Mar 31, 2023
7.1 Additions to CWIP includes borrowing costs amounting to A 23.38 million (For the year ended March 31, 2022 A 508.80 million) and allocated / will be allocated to different class of assets. The rate used to determine the amount of borrowing costs eligible for capitalisation was 5.22 % (For the year ended March 31, 2022 was 6.20%) which is the effective interest rate on borrowings.
7.2 An amount of A 0.90 million (Year ended March 31, 2022 A 76.93 million) towards Finance cost on lease liability has been capitalized as a component of cost of Capital Work-in-Progress (CWIP).
7.3 An amount of A 0.71 million (Year ended March 31, 2022 A 32.35 million) towards depreciation charged to Right-of-Use Asset has been capitalized as a component of cost of Capital Work-in-Progress (CWIP).
7.4 Capital Work-in-Progress (CWIP) includes Unsecured Rupee Term Loan for Capex [refer note 22.7.1] and Unsecured Foreign Currency Term Loan (FCNR) (B) for Capex [refer note 22.8].
8.1 Includes land measuring 102.995 acres is held for capital appreciation.
8.2 There is no contractual obligation to purchase, construct or develop investment property.
8.3 The net amount recognised in the Statement of Profit and Loss for investment property for current year is A Nil (Year ended March 31, 2022 A Nil).
8.4 No Right-of-Use Asset has been included in the investment property as given above.
8.5 The best evidence of fair value is current prices in an active market for similar properties.
8.6 The Company has considered the fair value of the freehold land amounting to A 412.00 million as at March 31, 2023 (As at March 31, 2022 A 409.24 million) based on the valuation carried out by independent valuer report dated November 17, 2022.
9.1 Goodwill includes A 4.04 million towards excess consideration paid over net assets acquired for acquisition of Nitrogen plant.
9.2 Goodwill has been recognised in the books of the Company on account of amalgamation of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) as per the clarification in Indian Accounting Standard (Ind AS) Transition Facilitation Group (ITFG) Clarification Bulletin 9.
11.2.1 Details of Investment: Startup Fund
During the year the company has subscribed 5,94,207 noâs units of ONGC Startup Fund Trust (registered with SEBI as an Alternative Investment Fund category I) for total consideration of A 5.94 million. Further an amount of A 1.00 million has been paid towards subscription of units pending allotment as at March 31, 2023 [refer note 13 (f)].
The investment in Mangalam Retail Services Limited, Mangalore SEZ Limited and ONGC Startup Fund have been measured at fair value through profit or loss. The management has considered the fair value (level 3 hierarchy) of such investment equivalent to the carrying amount as at reporting period.
12.1 Company has policy of providing financial assistance to Schedule Caste / Schedule Tribe category dealers for Retail Outlets under the Corpus Fund Scheme (CFS). Under this scheme upon written request seeking working capital loan / assistance by dealer, the company provides working capital loan for a full cycle of operation (equivalent to seven days sales volume) of the dealer. This working capital loan as well as the interest at the specified rate thereon will be recovered in hundred equal monthly instalments from the thirteenth month of commissioning of the dealer operated Retail Outlet.
13.1 As per the Government of Indiaâs scheme for Promotion of flagging of merchant ships in India by providing subsidy support to Indian Shipping companies in global tenders floated by Ministries / Departments / Central Public Sector Enterprises (CPSEs), the eligible Indian shipping company shall be paid the subsidy amount along with the charter hire amount as per the contract term by the Company and the Company will be then reimbursed by Government under the scheme.
13.2 Earmarked in favour of Commercial Taxes Authority.
14.1 During the financial year ended March 31, 2020, the Company opted to settle Income Tax Disputes under the Direct Tax Vivad Se Vishwas Act, 2020, and accordingly, a sum of A 1,084.76 million payable under the said scheme was charged as prior year tax in the Statement of Profit and Loss in the financial year ended March 31, 2020. Pursuant to this, the tax assets and liabilities were reclassified for the year ended March 31, 2020. The tax assets of A 2,908.37 million and liabilities of A 1,084.76 million pertaining to assessment years for which the Company exercised the option were considered as current tax assets and current tax liabilities respectively, as the same were expected to be settled within a year. The same treatment is continued in the financial year 2021-22 and also during current financial year, as the final orders under the said scheme are awaited.
14.2 The Taxation Laws (Amendment) Act, 2019 inserted a new section 115BAA in the Income Tax Act, 1961, which gives domestic companies a non-reversible option to pay corporate tax at reduced rate, subject to certain conditions. Such option can be exercised for the financial year 2019-20 or any subsequent financial year. The Company did not exercise the option for the financial years ended March 31, 2020, March 31, 2021 and March 31, 2022. The financial statements of the Company for the year ended March 31, 2023 have been prepared considering the old Corporate Tax rate. However, the option for the new lower tax rate for the financial year 2022-23 can be exercised by the Company on or before the due date for filing of the return of income for the financial year 2022-23.
15.1 Includes A 2,125.25 million relating to an appeal in the matter of classification of Reformate import pending before Honâble CESTAT and other amount paid under protest.
16.1 The cost of inventories recognized as an expense includes A Nil million (Year ended March 31, 2022 A 222.82 million) in respect of write down of inventories to net realisable value. There has been no reversal of such write down in current year and previous year.
16.2 Includes stock lying with others amounting to A Nil million (As at March 31, 2022 A 5.23 million)
16.3 The method of valuation of inventories has been stated in Note 3.19.
17.1 Generally, the Company enters into long-term sales arrangement with Oil Marketing Companies for domestic sales and short term arrangement with others. Besides, the export of products are undertaken through term contracts, spot international tenders, short term tender arrangements, B2B arrangements and supplies to SEZ customers. The average credit period on sales ranges from 7 to 45 days (Year ended March 31, 2022 ranges from 7 to 45 days). Interest is not charged on trade receivables for the applicable credit period from the date of invoice. For delayed period of payments, interest is charged as per respective arrangements, which is upto 2 % per annum (Year ended March 31, 2022 upto 2% per annum) over the applicable bank rate on the outstanding balance.
17.3 Usually, the Company collects all receivables from its customers within the applicable credit period. The Company assesses impairment on trade receivables from all the customers on facts and circumstances relevant to each transaction.
17.4 Secured by bank guarantees / letter of credit received from customers.
17.5 The Company has concentration of credit risk due to the fact that the Company has significant receivables from customers mentioned in note 17.2, however these customers are reputed and creditworthy.
17.6 There are no outstanding receivables due from directors or other officers of the Company.
20.1 Terms/rights attached to Equity shares
The Company has two classes of equity shares having a par value of A 10 per share and A 10,000 per share. Each holder of equity shares is entitled to one vote per share. The dividend (if any) proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
20.5 Equity shares reserved for issue under options and contracts or commitments for the sale of shares or disinvestment: Nil (As at March 31, 2022: Nil).
20.6 Equity shares of A 10 each (equivalent to 303,550 equity shares of A 10 each) were forfeited in the year 2009-10 against which amount originally paid up was A 654,000.
21.1 An amount of A 51.99 million as at March 31, 2023 (As at March 31, 2022 A 42.17 million) shown as deemed equity which denotes the difference between the fair value of Corporate Guarantee received from Holding Company and the consideration paid by the company.
21.2 The Company created capital redemption reserve on redemption of preference share capital during the financial years 2011-12 and 2012-13.
21.3 The Company created securities premium on issue of equity share capital and the same can be utilized as per the requirement of the Companies Act, 2013.
21.4 The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to Statement of Profit and Loss.
21.5 Other reserve represents excess consideration paid towards acquisition of non-controlling interest in erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) from non-controlling share holder.
21.6 The amount that can be distributed by the Company as dividends to its equity shareholders is determined considering the requirements of the Companies Act, 2013 and the dividend distribution policy of the Company. Thus, the amount reported in general reserves are not entirely distributable.
21.7 The company has a dividend distribution policy in line with SEBI (LODR) Regulation, 2016, Department of Investment and Public Asset Management (DIPAM) guidelines, Provisions of Companies Act, 2013, Companies (Declaration & Payment of Dividend) Rules, 2014 and other guidelines to the extent applicable. As per the guidelines with respect to payment of dividend issued by DIPAM, Government of India, the company is required to pay a minimum annual dividend of 30% of PAT or 5% of the net-worth, whichever is higher subject to maximum dividend permitted under extant legal provisions. Nonetheless, CPSEs are expected to pay the maximum dividend permissible under the Act under which a CPSE has set up, unless lower dividend proposed to be paid is justified after the analyses of the aspects on case to case basis viz. net-worth of CPSE and its capacity to borrow, Long Term Borrowings, CAPEX / Business Expansion needs, Retention of profit for further leveraging in line with the CAPEX needs; and Cash and Bank balance. Though the company endeavors to declare dividend as per these guidelines, during the Financial Year, considering Company''s Capital Expenditure plans and loan repayments due in FY 2023-24 and cash position of the company, the Company did not pay/declare dividends as prescribed by the DIPAM. The cumulative dividend for 2021-22 and 2022-23 as per the guidelines works out to A 16,781 million. The Company has represented (August 2022) to the Ministry of Petroleum and Natural Gas being its Administrative Ministry for getting exemption from payment of dividend for financial year 2021-22 as prescribed by DIPAM. The reply of the Ministry of Petroleum and Natural Gas was awaited (March 2023).
22.1 External Commercial Borrowings (ECB) :
22.1.1 ECB-1 amounting to A 4,107.30 million as at March 31,2023 (As at March 31, 2022 A 11,356.37 million) are USD denominated loans and carries variable rate of interest which is six month Libor plus spread (Interest rate as at March 31, 2023 is 6.13 % and interest rate as at March 31, 2022 was 1.32%).
22.1.2 ECB-2 taken by the erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) amounting to A 125.14 million as at March 31, 2023 (As at March 31, 2022 A 671.13 million) are USD denominated Loans and carries variable rate of interest, which is six month libor plus spread (Interest Rate as at March 31, 2023 is 7.21% and Interest rate as at March 31, 2022 was 3.89%).
22.1.3 ECB-1 is secured by first pari passu charge over immovable Property, Plant & Equipment and first ranking pari passu charge over movable Property, Plant & Equipment (including but not limited to Plant and Machinery, Spares, Tools, Furniture, Fixture, Vehicles and all other Movable Property, Plant & Equipment) both present and future.
22.1.4 ECB-2 is secured by first pari passu charge over all immovable and movable properties both present and future and second charge on all current assets of the erstwhile subsidiary company OMPL and after merger on MRPL.
22.1.5 A 4,232.44 million (As at March 31, 2022 of A 8,135.45 million) is repayable within one year i.e. Current Maturities of long term debt has been shown as Current Borrowing.
22.2 Foreign Currency Borrowings (FCTL) :
22.2.1 Foreign Currency Borrowings taken by the erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) are USD denominated Loans and carries variable rate of interest, which is linked with six month Libor & three month SOFR plus spread (Interest Rate as at March 31, 2023 is 7.25% & 6.10% and Interest rate as at March 31, 2022 was 2.93%).
22.2.2 Foreign Currency Borrowing is secured by way of first pari passu charge on Fixed Assets of the Company both present and future.
22.2.3 A 5,555.03 million (As at March 31, 2022 of A 3,026.81 million) is repayable within one year i.e. Current Maturities of long term debt has been shown as Current Borrowing.
22.3.1 Loan from OIDB taken by the Company carries fixed rate of interest (Interest rate as at March 31, 2023 and March 31, 2022 is in range of 6.01% to 7.98% ).
22.3.2 OIDB loan is secured by way of first ranking pari passu charge by way of hypothecation / mortgage only on Property, Plant & Equipment / projects financed out of loan proceeds of OIDB.
22.3.3 A 1,485.63 million (As at March 31, 2022 of A 1,485.63 million) is repayable within one year i.e. Current Maturities of long term debt has been shown as Current Borrowings.
22.4 Interest Free Loan from Govt. of Karnataka - VAT Loan
22.4.1 This Loan represents amounts payable on account of âInterest free loanâ received from Government of Karnataka. This interest free loan against VAT will be repayable from March 31, 2028.
22.4.2 The benefit of a Government loan at a below-market rate of interest is treated as a government grant (Ind AS 20). The Interest free loan is recognised and measured in accordance with Ind AS 109, Financial Instruments. The benefit of the Interest free loan is measured as the difference between the initial carrying value of the loan determined in accordance with Ind AS 109, and the proceeds received. The benefit is accounted for in accordance with this Standard.
22.4.3 Interest Free Loan from Govt.of Karnataka - VAT Loan are secured by bank guarantees given by the company.
22.5.1 Working capital borrowings pertaining to the company amounting to A 180.26 million as at March 31, 2023 (As at March 31, 2022 A 181.94 million) from consortium banks are secured by way of first ranking pari passu charge by way of hypothecation of Companyâs stocks of Raw Material, Finished Goods, Stock-in-Process, Stores, Spares, Components, Trade receivables, outstanding Money Receivables, Claims, Bills, Contract, Engagements, Securities both present and future and further secured by second ranking pari passu charge over companies movable and immovable property (all Property, Plant & Equipment) both present and future.
Short Term Rupee loan pertaining to erstwhile subsidiary company OMPL amounting to A Nil as at March 31, 2023 (As at March 31, 2022 A 5,000.00 million) is sanctioned by earmarking existing Overdraft Limit of a Bank which is secured by way of first pari passu charge on inventories, receivables and other current assets and second pari passu charge on the fixed assets of the erstwhile subsidiary company OMPL.
22.7.1 Term loan - 1 amounting to A 2,342.96 million as at March 31, 2023 (As at March 31, 2022 A 2,343 million) carries variable rate of interest which is linked to RBI Repo Rate plus spread (Interest rate as at March 31, 2023 is 7.95 % and Interest rate as at March 31,2022 was 5.75%).
22.7.2 Term loan-2 taken by the erstwhile subsidiary company OMPL amounting to A 9,868.26 million as at March 31, 2023 (As at March 31, 2022 A 9,870.22 million) carries variable rate of interest which is linked to One Month MCLR rate (Interest rate as at March 31, 2023 is 8.10% and Interest rate as at March 31,2022 was 6.35%).
22.10.1 Refinancing of existing two External Commercial Borrowing of USD 150 million and USD 400 million with a single loan of USD 550 million has been done during the Financial year. The loan refinanced is USD denominated and linked to three month SOFR plus spread (Interest rate as at March 31, 2023 is 6.06 % and Interest rate as at March 31, 2022 was 2.56%)
22.11 Deferred Payment Liabilities - From Government of Karnataka :
22.11.1 Deferred payment liability against tax payable under Central Sales Tax (CST) represents amount payable on account of âInterest free loanâ received from Govt. of Karnataka. This sum of the deferred CST loan against Central Sales Tax (CST) shall be repayable in five equal annual instalments without interest after the closure of deferment period.
22.11.2 The benefit of a Government loan at a below-market rate of interest is treated as a government grant (Ind AS 20). The Interest free loan is recognised and measured in accordance with Ind AS 109, Financial Instruments. The benefit of the Interest free loan is measured as the difference between the initial carrying value of the loan determined in accordance with Ind AS 109, and the proceeds received. The benefit is accounted for in accordance with this Standard.
22.12 Bill Discounting Facility :
22.12.1 Unsecured Bill discounting facility against Non LC bill drawn on erstwhile Subsidiary Company âONGC Mangalore Petrochemicals Limitedâ (OMPL) amounting to Nil as at March 31, 2023 (As at March 31, 2022 A 1,149.30 million) (Interest rate as at March 31, 2023 is Nil and March 31, 2022 was 4.20% ).
22.13 Other Working Capital Loan :
22.13.1 Unsecured short term working capital loan from bank amounting to A 16,955.86 million as at March 31, 2023 (As at March 31, 2022 A 21,136.40 million) (Interest rate as at March 31, 2023 is in range of 6.84% to 7.15% and March 31, 2022 was in range of 3.88% to 4.00% ).
22.13.2 Unsecured Short Term Rupee loan from Banks pertaining to erstwhile subsidiary company OMPL amounting to Nil as at March 31, 2023 (As at March 31, 2022 A 17,213.47 million) (Interest rate as at March 31, 2023 is Nil and interest rate as at March 31,2022 was in the range of 4.10% to 4.20%).
22.14 The repayment schedules disclosed above are based on contractual cash outflows and hence will not reconcile to carrying amounts of such borrowings which are accounted at amortised cost.
23.1 No amount is due for payment to the Investor Education Protection Fund.
23.2 Price reduction schedule
Payable against capital goods includes A 154.40 million (As at March 31, 2022 A 203.67 million) relating to amounts withheld from vendors pursuant to price reduction schedule which will be settled on finalisation of proceedings with such vendors. When the withheld amounts are ultimately finalised, the related adjustment is made to the Property, Plant and Equipment prospectively.
25.1 In accordance with Ind AS 12 - Income Taxes, the Company has recognised deferred tax asset for all deductible temporary differences and also for carry-forward of unused tax losses and unused tax credits. The recognition of Deferred Tax Asset (DTA) is based on the probability of earning sufficient taxable profits in the future years as projected by the management (duly considering capacity utilization and price realisation) against which the deductible temporary difference and carry forward of unused tax losses and unused tax credits can be utilised. Deferred Tax asset has been recognised net of deferred tax liability.
25.2 Pursuant to the Scheme of Amalgamation of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) (âAmalgamating Companyâ) with the Company (âAmalgamated Companyâ) effective from the appointed date i.e. April 1, 2021, Company had reassessed and recognised the Deferred Tax Assets on unused tax losses and unused tax credits of OMPL in line with Ind AS 12 -Income Taxes, resulting in increase in the Deferred Tax Assets by A 14,554.27 million for the year ended March 31, 2022.
26.1 Trade payables include A Nil million (As at March 31, 2022 of A 20,793.60 million) for which ONGC has given guarantees on behalf of the Company.
26.2 The average credit period on purchases of crude, stores and spares, other raw material, services, etc. ranges from 7 to 60 days (Year ended March 31, 2022 ranges from 7 to 60 days). Thereafter, interest is charged upto 6.75 % per annum (Year ended March 31, 2022 upto 6.75% per annum) over the relevant bank rate as per respective arrangements on the outstanding balances. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
36.1 The company has generated a total of 10,293,143 Kwh of Solar power for the year ended March 31, 2023 (Year ended March 31, 2022 a total of10,683,169 Kwh) and the same are captively consumed. The monetary values of such power generated that are captively consumed are not recognised for the purpose of disclosure in the financial statement.
36.2 Excise Duty on sale of goods (domestic sales) has been included in âRevenue from operationsâ. Despite increase in sales of petroleum products for the current year, the Excise duty on sale of goods (includes SAED on exports) is lower mainly on account of decrease in excise duty rate. Excise duty shown above represents the difference between excise duty on opening and closing stock of finished goods.
36.3 The CSR expenditure comprises the following:
(a) Gross amount required to be spent by the Company during the year: A 50 million (Year ended March 31, 2022 A Nil).
36.5 Includes an amount of A 301.32 million and A 100.60 million respectively incurred towards Coker Heavy Gas Oil Hydro Treating Unit (CHTU) and 2G Ethanol project related activities, as no future economic benefits is expected to be derived from the corresponding expenditure towards the said activities.
With regard to amalgamation of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) with the company as per the scheme of amalgamation approved by Ministry of Corporate Affairs (MCA), an amount of A 300 million had been provided towards payment of stamp duty for the year ended March 31, 2022 and out of the said amount during the year an amount of A 275 million has been paid and balance A 25 million has now been written back as same is no longer required to be paid.
39 Leases39.1 Obligations under finance leases
39.1.1 The Company has adopted Ind AS 116 âLeasesâ effective April 1, 2019. The Company has entered into lease agreements for lands which have been classified as finance leases and the same is now disclosed as Right of Use Assets (ROU). The ownership of the lands will be transferred to the Company at the end of the lease term with nominal payment of administrative charges. The lease term ranges from 5 to 44 years.
Financial lease obligation as at March 31, 2023 is immaterial (As at March 31, 2022 : immaterial).
39.2 Operating lease arrangements39.2.1 Leasing arrangements
The Company has adopted Ind AS 116 âLeasesâ effective April 1, 2019. The Company has entered into arrangements for right of way for pipelines and lease of land which have been classified as operating leases and the same is now disclosed as Right of Use Assets (ROU). The lease period for right of way ranges from 11 months to 30 years and for leases of land ranges from 11 months to 99 years. In case of leasehold land, the Company does not have option to purchase the land at the end of the lease period. Generally, the lease arrangements for land requires Company to make upfront payments at the time of the execution of the lease arrangement with annual recurring charges with escalations in annual lease rentals.
39.2.2 Payments recognized as an expense
The Company has adopted Ind AS 116 âLeasesâ effective April 1, 2019 and wherever the lease is short term lease, lease for low value assets or having variable lease payments are not included in lease liabilities.
39.2.3 Non-cancellable operating lease commitments
The Company does not have any non-cancellable lease arrangements.
Pursuant to the scheme of Amalgamation (âthe Schemeâ) approved by the Ministry of Corporate Affairs (MCA) vide its order No. 24/3/2021-CL-III dated April 14, 2022, during the current financial year, Human Resource (HR) integration of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) with the company is carried out w.e.f May 1, 2022 (effective date of the scheme). Consequently, during current financial year, the Employee Benefit Expenses including Actuarial valuation is accounted in the books of accounts factoring the financial implication on integrated basis.
During the current financial year, pursuant to HR Integration of erstwhile subsidiary company OMPL (Aromatics Complex) with the company, Employerâs contribution including Aromatics Complex have been paid to Superannuation Fund with effect from the effective date of HR integration i.e. w.e.f May 1, 2022.
* Previous year figure includes contribution to Superannuation for erstwhile subsidiary company OMPL for A 16.79 million.
For previous financial year the contribution for the company towards provident fund was recognized under âOther Long Term Benefitsâ whereas contribution made by erstwhile subsidiary company OMPL was recognized under âDefined Contribution Planâ.
# During the current financial year, the Company has contributed to MRPL Provident Fund Trust upto December 31, 2022 and from January 1, 2023 onwards contributions were made to EPFO.
* Previous year figure includes contribution to Provident Fund for erstwhile subsidiary company OMPL for A 35.77 million and out of which A 1.08 million recognized towards key management personnel.
A brief description on Provident Fund is as follows:
(a) Provident Fund is governed through a separate trust established for this purpose in accordance with The Employee Provident Fund and Miscellaneous Provisions Act, 1952. The Companyâs contribution to the Provident Fund is remitted to this trust based on a fixed percentage of the eligible employeeâs salary and charged to Statement of Profit and Loss upto December 31, 2022. The Board of trustees of the Trust functions in accordance with any applicable guidelines or directions that may be issued in this behalf from time to time by the Central Government or the Central Provident Fund Commissioner. The board of trustees have the following responsibilities :
i. The investments shall be made in accordance with the pattern of investment prescribed by the Government of India in Rule 67 of Income Tax Rules, 1962, and /or directions given by the Central Government, from time to time.
ii. The Board of Trustees may raise such sum or sums of money as may be required for meeting obligatory expenses such as settlement of claims, grant of advances as per rules, and transfer of memberâs P.F. accumulations in the event of his / her leaving service of the Employer and any other receipts by sale of the securities or other investments standing in the name of the Fund subject to the prior approval of the Regional Provident Fund Commissioner.
iii. Fixation of rate of interest to be credited to membersâ accounts.
(b ) During the current financial year, pursuant to HR Integration of erstwhile subsidiary company OMPL with
the company, the entire Employerâs contribution have been paid to the Provident Fund Trust managed by the company except for the employees of OMPL for the month of April 2022 which was remitted to EPFO.
(c) Based on the request from the Board of Trustees of Provident Fund of MRPL and also by the Company, EPFO has issued the order dated December 12, 2022, stating that the exemption granted to the establishment stands surrendered w.e.f December 31, 2022 and the company has to report the compliances as un-exempted establishment with effect from January 2023. Accordingly, from January 2023 onwards the company has started remitting the contribution towards the Provident Fund to EPFO along with the applicable administrative charges thereon . The Trustees of the Provident Fund of MRPL are in the process of surrending the entire fund and securities along with the relevant records thereof to EPFO.
(d) Under the Statute, the shortfall, if any, in the interest obligation in comparison to minimum rate of return declared by Government of India will have to be made good by the Employer and therefore, for the current financial year upto December 31, 2022 an amount of A Nil million (Year ended March 31, 2022 A 82.21 million) has been provided and charged to Statement of Profit and Loss. As on December 31, 2022, the Trust investments included few Non-convertible Debentures of certain companies amounting to A 245.30 million (Year ended March 31, 2022 A 295.30 million) which have witnessed default in meeting interest obligations from financial year 2020-21 upto December 31, 2022. In anticipation of probable default in principal repayment, Provident Fund Trust had marked down these investments by 70% in its books in
financial year 2020-21, which continues to be the true and fair valuation as of31.12.2022 as per management assessment. Thus, no additional provision (Year ended March 31, 2022 A Nil million) is warranted during this financial year.
Purusant to surrendering of PF Trust during the current year, interest shortfall provided during year ending March 31, 2022 amounting to A 220.41 millions on account of differential value of plan assets arising out of Actuarial valuation has been written back during the current year as the payment of future interest obligation rests with EPFO on account of surrendering of the exemption granted by EPFO.
40.1.2.1Brief Description: A general description of the type of Defined benefit plans are as follows:
a) Gratuity:
15 days salary for every completed year of service. Vesting period is 5 years and the payment is restricted to A 2 million. Besides the ceiling of gratuity increase by 25% whenever IDA rises by 50%.
The MRPL Gratuity Fund Trust was formed on April 20, 2007 and investments of the funds received from the company after actuarial valuation and the investment of the funds upto June 28, 2013 was made in the manner prescribed by Income tax Rule 67(1) of the Income Tax Rules ,1962 as amended from time to time.
The Funds of MRPL Gratuity Fund Trust after June 28, 2013 are being invested in Group Gratuity Cash Accumulation Scheme (Traditional Fund) of various insurance companies.
The gratuity provision for erstwhile subsidiary company OMPL was unfunded and consequent to the HR Integration with the company during the current financial year, the same has now been classified as funded in line with the policy followed by the company.
b) Post-Retirement Medical Benefits:
After retirement, on payment of one time lump sum contribution, the superannuated employee and his/her dependent spouse and dependent parents will be covered for medical benefit as per the rules of the Company. During the current financial year, pursuant to HR Integration, employees of erstwhile subsidiary company OMPL are also being covered under Post Retirement Medical Benefit scheme of the Company.
c) Resettlement :
At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Settlement Allowance.
During the current financial year, pursuant to HR Integration, employees of erstwhile subsidiary company OMPL are also being covered under the Resettlement Allowance benefits of the Company.
In respect of the plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2023 by a member firm of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method. The liabilities for Defined Benefit Plans are recognized and charged to Statement of Profit and Loss.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
40.2 Other long term employee benefits
40.2.1 Leave encashment
A brief description on Leave encashment are as follows:
a) Earned Leave Benefit (EL):
Accrual - 32 days per year Accumulation up to 300 days allowed
EL accumulated in excess of15 days is allowed for encashment while in service provided the EL encashed is not less than 5 days.
b) Half Pay Leave (HPL)
Accrual - 20 days per year Encashment while in service is not allowed
Encashment on retirement is permitted; restricted up to 300 days along with Earned leave.
The liability for above leaves (a & b) are recognized on the basis of actuarial valuation.
40.3 Termination Benefits :
40.3.1 Premature Retirement on Medical Grounds
The Company has an approved scheme of Premature Retirement on Medical Grounds. Ex-gratia payment equivalent 60 days emolument for each completed year of service or the monthly emoluments at the time of retirement multiplied by the balance months of service left before normal date of retirement, whichever is less is payable apart from Superannuation Benefits.
40.3.2 Scheme for Self Insurance for providing lump-sum monetary compensation
Under the scheme of âPost Retirement Benefit and Benefit on Separationâ, in case of employee suffering death or permanent total disablement due to an accident arising out of and in the course of employment, a compensation equivalent to 100 months Basic Pay plus Dearness Allowance (DA) without laying down any minimum amount is payable.
40.3.3 Benefits of Separation under SABF (re-nomenclatured now as MDCPS)
In case of death / permanent disablement of an employee while in service in the Company, the beneficiary has to exercise desired options available within 6 months from the date of death / permanent total disablement
40.3.4 Terminal benefits are unfunded plans, and no plan assets are involved.
40.3.5 Termination Benefits are charged to Statement of Profit and Loss as and when incurred.
The Company has âPetroleum Productsâ as single reportable segment.
41.1 Information about major customers
Companyâs significant revenues are derived from sales to oil marketing companies which is 57% and 52% of the Companyâs sales related to petroleum products for the year ending March 31, 2023 & March 31, 2022 respectively. The total sales to such companies amounted to A 7,04,816.95 million for the year ended March 31, 2023 and A 4,51,302.90 million for the year ended March 31, 2022.
No customer (excluding oil marketing companies mentioned above) for the years ended March 31, 2023 and March 31, 2022 contributed 10% or more to the Companyâs revenue.
The above transactions with the government related entities cover transactions that are significant individually and collectively. The Company has also entered into other transactions such as telephone expenses, air travel, fuel purchase and deposits etc. with above mentioned and other various government related entities. These transactions are insignificant individually and collectively and hence not disclosed.
42.3.4 Relationship, transactions and outstanding balances with ONGC, HPCL, PMHBL, ONGC Nile Ganga BV, OPAL and ONGC Videsh Ltd. have been disclosed in Noe 42.21 to 42.2.8 above.
43 Financial instruments43.1 Capital Management
The Companyâs objective when managing capital is to safeguard its ability to continue as going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders; and maintain an optimal capital structure to reduce the cost of capital.
The Company maintains its financial framework to support the pursuit of value growth for shareholders, while ensuring a secure financial base. In order to maintain or adjust the capital structure, the Company may vary the distribution of dividends to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The capital structure of the Company consists of net debt (borrowings as detailed in note 22 offset by cash and bank balances) and total equity of the Company.
The Companyâs management reviews the capital structure of the Company on quarterly basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital requirements and maintenance of adequate liquidity.
43.2.1 Investment in Joint Venture has not been disclosed above as these are measured at cost less impairment, if any.
43.3 Financial risk management objectives
The Companyâs Risk Management Committee monitors and manages key financial risks relating to the operations of the Company by analysing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. The major components of market risk are foreign currency exchange risk and interest rate risk.
43.6 Interest rate risk management
The Company has availed borrowings at fixed and floating interest rates, hence is exposed to interest rate risk. The Company has not entered into any of the interest rate swaps and hence the Company is exposed to interest rate risk.
Interest rate sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate borrowings, the analysis is prepared assuming the amount of the borrowings outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used for disclosing the sensitivity analysis.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Companyâs profit for the year ended March 31, 2023 would decrease/increase by A 480.79 million (for the year ended March 31, 2022 : decrease/increase by A 677.74 million). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings (considered on closing balance of borrowings as at year end).
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from cash and cash equivalents, deposits with banks as well as customers including receivables. Credit risk management considers available reasonable and supportive forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate etc.).
Major customers comprise of public sector undertakings (Oil Marketing Companies - OMCs) having highest credit ratings and carry negligible credit risk. Concentration of credit risk to any other counterparty did not exceed 10% of total monetary assets at any time during the year.
Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
43.8 Liquidity risk management
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due. Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios. The Company manages liquidity risk by maintaining adequate cash & credit lines and continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.
45 |
Contingent liabilities and Assets : |
|||
45.1 |
Claims against the Company/ disputed demands not acknowledged as debt:- |
|||
Sl. |
Particulars |
As at |
As at |
|
No. |
March 31, 2023 |
March 31, 2022 |
||
1 |
Claims of Contractors / vendors in Arbitration / Court Some of the contractors for supply and installation of equipment have lodged claims on the Company seeking revision of time of completion without liquidated damages, extended stay compensation and extra claims etc., which are contested by the Company as not admissible in terms of the provisions of the respective contracts. In case of unfavourable awards the amount payable that would be capitalised is A 6,357.41 million / charged to revenue account would be A 340.20 million (Year ended March 31, 2022 A 5,050.68 million and A 283.67 million). |
6,697.61 |
5,334.34 |
|
2 |
Others |
|||
The claim of Mangalore SEZ Limited over and above the advance paid for land and rehabilitation & resettlement work. |
20.05 |
20.05 |
||
Total |
6,717.66 |
5,354.39 |
In respect of all these claims, it is being contested by the Company as not admissible. It is not practicable to make a realistic estimate of the outflow of resource, if any, for settlement of such claim, pending resolution / award from Arbitrators/ Court.
45.2 Disputed tax / Duty demands pending in appeal as at 31st March,2023
45.2.1 Income Tax: A 198.62 million as at March 31,2023 (As at March 31, 2022 A 224.05 million). Against this A 9.00 as at March 31,2023 (As at March 31, 2022 A Nil) is pre-deposit / paid under protest and is included under tax assets/ liability [refer note 14].
45.2.2 Excise Duty: A 11,077.05 million as at March 31,2023 (As at March 31, 2022 A 10,581.06 million). Against this A 185.89 million as at March 31,2023 (As at March 31, 2022 A 185.89 million) is predeposit / paid under protest and is included under other assets [refer note 15].
45.2.3 Customs Duty: A 1,039.34 million as at March 31,2023 (As at March 31, 2022 A 996.28 million). Against this A 379.40 million as at March 31,2023 (As at March 31, 2022 A 378.71 million) is adjusted / paid under protest and is included under other assets [It excludes the amount mentioned at 45.2.4] [refer note 15].
45.2.4 There is a claim from the custom department for customs duty amounting to A 2,121.14 million as at March 31,2023 (As at March 31, 2022 A 2,121.14 million) along with applicable interest and penalties totally amounting to A 6,168.37 million as at March 31,2023 (As at March 31, 2022 A 6,168.37 million) in respect of classification of tariff of the reformate for the purpose of payment of import duty. An appeal
has been filed before the Appellate Authority contesting the entire demand. Pending outcome of the appeal proceedings, no provision for the said demand has been made in the books [refer note 15].
As informed by a vendor company, there is a claim from the Deputy Commissioner of Commercial Tax (CT) amounting to A 4,359.27 million as at March 31,2023 (As at March 31, 2022 A 4,117.01 million) against which a writ petition has been filed by them before Honâble Karnataka High Court . In terms of the contract entered with the vendor company, the said liability as and when reaches finality is to be discharged by the company on back to back basis.
An amount of A 95.28 million as at March 31, 2023 (As at March 31, 2022 A 95.28 million) earmarked by MSEZL as third party share payable to the company towards pipeline-cum-road corridor usage which is not considered in the current period, as the same has not been finalized pending freezing of the project cost of pipeline corridor project.
46 Commitments46.1 Capital Commitments:
46.1.1 The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as at March 31, 2023 A 4,461.45 million (As at March 31, 2022 A 3,069.74 million).
46.1.2 The Company has requested KIADB for an allotment of 1,050 acres of land for Phase IV expansion. The balance capital commitment in this regard is around A 6,407.14 million (As at March 31,2022 A 6,407.14 million).
46.2.1 Pending commitment on account of Refinery-MRPL is in possession of certain land provisionally measuring 36.69 acres ceded by HPCL for use by MRPL Phase III expansion and upgradation work .The consideration for such land is mutually agreed to be by way of swapping of land in possession of MRPL/HPCL. The final documentation in this regard is pending to be executed.
46.2.2 Pending commitment on account of Refinery performance improvement programme by M\s.Shell Global International Solution (M\s.Shell GIS) as at March 31, 2023 is USD Nil million net of advance (As at March 31, 2022 USD 1.46 million net of advance).
46.2.3 Pending commitments on account of Corporate Environment Responsibility (CER) and Enterprise Social Commitment (ESC) as at March 31, 2023 A 755.23 million (As at March 31, 2022 A 758.79 million).
47 Reconciliation of liabilities arising from financing activities.
The table below details change in the Companyâs liabilities arising from financing activities, including both cash and non cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Companyâs Statement of Cash Flows as cash flows from financing activities.
From the current financial year the Company has identified and reported the shareholders whose name has been struck off by the Registrar of Companies.
48.6 No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions Prohibitions Act, 1988 and the rules thereunder as at March 31, 2023 and March 31, 2022.
48.7 The Company has not been declared a wilful defaulter by any bank or financial institution or other lender as at March 31, 2023 and March 31, 2022.
48.8 All charges or satisfaction have been registered with Registrar of Companies (RoC) within the statutory period as at March 31, 2023 and March 31, 2022.
48.9 The requirement of number of layers as prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable to the Company.
48.10 The company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken as at March 31, 2023 and March 31, 2022.
48.11 The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall 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 provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
48.12 The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding party) with the understanding (whether recorded in writing or otherwise) that the company shall 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 provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
48.13 The Company did not have any transaction which was not recorded in the books of accounts that has been surrendered or disclosed as income during the previous year in the tax assessments under the Income Tax Act, 1961.
48.14 The Company has not traded or invested in Crypto currency or virtual currency during the year ended March 31, 2023 and year ended March 31, 2022.
48.15 The Company has complied with the approved Scheme(s) of Arrangements.
50 Integration of Human Resouse of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited:
Pursuant to the scheme of Amalgamation (âthe Schemeâ) approved by the Ministry of Corporate Affairs (MCA) vide its order No. 24/3/2021-CL-III dated April 14, 2022, during the current financial year, Human Resource (HR) integration of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) with the company is carried out w.e.f May 1, 2022 (effective date of the scheme). Consequently, during current financial year, the Employee Benefit Expenses including Actuarial valuation is accounted in the books of accounts factoring the financial implication on integrated basis.
Subsequently, the management grade employees of erstwhile subsidiary company OMPL represented the matter before Honourable High Court of Karnataka with regard to their salary and grade fixation and the matter is subjudice.
Furthermore, the memorandum of settlement with respect to non-management employees of erstwhile subsidiary company OMPL is under negotiation and yet to be concluded. Necessary provision on estimated basis towards the financial implication on account of the settlement has been duly considered in the books of accounts.
51 The Company also operates in special economic zone (SEZ) in Mangalore, accordingly is eligible for certain economic benefits such as exemptions from GST, custom duty, excise duty, service tax , value added tax, entry tax, etc. which are in the nature of government assistance. These benefits are subject to fulfilment of certain obligations by the Company.
52 The Company has a periodic system of physical verification of Inventory, Property, Plant and Equipment and capital stores in a phased manner to cover all items over a period. Adjustment differences, if any, is carried out on completion of reconciliation.
53 The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.
54 Some balances of trade and other receivables, trade and other payables and loans are subject to confirmation/reconciliation. Adjustments, if any, will be accounted for on confirmation/reconciliation of the same, which will not have a material impact.
55 During FY 2021-22, company was awarded with 87,748 Nos of Energy Saving Certificates (EScerts) from Bureau by Energy Efficiency (BEE) as part of âPerform, Achieve and Tradeâ (PAT) scheme, India for achieving reduction in Specific Energy Consumption above targets set by them for the performance during FY 2018-19. These can be redeemed to meet Refineryâs own shortfall (if any) or can be used as tradable certificates which can be sold through power exchanges in future periods. As per formula prescribed by Honâble Ministry of Power for determining the floor price, the calculated floor value of the ESCerts worksout to Rs. 161.47 million. The Company intends to redeem the ESCerts only to meet refineries own shortfall (if any) based on Monitoring & Verification to be conducted in future and hence the same has not been carried in inventory as at March 31, 2023.
56 The number of independent directors during previous financial years were less than the minimum number of Independent Directors required in terms of the provisions of the Listing Agreement and the Companies Act, 2013 and composition of the Board Level Committees viz., Audit Committee, Nomination & Remuneration Committee and Risk Management Committee. Consequently penalty for the said noncompliances was levied by both BSE and NSE for an amount of A 10.88 million and A 8.80 million
respectively upto December 2022. The company being a Central Public Sector Enterprise (CPSE), the nomination of Directors on the Board of the Company is made by the Administrative Ministry of the company, i.e. Ministry of Petroleum and Natural Gas (MoP&NG), Government of India (GoI). The company has been continuously following up with MoP&NG for appointment of requisite number of Independent Directors on the Board. MoP&NG has appointed 4 (Four) independent directors during 2021-22 which enabled the Company to comply with regard to only composition of above referred Committees. Further the Policy for exemption of fines, which provides for waiver/ reduction of penalty in case of inability of the Company to make any appointment on the Board due to pending approval from the Government (Ministry) / Regulator or any statutory Authority. In view of the above, the Exchanges were requested by the company to waive off the fine citing the above fact and subsequently based on the request by the company, BSE waived fines up to December, 2020 under Regulation 17(1), 18(1), 19(1) & 21(1) of SEBI (LODR), Regulations, 2015 and NSE from December 2020 to March 2022 under Regulation 18(1), 19(1) & 21(1) of SEBI (LODR), Regulations, 2015 for an amount of A 3.29 million and A 2.17 million, respectively. For the balance amount of A 7.58 million and A 6.63 million levied by BSE and NSE, waiver is expected.
57 The Company has assessed the possible effect that may result from Russia-Ukraine War, which is not significant on the carrying amounts of Property, Plant and
Mar 31, 2022
Secured External Commercial Borrowings are secured by first pari passu charge over immovable Property, Plant & Equipment and first ranking pari passu charge over movable Property, Plant & Equipment (including but not limited to Plant and Machinery, Spares, Tools, Furniture, Fixture, Vehicles and all other Movable Property, Plant & Equipment) both present and future.
Loan from OIDB is secured by way of first ranking pari passu charge by way of hypothecation / mortgage only on Property, Plant & Equipment / proj ects financed out of loan proceeds of OIDB.
Working capital borrowings from consortium banks are secured by way of first ranking pari passu charge by way of hypothecation of Company''s stocks of Raw Material, Finished Goods, Stock-in-Process, Stores, Spares, Components, Trade receivables, outstanding Money Receivables, Claims, Bills, Contract, Engagements, Securities both present and future and further secured by second ranking pari passu charge over companies movable and immovable property (all Property, Plant & Equipment) both present and future.
The Company was eligible for certain economic benefits such as exemptions from entry tax, custom duty etc. on import/local purchase of capital goods in earlier years. The Company had accounted benefits received for custom duty and entry tax on purchase of Property, Plant and Equipment as Government grants. The Company had adjusted the cost of Property, Plant and Equipment as at April 1, 2017 and credited deferred Government grant amounting to ?3,618.21 million. The deferred Government grant is amortised over the remaining useful life of the Property, Plant and Equipment amounting to ? 159.02 million for the year ended March 31,2022 (Year ended March 31,2021 ? 159.02 million).
As per the requirement of Ind AS 16 (Property, Plant and Equipment), the residual value and the useful life of an asset shall be reviewed at least at each financial year-end. During the current financial year, the estimated useful lives of Property, Plant and Equipment have been reviewed and revised wherever expectations differ from previous estimate, which is different from the useful life as indicated in Part C of Schedule II of Companies Act, 2013. The impact on account of above change is decrease in depreciation by
? 1,141.81 million during current financial year. Overall future impact on the Property, Plant and Equipment existing as on 31.03.2022 is not disclosed considering impracticability in assessing the effect of same.
Additions/(adjustments) to Plant and Equipment includes ?58.61 million [Year ended March 31,2021 ?(173.96) million] in relation to foreign exchange differences capitalised as perparaD13AAofIndAS 101 [referNote50]
Few assets under the property, plant and equipment which are constructed on lease hold lands and whose useful life is more than the leasehold period are depreciated based on their useful lives considering the likely renewal of the lease period.
Additions to CWIP includes borrowing costs amounting to ''508.80 million (For the year ended March 31, 2021 ''483.10 million) and allocated / will be allocated to different class of assets. The rate used to determine the amount of borrowing costs eligible for capitalisation was 6.20% (For the year ended March 31, 2021 was 7.14%) which is the effective interest rate on borrowings.
An amount of ''76.93 million (Year ended March 31, 2021 ''89.44 million) towards Finance cost on lease liability has been capitalized as a component of cost of Capital Work-in-Progress (CWIP).
An amount of ''32.35 million (Year ended March 31, 2021 ''37.57 million) towards depreciation charged to Right-of-Use Asset has been capitalized as a component of cost of Capital Work-in-Progress (CWIP).
Capital Work-in-Progress (CWIP) includes loan availed from OIDB, which is secured by way of first ranking pari passu charge by way of hypothecation / mortgage only on Property, Plant & Equipment / projects financed out of loan proceeds of OIDB [refer note 22.3], Unsecured Rupee Term Loan for Capex availed [refer note 22.8.1] and Unsecured Foreign Currency Term Loan (FCNR) (B) for Capex [refer note 22.9].
Till previous Financial Year, the Company had opted not to avail the GST input tax credit on the capital goods and the same was being capitalized along with the cost of the Assets. During the current financial year, the Company has started availing the input tax credit on the eligible GST input tax credit on the capital goods as permitted by GST Act and the applicable Rules, resulting in an amount of ''231.80 million as at March 31, 2021 being reclassified from Capital Work-in-Progress (CWIP) to GST Input tax credit [refer note 15].
Includes land measuring 102.31 acres is held for capital appreciation.
There is no contractual obligation to purchase, construct or develop investment property.
The net amount recognised in the Statement of Profit and Loss for investment property for current year is '' Nil (Year ended March 31, 2021 '' Nil).
No Right-of-Use Asset has been included in the investment property as given above.
The best evidence of fair value is current prices in an active market for similar properties.
The Company has considered the fair value of the freehold land amounting to '' 409.24 million as at March 31, 2022 (As at March 31, 2021''409.24 million) based on the valuation carried out by independent valuer report dated October 30, 2020.
Goodwill includes '' 4.04 million towards excess consideration paid over net assets acquired for acquisition of Nitrogen plant.
Goodwill has been recognised in the books of the Company on account of amalgamation of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) as per the clarification in Indian Accounting Standard (Ind AS) Transition Facilitation Group (ITFG) Clarification Bulletin 9.
Company has policy of providing financial assistance to Schedule Caste / Schedule Tribe category dealers for Retail Outlets under the Corpus Fund Scheme (CFS). Under this scheme upon written request seeking working capital loan / assistance by dealer, the company provides working capital loan for a full cycle of operation (equivalent to seven days sales volume) of the dealer. This working capital loan as well as the interest at the specified rate thereon will be recovered in hundred equal monthly instalments from the thirteenth month of commissioning of the dealer operated Retail Outlet.
As per the Government of Indiaâs scheme for Promotion of flagging of merchant ships in India by providing subsidy support to Indian Shipping companies in global tenders floated by Ministries / Departments / Central Public Sector Enterprises (CPSEs), the eligible Indian shipping company shall be paid the subsidy amount along with the charter hire amount as per the contract term by the Company and the Company will be then reimbursed by Government under the scheme.
During the financial year ended March 31, 2020, the Company opted to settle Income Tax Disputes under the Direct Tax Vivad Se Vishwas Act, 2020, and accordingly, a sum of ''1,084.76 Million payable under the said scheme was charged as prior year tax in the Statement of Profit and Loss in the financial year ended March 31, 2020. Pursuant to this, the tax assets and liabilities were reclassified for the year ended March 31, 2020. The tax assets of ''2,908.37 Million and liabilities of ''1,084.76 Million pertaining to assessment years for which the Company exercised the option were considered as current tax assets and current tax liabilities respectively, as the same were expected to be settled within a year. The same treatment is continued in the current financial year, as the final orders under the said scheme are awaited.
The Taxation Laws (Amendment) Act, 2019 inserted a new section 115BAA in the Income Tax Act, 1961, which gives domestic companies a non-reversible option to pay corporate tax at reduced rate, subject to certain conditions. Such option can be exercised for the financial year 2019-20 or any subsequent financial year. The Company did not exercise the option for the financial years ended March 31, 2020 and March 31, 2021. The financial statements of the Company for the year ended March 31, 2022 have been prepared considering the old Corporate Tax rate. However, the option for the new lower tax rate for the financial year 2021-22 can be exercised by the Company on or before the due date for filing of the return of income for the financial year 2021-22.
Includes ''2,125.25 million relating to an appeal in the matter of classification of Reformate import pending before Honâble CESTAT and other amount paid under protest.
Includes ''Nil as at March 31, 2022 with Related Parties [As at March 31, 2021, ''1.21 million (''0.58 million Non- Current and ''0.63 million Current)].
The cost of inventories (cost of sales) recognised as an expense during the year is ''7,16,584.34 million (Year ended March 31,2021 '' 3,52,105.37 million).
The cost of inventories recognized as an expense includes ''222.82 million ( Year ended March 31,2021 '' 300.56 million) in respect of write down of inventories to net realisable value. There has been no reversal of such write down in current year and previous year.
Includes stock lying with others amounting to ''5.23 million (As at March 31,2021 ''Nil)
From current financial year, the Company has started recognising the scrap inventory at estimated net realisable value and recognised an amount of ''241.14 million as at March 31, 2022. Introduction of the said accounting policy has resulted in increase in Profit Before Tax for FY 2021-22 by '' 241.14 million.
The method of valuation of inventories has been stated in Note 3.19.
Generally, the Company enters into long-term sales arrangement with Oil Marketing Companies for domestic sales and short term arrangement with others. Besides, the export of products are undertaken through term contracts, spot international tenders, short term tender arrangements, B2B arrangements and supplies to SEZ customers. The average credit period on sales ranges from 7 to 45 days (Year ended March 31,2021 ranges from 7 to 45 days). Interest is not charged on trade receivables for the applicable credit period from the date of invoice. For delayed period of payments, interest is charged as per respective arrangements, which is upto 2 % per annum (Year ended March 31,2021 upto 2% per annum) over the applicable bank rate on the outstanding balance.
Note: Major customers identity are not disclosed on account of market confidentiality. Trade receivable from individual customer for current / previous year not more than 5% of total trade receivables amount has not been disclosed.
Usually, the Company collects all receivables from its customers within the applicable credit period. The Company assesses impairment on trade receivables from all the customers on facts and circumstances relevant to each transaction.
Secured by bank guarantees / letter of credit received from customers.
The Company has concentration of credit risk due to the fact that the Company has significant receivables from customers mentioned in note 17.2, however these customers are reputed and creditworthy.
There are no outstanding receivables due from directors or other officers of the Company.
Movement of Impairment for doubtful receivables
The Company has two classes of equity shares having a par value of '' 10 per share and ''10,000 per share. Each holder of equity shares is entitled to one vote per share. The dividend (if any) proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
An amount of ''42.17 million as at March 31, 2022 (As at March 31, 2021 ''42.17 million) shown as deemed equity denotes the fair value of fees towards financial guarantee received from Oil and Natural Gas Corporation Limited without any consideration. Further to that as at March 31,2021 an amount of ''1.89 million towards the fair value of financial guarantee towards backstop for interest on CCDs issued by erstwhile subsidiary Company OMPL received from Oil and Natural Gas Corporation Limited without any consideration. The said amount of ''1.89 million has been adjusted on account of amalgamation of erstwhile subsidiary company OMPL [refer note 50].
The Company created capital redemption reserve on redemption of preference share capital during the financial years 2011-12 and 2012-13.
The Company created securities premium on issue of equity share capital and the same can be utilized as per the requirement ofthe Companies Act, 2013.
The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to Statement of Profit and Loss.
Other reserve represents excess consideration paid towards acquisition of non-controlling interest in erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) from non-controlling share holder [refer note 50].
The amount that can be distributed by the Company as dividends to its equity shareholders is determined considering the requirements of the Companies Act, 2013 and the dividend distribution policy of the Company. Thus, the amount reported in general reserves are not entirely distributable.
External Commercial Borrowings (ECB) :
ECB-1 taken by the company amounting to ''11,356.37 million (As at March 31,2021 ''18,241.90 million) are USD denominated loans and carries variable rate of interest which is six month Libor plus spread (Interest rate as at March 31,2022 is 1.32 % and interest rate as at March 31,2021 was 1.24%).
ECB-2 taken by the erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) amounting to ''671.13 million (As at March 31, 2021 ''2,799.78 million) are USD denominated Loans and carries variable rate of interest, which is six month libor plus spread (Interest Rate as at March 31, 2022 is 3.89% and Interest rate as at March 31,2021 was 2.60%).
ECB-1 is secured by first pari passu charge over immovable Property, Plant & Equipment and first ranking pari passu charge over movable Property, Plant & Equipment (including but not limited to Plant and Machinery,Spares, Tools, Furniture, Fixture, Vehicles and all other Movable Property, Plant & Equipment) both present and future.
ECB-2 is secured by first pari passu charge over all immovable and movable properties both present and future and second charge on all current assets ofthe erstwhile subsidiary company OMPL.
''8,135.45 million (As at March 31, 2021 of ''9,463.91 million) is repayable within one year i.e. Current Maturities of long term debt has been shown as Current Borrowing.
Foreign Currency Borrowings (FCTL) :
Foreign Currency Borrowings taken by the erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) are USD denominated Loans (USD 360 million) and carries variable rate of interest, which is six month Libor based plus spread (Interest Rate as at March 31, 2022 is 2.93% and Interest rate as at March 31, 2021 was 2.64%).
Foreign Currency Borrowing is secured by way of first pari passu charge on Fixed Assets of the Company both present and future.
''3,026.81 million (As at March 31, 2021 of ''Nil) is repayable within one year i.e. Current Maturities of long term debt has been shown as Current Borrowing.
Loan from Oil Industry Development Board (OIDB) :
Loan from OIDB taken by the Company carries fixed rate of interest (Interest rate as at March 31, 2022 and March 31, 2021 is in range of 6.01% to 7.98% ).
OIDB loan is secured by way of first ranking pari passu charge by way of hypothecation / mortgage only on Property, Plant & Equipment /projects financed out of loan proceeds of OIDB.
''1,485.62 million (As at March 31, 2021 of ''1,347.50 million) is repayable within one year i.e. Current Maturities of long term debt has been shown as Current Borrowings.
Repayment schedule of loan from OIDB is as follows:
[ This Loan represents amounts payable on account of "Interest free loan" received from Government of Karnataka. This interest free loan against VAT will be repayable from March 31,2028.
I The benefit of a Government loan at a below-market rate of interest is treated as a government grant (Ind AS 20). The Interest free loan is recognised and measured in accordance with Ind AS 109, Financial Instruments. The benefit of the Interest free loan is measured as the difference between the initial carrying value of the loan determined in accordance with Ind AS 109, and the proceeds received. The benefit is accounted for in accordance with this Standard.
$ Interest Free Loan from Govt.of Karnataka - VAT Loan are secured by bank guarantees given by the company.
Working capital borrowings pertaining to the company amounting to ''181.94 million (As at March 31, 2021 ''Nil) from consortium banks are secured by way of first ranking pari passu charge by way of hypothecation ofCompany''s stocks of Raw Material, Finished Goods, Stock-in-Process, Stores, Spares, Components,Trade receivables, outstanding Money Receivables, Claims, Bills, Contract, Engagements, Securities both present and future and further secured by second ranking pari passu charge over companies movable and immovableproperty (all Property, Plant & Equipment) both present and future.
Short Term Rupee loan pertaining to erstwhile subsidiary company OMPL amounting to '' 5,000.00 million (As at March 31, 2021 ('' Nil) is sanctioned by earmarking existing Overdraft Limit of a Bank which is secured by way of first pari passu charge on inventories, receivables and other current assets and second pari passu charge on the fixed assets of the erstwhile subsidiary company OMPL.
The erstwhile Subsidiary Company OMPL had allotted 1,000 Compulsorily Convertible Debentures (CCDs) of ''10 million each on March 5, 2020 through private placement. Company has issued CCDs in 3 different series. Series I Debentures consists of ''2,500 million with Coupon Rate of 8.35% p.a., Series II Debentures consists of ''2,500 million with Coupon Rate of 8.50% p.a. and Series III Debentures consists of ''5,000 million with Coupon Rate of 8.75% p.a. Interest for all the three series of debentures to be served on quarterly basis.
Coupon Rate of Series I Debenture was subject to annual reset with interest rate linked to 364 days Treasury bill. The interest rate has been reset on March 5, 2022 from 6.91% to 7.82% p.a.. Coupon rate for series II and series III CCDs are fixed over the tenure of debentures.
Under Transaction Document of CCDs, the erstwhile Subsidiary Company OMPL had obligation to timely service the interest to investors. Further, CCDs were backed by undertaking from Sponsor Companies i.e. ONGC and MRPL to ensure payment of Coupon amount on debentures in case erstwhile Subsidiary Company OMPL fails to do so.
Tenor of CCDs was 36 months from Deemed Date of Allotment, with mandatory Put / Call Option at the end of the 35th month. The Sponsors (in the ratio of ONGC - 49% and MRPL - 51%) to mandatorily acquire all the CCDs from the investors at the end of 35th month from the date of allotment.
The Company (MRPL) was nominated by ONGC to buyout CCDs of ''4,900 million for which backstop support was given by ONGC. Considering the amalgamation process, CCDs issued by erstwhile Subsidiary Company OMPL were acquired by the company on March 30, 2022 by exercising Accelerated Buyout Option. As per scheme of amalgamation filed with Ministry of Corporate Affairs (MCA) upon amalgamation becoming effective CCDs stand extinguished and cancelled in entirety without any consideration and without any further act or deed [refer note 50].
Rupee term loan from bank :
Term loan - 1 taken by the Company amounting to ''2,343.00 million (As at March 31, 2021 ''Nil ) carries variable rate of interest which was linked to RBI Repo Rate plus spread (Interest rate as at March 31, 2022 is 5.75%).
Term loan-2 taken by the erstwhile subsidiary company OMPL amounting to ''9,870.22 million (As at March 31, 2021 ''9,868.16 million) carries variable rate of interest which was linked to G-Sec linked lending rate (Interest rate as at March 31,2022 is 6.35% and Interest rate as at March 31,2021 was 6.25%).
Foreign Currency Borrowings taken by the erstwhile subsidiary company OMPL is USD denominated Loan and carries variable rate of interest, which is six month Libor based plus spread (Interest Rate as at March 31, 2022 is 2.13% and Interest rate as at March 31, 2021 was 2.25%).
Deferred payment liability against tax payable under Central Sales Tax (CST) represents amount payable on account of "Interest free loan" received from Govt. of Karnataka. This sum of the deferred CST loan against Central Sales Tax (CST) shall be repayable in five equal annual instalments without interest after the closure of deferment period.
The benefit of a Government loan at a below-market rate of interest is treated as a government grant (Ind AS 20). The Interest free loan is recognised and measured in accordance with Ind AS 109, Financial Instruments. The benefit of the Interest free loan is measured as the difference between the initial carrying value of the loan determined in accordance with Ind AS 109, and the proceeds received. The benefit is accounted for in accordance with this Standard.
Foreign Currency Term Loan was taken by the company are USD denominated loans, repayable within one year from the date of each disbursement and carries variable rate of interest which is three month USD Libor plus spread.
Bill Discounting Facility :
Unsecured Bill discounting facility against Non LC bill drawn on erstwhile Subsidiary Company "ONGC Mangalore Petrochemicals Limited" (OMPL) (Interest rate as at March 31,2022 is 4.20% and March 31,2021 was 4.50% ).
Other Working Capital Loan :
Unsecured short term working capital loan from bank amounting to ''21,136.40 million (As at March 31, 2021 ''15,405.00 million) (Interest rate as at March 31, 2022 is in range of 3.88% to 4.00% and March 31, 2021 was in range of 4.10% to 4.25% ).
Unsecured Short Term Rupee loan from Banks pertaining to erstwhile subsidiary company OMPL amounting to ''17,213.47 million (As at March 31, 2021 '' 16,158.32 million) (Interest rate as at March 31, 2022 is in the range of 4.10% to 4.20% and interest rate as at March 31,2021 was in the range of 4.25% to 4.50%).
Commercial Paper
The Commercial paper issued is unsecured fixed rate short term debt instrument.
The repayment schedules disclosed above are based on contractual cash outflows and hence will not reconcile to carrying amounts of such borrowings which are accounted at amortised cost.
No amount is due for payment to the Investor Education Protection Fund.
Price reduction schedule
Payable against capital goods includes ''203.67 million (As at March 31, 2021 ''242.28 million) relating to amounts withheld from vendors pursuant to price reduction schedule which will be settled on finalisation of proceedings with such vendors. When the withheld amounts are ultimately finalised, the related adjustment is made to the Property, Plant and Equipment prospectively.
Towards bills payable in respect of purchases drawn by Holding Company.
In accordance with Ind AS 12 - Income Taxes, the Company has recognised deferred tax asset for all deductible temporary differences and also for carry-forward of unused tax losses and unused tax credits. The recognition of Deferred Tax Asset (DTA) is based on the probability of earning sufficient taxable profits in the future years as projected by the management (duly considering capacity utilization and price realisation) against which the deductible temporary difference and carry forward of unused tax losses and unused tax credits can be utilised. Deferred Tax asset has been recognised net of deferred tax liability.
Pursuant to the Scheme of Amalgamation of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) (âAmalgamating Companyâ) into and with the Company (âAmalgamated Companyâ) effective from the appointed date i.e. April 1, 2021, the financial statements of the Company for the year ended March 31, 2022 has been prepared giving effect to the amalgamation as per the requirements of the applicable Indian Accounting Standards [refer note 50].
Pursuant to the amalgamation, the unused tax losses and unused tax credits of the amalgamating company becomes unused tax losses and unused tax credits of the amalgamated company (i.e. the Company) for the financial year 2021-22 and the Company is entitled to carry forward such unused tax losses and unused tax credits in accordance with the provisions of the Income Tax Act, 1961. Hence, the Company has reassessed and recognised the Deferred Tax Assets on such unused tax losses and unused tax credits based on the probability of earning sufficient taxable profits in the future years as projected by the management for the amalgamated entity in line with Ind AS 12 - Income Taxes. This has resulted in increase in the Deferred Tax Assets by ''14,554.27 million for the year ended March 31,2022 ('' Nil for the year ended March 31,2021).
Trade payables include ''20,793.60 million (As at March 31, 2021 of '' Nil) for which ONGC has given guarantees on behalf ofthe Company.
