MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of our financial condition and results of operations is based on, and should be read in conjunction with, our Restated Financial Information (including the schedules, notes and significant accounting policies thereto), included in the section titled "Restated Financial Information " beginning on page 243 of this Draft Red Herring Prospectus.
Our Restated Financial Information has been derived from (i) our audited financial statements for Fiscal 2023;
(ii) our audited special purpose financial statements for Fiscal 2022, 2021 and (iii) our audited special purpose interim financial statements for the three month period ended June 30, 2023; and have been restated in accordance with the SEBIICDR Regulations and the ICAI Guidance Note. Our financial statements for Fiscal 2023, our audited special purpose financial statements for Fiscal 2022, 2021 and our audited special purpose interim financial statements for the three month period ended June 30, 2023 are prepared in accordance with Ind AS, notified under the Companies (Indian Accounting Standards) Rules, 2015, and read with Section 133 of the Companies Act, 2013 to the extent applicable. Ind AS differs in certain material respects from IFRS and U.S. GAAP and other accounting principles with which prospective investors may be familiar. Accordingly, the degree to which the financial statements prepared in accordance with Ind AS included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the readers level offamiliarity with Ind AS accounting policies. We have not attempted to quantify the impact of IFRS or U.S. GAAP on the financial information included in this Draft Red Herring Prospectus, nor do we provide a reconciliation of our financial information to IFRS or U.S. GAAP. Any reliance by persons not familiar with Ind AS accounting policies on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited.
Unless otherwise indicated or the context requires otherwise, the financial information for the three month period ended June 30, 2023 andfor the Fiscals 2023, 2022 and 2021 included herein have been derivedfrom our restated statements of assets and liabilities as of June 30, 2023, March 31, 2023, March 31, 2022 and March 31, 2021 and restated statements of profit and loss (including other comprehensive income), restated statements of cash flows and restated statements of changes in equity for the three month period ended June 30, 2023 and for the fiscal years ended March 31, 2023, March 31, 2022 and March 31, 2021 of the Company, together with the statement of significant accounting policies, and other explanatory information thereon.
Our fiscal year ends on March 31 of each year, and references to a particular fiscal period are to the 12 months ended March 31 of that year. All references to a year are to that Fiscal Year, unless otherwise noted.
Some of the information contained in this section, including information with respect to our strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section titled "Forward- Looking Statements" beginning on page 19 of this Draft Red Herring Prospectus for a discussion of the risks and uncertainties related to those statements and also the section titled "Risk Factors" and "Our Business" beginning on pages 27 and 181, respectively, of this Draft Red Herring Prospectus for a discussion of certain factors that may affect our business, results of operations and financial condition. The actual results of the Company may differ materially from those expressed in or implied by these forward-looking statements.
Unless otherwise indicated, industry and market data used in this section has been derived from the report "Market dynamics for select forged and machined components and assemblies in the commercial vehicle and tractor segment" dated November, 2023 (the "CRISIL Report") prepared and released by CRISIL Limited and commissioned and paid for by us in connection to the Offer. A copy of the CRISIL Report will be available on the website of our Company at www.krosslimited.com from the date of the Red Herring Prospectus. Unless otherwise indicated, all financial, operational, industry and other related information derived from the CRISIL Report and included herein with respect to any particular year refers to such information for the relevant calendar year.
Unless otherwise stated, references to "the Company", "our Company", "we", "us", and "our" are to Kross Limited.
Overview
We are a diversified player focused on manufacturing and supply of trailer axle and suspension assembly and a wide range of forged and precision machined high performance safety critical parts for medium and heavy commercial vehicles ("M&HCV") and farm equipment segments. We are widely recognized as one of the prominent manufacturers of trailer axles and suspension assembly in India (Source: CRISIL Report). In 2019, we
commenced manufacture and sale of trailer axle and suspension assemblies and have witnessed robust growth in the past three years (between Fiscal 2020 and Fiscal 2023) (Source: CRISIL Report). We have become one of the fastest growing player in the organised trailer axle manufacturing industry competing with major trailer axle manufacturers (Source: CRISIL Report). With over three decades of experience, we rely on our product development capabilities to design and deliver proprietary products such as trailer axle and suspension assembly. We are one of the few players domestically, with the competency to manufacture trailer axles and suspension assembly in-house (Source: CRISIL Report).
With a diversified portfolio of high performance and safety critical components for the M&HCV and farm equipment segments, we are a specialist in manufacturing of safety critical components for M&HCV segment which include axle shafts, companion flanges, anti-roll bars and stabilizer bar assembly, suspension linkages, differential spiders, bevel gears, planet carriers, inter-axle kits, rear end spindles, pole wheels and wide variety of tractor components for the hydraulic lift arrangement, power take-off ("PTO") shafts and front axle spindles.
We supply our products to a diversified client base which includes large original equipment manufacturers ("OEMs") manufacturing M&HCV and tractors, tier one suppliers to the OEMs in the M&HCV segment domestic dealers and fabricators for our trailer axle and suspension business. In the past we have been recognized by customers for the high-quality of the products supplied by us, which is one of the factors that has helped us establish long term relationships with several large domestic and global OEMs, including, Ashok Leyland Limited, a leading Indian automobile OEM and a Indian farm equipment OEM, each of whom we have been associated with for a period of more than 18 years and Tata International DLT Private Limited with whom we have been associated since 2019. Due to our track record and diverse product portfolio, we have also been able to attract new customers such as Leax Falun AB and a Japan based OEM manufacturing commercial vehicles. We have also commenced our bulk exports to Leax Falun AB, a Sweden based company manufacturing propeller shafts for commercial vehicle OEMs, in August 2023 with supplies of Universal Joint Crosses and are in stages of validation for other critical parts.
We are backward integrated with design, process engineering, forging, casting and machining capabilities which allows us greater control over process, timelines, pricing and quality. We believe that our in-house design capabilities have been instrumental in our success by allowing us to work closely with customers for design and development of high performance and safety-critical components and assemblies, such as, anti-roll bars and stabiliser bars, where we along with the OEMs design team, conceptualised the design and framework of the product. For our trailer axles and suspension assemblies, we are also forward integrated with a network of sales and service locations across key states in India, as of the date of this Draft Red Herring Prospectus. Design, technology used for development, backward integration and after-sale service provided are crucial aspects for trailer axle manufacturers (Source: CRISIL Report). For our trailer axle and suspension assembly business, we operate our service on a mobile and on road basis, where once a complaint is registered by the customer, our service associate is deployed to the location of origin of the compliant to resolve the same. We have a custom service software developed by Sales force which gives us accurate tracking of service complaints as well as service history of the vehicle.
We operate out of five manufacturing facilities in Jamshedpur, Jharkhand, equipped with (i) forging presses and upsetters equipped with induction billet heaters, (ii) foundry with a high pressure mould line, (iii) high-precision machining equipment such as turning centres, vertical and horizontal milling centres, grinding, broaching, hobbing, shaping and robotic welding, (iv) in-house cathodic electro-disposition plant ("CED Plant"), powder coating, spray painting and (v) heat treatment furnaces and induction hardening equipment. Our manufacturing facilities (Units I, II, III, IV and V) have obtained ISO 9001:2015 for manufacture of axle shaft, PTO shaft, lift shaft, ring gear, bevel gear assembly and related parts from TUV NORD CERT GmbH and IATF 16949:2016 quality certifications for manufacture of axle shafts, universal joints (for steering and propeller shaft), differential spiders, companion flanges, anti-roll bar, bevel kit assembly and trailer axle assembly from TUV NORD CERT GmbH.
We currently manufacture a large variety of components and have the capacity to manufacture forged parts of up to 40 kg input weight. We enhanced our backward integration capabilities by establishing a new casting facility at Unit V, setting up a high-pressure mould line foundry along with a machine shop. We are in the process of expanding our capacity and increasing our product offerings through the expansion of our existing facilities, through the addition of further production lines, which will allow us to produce a new line of parts such as the hydraulic cover for tractors and in-house machining line of hubs and brake drums. For further details of the proposed expansion, see "Objects of the Offer - Funding of capital expenditure requirements of our Company towards purchase of machinery and equipment on page 106.
Our Chairman and Managing Director, Sudhir Rai, has been an integral part in the establishment and growth of our Company and with over three decades of experience in the automotive component manufacturing industry, and has been instrumental in our continued growth. Most of the Key Management Personnel and the Senior Management Personnel of the Company have also been associated with us for more than a decade and have contributed to the growth of the Company through their commitment and expertise. We believe our experienced and dedicated senior management team also enables us to identify market opportunities, formulate and execute business strategies, manage customer expectations and proactively address changes in market conditions.
Our key performance indicators for the three-month period ended June 30, 2023 and for the last three Fiscals are as follows:
Particulars | As of / For the three month period ended June 30, 2023 |
As of/ For the year ended March 31, |
||
2023 | 2022 | 2021 | ||
Revenue from Operations (Rs. million) | 1,437.09 | 4,886.28 | 2,974.55 | 1,837.69 |
Total Income (Rs. million) | 1,438.74 | 4,893.57 | 2,978.81 | 1,842.05 |
Gross Profit (Rs. million)? | 544.90 | 1,989.19 | 1,371.69 | 950.37 |
Gross Margin (%)(2) | 37.92% | 40.71% | 46.11% | 51.72% |
EBITDA (Rs. million)? | 151.80 | 575.22 | 295.48 | 191.71 |
EBITDA Margin (%)(4) | 10.56%* | 11.77% | 9.93% | 10.43% |
Restated Profit Before Tax (Rs. million) | 110.16 | 417.10 | 163.10 | 58.34 |
Restated Profit for the period/ year (Rs. million) | 80.01 | 309.31 | 121.69 | 47.67 |
PAT Margin (%)(5) | 5.56%* | 6.32% | 4.09% | 2.59% |
Return on Equity (%)(6) | 7.25%* | 30.29% | 16.81% | 7.96% |
Return on Capital Employed (%)(7) | 6.66%* | 27.51% | 14.97% | 10.03% |
Gross Block (i.e. cost of property, plant and equipment right of use assets, capital work-inprogress and cost of intangible assets) (Rs. million) | 1,445.53 | 1,398.34 | 1,222.97 | 1,111.16 |
Gross Fixed Assets Turnover Ratio (in times)(8) | 0.99* | 3.49 | 2.43 | 1.65 |
Net Debt to EBITDA (in times)(9) | 5.89* | 1.29 | 2.89 | 4.32 |
* The ratios have not annualized Notes:
1. Gross profit is calculated as revenue from operations minus cost ofraw materials and components consumed minus changes in inventories of finished products and work in progress.
