Notes to Accounts of Prime Industries Ltd.

Mar 31, 2024

Note 28 Segment Information

In the opinion of the management, there is only one reportable business segment as envisaged by Ind AS 108 on ''Operating Segment'' issued by Institute of Chartered accountant of India. Accordingly, no separate disclosure for segment reporting is required to be made in the financial statements of the Company. Secondary segmentation based on geography has not been presented as the Company operates primarily in India and the Company perceives that there is no significant difference in its risk and returns in operating from different geographic areas within India.

The management assessed that cash and cash equivalents and bank balances, loans and advances, other financial assets, certain investments, trade payables and other financial liabilities approximate their fair value largely due to the short-term maturities of these instruments. Difference between carrying amount and fair value of bank deposits, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant in each of the year presented.

30.2 Fair value hierarchy

The fair value of financial instruments have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements)

Level 1:

Quoted prices in an active market: This level of hierarchy includes financial instruments that are measured by reference to quoted prices (unadjusted) in active markets for identical instruments.

Level 2:

Valuation techniques with observable inputs: This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3:

Valuation techniques with unobservable inputs: This level of hierarchy includes instruments measured using inputs that are not based on observable market data (unobservable inputs). Fair value is determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data.

30.3 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 activities expose it mainly to the market risk, credit risk and liquidity risk.

The monitoring and management of such risks is undertaken by the senior management of the Company. There are appropriate policies and procedures in place through which such financial risks are identified, measured and managed by the Company. The Audit Committee and the Board are regularly apprised of these risks and measures used to mitigation these risks.

a. Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of adverse changes in market rates and prices such as currency risk, interest rate risk, other price risk etc.

(i) Currency Risk

Currently company does not have transaction in foreign currencies and hence the company is not exposed to currency risk

(ii) Interest rate Risk

Since the Company does not have any significant financial assets or financial liabilities bearing floating interest rates, any change in interest rates would not have any significant impact on the financial statements of the Company.

(iii) Price Risk

The company is exposed to price risk arising from investments held by the company and classified in the balance sheet either as at fair value through profit or loss or at fair value through other comprehensive income. To manage its price risk arising from investments, the company diversifies its portfolio in equity, debt, money market and other instruments (including through funds). The Company also has strategic asset allocation benchmarks and risk limits.

Sensitivity analysis

The paragraph below summaries the impact of increase/decrease in the prices of investments held at the end of the year on the company''s profit and other comprehensive income for the year. The analysis is based on the assumption that prices of investments are increased or decreased by 5% with all other variables held constant:

(i) In respect of investments measured at fair value through other comprehensive income, other comprehensive income for the year ended 31st March , 2024 would have been increased/decreased by 1.23Mn ( 31st March, 2023: 6.51 Mn) as a result of the changes in prices of investments.

b. Credit Risk_

Credit risk is the risk of financial loss to the company if a customer or counter-party fails to meet its contractual obligations.

Financial instruments that are subject to concentrations of credit risk principally consist of receivables, cash and cash equivalents, bank deposits, investments in debentures, mutual funds & other funds and other financial assets.

The maximum exposure to credit risk was Rs.490.19 Mn and Rs. 85.38 Mn, as at March 31, 2024 and March 31, 2023 respectively, being the total carrying value of loans and advances, cash and cash equivalents, trade receivables, Investments (excluding equity investments) balances with bank and other financial assets.

To manage the credit risk, the credit worthiness of the receivables is evaluated on an ongoing basis and investment is made only after considering counterparty risks based on multiple criteria including Tier I capital, Capital Adequacy Ratio, Credit Rating, Profitability, NPA levels and deposit base of banks and financial institutions etc. These risks are monitored regularly as per its risk management program.

As at the end of the reporting period, all the investments have been fair valued and receivables, bank balances and other financial assets are considered to be good.

c. Liquidity Risk

"Liquidity risk refers to the risk that the Group cannot meet its financial obligations. The Group''s principal source of liquidity are cash and cash equivalents and the cash flow i.e. generated from operations. The Group consistently generated strong cash flows from operations which together with the available cash and cash equivalents and current investment provides adequate liquidity in short terms as well in the long term.

The table below provides details regarding the contractual maturities of financial liabilities including estimated interest payments as at :"

Note 32 Contingent liabilities and Commitments

a) Balance of Sundry Debtors, creditors, loans & advances are subject to confirmation and reconciliation if any.

(b) The Company has received notice from the Honorable High Court of Punjab & Haryana that sale tax department has filed an appeal against the order of tribunal by which demand of Rs.90,01,582 of Sales Tax against the company was dismissed by tribunal related to assessment year 2002-03. No provision has been made in books of accounts as in the opinion of the management the appeal is not maintainable.

