Home  »  Company  »  PCBL  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of PCBL Ltd.

Mar 31, 2023

NOTE 3(C): INVESTMENT PROPERTY Accounting Policy

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. Investment properties are derecognised either when they have been disposed off or when they are permanently

withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the statement of profit or loss in the period of derecognition.

Estimation of fair value

The Company’s investment property consists of freehold land in Angul, Odisha, India.

The fair value of the investment property is based on current prices for similar property. The main inputs used are quantum, area, location, demand, and trend of fair market value in the area.

The fair value is based on independent valuation done by registered valuer [as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017]. Fair valuation is based on market approach method and categorised as Level 2 fair value hierarchy. The fair value of the property is '' 7.98 Crores and '' 7.41 Crores as at 31 March, 2023 and 31 March, 2022 respectively.

The Company has no restrictions on the realisability of its investment property and no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance and enhancements.

Fair value hierarchy disclosures for investment properties have been provided in Note 30 (iv).

NOTE 3(D): INTANGIBLE ASSETS Accounting Policy

Intangible assets have a finite useful life and are stated at cost less accumulated amortisation, impairment loss, if any.

Computer Software for internal use, which is primarily acquired from third party vendors, is capitalised. Subsequent costs associated with maintaining such software are recognised as expense as incurred. Cost of software includes license fees and cost of implementation / system integration services, where applicable.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.

Amortisation method and period

Computer software is amortised on a straight line basis over estimated useful life of three years from the date of capitalisation.

Amortisation method and useful lives are reviewed periodically at each financial year end.

1. Amortisation has been included under depreciation and amortisation expense in the Statement of Profit and Loss (Refer Note 20).

NOTE 3(E): RIGHT OF USE ASSETS Accounting Policy

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date. Right-of use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

The right-of-use assets are also subject to impairment. Refer to the accounting policies in section 1.2. Impairment of non-financial assets.

NOTE 4(A): INVESTMENTS Accounting Policy 1. Investment in subsidiaries

Investments in shares of subsidiaries are stated at cost less provision for impairment losses, if any. Investments are tested for impairment whenever an event or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of investments exceeds its recoverable amount. If, in a subsequent period, recoverable amount equals or exceeds the carrying amount, the impairment loss recognised is reversed accordingly.

1.1 Investment (other than investment in shares of subsidiaries)1.1.1. Classification

The Company classifies its investments as those to be measured subsequently at fair value (either through other comprehensive income or through profit and loss).

The classification depends on the Company’s business model for managing the investments and the contractual terms of cash flows.

For investments measured at fair value, gains and losses are either recorded in the statement of profit and loss or other comprehensive income. For investments in debt instruments, this depends on the business model in which the investment is held. For investments in equity instruments, this depends on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVTOCI). The Company reclassifies the debt investments when and only when the business model for managing those investment changes.

1.1.2. Measurement

At initial recognition, the Company measures an investment at its fair value plus, in the case of investment not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition of the investment. Transaction costs of investments carried at fair value through profit and loss are expensed in the statement of profit and loss.

(a) Debt Instrument

Subsequent measurement of debt instruments depends on the Company’s business model for managing the investment and the cash flow characteristics of the investment. The Company classifies its debt instruments as:

Fair value Through Profit and Loss (FvTPL): Investments that do not meet the criteria for amortised cost or FVTOCI are measured at fair value through profit and loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit and loss is recognised in statement of profit and loss and presented on net basis in the statement of profit and loss within other income/ other expense in the year in which it arises.

(b) Equity Instrument

The Company subsequently measures all equity investments at fair value through Other Comprehensive Income and there is no subsequent reclassification of fair value gains and losses to the statement of profit and loss. At the time of derecognition of such investments, the gain or loss is transferred to retained earnings.

2 Refer note 30 for information about fair value measurements and note 31 for credit risk and market risk on investments.

@ These investments in equity instruments are not held for trading. Upon application of Ind AS 109, the Company has chosen to designate these investments in equity instruments at FVTOCI as the management believes that this provides a more meaningful presentation for long term investments than reflecting changes in fair values immediately in statement of profit and loss. Based on the aforesaid election, fair value changes are accumulated within Equity under "Fair Value Changes through Other Comprehensive Income - Equity Instruments”. The Company transfers amounts from this reserve to retained earnings when relevant equity shares are derecognised. The fair value of such unquoted investments has been carried out by applying applicable valuation methodologies, which has been performed by independent valuation experts.

* The cost of quoted and unquoted investments in equity instruments (fully paid up) and preference shares (fully paid up) respectively, written off in earlier years, though quantity thereof appears in the books. During the current year, the same has been sold.

x The cost of unquoted investments in equity instruments (fully paid up) have been written off during the year, though quantity thereof appears in the books.

Trade receivables are amounts receivable from customers for goods sold in the ordinary course of business. Trade receivable are initially recognised at transaction price and subsequently measured at amortised cost using the effective interest method, less provision for impairment. For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Accounting Policy

Inventories are stated at lower of cost and net realisable value.

• Raw materials, Stores and Spares and Packing Material: cost is determined on moving weighted average method and includes cost of purchase and other incidental costs. However, material and other items held for use in production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

• Finished goods: cost includes cost of direct materials, labour and a proportion of manufacturing overheads based on the normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of

completion and the estimated cost necessary to make the sale.

(i) Pursuant to the Special Resolution passed by the Shareholders of the Company by way of Postal Ballot through electronic means on 17 March, 2022, the Company has sub-divided its equity share of face value '' 2/- ('' Two only) each fully paid up, into 2 (two) equity shares of face value Re. 1/- (Rupee One) each fully paid-up, effective from 13 April, 2022. This has been considered for calculating weighted average number of equity shares for year ended 31 March, 2022 as per Ind AS 33-Earnings Per Share.

(ii) During the previous year ended 31 March, 2022, the Company has issued and allotted 1,63,93,442 equity shares of '' 2 each at an issue price of '' 244 per equity share, aggregating to '' 399.99 Crores (including securities premium of '' 396.71 Crores) on 5 October, 2021. The issue was made through eligible Qualified Institutions Placement (QIP) in terms of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI Regulations) as amended, Section 42, Section 62 and other relevant provisions of the Companies Act, 2013. Pursuant to the allotment of equity shares in the QIP, the paid up equity share capital of the Company has increased from '' 34.47 Crores comprising of 17,23,37,860 equity shares to '' 37.75 Crores comprising of 18,87,31,302 equity shares.

The Company had incurred expenses amounting to '' 9.89 Crores towards issuance of equity shares which have been debited to securities premium account.

The Company has complied with applicable provisions of the Companies Act, 2013 and SEBI Regulations in respect of Qualified Institutions Placement of equity shares during the year. The amount raised, as aforesaid has been fully utilised for the purposes for which the funds were raised.

(iii) No equity shares were allotted as fully paid up by way of bonus shares or pursuant to contract(s) without payment being received in cash during the last five years. Further, none of the shares were bought back by the Company during the last five years.

(vi) Terms/ Rights attached to equity shares

The Company has only one class of equity shares having par value of Re 1/- per share and each shareholder is entitled for one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(vii) Allotment of 1,823 equity shares of '' 10/- each is pending against rights issue made during 1993-94.

(viii) 48 equity shares of '' 10/- each have not been issued to the concerned non-resident shareholders pending approval of the Reserve Bank of India.

(ix) There are no calls unpaid by Directors / Officers of the Company.

(x) The Company has not converted any securities into equity shares / preference shares during above financial yea rs.

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of profit and loss over the period of the borrowings using the effective interest rate method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the borrowings to the extent that it is probable that some or all of the facility will be utilised. In this case, the fee is deferred until the draw down occurs. Borrowings are derecognised from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.

Borrowings are classified as current and non-current liabilities based on repayment schedule agreed with banks.

Lease Liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) and does not include non-lease components (maintenance charges etc.). In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.

Liabilities for short term employee benefits that are expected to be settled wholly within 12 months after the end of the period are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefits payable in the balance sheet.

Provisions

Provisions are recognised when the Provisions has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management’s best estimates of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Pursuant to the introduction of Section 115BAA of the Income Tax Act, 1961, w.e.f. 1 April, 2019, companies in India have the option to pay corporate income tax at reduced rate subject to certain conditions. The management expects to be in lower tax regime going forward and accordingly the Deferred Tax Liabilities (net) as at 31 March, 2023 have been re-measured. Consequently, tax expense for year ended 31 March, 2023 includes a credit of '' 39.62 crores towards reversal of deferred tax liabilities.

Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received. If the grant received is to compensate the import cost of assets, and is subject to an export obligation as prescribed in the EPCG scheme, then the recognition of the grant would be linked to fulfilment of the associated export obligations. At the year end, the portion of grant for which the export obligation has not been met is retained in deferred revenue under other current liabilities. Revenue grant is recognised as an income in the period in which related obligation is met.

Sale of power

Revenue from the sale of power is recognised upon transmission of units to the buyer net of Unscheduled Interchange gains/losses as per the terms of contract with the customer.

Other Operating revenues

Exports entitlements (arising out of duty draw back, Merchandise exports from India Schemes) are recognised when the right to receive credit as per the terms of the schemes is established in respect of the exports made by the Company and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price allocated to that performance obligation. Amounts disclosed as revenue are net of returns, trade and other discounts, rebates and amounts collected on behalf of third parties.

Where the Company is the principal in the transaction, the sales are recorded at their gross values. The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of significant financing component, non-cash considerations and consideration payable to the customer (if any). Any amounts received for which the Company does not provide any distinct goods or services are considered as a reduction of purchase cost.

However, Goods and Service Tax (GST) is not received by the Company on its own account. Rather, it is collected on value added to the commodity by the seller on behalf of the Government. Accordingly, it is excluded from revenue.

The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company regardless of when the payment is being made and specific criteria have been met for each of the Company’s activities as described below.

Sale of carbon black

Revenue from sale of carbon black is recognised when the control of the goods has passed to the buyer as per the terms of contract. In case of domestic sales, the performance obligation is satisfied upon delivery of the finished goods at customer’s location. In case of export sales, the performance obligation is satisfied once the goods are shipped and the bill of lading has been obtained.

a. Interest Income

Interest Income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.

(I) Post-employment benefits Defined benefit plans

a. The liability or asset recognised in the balance sheet in respect of Defined benefit plans is the present value of the Defined benefits obligation at the end of the reporting period less the fair value of plan assets. The Defined benefit obligation is calculated annually by actuaries using the Projected Unit Credit Method at the year end.

b. The present value of the Defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligations.

c. The net interest cost is calculated by applying the discount rate to the net balance of the Defined benefit obligation and the fair value of plan assets. This cost is included in Employees Benefits Expense in the statement of profit and loss.

d. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included in retained earnings in the statement of changes in equity.

e. Changes in the present value of the Defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the statement of profit or loss as past service cost.

(II) Defined contribution plans

Contributions under Defined Contribution Plans payable in keeping with the related schemes are recognised as expenses for the period in which the employee has rendered the service.

(III) Other short-term employee benefit obligations

Liabilities for short term employee benefits that are expected to be settled wholly within 12 months after the end of the period are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefits payable in the balance sheet.

The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilised leave at each balance sheet date on the basis of year-end actuarial valuation using projected unit credit method. The scheme is unfunded.

(I) Post employment obligations(A) Gratuity

The Gratuity scheme is a defined benefit plan that provides for a lump sum payment on exit either by way of retirement, death, disability or voluntary withdrawal. The benefits are defined on the basis of last drawn salary and the period of service and paid as lump sum at exit. Gratuity payable is not restricted to the maximum limit prescribed under the Payment of Gratuity Act, 1972. The liability in respect thereof is determined by actuarial valuation at the year end based on the Projected Unit Credit Method and is recognised as a charge on accrual basis. Trustees administer the contributions made to the Gratuity fund. Amounts contributed to the Gratuity fund are invested solely with the Life Insurance Corporation of India.

# The estimate of future salary increase considered in actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors, such as demand and supply in the employment market.

In case of funded plan, the Company ensures that the investment positions are managed within an Asset - Liability Matching (ALM) framework that has been developed to achieve investment that are in line with the obligation under the gratuity scheme. Within this framework the Company’s ALM objective is to match asset with gratuity obligation. The Company actively monitors how the duration and the expected yield of instruments are matching the expected cash outflows arising from the gratuity obligations. The Company has not changed the process used to manage its risk from previous periods. The Company does not use derivatives to manage its risk. The gratuity scheme is funded with LIC which has good track record of managing fund except Contractor worker.

Method used for sensitivity analysis:

The sensitivity results above determine their individual impact on the plan’s end of year Defined Benefit

Obligation. In reality, the plan is subject to multiple external experience items which may move the Defined

Benefit Obligation in similar opposite directions, while the plan’s sensitivity to such changes can vary over time.

(vii) Risk Exposure

Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below:

1 Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

2 Salary Inflation risk : Higher than expected increases in salary will increase the defined benefit obligation.

3 Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

(II) Defined Contribution Plans

The Company has certain Defined Contribution Plans viz. Provident Fund and Superannuation Fund. Contributions are made to provident fund for employees at the rate of 12% of basic salary as per regulations. The Company has a defined contribution Superannuation plan for which contribution is made at a rate not exceeding 4.87% of Basic and Dearness Allowance of the member with Superannuation. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is '' 12.95 Crores (31 March, 2022'' 13.71 Crores).

(III) Defined Benefit Liability and Employer Contributions

Expected contribution to Post-employment benefit plans for the year ending 31 March, 2023 basis the acturial report is '' 2.63 Crores (31 March, 2022: '' 2.50 Crores)

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect of situation in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the standalone financial statements.

Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction that at the time of the transaction affects neither accounting profit/ loss nor taxable profit (tax loss).

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period.

Current and deferred tax is recognised in statement of profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, if any. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax for the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognises MAT credit as an asset, it is created by way of credit to the statement of profit and loss and shown as part of deferred tax assets. The Company reviews the "MAT credit entitlement” asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period. Unrecognised MAT are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the MAT to be recovered.

In the situations where the Company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognised in respect of temporary differences which reverse during the tax holiday period, to the extent the Company’s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognised in the year in which the temporary differences originate. However, the Company restricts recognition of deferred tax assets to the extent it is probable that sufficient future taxable income will be available against which such deferred tax assets can be realised. For recognition of deferred taxes, the temporary differences which originate first are considered to reverse first.

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to owners of the equity by the weighted average number of equity shares outstanding during the year.

The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

(f) Terms and Conditions

All transactions were made on normal commercial terms and conditions and are at arm’s length price.

All outstanding balances are unsecured and are repayable in cash.

(g) Unwinding of interest on investment in preference shares of Devise Properties Private Ltd. is not disclosed above considering it to be a IND AS adjustment.

includes equity and preference shares alloted by wholly owned subsidiary PCBL (TN) Limited, Intially given as advance against pending allotment.

NOTE 29: SEGMENT Accounting Policy

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The chief operating decision maker is responsible for allocating resources and assessing performance of the operating segments and has been identified as the Managing Director of the Company.

(a) Description of segments and principal activities

Carbon Black : The Company is primarily engaged in production of Carbon Black through its four manufacturing units located at Durgapur, Kochi, Vadodara and Mundra.

Power: The Company is also engaged in generation of electricity for the purpose of captive consumptions as well as sale of surplus to outsiders.

The segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the standalone financial statement. Also the Company’s borrowings (including finance costs and interest income), income taxes, investments are managed at head office and are not allocated to operating segments.

Inter-Segment transfers being power consumed for manufacture of Carbon Black are based on price paid for power purchased from external sources. Segment revenue is measured in the same way as in the Statement of Profit and Loss.

Segment assets and liabilities are measured in the same way as in the standalone financial statements. These assets are allocated based on the operations of the segment and the physical location of the assets.

Non-current assets of the Company (excluding certain financial assets) are located in India and Belgium.

The fair values of financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent in all the years. The following methods and assumptions were used to estimate the fair values:

(a) In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors. Accordingly, such net asset values are analogous to fair market value with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the issuers of these units of mutual funds.

(b) In respect of investments in listed equity instruments, the fair values represents available quoted market price at the Balance Sheet date.

(c) The fair value of derivative contracts (foreign exchange forward contracts and Currency and Interest rate swaps) is determined using discounted cash flow analysis and swaps and options pricing models.

(d) The management assessed that fair values, of trade receivables, cash and cash equivalents, other

bank balances, loans, trade payables, current borrowings, other current liabilities and other financial liabilities (current), approximate to their carrying amounts largely due to the short-term maturities of these instruments. Further, management also assessed the carrying amount of certain non-current loans which are a reasonable approximation of their fair values and the difference between the carrying amounts and fair values is not expected to be significant.

(iii) Fair value of financial assets and liabilities measured at amortised cost

The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amount would be significantly different from the values that would eventually be received or settled.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.

The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There are no transfers between level 1 and level 2 fair value measurements during the year ended 31 March, 2023 and 31 March, 2022.

Some of the Company’s financial assets are carried at fair value for which Level 3 inputs have been used. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique(s) and inputs used).

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have net asset value as stated by the issuers in the published statements. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Valuation process :

The main level 3 inputs for unquoted equity shares and unquoted preference share used by the Company are derived and evaluated as follows:

Discount rates are determined using a capital asset pricing model to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset.

NOTE 31: FINANCIAL RISK MANAGEMENT

The Company’s principal financial liabilities comprises of borrowings, trade and other payables and other financial liabilities. The main purpose of these financial liabilities is to finance and support the operations of the Company. The Company’s principal financial assets include trade and other receivables, loans, investments and cash & cash equivalents that derive directly from its operations.

The Company’s business activities are exposed to a variety of risks including liquidity risk, credit risk and market risk. The Company seeks to minimize potential adverse effects of these risks by managing them through a structured process of identification, assessment and prioritization of risks followed by coordinated efforts to monitor, minimize and mitigate the impact of such risks on its financial performance and capital. For this purpose, the Company has laid comprehensive risk assessment and minimization/mitigation procedures, which are reviewed by the Audit Committee and approved by the Board from time to time. These procedures

are reviewed to ensure that executive management controls risks by way of properly defined framework. The Company does not enter into derivative financial instruments for speculative purposes.

(A) Credit risk

Credit risk refers to risk of financial loss to the Company if customers or counterparties fail to meet their contractual obligations. The Company is exposed to credit risk from its operating activities (mainly trade receivables) and from its investing activities (primarily deposit with banks and investment in mutual funds).

(i) Credit risk management (a) Trade Receivable

Customer credit risk is managed by the Company through its established policies and procedures which involve setting up credit limits based on credit profiling of individual customers, credit approvals for enhancement of limits and regular monitoring of important developments viz. payment history, change in credit rating, regulatory changes, industry outlook etc. Outstanding receivables are regularly monitored and an impairment analysis is performed at each reporting date on an individual basis for each major customer. In addition, small customers are grouped into homogeneous groups and assessed for impairment collectively. The Company also has a policy to provide for all receivables which are overdue for a period over 365 days. In accordance with Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or reversal thereof.