2. Gross Margin is calculated as gross profit divided by Revenue from Operations.
3. EBITDA is calculated as restated profit for the period/ year minus other income plus finance costs, depreciation and amortisation expense and total tax expense.
4. EBITDA Margin is calculated as EBITDA divided by Revenue from Operations.
5. PAT Margin is calculated as restated profit for the period/ year divided by total income.
6. Return on Equity is calculated as restated profit for the period/ year divided by total equity.
7. Return on Capital Employed is calculated as EBIT divided by capital employed Capital employed is calculated as total equity plus deferred tax liability plus lease liabilities (current and non-current) plus total borrowings while EBIT is calculated as restated profit for the period/ year plus total tax expense plus finance costs.
8. Gross Fixed Assets Turnover Ratio is calculated as revenue from operations divided by Gross Block as at the end of the period/year.
9. Net Debt to EBITDA is calculated as net debt divided by EBITDA. Net Debt is calculated as total of non-current borrowings and current borrowings minus total of cash and cash equivalents and bank balances.
For reconciliation in relation to the Gross Profit, Gross Margin, EBITDA, EBITDA Margin, Return on Equity, Return on Capital Employed, PAT Margin, Gross Fixed Asset Turnover Ratio and Net Debt to EBITDA, see " -
Non-GAAP Financial Measures" on page 311.
Principal Factors Affecting our Results of Operations and Financial Condition
Our results of operations have been, and will continue to be, affected by a number of events and actions, some of which are beyond our control. However, there are some specific items that we believe have impacted our results of operations and, in some cases, will continue to impact our results. We believe that the following factors, amongst others, have, or could have an impact on these results, the manner in which we generate income and incur the expenses associated with generating this income.
Trends affecting demand in sectors our customers operate in
Demand for our products is directly related to the production and sales of M&HCV and farm equipment by our customers. Production and sales of M&HCV and farm equipment may be affected by general economic or industry
conditions, improving industrial activity, agricultural output, the pace of infrastructure development as well as evolving regulatory requirements, government initiatives and trade agreements. Our sales are directly dependent on the production level of OEMs in M&HCV and farm equipment as well as manufacturers of tractor trailers and are affected by inventory levels of manufacturers operating in these industries. Set out below are the revenues generated from various end-use industries and as a percentage of our revenue from sale of products:
(in f million, except percentages)
Particulars | Three month period ended June 30, 2023 |
Fiscal 2023 |
Fiscal 2022 |
Fiscal 2021 |
||||
Amount (in Rs. million) | % of total revenue from operation | Amount (in Rs. million) | % of total revenue from operation | Amount (in Rs. million) | % of total revenue from operations |
Amount (in Rs. million) | % of total revenue from operations |
|
Commercial Vehicles* |
1,234.24 | 85.88% | 4043.46 | 82.75% | 2,230.92 | 75.00% | 1,162.83 | 63.28% |
Farm Equipment |
162.24 | 11.29% | 592.73 | 12.13% | 546.52 | 18.37% | 563.66 | 30.67% |
Total | 1,396.48 | 97.17% | 4,636.18 | 94.88% | 2,777.44 | 93.37% | 1,726.49 | 93.95% |
*Commercial vehicles include trailer axle and suspension
Further, production and sales of the vehicles for which we supply products are affected by a variety of other factors that are beyond our control, including changes in government policies, changes in consumer demand, product mix shifts favouring other types of vehicles, fuel prices, vehicle electrification, economic conditions, demographic trends, employment and income levels and interest rates, disruptions in these industries supply chain, vehicle age, labour relations, regulatory requirements, credit availability and cost of credit and general economic and industry conditions.
See "Industry Overview on page 138, for a discussion of macroeconomic conditions in the global economy and Indian economy and trends affecting the demand for MH&CV and farm equipment.
Raw Material Costs and Operating Costs
Our business, financial condition, results of operations and prospects are significantly impacted by the prices of raw materials purchased by us, particularly prices of steel. The cost of raw materials consumed (including changes in inventories of finished products and work in progress) was Rs.892.19 million, Rs.2,897.09 million, Rs.1,602.86 million and Rs.887.32 million in the three month period ended June 30, 2023, Fiscal 2023, 2022 and 2021 which represented 62.01%, 59.02%, 53.81% and 48.17% of our total income for the respective periods. Raw material pricing can be volatile due to a number of factors beyond our control, including global demand and supply, general economic and political conditions, transportation and labour costs, labour unrest, natural disasters, competition, import duties, fuel prices and availability, power tariffs and currency exchange rates. This volatility in commodity prices can significantly affect our raw material costs. While some of the contracts we have with our customers provide for pass through of any variation in the raw material costs, our cash flows may still be adversely affected because of any gap in time between the date of procurement of those primary raw materials and date on which we can reset the product prices for our customers, to account for the increase in the prices of such raw materials.
Our ability to manage our operating costs and operations efficiencies is critical to maintaining our competitiveness and profitability. Our profitability is partially dependent on our ability to increase our productivity and reduce our operating expenses.
Relationship with and dependence on key customers
We have established long-standing relationships with several large domestic and global OEMs, including, Ashok Leyland Limited, a leading Indian automobile OEM and a Indian farm equipment OEM, each of whom we have been associated with for a period of more than 18 years and Tata International DLT Private Limited with whom we have been associated since 2019. Due to our track record and diverse product portfolio, we have also been able to attract new customers such as Leax Falun AB and a Japan based OEM manufacturing commercial vehicles. We have also commenced our bulk exports to Leax Falun AB, a Sweden based company manufacturing propeller shafts for commercial vehicle OEMs, in August 2023 with supplies of Universal Joint Crosses and are in stages of validation for other critical parts.
Set out in the table below are our revenues from operations from our top three and top five customers, based on our Restated Financial Information during the three month period ended June 30, 2023 and the Fiscals 2023, 2022 and 2021:
Three month period ended June 30, 2023 |
Fiscal 2023 |
Fiscal 2022 |
Fiscal 2021 |
|||||
Particular s |
Amoun t (in Rs. million) | % of total revenue from operation s |
Amoun t (in Rs. million) | % of total revenue from operation s |
Amoun t (in Rs. million) | % of total revenue from operation s |
Amoun t (in Rs. million) | % of total revenue from operation s |
Top three customers | 797.83 | 55.52% | 2,467.7 7 |
50.50% | 1,620.9 1 |
54.49% | 1,081.4 4 |
58.85% |
Top five customers | 1,025.9 0 |
71.39% | 3,340.9 5 |
68.37% | 2,025.1 2 |
68.08% | 1,448.3 2 |
78.81% |
We plan our production scheduled based on the forecasts from our customers, as is standard in the automotive and non-automotive sectors. Any increases or decreases in the levels of inventory and activity by our customers, in turn, are likely to have an effect on our revenues and our results of operations. Our customers, in turn, are dependent on general trends impacting their operation. See, "-Trends affecting demand in sectors our customers operate in" on page 297.
Success of new products and geographies
We entered the trailer axle and suspension assembly business in 2019, and have witnessed robust growth in the past 3 years (between Fiscal 2020 and Fiscal 2023), becoming one of the fastest growing players in the organized trailer axle manufacturing industry (Source: CRISIL Report). Our revenues for operations from trailer axle and suspension business over the periods is as under:
Particular s |
Three month period ended June 30, 2023 |
Fiscal 2023 |
Fiscal 2022 |
Fiscal 2021 |
||||
Amoun t (in Rs. million) | % of total revenue from operation s |
Amoun t (in Rs. million) | % of total revenue from operation s |
Amoun t (in Rs. million) | % of total revenue from operatio n | Amoun t (in Rs. million) | % of total revenue from operation s |
|
Trailer axle and suspension s |
629.35 | 43.79% | 1,628.2 2 |
33.32% | 668.96 | 22.49% | 225.11 | 12.25% |
The trailer axle and suspension business differs significantly from our core business as this required us to set up distribution and servicing capabilities which were earlier not as critical in the component business. Having grown the business at a CAGR of 168.94% between Fiscal 2021 and Fiscal 2023, we intend to expand our product profile in axle business and will evaluate business segments which require similar capabilities. Once commissioned, we plan to utilize our capabilities in axle beam extrusion and seamless tube to explore areas of growth which are not available to us at this point in time.
Due to our track record and diverse product portfolio, we have also been able to attract new customers such as Leax Falun AB and a Japan based OEM manufacturing commercial vehicles. We have also commenced our bulk exports to Leax Falun AB, a Sweden based company manufacturing propeller shafts for commercial vehicle OEMs, in August 2023 with supplies of Universal Joint Crosses and are in stages of validation for other critical parts.The success of these industries, products and geographies depends on our managements ability to identify high growth potential opportunities and utilise our resources to develop these opportunities, which could have a significant impact on our results of operations.
Availability offunds for capital expenditure
We invest in machinery and equipment on an ongoing basis to expand our capacities as well as capabilities to seize opportunities for growth in the market. In the three month period ended June 30, 2023 and Fiscal 2023, 2022 and 2021, our cumulative capital expenditure (i.e. payments for acquisition of property, plant and equipment and intangible assets (including capital work in progress)) was Rs.457.02 million while our gross block (i.e. cost of property, plant and equipment, right of use assets, capital work-in-progress and cost of intangible assets) as at June 30, 2023 was Rs.1,445.53 million. Around 31.62% of our gross block as at June 30, 2023, was a result of our capital expenditure made between beginning of Fiscal 2021 and June 30, 2023.
