Aarvi Encon Ltd. ಖಾತೆಯ ಉಪಯುಕ್ತ ಮಾಹಿತಿ

Mar 31, 2025

A Expected Credit Loss:

Trade receivables and unbilled revenue are unsecured and are derived from revenue earned from customers primarily located in India. Periodically, the Company evaluates all customer dues to the Company for collectability. The need for impairment is assessed based on various factors including collectability of specific dues, risk perceptions of the industry in which the customers operates, general economic factors, which could affect the customer''s ability to settle. More than 95% of the Company''s customers have been transacting with the Company for over five years and none of these customers'' balance are credit impaired. An impairment analysis is performed at each reporting date on invoice wise receivable balances. The Life time credit loss write off during the year arises more out of the disputes or charges rather than credit impairment.

Since the Company Calculates impairment under the simplified approach the Company does not track the changes in credit risk of trade receivables the impairment amount represents lifetime expected credit loss. Hence the additional disclosures in trade receivables for changes in credit risk and credit impaired trade receivable are not disclosed.

b) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of '' 10/- per share. Each holder of equity shares is entitled to one vote per share. The shareholders are entitled to dividend in the proportion of their shareholding. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after payment of all external liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

Security for loans and Terms of payment

In respect of Cash Credit, working capital demand loan and Bank guarantees from HSBC Bank Limited

a. Pari Passu charge on Current Assets and Fixed Assets.

b. Exclusive Charge over Property situated at Office no. 901, 9th floor, B2, Marathon Nextgen Innova, Lower Parel, Mumbai 400013.

c. Personal Guarantee from Mr. Jaydev Sanghavi and Mr. Virendra Sanghavi

d. 15% Deposits under lien

e. 100% Deposit Under Lien open ended BG

In respect of Cash Credit, working capital demand loan and Bank guarantees from Yes Bank Limited

a. Pari Passu charge with HDFC Bank and HSBC on Current Assets and movable Fixed Assets.

b. Equitable mortgage of commercial properties located at Shah & Nahar Industrial Estate, Lower Parel (Mumbai) and Marathon Nextgen Realty Limited, Lower Parel (Mumbai).

c. Unconditional and Irrevocable Personal guarantees of Mr Jaydev Sanghavi, Mr Virendra Sanghavi.

d. '' 73.50 lakhs in the form of fixed deposit receipt placed under bank lien.

In respect of Cash Credit, working capital demand loan and Bank guarantees from HDFC Bank Limited

a. First charge on Pari Passu basis with HSBC and Yes Bank by the way of Hypothecation on all present and future book debts of the Company.

b. Fixed Deposit of '' 383.55 lakhs under lien

c. Exclusive charge on Flat No 11 & 11A, Building O, 4th Floor, Konark Campus Co-operative Housing Society, Lohegaon Village, Taluka Haveli, Pune.

a) Amounts due to Micro, Small and Medium Enterprises

The above information regarding Micro, Small and Medium Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. This is relied upon by the auditors.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

There is no minimum funding requirement for a gratuity plan in India and there is no compulsion on the part of the company fully or partially pre-fund the liabilities under the plan. Since the liabilities are un funded there is no asset liability matching strategy devised for the plan.

(iv) Actuarial Risk:

A Actuarial Risk

It is the risk that benefits will cost more than expected.This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

B Investment Risk:

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

C Liquidity Risk

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cashflows.

D Market Risk:

Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

E Legislative Risk:

Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/ regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

20 Contingent Liabilities
Particulars	March 31, 2025	March 31, 2024
Bank Guarantees	1423.44	1,285.20
Total	1,423.44	1,285.20
21 Commitments
Particulars	March 31, 2025	March 31, 2024
Capital Commitments:
Estimated amount of contracts remaining to be executed on capital account. (Net of Capital Advances)	-	-
Total	-	-

26 Significant accounting judgements, estimates and assumptions

The financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods .

Judgements

In the process of applying the company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the separate financial statements.

Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

The management assessed that fair value of cash and short-term deposits, trade receivables, trade payables, book overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the shortterm maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

28 Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are

(a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within 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 assets or liabilities that are not based on observable market data (unobservable inputs).

