Mar 31, 2022
Property plant and equipment are subject to charge to secure the company''s borrowings as discussed in Note 16
On transition to Ind AS (i.e. 1 April 2015), the company has elected to continue with the carrying value of all Property, plant and equipment measured as per the previous GAAP and use that carrying value as the deemed cost of Property, plant and equipment.
Land for soda ash plant and for corporate office are taken on lease from the Government of India for a year of 90 to 99 years. leasehold lands are capitalised and amortised over the life of lease or life of assets (whichever is lower).
Leased mines represents expenditure incurred on development of mines.
Assets held for sale represents the assets of Home textile business at Vapi unit to be transferred by the company pursuent to a Business transfer agreement and Land in Madurai (Yarn Unit) approved by Board for transfer in future. ( Refer Note no 47)
The amount of borrowing cost capitalised during the year ended March 31, 2022 was NIL (for the year March 31, 2021: INR 0.34 Crore) on account of capacity expansion of soda ash plant and other capital expenditure. The rate used to determine the amount of borrowing costs eligible for capitalisation was NIL (for the year March 31 2021: 8.25%) which is the effective interest rate of the specific borrowing.
Intangible assets include license for trademark acquired for obtaining exclusive manufacturing and marketing rights for one of its innovative textile product in USA.
On transition to Ind AS (i.e. 1 April 2015), the company has elected to continue with the carrying value of all Intangible assets measured as per the previous GAAP and use that carrying value as the deemed cost of Intangible assets.
Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities and quoted debt 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 or loss will not reflect the purpose of holding. The Company has not transferred any gain or loss within equity in the previous year. Refer note 39 for determination of their fair values.
# Amount being in thousands are not appearing
# As per the guidelines of the Ministry of Coal, Government of India all Coal Mine owners who are operating Coal Mines are required to prepare a Mine Closure Plan and on approval of such plan need to open an escrow for depositing money towards mine closure activity. Annual amount to be deposited shall be as per mine closure plan. Total amount deposited along with interest shall be refunded as per conditions of approved mine plan.
* Margin money held with banks against opening of letter of credit (LC) and bank gurantee
No Loans are due from directors or other officer of the Company either severally or jointly with any other person. Nor any loans are due from firm or any private companies respectively in which any director is a partner, a director or a member other than stated above.
Loans and receivables are non-derivative financial assets which generate a fixed or variable interest income for the Company. The carrying value may be affected by changes in the credit risks of the counter parties.
The Company has one class of equity shares having a par value of INR 10 per share. Each shareholder is entitled to one vote per equity share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuring Annual General Meeting, except in case of interim dividend. In the event of liquidation on the Company, the equity shareholders are eligible to receive remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.
As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
No shares have been issued by the Company for consideration other than cash, during the year of five years immediately preceding the reporting date.
For details of shares reserved for issue under the Share based payment plan of the company, please Refer Note 33
a) Loan aggregating to H 12.83 crores (Previous Year H 23.43 crores) is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company''s Soda Ash Division situated at village Sutrapada, Veraval in Gujarat. The remaining tenure of the loans is 1 to 2 years.
b) Loan aggregating to H 441.42 crores (Previous Year H 329.60 crores) is secured by way of first pari passu charge on movable fixed assets of Soda Ash Division situated at village Sutrapada, Veraval, Gujarat excluding assets exclusively charged to other lenders both present and future. The remaining tenure of the loans is 3 to 6 years.
c) Loan aggregating to Nil (Previous Year H 46.20 crores) is secured by exclusive charge on specific fixed assets created out of the proceeds of the for Company''s Home Textile Division situated at Vapi in Gujarat.
d) Loan aggregating to NIL (Previous Year H 5.73 crores) is secured by an exclusive first charge over movable fixed assets pertaining to Windmill Project situated at Jodia, Jamnagar District, Gujarat, both present and future, created out of the proceeds of the loan. The term loan has been prepaid during current year.
e) Loan aggregating to H 92.21 crores (Previous Year H144.42 crores) is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company''s Textile Division situated at Madurai, Tamil Nadu. The remaining tenure of the loans is 3 to 6 years.
f) Loan aggregating to NIL (Previous Year H 124.74 crores) is secured by first charge on pari passu basis over movable fixed assets of Company''s Textile division present and future situated at Paravai and Manaparai, Tamilnadu excluding movable assets already hypothecated on exclusive charge basis. Term Loan has been prepaid during current year.
g) Loan aggregating to NIL (Previous Year H 9.88 crores) is secured by first exclusive charge on movable fixed assets of Textile Division (including Phase I, II, III) Madurai, Tamil Nadu. The loan has been repaid during current year.
h) Loan aggregating to NIL (Previous Year H 17.24 crores) is secured by an exclusive first charge over movable and immovable fixed assets pertaining to Windmill Project situated at Tirunelveli District, Tamilnadu, both present and future, created out of the proceeds of the loan. The term loan has been prepaid during current year.
i) Loan aggregating to H 12.95 (Previous Year H25.51 crores) crores is secured by an exclusive first charge over movable fixed assets pertaining to Windmill Project situated at Tirunelveli District, Tamilnadu, both present and future, created out of the proceeds of the loan. The remaining tenure of the loan is 3 years.
j) Out of all the aforesaid secured Loans appearing in Note 16 (1) (a) to 16 (1) (i) totaling H 559.40 crores (Previous Year H 726.75 crores), an amount of H 134.80 crores (Previous Year H 162.93 crores) is due for payment in next 12 months and accordingly reported under Note 16(b) under the head "Short term borrowingsâ as "current maturities of Long Term Borrowingsâ.
k) The Company has satisfied all the loan covenants..
(a) Credit Facilities in Indian Rupees: The facilities availed by way of Cash Credit, Working capital demand loan and Bill Discounting are repayable on demand and carries an average interest rate of 4.90% p.a (Previous Year 5.70% p.a) on the amount outstanding.
(b) Credit facilities in foreign currency : The facilities availed by way of foreign currency demand loan, packing credit in foreign currency, Export Bill discounting and Supplier''s Credit are repayable as per maturity dates being not more than 1 year and carries an average interest NIL (without forward premium) (Previous Year 0.45% p.a) on the amount outstanding.
(c ) Quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.
16.3 The Company has satisfied all the loan covenants.
16.4 As at March 31 2022, the Company had available INR 242 Crores (As at March 31 2021: INR 630 Crores) of undrawn committed borrowing facilities.
16.5 The Company''s long term borrowings under indian rupees carry interest rate in range of 6.60% to 8.4% p.a. (excluding TUFS benefit availed in few Textile loans)
16.6 The Company''s long term borrowings under foreign currency carry interest rate of 3.21% p.a.
*MCA has notified Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, Companies (Amendment) Act 2019, Companies (Amendment) Act 2021. The notification states that"any amount remaining unspent under section 135 (5), pursuant to any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in pursuance of its Corporate Social Responsibility Policy, shall be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year".
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the company by weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares..
31 Significant accounting judgements, estimates and assumptions
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses and the accompanying disclosures. Uncertainty about the assumptions and estimates could result in outcomes that require a material adjustment to the carrying value of assets or liabilities affected in future years.
Other disclosures relating to the Company''s exposure to risks and uncertainties includes:
⢠Financial risk management objectives and policies in Note 40
⢠Sensitivity analyses disclosures in Note 32 and Note 40
⢠Estimation uncertainty relating to the Global health pandemic on Covid 19 in Note 49
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future years affected.
Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
In the process of applying the accounting policies, management has made the following judgements, which have significant effect on the amounts recognised in the Company''s financial statements:
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
The Company determines the lease term as the non-cancellable year of a lease, together with both years covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and years covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable year of a lease.
The Company applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers:
Revenues from customer contracts are considered for recognition and measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to perform the irrespective obligations under the contract, and the contract is legally enforceable.
The Company''s contracts with customers could include promises to transfer multiple product. The Company assesses the products promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables.
Judgement is also required to determine the transaction price for the contract and to ascribe the transaction price to each distinct performance obligation. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, cash discount, price concessions and incentives. The transaction price is also adjusted for the effects of the time value of money if the contract includes a significant financing component. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting year. The Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations.
The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37, ''Provisions, contingent liabilities and contingent assets''. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss.
The Company has designated investments in equity instruments as FVTOCI investments since the Company expects to hold these investment with no intention to sale. The difference between the instrument''s fair value and Indian GAAP carrying amount has been recognized in retained earnings.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to impairment assessment of property plant and equipment and investment in subsidiary companies, recognised by the Company. Company had done the impairment assessment of Home Textile Division during the previous year.
For the measurement of the fair value of equity-settled transactions with employees at the grant date, the Company uses a Black-Scholes model for Employee Share Option Plan (GESP). The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 33.
The estimated useful lives of property, plant and equipment are based on a number of factors including the effects of obsolescence, demand, competition, internal assessment of user experience and other economic factors (such as the stability of the industry, and known technological advances) and the level of maintenance expenditure required to obtain the expected future cash flows from the asset. The Company reviews the useful life of property, plant and equipment at the end of each reporting date.
Employee benefit obligations (gratuity obligation) are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Further details about gratuity obligations are given in Note 32.
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer Note 41 for further disclosures
The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Company ''would have to pay'', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Company estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates.
a) Sale of Yarn to Home Textile undertaking at Vapi unit in normal course of business has been considered by the Company as part of its revenue from continued operations.
b) Pursuant to the terms of the BTA, certain assets pertaining to HT Business are pass through in nature (i.e. the beneficial ownership of these assumed assets continued to be with the Company) such as export incentives receivable, claims receivables which would be transferred immediately to the Company by the Purchaser whenever received post-closing date. Consequently, such receivables have been retained by the Company and is forming part of the continuing operations.
c) Contingent liabilities of the HT Business have been reported on the basis of list of assumed litigations read with excluded liabilities as per the terms specified in the BTA subject to the amendments and substitution vide Supplemental BTA.
32 Defined benefit and contribution plan
Defined contribution plan
The Company makes contributions towards provident fund and superannuation fund to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits. Contribution paid for provident fund and superannuation fund are recognised as expense for the year :
The employees'' gratuity fund scheme managed by a trust is a defined benefit plan. The present value of the obligation is determined based on actuarial valuation using the projected unit credit method, which recognises each year of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
Employees who are in continuous service for a year of 5 years are eligible for gratuity. The amount of gratuity payable to an employee upon leaving the company is the 50% of Fixed cost to company per month computed proportionately for 15/26 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to Group Gratuity Trust registered under Income Tax Act-1961.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2022. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
The plan assets are managed by the Gratuity Trust formed by the Company. The management of 100% of the funds is entrusted according to norms of Gratuity Trust, whose pattern of investment is available with the Company.
In accordance with the Securities and Exchange Board of India (share based employee benefits) Regulations, 2014 and the guidance Note on accounting for ''Employees share-based payments, the scheme detailed below is managed and administered, compensation benefits in respect of the scheme is assessed and accounted by the company. To have an understanding of the scheme, relevant disclosures are given below.
a) As approved by the shareholders at their Annual General Meeting held on 23rd July 2015, the Company has got 50,00,000 number of Options under the employee stock option scheme "GHCL ESOS 2015â. The following details show the actual status of ESOS granted during the financial year ended on March 31, 2022.
The Company has lease contracts for various items of Building and Salt works (fields taken on lease for salt production) in its operations. Leases of Building generally have lease terms between 1 and 10 years, while salt works generally have lease terms between 3 and 30 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets and some contracts require the Company to maintain certain financial ratios. There are no major lease contracts that include extension and termination options and variable lease payments.
* Cases pending before appellate authorities/dispute resolution panel in respect of which the Company has filed appeals.
On the basis of current status of individual case for respective years and as per legal advice obtained by the company, wherever applicable, the company is confident of winning the above cases and is of the view that no provision is required in respect of above cases.
** ''In previous year, an order passed by Income Tax Appellate Tribunal (ITAT), Ahmedabad dated March 05,2021, ITAT has disposed off cases pertaining to AY2009-10, AY2010-11, AY2011-12, AY 2012-13, AY 2013-14 and AY 2014-15 and decided in favour of the company. As the Income Tax Authorities (the Department) has not filed an appeal to the High Count against the Appellate Tribunal''s order within stipulated time, therefore the amount pertains to above mentioned assessment years i.e. INR 154.65 Crores is not considered as contingent liability as on 31st March 2022.
# Government of India vide its notification dated March 29,2021, issued under the National Disaster Management Act 2005, directed that all employers shall make full payment of wages, of their workers at their workplaces, for the period of closure under the lockdown. Subsequently on the petition filed by some of the employers against the aforementioned notification , the Honourable Supreme Court of India, passed an interim order dated June 12, 2021 and directed employers to enter into a negotiation and settlement with workers for wages payment during the lockdown period. The aforesaid notification also stands withdrawn w.e.f May 18,2021. In the meanwhile, the Company had made payments to its workers and will do the final settlement if any as per the final order of the Honourable Supreme Court of India. If the Honourable Supreme Court upheld the notification of Government of India , the Company will have to pay further wages of H 4.57 Crores to the workers, whereas based on the management''s assessment the chances of the same is remote.
##Claims under this heading relate to legal cases pending in different courts under the jurisdiction of Gujarat High Court and the courts subordinate to it. Some of the cases relates to execution of ex-parte foreign decrees which are not enforceable in India. Certain claims relate to contractor''s workmen, whose services have been terminated by the concerned contractor and the matter is in between the contractor and their workmen and GHCL is made a party to the dispute only. Other cases relate to some ex-workmen who after opting VRS scheme duly approved by the regional Labour Officer challenged the same and this case is a week case since workmen have already lost one round of litigation till Hon''ble SC where directions were issued to deposit the entire amount received during VRS before initiating the legal proceedings. Apart from theses certain civil disputes are also pending which on merit are weak and GHCL has fair chances in winning these cases.
These include claims against the Company for recovery lodged by various parties.
The Company is primarily engaged in the business of manufacture of inorganic chemicals and textiles and based on this it has two reportable segments:
Inorganic chemicals segment majorly includes manufacture of soda ash which is an important raw material for detergent and glass industry. Major raw materials to manufacture soda ash are salt, limestone, coke, briquette, coal and lignite. The total Inorganic chemical segment contributes approximately 76% of total Indian Standalone revenue.
Textiles segment manufactures cotton yarn and polyester yarn and home textile products. GHCL Limited is one of the largest integrated textile manufacturers own spinning, weaving and processing & dyeing and cutting & sewing manufacturing facility.
The management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Income taxes are managed on Company basis and are not allocated to Operating segments.
Adjustments and 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 company basis.
Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a company basis.
Capital expenditure consists of additions of property, plant and equipment and intangible assets.