We intend to use Rs.700.00 million from the net proceeds from the Offer for further capital expenditure. We also intend to create manufacturing capabilities in axle beam extrusion and intend to backward integrate into the seamless tube. The actual amount and timing of our future capital expenditure may deviate from initial estimates due to various factors including unforeseen delays or cost overruns, unanticipated expenses, regulatory changes, economic conditions, engineering design changes, technological advancements, and emerging market developments and opportunities in the sectors we focus on.
Significant Accounting Policies
Basis of Accounting and preparation of financial statements
The Restated Financial Information of the Company comprises the Restated Statement of Assets and Liabilities as at June 30, 2023, March 31, 2023, 2022 and 2021, the Restated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Statement of Cash Flows and the Restated Statement of Changes in Equity for the three month period ended June 30, 2023 and the years ended March 31, 2023, 2022 and 2021, and a summary of significant accounting policies and other explanatory information .
The Restated Financial Information has been approved by the Board of Directors of the Company on November 30, 2023 and have been prepared in all material respects with the requirements of:
(a) Section 26 of Part I of Chapter III of the Companies Act 2013 (the "Act"), as amended from time to time;
(b) SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, (the "SEBI ICDR Regulations"), as amended from time to time, and
(c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India (ICAI), as amended from time to time ("the Guidance Note").
The Restated Financial Information has been compiled from:
Audited financial statement of the Company as at year ended March 31, 2023 and Audited Special Purpose Interim Financial Statements for the three month period ended June 30, 2023, Audited Special Purpose Financial Statements for the years ended March 31, 2022 and 2021 which were prepared in accordance with Indian Accounting Standard as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India (referred to as "Ind AS"), which have been approved by the Board of Directors at their meetings held on September 27, 2023, November 30, 2023, November 30, 2023 and November 30, 2023, respectively.
Functional and presentation currency
These financial statements are presented in Indian Rupees Rs., which is also the Companys functional currency. All amounts have been rounded-off to the nearest Millions upto two decimals, unless otherwise stated.
Basis of measurement
These Restated Financial Information has been prepared on the historical cost basis except certain financial assets and liabilities which are measured at fair values.
Use of estimates and critical accounting judgements
In the preparation of the Restated Financial Information, the Company makes judgements, estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent from other sources. 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. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
Key source of estimation of uncertainty at the date of the Restated financial information, which may cause material adjustment to the carrying amounts of assets and liabilities within the next financial year are provided below:
(a) Property, plant and equipment and intangible assets - useful life
Property, plant and equipment represents 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 assets expected useful life and the expected residual value at the end of its life. The useful lives and residual values of the Companys assets are determined by the Company at the time the asset is acquired and reviewed periodically, including at the end of each reporting period. The lives are based on historical experience with similar assets.
(b) Assets and obligations relating to employee benefits
The cost of the defined benefit gratuity plan and the present value of the gratuity 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. 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.
(c) Lease classification, termination and renewal option of leases
Ind AS 116, Leases requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that the Company will continue the lease beyond non-cancellable period and whether any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the terminating the lease and the importance of the underlying asset to Companys operations taking in to account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Company has concluded that no material changes are required to lease period relating to the existing lease contracts.
(d) Contingent Liabilities
At each balance sheet date, on the basis of the management judgment, changes in facts and legal aspects, the Company assesses the requirement of disclosure against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.
Measurement of fair values
A number of the Companys accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values. The Company regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to measure fair values, then the Company assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in 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: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognises transfer between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Significant accounting policies
Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset is classified current when it is:
(a) Expected to be realised or intended to be sold or consumed in the normal operating cycle;
(b) Held primarily for the purpose of trading;
(c) Expected to be realised within twelve months after the reporting period; or
(d) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified current when:
(a) It is expected to be settled in the normal operating cycle;
(b) It is held primarily for the purpose of trading;
(c) It is due to be settled within twelve months after the reporting period; or
(d) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
Current liabilities include current portion of non- current financial liabilities .All other liabilities are classified as non - current.
Deferred tax assets and liabilities are always classified as non-current assets and liabilities.
Financial instruments
(a) Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
(b) Classification and subsequent measurement
Financial assets- On initial recognition, a financial asset is classified as measured at
- amortised cost;
- Fair value through profit or loss (FVTPL) or Fair value through other comprehensive income (FVOCI)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A financial asset is measured at fair value through other comprehensive income (FVOCI) if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows and cash flows from sales; 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.
All financial assets not classified as measured at amortised cost as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Equity instruments are always classified fair value through profit and loss, except in cases where the Company has elected an irrevocable option of designating the same as fair value through other comprehensive income (FVOCI).
Financial assets: Subsequent measurement and gains and losses
Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Financial assets at FVOCI : These assets are subsequently measured at fair value through other comprehensive income i.e., subsequent changes in fair value of the instrument is recognised in other comprehensive income. Any dividend received on such instruments are recognised in Statement of Profit and Loss.
Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified and measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss.
Any gain or loss on derecognition is also recognised in profit or loss.
(c) Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset. If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
(d) Impairment of financial assets
Loss allowance for expected credit losses is recognised for the "financial assets measured at amortised cost" and "fair value through other comprehensive income".
The Company has applied life time expected credit losses for determining loss allowances for all trade receivables that do not constitute a financing transaction.
For financial assets (apart from trade receivables that do not constitute of financing transaction) whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk of the financial asset has significantly increased since initial recognition.
(e) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
(f) Contract Assets
Contract assets is right to consideration in exchange for goods or services transferred to the customer and performance obligation satisfied. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional, in the nature of unbilled receivables. Upon completion of the attached condition and acceptance by the customer, the amounts recognised as contract assets is reclassified to trade receivables upon invoicing. A receivables represents the Companys right to an amount of consideration that is unconditional. Contract assets are subject to impairment assessment.
(g) Contract Liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer or has raised the invoice in advance. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract (i.e., transfers control of the related goods or services to the customer).
Revenue
Revenue from contracts with customers is recognised when the control of the goods/services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods/services. Such revenue is recognised upon the Companys performance of its contractual obligations and on satisfying all the following conditions:
(1) Parties to the contract have approved the contract and undertaken to perform their respective obligations;
(2) Such contract has specified the respective rights and obligations of the parties in connection with the transfer of goods or rendering of services (hereinafter the "Transfer");
(3) Such contract contains specific payment terms in relation to the Transfer;
(4) Such contract has a commercial nature, namely, it will change the risk, time distribution or amount of the Companys future cash flow;
(5) The Company is likely to recover the consideration it is entitled to for the Transfer to customers.
Revenue is recognised when no significant uncertainty exists regarding the collection of the consideration. The amount recognised as revenue is exclusive of all indirect taxes and net of returns and discounts.
(a) Sale of goods
For contracts with customers for sale of goods, revenue is recognised net of discount and rebates, at a point in time when control of the asset is transferred to the customer, which is when the goods are delivered to the customers as per the terms of the contracts. Delivery happens when the goods have been shipped or delivered to the specific location, as the case may be, the risk of loss has been transferred, and either the customer has accepted the goods in accordance with the contracts or the Company has objective evidence that all criteria related for acceptance has been satisfied.
No element of significant financing is deemed present as the sales are generally made with a credit term which is consistent with the market practice. A receivable is recognised when the goods are delivered and this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
(b) Sale of Services
Revenue from service contracts are recognised in the accounting period in which the services are rendered. Where the contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on the standalone selling price and revenue is recognised over time as and when the customer receives the benefit of the Companys performance based on the actual service provided to as proportion of the total services to be provided. In case, the service contracts include one performance obligation revenue is recognised based on the actual service provided to the end of the reporting period as proportion of the total services to be provided. This is determined based on the actual expenditure incurred to the total estimated cost.
(c) Dividend and interest income
Dividend income is recognised when the companys right to receive payment has been established and that the economic benefits will flow to the Company and amount of income can be measured reliably.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the assets net carrying amount on initial recognition.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.
Income Taxes
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.
Current tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit or loss. Company periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the balance sheet liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
Foreign currencies
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The Companys financial statements are presented in Indian Rupees, which is the Companys functional and presentation currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Company in its functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised in profit or loss unless they relates to the qualifying cash flow hedges.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
In determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which the Company initially recognises the non-monetary asset or nonmonetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Company determines the transaction date for each payment or receipt of advance consideration.
Property, plant and equipment
Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Capital Work-in-Progress is stated at cost, net of accumulated impairment losses, if any.
Cost of Property, plant and equipment includes the costs directly attributable to the acquisition or constructions of assets, or replacing parts of the plant and equipment and borrowing costs for qualifying assets, if the recognition
criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with them will flow to the Company and the cost of the item can measured reliably. All other repair and maintenance costs are recognised in profit or loss as incurred.
Advance given for acquisition / construction of Property, Plant and Equipment and Intangible assets are presented as "Capital Advance" under Other Non Current Assets.
The assets in the process of construction or acquisition but not ready for managements intended use are included under Capital Work in progress.
Depreciation is provided on written down value method in the manner and on the basis of useful lives prescribed in Schedule II to the Companies Act, 2013. Depreciation on addition / deduction is calculated pro-rata from/to the month of addition / deduction.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
The estimated useful lives of the assets considered by the Company is stated hereunder:
Assets Description | Useful Life in Years |
Office Building | 60 |
Heavy Equipments | 15 |
Heavy Vehicles | 6 |
Office Appliances | 5 |
Computer | 3 |
Other Machinery | 15 |
Motor Cycle, Scooter | 10 |
Motor Vehicles | 8 |
Furniture | 10 |
Electrical Equipments | 10 |
Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate.
Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments.
The Companys lease obligations are presented on the face of the Balance Sheet.
Short-term leases and leases of low value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date). It also applies the lease of low-value assets recognition exemption to leases of assets that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
The Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Subsequent to initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
Intangible assets are amortised over the useful economic life (5 years for computer software) and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Restated Statement of Profit and Loss (including other comprehensive income).
Impairment of assets (other than financial assets)
At each balance sheet date, the Company reviews the carrying value of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
Provisions and contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.
