m. Contingent liability
Contingent liabilities are disclosed in the notes, if any. Contingent liabilities are disclosed for
i. possible obligations which will be confirmed only by future events not wholly within the control of the Company or
ii. present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
n. Employee benefits
Short-term obligations
Short-term employee benefits are expensed as the related service is provided. Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within one year after the end of the period in which the employees render the related service are the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
Other long-term employee benefits obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
The company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months and accordingly amounts have been classified as current and non-current based on actuarial valuation report.
Post-employment obligations
The Company operates the following post-employment schemes:
i. defined benefit plan - gratuity; and
ii. defined contribution plans such as provident fund and superannuation fund.
Defined benefit plans
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present
value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. If the fair value of plan assets exceeds the present value of the defined benefit obligation at the end of the balance sheet date, then excess is recognized as an asset to the extent that it will lead to, for example, a reduction in future contribution to plan asset.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
Defined contribution plans
Retirement benefit in the form of provident fund and superannuation fund are defined contribution schemes. The Company has no obligation, other than the contribution payable to the provident fund and superannuation fund. The Company recognizes contribution payable to the provident fund and superannuation fund as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid.
o. Financial instruments
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value, except for investment in subsidiaries, associates or joint venture where the Company has availed option to recognise the same at cost in separate financial statements.
The classification depends on the Company’s business model for managing the financial asset and the contractual terms of the cash flows. The Company classifies its financial assets in the following measurement categories:
i. to be carried at fair value through other comprehensive income (FVOCI),
ii. to be carried at fair value through profit or loss (FVPL),
iii. to be carried at amortised cost, and
iv. to be carried at cost (investment in Subsidiaries/associates).
Subsequent measurement
For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. Other financial assets are measured at amortised cost, using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit or loss.
Impairment of financial assets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss financial assets that are not fair valued.
/
The Company follows ‘simplified approach’ for recognition of impairment loss allowance on Trade receivables or contract revenue receivables; and all lease receivables resulting from transactions within the scope of Ind AS 116. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.
The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized, is recognized under the head ‘other expenses’ in the statement of profit and loss.
The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are credit impaired on purchase/ origination.
De-recognition of financial assets
The Company derecognizes a financial asset when -
i. the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under IND AS 109.
ii. it retains contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients.
When the entity has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is de-recognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to extent of continuing involvement in the financial asset.
Financial liabilities Initial recognition
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification, as described below: Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within one year after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
p. Earnings per share
The basic earnings per share is computed by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The Company does not have any potential equity share or warrant outstanding for the periods reported, hence diluted earnings per share is same as basic earnings per share of the Company.
q. Segment reporting
Where a financial report contains both consolidated financial statements and separate financial statements of the parent, segment information needs to be presented only in case of consolidated financial statements.
Accordingly, segment information has been provided only in the consolidated financial statements.
r. Critical accounting estimates and judgements
Impairment of financial assets
The Company’s management estimates the collectability of Loan receivables, Investments in associates and Trade receivables by analysing historical payment patterns, credit-worthiness of party and current economic trends. If the financial condition of the party deteriorates, additional allowances may be required.
Fair valuation of certain investment
Fair value of unquoted investment in Alternate Investment Fund (AIF) is not readily available. As per the Scheme of the Fund, half-yearly valuation is provided by the Fund, after end of the reporting period, which sometimes may not be available till approval of the Company’s financial statement.
In such case the most recent valuation and other information (i.e. gain/loss) details provided by the Fund, available till financial statement/financial results approval date, is used for calculation of fair value gain/loss as on respective reporting date.
Income Taxes
Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
Defined benefit obligation
The cost of the defined benefit plans and the present value of the defined benefit obligation are based on actuarial valuation using the projected unit credit method. 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, employee turnover rate 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.
(d) Estimation of fair value
The Company obtains valuation for its investment properties once in five years, from registered valuers. The frequency of valuations depends upon the changes in fair values of the items of investment property being valued. Based on the Management’s assessment, frequent valuations are unnecessary, since changes in fair values are insignificant. The last fair valuation is done in March-2024. The fair market value arrived by the Valuers is based on - (i) for land inspection of properties and using comparable transfer instances of the similar type of properties of nearby locations, and (ii) for building - considering the prevailing building rates with appropriate depreciation for building.
Note 10(c): Nature and purpose of reserves
(i) Securities premium:
Securities premium reserve is used to record premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
(ii) General reserve:
General reserve are portion of the accumulated earnings of a company, which are kept aside to meet any business purpose or future (known or unknown) obligations.
(iii) Capital reserve:
Capital reserve comprises of :
i) ' 5.86 lakhs on reissue of forfeited shares
ii) ' 901.14 lakhs (31-Mar-2023: ' 901.14 lakhs ) on revaluation and conversion of land as stock in trade [refer note 7(a)].
iii) ' 135.15 lakhs (31-Mar-2023: ' 135.15 lakhs ) on merger of wholly owned subsidiary as per scheme approved by NCLT.
