and entertainment Pvt ltd
Servotech Siliguri strikers Private Limited
Associate Company
NIL
Note 27.3 Key management personnel and their relatives
A number of key management personnel, or their related parties, hold positions in other entities that result in them having
control or significant influence over those entities. A number of these personnel transacted with the Company during
the reporting period. The terms and conditions of the transactions with key management personnel and their related
parties were no more favourable than those available, or those which might reasonably be expected to be available, in
respect of similar transactions with non-key management personnel related entities on an arm''s length basis.
Name of key management personnel, their relatives and entities over which they have control or significant influence with
whom transaction were entered during the year or balance was outstanding at the balance sheet date are as follows:
Other Matters
(a) The VAT Department of Government of Haryana at Kundli had assessed the Sales Turnover of the company up to
30.06.2017 and created the demand of Rs.8.81 Lacs (Including Interest) for short submission of statutory forms on
12th March 2021. The Company paid the amount of Rs 2.28 lacs on 29th June,2020. Hence net demand of Rs 6.52 Lacs
is payable as on balance sheet date. The company had charged the said amount to profit & loss account and
reduce the advance payment Rs. 40.92 Lacs from the said Government Department .
(b) The income tax department has created demand of Rs 252.12 Lacs for the A.Y. 2017-18 on 26th of December 2019. The
company had filed an appeal before Commissioner of Income Tax, New Delhi on 21st January 2020 and deposited
Rs. 2.50 Lac against the same. The appeal is pending.
(c ) The income tax department has created demand of Rs 143.36 Lacs for the A.Y. 2016-17 on 28th March 2022. The company
had filed an appeal before Commissioner of Income Tax, New Delhi on 19th of April 2022. The appeal is pending.
(d) In the opinion of the Board, the current assets, loans and advances have a value on realization in the ordinary
course of business, at least equal to the aggregate amount as shown in the Balance Sheet
( e ) The company had received Rs.411.74 Lacs from different customers against supply / to be supply of goods has
been shown as advance from customers in books of accounts, will be adjusted against their outstanding after
reconciliation of their accounts.
(f) The outstanding balances of sundry debtors ,creditors & securities are as per the books of accounts of the
Company which are subject to confirmations and reconciliation, if any.
(g) Previous year figures have been regrouped/rearranged wherever found necessary.
(h) Note 1 to 33 are forming part of Balance Sheet, Profit & Loss & Cash Flow Statement and have been authenticated
by the directors.
Events occurring after the reporting period
There have been no material events other than disclosed in the financial statements after reporting date which
would require disclosure or adjustments to the financial statements as of and for the year ended 31st March 2025
Significant accounting policies 1&2
Notes on Financial Statements
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For Rohit KC Jain & Co. For and on behalf of the Board of Directors of
Chartered Accountants Servotech Renewable Power System Limited
FRN: 020422N ( Formerly known as Servotech Power Systems Limited)
Raman Bhatia Sarika Bhatia
(Managing Director) (Whole-time Director)
DIN-00153827 DIN-00155602
CA Rohit Jain Rupinder Kaur Vikas Bhatia
Partner (Company Secretary ) (Chief Financial Officer)
MN. 099444 M.No.- A38697 PAN- AJNPB0303P
UDIN: 25099444BMMLTN9696
Place: Delhi
Date: 06-05-2025
Mar 31, 2024
2.16 Provisions
A provision is recognised when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
A) Warranty Provisions
Provision for assurance type warranty-related costs are recognised when the product is sold or service is provided to customer. Initial recognition is based on historical experience. The Company periodically reviews the adequacy of product warranties and adjust warranty percentage and warranty provisions for actual experience, if necessary. The timing of outflow is expected to be with in one to five years.
B) Decommissioning Liability
Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the particular asset.
C) Contingent Liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases, where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements unless the probability of outflow of resources is remote. Provisions, contingent liabilities, contingent assets and commitments are reviewed at each Balance Sheet date.
2.17 Retirement and other employee benefits
A) Defined benefit Plan
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
B) Defined Contribution Plan
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
C) Short-term Obligations
Liabilities for wages, salaries and bonus, including non-monetary benefits that are expected to be settled wholly within 3 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
D) Post-Employment Obligations
The Company operates the following post-employment schemes:
- defined benefit plans for gratuity, and
- defined contribution plans for provident fund.