(b) Deposits and financial assets (Other than trade receivables):

The Company maintains exposure in cash and cash equivalents, term deposits with banks and money market liquid mutual fund schemes. Investments of surplus are made within assigned credit limits with approved counterparties who meet the threshold requirements with respect to ratings, financial strength, credit spreads etc. Counterparty credit limits are set to minimize concentration risk and are reviewed periodically by the Board.

(B) Liquidity Risk

Liquidity risk implies that the Company may not be able to meet its obligations associated with its financial liabilities. The Company manages its liquidity risk on the basis of the business plan that ensures that the funds required for financing the business operations and meeting financial liabilities are available in a timely manner and in the currency required at optimal costs. The Management regularly monitors rolling forecasts of the Company’s liquidity position to ensure it has sufficient cash on an ongoing basis to meet operational fund requirements. The surplus cash generated, over and above the operational fund requirement is invested in bank deposits / marketable debt securities / debt mutual fund schemes of highly liquid nature to optimize cash returns while ensuring adequate liquidity for the Company.

Additionally, the Company has committed fund and non-fund based credit lines from banks which may be drawn anytime based on Company’s fund requirements. The Company maintains a cautious liquidity strategy with positive cash balance and undrawn bank lines throughout the year.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments.

(C) Market Risk

Market risk is the risk that the fair value of future cash flow of financial instruments may fluctuate because of changes in market conditions. Market risk broadly comprises three types of risks namely currency risk, interest rate risk and price risk (for commodities or equity instruments). The above risks may affect the Company’s income and expenses and / or value of its investments. The Company’s exposure to and management of these risks are explained below

(i) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company operates in international markets and therefore is exposed to foreign currency risk arising from foreign currency transactions. The exposure relates primarily to the Company’s operating activities (when the revenue or expense is denominated in foreign currency), borrowings in foreign currencies and investment in overseas subsidiaries. Over ninety percent of Company’s foreign currency transactions are in USD while the rest are in EURO, CNY, VND and KRW. The risk is measured through forecast of highly probable foreign currency cash flows.

The Company’s risk management policy is hedging of net foreign currency exposure at all points in time through foreign exchange forward contracts, vanilla option contracts and cross currency interest rate swaps. The objective of the hedging is to eliminate the currency risk due to volatility in exchange rates.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to risk of change in market interest rates relates primarily to its debt interest obligations. It’s borrowings are at floating rates and its future cash flows will fluctuate because of changes in market interest rates.

(iii) Security Price risk

Securities price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded prices.

The Company invests its surplus funds in various debt instruments and equity instruments. These comprise of mainly liquid schemes of mutual funds, short term debt funds & income funds (duration investments),certain quoted equity instruments and bank fixed deposits. To manage its price risk arising from investments in mutual funds and equity instruments, the Company diversifies its portfolio. Mutual fund and equity investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments.

(a) Securities Price Risk Exposure

The Company’s exposure to securities price risk arises from investments in mutual funds and equity instruments held by the Company and classified in the Balance Sheet as fair value through profit or loss/fair value through other comprehensive income is disclosed under Note 30.

(D) Commodity Price Risk

Commodity price risk results from changes in market prices for raw materials, mainly carbon black feedstock which forms the largest portion of Company’s cost of sales.

The Company endeavours to reduce such risks by maintaining inventory at optimum level through a highly probable sales forecast on quarterly basis and also through worldwide purchasing activities. Raw materials are purchased exclusively to cover Company’s own requirements. Further, a significant portion of Company’s volume is sold based on formula-driven price adjustment mechanism which allows for recovery of the changed raw material cost from customers. The Company also endeavors to offset the effects of increases in raw material costs through price increases in its non-contract sales, productivity improvement and other cost reduction efforts. The Company has not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

NOTE 32: CAPITAL MANAGEMENT

For the purposes of the Company’s capital management, capital includes issued capital, all other equity reserves and long term borrowed capital less reported cash and cash equivalents.

The primary objective of the Company’s capital management is to maintain an efficient capital structure to reduce the cost of capital, support the corporate strategy and to maximise shareholder’s value.

The Company’s policy is to borrow primarily through banks to maintain sufficient liquidity. The Company also maintains certain undrawn committed credit facilities to provide additional liquidity. These borrowings, together with cash generated from operations are utilised for operations of the Company.

The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally imposed capital requirements.

d) 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 on behalf of the Ultimate Beneficiaries.

e) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall 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.

f) The Company has not surrendered or disclosed any transaction, previously unrecorded in the books of account, in the tax assessments under the Income Tax Act, 1961 as income during the year.

g) There are no proceedings initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.

No changes were made to the objectives, policies or processes for managing capital during the year ended 31 March, 2023 and 31 March, 2022.

NOTE 33: OTHER STATUTORY INFORMATION

a) The Company does not have any transactions with companies struck off.

b) The Company does not have any charges or satisfaction which is yet to be registered with ROC (Registrar of Companies) beyond the statutory period.

c) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

NOTE 35:

The Company has contributed ^ 10 crores (previous year ^ 40 crores) under section 182 of the Companies Act, 2013.

NOTE 36:

The Company has incorporated a wholly owned subsidiary company in the name of "PCBL EUROPE SRL” at Belgium, Europe on 14 April, 2023, with primary objective of research and development, manufacturing, marketing and trading of specialty chemicals and other chemical products.

NOTE 37:

PCBL (TN) Limited, a wholly owned subsidiary of the Company commenced commercial production of first phase (63,000 MT out of total capacity of 147,000 MT) at its Greenfield carbon black manufacturing facility in the state of Tamil Nadu w.e.f. April 14, 2023.

NOTE 38:

Figures of the previous year has been regrouped/rearranged to confirm current year’s presentation.


Mar 31, 2022

Accounting Policy

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably.

Investment properties are derecognised either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.

Amortisation method and period

Computer software is amortized on a straight line basis over estimated useful life of three years from the date of capitalisation.

Estimation of fair value

The Company''s investment property consists of freehold land in Angul, Odisha, India.

The fair value of the investment property is based on current prices for similar property. The main inputs used are quantum, area, location, demand, and trend of fair market value in the area.

The fair value is base on independent valuation done by registered valuer [as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017]. Fair valuation is based on market approach method and categorised as Level 2 fair value hierarchy. As at 31 March, 2022 and 31 March, 2021, the fair value of the property is '' 7.41 Crores and '' 5.39 Crores respectively.

The Company has no restrictions on the realisability of its investment property and no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance and enhancements.

Fair value hierarchy disclosures for investment properties have been provided in Note 30 (iv).

NOTE 3(D): INTANGIBLE ASSETS

1. Amortisation has been included under depreciation and amortisation expense in the Statement of Profit and Loss (Refer Note 20).

NOTE 3(E): RIGHT OF USE ASSETS Accounting Policy

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.


Accounting Policy

Intangible assets have a finite useful life and are stated at cost less accumulated amortisation, impairment loss, if any.

Computer Software for internal use, which is primarily acquired from third party vendors, is capitalised. Subsequent costs associated with maintaining such software are recognised as expense as incurred. Cost of software includes license fees and cost of implementation / system integration services, where applicable.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.

1. Investment in subsidiaries

I investments in shares of subsidiaries are stated at cost less provision for impairment losses, if any. Investments are tested for impairment whenever an event or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of investments exceeds its recoverable amount. If, in a subsequent period, recoverable amount equals or exceeds the carrying amount, the impairment loss recognised is reversed accordingly.

1.1 Investment (other than investment in shares of subsidiaries)

1.1.1. Classification

The Company classifies its investments as those to be measured subsequently at fair value (either through other comprehensive income or through profit and loss).

The classification depends on the Company''s business model for managing the investments and the contractual terms of cash flows.

For investments measured at fair value, gains and losses are either recorded in the statement of profit and loss or other comprehensive income. For investments in debt instruments, this depends on the business model in which the investment is held. For investments in equity instruments, this depends on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVTOCI). The Company reclassifies the debt investments when and only when the business model for managing those investment changes.

1.1.2. Measurement

At initial recognition, the Company measures an investment at its fair value plus, in the case of investment not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition of the investment. Transaction costs of investments carried at fair value through profit and loss are expensed in the statement of profit and loss.

(a) Debt Instrument

Subsequent measurement of debt instruments depends on the Company''s business model for managing the investment and the cash flow characteristics of the investment. The Company classifies its debt instruments as:

Fair value through profit and loss: Investments that do not meet the criteria for amortised cost or FVTOCI are measured at fair value through profit and loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit and loss is recognised in statement of profit and loss and presented on net basis in the statement of profit and loss within other income/ other expense in the period in which it arises.

(b) Equity Instrument

The Company subsequently measures all equity investments at fair value through Other Comprehensive Income and there is no subsequent reclassification of fair value gains and losses to the statement of profit and loss. At the time of derecognition of such investments, the gain or loss is transferred to retained earnings.

2 These investments in equity instruments are not held for trading. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments as at FVTOCI as the management believes that this provides a more meaningful presentation for long term investments, than reflecting changes in fair values immediately in statement of profit and loss. Based on the aforesaid election, fair value changes are accumulated within Equity under "Fair Value Changes through Other Comprehensive Income - Equity Instruments”. The Company transfers amounts from this reserve to retained earnings when relevant equity shares are derecognized.

3 Refer note 30 for information about fair value measurements and note 31 for credit risk and market risk on investments.

NOTE 4(B): TRADE RECEIVABLES Accounting Policy

Trade receivables are amounts receivable from customers for goods sold in the ordinary course of business.

Trade receivable are initially recognised at fair value and subsequently measured at amortised cost using the

effective interest method, less provision for impairment.

1. No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.

(At lower of cost and net realisable value)

Accounting Policy

Inventories are stated at lower of cost and net realisable value.

• Raw materials, Stores and Spares and Packing Material: cost is determined on moving weighted average method and includes cost of purchase and other incidental costs. However, material and other items held for use in production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

• Finished goods: cost includes cost of direct materials,labour and a proportion of manufacturing overheads based on the normal operating capacity.

(i) Pursuant to the Special Resolution passed by the Shareholders of the Company by way of Postal Ballot through electronic means on 17 March, 2022, the Company has sub-divided its equity share of face value '' 2/- ('' Two only) each fully paid up, into 2(two) equity shares of face value Re 1/- (Rupee One) each fully paid-up, effective from 13 April, 2022. This has been considered for calculating weighted average number of equity shares for year ended 31 March, 2022 and 31 March, 2021 as per Ind AS 33-Earnings Per Share.

(ii) During the year ended 31 March, 2022, the Company has allotted and issued 1,63,93,442 equity shares of '' 2 each at an issue price of '' 244 per equity share, aggregating to '' 399.99 Crores (including securities premium of '' 396.71 Crores) on 5 October, 2021. The issue was made through eligible Qualified Institutions Placement (QIP) in terms of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 ( SEBI Regulations) as amended, Section 42 , Section 62 and other relevant provisions of the Companies Act, 2013.

Pursuant to the allotment of equity shares in the QIP, the paid up equity share capital of the Company has increased from '' 34.47 crore comprising of 1723,37,860 equity shares to '' 37.75 Crores comprising of 18,87,31,302 equity shares.

The Company had incurred expenses amounting to '' 9.89 Crores towards issuance of equity shares which have been debited to securities premium account.

The Company has complied with applicable provisions of the Companies Act, 2013 and SEBI Regulations in respect of Qualified Institutions Placement of equity shares during the year. The amount raised, has been used for the purposes for which the funds were raised except for unutilised funds amounting to '' 196.10 Crores as at 31 March, 2022 which have been invested in liquid funds.

(iii) No equity shares were allotted as fully paid up by way of bonus shares or pursuant to contract(s) without payment being received in cash during the last five years. Further, none of the shares were bought back by the Company during the last five years.

(vi) Terms/ Rights attached to equity shares

The Company has only one class of equity shares having par value of '' 2/- per share and each shareholder is entitled for one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(vii) Allotment of 1,823 equity shares is pending against rights issue made during 1993-94.

(viii) 48 equity shares have not been issued to the concerned non-resident shareholders pending approval of the Reserve Bank of India.

The Company has elected to recognise changes in the fair value of certain investments in equity instruments in Other Comprehensive Income. These changes are accumulated within the FVTOCI equity investments reserve within equity. The Company transfers amounts from this reserve to Retained Earnings when the relevant equity shares are derecognised.

NOTE 10 (A): BORROWINGS Accounting Policy

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of profit and loss over the period of the borrowings using the effective interest rate method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the borrowings to the extent that it is probable that some or all of the facility will be utilised. In this case, the fee is deferred until the draw down occurs. Borrowings are derecognised from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.

Borrowings are classified as current and non-current liabilities based on repayment schedule agreed with banks.

Lease Liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) and does not include non-lease components (maintenance charges etc.). In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.

(I) Provisions

Provisions are recognised when the Provisions has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management''s best estimates of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Note:

i. Section 115BAA of the Income Tax Act, 1961 gives the corporate assessee an option to apply lower tax rate with effect from April 1, 2019 subject to certain condition specified therein. The Company has not opted for the same due to ongoing volatility and uncertainty in business environment create by the pandemic and geo political issues. Accordingly, no effect in this regard has been considered in measurement of tax expenses for the purpose of these financial statements. Management, however, will continue to review its profitability forecast at regular intervals and make necessary adjustments to tax expenses when there is reasonable certainty to avail the lower rate of tax.

Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received. If the grant received is to compensate the import cost of assets, and is subject to an export obligation as prescribed in the EPCG scheme, then the recognition of the grant would be linked to fulfilment of the associated export obligations. At the year end, the portion of grant for which the export obligation has not been met is retained in deferred revenue under other current liabilities. Revenue grant is recognised as an income in the period in which related obligation is met.

Sale of power

Revenue from the sale of power is recognised upon transmission of units to the buyer net of Unscheduled Interchange gains/losses as per the terms of contract with the customer.

Other Operating revenues

Exports entitlements (arising out of duty draw back, Merchandise exports from India Schemes) are recognised when the right to receive credit as per the terms of the schemes is established in respect of the exports made by the Company and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

Accounting Policy

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade and other discounts, rebates and amounts collected on behalf of third parties.

Where the Company is the principal in the transaction, the sales are recorded at their gross values. The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of significant financing component, non-cash considerations and consideration payable to the customer (if any). Any amounts received for which the Company does not provide any distinct goods or services are considered as a reduction of purchase cost.

However, Goods and Service Tax (GST) is not received by the Company on its own account. Rather, it is collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.

The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company regardless of when the payment is being made and specific criteria have been met for each of the Company''s activities as described below.

Sale of carbon black

Revenue from sale of carbon black is recognised when the control of the goods has passed to the buyer as per the terms of contract. In case of domestic sales, the performance obligation is satisfied upon delivery of the finished goods at customer''s location. In case of export sales, the performance obligation is satisfied once the goods are shipped and the bill of lading has been obtained.

a. Interest Income

Interest Income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.

b. Dividends

Dividends are recognised in the statement of profit and loss only when the right to receive payment is established and the amount of the dividend can be measured reliably which is generally when shareholders approve the dividend.

(I) Post-employment benefits Defined benefit plans

a. The liability or asset recognised in the balance sheet in respect of Defined benefit plans is the present value of the Defined benefits obligation at the end of the reporting period less the fair value of plan assets. The Defined benefit obligation is calculated annually by actuaries using the Projected Unit Credit Method at the year end.

b. The present value of the Defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligations.

c. The net interest cost is calculated by applying the discount rate to the net balance of the Defined benefit obligation and the fair value of plan assets. This cost is included in Employees Benefits Expense in the statement of profit and loss.

d. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included in retained earnings in the statement of changes in equity.

e. Changes in the present value of the Defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the profit or loss as past service cost.

(II) Defined contribution plans

Contributions under Defined Contribution Plans payable in keeping with the related schemes are recognised as expenses for the period in which the employee has rendered the service.

(III) Other short-term employee benefit obligations

Liabilities for short term employee benefits that are expected to be settled wholly within 12 months after the end of the period are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefits payable in the balance sheet.

The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilised leave at each balance sheet date on the basis of year-end actuarial valuation using projected unit credit method. The scheme is unfunded.

18.1 Employee Benefits:

(I) Post employment obligations

(A) Gratuity

The Gratuity scheme is a defined benefit plan that provides for a lump sum payment on exit either by way of retirement, death, disability or voluntary withdrawal. The benefits are defined on the basis of last drawn salary and the period of service and paid as lump sum at exit. Gratuity payable is not restricted to the maximum limit prescribed under the Payment of Gratuity Act, 1972. The liability in respect thereof is determined by actuarial valuation at the year end based on the Projected Unit Credit Method and is recognized as a charge on accrual basis. Trustees administer the contributions made to the Gratuity fund. Amounts contributed to the Gratuity fund are invested solely with the Life Insurance Corporation of India.

In case of funded plan, the Company ensures that the investment positions are managed within an asset - liability matching (ALM) framework that has been developed to achieve investment that are in line with the obligation under the gratuity scheme. Within this framework the Company''s ALM objective is to match asset with gratuity obligation. The Company actively monitors how the duration and the expected yield of instruments are matching the expected cash outflows arising from the gratuity obligations. The Company has not changed the process used to manage its risk from previous periods. The Company does not use derivatives to manage its risk. The gratuity scheme is funded with LIC which has good track record of managing fund except Contractor worker.

3 Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

(II) Defined Contribution Plans

The Company has certain Defined Contribution Plans viz. Provident Fund and Superannuation Fund. Contributions are made to provident fund for employees at the rate of 12% of basic salary as per regulations. The Company has a defined contribution Superannuation plan for which contribution is made at a rate not exceeding 4.87% of Basic and Dearness Allowance of the member with Superannuation. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is '' 13.71 Crores (31 March, 2021- '' 2.42 Crores).

Certain employees of the Company used to receive provident fund benefit which were administered by the exempted provident fund trust set up by the Company (Defined Benefit Contribution). During the year such exempted provident fund trust has been surrendered with Employee Provident Fund Organisation (EPFO). Hence, provident contribution of these employees have reckoned as defined benefit contribution plan during the year.

(III) Defined Benefit Liability and Employer Contributions

Expected contribution to Post-employment benefit plans for the year ending 31 March, 2022 basis the acturial report is '' 2.50 Crores (31 March, 2021: '' 6.05 Crores)

Method used for sensitivity analysis:

The sensitivity results above determine their individual impact on the plan''s end of year Defined Benefit Obligation. In reality, the plan is subject to multiple external experience items which may move the Defined Benefit Obligation in similar opposite directions, while the plan''s sensitivity to such changes can vary over time.

