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Notes to Accounts of HEG Ltd.
Mar 31, 2025
(xv) Provisions, Contingent Liabilities and
Contingent Assets
Provisions are recognized when the company
has a present obligation (legal or constructive)
as a result of a past event, for which it is probable
that an outflow of resources embodying
economic benefits will be required to settle
the obligation and are reliable estimate can be
made of the amount of the obligation. As the
timing of outflow of resources is uncertain,
being dependent upon the outcome of the
future proceedings, these provisions are not
discounted to their present value.
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. When there is a possible
obligation or a present obligation in respect
of which likelihood of outflow of resources is
remote, no provision or disclosure is made.
Contingent assets are neither recognised nor
disclosed in the Standalone Financial Statements
since this may result in the recognition of income
that may never be realised.
(xvi) Earnings Per Share
Basic earnings per equity share is computed
by dividing the profit or loss for the period
attributable to the equity holders of the
company by the weighted average number of
equity shares outstanding during the period.
Diluted earnings per share is computed by
adjusting the net profit or loss for the period
attributable to equity shareholders and the
weighted average number of shares outstanding
during the period, for the effects of all dilutive
potential equity shares, if any.
(xvii) Financial instruments
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.
(i) Initial recognition
The company recognises the financial
assets and financial liabilities when it
becomes party to the contractual provision
of the instruments. All financial assets
and liabilities are recognised 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
of financial assets and or issue of financial
liabilities that are not recognized at fair
value through profit or loss, are added to or
reduced from the fair value of the financial
assets or financial liabilities, as appropriate.
Transaction cost directly attributable to the
acquisition of financial assets and financial
liabilities recognized at fair value through
Profit or Loss are recognised immediately
in the Statement of Profit and Loss.
(ii) Subsequent measurement
For the purposes of subsequent
measurement, financial instruments are
classified as follows:
A. Non-derivative financial instruments
(a) Financial assets carried at
amortized cost
A financial asset is subsequently
measured at amortized cost if it is
held with a business model whose
objective is to hold the asset in order
to collect contractual cash flows and
the contractual terms of the financial
instrument give rise on specified
dates to cash flows that are solely
payments of principal and interest on
the principal amount outstanding.
Interest income for such instruments
is recognised in profit or loss using
the effective interest rate (EIR)
method, which is the rate that exactly
discounts estimated future cash
receipts through the expected life of
the financial asset to that asset''s gross
carrying amount.
The carrying amounts of financial
assets that are subsequently
measured at amortised cost are
determined based on the effective
interest method less any impairment
losses.
(b) 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 with a business model
whose objective is achieved by both
collecting contractual cash flows
and selling financial assets and the
contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments of
principal and interest on the principal
amount outstanding.
Interest income for such instruments
is recognised in profit or loss using
the effective interest rate (EIR)
method, which is the rate that exactly
discounts estimated future cash
receipts through the expected life of
the financial asset to that asset''s gross
carrying amount.
Fair value movements are recognised
in the other comprehensive income
(OCI) until the financial asset is
derecognised. On de-recognition,
cumulative gain or loss previously
recognised in OCI is reclassified from
the equity to the profit or loss.
(c) Financial assets at fair value
through profit or loss (FVTPL)
A financial asset which is not classified
in any of the above categories are
subsequently measured at fair valued
through profit or loss.
Dividend and interest income from
such instruments is recognized in the
statement of profit and loss, when
the right to receive the payment is
established.
Fair value changes on such assets are
recognised in the statement of profit
and loss.
(d) Investment in Subsidiary and
Associates
Investment in subsidiary and
associates is carried at cost less
provision for impairment, if any.
Investment is tested for impairment
whenever events or changes in
circumstances indicate that the
carrying amount may not be
recoverable. An impairment loss is
recognised for the amount by which
the carrying amount of investment
exceeds its recoverable amount.
(e) Financial liabilities
Financial liabilities are subsequently
carried at amortized cost using the
effective interest method, except for
contingent consideration recognized
in a business combination or is
held for trading or it is designated
as at FVTPL which is subsequently
measured at fair value through profit
and loss. For trade and other payables
maturing within one year from the
balance sheet date, the carrying
amount approximates fair value
due to the short maturity of these
instruments.
All changes in fair value in respect
of liabilities measured at fair value
through profit and loss are recognised
in the statement of profit and loss.
B. Derivative financial instruments
The company holds derivative
financial instruments such as foreign
exchange forward and option
contracts to mitigate the risk of
changes in exchange rates on foreign
currency exposures. The counterparty
for these contracts is generally a bank.
Although the company believes that
these derivatives constitute hedges
from an economic perspective,
they may not qualify for hedge
accounting under Ind AS 109,
Financial Instruments. Any derivative
that is either not designated a hedge,
or is so designated but is ineffective
as per Ind AS 109, is categorized as a
financial asset or financial liability, at
fair value through profit or loss.
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 charged to Statement of
Profit and Loss.
C. Equity Instruments
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. Incremental costs
directly attributable to the issuance
of equity instruments and buy back
of equity instruments are recognized
as a deduction from equity, net of any
tax effects.
(iii) Impairment of Financial Assets
Financial assets that are carried at
amortized cost and fair value through
other comprehensive income (FVOCI)
are assessed for possible impairments
basis expected credit losses taking into
account the past history of recovery, risk
of default of the counterparty, existing
market conditions etc. The impairment
methodology applied depends on whether
there has been a significant increase in
credit risk since initial recognition.
Expected Credit Losses are measured
through a loss allowance at an amount
equal to:
⢠12-months expected credit losses
(expected credit losses that result from
those default events on the financial
instrument that are possible within 12
months after the reporting date); or
⢠Lifetime expected credit losses
(expected credit losses that result from
all possible default events over the life
of financial instruments).
For trade receivables or any contractual
right to receive cash or another financial
asset that result from transaction that are
within the scope of Ind AS 115 and Ind AS
116, the Company always measures the loss
allowance at an amount equal to lifetime
expected credit losses.
For all other financial assets, expected
credit losses are measured at an amount
equal to the 12-month ECL, unless there
has been a significant increase in credit risk
from initial recognition in which case those
are measured at lifetime ECL.
(iv) De-recognition
A financial asset (or, a part of a financial
asset) is primarily derecognized when:
(i) The contractual right to receive cash
flows from the financial assets expire, or
(ii) The company transfers the financial
assets or its right to receive cash
flow from the financial assets and
substantially all the risks and rewards
of ownership of the asset to another
party.
On de-recognition of a financial asset, the
difference between the asset''s carrying
amount and the sum of the consideration
received/receivable is recognised in the
profit or loss.
A financial liability (or, a part of financial
liability) is derecognized when the
obligation specified in the contract is
discharged or cancelled or expires.
On de-recognition of a financial liability, the
difference between the carrying amount of
the financial liability de-recognised and the
consideration paid/payable is recognised
in profit or loss.
(v) Offsetting financial instruments
Financial assets and financial liabilities are
offset and the net amount is reported in
the balance sheet, if there is a currently
enforceable legal right to offset the
recognised amounts and there is an
intention to settle them on a net basis or
to realise the assets and settle the liabilities
simultaneously.
(vi) Write-off
The gross carrying amount of a financial
asset is written off when the Company has
no reasonable expectations of recovering
the financial asset in its entirety or a portion
thereof.
(xviii) Statement of Cash flows
The statement of cash flows is prepared
in accordance with the Indian Accounting
Standard (Ind AS) - 7 "Statement of Cash
flows" using the indirect method for
operating activities whereby profit for
the period is adjusted for the effects of
transaction of a non-cash nature, 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. The Company considers all
highly liquid investments that are readily
convertible to known amounts of cash to
be cash equivalents.
(xix) Cash and cash equivalents
The Cash and cash equivalent in the balance
sheet comprise balance at banks and cash
on hand and short-term deposits with
original maturity period of three months
or less from the acquisition date, which are
subject to an insignificant risk of changes in
value.
(xx) Dividends
Final dividends on shares are recorded
as a liability on the date of approval by
the shareholders and interim dividends
are recorded as a liability on the date of
declaration by the Board of Directors.
2.4 Significant accounting judgements, estimates
and assumptions
The preparation of financial statements in conformity
with Indian Accounting Standards (Ind AS) require
management to make judgements, estimates and
assumptions in the application of accounting policies
that affect the reported amount of income, expenses,
assets and liabilities and disclosure of contingent
liabilities.
The estimates and associated assumptions are based
on historical experience and other factors that are
considered to be relevant. Actual results may differ
from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis and
the effect of revision to accounting estimates is
recognized prospectively from the period in which
the estimate is revised.
The following are the areas of critical judgements,
estimates and assumptions that the management
has made in the process of preparation of Standalone
Financial Statements and that have the significant
effect on the amounts recognised in the Standalone
Financial Statements:
Useful lives of property, plant and equipment
The estimated useful lives of property, plant and
equipment are based on a number of factors including
the effects of obsolescence, internal assessment of
user experience and other economic factors (such as
the stability of the industry and known technological
advances) and the level of maintenance expenditure
required to obtain the expected future cash flows
from the asset. The Company reviews the useful life
of property, plant and equipment at the end of each
reporting date.
Defined benefit plans and other post-employment
benefits
The cost of the defined benefit plan and other
post-employment benefits and the present value
of such obligation are determined using actuarial
valuations. An actuarial valuation involves making
various assumptions that may differ from actual
developments in the future. These include the
determination of the discount rate, future, salary
increases and mortality rates etc. Due to the
complexities involved in the valuation and its
long-term nature, a defined benefit obligation is
highly sensitive to changes in these assumptions.
All assumptions are reviewed at each reporting date.
Provisions/Contingencies
Management judgement is required for estimating
the possible outflow of resources, if any, in respect of
contingencies/claims/litigations against the Company
as it is not possible to predict the outcome of pending
matters with accuracy. The Company annually assesses
such claims and monitors the legal environment on
an ongoing basis, with the assistance of external legal
counsel, wherever necessary.
Fair Value measurements
When the fair values of financial assets and financial
liabilities recorded in the Balance Sheet cannot be
measured based on quoted prices in active markets,
their fair values are measured using valuation
techniques, including the discounted cash flow model,
underlying asset model, comparable companies
multiple method and comparable transaction method
which involve various judgements and assumptions.
Current tax and Deferred tax
Significant judgement is required in determination
of provision for current tax and deferred tax e.g.
determination of taxability of certain incomes and
deductibility of certain expenses etc. The carrying
amount of income tax assets/liabilities is reviewed
at each reporting date. The factors used in estimates
may differ from actual outcome which could lead to
signification adjustment to the amounts reported in
financial statements.
Inventories
Management estimates the net realizable values of
inventories, taking into account the most reliable
evidence available at each reporting date. The future
realization of these inventories may be affected by
market driven changes.
2.5. Current - non-current classification
All assets and liabilities have been classified as current
and non-current on the basis of the following criteria:
Assets
An asset is classified as current when it satisfies any of
the following criteria:
a) it is expected to be realised in, or is intended for
sale or consumption in, the company''s normal
operating cycle;
b) it is held primarily for the purpose of being
traded;
c) it is expected to be realised within 12 months
after the reporting date; or
d) It is cash or cash equivalent unless it is restricted
from being exchanged or use to settle a liability
for at least 12 months after the reporting date.
Current assets include the current portion of
non-current financial assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies
any of the following criteria:
a) it is expected to be settled in the company''s
normal operating cycle;
b) it is held primarily for the purpose of
trading;
c) it is due to be settled within 12 months after
the reporting date; or
d) There is no unconditional right to defer
settlement of the liability for at least 12
months after the reporting date. Terms of
a liability that could, at the option of the
counterparty, result in its settlement by the
issue of equity instruments do not affect its
classification.
Current liabilities include current portion of
non-current financial liabilities.
All other liabilities are classified as
non-current
Operating cycle
Operating cycle is the time between the
acquisition of assets for processing/servicing
and their realization in cash or cash equivalents.
The normal operating cycle is considered as
twelve months.
. Applicability of new and revised Ind AS
Ministry of Corporate Affairs ("MCA") notifies new
accounting standards or amendments to the existing
standards under Companies (Indian Accounting
Standards) Rules as issued from time to time.
As at March 31, 2025, MCA has not notified any new
standards or amendments to the existing standards
applicable to the Company.
b) Terms/rights attached to equity shares
Company has only one class of equity shares having a par value of H2 each (Post sub-division of equity shares).
Each holder of equity shares is entitled to one vote per share. The dividend (if any) proposed by the Board of Directors
is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend.
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.
Note (i): Update regarding sub-division of equity Shares (New Face Value H2 per equity share):
(a) Pursuant to approval granted by the Shareholders of HEG Limited through Postal Ballot on 20-09-2024, for the Sub-Division of
one (1) equity share of HEG Limited (''Company'') of Face Value of H10 each into five (5) equity shares of Face Value of H2 each,
necessary post sub-division credits have been made to the shareholders holding shares in demat form as on record date through
NSDL/CDSL system and new share certificates have been issued to the shareholders having shares in physical form. Record Date
for the said Sub-Division was 18-10-2024.
(b) As a result of above said sub-division, Promoter/Promoter Group shareholding has been changed from 2,15,27,974 equity shares
of Face Value of H10 each to 10,76,39,870 equity shares of Face Value of H2 each (Ratio 5 : 1). Pre and Post sub-division holding
percentage is appearing same i.e. 55.78%. There was no change in percentage holding of Promoter/Promoter Group.
(c) Total paid up share capital (in equity shares) has been changed from 3,85,95,506 equity shares of Face Value of H10 each to
19,29,77,530 equity shares of Face Value of H2 each. There was no change in paid up share capital (Pre and Post sub-division of
equiry shares) in Rupees i.e. H38,59,55,060.
Note (ii): Update regarding Promoter/Promoter Group shareholding:
(a) Redrose Vanijya LLP (Formerly known as Redrose Vanijya Private Limited) has shown as share holder of 28.95% by way
of acquisition of 5,58,73,775 shares from promoter group companies through off market transfer pursuant to Scheme of
Arrangement approved by Hon''ble NCLT, Kolkata Bench, therefore became member of promoter group of HEG Limited pursuant
to provisions of Regulation 2 (1) (q) of SEBI SAST Regulations, 2011 read with Regulation 2 (1) (pp) (iii) of SEBI ICDR Regulations,
2018. The Promoter Group Companies of HEG Limited amalgamated pursuant to above NCLT Order were Bharat Investment
Growth Limited, Dreamon Commercial Private Limited, Giltedged Industrial Securities Limited, Investors India Limited, India
Texfab Marketing Limited, Jet (India) Private Limited, LNJ Financial Services Limited, M.L. Finlease Private Limited, Purvi Vanijya
Niyojan Limited, Raghav Commercial Limited and Shashi Commercial Company Limited. In this regard, necessary disclosures
under the SEBI (SAST) Regulations, 2011 and the SEBI (PIT) Regulations, 2015 have already been made to BSE Limited and National
Stock Exchange of India Limited alongwith the required explanation.
(b) As a result of the above said Scheme of Arrangement duly sanctioned by Hon''ble NCLT, Kolkata Bench, the above said 11 (Eleven)
Promoter Group Companies of HEG Limited were amalgamated into Redrose Vanijya LLP (Formerly known as Redrose Vanijya
Private Limited). The same has been disclosed in the shareholding pattern for year ended 31st March, 2025 under the Category
"Statement showing shareholding pattern of the Promoter and Promoter Groupâ.