2.18 Investment in Subsidiaries
The investment in subsidiaries, associate and Joint venture are carried at cost as per Ind AS 27.
2.19 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the management. The Management monitors the operating results of all strategic business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured consistently with profit and loss in the financial statements.
2.20 Cash and cash equivalent
Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and shortterm deposits with an original maturity of three months or less, that are readily convertible to a known amount of cash and which are subject to insignificant risk of changes in value.
2.21 Cash flow statement
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
2.22 Finance costs
Borrowing costs are recognised in the statement of profit and loss using the effective interest method. The associated cash flows are classified as financing activities in the statement of cash flows.
2.23 Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest INR as per the requirement of Schedule III, unless otherwise stated.
2.24 Earning Per share
A) Basic EPS
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders of the Company (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period.
B) Diluted EPS
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.
2.25 Approval of Financial Statements
The financial statements were approved for issue by the board of directors on May 9, 2024.
Secured borrowings and assets pledged as security
1) ICICI Bank had sanctioned Term loan of Rs. 600.00 Lacs on 01.12.2022, 360.50 Lacs on 13.04.2023, 185.30 Lacs on 26.04.2023, 154.20 Lacs on 14.06.2023 & 300 Lacs on 30.11.2023. Out of above Rs 600 Lacs against Property and 1000 Lacs towards Machineries. Such loan is secured against equitable mortgaged of commercial property situated (Killa No-14/6/1/2(0-3), Village- Safiabad, Tehsil-Rai, Sonepat-231029) and personal guarantees of directors. The said loan is repayable in upto 84 equal monthly installments.Outstanding balance as on 31.03.2024 was Rs. 1363.25 Lacs (Previous year 571.71 Lacs) , Payable within one year Rs 227.29 Lacs (Previous year 85.71 Lacs) .
2) Punjab National Bank had sanctioned working capital term loan of Rs. 247 Lacs on 18.07.2020 under GECL Scheme to meet operational liabilities and restart the business effected due to COVID-19. The loan is repayable in 36 installments after one year moratorium period. Outstanding as on 31.03.2024 was Rs. 20.58 Lacs (Previous year Rs. 102.13 Lacs) payable within one year Rs. 20.58 Lacs (Previous year Rs. 78.00 Lacs)
3) Punjab National Bank had sanctioned working capital term loan of Rs. 172.96 Lacs on 15.12.2021 under GECL Scheme to meet operational liabilities. The loan is repayable in 36 installments after 2 years moratorium period. Outstanding as on 31.03.2024 was Rs. 153.74 Lacs (Previous year Rs. 173.94 Lacs) payable within one year Rs. 57.65 Lacs (Previous year Rs. 14.41Lacs)
*Punjab National Bank had renewed fund based limit of Cash Credit Rs 4600 Lacs & Term Loan Rs 1000 Lacs (Previous year Rs 626 Lacs towards Cash Credit) and non fund based limit of Rs.1500 Lacs (Previous year Rs 1150 Lacs) towards Bank Guarantee/ Letter of Credit on 10.08.2023. These limit are secured against hypothecation of inventories, books debts, other current assets, fixed deposits of Rs. 200 Lacs, Plant and machineries and all other fixed assets of the company, besides equitable mortgage of properties of company and its directors along with their personal guarantees. Current assets are having pari passu charge with HDFC Bank and ICICI Bank. Property is having pari passu charge with ICICI bank.
*HDFC Bank had renewed Fund Based Limit of Cash Credit Rs.2000 Lacs including WCDL of Rs. 1800 Lacs being sublimit of Cash Credit facility(Previous year Cash Credit Limit of Rs 400 Lacs and WCDL of Rs 500 Lacs) and Non Fund Based Limit of Rs 2000 Lacs towards Bank Guarantee/Letter of Credit on 22.03.2024. These limits are secured by exchange of Pari passu charge on current assets with ICICI Bank, Punjab National Bank for working capital limits & pari passu Charge for Hypothecation & equitable Mortgage of properties at Village Safiyabad, Industrial Area, Sector-43, Narela Road, Tehsil Rai, District Sonipat, Haryana - 131029 and fixed deposits of Rs 305 Lacs as Colletral Security.