(vii) Risk Exposure

Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below:

1 I nterest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

2 Salary Inflation risk: Higher than expected increases in salary will increase the defined benefit obligation.

NOTE 19: FINANCE COSTS Accounting Policy

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect of situation in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the standalone financial statements. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction that at the time of the transaction affects neither accounting profit/ loss nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period.

Current and deferred tax is recognised in statement of profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, if any. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Accounting Policy

The Company''s business research and development concentrates on the development of improved finished goods and better operational efficiency. Research costs are expensed as incurred. Expenditure on development that does not meet the specified criteria under Ind AS 38 ''Intangible Assets'' is recognised as expense as incurred.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax for the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset, it is created by way of credit to the statement of profit and loss and shown as part of deferred tax assets. The company reviews the "MAT credit entitlement” asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period. Unrecognised MAT are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the MAT to be recovered.

In the situations where the Company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of temporary differences which reverse during the tax holiday period, to the extent the Company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognized in the year in which the temporary differences originate. However, the Company restricts recognition of deferred tax assets to the extent it is probable that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the temporary differences which originate first are considered to reverse first.

A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.

As at

31 March, 2022

As at

31 March, 2021

Contingent Liabilities for:

(a) (i) Claims against the Company not acknowledged as debts:

Income-tax matters under dispute

19.27

-

Excise duty matters under dispute

4.04

4.04

Sales tax matter under dispute

0.14

0.30

Service tax matters under dispute

6.26

6.26

Value added tax matters under dispute

1.09

1.09

(ii) Other money for which the Company is contingently liable

Excise duty matters under dispute

1.57

1.57

(b) Guarantees or counter guarantees or counter indemnity given by the Company

On behalf of bodies corporate and others

- Limit

-

0.09

- Outstanding

-

0.09

NOTE 27: EARNING PER EQUITY SHARE

Accounting Policy Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to owners of the equity by the weighted average number of equity shares outstanding during the year.

The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

• the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

It is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above contingent liabilities pending resolution of the respective proceedings.

NOTE 25: COMMITMENTS

As at

31 March, 2022

As at

31 March, 2021

Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and

not provided for

Property, plant and equipment (net of capital advances)

30.41

26.08

NOTE 26: DIVIDEND ON EQUITY SHARE

Interim Dividend for the year ended 31 March, 2022 of '' 10/- per share on face value of '' 2/- per share

Year ended 31 March, 2022

Year ended 31 March, 2021

188.73

120.64

(31 March, 2021 '' 7/- per share on face value of '' 2/- per share)

188.73

120.64

(f) Terms and Conditions

All transactions were made on normal commercial terms and conditions.

All outstanding balances are unsecured and are repayable in cash.

NOTE 29: SEGMENT Accounting Policy

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The chief operating decision maker is responsible for allocating resources and assessing performance of the operating segments and has been identified as the Managing Director of the Company.

(a) Description of segments and principal activities

Carbon Black: The Company is primarily engaged in production of Carbon Black through its four manufacturing units located at Durgapur, Kochi, Vadodara and Mundra.

Power: The Company is also engaged in generation of electricity for the purpose of captive consumptions as well as sale of surplus to outsiders.

The segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the standalone financial statement. Also the Company''s borrowings (including finance costs and interest income), income taxes, investments are managed at head office and are not allocated to operating segments.

I nter-Segment transfers being power consumed for manufacture of Carbon Black are based on price paid for power purchased from external sources. Segment revenue is measured in the same way as in the Statement of Profit and Loss.

Segment assets and liabilities are measured in the same way as in the standalone financial statements. These assets are allocated based on the operations of the segment and the physical location of the assets.

All Non-current assets of the Company (excluding certain financial assets) are located in India and Belgium.

Investment in subsidiaries amounting to '' 225.01 Crores (31 March, 2021 '' 24.01 Crores) is recognised at cost and not included in table above.

(ii) Fair Value

The fair values of financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent in all the years. The following methods and assumptions were used to estimate the fair values:

(a) In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors. Accordingly, such net asset values are analogous to fair market value

with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the issuers of these units of mutual funds.

(b) I n respect of investments in listed equity instruments, the fair values represents available quoted market price at the Balance Sheet date.

(c) The fair value of derivative contracts (foreign exchange forward contracts and Currency and Interest rate swaps) is determined using discounted cash flow analysis and swaps and options pricing models.

(d) The management assessed that fair values, of trade receivables, cash and cash equivalents, other bank balances, loans, trade payables, current borrowings, other current liabilities and other financial liabilities (current), approximate to their carrying amounts largely due to the short-term maturities of these instruments. Further, management also assessed the carrying amount of certain non-current loans which are a reasonable approximation of their fair values and the difference between the carrying amounts and fair values is not expected to be significant.

(iii) Fair value of financial assets and liabilities measured at amortised cost

The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amount would be significantly different from the values that would eventually be received or settled.

(iv) Fair value hierarchy

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

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.

The Company''s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There are no transfers between level 1 and level 2 fair value measurements during the year ended 31 March, 2022 and 31 March, 2021.

Some of the Company''s financial assets are carried at fair value for which Level 3 inputs have been used. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique(s) and inputs used).

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have net asset value as stated by the issuers in the published statements. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Valuation process:

The main level 3 inputs for unquoted equity shares and unquoted preference shares used by the Company are derived and evaluated as follows:

Discount rates are determined using a capital asset pricing model to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset.

NOTE 31: FINANCIAL RISK MANAGEMENT

The Company''s principal financial liabilities comprises of borrowings, trade and other payables and other financial liabilities. The main purpose of these financial liabilities is to finance and support the operations of the Company. The Company''s principal financial assets include trade and other receivables, loans, investments and cash & cash equivalents that derive directly from its operations.

The Company''s business activities are exposed to a variety of risks including liquidity risk, credit risk and market risk. The Company seeks to minimize potential adverse effects of these risks by managing them through a structured process of identification, assessment and prioritization of risks followed by coordinated efforts to monitor, minimize and mitigate the impact of such risks on its financial performance and capital. For this purpose, the Company has laid comprehensive risk assessment and minimization/mitigation procedures, which are reviewed by the Audit Committee and approved by the Board from time to time. These procedures are reviewed to ensure that executive management controls risks by way of properly defined framework. The Company does not enter into derivative financial instruments for speculative purposes.

(A) Credit risk

Credit risk refers to risk of financial loss to the Company if customers or counterparties fail to meet their contractual obligations. The Company is exposed to credit risk from its operating activities (mainly trade receivables) and from its investing activities (primarily deposit with banks and investment in mutual funds).

(i) Credit risk management (a) Trade Receivables

Customer credit risk is managed by the Company through its established policies and procedures which involve setting up credit limits based on credit profiling of individual customers, credit approvals for enhancement of limits and regular monitoring of important developments viz. payment history, change in credit rating, regulatory changes, industry outlook etc. Outstanding receivables are regularly monitored and an impairment analysis is performed at each reporting date on an individual basis for each major customer. In addition, small customers are grouped into homogeneous groups and assessed for impairment collectively. The Company also has a policy to provide for all receivables which are overdue for a period over 365 days. In accordance with Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or reversal thereof.

(B) Liquidity Risk

Liquidity risk implies that the Company may not be able to meet its obligations associated with its financial liabilities. The Company manages its liquidity risk on the basis of the business plan that ensures that the funds required for financing the business operations and meeting financial liabilities are available in a timely manner and in the currency required at optimal costs. The Management regularly monitors rolling forecasts of the Company''s liquidity position to ensure it has sufficient cash on an ongoing basis to meet operational fund requirements. The surplus cash generated, over and above the operational fund requirement is invested in bank deposits / marketable debt securities / debt mutual fund schemes of highly liquid nature to optimize cash returns while ensuring adequate liquidity for the Company.

Additionally, the Company has committed fund and non-fund based credit lines from banks which may be drawn anytime based on Company''s fund requirements. The Company maintains a cautious liquidity strategy with positive cash balance and undrawn bank lines throughout the year.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments.

NOTE 31: FINANCIAL RISK MANAGEMENT(C) Market Risk

(b) Deposits and financial assets (Other than trade receivables):

The Company maintains exposure in cash and cash equivalents, term deposits with banks and money market liquid mutual fund schemes. Investments of surplus are made within assigned credit limits with approved counterparties who meet the threshold requirements with respect to ratings, financial strength, credit spreads etc. Counterparty credit limits are set to minimize concentration risk and are reviewed periodically by the Board.

Market risk is the risk that the fair value of future cash flow of financial instruments may fluctuate because of changes in market conditions. Market risk broadly comprises three types of risks namely currency risk, interest rate risk and price risk (for commodities or equity instruments). The above risks may affect the Company''s income and expenses and / or value of its investments. The Company''s exposure to and management of these risks are explained below

(i) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company operates in international markets and therefore is exposed to foreign currency risk arising from foreign currency transactions. The exposure relates primarily to the Company''s operating activities (when the revenue or expense is denominated in foreign currency), borrowings in foreign currencies and investment in overseas subsidiaries. Over ninety percent of Company''s foreign currency transactions are in USD while the rest are in EURO, CNY, VND and GBP. The risk is measured through forecast of highly probable foreign currency cash flows.

The Company''s risk management policy is hedging of net foreign currency exposure at all points in time through foreign exchange forward contracts, vanilla option contracts and cross currency interest rate swaps. The objective of the hedging is to eliminate the currency risk due to volatility in exchange rates.

(ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to risk of change in market interest rates relates primarily to its debt interest obligations. It''s borrowings are at floating rates and its future cash flows will fluctuate because of changes in market interest rates.

(iii) Security Price risk

Securities price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded prices.

The Company invests its surplus funds in various debt instruments and equity instruments. These comprise of mainly liquid schemes of mutual funds, short term debt funds & income funds (duration investments), certain quoted equity instruments and bank fixed deposits. To manage its price risk arising from investments in mutual funds and equity instruments, the Company diversifies its portfolio. Mutual fund and equity investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments.

(a) Securities Price Risk Exposure

The Company''s exposure to securities price risk arises from investments in mutual funds and equity instruments held by the Company and classified in the Balance Sheet as fair value through profit or loss/fair value through other comprehensive income is disclosed under Note 30.

(b) Sensitivity

The sensitivity of profit or loss to changes in Net Assets Values (NAVs) as at year end for investments in mutual funds.

(D) Commodity Price Risk

Commodity price risk results from changes in market prices for raw materials, mainly carbon black feedstock which forms the largest portion of Company''s cost of sales.

The Company endeavours to reduce such risks by maintaining inventory at optimum level through a highly probable sales forecast on quarterly basis and also through worldwide purchasing activities. Raw materials are purchased exclusively to cover Company''s own requirements. Further, a significant portion of Company''s volume is sold based on formula-driven price adjustment mechanism which allows for recovery of the changed raw material cost from customers. The Company also endeavors to offset the effects of increases in raw material costs through price increases in its non-contract sales, productivity improvement and other cost reduction efforts. The Company has not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

NOTE 32: CAPITAL MANAGEMENT

For the purposes of the Company''s capital management, capital includes issued capital, all other equity reserves and long term borrowed capital less reported cash and cash equivalents.

The primary objective of the Company''s capital management is to maintain an efficient capital structure to reduce the cost of capital, support the corporate strategy and to maximise shareholder''s value.

The Company''s policy is to borrow primarily through banks to maintain sufficient liquidity. The Company also maintains certain undrawn committed credit facilities to provide additional liquidity. These borrowings, together with cash generated from operations are utilised for operations of the Company.

The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally imposed capital requirements.

a) The Company does not have any transactions with companies struck off.

b) The Company does not have any charges or satisfaction which is yet to be registered with ROC (Registrar of Companies) beyond the statutory period.

c) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

d) 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 on behalf of the Ultimate Beneficiaries.

e) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall 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.

f) The Company has not surrendered or disclosed any transaction, previously unrecorded in the books of account, in the tax assessments under the Income Tax Act, 1961 as income during the year.

g) There are no proceedings initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.

NOTE 35 : The Company has contributed '' 40 crores (previous year '' 20 crores) under section 182 of the Companies Act, 2013.

NOTE 36 : The operations of the Company for the year ended 31 March, 2021 were impacted by disruptions owing to nationwide lockdowns because of the Covid 19 pandemic and hence figures for corresponding previous year is not comparable with the figures for the year ended 31 March, 2022. During the current year ended 31 March, 2022 also, the operations of the Company were slightly impacted due to regional lock down because of the Covid 19 pandemic. The Company has made an assessment of the recoverability and carrying values of its assets comprising property, plant and equipment, inventories, receivables and other current / noncurrent assets as of 31 March, 2022 and on the basis of evaluation, has concluded that no material adjustments are required in the financial results. The Company is taking all the necessary steps and precautionary measures to ensure smooth functioning of its operations and to ensure the safety and well-being of all its employees. Given the criticalities associated with nature, condition and duration of COVID-19, the assessment on recoverability of the Company''s assets will be continuously made and provided for as required.

NOTE 37 : <


Mar 31, 2018

CORPORATE INFORMATION

Phillips Carbon Black Limited is a public Company limited by shares and incorporated under the Companies Act in India. The Company is primarily engaged in the business of manufacturing & sale of carbon black and sale of power as detailed under segment information in Note 28. Equity shares of the Company are listed on BSE Limited, National Stock Exchange of India Limited and The Calcutta Stock Exchange Limited. The registered office of the Company is located at Duncan House, 31, Netaji Subhas Road, Kolkata 700001, West Bengal, India.

These standalone financials statements were approved and authorised for issue with the resolution of the Board of Directors on 04 May, 2018.

NOTE 1: CRITICAL ESTIMATES AND JUDGEMENT

The preparation of standalone financial statements in conformity with the Ind AS requires management to make judgments, estimates and assumptions, that affect the application of accounting policies and reported amounts of assets, liabilities, income, expense and disclosure of contingent assets and liabilities at the date of these standalone financial statements and the reported amount of revenues and expenses for the years presented. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed at each Balance Sheet date. Revision to accounting estimates is recognised in the period in which the estimates are revised and future periods impacted.

The areas involving critical estimates and assumptions of judgments are:

Employee Benefits (Estimation of defined benefit obligation) Post-employment benefits represents obligation that will be settled in future and require assumptions to project benefit obligations. Post-employment benefits accounting is intended to reflect the recognition of future benefits cost over the employee’s approximate service period, based on the terms of plans and the investment and funding decisions made. The accounting requires the company to make assumptions regarding variables such as discount rate, rate of compensation increase and future mortality rates. Changes in these key assumptions can have a significant impact on the defined benefit obligations, funding requirements and benefit costs incurred.

Estimation of expected useful lives and residual values of property, plants and equipment

Property, plant and equipment are depreciated at historical cost using straight-line method based on the estimated useful life, taking into account any residual value. The asset’s residual value and useful life are based on the Company’s best estimates and reviewed, and adjusted if required, at each Balance Sheet date.

Contingent Liabilities

Legal proceedings covering a range of matters are pending against the Company. Due to the uncertainty inherent in such matters, it is often difficult to predict the final outcomes. The cases and claims against the Company often raise difficult and complex factual and legal issues that are subject to many uncertainties and complexities, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction and the differences in applicable law, in the normal course of business. The Company consults with legal counsel and certain other experts on matters related to litigations. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated. In the event an adverse outcome is possible or an estimate is not determinable, the matter is disclosed.

Fair Value Measurements

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques which involve various judgements and assumptions. Judgements include consideration of inputs such as liquidity risk, credit risk and volatility. Changes in the assumptions about these factors could affect the reported fair value of financial instruments. Refer note 29 for further disclosures.

The expected return on plan assets is determined after taking into consideration composition of plan assets held, assessed risks of asset management, historical results of return on plan assets, Company’s policies for plan asset management and other relevant factors.

The expenses for the above mentioned benefits have been included and disclosed under the following line items:-

Gratuity - under ‘Contribution to Provident and other Funds’ in Note 17 Post Retirement Medical Benefit - under ‘Staff Welfare Expenses’ in Note 17

# The estimate of future salary increase considered in actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors, such as demand and supply in the employment market.

In case of funded plan, the Company ensures that the investment positions are managed within an asset - liability matching (ALM) framework that has been developed to achieve investment that are in line with the obligation under the gratuity scheme. Within this framework the Company’s ALM objective is to match asset with gratuity obligation. The Company actively monitors how the duration and the expected yield of instruments are matching the expected cash outflows arising from the gratuity obligations. The Company has not changed the process used to manage its risk from previous periods. The Company does not use derivatives to manage its risk. The gratuity scheme is funded with LIC which has good track record of managing fund.

Method used for sensitivity analysis:

The sensitivity results above determine their individual impact on the plan’s end of year Defined Benefit Obligation. In reality, the plan is subject to multiple external experience items which may move the Defined Benefit Obligation in similar opposite directions, while the plan’s sensitivity to such changes can vary over time.

(g) Defined Benefit Liability and Employer Contributions

Expected contributions to Post-employment benefit plans for the year ending 31 March, 2019 are Rs.626.45 Lakhs (31 March, 2018: Rs.425.58 Lakhs)

The weighted average duration of the defined benefit obligation is 6 years (31 March, 2017 - 6 years). The expected maturity analysis of gratuity and post employment medical benefits is as follows:

(h) Risk Exposure

Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below:

1 Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase

2 Salary Inflation risk : Higher than expected increases in salary will increase the defined benefit obligation

3 Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

(C) Provident Fund

Certain employees of the Company receive provident fund benefits, which are administered by the Provident Fund Trust set up by the Company. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or cessation of employment. Both the employees and the Company make monthly contributions at specified percentage of the employees’ salary to such Provident Fund Trust set up by the Company. The Company has an obligation to fund any shortfall in return on plan assets over the interest rates prescribed by the authorities from time to time. In view of the Company’s obligation to meet the shortfall this is a defined benefit plan. Actuarial valuation of the Company’s liability under such scheme is carried out under the Projected Unit Credit Method at the year end and the charge/ gain, if any, is recognized in the Statement of Profit and Loss. Actuarial gains/ losses are recognized immediately in the Statement of Profit and Loss as income/ expense.

The Actuary has carried out actuarial valuation of the plan’s liabilities and interest rate guarantee obligations as at the balance sheet date using Projected Unit Credit Method and deterministic approach as outlined in the Guidance Note 29 issued by the Institute of Actuaries of India. Based on such valuation, the future anticipated shortfall with regard to interest rate obligation of the Company amounts to Rs.8.25 Lakhs (31 March, 2017: Rs.5.84 Lakhs) and outstanding as at the balance sheet date amounts to Rs.53.73 Lakhs (31 March, 2017: Rs.45.48 Lakhs). Disclosure given hereunder are restricted to the relevant information available as per the actuary’s report.