Inventories
Raw materials, work-in-progress and finished products are valued at lower of cost and net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes purchase price, nonrefundable taxes and duties and other directly attributable costs incurred in bringing the goods to the point of sale.
Work-in-progress and finished goods include appropriate proportion of overheads.
Stores and spares and consumables are valued at cost comprising of purchase price, non refundable taxes and duties and other directly attributable costs after providing for obsolescence and other losses, where considered necessary.
Cash and short-term deposits
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and shortterm highly liquid deposits with a maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.
Employee benefits
Short-term employee benefits- Liabilities for short-term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee related liabilities under other financial liabilities in balance sheet.
Post - employment benefits- The liability or asset recognised in the Balance Sheet in respect of defined benefit 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 at year end by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in Employee Benefits Expense in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. These are included in the Statement of Changes in Equity and in the Balance Sheet.
Changes in the present value of the defined benefit obligations resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
Defined contribution plan - The Company pays provident fund contributions to publicly administered provident fund as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
Earnings per share
Basic earnings per share is calculated by dividing:
the profit attributable to owners of the Company
by the weighted average number of equity shares outstanding during the period
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
The weighted average number of Equity shares have been adjusted for the events such as bonus issue and share split that have changed the number of equity shares outstanding, without corresponding changes in resources
Contributed equity
Equity shares are classified as equity. Incremental cost directly attributable to the issue of new shares or options are shown in equity as reduction, net of tax from the proceeds.
Dividend
The Company recognises a liability to pay a final dividend when the distribution is authorised, and the distribution is no longer at the discretion of the Company. As per the corporate laws of India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
The Company recognises a liability to pay the interim dividend when the distribution is authorised by the board of directors subject to the approval of the shareholders.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker ("CODM").
The CODM is responsible for allocating resources and assessing performance of the operating segments and has been identified as the Board of Directors of the Company.
New amendments issued and effective w.e.f. April 1, 2023
The Ministry of Corporate Affairs has vide notification dated March 23, 2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amends certain accounting standards, and are effective April 1, 2023.
The Rules predominantly amend Ind AS 12, Income taxes, and Ind AS 1, Presentation of financial statements. The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications. These amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions. Specifically, no changes would be necessary as a consequence of amendments made to Ind AS 12 as the groups accounting policy already complies with the now mandatory treatment.
Changes in the accounting policy, if any, in the last three years and their effect on our profits and reserves
Other than the transition to Ind AS from IGAAP, with effect from April 1, 2021, there have been no changes in accounting policies of the Company during Fiscal 2023, Fiscal 2022 and Fiscal 2021.
Non-GAAP Financial Measures
Earnings before Interest, Taxes, Depreciation and Amortization Expenses ("EBITDA")/ EBITDA Margin/ Return on Capital Employed / PAT Margin / Return on Equity / Gross Fixed Assets Turnover Ratio / Gross Profit/ Gross Margin / Net Debt to EBITDA
In addition to our results determined in accordance with Ind AS, we believe the following Non-GAAP measures are useful to investors in evaluating our operating performance and liquidity. We use the following Non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Non-GAAP financial information, when taken collectively with financial measures disclosed in the financial statements prepared in accordance with Ind AS, may be helpful to investors because it provides an additional tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial results with other companies in our industry because it provides consistency and comparability with past financial performance. However, our management does not consider these Non-GAAP measures in isolation or as an alternative to financial measures.
Gross Profit, Gross Margin, EBITDA, EBITDA Margin, Return on Equity, Return on Capital Employed, PAT Margin, Gross Fixed Asset Turnover Ratio and Net Debt to EBITDA ("Non-GAAP Measures") presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, Indian GAAP, IFRS or US GAAP. Further, EBITDA is not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the periods or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, IFRS or US GAAP. In addition, Non-GAAP Measures are not standardised terms, hence a direct comparison of Non-GAAP Measures between companies may not be possible. Other companies may calculate the Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although Non- GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards,
our Companys management believes that it is useful to an investor in evaluating us because it is a widely used measure to evaluate a companys operating performance. See "Risk Factors - Certain non-GAAP financial measures and certain other statistical information relating to our operations and financial performance Gross Profit, Gross Margin, EBITDA, EBITDA Margin, Return on Equity, Return on Capital Employed, PAT Margin, Gross Fixed Asset Turnover Ratio and Net Debt to EBITDA have been included in this Draft Red Herring Prospectus. These non-GAAP financial measures are not measures of operating performance or liquidity defined by Ind AS and may not be comparable." on page 47.
Reconciliation of Restated Profit for the period/ year to EBITDA and EBITDA Margin
The following table sets forth our EBITDA, EBITDA Margin, including a reconciliation of EBITDA and EBITDA Margin to our restated profit for the period/ year, for the mentioned time periods.
(in f millions, except percentages)
Particulars | As at/ for the three month period ended June 30, 2023 |
As at/ for the fiscal year ended March 31, |
||
2023 | 2022 | 2021 | ||
Profit for the period/ year (I) | 80.01 | 309.31 | 121.69 | 47.67 |
Other income (II) | 1.65 | 7.29 | 4.26 | 4.36 |
Finance costs (III) | 29.58 | 122.19 | 81.61 | 90.15 |
Depreciation and amortisation expense (IV) | 13.71 | 43.22 | 55.03 | 47.58 |
Total tax expense (V) | 30.15 | 107.79 | 41.41 | 10.67 |
EBITDA (VI = I-II+III+IV+V) | 151.80 | 575.22 | 295.48 | 191.71 |
Revenue from operations (VII) | 1,437.09 | 4,886.28 | 2,974.55 | 1,837.69 |
EBITDA Margin (%) (VIII) = (VI/VII) | 10.56% | 11.77% | 9.93% | 10.43% |
Reconciliation of Total Equity to Capital Employed, Restated Profit for the period/ year to EBIT and Return on Capital Employed
The table below reconciles total equity to capital employed. Capital employed is calculated as total equity plus total borrowings plus deferred tax liability plus lease liabilities (current and non-current) while EBIT is calculated as restated profit for the period/ year plus total tax expense plus finance costs. Return on Capital Employed is calculated as EBIT divided by capital employed.
(in f millions, except percentages)
As at/ for the | As at/ for the fiscal year |
|||
Particulars | three month | ended | ||
period ended | March 31, | |||
June 30, 2023 | 2023 | 2022 | 2021 | |
Total equity (I) | 1,104.15 | 1,021.06 | 724.04 | 599.09 |
Non-current borrowings (including non-current lease liabilities) (II) | 257.04 | 271.13 | 237.28 | 293.64 |
Current borrowings (including current lease liabilities) (III) | 677.13 | 611.45 | 623.28 | 541.12 |
Deferred tax liability (IV) | 61.11 | 56.37 | 49.95 | 46.94 |
Total Capital Employed (V) = I+H+III+IV | 2,099.43 | 1,960.01 | 1,634.55 | 1,480.79 |
Profit for the period/ year (VI) | 80.01 | 309.31 | 121.69 | 47.67 |
Total tax expense (VII) | 30.15 | 107.79 | 41.41 | 10.67 |
Finance costs (VIII) | 29.58 | 122.19 | 81.61 | 90.15 |
Earnings before interest and tax (EBIT) (IX = VI + VII + VIII) | 139.74 | 539.29 | 244.71 | 148.49 |
Return on Capital Employed (%) (X = IX/ V) | 6.66%* | 27.51% | 14.97% | 10.03% |
* Not annualized
Reconciliation of Total Equity to Return on Equity
The table below reconciles total equity to return on equity. Return on equity is calculated as restated profit for the period/ year divided by total equity.
(in f millions, except percentages)
Particulars | As at/ for the three month period ended June 30, 2023 |
As at/ for the fiscal year ended March 31, |
||
2023 | 2022 | 2021 | ||
Total equity (I) | 1,104.15 | 1,021.06 | 724.04 | 599.09 |
Profit for the period/ year (II) | 80.01 | 309.31 | 121.69 | 47.67 |
Return on Equity (%) (III) = (II/I) | 7.25%* | 30.29% | 16.81% | 7.96% |
* Not annualized
Reconciliation of Revenue from Operations to Gross Fixed Assets Turnover Ratio
The table below reconciles revenue from operations to gross fixed assets turnover ratio.
(in f millions, except percentages)
Particulars | As at/ for the three month period ended June 30, 2023 |
As at/ for the fiscal year ended March 31, |
||
2023 | 2022 | 2021 | ||
Revenue from Operations (I) | 1,437.09 | 4,886.28 | 2,974.55 | 1,837.69 |
Property, plant and equipment (II) | 1,417.15 | 1,392.06 | 1,217.64 | 994.99 |
Capital work in progress (III) | 15.74 | - |
- |
110.84 |
Right of use assets (IV) | 7.10 | 0.85 | - |
- |
Other intangible assets (V) | 5.54 | 5.43 | 5.33 | 5.33 |
Total Gross Fixed Assets (VI = II + III + IV + V) | 1,445.53 | 1,398.34 | 1,222.97 | 1,111.16 |
Gross Fixed Assets Turnover Ratio (in times) (VII = I/VI) | 0.99* | 3.49 | 2.43 | 1.65 |
* Not annualized
Reconciliation for Total Borrowings to Net Debt and Net Debt to EBITDA
The table below reconciles total borrowings to net debt and net debt to EBITDA. Net Debt is calculated as total of non-current borrowings (including non-current lease liabilities) and current borrowings (including current lease liabilities) minus total of cash and cash equivalents and other bank balances.