1 O ⢠r-m ¦ ¦ ¦ I
Note 37: Segment information
The Company''s Chief Operational Decision Makers consisting of Executive whole time director (CEO) examines the
Company''s performance both from product and geographic perspective and has identified two segments, i.e., Graphite
electrodes (including other carbon products) and Power. The business segments are monitored separately for the purpose
of making decisions about resource allocation and performance assessment.
The reportable segments are:
⢠Graphite Electrodes (including other carbon products)- The segment comprises of manufacturing of graphite
electrodes.
⢠Power Generation - The segment comprises of generation of power for sale.
Segment measurement
The measurement principles for segment reporting are based on Ind AS 108. Segment''s performance is evaluated based
on segment revenue and profit/loss from operating activities. Operating revenues and expenses related to both third party
and inter-segment transactions are included in determining the segment results of each respective segment.
Inter segment transactions are carried out at arm''s length price.
6) The Company''s major sales are export based which is diversified in different countries and no single customer
contributes more than 10% of the total Company''s revenue in 2024-25 and 2023-24
7) The Company has business operations only in India and does not hold any non current asset outside India.
8) For the purpose of reporting as per the requirements of Ind AS 108 ''Operating Segments'', until the last financial
year, the ''Power Segment'' comprised of two Thermal Power Plants having total capacity of 63 MW at Mandideep,
Bhopal (MadhyaPradesh) and a Hydro Power Plant having capacity of 13.5 MW at Tawa Nagar, District Hoshangabad
(Madhya Pradesh). Keeping in view the intended future use of the Thermal Power Plants exclusively to meet the power
requirement of graphite business, the thermal power plants have been considered as a part of ''Graphite Segment''
w.e.f. current financial year. Further the Hydro Power Plant is considered a separate segment and is being continued to
be disclosed under ''Power segment'' for reporting as per Ind AS 108 ''Operating Segments'', Accordingly, Previous year
figures relating to these have been rearranged/regrouped, wherever considered necessary, to make them comparable
with those of current year.
(B) Defined benefit plan
The Company sponsors funded defined benefit plan for qualifying employees. This defined benefit plan of gratuity is
administered by a separate trust that is legally separate from the entity. The trust is responsible for investment policy with
regard to the assets of the trust and the contributions are invested in a scheme with Life Insurance Corporation of India (LIC)
as permitted by Law. The management of fund is entrusted with the LIC. The liability for employee gratuity is determined
on actuarial valuation using projected unit credit method.
These plans typically expose the Company to actuarial risks such as Investment risk, Interest rate risk, Longevity risk and
Salary risk.
(i) Investment risk
The probability or likelihood of occurrence of losses related to the expected return on investment. if the actual return on
plan assets is below the expected return, it will create plan deficit.
(ii) Interest risk
The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate
cost of providing the above benefit and will thus result in an increase in value of the liability.
(iii) Longevity risk
The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan
participants. An increase in the life expectancy of the plan participants will increase the plans liability.
(iv) Salary risk
The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants
in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to
determine the present value of obligation will have a bearing on the plan''s liability.
The following table set out the funded status of the gratuity plan and amounts recognised in the balance sheet:
Note 45: Financial instruments and risk management
45A. Capital management
The Company''s objective when managing capital are to:
(i) 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
(ii) Maintain an optimal capital structure to reduce the cost of capital
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company monitors capital using a gearing ratio, which is net debt (net of cash and cash equivalents) divided by
total equity.
The Company is not subject to any externally imposed capital requirements.
(ii) Loan covenants:
In order to achieve overall objective of capital management, amongst other things, the management aims to ensure
that it meets financial covenants attached to the loans and borrowings. The management carefully negotiates the
terms and conditions of the loans and ensures adherence to all the financial covenants. Breaches in meeting the
financial covenants would permit the bank to call loans and borrowings or charge some penal interest. There have
been no breaches in the loan covenants of in respect of loans and borrowings during the year ended March 31,2025
and March 31,2024.
Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities,
short term loans from banks and other financial institutions approximate their carrying value largely due to the short-term
maturities of these instruments.
(b) Fair value measurement
The fair value of the financial assets and liabilities is the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale. This section explains the judgements and
estimates made in determining the fair values of the financial instruments. To provide an indication about the reliability
of inputs used in determining fair values, the Company has classified its financial instruments into three levels prescribed
under the accounting standards.
The Company uses the following hierarchy for determining and disclosing the fair value of the financial instruments by
valuation techniques:
Level 1: Quoted prices (unadjusted) in the active markets for identical assets or liabilities.
Level 2: Other techniques for which all the inputs have a significant effect on the recorded fair values are observable, either
directly or indirectly.
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable
market data.Sensitivity of Level 3 Financial Instruments is insignificant.
The following methods and assumptions were used to estimate the fair values:
Quoted equity investments: Fair value is derived from quoted market prices in active markets.
Investments in mutual funds/ fixed maturity Plans/bond funds: Fair value is determined by reference to quotes from
the financial institutions, i.e. net asset value (NAV) declared by fund house.
Investment in market linked non-convertible debentures: Fair value is determined by reference to valuation provided
by CRISIL.
Investment in infrastructure trust: Fair value is derived on the basis of valuation certificate by independent professional
based on net asset at fair value approach, in this approach the net asset at fair value is used to capture the fair value of
these investments.
Derivative contracts: The Company has entered into foreign currency contracts to manage its exposure to fluctuations
in foreign exchange rates. These financial exposures are managed in accordance with the Company''s risk management
policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on
information derived from observable market data, i.e., mark to market values determined by the authorised dealers banks.
Note 45C Financial risk management
This note explains the risk which Company is exposed to and policies and framework adopted by the Company to manage
these risks.
The Company''s principal financial liabilities comprise borrowings, trade and other payables and the main purpose of these
financial liabilities is to manage finances for the day to day operations of the Company. The Company''s principal financial
assets include trade and other receivables, and cash and bank balances that arise directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the
management of these risks. The Board of Directors reviews and approves 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 three types of risk: currency risk, interest rate risk and other price risk, such as
equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits,
investments, and derivative financial instruments. The sensitivity of the relevant profit or loss item is the effect of the
assumed changes in respective market risks.
(i) Foreign currency risk:
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in
foreign exchange rates. Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily
with respect to USD and EURO. The Company uses foreign currency forward contracts to hedge its risks associated with
foreign currency fluctuations relating to accounts receivable and accounts payable. The use of foreign currency forward
contracts is governed by the Company''s strategy approved by the Board of Directors, which provide principles on the use
of such forward contracts consistent with the Company''s Risk Management Policy. The Company does not use forward
contracts for speculative purposes.
(iii) Security price risk:
(a) Price risk:
The Company manages the surplus funds majorly through investments in debt based fixed maturity plans, mutual fund
schemes, equity instruments and infrastructure trust. The price of investment in Fixed Maturity Plans, mutual fund schemes
is reflected through net asset value (NAV) declared by the asset management Company on daily basis as reflected by the
movement in the NAV of invested schemes. The price of investment in equity instruments is reflected through price listed on
stock exchange. The price of investment in infrastructure trust is reflected through valuation certificate by the independent
professional on quarterly basis where valuation is determined based on fair value of assets of trust as on date of valuation.
The Company is exposed to price risk on such Investments.
(B) Credit risk:
Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial
loss to the Company. The Company is exposed to credit risk from its operating activities (primarily trade receivables, loans to
employees and security deposits). Credit risk on cash and cash equivalents, other bank balances is limited as the Company
generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies.
The Company''s credit risk in case of all other financial instruments is negligible.
To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial
conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.
The Company considers the probability of default upon initial recognition of assets and whether there has been a significant
increase in credit risk on an ongoing basis through each reporting period.
The Company''s major sales are export based which is diversified in different countries and none of the customer contributes
10% or more of the total Company''s revenue for the financial year 2024-25 and 2023-24
(C) Liquidity risk:
Liquidity risk is defined as the risk that Company will not be able to settle or meet its obligation on time or at a reasonable
price. The financial liabilities of the Company, other than derivatives, include loans and borrowings, trade and other
payables. The Company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated
from operations. The Company''s treasury department is responsible for liquidity, funding as well as settlement management.
In addition, processes and policies related to such risk are overseen by senior management. Management monitors the
Company''s net liquidity position through rolling, forecast on the basis of expected cash flows.
Prudent liquidity risk management implies maintaining sufficient availability of standby funding through an adequate line
up committed credit facilities to meet financial obligations as and when due.
Note 52
The Company has taken borrowings from banks on the basis of security of current assets. The quarterly returns/statements
filed by the Company with the banks are in agreement with the books of account.
Note 53: Disclosures required as per Schedule III to the Companies Act,2013
(i) The Company did not have any transaction with companies struck off under Section 248 of the Companies Act, 2013
or section 560 of Companies Act, 1956 during the financial year.
(ii) No proceeding have been initiated or pending against the Company for holding any benami property under the
Benami Transactions (Prohibition) Act, 1988 (45 of 1988).
(iii) The Company has not been declared as wilful defaulter by any bank or financial Institution or other lender.
(iv) No funds that have been advanced or loaned or invested (either from borrowed funds or share premium or any
other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities
("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall
directly or indirectly lend or invest or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(v) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("funding
party") with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly
lend or invest in other persons or entities in any manner whatsoever by or on behalf of the funding party ("Ultimate
beneficiaries") or provide ny guarantee, security or the like on behalf of the ultimate beneficiaries.
(vi) During the financial year, the Company has not traded or invested in Crypto currency or virtual currency.
(vii) The Company does not have any charge or satisfaction thereof which is pending for registration with ROC beyond the
statutory period.
(viii) The Company has utilised the borrowings from banks and financial institutions for the specific purpose for which it
was taken.
(ix) The Company did not have any long-term contracts including derivative contracts for which there were any material
foreseeable losses.
(x) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered
or disclosed as income during the year in the tax assessments under the Income Tax Act 1961(such as search, survey
or any other relevant provisions of the Income Tax Act, 1961.
Note 54:
The Board of Directors of the Company at its meeting held on 22 May 2024 had approved the Composite Scheme of
Arrangement amongst HEG Limited ("the Company") and HEG Graphite Limited ("Resulting Company") and Bhilwara Energy
Limited ("Transferor Company") and their respective shareholders and creditors ("Scheme").
The proposed Scheme inter alia provides for:
(a) the demerger of the Demerged Undertaking (i.e. Graphite Business) from the Company into the Resulting Company
on a going concern basis and issue of equity shares by the Resulting Company to the shareholders of the Company in
consideration thereof, and
(b) amalgamation of the Transferor Company with the Company and issue of equity shares by the Company to the
shareholders of the Transferor Company (except the Company itself) in consideration thereof. The Appointed Date
for the Scheme is 1st April 2024.
Thereafter, the Company had filed the requisite application with the stock exchanges (viz. BSE Limited and National Stock
Exchange of India Limited) under Regulation 37 of the listing Regulations ("Regulation 37 Application").
Taking into consideration the business needs, the board of directors of the Transferor Company vide its resolution dated 10
March 2025 has approved the execution of definitive agreements in connection with the issue of further shares to proposed
investors.
In view of the aforesaid, the companies involved in the Scheme have modified the Scheme basis SEBI''s observation, after
taking into account, inter alia, the updated valuation reports issued by the registered valuer and fairness opinion issued by
the merchant banker on the modified scheme.
The Company has thereafter filed fresh Regulation 37 application with the stock exchanges in relation to the modified
Scheme. The Scheme is, inter alia, subject to receipt of approval from the statutory and regulatory authorities, including
BSE Limited, National Stock Exchange of India Limited, jurisdictional National Company Law Tribunal and the shareholders
and creditors (as applicable) of the Companies involved in the Scheme.
Pending receipt of final approvals, no adjustments have been made in the financial statements for the year ended
31st March 2025.
See accompanying notes to the standalone financial statements
As per our report of even date attached For and on behalf of the Board of Directors
For SCV & Co. LLP Ravi Jhunjhunwala Riju Jhunjhunwala Manish Gulati
Chartered Accountants Chairman, Managing Director & CEO Vice Chairman Executive Director
Firm Regn. No. 000235N/N500089 DIN: 00060972 DIN: 00061060 DIN: 08697512
Sunny Singh Shekhar Agarwal Satish Chand Mehta
Partner Director Director
Membership No. 516834 DIN: 00066113 DIN: 02460558
Ravi Kant Tripathi Vivek Chaudhary
Place : Noida(U.P) Chief Financial Officer Company Secretary
Date : May 19, 2025 Membership No. A13263
Mar 31, 2024
(iii) Fair value technique used and its heirarchy
The Company has obtained independent valuations of its investment property from independent registered valuer as defined under rule 2 of the Companies (Registered valuers and valuation) Rules, 2017. The fair value measurement for investment property has been categorised as Level 2 fair value based on the inputs to the valuation technique used. The main inputs considered by the valuer are government rates, property location, market research & trends, contracted rentals, terminal yields, discount rates and comparable values, as appropriate.
(iv) The aggregate depreciation has been included under depreciation and amortisation expense in the statement of profit and loss.
b) Terms/rights attached to equity shares
Company has only one class of equity shares having a par value of C10/-. Each holder of equity shares is entitled to one vote per share. The dividend(if any) proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend.
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.
Nature and purpose of reserves1) Capital reserve:
The Capital reserve has been created on account of warrant money forfeited and profit made on hived off of steel business.
2) Capital redemption reserve:
The capital redemption reserve has been created at the time of redemption of preference shares and buy back of own shares. The reserve can be utilised for issuing bonus shares.
Retained earnings refer to net earnings not paid out as dividend but retained to be reinvested in the core business. The amount is available for distribution of dividend to the equity shareholders.
(ii) Nature of security against loans
a) Working capital borrowings from banks are secured by first charge against hypothecation of all stocks present and future, stores, spare parts, packing materials, raw materials, finished goods, goods in transit / process, book debts, outstanding monies receivable, claims, bills etc.
b) Pari-passu second charge over entire fixed assets (including land & building and plant & machineries) of the Company in respect of Graphite & Thermal Power Unit at Mandideep and Hydel Power unit at Tawa Nagar, Hoshangabad.
(iii) Refer Note 46B for classification of financial liabilities
(iv) Refer Note 47 for carrying amount of assets pledged as security for borrowings.
(v) Refer note 46C for information about liquidity risk and market risk in respect of borrowings.
Note: Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
The provisions for indirect taxes and legal matters comprises of separate cases that arise in the ordinary course of business. These provisions have not been discounted as it is not practicable to estimate the timing of the provision utilisation and cash outflows, if any, pending resolution.
No reimbursements are expected in respect of the above provisions
The Companyâs Chief Operational Decision Makers consisting of Chief Executive Officer and Chief Finance Officer examines the Companyâs performance both from product and geographic perspective and has identified two segments, i.e., Graphite electrodes (including other carbon products) and power. The business segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment.
The reportable segments are:
⢠Graphite Electrodes (including other carbon products)- The segment comprises of manufacturing of graphite electrodes
⢠Power Generation - The segment comprises of generation of power for captive consumption and sale.
The measurement principles for segment reporting are based on Ind AS 108. Segmentâs performance is evaluated based on segment revenue and profit/loss from operating activities. Operating revenues and expenses related to both third party and inter-segment transactions are included in determining the segment results of each respective segment.
Inter segment transactions are carried out at armâs length price.
Terms and conditions of transactions with related parties
All related party transactions entered during the year were in ordinary course of the business and on armâs length basis. Outstanding balances at the year-end are unsecured and settlement occurs in cash.
There have been no guarantees provided or received for any related party as at March 31, 2024 and March 31, 2023.
