Mar 31, 2023
(i) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities. These equity shares are designated as FVTOCI as they are not held for trading purpose and are not in similar line of business as the Company. Thus disclosing their fair value fluctuation in profit and loss will not reflect the purpose of holding. Refer Note 44 for determination of their fair values
(ii) Investments in unquoted investments includes investment in Industry House Limited (IHL) amounting to '' 26.79 Crore (31 March 2022''27.38 Crore). The Company is holding 35.28% of equity shares in IHL. As the Company does not have significant influence over Industry House Limited, the Company has not considered it as an associate as per Ind AS 28 "Investments in Associates and Joint Ventures" and hence not consolidated. The Companyâs share of profit of Industry House Limited is insignificant.
Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability as at 31 March 2023.
General Reserves is used from time to time to transfer profits from Retained earnings for appropriation purpose. This reserve will be utilised in accordance with the provisions of the Companies Act, 2013.
(e) Other Comprehensive Income FVOCI equity investments:
The Company has elected to recognise changes in the fair value of certain investments in equity securities in OCI. These changes are accumulated within the FVOCI equity investment reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
Repayment of loan covered above is due on Feb-2025, however as per the term & conditions of NCD put option shall be exercisable by debenture holders at the end of 2 (two) years from the date of Allotment. Hence the said NCD has been classified as current.
Details of Security:1. Loans covered in Sr. No. 1 :
First pari passu charge on present and future plant and machineries of Birla Century, Pulp and Paper divisions and excluding Furniture and Fixtures and vehicles of the said divisions.
2. Loans covered in Sr. No. 4 :
First pari passu charge on the present and future movable fixed assets of the Borrower''s Birla Century unit at Bharuch Gujarat and Pulp & Paper unit at Lalkuan, Uttarakhand. Negative lien on the present and future immovable fixed assets of the Borrower''s Birla Century unit at Bharuch Gujarat and Pulp & Paper unit at Lalkuan, Uttarakhand.
There was modification in security details of above term loan where by Freehold land admeasuring 25,323.78 sq. meters and the Birla Centurion building thereon situated at Worli, Lower Parel Divisions, Mumbai was released during the year.
Bank loan and NCDs contain certain debt covenants relating to total term loan to tangible net worth, fixed asset coverage ratio, net debt to equity ratio and interest coverage ratio. The Company is compliant with the said covenants during the year ended 31 March 2023. The Company has also satisfied all other debt covenants prescribed in the terms of bank loan and NCDs.
The Company has not defaulted in repayment of borrowing and interest thereon.
(i) Unclaimed dividend amounting to '' 0.05 crore (31 March 2022''0.05 crore) is pending on account of litigation among claimants / notices from the tax recovery officer.
(ii) Derivative financial instruments:
The Company entered into foreign exchange forward contracts with the intention of hedging foreign exchange risk of expected sales and purchases, these contracts are not designated as hedge and are measured at fair value through profit or loss.
Derivative instruments at fair value through profit or loss reflect the negative change in fair value of those foreign exchange forward contracts that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for expected sales and purchases.
(i) Cash credit / Overdraft facility form Banks of '' 19.82 Crores (31 March 2022''0.50 crores) are secured against a first and pari passu charge over the current assets (including documents of title to goods/related receivables) and collateral security on a pari-passu basis over the present and future property plant and equipments (plant and machinery) of Birla Century (Gujarat), Century Pulp and paper.
(ii) Cash credit / Overdraft facility of '' 113.87 crores (31 March 2022 '' Nil) & Line of credit from banks are secured against a first and pari passu charge with other facility by way of registered mortgage on the property, project, future scheduled receivable of the project and all insurance proceed, both present and future, on security of all rights, title, interest, claims, benefits, demands under the project documents of both present and future, on the escrow and DSR account of the project including all monies credited / deposited therein and all investment in respect thereof.
All such sold units of secured project, booking of which are subsequently cancelled by customer shall continue to stand mortgaged to the lender.
(a) The above information has been provided as available with the company to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the MSMED Act.
(b) Trade payables are non interest bearing and are normally settled on 60-90 days terms. Acceptances are interest bearing and have an average term of six months. There are no other amounts paid / payable towards interest / principal under the MSMED.
(c) Trade payables Ageing Schedule
~30| HEDGING ACTIVITIES AND DERIVATIVES Derivatives not designated as hedging instruments
The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from 1 to 12 months.
Derivatives designated as hedging instruments Cash flow hedges Foreign currency risk:
Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges against forecast sales / purchases in US dollars. This forecast transactions are highly probable since purchase order already issued / projection of counter party available with the Company and hence expected to be utilised in near term. The foreign exchange contract balances vary with the level of expected foreign currency sales / purchases and changes in foreign exchange forward rate. The long term swap by way of foreign currency sales has been done on the basis of historical business with buyers and comprises 50% of projected sales.
32 Revenue expenditure on research and development activities relating to Government recognised in-house research and development laboratories incurred and charged out during the year through the natural heads of account, aggregate '' 4.35 crores (31 March 2022: '' 3.83 crores).
33 During the financial year 2017-18, the Company had entered into an agreement with Grasim Industries Limited (''GIL'') granting right to manage and operate the Companyâs Viscose Filament Yarn (''VFYâ) business, which is part of Textile segment, for a duration of 15 years commencing from February 1, 2018. As a part of consideration, GIL has paid an upfront Royalty of '' 605.00 crores. In addition GIL has also paid the carrying value of net working capital and the interest free security deposit of '' 200.00 crores which is repayable after 15 years. With effect from February 1,2018, GIL have right to use the VFY business assets including its intangible assets for a period of 15 years from the above date. The Company is recognizing royalty income over the period of 15 years.
Pursuant to the agreement, GIL shall incur all capital expenditure and commitments involving capital expenditure as may be necessary for the proper, optimum and profitable operation of the VFY Business. In this regard, Company has agreed that all improvement/ capital expenditure done by GIL during the tenure of agreement will be transferred to the Company, at such fair value as may be agreed between the Company and GIL.
(i) '' 17.04 Crore (31 March 2022 '' 10.71 Crore) due to micro and small enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). There are no other amounts paid / payable towards interest / principal under the MSMED; and
(ii) The above information has been determined to the extent such parties have been identified on the basis of the information available with the Company regarding the status of suppliers under the MSMED Act.
~35| DISCONTINUED OPERATIONSYarn and Denim division (sold during the previous year)
During the previous year ended 31 March 2022, the Company has sold all the assets of its Yarn and Denim division (''Y&D'') to a third party for a consideration of '' 62.00 crore and has recognised a gain of '' 17.63 crore net of provision for termination benefits and other restructuring costs.
During the year ended 31 March 2023, the Company has transferred its leasehold land in Gujarat to Grasim Industries Limited for a consideration of '' 215.85 Crores resulting in a net gain of '' 134.21 Crores as an exceptional item after adjusting non-usage charges amounting to '' 21.64 Crores and transfer fees amounting to '' 37.52 Crores paid to Gujarat Industrial Development Corporation. Further, tax on such gain amounting to '' 25.64 Crores is included in the current tax for the year.