(in f millions, except percentages)
Particulars | As at/ for the three month period ended June 30, 2023 |
As at/ tor the fiscal year ended March 31, |
||
2023 | 2022 | 2021 | ||
Non-current borrowings (including non-current lease liabilities) (I) | 257.04 | 271.13 | 237.28 | 293.64 |
Current borrowings (including current lease liabilities) (II) | 677.13 | 611.45 | 623.28 | 541.12 |
Cash and cash equivalents (III) | 19.92 | 129.98 | 6.23 | 5.95 |
Other bank balances (IV) | 19.41 | 12.48 | ||
Net Debt (V = (I + II) - (III + IV)) | 894.84 | 740.12 | 854.33 | 828.81 |
EBITDA (VI) | 151.80 | 575.22 | 295.48 | 191.71 |
Net Debt to EBITDA (in times) (VII) = (V/VI) | 5.89* | 1.29 | 2.89 | 4.32 |
Net Debt to Total Equity | 0.81* | 0.72 | 1.18 | 1.38 |
* Not annualized
Reconciliation for Revenue from Operations to Gross Profit and Gross Margin The table below reconciles revenue from operations to gross profit and gross margin:
(in f millions, except percentages)
Particulars | For the three month period ended June 30, 2023 |
For the fiscal year ended March 31, |
||
2023 | 2022 | 2021 | ||
Revenue from operations (I) | 1,437.09 | 4,886.28 | 2,974.55 | 1,837.69 |
Cost of raw materials consumed (II) | 885.79 | 2,941.66 | 1,595.67 | 872.82 |
Changes in inventories of finished products and work in progress (III) | 6.40 | (44.57) | 7.19 | 14.50 |
Gross Profit (IV) = (I - (II+III)) | 544.90 | 1,989.19 | 1,371.69 | 950.37 |
Gross Margin (%) (V = IV/I) | 37.92% | 40.71% | 46.11% | 51.72% |
Reconciliation for Restated Profit for the period/ year to Profit After Tax Margin (PAT Margin)
The table below reconciles restated profit for the period/ year to PAT Margin:
(in f millions, except percentages)
Particulars | For the three month period ended June 30, 2023 |
For the fiscal year ended March 31, |
||
2023 | 2022 | 2021 | ||
Profit for the period/ year (I) | 80.01 | 309.31 | 121.69 | 47.67 |
Total income (II) | 1,438.74 | 4,893.57 | 2,978.81 | 1,842.05 |
PAT Margin (%) (III = I/II) | 5.56% | 6.32% | 4.09% | 2.59% |
Overview of Revenue and Expenditure
The following descriptions set forth information with respect to key components of our income statement. Revenue
Revenue from operations
Revenue from operations comprises income from sale of safety-critical components and assemblies for M&HCV and farm equipment sectors.
Other income
Other income primarily comprises of interest income on financial assets measured at amortised cost, Income from mutual fund, net gain on foreign currency transactions and translations, insurance claims, profit on sale of property, plant and equipment and other miscellaneous income.
Expenses
Our expenses comprise of cost of raw materials consumed, changes in inventories of finished goods and work in progress, employee benefit expense, finance costs, depreciation and amortisation expense and other expenses.
Cost of raw materials consumed
Cost of raw materials consumed primarily consists of raw materials i.e., primarily steel procured in the form of bars, billets, flats and tubes.
Changes in inventories of finished goods and work in progress
Changes in inventories of finished goods and work in progress between opening and closing dates of a reporting period.
Employee benefit expenses
Employee benefit expenses primarily comprises of salaries, wages and bonus, contribution to provident and other funds, gratuity expenses and staff welfare expenses.
Finance costs
Finance costs primarily comprises of interest expenses on borrowings from banks and financial institutions, interest on lease obligations and other borrowing costs.
Depreciation and amortisation expenses
Depreciation and amortisation expenses comprises (i) depreciation of our property, plant and equipment, (ii) amortisation on right of use assets; and (iii) amortisation of intangible assets.
Other expenses
Other expenses comprise primarily of (a) consumption of stores, spare parts and consumables; (b) freight, transportation and handling charges; (c) power & fuel expense; (d) contractual labour charges; (e) work offloading charges; (f) commission; (g) packing and forwarding expenses; (h) material handling and weightment charges; (i) repairs and maintenance expenses; (j) travelling, conveyance, vehicle running and maintenance expenses; (k) donation; (l) rental expenses; (m) insurance charges; (n) warehouse, yard and branch expenses; (o) allowances for expected credit loss; (p) provision for warranty expenses; (q) rates & taxes; (r) legal & professional charges; (s) auditors remuneration and (t) other general expenses.
Operating Segment and Business Models
Our Company is operating in one business segment, i.e. manufacturing of critical components for M&HCV and farm equipment. Accordingly, manufacturing of auto components for commercial vehicles is our only operating segment. Our Company is domiciled in India and provides services in India.
Results of Operations
The following table sets forth our income statement data, the components of which are expressed as a percentage of total income for the periods indicated below.
Particulars | For the three month period ended June 30, 2023 |
For the year ended March 31, |
||||||
2023 |
2022 |
2021 |
||||||
(f in millions) |
% of Total Income |
(f in millions) |
% of Total Income |
(f in millions) |
% of Total Income |
(f in millions) |
% of Total Income |
|
Revenue from operations | 1,437.09 | 99.89% | 4,886.28 | 99.85% | 2,974.55 | 99.86% | 1,837.69 | 99.76% |
Other income | 1.65 | 0.11% | 7.29 | 0.15% | 4.26 | 0.14% | 4.36 | 0.24% |
Total Income | 1,438.74 | 100.00 % |
4,893.57 | 100.00 % |
2,978.81 | 100.00 % |
1,842.05 | 100.00 % |
Expenses | ||||||||
(a) Cost of raw materials consumed |
885.79 | 61.57% | 2,941.66 | 60.11% | 1,595.67 | 53.57% | 872.82 | 47.38% |
(b) Changes in inventories of finished products | 6.40 | 0.44% | (44.57) | (0.91) % |
7.19 | 0.24% | 14.50 | 0.79% |
Particulars | For the three month period ended June 30, 2023 |
For the year ended March 31, |
||||||
2023 |
2022 |
2021 |
||||||
(f in millions) |
% of Total Income |
(f in millions) |
% of Total Income |
(f in millions) |
% of Total Income |
(f in millions) |
% of Total Income |
|
and work in progress | ||||||||
(c) Employee benefits expense | 67.58 | 4.70% | 265.09 | 5.42% | 201.77 | 6.77% | 161.64 | 8.78% |
(d) Finance costs | 29.58 | 2.06% | 122.19 | 2.50% | 81.61 | 2.74% | 90.15 | 4.89% |
(e) Depreciation and amortisation expense | 13.71 | 0.95% | 43.22 | 0.88% | 55.03 | 1.85% | 47.58 | 2.58% |
(f) Other expense | 325.52 | 22.63% | 1,148.88 | 23.48% | 874.44 | 29.36% | 597.02 | 32.41% |
Total Expenses | 1,328.58 | 92.34% | 4,476.47 | 91.48% | 2,815.71 | 94.52% | 1,783.71 | 96.83% |
Profit before tax | 110.16 | 7.66% | 417.10 | 8.52% | 163.10 | 5.48% | 58.34 | 3.17% |
Tax Expense | ||||||||
(a) Current tax | ||||||||
(i)Current tax | 26.43 | 1.84% | 100.80 | 2.06% | 39.51 | 1.33% | 17.79 | 0.97% |
(ii) Current tax for the earlier years | 0.98 | 0.02% | ||||||
(b) Deferred tax | ||||||||
(i) Deferred tax | 3.72 | 0.26% | 6.01 | 0.12% | 1.90 | 0.06% | (7.12) | (0.39) % |
Total tax expense | 30.15 | 2.10% | 107.79 | 2.20% | 41.41 | 1.39% | 10.67 | 0.58% |
Profit for the period/ year | 80.01 | 5.56% | 309.31 | 6.32% | 121.69 | 4.09% | 47.67 | 2.59% |
Other comprehensive income/ (loss) |
||||||||
(A) Items that will not be reclassified to profit or loss | ||||||||
(a) Remeasurement of the employees defined benefit plans |
4.11 | 0.29% | 1.64 | 0.03% | 4.36 | 0.15% | 0.01 | 0.00% |
(b) Income tax relating to above items | (1.03) | (0.07) % | (0.41) | (0.01 ) % | (1.10) | (0.04) % | ||
Total other comprehensive income |
3.08 | 0.21% | 1.23 | 0.03% | 3.26 | 0.11% | 0.01 | 0.00% |
Total comprehensive income for the period/ year |
83.09 | 5.78% | 310.54 | 6.35% | 124.95 | 4.19% | 47.68 | 2.59% |
Results of operations for the three month period ended June 30, 2023
Revenue from operations
Our revenue from operations was t 1,437.09 million which primarily comprised sale of products manufactured by the Company, sale of services and other operating revenue including scrap sales and freight on sales.
Other Income
Our other income was t 1.65 million which primarily consisted of interest income from deposits with banks, income from mutual funds, net gain on foreign currency transaction and translation and other miscellaneous income.
Cost of materials consumed
Our cost of materials consumed was t 885.79 million which was 61.57% of our Total Income.
Change in inventories of finished goods and work-in-progress
The closing stock of finished goods and work in progress was t 253.63 million as at June 30, 2023 against an opening stock of t 260.03 million as at April 1, 2023 which led to expense of t 6.40 million for the period
Employee benefits expense
Our employee benefits expense was t 67.58 million primarily comprising of payment of salaries, wages and bonus, contribution to provident and other funds, gratuity and staff welfare expenses.
Finance costs
Our finance costs was t 29.58 million primarily comprising of interest expenses on short-term borrowings from banks and financial institutions, interest expenses on term loans from banks, interest on loan from others, interest on lease liabilities and other borrowings cost.
Depreciation and amortisation expense
Our depreciation and amortisation expense was t 13.71 million, primarily on account of depreciation on property, plants and equipment and amortisation of intangible assets and amortisation of right of use assets.
Other expenses
Our other expenses was t 325.52 million primarily comprising of consumption of stores, spare parts and consumables, freight, transportation and handling charges, power and fuel expenses, contractual labour charges, work offloading charges, packing and forwarding expenses, repairs and maintenance expenses, travelling, conveyance, rental expenses, vehicle running and maintenance expenses, provision for warranty expenses, donation, rates and taxes and other general expenses.
Profit before tax
As a result of the foregoing, we recorded profit before tax of t 110.16 million.
Tax expenses
Our total tax expenses was t 30.15 million.
