1.3.6 Contingent Liabilities and Provisions
Contingent Liabilities
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not probable that an
outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.
Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that is reasonably estimable, and it is probable that an
outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability.
1.3.7 Employee Benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service are recognised in respect of employee's services up to the end of the reporting period and are measured at the
amounts expected to be paid when the liabilities are settled. The liabilities are presented as current financial liabilities in the balance sheet.
Post-employment obligations
The company operates the following post-employment schemes:
(a) defined benefit plans - gratuity, and
(b) defined contribution plans such as provident fund.
Gratuity: Defined benefits obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting
period less the fair value of plan assets. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting
period on government bonds that have term approximating the term of the related obligation. The net interest cost is calculated by applying the discount rate to the net
balance of the defined benefit obligation and the fair value of plan assets.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in
other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Such accumulated re-measurement
balances are never reclassified into the statement of profit and loss subsequently.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service
costs.
Defined contribution plan
Retirement benefit in the form of provident fund scheme are the defined contribution plans. The Company has no obligation, other than thecontribution payable. The
Company recognizes contribution payable to these schemes as an expenditure, when an employee renders the related service.
1.3.8 Earnings Per Share
Basic earnings per share amounts are computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of shares
outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit for the year 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.
1.3.9 Segment reporting
Identification of segments
An operating segment is a component of the company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are
regularly reviewed by the company’s chief operating decision maker to make decisions about resources to be allocated to these segment and assess its performance, and for
which discrete financial information is available. Operating segments of the company are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker.
The company’s operating businesses are organized and managed on a single segment considering the entire manufacturing and distribution of eggs powders & other egg
related productsas one single operating segment.
The analysis of geographical segments is based on the location in which the customers are situated.
1.3.10 Cash Flow Statements
Cash flows are reported using the indirect method. whereby net profit/(loss) 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 item of income or expenses associated with investing or financing cash flows. The cash flows from
operating, investing and financing activities of the Company are segregated.
1.3.11 Recent accounting pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued
from time to time. During the year ended March 31, 2025, MCA has notified Ind AS 117 - Insurance Contracts and amendments to Ind As 116 - Leases , relating to sale and
lease back transactions, applicable from April 1, 2024. The Company has assessed that there is no significant impact on its financial statements.
On May 9, 2025, MCA notifies the amendments to Ind AS 21 - Effects of Changes in Foreign Exchange Rates. These amendments aim to provide clearer guidance on
assessing currency exchangeability and estimating exchange rates when currencies are not readily exchangeable. The amendments are effective for annual periods beginning
on or after April 1, 2025. The Company is currently assessing the probable impact of these amendments on its f inancial statements
13.2 Terms/Rights attached to Equity Shares
Each holder of the equity share, as reflected in the records of the Company as of the date of the shareholders meeting, is entitled to one vote in respect of each share held for all matters
submitted to vote in the shareholders meeting.
The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General
Meeting.
In the event of liquidation of the company the holders of equity will be entitled to the remaining assets of the company, after distribution to all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the shareholders.
Retained earnings:
Retained earnings are the profits/(loss) that the Company has earned/incurred till date, dividends or other distributions paid to shareholders. Retained earnings include re-measurement
loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss
Other Reserves:
Equity Instruments through Other comprehensive Income are created on account of Investments in equity instruments of SMIFS Capital Markets Limited and capital reserves.
Terms of Secured Borrowings
Term Loans from banks - Secured
(i) HDFC Term Loan
Outstanding balance for HDFC term loan as on 31st March 2025 amounts to INR 161.15 Lakhs of which current maturities bring INR 21.40 Lakhs at interest rate of 7.84% per annum
secured against 25% on Export Book Debts, 25% on Export Stock, Bill For Discounting, Eclgs Guarantee, Personal Guarantee, Plant & Machinery along with industrial properties.
The term loan has to be repaid within 84 equal installments of installments amounting to INR 0.81 lakhs until Mar'25 and installments of INR 2.71 lakhs Apr'25 onwards.
(ii) Term loan for vehicles
Outstanding Balance as on 31st March 2025 amouning to INR 132.42 lakhs of which current maturities being INR 35.07 lakhs (previous year - 7.7 lakhs) is secured by hyothecation of
the vehicle for which the loan is obtained.
The vehicle loans taken banks have maturity dates ranging from April 2021 to September 2029. The rate of interest varies from 7.35% p.a. to 9.02% p.a and are repayable in monthly or
semi annually equated instalments along with interest.
(iii) Working Capital Loans
(a) Outstanding balance as on 31st March 2025 amounting to INR 103.30 lakhs ofwhich current maturities being INR 103.30 lakhs is secured against 25% on Export BookDebts, 25% on
Export Stock, Bill For Discounting, ECLGS, Personal Guarantee, Plant & Machinery along with industrial properties with a sanction limit of INR 246.98 lakhs.
The said loan is repayable in 24 equal monthly installments of INR 9.77 lakhs with an interest rate of 8.25% linked to 3 month T bill rate.