For the year ended March 31, 2024, the Company has not recorded any impairment in respect of any bad or doubtful debts due from related parties (March 31, 2023: Nil).
The Company sponsors funded defined benefit plan for qualifying employees. This defined benefit plan of gratuity is administered by a separate trust that is legally separate from the entity. The trust is responsible for investment policy with regard to the assets of the trust and the contributions are invested in a scheme with Life Insurance Corporation of India (LIC) as permitted by Law. The management of fund is entrusted with the LIC. The liability for employee gratuity is determined on actuarial valuation using projected unit credit method.
These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.
(i) Investment risk
The probability or likelihood of occurrence of losses related to the expected return on investment. if the actual return on plan assets is below the expected return, it will create plan deficit.
(ii) Interest risk
The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.
(iii) Longevity risk
The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plans liability.
(iv) Salary risk
The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plans liability.
The Board of Directors have recommended the payment of final dividend of C 22.50 /- per equity share (previous year C 42.50/- per equity share) which is subject to the approval of shareholders in the ensuing Annual General meeting.
Note 43: Corporate Social Responsibility (CSR)The Company meeting the applicable threshold under Section 135 of the Companies Act, 2013 (âActâ) read with related rules thereto, is mandatorily required to spend at least 2% of its average net profit for the immediately preceding three financial years on Corporate Social Responsibility (CSR) activities. The funds were utilized throughout the year on the activities which are specified in Schedule VII of the Companies Act, 2013. The disclosures in this regard are as under:
Note: In line with Circular No 04/2015 issued by Ministry of Corporate Affairs dated March 10, 2015, loans given to employees (including loan to whole time Director in the capacity of employee) as per the policy are not considered for the purposes of disclosure under Section 186(4) of the Companies Act, 2013.
Note 46: Financial instruments and risk management 46A. Capital management
The Company''s objective when managing capital are to:
i) 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
(ii) Maintain an optimal capital structure to reduce the cost of capital
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company monitors capital using a gearing ratio, which is net debt (net of cash and cash equivalents) divided by total equity.
The Company is not subject to any externally imposed capital requirements.
In order to achieve overall objective of capital management, amongst other things, the management aims to ensure that it meets financial covenants attached to the loans and borrowings. The management carefully negotiates the terms and conditions of the loans and ensures adherence to all the financial covenants. Breaches in meeting the financial covenants would permit the bank to call loans and borrowings or charge some penal interest. There have been no breaches in the loan covenants of in respect of loans and borrowing during the year ended March 31, 2024 and March 31, 2023.
# Investment value excludes investment in Associates/Subsidiaries of C39,130.50 lakhs (March 31, 2023: C32,130.50 lakhs) which are shown at cost in balance sheet as per Ind AS 27 ""Separate Financial Statementsâ.
Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying value largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. This section explains the judgements and estimates made in determining the fair values of the financial instruments. To provide an indication about the reliability of inputs used in determining fair values, the Company has classified its financial instruments into three levels prescribed under the accounting standards.
The Company uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation techniques:
Level 1: Quoted prices (unadjusted) in the active markets for identical assets or liabilities.
Level 2: Other techniques for which all the inputs have a significant effect on the recorded fair values are observable, either directly or indirectly.
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.Sensitivity of Level 3 Financial Instruments is insignificant.
The following methods and assumptions were used to estimate the fair values:
Quoted equity investments: Fair value is derived from quoted market prices in active markets.
Investments in mutual funds/ fixed maturity Plans/bond funds : Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) declared by fund house.
Investment in market linked non-convertible debentures: Fair value is determined by reference to valuation provided by CRISIL.
Investment in infrastructure trust: Fair value is derived on the basis of valuation certificate by independent professional based on net asset at fair value approach, in this approach the net asset at fair value is used to capture the fair value of these investments.
Derivative contracts: The Company has entered into foreign currency contracts to manage its exposure to fluctuations in foreign exchange rates . These financial exposures are managed in accordance with the Companyâs risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the authorised dealers banks.
Note 46C: Financial risk management
This note explains the risk which Company is exposed to and policies and framework adopted by the Company to manage these risks.
The Companyâs principal financial liabilities comprise borrowings, trade and other payables and the main purpose of these financial liabilities is to manage finances for the day to day operations of the Company. The Company''s principal financial assets include trade and other receivables, and cash and bank balances that arise 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 approves policies for managing each of these risks, which are summarized below.
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 three types of risk: currency risk, interest rate risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks.
(i) Foreign currency risk:
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD and EURO. The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to accounts receivable and accounts payable. The use of foreign currency forward contracts is governed by the Companyâs strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Companyâs Risk Management Policy. The Company does not use forward contracts for speculative purposes.
(a) Price risk:
The Company manages the surplus funds majorly through investments in debt based fixed maturity plans, mutual fund schemes, non-convertible debentures and infrastructure trust. The price of investment in Fixed Maturity Plans, mutual fund schemes is reflected though net asset value (NAV) declared by the asset management Company on daily basis as reflected by the movement in the NAV of invested schemes. The price of investment in non-convertible debentures is reflected through valuation by CRISIL on weekly basis. The price of investment in infrastructure trust is reflected through valuation certificate by the independent professional on quarterly basis where valuation is determined based on fair value of assets of trust as on date of valuation. The Company is exposed to price risk on such Investments.
(ii) 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 Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs debt obligations with floating interest rates. In order to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of the fixed rate and floating rate financial instruments in its total portfolio.
Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (primarily trade receivables, loans to employees and security deposits). Credit risk on cash and cash equivalents, other bank balances is limited as the Company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. The Companyâs credit risk in case of all other financial instruments is negligible.
To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.
The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period.
The Company''s major sales are export based which is diversified in different countries and none of the customer contributes 10% or more of the total Company''s revenue for the financial year 2023-24 and 2022-23
Liquidity risk is defined as the risk that Company will not be able to settle or meet its obligation on time or at a reasonable price. The financial liabilities of the Company, other than derivatives, include loans and borrowings, trade and other payables. The Company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company''s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. Management monitors the Company''s net liquidity position through rolling, forecast on the basis of expected cash flows.
Prudent liquidity risk management implies maintaining sufficient availability of standby funding through an adequate line up committed credit facilities to meet financial obligations as and when due.
(iii) Trade receivables and contract balances
The Company classifies the right to consideration in exchange for deliverables as receivable.
The balances of trade receivables and advance from customers at the beginning and end of the reporting period have been disclosed at note no. 10 and 24 respectively.
The revenue recognised during the year ended March 31, 2024 includes revenue against advances from customers amounting to C147.20 Lakhs (previous Year- C310.07 lakhs) at the beginning of the year.
The revenue of Nil has been recognised during the year ended March 31, 2024 (Previous year -Nil ) against performance obligations satisfied (or partially satisfied) in previous periods.
(iv) Performance obligations and remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue.
The Company has taken borrowings from banks on the basis of security of current assets. The quarterly returns/statements filed by
the Company with the banks are in agreement with the books of account.
Note 54: Disclosures required as per Schedule III to the Companies Act,2013
(i) The Company did not have any transaction with companies struck off under Section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 during the financial year.
(ii) No proceeding have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988).
(iii) The Company has not been declared as wilful defaulter by any bank or financial Institution or other lender.
(iv) No funds that have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities (âIntermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever (âUltimate Beneficiariesâ) by or on behalf of the Company; or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(v) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (âfunding partyâ) with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly lend or invest in other persons or entities in any manner whatsoever by or on behalf of the funding party (âUltimate beneficiariesâ) or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(vi) During the financial year, the Company has not traded or invested in Crypto currency or virtual currency.
(vii) The Company does not have any charge or satisfaction thereof which is pending for registration with ROC beyond the statutory period.
(viii) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken.
(ix) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
Mar 31, 2023
The Company has obtained Independent Valuations of its investment property from independent registered valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017. The fair value of the investment property have been derived using the Direct Comparison Method. The direct comparison approach involves a comparison of the investment property to similar properties that have actually been sold in arms-length distance from investment property or are offered for sale in the same region. This approach demonstrates what buyers have historically been willing to pay (and sellers willing to accept) for similar properties in an open and competitive market, and is particularly useful in estimating the value of the land and properties that are typically traded on a unit basis. This approach leads to a reasonable estimation of the prevailing price. Given that the comparable instances are located in close proximity to the investment property; these instances have been assessed for their locational comparative advantages and disadvantages while arriving at the indicative price assessment for investment property.
(ii) Fair Value Heirarchy
The fair value measurement for all of the Investment properties has been categorized as level 3 Fair value based on the inputs to the valuations techniques used.
(iii) The aggregate depreciation has been included under depreciation and amortisation expense in the statement of Profit and loss.
Note (i) : The above figure includes loans to whole time director in the capacity of employee amounting to Nil (Previous year C71.11 Lakhs) which is repayable in accordance with the Company''s policy applicable to all the employees. Such loan outstanding as at the end of the year amounts to Nil (Previous Year 45.93%) of total loans to employees outstanding as on that date. The maximum balance outstanding during the FY 2022-23 was C71.11 lakhs (Previous year C80.00 Lakhs)
Note (ii) : The above figure includes loans to Chief Financial officer/Company Secretary (KMP) amounting to C20.52 Lakhs (Previous year C1.78 Lakhs) which is repayable in accordance with the Company''s policy applicable to all the employees. Such loan outstanding as at the end of the year amounts to 68.4% (Previous Year 1.15%) of total loans to employees outstanding as on that date. The maximum balance outstanding during the FY 2022-23 was C22.00 Lakhs (Previous year C4.44 Lakhs)
b) Terms/Rights attached to equity shares
Company has only one class of equity shares having a par value of '' 10/-. Each holder of equity shares is entitled to one vote per share. The dividend (if any) proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend.
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.
As per records of the Company, including its register of shareholders/members and other declaration received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares exept Bharat investments Growth Limited, in which significant benificial owner is Shri Ravi Jhunjunwala, Chairman, Managing Director & CEO, who is also the promoter of the Company and exercises significant influence over it.
NATURE AND PURPOSE OF RESERVES1) Capital Reserve:
The Company created part of Capital Reserve on account of warrant money forfeited and part on profit made on hive off of Steel business .
2) Capital Redemption Reserve:
The Company created Capital Redemption Reserve at the time of redemption of Preference Shares and buy back of its own shares. The reserve can be utilised for issuing bonus shares.
Retained earnings refer to net earnings not paid out as dividend but retained by the company to be reinvested in its core business. The amount is available for distribution of dividend to its equity shareholders. Remeasurements of Net Defined Benefit Plans: Differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised in other comprehensive income and are adjusted to retained earnings.
4) Reserve for other items through Other comprehensive income
The reserve represents cumulative gains and losses on remeasurement of defined benefit plan net of taxes. The balance in Other Comprehensive income can be transferred to Other Components of equity i.e. retained earnings as and when the company decides to do so. The company has transferred the said reserve to the retained earnings during the Previous year.
a) Working Capital Borrowings from Banks are secured by first charge against hypothecation of all stocks present and future, stores, spare parts, packing materials, raw materials, finished goods, goods in transit / process, book debts, outstanding monies receivable, claims, bills etc.
b) Pari-passu second charge over entire fixed assets (including land & building and plant & machineries) of the Company in respect of Graphite & Thermal Power Unit at Mandideep and Hydel Power unit at Tawa Nagar, Hoshangabad.
Refer Note 46B for Classification of Financial Liabilities
Refer Note 47 for carrying amount of assets pledged as security for borrowings.
Refer note 46C for information about liquidity risk and market risk in respect of borrowings.
c) Working Capital demand loans.
Working capital demand loans are repayable on demand.
The Company''s Chief Operational Decision Makers consisting of Chief Executive Officer and Chief Finance Officer examines the company''s performance both from product and geographic perspective and has identified two segments, i.e., Graphite electrodes (including other carbon products) and power. The business segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment.
⢠Graphite Electrodes (including other carbon products)- The segment comprises of manufacturing of graphite electrodes
⢠Power Generation - The segment comprises of generation of power for captive consumption and sale. Segment Measurement
The measurement principles for segment reporting are based on IND AS 108. Segment''s performance is evaluated based on segment revenue and profit or loss from operating activities. Operating revenues and expenses related to both third party and inter-segment transactions are included in determining the segment results of each respective segment.
Inter segment transactions are carried out at arm''s length price.
(i) Based on legal advice, discussions with the solicitors, etc., the management believes that there is fair chance of decisions in the company''s favor in respect of all the items listed above and hence no provision is considered necessary against the same. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the company''s financial position and results of operations.
Further Company has deposited amount to the tax authorities against the cases, which shown as payment under protest in Note 13 of Other assets.
(ii) The Company has received a letter dated 2nd May 2023 from the office of General Manager (O&M) M.P MKV Co. Ltd, Bhopal in connection with levy of surcharge/interest on the demand already deposited by the Company in respect of power related matter pertaining to the period prior to March 2011 which has not been charged in the power bills of all the years. As mentioned in the letter, the calculation of surcharge is under progress and shall be intimated to the company.
The company has contested such levy and filed petition in the H''ble High Court of Madhya Pradesh on the ground that this demand is time barred in accordance with the provisions of section 56 (2) of the Electricity Act, 2003 which states that no sum due from any customer is recoverable after a period of two years from the date when such sum became first due unless such sum has been showing continuously as recoverable.
The Company sponsors funded defined benefit plan for qualifying employees. This defined benefit plan of gratuity is administered by a separate trust that is legally separate from the entity. The trust is responsible for investment policy with regard to the assets of the trust and the contributions are invested in a scheme with Life Insurance Corporation of India (LIC) as permitted by Law. The management of fund is entrusted with the LIC. The liability for employee gratuity is determined on actuarial valuation using projected unit credit method.
These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.
The probability or likelihood of occurrence of losses related to the expected return on investment. If the actual return on Plan assets is below the expected return, it will create Plan deficit.
The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.
The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.
The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.
Note : 46 Financial Instruments and Risk Management 46A. Capital Management
The company''s objective when managing capital are to:
i) 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 (ii) Maintain an optimal capital structure to reduce the cost of capital
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company monitors capital using a gearing ratio, which is net debt (net of cash and cash equivalents) divided by total equity.
The fair value of the financial assets and liabilities is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. This section explains the judgements and estimates made in determining the fair values of the financial instruments. To provide an indication about the reliability of inputs used in determining fair values, the company has classified its financial instruments into three levels prescribed under the accounting standards.
Level 1: Quoted prices (unadjusted) in the active markets for identical assets or liabilities
Level 2: Other techniques for which all the inputs have a significant effect on the recorded fair values are observable, either directly or indirectly
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.Sensitivity of Level 3 Financial Instruments is insignificant
The following methods and assumptions were used to estimate the fair values:
Quoted equity investments: Fair value is derived from quoted market prices in active markets.
Investments in mutual funds/ Fixed Maturity Plans/Bond funds : Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) declared by fund house.
Investment in Market Linked Non-convertible debentures: Fair value is determined by reference to valuation provided by CRISIL.
Investment in Infrastructure Trust: Fair value is derived on the basis of valuation certificate by independent professional based on net asset at fair value approach, in this approach the net asset at fair value is used to capture the fair value of these investments.
Derivative contracts: The Company has entered into foreign currency contracts to manage its exposure to fluctuations in foreign exchange rates . These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the Authorised Dealers Banks.
Note 46C Financial risk management
This note explains the risk which company is exposed to and policies and framework adopted by the company to manage these risks.
The Company''s principal financial liabilities comprise borrowings, trade and other payables and the main purpose of these financial liabilities is to manage finances for the day to day operations of the company. The Company''s principal financial asset includes trade and other receivables, and cash and bank balances that arise directly from its operations.