(III) Defined Contribution Plans

The Company has certain Defined Contribution Plans viz. Provident Fund and Superannuation Fund. Contributions are made to provident fund for employees at the rate of 12% of basic salary as per regulations. The company has a defined contribution Superannuation plan for which contribution is made at a rate not exceeding 4.87% of Basic and Dearness Allowance of the member with Superannuation. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is Rs.374.62 lakhs (31 March, 2017-Rs.194.88 Lakhs)

a) Raw material purchase is net of Rs.2,088.46 Lakhs [31 March, 2017: Rs.1,841.85 Lakhs] being benefits under duty exemption/ benefit scheme pertaining to exports.

b) Raw material consumption includes amount accrued on account of a disputed arbitration awarded against the Company during the year, relating to purchase of raw material in earlier years and Entry taxes payable on imports of raw materials into the state of West Bengal consequent to a recent ruling of the Hon’ble Supreme Court in the matter of Entry taxes.

NOTE 2: SEGMENT

(a) Description of segments and principal activities

The Company’s Managing Director examines the Company’s performance and has identified two reportable segments of its business.

Carbon Black : The Company is primarily engaged in production of Carbon Black through its four manufacturing units located at Durgapur, Kochi, Vadodara and Mundra.

Power: The Company is also engaged in generation of electricity for the purpose of captive consumptions as well as distribution of surplus to outsiders.

The segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the standalone financial statement. Also the Company’s borrowings (including finance costs and interest income), income taxes, investments are managed at head office and are not allocated to operating segments.

Inter-Segment transfers being power consumed for manufacture Carbon Black are based on price paid for power purchased from external sources. Segment revenue is measured in the same way as in the Statement of Profit and Loss.

Segment assets and liabilities are measured in the same way as in the standalone financial statements. These assets are allocated based on the operations of the segment and the physical location of the assets.

All non-current assets of the Company (excluding certain financial assets) are located in India.

(ii) Fair Value

The fair values of financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent in all the years. The following methods and assumptions were used to estimate the fair values:

(a) In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors. Accordingly, such net asset values are analogous to fair market value with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the issuers of these units of mutual funds.

(b) In respect of investments in listed equity instruments, the fair values represents available quoted market price at the Balance Sheet date.

(c) The fair value of derivative contracts (foreign exchange forward contracts and Currency and Interest rate swaps) is determined using forward exchange rates at the Balance Sheet date.

(d) The management assessed that fair values, of trade receivables, cash and cash equivalents, other bank balances, loans, trade payables, current borrowings, other current liabilities and other financial liabilities (current), approximate to their carrying amounts largely due to the short-term maturities of these instruments. Further, management also assessed the carrying amount of certain non-current loans, non-current financial liabilities and long-term borrowings at floating interest rates which are a reasonable approximation of their fair values and the difference between the carrying amounts and fair values is not expected to be significant.

(iii) Fair value of financial assets and liabilities measured at amortised cost

The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amount would be significantly different from the values that would eventually be received or settled.

(iv) Fair value hierarchy

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

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have net asset value as stated by the issuers in the published statements. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.

The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There are no transfers between level 1 and level 2 fair value measurements during the year ended 31 March, 2018 and 31 March, 2017.

Some of the Company’s financial assets are carried at fair value for which Level 3 inputs have been used. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique(s) and inputs used).

Valuation process :

The main level 3 inputs for unquoted equity shares and unquoted preference share used by the Company are derived and evaluated as follows: Discount rates are determined using a capital asset pricing model to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset.

NOTE 3: FINANCIAL RISK MANAGEMENT

The Company’s principal financial liabilities comprises of borrowings, trade and other payables and other financial liabilities. The main purpose of these financial liabilities is to finance and support the operations of the Company. The Company’s principal financial assets include trade and other receivables, loans, investments and cash & cash equivalents that derive directly from its operations.

The Company’s business activities are exposed to a variety of risks including liquidity risk, credit risk and market risk. The Company seeks to minimize potential adverse effects of these risks by managing them through a structured process of identification, assessment and prioritization of risks followed by coordinated efforts to monitor, minimize and mitigate the impact of such risks on its financial performance and capital. For this purpose, the Company has laid comprehensive risk assessment and minimization/mitigation procedures, which are reviewed by the Audit Committee and approved by the Board from time to time. These procedures are reviewed to ensure that executive management controls risks by way of properly defined framework. The Company does not enter into derivative financial instruments for speculative purposes.

(A) Credit risk

Credit risk refers to risk of financial loss to the Company if customers or counterparties fail to meet their contractual obligations. The Company is exposed to credit risk from its operating activities (mainly trade receivables) and from its investing activities (primarily deposit with banks and investment in mutual funds).

(i) Credit risk management

(a) Trade Receivable

Customer credit risk is managed by the Company through its established policies and procedures which involve setting up credit limits based on credit profiling of individual customers, credit approvals for enhancement of limits and regular monitoring of important developments viz. payment history, change in credit rating, regulatory changes, industry outlook etc. Outstanding receivables are regularly monitored and an impairment analysis is performed at each reporting date on an individual basis for each major customer. In addition, small customers are grouped into homogeneous groups and assessed for impairment collectively. The Company also has a policy to provide for all receivables which are overdue for a period over 365 days. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or reversal thereof.

(b) Deposits and financial assets (Other than trade receivables):

The Company maintains exposure in cash and cash equivalents, term deposits with banks and money market liquid mutual fund schemes. Investments of surplus are made within assigned credit limits with approved counterparties who meet the threshold requirements with respect to ratings, financial strength, credit spreads etc. Counterparty credit limits are set to minimize concentration risk and are reviewed periodically by the Board.

(B) Liquidity Risk

Liquidity risk implies that the Company may not be able to meet its obligations associated with its financial liabilities. The Company manages its liquidity risk on the basis of the business plan that ensures that the funds required for financing the business operations and meeting financial liabilities are available in a timely manner and in the currency required at optimal costs. The Management regularly monitors rolling forecasts of the Company’s liquidity position to ensure it has sufficient cash on an ongoing basis to meet operational fund requirements. The surplus cash generated, over and above the operational fund requirement is invested in bank deposits / marketable debt securities / debt mutual fund schemes of highly liquid nature to optimize cash returns while ensuring adequate liquidity for the Company.

Additionally, the Company has committed fund and non-fund based credit lines from banks which may be drawn anytime based on Company’s fund requirements. The Company maintains a cautious liquidity strategy with positive cash balance and undrawn bank lines throughout the year.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments.

(C) Market Risk

Market risk is the risk that the fair value of future cash flow of financial instruments may fluctuate because of changes in market conditions. Market risk broadly comprises three types of risks namely currency risk, interest rate risk and price risk (for commodities or equity instruments). The above risks may affect the Company’s income and expenses and / or value of its investments. The Company’s exposure to and management of these risks are explained below

(i) Foreign currency risk

The Company operates in international markets and therefore is exposed to foreign currency risk arising from foreign currency transactions. The exposure relates primarily to the Company’s operating activities (when the revenue or expense is denominated in foreign currency), borrowings in foreign currencies and investment in overseas subsidiaries. Over ninety percent of Company’s foreign currency transactions are in USD while the rest are in EURO, JPY and GBP. The risk is measured through forecast of highly probable foreign currency cash flows.

The Company’s risk management policy is hedging of net foreign currency exposure at all points in time through foreign exchange forward contracts, vanilla option contracts and cross currency interest rate swaps. The objective of the hedging is to eliminate the currency risk due to volatility in exchange rates.

(a) Foreign currency risk exposure

The Company’s exposure to foreign currency risk at the end of the reporting period expressed in ‘, are as follows:

(ii) Interest rate risk

The Company’s exposure to risk of change in market interest rates relates primarily to its debt interest obligations. It’s borrowings are at floating rates and its future cash flows will fluctuate because of changes in market interest rates.

(a) Interest Rate Risk Exposure

The exposure of the Company’s borrowings to interest rate changes at the end of the reporting period are as follows:

(b) Sensitivity

Profit or loss is sensitive to higher / lower interest expense from borrowings as a result of changes in interest rates.

(iii) Security Price risk

Securities price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded prices.

The Company invests its surplus funds in various debt instruments and equity instruments. These comprise of mainly liquid schemes of mutual funds, short term debt funds & income funds (duration investments), certain quoted equity instruments and bank fixed deposits. To manage its price risk arising from investments in mutual funds and equity instruments, the Company diversifies its portfolio. Mutual fund and equity investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments.

(a) Securities Price Risk Exposure

The Company’s exposure to securities price risk arises from investments in mutual funds and equity instruments held by the Company and classified in the Balance Sheet as fair value through profit or loss/fair value through other comprehensive income is disclosed under Note 29.

(b) Sensitivity

The sensitivity of profit or loss to changes in Net Assets Values (NAVs) as at year end for investments in mutual funds.

(D) Commodity Price Risk

Commodity price risk results from changes in market prices for raw materials, mainly carbon black feedstock which forms the largest portion of Company’s cost of sales.

The Company endeavors to reduce such risks by maintaining inventory at optimum level through a highly probable sales forecast on quarterly basis and also through worldwide purchasing activities. Raw materials are purchased exclusively to cover Company’s own requirements. Further, a significant portion of Company’s volume is sold based on formula-driven price adjustment mechanism which allows for recovery of the changed raw material cost from customers. The Company also endeavors to offset the effects of increases in raw material costs through price increases in its non-contract sales, productivity improvement and other cost reduction efforts. The Company has not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

4: The Company is a respondent in an enquiry by Central Government authorities in relation to investments, amounting to Rs.2,752.79 lakhs, made by the Company in its foreign subsidiaries in earlier years. The Company has submitted point wise clarifications and responses against each of the queries raised by the authorities and has requested to withdraw the Show Cause Notice (SCN). The Company now awaits the judgement in this matter.

NOTE 5 : CAPITAL MANAGEMENT

For the purposes of the Company’s capital management, capital includes issued capital, all other equity reserves and long term borrowed capital less reported cash and cash equivalents.

The primary objective of the Company’s capital management is to maintain an efficient capital structure to reduce the cost of capital, support the corporate strategy and to maximise shareholder’s value.

The Company’s policy is to borrow primarily through banks to maintain sufficient liquidity. The Company also maintains certain undrawn committed credit facilities to provide additional liquidity. These borrowings, together with cash generated from operations are utilised for operations of the Company.

The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally imposed capital requirements.

No changes were made to the objectives, policies or processes for managing capital during the years ended 31 March, 2018 and 31 March, 2017.

6 : Figures of the previous year has been regrouped/ rearranged to confirm current year’s presentation.


Mar 31, 2017

BACKGROUND

Phillips Carbon Black Limited is a Company limited by shares, incorporated and domiciled in India. The Company is primarily engaged in the business of manufacturing & sale of carbon black and sale of power as detailed under segment information in Note 32. Equity shares of the Company are listed on BSE Limited, National Stock Exchange of India Limited and The Calcutta Stock Exchange Limited. The registered office of the Company is located at Duncan House, 3rd Floor, 31, Netaji Subhas Road, Kolkata 700001, West Bengal, India.

The standalone financials statements were approved and authorised for issue with the resolution of the Board of Directors on August 10, 2017

NOTE 1: CRITICAL ESTIMATES AND JUDGEMENT

The preparation of standalone financial statements in conformity with the Ind AS requires management to make judgments, estimates and assumptions, that affect the application of accounting policies and reported amounts of assets, liabilities, income, expense and disclosure of Contingent assets and liabilities at the date of these standalone financial statements and the reported amount of revenues and expenses for the years presented. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed at each Balance Sheet date. Revision to accounting estimates are recognised in the period in which the estimates is revised and future period impacted.

This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the standalone financial statements:-

The areas involving critical estimates of judgments are:

Employee Benefits(Estimation of defined benefit obligation) - Note 1.17 and 11

Post-employment benefits represents obligation that will be settled in the future and require assumptions to project benefit obligations. Post-employment benefit accounting is intended to reflect the recognition of future benefit cost over the employee’s approximate service period, based on the terms of plans and the investment and funding decisions made. The accounting requires the company to make assumptions regarding variables such as discount rate, rate of compensation increase and future mortality rates. Changes in these key assumptions can have a significant impact on the defined benefit obligations, funding requirements and benefit costs incurred.

Impairment of trade receivables - Note 1.11 and 4(b)

The risk of uncollectability of accounts receivable is primarily estimated based on prior experience with, and the past due status of doubtful debtors, while large accounts are assessed individually based on factors that include ability to pay, bankruptcy and payment history The assumptions and estimates applied for determining the valuation allowance are reviewed periodically

Estimation of expected useful lives and residual values of property, plants and equipment - Notes 1.3 and 3(a)

Property plant and equipment are depreciated at historical cost using straight-line method based on the estimated useful life, taken into account at residual value. The asset’s residual value and useful life are based on the Company’s best estimates and reviewed, and adjusted if required, at each Balance Sheet date.

Contingent Liabilities - Note 1.19 and 24

Legal proceedings covering a range of matters are pending against the Company Due to the uncertainty inherent in such matters, it is often difficult to predict the final outcomes. The cases and claims against the Company often raise difficult and complex factual and legal issues that are subject to many uncertainties and complexities, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction and the differences in applicable law, in the normal course of business, the Company consults with legal counsel and certain other experts on matters related to litigations. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated. In the event an adverse outcome is possible or an estimate is not determinable, the matter is disclosed.

Fair Value Measurements - Note 1.8.6 and 4(a)

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques which involve various judgements and assumptions.

Estimation of fair value

The fair value of the investment property is approximate to it’s carrying amount stated above and is based on current prices for similar property. The main inputs used are quantum, area, location, demand, and trend of fair market value in the area.

The valuation is based on valuation performed by an accredited independent valuer. Fair valuation is based on market approach method. The fair value measurement is categorised in Level 2 fair value hierarchy

2 These investments in equity instruments are not held or trading. Upon the application of Ind AS 109, the company has chosen to designate these investments in equity instruments as at FVOCI as the management believes that this provides a more meaningful presentation for long term investments, than reflecting changes in fair values immediately in statement of profit and loss. Based on the aforesaid election, fair value changes are accumulated within Equity under “Fair Value Changes through Other Comprehensive Income - Equity Instruments”. The Company transfers amounts from this reserve to retained earnings when relevant equity securities are derecognized.

3 Refer note 33 for information about fair value measurements and note 34 for credit risk and market risk on investments.

NOTE 2: EQUITY SHARE CAPITAL

(i) There were no change in number of shares during the year ended 31 March, 2017 and 31 March 2016. No additional shares were allotted as fully paid up by way of bonus shares or pursuant to contract(s) without payment being received in cash during the last five years. Further, none of the shares were bought back by the Company during the last five year

(ii) Details of equity shares held by the Holding Company :-

(iii) Details of equity shares held by shareholders holding more than 5% of the aggregate shares in the Company :

(iv) Terms/ Rights attached to equity shares

The Company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(v) Allotment of 1823 shares is pending against rights issue made during 1993-94.

(vi) 48 Shares have not been issued to the concerned non-resident shareholders pending approval of the Reserve Bank of India.

NOTE 3: OTHER EQUITY

(a) Capital reserve represents amount transferred from the transferor company pursuant to a Scheme of Amalgamation

(b) Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of Section 52 of the Companies Act, 2013

(c) Statutory Reserve has been created in the books of the Transferor Company in accordance with the requirements of Section 45-IC of Reserve Bank of India Act, 1934.

(d) General Reserve

Under the erstwhile Indian Companies Act, 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act, 2013, the requirement to mandatory transfer a specified percentage of the net profit to general reserve has been withdrawn though the Company may transfer such percentage of its profits for the financial year as it may consider appropriate. Declaration of dividend out of such reserve shall not be made except in accordance with rules prescribed in this behalf under the Act.

The Company has elected to recognise changes in the fair value of certain investments in equity instruments in Other Comprehensive Income. These changes are accumulated within the FVOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

Nature of Security

Term loan from bank amounting to Rs.Nil (31 March, 2016: Rs.2,757.11 Lakhs, 1 April, 2015: Rs.7,786.03 Lakhs) is secured by way of pari-passu first charge created on all the immovable properties of the Company situated in Durgapur in West Bengal, Palej and Mundra in Gujarat and Kochi in Kerala and also on the Company’s movable plant and machinery, machinery spares, tools and accessories and other movable properties both present and future. The above term loan from bank is also secured by pari-passu second charge on the Company’s existing and future stock of raw materials, finished and semi finished goods, consumables stores and spares, including stock in transit and in the possession of any third party, present and future book debts, monies receivable, claims etc held by any third party to the order of the disposition of the Company excluding those relating to 30MW cogeneration power plant at Durgapur in West Bengal.

Terms of Repayment

Loan availed for Rs.24,358.72 Lakhs is repayable in 12 equal semi-annual installments, first installment being due at the end of 30 months from the first drawdown date of the facility i.e. on 29 March , 2011 and at the end of every six months there after.

Nature of Security

Term loan from bank amounting to Rs.Nil (31 March, 2016: 5,698.05 Lakhs, 1 April 2015: Rs.8,534.41 Lakhs) is secured by way of first pari-passu charge over all the immovable and movable properties of the Company. The above term loan from bank is also secured by second charge by way of hypothecation of the Company’s entire stocks of raw materials, semi finished and finished goods, consumable stores and spares and such other movables including book debts, bills whether documentary or clean, outstanding monies, receivables (excluding current assets relating to 30MW co-generation power plant at Durgapur in West Bengal), both present and future, in a form and manner satisfactory to the bank, ranking pari-passu with other participating banks.

Terms of Repayment

Loan availed for Rs.10,000 Lakhs is repayable in 14 equal quarterly installments. First installment due at the end of 21 month from the first drawdown date of the facility i.e. on 26 November, 2014. However, the loan has been fully repaid during the year.

Nature of Security

Term loan from bank amounting to Rs.Nil (31 March,2016 : 8,587.90 Lakhs, 1 April 2015: Rs.9,928.99 Lakhs) is secured by way of first pari passu charge over all the immovable and movable properties of the Company. The above term loan from bank is also secured by second charge by way of hypothecation of the Company’s entire stocks of raw materials, semi finished and finished goods, consumable stores and spares and such other movables including book debts, bills whether documentary or clean, outstanding monies, receivables (excluding current assets relating to 30MW co-generation power plant at Durgapur in West Bengal) both present and future, in a form and manner satisfactory to the bank, ranking pari passu with other participating banks.