~36| DISCLOSURES PURSUANT TO - "EMPLOYEE BENEFITS"(a) Defined Contribution Plans:
The Company''s contribution to Provident Fund and Superannuation Fund aggregating '' 5.92 Crores (31 March 2022: '' 5.06 Crores) has been recognised in the Statement of Profit and Loss under the head Employee benefits expense.
(b) Defined Benefit Plans:(i) Gratuity
The Company has a defined benefit gratuity plan (funded).The Companyâs defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy.
Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. This includes employing the use of annuities and longevity swaps to manage the risks. The Board of Trustees decides its contribution based on the results of this annual review. Generally, it aims to have a portfolio mix of equity instruments, property and debt instruments. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
38 CONTINGENT LIABILITIES (i) Contingent liabilities (to the extent not provided for) ('' in Crores) |
||
Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
Contingent liabilities - Continuing Operations |
||
(a) (i) Claims against the Company not acknowledged as debts in respect of : |
||
- Custom Duty and Excise Duty |
11.22 |
11.01 |
- Sales Tax and Entry Tax |
11.00 |
10.27 |
- Others |
6.29 |
6.05 |
(ii) Claims not acknowledged as debts jointly with other members of "Business Consortium of Companies" in which the Company had an interest (proportionate) (b) Disputed income tax matters under appeal |
26.51 133.34 |
24.86 115.44 |
(c) Indirect exposure upon the Company |
||
- Guarantee given |
200.00 |
200.00 |
(d) The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant. |
Amount not determinable |
Amount not determinable |
The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties are dependent on the outcome of the different legal processes. The timing of future cash flows will be determinable only on receipt of judgments / decisions pending with various forums/authorities. The Company does not expect any reimbursements against the above.
39 COMMITMENTS ('' in Crores) |
||
Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
Capital commitments |
||
Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) (a) Other commitments The Company has imported capital goods under the Export promotion capital goods scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified exports in the future years |
50.56 |
35.82 |
74.70 |
165.78 |
F. The Board of Directors monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
G. No single customer contributed 10% or more to the Companyâs revenue for the year ended 31 March 2023 and 31 March 2022
H. The accounting policies of the reportable segments are the same as the Companyâs accounting policies described in note 2A.
Segment profit represents the profit before finance cost and tax earned by each segment without allocation of central administration costs and directorsâ salaries, investment income and finance costs. This is the measure reported to the chief operating decision maker for the purposes of allocation and assessment of segment performance.
For the purpose of the Companyâs capital management, equity includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximize the shareholder value. The Companyâs Capital Management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholdersâ value. The Company is monitoring capital using debt equity ratio as its base which is debt to equity. The Companyâs policy is to keep debt equity ratio below two and infuse capital if and
~43| FINANCIAL RISK MANAGEMENT FRAMEWORK
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The Companyâs principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees these risks management. The Companyâs senior management provides assurance that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the companyâs policies and risk objectives. All derivative activities for risk management purposes are carried out by teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Credit risk is the risk that counter party will not meet it obligation under a financial instrument or customer contract leading to a financial loss. The Company is exposed to credit risk mainly from trade receivables and other financial assets. The Company only deals with parties which has good credit ratings / worthiness based on companyâs internal assessment.
The Company has divided parties in two grades based on their performance.
Good: parties with a positive external rating (if available) and stable financial position with no past default is considered in this category.
Doubtful: parties where the company doesnât have information on their financial position or has past trend of default are considered under this category.
The Company has not acquired any credit impaired asset. There was no modification in any financial assets.
(i) Trade receivables
Customer credit is managed by each business division subject to the Companyâs established policy procedures and control related to customer credit risk management.
Export customers are mainly against Letter of Credit and/or insurance cover on export outstanding is also taken. Generally deposits are taken from domestic debtors. Apart from deposit there is a commission agent area wise. In case any customer defaults the amount is first recovered from deposits, then from the agentâs commission. Each outstanding customer receivables are regularly monitored and if outstanding is above due date the further shipments are controlled and can only be released if there is a proper justification. The carrying amount and fair value of security deposit amounts to '' 73.69 crores (31 March 2022: '' 53.11 crores) as it is payable on demand.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets and their credit worthiness are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
Credit risk from balances with banks is managed by Companyâs treasury department in accordance with the Company policy. Investment of surplus funds are made only in approved Mutual Funds and that too in liquid funds. As soon as the fund reaches to a reasonable level the Company repay its working capital borrowing by redeeming the liquid fund. The other financial assets are from various forum of Government authorities and are released by Government authorities on completion of relevant terms and conditions for the release of outstanding.
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 of three types of risks - interest rate risk, currency risk and other price risk in a fluctuating market environment. Financial instrument affected by market risks includes loans and borrowings, deposits, FVTOCI Investments, derivatives and other financials assets.
The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.
The sensitivity analyses in the following sections relates to the outstanding balance as at 31 March 2023 and 31 March 2022
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2023.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2023 and 31 March 2022
(i) Currency Risk
This is the risk that the Company may suffer losses as a result of adverse exchange rate movement during the relevant period. As a policy, Company is covering all foreign exchange risk on account of import and loans so that Company may not be put to any loss situation due to adverse fluctuations in currency rates. There is periodical review of foreign exchange transactions and hedging by the Companyâs executives.
Foreign Currency Sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD, EUR and GBP exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives. The Company evaluates exchange rate exposure arising from foreign currency transactions. The company follows established risk management policies and standard operating procedures. The companyâs exposure to foreign currency changes for all other currencies is not material.
The Company manages interest rate risk by having a balanced portfolio of fixed and variable rate of interest on loans and borrowings. To manage this, Company has issued fixed rate bonds and loans taken from banks are linked to MCLR rate of the bank, which are variable.
(iii) Equity Price Risk
The Company is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.
(i) Liquidity risk management
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows on daily, monthly and yearly basis. The Company ensures that there is a free credit limit available at the start of the year which is sufficient for repayments getting due in the ensuing year. Loan arrangements, credit limits with various banks including working capital and monitoring of operational and working capital issues are always kept in mind for better liquidity management
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.
The management assessed that cash and cash equivalents, trade receivables, trade payables, cash credit and all other current financial assets and liabilities approximates their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities are 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. The following methods and assumptions were used to estimate the fair values:
(i) Receivables are evaluated by the company based on parameters such as interest rates and individual credit worthiness of the customer. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
(ii) The fair value of loans from banks and other financial liabilities, security deposit, as well as other financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(iii) The fair values of the unquoted equity instruments have been estimated using a net adjusted fair value method. The valuation requires management to make certain assumptions about the assets, liabilities, investments of Investee Company. The probabilities of the various assumptions can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments based on the best information available to the Company.
(iv) The fair values of quoted equity instruments are derived from quoted market prices in active markets.
(v) The Company enters into foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs.
(vi) The fair value of floating rate borrowings are determined by using discounted cash flow method using discount rate that reflects the issuer''s borrowing rate at the end of the reporting period. As the Company''s interest rates changes with the change in market interest rate, there is no material difference in carrying value and fair value. The own non performance risk as at 31 March 2023 was assessed to be insignificant.
