34 Segment Reporting
......The Company is engaged in the manufacture, Trading and providing services of Specialty Chemicals, which in the
context of IND AS 108- Operating segment specifed under section
133 of the Companies Act, 2013 is considered as a single business segment of the company."
Operating segment are reported in a manner consistent with internal report provided to chief operating decision maker. The Board of Directors of the company has been identified as chief operating decision maker which reviews and assesses the financial performance and makes the strategic decision.
Revenue from single External customer is Not in excess of 10% of the Total revenue for the year.
35 Financial instruments - Fair values and risk management
A. Accounting classification and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
Fair values for financial instruments carried at amortised cost approximates the carrying amount, accordingly the fair values of such financial assets and financial liabilities have not been disclosed separately.
B. Measurement of fair values
Ind AS 107, 'Financial Instrument - Disclosure' requires classification of the valuation method of financial instruments measured at fair value in the Balance Sheet, using a three level fair-value-hierarchy (which reflects the significance of inputs used in the measurements). The hierarchy gives the highest priority to un-adjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to un-observable inputs (Level 3 measurements). Fair value of derivative financial assets and liabilities are estimated by discounting expected future contractual cash flows using prevailing market interest rate curves. The three levels of the fair-value-hierarchy under Ind AS 107 are described below:
Level 1: Heirarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3. e.g. unlisted equity securities.
Transfers between Levels
There are no transfers betweeen the levels
C. Financial risk management
The Company's activities expose it to Credit risk, liquidity risk and market risk.
i. Risk management framework
Risk Management is an integral part of the Company's plans and operations. The Company's board of directors has overall responsibility for the establishment and oversight of the Company risk management framework. The board of directors is responsible for developing and monitoring the Company risk management policies. The Risk Management committee oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers and investments in debt securities, cash and cash equivalents, mutual funds, bonds etc.
The carrying amount of financial assets represents the maximum credit exposure.
Trade and other receivables
Credit risk is the risk of possible default by the counter party resulting in a financial loss.
The Company manages credit risk through various internal policies and procedures setforth for effective control over credit exposure. These are managed by way of setting various credit approvals,evaluation of financial condition
before supply terms, setting credit limits, industry trends,ageing analysis and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.Based on prior experience and an assessment of the current economic environment, management believes that sufficient provision is made based on expected credit loss model for credit risk wherever credit is extended to customers.
Cash and cash equivalents
Credit risk from balances with banks is managed by the Company's treasury department in accordance with the Company's policy. Investment of surplus funds are made in mainly in mutual funds with good returns and with high credit ratings assigned by International and domestic credit ratings agencies.Other than trade and other receivables, the Company has no other financial assets that are past due but not impaired.
iii. Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company's reputation.
The Company has obtained fund and non-fund based working capital lines from various banks. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility. Accordingly, liquidity risk is perceived to be low.
The following table shows the maturity analysis of financial liabilities of the Company based on contractually agreed undiscounted cash flows as at the Balance Sheet date:
iv. Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates ). Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of its investments. Thus, the Company's exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies. a) Currency risk
The Compnay is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchase, and other expenses are denominated and the functional currency of the Company. The functional currency of the Company is Indian Rupees (INR). The currencies in which these transactions are primarily denominated are EURO and USD.
Exposure to currency risk
The summary quantitative data about the Company's exposure to currency risk as reported to the management of the Company is as follows:
a. The Company has entered into forward contracts to hedge the foreign currency risks arising from amounts designated in foreign currency. The counter party to such forward contract is a bank. Forward contracts outstanding at the year end are:
b) 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. Investment committee manages and constantly reviews the interest rate movements in the market. This risk is mitigated by the Company by investing the funds in varioustenors depending on the liquidity needs of the Company. The Company's exposures to interest rate risk is not significant.
37 RELATED PARTY DISCLOSURES
Related party disclosures as required under Accounting Standard on "Related Party Disclosures" issued by the Institute of Chartered Accountants of ndia are given below:
a) Relationship:
I. Subsidiary Companies:
Chembond Water Technologies Ltd., Chembond Material Technologies Pvt Ltd , Chembond Biosciences Limited, Chembond Calvatis Industrial Hygiene Systems Ltd.,Phiroze Sethna Pvt Ltd,Chembond Distribution Ltd., Chembond Chemical Specialties Limited.
ii. Step down Subsidiary and Associate:
Gramos Chemicals India Private Limited, Chembond Clean Water Technologies Limited, Chembond Water Technologies (Malaysia) SDN. BHD. and Chembond Water Technologies (Thailand) Co. Limited, Rewasoft Solutions Private Limited.
iii. Key Management Personnel and their relatives (KMP)
Key Management Personnel:
Sameer V Shah, Nirmal V Shah, Ashwin R. Nagarwadia, Bhadresh D. Shah, Mahendra K. Ghelani, Sushil U. Lakhani, Dr. Prakash Trivedi, Sarawati Sankar.