Terms of Repayment

Loan availed for Rs.10,000 Lakhs is repayable in 22 equal quarterly installments. First installment due at the end of 21 month from the first drawdown date of the facility i.e on 30 July, 2015. However, the loan has been fully repaid during the year

Nature of Security

Term loan from bank amounting to Rs.Nil Lakhs (31 March, 2016,: Rs.6,043.03 Lakhs, 1 April 2015: Rs.8,063.09 Lakhs) is secured by way of first charge on the fixed assets both present and future, of the Company by way of mortgage on pari-passu basis.

Terms of Repayment

Loan availed for Rs.10,000 Lakhs is repayable in 20 equal quarterly installments. First installment due on 30 June, 2014 . However, the loan has been fully repaid during the year

Nature of Security

Term loan from bank amounting to Rs.5,026.79 Lakhs (31 March, 2016: 8,611.04 Lakhs, 1 April 2015: Rs.9,963.12 Lakhs) is secured by way of first charge on fixed assets both present and future, of the Company by way of hypothecation and mortgage on pari-passu basis with other term lenders. Second charge on all current assets (present & future) of company on pari passu basis excluding current assets relating to 30MW co-generation power plant at Durgapur in West Bengal.

Terms of Repayment

Loan availed for Rs.10,000 Lakhs is repayable in 22 equal quarterly installments. First installment being due after a moratorium period of 18 months from the date of disbursement i.e. on 21 August, 2015.

Nature of Security

Term loan from bank amounting to Rs.15,471.47 Lakhs (31 March 2016: Rs.Nil, 1 April 2015: Nil) is secured by first charge on the entire fixed assets of the company both present and future: The above security to be shared on pari passu basis amongst lenders.

Terms of Repayment

Loan availed for Rs.16,000 Lakhs is repayable in 32 equal quarterly installments of the total amount drawn under the said facility starting from 31 March 2017

Nature of Security

Term loan from bank amounting to ‘562.76 Lakhs (31 March, 2016: Rs.Nil, 1 April 2015: Rs.Nil) is secured by pari passu first charge on the entire fixed assets both present and future, moveable and immovable. Second pari passu charge by way of hypothecation of the entire current assets of the Company (both present and future)

Terms of Repayment

Loan availed for Rs.564.90 Lakhs repayable in 28 quarterly installments as follows after 1 year of moratorium from the date of first disbursal (29 March, 2017).Repayment to start from 30 June 20181) 2nd Year-10%

2) 3rd Year-12.50%

3) 4th Year-12.50%

4) 5th Year-15%

5) 6th Year-15%

6) 7th Year-17.50%

7) 8th Year-17.50%

a) Nature of Security

Secured by first charge by way of hypothecation of all the Company’s current assets, namely all the stock of raw material, stock in process, semi finished goods and finished goods, consumable stores and spares not relating to plant and machinery (consumable and spares) both present and future, bills receivable, bills whether documentary or clean, outstanding monies, receivable, book debts and all other current assets of the Company both present and future excluding current assets relating to 30MW co-generation power plant at Durgapur in West Bengal, ranking pari passu without any preference or priority of one over the others and also by second charge on the company’s immovable and movable fixed assets, both present and future excluding those immovable and movable fixed assets pertaining to 30MW co-generation power plant at Durgapur, West Bengal ranking pari passu without any preference or priority of one over the others.

Balance outstanding as at 31 March, 2017 in respect of Commercial Paper was Rs.Nil (31 March, 2016: Nil, 1 April, 2015: Nil). Maximum amount outstanding at any time during the year was Rs.29,000 Lakhs (2015-16: Rs.25,000 Lakhs, 2014-15: Rs.7,500 Lakhs)

Refer notes 3(a), 4(b), 4(c), 4(e) and 4(f) for details of assets pledged as security as set out in the above note. Refer note 34 for information about liquidity risk and market risk on borrowings.

4.1 Employee Benefits:

(I) Leave Obligations

The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number days of unutilised leave at each balance sheet date on the basis of year-end actuarial valuation using projected unit credit method. The scheme is unfunded.

Based on past experience and in keeping with Company’s practice, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months and accordingly the total year end provision determined on actuarial valuation, as aforesaid is classified between current and non current.

(II) Post employment obligations

(A) Gratuity

The Gratuity scheme is a final salary defined benefit plan that provides for a lump sum payment made on exit either by way of retirement, death, disability or voluntary withdrawal. The benefits are defined on the basis of final salary and the period of service and paid as lump sum at exit. Benefits provided under this plan is over and above the requirement of the Payment of Gratuity Act, 1972. Trustees administer the contributions made to the Gratuity fund. Amounts contributed to the Gratuity fund are invested in solely with the Life Insurance Corporation of India.

(B) Post- retirement medical benefits

Post Retirement Medical Benefits [comprising payment of annual medical insurance premium to cover hospitalizations and reimbursement of domiciliary medical expenses within a defined monetary limit], a defined benefit retirement plan are extended to certain employees. The liability in respect thereof is determined by actuarial valuation at the year end based on the Projected Unit Credit Method and are recognized as a charge on accrual basis. The scheme is unfunded

The expected return on plan assets is determined after taking into consideration composition of plan assets held, assessed risks of asset management, historical results of return on plan assets, Company’s policies for plan asset management and other relevant factors.

The expenses for the above mentioned benefits have been included and disclosed under the following line items:-

Gratuity - under ‘Contribution to Provident and other funds’ in note 18 Post retirement medical benefit - under ‘Staff welfare expenses’ in note 18

In case of funded plan, the Company ensures that the investment positions are managed within an asset - liability matching (ALM) framework that has been developed to achieve investment that are in line with the obligation under the gratuity scheme. Within this framework the Company’s ALM objective is to match asset with gratuity obligation. The Company actively monitors how the duration and the expected yield of instruments are matching the expected cash outflows arising from the gratuity obligations. The Company has not changed the process used to manage its risk from previous periods. The Company does not use derivatives to manage its risk. The gratuity scheme is funded with LIC which has good track record of managing fund.

Method used for sensitivity analysis:

The sensitivity results above determine their individual impact on the plan’s end of year defined benefit obligation. In reality, the plan is subject to multiple external experience items which may move the defined benefit obligation in similar / opposite directions, while the plan’s sensitivity to such changes can vary over time.

(g) Defined benefit liability and employer contributions

Expected contributions to post-employment benefit plans for the year ending 31 March, 2018 are Rs.425.58 Lakhs.

The weighted average duration of the defined benefit obligation is 6 years (31 March, 2016 - 7 years). The expected maturity analysis of gratuity and post employment medical benefits is as follows:

(h) Plan assets for gratuity is funded with Life Insurance Corporation of India.

(i) Risk Exposure

Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below:

1 Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase

2 Salary inflation risk : Higher than expected increases in salary will increase the defined benefit obligation

3 Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

(C) Provident Fund

Certain employees of the Company receive provident fund benefits, which are administered by the provident fund trust set up by the Company Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or cessation of employment. Both the employees and the Company make monthly contributions at specified percentage of the employees’ salary to such provident fund trust. The Company has an obligation to fund any shortfall in return on plan assets over the interest rates prescribed by the authorities from time to time. In view of the Company’s obligation to meet the shortfall this is a defined benefit plan. Actuarial valuation of the Company’s liability under such scheme is carried out under the Projected Unit Credit Method at the year end and the charge/ gain, if any, is recognized in the Statement of Profit and Loss. Actuarial gains/ losses are recognized immediately in the Statement of Profit and Loss as income/ expense.

The Actuary has carried out actuarial valuation of the plan’s liabilities and interest rate guarantee obligations as at the balance sheet date using Projected Unit Credit Method and deterministic approach as outlined in the Guidance Note 29 issued by the Institute of Actuaries of India. Based on such valuation, the future anticipated shortfall with regard to interest rate obligation of the Company amounts to ‘5.84 Lakhs (31 March, 2016: Rs.3.97 Lakhs) and outstanding as at the balance sheet date amounts to Rs.45.48 Lakhs (31 March, 2016: Rs.39.64 Lakhs, 1 April , 2015: Rs.35.67 Lakhs). Disclosure given hereunder are restricted to the relevant information available as per the actuary’s report.

(III) Defined contribution plans

The Company has certain defined contribution plans viz. provident fund and superannuation fund. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The Company has a defined contribution Superannuation plan for which contribution is made at a rate not exceeding 4.87% of basic and dearness Allowance of the member with superannuation. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is Rs.194.88 Lakhs(31 March 2016-Rs.180.12 Lakhs)

Write down of inventories to net realisable value amounted to Rs.16.21 Lakhs (Previous year Rs.90.99 Lakhs). These were recognised as an expense during the year ended 31 March 2017 and 31 March 2016 respectively and included in changes in inventories of finished goods in the Statement of profit and loss.

5 As set out in note 1.3.1 and 36.1.1.1, the Company has elected to measure certain items of property, plant and equipment at its fair value as at the transition date and considered such value as deemed cost at that date. Fair value of such assets as on April 1, 2015 were carried out by an external valuer using the following approach:

- Market approach for Freehold and Leasehold Land

- Direct method of the Cost Approach to arrive at the fair value of the various factory and non-factory buildings.

- Indirect/ indexing method of the Cost Approach to arrive at the fair value in case of Plant & Machinery, Office Equipment, Electrical Installations and Railway sidings 29 Pending completion of the relevant formalities of transfer of certain assets acquired pursuant to the Scheme of Amalgamation of Transmission Holdings Limited with the Company in 2001-02, such assets remained included in the books of the Company under the name of the transferor Company

NOTE 6

A Scheme of Amalgamation of Goodluck Dealcom Private Limited, a wholly owned subsidiary of the Company, (the “Transferor Company”) with the Company was filled in 2016-17 before the applicable regulatory authorities in keeping with the provisions of applicable statutes. (“the Scheme”)

The Financial Statements of the Company for the year ended 31 March, 2017 were first approved by the Board of Directors at its meeting held on 25th May, 2017 without giving effect of the amalgamation of the Transferor Company with the Company pending receipt of the Order from the National Company Law Tribunal (“NCLT”), On receipt of the order dated 19th July, 2017 from NCLT sanctioning the Scheme and filing the same with the Registrar of Companies on 21 July, 2017, the financial statements approved on 25th May, 2017 as aforesaid have been revised by the Company only to give effect to the aforesaid amalgamation with effect from the Appointed Date of 1 April, 2016 in keeping with the Scheme and with the applicable Accounting Standards.

This common control business combination has been accounted for as per the Scheme and in accordance with applicable Accounting Standards notified under the Companies Act, 2013 and has been accounted by using the Pooling of Interest method. Accordingly, the Company has recorded all the assets, liabilities and reserves of the Transferor Company at their respective book values as appearing in the books of account of the Transferor Company immediately preceding the appointed date, the details of which are as follows: (also refer footnote on Note 36.2.1)

NOTE 7: SEGMENT

(a) Description of segments and principal activities

The Company’s Managing Director examines the Company’s performance and has identified two reportable segments of its business.

Carbon Black : The company is primarily engaged in production of Carbon Black through its four manufacturing units located at Durgapur, Kochi, Vadodara and Mundra

Power: The Company is also engaged in generation of electricity for the purpose of captive consumptions as well as distribution of surplus to outsiders.

The segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the standalone financial statement. Also the company’s borrowings (including finance costs and interest income), income taxes, investments are managed at head office and are not allocated to operating segments.

Inter-Segment transfers being power consumed for manufacture Carbon Black are based on price paid for power purchased from external sources. Segment revenue is measured in the same way as in the Statement of Profit and Loss.

Segment assets and liabilities are measured in the same way as in the standalone financial statements. These assets are allocated based on the operations of the segment and the physical location of the assets.

All non-current assets of the Company (excluding financial assets) are located in India.

Revenue of Rs.76,158.99 Lakhs (31 March 2016- Rs.78,891.59 Lakhs) are derived from two external customers in the Carbon Black segment, each of whom contribute to more than 10% of the total revenue.

The Company is domiciled in India. The amount of its revenue from external customers broken down by the location of the customers is shown in table below:

NOTE 8: FAIR VALUE MEASUREMENT

(i) Financial instruments by category

(ii) Fair Value

The fair values of financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, Methods and assumptions used to estimate the fair values are consistent in all the years, The following methods and assumptions were used to estimate the fair values:

(a) In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements, Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors, Accordingly, such net asset values are analogous to fair market value with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the issuers of these units of mutual funds,

(b) In respect of investments in listed equity instruments, the fair values represents available quoted market price at the Balance Sheet date,

(c) The fair value of derivative contracts (foreign exchange forward contracts and Currency and Interest rate swaps) is determined using forward exchange rates at the Balance Sheet date,

(d) The management assessed that fair values, of trade receivables, cash and cash equivalents, other bank balances, loans, trade payables, current borrowings, other current liabilities and other financial liabilities (current), approximate to their carrying amounts largely due to the short-term maturities of these instruments, Further, management also assessed the carrying amount of certain non-current loans, non-current financial liabilities and long-term borrowings at floating interest rates which are a reasonable approximation of their fair values and the difference between the carrying amounts and fair values is not expected to be significant,

(iii) Fair value of financial assets and liabilities measured at amortised cost

The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amount would be significantly different from the values that would eventually be received or settled,

(iv) Fair value hierarchy

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

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices, This includes listed equity instruments and mutual funds that have net asset value as stated by the issuers in the published statements, The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period, The mutual funds are valued using the closing NAV

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates, If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2

Level 3: If one or more ofthe significant inputs is not based on observable market data, the instrument is included in level 3,This isthe case for unlisted equity securities included in level 3,

The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period, There are no transfers between level 1 and level 2 fair value measurements during the year ended 31 March, 2017 and 31 March, 2016,

Some of the Company’s financial assets are carried at fair value for which Level 3 inputs have been used, The following table gives information about howthe fair values of these financial assets are determined (in particular, the valuation technique(s) and inputs used),

Valuation process:

The main level 3 inputs for unquoted equity shares and unquoted preference share used by the Company are derived and evaluated as follows:

Discount rates are determined using a capital asset pricing model to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset,

NOTE 9: FINANCIAL RISK MANAGEMENT

The Company’s principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables and other financial liabilities. The main purpose of these financial liabilities is to finance and support the operations of the Company. The Company’s principal financial assets include trade and other receivables, loans, investments and cash & cash equivalents that derive directly from its operations.

The Company’s business activities are exposed to a variety of risks including liquidity risk, credit risk and market risk. The Company seeks to minimize potential adverse effects of these risks by managing them through a structured process of identification, assessment and prioritization of risks followed by coordinated efforts to monitor, minimize and mitigate the impact of such risks on its financial performance and capital. For this purpose, the Company has laid comprehensive risk assessment and minimization/mitigation procedures, which are reviewed by the Audit Committee and approved by the Board from time to time. These procedures are reviewed to ensure that executive management controls risks by way of properly defined framework. The Company does not enter into derivative financial instruments for speculative purposes.

(A) Credit risk

Credit risk refers to risk of financial loss to the Company if customers or counterparties fail to meet their contractual obligations. The Company is exposed to credit risk from its operating activities (mainly trade receivables) and from its investing activities (primarily deposit with banks and investment in mutual funds).

(i) Credit risk management

(a) Trade Receivable

Customer credit risk is managed by the Company through its established policies and procedures which involve setting up credit limit based on credit profiling of individual customers, credit approvals for enhancement of limits and regular monitoring of important developments viz. payment history, change in credit rating, regulatory changes, industry outlook etc. Outstanding receivables are regularly monitored and an impairment analysis is performed at each reporting date on an individual basis for each major customer. In addition, small customers are grouped into homogeneous groups and assessed for impairment collectively. The Company also has a policy to provide for all receivables which are overdue for a period over 365 days. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or reversal thereof.

(b) Deposits and financial assets (Other than trade receivables):

The Company maintains exposure in cash and cash equivalents, term deposits with banks and money market liquid mutual fund schemes. Investments of surplus are made within assigned credit limits with approved counterparties who meet the threshold requirements with respect to ratings, financial strength, credit spreads etc. Counterparty credit limits are set to minimize concentration risk and are reviewed periodically by the Board.

(B) Liquidity Risk

Liquidity risk implies that the Company may not be able to meet its obligations associated with its financial liabilities. The Company manages its liquidity risk on the basis of the business plan that ensures that the funds required for financing the business operations and meeting financial liabilities are available in a timely manner and in the currency required at optimal costs. The Management regularly monitors rolling forecasts of the Company’s liquidity position to ensure it has sufficient cash on an ongoing basis to meet operational fund requirements. The surplus cash generated, over and above the operational fund requirement is invested in bank deposits / marketable debt securities / debt mutual fund schemes of highly liquid nature to optimize cash returns while ensuring adequate liquidity for the Company

Additionally the Company has committed fund and non-fund based credit lines from banks which may be drawn anytime based on Company’s fund requirements. The Company maintains a cautious liquidity strategy with positive cash balance and undrawn bank lines throughout the year

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments.

(C) Market Risk

Market risk is the risk that the fair value of future cash flow of financial instruments may fluctuate because of changes in market conditions. Market risk broadly comprises three types of risks namely currency risk, interest rate risk and price risk (for commodities or equity instruments). The above risks may affect the Company’s income and expenses and / or value of its investments. The Company’s exposure to and management of these risks are explained below

(i) Foreign currency risk

The Company operates in international markets and therefore is exposed to foreign currency risk arising from foreign currency transactions. The exposure relates primarily to the Company’s operating activities

(when the revenue or expense is denominated in foreign currency), borrowings in foreign exchange and investment in overseas subsidiaries. Over ninety percent of Company’s foreign currency transactions are in USD while the rest are in EURO, JPY and GBP The risk is measured through forecast of highly probable foreign currency cash flows.

The Company’s risk management policy is complete hedging of net foreign currency exposure at all points in time through foreign exchange forward contracts, vanilla option contracts and cross currency interest rate swaps. The objective of the hedging is to eliminate the currency risk due to volatility in exchange rates.

(a) Foreign currency risk exposure

The company’s exposure to foreign currency risk at the end of the reporting period expressed in INR, are as follows:

(b) Sensitivity

A fluctuation in the exchange rates of 7% with other conditions remaining unchanged would have the following effect on Company’s profit or loss before taxes as at 31 March 2017 and 31 March 2016:

(ii) Interest rate risk

The Company’s exposure to risk of change in market interest rates relates primarily to its debt interest obligations. It’s borrowings are at floating rates and its future cash flows will fluctuate because of changes in market interest rates.

(a) Interest Rate Risk Exposure

The exposure of the Company’s borrowings to interest rate changes at the end of the reporting period are as follows:

(b) Sensitivity

Profit or loss is sensitive to higher / lower interest expense from borrowings as a result of changes in interest rates.

(iii) Security Price risk

Securities price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded prices.

The Company invests its surplus funds in various debt instruments and equity instruments. These comprise of mainly liquid schemes of mutual funds, short term debt funds & income funds (duration investments) and certain quoted equity instruments.