(iv) Retained earnings:
Retained earnings comprises of the Company’s undistributed earnings after taxes.
(v) FVOCI equity instrument reserve:
The fair value changes of certain investments in equity instruments, designated as ‘fair value changes through other comprehensive income’, is recognised in reserves under FVOCI equity instruments reserve.
(i) Leave obligations -
The leave obligation covers the Company’s liability for accumulated leaves that can be encashed or availed. The company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months and accordingly amounts have been classified as current and non current based on actuarial valuation report.
(ii) Defined benefit plans:
a. Gratuity - The Company provides for gratuity for employees as per the terms of employment. Employees who are in continuous service at least for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is calculated at the last drawn monthly basic salary multiplied by 15 days salary for each completed years of service of the employee. The scheme is funded with Life Insurance Corporation of India (LIC).
In addition, employees who have completed 20 years of service are eligible to additional gratuity computed at last drawn monthly basic salary multiplied by 7 days salary for each completed years of service of the employee. The additional gratuity benefit is unfunded.
The net liability disclosed above relates to unfunded plan. The Company has no legal obligation to settle the deficit in the unfunded plans with an immediate contribution or additional contribution. The Company intends to contribute in line with the recommendations of the fund administrator and the actuary.
ab. As at March 31, 2024 and March 31, 2023, plan assets were invested in funds managed by insurer (LIC).
ac. Through its defined benefit plans, the group is exposed to number of risks, the most significant of which are detailed below:
Asset Volatility: The Plan liabilities are calculated using a discount rate set with reference to government bond yields. If plan assets underperform, this yield will create a deficit. The plan asset investments are in funds managed by insurer. These are subject to interest rate risk.
Changes in bond yield: A decrease in government bond yields will increase plan liabilities, although this may be partially offset by an increase in the returns from plan asset.
b. Defined benefit liability and employer contributions:
ba. The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans. Within the framework, the Company’s ALM objective is to match assets to the gratuity obligations by investing in funds with LIC in the form of a qualifying insurance policy.
The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the process used to manage its risks from previous periods.
c) Valuation technique used to determine fair value
Level 1: This hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock exchange is valued using the closing price as at the reporting period. The fair value of all mutual funds are arrived at by using closing Net Asset Value published by the respective mutual fund houses.
Level 2: Fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument as observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable data, the instrument is included in level 3. This is the case for unlisted equity securities.
The Company’s business activities are exposed to a variety of financial risks, namely liquidity risk, market risks and credit risk. The Company’s senior management has the overall responsibility for establishing and governing the Company’s risk management framework. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.
a. MANAGEMENT OF CREDIT RISK
Credit risk is the risk that a counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities and from its investing activities, including loans, deposits with banks and other financial instruments.
i) Trade Receivables
Trade receivables are generally unsecured. Customer credit risk has always been managed by the company through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business.
For real estate project the Company’s average execution cycle ranges from 12 to 36 months based on the nature of project. The company’s credit period generally ranges from 15-60 days.
The Company follows ‘simplified approach’ for recognition of impairment loss allowance on Trade receivables, as explained in note 2(o).
During the period, the Company made no write-offs of trade receivables. It does not expect to receive future cash flows or recoveries from receivables previously written off.
ii) Other financial assets:-
The Company maintains exposure in cash and cash equivalents, loans and investment in group companies, investments in money market, mutual funds etc. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company on an annual basis, and may be updated throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.
Other financial assets that are potentially subject to credit risk consists of inter corporate loans. The company assesses the recoverability from these financial assets on regular basis. Factors such as business and financial
performance of counterparty, their ability to repay, regulatory changes and overall economic conditions are considered to assess future recoverability. The company charges interest on such loans is at arms length rate considering counterparty’s credit rating. Based on the assessment performed, the company considers all the outstanding balances of such financial assets to be recoverable as on balance sheet date and no provision for impairment is considered necessary.
The Company’s maximum exposure to credit risk is the carrying value of each class of financial assets.
iii) Financial Guarantee given:
The Company has given a corporate financial guarantee to banks on behalf of AMJ Land Developers (the “Subsidiary Entity”) for credit facility of 15 crores (31-Mar-23: 15 crores). The credit facility of the Subsidiary Entity is for the period up to repayment of loan.
As per Ind AS 109, the Company is required to recognise financial guarantee commission income and financial guarantee liability based on fair value of such financial guarantee. However, the Company has not directly or indirectly received any commission or benefit by whatever name called, for providing such guarantee. Also there is no future right to receive any benefit/ commission. As per the Management’s assessment, there would not be any change in rate of interest, commission, other charges charged by the banks to the Subsidiary Entity on the said credit facility or in any if the terms of the credit facility, with or without the corporate financial guarantee given by the Company. Hence based on the Management’s assessment, the Company has not recorded any guarantee commission income on the corporate financial guarantee given to the Subsidiary Entity.