38 Hedging activities and derivatives
Derivatives not designated as hedging instruments
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are foreign currency risk.
The Company''s risk management strategy and how it is applied to manage risk are explained in Note 40.
The Company uses 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 years consistent with foreign currency exposure of the underlying transactions, generally from one to 24 months.
These contracts are not designated in hedge relationships and are measured at fair value through profit or loss.
The management assessed that cash and cash equivalents, Bank balances other than cash and cash equivalents, trade receivables, Export incentives receivable, GST refund receivable, Subvention receivable, trade payables and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The other current financial liabilities represents Dealer deposits, Security deposits, Capital creditors, Unpaid dividend and Interest accrued on bank deposits, the carrying value of which approximates the fair values as on the reporting date.
* Investments excludes investment in subsidiary which is carried at cost.
*** The other non-current financial assets represents bank deposits and Insurance claim receivable.
The following methods and assumptions were used to estimate the fair values:
i The fair value of the financial assets and liabilities is included at the amount at which the instrument is exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
ii The fair values of the FVTOCI financial assets are derived from quoted market prices in active markets.
40 Financial risk management objectives and policies
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, lease liabilities trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. 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 is supported by a banking and operations committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company''s senior management 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 expert list teams that have the appropriate skills, experience and supervision. It is the Company''s policy, that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
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, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at March 31, 2022 and March 31, 2021. The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt are all constant.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
In order to optimize the Company''s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.
The Company is not exposed the significant interest rate as at a respective reporting date.
b) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to its operating activities. The company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 12 month for hedges of forecasted sales and purchases in foreign currency. The hedging is done through foreign currency forward contracts.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to its operating activities. The company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 12 month for hedges of forecasted sales and purchases in foreign currency. The hedging is done through foreign currency forward contracts.
The Company''s listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.
At the reporting date, the exposure to unlisted equity securities at fair value was INR 1.38 crores as on March 31, 2022 (INR 1.29 crores as on March 31, 2021).
At the reporting date, the exposure to listed equity securities at fair value was INR 15.13 Crore as on March 31, 2022 (INR 13.82 as on March 31, 2021). A decrease of 10% on the NSE/BSE market index could have an impact of approximately INR 1.51 Crore on the OCI or equity attributable to the company. An increase of 10% in the value of the listed securities would also impact OCI and equity. These changes would not have an effect on profit or loss.
The Company is impacted by the price volatility of coal and cotton. Its operating activities require continuous manufacture of soda ash, and therefore require a regular supply of coal. Cotton is the key raw material for the spinning unit. Due to the significant volatility of the price of coal and cotton in international market, the company has entered into purchase contract for coal with its designated vendor(s). The price in the purchase contract is linked to the certain indices. The Company''s commercial department has developed and enacted a risk management strategy regarding commodity price risk and its mitigation.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on customer profiling, credit worthiness and market intelligence. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.
An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are Companyed into homogenous Company''s and assessed for impairment collectively. The calculation is based on exchange losses historical data. The Company does not hold collateral as security. 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.
Credit risk from balances with banks is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company''s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Banking & Operations Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
The company''s maximum exposure to credit risk for the components of the balance sheet at March 31, 2022 and March 31, 2021 is the carrying amounts as illustrated in Note 9 except for financial guarantees and derivative financial instruments. The company''s maximum exposure relating to financial guarantees and financial derivative instruments is noted in note on commitments and contingencies and the liquidity table below.
Liquidity risk is the risk that the company will encounter in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The approach of the company to manage liquidity is to ensure , as far as possible, that it should have sufficient liquidity to meet its respective liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risk damage to their reputation. The Company also beleives a significant liquidity risk with regard to its lease liabilities as the current aseets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
The company assessed the concentration of risk with respect to refinancing its debt and concluded it to below.
For the purpose of the Company''s capital management, capital includes issued equity capital, 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 manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company''s policy is to keep the gearing ratio of less than 75%. The Company includes within net debt, interest bearing loans and borrowings, lease liabilities, trade and other payables, less cash and cash equivalents.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.
No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2022.
43 In prior years as per SEBI (ESOS & ESPS) guidelines 1999 the Employees Stock Option Schemes of GHCL was administered by the registered Trust named GHCL Employees Stock Option Trust. However, the SEBI circular dated November 29, 2013, required the closure of all Employee Stock Option Trusts by June 2014. Accordingly, GHCL closed its ESOS Scheme, disposed of GHCL shares but retained its ESOS Trust for a limited purpose of litigation. ESOS Trust owns 20,46,195 GHCL shares, out of which 15,79,922 shares were illegally sold by broker involved, against which ESOS Trust has initiated legal proceedings and 4,66,273 shares were blocked for transactions by Stock exchange under legal proceedings. During the earlier year, 4,66,273 shares were transferred/released to ESOS Trust as per NSE order dated July 24, 2019 and are currently held by the Trust.
During the tenure of ESOS Trust, the company had advanced INR 29.54 crores interest free loan to the Trust to buy the shares and at the end of March''2014, the company had written off an amount of INR 23.34 crores due from ESOS Trust on account of permanent diminution in the value of 20,46,195 shares as on March 31, 2014 held by the Trust.
Once the legal matter will settle ESOS Trust will get the possession of 15,79,922 shares also, the sale proceeds from the disposal of these 20,46,195 shares by ESOS Trust will first be used to repay the loan amounting to INR 29.54 crores due to GHCL which includes restatement of earlier write-off of INR 23.34 crores taken in March, 2014 and the balance surplus (if any) will be used for the benefit of the employees of the company as per the recommendation of GHCL''s Compensation Committee.
A. The Board of Directors and shareholders of GHCL Limited (''Company'') at their respective meetings held on December 6, 2021 and January 21, 2022 (through Postal Ballot), approved the sale and transfer of the Company''s Home Textiles Business (comprising of weaving, processing and cutting and sewing of home textiles products) to Indo Count Industries Limited ("ICILâ) on a going concern basis under a slump sale arrangement. Accordingly, a Business Transfer Agreement (''BTA'') was executed on December 6, 2021 between the Company and ICIL (read with the Amendment agreement (''ABTA'') dated March 30, 2022 entered into to record the amendment and substitution of certain provisions of the BTA). In addition, Grace Home Fashions LLP (''GHF''), a wholly owned subsidiary of the Company also entered into an Asset Transfer Agreement (ATA) on December 6, 2021 for transfer of its identified assets (i.e., inventory and intellectual property) to Indo Count Global Inc., USA (US subsidiary of ICIL), Indo Count Global Inc., USA together with "ICILâ known as "Purchaserâ (read with the Amendment agreement (''AATA'') dated March 30, 2022 entered into to record the amendment and substitution of certain provisions of the ATA).
B. The transfer of Home Textile Business and identified assets of GHF ("Divestmentâ) to the Purchaser was subject to the satisfaction of conditions precedent as stipulated in the BTA, AA and ATA and receipt of applicable permissions and consents from concerned authorities. The Company and GHF successfully completed the divestment on April 2, 2022 in accordance with the terms of BTA and ATA for a consolidated consideration of H 592.8 Crores (subject to validation of customary closing date adjustment of working capital in terms of the BTA and ATA), In addition the Company/GHF expects to realise H 15.5 crores on its own account. The Company has received H 300 crores as advance from the said consideration on March 30, 2022.
C. In the Standalone Financial Statements, Assets and liabilities of Home Textiles business covered by the BTA have been disclosed as held for sale and disclosed separately in the Balance Sheet as at March 31, 2022 as "Assets of discontinued operations classified as held for saleâ and "Liabilities of discontinued operations classified as held for saleâ respectively. As mandated by Indian Accounting Standard (Ind AS) 105 Asset Held for Sale and Discontinued Operations ("Ind AS 105â), assets and liabilities have not been reclassified or re-presented for prior period i.e. year ended March 31, 2021
D. Further the net results of Home Textile Business and GHF have been disclosed separately as discontinued operation as required by Ind AS 105. Consequently, the Company''s Statement of Profit and Loss for the year ended March 31, 2022 presented pertains to its continuing operations only and for that purpose the Statement of Profit and Loss for the year ended March 31, 2021 has been restated accordingly.
E. The closing date being subsequent to the balance sheet date, no gain/loss with respect to the Divestment have been recognized in the Statement of Profit and Loss for the year ended March 31, 2022. The total assets and liabilities of the Home Textile business and GHF are H 572.65 Cr and H 82.49 Cr lakhs respectively as at March 31, 2022
In view of the divestment of HT Business of the Company to ICIL pursuant to BTA (mentioned above), the Board of Directors of the Company, at their meeting held on December 06, 2021 approved withdrawal of the existing Scheme of Arrangement u/s 230-232 of the Companies Act 2013, involving demerger of its entire Textiles business into GHCL Textiles Limited (''Original Scheme'') and correspondingly approved "Scheme of Arrangement consisting of demerger of Spinning Division of GHCL Limited ("Demerged Companyâ) into GHCL Textiles Limited (''Resulting Company'')â (the "Schemeâ). Subsequently, on December 20, 2021, Hon''ble NCLT (Ahmedabad Bench) allowed the withdrawal petition. The Company has received the observation letter/ approval from BSE,NSE on March 03, 2022 and competition commission of india on March 24, 2022 .The Company is in process of filing the 1st motion petition along with requisite documents with the Ahmedabad jurisdiction of NCLT.
Upon the Scheme becoming effective, the Textile Business (along with all assets and liabilities thereof) shall be carved out and transferred to the Resulting Company on a going concern basis. As a consideration for the Demerger, the Resulting Company would issue its equity shares to the shareholders of GHCL as on the record date in a 1:1 swap ratio (i.e. One (1) share of INR 2 each would be issued by the Resulting Company for every one (1) share of INR 10 each held in GHCL), following which the shareholding of both Companies shall be same as at the record date.
Post Demerger, GHCL shall continue with the Chemicals Business while the Resulting Company shall house the Textiles Spinning division. Shares of GHCL shall continue to be listed on the BSE and NSE and that of the Resulting Company shall also be listed on the BSE and NSE. The Demerger is expected to facilitate focused growth, concentrated approach, business synergies and increased operational and customer focus for respective business verticals apart from exploring independent business opportunities with efficient capital allocation.
(i) For details relating Discontinued operations ( Home Textiles business at Vapi, Gujarat) refer note no 45
(ii) The management has balance excessive and surplus land of 50.75 acres (Previous Year 48.33 acres) outside the premises of factory at Madurai, that is being disposed off and balance is held as non current asset held for sale. During the year the Company has sold/disposed 0.47 acres (Previous Year 12.25 acres) of land. Also the Company has transferred 2.42 acres (Previous Year 33.19 acres) of land from Property, Plant and Equipment being to be sold after the approval of Board of directors.
48 Additional regulatory information
1 The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
2 The Company do not have any transactions with companies struck off.
3 The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,
4 The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
5 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
48 Other Statutory Information
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
6 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 Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
7 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
49 Coronavirus (COVID-19) Impact on Financial Reporting - Accounting Year Ending March 31, 2022
The Company has considered the possible effects that may result from COVID-19 in the preparation of these Standalone financial statements including the recoverability of carrying amounts of financial and non-financial assets. Based on the current year performance and estimates arrived at using internal and external sources of information, the company does not expect any material impact on such carrying values. Based on the projected cash flows for the next one year the management is confident of liquidating its liabilities as and when they fall due and the Going concern assumption used for preparation of these financial statements is appropriate.
50 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 is in the process of assessing the impact of the code and will record the same, if any, in the year the Code becomes effective.
51 Exceptional item pertains to provision for diminution in the value of investment made in a wholly owned subsidiary in view of its negative net-worth & projected business plan as at March 31, 2022.
52 As per the Transfer Pricing Rules of the Income Tax Act, 1961 every company is required to get a transfer pricing study conducted to determine whether the transactions with associated enterprises were undertaken at an arm''s length basis for each financial year end. Transfer pricing study for the transaction pertaining to the year ended March 31, 2022 is currently in progress and hence adjustments if any which may arise there from have not been taken into account in these financial statements for the year ended March 31, 2022 and will be effective in the financial statements for the year ended March 31, 2023. However, in the opinion of the Company''s management, adjustments, if any, are not expected to be material.
53 Standards notified but not yet effective
There are no new standards that are notified, but not yet effective, upto the date of issuance of the Company''s financial statements.
54 Previous year''s figures have been regrouped / rearranged wherever necessary, to conform to current year''s presentation. As required by Indian Accounting Standard (Ind AS) 105 "Asset Held for Sale and Discontinued Operationsâ, the Statement of Profit and Loss for the year ended March 31, 2021 has been restated to make it comparable, however Balance Sheet as at March 31, 2021 has not been reclassified or re-presented.
Mar 31, 2018
1. Segment information
The Company is primarily engaged in the business of manufacture of inorganic chemicals and textiles and based on this it has two reportable segments:
Inorganic chemicals segment majorly includes manufacture of soda ash which is an important raw material for detergent and glass industry. Major raw materials to manufacture soda ash are salt, limestone, coke, briquette, coal and lignite. The total Inorganic chemical segment contributes approximately 60 % of total Indian Standalone revenue.
Textiles segment manufactures cotton yarn and polyester yarn and home textile products. GHCL Limited is one of the largest integrated textile manufacturers own spinning, weaving and processing & dyeing and cutting & sewing manufacturing facility.
The management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Income taxes are managed on Company basis and are not allocated to Operating segments.
2. Related party transactions
a) The following table provides the list of related parties and total amount of transactions that have been entered into wi related parties for the relevant financial years.
A) Wholly owned subsidiaries
Dan River Properties LLC Grace Home Fashions LLC
B) Key managerial personnel
Mr. R. S. Jalan, Managing Director
Mr. Raman Chopra, CFO & Executive Director (Finance)
Mr. Bhuwneshwar Mishra, Sr. General Manager & Company Secretary
C) Non-whole-time directors
Mr. Sanjay Dalmia Mr. Anurag Dalmia Mr. Neelabh Dalmia Dr. B. C. Jain Mr. G. C. Srivastava
Mrs. Vijaylaxmi Joshi (w.e.f. April 20, 2017)
Mr. Sanjiv Tyagi
Mr. Mahesh Kumar Kheria
Mr. K C. Jani
Mr. Lavanya Rastogi
D) Relative of key managerial personnel
Mrs. Sarita Jalan, w/o Mr. R. S. Jalan
Mrs. Bharti Chopra, w/o Mr. Raman Chopra
Mrs. Vandana Mishra, w/o Mr. Bhuwneshwar Mishra
E) Enterprises over which key managerial personnel are able to exercise significant influence
Dalmia Centre for Research & Development
GHCL Foundation Trust
GHCL Employees Group Gratuity Scheme
Gujarat Heavy Chemical Limited Superannuation Scheme
Dalmia Biz Private Limitd.