To manage its price risk arising from investments in mutual funds and equity instruments, the Company diversifies its portfolio. Mutual fund and equity investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments.

(a) Securities Price Risk exposure

The Company’s exposure to securities price risk arises from investments in mutual funds and equity instruments held by the Company and classified in the Balance Sheet as fair value through profit or loss/ fair value through other comprehensive income is disclosed under Note 33.

(b) Sensitivity

The sensitivity of profit or loss to changes in Net Assets Values (NAVs) as at year end for investments in mutual funds.

(D) Commodity Price Risk

Commodity price risk results from changes in market prices for raw materials, mainly carbon black feedstock which forms the largest portion of Company’s cost of sales. Significant movement in raw material costs could have an adverse effect on results of Company’s operations.

The Company endeavors to reduce such risks by maintaining inventory at optimum level through a highly probable sales forecast on quarterly basis and also through worldwide purchasing activities. Raw materials are purchased exclusively to cover Company’s own requirements. Further, a significant portion of Company’s volume is sold based on formula-driven price adjustment mechanism which allows for recovery of the changed raw material cost from customers. The Company also endeavors to offset the effects of increases in raw material costs through price increases in its non-contract sales, productivity improvement and other cost reduction efforts. The Company has not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

NOTE 10 : CAPITAL MANAGEMENT

For the purposes of the Company’s capital management, capital includes issued capital, all other equity reserves and long term borrowed capital less reported cash and cash equivalents.

The primary objective of the Company’s capital management is to maintain an efficient capital structure to reduce the cost of capital, support the corporate strategy and to maximise shareholder’s value.

The Company’s policy is to borrow primarily through banks to maintain sufficient liquidity. The Company also maintains certain undrawn committed credit facilities to provide additional liquidity. These borrowings, together with cash generated from operations are utilised for operations of the Company

The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally imposed capital requirements.

NOTE 11: FIRST TIME ADOPTION OF IND-AS

These are the Company’s first standalone financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31 March, 2017, the comparative information presented in these financial statements for the year ended 31 March, 2016 and in the preparation of an opening Ind AS balance sheet at 1 April, 2015 (the Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standard Rules), 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has impacted the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

11.1 Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

11.1.1 Ind AS optional exemptions

11.1.1.1 Deemed cost

Ind AS 101 permits a first time adopter to elect to measure an item of property, plant and equipment at the date of transition to Ind AS at its fair value and use that fair value as its deemed cost at that date. The exemption can also be used for intangible assets covered by Ind AS 38 ‘Intangible Assets’.

Accordingly, the Company has elected to measure certain class of property, plant and equipment at its fair value as at the transition date and considered such value as deemed cost at that date. While remaining class of assets are carried at historical cost determined in accordance with retrospective application of Ind AS.

11.1.1.2Designation of previously recognised equity instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS.

The Company has elected to apply this exemption for its investment in certain equity instruments (other than its subsidiaries).

11.1.1.3Investments in subsidiaries

Ind AS 101 permits a first time adopter to elect to measure its investment in subsidiaries at fair value of such investments at the Company’s date of transition to Ind AS or previous GAAP carrying amount at that date and use that as its deemed cost as on the date of transition.

Accordingly the Company has elected to measure its investment in Phillips Carbon Black Cyprus Holding Limited at fair value as at 1 April, 2015.

11.1.1.4Exchange differences on long-term foreign currency monetary items

Under previous GAAP, exchange differences arising on reporting of long-term foreign currency monetary items (i) relating to acquisition of depreciable capital assets were allowed to be adjusted to the carrying amount of such assets (to be adjusted over the balance life of the related asset) and (ii) in other cases were allowed to be accumulated in a ‘Foreign Currency Monetary item Translation Difference Account’ (to be adjusted over the balance period of the related long term monetary asset/ liability). Ind AS 101 includes an optional exemption that allows a first time adopter to continue with the above accounting policy in respect of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of first Ind AS financial reporting period i.e. 1 April, 2016 or to discontinue with such policy

The Company has not availed aforementioned optional exemption and has decided to discontinue with the above policy

11.1.2 Ind AS mandatory exceptions

11.1.2.1Estimates

An entity’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error

Ind AS estimates as at 1 April, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP, The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:- Investments in equity instruments carried at FVPL and OCI - Impairment of financial assets based on expected credit loss model

11.1.2.2 De-recognition of financial assets and liabilities

Ind AS 101 requires a first time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of company’s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has elected to apply the derecognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

11.1.2.3Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS. The Company has assessed the same accordingly

11.2Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

11.2.1 Impact of Ind AS adoption on the cash flows for the year ended 31 March, 2016

There were no material differences between the Cash Flow statement presented under Ind AS and the previous GAAP.

11.3Notes to first-time Adoption

11.3.1 Property, plant and equipment

Under the previous GAAP, Property, plant and equipment were stated at revalued amount (for items revalued)/cost of acquisition/construction (for items not revalued) less accumulated depreciation/ amortisation, impairment loss, if any and inclusive of borrowing cost, where applicable, and adjustments for exchange difference arising on reporting of long-term foreign currency monetary items relating to acquisition of depreciable capital assets.

Under Ind AS, the Company has elected to measure certain class of property, plant and equipment at its fair value as at the transition date and considered such value as deemed cost at that date. While remaining class of property, plant and equipment are carried at historical cost determined in accordance with retrospective application of Ind AS. (Refer Note 36.1.1.1)

The resulting fair value changes consequent to the measurement of property, plant and equipment at their fair value have been recognised in retained earning as at the date of transition. This increased retained earnings by Rs.61,764.77 Lakhs as at 31 March, 2016 (1 April, 2015 - Rs.61,764.77 Lakhs)

Basis fair value changes in measurement of certain class of property, plant and equipment , depreciation on such increase amounting to ‘564.26 lakhs have been charged to the statement of profit and loss for the year ended 31 March, 2016 under depreciation expense.

Consequent to the above, the total equity as at 31 March 2016 has increased by Rs.61,200.51 Lakhs (1 April 2015- Rs.61,764.77 Lakhs) and profit for the year ended 31 March, 2016 decreased by Rs.564.26 Lakhs.

11.3.2Fair valuation of investment (other than investment in subsidiary)

Under the previous GAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments, as determined by the Board of directors of the Company based on periodical review.

Under Ind AS, these investments are required to be measured at fair value.

Fair value changes with respect to investments in equity instruments designated at FVOCI have been recognised in FVOCI - Equity Investments Reserve as at the date of transition and subsequently in the other comprehensive income for the year ended 31 March 2016. This has resulted into increase in other reserves by ‘5,421.87 Lakhs as at 31 March, 2016 (1 April 2015- Rs.7,595.46 Lakhs) and decrease in other comprehensive income for the year ended 31 March, 2016 by Rs.2,173.59 Lakhs.

Loss on sale of equity instrument classified as FVTOCI amounting to Rs.0.67 Lakhs earlier recognised in Statement of Profit and Loss has been reclassified to Other Comprehensive Income. This increased profit for the year ended 31 March, 2016 by Rs.0.67 Lakhs with decrease in other comprehensive income by an equivalent amount.

Under Ind AS investments in preference shares have been classified as fair value through profit and loss and accordingly gain / loss on such fair valuation has been recognised in retained earnings as on the transition date and subsequently in statement of profit and loss under fair value gain on financial assets at FVTPL. This decreased retained earning by Rs.992.72 Lakhs as at 31 March, 2016 (1 April 2015: Rs.1,206.64 Lakhs) and increase in profit for the year ended 31 March, 2016 by Rs.213.92 Lakhs.

Under the previous GAAP, current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value.

The resulting fair value changes of these investments have been recognised in the retained earnings as at the date of transition and subsequently in the statement of profit and loss under fair value gain on financial assets at FVPL for the year ended 31 March, 2016. This increased retained earnings by Rs.8.25 Lakhs (1 April, 2015 - Rs.Nil) and profit for the year ended 31 March, 2016 by Rs.8.25 Lakhs

Consequent to the above, the total equity as at 31 March 2016 increased by Rs.4,437.40 Lakhs (1 April 2015- Rs.6,388.82 Lakhs), profit for the year ended 31 March, 2016 increased by Rs.222.84 Lakhs and other comprehensive income for the year ended 31 March 2016 decreased by Rs.2,174.26 Lakhs.

11.3.3 Loan to subsidiary carried at amortised cost

Under the previous GAAP, financial assets are initially recognised and carried at cost. Under Ind

AS, Company has classified and measured interest free loan given by it to Phillips Carbon Black Cyprus Holding Limited, a subsidiary company at amortised cost. The resulting change in the carrying amount of this financial asset have been recognised in the investment in subsidiary as at the date of transition. Unwinding of Interest income amounting to Rs.38.46 Lakhs from this financial assets measured using effective interest rate method have been credited to the statement of profit and loss for the year ended 31 March, 2016 under other income. This decreased loan to related party as at 31 March, 2016 by Rs.196.35 Lakhs (1 April, 2015 - Rs.234.81 Lakhs) and increased investment in subsidiary by Rs.234.81 Lakhs (1 April, 2015 - Rs.234.81 Lakhs)

Consequent to the above, total equity as at 31 March 2016 increased by Rs.38.46 Lakhs (1 April 2015- Rs.Nil) with a corresponding increase in profit for the year ended 31 March 2016 by an equivalent amount.

11.3.4 Fair Value of investment in subsidiary

Under the previous GAAP, investment in subsidiaries were carried at cost less provision for other than temporary decline in the value of such investments, as determined by the Board of Directors based on periodical review. Under Ind AS, Company has elected to measure its investment in Phillips Carbon Black Cyprus Holding Limited at fair value as at the transition date and considered these as their deemed cost pursuant to optional exemption given under Ind AS 101 (Refer Note 36.1.14).

The resulting fair value changes on measurement of investment in Phillips Carbon Black Cyprus Holding Limited at fair value have been recognised in retained earning as at the date of transition. Company has also recognised provision for impairment loss for decline in the value of investment below its deemed cost in accordance with the requirement of Ind AS 109 in the statement of profit and loss for the year ended 31 March, 2016. This decreased retained earnings and consequently total equity as at 31 March, 2016 by Rs.1,202.02 Lakhs (1 April, 2015 - Rs.1,092.30 Lakhs). The profit for the year ended 31 March, 2016 is decreased by Rs.109.72 Lakhs.

11.3.5Financial Instrument - Derivative Contract

Under the previous GAAP, forward contract cost were accounted for as prescribed under AS 11 “The Effects of Changes in Foreign Exchange Rates” under which forward premium was amortised over the period of forward contracts and forward contracts were stated at the year end spot exchange rate and gains / losses on settlement on aforesaid contracts and mark to market loss relating to outstanding contracts as at the balance sheet date in respect of derivative contracts (other than forward exchange contract covered under Accounting Standard 11 on “The Effects of Changes in Foreign Exchange Rates”), were recognized in the statement of profit and loss.

Under Ind AS 109, all derivative financial instrument are to be marked to market and any resultant gain or loss on settlement as well as on outstanding contracts as at the balance sheet date is to be charged or credited to the statement of profit and loss.

Accordingly, the marked to market gain/loss has been recognized on all derivative contracts and unamortized forward premium balance and exchange gain / loss on reinstatement of forward contracts under aforesaid AS 11 has been reversed. As a result of this adjustments, the retained earning and consequently total equity as at 31 March, 2016 is higher by Rs.656.64 Lakhs (1 April, 2015 - Rs.1,523.26 Lakhs). The profit for the year ended 31 March, 2016 is lower by Rs.866.62 Lakhs.

11.3.6Deferred Tax

Company has recognised deferred tax on the adjustments made on transition to Ind AS. The corresponding adjustments have been made in retained earnings. Company has also recognised deferred tax assets as at the transition date on the carrying amount of MAT credit entitlement as per previous GAAP. Deferred tax on Ind AS adjustments have been charged/credited subsequently to the statement of profit and loss for the year ended 31 March, 2016. This resulted into increase in deferred tax liabilities as at 31 March, 2016 by Rs.9,829.30 Lakhs (1 April, 2015 - Rs.10,127.68 Lakhs), derecognition of MAT Credit entitlement under previous GAAP Rs.5,389.13 lakhs (1 April, 2015 - Rs.5,389.13 Lakhs), decrease in retained earning by Rs.15,218.41 Lakhs (1 April, 2015- Rs.15,516.82 Lakhs).

Consequent to the above, total equity as at 31 March, 2016 has decreased by Rs.15,218.41 Lakhs (1 April, 2015 - Rs.15,516.82 Lakhs), profit for the year ended 31 March, 2016 has increased by Rs.281.85 Lakhs and other comprehensive income for the year ended 31 March, 2016 has decreased by Rs.0.78 Lakhs which includes deferred tax charge on gain on equity instruments through other comprehensive income amounting to Rs.24.81 Lakhs

11.3.7 Trade receivables

As per Ind AS 109, the Company is required to apply expected credit loss model for recognising the allowance on trade receivable. As a result, the allowance for expected credit loss was recognised amounting to Rs.84.15 Lakhs as at 31 March, 2016 (1 April, 2015- Rs.82.60 Lakhs) and consequently total equity as at 31 March, 2016 and 1 April, 2015 decreased by an equivalent amount. The profit for the year ended 31 March, 2016 decreased by Rs.1.55 Lakhs.

11.3.8Borrowings and Other financial liabilities

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the statement of profit and loss over the tenure of the borrowing as part of the other borrowing cost by applying the effective interest rate method.

Under previous GAAP, these transaction costs were charged to statement of profit and loss as and when incurred. Accordingly, non-current borrowings and other financial liabilities as at 31 March, 2016 have been reduced by Rs.56.10 Lakhs (1 April, 2015- Rs.117.68 Lakhs) and Rs.52.76 Lakhs (1 April, 2015 - 83.02 Lakhs) respectively with a corresponding adjustment to retained earnings. The total equity increased by an equivalent amount. The profit for the year ended 31 March 2016 decreased by Rs.91.84 Lakhs as a result of the additional other borrowing cost. Further, unamortised transaction cost amounting to Rs.41.79 Lakhs ( 31 March, 2016: Rs.92.13 Lakhs) relating to current borrowings have been regrouped from prepaid expenses to current borrowings. There is no impact on total equity and profit.

11.3.9 Proposed Dividend & Tax on Proposed Dividend

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly the liability for proposed dividend and tax on proposed dividend of Rs.1,037.11 Lakhs as at 31 March, 2016 (1 April 2015 -Rs.414.85 Lakhs) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

11.3.10 Excise Duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty Under Ind AS, revenue from sale of goods is presented inclusive of excise duty The excise duty paid is presented on the face of statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31 March, 2016 by Rs.22,137.79 Lakhs. There is no impact on the total equity and profit.

11.3.11 Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of statement of profit and loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As result of this change, employee benefit expense for the year ended 31 March, 2016 have been decreased by Rs.73.94 Lakhs resulting into increase in profit by Rs.32.57 Lakhs (net of current tax Rs.15.78 Lakhs and deferred tax Rs.25.59 Lakhs) with the corresponding decrease in the other comprehensive income by an equivalent amount. There is no impact on the total equity as at 31 March, 2016.

11.3.12 Exchange difference on translation of long-term foreign currency monetary items

Under Ind AS, company has elected to discontinue with the accounting policy of adjusting the carrying amount of depreciable property plant and equipment for exchange differences arising on reporting of long-term foreign currency monetary items relating to acquisition of capital assets (refer note 36.1.1.5). This has resulted into increase in the net gain on foreign currency transaction/translation and property plant and equipment by Rs.995.63 Lakhs and increase in the related depreciation expense by Rs.154.09 Lakhs for the year ended 31 March, 2016 in the statement of profit and loss.

Consequent to the above, total equity as at 31 March, 2016 and profit for the year ended on that date has increased by Rs.841.54 Lakhs

11.3.13 Cash discount

Under Previous GAAP cash discount paid to customers were recorded as a part of expenses in the statement of profit and loss. However under Ind AS these expenses are netted off against revenue. This change has resulted in decrease in total revenue and total expenses for the year ended 31 March, 2016 by Rs.62.18 Lakhs. There is no impact on total equity as at 31 March, 2016 and profit for the year ended 31 March, 2016.

11.3.14Gain/(Loss) on disposal of property,


Mar 31, 2016

1. Based on the valuation reports submitted by the valuers appointed for the purpose, certain items of the Company''s fixed assets [viz., Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildings on such Land, Flats, Electrical Installations, Plant and Machinery and Railway Siding] were revalued on 30th November, 1984, on 30th September, 1991 and also on 30th September, 2001 (except Railway Siding) after considering the following factors:

- Estimated current market value pertaining to Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildings on such land and Flats.

- Values of Electrical Installations, Plant and Machinery and Railway Siding (when applicable) based on their current cost of replacement.

- Adjustments for the condition, the standard of maintenance, depreciation up to valuation dates, etc.

The resultant revaluation surplus of Rs.1,011.07 lakhs, Rs.2,994.04 lakhs and Rs. 5,995.27 lakhs arising from the aforesaid revaluations were transferred to Revaluation Reserve in the Company''s annual accounts for the years 1983-84, 1990-91 and 2000-01 respectively. Such Revaluation Reserves have however been fully adjusted in earlier years.

2. Depreciation for the year ended 31st March, 2016 on items of fixed assets revalued include an additional charge of Rs. 150.09 lakhs (Previous Year - Rs. 165.81 lakhs) over that calculated on original cost at lives based on technical evaluation carried out in 2014-15 by the Company''s expert representing depreciation on the incremental amounts added on revaluation calculated at the rates considered applicable by the valuers and confirmed on technical evaluation carried out during 2014-15 by the Company''s expert.

Aforesaid technical evaluation carried out in 2014-15 have been revisited by the Company''s management during the year and no change in evaluated life considered necessary.

3. Pending completion of the relevant formalities of transfer of certain assets acquired pursuant to the Scheme of Amalgamation of Transmission Holdings Limited with the Company in 2001-2002, such assets remain included in the books of the Company under the name of the transferor company.

4. A) Rent of Rs. 507.93 lakhs (Previous Year - Rs. 448.80 lakhs) relates to operating leases taken on or after 01.04.2001. These lease arrangements range from 11 months to 9 years and are primarily in respect of accommodation for offices, warehouses etc. and inter alia include escalation clause and option for renewal.

5. Effective 1st April 2014, the Company has charged depreciation in keeping with the requirements of Schedule II to the Companies Act, 2013. Consequently, the estimated useful lives of certain fixed assets were revised, where considered appropriate, in keeping with the provisions of Schedule II to the Companies Act, 2013 effective 1st April, 2014. Pursuant to the said revision in useful lives, the net book value aggregating Rs. 72.94 lakhs (net of deferred tax Rs.37.56 lakhs) relating to fixed assets, where the revised useful lives had expired by 31st March, 2014, had been adjusted against opening balance of retained earnings as on 1st April, 2014.