Based on expected credit loss assessment, the Management does not estimate any liability to arise in future on account of the corporate financial guarantee given. Hence no liability recognised in books for such corporate financial guarantee contract.
b. MANAGEMENT OF LIQUIDITY RISK
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company’s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses or risking damage to company’s reputation. In doing this, management considers both normal and stressed conditions.
Management monitors the rolling forecast of the company’s liquidity position on the basis of expected cash flows. This monitoring includes financial ratios and takes into account the accessibility of cash and cash equivalents.
The company has access to funds from debt markets through loan from banks .The company invests its surplus funds in bank deposits and debt based mutual funds.
The following table shows the maturity analysis of the Company’s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of fluctuation in market prices. These comprise three types of risk i.e. currency rate , interest rate and other price related risks. Financial instruments affected by market risk include loans and borrowings, deposits and investments.
i) Currency Risk and sensitivity:-
The Company does not have any currency risk as all operations are within India.
ii) Interest Rate Risk and Sensitivity:-
Interest rate risk is the risk that the fair value or future cash flows on a financial instrument will fluctuate because of changes in market interest rates. The management is responsible for the monitoring of the company’s interest rate position. Various variables are considered by the management in structuring the company’s investment to achieve a reasonable competitive, cost of funding.
Cash flow sensitivity analysis for variable rate instruments
The Company does not have any variable rate instrument/loan. Hence there will be no change in profit due to change in interest rates.
iii) Price Risk and Sensitivity:
The Company is mainly exposed to the price risk due to its investment in debt mutual funds, alternative investment fund (AIF) and investment in equity instruments carried at FVOCI. The price risk arises due to uncertainties about the future market values of these investments. As on 31st March 2024, the investments in debt liquid mutual funds amounts to ' 2,555.59 lakhs (31-Mar-2023: 2,083.30 lakhs), debt mutual funds amounts to ' 60.72 lakhs (31-Mar-2023: 56.38 lakhs), alternative investment funds to ' 440.40 lakhs (31-Mar-2023: 547.13 lakhs) and the investment in equity instruments carried at FVOCI is ' 3,973.19 lakhs (31-Mar-2023: 2344.34 lakhs). These investments are exposed to price risk. Change in price of debt liquid mutual funds are very minimal, hence not considered in price risk sensitivity disclosure.
The Company has laid policies and guidelines which it adheres to in order to minimise price risk arising from investments in debt mutual funds and alternate investment fund.
A 1% increase in prices would have led to approximately an additional ' 5.01 lakhs gain in the Statement of profit and loss and (31-March-2023: ' 6.04 lakhs gain). A 1% decrease in prices would have led to an equal but opposite effect.
The company also have investment in equities of group companies. The company treats such investment as strategic and thus fair value the investment through OCI. Thus the changes in the market price of the securities are reflected under OCI and hence not having impact on profit and loss. The profit or loss on sale will be considered at the time of final disposal or transfer of the investment. The investment in associates and subsidiaries are carried at cost.
(a) Risk management
The Company’s policy is to maintain an adequate capital base so as to maintain creditor and market confidence and to sustain future development. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using gearing ratio, which is net debt divided by total capital plus net debt. Net debt comprises of long term and short term borrowings less cash and bank balances and liquid investments. Equity includes equity share capital and other equity that are managed as capital.
Note 33: Benami Property Details
No proceedings has been initiated or pending against the Company for holding any benami property under the Benami Transaction (Prohibition) Act 1988 or rules made thereunder. Hence no further disclosure required.
Note 34: Layers of Companies
The Company is not in non compliance with number of layers of companies prescribed under clause (87) of section 2 of the Companies Act 2013 read with the Companies (Restriction on number of layers) Rules, 2017. Hence no further disclosure required.
Note 35: Registration of Charges
There has been no delay in registration of charges or satisfaction with ROC.
Note 36: Reclassification
Previous year figure’s have been reclassified to conform to this year’s classification The accompanying notes are integral part of the financial statements.
As per our report of date attached For and on behalf of the Board of Directors of AMJ Land Holdings Limited
For J M AGRAWAL & CO. Preeti Mehta A. K. Jatia
Firm Registration No - 100130W Director Chairman
Chartered Accountants
PUNIT AGRAWAL Shrihari Waychal S. K. Bansal
Partner Company Secretary Director (Finance) &
Membership No - 148757 Chief Financial Officer
Place : Pune Place : Pune
Date : 28lh May, 2024 Date : 28lh May, 2024
|