Padma V. Shah, Dr. Shilpa S. Shah, Mamta N. Shah, Alpana S. Shah, Jyoti N. Mehta, Amrita S. B'Durga, Malika S. Shah, Kshitija N. Shah, Raunaq S. Shah, Rahil N. Shah.
iv. Entities over which Key Management personnel are able to exercise influence :
CCL Optoelectronics Pvt Ltd., Finor Piplaj Chemicals Ltd., S and N Ventures Private Ltd., Visan Holdings Pvt Ltd and Oriano Clean Energy Pvt Ltd., Visan Trust
38 Capital Management
For the purpose of the Company's capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value.
As at 31st March, 2024, the Company has only one class of equity shares and has low debt. Consequent to such capital structure, there are no externally imposed capital requirements. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or re-investment into business based on its long term financial plans.
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40
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Contingent Liabilities and Commitments (To the extent not provided for) :
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Particulars
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A)
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Contingent Liabilities not provided for :
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a)
i)
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Claims against the company not acknowledged as debts -Income Tax matter under Appeal
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14.61
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15.46
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ii)
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TDS Default
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1.85
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1.06
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iii)
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Service tax due as per final audit report and show cause notice**
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259.42
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265.71
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iv)
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Income tax demands pending for rectification
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32.39
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98.35
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v)
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Davendra Feeds lndia Private Limited has lodged. F. l.R dated 24th June, 2022 with police station Safidon District Jind Haryana against Chembond Chemicals Limited,
Mr Sameer Shah (Chairman & Managing Director) and 3 other
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current & ex-employees, with respect to damage caused by inferior quality of Products. The Company has disclaimed liability and is defending the action. It is not practical to estimate the potential effect of this claim, as the matter is being currently considered by the Competent Authorities and Courts.
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b) Counter Guarantees given by Company for Bank Guarnatees issued -i) Corporate Guarantee given to Banks by the
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2,550.00
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2,550.00
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Company on behalf
of Subsidiaries Chembond Water Technologies Ltd. & Step Subsidiary Chembond Clean Water Technologies Ltd.
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B) Capital Commitments
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Estimated amounts of contracts remaining to be executed on
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NOTE : 46
Working Capital Facilities:-Details of credit facilities from banks:
The Company has sanctioned credit facilities from HDFC Bank of '472.50 lakhs (i.e cash credit facility - '220.00 lakhs, letter of credit - '209.60 lakhs and Bank Guarantee - '42.89 lakhs) The Company has not utilised cash credit facilities at the year end.
Terms of loan
a) The credit facility carries interest at mutually agreed rates,(interest payable on monthly rests).
b) The credit facility is secured by : Hypothecation of stocks and bookdebts, Factory land & building.
Utilisation of borrowings :
(a) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date.
(b) The quarterly returns/statements of current assets filed by the Company with banks or financial institutions in relation to secured borrowings wherever applicable, are in agreement with the books of accounts.
47 Audit Trail
"The Ministry of Corporate Affairs (MCA) has issued a notification - Companies (Accounts) Amendment Rules, 2021 which is effective from 1st April, 2023. The amendment requires that every company which uses an accounting software for maintaining its books of account shall use an accounting software where there is feature of recording audit trail of each and every transaction and further creating an edit log of each change made to the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Company uses an accounting software for maintaining books of account which has a feature of recording audit trail and edit log facility and that has been operative throughout the financial year for the transactions recorded in the software impacting books of account at the application level. The software being managed on public cloud, users do not have access to enable, disable, deactivate or tamper with the audit trail setting.
The Company also uses software for payroll application and employee reimbursement. In both the software there is a feature of audit log for recording audit trail and the same cannot be disabled or modified.
The audit trail feature is not enabled at the database level in respect of these software.
48 Events occurring After Balance sheet date
The Company evaluates events and transactions that occur subsequent to the balance sheet date but prior to approval of the financial statements to determine the necessity for recognition and / or reporting of any of these events and transactions in the financial statements. As on 25th May, 2024, there are no subsequent events to be recognised or reported.
49 Fire Incident
The Company's claim of Rs. 119.50 lakhs for the Inventory damaged in the fire incident which occurred in April 2022 at Tarapur Plant has been settled by the Insurance Company at Rs. 110.57 Lakhs during FY 2022-23.During the current Financial year the claim against property, plant & equipment is partially settled and is still under review.
50 The company has evaluated the option permitted under section 115BAA of the Income Tax Act, 1961 (the "Act") as introduced by the Taxation Laws (Ammendment) Ordinance, 2019. Accordingly, the Company has presently decided to continue with the existing tax structure.
51 The previous year figures have been regrouped, reallocated or reclassified wherever necessary to confirm to current year classification and presentation.
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