The Company has significant leasing arrangements in respect of operating leases for premises. These are non cancellable leases with a lock in period of minimum three years. Most of the leases are renewable for a further period on mutually agreeable terms and also include escalation clauses on renewal. The Company has entered into operating leases for its Investment property. These typically have lease terms of between 1 to 4 years. The Company has recognized an amount of '' 124.73 Crore (31 March 2022''126.45 Crore) as rental income for operating lease during the year ended 31 March 2023.
[47] OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding 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
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in 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 Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company does not have 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.
48 The Company has defined process to take daily back-up of books of account maintained electronically and maintain the logs of the back-up of such books of account however in few cases daily back-up was failed because of technical issue and manual back-up has been taken on the next day. Management has taken adequate steps to configure systems to ensure that back up for books of account is taken on daily basis even in case of technical failure.
49 Figures less than '' 50,000 have been shown at actuals in brackets, since the figures are rounded off to the nearest lakh.
Mar 31, 2022
(i) During the year ended 31 March 2022 and 31 March 2021, no impairments indicator existed for any of its Cash Generating Unit (CGU) and accordingly no provision for impairment has been recognised.
(ii) Capitalised borrowing cost :
No borrowing costs are capitalised on property, plant and equipments under construction
(iii) Title deeds
(a) All title deeds of immovable properties included in property, plant and equipments are held in the name of the Company as at 31st March 2022.
(b) Refer note 14 and note 18 for details of pledge and securities.
The above valuation of the investment properties are in accordance with the Ready Reckoner rates prescribed by the Government of Maharashtra for the purpose of levying stamp duty. The Independent Valuer has referred to the publications and Government website for Ready Reckoner rates. Suitable adjustments if required have been made to account for availability of FSI in land parcels in Mumbai in accordance with the guidelines prescribed by the Department of Registrations and Stamps. The adjustments related to floors, lifts and other factors are not considered for valuation of commercial property. Since the valuation is based on the published Ready Reckoner rates, the Company has classified the same under Level 2.
(i) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities. These equity shares are designated as FVTOCI as they are not held for trading purpose and are not in similar line of business as the Company. Thus disclosing their fair value fluctuation in profit and loss will not reflect the purpose of holding. Refer Note 44 for determination of their fair values.
(ii) Investments in unquoted investments includes investment in Industry House Limited (IHL) amounting to '' 27.38 Crore (31 March 2021 '' 25.64 Crore). The Company is holding 35.28% of equity shares in IHL. As the Company does not have significant influence over Industry House Limited, the Company has not considered it as an associate as per Ind AS 28 âInvestments in Associates and Joint Venturesâ and hence not consolidated. The Company''s share of profit of Industry House Limited is insignificant.
(i) Cost of inventories recognised as an expense includes '' 3.07 Crores (31 March 2021''1.01 Crores) in respect of write-downs of inventory to net realisable value.
(ii) For charge created on inventories refer Note 14 and 18
(iii) Real estate inventory includes borrowing costs during the year of '' 31.87 Crores (31 March 2021''18.62 Crores)
(i) No trade receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade receivable are due from firms or private companies respectively in which any director is a partner or a director or a member. Trade receivables are non interest bearing and are generally on terms of 7 to 120 days of credit period.
Short term fixed deposits are varying between three months and twelve months, depending on the immediate cash requirements and earn interest at the respective short term deposit rate. Interest rate is between 4.40% to 6.00%
(i) Securities premium is used to record the excess of the amount received over the face value of the shares. This reserve will be utilised in accordance with the provisions of the Companies Act, 2013.
The Company was required to create a Debenture Redemption Reserve out of the profits which are available for payment of dividend for the purpose of redemption of debentures. Pursuant to Companies (Share Capital and Debentures) Amendment Rules, 2019 dated 16 August, 2019, the Company is not required to create Debenture Redemption Reserve (DRR). Accordingly, the Company has not created DRR during the year and DRR created till FY 2020 were transferred to retained earnings on redemption of debentures in the previous year.
Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability as at 31 March 2022.
General Reserves is used from time to time to transfer profits from Retained earnings for appropriation purpose. This reserve will be utilised in accordance with the provisions of the Companies Act, 2013.
The Company has elected to recognise changes in the fair value of certain investments in equity securities in OCI. These changes are accumulated within the FVOCI equity investment reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
First pari passu charge on present and future plant and machineries of Birla Century, Pulp and Paper divisions and excluding Furniture and Fixtures and vehicles of the said divisions.
First pari passu charge on the present and future movable fixed assets of the Borrower''s Birla Century unit at Bharuch Gujarat and Pulp & Paper unit at Lalkuan, Uttarakhand. First pari passu security interest on Freehold land admeasuring 25,323.78 sq. meters and the Birla Centurion building thereon situated at Worli, Lower Parel Divisions, Mumbai. Negative lien on the present and future immovable fixed assets of the Borrower''s Birla Century unit at Bharuch Gujarat and Pulp & Paper unit at Lalkuan, Uttarakhand.
Bank loan and NCDs contain certain debt covenants relating to total term loan to tangible net worth, fixed asset coverage ratio, net debt to equity ratio and interest coverage ratio. The Company is compliant with the said covenants during the year ended 31 March 2022. The Company has also satisfied all other debt covenants prescribed in the terms of bank loan and NCDs.
The Company has not defaulted in repayment of borrowing and interest thereon.
(i) Unclaimed dividend amounting to '' 0.05 Crore (31 March 2021''0.04 Crore) is pending on account of litigation among claimants / notices from the tax recovery officer.
(ii) Derivative financial instruments:
The Company entered into foreign exchange forward contracts with the intention of hedging foreign exchange risk of expected sales and purchases, these contracts are not designated as hedge and are measured at fair value through profit or loss.
(i) Working capital loans from banks are secured against a first and pari passu charge over the current assets (including documents of title to goods/related receivables) and collateral security on a pari-passu basis over the present and future property plant and equipments (plant and machinery) of Birla Century (Gujarat), Century Pulp and paper.
(a) The above information has been provided as available with the company to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the MSMED Act.
(b) Trade payables are non interest bearing and are normally settled on 60-90 days terms. Acceptances are interest bearing and have an average term of six months. There are no other amounts paid / payable towards interest / principal under the MSMED.
The Company has not transferred the amount remaining unspent in respect of ongoing projects, to a special account, till the date of the report. However, the period for such transfer i.e., thirty days from the end of the financial year as permitted under sub section (6) of section 135 of the Companies Act, has not elapsed till date.
There are no unspent amount as at year end towards other than ongoing projects (31 March 2021: Nil)
30 HEDGING ACTIVITIES AND DERIVATIVES
The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from 1 to 12 months.
Derivatives designated as hedging instruments Cash flow hedges Foreign currency risk:
Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges against forecast sales / purchases in US dollars. This forecast transactions are highly probable since purchase order already issued / projection of counter party available with the Company and hence expected to be utilised in near term. The foreign exchange contract balances vary with the level of expected foreign currency sales / purchases and changes in foreign exchange forward rate. The long term swap by way of foreign currency sales has been done on the basis of historical business with buyers and comprises 50% of projected sales.