*ICICI Bank had renewed Fund Based Limit of Rs.1400 Lacs including WCDL of Rs. 800 Lacs being sublimit of Cash Credit (Cash Credit Limit of Rs 1400 Lacs and Working Capital Demand Loan of Rs 800 Lacs which is sublimit of Cash Credit), Non Fund Based Limit of Rs 1000 Lacs towards Bank Guarantee/Letter of Credit being sublimit of Cash Credit and Rs 1600 Lacs towards Term Loan of on 22.11.2023. These limit are secured by Exchange of Pari passu charge on current assets with Punjab National Bank & HDFC Bank.
*CITI Bank had sanctioned Fund Based Limit of Rs.2000 Lacs (Cash Credit Limit of Rs 1000 Lacs and WCDL and bill discounting of Rs 1000 Lacs) on 28.03.2023.
*Company has taken unsecured loan from its subsidiary Servotech EV Infra Pvt. Ltd.of Rs. 806.33 Lacs on 26.02.2024 and interest rate on the same is @8.50% P.A.
This section 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 and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have quoted price and are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level3.
NOTE 24.2 : VALUATION TECHNIQUE USED TO DETERMINE FAIR VALUE
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices
NOTE 24.3 : FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES MEASURED AT AMORTISED COST
The carrying amounts of financial assets comprising trade receivables, cash and cash equivalents, fixed deposits with banks, security and other deposits and carrying value of financial liabilities comprising borrowings and trade paybles and other payables are considered to be the same as their fair values, due to their short-term nature and covered under level 3 category.
NOTE 25 : FINANCIAL RISK MANAGEMENT
The Company''s activities expose it to market risk, liquidity risk and credit risk. In order to minimise any adverse effects on the financial performance, derivative financial instruments, such as foreign exchange forward contracts and commodity forward contracts, are entered to hedge certain foreign currency risk exposures and commodity price risk exposures.
This note explains the sources of risk which the Company is exposed to and how such risk were managed.
The risk of financial loss due to counterparty''s failure to honour its obligations arises principally in relation to transactions where the Company provides goods on deferred terms.
The Company''s policies are aimed at minimising such losses, and require that deferred terms are granted only to customers who demonstrate an appropriate payment history and satisfy creditworthiness procedures. Individual exposures are monitored with customers subject to credit limits to ensure that the Company''s exposure to bad debts is not significant. The maximum exposure to credit risk regarding financial assets is the carrying amount as disclosed in the balance sheet. With respect to credit risk arising from all other financial assets of the Company, the Company''s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the corresponding carrying amount of these instruments.
On account of the adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors such as historical experience for customers. The Company''s receivable are high quality with negligible credit risk and the counter-party has strong capacity to meet the obligations and where the risk of default is negligible or nil. Accordingly, no provision for expected credit loss is recognised.
The following table provides information about the exposure to credit risk for trade receivables from individual customers.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. In addition, the Company''s liquidity management policy involves monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
NOTE 25.3 MARKET RISK MANAGEMENT INTEREST RATE RISK
The Company''s main interest rate risk arises from borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31 March 2024 and 31 March 2023, the Company''s borrowings at variable rate were mainly denominated in INR.
The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
The long term variable interest rate borrowings are not significant and accordingly, no such sensitivity for interest rate cash flow has been disclosed.
PRICE RISK
The Company''s significant exposure for price risk is relating to commodity forward contracts. However, no open commodity forward contract is outstanding as on the reporting date and accordingly, doesn''t have related price risk.
NOTE 26 : CAPITAL MANAGEMENT
NOTE 26.1
RISK MANAGEMENT
The Company''s objectives when managing capital are to
- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
- Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company issue new shares. Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by Total âequity'' (as shown in the balance sheet.
