(p) Provision, Contingent Liabilities and Contingent Assets, legal or constructive
Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event and it is probable ("more likely than not") that it is required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the estimated cash flows to settle the present obligation, its carrying amount is the present value of those cash flows. The discount rate used is a pretax rate that reflects current market assessments of the time value of money in that jurisdiction and the risks specific to the liability.
A contingent liability is a possible obligation that arises from a past event, with the resolution of the contingency dependent on uncertain future events, or a present obligation where no outflow is probable. Material contingent liabilities are disclosed in the financial statements unless the possibility of an outflow of economic resources is remote. Contingent assets are not recognized in the financial statements unless it is virtually certain that the future event will confirm the asset's existence and the asset will be realised.
2D Recent Indian Accounting Standards (Ind AS)/ Pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. There is no such notification which would have been applicable from 1st April, 2024, for which the impact on the Standalone Financial Information is required to be disclosed
Security
Cash credit, Packing Credit & Working Capital Demand Loan
(a) The Company has Cash credit facility with Bank of Baroda with a sub-limit of letter of credit (ILC/FLC/SBLC), carrying variable interest (presently @ 9.15% p.a.), secured by:
Security details
- First pari-pasu charge on the entire current assets of the company, both present and future.
- 10 % cash Margin in the Form of FDR on L/C Limit utilization basis.
- 10 % cash Margin in the Form of FDR on P/C Limit utilization basis.
- 10 % cash Margin in the Form of FDR on BG Limit utilization basis. (In case of disputed liabilities / Court cases 100% cash Margin).
Collateral security
- Equitable Mortgage on Factory Lands along with Shed & Building thereon (First Pari Passu Charge with Citi Bank, NA).
- Entire Fixed Assets of the Company except Land & Building as above. (First Pari Passu Charge with Citi Bank, NA).
- Lien on FDR for ? 3.38 millions in the name of the company.
- Personal Guarantee
Above facilities are secured by personal guarantee of three Promoter directors.
(b) The company has Cash credit facility with Citi Bank with a sub-limit of Working Capital Demand Loan (WCDL), Packing Credit, Pre and Post
Shipment - Under LCs/ PO and Sight/ Usance Letter of credit, carrying variable interest (presently @ 8.5% p.a.), secured by:
Security details
- First paripasu charge on the Stock and Book debts of the company both present and future.
- First Paripasu Charge on Entire Plant & Machinery and other movable assets of the company present and future.
- First Paripasu charge by way of Equitable Mortgage on factory land along with shed, building etc located at Jalan Industrial Complex, Domjur, District, Howrah and at Belur 189, Girish Ghosh Road, Howrah, owned by the company.
- Cash margin of 10% on SLC/ULC and BG.
- Personal Guarantee
Above facilities has been secured by personal guarantee of two Promoter directors.
37 Segment information
An operating segment is one whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. The Company has identified the Chief Operating Decision Maker as its Managing Director. The company operates mainly in one business segment viz., Manufacturing and selling of Zinc based products and all other activities revolve around the main activity. As the Company has a single reportable segment, the segment wise disclosure requirements of Ind AS 108 on Operating Segment is not applicable. In compliance to the said standard, Entity-Wise disclosures are as under:
B. Fair Value Hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.
Level 2: Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly (i.e. available prices) or indirectly (i.e. derived from estimation).
Level 3: Inputs for the assets or liabilities that are not based on observable market data.
Valuation techniques to determine Fair Value
(i) The management assessed that fair value of trade receivables, cash and cash equivalents, other bank balances, loans, borrowings, 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 equity investment which are quoted, are derived from quoted market prices in active markets. The Investment measured at fair value (FVTOCI) and falling under fair value hierarchy Level 2 is valued on the basis of valuation report provided by external valuer.
(iii) The fair values of investments in mutual fund units is based on the net asset value ('NAV') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors
(iv) The Company enters into derivative financial instruments with few financial institutions. Commodity contracts are valued using the forward LME rates of commodities actively traded on the listed metal exchange i.e. London Metal Exchange, United Kingdom (U.K.) [a level 2 technique]. The changes in counterparty risk had no material effect on the hedge effectiveness assessment for the derivatives designated in hedge relationship and the value of the other financial instrument recognised at fair value.