The average credit period on purchases of crude, stores and spares, other raw material, services, etc. ranges from 7 to 60 days (Year ended March 31,2021 ranges from 7 to 60 days). Thereafter, interest is charged upto 6.75% per annum (Year ended March 31, 2021 upto 6.75% per annum) over the relevant bank rate as per respective arrangements on the outstanding balances. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
The company has generated a total of 10,683,169 Kwh of Solar power for the year ended March 31, 2022 (Year ended March 31,2021 a total of 10,631,356 Kwh) and the same are captively consumed. The monetary values of such power generated that are captively consumed are not recognised for the purpose of disclosure in the financial statement.
Excise Duty on sale of goods has been included in "Revenue from operations". Despite increase in sales of petroleum products for the current year, the Excise duty on sale of goods is lower mainly on account of decrease in excise duty rate. Excise duty shown above represents the difference between excise duty on opening and closing stock of finished goods.
The CSR expenditure comprises the following:
Gross amount required to be spent by the Company during the year: ''Nil million (Year ended March 31, 2021''470.40 million).
The Company has adopted Ind AS 116 âLeasesâ effective April 1, 2019. The Company has entered into lease agreements for lands which have been classified as finance leases and the same is now disclosed as Right of Use Assets (ROU). The ownership of the lands will be transferred to the Company at the end of the lease term with nominal payment of administrative charges. The lease term ranges from 5 to 44 years.
Financial lease obligation as at March 31, 2022 is immaterial (As at March 31, 2021:immaterial).
Operating lease arrangements Leasing arrangements
The Company has adopted Ind AS 116 âLeasesâ effective April 1, 2019. The Company has entered into arrangements for right of way for pipelines and lease of land which have been classified as operating leases and the same is now disclosed as Right of Use Assets (ROU). The lease period for right of way ranges from 11 months to 30 years and for leases of land ranges from 11 months to 99 years. In case of leasehold land, the Company does not have option to purchase the land at the end of the lease period. Generally, the lease arrangements for land requires Company to make upfront payments at the time of the execution of the lease arrangement with annual recurring charges with escalations in annual lease rentals.
The Company does not have any non-cancellable lease arrangements.
With regard to amalgamation of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) with the company as per the scheme of amalgamation approved by Ministry of Corporate Affairs (MCA), as Human Resource (HR) integration with respect to amalgamation is in progress, the Employee Benefits Expense including Actuarial valuation and the corresponding disclosures in this regard have been provided separately for both the companies.
Considering the above, possible impact of the changes could not be quantified and disclosed at this juncture.
1 Brief Description: A general description of the type of Defined benefit plans are as follows:
15 days salary for every completed year of service. Vesting period is 5 years and the payment is restricted to ''2 million. Besides the ceiling of gratuity increase by 25% whenever IDA rises by 50%.
The MRPL Gratuity Fund Trust was formed on 20th April, 2007 and investments of the funds received from the company after actuarial valuation and the investment of the funds upto June 28, 2013 was made in the manner prescribed by Income tax Rule 67(1) of the Income Tax Rules ,1962 as amended from time to time.
The Funds of MRPL Gratuity Fund Trust after June 28, 2013 is being invested in Group Gratuity Cash Accumulation Scheme (Traditional Fund) in LIC, Bajaj Allianz, HDFC Standard Life Insurance Co., Aditya Birla Sunlife Insurance co, India First Life Insurance Co. and SBI Life Insurance Co.
After retirement, on payment of one time lump sum contribution, the superannuated employee and his/her dependent spouse and dependent parents will be covered for medical benefit as per the rules of the Company.
At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Settlement Allowance.
The investments shall be made in accordance with the pattern of investment prescribed by the Government of India in Rule 67 of Income Tax Rules, 1962, and /or directions given by the Central Government, from time to time.
The Board of Trustees may raise such sum or sums of money as may be required for meeting obligatory expenses such as settlement of claims, grant of advances as per rules, and transfer of member''s P.F. | accumulations in the event of his / her leaving service of the Employer and any other receipts by sale of the securities or other investments standing in the name of the Fund subject to the prior approval of the Regional Provident Fund Commissioner.
Under the Statute, the shortfall, if any, in the interest obligation in comparison to minimum rate of return declared by Government of India will have to be made good by the Employer and therefore, for the financial year 2021-22, an amount of '' 82.21 million (Year ended March 31, 2021 '' 28.72 million) has been provided and charged to Statement of Profit and Loss. On reporting date, the Trust investments included few Non-convertible Debentures of certain companies, amounting to ''295.30 million (Year ended March 31, 2021 '' 347.30 million) which have witnessed default in meeting interest obligations in financial year 2020-21, which continued in financial year 2021-22. In anticipation of probable default in principal repayment, Provident Fund Trust had marked down these investments by 70% in its books in financial year 2020-21, which continues to be the true and fair valuation as of 31.03.2022 as per management assessment. Thus, no additional provision (Year ended March 31,2021''243.11 million) is warranted during this financial year.
Termination Benefits :
Premature Retirement on Medical Grounds
The Company has an approved scheme of Premature Retirement on Medical Grounds. Ex gratia payment equivalent 60 days emolument for each completed year of service or the monthly emoluments at the time of retirement multiplied by the balance months of service left before normal date of retirement, whichever is less is payable apart from Superannuation Benefits.
Scheme for Self Insurance for providing lump-sum monetary compensation
Under the scheme of âPost Retirement Benefit and Benefit on Separationâ, in case of employee suffering death or permanent total disablement due to an accident arising out of and in the course of employment, a compensation equivalent to 100 months Basic Pay plus Dearness Allowance (DA) without laying down any minimum amount is payable.
Benefits of Separation under SABF (re-nomenclatured now as MDCPS)
In case of death / permanent disablement of an employee while in service in the Company, the beneficiary has to exercise desired options available within 6 months from the date of death / permanent total disablement.
Terminal benefits are unfunded plans, and no plan assets are involved.
Termination Benefits are charged to Statement of Profit and Loss as and when incurred.
The employee benefit disclosures of the erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) are as follows :-
Defined benefit plans
Brief Description: A general description of the type of employee benefits plans is as follows:
Gratuity:
15 days salary for every completed year of service. Vesting period is 5 years and the payment is restricted to maximum of '' 2 million.
Post-Retirement Medical Benefits:
After retirement, on payment of one time lump sum contribution, the superannuated employee and his/her dependent spouse will be covered for medical benefit as per the rules of the Company.
This plans typically expose the Company to actuarial risks such as: interest rate risk, longevity risk and salary risk.
Interest Rate risk |
A decrease in the bond interest rate will increase the plan liability. |
Longevity risk |
The present value of the defined benefit plan liability is calculated by reference to the estimate of the mortality of plan participants both during and after their employment. increase in the life expectancy of the plan participants will increase the planâs liability. |
Salary risk |
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability. |
In respect of gratuity, the actuarial valuation was carried out as at March 31, 2022 by M/s. K. A. Pandit Consultants and Actuaries, Fellow firm of the Institute of Actuaries of India. The present value of the defined benefit obligation, the related current service cost and past service cost, were measured using the projected unit credit method.
Sensitivity analysis is an analysis which will give the movement in liability if the assumptions were not proved to be true on different count. This only signifies the change in the liability if the difference between assumed and the actual is not following the parameters of the sensitivity analysis.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
The Company has âPetroleum Productsâ as single reportable segment.
Information about major customers
Companyâs significant revenues are derived from sales to oil marketing companies which is 52% and 69% of the Company''s sales related to petroleum products for the year ending March 31, 2022 & March 31, 2021 respectively. The total sales to such companies amounted to ''4,51,302.90 million for the year ended March 31,2022 and ''350,501.95 million for the year ended March 31,2021.
No customer (excluding oil marketing companies mentioned above) for the years ended March 31, 2022 and March 31, 2021 contributed 10% or more to the Companyâs revenue.
The above transactions with the government related entities cover transactions that are significant individually and collectively. The Company has also entered into other transactions such as telephone expenses, air travel, fuel purchase and deposits etc. with above mentioned and other various government related entities. These transactions are insignificant individually and collectively and hence not disclosed.
Relationship, transactions and outstanding balances with ONGC, HPCL, PMHBL, ONGC Nile Ganga BV, OPAL and ONGC Videsh Ltd. have been disclosed in Note 42.2.1 to 42.2.8 above.
The Companyâs objective when managing capital is to safeguard its ability to continue as going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders; and maintain an optimal capital structure to reduce the cost of capital.
The Company maintains its financial framework to support the pursuit of value growth for shareholders, while ensuring a secure financial base. In order to maintain or adjust the capital structure, the Company may vary the distribution of dividends to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The capital structure of the Company consists of net debt (borrowings as detailed in note 22 offset by cash and bank balances) and total equity of the Company.
The Companyâs management reviews the capital structure of the Company on quarterly basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital requirements and maintenance of adequate liquidity.
Investments in Joint Venture has not been disclosed above as these are measured at cost less impairment, if any. Financial risk management objectives
The Companyâs Risk Management Committee monitors and manages key financial risks relating to the operations of the Company by analysing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. The major components of market risk are foreign currency exchange risk and interest rate risk.
The Company undertakes transactions denominated in foreign currencies, primarily for purchases of crude oil and exports sales and has borrowings denominated in foreign currency; consequently, exposures to exchange rate fluctuations arise. Significant carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
The Company books short term forward contracts upto a maximum period of 30 days to the limited extent when export receivables date and import payments date do not fall within the spot date.
The Company has availed borrowings at fixed and floating interest rates, hence is exposed to interest rate risk. The Company has not entered into any of the interest rate swaps and hence the Company is exposed to interest rate risk.
Interest rate sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate borrowings, the analysis is prepared assuming the amount of the borrowings outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used for disclosing the sensitivity analysis.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company''s profit for the year ended March 31, 2022 would decrease/increase by ''677.74 million (for the year ended March 31,2021 : decrease/increase by ''728.98 million). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings (considered on closing balance of borrowings as at year end).
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from cash and cash equivalents, deposits with banks as well as customers including receivables. Credit risk management considers available reasonable and supportive forward-looking information including indicators like external credit rating (as far as available), macroeconomic information (such as regulatory changes, government directives, market interest rate etc.).
Major customers comprise of public sector undertakings (Oil Marketing Companies - OMCs) having highest credit ratings and carry negligible credit risk. Concentration of credit risk to any other counterparty did not exceed 10% of total monetary assets at any time during the year.
Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due. Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios. The Company manages liquidity risk by maintaining adequate cash & credit lines and continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.
The following table details the Company''s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.
In respect of all these claims, it is being contested by the Company as not admissible. It is not practicable to make a realistic estimate of the outflow of resource, if any, for settlement of such claim, pending resolution / award from Arbitrators/ Court.
[ Income Tax: ''224.05 million as at March 31,2022 (As at March 31, 2021 ''228.76 million). Against this '' Nil as at March 31,2022 (As at March 31, 2021 ''Nil) is adjusted / paid under protest and is included under tax assets/ liability [refer note 14].
I Excise Duty: ''7,966.52 million as at March 31,2022 (As at March 31, 2021 ''7,633.38 million). Against this ''185.89 million as at March 31,2022 (As at March 31, 2021 ''186.39 million) is predeposit / paid under protest and is included under other assets [refer note 15].
$ Customs Duty: ''996.28 million as at March 31, 2022 (As at March 31, 2021 ''956.02 million). Against this '' 378.71 million as at March 31, 2022 (As at March 31, 2021 ''379.48 million) is adjusted / paid under protest and is included under other assets [refer note 15].
\ There is a claim from the custom department for customs duty amounting to ''2,121.14 million as at March 31, 2022 (As at March 31,2021 ''2,121.14 million) along with applicable interest and penalties totally amounting to ''6,168.37 million as at March 31, 2022 (As at March 31, 2021 ''6,168.37 million) in respect of classification of tariff of the reformate for the purpose of payment of import duty. An appeal has been filed before the Appellate Authority contesting the entire demand. Pending outcome of the appeal proceedings, no provision for the said demand has been made in the books [refer note 15].
As informed by a vendor company, there is a claim from the Deputy Commissioner of Commercial Tax (CT) amounting to '' 4,117.01 million as at March 31, 2022 (As at March 31, 2021 ''Nil) against which a writ petition has been filed by them before Hon''ble Karnataka High Court . In terms of the contract entered with the vendor company, the said liability as and when reaches finality is to be discharged by the company on back to back basis.
An amount of ''95.28 million as at March 31, 2022 (As at March 31, 2021 ''62.76 million) earmarked by MSEZL as third party share payable to the company towards pipeline-cum-road corridor usage which is not considered in the current period, as the same has not been finalized pending freezing of the project cost of pipeline corridor project.
L The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as at March 31,2022 ''3,069.74 million (As at March 31,2021 ''6,464.09 million).
I The Company has requested KIADB for an allotment of 1,050 acres of land for Phase IV expansion. The balance capital commitment in this regard is around ''6407.14 million (As at March 31,2021 ''6,407.14 million).
L Pending commitment on account of Refinery-MRPL is in possession of certain land provisionally measuring 36.69 acres ceded by HPCL for use by MRPL Phase III expansion and upgradation work .The consideration for such land is mutually agreed to be by way of swapping of land in possession of MRPL/HPCL. The final documentation in this regard is pending to be executed.
I Pending commitment on account of Refinery performance improvement programme by M\s.Shell Global International Solution (M\s.Shell GIS) as at March 31, 2022 USD 1.46 million net of advance (As at March 31, 2021 USD 1.46 million net of advance).
5 Pending commitments on account of Corporate Environment Responsibility (CER) and Enterprise Social Commitment (ESC) as at March 31,2022 ''758.79 million (As at March 31, 2021 '' Nil).
As a part of reorganization of the Group, the Board of Directors of the Company had approved a scheme for amalgamation (''the Scheme'') of the erstwhile wholly owned subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) (the amalgamating company) with the company (the amalgamated company) onJune 10,2021.
Prior to this, the Company had acquired the control over the amalgamating company on February 28, 2015 by acquiring 51.0017% of equity shares. Subsequently, the Company had acquired additional shares to the tune of 48.9981% from non-controlling shareholders i.e. from Oil and Natural Gas Corporation Ltd. in ONGC Mangalore Petrochemicals Limited on January 1, 2021.
The amalgamating company was primarily engaged in operating a green field petrochemicals project consisting of an aromatic complex situated in Mangalore Special Economic Zone, Permude, Mangaluru, Karnataka for production of Para-xylene, Benzene and other products.
Pursuant to the scheme of Amalgamation (''the Scheme'') approved by the Ministry of Corporate Affairs (MCA) vide its order No. 24/3/2021-CL-III dated April 14, 2022, the amalgamating company has been amalgamated with the Company with effect from April 1, 2021 (''the appointed date''). As per Appendix âCâ of Ind AS 103 -Business Combinations, the financial information in the standalone financial statements in respect of prior periods is restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. Accordingly, business combination is accounted with effect from April 1,2020.
Business combination is accounted for using the ''pooling of interests'' method as per Appendix âCâ of Ind AS 103 - Business Combinations as notified under Section 230 to 232 of the Companies Act, 2013 which involves the following:
The financial information in the financial statements in respect of prior periods is restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. Accordingly, business combination is accounted with effect from April 1, 2020.
The Company has recorded the asset and liabilities of the transferor company vested in it pursuant to this Scheme at the respective book values appearing in the books of the transferor company.
The value of investment in the transferor company in the books of the Company has been cancelled.
No adjustments are made to reflect fair values, or recognise any new assets or liabilities.
As per clarification in Ind AS Transition Facilitation Group (ITFG) Clarification Bulletin 9, Goodwill has been recognised in the books of the Company.
The difference between the net assets of the transferor company transferred to the Company, after making adjustment specified in (c) and (e) has been adjusted in ''Other Equity'' of the Company.
The materiality threshold limits followed by the company and the erstwhile subsidiary company OMPL were different based on the judgement of the respective management of both the companies. However, the impact of same in the restated financial statement is immaterial.
The Company also operates in special economic zone (SEZ) in Mangalore, accordingly is eligible for certain economic benefits such as exemptions from GST, custom duty, excise duty, service tax , value added tax, entry tax, etc. which are in the nature of government assistance. These benefits are subject to fulfilment of certain obligations by the Company.
The Company has a periodic system of physical verification of Inventory, Property, Plant and Equipment and capital stores in a phased manner to cover all items over a period. Adjustment differences, if any, is carried out on completion of reconciliation.
The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.
Some balances of trade and other receivables, trade and other payables and loans are subject to confirmation/reconciliation. Adjustments, if any, will be accounted for on confirmation/reconciliation of the same, which will not have a material impact.
The Company has assessed the possible effect that may result from COVID-19 pandemic / Russia-Ukraine War, which is not significant on the carrying amounts of Property, Plant and Equipment, Inventories, Receivables and Other Current Assets. The demand for Companyâs products is expected to be lower in the short term which is not likely to have a continuing impact on the business operations of the Company. In the opinion of the management, the carrying amount of these assets will be recovered.
Figures in parenthesis as given in these notes to financial statements relate to previous years. Previous year figures have been regrouped wherever required.
The financial statements were approved for issue by the Board of Directors on May 11, 2022.
Mar 31, 2019
1. Corporate information
Mangalore Refinery and Petrochemicals Limited (''MRPL'' or ''the Company'') is a Central public sector enterprise domiciled and incorporated in India having its registered office at Mudapadav, Kuthethoor P.O. via Katipalla, Mangaluru, Karnataka -575030. The Company''s equity shares are listed and traded on BSE Limited and National Stock Exchange Limited, stock exchanges. The Company is engaged in the business of refining of crude oil. The Company is a subsidiary of Oil and Natural Gas Corporation Limited which holds 71.63% equity shares.
2. Application of new and revised Indian Accounting Standards
All the Indian Accounting Standards issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) till the financial statements are authorized have been considered in preparing these financial statements.
2.1 Recent accounting pronouncements
The Ministry of Corporate Affairs ("MCA"), through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified the following new and amendments to Ind ASs which the Company has not applied as they are effective from April 1, 2019
(a) New Indian Accounting Standards (Ind AS) issued but not yet effective
Ind AS-116 - Leases
Ind AS 116 will replace the existing leases standard, Ind AS 17 Leases. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on-balance sheet lessee accounting model for lessees. A lessee recognises right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17.
The Company is evaluating the requirements of the amendments and its effect on the Standalone Financial Statements.
(b) Amendments to Indian Accounting Standards (Ind AS) issued but not yet effective
Ind AS 12 - Income taxes (amendments relating to income tax consequences of dividend and uncertainty over income tax treatments)
The amendment relating to income tax consequences of dividend clarify that an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. The Company does not expect any impact from this pronouncement.
The amendment to Appendix C of Ind AS 12 specifies that the amendment is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. It outlines the following: (1) the entity has to use judgement, to determine whether each tax treatment should be considered separately or whether some can be considered together. The decision should be based on the approach which provides better predictions of the resolution of the uncertainty (2) the entity is to assume that the taxation authority will have full knowledge of all relevant information while examining any amount (3) entity has to consider the probability of the relevant taxation authority accepting the tax treatment and the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates would depend upon the probability. The Company does not expect any significant impact of the amendment on its financial statements.
Ind AS 109 - Prepayment Features with Negative Compensation
The amendments relate to the existing requirements in Ind AS 109 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. The Company does not expect this amendment to have any impact on its financial statements.
Ind AS 19 - Employee Benefits Plan Amendment, Curtailment or Settlement
The amendments clarify that if a plan amendment, curtailment or settlement occurs, it is mandatory that the current service cost and the net interest for the period after the re-measurement are determined using the assumptions used for the remeasurement. In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. The Company does not expect this amendment to have any significant impact on its financial statements.
Ind AS 23 - Borrowing Costs
The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. The Company does not expect any impact from this amendment.
Ind AS 28 - Long-term Interests in Associates and Joint Ventures
The amendments clarify that an entity applies Ind AS 109 Financial Instruments, to longterm interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. The Company does not currently have any long-term interests in associates and joint ventures.
Ind AS 103 - Business Combinations
The amendments to Ind AS 103 relating to re-measurement clarify that when an entity obtains control of a business that is a joint operation, it re-measures previously held interests in that business.
Ind AS 111 - Joint Arrangements
The amendments to Ind AS 111 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not re-measure previously held interests in that business. The Company will apply the pronouncement if and when it obtains control / joint control of a business that is a joint operation.
a) These leasehold lands are considered as finance lease in nature as the ownership will be transferred to the Company at the end of the lease period . These leasehold lands are not depreciated.
b) Leasehold lands includes land amounting to Rs. 265.06 million (As at March 31, 2018 Rs. 36.56 million), which is in possession of the Company towards which formal lease deeds are yet to be executed.
c) Plant and equipment include Rs. 39.15 million (As at March 31, 2018 Rs. 39.15 million) being Company''s share of an asset jointly owned with another company.
3.1 Property plant and equipment pledged as security (Refer note 21):
External Commercial Borrowing are secured by first pari passu charge over immovable property, plant & equipment and first ranking pari passu charge over movable property, plant & equipment (including but not limited to plant and machinery, spares, tools, furniture, fixture, vehicles and all other movable property, plant & equipment) both present and future.
Working capital borrowings from consortium banks are secured by way of first ranking pari passu charge by way of hypothecation of Company''s stocks of Raw material, Finished goods, stock-in-process, stores, spares, components, trade receivables, outstanding money receivables, claims, bills, contract, engagements, securities both present and future and further secured by second ranking pari passu charge over companies movable and immovable property (all property, plant & equipment) both present and future.
3.2 Foreign exchange differences capitalised
Additions to property, plant and equipment includes Rs. 1,351.20 million (For the year ended March 31, 2018 Rs. 27.28 million) in relation to foreign exchange differences. Asset class wise addition details are disclosed below:
3.3 During the previous year, the Company had prepaid unutilised External Commercial Borrowings of Rs. 2,959.33 million. Consequent to the same, the Borrowing costs (net of interest income) and exchange rate variation amounting to Rs. 25.57 million (net) had been adjusted against the Property plant and equipment during the previous year.
3.4 The Company is eligible for certain economic benefits such as exemptions from entry tax, custom duty, etc. on import/ local purchase of capital goods in earlier years. The Company had accounted benefits received for custom duty and entry tax on purchase of property, plant and equipment as government grants. In the previous year, the Company had adjusted the cost of property, plant and equipment as at April 1, 2017 and credited deferred government grant amounting to Rs. 3,618.21 million. The deferred government grant is amortised over the remaining useful life of the property, plant and equipment.
4.1 Additions to CWIP includes borrowing costs amounting to Rs. 232.47 million (For the year ended March 31, 2018 Rs. 13.45 million) and allocated to different class of assets. The rate used to determine the amount of borrowing costs eligible for capitalisation was 7.69% (For the year ended March 31, 2018 was 6.24%) which is the effective interest rate on borrowings.
4.2 Leasehold lands includes land amounting to Rs. 717.31 million (As at March 31, 2018 Rs. 717.31 million), which is in possession of the Company towards which formal lease deeds are yet to be executed.
4.3 Includes loan availed against OIDB, which is secured by way of first ranking pari passu charge by way of hypothecation / mortgage only on property, plant & equipment / projects financed out of loan proceeds of OIDB. (Refer note 21).
a The Company had classified freehold land measuring 102.31 acres as "Current assets- Non-current assets held for sale" based on the Board''s approval in 2007. During the previous year, the Company reclassified the aforesaid land as "Noncurrent assets- Investment Property" based on the Board decision to hold the aforesaid land for capital appreciation.
b The Company has considered the fair value of the freehold land amounting to Rs. 255.80 million as at March 31, 2019 (as at March 31, 2018 Rs. 255.80 million) based on the valuation carried out by independent valuer report dated April 30, 2018. The management has considered the same fair value as there is no significant indication of change in fair value as on March 31, 2019.
5.1 The cost of inventories (cost of sales) recognised as an expense during the year was Rs. 603,544.13 million (For the year ended March 31, 2018 Rs. 442,827.35 million).
5.2 During the previous year, the Company had changed inventory valuation method of Stock-in-trade from FIFO to weighted average method and the impact of the same was not material.
5.3 The method of valuation of inventories has been stated in Note 3.18.
6.1 Generally, the Company enters into long-term sales arrangement with Oil Marketing Companies for domestic sales besides export of products through term contracts and spot international tenders and supplies to SEZ customers. The average credit period on sales ranges from 7 to 45 days (year ended March 31, 2018 ranges from 7 to 45 days). Interest is not charged on trade receivables for the applicable credit period from the date of invoice. For delayed period of payments, interest is charged as per respective arrangements, which is upto 3% per annum (year ended March 31, 2018 upto 2% per annum) over the applicable bank rate on the outstanding balance.
6.2 Usually, the Company collects all receivables from its customers within the applicable credit period. The Company assesses impairment on trade receivables from all the customers on facts and circumstances relevant to each transaction.
6.3 Secured by bank guarantees received from customers.
6.4 The Company has concentration of credit risk due to the fact that the Company has significant receivables from customers mentioned in note 16.2, however these customers are reputed and creditworthy.
6.5 Includes share of costs receivable from Oil Marketing Companies, valued on fair estimate basis at the end of each year and is subject to finalisation of settlements.
7.1 Bank deposits maintained by the Company with banks comprise time deposits, which can be withdrawn at any point of time without prior notice or penalty on the principal.
7.2 Amount deposited in the unclaimed interest on debentures account is earmarked for payment of interest and cannot be used for any other purpose.
7.3 Amount deposited in the unclaimed dividend account is earmarked for payment of dividend and cannot be used for any other purpose.
8.1 Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
8.2 Equity shares reserved for issue under options and contracts or commitments for the sale of shares or disinvestment: Nil (As at March 31, 2018: Nil).
8.3 Equity shares of Rs. 10 each (equivalent to 303,550 equity shares of Rs. 10 each) were forfeited in the year 2009-10 against which amount originally paid up was Rs. 654,000.
9.1 The amount of Rs. 42.17 million ( As at March 31, 2018 Rs. 38.40 million ) shown as deemed equity denotes the fair value of fees towards financial guarantee received from Oil and Natural Gas Corporation Limited without any consideration.
9.2 The Company created capital redemption reserve on redemption of preference share capital during the financial years 2011-12 and 2012-13.
9.3 The Company created securities premium on issue of equity share capital and the same can be utilized as per the requirement of the Companies Act, 2013.
9.4 The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.
9.5 The amount that can be distributed by the Company as dividends to its equity shareholders is determined considering the requirements of the Companies Act, 2013 and the dividend distribution policy of the Company. Thus, the amount reported in general reserves are not entirely distributable.
In respect of the year ended March 31, 2019, the Board of Directors has proposed a final dividend of Rs. 1 /- per share to be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs. 1,752.60 million and the dividend distribution tax thereon amounts to Rs. 360.25 million.
10.1 External Commercial Borrowing (ECB)
10.1.1 External Commerical Borrowing taken by the Company are USD denominated loans and carries variable rate of interest which is six month Libor plus spread (Interest rate as at March 31, 2019 is 3.86% and range of interest rate as at March 31, 2018 was 3.63% to 4.45%).
10.1.2 External Commercial Borrowing are secured by first pari passu charge over immovable property, plant & equipment and first ranking pari passu charge over movable property, plant & equipment (including but not limited to plant and machinery, spares, tools, furniture, fixture, vehicles and all other movable property, plant & equipment) both present and future.
10.1.3 Rs. Nil (As at March 31, 2018 of Rs. 25,722.08 million) is repayable within one year and the same has been shown as "Current maturities of long term debts (secured)" under Note 22.
11.1 Loan from Oil Industry Development Board (OIDB)
11.1.1 Loan from OIDB taken by the Company carries fixed rate of interest (Interest rate as at March 31, 2019 is 7.98% and range of interest rate as at March 31, 2018 was 8.73% to 9.27%).
11.2.2 OIDB loan is secured by way of first ranking pari passu charge by way of hypothecation / mortgage only on property, plant & equipment / projects financed out of loan proceeds of OIDB.
11.2.3 Rs. Nil (As at March 31, 2018 of Rs. 750.00 million) is repayable within one year and the same has been shown as "Current maturities of long term debts" (secured)" under Note 22.
11.3 Deferred payment liabilities: VAT Loan
11.3.1 Deferred payment liability against VAT Loan represents amounts payable on account of "Interest free loan" received from Government of Karnataka. This interest free loan against VAT will be repaybale from March 31, 2028.
11.3.2 The benefit of a Government loan at a below-market rate of interest is treated as a government grant (Ind AS 20). The Interest free loan is recognised and measured in accordance with Ind AS 109, Financial Instruments. The benefit of the Interest free loan is measured as the difference between the initial carrying value of the loan determined in accordance with Ind AS 109, and the proceeds received. The benefit is accounted for in accordance with this Standard.
11.3.3 Deferred payment liabilities - VAT Loan are secured by bank guarantees given by the company.
11.4 Working capital loan from Banks
11.4.1 Working capital borrowings from consortium banks are secured by way of first ranking pari passu charge by way of hypothecation of Company''s stocks of Raw material, Finished goods, stock-in-process, stores, spares, components, trade receivables, outstanding money receivables, claims, bills, contract, engagements, securities both present and future and further secured by second ranking pari passu charge over companies movable and immovable property (all property, plant & equipment) both present and future. Working capital borrowings from banks in the form of overdraft facility against fixed deposits are secured by way of hypothecation on original fixed deposits.
11.5 Term loan from related party
11.5.1 Term loan from related Party (ONGC) taken by the Company carries variable rate of interest which is G-sec yield for 5 years tenor plus spread w.e.f April 1, 2016 (Interest rate as at March 31, 2019 is Nil and as at March 31, 2018 was 7.17%).
11.5.2 Rs. Nil (As at March 31, 2018 of Rs. 6,857.20 million) is repayable within one year and the same has been shown as "Current maturities of long-term debts (unsecured)" under Note 22.
11.6 Deferred payment liabilities: CST
11.6.1 Deferred payment liability represents amount payable on account of sales tax liability to be paid after a specified period to the sales tax authority, Karnataka. Such deferral of sales tax liability is not liable for any interest.
11.6.2 Rs. 218.63 million (As at March 31, 2018 of Rs. 400.00 million) is repayable within one year and the same has been shown as "Current maturities of long term debts (unsecured)" under Note 22.
11.7 Foreign Currency Term Loan (FCTL)
11.7.1 Foreign Currency Term Loan (FCTL) from bank are USD denominated loans and carries variable rate of interest which is one month Libor plus spread (Range of interest rate as at March 31, 2019 is 3.58% to 3.59% and as at March 31, 2018 was 2.81% to 2.97%).
11.7.2 Rs. 3,458.00 million (As at March 31,2018 of '' Nil ) is repayable within one year and the same has been shown as "Current maturities of long term debts (unsecured)" under Note 22.
11.8 Rupee term loan from bank
11.8.1 Term loan from SBI taken by the Company carries variable rate of interest which is three months MCLR plus spread (Interest rate as at March 31, 2019 is 8.39% and as at March 31, 2018 was Nil).
11.8.2 Rs. 6,857.20 million (As at March 31, 2018 of '' Nil) is repayable within one year and the same has been shown as "Current maturities of long-term debts (unsecured)" under Note 22.
11.9 Working capital Term Loan from Banks - ECB
11.9.1 External Commercial Borrowing taken by the Company are USD denominated loans and carries variable rate of interest which is six month Libor plus spread (Interest rate as at March 31, 2019 is 3.96% and as at March 31, 2018 was Nil).
