2.16 Provisions, contingent liabilities and contingent assets
Provision is recognized when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. Disclosure for contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. No provision is recognized or disclosure for contingent liability is made when there is possible obligation or a present obligation and the likelihood of outflow of resources is remote. Contingent Asset is neither recognized nor disclosed in the financial statements.
2.17 Cash Flow statement and Cash and Cash equivalents
Cash Flows are reported using the Indirect method, whereby 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 or payments and items of income or expense associated with investing or financing cash flows. Cash and cash equivalents include cash on hand and balances with banks in current accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the company.
3. Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in note. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
The 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Information about such estimates and judgments are included in the relevant notes together with the basis of calculation for relevant line item in the financial statements. Estimates and judgments are based on historical experience and other factors, including expectations of future events that may have a financial impact on the company and that are believed to be reasonable under the circumstances
iii) Fair Value of financial assets and liabilities measured at amortised cost
The carrying amounts of trade receivables, trade payables and cash and cash equivalents are considered to be the same as their fair values, due to their short term and settlement on demand nature.
For all other financial assets and liabilities measured at amortised cost, the Company considers that their carrying amounts approximates their fair values
Information about major customers Contributing 10 % or more to the Company's revenue
The sale revenue includes sale to two customers amounting to Rs. 26521 Lakhs (Previous year three customers amounting to Rs. 40285 Lakhs) contributing more than 10% of the company's sale revenue in each case.
30.12. APPROVAL OF FINANCIAL STATEMENTS
The Financial statements were apporved for issue by the Board of Directors on 25.05.2024
30.13. FINANCIAL RISK MANAGEMENT OBJECTIVES
The Company prima facie is exposed to financial risks which is inclusive of Market risk, Interest rate risk ,Price risk, Credit risk and Liquidity risk.
Market Risk : The substantial operations of the Company are into exports and imports and are subject to Foreign Currency Fluctuation risk. The Company enters into Foreign Currency forward contracts based on underlying to mitigate such Flutucation risks. Further the Company is also having natural hedge on account of exports exceeding imports.
Interest Rate Risk: The Company's working capital borrowings are short term in nature and hence any fluctuation in market interest rates would not impact the profitablity of the Company in terms of debt servicing and liquidating of such borrowings.
Price Risk: The price risk arises on account of holding marketable financial assets. The company's equity investmements forms insignificant portion and hence any price fluctuation would not have any impact over the financial position of the company.
Credit Risk : Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The credit risk in trade receivables is managed by selling goods to specific orders and reputed customers . Exports are made against irrevocable letter of credits .
Domestic sales are largely against advance payments. However certain exceptions are made in specific cases .There are no other financial assets carrying credit risk.
Liquidity Risk: Liquidity risk refers to the risk that the company cannot meet its financial obligations. The Company carries substantial current assets to pay off short term obligations arising from working capital bank borrowings , trade payables and other related liabilities .
Capital Management: The company manages its capital to ensure that it will continue to operate as a going concern while maximising the return to stakeholders. The core focus is to safeguard and maintain the company's financial stablity and independence. The fund requirements of the company are generally met through internal accruals. The working capital borrowings are meant for agumenting current assets. Substantial capital assets and current assets are built and maintained
Previous year's figures have been regrouped / reclassified, wherever necessary, to conform with the current period presentation.
As per our report of even date attached F or and on behalf of the Board
For S. Krishnamoorthy & Co., Sd/- Sd/-
Chartered Accountants P.V. Chandran Dr.K.Venkatachalam
Firm Reg. No 001496S (Chairman and Managing Director) (Director)
(DIN : 00628479) (DIN : 01062171)
Sd/- Sd/-
(B. Krishnamoorthi) e.M. Nagasivam
Membership No. 020439 (Director)
Partner (DIN : 07894618)
Place : Coimbatore Radheshyam Padia M.Vijayakumar
Date : 25.05.2024 (Company Secretary) (Chief Financial Officer)