The corporate treasury department reports quarterly to the Company''s risk management Committee, an independent body who monitors risk and policies implemented to mitigate risk exposures.
The company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and approves policies for managing each of these risks, which are summarized below.
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 three types of risk: currency risk, interest rate risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks.
(i) Foreign Currency Risk:
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD and EURO. The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to accounts receivable and accounts payable. The use of foreign currency forward contracts is governed by the Company''s strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Company''s Risk Management Policy. The Company does not use forward contracts for speculative purposes.
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 debt obligations with floating interest rates. In order to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of the fixed rate and floating rate financial instruments in its total portfolio.
The Company manages the surplus funds majorly through investments in debt based Fixed Maturity Plans, mutual fund schemes, Non-convertible debentures and infrastructure trust. The price of investment in Fixed Maturity Plans, mutual fund schemes is reflected though Net Asset Value (NAV) declared by the Asset Management Company on daily basis as reflected by the movement in the NAV of invested schemes. The price of investment in Non-convertible debentures is reflected through valuation by CRISIL on weekly basis. The price of investment in infrastructure trust is reflected through valuation certificate by the independent professional on quarterly basis where valuation is deteremined based on fair value of assets of trust as on date of valuation. The Company is exposed to price risk on such Investments.
Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company. The Company is exposed to credit risk from its operating activities (primarily trade receivables, loans to employees and security deposits). Credit risk on cash and cash equivalents, other bank balances is limited as the company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. The Company''s credit risk in case of all other financial instruments is negligible.
To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.
The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period.
The Company''s major sales are export based which is diversified in different countries and none of the customer contributes 10% or more of the total company''s revenue for the financial year 2022-23 and 2021-22
Liquidity risk is defined as the risk that company will not be able to settle or meet its obligation on time or at a reasonable price. The financial liabilities of the Company, other than derivatives, include loans and borrowings, trade and other payables. The Company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The company''s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. Management monitors the company''s net liquidity position through rolling, forecast on the basis of expected cash flows.
Prudent liquidity risk management implies maintaining sufficient availability of standby funding through an adequate line up committed credit facilities to meet financial obligations as and when due.
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments:
(ii) Trade receivables and Contract Balances
The company classifies the right to consideration in exchange for deliverables as receivable.
The balances of trade receivables and advance from customers at the beginning and end of the reporting period have been disclosed at note no. 10 and 24 respectively.
The revenue recognised during the year ended 31st March, 2023 includes revenue against advances from customers amounting to C310.07 Lakhs (Previous Year- C142.55 lakhs) at the beginning of the year.
The revenue of CNil has been recognised during the year ended 31st March, 2023 (Previous Year -Nil ) against performance obligations satisfied (or partially satisfied) in previous periods.
(iii) Performance obligations and remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue.
Note 54. Additional disclosures required as per Schedule III to the Companies Act, 2013
(i) The Company did not have any transaction with companies struck off under Section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 during the financial year.
(ii) No proceeding have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988).
(iii) The company has not been declared as wilful defaulter by any bank or financial Institution or other lender.
(iv) No funds that have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Company; or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(v) No funds have been received by the company from any person(s) or entity(ies), including foreign entities ("funding party") with the understanding, whether recorded in writing or otherwise, that the company shall directly or indirectly lend or invest in other persons or entities in any manner whatsoever by or on behalf of the funding party ("Ultimate beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vi) During the financial year, the Company has not traded or invested in Crypto currency or Virtual Currency.
Mar 31, 2018
1. Corporate Information
âHEG Limited (the âCompanyâ), incorporated in 1972, is a leading manufacturer and exporter of graphite electrodes in India and operates worldâs largest single-site integrated graphite electrodes plant. The Company also operates three power generation facilities with a total capacity of about 76.5 MW.
The Company is a public limited company incorporated and domiciled in India, has its registered office at Mandideep, Bhopal , Madhya Pradesh and is listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). â
Basis of preparation of financial statement
The financial statements of the Company are prepared in accordance with Indian Accounting Standards (Ind AS) under historical cost convention on accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act 2013(the Act) and guidelines issued by the Securities & Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act, read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
The financial statements are presented in Indian rupees (INR) and all values are rounded to the nearest lakhs and two decimals thereof, except otherwise stated.
Effective April 1, 2016, the company has adopted all the Ind AS and the adoption was carried out in accordance with Ind AS 101, First time adoption of Indian Accounting Standards with effect from 01st April, 2015 as the transition date. The transition was carried out from Indian accounting principles generally accepted in India as prescribed under section 133 of the Act read with Rule 7 of Companies (Accounts) Rules 2014 (GAAP) which was previous GAAP.
Amount for year ended and as at 31st March, 2017 were audited by previous auditors S.S.Kothari Mehta & Co. and Doogar & Associates jointly. The financial statements are authorized for issue by the Companyâs Board of directors on 08th May 2018.
2 Critical accounting estimates and Judgments
a. Property, Plant and Equipment
Property, Plant and Equipment represent a significant proportion of the asset base of the company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of property, plant and equipment are determined by the management based on technical assessment by internal team and external advisor. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology. The Company believes that the useful life best represents the period over which the Company expects to use these assets.
b. Contingent liability
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
c. Income taxes
Management judgment is required for the calculation of provision for income taxes and deferred tax assets and liabilities. The Company reviews, at each balance sheet date, the carrying amount of deferred tax assets.
d. Defined benefit plans
The cost of the defined benefit gratuity plan and its present value is determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
a) Assets amounting to Rs.83.13 Lacs (Previous Year Rs.83.13 Lacs) (Gross) are owned jointly with RSWM Ltd.
b) The Company continues to had exercise the option made available by the Notification dated 29th December, 2011 issued by the Ministry of Corporate Affairs and also optional exemption under Ind-AS. Accordingly, an amount of Rs.49.83 Lacs (Realized Loss being adjusted against respective assets),( Previous Year Rs.219 Lacs(Unrealized Gain) & â88.10 (Realized Loss being adjusted against respective assets)) being exchange difference arising on reporting of long term Foreign currency loans availed for acquisition of depreciable Fixed assets have been taken to respective assets.
c) Leased Assets
The lease term in respect of leasehold land generally expire with in 30 to 99 years. The ground rent shall be liable to be increased on the expiry of 10 to 30 years depending on the term of lease from the date of execution of this deed and also at subsequent interval of 10 to 30 years, provided that the increase on each occasion shall not exceed one quarter of the rent fixed for the preceding 10 to 30 years. The above lease hold land or any part thereof or any building erected thereon cannot be sublet, assign or otherwise transferred without any previous sanction in writing of the lessor.
d) Property, Plant & Equipment pledged as security
Refer to note no. 50 for information on Property, Plant and Equipment pledged as security by the company.
Capital work in progress includes NIL (Previous year Rs.1.49 Lacs) being preoperative expenditure and Rs.23.43 Lacs (Previous year Rs.18.66 Lacs) being capital stores.
The Company has obtains independent valuation for its properties at least annually. The best evidence of fair value is current market prices in an active market for similar properties.
The fair values of investment properties have been determined by the independent chartered valuer. All fair value estimates for Investment properties are included in level 1.
Note 1 :- The company has opted for carrying value as per previous GAAP as the deemed cost of investment in subsidiary and associates, however it has impaired its investment in subsidiary company by Rs.0.32 Lacs during the financial year 2016-17, routing through Profit and loss.
Note 2 :- The Name of M/s HEG Graphite Product and Service Pvt Ltd has been struck off from the registrar of Companies under the provision of sub section (5) of section 248 of the companies act 2013. Therefore the company stand dissolved.
In view thereof the Investment made in the equity of M/s HEG Graphite Product and Service Pvt Ltd a subsidiary of the company has been written off during the year.
Note 3 :- Refer Note: 49 for Classification of Financial Assets
a) Direct taxes refundable represent amounts recoverable from the Income Tax Department for various assessment years. In respect of disputed demands, Company has filed appeals which are pending at various levels .
Based on legal advice, discussions with the solicitors, etc., the management believes that there are fair chances of decisions in Companyâs favor in respect of all the items listed above and no value adjustment is considered necessary.
(a) Finished goods are written down from its cost to Net Realisable value by âNIL ( Previous year Rs.384.51 Lacs ).
(b) Others include Renewable Energy Credits in hand.
(c) The cost of inventories recognised as an expense during the year in respect of continuing operation was Rs.57,010.98 (Previous years Rs.51,774.28)
b) Terms/Rights attached to equity shares
Company has only one class of equity shares having a par value of Rs.10/-. Each holder of equity shares is entitled to one vote per share. The dividend (if any) proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
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 ended 31st March, 2018, the Company has paid an amount of Rs.30 per Equity Share (300%) as Interim Dividend for the financial year 2017-18 to the equity shareholders of the Company.
c) Detail of Shareholders holding more than 5% Shares in the Company
As per records of the Company, including its register of shareholders/members and other declaration received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
d) During the five years immediately preceding the date at which the Balance Sheet is prepared, the company has neither issued any bonus shares nor issued any shares for consideration other than cash. Further the company has not bought back any shares during five years immediately preceding the date at which the Balance Sheet is prepared.
NATURE AND PURPOSE OF RESERVES
1) Capital Reserve:
The Company created part of Capital Reserve on account of warrant money forfeited and part on profit made on hive off of Steel business .
2) Securities Premium Reserve:
Securities Premium reserve is used to record the premium on issue of shares. The reserve can be utilised in accordance with the provision of the Companies Act 2013.
3) Capital Redemption Reserve:
The Company created Capital Redemption Reserve at the time of redemption of Preference Shares and buy back of its own shares. The reserve can be utilised for issuing bonus shares.
Non current borrowings are net of Current maturities which has been disclosed in Note no. 20 Refer Note: 49 for Classification of Financial Liabilities
* The loans have been repaid during the year ended 31st March, 2018 and therefore, the disclosure of maturity date and terms of repayments is no longer applicable.
Term Loans from Financial Institutions and Banks/other lending Institutions are/shall be secured by way of joint equitable mortgage of all the immovable properties (present and future) of Graphite and Thermal Power units at Mandideep and Hydel unit at Tawa Nagar ranking on pari- passu basis and hypothecation of all movable assets of the Company ( except book debts) subject to prior charge of the companyâs bankers on specified movable assets in respect of working capital borrowings. (Refer Note No. 50 for carrying amount of assets pledged as security for borrowings.)
a) Working Capital Borrowings from Banks are secured by hypothecation of all stocks present and future, stores, spare parts, packing materials, raw materials, finished goods, goods in transit / process, book debts, outstanding monies receivable, claims, bills etc.
b) Second charge by way of joint equitable mortgage of immovable properties of the Company in respect of Graphite & Thermal Power units at Mandideep and Hydel unit at Tawanagar. The said charge in favor of bank shall rank sub-ordinate and subservient to the existing charges created by the Company in favor of financial Institutions and banks for their term loans.
(Refer Note No. 50 for carrying amount of assets pledged as security for borrowings.)
The information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 (âthe Actâ) has been determined to the extent such parties have been identified by the company, on the basis of information and records available with them. This information has been relied upon by the auditors. Disclosure in respect of interest due on delayed payment has been determined only in respect of payments made after the receipt of information, with regards to filing of memorandum, from the respective suppliers. Disclosure as required under section 22 of the Act, is as under:
Note: 3 Earnings per share
The calculation of Earning Per Share (EPS) as disclosed in the statement of profit and loss has been made in accordance with Indian Accounting Standard (Ind AS)-33 on âEarning Per Shareâ
Note: 4 Segment Reporting
The Companyâs Chief Operational Decision Makers consisting of Chief Executive Officer and Chief Finance Officer examines the companyâs performance both from product and geographic perspective and has identified two segments, i.e., Graphite electrodes (including other carbon products) and power. The business segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment.
âThe Reportable Segments are:
- Graphite Electrodes (including other carbon products)- The segment comprises of manufacturing of graphite electrodes
- Power Generation - The segment comprises of generation of power for captive consumption and sale.
Segment Measurement
The measurement principles for segment reporting are based on IND AS 108. Segmentâs performance is evaluated based on segment revenue and profit and loss from operating activities. Operating revenues and expenses related to both third party and inter-segment transactions are included in determining the segment results of each respective segment.
Sales between segments are carried out at armâs length price and are eliminated on consolidation.
1) Segment Revenue :
2) Secondary Revenue (By Geographical Location):
4) Details of Unallocated Items
5) The Company is domiciled in India. The amount of its revenue from external customers broken down by location of the customers is as follows:
*Others includes revenue from countries having less than 10% of total revenue from outside India
6) The Companyâs major sales are export based which is diversified in different countries and none of the customer contributes 10% or more of the total companyâs revenue for the financial year 2017-18 and 2016-17.
Based on legal advice, discussions with the solicitors, etc., the management believes that there is fair chance of decisions in the companyâs favor in respect of all the items listed above and hence no provision is considered necessary against the same. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the companyâs financial position and results of operations.
Further Company has deposited amount to the tax authorities against the cases, which shown as payment under protest in note 12 of Other assets.
* Note: *HEG Graphite Products and Services Ltd, a wholly owned subsidiary (âWOSâ) of the Company, the name of which has been struck-off under Section 248 (5) of the Companies Act, 2013, upon the application made by WOS under Section 248(2) of the Companies Act, 2013, from the Register of Companies and WOS stands dissolved w.e.f. 21st December, 2017.
Loan, guarantee and investments made during the Financial Year 2017-18
The Company has not given any Loan, Guarantee and not made any investments during the financial year 2017-18.
Note : 5 Events after the Reporting Period
The Board of Directors have recommended dividend of Rs.50 per Equity Share of Rs.10 each, aggregating Rs.24,406.94 including Rs.4,067.37 dividend distribution tax for the financial year 2017-18
Note : 6 Corporate Social Responsibility (CSR)
As per section 135 of the Company Act, 2013, a company meeting the applicable threshold, need to spend atleast 2% of the average net profit for the immediate preceding three financial years on CSR activities as defined in schedule VII of the Companies Act 2013.
Note:7
The company is exposed to market risk, credit risk and liquidity risk. The Groupâs senior management oversees the management of these risks. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken. 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 three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans, borrowings and deposits. The company is exposed to interest rate risk on variable rate long term and short term borrowings.
(i) Foreign Currency Risk:
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD and EURO
(a) Sensitivity:
The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and the impact on other components of equity arises from foreign forward exchange contracts, foreign exchange option contracts designated as cash flow hedges.
The following table demonstrates the sensitivity in the USD and Euro to the Indian Rupee with all other variables held constant. The impact on the Companyâs profit before tax and other comprehensive income due to changes in the fair value of monetary assets and liabilities is given below:
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 Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long-term debt obligations with floating interest rates.
(a) Interest Risk Exposure:
The exposure of the companyâs borrowings to interest rate changes at the end of the reporting period are as follows:
(iii) Price risk:
The company is not exposed to any price risk as there is no investment in equities outside the group and the company doesnât deal in commodities.
Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, unsecured loan to subsidiary company and other financial instruments.
To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.
The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period.
(a) Expected Credit Loss for Financial Assets
(C) Liquidity Risk:
Liquidity risk is defined as the risk that company will not be able to settle or meet its obligation on time or at a reasonable price. The companyâs treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. Management monitors the companyâs net liquidity position through rolling, forecast on the basis of expected cash flows.
Prudent liquidity risk management implies maintaining sufficient availability of standby funding through an adequate line up committed credit facilities of RS.28,754.51 Lacs (previous year RS.8,069 Lacs) to meet obligation when due and close out market position.