Profit for the period
As a result of the foregoing, we recorded profit for the period of t 80.01 million.
Fiscal 2023 compared with Fiscal 2022
Revenue from operations
Our revenue from operations increased by 64.27% from t 2,974.55 million in Fiscal 2022 to t4,886.28 million in Fiscal 2023. This increase is primarily attributed to revenue generated from our sales of products which increased from t 2,748.32 million in Fiscal 2022 to t 4,596.83 million in Fiscal 2023. Further, our other operating revenue comprising of scrap sales and freight on sales increased from t 225.00 million in Fiscal 2022 to t 286.62 million in Fiscal 2023 recording an increase of 27.39% during the year.
Other Income
Our other income increased by 71.13% from Rs. 4.26 million in Fiscal 2022 to Rs.7.29 million in Fiscal 2023. Such increase was primarily on account of 32.54% increase in interest income from deposits with Banks from Rs.2.95 million in Fiscal 2022 to Rs.3.91 million in Fiscal 2023 and increase in net gain on foreign currency transaction and translation by 168.10% from Rs.1.16 million in Fiscal 2022 to Rs.3.11 million in Fiscal 2023.
Cost of materials consumed
Our cost of materials consumed increased by 84.35% from Rs. 1,595.67 million in Fiscal 2022 to Rs.2,941.66 million in Fiscal 2023, primarily due to an increase in scale of business, change in product mix and increase in inventories of finished goods and work-in-progress.
Change in inventories of finished goods and work-in-progress
Our closing stock of finished goods and stock-in-trade was Rs. 215.46 million as at March 31, 2022, while it was Rs.260.03 million as at March 31, 2023.
Employee benefits expense
Our employee benefits expense increased by 31.38% from Rs. 201.77 million in Fiscal 2022 to Rs.265.09 million in Fiscal 2023, primarily on account of increase in payment of salaries, wages and bonus which increased from Rs. 179.62 million in Fiscal 2022 to Rs.241.51 million in Fiscal 2023, increase in contribution to provident and other funds which increased from Rs. 9.27 million in Fiscal 2022 to Rs. 12.26 million in Fiscal 2023, increase in gratuity from Rs. 6.99 million in Fiscal 2022 to Rs. 7.63 million in Fiscal 2023. The increase was marginally offset by decrease in staff welfare expense from Rs. 5.89 million in Fiscal 2022 to Rs. 3.69 million in Fiscal 2023.
Finance costs
Our finance costs increased by 49.72% from Rs.81.61 million in Fiscal 2022 to Rs.122.19 million in Fiscal 2023, primarily due to increase in interest expenses on short-term borrowings from banks and financial institutions from Rs.52.81 million in Fiscal 2022 to Rs.73.62 million in Fiscal 2023, increase in interest expense on term loans from banks from Rs.20.94 million in Fiscal 2022 to Rs.31.47 million in Fiscal 2023, increase in other borrowings cost from Rs.7.19 million in Fiscal 2022 to Rs.8.16 million in Fiscal 2023 and increase in interest expense for short fall on payment of income tax from Rs.nil in Fiscal 2022 to Rs.8.78 million in Fiscal 2023.
Depreciation and amortisation expense
Our depreciation and amortization expense decreased by 21.46% from Rs. 55.03 million in Fiscal 2022 to Rs.43.22 million in Fiscal 2023, on account of an decrease in depreciation on property, plant and equipments from Rs. 55.01 million in Fiscal 2022 to Rs.43.01 million in Fiscal 2023, which was partially offset by an increase in the amortisation of intangible assets from Rs. 0.02 million in Fiscal 2022 to Rs.0.04 million in Fiscal 2023 and an increase in the amortisation of right of use assets from Rs.nil in Fiscal 2022 to Rs.0.17 million in Fiscal 2023.
Other expenses
Our other expenses increased by 31.38% from Rs. 874.44 million in Fiscal 2022 to Rs. 1,148.88 million in Fiscal 2023, generally in line with the increase in business operations. The absolute increase was mainly driven by increases in (i) freight, transportation and handling charges from Rs.129.12 million in Fiscal 2022 to Rs.160.24 million in Fiscal 2023, (ii) power and fuel expense from Rs. 79.82 million in Fiscal 2022 to Rs. 158.38 million in Fiscal 2023,
(iii) contractual labour charges from Rs. 82.23 million in Fiscal 2022 to Rs. 213.30 million in Fiscal 2023, (iv) work offloading charges from Rs. 88.24 million in Fiscal 2022 to Rs. 101.55 million in Fiscal 2023, (v) commission from Rs.nil in Fiscal 2022 to Rs. 24.59 million in Fiscal 2023, (vi) packing and forwarding expenses from Rs. 24.91 million in Fiscal 2022 to Rs. 31.11 million in Fiscal 2023, (vi) repairs and maintenance expenses from Rs. 26.21 million in Fiscal 2022 to Rs. 44.37 million in Fiscal 2023, (vii) warehouse, yard and branch expenses from Rs. 1.04 million in Fiscal 2022 to Rs. 4.05 million in Fiscal 2023 and (viii) provision for warranty expenses from Rs. 1.48 million in Fiscal 2022 to Rs. 8.22 million in Fiscal 2023. However, the increase was partially offset by decrease in consumption of stores, spare parts and consumables from Rs. 366.51 million in Fiscal 2022 to Rs. 334.95 million in Fiscal 2023 and decrease in material handling and weightment charges from Rs. 27.36 million in Fiscal 2022 to Rs. 7.95 million
in Fiscal 2023.
Profit before tax
As a result of the foregoing, we recorded an increase of 155.73% in our profit before tax, from t 163.10 million in Fiscal 2022 to t 417.10 million in Fiscal 2023.
Tax expenses
Our tax expenses increased by 160.30% from t 41.41 million in Fiscal 2022 to t107.79 million in Fiscal 2023. The increase in our tax expenses in Fiscal 2023 was primarily due to an increase in the profit before tax, which was attributable to the increase in total income.
Profit for the year
As a result of the foregoing, we recorded an increase of 154.18% in our profit for the year from t 121.69 million in Fiscal 2022 to t309.31 million in Fiscal 2023.
Fiscal 2022 compared with Fiscal 2021
Revenue from operations
Our revenue from operations increased by 61.86% from t1,837.69 million in Fiscal 2021 to t 2,974.55 million in Fiscal 2022. This increase is primarily attributed to revenue generated from our sales of products which increased by 59.31% from t 1,725.14 million in Fiscal 2021 to t 2,748.32 million in Fiscal 2022. Further, our other operating revenue comprising of scrap sales and freight on sales increased from t 111.11 million in Fiscal 2021 to t 225.00 million in Fiscal 2022.
Other Income
Our other income decreased by 2.29% from t4.36 million in Fiscal 2021 to t 4.26 million in Fiscal 2022. Such decrease was primarily on account of decrease in interest income from deposits with Banks from t3.29 million in Fiscal 2021 to t2.95 million in Fiscal 2022 and decrease in income from mutual fund from t0.26 million in Fiscal 2021 to t 0.02 million in Fiscal 2022, which was offset by increase in net gain on foreign currency transaction and translation from t0.13 million in Fiscal 2021 to t1.16 million in Fiscal 2022.
Cost of materials consumed
Our cost of materials consumed increased by 82.82% from t872.82 million in Fiscal 2021 to t 1,595.67 million in Fiscal 2022, primarily due to an increase in scale of business, change in product mix and increase in inventories of finished goods and work-in-progress.
Change in inventories of finished goods and work-in-progress
Our closing stock of finished goods and stock-in-trade was t 222.65 million as at March 31, 2021, while it was t215.46 million as at March 31, 2022.
Employee benefits expense
Our employee benefits expense increased by 24.83% from t 161.64 million in Fiscal 2021 to t 201.77 million in Fiscal 2022, primarily on account of increase in payment of salaries, wages and bonus which increased from t 145.33 million in Fiscal 2021 to t 179.62 million in Fiscal 2022, increase in contribution to provident and other funds which increased from t 7.62 million in Fiscal 2021 to t 9.27 million in Fiscal 2022, increase in gratuity from t 6.23 million in Fiscal 2021 to t 6.99 million in Fiscal 2022 and increase in staff welfare expense from t 2.46 million in Fiscal 2021 to t 5.89 million in Fiscal 2022.
Finance costs
Our finance costs decreased by 9.47% from t90.15 million in Fiscal 2021 to t81.61 million in Fiscal 2022, primarily due to decrease in interest expenses on short-term borrowings from banks and financial institutions from
Rs. 64.35 million in Fiscal 2021 to Rs.52.81 million in Fiscal 2022, which was partially offset by increase in interest expense on term loans from banks from Rs. 19.35 million in Fiscal 2021 to Rs.20.94 million in Fiscal 2022, increase in other borrowings cost from Rs. 6.36 million in Fiscal 2021 to Rs.7.19 million in Fiscal 2022 and increase in interest on loan from others from Rs.0.09 million in Fiscal 2021 to Rs.0.67 million in Fiscal 2022.
Depreciation and amortisation expense
Our depreciation and amortisation expense increased by 15.66% from Rs. 47.58 million in Fiscal 2021 to Rs. 55.03 million in Fiscal 2022, on account of an increase in depreciation on property, plant and equipments from Rs.47.56 million in Fiscal 2021 to Rs. 55.01 million in Fiscal 2022.
Other expenses
Our other expenses increased by 46.47% from Rs. 597.02 million in Fiscal 2021 to Rs. 874.44 million in Fiscal 2022, generally in line with the increase in business operations. The increase was mainly driven by increases in (i) consumption of stores, spare parts and consumables from Rs.204.05 million in Fiscal 2021 to Rs. 366.51 million in Fiscal 2022, (ii) freight, transportation and handling charges from Rs. 96.24 million in Fiscal 2021 to Rs.129.12 million in Fiscal 2022, (iii) contractual labour charges from Rs. 62.59 million in Fiscal 2021 to Rs. 82.23 million in Fiscal 2022, (iv) work offloading charges from Rs. 55.53 million in Fiscal 2021 to Rs. 88.24 million in Fiscal 2022, (v) packing and forwarding charges from Rs. 18.59 million in Fiscal 2021 to Rs. 24.91 million in Fiscal 2022, (vi) material handling and weightment charges fromRs. 23.04 million in Fiscal 2021 to Rs. 27.36 million in Fiscal 2022,
(vii) repairs and maintenance expenses from Rs. 18.76 million in Fiscal 2021 to Rs. 26.21 million in Fiscal 2022, and
(viii) travelling, conveyance, vehicle running & maintenance expenses from Rs. 14.35 million in Fiscal 2021 to Rs. 22.38 million in Fiscal 2022. However, the increase was partially offset by decrease in power and fuel expense from Rs. 82.05 million in Fiscal 2021 to Rs. 79.82 million in Fiscal 2022.