NOTE : 27.2 FELLOW SUBSIDIARIES
Rebreathe Medical Devices India Private Limited
Techbec Industries Limited
Techbec Green Energy Private Limited
Servotech EV Infra Private Limited
Associate Company
NIL
NOTE 27.3 KEY MANAGEMENT PERSONNEL AND THEIR RELATIVE
A number of key management personnel, or their related parties, hold positions in other entities that result in them having control or significant influence over those entities. A number of these personnel transacted with the Company during the reporting period. The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those available, or those which might reasonably be expected to be available, in respect of similar transactions with non-key management personnel related entities on an arm''s length basis.
Name of key management personnel, their relatives and entities over which they have control or significant influence with whom transaction were entered during the year or balance was outstanding at the balance sheet date are as follows:
Key management personnel and relatives:
Mr. Raman Bhatia Ms. Sarika Bhatia
*Punjab National Bank had renewed fund based limit of Cash Credit Rs 4600 Lacs & Term Loan Rs 1000 Lacs (Previous year Rs 626 Lacs towards Cash Credit) and non fund based limit of Rs.1500 Lacs (Previous year Rs 1150 Lacs) towards Bank Guarantee/ Letter of Credit on 10.08.2023. These limit are secured against hypothecation of inventories, books debts, other current assets, fixed deposits of Rs. 200 Lacs, Plant and machineries and all other fixed assets of the company, besides equitable mortgage of properties of company and its directors along with their personal guarantees. Current assets are having pari passu charge with HDFC Bank and ICICI Bank. Property is having pari passu charge with ICICI bank.
*HDFC Bank had renewed Fund Based Limit of Cash Credit Rs.2000 Lacs including WCDL of Rs. 1800 Lacs being sublimit of Cash Credit facility(Previous year Cash Credit Limit of Rs 400 Lacs and WCDL of Rs 500 Lacs) and Non Fund Based Limit of Rs 2000 Lacs towards Bank Guarantee/Letter of Credit on 22.03.2024. These limits are secured by exchange of Pari passu charge on current assets with ICICI Bank, Punjab National Bank for working capital limits & pari passu Charge for Hypothecation & equitable Mortgage of properties at Village Safiyabad, Industrial Area, Sector-43, Narela Road, Tehsil Rai, District Sonipat, Haryana - 131029 and fixed deposits of Rs 305 Lacs as Colletral Security.
*ICICI Bank had renewed Fund Based Limit of Rs.1400 Lacs including WCDL of Rs. 800 Lacs being sublimit of Cash Credit (Cash Credit Limit of Rs 1400 Lacs and Working Capital Demand Loan of Rs 800 Lacs which is sublimit of Cash Credit), Non Fund Based Limit of Rs 1000 Lacs towards Bank Guarantee/Letter of Credit being sublimit of Cash Credit and Rs 1600 Lacs towards Term Loan of on 22.11.2023. These limit are secured by Exchange of Pari passu charge on current assets with Punjab National Bank & HDFC Bank.
*CITI Bank had sanctioned Fund Based Limit of Rs.2000 Lacs (Cash Credit Limit of Rs 1000 Lacs and WCDL and bill discounting of Rs 1000 Lacs) on 28.03.2023.
*Company has taken unsecured loan from its subsidiary Servotech EV Infra Pvt. Ltd.of Rs. 806.33 Lacs on 26.02.2024 and interest rate on the same is @8.50% P.A.
Other Matters
(a) The VAT Department of Government of Haryana at Kundli had assessed the Sales Turnover of the company up to 30.06.2017 and created the demand of Rs.8.81 Lacs (Including Interest) for short submission of statutory forms on 12th March 2021. The Company paid the amount of Rs 2.28 lacs on 29th June,2020. Hence net demand of Rs 6.52 Lacs is payable as on balance sheet date. The company had charged the said amount to profit & loss account and reduce the advance payment Rs. 40.92 Lacs from the said Government Department .
(b) The income tax department has created demand of Rs 252.12 Lacs for the A.Y. 2017-18 on 26th of December 2019. The company had filed an appeal before Commissioner of Income Tax, New Delhi on 21st January 2020 and deposited Rs. 2.50 Lac against the same. The appeal is pending.