11.10 Foreign currency non repatriable loan (FCNR)
11.10.1 Foreign Currency Non Repatriable Loan from bank are USD denominated loans and carries variable rate of interest which is six month Libor plus spread and is repayable within one year from the date of each disbursement.
11.11 Buyers Credit & Pre/Post Shipment Export Credit
11.11.1 Buyers Credit and Pre/Post Shipment Export Credit from banks are USD denominated loans carries variable rate of interest which is one month Libor plus spread and is repayable within one year from the date of each disbursement.
11.12 Commercial Paper
11.12.1 The Commercial paper issued is unsecured fixed rate debt instrument with tenure of 90 days.
11.13 The repayment schedules disclosed above are based on contractual cash outflows and hence will not reconcile to carrying amounts of such borrowings which are accounted at amortised cost.
12.1 No amount is due for payment to the Investor Education Protection Fund.
12.2 Represents interest payable towards matured debentures.
12.3 Price reduction schedule
Payable against capital goods includes Rs. 259.15 million (As at March 31, 2018 Rs. 177.65 million) relating to amounts withheld from vendors pursuant to price reduction schedule which will be settled on finalisation of proceedings with such vendors. When the withheld amounts are ultimately finalised, the related adjustment is made to the property, plant and equipment prospectively.
13.1 Others include provision for excise duty on closing stock
The Company estimates provision based on substantial degree of estimation for excise duty payable on clearance of goods lying in stock as on March 31, 2019 Rs. 4,531.29 million (As at March 31, 2018 Rs. 3,993.55 million) and has included it in other provision. This provision is expected to be settled when the goods are removed from the factory premises.
13.2 Trade payables include Rs. 9,139.87 million (As at March 31, 2018 of Rs. 5,079.26 million) for which ONGC has given guarantees on behalf of the Company.
13.3 The average credit period on purchases of crude, stores and spares, other raw material, services, etc. ranges from 14 to 60 days (year ended March 31, 2018 ranges from 15 to 60 days). Thereafter, interest is charged upto 6.75% per annum (year ended March 31, 2018 upto 6.75% per annum) over the relevant bank rate as per respective arrangements on the outstanding balances. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
13.4 The Company enjoys benefit of entry tax exemption on crude oil for its Phase III operations which qualifies to be government grant. The Company recognised such grant on net basis and is included in the ''Cost of Materials consumed''. Entry tax exemption on crude oil amounted to Rs. Nil and Rs. 166.76 million for the year ended March 31, 2019 and year ended March 31, 2018 respectively. Upon implementation of Goods and Services Tax w.e.f July 1, 2017, entry tax levy itself stands abolished.
13.5 The Non Management employees wage revision is due for revision effective from January 1, 2017 and the negotiation with the employees union is in progress. Pending final negotiation, the company has made provision for wage revision on estimated basis for the year ended March 31, 2019 amounting to Rs. 255.70 million (Year ended March 31, 2018 Rs. 245.70 million) and is shown under ''Employee benefits expense''.
13.6 The company has generated a total of 8,145,848 Kwh of Solar power for the year ended March 31, 2019 (Year ended March 31, 2018 Nil) and the same are captively consumed. The monetary values of such power generated that are captively consumed are not recognised for the purpose of disclosure in the financial statement.
13.7 Excise duty on sale of product has been included in''Revenue from operations'' and excise duty shown above represents the difference between excise duty on opening and closing stock of finished goods.
13.8 The CSR expenditure comprises the following:
(a) Gross amount required to be spent by the Company during the year: Rs. 906.30 million (Year ended March 31, 2018 Rs. 338.70 million).
(b) Amount spent during the year on:
13.9 The exceptional items for current year is on account of :
(a) Expense of Rs. 228.73 million is towards differential contribution to "MRPL Defined Contribution Pension Scheme" for Management Staff (pertaining to the period January 2007 to March 2018) and Non Management Staff (pertaining to the period April 2007 to March 2018).
(b) Expense of Rs. 339.75 million is on account of estimated cost of purchase of Renewable Energy Certificate (REC) from Indian Energy Exchange (IEX), as per the direction received from Karnataka Electricity Regulatory Commission, for meeting Renewable Energy Purchase Obligation (RPO) from the financial year 2015-16 to 2017-18 based on company''s captive and auxiliary consumption.
(c) Income of Rs. 420.54 million relating to reclaim of input tax credit under Goods and Service Tax Act (GST Act) for the financial year 2017-18 represents the credit taken based on annual mix of products covered under GST and products not covered under GST.
13.10 Exceptional items for the previous year was on account of sharing of terminalling charges collected from oil marketing companies on cross country dispatch retrospectively from financial year 2003-04 amounting to Rs. 258.90 million.
14 Leases
14.1 Obligations under finance leases
14.1.1 The Company has entered into lease agreements for lands which have been classified as finance leases. The ownership of the lands will be transferred to the Company at the end of the lease term with nominal payment of administrative charges. The lease term ranges from 5 - 44 years. The Company has pledged these leasehold lands for obtaining borrowings [Refer note 5.1].
Financial lease obligation as at March 31, 2019 is immaterial (As at March 31, 2018 : immaterial).
14.2 Operating lease arrangements
14.2.1 Leasing arrangements
The Company has entered into arrangements for right of way for pipelines and lease of land which have been classified as operating leases. The lease period for right of way ranges from 11 months to 30 years and for leases of land ranges from 5 to 99 years. In case of leasehold land, the Company does not have option to purchase the land at the end of the lease period. Generally, the lease arrangements for land requires Company to make upfront payments at the time of the execution of the lease arrangement with annual recurring charges with escalations in annual lease rentals.
14.2.3 Non-cancellable operating lease commitments
The Company does not have any non-cancellable lease arrangements.
15. Employee benefit plans
15.1 Defined Contribution plans
The amounts recognized in the financial statements for defined contribution plans are as under:
15.2 Other long term employee benefits
15.2.1 Brief Description: A general description of the type of Other long-term employee benefits are as follows:
a) Earned Leave Benefit (EL):
Accrual - 32 days per year Accumulation up to 300 days allowed
EL accumulated in excess of 15 days is allowed for encashment while in service provided the EL encashed is not less than 5 days.
b) Half Pay Leave (HPL)
Accrual - 20 days per year Encashment while in service is not allowed
Encashment on retirement is permitted; restricted up to 300 days along with Earned leave.
15.2.2 The liability for leaves are recognized on the basis of actuarial valuation.
15 .3 Defined benefit plans
15.3.1 Brief Description: A general description of the type of Defined benefit plans are as follows:
a) Gratuity:
15 days salary for every completed year of service. Vesting period is 5 years and the payment is restricted to Rs. 2 million.
The MRPL- Gratuity Trust was formed on 20th April,2007 and investments of the funds received from the company after actuarial valuation and the investment of the funds upto June 28, 2013 was made in the manner prescribed by Income tax Rule 67(1) of the Income Tax Rules ,1962 as amended from time to time.
The Funds of MRPL- Gratuity Trust after June 28, 2013 is being invested in Group Gratuity Cash Accumulation Scheme (Traditional Fund) in LIC, Bajaj Allianz, HDFC Standard Life Insurance Co., Birla Sunlife Insurance co and Inda First Life Insurance Co.
b) Post-Retirement Medical Benefits:
After retirement, on payment of one time lump sum contribution, the superannuated employee and his/ her dependent spouse and dependent parents will be covered for medical benefit as per the rules of the Company.
c) Resettlement Allowance:
At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Settlement Allowance.
15.3.2 The liability for Defined benefit plans is recognized on the basis of actuarial valuation.
No other post-retirement benefits are provided to these employees.
In respect of the plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2019 by a member firm of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
The rate of discounting based upon the market yield available on Government bonds at the accounting date with a term that matches. The salary growth takes account inflation, seniority, promotion and other relevant factor on long term basis. Expected rate of return on plan assets is based on market expectation, at the beginning of the year, for return over the entire life of the related obligation.
The current service cost and the net interest expense for the year are included in the ''Employee benefits expense'' line item in the statement of profit and loss.
The remeasurement of the net defined benefit liability is included in other comprehensive income. The components of remeasurement of net defined benefit liability recognised in other comprehensive income is Rs. (-) 69.49 million ( previous year Rs. 51.04 million )
The amounts included in the fair value of plan assets of gratuity fund in respect of Company''s own financial instruments and any property occupied by, or other assets used by the reporting enterprise are '' Nil (As at March 31, 2018 Rs.Nil)
Post-Retirement Medical Benefits and terminal benefits and Resettlement allowances are unfunded plans, and no plan assets are involved.
Expected Contribution in respect of Gratuity for next year will be Rs. 85.61 million (For the year ended March 31, 2018 Rs. 59.19 million).
The Company has recognized a gratuity liability of Rs. 97.98 million as at March 31, 2019 (As at March 31, 2018 Rs. 61.10 million).
16. The actual return on plan assets of gratuity was Rs. 57.77 million (As at March 31, 2018 Rs. 44.37 million).
16.1 Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
17. Segment Reporting
The Company has "petroleum products" as single reportable segment.
17 .1 Information about major customers
Company''s significant revenues are derived from sales to oil marketing companies which is 64% and 66% of the Company''s total revenue for the year ending March 31, 2019 & March 31, 2018 respectively. The total sales to such companies amounted to Rs. 380,853.71 million for the year ended March 31, 2019 and Rs. 413,922.96 million for the year ended March 31, 2018.
No customer (excluding oil marketing companies mentioned above) for the years ended March 31, 2019 and March 31, 2018 contributed 10% or more to the Company''s revenue. The total sales to such customer amounted to Nil for the year ended March 31, 2019 and Nil for the year ended March 31, 2018.
18 Related Party Disclosures
18.1 Name of related parties and description of relationship:
A Entity having control over the Company (Holding Company)
Oil and Natural Gas Corporation Limited (ONGC)
B Entity having significant influence over the Company Hindustan Petroleum Corporation Limited (HPCL)
C Subsidiary
ONGC Mangalore Petrochemicals Limited (OMPL)
D Joint Ventures
1 Shell MRPL Aviation Fuels and Services Limited (SMAFSL)
2 Mangalam Retail Services Limited(MRSL) (upto January 16, 2017)
E Trusts (including post retirement employee benefit trust) where in MRPL is having control
1 MRPL Gratuity Fund Trust
2 MRPL Provident Fund Trust
F Key Management Personnel F.1 Non-Executive directors
Shri Shashi Shanker, Chairman, from October 01, 2017 F.2 Executive Directors
1. Shri M. Venkatesh, Managing Director with additional charge of Director (Refinery) from June 1, 2018.
Additional charge of Director (Finance) from November 20, 2018.
2. Shri H. Kumar, Managing Director, from August 14, 2014 to May 31, 2018.
3. Shri M. Venkatesh Director (Refinery), from April 1, 2015 to May 31, 2018.
4. Shri A. K. Sahoo, Director (Finance), from February 1, 2016 to December 11, 2018.
F.3 Other Non-Executive Directors
1 Shri Vinod S. Shenoy, Nominee Director (HPCL) from November 8, 2016
2 Shri Subhash Kumar, Nominee Director (ONGC) from May 15, 2018
3 Shri K.M. Mahesh, Government Nominee Director from November 24, 2017
4 Shri Sanjay Kumar Jain, Government Nominee Director from November 24, 2017
5 Ms. Manjula C, Independent Director from January 31, 2017
6 Shri V.P. Haran , Independent Director from September 08, 2017
7 Shri Sewa Ram , Independent Director from September 08, 2017
8 Dr. G.K. Patel , Independent Director from September 08, 2017
9 Shri Balbir Singh Yadav, Independent Director from September 08, 2017
10 Shri Vivek Mallya, Independent Director from January 7, 2019 F.4 Chief Financial Officer
Shri S. Raviprasad from February 07, 2019 F.5 Company Secretary
Shri Dinesh Mishra, Company Secretary
The above transactions with the government related entities cover transactions that are significant individually and collectively. The Company has also entered into other transactions such as telephone expenses, air travel, fuel purchase and deposits etc. with above mentioned and other various government related entities. These transactions are insignificant individually and collectively and hence not disclosed.
18.2 Relationship, transactions and outstanding balances with ONGC, HPCL, OMPL, PMHBL and ONGC Nile Ganga BV have been disclosed in Note 42.2.1 to 42.2.10 above.
19 Financial instruments
19.1 Capital Management
The Company''s objective when managing capital is to safeguard its ability to continue as going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders; and maintain an optimal capital structure to reduce the cost of capital.
The Company maintains its financial framework to support the pursuit of value growth for shareholders, while ensuring a secure financial base. In order to maintain or adjust the capital structure, the Company may vary the distribution of dividends to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The capital structure of the Company consists of net debt (borrowings as detailed in notes 21 and 22 offset by cash and bank balances) and total equity of the Company.
The Company''s management reviews the capital structure of the Company on quarterly basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital requirements and maintenance of adequate liquidity.
19.2.1 Investments in subsidiary and joint venture have not been disclosed above as these are measured at cost less impairment, if any.
19.3 Financial risk management objectives
The Company''s risk management committee monitors and manages key financial risks relating to the operations of the Company by analysing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
19.4 Market Risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. The major components of market risk are foreign currency exchange risk and interest rate risk.
19.5 Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies, primarily for purchases of crude oil and exports sales and has borrowings denominated in foreign currency; consequently, exposures to exchange rate fluctuations arise. Significant carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows
19.5.1 Foreign currency sensitivity analysis
The Company is mainly exposed to the currency of United States of America (USD). Sensitivity of profit or loss arises mainly from USD denominated receivables and payables.
19.5.2 Forward foreign exchange contracts
The Company has not entered into any forward foreign exchange contracts during the reporting period.
19.6 Interest rate risk management
The Company has availed borrowings at fixed and floating interest rates, hence is exposed to interest rate risk. The Company has not entered into any of the interest rate swaps and hence the Company is exposed to interest rate risk.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate borrowings, the analysis is prepared assuming the amount of the borrowings outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used for disclosing the sensitivity analysis.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company''s profit for the year ended March 31, 2019 would decrease/increase by Rs. 406.14 million (for the year ended March 31, 2018 : decrease/increase by Rs. 389.22 million). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.
19.7 Credit risk management
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from cash and cash equivalents, deposits with banks as well as customers including receivables. Credit risk management considers available reasonable and supportive forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate).
Major customers comprise of public sector undertakings (Oil Marketing Companies - OMCs) and subsidiary Company ONGC Mangalore Petrochemicals Limited (OMPL). Both public sector undertakings (OMCs) and OMPL are having highest credit ratings, carry negligible credit risk. Concentration of credit risk to any other counterparty did not exceed 10% of total monetary assets at any time during the year.
Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
19.8 Liquidity risk management
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due. Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios. The Company manages liquidity risk by maintaining adequate reserves and continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.
The Company has access to financing facilities as described below, of which Rs. 2,463.20 million were unused at the end of the reporting period (As at March 31, 2018 Rs. 2,679.00 million). The Company expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.
19.9 Fair value measurement
The management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values unless otherwise stated.
In respect of all these claims, it is being contested by the Company as not admissible. It is not practicable to make
a realistic estimate of the outflow of resource, if any, for settlement of such claim, pending resolution / award from Arbitrators/ Court.
20. Disputed tax / Duty demands pending in appeal as at 31st March,2019
20.1.1 Income Tax: Rs. 2,990.62 million as at March 31,2019 (As at March 31, 2018 Rs. 2,577.93 million). Against this Rs. 307.24 million as at March 31,2019 (As at March 31, 2018 Rs. 1,898.44 million) is adjusted / paid under protest and is included under tax assets/ liability [Note 13].
20.2.2 Excise Duty: Rs. 6,888.27 million as at March 31,2019 (As at March 31, 2018 Rs. 6,280.26 million). Against this Rs. 182.10 million as at March 31,2019 (As at March 31, 2018 Rs. 133.13 million) is paid under protest and is included under other assets (non current) [Note 14].
20.2.3 Customs Duty: Rs. 873.25 million as at March 31, 2019 (As at March 31, 2018 Rs. 817.25 million).
21. Commitments
21.1 Capital Commitments:
a The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as at March 31, 2019 Rs. 18,170.79 million (As at March 31, 2018 Rs. 9,914.68 million).
b The Company has requested KIADB for an allotment of 1,050 acres of land for Phase IV expansion. The balance capital commitment in this regard is around Rs. 6,407.14 million (As at March 31, 2018 Rs. 6,407.14 million).
c The Company has requested KIADB for an allotment of 47.65 acres of land at Hanagavadi Industrial Area, Davangere District for setting up 2G Ethanol Plant. The balance capital commitment in this regard is around Rs. 367.87 million (As at March 31,2018 Rs. Nil).
21.2 Other Commitments
a Pending commitment on account of Refinery-MRPL is in possession of certain land provisionally measuring 36.69 acres ceded by HPCL for use by MRPL Phase III expansion and upgradation work .The consideration for such land is mutually agreed to be by way of swapping of land in possession of MRPL/HPCL. The final documentation in this regard is pending to be executed.
b Pending commitment on account of Refinery performance improvement programme by M\s.Shell Global International Solution (M\s.Shell GIS) as at March 31, 2019 USD 1.46 million net of advance (As at March 31, 2018 USD 1.46 million net of advance)
c The Company has an export obligation as at March 31,2019 '' Nil (As at March 31, 2018 Rs. 496.81 million) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.
22. Reconciliation of liabilities arising from financing activities.
The table below details change in the Company''s liabilities arising from financing activities, including both cash and non cash changes. Liabilities arising from financing activities are those for which cash flows where, or future cash flows will be, classified in the Company''s statement of cash flows as cash flows from financing activities.
The cash flows bank loans, loans from related parties and other borrowings make up the net amount of proceeds from borrowings and repayments of borrowings in the statement of cash flows.
23. The Company has a periodic system of physical verification of inventory, property, plant and equipment and capital stores in a phased manner to cover all items over a period. Adjustment differences, if any, is carried out on completion of reconciliation.
24. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.
25. Some balances of trade and other receivables, trade and other payables and loans are subject to confirmation/reconciliation. Adjustments, if any, will be accounted for on confirmation/reconciliation of the same, which will not have a material impact.
26. The Board had accorded consent for amalgamation of the subsidiary ONGC Mangalore Petrochemicals Limited with the Mangalore Refinery and Petrochemicals Limited (MRPL), subject to necessary approvals. The Company had received "No Objection" vide letter dated April 18, 2018 from Ministry of Petroleum & Natural Gas. No effect is considered towards the same in the financial statements as it is still at a preliminary stage.
27. Figures in parenthesis as given in these notes to financial statements relate to previous years. Previous year figures have been regrouped wherever required.
28. Approval of financial statements
The financial statements were approved for issue by the board of directors on May 13, 2019.
Mar 31, 2018
1. Corporate information
Mangalore Refinery and Petrochemicals Limited (âMRPLâ or âthe Companyâ) is a Central public sector enterprise domiciled and incorporated in India having its registered office at Mudapadav, Kuthethoor P.O. via Katipalla, Mangaluru, Karnataka -575030. The Companyâs equity shares are listed and traded on BSE Limited and National Stock Exchange Limited, stock exchanges. The Company is engaged in the business of refining of crude oil. The Company is a subsidiary of Oil and Natural Gas Corporation Limited which holds 71.63% equity shares.
2. Application of new and revised Indian Accounting Standards
All the Indian Accounting Standards issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) till the financial statements are authorized have been considered in preparing these financial statements.
2.1. (a) New and amended standards and interpretations
The Company applied for the first time following amendment to the Ind AS which are effective for annual periods beginning on or after 1 April 2017. The nature and the impact of the amendments are described below:
Amendments to Ind AS 7 Statement of Cash Flows: Disclosure Initiative
The amendment requires entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The Company has provided the information for both the current and the comparative period in Note 47.
(b) Recent accounting pronouncements
(i) New Indian Accounting Standard (Ind AS) issued but not yet effective
Ind AS 115 âRevenue from Contracts with Customersâ was notified 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. This new standard requires revenue to be recognised when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
(ii) Amendments to Indian Accounting Standards (Ind AS) issued but not yet effective
The amendments to standards that are issued, but not yet effective, up to the date of issuance of the 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 standards:
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. The Company is evaluating the requirements of these amendments and the effect on the financial statements is being evaluated.
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 derecognition of a non-monetary asset or nonmonetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the nonmonetary asset or non-monetary 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:
(i) The beginning of the reporting period in which the entity first applies the Appendix, or
(ii) 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. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Amendments to Ind AS 40 - Transfers of Investment Property
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 managementâs 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 is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
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 entityâs 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 group that is classified) as held for sale. These amendments are not applicable to the Company.
Ind AS 28 Investments in Associates and Joint Ventures - Clarification that measuring investees at fair value through profit or loss is an investment-by-investment choice
The amendments clarify that:
- An entity that is a venture capital organisation, or other qualifying entity, may elect, at initial recognition on an investment-by-investment basis, to measure its investments in associates and joint ventures at fair value through profit or loss.
- If an entity, that is not itself an investment entity, has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associateâs or joint ventureâs interests in subsidiaries. This election is made separately for each investment entity associate or joint venture, at the later of the date on which: (a) the investment entity associate or joint venture is initially recognised; (b) the associate or joint venture becomes an investment entity; and (c) the investment entity associate or joint venture first becomes a parent.
The amendments should be applied retrospectively and are effective from 1 April 2018. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
3. Critical Accounting Judgments, Assumptions and Key Sources of Estimation Uncertainty
Inherent in the application of many of the accounting policies used in preparing the financial statements is the need for management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual outcomes could differ from the estimates and assumptions used.
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 future periods are affected.
Key source of judgments, assumptions and estimation uncertainty in the preparation of the financial statements which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are in respect of useful lives of property, plant and equipment, employee benefit obligations, provision for income tax and measurement of deferred tax assets.
3.1. Critical judgments in applying accounting policies
The following are the critical judgements, apart from those involving estimations (Refer note 4.2), that the Management have made in the process of applying the Companyâs accounting policies and that have the significant effect on the amounts recognized in the Financial Statements.
(a) Determination of functional currency
Currency of the primary economic environment in which the Company operates (âthe functional currencyâ) is Indian Rupee (â in which the company primarily generates and expends cash. Accordingly, the management has assessed its functional currency to be Indian Rupee (Rs.).
3.2. Assumptions and key sources of estimation uncertainty
Information about estimates and assumptions that have the significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may differ from these estimates.
a) Useful lives of property, plant and equipment and intangible assets
Management reviews its estimate of the useful lives of PPE and intangible assets at each reporting date, based on the future economic benefits expected to be consumed from the assets.
b) Defined benefit obligation (DBO)
Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
c) Provision for income tax
Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions.
d) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties.
e) Impairment of investment in subsidiary
As at March 31, 2018, the Company has carrying amount of Rs.13,346.23 million (As at March 31, 2017: Rs.13,346.23 million) for equity investment made in ONGC Mangalore Petrochemicals Limited (OMPL). OMPL started its operations in the year 2014-15 as a Greenfield project and expected to incur losses during initial phase. The Company has been incurring losses since it started its operations which requires the management to assess impairment of its investment in OMPL.
The management has considered relevant future cash flows, based on assumptions about the future, discounted to their present value. Impairment testing requires longterm assumptions to be made concerning a number of often volatile economic factors such as future market prices, currency exchange rates and future output and discount rate, in order to establish relevant future cash flows.
Based on the aforesaid assessment, the management has concluded that current diminution in the value of investment is due to losses incurred by OMPL is temporary in nature. Accordingly, no impairment exists as at March 31, 2018.
a) These leasehold lands are considered as finance lease in nature as the ownership will be transferred to the Company at the end of the lease period . These leasehold lands are not depreciated.
b) Leasehold lands includes land amounting to Rs.36.56 million (As at March 31, 2017 Rs.28.82 million), which is in possession of the Company towards which formal lease deeds are yet to be executed.
c) Plant and equipment include Rs.39.15 million (As at March 31, 2017 Rs.39.15 million) being Companyâs share of an asset jointly owned with another company.
4.1. Property plant and equipment pledged as security:
External commercial borrowing and loan availed from Oil Industry Development Board (OIDB) are secured by first pari passu charge over immovable property, plant and equipment and first ranking pari passu charge over movable property, plant and equipment both present and future. Working capital borrowings from consortium banks are secured by way of hypothecation of Companyâs stocks of raw material , finished goods, stock-in-process, stores, spares, components, trade receivables, outstanding money receivables, claims, bills, contract, engagements, securities both present and future and further secured by second ranking pari passu charge over Companies movable and immovable property, plant and equipment both present and future (Refer note 22).
4.2 Foreign exchange differences capitalised
Additions to property, plant and equipment includes Rs.27.28 million (For the year ended March 31, 2017 â (766.49) million) in relation to foreign exchange differences. Asset class wise addition details are disclosed below:
4.3 During the year, the Company has prepaid unutilised External Commercial Borrowings of Rs.2,959.33 million. Consequent to the same, the Borrowing costs (net of interest income) and exchange rate variation amounting to Rs.25.57 million (net) has been adjusted against the Property plant and equipment during the current year.
4.4 The Company is eligible for certain economic benefits such as exemptions from entry tax, custom duty, etc. on import/ local purchase of capital goods in earlier years. The Company has accounted benefits received for custom duty and entry tax on purchase of property, plant and equipment as government grants. In the current year, the Company has adjusted the cost of property, plant and equipment as at April 1, 2017 and credited deferred government grant amounting to Rs.3,618.21 million. The deferred government grant is amortised over the remaining useful life of the property, plant and equipment.
5.1 Additions to CWIP includes borrowing costs amounting to Rs.13.45 Million (For the year ended March 31, 2017 Rs. Nil) and allocated to different class of assets. The rate used to determine the amount of borrowing costs eligible for capitalisation was 6.24% (For the year ended March 31, 2017 was nil) which is the effective interest rate on borrowings.
5.2 Leasehold lands includes land amounting to Rs.717.31 million (As at March 31, 2017 Rs.717.31 million), which is in possession of the Company towards which formal lease deeds are yet to be executed.
a The Company classified freehold land measuring 102.31 acres as âCurrent assets- Non-current assets held for saleâ based on the Boardâs approval in 2007. During the current year, the Company has reclassified the aforesaid land as âNoncurrent assets- Investment Propertyâ based on the Board decision to hold the aforesaid land for capital appreciation
b The fair value of the freehold land is Rs.255.80 million as at March 31, 2018 as per valuation carried out by independent valuer.
6.1 Goodwill represents excess of consideration paid over net assets acquired for acquisition of nitrogen plant.
7.1.1 Restrictions on disinvestment of share in ONGC Mangalore Petrochemicals Limited are subject to the approval of the Board of Oil and Natural Gas Corporation Limited.
7.1.2 Restrictions on disinvestment of shares in Shell MRPL Aviation Fuels and Services Limited and Mangalam Retail Services Limited are subject to the approval of the Board of Oil and Natural Gas Corporation Limited.
During the financial year 2016-2017, the Company sold 31% equity stake in MRSL which resulted in loss of joint control over MRSL. As at March 31, 2018 the investment in MRSL has been measured at fair value through profit or loss. The management has considered the fair value (level 3 heirarchy) of such investment equivalent to the carrying amount as at reporting period.
8.1 The cost of inventories (cost of sales) recognised as an expense during the year was Rs.442,827.35 million (For the year ended March 31, 2017 Rs.385,732.81 million).
8.2 During the year, the Company has changed inventory valuation method of Stock-in-trade from FIFO to weighted average method and the impact of the same is not material.
8.3 The method of valuation of inventories has been stated in Note 3.18.
9.1 Generally, the Company enters into long-term sales arrangement with Oil Marketing Companies for domestic sales besides export of products through term contracts and spot international tenders and supplies to SEZ customers. The average credit period on sales ranges from 7 to 45 days. Interest is not charged on trade receivables for the applicable credit period from the date of invoice. For delayed period of payments, interest is charged as per respective arrangements, which is upto 2% per annum over the applicable bank rate on the outstanding balance.
9.2 Of the trade receivables, balance as at March 31, 2018 of Rs.24,116.77 million (As at March 31, 2017 Rs.24,308.83 million) are due from the customers mentioned below. There are no other customers who represent more than 5% of the total balance of trade receivables other than mentioned below.
9.3 Usually, the Company collects all receivables from its customers within the applicable credit period. The Company assesses impairment on trade receivables from all the customers on facts and circumstances relevant to each transaction.
9.4 Secured by bank guarantees received from customers.
9.5 The Company has concentration of credit risk due to the fact that the Company has significant receivables from customers mentioned in note 16.2, however these customers are reputed and creditworthy.
9.6 Includes share of costs receivable from Oil Marketing Companies, valued on fair estimate basis at the end of each year and is subject to finalisation of settlements.
10.1 Bank deposits maintained by the Company with banks comprise time deposits, which can be withdrawn at any point of time without prior notice or penalty on the principal.
10.2 Amount deposited in the unclaimed interest on debentures account is earmarked for payment of interest and cannot be used for any other purpose.
10.3 Amount deposited in the unclaimed dividend account is earmarked for payment of dividend and cannot be used for any other purpose.
10.4 Restricted bank balance represents unutilized capital expenditure fund drawn by way of external commercial borrowing which was kept in a non-interest bearing account as per the Reserve Bank of India guidelines and could be utilised only for the stated purposes.
11.1 Assets held for sale includes certain Property, plant and equipments which have been fully depreciated.
12.1 Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
12.1 Equity shares reserved for issue under options and contracts or commitments for the sale of shares or disinvestment: Nil (As at March 31, 2017: Nil ).
12.2 Equity shares of Rs.10 each (equivalent to 303,550 equity shares of Rs.10 each) were forfeited in the year 2009-10 against which amount originally paid up was Rs.654,000.
13.1 The amount of Rs.38.40 million ( Previous year Rs.30.53 million ) shown as deemed equity denotes the fair value of fees towards financial guarantee received from Oil and Natural Gas Corporation Limited without any consideration.
13.2 The Company created capital redemption reserve on redemption of preference share capital during the financial years 2011-12 and 2012-13.
13.3 The Company created securities premium reserve on issue of equity share capital and the same can be utilized as per the requirement of the Companies Act, 2013.
13.4 The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.
13.5 The amount that can be distributed by the Company as dividends to its equity shareholders is determined considering the requirements of the Companies Act, 2013 and the dividend distribution policy of the Company. Thus, the amount reported in general reserves are not entirely distributable.
In respect of the year ended March 31, 2018, the Board of Directors has proposed a final dividend of Rs.3/- per share to be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs.5,257.80 million and the dividend distribution tax thereon amounts to Rs.1,080.76 million.
14.1 External commercial borrowing (ECB)
14.1.1 ECB taken by the Company are USD denominated loans and carries variable rate of interest which is six month Libor plus spread. These are secured by first pari passu charge over immovable property, plant and equipment and first ranking pari passu charge over movable property, plant and equipment both present and future.
14.1.2 Rs.25,722.08 million (As at March 31, 2017 of Rs.9,945.16 million) is repayable within one year and the same has been shown as âCurrent maturities of long term debts (secured)â under Note 23.
14.2 Loan from Oil Industry Development Board (OIDB)
14.2.1 Loan from OIDB taken by the Company carries fixed rate of interest. These are secured by first pari passu Charge over immovable property, plant and equipment and first ranking pari passu Charge over movable property, plant and equipment both present and future.