(b) Outstanding balance as on31st March 2024 amounting to INR 208.41 lakhs ofwhich current maturities being INR 104.08 lakhs is secured against 25% on Export BookDebts, 25% on
Export Stock, Bill For Discounting, ECLGS, Personal Guarantee, Plant & Machinery along with industrial properties with a sanction limit of INR 246.98 lakhs.
The said loan is repayable in 24 equal monthly installments of INR 9.77 lakhs with an interest rate of 8.25% linked to 3 month T bill rate.
(iv) Packing Credit facility from Bank - Secured
(a) Outstanding balance as on 31 March 2025 is INR 1,198.50 lakhs.
Packing credit is secured against 25% On Export Book Debts, 25% On Export Stock, Bill For Discounting, Eclgs Guarantee, Personal Guarantee, Plant & Machinery along with industrial
properties with a sanction limit of INR 2,500 Lakhs.
Repayable within 365 days with an interest of 8.25% i.e spread of 2.25% linked to REPO rates
(b) Outstanding balance as on 31 March 2024 is INR 1251.02 lakhs.
Packing credit is secured against 25% On Export Book Debts, 25% On Export Stock, Bill For Discounting, Eclgs Guarantee, Personal Guarantee, Plant & Machinery along with industrial
properties with a sanction limit of INR 2,500 Lakhs.
Repayable within 365 days with an interest of SOFR 125BPS.
(v) Bill Discounting from bank - Secured
(a) Outstanding balance as on 31 March 2025 is INR 1,094.90 Lakhs
Bill Discounting is secured against 25% On Export Book Debts, 25% On Export Stock, Bill For Discounting, Eclgs Guarantee, Personal Guarantee, Plant & Machinery along with
industrial properties with a sanction limit of INR 2,500 lakhs.
Repayable within 365 days with an interest of 8.25% i.e spread of 2.25% linked to REPO rates
(b) Outstanding balance as on 31 March 2024 is INR 462.43 lakhs.
Bill Discounting is secured against 25% On Export Book Debts, 25% On Export Stock, Bill For Discounting, Eclgs Guarantee, Personal Guarantee, Plant & Machinery along with
industrial properties with a sanction limit of INR 2,500 lakhs.
Repayable within 365 days with an interest rate of 8.25% linked to 3 month T bill rate.
b) Defined benefit plans
In accordance with the Payment of Gratuity Act, 1972 applicable for the Indian Companies , the company provides for a lumpsum payment to eligible employees at the termination or
retirement of employment based on last drawn salary and years of employment with the company. The Gratuity fund is managed by third party fund managers. The Company sponsors
funded defined benefit plans for qualifying employees . The defined benefit plans are administered by a separate Fund that is legally separated from the entity. The benefit vests upon
completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is
payable irrespective of vesting. The Company makes annual contribution to the Fund.
Liabilities with respect to these defined benefit plan are determined by acturial valuation, performed by external actuary , at each Balance Sheet using projected unit credit method.
These defined benefit plan exposes the company to acturial risks such as liquidity risks, interest rate risk, demographic risk , regulatory risk and salary escalation risk.
Liquidity Risks
This is the risk that the Company is not able to meet the short term gratuity payouts.This may arise due to non availabilty of enough cash/cashequivalent to meet the liabilities or holding
of illiquid assets not being sold in time.
Interest Risk
The plan exposes the Company to the risk of all in interest rates.A fall in interest rates will result in an increase in the ultimate cost ofproviding the above benefit and will thus result in
an increase in the value of the liability (as shown in financial statements).
Demographic Risks
The Company has used certain mortality and attrition assumptions in valuation of the liability.The Company is exposed to the risk of actual experience turning out to be worse compared
to the assumption.
Regulatory Risks
Gratuity benefit is paid in accordance with the requirements of the Payment of GratuityAct,1972(as amended from time to time).There is a risk of change in regulations requiring higher
gratuity payouts(e.g.Increase in the maximum limit on gratuity of INR 20.00 lakhs).
Salary escalation Risk
The present value of the defined plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the increase of salary in future for plan
participants from the rate of increase in salary used to determine the present value of obligation will have bearing on the plan's liability.
The following table summarises the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the Balance
Sheet for gratuity benefit.
38. Contingent Liabilities
As at March 31, 2025, there are certaincases filed by past employees ofthe companyat different forums and are atvarious stages ofresolutions. One ofthe case is pendingbefore the High Court ofKarnatakaand five other cases are
pending before various labour courts. Though the exposure with respect to the above said cases cannot be quantified, the management believes that the outcome of such cases would not have any material impact on company's
financial position or operations.
39. Commitments
(i) The companyhas entered into an agreement with Bestovo Foods Private Limited forthe purchase ofplant and machineryamountingto INR 570.00 Lakhs, out ofwhich an amount of INR 570 Lakhs has beenpaid as advance to
the party during the FY 2023-24.
(ii) The companyhas entered into an agreement with Piculets Solutions Private Limited for SAP Add on Builder &Web integration amounting to INR 5.00 Lakhs, out ofwhich an amount of3 lakhs has beenpaid as advance to the
vendor during the FY 2024-25.