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments:
Note:8 Capital Management
(a) Risk Management
The companies objective when managing capital are to:
i) 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
(ii) Maintain an optimal capital structure to reduce the cost of capital
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
* Debt is defined as long- term and short-term borrowings (excluding derivative, financial guarantee contracts and contigent consideration), refer note 18 and 20 for the breakup of borrowings.
(ii) Loan Covenants:
Under the terms of the major borrowing facilities, the group is required to comply with the following financial covenants:
1) Total Outside Liability (TOL) to Tangible Net Worth (TNW) ratio not be more than 3
2) Current Ratio not be less than 1.0
3) Interest Coverage Ratio not be less than 2.0
4) Gross Debt Service Coverage Ratio(DSCR) not be less than 1
5) Total Debt to EBIDTA less than 5.5
(i) Fair value hierarchy
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying value largely due to the short-term maturities of these instruments.
2. Financial instruments with fixed and variable interest rates evaluated by the Company based on the parameters such as interest rates and individual credit worthiness of the counterparty. Based on the evaluation, allowances are taken to account the expected losses of these receivables.
The Company uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation techniques:
Level 1: Quoted prices (unadjusted) in the active markets for identical assets or liabilities
Level 2: Other techniques for which all the inputs have a significant effect on the recorded fair values are observable, either directly or indirectly
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
(ii) Valuation technique used to determine fair value
The following methods and assumptions were used to estimate the fair values
i. Fair value of cash and deposits, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
ii. The fair values of the Companyâs interest-bearing borrowings and loans are determined by using DCF method using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period.
Note: 9
In accordance with Ind AS 18 âRevenue Recognitionâ and Schedule III to the Companies Act, 2013, Sales for the previous year ended 31 March 2017 and for the period 1 April to 30 June 2017 were reported gross of Excise Duty and net of VAT/ CST. Excise Duty was reported as a separate expense line item. Consequent to the introduction of Goods and Services Tax (GST) with effect from 1 July 2017, VAT/CST, Excise Duty etc. have been subsumed into GST and accordingly the same is not recognised as part of sales as per the requirements of Ind AS 18. This has resulted in lower reported sales in the current year in comparison to the sales reported under the pre-GST structure of indirect taxes. With the change in structure of indirect taxes, certain expenses where credit of GST is available are also being reported net of taxes.
Note: 10 Recent Accounting Pronouncements
âOn March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, âForeign Currency Transactions and Advance Considerationâ which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration.
The amendment is applicable for annual reporting periods beginning on or after April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.
Ind AS 115- Revenue from Contract with Customers:
âOn March 28, 2018, Ministry of Corporate Affairs (ââMCAââ) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.
Note: 11 Reconciliation of Cash flow from financing Activities
In Pursuant to amendment in the Companies(Indian Accounting Standards) Rules,2017 via MCA notification G.S.R 258(E) dated 17th March, 2017 Para 44A to Para 44E has been inserted after para 44 in Indian Accounting Standard -7 âStatement of Cash Flowsâ, following reconciliation required from annual periods beginning on or after 1st April,2017
Note: 12
Previous year figures have been regrouped/reclassified , wherever necessary to conform the current year classification.
Mar 31, 2017
1. Corporate Information
âHEG Limited (the âCompanyâ), incorporated in 1972, is a leading manufacturer and exporter of graphite electrodes in India and operates worldâs largest single-site integrated graphite electrodes plant. The Company also operates three power generation facilities with a total rated capacity of about 76.5 MW.
The Company is a public limited company incorporated and domiciled in India, having its registered office at Mandideep (Near Bhopal), Distt. Raisen, Madhya Pradesh.
2. Significant Accounting Policies
2.1 Basis of preparation of Financial Statements
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company, with effect from 1 April 2016, has adopted Indian Accounting Standards (the âInd ASâ) notified under the Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) (Amended) Rules, 2016. For all periods up to 31st March 2016, the Company had prepared its financial statements in accordance with accounting standards as prescribed under Section 133 of the Companies Act, 2013 (the âActâ) read with Rule 7 of the Companies (Accounts) Rules, 2014 (referred to as âIndian GAAPâ).
These financial statements are the Companyâs first Ind AS financial statements. The Company has adopted all the Ind AS and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards. Previous period figures in the financial statements have been restated to Ind AS. Reconciliations and descriptions of the effect of the transition have been summarized in Note 50. The details of the first time adoption exemptions availed by the Company are given in Note 50(a).
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
The financial statements are presented in Indian rupees (INR) and all values are rounded to the nearest lacs and two decimals thereof, except otherwise stated.
These financial statements have been prepared under the historical cost convention on accrual basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
3. Critical accounting estimates and judgments
The preparation of financial statements in conformity with Indian Accounting Standards (Ind AS) requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities at the end of the reporting period. Although these estimates are based upon managementâs best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. Critical accounting estimates and Judgments
a. Property, plant and equipment
Property, plant and equipment represent a significant proportion of the asset base of the company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of property, plant and equipment are determined by the management based on technical assessment by internal team and external advisor. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology. The Company believes that the useful life best represents the period over which the Company expects to use these assets.
b. Contingent liability
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/ litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
c. Income taxes
Management judgment is required for the calculation of provision for income taxes and deferred tax assets and liabilities. The Company reviews at each balance sheet date the carrying amount of deferred tax assets.
d. Defined benefit plans (gratuity and leave encashment)
The cost of the defined benefit gratuity plan and leave encashment benefit and their present value is determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its longterm nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
a) Assets amounting to Rs.83.13 Lacs (Previous Year Rs.83.13 Lacs) (Gross) are owned jointly with RSWM Ltd.
b) The Company has opted to avail the exemption under para D13AA of Ind AS 101 and elected to continue the policy adopted for accounting for exchange difference arising from translation of long term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the transition date to Ind AS. Accordingly, an amount of Rs.219 Lacs (Unrealized Gain) & Rs.88.10 lacs (Realized Loss being adjusted against respective assets), (Previous Year Rs.1476.13 Lacs (Unrealized Loss) & Rs.62.21 (Realized Loss being adjusted against respective assets) being exchange difference arising on reporting of long term Foreign currency loans availed for acquisition of depreciable Fixed assets have been taken to respective assets and ? NIL Lacs,( Previous Year Rs.732.89) to capital work-in-progress.
c) During the Financial year 2015-16 company revised the useful life of its fixed assets in keeping with the provision of Schedule II. Accordingly, depreciation for the year is lower by Rs.372.40 Lacs.
d) The Company has reviewed its tangible fixed assets as at 1st April, 2015 and identified significant component with different useful life from the remaining parts of the assets in keeping with the provisions of Schedule II to the Companies Act, 2013. The depreciation has been computed for such components separately effective 1st April, 2015. As a result, the depreciation expense for the financial year 2015-16 is higher by Rs.552.93 Lacs.
e) During the financial year 2015-16 Company revised the useful life of its fixed assets in keeping with the provision of Schedule II. Accordingly, depreciation of Rs.294.09 Lacs on account of assets whose useful life was already exhausted on 1st April, 2015 has been adjusted against reserves.
f) Leased Assets
The lease term in respect of leasehold land generally expire with in 30 to 99 years. The ground rent shall be liable to be increased on the expiry of 10 to 30 years depending on the term of lease from the date of execution of this deed and also at subsequent interval of 10 to 30 years, provided that the increase on each occasion shall not exceed one quarter of the rent fixed for the preceeding 10 to 30 years. The above lease hold land or any part thereof or any buliding errected theron cannot be sublet, assign or otherwise transferred without any prevoius sanction in writing of the lessor.
g) Property , Plant & Equipment pledged as security
Refer to note no. 49 for information on property, plant and equipment pledged as security by the company.
Capital work in progress includes Rs.1.49 Lacs (Previous year Rs.772.11 Lacs) being preoperative expenditure and Rs.18.66 Lacs (Previous year Rs.103.46 Lacs) being capital stores.
(i) Amounts recognised in profit or loss for investment properties
(ii) Fair value of Investment property held is Rs.2,029.02 Lacs
(iii) On transition to Ind AS, the investment property are recognised at Net Block, the accumulated depreciation on transition was Rs.43.57 lacs.
Based on legal advice, discussions with the solicitors, etc., the management believes that there are fair chances of decisions in the Companyâs favour in respect of all the items listed above and no value adjustment is considered necessary.
b) Direct taxes refundable represent amounts recoverable from the Income Tax Department for various assessment years. In respect of disputed demands, Company has filed appeals which are pending at various levels and for assessment years where the issues have been decided in favour of the Company. The Company is in the process of reconciling / adjusting the same with the department. Necessary value adjustments shall be made on final settlement by the department.
c) Provision for Income Tax for earlier years has been made based on Income Tax Assessment cases pending at Appellate Jurisdictions on which Income Tax demand has arisen and the cases are sub-judice.
I Inventories (Valued at Lower of Cost and Net Realizable Value)
(a) Finished goods are written down from its cost to Net Realisable value by Rs.384.51 Lacs (Previous year Rs.229.86 Lacs).
(b) Others include Renewable Eneregy Credits in hand.
Of the above
2,21,96,821 (Previous year 2,21,96,821) Equity Shares have been issued as fully paid up bonus shares by capitalisation of Reserves.
3,00,000 (Previous year 3,00,000) Equity Shares have been issued as fully paid up pursuant to a contract without payment being received in cash.
10,700 (Previous year 10,700) Equity shares have been issued at par as fully paid up to the members of erstwhile subsidiary company Bhilwara Viking Petroleum Limited pursuant to amalgamation.
a) Reconciliation of the Shares outstanding at the beginning and at the end of the reporting period
b) Terms/Rights attached to equity shares
Company has only one class of equity shares having a par value of Rs.10/-. Each holder of equity shares is entitled to one vote per share. The dividend (if any) proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
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.
c) Detail of Shareholders holding more than 5% Shares in the Company
As per records of the Company, including its register of shareholders/members and other declaration received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
I I Other Equity
(a) During the year company revised the useful life of its fixed assets in keeping with the provision of Schedule II. Accordingly, depreciation of Rs.294.09 Lacs on account of assets whose useful life was already exhausted on 01st April, 2015 has been adjusted against reserves.
(b) NATURE & PURPOSE OF RESERVES
1) Capital Reserve:
The Company created part of Capital Reserve on account of warrant money forfeited and part on profit made on hive off of Steel business .
2) Securities Premium Reserve:
Securities Premium reserve is used to record the premium on issue of shares. The reserve can be utilised in accordance with the provision of the Companies Act 2013.
3) Capital Redemption Reserve:
The Company created Capital Redemption Reserve at the time of redemption of Preference Shares and buy back of its own shares. The reserve can be utilised for issuing bonus shares.
Term Loans from Financial Institutions and Banks/other lending Institutions are / shall be secured by way of joint equitable mortgage of all the immovable properties (present and future) of Graphite & Thermal Power units at Mandideep and Hydel unit at Tawa Nagar ranking on pari-passu basis and hypothecation of all movable assets of the Company ( except book debts) subject to prior charge of the companyâs bankers on specified movable assets in respect of working capital borrowings. (Refer Note No. 49 for carrying amount of assets pledged as security for borrowings.)
a) Working Capital Borrowings from Banks are secured by hypothecation of all stocks present and future, stores, spare parts, packing materials, raw materials, finished goods, goods in transit / process, book debts, outstanding monies receivable, claims, bills etc.
b) Second charge by way of joint equitable mortgage of immovable properties of the Company in respect of Graphite & Thermal Power units at Mandideep and Hydel unit at Tawanagar. The said charge in favour of bank shall rank sub-ordinate and subservient to the existing charges created by the Company in favour of financial Institutions and banks for their term loans.
(Refer Note No. 49 for carrying amount of assets pledged as security for borrowings.)
The information as required to be disclosed under the Micro, Small and Medium Enterprises (Development) Act, 2006 (âthe Actâ) has been determined to the extent such parties have been identified by the company, on the basis of information and records available with them. This information has been relied upon by the auditors. Disclosure in respect of interest due on delayed payment has been determined only in respect of payments made after the receipt of information, with regards to filing of memorandum, from the respective suppliers. Disclosure as required under Section 22 of the Act, is as under:
The Companyâs Chief Operational Decision Makers consisting of chief executive officer and chief finance officer examines the companyâs performance both from product and geographic perspective and has identified two segments, i.e., Graphite electrodes and power.The business segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment.
The Reportable Segments are:
- Graphite Electrodes - The segment comprises of manufacturing of graphite electrodes
- Power Generation - The segment comprises of generation of power for captive consumption and sale.
Segment Measurement
The measurement principles for segment reporting are based on Ind AS 108. Segmentâs performance is evaluated based on segment revenue and profit and loss from operating activities. Operating revenues and expenses related to both third party and inter-segment transactions are included in determining the segment results of each respective segment.
Sales between segments are carried out at armâs length price and are eliminated on consolidation.
Based on legal advice, discussions with the solicitors, etc., the management believes that there is fair chance of decisions in the companyâs favour in respect of all the items listed above and hence no provision is considered necessary against the same. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the companyâs financial position and results of operations.
Defined Contribution Plan
Contribution to Defined Contribution Plan, recognised as expense for the year are as under :
Defined Benefit Plan
The employeesâ gratuity fund scheme managed by a trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognised in the same manner as gratuity. The Company has maintained a fund with LIC, ICICI Prudential Life Insurance Company Ltd and Relaince Insurance Company Ltd.
The Following table summarizes the components of net benefit expense recognised in the statement of profit and loss and the funded status amounts recognised in the balance sheet:
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
Note : 4
The Company had entered into operating leases on premises. These leasing arrangements are cancellable,range between 3 to 5 years and usually renewable by mutual consent on mutually agreeable terms.
Note : 5
a) Claims lodged with insurance companies
b) Interest on income tax refunds granted on summary basis, pending finalization of assessments is treated as income in the year of accrual.
Final adjustments are carried out in the year of completion of assessment.
Note : 6
(a) Gross amount required to be spent by the company during the year Rs.97.73 Lacs (Rs.181.14 Lacs)
Loan, guarantee and investments made during the Financial Year 2016-17.
The Company has not given any Loan, Guarantee and not made any investments during the financial year 2016-17.
Note : 7
The company is exposed to market risk, credit risk and liquidity risk. The Groupâs senior management oversees the management of these risks. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken. 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 three types of risk:interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits. The company is exposed to interest rate risk on variable rate long term borrowings.
(i) Foreign Currency Risk:
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD, EURO.
(c) Sensitivity:
The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and the impact on other components of equity arises from foreign forward exchange contracts, foreign exchange option contracts designated as cash flow hedges.
The following table demonstrates the sensitivity in the USD and Euro to the Indian Rupee with all other variables held constant. The impact on the Companyâs profit before tax and other comprehensive income due to changes in the fair value of monetary assets and liabilities is given below:
(ii) 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 Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long-term debt obligations with floating interest rates.
(a) Interest Risk Exposure:
The exposure of the Companyâs borrowings to interest rate changes at the end of the reporting period are as follows:
An analysis of the maturities is provided in note - 46 (C) below. The percentage of total loans shows the proportion of loans that are currently at variable rates in relation to the total.
(b) Sensitivity:
Profit/loss is sensitive to higher/lower interest expense from borrowings as a result of changes in interest rates.
(iii) Price risk:
The company is not exposed to any price risk as there is no investment in equities outside the group and the company doesnât deal in commodities.
(B) Credit Risk:
Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, unsecured loan to subsidiary company and other financial instruments.
To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.
The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period.