The following table presents the fair value measurement hierarchy of financial assets and liabilities measured at fair value on recurring basis as at March 31,2025 and March 31,2024.

29 Financial risk factors

Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

(a) Credit risk

Credit risk is the risk that counterparty will not meet its contractual obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and loans receivables, investments and other financial instruments.

(b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company monitors its risk of a shortage of funds on a regular basis. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash credit facilities.

(c) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and foreign currency risk. Financial instruments affected by market risks include trade receivable and trade payable.

i. Interest rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates. The Company does not have significant debt obligation with floating interest rates, hence is not exposed to any significant interest rate risks.

ii. Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign currency rates. The Company does not have significant foreign currency exposure and hence is not exposed to any significant foreign currency risks.

30 Capital management

For the purpose of the company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the company’s capital management is to maximise the shareholder value.

The company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The company includes within net debt, short term borrowings, trade and other payables, less cash and cash equivalents.

The Company has implemented Employee Stock Option Scheme 2022 (’ESOP 2022’) as approved by the shareholders on 29th July, 2022. The ESOP 2022 Scheme covers the permanent employees of the Company and its subsidiaries and directors (excluding promoter directors) [collectively “eligible employees”]. The nomination and remuneration committee of the Board of AARVI ENCON LIMITED administers the ESOP 2022 Scheme and grants stock options to eligible employees.

The options are granted at an exercise price, which is in accordance with the relevant SEBI guidelines in force, at the time of such grants. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of face value ''10 each.

35 The figures for the previous year are re-arranged/ re-grouped, wherever necessary.

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Mar 31, 2024

g) Provisions

The Company recognizes a provision when: it has a present legal or constructive obligation as a result of past events; it is likely that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognized for future operating losses.

h) Fair Value Measurement

The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

♦ In the principal market for the asset or liability, or

♦ In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

i) Financial Instruments

(i) Financial Assets & Financial Liabilities

Initial recognition and measurement

All financial assets and liabilities are recognised initially at fair value.

In the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset is treated as cost of acquisition. 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.

Subsequent Measurement

For purposes of subsequent measurement, financial assets are classified in following categories:

♦ Debt instruments at amortised cost

♦ Debt instruments at fair value through other comprehensive income (FVTOCI)

♦ Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)

♦ Equity instruments measured at fair value through other comprehensive income (FVTOCI)

Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit and loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The Explanatory Notes details how the entity determines whether there has been a significant increase in credit risk. For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Derecognition of financial instruments

A financial asset is derecognised only when

* The Company has transferred the rights to receive cash flows from the financial asset or

* retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the group evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the group has not retained control of the financial asset. Where the group retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

A financial liability (or a part of a financial liability) is derecognized from the Company’s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.

(ii) Investments in associates

Investments in associates are carried at cost in the Separate Financial Statements.

j) Revenue Recognition

i) Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to credit risks. The specific recognition criteria described below must also be met before revenue is recognised.

Manpower Services

Revenue from manpower services is accounted at a point in time on accrual basis on performance of the services agreed in the contract with the customers.

Interest Income

For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit or loss.

Dividends

Dividend income is recognised when the Company’s right to receive the payment is established, which is generally when shareholders approve the dividend.

k) Taxes

Tax expenses comprise Current Tax and Deferred Tax.:

i) Current Tax:

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

ii) Deferred Tax:

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the standalone financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

For items recognised in OCI or equity, deferred / current tax is also recognised in OCI or equity.

iii) Minimum Alternate Tax (MAT) Credit:

The Company has opted for income tax under Section 115BAA of the Income tax act, 1961. As per provisions of the Act, the domestic companies opting for section 115BAA will not be able to claim MAT credits for taxes paid under MAT during the tax holiday period. The companies would not be able to reduce their tax liabilities under section 115BAA by claiming MAT credits. Therefore, the Company has reversed all the MAT credit during the year 2020-21.

l) Earnings Per Share

Earnings per share is calculated by dividing the net profit or loss before OCI for the year by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss before OCI for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

m) Dividend Distribution

Dividend distribution to the Company’s equity holders is recognized as a liability in the Company’s annual accounts in the year in which the dividends are approved by the Company’s equity holders.

n) Foreign exchange transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the statement of profit and loss.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date, the resultant exchange differences are recognised in the statement of profit and loss.

o) Employee benefits

Short term employee benefits

Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and other benefits. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related service is rendered by employees.