C. Financial Risk Management
The Company's activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company continues to focus on a system-based approach to business risk management. The Company's financial risk management process seeks to enable the early identification, evaluation and effective management of key risks facing the business. Backed by strong internal control systems, the current Risk Management System rests on policies and procedures issued by appropriate authorities; process of regular reviews / audits to set appropriate risk limits and controls; monitoring of such risks and compliance confirmation for the same.
(i) Market Risk
Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the company functional currency exposure.
Price Risk
The Company invests its surplus funds primarily in equity shares and mutual funds measured at fair value. Aggregate value of such investments as at March 31,2024 is ? 354.42 millions (As at March 31,2023 ? 29.45 millions)
Increase/(decrease) of 5% would result in an impact increase/(decrease) by ? 17.72 millions and ? 1.47 millions on total profit for the year ended March 31,2024 & March 31,2023
(ii) Liquidity Risk
Liquidity risk is the risk than an entity will encounter difficulty in meeting obligation associated with financial liabilities that are settled by delivering cash or other financial assets. The Company mitigates its liquidity risks by ensuring timely collections of its receivables and close monitoring of its credit cycle.
(iii) Credit Risk
Credit risk is the risk of financial loss in case counter-party to a financial instrument fails to repay debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks.
Financial instruments that are subject to credit risk and concentration thereof principally consist of trade receivables and loans, investments and other financial assets.
In respect of trade and other receivables, the company is not exposed to any significant credit risk exposure to any single party. Trade receivables consist of major customers belonging to Tyre & Rubber Industries. The company has very limited history of customer default, and considers the credit quality of trade receivables, that are not past due or impaired, to be good.
The credit risk for cash and cash equivalents and bank deposits is considered negligible, since the counterparties are reputable organisations with high quality external credit ratings.
The exposure to credit risk was ? 1114.45 millions & ? 898.16 millions, as at March 31, 2024 and March 31, 2023 respectively, being the total carrying value of trade receivables, loans, investments in mutual funds and other financial assets.
(iv) Capital Management
The Company's policy is to maintain a strong capital base for future development of the business. For the purpose of Company's capital management, capital includes issued capital and all other equity attributable to equity shareholders of the Company. As at March 31,2024, the Company has only one class of equity shares.
(v) Hedging activity and derivatives
Fair value hedge of Zinc metal price risk
The Company is exposed to fluctuations in zinc metal price on purchase, sale and inventories lying with the company. To manage the variations in fair value, the company enters into derivative financial instruments relating to the highly probable forecasted transactions to mitigate the risk associated with zinc metal price fluctuations. Such derivative financial instruments are primarily in the nature of future commodity contracts.
The company designates derivatives as hedging instruments in respect of commodity price risk in cash flow hedges and fair value hedges. As the value of the derivative instruments generally changes in response to the value of the hedged item, the economic relationship is established.
45 Other Regulatory Information :
(i) The Company does not have any Benami property and no proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with struck off Companies.
(iii) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
(iv) The Company has not advanced or given loan or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) 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
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(v) The Company has not received any fund 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:
(a) 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
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vi) The Company does not have any such 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.
(vii) The Company has not traded or invested in Crypto currency or Virtual Currency during the year.
(viii) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
(ix) There are no charges or satisfaction yet to be registered with ROC beyond the statutory period.
47 Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification/disclosure. Accordingly, amounts and other disclosures for the preceding year are included as an integral part of the current year's financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.
As per our report of even date For and on behalf of the Board of Directors of
For S. Jaykishan J.G.Chemicals Limited
Chartered Accountants
Firm's Registration Number :309005E Suresh Jhunjhunwala Anirudh Jhunjhunwala
Executive Chairman CEO & Managing Director
CA Vishal Agarwal DIN No. 00234725 DIN No. 00234879
Partner
Membership No. 315490 Anuj Jhunjhunwala Swati Poddar
UDIN: 24315490BKCBWW6238 Whole time Director & CFO CS & Compliance Officer
Place : Kolkata DIN No. 00234926 Membership No. : A49212
Date: 08 May 2024
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