(C) Liquidity Risk:
Liquidity risk is defined as the risk that company will not be able to settle or meet its obligation on time or at a reasonable price. The companyâs treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. Management monitors the companyâs net liquidity position through rolling, forecast on the basis of expected cash flows.
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments:
Note : 8
(a) Risk Management
The Companyâs objective when managing capital are to:
i) 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
(ii) Maintain an optimal capital structure to reduce the cost of capital
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
(ii) Loan Covenants:
Under the terms of the major borrowing facilities, the group is required to comply with the following financial covenants:
1) Total Outside Liability (TOL) to Tangible Net Worth (TNW) ratio to be more than 3
2) Current Ratio to be less than 1.0
3) Interest Coverage Ratio to be less than 2.0
4) Gross Debt Service Coverage Ratio (DSCR) to be less than 1.0
5) Total Debt to EBIDTA < 5.5
The company has complied with TOI/TNW (Total outside Liability to Tangible Net Worth Ratio) throughout the reporting period but was unable to comply with other covenants.
EKM Financial Instruments Accounting Classification and Fair Value Measurement
(i) Fair value hierarchy
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying value largely due to the short-term maturities of these instruments.
2. Financial instruments with fixed and variable interest rates evaluated by the Company based on the parameters such as interest rates and individual credit worthiness of the counterparty. Based on the evaluation, allowances are taken to account the expected losses of these receivables.
The Company uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation techniques:
Level 1: Quoted prices (unadjusted) in the active markets for identical assets or liabilities
Level 2: Other techniques for which all the inputs which have a significant effect on the recorded fair values are observable, either directly or indirectly
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
(ii) Valuation technique used to determine fair value
The following methods and assumptions were used to estimate the fair values
i. Fair value of cash and deposits, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
ii. The fair values of the Companyâs interest-bearing borrowings and loans are determined by using DCF method using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2016 was assessed to be insignificant.
(a) Exemptions and Exceptions as per Ind AS 101 Exemptions:
Ind AS 101 allows first - time adopters certain exemptions from certain requirements under Ind AS. The company has applied the following exemptions:
i. Carrying value as deemed cost in Property, plant and equipment
The company has elected to apply previous GAAP carrying amount of its plant, property and equipment as deemed cost at the date of transition to IndAS.
ii. Investments in subsidiary and associate
The company has elected to apply previous GAAP carrying amount of its equity investment in associate as deemed cost as on the date of transition to Ind AS.
For investment in subsidiaries, the company has taken fair value on the date of transition to Ind AS as deemed cost.
iii. Long Term Foreign Currency Monetary Items
The company has elected to continue the policy adopted for accounting for exchange difference arising from translation of long term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the transition date to Ind AS, i.e. 01-04-2016.
iv. Business Combination
The company has elected to apply Ind AS 103 prospectively. Accordingly, the business combinations occurring prior to the date of transition have not been restated.
v. Leases
The Company has applied the transition provision in Appendix C of Ind AS 17, âDetermining whether an arrangement contains a Leaseâ, and has assessed all arrangement as at the date of transition.
Exceptions:
Ind AS 101 allows first - time adopters certain exceptions from the retrospective application of certain requirements under Ind AS. The company has applied the following exceptions:
i. Estimates
An entityâs estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The company made estimates for following items in accordance with Ind AS at the date of transition as theses were not required under previous GAAP:
Investment in securities carried at FVTPL;
Impairment of financial assets based on expected credit loss model.
ii. Derecognition of financial assets and financial liabilities
The company has applied the derecognition requirements for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.
iii. Classification and measurement of financial assets
The company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.
The Company has opted to avail the exemption under para D13AA of Ind AS 101 and elected to continue the policy adopted for accounting for exchange difference arising from translation of long term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the transition date to Ind AS, i.e. 01-04-2016.The exchange differences on long term foreign currency monetary items are being dealt with in the following manner:
- Foreign exchange difference on acquisition of a depreciable asset, is adjusted in the cost of the depreciable asset, which would be depreciated over the balance life of the asset.
- It has transferred the difference arising out of foreign currency translation in respect of acquisition of depreciable capital assets to the respective assets account/Capital Work-in-progress.In case this accounting practice had not been adopted, the pre-tax profit for the financial year ended 31st March 2017 would have been up by Rs.131.86 lacs (Gain), (Previous year Rs.1060.00 lacs (loss)) with a consequential impact on both the Basic and Diluted EPS.
Inventories, loans & advances, trade receivables and other current / non-current assets are reviewed annually and in the opinion of the Management do not have a value on realization in the ordinary course of business, less than the amount at which they are stated in the Balance Sheet.
Note : 9
There is no general borrowings. Till 31st March, 2017, the amount of interest capitalized is Rs.423.80 Lacs (previous year Rs.1,684.12 Lacs).
Note : 10
Details of Specified Bank Note (SBN) held and transaction during the period 08th November, 2016 to 30th December, 2016 as under
Note : 11
Previous year figures have been regrouped/reclassified, wherever necessary to confirm to current year classification.
Mar 31, 2016
i) 2,21,96,821 (Previous year 2,21,96,821) equity shares have been issued as fully paid up bonus shares by capitalization of reserves.
ii) 3,00,000 (Previous year 3,00,000) equity shares have been issued as fully paid up pursuant to a contract without payment being received in cash.
iii) 10,700 (Previous year 10,700) equity shares have been issued at par as fully paid up to the members of erstwhile subsidiary company Bhilwara Viking Petroleum Limited pursuant to scheme of amalgamation.
b) Terms/Rights attached to equity shares
Company has only one class of equity shares having a par value of ''10/-. 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 will be in proportion to the number of equity shares held by the shareholders.
During the year ended 31st March, 2016, the amount of dividend per share recognized as distribution to equity shareholders was NIL (Previous year ''3 per equity share).
a) Assets amounting to Rs.83.13 Lacs (Previous Year Rs.83.13 Lacs) (Gross) are owned jointly with RSWM Ltd.
b) The Company has exercised the option made available by the Notification No GSR 914(E) dated 29th December 2011 issued by the Ministry of Corporate Affairs. Accordingly, an amount of Rs.1476.14 Lacs (Unrealized Loss) & Rs.62.21 Lacs (realized loss) being adjusted against respective assets (Previous Year Rs.1051.23 Lacs (unrealized gain) & Rs.70.11 Lacs (realized loss) being adjusted against respective assets), being exchange difference arising on reporting of long term foreign currency loans availed for acquisition of depreciable Fixed assets have been taken to respective assets and Rs.200.42 Lacs, (Previous Year Rs.732.89 lacs) to capital work-in-progress.
c) During the year Company revised the useful life of its fixed assets in keeping with the provision of Schedule II. Accordingly, depreciation for the year is lower by Rs.372.40 Lacs.
d) The Company has reviewed its tangible fixed assets as at 1st April, 2015 and identified significant component with different useful life from the remaining parts of the assets in keeping with the provisions of Schedule II to the Companies Act, 2013. The depreciation has been computed for such components separately effective 1st April, 2015. As a result, the depreciation expense for the financial year is higher by Rs.552.93 Lacs.
e) During the year company revised the useful life of its fixed assets in keeping with the provision of Schedule II. Accordingly, depreciation of Rs.294.09 Lakhs on account of assets whose useful life was already exhausted on 1st April,2015 has been adjusted against reserves.
Defined Benefit Plan
The employees'' gratuity fund scheme managed by a trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity. The Company has maintained a fund with LIC, ICICI Prudential Life Insurance Company Ltd. and Reliance Insurance Company Ltd.
The Company has opted to avail the choice provided under paragraph 46A of AS 11: The effects of changes in foreign exchange rates inserted vide Notification No 914 (E) dated December 29, 2011 issued by the Ministry of Corporate Affairs, Government of India. The exchange differences on long term foreign currency monetary items are being dealt with in the following manner:
- Foreign exchange difference on acquisition of a depreciable asset, is adjusted in the cost of the depreciable asset, which would be depreciated over the balance life of the asset.
- It has transferred the difference arising out of foreign currency translation in respect of acquisition of depreciable capital assets to the respective assets account/capital work-in-progress. In case this accounting practice had not been adopted, the pre-tax profit for the financial year ended 31st March 2016 would have been lower by Rs.1,060.00 Lacs (Loss) ((previous year Rs.248.22 (Gain)) with a consequential impact on both the Basic and diluted EpS.
There are no present obligations requiring provisions in accordance with the guiding principles as enunciated in Accounting Standard (AS)-29 ''Provisions, Contingent Liabilities & Contingent Assets''
In accordance with the provisions of Accounting Standard on Impairment of Assets, AS-28, the Management has made assessment of assets in use & considering the business prospects related thereto, no provision is considered necessary in these accounts on account of impairment of assets.
The following transactions are accounted for on the basis of estimates / available data, with final adjustments being carried out in the year of settlement.
a) Claims lodged with insurance companies
b) Interest on income tax refunds granted on summary basis, pending finalization of assessments is treated as income in the year of accrual. Final adjustments are carried out in the year of completion of assessment.
Loan, guarantee and investments made during the Financial Year 2015-16
The Company has not given any loan, guarantee and not made any investments during the financial year 2015-16. Previous year figures have been regrouped/reclassified, wherever necessary to conform to current year classification.
Mar 31, 2015
1 BASIS OF PREPARATION
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP).The financial statements have been prepared to comply in
all material respects with the accounting standards prescribed under
the Companies Act, 2013 read with Rule 7 of the Companies (Accounts)
Rules, 2014. The financial statements have been prepared on an accrual
basis and under the historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
2) Terms/Rights attached to equity shares
Company has only one class of equity shares having a par value of Rs.
10/-. Each holder of equity shares is entitled to one vote per share.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
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 ended 31st March, 2015 , the amount per share dividend
recognized as distribution to Equity Shareholders was Rs. 3 per Equity
Share (Previous year Rs. 6 per Equity Share).
a) Based on legal advice, discussions with the solicitors, etc., the
management believes that there are fair chances of decisions in the
Company's favour in respect of all the items listed above and no value
adjustment is considered necessary.
b) Direct taxes refundable represent amounts recoverable from the
Income Tax Department for various assessment years. In respect of
disputed demands, Company has filed appeals which are pending at
various levels. For assessment years where the issues have been decided
in favour of the Company, the Company is in the process of reconciling
/ adjusting the same with the department.Necessary value adjustments
shall be made on final settlement by the department.
c) Provision for Income Tax for earlier years has been made based on
Income Tax Assessment cases pending at Appellate Jurisdictions on which
Income Tax demand has arisen and the cases are sub-judice.
(` in Lacs)
Particulars As at As at
31st March, 2015 31st March, 2014
For Taxation matters
a) Excise duty under appeal 265.09 261.97
b) Service Tax 1,040.51 953.22
c) Income Tax 4,805.62 2,187.00
d) Sales Tax 1,439.70 210.64
Other than Taxation matters
a) Electricity Charges 4,945.38 4,650.00
b) RPO Obligation 750.62 520.35
c) Advance & EPCG License 232.62 508.84
Labour related matters 42.37 34.22
Based on legal advice, discussions with the solicitors, etc., the
management believes that there is a fair chance of decisions in
Company's favour in respect of all the items listed above and hence no
provision is considered necessary against the same. The management
believes that the ultimate outcome of these proceedings will not have a
material adverse effect on the Company's financial position and results
of operations.
Inventories, loans & advances, trade receivables and other current /
non-current assets are reviewed annually and in the opinion of the
Management do not have a value on realization in the ordinary course of
business, less than the amount at which they are stated in the Balance
Sheet.
3.Defined Benefit Plan
The employees' gratuity fund scheme managed by a trust is a defined
benefit plan. The present value of obligation is determined based on
actuarial valuation using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation for leave encashment is
recognised in the same manner as gratuity. The Company has maintained a
fund with ICICI Prudential Life Insurance Company and Reliance Life
Insurance Company Limited.
4.Provident Fund
The Guidance note issued by Accounting Standard Board (ASB) on
implementation of AS-15, "Employee Benefit" states that provident funds
set up by the employers, which require interest shorfall to be met by
the employer, needs to be treated as defined benefit plan.
The fund does not have any existing deficit or interest shortfall. In
regard to any future obligation arising due to interest shortfall (i.e.
government interest to be paid on provident fund scheme exceeds rate of
interest earned on investment), pending the issuance of Guidance Note
from the actuarial society of India, the Company's actuary has
expressed his inability to reliably measure the same.
5) Enterprises over which any person described in (c) or (d) is able to
exercise significant influence.
(i) RSWM Ltd
(ii) Malana Power Company Ltd
(iii) Aadi Marketing Company Pvt Ltd
(iv) Bhilwara Energy Ltd
(v) Bhilwara Services Pvt Ltd
(vi) BMD Renewable Energy Pvt Ltd
(vii) Essay Marketing Company Ltd
(viii) Glorious Commodeal Pvt Ltd
(ix) Giltedged Industrial Securities Ltd
(x) India Texfab Marketing Ltd
(xi) Investors India Ltd
(xii) Kalati Holdings Pvt Ltd
(xiii) LNJ Financial Services Ltd
(xiv) Modify Distributors Pvt Ltd
(xv) Nikita Electrotrades Pvt Ltd
(xvi) Nivedan Vanijya Niyojan Ltd
(xvii) Purvi Vanijya Niyojan Ltd
(xviii) Raghav Commercial Ltd
(xix) Raghav Knits & Textile Pvt Ltd
(xx) Shashi Commercial Company Ltd
(xxi) Veronia Tie-Up Pvt Ltd
(xxii) Zongoo Commercial Company Pvt Ltd
6 The Company had opted to avail the choice provided under paragraph
46A of AS 11: The Effects of Changes in Foreign Exchange Rates inserted
vide Notification No 914 (E) dated December 29, 2011 issued by the
Ministry of Corporate Affairs, Government of India, The following
exchange differences on long term foreign currency monetary items are
being dealt with in the following manner:
* Foreign exchange difference on acquisition of a depreciable asset, is
adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset.
* It has transferred the differences arising out of foreign currency
translation in respect of acquisition of depreciable capital assets to
the respective assets account / Capital Work-in-progress. In case this
accounting practice had not been adopted, the Pre-tax Profit for the
financial year ended 31st March 2015 would have been up by Rs. 248.22
Lacs (Gain) (Previous year Rs. 5,064.34 (Loss)) with a consequential
impact on both the Basic and Diluted EPS.
7 There are no present obligations requiring provisions in accordance
with the guiding principles as enunciated in Accounting Standard (AS)-
29 'Provisions, Contingent Liabilities & Contingent Assets'
8 The following transactions are accounted for on the basis of
estimates / available data,with final adjustments being carried out
in the year of settlement.
9 a) Claims lodged with insurance Companies
b) Interest on income tax refunds granted on summary basis, pending
finalization of assessments is treated as income in the year of
accrual. Final adjustments are carried out in the year of completion
of assessment.
10 Previous year figures have been regrouped/reclassified, wherever
necessary to conform to current year classification.
Mar 31, 2014
1. CONTINGENT LIABILITIES NOT PROVIDED FOR (Rs. in Lacs)
Particulars As at As at
31st March,
2014 31st March,
2013
For Taxation matters
a) Excise duty under appeal 261.97 261.97
b) Service Tax 953.22 939.04
c) Income Tax 2,187.00 2,290.00
d) Sales Tax 210.64 96.86
Other than Taxation matters
a) Electricity Charges 4,650.00 4,775.98
b) RPO Obligation 980.00 568.93
b) Advance & EPCG License 508.84 2,166.01
Labour related matters 34.22 34.02
Based on legal advice, discussions with the solicitors, etc., the
management believes that there is fair chance of decisions in the
company''s favour in respect of all the items listed above and hence no
provision is considered necessary against the same. The management
believes that the ultimate outcome of these proceedings will not have a
material adverse effect on the Company''s financial position and results
of operations.