(c) The Company is involved in other small legal proceedings for claims related to the ordinary course of its business. In respect of these claims, the company believes, these claims do not constitute material litigation matters and with its meritorious defense the ultimate disposition of these matter will not have material adverse effect on its financial statements. In view of the management and the legal advice sought, no provision is required to be made in case litigation against/by the company. Therefore, provision for the same has not been provided in the books of accounts .

(d) The company is making its strategic entry into manufacturing of Capital Goods and Special Products for Priority sectors like defence, Aerospace and nuclear industries by investing in M/s Kay Bouvet Engineering Limited(KBEL) having its registered office address N-3 Addl. MIDC Area Satara -415004, who is already engaged into manufacturing in this line of business. KBEL availed fund and non-fund based facilities and working capital facility from various banks etc. KBEL has submitted the OTS proposal to settle the outstanding dues at Rs.125 crore. The company along with another investors called as "Investors" have entered into the Memorandum of Understanding dated 29.06.2023 (MOU) with the M/s Kay Bouvet Engineering Limited. As per MOU the company along with another investors is to invest by way of equity and loans up to a sum of Rs.125 crore in KBEL to settle the total dues of KBEL under OTS proposal with the banks. As per MOU the company has acquired 98,59,000 equity shares of Rs.10/- each of KBEL being 48.69% stake and paid Rs.2,46,47,500/- being Rs.2.50 per share. Further, uncalled liability on 98,59,000 equity shares @ Rs.7.50 per share amounting to Rs.7,39,42,500/- will be brought by the company within the 12th month from the date of OTS Sanctioned by all lenders. Further as required by the lenders, the company has deposited interest free amount of Rs.12.50 crore in a separate bank account of KBEL with IDBI Bank. The proposal of OTS is pending with the lenders.

The balance of Rs.102.64 Crores shall be brought by the Investors including the company jointly and severally in KBEL after the sanction of the OTS proposal based on the maximum of Rs.125 crore as mentioned in the MOU. All funds including Rs.12.50 Crore will be refunded to the company if the OTS proposal based on the maximum amount of Rs.125 Crores is not sanctioned by all the lenders.

Note 33

In the opinion of the Board, all the current assets, Loans & advances having the value on realization in the ordinary course of business at least equal to the amount at which they are stated except as expressly stated otherwise.

Note 34

Sales of Securities/ Land amounting to Rs. 1,55,94,917/- (Previous Year Rs. 5,60,72,200/-) includes sale of securities of Rs. 55,04,917/-(Previous Year Rs. 5,60,72,200/-) and sale of Land Rs. 1,00,90,000/- (Previous Year NIL). Other Incomes Rs.1,07,313/- includes Lease Rent Rs. 1,07,313/-(Previous Year Lease Rent Rs.3,34,370/-and Rs. 88,00,000 received from settlement of old dispute/debt) .

Note 35

Detail of Investments and Loan and advances covered under the provision of Section 186 of the Act, are given in the note No.5 and 10 to the Financial Statement.

Note 38. ADDITIONAL REGULATORY INFORMATION AS PER DIVISION III SCHEDULE III OF COMPANIES ACT, 2013_

a) No funds have been advanced or loaned or invested 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, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

b) No funds have been received by the company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified 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.

c) The Company does not have any long-term contracts including derivative contracts for which there are any material forseeable losses.

d) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

e) No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988).

f) The Company has not been declared as wilful defaulter by any bank or financial Institution or other lender.

g) During the year, the company has not entered into any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

h) There are no transactions which have not been recorded in the books of accounts and which have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

i) There are no charges or satisfaction yet to be registered with the registrar of companies during the year.

j) The company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.

k) Section 135 of the Companies Act, 2013 pertaining to Corporate Social Responsibility is not applicable to the company.

39. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification/disclosure.

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Mar 31, 2014

1. Contingent liabilities

The Punjab State Industrial Development Corporation Limited (PSIDC) had contributed `88.50 Lacs in the equity share capital of Prime Industries Ltd @ `10/- per share, as Direct Equity Participation in 1993. The associates / promoters of Prime Industries Ltd. ,pledged shares of Prime Industries Ltd of `10/- each to PSIDC along with irrevocable power of attorney. The associates / promoters has also subscribed to the undertaking for buy back of the shares subscribed by PSIDC as referred above. As per the terms of undertaking for buy back of the shares, the associates / promoters are to buy the said shares at the face value along with interest applicable to terms financing before the expiring of seven years from the date of commencement of commercial production i.e.4th April, 1994. As per the term of the above referred undertaking, in case the associates / promoters do not buy back the shares subscribed by PSIDC, then the PSIDC is entitled to sell the shares subscribed by it and also recovers the loss if any by sale of the above referred shares pledged to the PSIDC. The PSIDC had announced OTS Policy for equity disinvestment. The associates / promoters have applied for buy back of shares under OTS policy, subject to their rights under the law to adjudicate upon the amount due under the buy back agreement However the government of Punjab has amended the one time settlement scheme whereby the profit making companies are not eligible for the OTS scheme as per industrial policy 2003. The PSIDC vide letter dated 29th April, 2009 has illegally withdrawn the OTS in case of Prime Industries Limited and the matter is sub judice before Honorable Punjab & Haryana High Court. The Government of Punjab has Further notified a new one time settlement scheme (OTS) vide notification number 15/03/09-AS-6/400 Dated 2nd March, 2009. The associates / promoters being eligible even under the new OTS policy also, have applied for buy back of shares. The request of associates / promoters has not been accepted by PSIDC and the matter is sub judice before Honorable Punjab & Haryana High Court. The associate Master Trust Ltd has already paid a sum of Rs. 2.51 crore to PSIDC in this regard but the PSIDC has made company as one of party in suit for Recovery filed with Debt Recovery Tribunal. . In view of the management the company has no liability as company is not party to buy back agreement.