6. The Company has provided interest bearing (which is not lower than prevailing yield of related Government security close to the tenure of the respective loans) unsecured loans repayable on demand during the year aggregating to Rs. 9,015.00 lakhs (Previous Year Rs. 12,406.00 lakhs) to certain companies for temporary financial assistance. Year-end balance of aforesaid loans is Rs. Nil (31.03.2015 Rs. Nil).

7. Shareholders’ approval by way of a special resolution will be obtained in the ensuing Annual General Meeting for reappointment of Managing Director effective 05th February, 2016 for a period of 3 years and remuneration amounting to Rs. 17.73 lakhs (excluding amount set out in Note 20) paid to him from that date.

8. Previous year’s figures have been regrouped/rearranged wherever necessary.


Mar 31, 2015

1b(ii) iny became a subsidiary of Rainbow Investments Limited (RIL) pursuant to a Scheme of Amalgamation and Arrangement between

Rainbow Investments Limited and certain companies and their respective shareholders as sanctioned by the Hon'ble High Court at Calcutta vide order passed during the current year. The certified copy of the aforesaid order has been filed with the Registrar of Companies on July 8, 2014 (effective date of the aforesaid Scheme). Effective September 23, 2014, the holding of RIL in the Comapny became 49.95%. 2c. Terms/ Rights attached to Equity Shares

The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

2d. Allotment of 1823 shares is pending against Rights Issue made during 1993-94.

2e. 48 Shares have not been issued to the concerned non-resident shareholders pending approval of the Reserve Bank of India.

Balance outstanding as at 31st March, 2015 in respect of Commercial Paper was Rs. Nil (Previous Year Rs. Nil). Maximum amount outstanding at any time during the year was Rs. 7,500 Lakhs (Previous Year Rs. Nil)

Nature of Security on Secured Borrowings availed from the Banks

Secured Loan from banks are secured by way of hypothecation in favour of the banks as and by way of first charge, ranking pari-passu among themselves, of the Company's existing and future stock of Raw Materials, Finished and Semi Finished Goods, Consumables Stores and Spares, including Stock in transit and in the possession of any third party, present and future Book debts, Monies Receivable, Claims etc. held by any third party to the order of the disposition of the Company (excluding those relating to 30 MW Co-generation power plant at Durgapur in West Bengal) and also by a pari-passu second charge created/to be created on the fixed assets of the Company at Durgapur in West Bengal (excluding those relating to 30 MW Co-Generation power plant at Durgapur in West Bengal), Palej and Mundra in Gujarat and Kochi in Kerala.

2.3 Raw material purchase is net of Rs. 2,099.96 lakhs (Previous year Rs. 2,439.52 lakhs) being benefits under duty exemption scheme pertaining to exports/deemed exports.

2.4 VALUE OF IMPORTED AND INDIGENOUS RAW MATERIALS, STORE AND SPARE PARTS CONSUMED*:

3 CONTINGENT LIABILITIES

Contingent Liabilities for :

(a) (i) Claims against the Company not acknowledged as debts :

Income-tax matters under dispute 42.27 -

Excise Duty matters under dispute 310.27 367.51

Custom Duty matters under dispute 57.12 57.12

(ii) Others

Excise Duty matters under dispute 156.52 99.28

Entry Tax matter under dispute 1,605.77 1,046.08

(b) Outstanding Bank Guarantees etc. 911.70 1,024.59

(c) Guarantees or Counter Guarantees or Counter Indemnity given by the Company :

On behalf of bodies corporate and others

- Limit 9.00 9.00

- Outstanding 9.00 9.00

(d) Bills Discounted -- 205.33

4 SEGMENT REPORTING

a Information relating to the two business segments, being Carbon black and Power has been disclosed as Primary Segment. b Inter-Segment transfers being power consumed for manufacture of Carbon Black are based on price paid for power purchased from external Sources.

c Segment Revenues, Results and other information:

39A POST EMPLOYMENT DEFINED BENEFIT PLANS I. Gratuity and Post retirement medical benefits Gratuity

In keeping with the Company's gratuity scheme, eligible employees are entitled for gratuity benefit as per The Payment of Gratuity Act, 1972 on retirement/death/incapacitation/termination etc. Also refer Note 1.11 (b) (iii) for accounting policy related to gratuity.

Post retirement medical benefits

Post Retirement Medical Benefits [comprising payment of annual medical insurance premium to cover hospitalizations and reimbursement of domiciliary medical expenses within a defined monetary limit] are extended to certain employees. The liability in respect thereof is determined by actuarial valuation at the year end based on the Projected Unit Credit Method and are recognized as a charge on accrual basis. This is a defined benefit plan.

The expected return on plan assets is determined after taking into consideration composition of plan assets held, assessed risks of asset management, historical results of return on plan assets, company's policies for plan asset management and other relevant factors.

4.3 Actual Return on Plan Assets -

Rupees in Lakhs

4.4 Plan assets for gratuity is funded with Life Insurance Corporation of India.

The expenses for the above mentioned benefits have been included and disclosed under the following line items:- Gratuity - under 'Contribution to Provident and other Funds' in Note 25 Post Retirement Medical Benefit - under 'Staff Welfare Expenses' in Note 25

4.5 (a) Principal Actuarial Assumptions used (Gratuity) -

The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors such as demand and supply in the employment market.

4.6 Effect of increase / decrease of one percentage point in the assumed medical cost trend rates on:

4.7 The contribution to the defined benefits plan expected to be made by the company during the annual period beginning after the balance sheet date is yet to be reasonably determined.

II. Provident Fund

In terms of the Guidance on implementing Accounting Standard 15 (Revised 2005) on employee benefits issued by the Accounting Standard Board of the Institute of Chartered Accountants of India, a provident fund setup by the Company is a defined benefit plan in view of the Company's obligation to meet shortfall, if any, on account of interest.

The Actuary has carried out actuarial valuation of the plan's liabilities and interest rate guarantee obligations as at the balance sheet date using Projected Unit Credit Method and deterministic approach as outlined in the Guidance Note 29 issued by the Institute of Actuaries of India. Based on such valuation, the future anticipated shortfall with regard to interest rate obligation of the Company written back during the year amounts to Rs 0.43 lakhs (Previous year Rs.11.03 lakhs) and outstanding as at the balance sheet date amounts to Rs 35.67 lakhs (Previous year Rs. 36.10 Lakhs). Disclosure given hereunder are restricted to the relevant information available as per the Actuaries Report.

39B Amount recognised as expenses (included in Note 25 Employee Benefit Expense under the line item Contribution to Provident and Other Funds) during the year under Defined Contribution Plan aggregate to Rs.155.21 lakhs (Previous year Rs. 255.33 lakhs).

(c) Mark to Market Losses provided for

41. Based on the valuation reports submitted by the valuers appointed for the purpose, certain items of the Company's fixed assets [viz., Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildings on such Land, Flats, Electrical Installations, Plant and Machinery and Railway Siding] were revalued on 30th November, 1984, on 30th September, 1991 and also on 30th September, 2001 (except Railway Siding) after considering the following factors:

- Estimated current market value pertaining to Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildings on such land and Flats.

- Values of Electrical Installations, Plant and Machinery and Railway Siding (when applicable) based on their current cost of replacement.

- Adjustments for the condition, the standard of maintenance, depreciation up to valuation dates, etc.

The resultant revaluation surplus of Rs.1,011.07 lakhs, Rs.2,994.04 lakhs and Rs. 5,995.27 lakhs arising from the aforesaid revaluations were transferred to Revaluation Reserve in the Company's annual accounts for the years 1983-84, 1990-91 and 2000-01 respectively. Such Revaluation Reserves have however been fully adjusted in earlier years.

5. Depreciation for the year ended 31st March, 2015 on items of fixed assets revalued include an additional charge of Rs. 165.81 lakhs (Previous Year - Rs. 180.92 lakhs) over that calculated on original cost at lives based on technical evaluation carried out during the year by the Company's expert representing depreciation on the incremental amounts added on revaluation calculated at the rates considered applicable by the valuers and confirmed on technical evaluation carried out during the year by the Company's expert.

6. Capital Work in Progress/Tangible assets as at 31st March 2015 includes, Consumption of Raw Material Rs. Nil (Previous Year - Rs. 5,919.84 lakhs), Salaries and wages Rs. Nil (Previous Year- Rs. 363.40 Lakhs), Contribution to Provident Fund and Other Funds Rs. Nil (Previous Year- Rs.24.89 lakhs), Staff Welfare expenses Rs. Nil ( Previous Year- Rs.9.16 lakhs), Consumption of Stores and Spares parts Rs. Nil (Previous Year- Rs.2,060.07 lakhs), Rent Rs. Nil (Previous Year- Rs.2.52 lakhs), Rates and Taxes Rs. Nil (Previous Year- Rs.0.40 lakhs), Repairs and Maintenance - Plant & Machinery Rs. Nil (Previous Year - Rs. 64.02 lakh), Repairs and Maintenance - Others Rs. Nil lakhs (Previous Year - Rs. 5.34 lakhs), Power Rs. Nil (Previous Year - Rs. 0.18) incurred during the year on various projects.

7. Pending completion of the relevant formalities of transfer of certain assets acquired pursuant to the Scheme of Amalgamation of Transmission Holdings Limited with the Company in 2001- 2002, such assets remain included in the books of the Company under the name of the transferor company.

8. A) Rent of Rs. 448.80 lakhs (Previous Year - Rs. 251.63 lakhs) relates to operating leases taken on or after 01.04.2001. These lease arrangements range from 11 months to 3 years and are primarily in respect of accommodation for offices, warehouses etc. and inter alia include escalation clause and option for renewal.

9. Effective 1st April, 2014, the Company has changed the basis of determining the cost of raw material from "First in First out (FIFO)" to "Weighted Average" for the purpose of inventory valuation. As a result of this change, year end inventories is higher by Rs. 42.97 lakhs, with corresponding favorable impact on the profit before tax for the year.

10. The Company has charged depreciation in keeping with the requirements of Schedule II to the Companies Act, 2013. Consequently, the estimated useful lives of certain fixed assets have been revised, where considered appropriate, in keeping with the provisions of Schedule II to the Companies Act, 2013 effective 1st April, 2014. Pursuant to the said revision in useful lives, the depreciation expense for the year ended 31st March, 2015 is higher and profit before tax is lower by Rs. 85.55 lakhs and the net book value aggregating Rs. 72.94 lakhs (net of deferred tax Rs.37.56 lakhs) relating to fixed assets, where the revised useful lives have expired by 31st March, 2014, has been adjusted against opening balance of retained earnings as on 1st April, 2014.

11. The Company has provided interest bearing (which is not lower than prevailing yield of related Government security close to the tenure of the respective loans) unsecured loans repayable on demand during the year aggregating to Rs. 12,406.00 lacs (Previous Year Rs. 7,300.00 lacs) to certain companies for temporary financial assistance. Year-end balance of aforesaid loans is Rs. Nil (31.03.2014 Rs. Nil).

12. Previous year's figures have been regrouped/rearranged wherever necessary.


Mar 31, 2013

1 SEGMENT REPORTING

a) Information relating to the two business segments, being Carbon black and Power has been disclosed as Primary Segment.

b) Inter-Segment transfers being power consumed for manufacture of Carbon Black are based on price paid for power purchased from external Sources.

c) Segment Revenues, Results and other information:

2 POST EMPLOYMENT DEFINED BENEFIT PLANS

I. Gratuity and Post retirement medical benefits

Gratuity

In keeping with the Company''s gratuity scheme, eligible employees are entitiled for gratuity benefit as per The Payment of Gratuity Act, 1972 on retirement/death/incapacitation/termination etc. Also refer Note 1.1 (b) (iii) for accounting policy related to gratuity.

Post retirement medical benefits

Post Retirement Medical Benefits [comprising payment of annual medical insurance premium to cover hospitalizations and reimbursement of domiciliary medical expenses within a defined monetary limit] are extended to certain categories of employees. The liability in respect thereof is determined by actuarial valuation at the year end based on the Projected Unit Credit Method and are recognized as a charge on accrual basis. This is a defined benefit plan.

3.1 Plan assets for gratuity is funded with Life Insurance Corporation of India.

3.2 The contribution to the defined benefits plan expected to be made by the company during the annual period begining after the balance sheet date is yet to be reasonably determined.

II. Provident Fund

In terms of the Guidance on implementing Accounting Standard 15 (Revised 2005) on employee benefits issued by the Accounting Standard Board of the Institute of Chartered Accountants of India, a Provident Fund setup by the Company is a defined benefit plan in view of the Company''s obligation to meet shortfall, if any, on account of interest.

The Actuary has carried out actuarial valuation actuarial valuation of the plan''s liabilities and interest rate guarantee obligations as at the balance sheet date using Projected Unit Credit Method and deterministic approach as outlined in the Guidance Note 29 issued by the Institute of Actuaries of India. Based on such valuation, the future anticipated shortfall with regard to interest rate obligation of the Company provided during the year amounts to Rs. 9.66 lakhs and outstanding as at the balance sheet date amounts to Rs. 50.35 lakhs. Disclosure given hereunder are restricted to information available as per the Actuaries Report.

For the Defined Contribution plans, contribution to provident fund aggregating to Rs. 220.72 lakhs (Previous Year - Rs. 184.05 lakhs) and contribution to superannuation fund aggregating to Rs. 168.65 lakhs (Previous Year - Rs. 126.96 lakhs) have ben recognized as an expense during the year in Note 25 Employee Benefit Expense under the line item Contribution to Provident and Other Funds.

4 For the purpose of these accounts, following methods and rates of depreciation have been used for depreciating the original cost of fixed assets:

(a) Certain items of Plant and Machinery being energy saving devices added during the period ended 31st March, 1987: Under Straight line method at rates specified in Schedule XIV of the Companies Act, 1956.

(b) Other assets added up to 31st March, 1987: Under written down value method at rates specified in Schedule XIV of the Companies Act, 1956.

(c) Additions since 1st April, 1987: Under Straight line method at rates specified in Schedule XIV of the Companies Act, 1956.

5 Based on the valuation reports submitted by the valuers appointed for the purpose, certain items of the Company''s fixed assets [viz. Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildings on such Land, Flats, Electrical Installations, Plant and Machinery and Railway Siding] were revalued on 30th November, 1984, on 30th September, 1991 and also on 30th September, 2001 (except Railway Siding) after considering the following factors:

- Estimated current market value pertaining to Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildings on such land and Flats.

- Values of Electrical Installations, Plant and Machinery and Railway Siding (when applicable) based on their current cost of replacement.

- Adjustments for the condition, the standard of maintenance, depreciation up to valuation dates, etc.

The resultant revaluation surplus of Rs.1,011.07 lakhs, Rs.2,994.04 lakhs and Rs. 5,995.27 lakhs arising from the aforesaid revaluations were transferred to Revaluation Reserve in the Company''s annual accounts for the years

1983-84, 1990-91 and 2000-01 respectively. Such Revaluation Reserves have however been fully adjusted in earlier years.

6 Depreciation for the year ended 31st March, 2013 on items of fixed assets revalued include an additional charge of Rs. 187.99 lakhs (Previous Year - Rs. 196.04 lakhs) over that calculated on original cost at rates prescribed under Schedule XIV of the Companies Act, 1956 as amended during 1993-94 representing depreciation on the incremental amounts added on revaluation calculated at the rates considered applicable by the valuers.

7 Capital Work-in-Progress as at 31st March, 2013 includes Raw Materials Consumed Rs. Nil (Previous Year- Rs.15.17 lakhs), Salaries and wages Rs. 144.71 Lakhs (Previous Year-195.65 lakhs), Contribution to Provident Fund and Other Funds Rs. 6.86 lakhs (Previous Year- Rs. 9.88 lakhs), Staff Welfare expenses Rs. 1.58 lakhs (Previous Year- Rs. 9.18 lakhs), Consumption of Stores and spares parts Rs. 14.31 lakhs (Previous Year-14.04 lakhs), Rent Rs. 0.70 lakhs (Previous Year- Rs. 1.50 lakhs), Rates and Taxes Rs. 0.02 lakhs (Previous Year- Rs.4.55 lakhs), Repairs and Maintenance Rs. 5.86 lakhs (Previous Year - Rs. 9.84 lakhs), Insurance Rs. Nil (Previous Year- Rs. 4.78 lakhs) incurred on various projects under implementation.

8 Pending completion of the relevant formalities of transfer of certain assets acquired pursuant to the Scheme of Amalgamation of Transmission Holdings Limited with the Company in 2001- 2002, such assets remain included in the books of the Company under the name of the transferor company.

9 Rent of Rs. 190.26 lakhs (Previous Year - Rs. 57.02 lakhs) relates to cancellable operating leases taken on or after 1.04.2001. These lease arrangements range from 11 months to 3 years and are primarily in respect of accommodation for offices, warehouses etc. and inter alia include escalation clause and option for renewal.

10 Previous year''s figures have been regrouped/rearranged wherever necessary.


Mar 31, 2012

A. Terms/ Rights attached to Equity Shares

The Company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

b. Allotment of 1823 shares is pending against Rights Issue made during 1993-94

c. 48 Shares have not been issued to the concerned non-resident shareholders pending approval of the Reserve Bank of India

Nature of Security on Secured Borrowings availed from the Banks

Secured Loan from banks are secured by way of hypothecation in favour of the banks as and by way of first charge, ranking pari-passu among themselves, of the Company's existing and future stock of Raw Materials, Finished and Semi Finished Goods, Consumables Stores and Spares, including Stock in transit and in the possession of any third party, present and future Book debts, Monies Receivable, Claims etc. held by any third party to the order of the disposition of the Company (excluding those relating to 30 MW Co-generation power plant at Durgapur in West Bengal) and also by a pari-passu second charge created/to be created on the fixed assets of the Company at Durgapur in West Bengal (excluding those relating to 30 MW Co-Generation power plant at Duragpur in West Bengal), Palej and Mundra in Gujarat and Karimugal in Kerala.

1.1 Raw material purchase is net of Rs. 3,990.24 lakhs (Previous year - Rs. 3,106.15 lakhs) being benefits under duty exemption schemes pertaining to exports/deemed exports.