Profit before tax
As a result of the foregoing, we recorded an absolute increase of 179.57% in our profit before tax, from Rs. 58.34 million in Fiscal 2021 to Rs. 163.10 million in Fiscal 2022.
Tax expenses
Our tax expenses increased by 288.10% from Rs. 10.67 million in Fiscal 2021 to Rs. 41.41 million in Fiscal. The increase in our tax expenses in Fiscal 2022 was primarily due to an increase in the profit before tax.
Profit for the year
As a result of the foregoing, we recorded an increase of 155.28% in our profit for the year from Rs. 47.67 million in Fiscal 2021 to Rs. 121.69 million in Fiscal 2022.
Liquidity and Capital Resources
We have historically financed the expansion of our business and operations primarily through internal accruals, through borrowings. From time to time, we may obtain loan facilities to finance our working capital requirements.
Cash Flows
The following table summarizes our cash flows for the periods indicated below:
(T in millions)
Particulars | For the three month period ended June 30, 2023 |
For the year ended March 31, |
||
2023 | 2022 | 2021 | ||
Net cash flow from/ (used in) operating activities | (80.84) | 417.46 | 175.38 | 13.06 |
Net cash flow from/(used in) investing activities | (45.15) | (187.98) | (119.96) | (104.76) |
Net cash flow from/ (used in) financing activities | 15.94 | (105.73) | (55.14) | 47.01 |
Net increase/decrease in cash and cash equivalents | (110.06) | 123.75 | 0.28 | (44.69) |
Cash and cash equivalent at the beginning of the period/ year | 129.98 | 6.23 | 5.95 | 50.64 |
Particulars | For the three month period ended June 30, 2023 |
For the year ended March 31, |
||
2023 | 2022 | 2021 | ||
Cash and cash equivalents at the end of the period/ year | 19.92 | 129.98 | 6.23 | 5.95 |
Cash flows from operating activities
We used Rs. 80.84 million in cash from operating activities during the three month period ended June 30, 2023. While our profit before tax was Rs. 110.16 million, we had an operating profit before working capital changes of Rs.153.18 million, primarily due to adjustments for depreciation and amortisation expenses of Rs.13.71 million and finance costs of Rs. 29.58 million. Our adjustments for working capital changes for the three month period ended June 30, 2023 primarily consisted of (i) increase in trade payables by Rs. 40.77 million, (ii) increase in trade receivables by Rs. 118.31 million, (iii) decrease in other current liabilities by Rs. 32.18 million; (iv) decrease in other current assets by Rs. 8.23 million and (v) increase in inventories by Rs. 113.48 million.
We generated Rs.417.46 million in cash from operating activities during Fiscal 2023. While our profit before tax was Rs.417.10 million, we had an operating profit before working capital changes of Rs.582.04 million, primarily due to adjustments for depreciation and amortisation expenses of Rs.43.22 million, finance costs of Rs. 122.19 million, allowances for expected credit loss of Rs. 3.71 million and interest income of Rs. 3.91 million. Our adjustments for working capital changes for the Fiscal 2023 primarily consisted of (i) increase in trade payables by Rs. 148.79 million, (ii) increase in trade receivables by Rs. 18.27 million, (iii) increase in other current liabilities by Rs. 12.58 million, (iv) increase in other current assets by Rs. 16.45 million and (v) increase in inventories by Rs. 208.24 million.
We generated Rs. 175.38 million in cash from operating activities during Fiscal 2022. While our profit before tax was Rs. 163.10 million, we had an operating profit before working capital changes of Rs. 299.66 million, primarily due to adjustments for depreciation and amortization expenses of Rs. 55.03 million, finance costs of Rs. 81.61 million, allowances for expected credit loss of Rs. 3.00 million and interest income of Rs. 2.95 million. Our adjustments for working capital changes for the Fiscal 2022 primarily consisted of (i) increase in trade payables by Rs. 29.18 million, (ii) increase in trade receivables by Rs. 96.96 million, (iii) increase in other current liabilities by Rs. 35.34 million,
(iv) increase in other current assets by Rs. 82.98 million and (v) decrease in inventories by Rs. 16.80 million.
We generated Rs. 13.06 million in cash from operating activities during Fiscal 2021. While our profit before tax was Rs. 58.34 million, we had an operating profit before working capital changes of Rs. 194.91 million, primarily due to adjustments for depreciation and amortization expenses of Rs. 47.58 million, finance costs of Rs. 90.15 million, allowances for expected credit loss of Rs. 3.00 million and interest income of Rs. 3.29 million. Our adjustments for working capital changes for the Fiscal 2021 primarily consisted of (i) decrease in trade payables of Rs. 24.65 million, (ii) increase in trade receivables by Rs. 66.96 million, (iii) increase in other current assets of Rs. 61.32 million, (iv) decrease in inventories by Rs. 18.58 million, (v) increase in other non-current financial assets by Rs. 59.14 million, and (v) decrease in other current financial assets by Rs. 10.30 million.
Cash flows used in investing activities
Net cash used in investing activities was Rs. 45.15 million for the three month period ended June 30, 2023, primarily on account of Rs. 39.13 million used towards purchase of property, plant and equipment, Rs. 0.11 million used for purchase of intangible assets and Rs. 6.93 million used towards term deposits while Rs.1.02 million was received as interest.
Net cash used in investing activities was Rs. 187.98 million for the Fiscal 2023, primarily on account of Rs. 185.85 million used towards purchase of property, plant and equipment, Rs. 6.32 million used towards term deposits, while Rs.3.91 million was received as interest and Rs. 0.38 million was received from proceeds from sale of property, plant and equipment.
Net cash used in investing activities was Rs. 119.96 million for the Fiscal 2022, primarily on account of Rs. 123.18 million used towards purchase of property, plant and equipment, Rs. 0.10 million used for purchase of intangible assets, while Rs. 2.95 million was received as interest, Rs. 0.11 million was received from proceeds from sale of property, plant and equipment and Rs. 0.16 million was received from proceeds from sale in investment in mutual fund.
Net cash used in investing activities was Rs. 104.76 million for the Fiscal 2021, primarily on account of Rs. 108.60
million used towards purchase of property, plant and equipment, Rs. 0.05 million used for purchase of intangible assets, while Rs. 3.29 million was received as interest and Rs. 0.60 million was received from proceeds from sale of property, plant and equipment.
Cashflows from/ used in financing activities
Net cash from financing activities for three month period ended June 30, 2023 amounted to Rs. 15.94 million, which primarily consisted of proceeds from short term borrowings of Rs. 62.25 million, proceeds from long term borrowings of Rs. 8.10 million, while repayment of long term borrowings amounted to Rs. 26.05 million, principal lease payments of Rs. 0.43 million and other interest payments amounting to Rs. 27.93 million.
Net cash used in financing activities for Fiscal 2023 amounted to Rs. 105.73 million, which primarily consisted of repayment of long term borrowings amounting to Rs. 104.60 million, repayment of short term borrowings of Rs. 3.46 million, dividends paid of Rs. 13.52 million, principal lease payments of Rs. 0.18 million and other interest payments amounting to Rs. 113.04 million, while proceeds from long term borrowings amounted to Rs. 129.07 million.
Net cash used in financing activities for Fiscal 2022 amounted to Rs. 55.14 million, which primarily consisted of repayment of long term borrowings amounting to Rs. 74.74 million, other interest payments amounting to Rs. 48.61 million and proceeds from long term borrowings of Rs. 68.21 million .
Net cash from financing activities for Fiscal 2021 amounted to Rs. 47.01 million, which primarily consisted of proceeds from long term borrowings of Rs. 177.85 million, repayment of long term borrowings amounting to Rs. 25.13 million, repayment of short term borrowings of Rs. 16.90 million and other interest payments amounting to Rs. 88.81 million.
Financial Indebtedness
The following table sets forth our secured and unsecured debt position as of the below mentioned time period.
(Z in millions)
Particulars | As on June 30, 2023 | As on March 31, 2023 | As on March 31, 2022 | As on March 31, 2021 |
Secured Short term Borrowings (I) | 251.78 | 270.70 | 237.28 | 293.64 |
Unsecured Short term Borrowings (II) | 17.60 | 17.60 | 11.32 | 8.61 |
Secured Long term Borrowings (III) | 658.31 | 593.60 | 611.96 | 532.51 |
Total (IV = I + II + III) | 927.69 | 881.90 | 860.56 | 834.76 |
Contingent Liabilities and Commitments
Contingent liabilities, to the extent not provided for, as of the below mentioned time periods, as determined in accordance with Ind AS 37, are described below.
(Z in millions)
Particulars | As on | As on | As on | As on |
June 30, | March | March | March | |
2023 | 31, 2023 | 31, 2022 | 31, 2021 | |
A. Contingent liabilities | ||||
(i) Excise duty and service tax matters | - |
- |
2.55 | 2.55 |
(ii) GST and VAT matters | 1.25 | 1.25 | 1.85 | 1.85 |
(iii) Income tax matters in dispute | 25.30 | 25.28 | 136.71 | 1.28 |
(iv) Bills Discounted with Kotak Mahindra Bank Limited* | 280.20 | 342.00 | 211.30 | 173.20 |
B. Commitments | ||||
Capital Commitment - Estimated amount of contracts remaining to be executed on capital account and not provided for in the books of account | 48.72 | 30.81 | ||
Other commitment | - | - | - | - |
*Bills Discounted with recourse to the Company with Kotak Mahindra Bank
For further details of our contingent liabilities, see "Restated Financial Information- Note 34 - Contingent liabilities and commitments" on page 275.