Dalmia Healthcare Limited
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
3 Hedging activities and derivatives
Derivatives not designated as hedging instruments
The Company uses 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 expected sales and purchases, generally from one to 24 months.
These contracts are not designated in hedge relationships and are measured at fair value through profit or loss.
4 Financial risk management objectives and policies
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. 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.
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, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at 31 March 2018. The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt are all constant.
a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
In order to optimize the Company''s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.
The Company is not exposed the significant interest rate as at a respective reporting date.
b) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to its operating activities. The company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 12 month periods for hedges of forecasted sales and purchases in foreign currency. The hedging is done through foreign currency forward contracts.
c) Equity price risk
The Company''s listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.
At the reporting date, the exposure to unlisted equity securities at fair value was INR 0.20 crores.
At the reporting date, the exposure to listed equity securities at fair value was INR 10.07 Crore. A decrease of 10% on the NSE/BSE market index could have an impact of approximately INR 1.02 Crore on the OCI or equity attributable to the company. An increase of 10% in the value of the listed securities would also impact OCI and equity. These changes would not have an effect on profit or loss.
d) Commodity risk
The Company is impacted by the price volatility of coal. Its operating activities require continuous manufacture of soda ash, and therefore require a regular supply of coal. Due to the significant volatility of the price of coal in international market, the company has entered into purchase contract for coal with its designated vendor(s). The price in the purchase contract is linked to the certain indices. The Company''s commercial department has developed and enacted a risk management strategy regarding commodity price risk and its mitigation.
e) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on customer profiling, credit worthiness and market intelligence. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.
An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous group''s and assessed for impairment collectively. The calculation is based on exchange losses historical data. The Company does not hold collateral as security. 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.
Financial instruments and cash deposits
Credit risk from balances with banks is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company''s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Banking & Operations Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
The company''s maximum exposure to credit risk for the components of the balance sheet at 31st March 2018 and March 2017 is the carrying amounts as illustrated in Note 9 except for financial guarantees and derivative financial instruments. The company''s maximum exposure relating to financial guarantees and financial derivative instruments is noted in note on commitments and contingencies and the liquidity table below.
Liquidity risk
Liquidity risk is the risk that the company will encounter in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The approach of the company to manage liquidity is to ensure , as far as possible, that it should have sufficient liquidity to meet its respective liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risk damage to their reputation.
The company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.
The table below summarises the maturity profile of the company''s financial liabilities based on contractual undiscounted payments.
5 Capital management
For the purpose of the Company''s capital management, capital includes issued equity capital, 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 manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company''s policy is to keep the gearing ratio of less than 75%. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2018.
6Significant accounting judgements, estimates and assumptions
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses and the accompanying disclosures. Uncertainty about the assumptions and estimates could result in outcomes that require a material adjustment to the carrying value of assets or liabilities affected in future periods.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
(i) Judgements
In the process of applying the accounting policies, management has made the following judgements, which have significant effect on the amounts recognised in the Company''s financial statements:
Provisions and contingencies
The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37, âProvisions, contingent liabilities and contingent assets''. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss.
Assessment of lease contracts
Classification of leases under finance lease or operating lease requires judgment with regard to the estimated economic life and estimated cost of the asset. The Company has analyzed each lease contract on a case to case basis to classify the arrangement as operating or finance lease, based on an evaluation of the terms and conditions of the arrangements.
Assessment of equity instruments
The Company has designated investments in equity instruments as FVTOCI investments since the Company expects to hold these investment with no intention to sale.
(ii) Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.
Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Useful lives of property, plant and equipment
The estimated useful lives of property, plant and equipment are based on a number of factors including the effects of obsolescence, demand, competition, internal assessment of user experience and other economic factors (such as the stability of the industry, and known technological advances) and the level of maintenance expenditure required to obtain the expected future cash flows from the asset. The Company reviews the useful life of property, plant and equipment at the end of each reporting date.
Post-retirement benefit plans
Employee benefit obligations (gratuity obligation) are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
7 Standards issued but not yet effective up to the date of Financial Statements Standards issued but not yet effective:
The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company''s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.
The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard:
i) Ind AS 115 Revenue from Contracts with Customers
Ind AS 115 was issued on 28 March 2018 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The new revenue standard will supersede all current revenue recognition requirements under Ind AS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 April 2018.
The Company is engaged in sale of goods of Inorganic Chemicals (mainly manufacture and sale of Soda Ash) and Home Textile division (comprising of yarn manufacturing, weaving, processing and cutting and sewing of home textiles products).
Ind AS 115 impact on sale of goods
The Company''s contracts with customers usually involve sale of goods as the only performance obligation, therefore adoption of Ind AS 115 is not expected to have any significant impact on the revenue and profit or loss. The Company expects the revenue recognition to occur at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods.
Volume rebates
For few of its customers, the Company provide concessions in the form of volume discounts and special discounts. These amounts are subsequently paid to customers in cash or are adjusted with related trade receivables. The Company is in the process of evaluating the accounting impact of these concessions being treated as variable consideration under Ind AS 115. Thus, financial impact on revenues and profit on March 31, 2018 is not known.
Presentation and disclosure requirements
The presentation and disclosure requirements in Ind AS 115 are more detailed than under current Ind AS. The presentation requirements represent a significant change from current practice and significantly increases the volume of disclosures required in the Company''s financial statements. In particular, the Company expects that the notes to the financial statements will be expanded because of the disclosure of significant judgements made particularly for determining the transaction price of those contracts that include variable consideration.
In addition, as required by Ind AS 115, the Company will disaggregate revenue recognised from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. It will also disclose information about the relationship between the disclosure of disaggregated revenue and revenue information disclosed for each reportable segment.
ii) Amendments to Ind 112 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure requirements in Ind AS 112
The amendments clarify that the disclosure requirements in Ind AS 112, other than those in paragraphs B10-B16, apply to an entity''s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal Company that is classified) as held for sale.
These amendments are unlikely to affect the Company''s financial statements.
iii) Amendments to Ind AS 12 Recognition of Deferred Tax Assets for Unrealised Losses
The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.
Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact.
These amendments are effective for annual periods beginning on or after 1 April 2018.
These amendments are not expected to have any impact on the Company as the Company has no deductible temporary differences or assets that are in the scope of the amendments.
iv) Transfers of Investment Property â Amendments to Ind AS 40
The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management''s intentions for the use of a property does not provide evidence of a change in use.
Entities should apply the amendments prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance with Ind AS 8 is only permitted if it is possible without the use of hindsight.
The amendments are effective for annual periods beginning on or after 1 April 2018. The Company will apply amendments when they become effective. However, since Company''s current practice is in line with the clarifications issued, the Company does not expect any effect on its financial statements.
v) Appendix B to Ind AS 21 Foreign Currency Transactions and Advance Consideration
The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the de-recognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or nonmonetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration.
Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognised on or after:
- The beginning of the reporting period in which the entity first applies the Appendix, or
- The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix.
The Appendix is effective for annual periods beginning on or after 1 April 2018. However, since the Company''s current practice is in line with the Interpretation, the Company does not expect any effect on its financial statements.
8 The financial statements for the previous year ended March 31, 2017 prepared in accordance with accounting standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) were jointly audited by the predecessor joint auditor and continuing auditor.
* The above reclassifications in the prior year''s published numbers have been made for better presentation in the financial statements and to conform to the current year''s classification/disclosure. This does not have any impact on the profit and hence no change in the basic and diluted earnings per share of previous year.
* The above restatements does not have any impact at the beginning of the previous year i.e., 01st April, 2016.
Mar 31, 2017
* The Board of Directors of the Company, at its meeting held on January 31, 2017, has approved a proposal to buy back up to 32,00,000 equity shares of the Company for an aggregate amount not exceeding Rs. 80 crore, being 3.2% of the total paid up equity share capital at amount per share not exceeding Rs. 315. During the year, the Company has bought back 5,73,438 equity share out of which 5,46,550 equity shares have been extinguished at 31.03.2017. The balance 26,888 shares has been cancelled post 31st March 2017.
In earlier years, Certain Fixed assets of the Company were revalued at their respective fair value as determined by government approved competent valuer appointed by the Company. The amount of such revaluation was transferred to Business development reserve, as per scheme of arrangement as approved by Hon''ble Gujarat High Court on 30th November, 2008. During the current year, the Company has adjusted the written down book value of revalued assets under business development reserve upon sale/write-off.
The Company had issued 10,000,000/- 10.75% Cumulative Redeemable Preference Shares (CRPS) of Rs. 10/- each, to IDBI Bank Limited during financial year 1999-2000 which was subsequently redeemed by the Company in the financial year 2001 02, pursuant to the provisions of Section 80 of the Companies Act, 1956 and the article 7 of the Article of Association of the Company. Accordingly, the Capital Redemption Reserve account to the extent of 100% of the value of CRPS redeemed (i.e. Rs. 10 Crore), was created out of profit of the Company available for payment of dividend.
An amount of Rs. 0.55 Crore (equivalent to nominal value of the equity shares bought back & cancelled by the Company during the year) has been transferred to Capital Redemption Reserve from General Reserves pursuant to the provisions of Section 69 of the Companies Act, 2013 and the article 7 of the Article of Association of the Company. (Refer Note No. 14) 16.1 Rupee Term Loans from Banks / Institutions have been secured against: -
a) Loan aggregating to Rs.102.45 crores is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company''s Soda Ash Division situated at village Sutrapada, Veraval in Gujarat. The remaining tenure of the loans is 2 to 8 years.
b) Loan aggregating to Rs 202.58 crores is secured by way of first pari passu charge on movable fixed assets of Soda Ash Division situated at village Sutrapada, Veraval, Gujarat excluding assets exclusively charged to other lenders both present and future. The remaining tenure of the loans is 9 years.
c) Loan aggregating to Rs 161.81 crores is secured by way of first pari passu charge on movable fixed assets of Soda Ash Division situated at village Sutrapada, Veraval in Gujarat. The remaining tenure of the loans is 2 to 3 years.
d) Loan aggregating to Rs. 51.85 crores is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company''s Home Textile Division situated at Vapi in Gujarat. The remaining tenure of the loans is to 10 years.
e) Loan aggregating to Rs. 8.69 crores is secured by an exclusive first charge over movable fixed assets situated at Jodia, Jamnagar District, Gujarat, both present and future, created out of the proceeds of the loan. The remaining tenure of the loan is 10 years.
f) Loan aggregating to Rs. 12.96 crores is secured by way of first pari passu charge on movable fixed assets of Home Textile Division situated at Vapi in Gujarat. The remaining tenure of the loans is 1 year.
g) Loan aggregating to Rs.107.86 crores is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company''s Textile Division situated at Madurai, Tamil Nadu. The remaining tenure of the loans is to 10 years.
h) Loan aggregating to Rs. 74.88 crores is secured by extension of first charge on pari passu basis on Factory Land & Building of Textile Division situated at Paravai and Manaparai, Tamil Nadu with other term lenders of the said project. The remaining tenure of the loans is 1 to 3 years.
i) Loan aggregating to Rs. 69.94 crores is secured by first exclusive charge on movable fixed assets of Textile Division situated at Paravai and Manaparai, Tamil Nadu, both present and future, excluding assets exclusively charged to other lenders. The remaining tenure of the loan is 4 years.
j) Loan aggregating to Rs. 47.66 crores is secured by an exclusive first charge on movable fixed assets situated at Tirunelveli District, Tamilnadu, both present and future, created out of the proceeds of the loan. The remaining tenure of the loan is 8 years.
k) Loan aggregating to Rs. 30.22 crores is secured by an exclusive first charge on movable and immovable fixed assets situated at Tirunelveli District, Tamilnadu, both present and future, created out of the proceeds of the loan. The remaining tenure of the loan is 9 years.
l) Loan aggregating to Rs. 45.77 crores is secured by extension of first charge on movable fixed assets of Consumer Product division situated at Chennai and Industrial Salt Division situated at Bhavnagar and exclusive first charge on the factory land and building situated at Thiruporur village, Chengalpattu Taluka, Kancheepuram District, Chennai. The remaining tenure of the loan is 3 years.
m) Out of all the aforesaid secured Loans appearing in note 16 (a) to16 (l) totaling Rs. 916.67 crores, an amount of Rs. 218.71 crores is due for payment in next 12 months and accordingly reported under note no 19 under the head â Other Current financial liabilitiesâ as âcurrent maturities of long term borrowing''.
16.2 Short Term Borrowings: This facility is secured by way of hypothecation on inventory & trade receivables & borrowed as under:
(a) Credit Facilities in Indian Rupees: The facilities availed by way of Cash Credit, Working capital demand loan, Export Packing Credit and Bill Discounting are repayable on demand and carries an average interest rate of 7.66% p.a on the amount outstanding.
(b) Credit Facilities in Foreign Currency : The facilities availed by way of Foreign currency nonresident borrowing, Packing Credit in foreign currency and Buyer''s Credit are repayable as per maturity dates being not more than 1 year and carries an average interest rate of 2.19% p.a on the amount outstanding.
* Provision for mines restoration
The Company provides for the estimated expenditure required to restore quarries and mines. The total estimate of restoration expenses is apportioned over the period of estimated mineral reserves and a provision is made based on minerals extracted during the year. The total estimate of restoration expenses is reviewed periodically, on the basis of technical estimates.
Information as required to be furnished as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) for the year ended March 31, 2017 is given below. This information has been determined to the extent such parties have been identified on the basis of information available with the Company32 Segment information
The Company is primarily engaged in the business of manufacture of Inorganic Chemicals and Textiles and based on this it has two reportable segments:
Inorganic Chemicals segment majorly includes manufacture of Soda Ash which is an important raw material for detergent and glass industry. Major raw materials to manufacture Soda Ash are Salt, limestone, coke, briquette, coal and lignite. The total Inorganic Chemical Segment contributes approx. 60 % of total Indian Standalone revenue.
Textiles segment manufactures cotton yarn and polyester yarn and home textile products. GHCL Limited is one of the largest integrated textile manufacturers own spinning, weaving and processing & dyeing and cutting & sewing manufacturing facility.
The management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Income taxes are managed on Company basis and are not allocated to Operating segments.
Defined Benefit Plan Gratuity (Funded)
The employees'' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of the obligation is determined based on actuarial valuation using the Projected unit Credit Method, which recognizes each year of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
1.elated Party Transactions
a) The following table provides the list of related parties and total amount of transactions that have been entered into with related parties for the relevant financial years.