2. Inventories, loans & advances, trade receivables and other current /
non-current assets are reviewed annually and in the opinion of the
Management do not have a value on realization in the ordinary course of
business, less than the amount at which they are stated in the Balance
Sheet.
Defined Benefit Plan
The employees'' gratuity fund scheme managed by a trust is a defined
benefit plan. The present value of obligation is determined based on
actuarial valuation using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation for leave encashment is
recognised in the same manner as gratuity. The Company has maintained
funds with ICICI Prudential Life Insurance Co. Ltd., Kotak Mahindra Old
Mutual Life Insurance Ltd. and Bajaj Allianz Life Insurance Co. Ltd.
Provident Fund
The Guidance note issued by Accounting Standard Board (ASB ) on
implementation AS-15. Employee Benefit states that provident funds set
up by the employers, which require interest shortfall to be met by the
employer, needs to be treated as defined benefit plan.
The fund does not have any existing deficit or interest shortfall. In
regard to any future obligation arising due to interest shortfall (i.e.
government interest to be paid on provident fund scheme exceeds rate of
interest earned on investment), pending the issuance of Guidance Note
from the actuarial society of India, the company''s actuary has
expressed his inability to reliably measure the same.
3. RELATED PARTY DISCLOSURE AS REQUIRED BY ACCOUNTING STANDARD (AS-18)
ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA : (contd.)
e) Enterprises over which any person described in (c) or (d) is able to
exercise significant influence.
(i) Aadi Marketing Company Pvt Ltd
(ii) Bhilwara Green Energy Ltd
(iii) Bhilwara Services Pvt Ltd
(iv) Bhilwara Technical Textiles Ltd
(v) BMD Pvt Ltd
(vi) BMD Renewable Energy Pvt Ltd
(vii) NJC Hydro Power Limited
(viii) Essay Marketing Company Ltd
(ix) Giltedged Industrial Securities Ltd
(x) India Texfab Marketing Ltd
(xi) Investors India Ltd
(xii) Kalati Holdings Pvt Ltd
(xiii) LNJ Financial Services Ltd
(xiv) LNJ Bhilwara Textile Anusandhan Vikas Kendra
(xv) Malana Power Company Ltd
(xvi) Maral Overseas Ltd
(xvii) Nikita Electrotrades Pvt Ltd
(xviii) Nivedan Vanijya Niyojan Ltd
(xix) Purvi Vanijya Niyojan Ltd
(xx) Raghav Commercial Ltd
(xxi) Raghav Knits & Textile Pvt Ltd
(xxii) RSWM Ltd
(xxiii) Shashi Commercial Co Ltd
(xxiv) Veronia Tie-Up Pvt Ltd
The Company has opted to avail the choice provided under paragraph 46A
of AS 11: The Effects of Changes in Foreign Exchange Rates inserted
vide Notification No 914 (E) dated December 29, 2011 issued by the
Ministry of Corporate Affairs, Government of India, the following
exchange differences on long term foreign currency monetary items are
being dealt with in the following manner:
Foreign exchange difference on acquisition of a depreciable asset, is
adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset.
- In other cases, the foreign exchange difference is accumulated in a
Foreign Currency Monetary Item Translation Difference Account and
amortised over the balance period of such long term asset/ liability.
It has transferred the differences arising out of foreign currency
translation in respect of acquisition of depreciable capital assets to
the respective assets account / Capital Work-in-progress. In case this
accounting practice had not been adopted, the Pre-tax Profit for the
financial year ended 31st March 2014 would have been lower by Rs. 1884.60
Lacs (Previous year Rs. 724 Lacs) with a consequential impact on both the
Basic and Diluted EPS.
There are no present obligations requiring provisions in accordance
with the guiding principles as enunciated in Accounting Standard
(AS)-29 ''Provisions, Contingent Liabilities & Contingent Assets.
4. In accordance with the provisions of Accounting Standard on impairment
of Assets, (AS-28), the management has made assessment of assets in use
& considering the business prospects related thereto, no provision is
considered necessary in these accounts on account of impairment of
assets.
5. The following transactions are accounted for on the basis of estimates
/ available data, with final adjustments being carried out in the year of
settlement.
a) Claims lodged with insurance companies.
b) Interest on income tax refunds granted on summary basis, pending
finalization of assessments is treated as income in the year of accrual.
Final adjustments are carried out in the year of completion of
assessment.
6. Previous year figures have been regrouped/reclassified , wherever
necessary to conform to current year classification.
Mar 31, 2013
Note: 1. BASIS OF PREPARATION
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The financial statements have been prepared to comply in
all material respects with the Accounting Standards notified under the
Companies (Accounting Standards) Rules, 2006, (as amended and as
applicable from time to time) and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared on an
accrual basis and under the historical cost convention on going concern
basis.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
Note: 2 CAPITAL WORK IN PROGRESS
Capital work in progress includes Rs. 5,972.56 (Previous Year Rs.
2,345.44 Lacs) being preoperative expenditure and Rs. 2,064.29
(Previous Year Rs. 3,431.55 Lacs) being capital stores.
Note: 3 LOANS & ADVANCES
a) Based on legal advice, discussions with the solicitors, etc., the
management believes that there are fair chances of decisions in the
Company''s favour in respect of all the items listed above and no
value adjustment is considered necessary.
b) Direct taxes refundable represent amounts recoverable from the
Income Tax Department for various assessment years. In respect of
disputed demands, Company has filed appeals which are pending at
various levels and for assessment years where the issues have been
decided in favour of the Company. The Company is in the process of
reconciling / adjusting the same with the department. Necessary value
adjustments shall be made on final settlement by the department.
c) Provision for Income Tax for earlier years has been made based on
Income Tax Assessment cases pending at Appellate Jurisdictions on which
Income Tax demand has arisen and the cases are sub-judice.
Note: 4 CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF :
(Rs. in Lacs)
As at As at
31st March, 2013 31st March, 2012
a) Excise duty under appeal 1,201.01 509.90
b) Other matters 7,510.92 6,963.89
Based on legal advice, discussions with the solicitors, etc., the
management believes that there is fair chance of decisions in the
company''s favour in respect of all the items listed above and hence
no provision is considered necessary against the same. The management
believes that the ultimate outcome of these proceedings will not have a
material adverse effect on the company''s financial position and
results of operations.
Note: 5
Inventories, loans & advances, trade receivables and other current /
non-current assets are reviewed annually and in the opinion of the
Management do not have a value on realization in the ordinary course of
business, less than the amount at which they are stated in the Balance
Sheet.
Note: 6 AS - 15 ''EMPLOYEE BENEFITS''
The Company has adopted Revised Accounting Standard - 15 ''Employee
Benefits'' and the required disclosures are given hereunder:
Defined Benefit Plan
The employees'' gratuity fund scheme managed by a trust is a defined
benefit plan. The present value of obligation is determined based on
actuarial valuation using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation for leave encashment is
recognised in the same manner as gratuity. The Company has maintained a
fund with LIC.
Provident Fund
The Guidance note issued by Accounting Standard Board (ASB) on
implementation AS-15. Employee Benefit (Revised 2005) states that
provident funds set up by the employers, which require interest
shortfall to be met by the employer, needs to be treated as defined
benefit plan.
The funds does not have any existing deficit or interest shortfall. In
regard to any future obligation arising due to interest shortfall (i.e.
government interest to be paid on provident fund scheme exceeds rate of
interest earned on investment), pending the issuance of Guidance Note
from the actuarial society of India, the company''s actuary has
expressed his inability to reliably measure the same.
Note: 7
The Company has opted to avail the choice provided under paragraph 46A
of AS 11: The Effects of Changes in Foreign Exchange Rates inserted
vide Notification No914 (E) dated December 29, 2011 issued by the
Ministry of Corporate Affairs, Government of India, The following
exchange differences on long term foreign currency monetary items are
being dealt with in the following manner:
- Foreign exchange difference on acquisition of a depreciable asset,
is adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset
- In other cases, the foreign exchange difference is accumulated in a
Foreign Currency Monetary Item Translation Difference Account and
amortised over the balance period of such long term asset/ liability.
It has transferred the differences arising out of foreign currency
translation in respect of acquisition of depreciable capital assets to
the respective assets account / Capital Work-in-progress. In case this
accounting practice had not been adopted, the Pre-tax Profit for the
financial year ended 31stMarch 2013 would have been lower by Rs. 724
Lacs (Previous year 760.00) with a consequential impact on both the
Basic and Diluted EPS.
Note: 8
There are no present obligations requiring provisions in accordance
with the guiding principles as enunciated in Accounting Standard
(AS)-29 ''Provisions, Contingent Liabilities & Contingent Assets''
Note: 9
In accordance with the provisions of Accounting Standard on impairment
of Assets, (AS-28), the management has made assessment of assets in use
& considering the business prospects related thereto, no provision is
considered necessary in these accounts on account of impairment of
assets
Note: 10
The following transactions are accounted for on the basis of estimates
/ available data, with final adjustments being carried out in the year
of settlement.
a) Claims lodged with insurance companies
b) Interest on income tax refunds granted on summary basis, pending
finalization of assessments is treated as income in the year of
accrual. Final adjustments are carried out in the year of completion
of assessment.
Note: 11
Previous year figures have been regrouped/reclassified, wherever
necessary to conform to current year classification.
Mar 31, 2012
Note: 1. BASIS OF PREPARATION
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP).The financial statements have been prepared to comply in
all material respects with the accounting standards notified under the
Companies (Accounting Standards) Rules, 2006, (as amended and as
applicable from time to time) and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared on an
accrual basis and under the historical cost convention on Going Concern
basis.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained below.
Note: 2. SHARE CAPITAL
i) 2,21,96,821 (2,21,96,821) Equity shares have been issued as fully
paid up bonus shares by capitalisation of Reserves.
i) 3,00,000 (3,00,000) Equity shares have been issued as fully paid up
pursuant to a contract without payment being received in cash
iii) 10,700 (10,700) Equity shares have been issued at par as fully
paid up to the members of erstwhile subsidiary company Bhilwara Viking
Petroleum Limited pursuant to amalgamation
The Board of Directors of the Company had approved the Buyback of its
Equity Shares from open market through Stock Exchanges vide a
Resolution passed at its meeting held on the 14th March, 2011. The
Buyback was approved for an aggregate amount upto Rs. 6,750 Lacs. The
Buyback of shares commenced on the 11th April, 2011, the Company
completed the buy back of Equity Shares through open market purchases
on 11 th November, 2011. 28,85,765 Shares were bought back and
extinguished and entire amount of Rs. 6,750 Lacs was utilised
b) Terms/rights attached to Equity Shares
Company has only one class of equity shares having a par value of Rs.
10/-. Each holder of equity shares is entitled to one vote per share.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
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.
As per records of the Company, including its register of
shareholders/members and other declarations received from shareholders
regarding beneficial interest, the above shareholding represents both
legal and beneficial ownerships of shares.
Note: 3. LONG TERM BORROWINGS
a) Secured redeemable Non-Convertible Debentures (NCDs) of Rs.15,000
Lacs were allotted on private placement basis. The NCDs have been
issued in demat mode and are listed in Wholesale Debt Segment of Bombay
Stock Exchange. Out of the said NCDs of Rs. 15,000 Lacs, 8.50% NCDs
aggregating to Rs. 5,000 Lacs allotted on 17th December, 2009 were
redeemed on 17th December, 2011. 8.90% NCDs aggregating to Rs. 5,000
Lacs allotted on 17th December, 2009 shall fall due for redemption on
17th December, 2012. 9.55% NCDs aggregating to Rs. 5,000 Lacs allotted
on 30th October, 2009 shall fall due for redemption on 30th October,
2012
b) Term loans from Financial Institutions and Banks and redeemable Non
Convertible Debentures stated as above are/shall be secured by way of
joint equitable mortgage of all the immovable properties (present and
future) of Graphite & Thermal Power units at Mandideep and Hydel unit
at Tawanagar ranking on pari- passu basis and hypothecation of all
movable assets of the Company (except book debts) subject to prior
charge of the Company's bankers on specified movable assets in respect
of working capital borrowings.
Note: 4. SHORT TERM BORROWINGS
Working Capital Loans from Banks are secured by hypothecation of all
stocks present and future, stores, spare parts, packing materials, raw
materials, finished goods, goods in transit / process, book debts,
outstanding monies receivable, claims, bills etc. and second charge by
way of joint equitable mortgage of immovable properties of the Company
in respect of Graphite & Thermal Power units at Mandideep and Hydel
unit at Tawanagar. The said charge in favour of bank shall rank
sub-ordinate and subservient to the existing charges created by the
Company in favour of financial Institutions and banks for their term
loans.
Note: 5. TRADE PAYABLES
The information as required to be disclosed under The Micro, Small and
Medium Enterprises Development Act, 2006 ("the Act") has been
determined to the extent such parties have been identified by the
Company, on the basis of information and records available with them.
This information has been relied upon by the auditors. Disclosure in
respect of interest due on delayed payment has been determined only in
respect of payments made after the receipt of information, with regards
to filing of memorandum, from the respective suppliers. Disclosure as
required under section 22 of the Act, is as under:
Note: 6. TANGIBLE ASSETS
a) Assets amounting to Rs. 83.13 Lacs (Previous year Rs. 83.13 Lacs)
(Gross) are owned jointly with RSWM Ltd.
b) Freehold agricultural land in village Kirat Nagar, District Raisen,
Madhaya Pradesh measuring 0.26 acre in the Company's possession pending
registration in favour of the Company.
c) The Company has exercised the option made available by the
notification No GSR 914(E) dated 29th November, 2011 issued by the
ministry of Corporate affairs. Accordingly,an amount of Rs.1,373.21
Lacs being exchange difference arising on reporting of long term
Foreign currency loans availed for acquisition of depreciable Fixed
assets have been taken to respective assets and Rs. 1,449.76 Lacs to
capital work in progress.
Note: 7. CAPITAL WORK IN PROGRESS
Capital work in progress includes Rs. 2,345.54 (Previous Year Rs.
607.42 Lacs) being preoperative expenditure and Rs. 3,431.55. (Previous
Year Rs. 3,840.31 Lacs) being capital stores.
Note: 8. LOANS & ADVANCES
a) Based on legal advice, discussions with the solicitors, etc., the
management believes that there are fair chances of decisions in the
Company's favour in respect of all the items listed above and no value
adjustment is considered necessary.
b) Direct taxes refundable represent amounts recoverable from the
Income Tax Department for various assessment years. In respect of
disputed demands, company has filed appeals which are pending at
various levels and for assessment years where the issues have been
decided in favour of the Company, company is in the process of
reconciling / adjusting the same with the department. Necessary value
adjustments shall be made on final settlement by the department.
c) Provision for Income Tax for Earlier years has been made based on
Income Tax Assessment cases pending at Appellate Jurisdictions on which
Income Tax Demand has arisen and the cases are sub-judice.
Note: 9. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF :
As at March
31, 2012 As at March
31, 2011
a) Excise duty under appeal 509.90 509.90
b) Other matters 6,963.89 1,619.23
c) Bank Guarantees 4,635.44 8,895.31
Based on legal advice, discussions with the solicitors, etc., the
management believes that there is fair chance of decisions in the
Company's favour in respect of all the items listed above and hence no
provision is considered necessary against the same. The management
believes that the ultimate outcome of these proceedings will not have a
material adverse effect on the Company's financial position and results
of operations.