32 Revenue expenditure on research and development activities relating to Government recognised in-house research and development laboratories incurred and charged out during the year through the natural heads of account, aggregate '' 3.83 Crores (31 March 2021: '' 4.13 Crores).
33 During the financial year 2017-18, the Company had entered into an agreement with Grasim Industries Limited (''GIL'') granting right to manage and operate the Company''s Viscose Filament Yarn (''VFY'') business, which is part of Textile segment, for a duration of 15 years commencing from February 1, 2018. As a part of consideration, GIL has paid an upfront Royalty of '' 605.00 Crores. In addition GIL has also paid the carrying value of net working capital and the interest free security deposit of '' 200.00 Crores which is repayable after 15 years. With effect from February 1, 2018, GIL have right to use the VFY business assets including its intangible assets for a period of 15 years from the above date. The Company is recognizing royalty income over the period of 15 years.
Pursuant to the agreement, GIL shall incur all capital expenditure and commitments involving capital expenditure as may be necessary for the proper, optimum and profitable operation of the VFY Business. In this regard, Company has agreed that all improvement/ capital expenditure done by GIL during the tenure of agreement will be transferred to the Company, at such fair value as may be agreed between the Company and GIL.
(i) '' 10.71 Crore (31 March 2021''14.93 Crore) due to micro and small enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). There are no other amounts paid / payable towards interest / principal under the MSMED; and
(ii) The above information has been determined to the extent such parties have been identified on the basis of the information available with the Company regarding the status of suppliers under the MSMED Act.
35. DISCONTINUED OPERATIONS Yarn and Denim division
During the year ended 31 March 2022, the Company has sold all the assets of its Yarn and Denim division (''Y&D'') to a third party for a consideration of '' 62.00 Crore and has recognised a gain of '' 17.63 Crore net of provision for termination benefits and other restructuring costs.
36. DISCLOSURES PURSUANT TO - âEMPLOYEE BENEFITSâ
The Company''s contribution to Provident Fund and Superannuation Fund aggregating '' 5.06 Crores (31 March 2021: '' 4.96 Crores) has been recognised in the Statement of Profit and Loss under the head Employee benefits expense.
The Company has a defined benefit gratuity plan (funded).The Company''s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy.
Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. This includes employing the use of annuities and longevity swaps to manage the risks. The Board of Trustees decides its contribution based on the results of this annual review. Generally, it aims to have a portfolio mix of equity instruments, property and debt instruments. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The weighted average duration of the defined benefit obligation as at 31 March 2022 is 11.48 years (31 March 2021 9.97 years)
In case of certain employees, the Provident fund contribution is made to trusts administered by the Company. In terms of guidance note issued by the Institute of Actuaries of India, the Actuary has provided a valuation of Provident fund liability based on the assumptions listed and determined that there is no shortfall as at 31 March 2022.
38 CONTINGENT LIABILITIES |
||
(i) Contingent liabilities (to the extent not provided for) |
||
Particulars |
As at 31 March 2022 ('' in Crores) |
As at 31 March 2021 ('' in Crores) |
Contingent liabilities - Continuing Operations |
||
(a) (i) Claims against the Company not acknowledged as debts in respect of : |
||
- Custom Duty and Excise Duty |
11.01 |
11.00 |
- Sales Tax and Entry Tax |
10.27 |
5.73 |
- Others |
6.05 |
6.16 |
(ii) Claims not acknowledged as debts jointly with other members of "Business Consortium of Companiesâ in which the Company had an interest (proportionate) |
24.86 |
24.86 |
(b) Disputed income tax matters under appeal |
115.44 |
60.20 |
(c) Indirect exposure upon the Company |
||
- Guarantee given |
200.00 |
200.00 |
(d) The Code on Social Security, 2020 (âCode'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant. |
Amount not determinable |
Amount not determinable |
The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties are dependent on the outcome of the different legal processes. The timing of future cash flows will be determinable only on receipt of judgments / decisions pending with various forums/ authorities. The Company does not expect any reimbursements against the above.
39 COMMITMENTS |
||
As at |
As at |
|
Particulars |
31 March 2022 |
31 March 2021 |
('' in Crores) |
('' in Crores) |
|
Capital commitments |
||
Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of Advances) |
35.82 |
103.98 |
(a) Other Commitments |
||
The Company has imported capital goods under the Export promotion capital goods scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified exports in the future years |
165.78 |
235.49 |
Finance income and costs, and fair value gains and losses on financial assets are not allocated to individual segments as the underlying instruments are managed on a group basis.
Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a group basis.
Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties.
G. No single customer contributed 10% or more to the Company''s revenue for the year ended 31 March 2022 and 31 March 2021
H. The accounting policies of the reportable segments are the same as the Company''s accounting policies described in note 2A.
Segment profit represents the profit before finance cost and tax earned by each segment without allocation of central administration costs and directors'' salaries, investment income and finance costs. This is the measure reported to the chief operating decision maker for the purposes of allocation and assessment of segment performance.
For the purpose of the Company''s capital management, equity includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximize the shareholder value. The Company''s Capital Management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholders'' value. The Company is monitoring capital using debt equity ratio as its base which is debt to equity. The Company''s policy is to keep debt equity ratio below two and infuse capital if and when required through issue of new shares and/or better operational results and efficient working capital management.
43. FINANCIAL RISK MANAGEMENT FRAMEWORK
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The Company''s principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees these risks management. The Company''s senior management provides assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Credit risk is the risk that counter party will not meet it obligation under a financial instrument or customer contract leading to a financial loss. The Company is exposed to credit risk mainly from trade receivables and other financial assets. The Company only deals with parties which has good credit ratings / worthiness based on company''s internal assessment.
The Company has divided parties in two grades based on their performance.
Good: parties with a positive external rating (if available) and stable financial position with no past default is considered in this category.
Doubtful: parties where the company doesn''t have information on their financial position or has past trend of default are considered under this category.
The Company has not acquired any credit impaired asset. There was no modification in any financial assets.
(i) Trade receivables
Customer credit is managed by each business division subject to the Company''s established policy procedures and control related to customer credit risk management.
Export customers are mainly against Letter of Credit and/or insurance cover on export outstanding is also taken. Generally deposits are taken from domestic debtors. Apart from deposit there is a commission agent area wise. In case any customer defaults the amount is first recovered from deposits, then from the agent''s commission. Each outstanding customer receivables are regularly monitored and if outstanding is above due date the further shipments are controlled and can only be released if there is a proper justification. The carrying amount and fair value of security deposit amounts to '' 53.11 Crores (31 March 2021: '' 48.00 Crores) as it is payable on demand.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets and their credit worthiness are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
The Company has recognised loss allowance provision on trade receivables amounting to '' 1.60 Crs during the year (31 March 2021''3.31 Crs) as there was no reasonable expectations of recovery and were outstanding for more than 360 days from becoming due.