(c ) The income tax department has created demand of Rs 143.36 Lacs for the A.Y. 2016-17 on 28th March 2022. The company had filed an appeal before Commissioner of Income Tax, New Delhi on 19th of April 2022. The appeal is pending.ng.
(d) The income tax department has created demand of Rs 275.23 Lacs for the A.Y. 2017-18 on 26th May 2023. The company had filed an appeal before Commissioner of Income Tax, New Delhi on 12th of June 2023. The appeal is still pending.
(e) In the opinion of the Board, the current assets, loans and advances have a value on realization in the ordinary course of business, at least equal to the aggregate amount as shown in the Balance Sheet.
(f) The company had received Rs. 96.53 Lacs from different customers against supply / to be supply of goods has been shown as advance from customers in books of accounts, will be adjusted against their outstanding after reconciliation of their accounts.
(g) The outstanding balances of sundry debtors ,creditors & securities are as per the books of accounts of the Company which are subject to confirmations and reconciliation, if any.
(h) Previous year figures have been regrouped/rearranged wherever found necessary.
Note 1 to 33 are forming part of Balance Sheet, Profit & Loss & Cash Flow Statement and have been authenticated by the
directors.
Events occurring after the reporting period
No event occurred after Balance Sheet date.
Significant accounting policies 1&2
The accompanying notes are an integral part of standalone financial statements
As per our report of even date
For Rohit KC Jain & Co. For and on behalf of the Board of Directors of
Chartered Accountants Servotech Power Systems Limited
FRN:020422N
CA Rohit Jain Raman Bhatia Sarika Bhatia
(Partner) (Managing Director) (Whole-time Director)
M.No.- 099444 DIN-00153827 DIN-00155602
Place: Delhi Rupinder Kaur Vikas Bhatia
Date : 09.05.2024 (Company Secretary ) (Chief Financial Officer)
UDIN : 24099444BKGXZZ4519 M.No.- A38697 PAN- AJNPB0303P
Mar 31, 2023
Provision for litigations and contingencies
The provision for litigations and contingencies are determined based on evaluation made by the management of the present
obligation arising from past events the settlement of which is expected to result in outflow of resources embodying economic
benefits, which involves judgements around estimating the ultimate outcome of such past events and measurement of the
obligation amount. Due to the judgements involved in such estimations the provisions are sensitive to the actual outcome
in future periods.
Significant estimates are involved in the determination of provisions related to liquidated damages, onerous contracts and
warranty provision. The Company records a provision for onerous sales contracts when current estimates of total contract
costs exceed expected contract revenue. Warranty provision is determined based on the historical trend of warranty expense
for the same types of goods for which the warranty is currently being determined, after adjusting for unusual factors related
to the goods that were sold or based on specific warranty clause in an agreement. Such estimates are reviewed annually
for any material changes in assumptions and likelihood of occurrence. The provision for warranty, liquidated damages and
onerous contracts is based on the best estimate required to settle the present obligation at the end of reporting period.
E) . Impairment of lion-financial assets
Impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which
is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is
based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market
prices less incremental costs for disposing of the asset. The value in use calculation is based on a Discounted Cash Flow
(DCF) model. The cash flows are derived from the budget and do not include restructuring activities that the Company is not
yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The
recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and
the growth rate used for extrapolation purposes.
The Company uses estimates and judgements based on the relevant rulings in the areas of allocation of revenue, costs,
allowances and disallowances which is exercised while determining the provision for income tax. Uncertainties exist with
respect to the interpretation of tax regulations, changes in tax laws, and the amount and timing of future taxable income.
Given the wide range of business relationships differences arising between the actual results and the assumptions made,
or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded.
The Company establishes provisions, based on reasonable estimates. The amount of such provisions is based on various
factors, such as experience of previous assessments and interpretations of tax regulations by the Company.
G) . Leases: whether an arrangement contains a lease
The Company determines the lease term as the agreed tenure of the lease, together with any periods covered by an option
to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if
it is reasonably certain not to be exercised. After the commencement date, the Company reassesses the lease term if there
is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise
the option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customisation to
the leased asset)
2.4 Current and non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification
An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Expected to be realised within twelve months after the reporting period; or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period.