2. (a) Balances of sundry debtors, loans & advances and creditors are subject to confirmation and reconciliation if any.

(b) The Company has pending suits for recovery against debtors/advances of Rs.37.00 lacs (previous year 37.00 lacs) for recovery of outstanding amounts. No provision has been considered necessary for these suits pending since in the opinion of management these debts are recoverable.

3. In the opinion of the Board, all the current assets, Loans & advances having the value on realization in the ordinary course of business at least equal to the amount at which they are stated except as expressly stated otherwise.

4. Income from Sales,Purchase of securities,Land,Others include , Income from Land Rs.47.01Lacs (Preivious Year Rs. Nil), Misc Income Rs 0.35 Lacs(Previous Year Rs Nil),Profit/(loss) on Shares/Derivatives Trading (Rs. 31.59) Lacs (Previous Year (Rs. 126.37) Lacs) ,Profit/(loss) on Investment in Shares Rs. 8.84 Lacs(Previous Year Nil), Profit and Loss On Sale of Fixed Assets (Rs.15.43 Lacs) (Previous Year Nil)

5. The company is primarily engaged in Real Estate and allied activities and there are no separate reportable segments as per Accounting Standard (AS) 17 on "Segment Reporting".

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Mar 31, 2013

1 Contingent liabilities

(a) Balances of sundry debtors , loans & advances and creditors are subject to confirmation and reconciliation if any.

(b) The Company has filed legal cases against debtors/advances of Rs.23.12 lacs (previous year 57.00 lacs) for recovery of outstanding amounts. No provision has been considered necessary for the cases filed in current year, since in the opinion of management these debts are recoverable.

2 (a) In the opinion of the Board, all the current assets, Loans & advances having the value on realization in the ordinary course of business at least equal to the amount at which they are stated except as expressly stated otherwise.

3 Income from Sales, Purchase of securities, Land, Others include , Income from trading of Land Rs.Nil (Previous Year Rs. 33.89 Lacs), Misc Income Rs Nil (Previous Year Rs 0.02 Lacs),Profit/(loss) on Shares/Derivatives Trading (Rs. 126.37) Lacs (Previous Year (Rs. 0.32) Lacs)

4 The company is primarily engaged in Real Estate and allied activities and there are no separate reportable segments as per Accounting Standard (AS) 17 on "Segment Reporting".

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Mar 31, 2012

1.1 Contingent liabilities

For the accounting year 2002-03, Excise & Taxation Department Patiala has issue a show notice to revision the Sales Tax liabilities of Rs. 90.02 lacs. The appeal has been decided in the favour of the company. The status of further appeal by department against the order of VAT tribunal Punjab is not clear as no intimation has been receieved from Department.

1.2 (a) Balances of sundry debtors , loans & advances and creditors are subject to confirmation and reconciliation if any.

(b) The Company has filed legal cases against debtors/advances of Rs.57.00 lacs (previous year 135.96 lacs) for recovery of outstanding amounts. No provision has been considered necessary for the cases filed in current year, since in the opinion of management these debts are recoverable.

1.3 (a) In the opinion of the Board, all the current assets, Loans & advances having the value on realization in the ordinary course of business at least equal to the amount at which they are stated except as expressly stated otherwise.

(b) The Shares of Sel Manufacturing Ltd have been valued at Cost of Rs.10.50 Crores, Market Value of which is Rs.1.67 Crore, The fall in opinion of management is temporary and hence no loss has been booked.

1.4 Income from Sales,Purchase of securities,Land,Others include, Income from trading of Land Rs.33.89 Lacs (Preivious Year Nil), Misc Income Rs.0.02 Lacs (Previous Year Nil),Profit/loss() on Shares/Derivatives Trading (Rs.0.32) Lacs (Previous Year (Rs. 10.97) Lacs), Insurance Claim Nil (Previous year Rs. 0.14 Lacs).

1.5 The company is primarily engaged in Real Estate and allied activities and there are no separate reportable segments as per Accounting Standard (AS) 17 on "Segment Reporting".

2 The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.