A) Wholly owned subsidiaries
Dan River Properties LLC Grace Home Fashions LLC
B) Key Managerial Personnel
Mr. R. S. Jalan, Managing Director
Mr. Raman Chopra, CFO & Executive Director (Finance)
Mr. Bhuwneshwar Mishra, General Manager & Company Secretary
C) Non-whole-time directors Mr. Sanjay Dalmia
Mr. Anurag Dalmia
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
2. Hedging activities and derivatives
Derivatives not designated as hedging instruments
The Company uses 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 expected sales and purchases, generally from one to 24 months.
These contracts are not designated in hedge relationships and are measured at fair value through profit or loss. (Refer Note 38(b))
3 Fair Values
Set out below, is a comparison by class of the carrying amounts and fair value of the Company''s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:
The management assessed that cash and cash equivalents, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The following methods and assumptions were used to estimate the fair values:
i The fair value of the financial assets and liabilities is included at the amount at which the instrument is exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
ii The fair values of the FVTOCI financial assets are derived from quoted market prices in active markets.
The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities.
Quantitative disclosures fair value measurement hierarchy for assets as at 31 March 2017:
4.inancial risk management objectives and policies
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. 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 overseas the management of these risks. The Company''s senior management is supported by a Banking and Operations committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company''s senior management 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 expert list teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below.
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, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at 31 March 2017. The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt are all constant.
a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
In order to optimize the Company''s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.
The Company is not exposed the significant interest rate as at a respective reporting date.
b) Foreign currency risk
Foreign Currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to its operating activities. The Company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 12 month periods for hedges of forecasted sales and purchases in foreign currency. The hedging is done through foreign currency forward contracts.
c) Equity price risk
The Company''s listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.
At the reporting date, the exposure to unlisted equity securities at fair value was INR 0.10 crores.
At the reporting date, the exposure to listed equity securities at fair value was INR 8.68 Crore. A decrease of 10% on the NSE/ BSE market index could have an impact of approximately INR 0.86 Crore on the OCI or equity attributable to the Company. An increase of 10% in the value of the listed securities would also impact OCI and equity. These changes would not have an effect on profit or loss.
d) Commodity Risk
The Company is impacted by the price volatility of coal. Its operating activities require continuous manufacture of soda ash, and therefore require a regular supply of coal. Due to the significant volatility of the price of coal in international market, the Company has entered into purchase contract for coal with its designated vendor(s). The price in the purchase contract is linked to the certain indices. The Company''s Commercial Department has developed and enacted a risk management strategy regarding commodity price risk and its mitigation.
e) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Trade Receivables
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on customer profiling, credit worthiness and market intelligence. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.
An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous group''s and assessed for impairment collectively. The calculation is based on exchange losses historical data. The Company does not hold collateral as security. 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.
Financial instruments and cash deposits
Credit risk from balances with banks is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company''s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Banking & Operations Committee. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
The Company''s maximum exposure to credit risk for the components of the balance sheet at 31st March 2017,March 2016 and
1 April 2015 is the carrying amounts as illustrated in Note 9 except for financial guarantees and derivative financial instruments. The Company''s maximum exposure relating to financial guarantees and financial derivative instruments is noted in note on commitments and contingencies and the liquidity table below.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The approach of the Company to manage liquidity is to ensure , as far as possible, that these will have sufficient liquidity to meet their respective liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risk damage to their reputation.
The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.
The table below summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments.
5.apital Management
For the purpose of the Company''s capital management, capital includes issued equity capital, 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 manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company''s policy is to keep the gearing ratio of less than 75%. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.
No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March 2017.
6.ignificant accounting judgments, estimates and assumptions
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses and the accompanying disclosures. Uncertainty about the assumptions and estimates could result in outcomes that require a material adjustment to the carrying value of assets or liabilities affected in future periods
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes:
(i) Judgments
In the process of applying the accounting policies, management has made the following judgments, which have significant effect on the amounts recognized in the Company''s financial statements:
Provisions and contingencies
The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Ind AS 37, âProvisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss.
Assessment of lease contracts
Classification of leases under finance lease or operating lease requires judgment with regard to the estimated economic life and estimated cost of the asset. The Company has analyzed each lease contract on a case to case basis to classify the arrangement as operating or finance lease, based on an evaluation of the terms and conditions of the arrangements.
Assessment of Equity instruments
The Company has designated investments in equity instruments as FVTOCI investments since the Company expects to hold these investment with no intention to sale. The difference between the instrument''s fair value and Indian GAAP carrying amount has been recognized in retained earnings.
(ii) Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Taxes
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Useful lives of property, plant and equipment
The estimated useful lives of property, plant and equipment are based on a number of factors including the effects of obsolescence, demand, competition, internal assessment of user experience and other economic factors (such as the stability of the industry, and known technological advances) and the level of maintenance expenditure required to obtain the expected future cash flows from the asset. The Company reviews the useful life of property, plant and equipment at the end of each reporting date. Post-retirement benefit plans
Employee benefit obligations (gratuity obligation) are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date
7. ESOS Trust owns total 20,46,195 shares, out of which 15,79,922 shares were illegally sold by a party against which ESOS Trust has initiated legal proceedings and 4,66,273 shares are held by Stock Exchange based on an arbitration award. Pending final decision on these shares held by Trust, the Trust will continue for the limited purpose of litigation.
8. Share Based Compensation
In accordance with the Securities and Exchange Board of India (Share Based Employee benefits) Regulations, 2014 and the Guidance Note on Accounting for ''Employees Share-based Payments, the scheme detailed below is managed and administered, compensation benefits in respect of the scheme is assessed and accounted by the Company. To have an understanding of the scheme, relevant disclosures are given below.
a) As approved by the shareholders at their Annual General Meeting held on 23rd July 2015, the Company has got 50,00,000 number of Options under the employee stock option scheme "GHCL ESOS 2015". The following details show the actual status of ESOS granted during the financial year ended on 31st March 2017.
Note: The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note.
Notes to the reconciliation of equity as at 1st April 2015 and 31st March 2016 and Total comprehensive income for the year ended 31st March 2016
1 Fair Valuation of Investments
Under Indian GAAP, investments in equity instruments were classified as long term investments based on the intended holding period and reliability. Long term investments were carried at cost less provision for other than temporary diminution in the value of investments.
Accordingly, the Company has designated investments in equity instruments as FVTOCI investments. The difference between the instrument''s fair value and Indian GAAP carrying amount has been recognized in retained earnings.
2 Derivative Instruments
The fair value of derivative instruments (i.e. forward contracts and options) is recognized under Ind AS whereas the same was not recognized under Indian GAAP. The Company has not designated these derivative instruments as hedging instruments under Indian GAAP as well as under Ind AS. Accordingly, difference on account of fair valuation of these instruments has been adjusted in retained earnings.
3 Borrowings
Under Indian GAAP, transaction costs incurred in connection with borrowings are amortized upfront and charged to profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method.
4 Proposed Dividend
Under Indian GAAP, proposed dividend (including DDT) is recognized as a liability in the period to which it relates, irrespective of when it is declared. Under Ind AS, proposed dividend is recognized as a liability in the period in which it is declared by the Company (usually when approved by shareholders in a general meeting) or paid.
In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability for the year ended 31st March 2015 recorded for the proposed dividend for the year along with dividend distribution tax is de-recognized and provided in the financial year in which it is declared or paid under IND AS.
5 Defined benefit obligation
Both under Indian GAAP and Ind AS, the Company recognizes costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, re-measurements comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus the employee benefit cost is increased by INR 0.89 crore (net of Tax) and re-measurement gains/ losses on defined benefit plans has been recognized in the OCI net of tax.
6 Sale of goods
Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of statement of profit and loss. Thus sale of goods under Ind AS has increased by INR 176.56 Crore for the period ended 31 March 2016 with a corresponding increase in other expense.
7 Deferred tax
Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS has resulted in recognition of deferred tax on temporary differences which was not required under Indian GAAP.
In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies adopted by the Company it has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.
8 Statement of cash flows
The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.
9 Other comprehensive income
Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.
9.irst Time Adoption Of Indian Accounting Standards
These are Company''s first financial statements prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ended 31 March 2017, together with the comparative period data as at and for the year ended 31 March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1 April 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements as at and for the year ended 31 March 2016
Exemptions Applied
Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
1 Mandatory exemptions :
I Estimates
An entity estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP
2 Optional exemptions:
I Deemed Cost for Property Plant & equipment
Ind AS 101 permits a first time adopter to elect to fair value its property, plant and equipment as recognized in financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition or apply principles of Ind AS retrospectively. Ind AS 101 also permits the first time adopter to elect to continue with the carrying value for all of its property plant and equipment as recognized in the financial statements as at the date of transition to Ind AS. This exemption can be also used for intangible assets covered by Ind-AS 38.
Accordingly, as per Ind AS 101, the Company has elected to consider fair value of its property, plant and equipment, capital work in progress and intangibles as its deemed cost on the date of transition to Ind AS.
II Leases
Appendix C to Ind AS 17-" Leases" requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 allows a first-time adopter to determine whether an arrangement existing at the date of transition to Ind AS contains a lease on the basis of facts and circumstances existing at that date. except where the effect is expected to be not material.
The Company has elected to apply this exemption for such contracts/arrangements.
3 Fair value measurement of financial assets and liabilities
Under IGAAP the financial assets and liabilities were being carried at the transaction value.
First-time adopters may apply Ind AS 109 to day one gain or loss provisions prospectively to transactions occurring on or after the date of transition to Ind AS. Therefore, unless a first-time adopter elects to apply Ind AS 109 retrospectively to day one gain or loss transaction, transactions that occurred prior to the date of transition to Ind AS do not need to be retrospectively restated.
The Company has measured its financial assets and liabilities at amortized cost or fair value.
4 Investments in subsidiaries
Ind AS 101 permits the first time adopter to measure investment in subsidiaries in accordance with Ind AS 27 at one of the following:
a) Cost determined in accordance with Ind AS 27 or
b) Deemed cost:
(i) fair value at date of transition
(ii) previous GAAP carrying amount at that date.
The Company has elected to consider previous GAAP carrying amount of its investments in subsidiaries on the date of transition to Ind AS its deemed cost for the purpose of determining cost in accordance with principles of IND AS 27- "Separate financial statements".
5 Embedded Derivatives
As per Ind AS 101 a first-time adopter shall assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date it first became a party to the contract and the date of reassessment. The Company has evaluated all its agreements on the basis of conditions that existed at the later of the date it first became a party to the contract and the date of reassessment.
10.andards issued but not yet effective up to the date of Financial Statements
The amendments to standards that are issued, but not yet effective, up to the date of issuance of the group''s financial statements are disclosed below. The group intends to adopt these standards, if applicable, when they become effective.
The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and has amended the following standard:
I) Amendment to Ind AS 7 Statement of Cash Flows
The amendments to Ind AS 7 requires an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.
On initial application of the amendment, entities are not required to provide comparative information for preceding periods. These amendments are effective for annual periods beginning on or after 1 April 2017. Application of this amendments will not have any recognition and measurement impact. However, it will require additional disclosure in the financial statements.
II) Amendment to Ind AS 102 Share-based Payment
The MCA has issued amendments to Ind AS 102 that address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction, the classification of a share-based payment transaction with net settlement features for withholding tax obligations, and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled. The amendments are effective for annual periods beginning on or after 1 April 2017. Application of this amendments will not have any recognition and measurement impact.
The group will adopt these amendments from their applicability date.
11. The financial statements for the previous year ended March 31, 2016 prepared in accordance with accounting standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) were audited by one of the predecessor joint auditor and continuing joint auditor.
12. revious period figures have been regrouped / reclassified, wherever considered necessary.
Mar 31, 2016
1. In Accordance with the Scheme of Arrangement duly approved by
Hon''ble High Court of Gujarat vide its order dated 30th November 2009,
the Company has not taken any effect in the current financial
statements for the year ended 31 March 2016. Consequently there is no
change in Business Development Reserve.
2. Exceptional items represent one time employees'' separation cost
incurred during the year on account of Voluntary Retirement Scheme
(VRS) given to employees of Soda Ash division. The benefits of VRS would
be accruing over a period of time
3. The following changes have taken place during the year with regard
to Subsidiary Companies
4. Prior Period Item of Rs..0.01 Cr. (Previous year Rs. 0.09 Cr.) is
on account of short provision for consultancy services of earlier year.
5. As per Accounting Standard-15 "Employee Benefits", the disclosures
of Employee Benefits as defined in the Accounting Standard are given
below :
6. Impairment of Assets
In pursuance of Accounting Standard - 28, the Company has reviewed its
carrying cost of assets with value in use (determined based on future
earnings) / net selling price (determined based on valuation). Based on
such review, management is of the view that in the current financial
year impairment of assets is not considered necessary.
7. ESOS Trust owns total 20,46,195 shares, out of which 15,79,922
shares were illegally sold by a party against which ESOS Trust has
initiated legal proceedings and 4,66,273 shares are held by Stock
Exchange based on an arbitration award. Pending final decision on these
shares held by Trust, the Trust will continue for the limited purpose
of litigation.
8. Corporate Social Responsibility ( CSR)
As per Section 135 of the Companies Act 2013 , a CSR committee has been
formed by the company. The area for CSR activities are drinking water /
sanitation, infrastructure for roof rain water harvesting, coastal area
development projects, agriculture, agro based livelihood, irrigation,
animal husbandry, healthcare, education/ literacy enhancement,
employment enhancing vocational skill etc. The funds were primarily
allocated to a corpus and utilised throughout the year on the
activities which are specified in Schedule VII of the Companies Act,
2013.
2.47 The previous year''s/corresponding period''s figures have been
regrouped / reclassified.
Mar 31, 2015
1) Working Capital Loans are secured by way of hypothecation of
stock-in-trade and book debts of Soda Ash / Home Textile Division /
Edible Salt / Textile Divisions and second charge on fixed assets of
Soda Ash Division / Home Textile Division and Textile Division, both
present and future.
2) Specified movable assets referred to in the above notes include all
movable assets of Soda Ash Division, Home Textile Division and Textile
Division both present and future but subject to prior charge created
and / or that may be created in favour of Company''s Bankers on
stock-in-trade for securing borrowing for working capital.
1. Building include a sum of Rs. 497.80 Lacs being cost of office
premises acquired on ownership basis.
2. Leased mines represent expenditure incurred on development of mines.
3. Cash Subsidy amounting to Rs. 823.35 Lacs (previous year Rs. 823.35
Lacs) relating to Home Textile division at Vapi has been reduced from
respective Fixed Assets.
4. As per transitional provision under Schedule-II when the remaining
useful life of the assets is nil, the residual of those assets has been
charged to Statement of Profit and Loss amounting to Rs. 656.12 Lacs in
the year.