Post-employment benefits

i. Defined contribution plans

A defined contribution plan is a post-employment benefit plan where the company makes specified monthly contributions towards employee provident fund to Government administered provident fund scheme which is a defined contribution plan. The Company’s contribution is recognised as an expense in the statement of profit and loss during the period in which the employee renders the related service

ii. Defined benefit plans -Gratuity

I n accordance with the applicable Indian laws, the Company provides for gratuity, defined benefit retirement plan (“the Gratuity plan”) covering eligible employees. The Gratuity plan provides a lumpsum payment to eligible employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment.

Liabilities with regard to the Gratuity plan are determined by actuarial valuation, performed by an independent actuary, at each reporting date using the projected unit credit method. Actuarial gains and losses are recognised in full in the other comprehensive income for the period in which they occur. Current service cost and the interest cost on obligation related to defined benefit plans are recognised in the statement of profit or loss.

p) Share based payments

Equity settled share-based payment transactions:

The Company operates equity settled share-based remuneration plans for its employees. All services received in exchange for the grant of any share-based payment are measured at their fair values on the grant date and is recognised as an employee expense, in the profit or loss with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The increase in equity recognised in connection with share-based payment transaction is presented as a separate component in equity under “Employee stock options / Employee stock appreciation rights”. The amount recognised as an expense is adjusted to reflect the actual number of stock options that vest.

Grant date is the date when the Company and employees have shared an understanding of terms and conditions on the arrangement.

Where employees are rewarded using share-based payments, the fair value of employees’ services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth). All share-based remuneration is ultimately recognised as an expense in the profit or loss. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest.

Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is recognised in the current period. The number of vested options ultimately exercised by holder does not impact the expense recorded in any period.

Market conditions are taken into account when estimating the fair value of the equity instruments granted. Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.

A Expected Credit Loss:

Trade receivables and unbilled revenue are unsecured and are derived from revenue earned from customers primarily located in India. Periodically, the Company evaluates all customer dues to the Company for collectability. The need for impairment is assessed based on various factors including collectability of specific dues, risk perceptions of the industry in which the customers operates, general economic factors, which could affect the customer’s ability to settle. More than 95% of the Company’s customers have been transacting with the Company for over five years and none of these customers’ balance are credit impaired. An impairment analysis is performed at each reporting date on invoice wise receivable balances. The Life time credit loss write off during the year arises more out of the disputes or charges rather than credit impairment.

Since the Company Calculates impairment under the simplified approach the Company does not track the changes in credit risk of trade receivables the impairment amount represents lifetime expected credit loss. Hence the additional disclosures in trade receivables for changes in credit risk and credit impaired trade receivable are not disclosed.

(iv) Actuarial Risk:

A Actuarial Risk

It is the risk that benefits will cost more than expected.This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

B Investment Risk:

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

C Liquidity Risk

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cashflows.

D Market Risk:

Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

E Legislative Risk:

Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

26 Significant accounting judgements, estimates and assumptions

The financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods .

Judgements

In the process of applying the company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the separate financial statements.

Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

28 Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within 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 assets or liabilities that are not based on observable market data (unobservable inputs).

During the year, the Company has no financial assets and liabilities which are measured at fair value.

29 Financial risk factors

Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

(a) Credit risk

Credit risk is the risk that counterparty will not meet its contractual obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and loans receivables, investments and other financial instruments.

(b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company monitors its risk of a shortage of funds on a regular basis. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash credit facilities.

(c) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and foreign currency risk. Financial instruments affected by market risks include trade receivable and trade payable.

i. Interest rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates. The Company does not have significant debt obligation with floating interest rates, hence is not exposed to any significant interest rate risks.

ii. Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign currency rates. The Company does not have significant foreign currency exposure and hence is not exposed to any significant foreign currency risks.