14.2.2 Rs.750.00 million (As at March 31, 2017 of Rs.1,750.00 million) is repayable within one year and the same has been shown as âCurrent maturities of long term debtsâ (secured)â under Note 23.
14.3 Deferred payment liabilities: VAT Loan
14.3.1 Deferred payment liability against VAT Loan represents amounts payable on account of âInterest free loanâ received from Government of Karnataka. This interest free loan against VAT will be repaybale from March 31, 2028.
14.3.2 The benefit of a Government loan at a below-market rate of interest is treated as a government grant. The Interest free loan is recognised and measured in accordance with Ind AS 109, Financial Instruments. The benefit of the Interest free loan is measured as the difference between the initial carrying value of the loan determined in accordance with Ind AS 109, and the proceeds received. The benefit is accounted for in accordance with this Standard.
14.3.3 Rs. Nil (As at March 31, 2017 of Rs. Nil ) is repayable within one year and the same has been shown as âCurrent maturities of long term debts (unsecured)â under Note 23.
14.3.4 Deferred payment liabilities - VAT Loan are secured by bank guarantees given by the company.
14.4 Working capital loan from Banks
14.4.1 Working capital borrowings from consortium banks are secured by way of hypothecation of Companyâs stocks of Raw material, Finished goods, stock-in-process, stores, spares, components, trade receivables, outstanding money receivables, claims, bills, contract, engagements, securities both present and future and further secured by second ranking pari passu charge over companies movable and immovable property, plant and equipment both present and future.
14.5 Term loan from related party
14.5.1 Term loan from related Party (ONGC) taken by the Company carries variable rate of interest which is G-sec yield for 5 years tenor plus spread w.e.f April 1, 2016.
14.5.2 Rs.6,857.20 million (As at March 31, 2017 of Rs.6,857.20 million) is repayable within one year and the same has been shown as âCurrent maturities of long-term debts (unsecured)â under Note 23.
14.5.3 Repayment schedule of loan from ONGC is as follows:
14.6 Deferred payment liabilities: CST
14.6.1 Deferred payment liability represents amount payable on account of sales tax liability to be paid after a specified period to the sales tax authority, Karnataka. Such deferral of sales tax liability is not liable for any interest.
14.6.2 Rs.400.00 million (As at March 31, 2017 of Rs.526.54 million) is repayable within one year and the same has been shown as âCurrent maturities of long term debts (unsecured)â under Note 23.
14.6.3 Repayment schedule of Deferred payment liability loan is as follows:
14.7 Foreign Currency Term Loan (FCTL)
14.7.1 Foreign Currency Term Loan (FCTL) from bank are USD denominated loans and carries variable rate of interest which is one month Libor plus spread.
14.7.2 Rs. Nil (As at March 31, 2017 Rs. Nil ) is repayable within one year and the same has been shown as âCurrent maturities of long term debts (unsecured)â under Note 23.
14.7.3 Repayment schedule of Foreign Currency Term Loan (FCTL) is as follows:
14.8 Foreign currency non repatriable loan (FCNR)
14.8.1 Foreign Currency Non Repatriable Loan from bank are USD denominated loans and carries variable rate of interest which is one month Libor plus spread and is repayable within one year from the date of each disbursement.
14.9 Buyers Credit & Pre/Post Shipment Export Credit
14.9.1 Buyers Credit and Pre/Post Shipment Export Credit from banks are USD denominated loans carries variable rate of interest which is one month Libor plus spread and is repayable within one year from the date of each disbursement.
14.10 The repayment schedules disclosed above are based on contractual cash outflows and hence will not reconcile to carrying amounts of such borrowings which are accounted at amortised cost.
15.1 No amount is due for payment to the Investor Education Protection Fund.
15.2 Represents interest payable towards matured debentures.
15.3 Price reduction clause
Payable against capital goods includes Rs.177.65 million (As at March 31, 2017 Rs.985.46 million) relating to amounts withheld from vendors pursuant to price reduction clause which will be settled on finalisation of proceedings with such vendors. When the withheld amounts are ultimately finalised, the related adjustment is made to the property, plant and equipment prospectively.
The Company estimates provision based on substantial degree of estimation for excise duty payable on clearance of goods lying in stock as on March 31, 2018 Rs.3,993.55 million (As at March 31, 2017 Rs.2,797.68 million) and has included it in other provision. This provision is expected to be settled when the goods are removed from the factory premises.
16.1 Trade payables include Rs.5,079.26 million (As at March 31, 2017 of Rs.9,102.11 million) for which ONGC has given guarantees on behalf of the Company.
16.2 The average credit period on purchases of crude, stores and spares, other raw material, services, etc. ranges from 15 to 60 days. Thereafter, interest is charged upto 6.75% p.a. over the relevant bank rate as per respective arrangements on the outstanding balances. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
16.3 Disclosure relating to dues to Micro, Small and Medium Enterprises
17.1 The Company enjoys benefit of entry tax exemption on crude oil for its Phase III operations which qualifies to be government grant. The Company recognised such grant on net basis and is included in the âCost of Materials consumedâ. Entry tax exemption on crude oil amounted to Rs.166.76 million and Rs.563.57 million for the year ended March 31, 2018 and year ended March 31, 2017 respectively. Upon implementation of Goods and Services Tax w.e.f July 1, 2017, entry tax levy itself stands abolished.
18.1 The Ministry of Petroleum and Natural Gas has approved revision of pay and allowances of management employees of the company effective from January 1, 2017. Accordingly salary revision in respect of Management employees has been given effect. The Non Management employees wage revision is due for revision effective from January 1, 2017 and the negotiation with the employees union is in progress. Pending final negotiation, the company has made provision for wage revision on estimated basis for the year ended March 31, 2018 amounting to Rs.245.70 Million (Previous Year Rs.57.38 million) and is shown under âEmployee benefits expenseâ.
19.1 Excise duty on sale of product has been included inâRevenue from operationsâ and excise duty shown above represents the difference between excise duty on opening and closing stock of finished goods.
19.2 The CSR expenditure comprises the following:
(a) Gross amount required to be spent by the Company during the year: Rs.338.70 million (Year ended March 31, 2017 Rs.50.00 million).
(b) Amount spent during the year on:
20.1 The exceptional items for current year is on account of sharing of terminal charges collected from oil marketing companies on cross country dispatch retrospectively from financial year 2003-04 amounting to Rs.258.90 million
Exceptional items for the previous year was on account of exchange rate variation gain arising out of settlement of overdue trade payables which got accumulated on account of non finalisation of remittance channel.
21 Leases
21.1 Obligations under finance leases
21.1.1 The Company has entered into lease agreements for lands which have been classified as finance leases. The ownership of the lands will be transferred to the Company at the end of the lease term with nominal payment of administrative charges. The lease term ranges from 5 - 44 years. The Company has pledged these leasehold lands for obtaining borrowings [Refer Note 5.1].
Financial lease obligation as at March 31, 2018 is immaterial (As at March 31, 2017 : immaterial).
21.2 Operating lease arrangements
21.2.1 Leasing arrangements
The Company has entered into arrangements for right of way for pipelines and lease of land which have been classified as operating leases. The lease period for right of way ranges from 11 months to 30 years and for leases of land ranges from 5 to 99 years. In case of leasehold land, the Company does not have option to purchase the land at the end of the lease period. Generally, the lease arrangements for land requires Company to make upfront payments at the time of the execution of the lease arrangement with annual recurring charges with escalations in annual lease rentals.
21.2.2 Payments recognized as an expense
21.2.3 Non-cancellable operating lease commitments
The Company does not have any non-cancellable lease arrangements.
22.2 Other long term employee benefits
22.2.1 Brief Description: A general description of the type of Other long-term employee benefits is as follows:
a) Earned Leave Benefit (EL):
Accrual - 32 days per year Accumulation up to 300 days allowed
EL accumulated in excess of 15 days is allowed for encashment while in service provided the EL encashed is not less than 5 days.
b) Half Pay Leave (HPL)
Accrual - 20 days per year Encashment while in service is not allowed
Encashment on retirement is permitted; restricted up to 300 days along with Earned leave.
22.2.2 The liability for leaves is recognized on the basis of actuarial valuation.
22.3 Defined benefit plans
22.3.1 Brief Description: A general description of the type of Defined benefit plans is as follows:
a) Gratuity:
15 days salary for every completed year of service. Vesting period is 5 years and the payment is restricted to Rs.2 million.
The MRPL- Gratuity Trust was formed on 20th April,2007 and invesments of the funds received from the company after actuarial valuation and the investment of the funds upto June 28, 2013 was made in the manner prescribed by Income tax Rule 67(1) of the Income Tax Rules ,1962 as amended from time to time.
The Funds of MRPL- Gratuity Trust after June 28, 2013 is being invested in Group Gratuity Cash Accumulation Scheme (Traditional Fund) in LIC, Bajaj Allianz, HDFC Standard Life Insurance Co., Birla Sunlife Insurance co and Inda First Life Insurance Co.
b) Post-Retirement Medical Benefits:
After retirement, on payment of one time lump sum contribution, the superannuated employee and his/ her dependent spouse and dependent parents will be covered for medical benefit as per the rules of the Company.
c) Resettlement Allowance:
At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Settlement Allowance.
22.3.2 The liability for Defined benefit plans is recognized on the basis of actuarial valuation.
22.3.3 These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
No other post-retirement benefits are provided to these employees.
In respect of the plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2018 by a member firm of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
The rate of discounting based upon the market yield available on Government bonds at the accounting date with a term that matches. The salary growth takes account inflation, seniority, promotion and other relevant factor on long term basis. Expected rate of return on plan assets is based on market expectation, at the beginning of the year, for return over the entire life of the related obligation.
22.3.4 Amounts recognised in statement of profit and loss in respect of these defined benefit plans are as follows:
The current service cost and the net interest expense for the year are included in the âEmployee benefits expenseâ line item in the statement of profit and loss.
The remeasurement of the net defined benefit liability is included in other comprehensive income. The components of remeasurement of net defined benefit liability recognised in other comprehensive income is Rs.51.04 million ( previous year Rs.(76.99) million )
23.3.5 The amount included in the Balance sheet arising from the entityâs obligation in respect of its defined benefit plan is as follows :
The amounts included in the fair value of plan assets of gratuity fund in respect of Companyâs own financial instruments and any property occupied by, or other assets used by the reporting enterprise are Rs. Nil (As at March 31, 2017 Rs. Nil)
Post-Retirement Medical Benefits and terminal benefits and Resettlement allowances are unfunded plans, and no plan assets are involved.
Expected Contribution in respect of Gratuity for next year will be Rs.59.19 million (For the year ended March 31, 2017 Rs.94.65 million).
The Company has recognized a gratuity liability of Rs.61.10 million as at March 31, 2018 (As at March 31, 2017 Rs.98.99 million).
22.3.6.1 The actual return on plan assets of gratuity was Rs.44.37 million (As at March 31, 2017 Rs.43.18 million).
22.3.7 Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
23 Segment Reporting
The Company has âpetroleum productsâ as single reportable segment.
23.1 Information about major customers
Companyâs significant revenues are derived from sales to oil marketing companies which is 66% and 68% of the Companyâs total revenue for the year ending 31st March 2018 & 31st March 2017 respectively. The total sales to such companies amounted to Rs.413,922.96 million for the year ended March 31, 2018 and Rs.405,803.37 million for the year ended March 31, 2017.
No customer (excluding oil marketing companies mentioned above) for the years ended March 31, 2018 and March 31, 2017 contributed 10% or more to the Companyâs revenue. The total sales to such customer amounted to Rs. Nil million for the year ended March 31, 2018 and Rs. Nil million for the year ended March 31, 2017.
24 Related Party Disclosures
24.1 Name of related parties and description of relationship:
A Entity having control over the Company (Holding Company)
Oil and Natural Gas Corporation Limited (ONGC)
B Entity having significant influence over the Company Hindustan Petroleum Corporation Limited (HPCL)
C Subsidiary
ONGC Mangalore Petrochemicals Limited (OMPL)
D Joint Ventures
1 Shell MRPL Aviation Fuels and Services Limited (SMAFSL)
2 Mangalam Retail Services Limited(MRSL) (upto January 16, 2017)
E Trusts (including post retirement employee benefit trust) wherein MRPL having control
1 MRPL Gratuity Fund Trust
2 MRPL Provident Fund Trust F Key Management Personnel F.1 Non-Executive directors
Shri Shashi Shanker, Chairman, from October 01, 2017 Shri D. K. Sarraf, Chairman, upto October 01, 2017
F.2 Executive Directors
1. Shri H. Kumar, Managing Director.
2. Shri M. Venkatesh Director (Refinery).
3. Shri A. K. Sahoo, Director (Finance).
F.3 Other Non-Executive Directors
1 Shri Vinod S. Shenoy, Nominee Director (HPCL)
2 Smt.Perin Devi, Government Nominee Director, upto November 24, 2017.
3 Shri Diwakar Nath Misra, Government Nominee Director, upto November 24, 2017.
4 Shri K.M. Mahesh, Government Nominee Director, from November 24, 2017.
5 Shri Sanjay Kumar Jain, Government Nominee Director, from November 24, 2017.
6 Ms.Manjula C, Independent Director.
7 Shri V.P. Haran , Independent Director, from September 08, 2017.
8 Shri Sewa Ram , Independent Director, from September 08, 2017.
9 Shri G.K. Patel , Independent Director, from September 08, 2017.
10 Shri Balbir Singh Yadav , Independent Director, from September 08, 2017.
F.4 Company Secretary
Shri Dinesh Mishra, Company Secretary
The above transactions with the government related entities cover transactions that are significant individually and collectively. The Company has also entered into other transactions such as telephone expenses, air travel, fuel purchase and deposits etc. with above mentioned and other various government related entities. These transactions are insignificant individually and collectively and hence not disclosed.
24.1.1 Relationship, transactions and outstanding balances with ONGC, HPCL, OMPL, PMHBL and ONGBV have been disclosed in Note 42.2.1 to 42.2.10 above.
25 Financial instruments
25.1 Capital Management
The Companyâs objective when managing capital is to safeguard its ability to continue as going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders; and maintain an optimal capital structure to reduce the cost of capital.
The Company maintains its financial framework to support the pursuit of value growth for shareholders, while ensuring a secure financial base. In order to maintain or adjust the capital structure, the Company may vary the distribution of dividends to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The capital structure of the Company consists of net debt (borrowings as detailed in notes 22 and 23 offset by cash and bank balances) and total equity of the Company.
The Companyâs management reviews the capital structure of the Company on quarterly basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital requirements and maintenance of adequate liquidity.
25.1.1 Gearing Ratio
The gearing ratio at the end of the reporting period is computed as follows:
The gearing ratio is worked out as follows
25.2.1 Investments in subsidiary and joint ventures have not been disclosed above as these are measured at cost less impairment, if any
25.3 Financial risk management objectives
The Companyâs risk management committee monitors and manages key financial risks relating to the operations of the Company by analyzing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
25.4 Market Risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. The major components of market risk are foreign currency exchange risk and interest rate risk.
25.5 Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies, primarily for purchases of crude oil and exports sales and has borrowings denominated in foreign currency; consequently, exposures to exchange rate fluctuations arise. Significant carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows :-
25.5.1 Foreign currency sensitivity analysis
The Company is mainly exposed to the currency of United States of America (USD). Sensitivity of profit or loss arises mainly from USD denominated receivables and payables.
As per managementâs assessment of reasonable possible changes in the exchange rate of /- 5% between USD-INR currency pair, sensitivity of profit or loss only on outstanding foreign currency denominated monetary items at the period end is presented below:
25.5.2 Forward foreign exchange contracts
The Company has not entered into any forward foreign exchange contracts during the reporting period.
25.6 Interest rate risk management
The Company has availed borrowings at fixed and floating interest rates, hence is exposed to interest rate risk. The Company has not entered into any of the interest rate swaps and hence the Company is exposed to interest rate risk.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate borrowings, the analysis is prepared assuming the amount of the borrowings outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used for disclosing the sensitivity analysis.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Companyâs profit for the year ended March 31, 2018 would decrease/increase by Rs.389.22 million (for the year ended March 31, 2017 : decrease/increase by Rs.318.68 million). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.
25.7 Credit risk management
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from cash and cash equivalents, deposits with banks as well as customers including receivables. Credit risk management considers available reasonable and supportive forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate).
Major customers, being public sector undertakings oil marketing companies having highest credit ratings, carry negligible credit risk. Concentration of credit risk to any other counterparty did not exceed 10% of total monetary assets at any time during the year.
Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
25.8 Liquidity risk management
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due. Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios. The Company manages liquidity risk by maintaining adequate reserves and continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.
The following table details the Companyâs expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Companyâs liquidity risk management as the liquidity is managed on a net asset and liability basis.
The Company has access to financing facilities as described below, of which Rs.2,679.00 million were unused at the end of the reporting period (As at March 31, 2017 Rs.3,239.60 million). The Company expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.
25.9 Fair value measurement
The management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values unless otherwise stated.
In respect of all these claims, it is being contested by the Company as not admissible. It is not practicable to make a realistic estimate of the outflow of resource, if any, for settlement of such claim, pending resolution / award from Arbitrators/ Court.
26.1 Disputed tax / Duty demands pending in appeal as at 31st March, 2018
26.1.1 Income Tax: Rs.2,577.93 million as at March 31,2018 (As at March 31, 2017 Rs.4,231.68 million). Against this Rs.1,898.44 million as at March 31,2018 (As at March 31, 2017 Rs.3,994.28 million) is adjusted / paid under protest and is included under tax assets/ liability [Note 13].
26.1.2 Commercial Tax: Rs. Nil as at March 31,2018 (As at March 31, 2017 Rs.0.43 million). Against this Rs. Nil as at March 31,2018 (As at March 31, 2017 Rs.0.21 million) is paid under protest and is included under other assets (non current) [Note 14].
26.1.3 Excise Duty: Rs.6,280.26 million as at March 31,2018 (As at March 31, 2017 Rs.5,962.90 million). Against this Rs.133.13 million as at March 31,2018 (As at March 31, 2017 Rs.130.06 million) is paid under protest and is included under other assets (non current) [note 14].
26.1.4 Customs Duty: Rs.817.25 million as at March 31,2018 (As at March 31, 2017 Rs.777.54 million).
27 Commitments
27.1 Capital Commitments:
The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as at March 31, 2018 Rs.9,914.68 Million (As at March 31, 2017 Rs.3,012.07 million). The Company has requested KIADB for an allotment of 1,050 acres of land for Phase IV expansion. The total capital commitment in this regard is around Rs.6,407.14 million (As at March 31,2017 Rs.1,042.02 million).
27.2 Other Commitments
a Pending commitment on account of Refinery-MRPL is in possession of certain land provisionally measuring 36.69 acres ceded by HPCL for use by MRPL Phase III expansion and upgradation work .The consideration for such land is mutually agreed to be by way of swapping of land in possession of MRPL/HPCL. The final documentation in this regard is pending to be executed.
b Pending commitment on account of Refinery performance improvement programme by M\s.Shell Global International Solution (M\s.Shell GIS) as at March 31, 2018 USD 1.46 Million net of advance (As at March 31, 2017 USD 1.46 Million net of advance)
c The Company has an export obligation as at March 31,2018 Rs.496.81 million (As at March 31, 2017 Rs.1,313.68 million) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.
28 Reconciliation of liabilities arising from financing activities.
The table below details change in the Companyâs liabilities arising from financing activities, including both cash and non cash changes. Liabilities arising from financing activities are those for which cash flows where, or future cash flows will be, classified in the Companyâs statement of cashflows as cashflows from financing activities.
The cash flows bank loans, loans from related parties and other borrowings make up the net amount of proceeds from borrowings and repayments of borrowings in the statement of cash flows.
29 The Company has a periodic system of physical verification of inventory, property, plant and equipment and capital stores in a phased manner to cover all items over a period. Adjustment differences, if any, is carried out on completion of reconciliation.
30 The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.
31 Some balances of trade and other receivables, trade and other payables and loans are subject to confirmation/reconciliation. Adjustments, if any, will be accounted for on confirmation/reconciliation of the same, which will not have a material impact.
32 The Board had accorded consent for amalgamation of the subsidiary ONGC Mangalore Petrochemicals Limited with the Mangalore Refinery and Petrochemicals Limited (MRPL), subject to necessary approvals. The Company has now received âNo Objectionâ vide letter dated April 18, 2018 from Ministry of Petroleum & Natural Gas. No effect is considered towards the same in the financial statements as it is still at a preliminary stage.
33 Figures in parenthesis as given in these notes to financial statements relate to previous years. Previous year figures have been regrouped wherever required.
34 Approval of financial statements
The financial statements were approved for issue by the board of directors on May 15, 2018
Mar 31, 2017
1. Corporate information
Mangalore Refinery and Petrochemicals Limited (âMRPLâ or âthe Companyâ) is a Central public sector enterprise domiciled and incorporated in India having its registered office at Mudapadav, Kuthethoor P.O. via Katipalla, Mangaluru, Karnataka -575030. The Companyâs equity shares are listed and traded on BSE Limited and National Stock Exchange Limited, stock exchanges. The Company is engaged in the business of refining of crude oil. The Company is a subsidiary of Oil and Natural Gas Corporation Limited which holds 71.63% equity shares.
2. Application of new and revised Indian Accounting Standards
All the Indian Accounting Standards issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) till the financial statements are authorized have been considered in preparing these financial statements.
2.1. Standards / Amendments issued but not yet effective
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, âStatement of cash flowsâ and Ind AS 102, âShare-based payment.â These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, âStatement of cash flowsâ and IFRS 2, âShare-based payment,â respectively. The amendments are applicable to the Company from April 1, 2017.
Amendment to Ind AS 7:
The amendment to Ind AS 7 requires the entities 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, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
As the Company has not issued any stock options plans, hence this amendment will have no effect on the Companyâs financial statements.
3. Critical Accounting Judgments, Assumptions and Key Sources of Estimation Uncertainty
Inherent in the application of many of the accounting policies used in preparing the financial statements is the need for management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual outcomes could differ from the estimates and assumptions used.
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 future periods are affected.
Key source of judgments, assumptions and estimation uncertainty in the preparation of the financial statements which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are in respect of useful lives of property, plant and equipment, employee benefit obligations, provision for income tax and measurement of deferred tax assets.
3.1. Critical judgments in applying accounting policies
The following are the critical judgements, apart from those involving estimations (Refer note 4.2), that the Management have made in the process of applying the Companyâs accounting policies and that have the significant effect on the amounts recognized in the Financial Statements.
(a) Determination of functional currency
Currency of the primary economic environment in which the Company operates (âthe functional currencyâ) is Indian Rupee (â in which the company primarily generates and expends cash. Accordingly, the management has assessed its functional currency to be Indian Rupee (â).
3.2. Assumptions and key sources of estimation uncertainty
Information about estimates and assumptions that have the significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may differ from these estimates.
a) Useful lives of property, plant and equipment and intangible assets
Management reviews its estimate of the useful lives of PPE and intangible assets at each reporting date, based on the future economic benefits expected to be consumed from the assets.
b) Defined benefit obligation (DBO)
Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
c) Provision for income tax
Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions.
d) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties.
a These leasehold lands are considered as finance lease in nature as the ownership will be transferred to the Company at the end of the lease period . These leasehold lands are not depreciated.
b Leasehold lands includes land amounting to Rs.28.82 million (As at March 31, 2016 Rs.28.82 million; As at April 1, 2015 Rs.28.82 million), which is in possession of the Company towards which formal lease deeds are yet to be executed.
c Plant and equipment include Rs.39.15 million (As at March 31, 2016 Rs.39.15 million; As at April 1, 2015 Rs.39.15 million) being Companyâs share of an asset jointly owned with another company.
4.1 The Company has elected to continue with the carrying value of its property, plant and equipment recognised as of April 1, 2015 measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per para D7AA of Ind AS 101 âFirst-time adoption of Indian Accounting Standardsâ [Refer note 3.24.7]. The deemed cost is further reduced for the unamortised transaction costs on borrowings as at April 1, 2015, which were earlier capitalised with Property, Plant and Equipment.
4.2 Property plant and equipment pledged as security:
External commercial borrowing and loan availed from Oil Industry Development Board (OIDB) are secured by first pari passu charge over immovable property, plant and equipment and first ranking pari passu charge over movable property, plant and equipment both present and future. Working capital borrowings from consortium banks are secured by way of hypothecation of Companyâs stocks of raw material , finished goods, stock-in-process, stores, spares, components, trade receivables, outstanding money receivables, claims, bills, contract, engagements, securities both present and future and further secured by second ranking pari passu charge over Companies movable and immovable property, plant and equipment both present and future [Refer note 21].
4.3 Foreign exchange differences and borrowing costs capitalised
Additions to property, plant and equipment includes â (766.49) million (For the year ended March 31, 2016 Rs.2,406.17 million) in relation to foreign exchange differences and Nil (For the year ended March 31, 2016 Rs.124.17 million) borrowing costs capitalised. Asset class wise addition details are disclosed below:
4.4 The rate used to determine the amount of borrowing costs eligible for capitalisation was NIL (For the year ended March 31, 2016 was 6.94 %) which is the effective interest rate on borrowings.
4.5 Under the Previous GAAP, the Company reported an amount of Rs.138,226.10 million as carrying amount of plant and equipment as at March 31, 2015. During the year ended March 31, 2016 the Company made an adjustment of Rs.499.67 million to comply with requirements of Schedule II of the Companies Act, 2013. The same amount is taken in the opening balance of plant and equipment with corresponding adjustment to retained earnings as at April 1, 2015. Accordingly, an amount of Rs.137,726.43 million (Rs.138,226.10 million minus Rs.499.67 million) has been considered as deemed cost on transition date. Deferred tax impact was Rs.172.93 million on account of this adjustment.
4.6 The Company is eligible for certain economic benefits such as exemptions from entry tax, custom duty, etc. on import/ local purchase of capital goods in earlier years amounting to Rs.3,622.28 million. The Company has not made retrospective adjustment to the value of the respective property, plant and equipment as they are in the nature of Government assistance rather than Goverment grant as defined in Ind AS 20.
5. Capital work-in-progress (CWIP)
5.1 Additions to CWIP includes exchange differences amounting to Nil (For the year ended March 31, 2016 Rs.5.26 million) and includes borrowing costs amounting to Rs.Nil (For the year ended March 31, 2016 Rs.2.61 million) and allocated to different class of assets. The rate used to determine the amount of borrowing costs eligible for capitalisation was nil (For the year ended March 31, 2016 was 6.94%) which is the effective interest rate on borrowings.
5.2 CWIP includes nil (For the year ended March 31, 2016: Rs.0.42 million) in relation to depreciation capitalised during construction period.
5.3 The Company has elected to continue with the carrying value of its CWIP recognised as of April 1, 2015 measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per para D7AA of Ind AS 101 âFirst-time Adoption of Indian Accounting Standardsâ [Refer note 3.24.7].
6.1 Goodwill represents excess of consideration paid over net assets acquired for acquisition of nitrogen plant.
6.2 The Company has elected not to apply Ind AS 103 âBusiness Combinationsâ retrospectively in relation to acquisition of nitrogen plant that occurred before the transition date April 1, 2015 [Refer note 3.24.3].
7.1 The Company has elected to continue with the carrying value of its other intangible assets, recognised as of April 1, 2015 measured as per the previous GAAP and used that carrying value as its deemed cost as on the transition date as per para D7AA of Ind AS 101 âFirst-time Adoption of Indian Accounting Standardsâ [Refer note 3.24.7].
8.1.1 The Company has elected to continue with the carrying value of its investment in subsidiary and joint ventures measured as per the Previous GAAP and used that carrying value on the transition date April 1, 2015 as per Para D15(b)(ii) of Ind AS 101.
8.1.2 Restrictions on disinvestment of share in ONGC Mangalore Petrochemicals Limited are subject to the approval of the Board of Oil and Natural Gas Corporation Limited.
8.1.3 Restrictions on disinvestment of shares in Shell MRPL Aviation Fuels and Services Limited and Mangalam Retail Services Limited are subject to the approval of the Oil and Natural Gas Corporation Limited.
9.1 The cost of inventories (cost of sales) recognised as an expense during the year in respect of continuing operations was Rs.385,732.81 million (For the year ended March 31, 2016 Rs.368,305.20 million).
9.2 The method of valuation of inventories has been stated in Note 3.18.
10.1 Generally, the Company enters into long-term sales arrangement with Oil Marketing Companies for domestic sales besides export of products through term contracts and spot international tenders and supplies to SEZ customers. The average credit period on sales ranges from 7 to 45 days. Interest is not charged on trade receivables for the applicable credit period from the date of invoice. For delayed period of payments, interest is charged as per respective arrangements, which is upto 3% per annum over the applicable bank rate on the outstanding balance.
10.2 Of the trade receivables, balance as at March 31, 2017 of Rs.24,308.83 million (As at March 31, 2016 Rs.21,531.97 million and as at April 1, 2015 Rs.23,180.40 million are due from the customers mentioned below. There are no other customers who represent more than 5% of the total balance of trade receivables other than mentioned below.
10.3 Usually, the Company collects all receivables from its customers within the applicable credit period. The Company assesses impairment on trade receivables from all the customers on facts and circumstances relevant to each transaction.
10.4 Secured by bank guarantees received from customers.
10.5 The Company has concentration of credit risk due to the fact that the Company has significant receivables from customers mentioned in note 15.2, however these customers are reputed and credit worthy.
11.1 Bank deposits maintained by the Company with banks comprise time deposits, which can be withdrawn at any point of time without prior notice or penalty on the principal.
11.2 Amount deposited in the unclaimed interest on debentures account is earmarked for payment of interest and cannot be used for any other purpose.
11.3 Amount deposited in the unclaimed dividend account is earmarked for payment of dividend and cannot be used for any other purpose.
11.4 Restricted bank balance represents unutilized capital expenditure fund drawn by way of external commercial borrowing which has been kept in a non-interest bearing account as per the Reserve Bank of India guidelines and can be utilised only for the stated purposes.
12.1 Based on the Boardâs approval in the year 2007, the Company has been reclassifying unutilised freehold land to be disposed of as âAssets held for saleâ under â Current assetsâ. The Company intends to dispose off the freehold land in the next twelve months rather than utilising it for business purposes. The Company is actively searching prospective buyer. No impairment loss was recognised on reclassification of the freehold land as at March 31, 2017 as the Company expects that the fair value (estimated based on the recent market prices of similar properties in similar locations) less costs to sell is higher than the carrying amount.
12.2 Assets held for sale includes certain Property, plant and equipments which have been fully depreciated.
13.1 Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
13.2 Details of equity shares held by the holding company or its subsidiaries or its associates are as under:-
13.3 Details of shareholders holding more than 5% equity shares in the Company are as under:-
13.4 Equity shares reserved for issue under options and contracts or commitments for the sale of shares or disinvestment: Nil (As at March 31, 2016: Nil ; As at April 1, 2015: Nil).
13.5 Equity shares of Rs.10 each (equivalent to 303,550 equity shares of Rs.10 each) were forfeited in the year 2009-10 against which amount originally paid up was Rs.654,000.
14.1 The Company created capital redemption reserve on redemption of preference share capital during the financial years 2011-12 and 2012-13.
14.2 The Company created securities premium reserve on issue of equity share capital and the same can be utilized as per the requirement of the Companies Act, 2013.