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 Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of
assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as
12 months for the purpose of current and non- current classification of assets and liabilities, except for long-term contracts. The
projects business comprises long-term contracts which have an operating cycle exceeding one year. For classification of current
assets and liabilities related to projects business, the Company uses the duration of the individual life cycle of the contract as
its operating cycle.
A liability is current when:
⢠It is expected to be settled in normal operating cycle;
⢠It is held primarily for the purpose of trading;
⢠It is due to be settled within twelve months after the reporting period; or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period;
Advance tax paid is classified as current assets
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Functional currency
The functional currency of the Company is the Indian Rupee.
Transactions and translations Initial recognition transactions in foreign currencies are recorded by the Company at their
respective functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of
exchange at the reporting date. The gains or losses resulting from such translations are recognised in the statement of profit
and loss.
Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated
at the exchange rate prevalent at the date when the fair value was measured. Non-monetary assets and non-monetary liabilities
denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of
the transaction.
Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for
the period in which the transaction is settled. Revenue, expense and cash flow items denominated in foreign currencies are
translated into the relevant functional currencies using the exchange rate in effect on the date of the transaction.
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer
at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or
services. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties
collected on behalf of the government. The Company has concluded that it is the principal in all of its revenue arrangements
since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and
credit risks.
The Company considers whether there are other promises in the contract that are separate performance obligations to which
a portion of the transaction price needs to be allocated if any. In determining the transaction price for the sale of goods,
the Company considers the effects of variable consideration, the existence of significant financing components, non-cash
consideration, and consideration payable to the customer (if any).
Revenue is stated exclusive of goods and service tax and net of trade and quantity discount.
Liquidated damages / penalties are provided for as per the contract terms wherever there is a delayed delivery attributable to
the Company.
A) Revenue from the sale of goods
Revenues are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer,
usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received
or receivable, net of returns and allowances, trade discounts and volume rebates.
B) Revenue from sale of services
Revenue from services rendered over a period of time, such as annual maintenance contracts, are recognised on straight
line basis over the period of the performance obligation.
C) Income from development services
Revenue from the development services is recognised as per the contract terms and when accrued. When the contract
outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to
be recovered.
Export incentives receivable are accrued for, when the right to receive the credit is established and there is no significant
uncertainty regarding the realisability of the incentive.
Interest income is recognised on time proportion basis.
Fair value gain on financial instruments is recognized using the effective interest method.
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the statement
of profit and loss.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at
the reporting date in the countries where the Company operates and generates taxable income.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and considers whether it is probable that a taxation authority will accept an
uncertain tax treatment. The Company shall reflect the effect of uncertainty for each uncertain tax treatment by using either
most likely method or expected value method, depending on which method predicts better resolution of the treatment.
The Company offsets tax assets and tax liabilities, where it has a legally enforceable right to set off the recognized amounts
and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively
enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect of changes in tax rates on deferred tax assets and liabilities
is recognized as income or expense in the period that includes the enactment or the substantive enactment date.
A deferred tax asset is recognized to the extent that it is probable that future taxable profit will be available against which
the deductible temporary differences and tax losses can be utilized.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in
OCI or directly in equity.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the deferred tax asset to be recovered.
2.8 Property, plant and equipment
Recognition and measurement
Freehold Land is carried at historical cost, all other item of property, plant and equipment is measured at cost, net of
accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable
to the acquisition of the asset. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for
long-term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are
required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise,
when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a
replacement if the recognition criteria are satisfied.
All other repair and maintenance costs are recognised in statement of profit or loss as incurred. The Company identifies and
determines cost of each component/ part of property, plant and equipment separately, if the component/ part has a cost which
is significant to the total cost of the property, plant and equipment and has useful life that is materially different from that of the
remaining asset. These components are depreciated over their useful lives; the remaining asset is depreciated over the life of
the principal asset.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as
capital advances and cost of assets not ready for use at the balance sheet date are disclosed under capital work- in- progress
is stated at cost less accumulated impairment loss.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be
measured reliably. The carrying amount of any component accounted for as a separate asset are derecognised when replaced.
All other repairs and maintenance are charged to statement of profit and loss during the reporting period in which they are
incurred.