As per our report of even date For and on behalf of the Board of Directors

Sd/- Sd/-

For Jay Shah & Associates Virendra D. Sanghavi Jaydev V. Sanghavi

Firm Registration No. 135424W Managing Director Executive Director & CFO

Chartered Accountants DIN:00759176 DIN:00759042

Sd/- Sd/-

Jay Shah Leela S. Bisht

Proprietor Company Secretary & Compliance Officer

M.No. 134334 Membership No. ACS 59748

UDIN : 24134334BKBEEA3412

Place : Mumbai Place : Mumbai

Date : 13th May, 2024 Date : 13th May, 2024

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Mar 31, 2023

g) Provisions

The Company recognizes a provision when: it has a present legal or constructive obligation as a result
of past events; it is likely that an outflow of resources will be required to settle the obligation; and the
amount has been reliably estimated. Provisions are not recognized for future operating losses.

h) Fair Value Measurement

The Company measures financial instruments, such as, derivatives at fair value at each balance sheet
date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The fair value measurement
is based on the presumption that the transaction to sell the asset or transfer the liability takes place
either:

♦ In the principal market for the asset or liability, or

♦ I n the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants
would use when pricing the asset or liability, assuming that market participants act in their economic
best interest.

i) Financial Instruments

(i) Financial Assets & Financial Liabilities
Initial recognition and measurement

All financial assets and liabilities are recognised initially at fair value.

In the case of financial assets not recorded at fair value through profit or loss, transaction costs that
are attributable to the acquisition of the financial asset is treated as cost of acquisition. 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.

Subsequent Measurement

For purposes of subsequent measurement, financial assets are classified in following categories:

♦ Debt instruments at amortised cost

♦ Debt instruments at fair value through other comprehensive income (FVTOCI)

♦ Debt instruments, derivatives and equity instruments at fair value through profit or loss
(FVTPL)

♦ Equity instruments measured at fair value through other comprehensive income (FVTOCI)

Financial liabilities are subsequently carried at amortized cost using the effective interest method,
except for contingent consideration recognized in a business combination which is subsequently
measured at fair value through profit and loss. For trade and other payables maturing within one
year from the Balance Sheet date, the carrying amounts approximate fair value due to the short
maturity of these instruments.

Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with
its assets carried at amortised cost. The impairment methodology applied depends on whether
there has been a significant increase in credit risk. The Explanatory Notes details how the entity
determines whether there has been a significant increase in credit risk. For trade receivables only,
the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which
requires expected lifetime losses to be recognised from initial recognition of the receivables.

Derecognition of financial instruments

A financial asset is derecognised only when

* The Company has transferred the rights to receive cash flows from the financial asset or

* retains the contractual rights to receive the cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the group evaluates whether it has transferred
substantially all risks and rewards of ownership of the financial asset. In such cases, the financial
asset is derecognised. Where the entity has not transferred substantially all risks and rewards of
ownership of the financial asset, the financial asset is not derecognised.

Where the entity has neither transferred a financial asset nor retains substantially all risks and
rewards of ownership of the financial asset, the financial asset is derecognised if the group has not
retained control of the financial asset. Where the group retains control of the financial asset, the
asset is continued to be recognised to the extent of continuing involvement in the financial asset.

A financial liability (or a part of a financial liability) is derecognized from the Company’s Balance
Sheet when the obligation specified in the contract is discharged or cancelled or expires.

(ii) Investments in associates

Investments in associates are carried at cost in the Separate Financial Statements.

j) Revenue Recognition

i) Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured, regardless of when the payment is being
made. Revenue is measured at the fair value of the consideration received or receivable, taking
into account contractually defined terms of payment and excluding taxes or duties collected on
behalf of the government. The Company has concluded that it is the principal in all of its revenue
arrangements since it is the primary obligor in all the revenue arrangements as it has pricing
latitude and is also exposed to credit risks. The specific recognition criteria described below must
also be met before revenue is recognised.