Credit risk from balances with banks is managed by Company''s treasury department in accordance with the Company policy. Investment of surplus funds are made only in approved Mutual Funds and that too in liquid funds. As soon as the fund reaches to a reasonable level the Company repay its working capital borrowing by redeeming the liquid fund. The other financial assets are from various forum of Government authorities and are released by Government authorities on completion of relevant terms and conditions for the release of outstanding.
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 of three types of risks - interest rate risk, currency risk and other price risk in a fluctuating market environment. Financial instrument affected by market risks includes loans and borrowings, deposits, FVTOCI Investments, derivatives and other financials assets.
The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.
The sensitivity analyses in the following sections relates to the outstanding balance as at 31 March 2022 and 31 March 2021
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2022.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2022 and 31 March 2021
(i) Currency Risk
This is the risk that the Company may suffer losses as a result of adverse exchange rate movement during the relevant period. As a policy, Company is covering all foreign exchange risk on account of import and loans so that Company may not be put to any loss situation due to adverse fluctuations in currency rates. There is periodical review of foreign exchange transactions and hedging by the Company''s executives.
Foreign Currency Sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD and EUR exchange rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives. The Company evaluates exchange rate exposure arising from foreign currency transactions. The company follows established risk management policies and standard operating procedures. The company''s exposure to foreign currency changes for all other currencies is not material.
The Company manages interest rate risk by having a balanced portfolio of fixed and variable rate of interest on loans and borrowings. To manage this, Company has issued fixed rate bonds and loans taken from banks are linked to MCLR rate of the bank, which are variable.
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.
(iii) Equity Price Risk
The Company is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.
(i) Liquidity risk management
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows on daily, monthly and yearly basis. The Company ensures that there is a free credit limit available at the start of the year which is sufficient for repayments getting due in the ensuing year. Loan arrangements, credit limits with various banks including working capital and monitoring of operational and working capital issues are always kept in mind for better liquidity management
(ii) Maturities of financial liabilities
The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
(iii) Maturities of financial assets
The following table details the Company''s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.
The management assessed that cash and cash equivalents, trade receivables, trade payables, cash credit and all other current financial assets and liabilities approximates their carrying amounts largely due to the shortterm maturities of these instruments.
The fair value of the financial assets and liabilities are 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. The following methods and assumptions were used to estimate the fair values:
(i) Receivables are evaluated by the company based on parameters such as interest rates and individual credit worthiness of the customer. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
(ii) The fair value of loans from banks and other financial liabilities, security deposit, as well as other financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(iii) The fair values of the unquoted equity instruments have been estimated using a net adjusted fair value method. The valuation requires management to make certain assumptions about the assets, liabilities, investments of Investee Company. The probabilities of the various assumptions can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments based on the best information available to the Company.
(iv) The fair values of quoted equity instruments are derived from quoted market prices in active markets.
(v) The Company enters into foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs.
(vi) The fair value of floating rate borrowings are determined by using discounted cash flow method using discount rate that reflects the issuer''s borrowing rate at the end of the reporting period. As the Company''s interest rates changes with the change in market interest rate, there is no material difference in carrying value and fair value. The own non performance risk as at 31 March 2022 was assessed to be insignificant.
The Company has significant leasing arrangements in respect of operating leases for premises. These are non cancellable leases with a lock in period of minimum three years. Most of the leases are renewable for a further period on mutually agreeable terms and also include escalation clauses on renewal. The Company has entered into operating leases for its Investment property. These typically have lease terms of between 1 to 4 years. The Company has recognized an amount of '' 126.45 Crore (31 March 2021''128.57 Crore) as rental income for operating lease during the year ended 31 March 2022.
(a) Mainly on account of classification of long term NCD as current borrowings
(b) During the previous year, on account of covid outbreak and various government restrictions, operations of the Company were impacted significantly. During the year, the situation has improved and accordingly, cashflows and profitability of company has also improved as compared to previous year and almost reached to pre covid level. Accordingly, all ratios related to cash flows, revenue and profitability of the Company has been improved as compared to previous year.
47. OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has 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
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company does not have 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
48. Figures less than '' 50,000 have been shown at actuals in brackets, since the figures are rounded off to the nearest lakh.
Mar 31, 2019
NOTES TO THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019
41. SEGMENT INFORMATION
A. INFORMATION ABOUT BUSINESS SEGMENT - PRIMARY
in Crore)
Sr. No. |
Particulars |
Textiles |
Pulp and Paper |
Real Estate |
Others |
Total |
|||||
2018-19 |
2017-18 |
2018-19 |
2017-18 |
2018-19 |
2017-18 |
2018-19 |
2017-18 |
2018-19 |
2017-18 |
||
1. |
Segment Revenue |
||||||||||
Sales of products |
814.95 |
1,396.25 |
2,642.75 |
2,228.84 |
159.14 |
135.23 |
16.54 |
97.15 |
3,633.38 |
3,857.47 |
|
Less: Inter Segment Revenue |
- |
3.48 |
0.08 |
67.17 |
3.07 |
0.83 |
- |
- |
3.15 |
71.48 |
|
Net Sales from Continuing Operations |
814.95 |
1,392.77 |
2,642.67 |
2,161.67 |
156.07 |
134.40 |
16.54 |
97.15 |
3,630.23 |
3,785.99 |
|
Sales from Discontinued Operations: |
|||||||||||
Textiles |
- |
86.78 |
|||||||||
Cement |
4,692.40 |
4,306.15 |
|||||||||
8,322.63 |
8,178.92 |
||||||||||
2. |
Result |
||||||||||
Segment Result of Continuing Operations |
78.82 |
151.54 |
613.64 |
372.60 |
215.04 |
132.16 |
3.52 |
13.21 |
911.02 |
669.51 |
|
Profit/floss) from Discontinued Operations: |
|||||||||||
Textiles |
(74.64) |
(49.45) |
|||||||||
Cement |
341.41 |
199.05 |
|||||||||
1,177.79 |
819.11 |
||||||||||
3. |
Other Information |
||||||||||
Segment Assets® |
961.62 |
998.28 |
3,142.92 |
3,135.52 |
1,538.18 |
1,484.83 |
37.64 |
39.78 |
5,680.36 |
5,658.41 |
|
Segment Assets Discontinued Operations: |
|||||||||||
Textiles |
2.23 |
- |
|||||||||
Cement |
3,992.71 |
4,015.98 |
|||||||||
Add: Unallocated common Assets |
457.22 |
656.94 |
|||||||||
Total Assets |
10,132.52 |
10,331.33 |
|||||||||
Segment Liabilities® |
1,017.11 |
1,078.24 |
547.39 |
535.14 |
129.86 |
149.43 |
12.55 |
14.33 |
1,706.91 |
1,777.14 |
|
Segment Liabilities Discontinued Operations: |
|||||||||||
Textiles |
42.95 |
- |
|||||||||
Cement |
1,034.93 |
1,174.65 |
|||||||||
Add: Unallocated Common Liabilities |
4,042.62 |
4,631.65 |
|||||||||
Total Liabilities |
6,827.41 |
7,583.44 |
|||||||||
4. |
Capital Expenditure during the year (excluding advances) |
24.42 |
77.10 |
18.00 |
28.46 |
59.55 |
65.42 |
101.97 |
170.98 |
||
Add: Unallocated Capital Expenditure |
101.97 |
107.62 278.60 |
|||||||||
5. |
Depreciation and amortisation * |
48.53 |
50.55 |
111.95 |
116.80 |
31.75 |
31.23 |
0.25 |
0.25 |
192.48 |
198.83 |
Add: Unallocated Depreciation |
0.52 |
114.92 |
|||||||||
193.00 |
313.75 |
* Includes charged to Cost of Raising and transporting Limestone and Laterite. @ Includes projects under implementation. Adjustments & Eliminations:
Finance income and costs, and fair value gains and losses on financial assets are not allocated to individual segments as the underlying instruments are managed on a group basis.
Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a group basis. Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties
B. RECONCILIATION OF PROFIT |
(Rs in Crores) |
|
Particulars |
Year Ended 31 March 2019 |
Year Ended 31 March 2018 |
Segment profit [A] |
911.02 |
669.51 |
Unallocable lncome/(Expense)[B]: |
||
Employee Benefit Expense |
(16.78) |
(14.78) |
Depreciation & Amortisation Expense |
(0.52) |
(0.48) |
Other Expense |
(50.79) |
(25.33) |
Other Income |
24.26 |
19.15 |
Total |
(43.83) |
(21.44) |
Finance Cost [C] |
(95.89) |
(211.81) |
Inter-segment Profit/(Loss) (elimination) [D] |
- |
3.80 |
Profit before tax from Continuing Operations [A B C D] |
771.30 |
440.06 |
Profit from Discontinued Operations |
266.77 |
149.60 |
Total Profit before Taxes |
1,038.07 |
589.66 |
Add/(Less): Taxes |
||
Income Tax (Charge)/Credit |
(357.00) |
(218.00) |
Profit after Tax |
681.07 |
371.66 |
C. RECONCILIATION OF ASSETS & LIABILITIES |
(Rs in Crores) |
|
Particulars |
As at 31 March 2019 |
As at 31 March 2018 |
1. A. Segment Operating Assets |
9,675.30 |
9,674.30 |
Unallocated Assets |
||
B. Non-current Assets |
||
Property, Plant and Equipments |
39.28 |
39.60 |
Other Intangible Assets |
- |
0.01 |
Financial Assets: |
||
Non-Current Investments |
265.39 |
223.41 |
Others |
0.41 |
|
Non-Current Tax |
53.08 |
98.71 |
Other Non-Current Assets |
11.75 |
3.61 |
Total Non-Current Assets (B) |
369.50 |
365.75 |
C. Current Assets |
||
Financial Assets: |
||
Cash and Cash Equivalents |
12.64 |
189.31 |
Bank balances other than above cash & cash equivalents |
64.69 |
60.39 |
Others |
6.90 |
31.66 |
84.23 |
281.36 |
|
Other Current Assets |
3.49 |
9.83 |
Total Current Assets (C) |
87.72 |
291.19 |
Total Unallocated Assets (B Q |
457.22 |
656.94 |
TOTAL ASSETS (A B C) |
10,132.52 |
10,331.33 |
41. SEGMENT INFORMATION (contd.) |
(Rs in Crores) |
|
Particulars |
As at 31 March 2019 |
As at 31 March 2018 |
II. A. Segment Operating Liabilities |
2,784.79 |
2,951.79 |
Unallocated Liabilities |
||
B. Non-Current Liabilities |
||
Financial Liabilities: |
||
Borrowings |
1,812.98 |
2,392.42 |
Deferred Tax Liability (Net) |
336.31 |
217.32 |
Total Non-Current Liabilities (B) |
2,149.29 |
2,609.74 |
C. Current Liabilities |
||
Financial Liabilities: |
||
Short Term Borrowings |
1,036.05 |
1,451.13 |
Cash Credit Facilities |
108.48 |
11.44 |
1,144.52 |
1,462.57 |
|
Trade Payables |
2.15 |
6.75 |
Other Financial Liabilities |
2.96 |
59.46 |
Current Maturities of long term debts |
608.82 |
478.84 |
Other Current Liabilities |
7.91 |
10.63 |
Provisions |
126.53 |
3.66 |
Total Current Liabilities (C) |
1,892.89 |
2,021.91 |
Total Unallocated Liability (B C) |
4,042.18 |
4,631.65 |
Total LIABILITIES (A B C) |
6,826.97 |
7,583.44 |
D. SECONDARY SEGMENT |
(Rs in Crores) |
|
I. Geographic information |
Year Ended 31 March 2019 |
Year Ended 31 March 2018 |
Revenue from external customers |
||
India |
3,200.56 |
3,158.89 |
Outside India |
429.67 |
401.05 |
Total revenue as per consolidated statement of profit or loss |
3,630.23 |
3,785.99 |
II. Non-current operating assets |
As at 31 March 2019 |
As at 31 March 2018 |
India |
4,704.87 |
7,290.56 |
Outside India |
- |
- |
Total |
4,704.87 |
7,290.56 |
Non-current assets for this purpose consist of property, plant and equipment, investment properties and intangible assets.
E. REVENUE FROM MAJOR PRODUCTS AND SERVICES (Rs in Crores)
The following is an analysis of the Company revenue from continuing operations from its major products and services:
Sale of Products |
Year Ended 31 March 2019 |
Year Ended 31 March 2018 |
Cotton Fabric |
684.90 |
531.15 |
Cotton Yarn |
77.97 |
82.79 |
Rayon Yarn |
- |
602.97 |
Tyre Yarn and Fabric |
- |
135.91 |
Pulp & Paper (including Paper Board/Straw Board) |
2,642.65 |
2,161.66 |
Others |
19.05 |
128.85 |
Rental Services |
205.66 |
142.66 |
Total |
3,630.23 |
3,785.99 |
Composition of the business segment Name of the Segment Types of products/services Comprises of:
(a) |
Textiles |
Yarn, Fabric, Viscose filament yarn, Tyre yarn & leasing of Viscose filament yarn & Tyre yarn plant |
(b) |
Pulp and Paper |
Pulp, writing & printing paper, tissue paper and multi-layer packaging board |
(c) |
Cement |
Cement and clinker. |
(d) |
Real Estate |
Leased Properties |
(e) |
Others |
Salt works and Chemicals |
F. The Board of Director monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
G. No single customer contributed 10% or more to the Company''s revenue for the year ended 31 March 2019 and 31 March 2018
H. The accounting policies of the reportable segments are the same as the Company''s accounting policies described in note 2A. Segment profit represents the profit before finance cost and tax earned by each segment without allocation of central administration costs and directors'' salaries, investment income and finance costs. This is the measure reported to the chief operating decision maker for the purposes of allocation and assessment of segment performance.