5. During the year, the management based on internal and external
technical evaluation and due to Schedule II of the Companies Act, 2013
reassessed the remaining useful life of assets with effect from 1st
April 2014. Accordingly the useful lives of certain assets required a
change from the previous estimate
2.1 Impairment of Assets
In pursuance of Accounting Standard - 28, the Company has reviewed its
carrying cost of assets with value in use (determined based on future
earnings) / net selling price (determined based on valuation). Based on
such review, management is of the view that in the current financial
year impairment of assets is not considered necessary.
2.2 ESOS Trust owns total 20,46,195 shares, out of which 15,79,922
shares were illegally sold by a party against which ESOS Trust has
initiated legal proceedings and 4,66,273 shares are held by Stock
Exchange based on an arbitration award. Pending final decision on these
shares held by Trust, the Trust will continue for the limited purpose
of litigation.
2.3 Corporate Social Responsibility ( CSR)
As per Section 135 of the Companies Act 2013 , a CSR committee has been
formed by the company. The area for CSR activities are drinking water /
sanitation, infrastructure for roof rain water harvesting, coastal area
development projects, agriculture, agro based livelihood, irrigation,
animal husbandry, healthcare, education/ literacy enhancement,
employment enhancing vocational skill etc. The funds were primarily
allocated to a corpus and utilised throughout the year on the
activities which are specified in Schedule VII of the Companies Act,
2013.
2.4 The previous year''s/corresponding period''s figures have been
regrouped / reclassified.
Mar 31, 2014
1.1 In Accordance with the Scheme of Arrangement duly approved by
Hon''ble High Court of Gujarat vide its order dated 30th November 2009,
the Company has taken following effects in the current financial
statements :- a) In accordance with the aforesaid Scheme, goodwill
arising on amalgamation or acquisition or consolidation of financials
statements of subsidiaries and which requires amortisation or
impairment, any unrealizable assets whether fixed or current or tangible
or intangible of the company, any diminution/write off in the value of
the investments in its subsidiaries; whether in India or overseas,
interest and other financial charges paid or payable on borrowings for
subsidiaries by the company or by its subsidiaries or borrowings
guaranteed by the company, mark to market adjustment on derivative
instruments, currency swaps expenses, all the expenses / costs incurred
in carrying out and implementing this Scheme, Integration expenses like
plant shifiting / shutting down, expenses arising on voluntary
retirement offered to the employees of acquired companies, expenses for
suit for bankruptcy including costs associated with existing projects /
subsidiaries / divisions in part and / or whole by the Transferee
Company and any additional depreciation on account of any upward
revaluation of assets are to be charged to Business Development Reserve
Account.
Accordingly Rs. 27,679.47 Lacs (previous year Rs. NIL) has been charged to
Business Development Reserve on account of diminution in the value of
investments and loans & advances to and receivables from subsidiaries.
Any further impairment arising out of such diminution shall be
accounted for in subsequent years upon reasonable certainty that the
same is non realisable and shall be charged to Business Development
Reserve until such reserves exists. Further additional depreciation
arising out of revaluation amounting to Rs.1937.65 Lacs (Previous year Rs.
1934.39 Lacs) has been charged to the Business Development Reserve.
1.2 Exceptional items are in respect of :
(a) Crystallized Loss amounting to Rs.1004.40 Lacs on sale of 8,81,191
Shares held by GHCL Employees Stock Option Trust in line with the
circulars issued by SEBI on January 17, 2013, May 13, 2013 and November
29, 2013 on Employees Stock
Option Scheme (ESOS) and Employees Stock Purchase Scheme, GHCL ESOS
Scheme will cease to be in existence by June 30, 2014 and accordingly
all the shares controlled by the trust have been sold before the
Balance Sheet date.
(b) Consequent to para (a) above, Rs. 240.85 lacs relating to the
provision made in previous years for minimum price appreciation
guarantee @ 20% as per the GHCL ESOS has been written back, since none
of the employees have exercised the option during the period ended 31st
March 2014.
(c) Write off amounting to Rs. 2333.65 Lacs due to permanent diminution
in the value of 20,46,195 shares originally held by GHCL ESOS trust
based on the difference in the average purchase price and current
market value. Of these, 15,79,922 shares were illegally sold by a party
against which ESOS trust has initiated legal proceedings and balance
4,66,273 shares are held by Stock exchange based on an arbitration
award.
1.3 The following changes have taken place during the year with regard
to Subsidiary Companies
a) Liquidation of the company Country Date of Liquidation
ROSEBYS UK LIMITED UK 24th DECEMBER 2013
b) Textile & Design Limited uK and Teliforce Holding India Limited
Cyprus, subsidiaries of the company are under Liquidation since 25th
September, 2009 & 29th January, 2014 respectively.
c) Subsequent to Balance Sheet date, GHCL Rosebys Limited, a step down
subsidiary in uK has been voluntarily dissolved on 6th May 2014.
1.4 unquoted investments in subsidiary companies are of long term
strategic value in the opinion of the management. Except as adjusted in
the financial statements, the current diminution in the value of these
investments is temporary in nature considering the inherent value and
nature of investee''s business proposal and hence no provision is
required.
1.5 In accordance with the requirements of Accounting Standard - 19
Leases issued by the Institute of Chartered Accountants of India,
future obligation/rights as at Balance Sheet date for lease
arrangements amount to:
1.6 The value of closing stock of Finished Goods includes excise duty
not paid Rs. 85.97 Lacs (previous year Rs. 269.52 Lacs). The value of
Lignite at mines includes excise duty, royalty & clean energy cess of Rs.
19.43 Lacs (previous year Rs. 37.66 Lacs) on the closing stock. The Value
of Salt at Salt Fields includes Cess & Royalty of Rs. 18.57 Lacs
(previous year Rs. 24.27 Lacs) on Closing Stock. This has however, no
impact on the profit for the year.
1.7 Prior Period Item of Rs. 16.75 Lacs (Previous year Rs. 3.92 Lacs) is
on account of excess provision for expenses of earlier year.
1.8 Loans & Advances includes Rs. 3308.99 Lacs (previous year Rs. 7617.29
Lacs) paid as advance for purchase of materials and services
outstanding for more than six months and considered good.
1.9 As per Accounting Standard-15 "Employee benefits", the disclosures
of Employee benefits as Defined in the Accounting Standard are given
below :
Defined Contribution Plan
Provident Fund and Superannuation Fund are Defined Contribution Plan.
Contribution paid for Provident Fund and Superannuation Fund are
recognised as expense for the year :
The Company''s Provident Fund is exempt under section 17 of Employees''
Provident Fund and Miscellaneous Provision Act, 1952. Conditions for
grant of exemption stipulate that the employer shall make good,
defciency if any, in the interest rate declared by the trust vis-Ã -vis
statutory rate
Defined benefit Plan
Gratuity (Funded)
The employees'' gratuity fund scheme managed by a Trust is a Defined
benefit plan. The present value of the obligation is determined based on
actuarial valuation using the Projected unit Credit Method, which
recognises each year of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation.
Leave encashment (unfunded)
The Company recognises the leave encashment expenses in the Statement
of profit & Loss based on actuarial valuation.
The expenses recognised in the Statement of profit & Loss and the Leave
encashment liability at the beginning and at the end of the year :
1.10 Related Party Transactions a Subsidiaries & Associate :
Indian England N.V.
Indian Wales N.V.
Dan River Properties LLC
Grace Home Fashions LLC
Rosebys Interiors India Limited
Teliforce Holding India Limited ( under Liquidation since 29th January,
2014)
Textile & Design Limited (under Liquidation since 25th September, 2009)
Rosebys uK Limited (Liquidated as at 24th December 2013)
GHCL Rosebys Limited (Liquidated as at 6th May, 2014)
Indian Britain B.V. (Liquidated as at 30th November, 2012)
Colwell & Salmon Communications Inc. (Liquidated as at 1st April, 2013)
DM Solar Farm Pvt Limited
TCP Limited (w.e.f. 31st January, 2014)
b Key Management Personnel:
Mr. R. S. Jalan, Managing Director
Mr. Raman Chopra, CFO & Executive Director - Finance
Mr. Tej Malhotra, Sr. Executive Director - Operations (upto 4th May
2012)
c Relative of Key Management Personnel:
Mrs. Bharti Chopra, w/o Mr. Raman Chopra Ravi Shanker Jalan, HuF
d significant infuence
Dalmia Centre for Research & Development
1.11 Intangible Assets
Intangible Asset, meeting the defnition as per the provisions of
Accounting Standard - 26 Intangible Assets issued by The Institute of
Chartered Accountants of India, comprises of Sofitware and Trade mark
Expenditure on purchased sofitware, ERP System, IT related expenses and
Trade mark is being written off over a period of three years.
1.12 Impairment of Assets
In pursuance of Accounting Standard - 28 - Impairment of Assets issued
by the Institute of Chartered Accountants of India, the Company has
reviewed its carrying cost of assets with value in use (determined
based on future earnings) / net selling price (determined based on
valuation). Based on such review, management is of the view that in the
current financial year impairment of assets is not considered necessary.
1.13 The GHCL ESOS Scheme, approved by the shareholders in their Extra
Ordinary General Meeting held on 19th March, 2008 will cease to be in
existence by 30th June 2014. The Consequential accounting entries have
been passed as exceptional item in the Statement of profit and Loss
during the year.
1.14 The previous year''s/corresponding period''s figures have been
regrouped / reclassified.
Mar 31, 2013
1.1 In Accordance with the Scheme of Arrangement duly approved by
Hon''ble High Court of Gujarat vide its order dated 30th November 2009''
the Company has taken following effects in the current fi nancial
statements :- a) In accordance with the aforesaid Scheme'' goodwill
arising on amalgamation or acquisition or consolidation of fi nancials
statements of subsidiaries and which requires amortisation or
impairment'' any unrealizable assets whether fi xed or current or
tangible or intangible of the company'' any diminution/write off in the
value of the investments in its subsidiaries; whether in India or
overseas'' interest and other fi nancial charges paid or payable on
borrowings for subsidiaries by the company or by its subsidiaries or
borrowings guaranteed by the company'' mark to market adjustment on
derivative instruments'' currency swaps expenses'' all the expenses /
costs incurred in carrying out and implementing this Scheme''
Integration expenses like plant shifting / shutting down'' expenses
arising on voluntary retirement offered to the employees of acquired
companies'' expenses for suit for bankruptcy including costs associated
with existing projects / subsidiaries / divisions in part and / or
whole by the Transferee Company and any additional depreciation on
account of any upward revaluation of assets are to be charged to
Business Development Reserve Account.
Accordingly NIL (previous year Rs. 10330.51 Lacs) has been charged to
Business Development Reserve on account of diminution in the value of
investments in and loans & advances to and receivables from
subsidiaries. Any further impairment arising out of such diminution
shall be accounted for in subsequent years upon reasonable certainty
that the same is non realisable and shall be charged to Business
Development Reserve until such reserves exists. Further additional
depreciation arising out of revaluation amounting to Rs. 1934.39 Lacs
(Previous year Rs. 1936.31 Lacs) has been charged to the Business
Development Reserve.
b) As per the Scheme'' NIL (Previous year Rs. 9989.96 Lacs) pertaining to
investment in subsidiary has been written off and adjusted against
General Reserve.
1.2 Exceptional items are in respect of write off of investment of
Rs.1934.53 Lacs in Indian Britain B. V. (subsidiary company liquidated on
30th November'' 2012) and Rs. 2023.79 Lacs on account of arbitration
settlement entered into by GHCL Employees Stock Option Trust for loss
on investment in company shares held by the ESOS Trust.
1.3 Provision for taxation has been made during the year under the
Minimum Alternate Tax (MAT) as per the provision of the Income tax
Act''1961 which can be set off in subsequent years based on the
provisions of Section 115JB.
1.4 The Company has received draft assessment order from the Income
tax Department for the Assessment Year 2009-10 (relevant to Accounting
Year 2008-09) showing addition of Rs. 3339.66 Lacs in the total income on
account of various disallowances. The Company is disputing and denying
additions proposed in draft assessment order based on legal opinion
available with it and has approached the Dispute Resolution Panel (DRP)
for adjudication. Hence no provision is considered necessary in the
books of accounts.
1.5 The value of closing stock of Finished Goods includes excise duty
not paid Rs. 269.52 Lacs (previous year Rs.62.70 Lacs). The value of
Lignite at mines includes excise duty'' royalty & clean energy cess of Rs.
37.66 Lacs (previous year Rs. 22.16 Lacs) on the closing stock. The Value
of Salt at Salt Fields includes Cess & Royalty of Rs. 24.27 Lacs
(previous year Rs. 19.11 Lacs) on Closing Stock.
This has however'' no impact on the profi t for the year.
1.6 Prior Period Item of Rs. 3.92 Lacs (Previous year Rs. 18.89 Lacs) is
on account of excess provision for expenses of earlier year.
1.7 Loans & Advances includes Rs. 7''617.29 Lacs (previous year Rs. 7650.18
Lacs) paid as advance for purchase of materials and services
outstanding for more than six months and considered good.
1.8 As per Accounting Standard-15 "Employee Benefi ts"'' the
disclosures of Employee Benefi ts as defi ned in the Accounting
Standard are given below :
Defi ned Contribution Plan
Provident Fund and Superannuation Fund are Defi ned Contribution Plan.
Contribution paid for Provident Fund and Superannuation Fund are
recognised as expense for the year :
1.9 Related Party Transactions a Subsidiaries & Associate :
Indian England N.V. Indian Wales N.V.
Dan River Properties LLC
Grace Home Fashions LLC
GHCL Rosebys Limited
Rosebys Interiors India Limited
Teliforce Holding India Limited
Rosebys UK Limited (under Liquidation since12th November'' 2012)
Textile & Design Limited (under Liquidation since 25th September'' 2009)
GHCL Inc. (Dissolved as at 14th May'' 2012)
Indian Britain B.V. (Liquidated as at 30th November'' 2012)
S C GHCL Upsom SA (ownership upto 12th November'' 2012)
Colwell & Salmon Communications Inc. (Liquidated as at 1st April'' 2013)
Fabient Textile Limited (Dissolved as at 31st January 2012)
Rosebys International Limited (Dissolved as at 31st January 2012)
DM Solar Farm Pvt Limited ( w. e. f. 04th June'' 2012)
b Key Management Personnel:
Mr. R. S. Jalan'' Managing Director
Mr. Tej Malhotra'' Sr. Executive Director - Operations (upto 4th May
2012)
Mr. Raman Chopra'' Executive Director - Finance
c Relative of Key Management Personnel:
Mrs. Bharti Chopra'' w/o Mr. Raman Chopra Ravi Shanker Jalan'' HUF
d Signifi cant infl uence
Dalmia Centre for Research & Development ( w. e. f. 1st August'' 2012)
1.10 Intangible Assets
Intangible Asset'' meeting the defi nition as per the provisions of
Accounting Standard - 26 Intangible Assets issued by The Institute of
Chartered Accountants of India'' comprises of Software and Trade mark
Expenditure on purchased software'' ERP System'' IT related expenses and
Trade mark is being written off over a period of three years.