As at As at 31st March, 2012 31st March, 2011 2 CONTINGENT LIABILITIES Rupees in Lakhs Rupees in Lakhs

Contingent Liabilities for :

(a) Claims against the Company not acknowledged as debts :

Income-tax matters under dispute 232.60 245.12

Excise Duty matters under dispute 91.03 49.63

(b) Outstanding Bank Guarantees etc. 1097.94 807.10

(c) Guarantees or Counter Guarantees or Counter Indemnity given by the Company :

On behalf of bodies corporate and others

- Limit 9.00 9.00

- Outstanding 9.00 9.00

3. SEGMENT REPORTING

a) Information relating to the two business segments, being Carbon black and Power has been disclosed as Primary Segment.

b) Inter-Segment transfers being power consumed for manufacture of Carbon Black are based on price paid for power purchased from external Sources.

4. In terms of the Guidance on implementing Accounting Standard 15 on employee benefits issued by the Accounting Standard Board of the Institute of Chartered Accountants of India, a provident fund setup by the Company is a defined benefit plan in view of the Company's obligation to meet shortfall, if any, on account of interest.

Unlike previous year, consequent upon issuance of Guidance Note by the Institute of Actuaries of India in 2011-12, actuarial valuation of provident fund as at the year end has been done under the Projected Unit Credit Method and the resultant charge/gain has been recognised in the accounts. Information pertaining to the year required to be considered as per AS 15 in this regard is also disclosed. However, in the absence of a Guidance Note from the Institute of Actuaries of India in earlier years, such exercise was not carried out and the related information has not been disclosed in respect of earlier years.

@ Represent accretion to plan assets relating to earlier year communicated by LIC during the year which has been adjusted against gratuity expense recognised in the accounts.

The expected return on plan assets is determined after taking into consideration composition of plan asstes held, assessed risks of asset management, historical results of return on plan assets, company's policies for plan asset management and other relevant factors.

The expenses for the above mentioned benefits have been included and disclosed under the following line items:- Gratuity - under 'Contribution to Provident and other Funds' in Note 25

Provident Fund - under 'Contribution to Provident and other Funds' in Note 25, other than employees' statutory contributions, voluntary contribution etc. which are recovered from their salaries, as included under 'Salaries and Wages' in Note 25 Post Retirement Medical Benefit - under 'Staff Welfare Expenses' in Note 25

5.1 For the Defined Contribution plans amount aggregating Rs 184.05 lakhs (previous year- Rs. 299.22 lakhs) have been recognized as an expense during the year. The Contribution to the defined benefits plan expected to be made by the company during the annual period begining after the balance sheet date is yet to be reasonably determined.

6 Change in Accounting Policy

The Company has exercised the option as set out in paragraph 46A of Accounting Standard 11 on "The Effects of Changes in Foreign Exchange Rates", pursuant to the notification dated 29th December, 2011. Accordingly, exchange differences arising on restatement of long term foreign currency loans obtained for the purpose of acquisition of depreciable capital assets, which were until previous year being recognized in the Statement of Profit and Loss, is adjusted in the cost of depreciable asset, which would be depreciated over the balance life of the asset.

Had the Company continued to follow the earlier accounting policy, the net foreign exchange loss recognized in the Statement of Profit and Loss would have been higher by Rs. 1205.84 lakhs with corresponding decrease in net profit for the year and Fixed Assets would have been lower to the same extent.

7 For the purpose of these accounts, following methods and rates of depreciation have been used for depreciating the original cost of fixed assets:

(a) Certain items of Plant and Machinery being energy saving devices added during the period ended 31st March, 1987: Under Straight line method at rates specified in Schedule XIV of the Companies Act, 1956.

(b) Other assets added up to 31st March, 1987: Under written down value method at rates specified in Schedule XIV of the Companies Act, 1956.

(c) Additions since 1st April, 1987: Under Straight line method at rates specified in Schedule XIV of the Companies Act, 1956.

8 Based on the valuation reports submitted by the valuers appointed for the purpose, certain items of the Company's fixed assets [viz., Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildings on such Land, Flats, Electrical Installations, Plant and Machinery and Railway Siding] were revalued on 30th November, 1984, on 30th September, 1991 and also on 30th September, 2001 (except Railway Siding) after considering the following factors:

- Estimated current market value pertaining to Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildings on such land and Flats.

- Values of Electrical Installations, Plant and Machinery and Railway Siding (when applicable) based on their current cost of replacement.

- Adjustments for the condition, the standard of maintenance, depreciation up to valuation dates, etc.

The resultant revaluation surplus of Rs.1,011.07 lakhs, Rs.2,994.04 lakhs and Rs. 5,995.27 lakhs arising from the aforesaid revaluations were transferred to Revaluation Reserve in the Company's annual accounts for the years 1983-84, 1990-91 and 2000-01 respectively. Such Revaluation Reserves have however been fully adjusted in earlier years.

9 Depreciation for the year ended 31st March, 2012 on items of fixed assets revalued include an additional charge of Rs. 196.04 lakhs (Previous Year - Rs. 214.22 lakhs) over that calculated on original cost at rates prescribed under Schedule XIV of the Companies Act, 1956 as amended during 1993-94 representing depreciation on the incremental amounts added on revaluation calculated at the rates considered applicable by the valuers.

10 Capital Work in Progress as at 31st March 2012 includes Raw Materials Consumed Rs.15.17 lakhs (Previous Year-1183.24 lakhs, Salaries, Wages and Bonus Rs. 195.65 Lakhs (Previous Year-107.66 lakhs), Contribution to Provident Fund, Super Annuation Fund, Gratuity, Other Funds Rs. 9.88 lakhs (Previous Year-7.24 lakhs), Labour and Staff Welfare Rs. 9.18 lakhs (Previous Year- 7.43 lakhs), Consumption of Stores and spares parts Rs. 14.04 lakhs (Previous Year-17.48 lakhs), Rent Rs. 1.50 lakhs (Previous Year- 8.42 lakhs), Rates and Taxes Rs. 4.55 lakhs (Previous Year-4.09 lakhs), Repairs and Maintenance Rs. 9.84 lakhs (Previous Year-13.61 lakhs), Insurance Rs.4.78 lakhs (Previous Year-9.31 lakhs) incurred on various projects under implementation.

11 Pending completion of the relevant formalities of transfer of certain assets acquired pursuant to the Scheme of Amalgamation of Transmission Holdings Limited with the Company in 2001- 2002, such assets remain included in the books of the Company under the name of the transferor company.

12 On exercise of the option to subscribe to the Company's Equity Shares by the holders of 12,50,000 convertible warrants of Rs. 196/- each allotted on 30th April, 2010 pursuant to the approval of the members of the Company in accordance with SEBI Guidelines, 12,50,000 Equity Shares of Rs. 10/- each fully paid up have been issued and allotted on 28th October, 2011 on conversion of said warrants. Consequently, out of the proceeds of Rs. 2,450 lakhs of the Convertible Warrants Rs. 125 lakhs and Rs.2,325 lakhs have been transferred to Share Capital and Securities Premium Account respectively.

13 Rent of Rs. 57.02 lakhs (Previous Year - Rs. 75.07 lakhs) relates to cancellable operating leases taken on or after 1.04.2001. These lease arrangements range from 11 months to 3 years and are primarily in respect of accommodation for offices; warehouses etc. and inter alia include escalation clause and option for renewal.

14 Members of the Company in the Annual General Meeting held on 30th July, 2008 and the Central Government vide its letter dated 15th Nov, 2010 approved payment of commission to Non Executive Directors up to a ceiling of 1% of the net profits of the Company. The Board of Directors in its meeting held on 29th May, 2012 has approved payment of commission up to 5% of the net profits of the Company subject to approval of members in the ensuing Annual General Meeting and of the Central Government as required under section 310 of the Companies Act, 1956. Accordingly, Commission of Rs. 190.43 lakhs in excess of 1% of the net profits is subject to approval of the members and of the Central Government as stated above.

15 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 figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

As at As at 31st March, 2011 31st March, 2010 Rupees in lakhs Rupees in lakhs

1. Contingent liabilities for :

(14.1) Claims against the Company not acknowledged as debts :

- Incomeltax matters pending ( other than matters set aside for reassessment) 245.12 119.95

- Excise and Customs matter etc 49.63 l

(1.2) Outstanding Bank

Guarantees etc. 807.10 716.56

2. Premium on foreign exchange arising from forward exchange contract to be recognised in the accounts of future periods Rs. 183.45 lakhs (Previous year - Rs. 29.00 lakhs).

3. Capital Commitments [(net of advances Rs. 2,660.84 lakhs, (31st March, 2010 - Rs. 2,604.94 lakhs)] not provided for as at 31st March, 2011 are estimated at Rs. 2,390.19 lakhs (31st March, 2010 - Rs. 4,498.24 lakhs).

4. As regards contribution to the provident fund maintained with separate Trust, in keeping with consistent practice, the Company's Actuary has carried out an assessment as to the adequacy of the related Trust Fund for distribution of interest at the rate prescribed by the Government and based on such assessment an amount of Rs 20.34 lakhs ( Previous Year-Nil) towards Shortfall in interest for the year has been provided for by the Company.

5. For the Defined Contribution Plans amounts aggregating Rs 299.22 lakhs( Previous Year-Rs 223.92 lakhs) have been recognized as expense during the year.

The contribution to the Defined Benefit Plans expected to be made by the Company during the annual period beginning after the balance sheet date is yet to be reasonably determined.

6. Segment Reporting

a) Information relating to the two business segments, being Carbon Black and Power has been disclosed as primary segments.

b) Interlsegment transfers being power consumed for manufacture of carbon black are based on price paid for power purchased from external sources.

c) Segment Revenues, Results and Other Information :

7. Pending completion of the relevant formalities of transfer of certain assets acquired pursuant to the Scheme of Amalgamation of Transmission Holdings limited with the Company in 2001l2002, such assets remain included in the books of the Company under the name of the transferor company.

8. In accordance with SEBI Guidelines and Members approval, the Company has allotted 4,964,376 Equity Shares of Rs10 each at a premium of Rs190 per share to the Qualified Institutional Buyers by way of Qualified Institutional Placements on 30th April 2010.Further in keeping with SEBI regulations, dividends( General and Golden Jubilee Year) at the rate of Rs 5 per share for the year ended 31st March 2010 has also been paid on such shares.

9. On 30th April,2010 the Company had allotted on a preferential basis to certain companies in the promoter group, 1,250,000 Convertible Warrants against receipt of 25% of the consideration of Rs 196/ l per warrant determined in keeping with the related SEBI Guidelines. Each Warrant is convertible into one Equity Share of nominal value of Rs 10/- each at a premium of 186/- per share at the option of the warrant holders within 18 months from the date of allotment in accordance with relevant SEBI Guidelines and the terms of the issue upon payment of balance consideration by the warrant holders. The shares to be allotted would rank pari passu in all respect with the then existing Equity Shares. In case, the conversion option is not exercised before the expiry of the period allowed for such conversion 25% of the consideration received as aforesaid shall be forfeited.

10. Expenses are after adjustment of amounts reimbursed to or by the Company.

11. Interest expenditure is net of Rs. 409.82 lakhs (Previous Year - Rs.226.67 lakhs) being interest earned on Fixed Deposits and Margin Money Deposits and Others [Gross, Tax Deducted at Source Rs.28.21lakhs (31.03.2010 Rs 32.33 lakhs)] and borrowing cost capitalised Rs.851.99 lakhs (31st March, 2010 lRs. 1508.47 lakhs)

12. Rent of Rs. 75.07 lakhs (Previous Year - Rs.116.96 lakhs) relates to cancellable operating leases taken on or after 1.04.2001. These lease arrangements range from 11 months to 3 years and are primarily in respect of accommodation for offices; warehouses etc. and inter alia include escalation clause and option for renewal.

13 Previous Year's figures are regrouped or rearranged where considered necessary to

Signatures to Schedules numbered 1 to 19


Mar 31, 2010

1. Directors Remuneration:

1.1 Shareholders approval will be obtained in the ensuing Annual General Meeting for re-appointment of Managing Director with effect from 23rd October 2009 and remuneration amounting to Rs. 82.57 lakhs paid to him from that date.

1.2 Computation of Net Profit under Section 198 (1)/ 349 of the Companies Act, 1956 had not been provided in the previous year as no commission was payable in view of inadequacy of profit.

2.0 Raw Material Purchase is net of Rs. 1,407.28 lakhs (Previous year - Rs. 1,747.62 lakhs) being benefits under various duty exemption schemes pertaining to exports / deemed exports.

2.1 Research and Development Expenses mainly includes Raw Materials Consumed Rs.355.25 lakhs (Previous year - Rs. 245.40 lakhs), Salaries, Wages and Bonus Rs. 46.91 lakhs (Previous year - Rs.50.33 lakhs), Contribution to Provident Fund, Superannuation Fund and Gratuity Fund Rs.2.71 lakhs (Previous year - Rs. 1.36 lakhs), Labour and Staff Welfare Rs. 1.78 lakhs (Previous year - Rs. 2.03 lakhs) and Miscellaneous Expenses Rs. 0.72 lakhs (Previous year - Rs. 0.46 lakhs).

3. Advances recoverable in cash or in kind or for value to be received of Rs. 2,273.00 lakhs (Previous Year - Rs. 2,148.13 lakhs) includes Rs.0.77 lakh (Previous Year - Rs. 0.93 lakh) due by an Officer of the Company, maximum amount due at any time during the year - Rs.0.93 lakh (Previous Year - Rs.1.09 lakhs).

3.1 For the purpose of these accounts, following methods and rates of depreciation have been used for depreciating the original cost of fixed assets:

(a) Certain items of Plant and Machinery being energy saving devices added during the period ended 31st March, 1987: Under Straight line method at rates specified in Schedule XIV of the Companies Act, 1956.

(b) Other assets added up to 31 st March, 1987: Under written down value method at rates specified in Schedule XIV of the Companies Act, 1956.

(c) Additions since 1st April, 1987: Under Straight line method at rates specified in Schedule XIV of the Companies Act, 1956.

4.0 Based on the valuation reports submitted by the valuers appointed for the purpose, certain items of the Companys fixed assets [viz., Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildings on such Land, Flats, Electrical Installations, Plant and Machinery and Railway Siding] were revalued on 30th November, 1984, on 30th September, 1991 and also on 30th September, 2001 (except Railway Siding) after considering the following factors:

- estimated current market value pertaining to Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildings on such land and Flats

- Values of Electrical Installations, Plant and Machinery and Railway Siding (when applicable) based on their current cost of replacement

- Adjustments for the condition, the standard of maintenance, depreciation up to valuation dates, etc.

The resultant revaluation surplus of Rs.1,011.07 lakhs, Rs.2,994.04 lakhs and Rs. 5,995.27 lakhs arising from the aforesaid revaluations were transferred to Revaluation Reserve in the Companys annual accounts for the years 1983-84, 1990-91 and 2000-01 respectively.

4.1 Depreciation for the year ended 31 st March, 2010 on items of fixed assets revalued include an additional charge of Rs. 255.84 lakhs (Previous Year - Rs. 278.33 lakhs) over that calculated on original cost at rates prescribed under Schedule XIV of the Companies Act, 1956 as amended during 1993-94 representing depreciation on the incremental amounts added on revaluation calculated at the rates considered applicable by the valuers.

4.2 Capital Expenditure in Progress includes Capital Advances unsecured, considered good - Rs.2,604.94 lakhs (31 st March, 2009-Rs. 11,105.45 lakhs)

5. According to the letters of undertaking given by the Company to the concerned Financial Institutions, its investments in equity shares of Maple Circuits Limited and Norplex Oak India Limited cannot be pledged, charged or otherwise encumbered or disposed off without their prior consent, during the currency of the loan facilities granted by the Financial Institutions to the said companies.

As at As at 31st March, 2010 31st March, 2009 Rupees in Lakhs Rupees in Lakhs 6. Contingent Liabilities for: (6.1) Claims against the Company not acknowledged as debts: Income-tax matters pending (other than matters set aside for reassessment) 119.95 0.87

(6.2) Outstanding Bank Garentees etc. 716.56 377.20

(6.3) Bills discounted - 1,923.90

(6.4) Guarantees or Counter Guarantees or Counter Indemnity given by the Company: on behalf of bodies corporate and others (other than guarantees which according to legal opinion are no longer enforceable against the Company) - Limit 9.00 9.00 - Outstanding 9.00 9.00

7 Premium on foreign exchange arising from forward exchange contract to be recognised in the accounts of future periods Rs. 29.00 lakhs (Previous year - Rs. 248.30 lakhs).

8. Capital Commitments [net of advances Rs. 2,604.94 lakhs, (31st March, 2009- Rs. 11,105.45 lakhs)] not provided for as at 31st March, 2010 are estimated at Rs. 4,498.24 lakhs (31st March, 2009 - Rs. 10,806.34 lakhs.)

9.0 As regards contribution to the provident fund maintained with separate Trust, the Companys Actuary has certified that the Trust fund is adequate for distribution of interest at the rate currently prescribed by the Government and based on actuarial valuation carried out in terms of revised AS 15 no additional contribution to the fund is required from the Company towards any inadequacy.

9.1 For the Defined Contribution Plans amounts aggregating Rs.223.92 lakhs (Previous Year - Rs. 196.24 Lakhs) have been recognised as expense during the year.

The contribution to the Defined Benefit Plans expected to be made by the Company during the annual period beginning after the balance sheet date is yet to be reasonably determined.

10. Segment Reporting

a) Information relating to the two business segments, being carbon black and power has been disclosed as primary segments.

b) Inter-segment transfers being power consumed for manufacture of carbon black are based on price paid for power purchased from external sources.

c) Segment Revenues, Results and Other Information :

11. Pending completion of the relevant formalities of transfer of certain assets acquired pursuant to the Scheme of Amalgamation of Transmission Holdings Limited with the Company in 2001-2002, such assets remain included in the books of the Company under the name of the transferor company.

12. Expenses are after adjustment of amounts reimbursed to or by the Company.

13. Interest expenditure is net of Rs. 226.67 lakhs (Previous Year - Rs.466.89 lakhs) being interest earned on Fixed Deposits and Margin Money Deposits and Others [Gross, Tax Deducted at Source Rs. 32.33 lakhs (31.03.2009 Rs 104.58 lakhs)] and borrowing cost capitalised of Rs. 1,508.47 lakhs (31st March, 2009 - Rs. 2,938.02 lakhs)

14. Rent of Rs. 116.96 lakhs (Previous Year - Rs. 73.61 lakhs) relates to cancelable operating leases taken on or after 1.04.2001. These lease arrangements range from 11 months to 3 years and are primarily in respect of accommodation for offices; warehouses etc. and inter alia include escalation clause and option for renewal.

15. Commercial operation of 90,000 MT p.a. capacity carbon black plant at Mundra, 30 MW of Co-generation Power Plant at Durgapur and 16 MW of Co-generation power plant at Mundra commenced from 17th October, 2009, 1st April, 2009 and 24th December, 2009 respectively.

16. Previous Years figures have been regrouped or rearranged where considered necessary to make the same comparable with current years figures.

Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X