Note: 10.
Inventories, loans & advances, trade receivables and other current /
non-current assets are reviewed annually and in the opinion of the
Management do not have a value on realization in the ordinary course of
business, less than the amount at which they are stated in the Balance
Sheet.
Note: 11. AS - 15 'EMPLOYEE BENEFITS'
The Company has adopted Revised Accounting Standard - 15 'Employee
Benefits' and the required disclosures are given hereunder:
Defined Benefit Plan
The employees' gratuity fund scheme managed by a trust is a defined
benefit plan. The present value of obligation is determined based on
actuarial valuation using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation for leave encashment is
recognised in the same manner as gratuity. The Company has maintained a
fund with LIC.
Provident Fund
The Guidance note issued by Accounting Standard Board (ASB) on
implementation AS-15. Employee Benefit (Revised 2005) states that
provident funds set up by the employers, which require interest
shortfall to be met by the employer, needs to be treated as defined
benefit plan
The funds does not have any existing deficit or interest shortfall. In
regard to any future obligation arising due to interest shortfall (i.e.
government interest to be paid on provident fund scheme exceeds rate of
interest earned on investment), pending the issuance of Guidance Note
from the actuarial society of India, the Company's actuary has
expressed his inability to reliably measure the same.
Note:12. RELATED PARTY DISCLOSURE AS REQUIRED BY ACCOUNTING STANDARD
(AS-18) ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA :
A List of Related Parties & Relationships
e) Enterprises over which any person described in (c) or (d) is able to
exercise significant influence.
i) RSWM Ltd.
ii) Malana Power Company Limited
iii) BMP Solar Power Pvt Ltd
iv) Escribe (India) Pvt Ltd
v) Bhilwara Services Pvt Ltd
vi) Ganga Yamuna Auto Pvt Ltd
vii) Deepak Knits & Texturise Pvt. Ltd.
viii) Maral Overseas Ltd.
ix) Investors India Ltd
x) Kalati Holdings Pvt Ltd
xi) Bhilwara Technical Textiles Ltd.
xii) BMP Power Pvt Ltd
xiii) Purvi Vanijya Niyojan Ltd
xiv) Uttri Investments Pvt Ltd
xv) LNJ Bhilwara Textile Anusandhan Vikas Kendra
xvi) Veronia Tie-Up Pvt Ltd
xvii) Vivek Garments Pvt Ltd
xviii) NJC Hydro Power Ltd
xix) Bhilwara Green Energy Ltd
Note: 13.
As the Company has opted to avail the choice provided under paragraph
46A of AS 11: The Effects of Changes in Foreign Exchange Rates inserted
vide Notification No914 (E) dated December 29, 2011 issued by the
Ministry of Corporate Affairs, Govt, of India, it has transferred the
differences arising out of foreign currency translation in respect of
acquisition of depreciable capital assets to the respective assets
account/ Capital Work-in-progress. In case this accounting practice had
not been adopted, the Pre-tax Profit for the financial year ended 31st
March, 201 2 would have been lower by Rs. 760.00 Lacs (Previous year
NIL) with a consequential impact on both the Basic and Diluted EPS.
Note: 14.
There are no present obligations requiring provisions in accordance
with the guiding principles as enunciated in Accounting Standard (AS)-
29 'Provisions, Contingent Liabilities & Contingent Assets'.
Note: 15.
In accordance with the provisions of Accounting Standard on impairment
of Assets, (AS-28), the management has made assessment of assets in use
& considering the business prospects related thereto, no provision is
considered necessary in these accounts on account of impairment of
assets.
Note: 16.
The following transactions are accounted for on the basis of estimates
/ available data,with final adjustments being carried out in the year
of settlement.
a) Claims lodged with insurance companies.
b) Interest on income tax refunds granted on summary basis, pending
finalization of assessments is treated as income in the year of
accrual. Final adjustments are carried out in the year of completion of
assessment.
Note: 17.
Till the year ended 31 March, 2011, the Company was using pre-revised
Schedule VI to the Companies Act, 1956, for preparation and
presentation of its financial statements. During the year ended 31
March, 2012, the revised Schedule VI notified under the Companies Act,
1956, has become applicable to the Company. The Company has
reclassified previous year figures to conform to this year's
classification.
Mar 31, 2011
(Rs. in Lacs)
As at As at
March 31, 2011 March 31, 2010
1 Contingent liabilities
a) Claims against the Company not
acknowledged as debts :
i) Excise duty under appeal 509.90 564.05
ii) Other matters 1,619.23 1,008.56
b) Bank Guarantees 8,895.31 4,094.70
c) The Company has provided Guarantee
in favour of International Finance
Corporation (IFC) with M/s RSWM Ltd.
on joint and several basis on behalf of
M/s AD Hydro Power Ltd. 600.00 600.00
d) Bills discounted with bankers 1,524.83 4,833.79
e) Pending export obligation against
Advance Licences & EPCG Licences 952.59 2,118.78
2 Estimated amount of contracts remaining
to be executed on capital account, not
provided for (net of advances of Rs.3503.16
Lacs (Rs.622.79 Lacs)) 7,020.77 704.30
3 There are no present obligations requiring provisions in accordance
with the guiding principles as enunciated in Accounting Standard
(AS)-29 'Provisions, Contingent Liabilities & Contingent Assets'
4 In accordance with the provisions of Accounting Standard on
impairment of Assets, (AS-28), the management has made assessment of
assets in use & considering the business prospects related thereto, no
provision is considered necessary in these accounts on account of
impairment of assets.
As the liabilities for gratuity and leave encashment are provided on an
actuarial valuation basis for the Company as a whole, the amount
pertaining to the directors are not included above.
5 The following transactions are accounted for on the basis of
estimates / available data, with final adjustments being carried out in
the year of settlement.
a) Claims lodged with insurance companies.
b) Interest on income tax refunds granted on summary basis, pending
finalisation of assessments is treated as income in the year of
accrual. Final adjustments are carried out in the year of completion of
assessment.
6 Term loans, Bonds and Debentures falling due in next 12 months
Rs.6,536 Lacs (previous year Rs.2,904 Lacs).
7 a) In the opinion of the management and to the best of their
knowledge and belief, the value on realisation of loans, advances and
other current assets in the ordinary course of business will not be
less than amount at which they are stated in the balance sheet.
8 The Company had allotted 47,30,000 Preferential Warrants of Rs.365/-
each on 5th June, 2008. These Warrants were convertible into equity
shares within 18 months from the date of allotment. Since no warrant
had been converted till 4th December, 2009, the aggregate amount of
Rs.1726.45 lacs received in respect of the same has been forfeited by the
Company in the previous year. The funds had been utilised for long
term working capital requirement.
9 One case of loss of material, by theft, was detected during the
previous year involving an amount of Rs.360.85 lacs which has been shown
as "Loss of material by theft" and is included in Schedule 12 :
Consumption of materials in the Profit & Loss account in the previous
year
10 AS - 15 'EMPLOYEE BENEFITS'
The Company has adopted Revised Accounting Standard - 15 'Employee
Benefits' and the required disclosures are given hereunder:
Defined Benefit Plan
The employees' gratuity fund scheme managed by a trust is a defined
benefit plan. The present value of obligation is determined based on
actuarial valuation using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation for leave encashment is
recognised in the same manner as gratuity. The Company has maintained a
fund with LIC.
Provident Fund
The Guidance note issued by Accounting Standard Board (ASB) on
implementation AS-15. Employee Benefit (Revised 2005) states that
provident funds set up by the employers, which require interest
shortfall to be met by the employer, needs to be treated as defined
benefit plan.
The funds does not have any existing deficit or interest shortfall. In
regard to any future obligation arising due to interest shortfall (ie
government interest to be paid on provident fund scheme exceeds rate of
interest earned on investment), pending the issuance of Guidance Note
from the actuarial society of India, the Company's actuary has
expressed his inability to reliably measure the same.
G) Provision for Income Tax for Earlier years has been made based on
Income Tax Assessment cases pending at Appellate Jurisdictions on which
Income Tax Demand has arisen and the cases are sub-judice.
I) In terms of Notification No.S.O.301(E) dated 8th February, 2011,
issued by Ministry of Corporate Affairs, the Board of Directors of the
Company has given its consent at the Board Meeting held on 29th April
2011 for non-disclosure of information contained in para 3(i)(a),
3(ii)(a), 3(ii)(b), 3(ii)(d), of Part II of Schedule VI.
(Previous Year's figures have been regrouped and recast wherever
considered necessary.
Figures in amount have been rounded off to nearest lacs upto two
decimals. Figures in bracket relate to the previous year.
The Schedules referred to in the Balance Sheet and Profit and Loss
Account form an integral part of the accounts.
Mar 31, 2010
(Rs. in Lac)
As at As at
31.03.2010 31.03.2009
1. Contingent Liabilities
a) Claims against the Company not
acknowledged as debts :
i) Excise duty under appeal 564.05 389.87
ii) Other matters 1,008.56 366.02
b) Bank Guarantees 4,094.70 10,268.82
c) The Company has provided Guarantee
in favour of 600.00 350.00
International Finance Corporation (IFC) with
M/s RSWM Ltd. on joint and several basis on behalf of
M/s AD Hydro Power Ltd.
d) Bills discounted with bankers 4,833.79 4,001.94
e) Pending export obligation against
Advance Licences & 2,118.78 8,142.66
EPCG Licences
2. Estimated amount of contracts remaining
to be executed on 704.30 1,362.12
capital account, not provided for (net
of advances of Rs.622.79 Lacs
(Rs.5,253.25 Lacs))
3. There are no present obligations requiring provisions in accordance
with the guiding principles as enunciated in Accounting Standard
(AS)-29 Provisions, Contingent Liabilities & Contingent Assets
4. As per Accounting Standard 22 "Accounting for Taxes on Income",
required disclosures are given below:
Deferred Tax Liabilities
Arising on account of timing difference
à Accumulated Depreciation 7,809.65 7,873.17
Deferred Tax Assets
Arising on account of timing difference
à Due to section 43B of the Income Tax Act, 1961 192.70 180.75
à Others 128.18 194.59
Net Deferred Tax Liability 7,488.77 7,497.84
5. Work in process includes Refractory Blocks and other 93.18 51.42
consumable stores lying at shop floor.
6. The Board of Directors of the Company had approved the Buyback of
its Equity Shares by the Company from open market through Stock
Exchanges vide a resolution passed at its Board Meeting dated 19th
August,2008 for an amount not exceeding Rs.48.50 Crores. The Buy-back
commenced on 13th October, 2008 and was completed on 18th August 2009
with the buy back and extinguishment of 32,95,703 shares at an average
price of Rs.147.15 per share aggregating Rs.48.49 Crores.
7. In accordance with the provisions of Accounting Standard on
impairment of Assets, (AS-28), the management has made assessment of
assets in use & considering the business prospects related thereto, no
provision is considered necessary in these accounts on account of
impairment of assets.
8. The following transactions are accounted for on the basis of
estimates / available data, with final adjustments being carried out in
the year of settlement.
a) Graphite Export Development Trust subsidy.
b) Claims lodged with Insurance Companies.
c) Interest on income tax refunds granted on summary basis, pending
finalisation of assessments is treated as income in the year of
accrual. Final adjustments are carried out in the year of completion of
assessment.
9. Term loans, Bonds and Debentures falling due in next 12 months Rs.
2,904 Lacs (previous year Rs. 9,775 Lacs).
10. (a) In the opinion of the management and to the best of their
knowledge and belief, the value on realisation of loans, advances and
other current assets in the ordinary course of business will not be
less than amount at which they are stated in the balance sheet.
11. On the basis of information made available to the Company by its
creditors regarding registration under the provisions of Micro, Small
and Medium Enterprises Development Act, 2006 ("Act"), none of the dues
outstanding to the enterprises which are defined under the said Act are
exceeding the limit of 45 days. Required disclosures are as under:
12. (a) The Company has following gross derivatives exposure
outstanding as on balance sheet date:
(b) In accordance with the principles for prudence and the announcement
on "Accounting for Derivatives" issued by the Institute of Chartered
Accountants of India, the Company has accounted for a loss of Rs. Nil
(previous year Rs. 275 Lacs) Lacs on derivative instruments in the
nature of net written option entered into for hedging purpose.
13. The Company had allotted 47,30,000 Preferential Warrants of
Rs.365/- each on 5th June, 2008. These Warrants were convertible into
equity shares within 18 months from the date of allotment. Since no
warrant had been converted till 4th December, 2009, the aggregate
amount of Rs.1726.45 Lacs received in respect of the same has been
forfeited by the Company. The funds had been utilised for long term
working capital requirement.
14. Related party disclosure as required by Accounting Standard (
AS-18) issued by the Institute of Chartered Accountants of India :
A List of Related Parties & Relationships
a) Enterprises that directly or indirectly through one or more
intermediaries, control or are controlled by or are under common
control with the reporting enterprise (this includes holding companies,
subsidiaries and fellow subsidiaries).
(i) HEG Graphite Products & Services Ltd. Subsidiary None
b) Associates and Joint Ventures
(i) Bhilwara Energy Limited Associate Associate
(ii) Bhilwara Infotech Ltd Associate Associate
c) Individuals owning directly or indirectly, an interest in the voting
power of the reporting enterprise that gives them control or
significant influence over the enterprise, and relatives of any such
individual.
Sh. L.N. Jhunjhunwala
Sh. Ravi Jhunjhunwala
Sh. Riju Jhunjhunwala
d) Key Management Personnel and their relatives
Sh. Ravi Jhunjhunwala
Sh. Riju Jhunjhunwala Sh. R. C. Surana
e) Enterprises over which any person described in (c) or (d) is able to
exercise significant influence.
(i) RSWM Ltd.
(ii) Malana Power Company Limited
(iii) AD Hydro Power Limited
(iv) Bhilwara Spinners Ltd.
(v) Bhilwara Scribe Pvt. Ltd.
(vi) Deepak Knits & Texturise Pvt. Ltd.
(vii) Maral Overseas Ltd.
(viii) Indo Canadian Consultancy Services Limited
(ix) Bhilwara Technical Textiles Ltd.
(x) BMD Pvt. Ltd.
(xi) Bhilwara Software Pvt. Ltd.
(xii) Bhilwara Infoway Pvt. Ltd.
(xiii) Bhilwara Services Pvt. Ltd.
(xiv) LNJ Bhilwara Textile Anusandhan Vikas Kendra
15. One case of loss of material, by theft, was detected during the
year involving an amount of Rs.360.85 lacs which has been shown as
"Loss of material by theft" and is included in Schedule 12 :
Consumption of materials in the Profit & Loss account of the current
year. The company has got the matter thoroughly investigated and has
taken strict follow up action including review and revision of internal
control systems, wherever necessary.
16 EMPLOYEE BENEFITS
The company has adopted Revised Accounting Standard - 15 Employee
Benefits and the required disclosures are given hereunder:
Defined Benefit Plan
The employees gratuity fund scheme managed by a trust is a defined
benefit plan. The present value of obligation is determined based on
actuarial valuation using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitliement and measures each unit separately to
build up the final obligation. The obligation for leave encashment is
recognised in the same manner as gratuity.
The company has maintained funds with ICICI Prudential Life Insurance
Company Limited for gratuity and superannuation.
17. (a) Previous Years figures have been regrouped and recast wherever
considered necessary.
(b) Figures in amount have been rounded off to nearest lacs upto two
decimals. Figures in bracket relate to the previous year.
(c) The Schedules referred to in the Balance Sheet and Profit and Loss
Account form an integral part of the accounts.
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