Provisions are recognised when there is a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation, or
the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the financial statements
A contingent asset is a possible asset that arises from past events and whose existence 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. Contingent assets are not recognized, but its existence is disclosed in the financial statements.
The Company’s accounting policies and disclosures require the measurement of fair values for financial instruments.
The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorized 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).
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 categorized 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 recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments also include derivative contracts such as foreign currency foreign exchange forward contracts, interest rate swaps and currency options; and embedded derivatives in the host contract.
i. Financial assets
Classification
The Company shall classify financial assets and subsequently measured at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL) on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Initial recognition and measurement
All financial assets are recognised initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset, in the case of financial assets not recorded at fair value through profit or loss. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the company commits to purchase or sell the asset.
Financial Asset measured at amortised cost
A financial asset is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Financial Asset measured at fair value through other comprehensive income (FVOCI)
A financial asset is measured at FVOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The asset’s contractual cash flows represent SPPI.
Financial assets included within the FVOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the profit and loss.
On derecognition of the non-derivative debt instruments designated at FVOCI,cumulative gain or loss previously recognised in OCI is reclassified from the equity to profit and loss. Whereas On derecognition of the equity instruments designated at FVOCI, cumulative gain or loss previously recognised in OCI is reclassified from the equity to retained earnings.
Interest earned whilst holding FVOCI debt instrument is reported as interest income using the EIR method.
Financial Asset measured at fair value through profit and loss (FVTPL)
FVTPL is a residual category for financial asset. Any financial asset, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as at FVTPL.In addition, the group company may elect to classify a financial asset, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition
inconsistency (referred to as accounting mismatch’). Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a company of similar financial assets) is primarily derecognised (i.e. removed from the company’s balance sheet) when:
i. The rights to receive cash flows from the asset have
expired, or
ii. The company has transferred its rights to receive
cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through’ arrangement; and either (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
iii. When the company has transferred its rights to
receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the company continues to recognise the transferred asset to the extent of the company’s continuing involvement. In that case, the company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the company has retained.
iv. Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the company could be required to repay.
Impairment of financial assets
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance.
b) Trade receivables.
The Company follows simplified approach’ for recognition of impairment loss allowance on:
i. Trade receivables which do not contain a significant
financing component.
The application of simplified approach recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
ii. For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
ii. Financial liabilities
The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be subsequently measured at fair value.
Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss or amortised costs.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The company’s financial liabilities include trade and other payables, loans and borrowings, financial guarantee contracts and derivative financial instruments.
Financial liabilities measured at fair value through profit or loss.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the company that are not designated as hedging instruments in hedge relationships as defined by Ind-AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind-AS 109 Financial Instruments are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/loss are not subsequently transferred to P&L. However, the company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit or loss.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to interest-bearing loans and borrowings.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced
by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when, the company has a legally enforceable right to set off the amount and it intends either to settle them on net basis or to realize the asset and settle the liability simultaneously.
(i) Derivative financial instruments
The company uses derivative financial instruments, such as forward currency contracts, interest rate swaps and forward commodity contracts, to hedge its foreign currency risks, interest rate risks and commodity price risks, respectively. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalent includes the cash and Cheques in hand, bank balances, demand deposits with bank and other short term highly liquid investments and balances with banks which are unrestricted for withdrawal and usage.
Bank overdraft are shown within borrowings in current liabilities in the balance sheet and forms part of financing activities in the cash flow statement. Book overdraft are shown within other financial liabilities in the balance sheet and forms part of operating activities in the cash flow statement.
Cash flows are reported using the indirect method, where by profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts orpayments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share from continuing operations.
Dilutive potential equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
C. Standard Issued but not yet effective
Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standard or amendments to the existing standards applicable to the Company.
42. The National Company Law Tribunal (’NCLT’), Indore Bench, vide order no. IA/190 (MP) 2021 IN CP (IB) 9 of 2020 dated on 13th October 2023 (’Approval Order Date’), the Resolution Plan ( Plan Approval Order") submitted by SVA Family Welfare Trust and M&B Switchgears ( Resolution Applicant ) for the Company.
As directed by Hon’ble NCLT the implementation of the plan will be monitored by a 3 member Implementation and Monitoring Committee to give effect and impact of Order of National Company Law Tribunal (NCLT) in the financial statement till the completion of implementation.
43. Pursuant to the Resolution Plan as approved by the Hon'ble National Company Law Tribunal, Indore Bench the following consequential impacts have been given :
a. Mr. Shyamsunder Mundra (DIN: 00113199), Mr. Anurag Mundra (DIN: 00113172) and Mr. Vikalp Mundra (DIN: 00113145) have been reinstated/reappointed by the Resolution Applicant with the effective date i.e. 20th October, 2023. Consequently, the said board members shall continue to serve in their current positions and responsibilities, ensuring the continued success and growth of Ujaas Energy Limited. Also from the effective date the management and control of the company has been transferred by the Resolution Applicant to the Board of Directors. The Company has also appointed Mr. Nilesh Rathi, Mr. Girish Kataria and Mrs. Surabhi Agrawal as independent directors with effect from 24th November, 2023.