1.11 Impairment of Assets
In pursuance of Accounting Standard - 28 - Impairment of Assets issued
by the Institute of Chartered Accountants of India'' the Company has
reviewed its carrying cost of assets with value in use (determined
based on future earnings) / net selling price (determined based on
valuation). Based on such review'' management is of the view that in the
current fi nancial year impairment of assets is not considered
necessary.
1.12 The details of amounts outstanding to Micro'' Small and Medium
Enterprises under the "Micro'' Small and Medium Enterprises Development
Act'' 2006 (MSMED Act)'' based on the available information with the
Company are as under''
1.13 Category-wise quantitative data about derivative instruments that
are outstanding are disclosed as per the requirement of Accounting
Standard - 30 issued by the Institute of Chartered Accountants of
India.
1.14 The shareholders in their Extra Ordinary General Meeting held on
19th March'' 2008 had approved the Employees Stock Option Scheme (ESOS
2008). Accordingly'' the Employees Stock Option granted pursuant to ESOS
2006 (Series - 1) had been cancelled and equivalent number of options
were granted by the compensation committee meeting held on 24th March''
2008. Under ESOS 2008 the compensation committee has assured a minimum
price appreciation guarantee @ 20% on the Exercise Price i.e. Rs. 76.95
per share i.e. the latest available closing price prior to the date of
grant of options i.e. 24th March'' 2008.
As per SEBI (ESOS & ESPS) Guidelines 1999 the Employees Stock Option
Scheme is administered by the registered Trust named GHCL Employees
Stock Option Trust (ESOS Trust). The balance amount of interest free
loan that the Company has advanced for the year for the purpose of
purchase of shares from the open market for allotment of shares to the
eligible employees upon exercising their option from time to time is of
Rs. 4''353.57 Lacs (Previous year 6''377.36 Lacs).
The current market value of the shares held by ESOS Trust is lower than
the cost of acquisition of these shares by Rs. 3''274 Lacs which is on
account of market volatility. The impact of fall in market value'' if
any would be appropriately considered by the company in its Statement
of Profi t and Loss at the time of exercise of Options by the eligible
employees. As per ESOS scheme'' 15'' 65''000 option have been vested with
the eligible employees as on March 24th 2010 with an exercise period of
4 years ending on 24th March 2014. However'' in line with the circulars
issued by SEBI on January 17'' 2013 and May 13'' 2013 on Employees Stock
option Scheme and Employees Stock Purchase Scheme'' GHCL ESOS Scheme
will cease to be in existence by December 31'' 2013 and accordingly all
the shares held by the trust will be disposed off on or before December
31'' 2013. None of the employees have exercised the option during the
period ended 31 March 2013.
The total number of shares purchased by ESOS Trust was 4''995''386
shares. Of these'' 1''579''922 shares were illegally sold by a party
against which ESOS trust has initiated legal proceedings. Pursuant to
arbitration award dated February 14'' 2013'' ESOS trust has set off
Rs.1''057.00 Lacs Loan taken from various companies against 2''068''000
shares pledged on their behalf to third parties.
1.15 The previous years/corresponding period fi gures have been
regrouped/reclassifi ed.
Mar 31, 2012
Rupee Term Loans from Banks / Institutions have been secured against :-
a) Loan aggregating to Rs. 17432.16 Lacs is secured by extension of first
charge on pari passu basis, by way of equitable mortgage on immovable
properties of the Soda Ash Division situated at Sutrapada, Veraval,
Gujarat and extension of hypothecation charge on movable assets, both
present and future of the company's Soda Ash division situated at
village - Sutrapada, Veraval in Gujarat with other term lenders of the
said project. The remaining tenure of the loans is 4 to 6 years.
b) Loan aggregating to Rs. 6878.49 Lacs is secured by exclusive charge on
the specific fixed assets created out of the proceeds of the loan for
Company's Soda Ash Division situated at village Sutrapada, Veraval in
Gujarat. The remaining tenure of the loans is 7 to 9 years.
c) Loan aggregating to Rs. 16435.14 Lacs is secured by way of first pari
passu charge on movable fixed assets of Soda Ash Division situated at
village Sutrapada, Veraval in Gujarat. The remaining tenure of the
loans is 1 to 5 years.
d) Loan aggregating to Rs. 8130.50 Lacs is secured by first charge on
pari passu basis by way of equitable mortgage on fixed assets of the
Textile Division situated at Vapi, Gujarat and hypothecation of movable
assets both present and future of the Company's Textile Division at
Vapi, Gujarat with other term lenders of the said project. The said
loan is availed under Technology upgradation Fund Scheme for Textile.
The remaining tenure of the loans is 3 to 4 years.
e) Loan aggregating to Rs. 1317.35 Lacs is secured by exclusive charge on
the specific fixed assets created out of the proceeds of the loan for
Company's Home Textile Division situated at Vapi in Gujarat. The
remaining tenure of the loans is 7 to 10 years.
f) Loan aggregating to Rs. 3600.00 Lacs is secured by first charge on
pari passu basis by way of equitable mortgage on Factory Land &
Building of Textile Division situated at Paravai and Manaparai, Tamil
Nadu and hypothecation of specified movable assets, both present and
future of the Company's Textile Division. The said loan is availed
under Technology upgradation Fund Scheme for Textile. The remaining
tenure of the loans is 3 to 5 years.
g) Loan aggregating to Rs. 2452.62 Lacs is secured by exclusive charge on
the specific fixed assets created out of the proceeds of the loan for
Company's Textile Division situated at Madurai, Tamil Nadu. The
remaining tenure of the loans is 7 to 10 years.
h) Loan aggregating to Rs. 10748.18 Lacs is secured by extension of first
charge on pari passu basis on Factory Land & Building of Textile
Division situated at Paravai and Manaparai, Tamil Nadu with other term
lenders of the said project. The remaining tenure of the loans is 1 to
4 years.
i) Loan aggregating to Rs. 346.95 Lacs is secured by an exclusive first
charge by way of equitable mortgage on immovable properties pertaining
to Wind Mill Division - I situated at Irukkandurai village, Tirunelveli
District in the state of Tamil Nadu and hypothecation of all present
and future movable assets of Wind Mill Division - I. The said loan is
availed under Technology upgradation Fund Scheme for Textile. The
remaining tenure of the loan is 3 years.
j) Loan aggregating to Rs. 503.55 Lacs is secured by an exclusive first
charge on all present and future movable assets of Wind Mill Division -
II situated at Chinnaputhur, near Poolavadi in the state of Tamil Nadu.
The said loan is availed under Technology upgradation Fund Scheme for
Textile. The remaining tenure of the loan is 3 years.
k) Loan aggregating to Rs. 1750.00 Lacs is secured by extension of first
charge on all present movable assets of Edible Salt division situated
at Thiruporur, Vedaranyam and Industrial Salt Division and exclusive
first charge on the factory land and building situated at Thiruporur
village, Chengalpattu Taluka, Kancheepuram District. The remaining
tenure of the loan is 2 years.
l) Loan aggregating to Rs. 4583.33 Lacs is secured by an exclusive charge
on immovable property situated at Plot No.B-38, Section-I, New Okhla
Industrial Area (Noida), Dist.-Gautam Budh Nagar, uttar Pradesh. The
remaining tenure of the loan is 4 years
m) Loan aggregating to Rs. 3000.00 Lacs is secured by an exclusive charge
on immovable property situated at GHCL House, Swastik Society,
Navrangpura, Ahmedabad, Gujarat. The remaining tenure of the loan is 5
years.
n) Out of all the aforesaid secured Loans appearing in note 2.3 (a) to
2.3 (m) totalling Rs. 77178.27 lacs, an amount of Rs. 7960.83 lacs is due
for payment in next 12 months and accordingly reported under note no
2.9 under the head " others Current Liabilities" as Rs.current maturities
of Long Term Debt'.
1) Working Capital Loans are secured by way of hypothecation of
stock-in-trade and book debts of Soda Ash / Home Textile Division /
Edible Salt / Textile Divisions and second charge on fixed assets of
Soda Ash Division / Home Textile Division and Textile Division, both
present and future.
2) Specified movable assets referred to in the above notes include all
movable assets of Soda Ash Division, Home Textile Division and Textile
Division both present and future but subject to prior charge created
and / or that may be created in favour of Company's Bankers on
stock-in-trade for securing borrowing for working capital.
1. Deletion of Building include a sum of Rs. 91.40 Lacs being cost of
office premises acquired on ownership basis sold during the year.
2. Leased mines represent expenditure incurred on development of
mines.
3. Cash Subsidy amounting to Rs. 855.70 Lacs (previous year Rs. 823.35
Lacs) relating to Home Textile division at Vapi has been reduced from
respective Fixed Assets.
4. Some of the fixed assets have been revalued as on 1st April 2008 as
per Scheme of Arrangement duly approved by Hon'ble High Court of
Gujarat vide its order dated 30th November 2009 by Rs. 1,01,184.68 lacs
(refer note no. 2.28).
5. Deletion of Free Hold Land includes Rs. 548.97 lacs being revaluation
amount of land of Sree Meenakshi Mills Division at Madurai and Plant &
Machinery of Rs. 9.04 Lacs of Soda Ash Division sold during the year.
*During the year the company has been impacted due to highly volatile
forex market and huge devaluation of Rupee. The total impact of this
fluctuation resulted into an exchange loss of Rs. 5101.11 Lakh for the
year. The Company had some borrowings in foreign currency instruments
which carry lower interest rate as compared to Indian Rupee borrowing
rate, resulting into to lower interest cost of Rs. 3919.84 lakh.
Therefore, out of total exchange loss of Rs. 5101.11 lakh, a sum of Rs.
3919.84 has been recognized under finance cost as "Applicable loss on
foreign currency transactions and translation" and balance Rs. 1181.27
Lakh has been shown as Foreign Exchange Loss.
1.1 In Accordance with the Scheme of Arrangement duly approved by
Hon'ble High Court of Gujarat vide its order dated 30th November 2009,
the Company has taken following effects in the current financial
statements :-
a) In accordance with the aforesaid Scheme, goodwill arising on
amalgamation or acquisition or consolidation of financials statements
of subsidiaries and which requires amortisation or impairment, any
unrealizable assets whether fixed or current or tangible or intangible
of the company, any diminution/write off in the value of the
investments in its subsidiaries; whether in India or overseas, interest
and other financial charges paid or payable on borrowings for
subsidiaries by the company or by its subsidiaries or borrowings
guaranteed by the company, mark to market adjustment on derivative
instruments, currency swaps expenses, all the expenses / costs incurred
in carrying out and implementing this Scheme, Integration expenses like
plant shifting / shutting down, expenses arising on voluntary
retirement offered to the employees of acquired companies, expenses for
suit for bankruptcy including costs associated with existing projects /
subsidiaries / divisions in part and / or whole by the Transferee
Company and any additional depreciation on account of any upward
revaluation of assets are to be charged to Business Development Reserve
Account.
Accordingly Rs.10,330.51 Lacs (previous year Rs. 2,654.45 Lacs) has been
charged to Business Development Reserve on account of diminution in the
value of investments in and loans & advances to and receivables from
subsidiaries. Any further impairment arising out of such diminution
shall be accounted for in subsequent years upon reasonable certainty
that the same is non realisable and shall be charged to Business
Development Reserve until such reserves exists. Further additional
depreciation arising out of revaluation amounting to Rs. 1,936.31 Lacs
(Previous year Rs. 1,936.95 Lacs) has been charged to the Business
Development Reserve. Also an amount of Rs. 2,958.90 lakhs (Previous year
Rs. 151.62 lakh gain and ignored) being marked to market impact on
derivatives has been charged to Business Development Reserve. An amount
of Rs. 10,000 Lacs charged to Business Development Reserve as provision
in earlier year has been written back during the current year.
b) As per the Scheme, a sum of Rs. 9,989.96 Lacs (Previous year
Rs.18,475.11 Lacs) pertaining to investment in/receivables from
subsidiaries have been written off and adjusted against General
Reserve.
1.2 Rates and Taxes includes Rs. 10 Lacs (previous year Rs. 10.00 Lacs)
for Wealth Tax
b) During the year, a wholly owned step down subsidary Indian England
N.V. (Netherlands) has been converted into a wholly owned direct
subsidary of the company on 21st February 2012.
c) Textile & Design Limited uK, subsidiary of the company which had
filed for administration during 2008-09 is under Liquidation since 28th
September, 2009.
d) During the year GHCL upsom, Romania, a step down subsidiary of the
company, the plant of which was lying closed since January 2010 due to
impending gas issues, has been put under administration on 21st
November 2011. The Company is in dialogue with the Judical
Administrator to assess the feasiblity of a re-organization plan.
e) Subsequent to Balance Sheet date, GHCL Inc, a step down subsidiary
in uSA has been voluntary dissolved on 14th May 2012.
1.3 unquoted investments in subsidiary companies are of long term
strategic value in the opinion of the management. Except for as
adjusted in the financial statements (as per Note 2.12 above), the
current diminution in the value of these investments is temporary in
nature considering the inherent value and nature of investee's business
proposal and hence no provision is required.
1.4 Rosebys Interiors India Limited, a subsidiary of the company has
been classified as a Non-current investment during the year.
1.5 In accordance with the requirements of Accounting Standard - 19
Leases issued by the Institute of Chartered Accountants of India,
future obligation/rights as at Balance Sheet Date for lease
arrangements amount to
1.6 The value of closing stock of Finished Goods includes excise duty
not paid Rs. 62.70 Lacs (previous year Rs.75.16 Lacs). The value of Lignite
at mines includes excise duty, royalty & clean energy cess of Rs. 22.16
Lacs (previous year Rs. 19.60 Lacs) on the closing stock. The Value of
Salt at Salt Fields includes Cess & Royalty of Rs. 19.11 Lacs (previous
year Rs. 15.11 Lacs) on Closing Stock. This has however, no impact on
the profit for the year.
1.7 Prior Period Item of Rs. 18.89 Lacs is on account of excess
provision of legal expenses of earlier year.
1.8 Loans & Advances includes Rs. 7,650.18 Lacs (previous year Rs. 7524.94
Lacs) paid as advance for purchase of materials and services
outstanding for more than six months and considered good.
1.9 As per Accounting Standard-15 "Employee Benefits", the disclosures
of Employee Benefits as defined in the Accounting Standard are given
below :
The Company's Provident Fund is exempt under section 17 of Employees'
Provident Fund and Miscellanous Provision Act, 1952. Conditions for
grant of exemption stipulate that the employer shall make good,
deficiency if any, in the interest rate declared by the trust vis-a-vis
statutory rate.