Manpower Services

Revenue from manpower services is accounted at a point in time on accrual basis on performance
of the services agreed in the contract with the customers.

Interest Income

For all financial instruments measured at amortised cost, interest income is recorded using the
effective interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash
receipts over the expected life of the financial instrument or a shorter period, where appropriate,
to the net carrying amount of the financial asset. When calculating the effective interest rate, the
Company estimates the expected cash flows by considering all the contractual terms of the financial
instrument but does not consider the expected credit losses. Interest income is included in finance
income in the statement of profit or loss.

Dividends

Dividend income is recognised when the Company’s right to receive the payment is established,
which is generally when shareholders approve the dividend.

k) Taxes

Tax expenses comprise Current Tax and Deferred Tax:

i) Current Tax:

The income tax expense or credit for the period is the tax payable on the current period’s taxable
income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and to unused tax losses. The current
income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the company and its subsidiaries and associates
operate and generate taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.

ii) Deferred Tax:

Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the standalone
financial statements. However, deferred tax liabilities are not recognised if they arise from the
initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the time
of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income
tax is determined using tax rates (and laws) that have been enacted or substantially enacted by
the end of the reporting period and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised
for all deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses. Current and
deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.

For items recognised in OCI or equity, deferred / current tax is also recognised in OCI or equity.

iii) Minimum Alternate Tax (MAT) Credit:

The Company has opted for income tax under Section 115BAA of the Income tax act, 1961. As
per provisions of the Act, the domestic companies opting for section 115BAA will not be able
to claim MAT credits for taxes paid under MAT during the tax holiday period. The companies
would not be able to reduce their tax liabilities under section 115BAA by claiming MAT credits.
Therefore, the Company has reversed all the MAT credit during the year.

l) Earnings Per Share

Earnings per share is calculated by dividing the net profit or loss before OCI for the year by the weighted
average number of equity shares outstanding during the period. For the purpose of calculating diluted
earnings per share, the net profit or loss before OCI for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are adjusted for the effects of all
dilutive potential equity shares.

m) Dividend Distribution

Dividend distribution to the Company’s equity holders is recognized as a liability in the Company’s
annual accounts in the year in which the dividends are approved by the Company’s equity holders.

n) Foreign exchange transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the
dates of the respective transaction. Exchange differences arising on foreign exchange
transactions settled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are
translated at the closing exchange rates on that date, the resultant exchange differences are recognised
in the statement of profit and loss.

o) Employee benefits

Short term employee benefits

Employee benefits payable wholly within twelve months of receiving employee services are classified as
short-term employee benefits. These benefits include salaries and wages, bonus and other benefits. The
undiscounted amount of short-term employee benefits to be paid in exchange for employee services is
recognised as an expense as the related service is rendered by employees.

Post-employment benefits

i. Defined contribution plans

A defined contribution plan is a post-employment benefit plan where the company makes specified
monthly contributions towards employee provident fund to Government administered provident
fund scheme which is a defined contribution plan. The Company’s contribution is recognised as an
expense in the statement of profit and loss during the period in which the employee renders the
related service.

ii. Defined benefit plans -Gratuity

In accordance with the applicable Indian laws, the Company provides for gratuity, defined benefit
retirement plan (“the Gratuity plan”) covering eligible employees. The Gratuity plan provides a
lump-sum payment to eligible employees at retirement, death, incapacitation or termination
of employment, of an amount based on the respective employee’s salary and the tenure of
employment.

Liabilities with regard to the Gratuity plan are determined by actuarial valuation, performed by an
independent actuary, at each reporting date using the projected unit credit method. Actuarial gains
and losses are recognised in full in the other comprehensive income for the period in which they
occur. Current service cost and the interest cost on obligation related to defined benefit plans are
recognised in the statement of profit or loss.