14.3 The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.
14.4 The amount that can be distributed by the Company as dividends to its equity shareholders is determined considering the requirements of the Companies Act, 2013 and the dividend distribution policy of the Company. Thus, the amount reported in general reserves are not entirely distributable.
In respect of the year ended March 31, 2017, the Board of Directors has proposed a final dividend of Rs.6/- per share to be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs.10,515.59 million and the dividend distribution tax thereon amounts to Rs.2,140.73 million.
15.1 External commercial borrowing (ECB)
15.1.1 ECB taken by the Company are USD denominated loans and carries variable rate of interest which is LIBOR (6 months) plus spread. These are secured by first pari passu charge over immovable property, plant and equipment and first ranking pari passu charge over movable property, plant and equipment both present and future.
15.1.2 Rs.9,945.16 million (As at March 31, 2016 of Rs.2,600.25 million, As at April 1, 2015 of Rs.1,266.93 million) is repayable within one year and the same has been shown as âCurrent maturities of long term debts (secured)â under Note 22.
15.2 Loan from Oil Industry Development Board (OIDB)
15.2.1 Loan from OIDB taken by the Company carries fixed rate of interest. These are secured by first pari passu Charge over immovable property, plant and equipment and first ranking pari passu Charge over movable property, plant and equipment both present and future. Prior to December 10, 2015 the loan from OIDB was unsecured.
15.2.2 Rs.1,750.00 million (As at March 31, 2016 of Rs.2,750.00 million, As at April 1, 2015 of Rs.2,750.00 million) is repayable within one year and the same has been shown as âCurrent maturities of long term debtsâ (secured)â as at march 31, 2017 and as at march 31,2016 and âCurrent maturities of long term debts (unsecured)â as at April 1,2017 under Note 22.
15.3 Working capital loan from Banks
15.3.1 Working capital borrowings from consortium banks are secured by way of hypothecation of Companyâs stocks of Raw material , Finished goods, stock-in-process, stores, spares, components, trade receivables, outstanding money receivables, claims, bills, contract, engagements, securities both present and future and further secured by second ranking pari passu charge over companies movable and immovable property, plant and equipment both present and future.
15.4 Term loan from related party
15.4.1 Term loan from related Party (ONGC) taken by the Company carries variable rate of interest which is G-sec yield for 5 years tenor plus spread w.e.f April 1, 2016 (earlier SBAR minus spread).
15.4.2 Rs.6,857.20 million (As at March 31, 2016 of Rs.6,857.20 million, As at April 1, 2015 of Rs.6,857.20) is repayable within one year and the same has been shown as âCurrent maturities of long-term debts (unsecured)â under Note 22.
15.5 Deferred payment liabilities
15.5.1 Deferred payment liability represents amount payable on account of sales tax liability to be paid after a specified period to the sales tax authority. Such deferral of sales tax liability is not liable for any interest. The Company has applied the mandatory exception provided under Ind AS 101 and accordingly has not fair valued the deferred payment liabilities that existed as at April 1, 2015.
15.5.2 Rs.526.54 million (As at March 31, 2016 of Rs.458.17 million, As at April 1, 2015 of Rs.555.83) is repayable within one year and the same has been shown as âCurrent maturities of long term debts (unsecured)â under Note 22.
15.6 Foreign currency non repatriable loan (FCNR)
15.6.1 Foreign Currency Non Repatriable Loan from bank are USD denominated loans carries variable rate of interest which is LIBOR (6 months) plus spread and is repayable at the end of one year from the date of each disbursement.
15.7 The repayment schedules disclosed above are based on contractual cash outflows and hence will not reconcile to carrying amounts of such borrowings which are accounted at amortised cost.
16.1 No amount is due for payment to the Investor Education Protection Fund.
16.2 Unclaimed interest on matured debentures represents interest payable towards disputed claims.
16.3 Price reduction clause
Payable against capital goods includes Rs.985.46 million (As at March 31, 2016 Rs.2,024.28 million, As at April 1, 2015 Rs.1,557.42 million) relating to amounts withheld from vendors pursuant to price reduction clause which will be settled on finalisation of proceedings with such vendors. When the withheld amounts are ultimately finalised, the related adjustment is made to the property, plant and equipment prospectively.
17.1 Trade payables include Rs.9,102.11 million (As at March 31, 2016 of Rs.4,638.87 million; As at April 1, 2015 of Rs.3,282.95 million) for which ONGC has given guarantees on behalf of the Company.
17.2 The average credit period on purchases of crude, stores and spares, other raw material, services, etc. ranges from 7 to 90 days. Thereafter, interest is charged upto 6.75% p.a. over the relevant bank rate as per respective arrangements on the outstanding balances. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
18.1 Net of amount receivable/ payable from/to gratuity trust.
19.1 Provision for revision in salary w.e.f January 01, 2017 is considered as per recommendation of âThird Pay Revision Committee Reportâ.
19.1 Excise duty on sale of product has been included in âRevenue from operationsâ and excise duty shown above represents the difference between excise duty on opening and closing stock of finished goods.
19.2 The CSR expenditure comprises the following:
(a) Gross amount required to be spent by the Company during the year: Rs.50.00 million (Year ended March 31, 2016 Rs.23.40 million).
(b) Amount spent during the year on:
20.1 Exceptional items for the current year is on account of exchange rate variation gain arising out of settlement of overdue trade payables which got accumulated on account of non finalisation of remittance channel.
20.2 The exceptional items for the previous year consists of Rs.1,541.87 million expenses arising out of differential wharfage for the period October 16, 2009 to March 31, 2015 paid as per order issued by Ministry of Shipping, Government of India, Rs.211.15 million towards adhoc contribution to Super Annuation Benefit Fund for the non-management staff as per Long Term settlement signed effective April 01, 2007 (contribution pertains to the period April 2007 to March 2015) and Rs.76.92 million on account of re-worked out Custom Duty on the basis of judgment of Honâble Supreme Court in MRPLâs Civil Appeals.
21 Leases
21.1 Obligations under finance leases
21.1.1 The Company has entered into lease agreements for lands which have been classified as finance leases. The ownership of the lands will be transferred to the Company at the end of the lease term with nominal payment of administrative charges. The lease term ranges from 5 - 44 years. The Company has pledged these leasehold lands for obtaining borrowings [Refer Note 5.2].
Financial lease obligation as at March 31, 2017 is immaterial ( As at March 31, 2016 : immaterial; As at April 1, 2015: immaterial).
21.2 Operating lease arrangements
21.2.1 Leasing arrangements
The Company has entered into arrangements for right of way for pipelines and lease of land which have been classified as operating leases. The lease period for right of way ranges from 11 months to 30 years and for leases of land ranges from 5 to 44 years. In case of leasehold land, the Company does not have option to purchase the land at the end of the lease period. Generally, the lease arrangements for land requires Company to make upfront payments at the time of the execution of the lease arrangement with annual recurring charges with escalations in annual lease rentals.
21.2.2 Payments recognized as an expense
21.2.3 Non-cancellable operating lease commitments
The Company does not have any non-cancellable lease arrangements.
22 Employee benefit plans
22.1 Defined Contribution plans
The amounts recognized in the financial statements for defined contribution plans are as under:
22.2 Other long term employee benefits
22.2.1 Brief Description: A general description of the type of Other long-term employee benefits is as follows:
a) Earned Leave Benefit (EL):
Accrual - 32 days per year Accumulation up to 300 days allowed
EL accumulated in excess of 15 days is allowed for encashment while in service provided the EL encashed is not less than 5 days.
b) Half Pay Leave (HPL)
Accrual - 20 days per year Encashment while in service is not allowed
Encashment on retirement is permitted; restricted up to 300 days along with Earned leave.
22.2.2 The liability for leaves is recognized on the basis of actuarial valuation.
22.3 Defined benefit plans
22.3.1 Brief Description: A general description of the type of Defined benefit plans is as follows:
a) Gratuity:
15 days salary for every completed year of service. Vesting period is 5 years and the payment is restricted to Rs.1 million.
The MRPL- Gratuity Trust was formed on 20th April,2007 and invesments of the funds received from the company after actuarial valuation and the investment of the funds upto June 28, 2013 was made in the manner prescribed by Income tax Rule 67(1) of the Income Tax Rules ,1962 as amended from time to time .
The Funds of MRPL- Gratuity Trust after June 28, 2013 is being invested in Group Gratuity Cash Accumulation Scheme (Traditional Fund) in LIC, Bajaj Allianz, HDFC Standard Life Insurance Co., Birla Sunlife Insurance co and Inda First Life Insurance Co.
b) Post-Retirement Medical Benefits:
After retirement, on payment of one time lump sum contribution, the superannuated employee and his/ her dependent spouse and dependent parents will be covered for medical benefit as per the rules of the Company.
c) Resettlement Allowance:
At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Settlement Allowance.
22.3.2 The liability for Defined benefit plans is recognized on the basis of actuarial valuation.
22.3.3 These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
No other post-retirement benefits are provided to these employees.
In respect of the plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2017 by a member firm of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
22.3.4 The principal assumptions used for the purposes of the actuarial valuations were as follows.
The rate of discounting based upon the market yield available on Government bonds at the accounting date with a term that matches. The salary growth takes account inflation, seniority, promotion and other relevant factor on long term basis. Expected rate of return on plan assets is based on market expectation, at the beginning of the year, for return over the entire life of the related obligation.
22.3.5 Amounts recognised in statement of profit and loss in respect of these defined benefit plans are as follows:
The current service cost and the net interest expense for the year are included in the âEmployee benefits expenseâ line item in the statement of profit and loss.
The remeasurement of the net defined benefit liability is included in other comprehensive income. The components of remeasurement of net defined benefit liability recognised in other comprehensive income is â (75.55) million (previous year Rs.5.28 million)
22.3.6 Movements in the present value of the defined benefit obligation are as follows:
22.3.7 The amount included in the Balance sheet arising from the entityâs obligation in respect of its defined benefit plan is as follows :
The amounts included in the fair value of plan assets of gratuity fund in respect of Companyâs own financial instruments and any property occupied by, or other assets used by the reporting enterprise are Nil (As at March 31, 2016 Nil ; As at April 1, 2015 Nil)
Post-Retirement Medical Benefits and terminal benefits and Resettlement allowances are unfunded plans, and no plan assets are involved.
22.3.8 Movements in the fair value of the plan assets are as follows :
Expected Contribution in respect of Gratuity for next year will be Rs.94.65 million (For the year ended March 31, 2016 Rs.27.08 million)
The Company has recognized a gratuity liability of Rs.98.99 as at March 31, 2017 (As at March 31, 2016 Rs.28.95 million; As at April 1, 2015 Rs.31.68 million).
22.3.9.1 The actual return on plan assets of gratuity was Rs.43.18 million (As at March 31, 2016 Rs.40.56 million).
22.3.10 Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
22.3.11 Sensitivity Analysis as at March 31, 2017
23 Segment Reporting
The Company has âpetroleum productsâ as single reportable segment.
23.1 Information about major customers
Companyâs significant revenues are derived from sales to oil marketing companies which is 68% and 70% of the Companyâs total revenue for the year ending 31st March 2017 & 31st March 2016 respectively. The total sales to such companies amounted to Rs.405,803.37 million for the year ended March 31, 2017 and Rs.354,414.95 million for the year ended March 31, 2016.
Nil customer (excluding oil marketing companies mentioned above) for the year ended March 31, 2017 and [nil] customers (excluding oil marketing companies mentioned above) for the year ended March 31, 2016 contributed 10% or more to the Companyâs revenue. The total sales to such customer amounted to nil million for the year ended March 31, 2017 and nil million for the year ended March 31, 2016.
23.2 Information about geographical areas:
a) The Company is domiciled in India. The amount of its revenue from customers broken down by location of customers is tabulated below:
b) Non-current assets (excluding financial assets and deferred tax assets) broken down by location of customers is tabulated below:
23.3 Revenue from major products
The following is an analysis of the Companyâs revenue from continuing operations from its major products:
24 Related Party Disclosures
24.1 Name of related parties and description of relationship:
A Entity having control over the Company
Oil and Natural Gas Corporation (ONGC)
B Entity having significant influence over the Company
Hindustan Petroleum Corporation Limited (HPCL)
C Subsidiary
ONGC Mangalore Petrochemicals Limited (OMPL)
D Joint Ventures
1 Shell MRPL Aviation Fuels and Services Limited (SMAFSL)
2 Mangalam Retail Services Limited(MRSL) (upto January 16, 2017)
E Trusts (including post retirement employee benefit trust) wherein MRPL having control
1 MRPL Gratuity Fund Trust
2 MRPL Provident Fund Trust F Key Management Personnel F.1 Non-Executive directors
Shri D. K. Saraff (Chairman)
F.2 Executive Directors
1 Shri H. Kumar, Managing Director.
2 Shri M. Venkatesh Director (Refinery).
3 Shri Vishnu Agrawal, Director (Finance) up to January 31, 2016.
4 Shri A. K. Sahoo, Director (Finance) from February 1, 2016.
F.3 Other Non-Executive Directors
1 Shri B.K.Namdeo, Nominee Director (HPCL) upto November 8, 2016.
2 Shri Nalin Kumar Srivastava, Government Nominee Director, upto March 3, 2016.
3 Shri Diwakar Nath Misra, Government Nominee Director, from March 9, 2016.
4 Shri Vinod S. Shenoy, Nominee Director (HPCL), from November 8, 2016.
5 Smt.Perin Devi, Government Nominee Director.
6 Ms.Manjula C, Independent Director, from January 31, 2017.
F.4 Company Secretary
Shri Dinesh Mishra, Company Secretary
The above transactions with the government related entities cover transactions that are significant individually and collectively. The Company has also entered into other transactions such as telephone expenses, air travel, fuel purchase and deposits etc. with above mentioned and other various government related entities. These transactions are insignificant individually and collectively and hence not disclosed.
24.2.1 Transactions and outstanding balances with ONGC, HPCL, OMPL, PMHBL and ONGBV have been disclosed in Note 41.2.1 to 41.2.10 above.
25 Financial instruments
25.1 Capital Management
The Companyâs objective when managing capital is to safeguard its ability to continue as going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders; and maintain an optimal capital structure to reduce the cost of capital.
The Company maintains its financial framework to support the pursuit of value growth for shareholders, while ensuring a secure financial base. In order to maintain or adjust the capital structure, the Company may vary the distribution of dividends to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The capital structure of the Company consists of net debt (borrowings as detailed in notes 21 and 22 offset by cash and bank balances) and total equity of the Company.
The Companyâs management reviews the capital structure of the Company on quarterly basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital requirements and maintenance of adequate liquidity.
25.1.1 Gearing Ratio
The gearing ratio at the end of the reporting period is computed as follows: The gearing ratio is worked out as follows
25.2.1 Investments in subsidiary and joint ventures have not been disclosed above as these are measured at cost less impairment, if any
25.3 Financial risk management objectives
The Companyâs risk management committee monitors and manages key financial risks relating to the operations of the Company by analyzing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
25.4 Market Risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. The major components of market risk are foreign currency exchange risk and interest rate risk.
25.5 Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies, primarily for purchases of crude oil and exports sales and has borrowings denominated in foreign currency; consequently, exposures to exchange rate fluctuations arise. Significant carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows
25.5.1 Foreign currency sensitivity analysis
The Company is mainly exposed to the currency of United States of America (USD). Sensitivity of profit or loss arises mainly from USD denominated receivables and payables.
As per managementâs assessment of reasonable possible changes in the exchange rate of /- 5% between USD-INR currency pair, sensitivity of profit or loss only on outstanding foreign currency denominated monetary items at the period end is presented below:
25.5.2 Forward foreign exchange contracts
The Company has not entered into any forward foreign exchange contracts during the reporting period.
25.6 Interest rate risk management
The Company has availed borrowings at fixed and floating interest rates, hence is exposed to interest rate risk. The Company has not entered into any of the interest rate swaps and hence the Company is exposed to interest rate risk.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate borrowings, the analysis is prepared assuming the amount of the borrowings outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used for disclosing the sensitivity analysis.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Companyâs profit for the year ended March 31, 2017 would decrease/increase by Rs.318.68 million (for the year ended March 31, 2016 : decrease/increase by Rs.370.75 million). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.
25.7 Credit risk management
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from cash and cash equivalents, deposits with banks as well as customers including receivables. Credit risk management considers available reasonable and supportive forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate).
Major customers, being public sector undertakings oil marketing companies having highest credit ratings, carry negligible credit risk. Concentration of credit risk to any other counterparty did not exceed 11% of total monetary assets at any time during the year.
Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
25.8 Liquidity risk management
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due. Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios. The Company manages liquidity risk by maintaining adequate reserves and continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.
The following table details the Companyâs expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Companyâs liquidity risk management as the liquidity is managed on a net asset and liability basis.
25.9 Fair value measurement
The management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values unless otherwise stated.
In respect of all these claims, it is being contested by the Company as not admissible. It is not practicable to make a realistic estimate of the outflow of resource, if any, for settlement of such claim, pending resolution / award from Arbitrators / Court.
26.1 Disputed tax / Duty demands pending in appeal as at 31st March,2017
26.2.1 Income Tax: Rs.4,231.68 million as at March 31,2017 (As at March 31, 2016 Rs.6649.42 million; As at April 1, 2015 Rs.5942.35 million). Against this Rs.3,994.28 million as at March 31,2017 (As at March 31, 2016 Rs.3373.70 million; As at April 1, 2015 Rs.2579.25 million). is adjusted / paid under protest and is included under tax assets/ liability [Note 12].
26.2.2 Commercial Tax: Rs.0.43 million as at March 31,2017 (As at March 31, 2016 Rs.32.36 million; As at April 1, 2015 Rs.32.36 million). Against this Rs.0.21 million as at March 31,2017 (As at March 31, 2016 Rs.15.58 million; As at April 1, 2015 Rs.15.58 million) is paid under protest and is included under other assets (non current) [note 13].
26.2.3 Excise Duty: Rs.5,962.90 million as at March 31,2017 (As at March 31, 2016 Rs.304.80 million ; As at April 1, 2015 Rs.315.27 million). Against this Rs.130.06 million as at March 31,2017(As at March 31, 2016 Rs.59.78 million; As at April 1, 2015 Rs.72.87 million) was paid under protest and is included under other assets (non current) [note 13].
26.2.4 Customs Duty: Rs.777.54 million as at March 31,2017 (As at March 31, 2016 Rs.737.82 million; As at April 1, 2015 Rs.747.56 million).
27 Commitments
27.1 Capital Commitments:
The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as at March 31, 2017 Rs.3,012.07 Million (As at March 31, 2016 Rs.1,153.52 million; As at April 1, 2015 Rs.1,602.96 million). The Company has requested KIADB for an allotment of 1050 acres of land for Phase IV expansion. The total capital commitment in this regard is around Rs.1,042.02 million (As at March 31,2016 Rs.6,946.81 million) as per the letter No.KIADB/Central Ofc/LA-MNG/2480/16195/2015-16 dated 22/02/2016.
27.2 Other Commitments
a Pending commitment on account of Refinery-MRPL is in possession of certain land provisionally measuring 39.76 acres ceded by HPCL for use by MRPL Phase III expansion and upgradation work .The consideration for such land is mutually agreed to be by way of swapping of land in possession of MRPL/HPCL. The final documentation in this regard is pending to be executed.
b Pending commitment on account of Refinery performance improvement programme by M\s.Shell Global International Solution (M\s.Shell GIS) as at March 31, 2017 USD 1.46 Million (As at March 31, 2016 USD 2.06 Million; As at April 1, 2015 USD 2.44 Million)
c The Company has an export obligation as at March 31,2017 Rs.1,313.68 million (As at March 31, 2016 Rs.1,556.36 million; As at April 1, 2015 Rs.1,346.93 Million) on account of concessional rate of customs duty availed under EPCG licence scheme on import of capital goods.
28 The Company has a periodic system of physical verification of inventory, property, plant and equipment and capital stores in a phased manner to cover all items over a period. Adjustment differences, if any, is carried out on completion of reconciliation.
29 The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.
30 Some balances of trade and other receivables, trade and other payables and loans are subject to confirmation/reconciliation.
Adjustments, if any, will be accounted for on confirmation/reconciliation of the same, which will not have a material impact.
31 Figures in parenthesis as given in these notes to financial statements relate to previous years.
32 Approval of financial statements
The financial statements were approved for issue by the board of directors on May 17, 2017
32 First-time Ind AS adoption reconciliations
32.1 Effect of Ind AS adoption on the balance sheet as at March 31, 2016 and April 1, 2015
Explanatory Notes to Balance sheet Reconciliation
1 Reclassification of leasehold land : Under Previous GAAP, upfront premium paid for leasehold land was recognised as property, plant and equipment. Under Ind AS, leasehold lands where the ownership of the land will not be transferred to Company at the end of lease period are classified as operating leases. Consequently, as on the transition date, an amount of Rs.6.96 million has been reclassified from property, plant and equipment and shown as prepayments under Ind AS. Similarly, an amount of Rs.6.88 million has been shown as prepayments as at March 31, 2016. This reclassification has no impact on equity as on transition date.
2 Adjustment relating to property, plant and equipment: Under the Previous GAAP, the Company reported an amount of Rs.138,226.10 million as carrying amount of plant and equipment as at March 31, 2015. During the year ended March 31, 2016 the Company made an adjustment of Rs.499.67 million to comply with requirements of Schedule II of the Companies Act, 2013. The same amount is taken in the opening balance of plant and equipment with corresponding adjustment to retained earnings as at April 1, 2015. Accordingly, an amount of Rs.137,726.43 million (Rs.138,226.10 million minus Rs.499.67 million) has been considered as deemed cost on transition date. Deferred tax impact was Rs.172.93 million on account of this adjustment.
3 Transaction Cost: Under Previous GAAP, transaction costs related to ECB loan were capitalised with the cost of property, plant and equipment (being costs eligible for capitalisation). Under Ind AS, borrowings are recognised net of transactions costs on initial recognition and subsequently measured at amortised cost. As at transition date, transaction costs amounting to Rs.416.20 million has been reduced from the property, plant and equipment and corresponding reduction in ECB Loan. Subsequent to the transition date, the transaction cost is amortised over the loan period using effective interest rate method and depreciation on property, plant and equipment is calculated on the reduced amount over the remaining useful life. Amortisation of transaction costs for the year ended March 31, 2016 has been recognized as finance costs in the Statement of Profit and Loss resulting in increase in finance cost by Rs.139.43 million. Depreciation reduction on account of above adjustment relating to property, plant and equipment amount to Rs.17.64 million for the year ended March 31, 2016
4 Reclassification of long term loans and advances : Under Previous GAAP, an advance paid towards capital expenditure which was presented as part of long-term loans and advances which has been re-classified as capital work-in-progress under Ind AS. Consequently, an amount of Rs.51.50 million has been reclassified from long-term loans and advances and classified as capital work-in-progress as at transition date and as at March 31, 2016. This reclassification has no impact on equity as on transition date.
5 Amortisation on Goodwill : Under Previous GAAP, Goodwill was amortised over the useful life of the assets, whereas under Ind AS Goodwill is tested for impairment at each reporting period and is not amortised. Consequently, goodwill amount as the transition date has been tested for impairment under Ind AS. Amortisation amounting to Rs.2.01 million for the year ended March 31, 2016 has been reversed. This reclassification has no impact on equity as on transition date.
6 Re-measurement of financial assets and financial liabilities : Under Ind AS, certain security deposits taken and other deposits given have been fair valued and subsequently accounted at amortised cost. The fair valuation impact of other deposit given and security deposit taken at transition date amounts to Rs.5.61 million and Rs.1.84 million respectively. This adjustment at transition date has resulted in decrease in the carrying balance of Other Deposit (financial asset) and Security Deposit (financial liability) by Rs.5.61 million and Rs.1.84 million respectively and recognition of Prepaid Rent and Advance Rental respectively. Subsequent to transition date, Other Deposit (financial asset) and Security Deposit (financial liability) have been accounted at amortised cost resulting in recognition of finance income and finance expense respectively. Prepaid Rent and Advance Rental are amortised on straight line basis over the period of deposit. This remeasurement has no impact on equity as on transition date. Subsequent to the transition date, such valuation difference on financial assets and liabilities has been recognized in statement of profit & loss resulting in increase in other expenditure by Rs.1.33 million, interest income by Rs.1.19 million, increase in finance cost by Rs.0.08 million and increase in other income by Rs.0.13 million for the year ended March 31, 2016. The net effect of above is decrease in financial assets by Rs.0.14 million, decrease in financial liabilities by Rs.0.05 million and decrease in total equity by Rs.0.09 million as at March 31, 2016.
7 Recognition of amount paid for certain facility having future economic benefits : An amount of Rs.265.17 million paid for ETP facility has been recognised as âPrepaymentsâ on transition date which was charged to Statement of Profit and Loss account under Previous GAAP. This has resulted in increase the retained earning on transition date. Subsequent to transition date, the amount is amortised over the remaining useful life of the ETP facility. The amount recognised in the Statement of Profit and Loss account for the year ended March 31, 2016 in relation to amortisation is Rs.8.95 million.
8 Reclassification of rebate accrued : Under Previous GAAP, accrual for rebate to customers (current) was shown as deduction from trade receivables. Under Ind AS, it has been reclassified and shown as âOther Financial Liabilitiesâ under current liabilities. Therefore an amount of Rs.93.47 million as at April 1, 2015 and Rs.262.16 million as at March 31, 2016 towards accrual of rebate is reclassified to âOther Financial Liabilitiesâ.
9 Reclassification Cash and Cash Equivalents and Other Bank Balances : Under Previous GAAP, the classification of bank deposits was based on the remaining maturity period of bank deposits as on the balance sheet date. Under Ind AS , the classification for the bank deposit is based on the original maturity period of the bank deposit. Accordingly, an amount of Rs.27468.71 million and Rs.81560.00 million has been re-classified from cash and cash equivalents to âother bank balancesâ as at transition date and March 31, 2016 respectively.
Under Previous GAAP, gold coins were shown cash and cash equivalents. Under Ind AS, gold coin are classified âother assetsâ. Accordingly, an amount of Rs.0.94 million and Rs.0.91 million have been reclassified from cash and cash equivalent to âother current assetsâ as at transition date and March 31, 2016 respectively.
Under Previous GAAP, unutilized CAPEX fund drawn by way of External Commercial Borrowing lying in the Current Account was shown as Cash and Cash Equivalent. Under Ind AS, the same is reclassified to âother bank balancesâ as restricted cash as withdrawal from this account is only for the purpose for meeting capital expenditure. Accordingly an amount of Rs.Nil and Rs.8,078.42 million has been reclassified from cash and cash equivalents to âother bank balancesâ as at transition date and March 31, 2016 respectively.
10 Reclassification of assets held for sale: As at transition date, an amount of Rs.77.96 million have been reclassified from Other Current Assets to Asset held for sale. These reclassifications have no impact on equity.
11 Financial Guarantees: Under Ind AS, financial guarantee given by holding company on behalf of subsidiary without charging any guarantee fees are fair valued. Accordingly, an amount of Rs.26.05 million has been recognized as Additional Paid in Capital as at April 1, 2015 with corresponding debit to prepayment for Guarantee Charges. Prepayment for guarantee charges is amortised over the guarantee period. For the year ended March 31, 2016, an amount of Rs.18.37 million has been amortised as Guarantee fees which has been charged to Statement of Profit and loss.
12 Deferred Tax: Deferred tax has been recognized on the account of adjustments made due to application of Ind AS. These adjustments have resulted in an increase in deferred tax liability by Rs.34.73 million as at March 31, 2016
Notes to Profit Reconciliation for the year 2015-16:
1 Revenue from Operations: Excise duty: Under Previous GAAP, revenue from sale of products was presented excluding excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty and the excise duty paid is presented separately as an expense. This has resulted in an increase in total revenue and total expenses by Rs.112321.37 million for the year ended March 31, 2016.
2 Employee benefit expenses : Under Previous GAAP, actuarial gains and losses on post-retirement defined benefit plans were recognised in Statement of Profit and Loss. Under Ind AS, the same is recognised in the âOther comprehensive incomeâ.
3 Transaction Cost : Under Previous GAAP, transaction costs related to ECB loan were capitalised with the cost of property, plant and equipment (being costs eligible for capitalisation). Under Ind AS, borrowings are recognised net of transactions costs on initial recognition and subsequently measured at amortised cost. As at transition date, transaction costs amounting to Rs.416.20 million has been reduced from the property, plant and equipment and corresponding reduction in ECB Loan. Subsequent to the transition date, the transaction cost is amortised over the loan period using effective interest rate method and depreciation on property, plant and equipment is calculated on the reduced amount over the remaining useful life. Amortisation of transaction costs for the year ended March 31, 2016 has been recognized as finance costs in the Statement of Profit and Loss resulting in increase in finance cost by Rs.139.43 million. Depreciation reduction on account of above adjustment relating to property, plant and equipment amount to Rs.17.64 million for the year ended March 31, 2016
4 Amortization of financial guarantees charges : As stated at note 3.20.2(a), financial guarantees charges have been recognized as Prepaid Guarantee Charges as at the transition date. Such guarantees have been amortized to Statement of Profit and Loss over the guarantee period, resulting in increase in finance cost by Rs.18.37 million during year ended March 31, 2016.
5 Reclassification of leasehold land : Under Previous GAAP, leasehold land was shown as part of property, plant and equipment and depreciated over the lease period. Under Ind AS, leasehold lands where the ownership of the land will not be transferred to Company at the end of lease period are classified as operating leases and therefore are shown as prepayments and amortized over the lease period. This reclassification resulted in decrease in depreciation expense by Rs.0.08 million with corresponding increase in other expenditure.
6 Reversal of Amortisation on Goodwill : Under Previous GAAP, Goodwill was amortised over the useful life of the assets, whereas under Ind AS Goodwill is tested for impairment at each reporting period and is not amortised. Consequently, goodwill amount as the transition date has been tested for impairment under Ind AS. Amortisation amounting to Rs.2.01 million for the year ended March 31, 2016 has been reversed.
7 Re-measurement of financial assets and financial liabilities : Under Ind AS, certain security deposits taken and other deposits given have been fair valued and subsequently accounted at amortised cost. The fair valuation impact of other deposit given and security deposit taken at transition date amounts to Rs.5.61 million and Rs.1.84 million respectively. This adjustment at transition date has resulted in decrease in the carrying balance of Other Deposit (financial asset) and Security Deposit (financial liability) by Rs.5.61 million and Rs.1.84 million respectively and recognition of Prepaid Rent and Advance Rental respectively. Subsequent to transition date, Other Deposit (financial asset) and Security Deposit (financial liability) have been accounted at amortised cost resulting in recognition of finance income and finance expense respectively. Prepaid Rent and Advance Rental are amortised on straight line basis over the period of deposit. This remeasurement has no impact on equity as on transition date. Subsequent to the transition date, such valuation difference on financial assets and liabilities has been recognized in statement of profit & loss resulting in increase in other expenditure by Rs.1.33 million, interest income by Rs.1.19 million, increase in finance cost by Rs.0.08 million and increase in other income by Rs.0.13 million for the year ended March 31, 2016. The net effect of above is decrease in financial assets by Rs.0.14 million, decrease in financial liabilities by Rs.0.05 million and decrease in total equity by Rs.0.09 million as at March 31, 2016.