The Company depreciates property, plant and equipment over their estimated useful lives using the Written Down method.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (up to) the date on which asset is ready for
use (disposed of).
Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are amortized over their
respective individual estimated useful lives on a written down basis, from the date that they are available for use. The estimated
useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand,
competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level
of maintenance expenditures required to obtain the expected future cash flows from the asset.
Amortization methods and useful lives are reviewed periodically including at each financial year end. The estimated useful lives
for intangible assets are 3 years.
Inventories consist of raw materials, work-in-progress, finished goods, stock-in-trade and stores an spares. Inventories are
measured at the lower of cost and net realisable value. However, materials and other items held for use in the production of
inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or
above cost.
The cost of various categories of inventories is arrived at as follows:
Stores, spares, raw materials, components and stock-in-trade - at rates determined on the moving weighted average method.
Goods in Transit - at actual cost. Work-in-progress and finished goods - at full absorption cost method which includes direct
materials, direct labour and manufacturing overheads. Cost is determined on weighted average method.
Cost includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in
bringing them to their existing location and condition.
Provision for obsolescence is made wherever necessary. Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
The factors that the Company considers in determining the provision for slow moving, obsolete and other non-saleable inventory
include estimated shelf life, planned product discontinuances, price changes, ageing of inventory and introduction of competitive
new products, to the extent each of these factors impact the Company''s business and markets. The Company considers all
these factors and adjusts the inventory provision to reflect its actual experience on a periodic basis.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
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 issue
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.
2.11.2 Subsequent measurementA). Non-derivative financial instruments
(i) Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business where the objective
is to hold the asset in order 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
(ii) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within
a business where the objective is achieved by both collecting contractual cash flows and selling financial assets
and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding. The Company has made an irrevocable election
for its investments which are classified as equity instruments to present the subsequent changes in fair value in
other comprehensive income based on its business model. Further, in cases where the Company has made an
irrevocable election based on its business model, for its investments which are classified as equity instruments,
the subsequent changes in fair value are recognized in other comprehensive income.
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit
or loss.
Financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured
at amortised cost, using the effective interest rate method where the time value of money is significant. Interest
bearing bank loans, overdrafts are initially measured at fair value and are subsequently measured at amortised
cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and
the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit
and loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts
approximate fair value due to the short maturity of these instruments.
Financial liabilities are subsequently carried at amortized cost using the effective interest method, For trade and
other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value
due to the short maturity of these instruments.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of
allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly
discounts future cash receipts or payments through the expected life of the financial instrument, or where
appropriate, a shorter period.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting
all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Off-setting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet
if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on
a net basis, to realise the assets and settle the liabilities simultaneously
B). Derivative financial instruments
This category has derivative financial assets or liabilities which are not designated as hedges.
Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are
recognized in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are
measured at fair value through profit or loss and the resulting exchange gains or losses are included in other income
/ expenses. Assets/ liabilities in this category are presented as current assets/current liabilities if they are either held
for trading or are expected to be realized within 12 months after the balance sheet date.
2.11.3 Impairment of Financial Assets
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments,
which requires expected lifetime losses to be recognized from initial recognition of the receivables.
2.11.4 Derecognition of Financial Assets
A financial asset is derecognised only when
- The Company has transferred the rights to receive cash flows from the financial asset ; or
- Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to
pay the cash flows to one or more recipients. â
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks
and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity
has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not
derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership
of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset.
Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of
continuing involvement in the financial asset
The Company measures financial instruments at fair value at each Balance Sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
- In the principal market for asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non- financial asset takes into account a market participant''s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in
its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair
value, maximising the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the
fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a
whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is
significant to fair value measurement as a whole) at the end of each reporting period.
The Company has a team comprising of members of senior management that determines the policies and procedures for both
recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for
nonrecurring measurement, such as assets held for distribution in discontinued operations.
External valuers are involved for valuation of significant assets, such as properties and unquoted investments and financial
assets, and significant liabilities, such as contingent consideration. Selection criteria include market knowledge, reputation,
independence and whether professional standards are maintained.