A Expected Credit Loss:

Trade receivables and unbilled revenue are unsecured and are derived from revenue earned from customers primarily
located in India. Periodically, the Company evaluates all customer dues to the Company for collectability. The need
for impairment is assessed based on various factors including collectability of specific dues, risk perceptions of the
industry in which the customers operates, general economic factors, which could affect the customer''s ability to
settle. More than 95% of the Company''s customers have been transacting with the Company for over five years and
none of these customers'' balance are credit impaired. An impairment analysis is performed at each reporting date
on invoice wise receivable balances.

The Life time credit loss write off during the year arises more out of the disputes or charges rather than credit
impairment.

Since the Company Calculates impairment under the simplified approach the Company does not track the changes in
credit risk of trade receivables the impairment amount represents lifetime expected credit loss. Hence the additional
disclosures in trade receivables for changes in credit risk and credit impaired trade receivable are not disclosed.

Security for loans and Terms of payment

In respect of Cash Credit, working capital demand loan and Bank guarantees from HSBC Bank Limited

a. Pari Passu charge on Current Assets and fixed assets.

b. Exclusive Charge over Property situated at Office no. 901, 9th floor, B2, Marathon Nextgen Innova, Lower Parel,
Mumbai 400013.

c. Personal Guarantee from Mr. Jaydev Sanghavi and Mr. Virendra Sanghavi

d. 15% Deposits under lien

In respect of Cash Credit, working capital demand loan and Bank guarantees from Yes Bank Limited

a. Pari Passu charge with HDFC Bank and HSBC on Current Assets and movable fixed assets.

b. Equitable mortgage of commercial properties located at Shah & Nahar Industrial Estate, Lower Parel (Mumbai) and
Marathon Nextgen Realty Limited, Lower Parel (Mumbai).

c. Unconditional and Irrevocable Personal guarantees of Mr Jaydev Sanghavi, Mr Virendra Sanghavi.

d. Rs. 73.50 lakhs in the form of fixed deposit receipt placed under bank lien.

(iv) Actuarial Risk:

A Actuarial Risk

It is the risk that benefits will cost more than expected.This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into
an increase in Obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the
Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the
acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary
growth and discount rate.

B Investment Risk:

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be
the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the
future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant
changes in the discount rate during the inter-valuation period.

C Liquidity Risk

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits.
If some of such employees resign/retire from the company there can be strain on the cashflows.

D Market Risk:

Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets.
One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of
money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa.
This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is
exposed to fluctuations in the yields as at the valuation date.

E Legislative Risk:

Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the
legislation/regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay
higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the
same will have to be recognized immediately in the year when any such amendment is effective.

23 Disclosure in accordance with Ind AS - 108 “Operating Segments”, of the Companies (Indian Accounting Standards)
Rules, 2015.

Based on the “management approach” as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates the
Company’s performance In accordance with IND AS “Operating Segment”, The Company has only one reportable operating
segment i.e. Manpower Supply and Consultancy Services.

a) Major Customers

The top 1 customers account for 17% of the total revenue earned during the year ended March 31,2023 (March
31,2022:Top 1 customers accounted for 14% of the total revenue earned).

b) Information about Geographical areas

Company’s operation are confined in India only. All its revenue are generated in the said geographical location.

24 Disclosure in accordance with Ind AS - 24 “Related Party Disclosures”, of the Companies ( Indian Accounting
Standards) Rules, 2015

Name of the related parties and related party relationships
A List of related parties

i Entities where control exists

Aarvi Engineering and Consultants Private Limited
Aarvi Encon FZE

Aarvi Encon Resources Limited, UK

Aarvi Encon Staffing Services, Qatar (Joint Venture)

PT Aarvi Encon Services, Indonesia (Step down subsidiary)

Aarvi Encon LLC, Oman (Step down subsidiary)

ii Key Management Personnel

Mr. Virendra Sanghavi, Managing Director

Mr. Jaydev Sanghavi, Executive Director & CFO

Ms Leela S. Bisht, Company Secretary & Compliance Officer

iii Entities significantly influenced or controlled by Key Management Personnel or their relatives

Eneryjobz Services Private Limited

Aarvi Encon Employees Group Gratuity Fund

iv Relatives of Key Management Personnel

Mr. Ninad Kulkarni (son in law of Managing Director)

Mrs. Naini Kulkarni, Proprietor of M/s Aarvi IT Services (daughter of Managing Director)

Mrs. Ami J. Sanghavi (wife of Executive Director)

Mr. Aditya J. Sanghavi (son of Executive Director)

Ms. Nirali J. Sanghavi (Daughter of Executive Director)

27 Significant accounting judgements, estimates and assumptions

The financial statements require management to make judgments, estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities.
Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods .

Judgements

In the process of applying the company’s accounting policies, management has made the following judgements, which have
the most significant effect on the amounts recognised in the separate financial statements.

Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available
against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred
tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax
planning strategies.

28 Financial Instruments

i) The carrying value and fair value of financial instruments by categories as at March 31,2023 and March 31,2022 is as
follows:

The management assessed that fair value of cash and short-term deposits, trade receivables, trade payables, book
overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short¬
term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a forced or liquidation sale.

29 Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that
are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed
in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value,
the group has classified its financial instruments into the three levels prescribed under the accounting standard. An
explanation of each level follows underneath the table.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within 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 assets or liabilities that are not based on observable market data (unobservable inputs).

During the year, the Company has no financial assets and liabilities which are measured at fair value.

30 Financial risk factors

Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk
management framework. The Company’s risk management policies are established to identify and analyse the risks
faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s
activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined
and constructive control environment in which all employees understand their roles and obligations.

(a) Credit risk

Credit risk is the risk that counterparty will not meet its contractual obligations under a financial instrument or customer
contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade
receivables) and loans receivables, investments and other financial instruments.

(b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The
objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Company’s reputation. The Company monitors its risk of a shortage of funds on a regular basis. The Company’s
objective is to maintain a balance between continuity of funding and flexibility through the use of cash credit facilities.

(c) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises two types of risk: interest rate risk and foreign currency risk. Financial instruments
affected by market risks include trade receivable and trade payable.

i. Interest rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate
because of changes in market interest rates. The Company does not have significant debt obligation with floating
interest rates, hence is not exposed to any significant interest rate risks.

ii. Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign currency rates. The Company does not have significant foreign currency exposure and hence is
not exposed to any significant foreign currency risks.

35 The figures for the previous year are re-arranged/ re-grouped, wherever necessary.

As per our report of even date For and on behalf of the Board of Directors

For Jay Shah & Associates Virendra D. Sanghavi Jaydev V. Sanghavi

Firm Registration No. 135424W Managing Director Executive Director & CFO

Chartered Accountants DIN:00759176 DIN:00759042

Jay Shah Leela S. Bisht

Proprietor Company Secretary & Compliance Officer

M.No. 134334 Membership No. ACS 59748

Place : Mumbai Place : Mumbai

Date : 29th May, 2023 Date : 29th May, 2023

---

Mar 31, 2018

1 Corporate information

"Aarvi Encon Limited (referred to as ""the Company"") is a Human Resource Company, offering capable manpower resources to businesses. The Company was incorporated as Aarvi Encon Private Limited under the provisions of the Companies Act 1956 vide certificate of incorporation dated December 03, 1987, issued by the Registrar of Companies, Maharashtra, Mumbai. Subsequently, the name of the Company was changed to Aarvi Encon Limited pursuant to conversion into a public company vide Shareholders'' approval on June 13, 2017 and fresh certificate of incorporation dated July 05, 2017 issued. The Company undertook an Intial Public issue of equity shares and subsequently got its equity shares listed on the National Stock Exchange, Emerge (SME Segment) with effect from 05.10.2017"

1 Pursuant to the resolution passed by the Shareholders of the Company in the Extra Ordinary General Meeting of the Company held on April 28, 2017, each existing Equity Share of the Company having face value of Rs. 100/- (Rupees Hundered) each has got sub-divided into 10 (Ten) Equity Shares having face value of Rs. 10/-(Rupees Ten) each fully paid up.

2 The Company has issued and allotted 77,50,000 equity shares of Rs. 10/- each to the eligible holders of equity . . shares as per the Board resolution dated July 17, 2017 by capitalizing reserves. The basis of issue is five (5) shares for every two (2) shares held.