b. With Effect From 20th October, 2023 the existing issued, subscribed and paid up equity share capital of the Company has been reduced from 20,02,90,000 equity shares of Re. 1 each to 3,01,272 equity shares of Re. 1 each thereby reducing the value of existing issued, subscribed and paid up equity share capital of the Company to the extent of 0.15% (zero point one five percent). Any fractional share below 0.5 shall be considered as 0 share, in excess of 0.5 shall be rounded to 1 share and equal to 0.5 shall be rounded to 1 share.
c. With Effect From 20th October, 2023, 10,00,00,000 equity shares of Re. 1 each aggregating to Rs. 10,00,00,000 (“Equity
Shares") be and are hereby issued and allotted to SVA Family Welfare Trust 9,90,00,000 shares of Re. 1 each and M&B Switchgears 10,00,000 shares of Re. 1 each (Successful Resolution Applicant), against the conversion of Resolution Applicant Loan of Rs. 10,00,00,000 availed from SVA Family Welfare Trust and M&B Switchgears 50,00,000 equity shares of Re. 1 each aggregating to Rs. 50,00,000 (“Equity Shares") be and are hereby issued and allotted to Swastika Fin-Mart Private Limited, against the conversion of unsecured debt of Rs. 50,00,000
d. The National Company Law Tribunal (’NCLT’), Indore Bench, vide order no. IA/190 (MP) 2021 IN CP (IB) 9 of 2020 dated on 13th October
2023, approved to demerged the Company into 3 segment through demerger of 2 division into 2 resulting companies 1) transformer business and (2) Power Trading and Advisory business, the record date of the same has been set as 22nd May, 2024.
e. Pursuant to resolution plan, in respect of derecognition of operational, financial creditors, difference amounting to Rs. 21,214.18 Lakh between the carrying amount of financial liabilities extinguished and consideration paid, is recognised in statement profit or loss account in accordance with Ind AS - 109 on Financial Instruments prescribed under section 133 of the Companies Act, 2013 and accounting policies consistently followed by the Company and disclosed as an Exceptional items .
f. Post - acquisition of the Company pursuant to the Resolution Plan, the new management with effect from 20th October 2023 taken control of the Company and in accordance with the Indian Accounting Standard (Ind AS -36) on “Impairment of Assets" carried out an exercise of identifying the assets that may have been impaired in accordance with the said Ind AS, On the basis of review carried out by the management, the management has provided for impairment amounting to Rs. 9,710.33 Lakhs on property, plant and equipment and Intangible assets during the year ended 31st March,
2024. '
a) De-recognition of liabilities amounting to Rs. 21,214.18 lakhs.
b) De-recognition of current assets (Trade Receivable, Security Deposits, Subsidy receivab le, REC andOthei Cuiraet AssCs4 amounlieg th Rs . 10,362.56 laldit.
c) Impairment of Property, Plant and Equipment andMtahhblihssnts Mnceinting to Rs. 9,710.33 lakhs.
d) Written down amount of Inventories to net realisable vilue Rs4 2,ae4.3d lakh4.
These adjustments, having one- time, non-routine m terial impact on the Statement of profit and Loss accourt snd Sier^c 6, 14c iame 6a4 bhen as
Eeceshostt hemr 4t tee dtatrment of crsCrt aed Loss accounts."
45. As per the resolution plan the Company has paid Rs. 2,800 1akhs payableto securedfinancial froditors.
46. During the year the company has accrued interest on Fix ;d Depo its with Axis Ban k amounting to Rs. 24.58 Lakhs (Previous Year 22.69 Lakhs), however the bank has not credited the same. Therefore, there exists a difference with regards to aforesaid amount as per balance confirmation provided by the banks and books of accounts.
47. During the financial year ended 31st March 2024, the crmpavy 6ui changad the pnlic4 s° rccogniticn ek ,16,436)16 nvur4y CertiCccle hrem argrnd t> aais to transfer / Sales basis. This change in accounting policy is made to provide more appropriate recognition of revenue from REC. This voluntary change in rn:ountina jtehey liat best treernnte1 for py sesfotih0 tha cimparalivc iiOOTmation 41^1' tCp preowdinu pcrie4. T4s dCite his el sr pre4g4tea 4 SiirC dblamcs oheel as at the beginning of he prec ding period. The change in accounting policy has impacted the financial rt:at3me4rr 4S folfowt:
i. The company has not granted Loans or Advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person, that are: (a) repayable on demand or (b) without specifying any terms or period of repayment.
ii. The company neither have any Benami property nor any proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
iii. The company is not declared wilful defaulter by any bank or financial Institution or other lender.
iv. The company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
v. The company has not made any investments in subsidiary company hence compliance with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable.
vi. (A) The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;
(B) The company has not received any fund from any person(s) or entity (ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall
(i) directly or indirectly lend or invest in other persons
or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vii. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
viii. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
ix. During the year there has been borrowings from banks on the basis of security of current assets. But as the Company was under the CIRP process no Quarterly returns or statements of current assets were asked and filed by the Company with banks.
To be read with our report of even date
FOR ASHOK KHASGIWALA & CO. LLP FOR AND ON BEHALF OF BOARD OF DIRECTORS
Chartered Accountants
(Firm Reg No. 000743C/C400037)
CA. AVINASH BAXI SARVESH DIWAN SHYAMSUNDER MUNDRA ANURAG MUNDRA
Partner Company Secretary Chief Managing Director CFO and Director
Membership No. 079722 M No. A70139 DIN: 00113199 DIN: 00113172
Place: Indore Date: 01th June, 2024