42. CAPITAL MANAGEMENT
For the purpose of the Company''s capital management, equity includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximise the shareholder value. The Company''s Capital Management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholders'' value. The Company is monitoring capital using debt equity ratio as its base which is debt to equity. The company''s policy is to keep debt equity ratio below two and infuse capital if and when required through issue of new shares and/or better operational results and efficient working capital management.
In order to achieve the aforesaid objectives, the Company has demerge its Cement Units to Ultra Tech Cement Limited along with a debt of Rs3000 Crore. Hence post demerger Company will become Debt light Company. Business focus will now be shifted to Real Estate, Paper and Textile and any capex will be done on the basis of optimum IRR.
Debt-to-equity ratio are as follows:
(Rs in Crores) |
||
31 March 2019 |
31 March 2018 |
|
Debt (A)* |
3,538.18 |
4,369.28 |
Equity (B) |
3,305.50 |
2,747.89 |
Debt to Equity Ratio (A/B) |
1.07 |
1.59 |
*lncludes debt pertaining to descontinued operations
43. FINANCIAL RISK MANAGEMENT FRAMEWORK
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The Company''s principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management provides assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
A. CREDIT RISK
Credit risk is the risk that counter party will not meet it obligation under a financial instrument or customer contract leading to a financial loss. The Company expose to credit risk mainly from trade receivables and other financial assets. The group only deals with parties which has good credit ratings/worthiness based on company''s internal assessment.
The Company has divided parties in two grades based on their performance.
Good: parties with a positive external rating (if available) and stable financial position with no past default is considered in this category.
Doubtful: parties where the company doesn''t have information on their financial position or has past trend of default are considered under this category.
The Company has not acquired any credit impaired asset. There was no modification in any financial assets.
(i) Trade receivables:
Customer credit is managed by each business division subject to the Company''s established policy procedures and control related to customer credit risk management.
Export customers are mainly against Letter of Credit and/or insurance cover on export outstanding is also taken. Generally deposits are taken from domestic debtors. Apart from deposit there is a commission agent area wise. In case any customer defaults the amount is first recovered from deposits, then from the agent''s commission. Each outstanding customer receivables are regularly monitored and if outstanding is above due date the further shipments are controlled and can only be released if there is a proper justification. The carrying amount and fair value of security deposit amounts to Rs 46.48 Crores (31 March 2018: Rs 269.02 Crores) as it is payable on demand.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets and their credit worthiness are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
The Company has written off trade receivables amounting to Rs 0.75 Crs during the year (31 March 2018 Rs 0.46 Crs) as there was no reasonable expectations of recovery and were outstanding for more than 360 days from becoming due.
As at 31 March 2019 |
Less Than 180 Days |
More Than 180 Days |
Expected loss rate |
0.15% |
85.16% |
Gross carrying amount |
202.12 |
13.74 |
Loss allowance provision |
0.31 |
11.70 |
(Rs in Crores) |
||
As at 31 March 2018 |
Less Than 180 Days |
More Than 180 Days |
Expected loss rate |
0.29% |
44.71% |
Gross carrying amount |
411.49 |
20.05 |
Loss allowance provision |
1.19 |
8.96 |
Reconciliation of loss allowance provision for Trade Receivables |
(Rs in Crores) |
|
Particulars |
31 March 2019 |
31 March 2018 |
Balance as at beginning of the year |
10.15 |
10.05 |
Impairment losses recognised in the year based on lifetime expected credit losses |
- |
- |
On receivables originated in the year |
8.67 |
0.56 |
For Discontinued Operations |
(6.06) |
|
Amounts written off during the year as uncollectible |
(0.75) |
(0.46) |
Amounts recovered during the year |
- |
- |
Balance at end of the year (Continuing Operations) |
12.01 |
10.15 |
(ii) Other Financial Assets
Credit risk from balances with banks is managed by Company''s treasury department in accordance with the Company policy. Investment of surplus funds are made only in approved Mutual Funds & that too in liquid funds. As soon as the fund reaches to a reasonable level the Company repay its working capital borrowing by redeeming the liquid fund. The other financial assets are from various forum of Government authorities and are released by Government authorities on completion of relevant terms and conditions for the release of outstanding.
B. 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 of three types of risks - interest rate risk, currency risk and other price risk in a fluctuating market environment. Financial instrument affected by market risks includes loans and borrowings, deposits, FVTOCI Investments, derivatives and other financial assets.
The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.
The sensitivity analyses in the following sections relate to the position as at 31 March 2019 and 31 March 2018
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2019.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2019 and 31 March 2018
(i) Currency Risk
This is the risk that the Company may suffer losses as a result of adverse exchange rate movement during the relevant period. As a policy, Company is covering all foreign exchange risk on account of import and loans so that Company may not be put to any loss situation due to adverse fluctuations in currency rates. There is periodical review of foreign exchange transactions and hedging by the Company''s executives.
Foreign Currency Sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD and EUR exchange rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives. The Company evaluates exchange rate exposure arising from foreign currency transactions. The company follows established risk management policies and standard operating procedures. The company''s exposure to foreign currency changes for all other currencies is not material.
Currency |
Change in rate |
Effect on profit before tax |
|
USD |
5% |
(6.17) |
|
31 March 2019 |
USD |
-5% |
6.17 |
EUR |
5% |
0.20 |
|
EUR |
-5% |
(0.20) |
|
USD |
5% |
(5.63) |
|
31 March 2018 |
USD |
-5% |
5.63 |
EUR |
5% |
(0.16) |
|
EUR |
-5% |
0.16 |
|
Outstanding foreign currency exposures |
(Rs in Crores) |
||
As at 31 March 2019 |
As at 31 March 2018 |
||
Trade Receivables |
|||
USD |
0.50 |
0.47 |
|
Euro |
0.13 |
- |
|
Others |
0.01 |
- |
|
Trade Payables USD |
1.93 |
0.25 |
|
Euro |
0.01 |
0.05 |
|
Others |
- |
0.01 |
|
Borrowings USD |
. |
2.16 |
|
Others |
|||
USD |
- |
0.21 |
|
Euro |
- |
0.01 |
|
Others |
_ |
(ii) Interest rate risk
The Company manages interest rate risk by having a balanced portfolio of fixed and variable rate of interest on loans and borrowings. To manage this, Company has issued fixed rate bonds and loans taken from banks are linked to MCLR rate of the bank, which are variable.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:
Currency |
Increase/ decrease in basis points |
Effect on profit before tax |
|
31 March 2019 |
INR |
50 |
7.41 |
INR |
-50 |
(7.41) |
|
31 March 2018 |
INR |
50 |
9.81 |
INR |
-50 |
(9.81) |
(Rs in Crores)
Particulars |
Total Borrowings |
Floating rate Borrowings |
Fixed rate Borrowings |
INR |
2,421.88 |
1,482.40 |
939.48 |
Total as at 31 March 2019 |
2,421.88 |
1,482.40 |
939.48 |
INR Total as at 31 March 2018 |
2,906.71 |
1,962.47 |
944.24 |
2,906.71 |
1,962.47 |
944.24 |
Includes debt pertaining to discontinued operations
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.
(iii) Equity Price Risk
The Company is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.