3 (a) The Company has issued and allotted 39,34,000 equity shares of Rs. 10/- each at a premium of Rs. 44/- per share as per Board resolution dated September 29, 2017.

(b) Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having a par value of Rs 10 each. Each shareholder is eligible for one vote per share held. The final dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

(c) Particulars of shareholders holding more than 5% shares of the aggregate shares of the Company

1 First charge on office preimises located at Marathon Nextgen Realty Limited, Lower Parel (Mumbai) and second charge on all present and future movable fixed assets. It is repayable in 59 equated monthly instalments of Rs 5,83,333/-(excluding interest) each commencing from September 2012 onwards.

2 Vehicle loan is secured by hypothecation of Motor Vehicle purchased with the loan amount. It is repayable in 84 equated monthly instalments of Rs 48,200/- each (including interest), commencing from November 2013 onwards.

3 Vehicle loan is secured by hypothecation of Motor Vehicle purchased with the loan amount. It is repayable in 35 equated monthly instalments of Rs 16,385/- each (including interest), commencing from May,2017 onwards.

Notes:

1 In respect of Cash Credit from Yes Bank

a. Pari Passu charge on hypothecation charge on Current Assets and all movable fixed assets.

b. Equitable mortgage of commercial properties located at Shah & Nahar Industrial Estate, Lower Parel (Mumbai), Jetalpur (Baroda), and Marathon Nextgen Realty Limited, Lower Parel (Mumbai).

c. Unconditional and Irrevocable Personal guarantees of Mr Jaydev Sanghavi, Mr Virendra Sanghavi and Mrs Niranjana Sanghavi.

d. Rs. 73,50,000/- in the form of fixed deposit receipt placed under bank lien.

2 In respect of Cash Credit and Working Capital demand loan from Citi Bank

a. First Pari Passu charge on present and future stocks, book debts and movable fixed assets.

b. Pari Passu charge on property located at - Shah & Nahar Industrial Estate, Lower Parel (Mumbai), Jetalpur (Baroda), Marathon Nextgen Realty Limited, Lower Parel (Mumbai) and Flat No 11 & 11A, Building O, 4th Floor, Konark Campus Cooperative Housing Society, Lohegaon Village, Taluka Haveli, Pune.

c. Personal guarantees of Mr Jaydev Sanghavi, Mr Virendra Sanghavi and Mrs Niranjana Sanghavi.

d. Pledged fixed deposits amounting to INR 30,00,000/-.

Note 2 Employee benefit plans

2.1 Defined contribution plans

The Company makes contributions towards Provident Fund and Employee State Insurance Scheme which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes. The Company recognised Rs 6,36,38,764/- (previous year: Rs 4,64,15,416/-) towards contributions to the following defined contribution plans.

2.2 Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity - funded (included as part of ''Salaries & wages including contribution to provident fund'' in Note 21 Direct expenses). The Company provides the Gratuity benefit through annual contribution to a fund managed by Aditya Birla Sun Life Insurance Company Limited.

ii. Compensated absences - unfunded (included as part of ''Salaries, wages and bonus'' in Note 19 Employee benefits expense)

(i) The Company has sub divided its euity share of Rs 100 each into 10 Equity share of Rs 10 each with effect from April 28, 2017.

(ii) "Further, the company has issued bonus shares to its existing shareholders on the basis of issue 5 shares for every 2 shares held with effect from July 17, 2017."

(iii) The resultant shares on account of sub division and bonus have been considered in computation of weighted average of equity shares for the current year and previous year.

Note 3 Interest in joint venture

The Company has 30% interest in Aarvi Encon Arabia. The Company has written off the said investment is books of accounts. However, the said Joint Venture is yet to be dissolved.

Note 4. Events occurring after the Balance Sheet Date

The board of directors of the company has proposed a dividend of 5% per share vide resolution dated May 19, 2018. However, the same is subject to approval of shareholders in Annual General Meetings.

Note 5. Previous year''s figures

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.