Defined Benefit Plan
Gratuity (Funded)
The employees' gratuity fund scheme managed by a Trust is a defined
benefit plan. The present value of the obligation is determined based
on actuarial valuation using the Projected Unit Credit Method, which
recognises each year of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation.
Leave Encashment (Unfunded)
The Company recognises the leave encashment expenses in the Statement
of Profit and Loss based on actuarial valuation.
The expenses recognised in the Statement of Profit and Loss and the
Leave encashment liability at the beginning and at the end of the year:
1.10 Related Party Transactions a Subsidiaries :
Colwell & Salmon Communications Inc.
Indian Britain B.V.
Indian England N.V.
Indian Wales N.V.
Dan River Properties LLC
Grace Home Fashions LLC
GHCL Rosebys Limited
Rosebys uK Limited
S C GHCL upsom SA (under administration since 21st November, 2011)
Rosebys Interiors India Limited
Teliforce Holding India Limited
GHCL Inc.(Dissolved as at 14th May, 2012)
Textile & Design Limited (under Liquidation since 28th September, 2009)
Fabient Textile Limited (Dissolved as at 31st January, 2012)
Rosebys International Limited (Dissolved as at 31st January, 2012) GHCL
International Inc. (Dissolved as at 13th September, 2011)
b Key Management Personnel:
Mr. R. S. Jalan, Managing Director
Mr. Tej Malhotra, Sr. Executive Director - Operations
Mr. Raman Chopra, Executive Director - Finance
c Relative of Key Management Personnel:
Mrs. Bharti Chopra, w/o Mr. Raman Chopra
1.11 Intangible Assets
Intangible Asset, meeting the definition as per the provisions of
Accounting Standard - 26 Intangible Assets issued by The Institute of
Chartered Accountants of India, comprises of :
a Salt Pans
Expenditure on the development of salt pans is being written off over a
period of five years
b Software
Expenditure on purchased software, ERP System and IT related expenses
is being written off over a period of three years.
1.12 Impairment of Assets
In pursuance of Accounting Standard - 28 - Impairment of Assets issued
by the Institute of Chartered Accountants of India, the Company has
reviewed its carrying cost of assets with value in use (determined
based on future earnings) / net selling price (determined based on
valuation). Based on such review, management is of the view that in the
current financial year impairment of assets is not considered
necessary.
1.13 The Company has exercised the option granted vide notification
F.No.17/33/2008/CL.V dated December 29, 2011 issued by the Ministry of
Corporate Affairs and accordingly the exchange differences arising on
revaluation of long term foreign currency monetary items for the year
ended 31st March, 2012 has been recognised over the maturity period.
The unamortised balance is presented as "Foreign Currency Monetary
item Translation Difference Account" (FCMTDA). Accordingly an amount
of Rs. 428. 68 lacs has been chagred to the Statement of Profit and Loss
and an aggregate amount of Rs. 996.15 lacs is deferred and recognised as
an asset under FCMTDA.
1.14 The Company provides for the estimated expenditure required to
restore quarries and mines. The total estimate of restoration expenses
is apportioned over the estimate of mineral reserves and a provision is
made based on minerals extracted during the year. The total estimate of
restoration expenses will be review periodically, on the basis of
technical estimates.
1.15 The shareholders in their Extra Ordinary General Meeting held on
19th March, 2008 had approved the Employees Stock Option Scheme (ESOS
2008). Accordingly, the Employees Stock Option granted pursuant to ESOS
2006 (Series - 1) had been cancelled and equivalent number of options
were granted by the compensation committee meeting held on 24th March,
2008. under ESOS 2008 the compensation committee has assured a minimum
price appreciation guarantee @ 20% on the Exercise Price i.e. Rs. 76.95
per share i.e. the latest available closing price prior to the date of
grant of options i.e. 24th March, 2008.
As per SEBI (ESOS & ESPS) Guidelines 1999 the Employees Stock Option
Scheme is administered by the registered Trust named GHCL Employees
Stock Option Trust (ESOS Trust). The Company has advanced interest free
loan of Rs. 6,377.36 Lacs (Previous year 6,403.20 Lacs) to the Trust for
the purpose of purchase of shares from the open market for allotment of
shares to the eligible employees upon exercising their option from time
to time.
The current market value of the shares held by ESOS Trust is lower than
the cost of acquisition of these shares by Rs. 5,692 Lacs which is on
account of market volatility. The impact of fall in market value, if
any would be appropriately considered by the company in its Statement
of Profit and Loss at the time of exercise of Options by the eligible
employees. As per ESOS scheme, 15, 65,000 option have been vested with
the eliglible empolyees as on March 24th 2010 with an exercise period
of 4 years ending on 24th March 2014. However none of the employees
have exercised the option during the period ended 31 March 2012.
The total number of shares purchased by ESOS Trust was 4,995,386
shares. Of these, 1,579,922 shares were illegally sold by a party
against which ESOS trust has initiated legal proceedings and has got a
favorable award from the Court. Additionally, ESOS Trust had taken a
loan of Rs.1,057.00 Lacs from various companies and had created a
third-party pledge of 2,068,000 shares on behalf of these lender
companies. The lender companies could not fulfill their obligations
toward the aforesaid third parties and consequently the pledge was
invoked by these parties. ESOS trust got a favorable arbitration award
against the lender companies whereby the lender companies would restore
2,068,000 shares in favour of ESOS Trust upon ESOS trust repaying their
loan of Rs. 967.00 Lacs.
The details as per regulation 12 of SEBI (ESOS & ESPS) Guidelines 1999
are as follows:
* The stock options in respect of two employees i.e. Mr. Nikhil Sen
(75000 options, resigned on 31-3-2011) and Mr. Jagdish Daral (20000
options, resigned on 3-12-2011) have lapsed as they have not exercised
their vested options within 60 days of date of their resignations.
** Mr. P Surlivelu (20000 options, retired on 30-4-2010), Mr. N K
Masand (20000 options, retired on 30-9-2010) and Mr. T Malayarasan
(20000 options, retired on 30-6-2011) have not exercised their vested
options.
1.16 The previous year's /corresponding period's figures have been
regrouped / reclassified to be in conformity with the Revised Schedule
VI of the Companies Act. 1956.
Mar 31, 2011
1.
As at As at
31st March, 31st March,
2011 2010
(Rs in (Rs in
Lacs) lacs)
b) Contingent Liabilities :
(i) Guarantees issued by banks 1,316.07 1,108.84
(ii) Letters of Credit 76.05 526.68
(ii) Bills discounted with banks
(since realized) 3,512.80 989.77
(iv) Claims against the Company not
acknowledged as debts
- Income Tax & Wealth Tax 140.49 48.66
- Sales Tax / VAT 5.99 3.99
- Excise & Service Tax 2,769.16 2,205.70
- Other claims 620.00 736.91
(v) Corporate guarantee to Bank on
behalf of subsidiaries of the Company 45,192.84 63,298.69
(vi) Premium on redemption of Foreign
Currency Convertible Bonds - 5,134.80
2. In Accordance with the Scheme of Arrangement duly approved by Hon'ble
High Court of Gujarat vide its order dated 30th November 2009, the
Company has taken following effects in the current financial statements
:-
a) Gains realised /(premium) paid on account of buyback/redemption
and cancellation of 2,900 (Previous year 3,900) Foreign Currency
Convertible Bonds (FCCBs) of USD 10,000 each at discount /(premium)
amounting to (Rs 926.81 Lacs) (Previous year Rs 2357.36 Lacs) has been
transferred to Business Development Reserve Account in accordance with
the Scheme.
b) In accordance with the aforesaid Scheme, goodwill arising on
amalgamation or acquisition or consolidation of financials statements
of subsidiaries and which requires amortisation or impairment, any
unrealizable assets whether fixed or current or tangible or intangible
of the company, any diminution/write off in the value of the
investments in its subsidiaries; whether in India or overseas, interest
and other financial charges paid or payable on borrowings for
subsidiaries by the company or by its subsidiaries or borrowings
guaranteed by the company, mark to market adjustment on derivative
instruments, currency swaps expenses, all the expenses / costs incurred
in carrying out and implementing this Scheme, Integration expenses like
plant shifting / shutting down, expenses arising on voluntary
retirement offered to the employees of acquired companies, expenses for
suit for bankruptcy including costs associated with existing projects /
subsidiaries / divisions in part and / or whole by the Transferee
Company and any additional depreciation on account of any upward
revaluation of assets are to be charged to Business Development Reserve
Account.
Accordingly Rs 2654.45 Lacs (previous year Rs 4,242.70 Lacs) has been
charged to Business Development Reserve on account of diminution in the
value investments in and loans & advances to and receivables from
subsidiaries. Any further impairment arising out of such diminution
shall be accounted for in subsequent years upon reasonable certainty
that the same is non realisable and shall be charged to Business
Development Reserve until such reserves exists. Further additional
depreciation arising out of revaluation amounting to Rs 1936.95 Lacs
(Previous year Rs 1,936.95 Lacs) has been charged to the Business
Development Reserve.
c) As per the Scheme, a sum of Rs 18,475.11 Lacs (Previous year Rs
16,622.24 Lacs) pertaining to receivables from subsidiaries have been
written off and adjusted against General Reserve.
d) As per the Scheme, the Profit and Loss Account Balance as appearing
in the Balance Sheet of the Company as on 31st March 2010 shall be in
part or full, without any further act, instrument or deed, stand
re-organised and be appropriated to the General Reserve, as may be
considered appropriate by the management in the interest of the
company. Accordingly Rs 17,500.00 Lacs (Previous year Rs 15,000 Lacs)
has been transferred from Profit and Loss Balance to General Reserve
Account.
3. Provision for taxation includes Rs 10.00 Lacs (previous year Rs 12.00
Lacs) for Wealth Tax .
4. The following changes have taken place during the year with regard to
Subsidiary Companies
b) Textile & Design Limited UK, subsidiary of the company which had
filed for administration during 2008-09 is under Liquidation since 28th
September, 2009.
5. Unquoted investments in subsidiary companies are of long term
strategic value in the opinion of the management. Except for as
adjusted in the financial statements, the current diminution in the
value of these investments is temporary in nature considering the
inherent value and nature of investee's business proposal and hence no
provision is required.
6. Rosebys Interiors India Limited, a subsidiary, was incorporated with
a view to separately set up home textiles retail segment and with an
the intention to divest ownership and control in the near future. Hence
such investment is classified as a current investment. Management is
actively looking at divestment opportunity and has accordingly engaged
a Merchant Banking Firm to achieve its objective of divestment.
8. The value of closing stock of Finished Goods includes excise duty not
paid Rs 75.16 Lacs (previous year Rs 36.65 Lacs). The value of Lignite
at mines includes excise duty, royalty & clean energy cess of Rs 19.60
Lacs (previous year Rs 0.74 Lacs) on the closing stock. The Value of
Salt at Salt Fields includes Cess & Royalty of Rs 15.11 Lacs (previous
year Rs 38.95 Lacs) on Closing Stock. This has however, no impact on
the profit for the year.
9. Prior Period Item of Rs 64.29 Lacs is on account of reversal of
Excess provision for Wealth Tax and expenses.
10. Loans & Advances includes Rs 7,524.94 Lacs (previous year Rs 7348.08
Lacs) paid as advance for purchase of materials and services
outstanding for more than six months and considered good.
11. As per Accounting Standard-15 "Employee Benefits", the disclosures
of Employee Benefits as defined in the Accounting Standard are given
below :
The Company's Provident Fund is exempted under section 17 of Employees'
Provident Fund and Miscellaneous Provision Act, 1952. Conditions for
grant of exemption stipulate that the employer shall make good,
deficiency if any, in the interest rate declared by the trust vis-ÃÂ -vis
statutory rate.
Defined Benefit Plan
Gratuity (Funded)
The employees' gratuity fund scheme managed by a Trust is a defined
benefit plan. The present value of the obligation is determined based
on actuarial valuation using the Projected Unit Credit Method, which
recognises each year of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation.
Leave Encashment (Unfunded)
The Company recognises the leave encashment expenses in the Profit &
Loss Account based on actuarial valuation.
12. a. Related Party Transactions Subsidiaries :
Colwell & Salmon Communications Inc.
Indian Britain B.V.
Indian England N.V.
Indian Wales N.V.
GHCL Inc.
GHCL International Inc.
Dan River Properties LLC
Grace Home Fashions LLC
GHCL Rosebys Limited
Textile & Design Limited
Rosebys UK Limited
S C GHCL Upsom SA
Rosebys Interiors India Limited
Fabient Textile Limited
Rosebys International Limited
Teliforce Holding India Limited
Old Apparel Inc (Dissolved as at 7th April 2010)
Old Apparel Properties Inc. (Dissolved as at 7th April 2010)
Textile & Design (No.3) (Dissolved as at 22nd June 2010)
Dan River Inc. (Dissolved as at 10th September 2010)
Dan River International Limited (Dissolved as at 10th September 2010)
Dan River Factory Stores Inc. (Dissolved as at 10th September 2010)
The Bibb Company LLC (Dissolved as at 10th September 2010)
Fabient Global Limited (Dissolved as at 31st December 2010)
b. Key Management Personnel:
Mr. R. S. Jalan, Managing Director
Mr. Tej Malhotra, Sr. Executive Director - Operations
Mr. Raman Chopra, Executive Director - Finance
c. Relative of Key Management Personnel:
Mrs. Bharti Chopra, w/o Mr. Raman Chopra
13. Deferred Revenue Expenditure
Deferred Revenue Expenditure comprises of carrying amount as per
Accounting Standard - 26 on Intangible Assets issued by The Institute
of Chartered Accountants of India.
Voluntary Retirement Scheme Expenses
Compensation under the Company's voluntary retirement scheme
paid/provided is being written off equally over a period of three
years.
14. Intangible Assets
Intangible Asset, meeting the definition as per the provisions of
Accounting Standard - 26 Intangible Assets issued by The Institute of
Chartered Accountants of India, comprises of :
a. Salt Pans
Expenditure on the development of salt pans is being written off over a
period of five years.
b. Software
Expenditure on purchased software, ERP System and IT related expenses
is being written off over a period of three years.
15. Impairment of Assets
In pursuance of Accounting Standard - 28 - Impairment of Assets issued
by the Institute of Chartered Accountants of India, the Company has
reviewed its carrying cost of assets with value in use (determined
based on future earnings) / net selling price (determined based on
valuation). Based on such review, management has provided for an
appropriate impairment of assets.