Property that is held for long term rental yields or for capital appreciation or for both, and that is not occupied by the Company,
is classified as investment property. Investment property is measured initially at its cost, including related transaction cost and
where applicable, borrowing costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated
depreciation and accumulated impairment loss, if any
Investment properties are de-recognised either when they have been disposed off or when they are permanently withdrawn
from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and
the carrying amount of the asset is recognised in Statement of Profit and Loss in the period of de-recognition.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing
costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs
in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an
adjustment to the borrowing costs.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right
to control the use of an identified asset for a period of time in exchange for consideration.
The Company''s lease asset classes primarily comprise of lease for land, buildings and vehicles. The Company assesses
whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves
the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through
the period of the lease and (iii) the Company has the right to direct the use of the asset.
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement
date less any lease incentives received. Right of-use assets in the nature of buildings are depreciated on a straight-line
basis over the shorter of the lease term and the estimated useful lives of the underlying asset. The right-of-use assets
comprising of land is depreciated based on the lease term.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise
of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including in substance
fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and
amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of
a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the
lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not
depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period
in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the
lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or
rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying
assetIn calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the lease is not readily determinable.
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset
are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial
direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset
and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the
period in which they are earned.
A provision is recognised when the Company has a present obligation (legal or constructive) as a result of past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Provision for assurance type warranty-related costs are recognised when the product is sold or service is provided to
customer. Initial recognition is based on historical experience. The Company periodically reviews the adequacy of product
warranties and adjust warranty percentage and warranty provisions for actual experience, if necessary. The timing of
outflow is expected to be with in one to five years.
Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash
flows and are recognised as part of the cost of the particular asset.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation
that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A
contingent liability also arises in extremely rare cases, where there is a liability that cannot be recognised because it cannot
be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial
statements unless the probability of outflow of resources is remote. Provisions, contingent liabilities, contingent assets and
commitments are reviewed at each Balance Sheet date.
2.17 Retirement and other employee benefitsA) Defined benefit Plan
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of
the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit
obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined
benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end
of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the
fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings
in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are
recognised immediately in profit or loss as past service cost.
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The
Company has no further payment obligations once the contributions have been paid. The contributions are accounted
for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is
available.
Liabilities for wages, salaries and bonus, including non-monetary benefits that are expected to be settled wholly within 3
months after the end of the period in which the employees render the related service are recognised in respect of employees''
services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are
settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
D) Post-Employment Obligations
The Company operates the following post-employment schemes:
- defined benefit plans for gratuity, and
- defined contribution plans for provident fund.
2.18 Investment in Subsidiaries
The investment in subsidiaries, associate and Joint venture are carried at cost as per Ind AS 27.
Operating segments are reported in a manner consistent with the internal reporting provided to the management. The
Management monitors the operating results of all strategic business units separately for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured
consistently with profit and loss in the financial statements.
Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and shortterm deposits with an original
maturity of three months or less, that are readily convertible to a known amount of cash and which are subject to insignificant
risk of changes in value.
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions
of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of
the Company are segregated.
Borrowing costs are recognised in the statement of profit and loss using the effective interest method. The associated cash flows
are classified as financing activities in the statement of cash flows.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest INR as per the requirement
of Schedule III, unless otherwise stated.
2.24 Earning Per shareA) Basic EPS
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders
of the Company (after deducting preference dividends and attributable taxes) by the weighted average number of equity
shares outstanding during the period.
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.
2.25 Approval of Financial Statements
The financial statements were approved for issue by the board of directors on May, 7,2023
Mar 31, 2018
Note:
1) Please complete all the details including details of member(s) in the above Box before submission.
2) It is optional to put "X" in the appropriate column against the Resolutions indicated in the Box. If you leave the "For" or "Against" column blank against any or all Resolutions, your Proxy will be entitled to vote in the manner as he/ she thinks appropriate.
3) A proxy can act on behalf of such number of member or members not exceeding 50 and holding in aggregate not more than 10% of the total share capital of the Company. Provided that a member holding more than 10% of the total share capital of the company carrying voting rights may appoint a single person as proxy and such person shall not act as proxy for any other person or shareholder.
4) The Form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the commencement of the Meeting.
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