(iii) The company has passed a resolution on March 11, 2024 for purchase of4,000 equity shares of the company Greenergy Wind Corporation Private Limited at the rate of INR 100 per share from one of the KMP's, Mr Syed Fahad
41. Financial risk management objectives and policies
The Company’s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose ofthese financial liabilities is to finance the Company to support its operations. The Company’s principal
financial assets include investments, cash and cash equivalents and security deposits that derive directly from its operations.
The Company's activities exposes it to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. The senior management ensures that the Company's financial risk
activities are governed by appropriate policies and procedures and that financials risks are identified, measured and managed in accordance with Company's policies and risk objectives. The Company reviews and agrees on policies
for managing each of these risks which are summarised below:
(a) 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 three types of risk: interest rate risk and currency risk. Financial
instruments affected by market risk include investments, loans and borrowings, debt instrument, trade receivables, trade payables and lease liabilities.
(i) 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 change in market interest rates. The Company's exposure to risk of changes in market interest rates relates primarily
to the Company's long term debt obligations with floating interest rates.
Exposure to interest rate risk
The exposure of the Company's borrowing to interest rate changes at the end of the year are as follows:
i) Trade receivables
Customer credit risk is managed by the Company subject to the Company's established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. To
manage this, the company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of trade receivable. The
Company creates allowance for all trade receivables based on lifetime expected credit loss model (ECL). The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company
has ECGC ( Export Credit Guarantee Corporation ) cover which provides protection against risk in relation to export debtors.
Notes to the financial statements for the year ended March 31, 2025
(All amounts in Indian Rupees Lakhs, except as otherwise stated)
45. During the year, the Company has commenced operations at Koppal, where the Company has bought out the land and has also paid advance towards purchase of plant and machineries from a
company by name M/s Bestovo Foods Private Limited (“seller”). Since, the transfer of ownership of such plant and machineries are yet to be completed, the Company is currently manufacturing the
products on a right to use basis as per the agreement with the seller dated 01 March 2024.
46. Code on Social Security, 2020
The Code on Social Security, 2020 ('the code') relating to employee benefits during employment and post employment benefits and received Indian parliament's approval and presidential assent in
September 2020. The code has been published in the gazette of India and subsequently, onNovember 13, 2020, draft rules have been published and stakeholders' suggestions for invited. However, the
date on which the code will come into effect has not been notified. The company will assess the impact of the code when it comes to effect and will record any related impact in the period the code
becomes effective.
47. Other Statutory Information
i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
ii) The Company do not have any charges or satisfaction which is yet to be registered with Registrar of Companies ('ROC') beyond the statutory period
iii) The Company has not been declared as wilful defaulter by any bank or financial institutions or other lenders.
iv) The title deeds of all of the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the
financial statements are held in the name of the Company.
v) During the year, the Company has not revalued its Property, Plant and Equipments.
vi) The Company has no layers as prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of layers) Rules, 2017
vii) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
viii) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the
Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
ix) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the
Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
x) The Company do not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
48. There are no events after the reporting period that are required to be disclosed in the financial statements.
49. Absolute amounts less than Rs. 500 are appearing in the Financial Statements as "0.00" due to presentation in lakhs
50. The Company uses Tally Prime, an accounting software for maintaining books of account which has a feature of recording audit trail (edit log) facility and the same is enabled throughout the year.
Also, the Company uses a software, Saral Pay Pack, for maintaining payroll records for which audit trail (edit log) feature has not been enabled. Further, no instance of audit trail feature being
tampered which was noted in respect of the accounting software.
51. Pursuant to the Ministry of corporate affairs (“MCA”) notification dated August 05, 2022 relating to maintenance of electronic books of accounts as per Rule 3 of the Companies (Accounts) rules,
2014 of of section 128 of Companies Act, 2013, the Company maintains the data in electronic mode and the applications are accessible in India all times. Presently, the Company is taking backup on a
fortnightly basis and stored in servers located in India. The Company is taking necessary steps to ensure backup is taken on a daily basis to comply with the said provisions of the Act.
52. Figures of the previous period have been regrouped, wherever considered necessary to make them comparable to current year's figures.
The accompanying notes form an integral part of the financial statements. ' 1 - 52
As per our report of even date attached
For ASA & Associates LLP For and on behalf of the Board of Directors of
Chartered Accountants Ovobel Foods Limited
Registration No: 009571N/N500006
Sd/- Sd/-
Sd/- Mysore Satish Sharad Satish Babu MP
Managing Director Director
Vinay K S DIN: 08987445 DIN: 02504337
Partner Place : Bengaluru Place : Bengaluru
Membership No. 223085 Date:27th May 2025 Date:27th May 2025
Sd/- Sd/-
Sunil Varghese P Prakriti Sarvouy
Chief Financial Officer Company Secretary
Membership No. : 21962
Place : Bengaluru Place : Bengaluru Place : Bengaluru
Date:27th May 2025 Date:27th May 2025 Date:27th May 2025
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