16. Category-wise quantitative data about derivative instruments that
are outstanding are disclosed as per the requirement of Accounting
Standard - 30 issued by the Institute of Chartered Accountants of
India.
b) The Company entered the derivative instruments to hedge the foreign
currency risk of fluctuation and protect interest rate risk and not for
speculation purposes. Mark to Market profit on outstanding derivatives
instruments as on 31st March 2011 stood Rs 151.62. lacs (Previous Year
loss Rs 511.34 lacs) arising from hedging transactions by the company
for its foreign currency related exposures. The company has not taken
credit for the profit on mark to market basis during the year.Since the
same would considered on maturity of the contracts.
17. The shareholders in their Extra Ordinary General Meeting held on
19th March, 2008 had approved the Employees Stock Option Scheme (ESOS
2008). Accordingly, the Employees Stock Option granted pursuant to ESOS
2006 (Series - 1) had been cancelled and equivalent number of options
were granted by the compensation committee meeting held on 24th March,
2008. Under ESOS 2008 the compensation committee has assured a minimum
price appreciation guarantee @ 20% on the Exercise Price i.e. Rs 76.95
per share i.e. the latest available closing price prior to the date of
grant of options i.e. 24th March, 2008. Company has made a appropriate
provison for a same during the year.
As per SEBI (ESOS & ESPS) Guidelines 1999 the Employees Stock Option
Scheme is administered by the registered Trust named GHCL Employees
Stock Option Trust (ESOS Trust). The Company had advanced interest free
loan of Rs 6,403.20 Lacs (Previous year 6,430.10 Lacs) to the Trust for
the purpose of purchased of shares from the open market for allotment
of shares to the eligible employees upon exercising their option.
The current market value of the shares held by ESOS Trust is lower than
the cost of acquisition of these shares by Rs 5,395 Lacs which is on
account of market volatility. The impact of fall in market value, if
any would be appropriately considered by the company in its profit and
loss account at the time of exercise of Options by the eligible
employees. As per ESOS scheme, 15, 65,000 option have been vested with
the eliglible empolyees March 24th 2010. However none of the employees
has exercised the option during the year ended 31 March 2011.
The total number of shares purchased by ESOS Trust was 4,995,386
shares. Of these, 1,579,922 shares were illegally sold by a party
against which ESOS trust has initiated legal proceedings and has got a
favorable award from the Court. Additionally, ESOS Trust had
taken a loan of Rs 1,057.00 Lacs from various companies and had created
a third-party pledge of 2,068,000 shares on behalf of these lender
companies. The lender companies could not fulfill their obligations
toward the aforesaid third parties and consequently the pledge was
invoked by these parties. ESOS trust got a favorable arbitration award
against the lender companies whereby the lender companies would restore
2,068,000 shares in favour of ESOS Trust upon ESOS trust repaying their
loan of Rs 967.00 Lacs.
The details as per regulation 12 of SEBI (ESOS & ESPS) Guidelines 1999
are as follows:
Particulars Details
a) No of Options granted 16,55,000 (Each option is equivalent
to one equity share on exercise of
option)
b) Pricing Formula Rs 76.95 (Market Price i.e. the latest
available closing price prior to the
date of grant of options)
c) Options Vested 15,65,000 (Vesting period is two years
from the date of grant i.e. March 24,
2008 to March 24, 2010)
d) Options Exercised Nil
e) Total Number of shares
arising as a result of
exercise of options Nil
f) Option Lapsed Nil
g) Variation of Terms of
Options Nil
h) Money realized by
exercise of options Nil
i) Total Number of Options 16,55,000
j) Number of options
lapsed for 5 employees
left/retired during/earlier 90,000 year
k) Total Number of Options
in force as at 31st March,
2011 1,565,000
l) Number of employees to
whom options are granted 33
(i) Senior Managerial person at the time of grant of option
Name No. of Name No. of
Options Options
Granted Granted
Mr. R.S. Jalan 200,000 Mr. BRD 75,000
Krishnamoorthy
Mr. Tej Malhotra 125,000 Mr. R S Pandey 75,000
Mr. Raman Chopra 100,000 Mr. N N Radia 75,000
Mr. Sunil Bhatnagar 100,000 Mr. M 75,000
Sivabalasubra
maniun
Mr. K V Rajendran 100,000 Mr. Neeraj Jalan 75,000
Mr. Nikhil Sen 75,000
(ii) Any other employee who receives a grant in None
any one year of options amounting to 5% or more
of option granted during that year
(iii) Identified employees who where granted None
options, during any one year, equal to or
exceeding 1% of the issued capital (excluding
outstanding warrants and conversions) of the
Company at the time of grant.
m) Diluted Earning Per Share (EPS) pursuant Not Applicable
to issue of shares on exercise of option
calculated in accordance with Accounting
Standard (AS) 20 "Earning Per Share"
n) Where the Company has calculated the Not Applicable
employee compensation cost using the
intrinsic value of the stock options,
the difference between the employee
compensation cost so computed and the
employee compensation cost that shall have
been recognized if it had used the fair value
of the options, shall be disclosed. The impact
of this difference on profits and on EPS of
the company shall also be disclosed.
o) Weighted Average exercise prices and weighted Not Applicable
average fair values of options shall be disclosed
separately for options whose exercise price
either equals or exceeds or is less than the
market price of the stock.
p) A description of the method and significant Options are
assumptions used during granted
the year to estimate the fair values of options, at Market
including the following weighted average price
information :
Risk - Free interest Rate Not Applicable
Expected Life Not Applicable
Expected Volatility Not Applicable
Expected Dividends Not Applicable
The price of the underlying share in the
market at the time of grant Rs 76.95 per
of option share
18. Subsequent to the Balance Sheet date, GHCL Upsom, Romania, a step
down subsidiary of the Company, the plant of which was lying closed
since January 2010 due to impending gas issues, has been put under
administration on 8th June, 2011. The Company is in dialogue with
Bankers and government agencies to work out a feasible re-organisation
plan.
19 Previous year figures have been regrouped and reclassified wherever
necessary.
Mar 31, 2010
1 Provision for taxation includes Rs. 12.00 Lacs (previous year Rs.
15.00 Lacs) for Wealth Tax.
2 During the earlier year the operations of certain subsidiaries have
been adversely affected due to the unprecedented Global meltdown. As a
result of the meltdown certain operating subsidiaries of the Company
have had financial difficulties. Accordingly the Company has not
accounted for interest income on loans granted to all its subsidiary
companies as a matter of prudence.
3 Sundry Debtors, Creditors and Loans and Advances are subject to
confirmation and consequential adjustment, if any.
4 Pursuant to the Guidelines on Buyback of Foreign Currency Convertible
Bonds (FCCBs) issued by Reserve Bank of India (RBI) and subsequent
approval from the RBI, the Company has bought back and cancelled 3,900
(Previous year 1,100) FCCBs of Face Value of USD 10,000 each at a
discount. At the Balance Sheet date FCCBs worth USD 29 Million
(Previous year USD 68 Million) were outstanding. Subsequent to the
Balance Sheet date, the Company has further bought back 725 bonds of
USD 10,000 each.
5 Unquoted investments in subsidiary companies are of long term
strategic value in the opinion of the management. Except for as
adjusted in the financial statements, the current diminution in the
value of these investments is temporary in nature considering the
inherent value and nature of investees business proposal and hence no
provision is required.
6 Rosebys Interiors India Limited, a wholly owned subsidiary, was
incorporated with a view to separately set up home textiles retail
segment and with an the intention to divest ownership and control in
the near future. Hence such investments are classified as a current
investments. Management is actively looking at divestment opportunity
and subsequent to the Balance Sheet date, the company has signed a non
binding MOU with regard to the divestment of its stake in retail
business, for which company expects to have a positive outcome.
7 Provision for doubtful debts includes Rs. 76.07 Lacs for balance
receivable from Product Direct Limited due to an unfavorable decree
issued . The sundry debtors balance shall be written off after
appropriate approval from Reserve Bank of India is granted.
8 In accordance with the requirements of Accounting Standard - 19
Leases issued by the Institute of Chartered Accountants of India,
future obligation/rights as at Balance Sheet Date for lease
arrangements amount to
9 The value of closing stock of Finished Goods includes excise duty
not paid Rs. 36.65 Lacs (previous year Rs.190.99 Lacs). The value of
Lignite at mines includes royalty of Rs. 0.74 Lacs (previous year Rs.
7.56 Lacs) on the closing stock. The Value of Salt at Salt Fields
includes Cess & Royalty of Rs. 38.95 Lacs (previous year Rs. 23.45
Lacs) on Closing Stock. This has however, no impact on the profit for
the year.
10 Prior Period Item of Rs. 11.29 Lacs is on account of provision for
repairs and maintenance of machinery due to non receipt of invoice.
11 Loans & Advances includes Rs. 7,348.08 Lacs (previous year Rs.
7,281.59 Lacs) paid as advance for purchase of materials and services
outstanding for more than six months and considered good.
12 As per Accounting Standard-15 "Employee Benefits", the disclosures
of Employee Benefits as defined in the Accounting Standard are given
below :
Defined Contribution Plan
Provident Fund and Superannuation Fund are Defined Contribution Plan.
Contribution paid for Provident Fund and Superannuation Fund are
recognised as expense for the year :
The Companys Provident Fund has applied for exemption under section 17
of Employees Provident Fund Act, 1952. Conditions for grant of
exemptions stipulates that the employer shall make good deficiency, if
any, in the interest rate declared by the trust vis-a-vis statutory
rate.
Defined Benefit Plan
Gratuity (Funded)
The employees gratuity fund scheme managed by a Trust is a defined
benefit plan. The present value of the obligation is determined based
on actuarial valuation using the Projected Unit Credit Method, which
recognises each year of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. Leave Encashment (Unfunded)
The Company recognises the leave encashment expenses in the Profit &
Loss Account based on actuarial valuation.
The expenses recognised in the Profit & Loss Account and the Leave
encashment liability at the beginning and at the end of the year:
13 a Related Party Transactions Subsidiaries :
Colwell & Salmon Communications Inc.
Indian Britain B.V.
Indian England N.V.
Indian Wales N.V.
GHCL Global Sourcing Limited (Dissolved w.e.f. from 3rd June , 2009)
GHCL Inc.
GHCL International Inc.
Dan River Inc. (Upto 20th April, 2008)
Dan River International Limited (Upto 20th April, 2008)
Dan River Factory Stores Inc. (Upto 20th April, 2008)
Dan River Properties LLC
The Bibb Company LLC ((Upto 20th April, 2008)
Old Apparel Inc
Old Apparel Properties Inc.
GHCL Rosebys Limited
Textile and Design Limited
Textile & Design (No.1) Limited (Dissolved as at 23rd Sept, 2009)
Textile and Design (No.2) Limited (Dissolved as at 23rd Sept, 2009)
Textile & Design (No.3) Rosebys UK Limited S C GHCL Upsom SA Rosebys
Interiors India Limited Fabient Global Limited Fabient Textile Limited
Grace Home Fashions LLC Rosebys International Limited Teliforce Holding
India Limited
b Key Management Personnel:
Mr. R. S. Jalan, Managing Director Mr. Tej Malhotra, Sr. Executive
Director - Operations Mr. Raman Chopra, Executive Director - Finance c
Relative of Key Management Personnel: Mrs. Bharti Chopra, w/o Mr. Raman
Chopra
14 Deferred Revenue Expenditure
Deferred Revenue Expenditure comprises of carrying amount as per
Accounting Standard - 26 on Intangible Assets issued by The Institute
of Chartered Accountants of India.
a Voluntary Retirement Scheme Expenses
Compensation under the Companys voluntary retirement scheme
paid/provided is being written off equally over a period of three
years.
b Prepayment Premium
Premium paid on prepayment of Term Loans/Non - Convertible Debenture is
charged off over the tenure of the loan in proportion to the principle
amount outstanding.
15 Intangible Assets
Intangible Asset, meeting the definition as per the provisions of
Accounting Standard - 26 Intangible Assets issued by The Institute of
Chartered Accountants of India, comprises of:
a Salt Pans
Expenditure on the development of salt pans is being written off over a
period of five years.
b Software
Expenditure on purchased software, ERP System and IT related expenses
is being written off over a period of three years.
c Goodwill
Goodwill is amortized over a period of five years.
16 Impairment of Assets
In pursuance of Accounting Standard - 28 - Impairment of Assets issued
by the Institute of Chartered Accountants of India, the Company has
reviewed its carrying cost of assets with value in use (determined
based on future earnings) / net selling price (determined based on
valuation). Based on such review, management is of the view that in the
current financial year impairment of assets is not considered
necessary.
17 The shareholders in their Extra Ordinary General Meeting held on
19th March, 2008 had approved the Employees Stock Option Scheme (ESOS
2008). Accordingly, the Employees Stock Option granted pursuant to ESOS
2006 (Series -1) had been cancelled and equivalent number of options
were granted by the compensation committee meeting held on 24th March,
2008. Under ESOS 2008 the compensation committee has assured a minimum
price appreciation guarantee @ 20% on the Exercise Price i.e. Rs. 76.95
per share i.e. the latest available closing price prior to the date of
grant of options i.e. 24th March, 2008. Company has made an appropriate
provison for a same during the year
As per SEBI (ESOS & ESPS) Guidelines 1999 the Employees Stock Option
Scheme is administered by the registered Trust named GHCL Employees
Stock Option Trust (ESOS Trust). The Company has advanced interest free
loan of Rs. 6,430.10 Lacs (Previous year 6,371.10 Lacs) to the Trust
for the purpose of purchase of shares from the open market for
allotment of shares to the eligible employees upon exercising their
option from time to time.
The current market value of the shares held by ESOS Trust is lower than
the cost of acquisition of these shares by Rs. 5,288.52 Lacs which is
on account of market volatility. The impact of fall in market value, if
any would be appropriately considered by the company in its profit and
loss account at the time of exercise of Options by the eligible
employees. As per ESOS scheme, 15, 65,000 options have been vested with
the eliglible empolyees on March 24, 2010. However, none of the
employees have exercised the options during the period ended 31 March
2010.
The total number of shares purchased by ESOS Trust was 4,995,386
shares. Of these, 1,579,922 shares were illegally sold by a party
against which ESOS trust has initiated legal proceedings and has got a
favorable award from the Court. Additionally, ESOS Trust had taken a
loan of Rs.1,057.00 Lacs from various companies and had created a
third-party pledge of 2,068,000 shares on behalf of these lender
companies. The lender companies could not fulfill their obligations
toward the aforesaid third parties and consequently the pledge was
invoked by these parties. ESOS trust got a favorable arbitration award
against the lender companies whereby the lender companies would restore
2,068,000 shares in favour of ESOS Trust upon ESOS trust repaying their
loan of Rs. Lacs.
18 Previous year figures have been regrouped and reclassified wherever
necessary.