8 Recognition of amount paid for certain facility having future economic benefits : An amount of Rs.265.17 million paid for ETP facility has been recognised as âPrepaymentsâ on transition date which was charged to Statement of Profit and Loss account under Previous GAAP. This has resulted in increase the retained earnings on transition date. Subsequent to transition date, the amount is amortised over the remaining useful life of the ETP facility. The amount recognised in the Statement of Profit and Loss account for the year ended March 31, 2016 in relation to amortisation is Rs.8.95 million.
9 Deferred Tax: Deferred tax has been recognized on the account of adjustments made due to application of Ind AS. These adjustments have resulted in an net increase in deferred tax by Rs.140.03 million during year ended March 31, 2016.
Mar 31, 2015
NOTE 1 OTHER DISCLOSURES
1.01 Valuation of Inventories (Finished Products) (AS-2)
The overall gross margin percentage for all joint products is
subtracted from the final net realisable value of each product to
arrive at the total cost of each product which is taken as the basis
for valuation of closing stock of finished products {Refer Policy No.
9.2 in Note 1 - "Statement of significant accounting policies").
1.02 Cash Flow Statements (AS-3)
Cash Flow Statement has been prepared under the ''Indirect Method" as
set out in the Accounting Standard (AS-3) issued by "The Instituite of
Chartered Accountants of India".
1.03 Exceptional Items (AS-5)
The exceptional items consists of Rs 867.23 million income arising from
Commercial Tax refund relating to Phase III project w.e.f 01.04.2012
pursuant to notification of Govt. of Karnataka, expenses of Rs 383.68
million arising out of discount on sales and obligation on dispute
settlement and Rs 149.08 million expenses arising out of differential
wharfage payable as per notification of TAMP.
1.04 Depreciation Accounting (AS-6)
Pursuant to applicability of Companies Act 2013 ("The Act") with
effect from April 1, 2014, the Company has computed depreciation based
on the useful life of the assets as specified in part "C" of the
Schedule II of the Act {Refer Policy No. 6 in Note 1 - "Statement of
significant accounting policies"). Accordingly, the carrying amount
of the assets as on April 1,2014 has been depreciated over the
remaining useful life of the fixed assets. Consequently, the
depreciation charge for the year is lower and profit before tax is
higher to the extent of Rs 3,779.12 Million for the year ended 31st
March, 2015.
Further an amount of Rs 782.90 million (net of tax - Rs 516.79 Million)
representing the carrying amount of fixed assets whose useful life is
Nil as at April 1, 2014 has been charged to the opening balance of
surplus as on April 1, 2014 as required in Schedule II to the Act.
1.05 The Effects of changes in Foreign Exchange Rates (AS-11)
Pursuant to Notification no GSR (914)E dated 29th December, 2011 issued
by MCA , the Company has opted, from the financial year ending 31st
March 2012, to adjust exchange difference arising on reporting of long
term foreign currency monetary items, in so far as , they relate to the
acquisition of depreciable assets, against the cost of such assets and
depreciate the said adjustment, over the balance life of the assets.
Pursuant to Notification No. 17/133/2008-CL-V dated 9th August, 2012
issued by MCA, the Company capitalised the exchange differences
including for the period subsequent to the capitalisation of assets.
Had this not been followed, the exchange differences amounting to Rs
1,116.87 Million (Previous Year Rs 397.36 million) relating to
capitalized assets would have been debited to Statement of Profit and
Loss Account and Fixed Assets would have been lower to that extent for
the year ended 31st March, 2015."
1.06 Employee Benefits (AS-15)
1.06.01 Brief Description: A general description on the type of
Defined Benefit Plans are as follows:
a Earned Leave Benefit (EL):
Accrual - 32 days per year Accumulation up to 300 days allowed
EL accumulated in excess of 15 days is allowed for encashment while in
service provided the EL encashed is not less than 5 days.
b Half Pay Leave (HPL)
Accrual - 20 days per year Encashment while in service is not allowed
Encashment on retirement is permitted ; restricted upto 300 days along
with Earned leave.
c Gratuity:
15 days salary for every completed year of service. Vesting period is
5 years and the payment is restricted to Rs 1 miilion.
d Post Retirement Medical Benefits:
After retirement, on payment of one time lump sum contribution,the
superannuated employee and his/ her dependent spouse and dependent
parents will be covered for medical benefit as per the rules of the
Company.
e Retirement Benefits:
At the time of superannuation, employees are entitled for reimbursement
of expenses towards travel, transportation of personal effects from
their place of retirement to the new location upto certain limits
depending on the designation of the employee at the time of retirement
and one month''s salary as settling allowance.
Note: Figures in parenthesis ( ) represent figure of 2013-14 and [ ]
represent figures of 2012-13
1.07 Borrowing Costs (AS-16)
Amount of borrowing costs capitalised during the year ended 31st March,
2015 is Rs 1,686.27 million ( Previous year Rs 3,778.55 million)
1.08 Related Party Disclosure (AS-18)
31.09.01 The Company is a state controlled enterprise and the
transactions with other state controlled enterprises are not
required to be disclosed as per AS-18.
31.09.02 Key Management Personnel:
(i) Shri H.Kumar, Managing Director - Remuneration from 14th August,
2014 to March, 2015Rs1.98 Million
(ii) Shri Vishnu Agrawal, Director (Finance) - Remuneration from April
2014 to March 2015- Rs 4.17 Million
(iii) Shri V.GJoshi, Director (Refinery) - Remuneration from April 2014
to March 2015- Rs 2.93 Million
(iv) Shri P.P.Upadhya, Managing Director - Remuneration from April 2014
to July 2014 - Rs 3.46 Million
(v) Shri Dinesh Mishra, Company Secretary - Remuneration from April
2014 to March 2015- Rs 2.53 Million
Note : Figures in brackets represent previous year figure
1.09 Leases (AS-19)
1.9.01 The Company has taken various premises under cancellable
operating lease.
1.9.02 These lease agreements are normally renewed on expiry of the
term.
1.9.03 Lease rental expenses for the year ended 31st March, 2015 in
respect of operating leases are Rs 37.73 Million (previous year Rs
37.70 Million)
1.10 Deferred Tax (AS-22)
The Company has recognised deferred tax asset (disclosed as Tax Expense
under "Statement of Profit and Loss Account") in respect of carry
forward business losses and unabsorbed depreciation to the extent of
deferred tax liability of Rs 4,436.58 million.
1.11 Intangible Assets - Research & Development (AS-26)
The Company during the year ended 31st March, 2015 has carried out
activities relating to product development in the area of Bitumen
Emulsion formulations, detailed characterization of High TAN Crude
using True Boiling point Apparatus, Inductively coupled Plasma Mass
Spectrometer (ICP-MS), Atomic Absorption Spectrometer, Methodology to
control the ammoniacal nitrogen and phenol in treated effluent as a
part of its R & D activities and has incurred expenditure as mentioned
below. These expenditure are booked in respective natural heads of
expenditure.
1.12 Provisions, Contingent Liabilities and Contingent Assets ( AS
-29)
1.12.01 Contingent Liabilities not provided for in respect of :
a) Corporate Guarantee given by the Company towards loan of Rs 3,372.30
Million ( Previous Year Rs 3,372.30 Million) sanctioned by certain
bankers / financial institutions to New Mangalore Port Trust (NMPT) for
construction of Jetties. Amount outstanding as at the close of the year
ended 31st March, 2015, after adjusting the repayment made by NMPT is Rs.
Nil (Previous Year Rs. Nil).
b) Claims against the Company not acknowledged as debt :
Particulars As on 31st As on 31st
March, March,
2015 2014
Claims of Contractors /
vendors in Arbitration / Court
Some of the contractors for
supply 378.86 371.96
and installation of equipment
have lodged claims on the
Company seeking revision of
time of completion without
liquidated damages, extended stay
compensation and extra claims
etc., which are contested by the
Company as not admissible in terms
of the provisions of the respective
contracts. In case of unfavourable
awards the amount payable that
would be capitalised is Rs 340.73
million / charged to revenue
account would be Rs 38.13 million
[Previous year Rs 334.33 million and
Rs 37.63 million respectively]
One of the overseas customers has - 365.72
lodged damage claim for supply of
off-spec cargo during 2008-09.
The Company has disputed the claim and
the issue is before the
arbitrator.
Claims / counter claims of Customers
One of the customer has lodged a 85.20 85.20
claim for damages for pre-closure
of the contract. The Company has
disputed the claim based on Force
Majure condition. In case of non
acceptance of the stand taken by
the Company the amount will be
debited to Statement of Profit &
Loss account.
Others
The New Mangalore Port Trust 2,105.44 1,897.82
(NMPT) has claimed from the
Company notified wharfage
charges for handling cargo at
oil berths for the period beyond
MOU term (berth No 10 from 16th
October.2009 to 31st March,2015 &
for berth no 11 from 1st April.2011
to 31st March,2015). The company
has claimed that the Memorandum
of Understanding, provides for
arriving at a mutually agreeable
rate subject to Government /TAMP
(Tariff Authority for Major Ports)
approval for the post MOU period.
The issue is now before Ministry of
Shipping. The differential wharfage
amount, if any arising out of such
decision will be debited / credited
to the Statement of Profit & Loss
Account in the year of such
settlement.
This represents the potential 133.67 133.67
liability which the company has
undertaken for reimbursement to
lessors, in case of any liability in
their respective tax assessments. In
case of any claim of such liability by
lessors the same will be debited to
Statement of Profit & Loss Account.
The claim of Mangalore SEZ Ltd. 109.25 37.43
over and above the advance
paid for land and rehabilitation
& resettlement work.
Total 2,812.42 2,891.80
In respect of all these claims, it is being contested by the
Company as not admissible. It is not practicable to make a realistic
estimate of the outflow of resource, if any, for settlement of such
claim, pending resolution / award from Arbitrators / Court.
1.12.02 Disputed tax / Duty demands pending in appeal as on
31st March,2015
a) Income Tax: Rs. 5,942.35 Million (Previous Year Rs 6,479.60 Million).
Against this Rs 2,579.25 Million (Previous year Rs 2,661.58 Million) is
adjusted / paid under protest and is included under other non current
assets Note 15.
b) Commercial Tax: Rs 32.36 Million (Previous Year
Rs 32.36 Million).Agains this Rs 15.58 Million (Previous year Rs 15.58
Million) is paid under protest and is included under loans & advances
Note 19)
c) Excise Duty: Rs. 315.27 Million (Previous Year Rs. 318.56 Million)
against this Rs. 72.87 Million ( Previous Year Rs.
1.13 Million) was paid under protest and is included under loans &
advances Note -19)
d) Customs Duty: Rs. 747.56 Million (previous year Rs 711.73 Million).
1.13.02 Capital and other commitments
a) Capital commitments
The estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) as on 31st March,
2015Rs1,602.96 Million (Previous Year Rs 12,895.10 Million).
b) Other commitments
Pending commitment on account of Refinery performance improvement
programme by Ms.Shell Global International Solution (Ms.Shell GIS)
USD 2.44 Million. (Previous year USD 2.44 Million).
The Company has an export obligation to the extent of Rs 1,346.93
Million (Previous year Rs 1,262.78 Million) on account of concessional
rate of customs duty availed under EPCG licence scheme on import of
capital goods.
1.14 Insurance Coverage
The Company has covered it''s Fixed Assets under a mega risk insurance
policy which is subject to sanctions limitation and exclusion by UK, EU
and UN.
1.15 Trade Payables
The trade payables referred in Note no 9 includes Rs. 147,854.73 million
(Previous year Rs 79,141.99 million) being overdue amount payable to
National Iranian Oil Company (NIOC) pending settlement due to non
finalisation of remittance channel arising out of UN/US/EU backed
sanctions .
1.16 Land Usage of HPCL Land
MRPL is in possession of certain land provisionally measuring 39.76
acres ceeded by HPCL for use by MRPL Phase III expansion and upgration
work .The consideration for such land is mutually agreed to be by way
of swapping of land in possession of MRPL/HPCL. The final documentation
in this regard is pending to be executed.
1.17 Foreign Exchange exposures
1.17.01 Exposures not hedged by Derivative instruments or otherwise:
The Company has receivables and payables in foreign currency as at the
Balance Sheet date. These foreign currency exposures are not hedged by
any derivative instruments or otherwise.
1.18 Loans and Advances :
Loans and advances (Note 14) includes refund claims of Custom Duty on
project imports Rs 378.71 Million (Previous year Rs 378.71 Million) and
Commercial Taxes Rs Nil (previous year Rs 97.29 Million). A refund due
towards Commercial Taxes Rs 2884.43 Million (Previous year Rs 2884.43
Million) (Refer Note no 19) for which there is a matching liability to
pay to customers on receipt of the refund which is included under other
current liabilities - Payable to Oil Companies on refund of Commercial
taxes ( Note 10).
1.19 Commercial Tax incentives:
The Company, as per the Government of Karnataka notification, is
entitled to Sales Tax deferment /exemption as follows:
The company, as per the Government of Karnataka Order and Notification
is entitled to the following benefits
i) Entry Tax exemption on crude processed in excess of 12.65 MMTPA for
a period of 15 years from 01.04.2012
ii) Full Central Sales Tax exemption on sale of Poly Propylene and
Petroleum Coke for a period of 15 years from 01.04.2012. CST exemption
on sale of LPG, Mixed Xylene, Naphtha, LSHS and Reformate made out of
crude throughput in excess of 12.65 MMTPA for a period of 15 years from
01.04.2012.
iii) Interest free soft loan to the extent of 60% (100% for initial
three years) of eligible gross VAT on sale of Poly Propylene, Petroleum
Coke, Mixed Xylene, Naphtha, LPG, LSHS and Reformate for a period of 15
years from 01.04.2012 subject to a limit of Rs. 5,000 million per annum,
the disbursement of loan is yet to take place.
1.20 Dues to Micro, Small & Medium enterprises:
The classification of the suppliers under Micro, Small and Medium
Enterprises Development Act, 2006 is made on the basis of information
made available to the company. The Company has neither paid any
interest in terms of Section 16 of the above said Act nor any interest
is remaining unpaid. No payments were made beyond the ''appointed date''
to such enterprises during the year ended 31st March,2015 subject to Rs
0.23 Million (Previous year Rs 0.70 Million) remaining unpaid on
account of non-compliance of order terms.
1.21 Price Reduction Clause
Note No.10 - Other current liabilities includes Rs 1,557.42 million
(Previous Year Rs 1,071.60 Million) which is payable against capital
goods as on 31st March, 2015 , being amount withheld from vendors
pursuant to, price reduction clause for delay in delivery and pending
finalisation of proceedings, cost of fixed assets , depreciation. The
WDV of the asset may undergo revision in the year in which the
proceedings to appropriate the withheld amounts are ultimately
finalised and appropriated.
1.22 The Company is yet to receive response for its confirmation
letters from some of the trade receivables , Loans and Advances and
trade payables. Reconciliation for those received as well as those for
which confirmation is yet to be received is to be made , the effect for
which, in management''s opinion is not significant.
1.23 Following expenses are included under other expenses
Insurance charges amounting to Rs 14.17 Million (Previous year Rs 13.41
Million) relating to crude purchase and staff welfare has been charged
under respective heads for the year ended 31st March, 2015.
1.24 Disclosure as required by Clause 32 of the Listing agreement
There are no loans and advances in the nature of loan to Subsidiary,
Associates and Joint Ventures.
1.25 Previous year''s figures have been re-grouped/ re classified
wherever necessary to confirm to the curent year''s classification.
Mar 31, 2014
Note :1 Other Disclosures
1.01 Intangible Assets - Research & Development (AS-26)
The Company during the year ended 31st March, 2014 has carried out
activities relating to product development in the area of Bitumen
Emulsion formulations, Establishing analytical methods using Ion-
Chromatography & Atomic Absorption Spectrometer with Hydride Generator,
Detailed Crude assay analysis using True Boiling Point Apparatus ,
Crude Compatibility Study, Physical and Chemical evaluation of Catalyst
as a part of its R & D activities and has incurred expenditure as
mentioned below. These expenditure are booked in respective natural
heads of expenditure.
1.02 Effects of changes in Foreign Exchange Rates (AS 11)
Pursuant to Notifcation no GSR (914)E dated 29th December 2011 issued
by MCA , the Company has opted, from the financial year ending 31st
March 2012, to adjust exchange difference arising on reporting of long
term foreign currency monetary items, in so far as , they relate to the
acquisition of depreciable assets, against the cost of such assets and
depreciate the said adjustment, over the balance life of the assets.
Pursuant to Notifcation No. 17/133/2008-CL-V dated 9th August 2012
issued by MCA, the Company capitalised the exchange differences
including for the period subsequent to the capitalisation of assets.
Had this not been followed, the exchange differences amounting to Rs.
397.36 Million (Previous Year Rs. (3.13) million) relating to capitalized
assets would have been debited to profit and Loss Account and Fixed
Assets would have been lower to that extent for the year ended 31st
March, 2014 .
1.03 Employee benefits (AS-15) 31.03.01 Brief Description: A general
description on the type of Defined
benefit Plans are as follows: a Earned Leave benefit (EL):
Accrual  32 days per year
Accumulation up to 300 days allowed
EL accumulated in excess of 15 days is allowed for encashment
while in service provided the EL encashed is not less than 5 days.
b Sick Leave (SL) now converted to Half Pay Leave (HPL)
Accrual  10 days per year ( now converted to 20 days per year)
Encashment while in service is not allowed Encashment on retirement is
permitted ; restricted upto 300 days along with Earned leave.
c Gratuity:
15 days salary for every completed year of service. Vesting period is 5
years and the payment is restricted to Rs. 1 miilion.
d Long Service Emblem:
On completion of each milestone of service from the date of joining and
also at the time of retirement, employees will be gifted with Gold
Coin, weight depends on the milestone of service completed.
e Post Retirement Medical benefits:
After retirement, on payment of one time lump sum contribution,the
superannuated employee and his/her dependent spouse and dependent
parents will be covered for medical benefit as per the rules of the
Company.
f Retirement benefits:
At the time of superannuation, employees are entitled for reimbursement
of expenses towards travel, transportation of personal effects from
their place of retirement to the new location upto certain limits
depending on the designation of the employee at the time of retirement
and one month''s salary as settling allowance.
1.04 Borrowing Costs (AS-16)
Amount of borrowing costs capitalised during the year ended 31st March
2014 is Rs. 3,778.55 million ( Previous year Rs. 3,589.01 million)
1.06 Related Party Disclosure (AS-18)
1.06.01 The Company is a state controlled enterprise and the
transactions with other state controlled enterprises are not required
to be disclosed as per AS-18.
1.06.02 Key Management Personnel:
(i) Shri P.P.Upadhya, Managing Director Remuneration from April
2013 to March 2014 - Rs. 36,22,630/- (ii) Shri Vishnu Agrawal, Director
(Finance) Remuneration from April 2013 to March 2014- Rs. 33,72,310/-
1.07 Leases (AS-19)
1.07.01 The Company has taken various premises under cancellable
operating lease.
1.07.02 These lease agreements are normally renewed on expiry of the
term.
1.07.03 Lease rental expenses for the year ended 31st March, 2014 in
respect of operating leases are Rs. 37.70 Million (previous year Rs. 35.06
Million)
1.08 Exceptional Items
The Company has recognised Rs. 1,118.85 million as income under
exceptional items, arising out of changed pricing terms for curde oil
supply, pursuant to signing of Crude Oil Sale Agreement (COSA) with
ONGC on 31st July 2013 effective from 1st April 2010.
1.09 Deferred Tax
The Company during the year has recognised deferred tax assets of Rs.
2,640.59 Million net of deferred tax liability (previous year Nil).
1.10 Provisions, Contingent Liabilities and Contingent Assets (AS -29)
Movement in Provisions
(Rs. in Million)
Year 2013-14 2012-13
Particulars Debtors Others Debtors Others
Opening Balance 714.43 103.12 629.95 96.55
Add : Provision
made 164.52 - 84.48 7.52
during the year
Less: Provision
written - - - 0.95
back/reclassified/
reduction during
year
Closing Balance 878.95 103.12 714.43 103.12
1.11 Provisions, Contingent Liabilities and Contingent Assets ( AS
-29)
1.11.02 Contingent Liabilities not provided for in respect of :
a Corporate Guarantee given by the Company towards loan of Rs. 3,372.30
Million ( Previous Year Rs. 3,372.30 Million) sanctioned by certain
bankers / financial institutions to New Mangalore Port Trust (NMPT) for
construction of Jetties. Amount outstanding as at the close of the year
ended 31st March, 2014, after adjusting the repayment made by NMPT is Rs.
Nil (Previous Year Rs. Nil).
1.11.03 Disputed tax / Duty demands pending in appeal as on 31st
March,2014
a) Income Tax: Rs. 2,840.81 Million (Previous Year Rs. 1,881.24 Million).
Against this Rs. 2,661.58 Million (Previous year Rs. 948.74 Million) is
adjusted / paid under protest and is included under loans & advances
Note 14.
b) Commercial Tax: Rs. 32.36 Million (Previous Year Rs. 24.09 Million)
c) Excise Duty: Rs. 296.08 Million (Previous Year Rs. 324.08 Million)
against this Rs. 70.33 Million ( Previous Year Rs. 74.95 Million) was paid
under protest and is included under loans & advances Note -19)
d) Customs Duty: Rs. 711.68 Million (previous year Rs. 762.86 Million).
1.11.04 Capital and other commitments
a) The estimated amount of contracts remaining to be executed on
capital account and not provided for (net of advances) as on 31st
March, 2014 Rs. 12,895.10 Million (Previous Year Rs. 19,896.30 Million).
b) Other commitments as on 31st March, 2014
Pending commitment on account of Refnery performance
improvement programme by Ms.Shell Global International Solution
(Ms.Shell GIS) USD 2.44 Million.(Previous year USD 3.25 Million)
1.13 Insurance Coverage
The Company has covered it''s Fixed Assets under a mega risk insurance
policy which is subject to sanctions limitation and exclusion by UK, EU
and UN.
1.14 Trade Payables ( NIOC )
The trade payables referred in Note no 9 includes Rs. 79141.99 million
being overdue amount payable to National Iranian Oil Company (NIOC)
pending settlement due to non finalisation of remittance channel arising
out of UN/US/EU backed sanctions .
1.15 Land Usage of HPCL Land
MRPL is in possession of certain land provisionally measuring 39.76
acres ceeded by HPCL for use by MRPL Phase IIII expansion and upgration
work .The consideration for such land is mutually agreed to be by way
of swapping land in possession of MRPL. The final documentation in this
regard is pending to be executed.
1.16 Valuation of Finished Products:
The overall gross margin percentage for all joint products is
subtracted from the final net realisable value of each product to arrive
at the total cost of each product which is taken as the basis for
valuation of closing stock of fnished products{Refer Policy No. 9.2 in
Note 1 - "Statement of significant accounting policies").
1.17 Foreign Exchange exposures
1.18 Loans and Advances :
Loans and advances (Note 14) includes refund claims of Custom Duty on
project imports Rs. 378.71.Million (Previous year Rs. 378.71 Million) and
Commercial Taxes Rs. 97.29 Million (previous year Rs. 158.30 Million). A
refund due towards Commercial Taxes Rs. 2,884.43 Million (Refer Note no
19) for which there is a matching liability to pay to customers on
receipt of the refund which is included under other current liabilities
- liability for statutory payments( Note 10).
1.19 The Company is yet to receive response for its confirmation
letters from some of the trade receivables , Loans and Advances and
trade payables. Reconciliation and adjustment will be effected on
receipt of confirmations, which in the opinion of the management will
not be significant.
1.20 Dues to Micro, Small & Medium enterprises:
The classifcation of the suppliers under Micro, Small and Medium
Enterprises Development Act, 2006 is made on the basis of information
made available to the company. The Company has neither paid any
interest in terms of Section 16 of the above said Act nor any interest
is remaining unpaid. No payments were made beyond the ''appointed date''
to such enterprises during the year ended 31st March,2014. Amount
outstanding to these enterprises payable within the "appointed date''
for the year ended 31st March, 2014 is Rs. 0.70 Million (Previous year
Nil)
1.21 Price Reduction Clause
Note No.10 - Other current liabilities includes Rs. 1,071.60 million
(Previous Year Rs. 838.81 Million) which is payable against capital goods
as on 31st March 2014 , being amount withheld from vendors pursuant to,
price reduction clause for delay in delivery and pending finalisation of
proceedings, cost of fixed assets , depreciation. The WDV of the asset
may undergo revision in the year in which the proceedings to
appropriate the withheld amounts are ultimately finalised and
appropriated.
1.21 Following expenses are included under other expenses
Insurance charges amounting to Rs. 13.41 Million (Previous year Rs. 29.88
Million) relating to crude purchase and staff welfare has been charged
under respective heads for the year ended 31st March 2014.
1.22 Disclosure as required by Clause 32 of the Listing agreement
There are no loans and advances in the nature of loan to associates and
joint ventures.
1.23 Current / MAT tax
During the year Company has provided current tax as per section 115JB
(MAT) of the Income Tax Act, 1961 (Previous year Nil).
1.24 Previous year''s figures have been re-grouped/ re classified
wherever necessary to confirm to the curent year''s classification.
Mar 31, 2013
1.01 Intangible Assets - Research & Development (AS-26)
The company during the year has carried out activities relating to Gas
Chromatographic methods development, Bitumen Emulsion formulations,
Reduction of Phenolic and Sulphidic odour in the spent caustic,
Ammoniacal and nitrate Nitrogen reduction in the treated effl uent,
Detailed Crude assay analysis, Crude Compatibility Study, Synthesis of
value added product for HSD lubricity improving application, as a part
of its R & D activities and has incurred expenditure as mentioned
below. These expenditure are booked in respective natural heads of
expenditure
1.02 Effects of changes in Foreign Exchange Rates (AS 11)
Pursuant to Notifi cation no GSR (914)E dated 29th December 2011 issued
by MCA , the Company has opted to adjust exchange difference arising on
reporting of long term foreign currency monetary items, in so far as ,
they relate to the acquisition of depreciable assets, against the cost
of such assets and depreciate the said adjustment over the balance life
of the assets from the fi nancial year ending 31st March 2012.
Pursuant to Notifi cation No. 17/133/2008-CL-V dated 9th August 2012
issued by MCA, the Company capitalised the exchange differences
including for the period subsequent to the completion of construction
of assets. Had this not been followed, the exchange differences
amounting to Rs. 3.13 million relating to capitalized assets would have
been credited to Profi t and Loss Account and Fixed Assets would have
been higher to that extent for the year ended 31st March 2013.
1.03 Employee Benefits (AS-15)
1.03.01 Brief Description: A general description on the type of
Defined Benefit Plans are as follows:
a Earned Leave Benefit (EL):
Accrual  32 days per year
Accumulation up to 300 days allowed
EL accumulated in excess of 15 days is allowed for encashment while in
service provided the EL encashed is not less than 5 days
b Sick Leave (SL):
Accrual  10 days per year
Encashment while in service is not allowed
Encashment on retirement is permitted and entire accumulation is
allowed for encashment
c Gratuity:
15 days salary for every completed year of service. Vesting period is 5
years and the payment is restricted to Rs. 1 miilion.
d Long Service Emblem:
On completion of each milestone of service from the date of joining and
also at the time of retirement, employees will be gifted with Gold
Coin, weight depends on the milestone of service completed.
e Post Retirement Medical Benefits:
After retirement, on payment of one time lump sum contribution,the
superanuated employee and his/her dependent spouse and dependent
parents will be covered for medical benefi t as per the rules of the
Company.
f Retirement Benefits:
At the time of superannuation, employees are entitled for reimbursement
of expenses towards travel, transportation of personal effects from
their place of retirement to the new location upto certain limits
depending on the designation of the employee at the time of retirement
and one monthÂs salary as settling allowance.
1.04 Borrowing Costs (AS-16)
Amount of borrowing costs capitalised during the year Rs. 3,589.01
million (Previous year Rs. 889.56)
1.05 Related Party Disclosure (AS-18)
1.05.01 The Company is a state controlled enterprise and the
transactions with other state controlled enterprises are not required
to be disclosed as per AS-18.
1.05.02 Key Management Personnel:
(i) Shri. U.K.Basu, Managing Director (upto 30/06/2012) Remuneration
- Rs. 34,52,847/- (ii) Shri P.P.Upadhya, Managing Director (from
01/07/2012 with additional
charge as Director (Technical)) Remuneration - Rs. 41,81,373/- (iii) Shri
Vishnu Agrawal, Director (Finance) Remuneration - Rs. 31,28,003/-
1.06 Leases (AS-19)
1.06.01 The company has taken various premises under cancellable
operating lease.
1.06.02 These lease agreements are normally renewed on expiry of the
term.
1.06.03 Lease rental expenses for the year ended 31st March, 2013 in
respect of above operating leases are Rs. 35.06 Million (pre. year Rs.
34.75 Million)
1.07 Exceptional Items
1.07.01 Pursuant to the order of Tariff Authority for Major Ports
(TAMP ) no TAMP/22/2012-NMPT dated 1st April 2013 notifi ed in Gazette
of India datad 12th April 2013 fi xing the wharfage rates for the years
2002-03 to 2008-09, the Company has recognised Rs. 444.54 Million as
receivable from NMPT and the same is considered as income under
Exceptional items. (Refer Note No. 29 )
1.08 Deferred Tax
1.08.01 The company has not recognized deferred tax assets amounting
to Rs. 5,792.10 Million in the absence of virtual certainty (Refer Note
No. 5)
1.08.02 Contingent Liabilities not provided for in respect of :
a Corporate Guarantee given by the Company towards loan of Rs. 3,372.30
Million sanctioned by certain bankers / fi nancial institutions to New
Mangalore Port Trust (NMPT) for construction of Jetties. Amount
outstanding as at the close of the year ended 31st March, 2013, after
adjusting the repayment made by NMPT is Rs. Nil (Previous Year Rs. Nil).
1.08.03 Disputed tax / Duty demands pending in appeal:
a) Income Tax: Rs. 1,881.24 Million (Previous Year Rs. 1,123.40 Million).
Against this Rs. 948.74 Million (Previous year Rs. 1000.92 Million) is
adjusted / paid under protest and is included under loans & advances
Note 15.
b) Commercial Tax: Rs. 24.09 Million (Previous Year Rs. 321.49 Million) Â
includes Rs. Nil (Previous Year Rs. 321.49 Million) relating to projects.
c) Excise Duty: Rs. 341.85 Million (Previous Year Rs. 500.19 Million).
(against this Rs. 79.36 Million ( Previous Year Rs. 39.10 Million was paid
under protest and is included under loans & advances Note -20)
d) Customs Duty: Rs. 762.86 Million (previous year Rs. 647.54 Million).
1.08.04 a) The estimated amount of contracts remaining to be executed
on capital account and not provided for (net of advances) Rs. 19,896.30
Million (Previous Year Rs. 31,185.31 Million).
b) Other commitments
i) ECB Loan to be availed USD 350 million
ii) ONGC Loan to be availed Rs. 17,000 million
iii) Pending commitment on account of Refi nery performance improvement
programme by Ms.Shell Global International Solution (Ms.Shell GIS)
USD 3.25 Million.