Capital expenditure
For the three month period ended June 30, 2023 and for the financial years ending March 31, 2023, March 31, 2022 and March 31, 2021, our capital expenditures (i.e. payments for acquisition of property, plant and equipment, intangible assets and capital work in progress) were Rs. 39.24 million, Rs. 185.95 million, Rs. 123.18 million and Rs. 108.65 million, respectively. The following table sets forth our gross fixed assets as at periods as indicated:
(Rs. in millions)
Particulars | As at/ for the three month period ended June 30,2023 |
As at/ for the fiscal year ended March 31, |
||
2023 | 2022 | 2021 | ||
Property, plant and equipment (I) | 1,417.15 | 1,392.06 | 1,217.64 | 994.99 |
Capital work in progress (II) | 15.74 | - |
- |
110.84 |
Right of use assets (III) | 7.10 | 0.85 | - |
- |
Other intangible assets (IV) | 5.54 | 5.43 | 5.33 | 5.33 |
Total Gross Fixed Assets (V = I + II + III + IV + V) | 1,445.53 | 1,398.34 | 1,222.97 | 1,111.16 |
Quantitative and Qualitative Disclosures about Market Risk
In the course of our business, we are exposed primarily to fluctuations in interest rates, liquidity and credit risk, which may adversely impact the fair value of our financial instruments. In order to minimise any adverse effects on the financial performance of the Company, the Company has risk management policies as described below:
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Our Company is exposed to credit risk from its operating activities (primarily trade receivables) including deposits with banks and financial institutions, foreign exchange transactions, other financial instruments carried at amortised cost.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Our approach to manage liquidity is to have sufficient liquidity to meet our liabilities when they are due, under both normal and stressed circumstances, without incurring unacceptable losses or risking damage to our reputation.
Our management monitors rolling forecasts of the Companys liquidity position and cash and cash equivalents on the basis of expected cash flows. This is generally performed in accordance with practice and limits set by the Company.
Contractual Maturities of financial liabilities
(Z in millions)
As at June 30, 2023 | Contractual maturities of financial liabilities |
||||
Less than 1 year | 1-2 years | 2-3 years | More than 3 years |
Total | |
Borrowings and interest thereon | 799.98 | 128.54 | 86.83 | 207.27 | 1,222.62 |
Lease liabilities | 1.74 | 1.82 | 2.92 | - |
6.48 |
Trade payables | 357.08 | 24.11 | - |
- |
381.19 |
Other financial liabilities | 37.39 | - |
- |
- |
37.39 |
Total financial liabilities | 1,196.19 | 154.47 | 89.75 | 207.27 | 1,647.68 |
As at March 31, 2023 | Less than 1 year | 1-2 years | 2-3 years | More than 3 years |
Total |
Borrowings ( inclusive of interest) | 735.27 | 128.54 | 86.83 | 207.27 | 1,157.91 |
Lease liabilities | 0.25 | 0.25 | 0.18 | - |
0.68 |
Trade payables | 336.10 | 4.33 | - |
- |
340.43 |
Other financial liabilities | 30.76 | - |
- |
- |
30.76 |
Total financial liabilities | 1,102.38 | 133.12 | 87.01 | 207.27 | 1,529.78 |
As at March 31, 2022 | Less than 1 year | 1-2 years | 2-3 years | More than 3 years |
Total |
Borrowings and interest thereon | 742.04 | 102.35 | 98.94 | 91.50 | 1,034.83 |
Lease liabilities | - | - | - | - | - |
Trade payables | 191.62 | - |
- | - | 191.62 |
Other financial liabilities | 13.89 | - |
- | - | 13.89 |
Total financial liabilities | 947.55 | 102.35 | 98.94 | 91.50 | 1,240.34 |
As at March 31, 2021 | Less than 1 year | 1-2 years | 2-3 years | More than 3 years |
Total |
Borrowings and interest thereon | 599.68 | 83.11 | 66.33 | 210.73 | 959.85 |
Lease liabilities | - |
- | - | - | - |
Trade payables | 162.45 | - |
- | - | 162.45 |
Other financial liabilities | 10.76 | - |
- | - | 10.76 |
Total financial liabilities | 772.89 | 83.11 | 66.33 | 210.73 | 1,133.06 |
Market Risk
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 Companys exposure to the risk of changes in market interest rates relates primarily to the Companys debt obligations with floating interest rates.
The Companys fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
Interest rate risk exposure on financial liabilities
in millions)
As at June 30, 2023 | As at March 31, 2023 |
As at March 31, 2022 | As at March 31, 2021 |
|
Fixed rate borrowings | 79.31 | 94.73 | 101.90 | 113.24 |
Variable rate borrowings | 848.38 | 787.17 | 758.66 | 721.52 |
Total borrowings (exclusive of Lease liabilities) | 927.69 | 881.90 | 860.56 | 834.76 |
Foreign currency risk
The Company undertakes transactions (e.g. sale of goods, foreign currency loan, purchase of raw materials, etc.) denominated in foreign currencies and thus is exposed to exchange rate fluctuations. The Company evaluates its exchange rate exposure arising from foreign currency transactions and manages the same based upon approved risk management policies.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, derivative instruments or other relationships with other entities that would have been established for the purpose of facilitating off-balance sheet arrangements.
Related Party Transactions
We enter into various transactions with related parties. For further information see "Restated Financial Information - Note 40 - Related Party Transactions" on page 281 of this Draft Red Herring Prospectus.
Significant Economic Changes
Other than as described above, to the best of the knowledge of our management, there are no other significant economic changes that materially affect or are likely to affect income from continuing operations. For further details, please see "Our Business" and "RiskFactors" on pages 181 and 27, respectively.
Unusual or Infrequent Events of Transactions
Except as described in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent".
Known Trends or Uncertainties
Our business has been affected and we expect will continue to be affected by the trends identified above in the heading titled "Managements Discussion and Analysis of Financial Condition and Results of Operations" on page 295 and the uncertainties described in the section titled "Risk Factors" beginning on page 27 of this Draft Red Herring Prospectus. To our knowledge, except as described or anticipated in this Draft Red Herring Prospectus, there are no known factors which we expect will have a material adverse impact on our revenues or income from continuing operations.
Future Relationship Between Cost and Income
Other than as described above and in "Our Business" and "RiskFactors" on pages 181 and 27, respectively, to the knowledge of our management, there are no known factors that might affect the future relationship between costs and revenues.
New Products or Business Segments
Other than as disclosed in this section and in "Our Business " on page 181, as on the date of this Draft Red Herring Prospectus, there are no new products or business segments that have had or are expected to have a material impact on our business prospects, results of operations or financial condition.
Extent to which Material Increases in Net Sales or Revenue are due to Increased Sales Volume, Introduction of New Products or Services or Increased Sales Prices
Changes in revenue in the last three Financial Years are as described in "Managements Discussion and Analysis of Financial Condition and Results of Operations - Fiscal 2023 compared with Fiscal 2022 - Revenue from Operations" and "Managements Discussion and Analysis of Financial Condition and Results of Operations - Fiscal 2022 compared with Fiscal 2021 - Revenue from Operations" above on pages 317 and 319, respectively.
Seasonality
Our business is not seasonal in nature.
Significant dependence on a single or few suppliers or customers
We are dependent on our top five customers for a significant portion of our revenue. For details, please refer to
"Risk Factors- Customer concentration risk - Our top five customers contributed a significant portion (more than 68.00% in each of the three month period ended June 30, 2023 and the previous three Fiscals) of our revenues. The loss of a major customer or reduction in demand for our products from any of our major customers may adversely affect our business, financial condition, results of operations and prospects" on page 27.
Competitive Conditions
We expect to continue to compete with existing and potential competitors. For details, please refer to the discussions of our competition in the sections "Risk Factors", "Industry Overview" and "Our Business"" on pages 27, 138 and 181, respectively.
Significant Developments after June 30, 2023, that may affect our future results of operations
1. Pursuant to a resolution passed by our Board on October 21, 2023 and our Shareholders on October 26, 2023, our Company has undertaken a bonus issue of 13,523,189 Equity Shares to the existing equity shareholders, in the ratio of 1:1.
2. Pursuant to a resolution passed by our Board on October 21, 2023 and a resolution passed by our Shareholders on October 26, 2023, the issued, subscribed and paid-up capital of our Company was sub-divided from 27,046,378 equity shares of face value of Rs.10 each to 54,092,756 Equity Shares of face value of Rs.5 each.
3. Our Company has entered into an agreement in the month of September 2023 for purchase of plot along with constructed building infrastructure at B32, B33 & B34 , located at Phase 3, Adityapur Industrial Area, Adityapur, Jamshedpur, Jharkhand admeasuring 205.48 decimal (89,500 sq. ft. approx.) from Tatanagar Wire Ropes Private Limited at a cost of Rs. 70.00 million. Out of the aforementioned purchase consideration of Rs. 70.00 million, our Company has paid full amount, as on the date of this Draft Red Herring Prospectus. However, the possession of the said plot has not yet been transferred in the name of our Company. Our Company has also deposited a sum of Rs. 1.62 million to JIADA in relation to transfer of leasehold rights of the aforementioned plot in the name of our Company. The approval of transfer of leasehold rights in favour of our Company is currently under process at JIADA.
4. Our Company has also paid Rs. 2.70 million towards advance against purchase of CNT land, admeasuring 99 decimal (43,120 sq. ft approx.) at Gamaharia Area, near our Unit V at Gamaharia, Jamshedpur, Jharkhand. The amount unpaid is Rs. 12.70 million this amount is to be paid at the time of execution of the sale deed for the abovementioned CNT land.
Except as set out above and elsewhere in this Draft Red Herring Prospectus, no developments have come to our attention since the date of the Restated Financial Information as disclosed in this Draft Red Herring Prospectus which materially and adversely affect or are likely to materially and adversely affect our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next twelve months.
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