C. LIQUIDITY RISK
(i) Liquidity risk management
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows on daily, monthly and yearly basis. The Company ensures that there is a free credit limit available at the start of the year which is sufficient for repayments getting due in the ensuing year. Loan arrangements, credit limits with various banks including working capital and monitoring of operational and working capital issues are always kept in mind for better liquidity management
(ii) Maturities of financial liabilities
The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.
(Rs in Crores) |
||||||
As at 31 March 2019 |
On Demand |
Less than 1 Year |
1-3 Years |
3-5 Years |
5 Years and above |
Total |
(a) Non-Derivative financial instruments |
||||||
Long term borrowings * |
- |
- |
1,004.46 |
299.39 |
509.13 |
1,812.98 |
Short term borrowings: * |
||||||
Cash Credit Facilities/Working Capital Loan |
108.70 |
- |
- |
- |
- |
108.70 |
Pre-shipment, Post-shipment facilities |
- |
43.01 |
- |
- |
- |
43.01 |
Bill Discounting with Bank |
- |
3.78 |
- |
- |
- |
3.78 |
Commercial Paper |
- |
988.42 |
- |
- |
- |
988.42 |
Trade payables: |
||||||
Trade payables - Micro and small enterprises |
- |
6.70 |
- |
- |
- |
6.70 |
Trade payables - other than micro and small |
- |
506.31 |
- |
- |
- |
506.31 |
enterprises |
||||||
Other financial liabilities: |
||||||
Deposits from dealers and agents |
46.48 |
- |
- |
- |
- |
46.48 |
Deposits against rental arrangements |
- |
47.79 |
79.12 |
12.21 |
- |
139.12 |
Current maturities of long-term debt * |
- |
608.83 |
- |
- |
- |
608.83 |
Other Interest Accrued |
- |
31.60 |
- |
- |
- |
31.60 |
Unclaimed/Unpaid dividends |
- |
2.16 |
- |
- |
- |
2.16 |
Creditors for Capital Supplies/Services |
- |
21.40 |
- |
- |
- |
21.40 |
Other current liabilities |
- |
1.85 |
0.50 |
- |
- |
2.35 |
(b) Derivative financial instruments |
||||||
Derivatives not designated as a hedging instruments |
- |
2.96 |
- |
- |
- |
2.96 |
Total |
155.18 |
2,264.91 |
1,084.08 |
311.60 |
509.13 '' |
1,324.80 |
*lncludes debt pertaining to discontinued operations |
||||||
(Rs in Crores) |
||||||
As at 31 March 2018 |
On Demand |
Less than 1 Year |
1-3 Years |
3-5 Years |
5 Years and above |
Total |
(a) Non-Derivative financial instruments |
||||||
Long term borrowings |
- |
- |
1,824.58 |
316.84 |
802.60 |
2,944.02 |
Short term borrowings |
||||||
Cash Credit Facilities/Working Capital Loan |
11.86 |
- |
- |
- |
- |
11.86 |
Pre-shipment, Post-shipment facilities |
- |
57.12 |
- |
- |
- |
57.12 |
Bill Discounting with Bank |
- |
7.80 |
- |
- |
- |
7.80 |
Buyer''s credit |
- |
147.33 |
- |
- |
- |
147.33 |
Commercial Paper |
- |
1,238.46 |
- |
- |
- |
1,238.46 |
Trade payables |
||||||
Trade payables - Micro and small enterprises |
- |
3.74 |
- |
- |
- |
3.74 |
Trade payables - other than micro and small |
- |
644.76 |
- |
- |
- |
644.76 |
enterprises |
||||||
Acceptances |
- |
33.30 |
- |
- |
- |
33.30 |
Other financial liabilities |
||||||
Deposits from dealers and agents |
269.02 |
- |
- |
- |
269.02 |
|
Deposits against rental arrangements |
16.71 |
24.94 |
27.90 |
11.35 |
80.90 |
|
Other long term liabilities |
- |
- |
- |
- |
0.50 |
0.50 |
Current maturities of long-term debt |
- |
718.10 |
- |
- |
- |
718.10 |
Other Interest accrued |
- |
128.10 |
- |
- |
- |
128.10 |
Unclaimed/Unpaid dividends |
- |
2.50 |
- |
- |
- |
2.50 |
Creditors for Capital Supplies/Services |
- |
38.10 |
- |
- |
- |
38.10 |
Other current liabilities |
- |
179.59 |
- |
- |
- |
179.59 |
(b) Derivative financial instruments |
||||||
Foreign exchange forward contracts |
- |
20.93 |
- |
- |
- |
20.93 |
Total |
280.88 |
3,236.54 |
1,849.52 |
344.74 |
814.45 |
6,526.13 |
(iii) Maturities of financial assets
The following table details the Company''s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.
(Rs in Crores)
As at 31 March 2019 |
On Demand |
Less than 1 Year |
1-3 Years |
3-5 Years |
5 Years and above |
Total |
(a) Non-Derivative financial instruments |
||||||
Trade Receivables |
- |
203.86 |
- |
- |
203.86 |
|
Other Bank Balances |
- |
64.99 |
- |
- |
64.99 |
|
Other financial Assets |
||||||
Security Deposits |
- |
3.35 |
- |
- |
6.92 |
10.27 |
Interest subsidy and Interest receivable |
- |
8.15 |
- |
- |
- |
8.15 |
Claims and other receivable |
- |
3.32 |
- |
- |
- |
3.32 |
Unbilled Revenue |
- |
7.32 |
3.29 |
0.10 |
- |
10.71 |
Loan to Subsidiary |
- |
3.52 |
- |
- |
- |
3.52 |
Others |
- |
4.89 |
- |
- |
- |
4.89 |
Finance Lease Receivables |
- |
1.98 |
4.49 |
- |
- |
6.47 |
(b) Derivative financial instruments |
||||||
Held for trading derivatives carried at FVTPL |
- |
0.03 |
- |
- |
- |
0.03 |
Total |
- |
301.12 |
7.78 |
0.10 |
6.92 |
315.92 |
(Rs in Crores) |
||||||
As at 31 March 2018 |
On Demand |
Less than 1 Year |
1-3 Years |
3-5 Years |
5 Years and above |
Total |
(a) Non-Derivative financial instruments |
||||||
Trade Receivables |
- |
421.47 |
- |
- |
- |
421.47 |
Other Bank Balances |
- |
60.39 |
- |
- |
- |
60.39 |
Other financial Assets |
||||||
Security Deposits |
- |
20.44 |
25.20 |
- |
- |
45.64 |
Advances recoverable in cash |
- |
0.40 |
- |
- |
- |
0.40 |
Interest subsidy and Interest receivable |
- |
8.55 |
- |
- |
- |
8.55 |
Subsidy/Incentive receivables |
- |
146.32 |
190.67 |
85.92 |
- |
422.91 |
Unbilled Revenue |
- |
22.91 |
- |
- |
- |
22.91 |
Claims and other receivable |
- |
7.22 |
9.51 |
- |
- |
16.73 |
Others |
- |
1.07 |
- |
- |