1.9 Loans and Advances :
Loans and advances (Note 14) include refund claims for Custom Duty on
project imports Rs. 378.71.Million (Previous year Rs. 378.71 Million) and
Commercial Taxes Rs. 158.30 Million (previous year Rs. 548.48 Million). A
further refund due towards Commercial Taxes Rs. 2,884.43 Million is also
included therein for which there is a matching liability to pay to
customers on receipt of the refund which is included under other
current liabilities - liability for statutory payments( Note 10).
1.10 Commercial Tax incentives:
1.10.01 The Sales tax deferment loan shown under Unsecured Loans
(Note-4) includes a sum of Rs. Nil (Previous Year Rs. 290.17 Million)
relating to CST on excise duty included under refund from Commercial
Tax Department ( Note 20) for the years 2000-01and 2001-02, which were
earlier paid under protest and are now being claimed as sales tax
deferment loan by the Company.
1.11 The Company is yet to receive response for its confi rmation
letters from some of the trade receivables , Loans and Advances and
trade payables. Reconciliation and adjustment will be effected on
receipt of confi rmations, which in the opinion of the management will
not be signifi cant.
1.12 Dues to Micro, Small & Medium enterprises:
The classifi cation of the suppliers under Micro, Small and Medium
Enterprises Development Act, 2006 is made on the basis of information
made available to the company. The Company has neither paid any
interest in the terms Section 16 of the above said Act nor any interest
remain unpaid and no payments were made beyond the ''appointed date to
such enterprises during the year ended 31.03.2013. Amount outstanding
to these enterprises for the year ended 31st March, 2013 is Rs. Nil
(Previous year: Rs. Nil)
1.13 Price Reduction Clause
Note No.10 - Other current liabilities includes Rs. 838.81 million
(Previous Year Rs. 386.92 Million)under payable against capital goods ,
being amount withheld from vendors pursuent to price reduction clause
for delay in delivery and pending fi nalisation of proceedings, cost of
fi xed assets, depreciation and WDV may undergo revision in the year in
which the proceedings to appropriate the withheld amounts are
ultimately fi nalised and appropriated.
1.14 Following expenses are included under other heads of expenses
Insurance charges amounting to Rs. 29.88 Million (Previous year Rs. 20.22
Million) relating to crude purchase and staff welfare has been charged
under respective heads.
1.15 Previous yearÂs fi gures have been re-grouped/ re arranged
wherever necessary to conform to the curent period presentation .
Mar 31, 2012
1.1 Shares held by holding or ultimate holding company or its
subsidiaries or associates 1,255,354,097 Equity Shares (1,255,354,097
Equity Shares) are held by ONGC Limited, the holding company.
1.2 No shares are reserved for issue under options and
contracts/commitments for the sale of shares/disinvestment
Notes
a. Includes Rs. 261.50 Million (Previous YearRs. 260.87 Million) which has
not been amortised in view of the fact that eventually the ownership
will get transferred to the Company on expiry of the lease period, of which
Rs.11.52 Million (Previous YearRs. 11.52 Million) is in the process
Being surrendered to Competent Authority. Net Block Rs.11.52 Million
(Previous YearRs. 11.52 Million).
b. Includes land value Rs. 29.99 Million (Previous YearRs. 29.99 Million),
which is in possession of the company towards which formal lease deeds
are yet to be executed . Net BlockRs.29.92 Million (Previous Year
Rs.29.92 Million)
c. Includes Rs. 782.98 Million (Previous Year Rs. 782.98 Million) being
Company's share of an asset jointly owned with another Company. Net
Block Rs. 120.73 Million (Previous YearRs. 162.07 Million).
d. Includes Office Equipments
e. Assets not in use and held for sale is shown at lower of cost or
estimated realisable value.
f. Represents consideration for purchase of business (Nitrogen Plant)
in excess of book value of net assets acquired.
2.01 Effects of changes in Foreign Exchange Rates (AS11)
Pursuant to Notification no. G.S.R.(914)E dated 29th December 2011,
issued by MCA, from the current financial year, the Company has opted
to adjust exchange differences arising on reporting of long term
foreign currency monetary items, in so far as they relate to the
acquisition of depreciable assets, against the cost of such assets and
depreciate the said adjustment over the balance life of the asset. Had
the option not been exercised, the difference amounting to Rs. 26.14
million on long term foreign currency monetary items relating to
depreciable assets would have been charged to Profit and Loss Account
and Capital Work in Progress would have been lesser to that extent.
2.02 Employee Benefits(AS-15)
2.02.01 Brief Description: A general description on the type of
Defined Benefit Plans are as follows: a Earned Leave Benefit (EL):
Accrual 32 days per year Accumulation up to 300 days allowed
EL accumulated in excess of 15 days is allowed for encashment while in
service provided the EL encashed is not less than 5 days. b Sick Leave
(SL):
Accrual Ã10 days per year Encashment while in service is not allowed
Encashment on retirement is permitted and entire accumulation is
allowed for encashment c Gratuity:
15 days salary for every completed year of service. Vesting period is 5
years and the payment is restricted to Rs. 1 miilion.
d Long Service Emblem:
On completion of each milestone of service from the date of joining and
also at the time of retirement, employees will be gifted with Gold
Coin, weight depends on the milestone of service completed.
e Post Retirement Medical Benefits:
After retirement, on payment of one time lump sum contribution, the
Superannuated employee and his/her dependent spouse and dependent
parents will be covered for medical benefit as per the rules of the
Company.
f Retirement Benefits:
At the time of superannuation, employees are entitled for reimbursement
of expenses towards travel, transportation of personal effects from
their place of retirement to the new location upto certain limits
depending on the designation of the employee at the time of retirement
and one month's salary as settling allowance.
2.03 Borrowing Costs(AS-16)
Amount of borrowing costs capitalised during the yearRs. 889.56 million
(Previous year Nil)
2.04 Segment Reporting(AS17)
The Company is engaged in the business of refining crude oil, all
activities of the Company revolve around this business and the
operations are in India. As such there is no other reportable segment
as defined by the Accounting Standard 17 - Segment Reporting issued
under The Companies (Accounting Standards ) Rules, 2006. The
clarification sought for by the Company on the EAC opinion is under
consideration by ICAI and hence segment reporting is not made.
2.05 Related Party Disclosure (AS-18)
2.05.01 The Company is a state controlled enterprise and the
transactions with other state controlled enterprises are not required
to be disclosed as perAS-18.
2.05.02 Key Management Personnel:
(i) Shri. U.K.Basu, Managing Director
(ii) Shri P.P.Upadhya, Director (Technical)
(iii) Shri Vishnu Agrawal, Director (Finance)
2.06 Leases(AS-19)
2.06.01 The company has taken various premises under cancellable
operating lease.
2.06.02 These lease agreements are normally renewed on expiry of the
term.
2.06.03 Lease rental expenses for the year ended 31st March, 2012 in
respect of above operating leases are Rs. 34.75 Million (pre. year
Rs. 44.22 Million)
2.07 Accounting for taxes on income(AS-22)
2.07.01 The company has commenced commercial refining of crude oil
from its Phase III refinery during the year and accordingly is entitled
to the deduction u/s80 IB of the Income TaxAct,1961.
2.07.02 Contingent Liabilities not provided for in respect of:
a Corporate Guarantee given by the Company towards loan of Rs. 3,372.30
Million sanctioned by certain bankers / financial institutions to New
Mangalore Port Trust (NMPT) for construction of Jetties. Amount
outstanding as at the close of the year ended 31st March, 2012, after
adjusting the repayment made by NMPT is Rs. Nil (Previous Year Rs.Nil).
In respect of all these claims, which are being contested by the
company as not admissible, it is not practicable to make a realistic
estimate of the outflow of resource, if any, for settlement of such
claim pending resolution / award from Arbitrators / Court.
2.07.03 Disputed tax / Duty demands pending in appeal:
a) Income Tax: Rs. 1123.40 Million (Previous YearRs. 373.90 Million).
(against this Rs. 1000.92 Million is adjusted / paid under protest and is
included under loans & advances. Note 21)
b) Commercial Tax: Rs. 321.49 Million (Previous Year Rs. 1217.84 Million)
Rs. includes Rs. 321.49 Million (Previous Year Rs. 524.87 Million) relating
to projects.
c) Excise Duty: Rs. 488.10 Million (Previous Year Rs. 360.26 Million).
(against this Rs. 27.01 Million is paid under protest and is included
under loans & advances Note -20)
d) Customs Duty:Rs.647.54 Million (previous yearRs. 130.19 Million).
2.07.04 a) The estimated amount of contracts remaining to be executed
on capital account and not provided for (net of advances) Rs.31,185.31
Million (Previous YearRs. 57,527.76 Million).
b) Other commitments
i) ECB Loan to be availed USD 200 million
ii)ONGC Loan to be availed Rs. 24000 million
iii)Pending commitment on account of Refinery performance improvement
programme by Ms.Shell Global International Solution
(Ms.Shell GIS) USD 0.50 Million USD
2.8 Foreign Exchange exposures
2.9 Loans and Advances :
Loans and advances (Note 20) include refund claims for Custom Duty on
project imports Rs. 378.71.Million (Previous yearRs. 378.71Million) and
Commercial Taxes Rs. 548.48 Million (previous year Rs. 476.34 Million). A
further refund due towards Commercial Taxes Rs. 2,884.43 Million is also
included therein for which there is a matching liability to pay to
customers on receipt of the refund which is included under other
current liabilities - liability for statutory payments( Note 10).
2.10.01 The Sales tax deferment loan shown under Unsecured Loans
(Note-4 ) includes a sum of Rs. 290.17 Million (Previous YearRs. 290.17
Million) relating to CST on excise duty included under refund from
Commercial Tax Department ( Note 20) for the years 2000-01and 2001-02,
which were earlier paid under protest and are now being claimed as
sales tax deferment loan by the Company.
2.11 The Company is yet to receive response for its confirmation
letters from some of the trade receivables , Loans and Advances and
trade payables. Reconciliation and adjustment will be effected on
receipt of confirmations, which in the opinion of the management will
not be significant.
2.12 Following expenses are included under other heads of expenses
Insurance charges amounting to Rs. 20.22 Million (Previous year Rs.17.13
Million) relating to crude purchase and staff welfare has been charged
under respective heads.
2.13 Dues to Micro, Small & Medium enterprises:
The classification of the suppliers under Micro, Small and Medium
Enterprises Development Act, 2006 is made on the basis of information
made available to the company. The Company has neither paid any
interest in the terms Section 16 of the above said Act nor any interest
remain unpaid and no payments were made beyond the 'appointed date'
to such enterprises during the year ended 31.03.2012. Amount
outstanding to these enterprises for the year ended 31st March, 2012 is
Rs.Nil (Previous year: Rs.Nil)
2.14 The financial statements for the year ended March, 31,2011 had
been prepared as per the then applicable , pre Revised Schedule VI to
the Companies Act,1956 . Consequent to the notification of Revised
Schedule VI under the Companies Act,1956, the financial statements for
the year ended March,31,2012 are prepared as per Revised Schedule VI.
Accordingly, the previous year's figures have also been reclassified to
conform to this year's classification. The adoption of Revised Schedule
VI for previous year's figures does not impact recognition and
measurement principles followed for preparation of financial statements.
Corporate Governance is based on principles of conducting business with
all integrity and fairness, being transparent with regard to all
transactions making all disclosures, complying with laws of land,
accountability and responsibility towards the shareholders and
commitment to conduct the business in an ethical manner.
We at MRPL are committed to good governance practices that create
long-term sustainable value for its stakeholders. Our Corporate
Governance framework is based on the following principles:
- Ensuring maximum disclosure of information to the Board/Committees
of the Board for meaningful and focused discussions in meetings;
- Committed to a transparent system and values;
- Operating in a sound system of internal control with a thrust on
integrity and accountability;
- Ensuring timely and adequate disclosure of all material information
to all Stakeholders;
- Ensuring compliance of applicable laws, guidelines, rules and
regulations;
- Committed for equitable and fair treatment to all its stakeholders
and society at large.
Mar 31, 2011
1. Loans and Advances :
1.1 Loans and advances include refund claims for Custom Duty on project
importsRs. 378.71.Million (Previous year Rs.378.71Million) and Commercial
Taxes Rs. 476.34 Million (previous year Rs. 500.63 Million). A further
refund due towards Commercial Taxes Rs. 2884.43 Million is also included
therein for which there is a matching liability to pay to customers on
receipt of the refund which is included under Sundry Creditors
(Others).
2.2. Sales tax deferment loan shown under Unsecured Loans includes a
sum of Rs. 290.17 Million (Previous Year Rs. 290.17 Million) relating to
CST on excise duty included under refund from Commercial Tax Department
(refer note no.1.1 above) for the years 2000-01and 2001-02, which were
earlier paid under protest and are now being claimed as sales tax
deferment loan by the Company.
3. The Company is yet to receive response for its confrmation letters
from some of the Sundry Debtors, Loans and Advances and Sundry
Credito Rs. Reconciliation and adjustment will be effected on receipt
of confrmations, which in the opinion of the management will not be
significant.
4. Following expenses are included under other heads of expenses
Insurance charges amounting to Rs. 17.13 Million (Previous year Rs. 20.46
Million) relating to crude purchase and staff welfare has been charged
under respective heads.
5. Wage revision
The Company during the financial year has finalised the wage revision of
unionised employees effective from 01.04.2007. The quantum of wage
arrears relating to period from 01.04.2007 to 31.03.2010 net of
provision amounting to Rs. 405.00 Million is shown under "Payment to and
Provision for Employees" in Schedule P.
6. Dues to Micro, Small & Medium enterprises:
The classifcation of the suppliers under Micro, Small and Medium
Enterprises Development Act, 2006 is made on the basis of information
made available to the Company. The Company has neither paid any
interest in the terms Section 16 of the above said Act nor any interest
remain unpaid and no payments were made beyond the 'appointed date' to
such enterprises during the year ended 31.03.2011. Amount outstanding
to these enterprises for the year ended 31st March, 2011 is Rs. Nil
(Previous year: Rs. 0.74 Million)
7. Disclosures as required under Accounting Standard 15 (Revised) is
given below:
7.1. Brief Description: A general description on the type of defined
Beneft Plans are as follows:
a) Earned Leave Beneft (EL):
Accrual - 32 days per year
Accumulation up to 300 days allowed
EL accumulated in excess of 15 days is allowed for encashment while in
service provided the EL encashed is not less than 5 days.
b) Sick Leave (SL):
Accrual - 10 days per year
Encashment while in service is not allowed
Encashment on retirement is permitted and entire accumulation is
allowed for encashment
c) Gratuity:
15 days salary for every completed year of service. Vesting period is 5
years and the payment is restricted to Rs. 10, 00,000.
d) Long Service Emblem:
On completion of each milestone of service from the date of joining and
also at the time of retirement, employees will be gifted with Gold
Coin, weight depends on the milestone of service completed.
e) Post Retirement Medical benefits:
After retirement, on payment of one time employee's share of premium,
the employee and his/her spouse will be covered under Group Medical
Insurance. The cover amount depends on designation of employee at the
time of retirement.
f) Retirement benefits:
At the time of superannuation, employees are entitled for reimbursement
of expenses towards travel, transportation of personal effects from
their place of retirement to the new location upto certain limits
depending on the designation of the employee at the time of retirement
and one month's salary as settling allowance.
8. Segment Reporting
The Company is engaged in the business of refining crude oil, all
activities of the Company revolve around this business and the
operations are in India. As such there is no other reportable segment
as defined by the Accounting Standard 17 - Segment Reporting issued
under the Company (Accounting Standard) Rules, 2006.
9. Information as per Accounting Standard (AS-18) on Related Party
Disclosures is given below
9.1. The Company is a state controlled enterprise and the transactions
with other state controlled enterprises are not required to be
disclosed as per AS-18.
9.2. Key Management Personnel: Functional Directors:
(i) Shri. U.K.Basu, Managing Director
(ii) Shri L.K.Gupta, Director (Finance).- Part of the period upto
31.05.2010
(iii) Shri P.P.Upadhya, Director (Technical) - Part of the period from
30.09.2010. Remuneration paid to the above-mentioned Directors during
the year is Rs. 6.92 Million (Previous year Rs. 5.63 Million) - Refer Note
No. 10 given below
The above fgures do not include Provision for Leave, Gratuity and Post
Retirement benefits as per Revised AS-15 since the same were not
ascertained for individual employees.
The performance related pay is considered on paid basis
Loan & Advances outstanding from Directors à Rs. Nil (Previous year - Rs.
Nil),
Maximum amount of Loans & Advances outstanding during the year ended
31st March, 2011, Rs.Nil (previous year Rs. 0.42 Million)
10. Operating Leases:
10.1. The company has taken various premises under cancellable
operating lease.
10.2. These lease agreements are normally renewed on expiry of the
term.
10.3. Lease rental expenses for the year ended 31st March, 2011 in
respect of above operating leases are Rs. 44.22 Million (previous year Rs.
40.87 Million)
11. Current Tax:
11.1. Provision for Current Tax is made in accordance with the
provisions of the Income Tax Act, 1961.
12. Disclosure on Research & Development Expenditure
The Company during the year has carried out activities relating to
study of Crude Assay, Modified Bitumen, Liquid effluents, VG Bitumen &
Additive Evaluation. as a part of its R & D activities. The company has
obtained approval of competent authority to establish R&D facilities
for carrying out development work w.r.t Polypropylene unit, PFCCU Unit,
Corrosion Monitoring, Development of Modified bitumen and Bitumen
Emulsions and effluent & Spent Caustic Treatment. The total expenditure
incurred by the company during the year on the above mentioned Research
& Development activities is Rs. 1.11 Million (Previous Year - Rs. 1.83
Million).
12.2 Contingent Liabilities not provided for in respect of:
1. Corporate Guarantee given by the Company towards loan of Rs. 3,372.30
Million sanctioned by certain bankers / financial institutions to New
Mangalore Port Trust (NMPT) for construction of Jetties. Amount
outstanding as at the close of the year ended 31st March, 2011, after
adjusting the repayment made by NMPT is Rs. Nil (Previous Year Rs. Nil).
2. Claims against the Company not acknowledged as debt :
(` in Million)
Sl. Particulars As on As on
No 31.03.2011 31.03.2010
1 Claims of Contractors / vendors in
Arbitration / Court 352.47 338.65
Some of the contractors for supply and
installation of equipment have lodged claims
on the Company seeking revision of time of
completion without liquidated damages,
extended stay compensation and extra claims
etc., which are contested by the Company as
not admissible in terms of the provisions of
the respective contracts. In case of
unfavourable awards the amount payable would
be capitalised Rs. 314.74 million /
Reimbursable Rs. 37.73 million [Previous
year Rs. 300.92 million and Rs.
37.73 million respectively]
2 Claims / counter claims of Customers
(a) The Company had gone into an international 16.17 14.31
arbitration at London against one of its export
customers. The arbitration Tribunal has dismissed
the Company's claims relating to throughput loss
and non-full fllment of contractual
obligations and has ordered the
Company to bear the customer's
advocate cost along with refund of part of adhoc
amount paid by the customer along with interest.
The Company has preferred an appeal in the
Mumbai High Court against this arbitral award. In
case of unfavourable award the amount payable
would be debited to Profit & Loss Account.
(b) One of the customers has lodged a claim for 85.20 85.20
damages for pre-closure of the contract. The
Company has disputed the claim basis Force
Majure condition. In case of non acceptance
of the stand taken by the Company the amount
will be debited to the Profit & Loss Account.
3 Others
(a) The New Mangalore Port Trust (NMPT) has 606.42 177.38
claimed from the Company notifed wharfage
charges for one of the Jetty. The company
has approached the Tariff Authority of Major
Ports (TAMP) for fxation of the wharfage rates
based on Tariff Policy. The differential amount
between the wharfage rate to be fixed by the
TAMP and the wharfage rate being paid by the
Company, if any, will be debited / credited to
the Profit & Loss Account.
(b)This represents the potential liability which 133.67 133.67
the Company has undertaken towards
reimbursement to lessors in case of any
liability in their respective tax assessments. In
case of any claim by lessors the same will be
debited to Profit & Loss Account.
4 Total 1193.93 749.21
In respect of all these claims, which are being contested by the
Company as not admissible, it is not practicable to make a realistic
estimate of the outfow of resource, if any, for settlement of such
claim pending resolution / award from Arbitrators / Court.
3. Disputed tax / Duty demands pending in appeal:
a) Income Tax: Rs. 373.90 Million (Previous Year Rs. 244.51 Million).
(against this Rs. 251.41 Million is adjusted / paid under protest and is
included under loans & advances.)
b) Commercial Tax: Rs. 1217.84 Million (Previous Year Rs. 1,188.76 Million)
- includes Rs. 524.87 Million (Previous Year Rs. 500.46 Million) relating
to projects. (Against this Rs. 377.20 Million is paid under protest and
included under loans & advances.)
c) Excise Duty: Rs. 360.26 Million (Previous Year Rs. 146.45 Million).
(against this Rs. 41.08 Million is paid under protest and is included
under loans & advances.)
d) Customs Duty: Rs. 130.19 Million (previous year Rs. 128.82 Million).
4. The estimated amount of contracts remaining to be executed on
capital account and not provided for (net of advances) Rs. 57,527.76
Million (Previous year Rs. 93,391.12 Million).
13. Previous year's fgures have been re-grouped / re-arranged wherever
necessary to conform to the current period presentation.
Mar 31, 2010
1. Contingent Liabilities not provided for in respect of:
1.1. Corporate Guarantee given by the Company towards loan of ?
3,372.30 Million sanctioned by certain bankers / financial institutions
to New Mangalore Port Trust (NMPT) for construction of Jetties. Amount
outstanding as at the close of the year after adjusting the repayment
made by NMPT is ? Nil (Previous Year ? 69.47 Million).
1.2. Claims against the Company not acknowledged as debt:
(in Million)
Sl.Particulars As on As on
No 31.03.2010 31.03.2009
1 Claims of Contractors / vendors in 338.65 357.37
Arbitration / Court
(a) Some of the contractors for supply
and installation of equipment have
lodged claims on the company seeking
revision of time of completion without
liquidated damages, extended stay
compensation and extra claims etc.,
which are contested by the company as
not admissiblein terms of the provisions
of the respective contracts. In case of
unfavourable awards the amount payable
would be capitalised (? 300.92 Million) /
Reimbursable (? 37.73 Million) [Previous
year ? 321.51 Million and X 35.86 million
respectively]
(b)A shipping company had gone for - 57.60
arbitration, disputing the mutual
settlement reached with the
company. The claim has been
withdrawn during the year.
2 Claims / counter claims of Customers
(a) The company had gone into an 14.31 1437
international arbitration at London
against one of its export customers.
The Arbitration Tribunal has
dismissed the companys claims
relating to throughput loss and
non-fulfillment of contractual
obligations and has ordered the
company to bear the customers
advocate cost along with refund of
part of adhoc amount paid by the
customer alongwith interest.
The company has preferred an
appeal in the Mumbai High Court
against this arbitral award.
In case of unfavourable award the
amount payable would be debited
to Profit & Loss Account.
(b)One of the customers has lodged a 85.20 85.20
claim for damages for pre-closure of
the contract. The company has
disputed the claim basis force
meagre condition. In case of
non acceptance of the stand taken
by the company the amount will be
debited to the Profit & Loss Account.
3 Others
(a) The New Mangalore Port Trust 177.38
(NMPT) has claimed from the
company notified wharfage charges
for one of the Jetty. The company
has approached the Tariff Authority
of Major Ports (TAMP) for fixation of
the wharfage rates based on Tariff
Policy. The differential amount
between the wharfage rate to be
fixed by the TAMP and the wharfage
rate being paid by the company,
if any, will be debited / credited
to the Profit & Loss Account.
(b)This represents the potential 133.67 133.67
liability which the company has
undertaken towards
reimbursement to lessors
in case of any liability in their
respective tax assessments. In
case on any claim by lessors the
same will be debited to Profit &
Loss Account.
4 Total 749.21 648.21
In respect of all these claims, which are being contested by the
company as not admissible, it is not practicable to make a realistic
estimate of the outflow of resource, if any, for settlement of such
claim pending resolution / award from Arbitrators / Court.
5. Disputed tax / Duty demands pending in appeal:
a) Income Tax: 244.51 Million (Previous Year 345.13 Million).
b) Commercial Tax: 1,188.76 Million (Previous Year 1,684.92
Million) - includes 500.46 Million (Previous Year 500.46 Million)
relating to projects. (Against this 1377.20 Million is paid under
protest and included under loans & advances.)
c) Excise Duty: 146.45 Million (Previous Year 188.96 Million).
(Against this ? 41.08 Million is paid under protest and is included
under loans & advances.)
d) Custom Duty: 128.82 Million (Previous year 124.21 Million).
6. The estimated amount of contracts remaining to be executed on
capital account and not provided for (net of advances) 93,391.12
Million (Previous Year 54,814.59 Million).
7. Loans and Advances :
7.1. Loans and advances include refund claims for Custom Duty on
project imports 378.71.Million (Previous year 378.71 Million) and
Commercial Taxes 500.63 (Previous year 315.68 Million). A further
refund due towards Commercial Taxes 2884.43 Million is also included
therein for which there is a matching liability to pay to customers on
receipt of the refund which is included under Sundry Creditors
(Others).
7.2, Sales tax deferment loan shown under Unsecured Loans includes a
sum of f 290.17 Million (Previous Year ? 290.17 Million) relating to
CST on excise duty included under refund from Commercial Tax Department
(refer note no.2.1 above) for the years 2000-01 and 2001-02, which were
earlier paid under protest and are now being claimed as sales tax
deferment loan by the Company.
8. The Company is yet to receive response for its confirmation letters
from some of the Sundry Debtors, Loans and Advances and Sundry
Creditors. Reconciliation and adjustment will be effected on receipt
of confirmations, which in the opinion of the management will not be
significant.
9. Provision for Wage Revision
The Ministry of Petroleum and Natural Gas has approved revision of pay
& allowances of management employees of the company in line with DPE
approved scales of pay effective from 1st January, 2007 & 28* November,
2008 respectively. Accordingly wage revision in respect of Management
employees has been given effect. The Non Management employees wage
revision is due for revision effective from 1st April, 2007 and the
negotiation with the employees union is in progress. Pending final
negotiation, the company has made provision for wage revision on
estimated basis for the year ended 31st March, 2010 amounting to 7 Nil
(Previous Year ? 39 Million) and is shown under "Payment to and
Provision for Employees" in Schedule P.
10. Following expenses are included under other heads of expenses
Insurance 20.46 Million (Previous year 11.47 Million)
11. Dues to Micro, Small & Medium Enterprises:
The classification of the suppliers under Micro, Small and Medium
Enterprises Development Act, 2006 is made on the basis of information
made available to the company. No interest amount remain unpaid to such
Micro and Small Enterprises as on 31.03.2010 and no payments were made
to such enterprises beyond the "appointed day" during the year. Also
the company has not paid any interest in terms of Section 16 of the
above-mentioned act or otherwise. Amount outstanding to these
enterprises for the year ended 31s1 March, 2010 is 0.74 Million
(Previous Year. Nil)
12. Fofwarc Cm tracts to cover Forex Risk
12.1. Forward contracts Nil is outstanding as on 31s1 March, 2010
(US$ 56.17 Million as on 31s1 March, 2009), which were entered into, to
hedge the risk of changes in foreign currency exchange rates on future
export sales against existing long term export contract.
12.2. As the company is not following Accounting Standard 30 -
Financial Instruments Recognition and Measurement, keeping in view of
the principle of prudence, the Company, has recognised an amount of ?
Nil (Previous Year: ? 226.38 Million) towards the mark to market (MTM)
loss (net) as on 31s1 March. 2010 (included under the head exchange
fluctuation (net) in Schedule P) on outstanding forward contracts
mentioned at para 8.1.
13. Disclosures as requited under Accounting Standard 15 (Revised) is
given below:
13.1. Brief Description: A general description on the type of Defined
Benefit Plans are as follows:
a) Earned Leave Benefit (EL): Accrual - 32 days per year. Accumulation
up to 300 days allowed. EL accumulated in excess of 60 days is allowed
for encashment while in service.
b) Sick Leave (SL): Accrual - 10 days per year. Encashment while in
service is not allowed. Encashment on retirement is permitted and
entire accumulation is allowed for encashment.
c) Gratuity:15 days salary for every completed year of service.
Vesting period is 5 years and the payment is restricted to 10,00,000.
d) Long Service Emblem: On completion of each milestone of service from
the date of joining and also at the time of retirement, employees will
be gifted with Gold Coin, weight depends on the milestone of service
completed.
e) Post Retirement Medical Benefits: After retirement, on payment of
one time employees share of premium, the employee and his/her spouse
will be covered under Group Medical Insurance. The cover amount
depends on designation of employee at the time of retirement.
f) Retirement Benefits: At the time of superannuation, employees are
entitled for reimbursement of expenses towards travel, transportation
of personal effects from their place of retirement to the new location
upto certain limits depending on the designation of the employee at the
time of retirement and one months salary as settling allowance.
14, Segment Reporting
The Company is engaged in the business of refining crude oil, all
activities of the Company revolve around this business and the
operations are in India. As such there is no other reportable segment
as defined by the Accounting Standard 17 - Segment Reporting issued
under the Company (Accounting Standard) Rules, 2006.
15. Information as per Accounting Standard (AS-18) on Related Party
Disclosures is given below.
15.1. The Company is a state controlled enterprise and the
transactions with other state controlled enterprises are not required
to be disclosed as per AS-18.
15.2. Key Management Personnel: Functional Directors:
(i) Shri. U.K.Basu, Managing Director
(ii) Shri L.K.Gupta, Director (Finance).
Remuneration paid to the above-mentioned Directors during the year is
5.63 Millions (Previous year ? 4.30 Million) - Refer Note No. 12 given
below.
The above figures do not include Provision for Leave, Gratuity and Post
Retirement Benefits as per Revised AS-15 since the same were not
ascertained for individual employees.
The performance related pay is considered on paid basis.
Loan & Advances outstanding from Directors -- Nil (Previous year -
Nil), Maximum amount of Loans & Advances outstanding during the year
0.42 Million (Previous year Nil)
16. Operating Leases:
16.1. The company has taken various premises under cancellable
operating lease.
16.2. These lease agreements are normally renewed on expiry of the
term.
16.3. Lease rental expenses for 2009-10 in respect of above operating
leases are 40.87 Million (previous year 38.80 Million)
17. Basic and Diluted Earnings Per Share:
18. Current Tax:
Provision for Current Tax is made in accordance with the provisions of
the Income Tax Act, 1961.
19. Disclosure on Research & Development Expenditure
The company during the year has carried out activities relating to
study of Crude Assay, Spent Caustic Treatment, additive degradation,
Fluorescence Characteristics of Petroleum fractions, Biological Oxygen
Demand and Chemical Oxygen Demand depletion, salt content of various
crude and evaluation of Crude Assay as a part of its R & D activities.
The total expenditure incurred by the company during the year on the
above mentioned Research & Development activities is Rs. Qr>- Million
(Previous Year - 7.99 Million).
Note : Figures in parenthesis represents previous year figure.
20.Foreign Exchange Exposures
21. Additional Information pursuant to the provisions of 3, 4B, 4C and
4D of Part II of Schedule - VI to the Companies Act, 1956: