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Notes to Accounts of PI Industries Ltd.

Mar 31, 2023

a. The difference between the issued and subscribed capital is on account of less number of shares allotted in right issue in earlier years.

b. Terms/ rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of ^1 per share (March 31, 2022 ^ 1 per share). Each holder of Equity Shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except 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.

c. Issue of Shares under employee stock option (ESOP) Scheme

During the year ended March 31, 2023, the Company has issued Nil equity shares (March 31, 2022 Nil), as per exercise price to PII ESOP Trust, set up to administer Employee Stock Option Plan. Out of total equity shares issued to the Trust in previous years, 13,443 equity shares of face value of ^ 1 each (March 31, 2022 33,442 equity shares of face value of ^ 1 each) have been allocated by the Trust to respective employees upon exercise of Stock Option. As on March 31, 2023, 42,378 equity shares of face value of ^ 1 per share (March 31, 2022 55,821 of face value of ^ 1 each) are pending to be allocated to employees upon exercise of Stock Option. (Refer Note 31)

d. Reconciliation of shares outstanding at the beginning and at the end of the reporting perioda. Foreign currency loans includes:

External commercial borrowing from HSBC Bank, Singapore, outstanding as at beginning of the year aggregating Rs. 2,678 million (USD 35.36 million) was repaid in full on January 12, 2023, though the original maturity date of the loan was October 10, 2024. The loan was secured by exclusive charge on movable plant and machinery and building relating to multi purpose plant (MPP) - 10 & 11 of the Company situated at SPM 29/2, Jambusar (Gujarat). HSBC Bank, Singapore has confirmed (vide "No Dues certificate" dated April 24, 2023) that all security provided by Company in connection with the Facility Agreement shall be released and/or discharged. Subsequently, the Company has filed satisfaction of charge with Registrar of Companies on May 03, 2023

c. Loan covenants

Under the terms of the major borrowing facilities, the Company was required to comply with the following financial covenants :

a. the Debt service coverage ratio (DSCR) must be higher than 2 as at year end. [DSCR = (PAT Depreciation Interest expenses Deferred tax Amortization)/ (Interest paid (including interest capitalized) Finance charges paid Long term and short term debt repayments excluding working capital)]

b. Fixed assets coverage ratio (FACR) must be higher than 1.25 as at year end [ Fixed assets coverage ratio = (Hypothecated Movable Fixed Assets (net book value) Immovable assets mortgaged (book value))/ (secured loan outstanding)]

c. External Debt/EBIDTA to be maintained below 2.5 as at year end. [ Total debt or borrowings/ EBIDTA]

d. External gearing to be maintained below 2 as at year end.[ Total debt or borrowings /Tangible net worth ]

The company complied with these ratios till the repayment date. Since there is no loan outstanding at the year end, hence, there are no covenants to be complied with.

d. There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.

e. The borrowings obtained by the company from banks and financial institutions have been applied for the purposes for which such loans were taken. In respect of the term loans which were taken in the previous year, those were applied in the respective year for the purpose for which the loans were obtained.

f. As on the Balance sheet date there is no default in repayment of loans and interest.

g. The Company has borrowings from banks on the basis of security of current assets. The Company has complied with the requirement of filing of quarterly returns/statements of current assets with the banks, as applicable, and these quarterly returns were in agreement with the unaudited books of accounts during the year ended March 31, 2023. However the Company has not filed return or statements for the quarter ended March 31, 2023 with the banks which will be filed subsequent to May 18, 2023, as per due date agreed.

30 EMPLOYEE BENEFITS

The Company participates in defined contribution and benefit schemes, the assets of which are held (where funded) in separately administered funds. For defined contribution schemes the amount charged to the statements of profit or loss is the total of contributions payable in the year.

Provident Fund

In accordance with the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952 (EPF and MP Act), employees are entitled to receive benefits under the Provident Fund. Employers and employees both contribute @12% of wages in contribution accounts. Further, the employers also contribute towards administration of the benefits under the EPF and MP Act. All employees have an option to make additional voluntary contributions as permissible under the Act. These contributions are made to the fund administered and managed by the Employee Provident Fund organization. The Company has no further obligations under the fund managed by the Employee Provident Fund Organization (EPFO) beyond its monthly contributions which are charged to the statements of profit or loss in the period they are incurred. The benefits are paid to employees on their retirement or resignation from the EPFO. Also, refer note 33.

Gratuity Plan

In accordance with the Payment of Gratuity Act of 1972, PI Industries Limited has established a defined benefit plan (the "Gratuity Plan"). The Gratuity Plan provides a lump sum payment to the employees at the time of retirement or resignation (after 5 years of continued services of employment), being an amount based on the respective employee''s last drawn salary and the number of years of employment with the Company. Based on actuarial valuations conducted as at year end, a provision is recognised in full for the benefit obligation over and above the funds held in the Gratuity Plan. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.

Long term compensated absences

The liabilities for compensated absence namely earned and contingency leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit and loss.

a) Defined Contribution Plans: -

The Company has recognised an expense of ^ 177 (Previous Year ^ 164) towards the defined contribution plan

IX Major Categories of plan assets:

The plan assets are managed by the Gratuity Trust formed by the Company. The management of 100% of the funds is entrusted with the Life Insurance Corporation of India, HDFC Standard Life Insurance Company Ltd. and Kotak Mahindra Old Mutual Life Insurance Ltd. Refer Below for major categories of plan assets invested where available.

a) Life Insurance Corporation of India (LIC):- The details of investments maintained by LIC are not available and have therefore not been disclosed.

b) HDFC Standard Life Insurance Company Ltd.:- 31.30% (PY 31.44%) of the Funds are in Defensive Manager Fund and 68.69% (PY 68.55%) of the Funds are in Secure Managed Fund.

c) Kotak Mahindra Old Mutual Life Insurance Ltd. - 44.64% (PY 44.29%) of the Funds are in Kotak Group Bond Fund, 35.43% (PY 35.94%) of the Funds are in Kotak Group Balance Fund and 19.93% (PY 19.77%) of the Funds are in Kotak Group Short Term Bond Fund.

X Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow -

A) Salary Increases- Actual salary increases will increase the Plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - If Plan is funded then the mismatch between assets and liabilities and actual return on assets being lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan''s liability.

D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan''s liability.

C) Long term compensated absences

The provision for long term compensated absences covers the Company''s liability for earned and sick leave, the amount of provision recognised is ^ 144 (March 31, 2022 ^ 137).

31 SHARE BASED PAYMENTS Employee Stock Option Plan

The Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows:

In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company (including subsidiary companies) with an intent to attract and retain talent in the organization. The aforesaid scheme was duly approved by shareholders in its EGM held on January 21, 2011 and is administered through independent trust. The Compensation Committee of the Board has granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.

33 CONTINGENT LIABILITIES

March 31, 2023

March 31, 2022

a. Claims against the company not acknowledged as debt; *

(refer note below)

- Sales Tax

212

44

- Excise Duty

327

327

- Income Tax

521

585

- Custom

126

108

- Other matters, including claims relating to customers, labour and third parties etc.

129

97

Notes: Represents amounts as stated in Demand Order excluding interest.

* Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above as it is determinable only on receipt of the judgements/ decisions pending with various forums / authorities.

The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

"In Company''s assessment the impact of the recent Supreme Court Judgment in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1(33)2019/ Vivekananda Vidya Mandir/284) dated March 20, 2019 and circular No. C-I/1(33)2019/Vivekanand Vidyamandir/717 dated August 28, 2019 issued by the Employees'' Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952 and computation of liability to be done as per provision of Para 2(f) of EPF Scheme, 1952, the aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements".

34 OPERATING SEGMENT

An operating segment is defined as a component of the entity that represents business activities from which it earns revenues and incurs expenses and for which discrete financial information is available. The operating segments are based on the Company''s internal reporting structure and the manner in which operating results are reviewed by the Chief Operating Decision Maker (CODM).

The Company has evaluated the applicability of segment reporting and has concluded that since the Company is operating in the field of Agro Chemicals both in the domestic and export markets and the CODM reviews the overall performance of the agro chemicals business, accordingly the Company has one reportable business segment viz. Agro Chemicals.

I. Revenue:A. Information about product revenues:

The Company is in the business of manufacturing and distribution of Agro Chemicals. The amount of its revenue from external customers broken down by products is shown in the table below:

The fair value of cash and cash equivalents, bank balances other than Cash and cash equivalents, deposits with financial institution, trade receivables, short term loans, contract assets, current financial assets, trade payables, current financial liabilities and borrowings approximate their carrying amount, largely due to the short-term nature of these instruments. Long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Accordingly, the carrying value of such long-term debt approximates fair value. Fair value for security deposits (other than perpetual security deposits) has been presented in the above table. Fair value for all other non-current assets and liabilities is equivalent to the amortised cost, interest rate on them is equivalent to the market rate of interest.

Fair value hierarchy

The table shown above analyses financial instruments carried at fair value, by valuation method. The different levels have been defined below:

Level 1 - This includes financial instruments measured using quoted prices. The mutual funds are valued using closing net assets value (NAV).

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. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

There are no transfers between level 1, level 2 and level 3 during the year.

Valuation technique used to determine fair value:

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices

- the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

The fair values for security deposits (assets & liabilities) were calculated based on present values of cash flows and the discount rates used were adjusted for counterparty or own credit risk. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit.

38 FINANCIAL RISK MANAGEMENTRisk management framework

The Company is exposed to credit risk, liquidity risk and market risk. The Company''s board of directors has the overall responsibility for the management of these risks and is supported by Management Advisory Committee that advises on the appropriate financial risk governance framework. The Company has risk management policies and systems in place which are reviewed regularly to reflect changes in market

conditions and price risk along with the Company''s activities. The Company''s audit committee oversees how management monitors compliance with the financial risk management policies and procedures and reviews the adequacy of risk management framework in relation to the risks faced by the Company.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and impact of hedge accounting in the financial statements.

I. Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation, and arises from the operating activities primarily (trade receivables) and from its financing activities including cash and cash equivalents, deposits with banks, derivatives and other financial instruments. The carrying amount of financial assets represents the maximum credit exposure and is as follows:

Trade and other receivables and contract assets

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate including the past trends on recoverability, ECL provision is considered based on the matrix defined below.

The Company has established a credit policy under which each customer is analyzed individually for creditworthiness before the Company''s credit terms are offered. Credit risk is managed

through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. Credit limits are established for each customer and reviewed periodically. Any sales order exceeding those limits requires approval from the appropriate authority.

There is one customer having revenue of ^ 27,802 (March 31, 2022 ^ 17,435) including an amount of ^ 19,596 and ^ 8,206 (March 31, 2022 ^ 8,692 and ^ 8,743) arising from shipments to United States of America and Japan respectively.

The concentration of credit risk is limited in domestic market due to the fact that the customer base is large and unrelated. The Company''s exports are mainly carried out in countries which have stable economic conditions, where the concentration is relatively higher; however the credit risk is low as the customers have good credit ratings.

The Company computes an allowance for impairment of trade receivables based on a simplified approach, that represents its expected credit losses. The Company uses an allowance matrix to measure the expected credit loss of trade receivables. Loss rates are based on actual credit loss experienced over the past 3 years. These loss rates are adjusted by considering the available, reasonable and supportive forward-looking information.

The following table provides information about the exposure to credit risk and expected credit loss as at 31 March 2023 and 31 March 2022 for both trade receivables and interest & other charges recoverable from customers under the simplified approach:

The exposure to credit risk and expected credit loss on contract assets as at 31 March 2023 and 31 March 2022 is insignificant and hence no loss allowance has been made.

Cash and cash equivalents, deposits with banks, mutual funds and other financial instruments

Credit risk from balances with banks and other financial instruments is managed by Company in accordance with its policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the management and may be updated throughout the year. Company also invests in mutual funds based on the credit ratings, these are reviewed for safety, liquidity and yield on regular basis.

Impairment on cash and cash equivalents, deposits and other financial instruments has been measured on the 12-month expected credit loss basis and reflects the short maturities of the exposures. For financial assets which are long term in nature, the expected credit loss is insignificant.

Accordingly, based on the assessment there is no material allowance in the above financial assets.

Derivatives

The derivatives are entered with banks and financial institution counterparties which have low credit risk based on external credit ratings of counterparties.

II. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation. Due to the dynamic nature of underlying businesses, the Company maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecast of Company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. In addition, the company''s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

III. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimizing the return.

The Company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate risk and market value of its investments. Thus, the Company''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Foreign Currency risk

The company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$ and Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency p). The Company uses forward exchange contracts to hedge its currency risk and are used exclusively for hedging purposes and not for trading and speculative purposes. These forward exchange contracts, carried at fair value, may have varied maturities depending upon the primary host contract requirement and risk management strategy of the Company. The objective of the hedges is to minimize the volatility of the ^ cash flows of highly probable forecast transactions.

The Company''s risk management policy is to hedge around 50% to 100% for first year and balance up to 70% of the net exposure with forward exchange contracts. The remaining exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short term requirements. Hedging decisions are based on rolling forex cash flow statement prepared and reviewed on a monthly basis. Such contracts are designated as cash flow hedges.

The foreign exchange forward contracts are denominated in the same currency as the highly probable future sales transaction; therefore, the hedge ratio is 1:1. The Company''s hedge policy allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective assessments to ensure that an economic relationship exists between the hedged item and the hedged instrument. The Company enters into hedge instruments where the critical terms of hedging instrument are aligned with terms of the hedged item.

Ineffectiveness is recognised on a cash flow hedge where the cumulative change in the value of the hedging instruments exceeds on an absolute basis the change in the value of the hedged item attributable to the hedged risk. Hedge ineffectiveness may arise due to the following:

- the critical terms of the hedging instrument and the hedged item differ (i.e. nominal amounts, timing of the forecast transaction, interest resets change from what was originally estimated), or

- differences arise between the credit risk inherent within the hedged item and the hedging instrument.

*In case of Shareholders, numbers shown above represents no. of shares of face value of Rs. 1 each held.

The Company has entered into above mentioned transactions in ordinary course of business and the Company does not have any relationship with these struck off Companies.

(i) Details of Benami property: No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

(ii) Utilisation of borrowed funds and share premium:

The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including

foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries

(iii) Compliance with number of layers of companies:

The Company has complied with the number of layers prescribed under the Companies Act, 2013.

(iv) Compliance with approved scheme(s) of arrangements:

The Company has entered into a scheme of arrangement which has been accounted for in accordance with the Scheme and applicable accounting standards

(v) Undisclosed income: There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(vi) Details of crypto currency or virtual currency: The

Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(vii) Valuation of PP&E, intangible asset and investment property: The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.

(viii) As at March 31, 2023 , the Company has not granted any loans or advances in the nature of Loans to the promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person which are repayable on demand or without specifying any terms or period of repayment (March 31, 2022: Nil). During the year, the Company had granted Loan of INR 690 million to PI Health Sciences Limited at an interest rate of 9.5%, the entire amount of principal is repayable over the period of 10 years and interest is to be serviced on annual basis. (Also, refer note 35).

(ix) The Company has not been declared as a Wilful Defaulter by any bank or financial institution or government or any government authority.

42. The Company has raised Rs. 20,000 million during the quarter ended 30th September 2020 through Qualified Institutional Placement (QIP) of equity shares. Out of the funds received of Rs.19,750 million (net of expense Rs 250 million), the Company had invested Rs. 865 million during the FY 22-23, in one of its subsidiary PI Health Sciences Limited to commence its business operations. Balance funds of Rs. 18,885 million

received pursuant to QIP remain invested in fixed deposits, liquid and other debt mutual funds (also refer note 45).

43. The goodwill on Isagro and Investment in Jivagro are tested for

impairment annually. The recoverable amount of Goodwill and Investment has been determined from a value in use calculation which require the use of assumptions. The value in use calculation uses cash flow forecasts based on the most recently approved financial budgets and business projections by the management, which cover a period of five years. Key assumptions underlying the value in use calculation are those regarding expected revenues, a post-tax discount rate of 17% per annum. Sales growth projections considers managements'' expectation of market development, current industry trends and post-tax discount rate based on the relevant risks. 4% growth rate has been used to extrapolate the cash flow projections beyond the five-year period of the approved financial budgets. The management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the cash generating unit.

44. FINAL DIVIDEND RECOMMENDED BY BOARD

The Board of Directors in the meeting held on May 18, 2023 have recommended a final dividend for the year ended March 31, 2023 which is subject to the approval of shareholders in the ensuing annual general meeting.

45. EVENTS SUBSEQUENT TO BALANCE SHEET DATE

a) PI Health Sciences Netherlands BV was incorporated on 7th April 2023 as a wholly owned subsidiary of PI Health sciences Limited and PI Health Sciences USA LLC was incorporated on 24th April 2023 as a wholly owned subsidiary of PI Health sciences Netherlands BV.

b) PI Health Sciences Ltd has entered into a share purchase agreement dated 27th April 2023 for the acquisition of 100% shareholding of "Therachem Research Medilab (India) Private Limited" and "Solis Pharmachem Private Limited". Further, PI Health Sciences USA, LLC has entered into an asset purchase agreement dated 27th April 2023 for the acquisition of certain identified assets of Therachem Research Medilab LLC, USA. These agreements are subject to satisfactory completion of conditions precedents as set out in the respective agreement.

c) PI Health Sciences Netherlands BV has entered into a share purchase agreement dated 26th April 2023 for the acquisition of 100% shareholding of "Archimica SPA, Italy". With this, Archimica SPA has become a ''Step down subsidiary'' of the Company w.e.f. 27th April 2023.

There is no impact of these transactions on the financial statements as at March 31, 2023.

These are the notes to the financial statements referred to in our report of even date


Mar 31, 2022

a. The difference between the issued and subscribed capital is on account of less number of shares allotted in right issue in earlier years.

b. Terms/ rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of ^1 per share (March 31, 2021 ^ 1 per share). Each holder of Equity Shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except 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.

c. Issue of Shares under employee stock option (ESOP) Scheme

During the year ended March 31, 2022, the Company has issued Nil equity shares of ^ 1 each (March 31, 2021 4,683 equity shares of ^ 1 each), as per exercise price to PII ESOP Trust, set up to administer Employee Stock Option Plan. Out of total equity shares issued to the

Trust 33,442 equity shares of face value of 3: 1 each (March 31, 2021 64,277 equity shares of face value of 3: 1 each) have been allocated by the Trust to respective employees upon exercise of Stock Option. As on March 31, 2022, 55,821 equity shares of face value of 3: 1 per share (March 31, 2021 89,263 of face value of 3: 1 each) are pending to be allocated to employees upon exercise of Stock Option. (Refer Note 31)

a. Foreign currency loans includes:

External commercial borrowings (ECB) from HSBC Bank, Singapore amounting to USD 35.36 MN (March 31, 2021 USD 45.0 MN) carrying interest rate of 3 months LIBOR plus 1.25% is outstanding as on March 31, 2022. The balance borrowing from HSBC Bank, Singapore is repayable in 11 (Eleven) {(March 31, 2021 14 (Fourteen)} equal quarterly instalments of USD 3.21 MN (March 31, 2021 USD 3.21 MN) each. The maturity date of the loan is October 10, 2024. The loan is secured by exclusive charge on movable plant and machinery and building relating to multi purpose plant (MPP) - 10 & 11 of the Company situated at SPM 29/2, Jambusar (Gujarat) .The loan was taken for the purpose of capital expenditure for two multi purpose plant designated as MPP 10 and MPP 11 at sterling SEZ in Jambusar, District, Gujarat. (refer note 40)

d. Loan covenants

Under the terms of the major borrowing facilities, the group is required to comply with the following financial covenants :

a. the Debt service coverage ratio (DSCR) must be higher than 2. [DSCR = (PAT Depreciation Interest expenses Deferred tax Amortization)/ (Interest paid (including interest capitalized) Finance charges paid Long term and short term debt repayments excluding working capital)]

b. Fixed assets coverage ratio (FACR) must be higher than 1.25 [ Fixed assets coverage ratio = (Hypothecated Movable Fixed Assets (net book value) Immovable assets mortgaged (book value))/ (secured loan outstanding)]

c. External Debt/EBIDTA to be maintained below 2.5. [ Total debt or borrowings/ EBIDTA]

d. External gearing to be maintained below 2.[ Total debt or borrowings /Tangible net worth ]

The Company complied with these ratios throughout the reporting period. As at March 31, 2022 Debt service coverage ratio was 14.25 (March 31, 2021 4.36), Fixed assets coverage ratio was 5.43 (March 31, 2021 4.94), External Debt/EBIDTA was 0.25 (March 31, 2021 at 0.34) and external gearing ratio was 0.05 (March 31, 2021 at 0.07).

e. There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.

f. The borrowings obtained by the Company from banks and financial institutions have been applied for the purposes for which such loans were

taken. In respect of the term loans which were taken in the previous year, those were applied in the respective year for the purpose for which the loans were obtained.

g. As on the Balance sheet date there is no default in repayment of loans and interest.

h. The Company has borrowings from banks on the basis of security of current assets. The Company has complied with the requirement of filing of monthly/ quarterly returns/statements of current assets with the banks, as applicable, and these returns were in agreement with the books of accounts for the year ended March 31, 2022.

(i) Long term compensated absencesThe long term compensated absences cover the Company''s liability for earned leave which are classified as other long-term benefits.

The entire amount of provision of ^ 137 is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However based on past experience, the Company does not expect all employees to avail the full amount of accrued leave or require payment for such leave within next 12 months.

(ii) Information about provisions for legal claims

(a) Government of Rajasthan issued a notification resulting into an excise liability of ^ 4 (March 31, 2021: ^ 4 ). The Company has filed writ against the notification and has furnished fixed deposit against the said liability. The case is pending before Honourable Rajasthan High Court.

(b) An objection was raised by the excise department on classification of one of the sale product resulting in demand of differential excise duty. The Company filed an appeal against the order. As on March 31, 2022 provision for excise duty is Rs. 128 (March 31, 2021 Rs.128) . Case is pending before Tribunal of Excise & Customs, Ahmedabad.

(c) An objection was raised by the custom department on classification of one of the imported raw materials resulting in demand of differential custom duty. The Company filed an appeal against the order and is clearing the goods after furnishing of bank guarantee for differential duty against each import of such raw material. As on March 31, 2022 total differential custom duty demand is Nil (March 31, 2021: ^ 132 ). During the year, the case has been decided in favour of the Company.

30 EMPLOYEE BENEFITS

The Company participates in defined contribution and benefit schemes, the assets of which are held (where funded) in separately administered funds. For defined contribution schemes the amount charged to the statements of profit or loss is the total of contributions payable in the year.

Provident Fund

In accordance with the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952 (EPF and MP Act), employees are entitled to receive benefits under the Provident Fund. Employers and employees both contribute @12% of wages in contribution accounts. Further, the employers also contribute towards administration of the benefits under the EPF and MP Act. All employees have an option to make additional voluntary contributions as permissible under the Act. These contributions are made to the fund administered and managed by the Employee Provident Fund organization. The Company has no further obligations under the fund managed by the Employee Provident Fund Organization (EPFO) beyond its monthly contributions which are charged to the statements of profit or loss in the period they are incurred. The benefits are paid to employees on their retirement or resignation from the EPFO. Also, refer note 33.

Gratuity Plan

In accordance with the Payment of Gratuity Act of 1972, PI Industries Limited has established a defined benefit plan (the "Gratuity Plan"). The Gratuity Plan provides a lump sum payment to the employees at the time of retirement or resignation (after 5 years of continued services of employment), being an amount based on the respective employee''s last drawn salary and the number of years of employment with the Company. Based on actuarial valuations conducted as at year end, a provision is recognised in full for the benefit obligation over and above the funds held in the Gratuity Plan. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.

Long term compensated absences

The liabilities for compensated absence namely earned and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit and loss.

a) Defined Contribution Plans: -

The Company has recognised an expense of ^ 164 (Previous Year ^ 147) towards the defined contribution plan

IX Major Categories of plan assets:

The plan assets are managed by the Gratuity Trust formed by the Company. The management of 100% of the funds is entrusted with

the Life Insurance Corporation of India, HDFC Standard Life Insurance Company Ltd. and Kotak Mahindra Old Mutual Life Insurance Ltd.

Refer Below for major categories of plan assets invested where available.

a) Life Insurance Corporation of India (LIC) :- The details of investments maintained by LIC are not available and have therefore not been disclosed.

b) HDFC Standard Life Insurance Company Ltd.:- 31.44% (PY 30.67%) of the Funds are in Defensive Manager Fund and 68.55% (PY 69.33%) of the Funds are in Secure Managed Fund.

c) Kotak Mahindra Old Mutual Life Insurance Ltd. :- 44.29% (PY 51.14%) of the Funds are in Kotak Group Bond Fund, 35.94% (PY 37.10%) of the Funds are in Kotak Group Balance Fund and 19.77% (PY 11.76%) of the Funds are in Kotak Group Short Term Bond Fund

X Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various

risks as follow -

A) Salary Increases- Actual salary increases will increase the Plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - If Plan is funded then the mismatch between assets and liabilities and actual return on assets being lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan''s liability.

D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan''s liability.

c) Long term compensated absences

The provision for long term compensated absences covers the Company''s liability for earned and sick leave, the amount of provision recognised is ^ 137 (March 31, 2021 ^ 181).

31 share based payments

employee Stock Option Plan

The Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows::

In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company (including subsidiary companies) with an intent to attract and retain talent in the organization. The aforesaid scheme was duly approved by shareholders in its EGM held on January 21, 2011 and is administered through independent trust. The Compensation Committee of the Board has granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.

(i) Represents amounts as stated in Demand Order excluding interest and penalty

* Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above as it is determinable only on receipt of the judgements/ decisions pending with various forums / authorities.

The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

"In Company''s assessment the impact of the recent Supreme Court Judgment in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 and circular No. C-I/1(33)2019/Vivekanand Vidyamandir/717 dated August 28, 2019 issued by the Employees'' Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952 and computation of liability to be done as per provision of Para 2(f) of EPF Scheme, 1952, the aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements".

34 OPERATING SEGMENT

An operating segment is defined as a component of the entity that represents business activities from which it earns revenues and incurs expenses and for which discrete financial information is available. The operating segments are based on the Company''s internal reporting structure and the manner in which operating results are reviewed by the Chief Operating Decision Maker (CODM).

The Company has evaluated the applicability of segment reporting and has concluded that since the Company is operating in the field of Agro Chemicals both in the domestic and export markets and the CODM reviews the overall performance of the agro chemicals business, accordingly the Company has one reportable business segment viz. Agro Chemicals.

c) Terms and conditions of transactions with related parties

The sales and purchases / services rendered to and from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2021: ^ Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

B. 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 measured 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. An explanation of each level follows underneath the table.

The fair value of cash and cash equivalents, bank balances other than Cash and cash equivalents, deposits with financial institution, trade receivables, short term loans, contract assets, current financial assets, trade payables, current financial liabilities and borrowings approximate their carrying amount, largely due to the short-term nature of these instruments. Long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Accordingly, the carrying value of such long-term debt approximates fair value. Fair value for security deposits (other than perpetual security deposits) has been presented in the above table. Fair value for all other non-current assets and liabilities is equivalent to the amortised cost, interest rate on them is equivalent to the market rate of interest.

Fair value hierarchy

The table shown above analyses financial instruments carried at fair value, by valuation method. The different levels have been defined below:

Level 1 - This includes financial instruments measured using quoted prices. The mutual funds are valued using closing net assets value (NAV).

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. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

There are no transfers between level 1, level 2 and level 3 during the year.

Valuation technique used to determine fair value:

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices

- the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

The fair values for security deposits (assets & liabilities) were calculated based on present values of cash flows and the discount rates used were adjusted for counterparty or own credit risk. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit.

38 FINANCIAL RISK MANAGEMENTRisk management framework

The Company is exposed to credit risk, liquidity risk and market risk. The Company''s board of Directors has the overall responsibility for the management of these risks and is supported by Management Advisory Committee that advises on the appropriate financial risk governance framework. The Company has risk management policies and systems in place which are reviewed regularly to reflect changes in market conditions and price risk along with the Company''s activities. The Company''s audit committee oversees how management monitors compliance with the financial risk management policies and procedures and reviews the adequacy of risk management framework in relation to the risks faced by the Company.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and impact of hedge accounting in the financial statements.

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation, and arises from the operating activities primarily (trade receivables) and from its financing activities including cash and cash equivalents, deposits with banks, derivatives and other financial instruments. The carrying amount of financial assets represents the maximum credit exposure and is as follows:

Trade and other receivables and contract assets

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Company has established a credit policy under which each customer is analyzed individually for creditworthiness before the Company''s credit terms are offered. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. Credit limits are established for each customer and reviewed periodically. Any sales order exceeding those limits requires approval from the appropriate authority. There is one customer having revenue of ^ 17,435 (March 31, 2021 ^ 15,743) including an amount of ^ 8,692 and ^ 8,743 (March 31, 2021 ^ 9,984 and ^ 5,759) arising from shipments to United States of America and Japan respectively.

The concentration of credit risk is limited in domestic market due to the fact that the customer base is large and unrelated. The Company''s exports are mainly carried out in countries which have stable economic conditions, where the concentration is relatively higher; however the credit risk is low as the customers have good credit ratings.

The Company computes an allowance for impairment of trade receivables based on a simplified approach, that represents its expected credit losses. The Company uses an allowance matrix to measure the expected credit loss of trade receivables. Loss rates are based on actual credit loss experienced over the past 3 years. These loss rates are adjusted by considering the available, reasonable and supportive forward-looking information like limited impacted of COVID - 19 on domestic trade receivable engaged in exempted areas of agricultural activities.

The following table provides information about the exposure to credit risk and expected credit loss:

Cash and cash equivalents, deposits with banks, mutual funds and other financial instruments

Credit risk from balances with banks and other financial instruments is managed by Company in accordance with its policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the management and may be updated throughout the year. Company also invests in mutual funds based on the credit ratings, these are reviewed for safety, liquidity and yield on regular basis.

Impairment on cash and cash equivalents, deposits and other financial instruments has been measured on the 12-month expected credit loss basis and reflects the short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk based on external credit ratings of counterparties.

Based on the assessment there is no impairment in the above financial assets.

Derivatives

The derivatives are entered with banks and financial institution counterparties which have low credit risk based on external credit ratings of counterparties.

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation. Due to the dynamic nature of underlying businesses, the Company maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecast of Company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. The Company does not anticipate material impact on future cash flows as agricultural activities are exempted from COVID -19 related travel restrictions. In addition, the Company''s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimizing the return.

The Company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate risk and market value of its investments. Thus, the Company''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Foreign Currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$ and Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (^). The Company uses forward exchange contracts to hedge its currency risk and are used exclusively for hedging purposes and not for trading and speculative purposes. These forward exchange contracts, carried at fair value, may have varied maturities depending upon the primary host contract requirement and risk management strategy of the Company. The objective of the hedges is to minimize the volatility of the ^ cash flows of highly probable forecast transactions.

The Company''s risk management policy is to hedge around 50% to 100% for first year and balance up to 70% of the net exposure with forward exchange contracts. The remaining exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short term requirements. Hedging decisions are based on rolling forex cash flow statement prepared and reviewed on a monthly basis. Such contracts are designated as cash flow hedges.

The foreign exchange forward contracts are denominated in the same currency as the highly probable future sales transaction; therefore, the hedge ratio is 1:1. The Company''s hedge policy allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective assessments to ensure that an economic relationship exists between the hedged item and the hedged instrument. The Company enters into hedge instruments where the critical terms of hedging instrument are aligned with terms of the hedged item.

Ineffectiveness is recognised on a cash flow hedge where the cumulative change in the value of the hedging instruments exceeds on an absolute basis the change in the value of the hedged item attributable to the hedged risk. Hedge ineffectiveness may arise due to the following:

- the critical terms of the hedging instrument and the hedged item differ (i.e. nominal amounts, timing of the forecast transaction, interest resets change from what was originally estimated), or

- differences arise between the credit risk inherent within the hedged item and the hedging instrument.

Interest rate risk

The Company''s main interest rate risk arises from long term foreign currency and working capital borrowings at variable rates. Company''s investments are primarily in fixed deposits which are short term in nature and do not expose it to interest rate risk. The Company regularly evaluates the interest rate hedging requirement to align with interest rate views and defined risk appetite, in order to ensure most cost-effective interest rate risk management.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

IV. Price risk

The Company''s exposure to price risk arises from investment in mutual funds and classified in the balance sheet as fair value through profit and loss. Mutual fund 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. However, due to very short tenor of the underlying portfolio in the liquid schemes, these do not pose any significant price risk. Company reviews these mutual fund investments based on safety, liquidity and yield on regular basis.

(d). Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee against US dollars at March 31 would have affected the measurement of foreign forward exchange contract designated as cash flow hedges and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. A 5% increase or decrease is used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign currency rate.

39 CAPITAL MANAGEMENT

The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The primary objective of the Company''s Capital management is to maximise shareholder''s value. The Company manages its capital and makes adjustment to it in light of the changes in economic and market conditions.

The Company has entered into above mentioned transactions in ordinary course of business and the Company does not have any relationship with these struck off Companies.

(ii) Details of Benami property: No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

(iii) Utilisation of borrowed funds and share premium:

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

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries

(iv) Compliance with number of layers of companies: The Company has complied with the number of layers prescribed under the Companies Act, 2013.

(v) Compliance with approved scheme(s) of arrangements: The Company has entered into a scheme of arrangement which has been accounted for in accordance with the Scheme and applicable accounting standards. The effect of the scheme of arrangement is disclosed in note 43.

(vi) undisclosed income: There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(vii) Details of crypto currency or virtual currency: The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(viii) Valuation of PP&E, intangible asset and investment property: The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.

(ix) As at March 31, 2022 , the Company has not granted any loans or advances in the nature of Loans to the promoters, Directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person which are repayable on demand or without specifying any terms or period of repayment (March 31, 2021: Nil). During the year, the Company had granted Loan of INR 27 million to PI Health Sciences Private Limited at interest rate of G SEC 0.38%, the entire amount of principal and interest was repaid within FY21-22. (Also, refer note 35).

(x) The Company has not been declared as a Wilful Defaulter by any bank or financial institution or government or any government authority.

42. The Company had raised Rs. 20,000 million during the FY 20-21 through Qualified Institutional Placement (QIP) of equity shares. The Company had issued 13,605,442 equity shares of face value of Rs. 1 each at a price of Rs. 1,470 per Equity Share, including a premium of Rs. 1,469 per Equity Share. Funds received pursuant to QIP (net of expense Rs. 250 million) remain invested in fixed deposits, liquid and other debt mutual funds.

43. The Hon''ble National Company Law Tribunal (NCLT), vide its order dated December 6, 2021, has approved the scheme of merger (''Scheme'') of Isagro (Asia) Agrochemicals Private Limited (hereinafter referred as ''Isagro'') with the Company, the appointed date being December 27, 2019. Isagro was engaged in manufacturing of agro chemicals, technical grade pesticides and formulations.

Consequently, the corresponding figures for the previous year have been restated based on the audited financial statements of the Company and its subsidiary to give effect of the merger in these financial statements in accordance with the Scheme and also IND AS 103, Business Combination and other applicable accounting standards.

Since this is a merger of a wholly owned subsidiary, there was no issue of shares or any other considerations.

44. The Company will provide necessary financial support to its wholly owned subsidiary PI Fermachem Private Limited and PI Bioferma Private limited as and when needed.

45. (a) The goodwill is tested for impairment annually. The recoverable amount of Goodwill has been determined from a value in use calculation

which require the use of assumptions. The value in use calculation uses cash flow forecasts based on the most recently approved financial budgets and business projections by the management, which cover a period of five years. Key assumptions underlying the value in use calculation are those regarding expected revenues, a post-tax discount rate of 16% per annum. Sales growth projections considers managements'' expectation of market development, current industry trends and post-tax discount rate based on the relevant risks. 4% growth rate has been used to extrapolate the cash flow projections beyond the five-year period of the approved financial budgets. The management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the cash generating unit.

(b) The investment in Jivagro Limited is tested for impairment annually. The recoverable amount of Goodwill has been determined from a value in use calculation which require the use of assumptions. The value in use calculation uses cash flow forecasts based on the most recently approved financial budgets and business projections by the management, which cover a period of five years. Key assumptions underlying the value in use calculation are those regarding expected revenues, a post-tax discount rate of 15% per annum. Sales growth projections considers managements'' expectation of market development, current industry trends and post-tax discount rate based on the relevant risks. 4% growth rate has been used to extrapolate the cash flow projections beyond the five-year period of the approved financial budgets. The management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the cash generating unit.

46. EVENTS AFTER REPORTING DATE

The Board of Directors in the meeting held on May 17, 2022 have recommended final dividend for the year ended March 31, 2022 which is subject to the approval of shareholders in the ensuing annual general meeting. Refer note 13(B) for details.

47. Pursuant to amendment in Schedule III to the Companies Act, 2013 by Ministry of Corporate Affairs vide its notification dated March 24, 2021, the comparative figures as disclosed in these financial statements have been regrouped/reclassified, wherever necessary, to make them comparable to current period figures.

These are the notes to the financial statements referred to in our report of even date


Mar 31, 2021

* On December 27,2019, the Company acquired 100% share of Isagro (Asia) Agrochemicals Private Limited ("Isagro") resulting into Isagro becoming subsidiary of the Company.

The Company acquired the total assets amounting to ^ 4,522 (including Cash and Cash equivalents amounting to ^ 87, Current Investments amounting to ^ 1,037, Property Plant and Equipment amounting ^ 750, Inventory amounting to ^ 780 and Debtors amounting to ^ 1079) and Liabilities amounting to ^ 918 (including trade payable to ^ 334) as a part of consideration and balance is attributable towards the Goodwill amounting to ^828 recognised in the consolidated financial statements of the Company towards excess of purchase consideration paid over fair value of net identifiable assets acquired.

The Isagro business is to be recognised such that the domestic retail activities undertaken by Isagro will be transferred to Jivagro Limited and rest of the activities will be merged into PI Industries. The reorganization will be undertaken with effect from the date of acquisition of the Isagro business by PI Industries viz December 27, 2019 through a scheme of reorganization as filed before the National Company Law Tribunal (NCLT).

The Honourable National Company Law Tribunal, (NCLT) Mumbai vide its order dated March 18, 2021 has approved the scheme of demerger of Domestic B2C business of Isagro Asia Agrochemicals to Jivagro Ltd. Certified copy of order has been received on April 06, 2021 and both companies have filed form INC 28 with respective Registrar of Companies on 4th May, 2021 which becomes the effective date of demerger as per the orders passed by the Hon''ble NCLT. As specified in the Scheme of Arrangement, 14,86,29,030 fully paid up equity shares of ^ 10/- shall be issued to shareholders of Isagro (Asia) Agrochemicals Private Limited after filing of the Order with ROC. These equity shares are currently pending allotment.

For the approval of merger of rest of the activities of Isagro with PI Industries Limited, the NCLT order is still awaited as at the signing date of these financials statements.The said demerger does not have any impact on the financial statements of the company.

Basis the individual net assets position on acquisition date (December 27, 2019) for domestic retail business and balance business of Isagro, total acquisition value of ^ 4,432 was split between Jivagro Limited and Isagro (Asia) Agrochemicals Private Limited basis valuation made by an independent valuer.

a. The difference between the issued and subscribed capital is on account of less number of shares allotted in right issue in earlier years.

b. Terms/ rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of ^ 1 per share (March 31, 2020 ^ 1 per share). Each holder of Equity Shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except 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.

c. Issue of Shares under employee stock option (ESOP) Scheme

During the year ended March 31, 2021, the Company has issued 4,683 equity shares of ^ 1 each (March 31, 2020 77,342 equity shares of ^ 1 each), as per exercise price to PII ESOP Trust, set up to administer Employee Stock Option Plan. Out of total equity shares issued to the Trust 64,277 equity shares of face value of ^ 1 each (March 31, 2020 1,59,685 equity shares of face value of ^ 1 each) have been allocated by the Trust to respective employees upon exercise of Stock Option. As on March 31, 2021, 89,263 equity shares of face value of ^ 1 per share (March 31, 2020 1,31,036 of face value of ^ 1 each) are pending to be allocated to employees upon exercise of Stock Option. (Refer Note 31)

(i) ''External commercial borrowings (ECB) from HSBC Bank, Singapore amounting to USD 45.0 MN (March 31, 2020 USD 30.0 MN) (drawn) carrying interest rate of 3 months LIBOR plus 1.25% is outstanding as on March 31, 2021.The borrowing from HSBC Bank, Singapore are repayable in 14 (fourteen) equal quarterly instalments of USD 3.21 MN (March 31, 2020 USD 4.14 MN) each. The maturity date of the loan is October 10, 2024. The loan is secured by exclusive charge on movable plant and machinery and building relating to multi purpose plant (MPP) - 10 & 11 of the Company situated at SPM 29/2, Jambusar (Gujarat) .The loan was taken for the purpose of capital expenditure for two multi purpose plant designated as MPP 10 and MPP 11 at sterling Multi Product SEZ in Jambusar, District, Gujarat. (refer note 40)

(ii) ''External commercial borrowings (ECB) from HSBC Bank, Mauritius amounting to USD Nil (March 31, 2020 USD 1.42 MN) is outstanding as on March 31, 2021.The maturity date of the loan was May 26, 2020 and has been fully repaid.The loan was secured by exclusive charge on movable plant and machinery & building relating to multi purpose plant (MPP) - 6 &7 of the Company situated at SPM 28, Jambusar (Gujarat). The loan was taken for the purpose of capital expenditure for two multi purpose plant designated as MPP 6 and MPP 7 at sterling Multi Product SEZ in Jambusar, District, Gujarat. (refer note 40).

(iii) ''Rupee Term Loan from Citicorp Finance (India) Limited ("CFIL") amounting to 3: Nil (March 31, 2020 3: 1,740) is outstanding as on March 31, 2021.The maturity date of the loan was December 31, 2022, however the Company has fully repaid the loan during the year.The loan was secured by exclusive charge on moveable fixed assets of multi purpose plant (MPP) 8 and under construction Multi purpose plant (MPP) 9 of the Company situated at SPM 29/2, Jambusar (Gujarat). The purpose of Loan was reimbursement of capital expenditure at various manufacturing facility in FY 2019 and H1 FY 2020.(refer note 40).

As on the Balance sheet date there is no default in repayment of loans and interest.

d. Loan covenants

Under the terms of the major borrowing facilities, the group is required to comply with the following financial covenants :

a. the Debt service coverage ratio (DSCR) must be higher than 2. [DSCR = (PAT Depreciation Interest expenses Deferred tax Amortization)/ (Interest paid (including interest capitalized) Finance charges paid Long term and short term debt repayments excluding working capital)]

b. Fixed assets coverage ratio (FACR) must be higher than 1.25 [ Fixed assets coverage ratio = (Hypothecated Movable Fixed Assets (net book value) Immovable assets mortgaged (book value))/ (secured loan outstanding)]

c. External Debt/EBIDTA to be maintained below 2.5. [ Total debt or borrowings/ EBIDTA]

d. External gearing to be maintained below 2.[ Total debt or borrowings /Tangible net worth ]

The company complied with these ratios throughout the reporting period. As at March 31, 2021 Debt service coverage ratio was 4.35 (March 31, 2020 10.72), Fixed assets coverage ratio was 4.94 (March 31, 2020 3.44), External Debt/EBIDTA was 0.34 (March 31, 2020 at 0.76) and external gearing ratio was 0.07 (March 31, 2020 at 0.22).

(i) Long term compensated absences

The long term compensated absences cover the Company''s liability for earned leave which are classified as other long-term benefits.

The entire amount of provision of ^ 180 is presented as current, since the company does not have an unconditional right to defer settlement for any of these obligations. However based on past experience, the company does not expect all employees to avail the full amount of accured leave or require payment for such leave within next 12 months.

(i) Information about provisions for legal claims

(a) An objection was raised by the custom department on classification of one of the imported raw materials resulting in demand of differential custom duty. The Company filed an appeal against the order and is clearing the goods after furnishing of bank guarantee for differential duty against each import of such raw material. As on March 31, 2021 total differential custom duty demand is ^ 132 (March 31, 2020: ^ 128 ). Case is pending before Assistant Commissioner of Customs, Mumbai.

(b) Government of Rajasthan issued a notification resulting into an excise liability of ^ 4 (March 31, 2020: ^ 4 ). The Company has filed writ against the notification and has furnished fixed deposit against the said liability. The case is pending before Honorable Rajasthan High Court.

30 EMPLOYEE BENEFITS

The Company participates in defined contribution and benefit schemes, the assets of which are held (where funded) in separately administered funds. For defined contribution schemes the amount charged to the statements of profit or loss is the total of contributions payable in the year.

Provident Fund

In accordance with the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952 (EPF and MP Act), employees are entitled to receive benefits under the Provident Fund. Employers and employees both contribute @12% of wages in contribution accounts. Further, the employers also contribute towards administration of the benefits under the EPF and MP Act. All employees have an option to make additional voluntary contributions as permissible under the Act. These contributions are made to the fund administered and managed by the Employee Provident Fund organization. The Company has no further obligations under the fund managed by the Employee Provident Fund Organization (EPFO) beyond its monthly contributions which are charged to the statements of profit or loss in the period they are incurred. The benefits are paid to employees on their retirement or resignation from the EPFO. Also, refer note 33.

Gratuity Plan

In accordance with the Payment of Gratuity Act of 1972, PI Industries Limited has established a defined benefit plan (the "Gratuity Plan"). The Gratuity Plan provides a lump sum payment to the employees at the time of retirement or resignation (after 5 years of continued services of employment), being an amount based on the respective employee''s last drawn salary and the number of years of employment with the Company. Based on actuarial valuations conducted as at year end, a provision is recognised in full for the benefit obligation over and above the funds held in the Gratuity Plan. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.

Long term compensated absences

The liabilities for compensated absence namely earned and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit and loss.

a) Defined Contribution Plans: -

The Company has recognised an expense of ^ 139 (Previous Year ^ 131) towards the defined contribution plan.

IX Major categories of plan assets :

The plan assets are managed by the Gratuity Trust formed by the Company. The management of 100% of the funds is entrusted with the Life Insurance Corporation of India, HDFC Standard Life Insurance Company Ltd. and Kotak Mahindra Old Mutual Life Insurance Ltd. Refer Below for major categories of plan assets invested where available :

a) Life Insurance Corporation of India (LIC) :- The details of investments maintained by LIC are not available and have therefore not been disclosed.

b) HDFC Standard Life Insurance Company Ltd.:- 30.67% (PY 28.19%) of the Funds are in Defensive Manager Fund and 69.33% (PY 71.81%) of the Funds are in Secure Managed Fund.

c) Kotak Mahindra Old Mutual Life Insurance Ltd. :- 51.14% (PY 55.77%) of the Funds are in Kotak Group Bond Fund, 37.10% (PY 31.17%) of the Funds are in Kotak Group Balance Fund and 11.76% (PY 13.06%) of the Funds are in Kotak Group Short Term Bond Fund.

X Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow -

A) Salary Increases- Actual salary increases will increase the Plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - If Plan is funded then the mismatch between assets and liabilities and actual return on assets being lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan''s liability.

D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan''s liability.

c) Long term compensated absences

The provision for long term compensated absences covers the Company''s liability for earned and sick leave, the amount of provision recognised is ^ 180 (March 31, 2020 ^ 152).

31 SHARE BASED PAYMENTSEmployee Stock Option Plan

The Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows:

In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company (including subsidiary companies) with an intent to attract and retain talent in the organization. The aforesaid scheme was duly approved by shareholders in its EGM held on January 21, 2011 and is administered through independent trust. The Compensation Committee of the Board has granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.

(i) Represents amounts as stated in Demand Order excluding interest and penalty

* Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above as it is determinable only on receipt of the judgements/ decisions pending with various forums / authorities.

The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

"In Company''s assessment the impact of the recent Supreme Court Judgment in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 and circular No. C-I/1(33)2019/Vivekanand Vidyamandir/717 dated August 28, 2019 issued by the Employees'' Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952 and computation of liability to be done as per provision of Para 2(f) of EPF Scheme, 1952, the aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements".

34 OPERATING SEGMENT

An operating segment is defined as a component of the entity that represents business activities from which it earns revenues and incurs expenses and for which discrete financial information is available. The operating segments are based on the Company''s internal reporting structure and the manner in which operating results are reviewed by the Chief Operating Decision Maker (CODM).

The Company has evaluated the applicability of segment reporting and has concluded that since the Company is operating in the field of Agro Chemicals both in the domestic and export markets and the CODM reviews the overall performance of the agro chemicals business, accordingly the Company has one reportable business segment viz. Agro Chemicals.

c) Terms and conditions of transactions with related parties

The sales and purchases / services rendered to and from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2021, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2020: ^ Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

B. 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 measured 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. An explanation of each level follows underneath the table.

The fair value of cash and cash equivalents, bank balances other than Cash and cash equivalents, trade receivables, short term loans, contract assets, current financial assets, trade payables, current financial liabilities and borrowings approximate their carrying amount, largely due to the short-term nature of these instruments. Long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Accordingly, the carrying value of such long-term debt approximates fair value. Fair value for security deposits (other than perpetual security deposits) has been presented in the above table. Fair value for all other non-current assets and liabilities is equivalent to the amortised cost, interest rate on them is equivalent to the market rate of interest.

Fair value hierarchy

The table shown above analyses financial instruments carried at fair value, by valuation method. The different levels have been defined below:

Level 1 - This includes financial instruments measured using quoted prices. The mutual funds are valued using closing net assets value (NAV).

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. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

There are no transfers between level 1, level 2 and level 3 during the year.

Valuation technique used to determine fair value:

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices

- the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

The fair values for security deposits (assets & liabilities) were calculated based on present values of cash flows and the discount rates used were adjusted for counterparty or own credit risk. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit.

38 FINANCIAL RISK MANAGEMENTRisk management framework

The Company is exposed to credit risk, liquidity risk and market risk. The Company''s board of directors has the overall responsibility for the management of these risks and is supported by Management Advisory Committee that advises on the appropriate financial risk governance framework. The Company has risk management policies and systems in place which are reviewed regularly to reflect changes in market conditions and price risk along with the Company''s activities. The Company''s audit committee oversees how management monitors compliance with the financial risk management policies and procedures and reviews the adequacy of risk management framework in relation to the risks faced by the Company.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and impact of hedge accounting in the financial statements.

I. Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation, and arises from the operating activities primarily (trade receivables) and from its financing activities including cash and cash equivalents, deposits with banks, derivatives and other financial instruments. The carrying amount of financial assets represents the maximum credit exposure and is as follows:

trade and other receivables and contract assets

he Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

he Company has established a credit policy under which each customer is analyzed individually for creditworthiness before the Company''s credit terms are offered. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. Credit limits are established for each customer and reviewed periodically. Any sales order exceeding those limits requires approval from the appropriate authority. There is one customer having revenue of ^ 15,743 (March 31, 2020 ^ 12,353) including an amount of ^ 9,984 and ^ 5,759 (March 31, 2020 ^ 7,039 and ^ 5,314) arising from shipments to United States of America and Japan respectively.

The concentration of credit risk is limited in domestic market due to the fact that the customer base is large and unrelated. The Company''s exports are mainly carried out in countries which have stable economic conditions, where the concentration is relatively higher; however the credit risk is low as the customers have good credit ratings.

The Company computes an allowance for impairment of trade receivables based on a simplified approach, that represents its expected credit losses. The Company uses an allowance matrix to measure the expected credit loss of trade receivables. Loss rates are based on actual credit loss experienced over the past 3 years. These loss rates are adjusted by considering the available, reasonable and supportive forward-looking information like limited impacted of COVID - 19 on domestic trade receivable engaged in exempted areas of agricultural activities.

The following table provides information about the exposure to credit risk and expected credit loss:

Reconciliation of loss allowance provision - Trade receivables and Interest and Other charges recoverable from customer

Credit risk from balances with banks and other financial instruments is managed by Company in accordance with its policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty

credit limits are reviewed by the management and may be updated throughout the year. Company also invests in mutual funds based on the credit ratings, these are reviewed for safety, liquidity and yield on regular basis.

Impairment on cash and cash equivalents, deposits and other financial instruments has been measured on the 12-month expected credit loss basis and reflects the short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk based on external credit ratings of counterparties.

Based on the assessment there is no impairment in the above financial assets.

Derivatives

The derivatives are entered with banks and financial institution counterparties which have low credit risk based on external credit ratings of counterparties.

Fvnnci ira to rrorlit riel/1

II. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation. Due to the dynamic nature of underlying businesses, the Company maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecast of Company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. The Company does not anticipate material impact on future cash flows as agricultural activities are exempted from COVID -19 related travel restrictions. In addition, the company''s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

(b) Maturities of financial liabilities

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted and include estimated interest payments and exclude the impact of netting agreements.

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimizing the return.

The Company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate risk and market value of its investments. Thus, the Company''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Foreign Currency risk

The company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$ and Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (^). The Company uses forward exchange contracts to hedge its currency risk and are used

exclusively for hedging purposes and not for trading and speculative purposes. These forward exchange contracts, carried at fair value, may have varied maturities depending upon the primary host contract requirement and risk management strategy of the Company. The objective of the hedges is to minimize the volatility of the ^ cash flows of highly probable forecast transactions.

The Company''s risk management policy is to hedge around 50% to 100% for first year and balance up to 70% of the net exposure with forward exchange contracts. The remaining exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short term requirements. Hedging decisions are based on rolling forex cash flow statement prepared and reviewed on a monthly basis. Such contracts are designated as cash flow hedges.

The foreign exchange forward contracts are denominated in the same currency as the highly probable future sales transaction; therefore, the hedge ratio is 1:1. The Company''s hedge policy allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective assessments to ensure that an economic relationship exists between the hedged item and the hedged instrument. The Company enters into hedge instruments where the critical terms of hedging instrument are aligned with terms of the hedged item.

Ineffectiveness is recognised on a cash flow hedge where the cumulative change in the value of the hedging instruments exceeds on an absolute basis the change in the value of the hedged item attributable to the hedged risk. Hedge ineffectiveness may arise due to the following:

- the critical terms of the hedging instrument and the hedged item differ (i.e. nominal amounts, timing of the forecast transaction, interest resets change from what was originally estimated), or

- differences arise between the credit risk inherent within the hedged item and the hedging instrument.

Foreign currency risk exposure -

The currency profile of financial assets and financial liabilities as at March 31, 2021 and March 31, 2020 expressed in Indian Rupees (^) are as below:

The Company''s exposure to price risk arises from investment in mutual funds and classified in the balance sheet as fair value through profit and loss. Mutual fund 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. However, due to very short tenor of the underlying portfolio in the liquid schemes, these do not pose any significant price risk. Company reviews these mutual fund investments based on safety, liquidity and yield on regular basis.

39 CAPITAL MANAGEMENT

The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The primary objective of the Company''s Capital management is to maximise shareholder''s value. The Company manages its capital and makes adjustment to it in light of the changes in economic and market conditions.

41. In management''s evaluation, there is no significant impact of the COVID-19 pandemic on current and future business condition of the Company, liquidity position and cash flow and therefore, no material adjustments are required in the financial statements. Management will continue to closely monitor the situation.

42. The Company has raised ^ 20,000 million in July 2020 through Qualified Institutional Placement (QIP) of equity shares. The Company has issued 13,605,442 equity shares of face value of ^ 1 each at a price of ^ 1,470 per Equity Share, including a premium of ^ 1,469 per Equity Share. Funds received pursuant to QIP ( net of expenses of ^ 250 million) remain invested in fixed deposits amounting to ^ 12,691 million and debt mutual funds of ^ 7,059 (liquid and other short term categories).

43. EVENTS AFTER REPORTING DATE

The Board of Directors in the meeting held on May 18, 2021 have recommended final dividend for the year ended March 31, 2021 which is subject to the approval of shareholders in the ensuing annual general meeting. Refer note 13(B) for details.


Mar 31, 2018

1 CORPORATE INFORMATION

PI Industries Limited (“PI” or “the Company”) is a public limited company domiciled in India and has its registered office at Udaipur. The shares of the Company are listed on National Stock Exchange and Bombay Stock Exchange.

PI is in the field of Agri Sciences having strong presence in both Domestic and Export market. It has three manufacturing facilities in Gujarat and a Research & Development centre at Udaipur.

The registered office of the company is situated at Udaisagar Road, Udaipur - 313 001, Rajasthan, India and the corporate office is situated at 5th Floor, Vipul Square, B-Block, Sushant Lok, Phase-I, Gurgaon - 122 009.

2 BASIS OF PREPARATION

a) Statement of compliance

These financial statements have been prepared in all material aspects, in accordance with the recognition and measurement principles laid down in Indian Accounting Standard (‘Ind AS’) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013 (‘the Act’) and other relevant provisions of the Act to the extent applicable.

These financial statements were authorised for issue by the Board of Directors on May 15, 2018.

b) Basis of measurement

The financial statements have been prepared on an accrual basis and under the historical cost convention, except for the following:

- Certain financial assets and liabilities (including derivative instruments) and contingent considerations are measured at fair value;

- Defined benefit plan assets measured at fair value;

- Share-based payments measured at fair value.

c) Amended standards adopted by the Company

The amendments to IND AS 7 requires disclosure of changes in liabilities arising from financing activities. Refer Note 14 (a).

d) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (“the functional currency”). The financial statements are presented in Indian National Rupee (‘INR’), which is the Company’s functional and presentation currency. All amounts have been presented in lacs with two decimal, unless otherwise indicated.

e) Current or Non current classification

All Assets and Liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services provided and time between the rendering of services and their realisation in cash and cash equivalents, the

Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

f) Use of judgements and estimates

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, the disclosures of contingent liabilities and contingent assets at the date of financial statements, income and expenses during the period. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

Application of accounting policies that require critical accounting estimates and assumption judgements having the most significant effect on the amounts recognised in the financial statements are:

- Measurement of defined benefit obligations;

- Recognition of deferred tax assets & minimum alternative tax credit entitlement;

- Useful life and residual value of Property, plant and equipment and intangible assets;

- Impairment test of financial and non-financial assets including recoverability of expenditure on internally-generated intangible assets;

- Measurement of fair value for share based payments;

- Recognition and measurement of provisions and contingencies.

a. The difference between the issued and subscribed capital is on account of less number of shares allotted in right issue in earlier years.

b. Terms/ rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of Rs.1 per share (March 31, 2017 Rs.1 per share). Each holder of Equity Shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except 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.

c. Issue of Shares under employee stock option (ESOP) Scheme

During the year ended March 31, 2018, the Company has issued 320,694 equity shares of Rs.1 each (March 31, 2017 459,402 equity shares of Rs.1 each), as per exercise price to PII ESOP Trust, set up to administer Employee Stock Option Plan. Out of total equity shares issued to the Trust 233,496 equity shares of face value of Rs.1 each (Previous Year 503,177 equity shares of face value of Rs.1 each) have been allocated by the Trust to respective employees upon exercise of Stock Option from time to time. As on March 31, 2018, 266,748 equity shares of face value of Rs.1 per share (March 31, 2017 184,360 of face value of Rs.1 each) are pending to be allocated to employees upon exercise of Stock Option. (Refer Note 30).

d. Reconciliation of shares outstanding at the beginning and at the end of the reporting period Issued Share Capital

e. Shares reserved for issue under option

Shares reserved for issue under employee stock option scheme is set out in Note 30.

a. Foreign Currency Loans includes:

External commercial borrowings (ECB) from HSBC bank amounting to USD 128.57 lacs carrying interest rate of 3 months LIBOR plus 1.42% is outstanding as on March 31, 2018 and is repayable in balance 9 quarterly instalments of USD 14.29 lacs each. The loan is secured by exclusive charge on movable plant and machinery relating to multi purpose plant (MPP) - 6 &7 of the Company situated at SPM 28, Jambusar (Gujarat). Carrying value of assets pledged as securities is Rs.18,253.25 lacs. Refer note 40.

b. As on the Balance sheet date there is no default in repayment of loans and interest.

(i) Information about provisions for legal claims

(a) An objection was raised by the custom department on classification of one of the imported raw materials resulting in demand of differential custom duty. The Company filed an appeal against the order and is clearing the goods after furnishing of bank guarantee for differential duty against each import of such raw material. As on March 31 , 201 8 total differential custom duty demand is Rs.964.70 lacs (March 31, 2017 Rs.772.10 lacs). Case is pending before Assistant Commissioner of Customs, Mumbai.

(b) Government of Rajasthan issued a notification resulting into an excise liability of Rs.44.92 lacs (March 31, 2017: Rs.44.92 lacs). The Company has filed writ against the notification and has furnished fixed deposit against the said liability. The case is pending before Honourable Rajasthan High Court.

Goods and Service Tax (GST) has been effective from July 01, 2017. Consequently, excise duty, value added tax (VAT), Service tax etc. have been replaced with GST. Until June 30, 2017, ‘Sale of products’ included the amount of excise duty recovered on sales. With effect from July 01, 2017, ‘Sale of products’ excludes the amount of GST recovered. Accordingly, revenue from ‘Sale of Products’ and ‘Revenue from operations’ for the year ended March 31, 2018 are not comparable with those of the previous year.

3 EMPLOYEE BENEFITS

The Company participates in defined contribution and benefit schemes, the assets of which are held (where funded) in separately administered funds. For defined contribution schemes the amount charged to the statements of profit or loss is the total of contributions payable in the year.

Provident fund

In accordance with the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPF and MP Act), employees are entitled to receive benefits under the Provident Fund. Employers and employees both contribute @12% of wages in contribution accounts. Further, the employers also contribute towards administration of the benefits under the EPF and MP Act. All employees have an option to make additional voluntary contributions as permissible under the Act. These contributions are made to the fund administered and managed by the Employee Provident Fund organization. The Company has no further obligations under the fund managed by the Employee Provident Fund Organization (EPFO) beyond its monthly contributions which are charged to the statements of profit or loss in the period they are incurred. The benefits are paid to employees on their retirement or resignation from the EPFO.

Gratuity Plan

In accordance with the Payment of Gratuity Act of 1972, PI Industries Limited has established a defined benefit plan (the “Gratuity Plan”). The Gratuity Plan provides a lump sum payment to the employees at the time of retirement or resignation (after 5 years of continued services of employment), being an amount based on the respective employee’s last drawn salary and the number of years of employment with the Company. Based on actuarial valuations conducted as at year end, a provision is recognised in full for the benefit obligation over and above the funds held in the Gratuity Plan. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.

Long term compensated absences

The liabilities for compensated absence namely earned and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit and loss.

a) Defined Contribution Plans:-

The Company has recognised an expense of Rs.841.35 lacs (Previous Year Rs.788.45 lacs) towards the defined contribution plan.

The plan assets are managed by the Gratuity Trust formed by the Company. The management of 100% of the funds is entrusted with the Life Insurance Corporation of India, HDFC Standard Life Insurance Company Ltd. and Kotak Mahindra Old Mutual Life Insurance Ltd., whose pattern of investment is not available with the Company.

IX Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow-

A) Salary Increases- Actual salary increases will increase the Plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - If Plan is funded then the mismatch between assets and liabilities and actual return on assets being lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate : Reduction in discount rate in subsequent valuations can increase the plan’s liability.

D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan’s liability.

C) Long term compensated absences

The provision for long term compensated absences covers the Company’s liability for earned and sick leave, the amount of provision recognised is Rs.1,033.73 lacs (March 31, 2017 Rs.1,021.88 lacs).

4 SHARE BASED PAYMENTS

Employee Stock Option Plan

The Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows:

In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company (including subsidiary companies) with an intent to attract and retain talent in the organization. The aforesaid scheme was duly approved by shareholders in its EGM held on January 21, 2011 and is administered through independent trust. The Compensation Committee of the Board has granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.

IV. The weighted average market price of options exercised during the year ended March 31, 2018 is Rs.882.59 (March 31, 2017 is Rs.832.44).

V. Method and Assumptions used to estimate the fair value of options granted during the year ended:

The fair value has been calculated using the Black Scholes Option Pricing model

VI. Assumptions:

1 Stock Price: Closing price on National Stock Exchange on the date of grant has been considered

2 Volatility: The historical volatility over the expected life has been considered to calculate the fair value.

3 Risk-free rate of return: The risk-free interest rate being considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero-coupon yield curve for Government Securities

4 Exercise Price: Exercise Price of each specific grant has been considered.

5 Time to Maturity: Time to Maturity / Expected Life of options is the period for which the Company expects the options to be live.

6 Expected divided yield: Expected dividend yield has been calculated based on the dividend declared prior to the date of grant.

Finance lease commitments - As lessee

The Company has entered into finance lease for land in Panoli and Jambusar (Gujarat). Future minimum lease payments under finance leases for all the land is Rs.225 per annum. For land in Panoli company has a renewal option for further 2 periods with 100% increase in lease rentals and for land in Jambusar company has a renewal option upon expiry as may be agreed between the parties or as may be determined by Development Committee from time to time. The amount of minimum lease payments and their present value is not material.

* Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above as it is determinable only on receipt of the judgements/ decisions pending with various forums / authorities.

The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

5 OPERATING SEGMENT

An operating segment is defined as a component of the entity that represents business activities from which it earns revenues and incurs expenses and for which discrete financial information is available. The operating segments are based on the Company’s internal reporting structure and the manner in which operating results are reviewed by the Chief Operating Decision Maker (CODM).

The Company has evaluated the applicability of segment reporting and has concluded that since the Company is operating in the field of Agro Chemicals both in the domestic and export markets and the CODM reviews the overall performance of the agro chemicals business, accordingly the Company has one reportable business segment viz. Agro Chemicals.

I Revenue A. Information about product revenues:

The Company is in the business of manufacturing and distribution of Agro Chemicals. The amount of its revenue from external customers broken down by products is shown in the table below:

6 RELATED PARTY DISCLOSURES

Related party disclosure, as required by Indian Accounting Standard-24, is as below:

a) Nature of Related Party relationship

i Subsidiaries, Associates and Controlled Trust:

(a) PILL Finance and Investment Ltd. Subsidiary

(b) PI Life Science Research Ltd. Subsidiary

(c) PI Japan Co.Ltd. Foreign Subsidiary

(d) Solinnos Agro Sciences Pvt. Ltd. Associate

(e) PI Kumiai Pvt. Ltd. Joint Venture

(f) PII ESOP Trust Controlled Trust

ii Key Management Personnel (KMP) & their relatives with whom transactions have taken place:

(a) Key Management Personnel

Mr. Salil Singhal Chairman & Managing Director (till August 21, 2016)

Mr. Mayank Singhal Managing Director & CEO

Mr. Rajnish Sarna Whole-Time Director

Mr. Narayan K. Seshadri Non-executive Director (Chairman w.e.f. October 5, 2016)

Mr. Pravin K. Laheri Non-executive Director

Ms. Ramni Nirula Non-executive Director

Mr. Ravi Narain Non-executive Director (w.e.f. May 24, 2016)

Mr. Arvind Singhal Non-executive Director (w.e.f. October 5, 2016)

Mr. Anurag Surana Non-executive Director (till May 11, 2016)

Dr. Venkatrao S. Sohoni Non-executive Director (till September 14, 2016)

Dr. Tanjore Soundararajan Balganesh Non-executive Director (w.e.f. May 16, 2017)

(b) Relatives of Key Management Personnel

Mr. Salil Singhal Father of Mr. Mayank Singhal

Ms. Madhu Singhal Mother of Mr. Mayank Singhal

Ms. Pooja Singhal Sister of Mr. Mayank Singhal

iii Entities controlled by KMP with whom transactions have taken place:

(a) PI Foundation

* The above post employment benefits excludes gratuity and compensated absences which cannot be separately identified from the composite amount advised by the actuary.

c) Terms and conditions of transactions with related parties

The sales and purchases / services rendered to and from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2017: ‘ Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

B. 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 measured 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. An explanation of each level follows underneath the table.

The fair value of cash and cash equivalents, bank balances other than Cash and cash equivalents, trade receivables, short term loans, current financial assets, trade payables, current financial liabilities and borrowings approximate their carrying amount, largely due to the short-term nature of these instruments. Long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Accordingly, the carrying value of such long-term debt approximates fair value. Fair value for security deposits (other than perpetual security deposits) has been presented in the above table. Fair value for all other non-current assets and liabilities is equivalent to the amortised cost, interest rate on them is equivalent to the market rate of interest.

Fair value hierarchy

The table shown above analyses financial instruments carried at fair value, by valuation method. The different levels have been defined below:

Level 1 - This includes financial instruments measured using quoted prices. The mutual funds are valued using closing net assets value (NAV).

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. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

There are no transfers between level 1, level 2 and level 3 during the year.

Valuation technique used to determine fair value:

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices

- the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

The fair values for security deposits (assets & liabilities) were calculated based on present values of cash flows and the discount rates used were adjusted for counterparty or own credit risk. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit.

7. FINANCIAL RISK MANAGEMENT

Risk management framework

The Company is exposed to credit risk, liquidity risk and market risk. The Company’s board of directors has the overall responsibility for the management of these risks and is supported by Management Advisory Committee that advises on the appropriate financial risk governance framework. The Company has the risk management policies and systems in place and are reviewed regularly to reflect changes in market conditions and price risk along with Company’s activities. The Company’s audit committee oversees how management monitors compliance with the financial risk management policies and procedures, and reviews the adequacy of risk management framework in relation to the risks faced by the Company.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and impact of hedge accounting in the financial statements.

i. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation, and arises from the operating activities primarily (trade receivables) and from its financing activities including cash and cash equivalents, deposits with banks, derivatives and other financial instruments. The carrying amount of financial assets represents the maximum credit exposure and is as follows:

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Company has established a credit policy under which each customer is analysed individually for creditworthiness before the Company’s credit terms are offered. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. Credit limits are established for each customer and reviewed periodically. Any sales order exceeding those limits require approval from the appropriate authority.

T he concentration of credit risk is limited in domestic market due to the fact that the customer base is large and unrelated. The Company’s exports are mainly carried out in countries which have stable economic conditions, where the concentration is relatively higher, however the credit risk is low as the customers have good credit ratings.

The Company computes an allowance for impairment of trade receivables based on a simplified approach, that represents its expected credit losses. The Company uses an allowance matrix to measure the expected credit loss of trade receivables. Loss rates are based on actual credit loss experienced over the past 3 years. These loss rates are adjusted by considering the available, reasonable and supportive forward looking information.

The following table provides information about the exposure to credit risk and expected credit loss:

Cash and cash equivalents, deposits with banks, mutual funds and other financial instruments

Credit risk from balances with banks and other financial instruments is managed by Company in accordance with its policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the management, and may be updated throughout the year. Company also invests in mutual funds based on the credit ratings, these are reviewed for safety, liquidity and yield on regular basis.

Impairment on cash and cash equivalents, deposits and other financial instruments has been measured on the 12-month expected credit loss basis and reflects the short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk based on external credit ratings of counterparties.

Based on the assessment there is no impairment in the above financial assets.

Derivatives

The derivatives are entered into with banks and financial institution counterparties which have low credit risk based on external credit ratings of counterparties.

Exposure to credit risk:

The gross carrying amount of financial assets, net of impairment losses recognized represent the maximum credit exposure. The maximum exposure to credit risk as at March 31, 2018 and March 31, 2017 was as follows:

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. Due to the dynamic nature of underlying businesses, the Company maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecast of Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. In addition, the company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

(a) Financing arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

(b) Maturities of financial liabilities

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

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return.

The Company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate risk and market value of its investments. Thus the Company’s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Foreign Currency risk

The company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$ and JPY. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR). The Company uses forward exchange contracts to hedge its currency risk and are used exclusively for hedging purposes and not for trading and speculative purposes. These forward exchange contracts, carried at fair value, may have varied maturities depending upon the primary host contract requirement and risk management strategy of the Company. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transactions.

The Company’s risk management policy is to hedge around 50% to 100% of the net exposure with forward exchange contracts. The remaining exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short term requirements. Hedging decisions are based on rolling forex cash flow statement prepared and reviewed on a monthly basis. Such contracts are designated as cash flow hedges.

The foreign exchange forward contracts are denominated in the same currency as the highly probable future sales transaction, therefore the hedge ratio is 1:1. The Company’s hedge policy allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective assessments to ensure that an economic relationship exists between the hedged item and the hedged instrument. The Company enters into hedge instruments where the critical terms of hedging instrument are aligned with terms of the hedged item. Ineffectiveness is recognised on a cash flow hedge where the cumulative change in the value of the hedging instruments exceeds on an absolute basis the change in the value of the hedged item attributable to the hedged risk. Hedge ineffectiveness may arise due to the following:

- the critical terms of the hedging instrument and the hedged item differ (i.e. nominal amounts, timing of the forecast transaction, interest resets changes from what was originally estimated), or

- differences arise between the credit risk inherent within the hedged item and the hedging instrument.

Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee at March 31 would have affected the measurement of financial instruments denominated in foreign currencies and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. Impact of hedging, if any has not been considered here. A 1% increase or decrease is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign currency rate.

The Company’s main interest rate risk arises from long term foreign currency and working capital borrowings at variable rates. Company’s investments are primarily in fixed deposits which are short term in nature and do not expose it to interest rate risk. The Company regularly evaluates the interest rate hedging requirement to align with interest rate views and defined risk appetite, in order to ensure most cost effective interest rate risk management.

Exposure to interest rate risk

The interest rate profile of the Company’s interest-bearing financial instruments as reported to the management of the Company is as follows.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 50 bp in interest rates would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

iv) Price risk

The Company’s exposure to price risk arises from investment in mutual funds and classified in the balance sheet as fair value through profit and loss. Mutual fund 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. However, due to very short tenor of the underlying portfolio in the liquid schemes, these do not pose any significant price risk. Company reviews these mutual fund investments based on safety, liquidity and yield on regular basis.

(d) Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee against US dollars at March 31 would have affected the measurement of foreign forward exchange contract designated as cash flow hedges and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. A 1% increase or decrease is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign currency rate.

8 CAPITAL MANAGEMENT

The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The primary objective of the Company’s Capital management is to maximise shareholder’s value. The Company manages its capital and makes adjustment to it in light of the changes in economic and market conditions.

9 EVENTS AFTER REPORTING DATE

The Board of Directors in the meeting held on May 15, 2018 have recommended final dividend for the year ended March 31, 2018 which is subject to the approval of shareholders in the ensuing annual general meeting. Refer note 13(B) for details.

10 ASSETS PLEDGED AS SECURITY

The carrying amounts of assets pledged as security for borrowings are :

11 NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying Ind AS 115, ‘Revenue from Contracts with Customers’, and consequential amendments to other Ind AS. The amendments are applicable to the Company from April 01, 2018. The Company is currently evaluating the impact of the new standard.


Mar 31, 2017

1 CORPORATE INFORMATION

PI Industries Limited (“PI” or “the Company”) is a public limited company domiciled in India and has its registered office at Udaipur. The shares of the Company are listed on National Stock Exchange and Bombay Stock Exchange.

PI is a leading player in the field of Agri Sciences having strong presence in both Domestic and Export market. It has three manufacturing facilities in Gujrat and a Research & Development centre at Udaipur.

2 BASIS OF PREPARATION

a) Statement of compliance

These financial statements have been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard (‘Ind AS’) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013 (‘the Act’) and other relevant provisions of the Act to the extent applicable.

The financial statement up to year ended March 31, 2016 were prepared in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) and other relevant provisions of the Act.

As these are the Company’s first financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 43.

These financial statements were authorised for issue by the Board of Directors on May 16, 2017.

b) Basis of measurement

The financial statements have been prepared on an accrual basis and under the historical cost convention, except for the following:

- Certain financial assets and liabilities (including derivative instruments) measured at fair value;

- Defined benefit plan assets measured at fair value;

- Share-based payments measured at fair value.

c) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (“the functional currency”). The financial statements are presented in Indian National Rupee (‘INR’), which is the Company’s functional and presentation currency. All amounts have been rounded to the nearest lacs, unless otherwise indicated.

d) Current or Non current classification

All Assets and Liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services provided and time between the rendering of services and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

e) Use of judgements and estimates

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, the disclosures of contingent liabilities and contingent assets at the date of financial statements, income and expenses during the period. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

Application of accounting policies that require critical accounting estimates and assumption judgements having the most significant effect on the amounts recognised in the financial statements are:

- Measurement of defined benefit obligations;

- Recognition of deferred tax assets & MAT credit entitlement;

- Useful life and residual value of Property, plant and equipment and intangible assets;

- Impairment test of financial and non-financial assets including recoverability of expenditure on internally-generated intangible assets;

- Measurement of fair value for share based payments;

- Recognition and measurement of provisions and contingencies.

3 EQUITY SHARE CAPITAL

a. The difference between the issued and subscribed capital is on account of less number of shares allotted in right issue in earlier years.

b. Terms/ rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of Rs.1 per share (Previous Year Rs.1 per share). Each holder of Equity Shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except 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.

During the year ended March 31, 2017, the Company has declared 150% Interim dividend on Equity Shares of face value of Rs.1 each to the Equity Shareholders, which is recognised as distribution to the Equity Shareholders. (Previous Year Final dividend of Nil and Interim dividend of 310% on face value of Rs.1 per share)

c. issue of Shares under ESOP Scheme

During the year ended March 31, 2017, the Company has issued 459,402 Equity Shares of Rs.1 each (Previous Year 551,040 Equity Shares of Rs.1 each), as per exercise price to PII ESOP Trust, set up to administer Employee Stock Option Plan. Out of total Equity Shares issued to the Trust 503,177 Equity Shares of face value of Rs.1 each (Previous Year 601,363 Equity Shares of face value of Rs.1 each) have been allocated by the Trust to respective employees upon exercise of Stock Option from time to time. As on March 31, 2017, 184,360 Equity Shares of face value of Rs.1 per share (Previous Year 228,135 of face value of Rs.1 each) are pending to be allocated to employees upon exercise of Stock option. (Refer Note 32)

f. Shares reserved for issue under option

Shares reserved for issue under ESOP - Refer Note 32

4 PROVISIONS

(i) information about Other Provisions Legal claim

(a) In May 2010, an objection was raised by the custom department on classification of one of the imported raw materials resulting in demand of differential custom duty. The Company filed an appeal against the order and is clearing the goods after furnishing of bank guarantee for differential duty against each import of such raw material. As on March 31, 2017 total differential custom duty demand is Rs.772.10 lacs (March 31, 2016 Rs.643.53 lacs, April 01 2015 Rs.446.86 lacs). Case is pending before Commissioner of Customs (Appeals), Mumbai.

(b) In March 1987, a notification issued by the Government of Rajasthan resulted into an excise liability of Rs.44.92 lacs. The Company decided to file writ against the notification and has furnished fixed deposit against the said liability. The case is pending before Rajasthan High Court.

5 EMPLOYEE BENEFITS

The Company participates in defined contribution and benefit schemes, the assets of which are held (where funded) in separately administered funds. For defined contribution schemes the amount charged to the statements of profit or loss is the total of contributions payable in the year.

Central provident fund

In accordance with the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, employees are entitled to receive benefits under the Provident Fund. Employers and employees both contribute @12% of wages in contribution accounts. Further, the employers also contribute towards administration of the benefits under the EPF & MP Act. All employees have an option to make additional voluntary contributions as permissible under the Act. These contributions are made to the fund administered and managed by the Employee Provident Fund organization. The Company has no further obligations under the fund managed by the Employee Provident Fund Organization (EPFO) beyond its monthly contributions which are charged to the statements of profit or loss in the period they are incurred. The benefits are paid to employees on their retirement or resignation from the EPFO.

Gratuity Plan

In accordance with the Payment of Gratuity Act of 1972, PI Industries Limited contribute to a defined benefit plan (the “Gratuity Plan”). The Gratuity Plan provides a lump sum payment to the employees at the time of retirement or resignation (after 5 years of continued services of employment), being an amount based on the respective employee’s last drawn salary and the number of years of employment with the Company. Based on actuarial valuations conducted as at year end, a provision is recognised in full for the benefit obligation over and above the funds held in the Gratuity Plan. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.

Long term leave encashment

The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit and loss.

a) Defined Contribution Plans:-

The Company has recognised an expense of Rs.788.45 lacs (Previous Year Rs.713.77 lacs) towards the defined contribution plan.

b) Defined benefits plans - as per actuarial valuation

i Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow -

A) Salary Increases- Actual salary increases will increase the Plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate - Reduction in discount rate in subsequent valuations can increase the plan’s liability.

D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan’s liability.

6 SHARE BASED PAYMENTS

The Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows:

In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company (including subsidiary companies) with an intent to attract and retain talent in the organization. The aforesaid scheme was duly approved by shareholders in its EGM held on January 21, 2011 and is administered through independent trust. The Compensation Committee of the Board has granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.

i. The weighted average market price of options exercised during the year ended March 31, 2017 is Rs.832.44. The weighted average market price of options exercised during the year ended March 31, 2016 is Rs.630.06.

ii. Method and Assumptions used to estimate the fair value of options granted during the year ended:

The fair value has been calculated using the Black Scholes Option Pricing model.

I. Assumptions:

1 Stock Price - Closing price on National Stock Exchange on the date of grant has been considered.

2 Volatility - The historical volatility over the expected life has been considered to calculate the fair value.

3 Risk-free rate of return - The risk-free interest rate being considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero-coupon yield curve for Government Securities.

4 Exercise Price - Exercise Price of each specific grant has been considered.

5 Time to Maturity - Time to Maturity / Expected Life of options is the period for which the Company expects the options to be live.

6 Expected divided yield - Expected dividend yield has been calculated based on the dividend declared prior to the date of grant.

7 CAPITAL & OTHER COMMITMENT

Operating lease commitments - As lessee

The Company has entered into a lease agreement with some of the parties for lease of corporate office & Vadodara office with lease term of 9 years. The lease rent would be increased by 12.5% and 15% respectively after every 3 years. Total of future minimum lease payments under non-cancellable operating leases for each of the following periods:

Finance lease commitments - As lessee

The Company has entered into finance lease for land in Panoli and Jambusar (Gujrat). Future minimum lease payments under finance leases for all the land is Rs.225 per annum. For land in Panoli company has a renewal option for further 2 periods with 100% increase in lease rentals and for land in Jambusar company has a renewal option upon expiry as may be agreed between the parties or as may be determined by Development Committee from time to time. The amount of minimum lease payments and their present value is not material.

8 contingent liabilities

* Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above as it is determinable only on receipt of the judgements/ decisions pending with various forums / authorities.

The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

9 OPERATING SEGMENT

An operating segment is defined as a component of the entity that represents business activities from which it earns revenues and incurs expenses and for which discrete financial information is available. The operating segments are based on the Company’s internal reporting structure and the manner in which operating results are reviewed by the Chief Operating Decision Maker (CODM).

The Company has evaluated the applicability of segment reporting and has concluded that since the Company is operating in the field of Agro Chemicals both in the domestic and export markets and the CODM reviews the overall performance of the agro chemicals business, accordingly the Company has one reportable business segment viz. Agro Chemicals.

i Revenue

A. information about product revenues:

The Company is in the business of manufacturing and distribution of Agro Chemicals. The amount of its revenue from external customers broken down by products is shown in the table below:

B. Geographical Areas

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

C. Revenues from transactions with external customers amounted to more than 10% of the Company’s revenues in one case.

ii The total of Non-current assets (other than financial instruments and deferred tax assets), broken down by location of the assets, is shown in the table below:

10 RELATED PARTY DISCLOSURES

Related party disclosure, as required by Indian Accounting Standard-24, is as below:

a) Nature of Related Party relationship

i Subsidiaries, Associates and Controlled Trust:

(a) PILL Finance and Investment Ltd. Subsidiary

(b) PI Life Science Research Ltd. Subsidiary

(c) PI Japan Co.Ltd. Subsidiary

(d) Solinnos Agro Sciences Pvt. Ltd. Associate

(e) PII ESOP Trust Controlled Trust

ii Key Management Personnel (KMP) & their relatives with whom transactions have taken place:

(a) Key Management Personnel

Mr. Salil Singhal Chairman & Managing Director (till August 21, 2016)

Mr. Mayank Singhal Managing Director & CEO

Mr. Rajnish Sarna Whole-Time Director

Mr. Narayan K. Seshadri Non-executive Director (Chairman w.e.f. October 5, 2016)

Mr. Pravin K. Laheri Non-executive Director

Ms. Ramni Nirula Non-executive Director

Mr. Ravi Narain Non-executive Director (w.e.f. May 24, 2016)

Mr. Arvind Singhal Non-executive Director (w.e.f. October 5, 2016)

Mr. Anurag Surana Non-executive Director (till May 11, 2016)

Dr. Venkatrao S. Sohoni Non-executive Director (till September 14, 2016)

(b) Relatives of Key Management Personnel

Mr. Salil Singhal Father of Mr. Mayank Singhal

Ms. Madhu Singhal Mother of Mr. Mayank Singhal

Ms. Pooja Singhal Sister of Mr. Mayank Singhal

iii Entities controlled by KMP with whom transactions have taken place:

(a) Singhal Foundation; (b) PI Foundation

b) The following transactions were carried out with related parties in the ordinary course of business:

* The above post employment benefits excludes gratuity and compensated absences which cannot be separately identified from the composite amount advised by the actuary.

c) Terms and conditions of transactions with related parties

The sales and purchases / services rendered to and from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free (except loan given to PII ESOP Trust which carries an interest of 9% p.a.) and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2016: Rs.Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

B. 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 measured 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. An explanation of each level follows underneath the table.

The fair value of cash and cash equivalents, bank balance other than cash and cash equivalents trade receivables, short term loans, current financial assets, trade payables, current financial liabilities and borrowings approximate their carrying amount, largely due to the short-term nature of these instruments. Long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Accordingly, the carrying value of such long-term debt approximates fair value. Fair value for security deposits (other than perpetual security deposits) has been presented in the above table. Fair value for all other noncurrent assets and liabilities is equivalent to the amortised cost, interest rate on them is equivalent to the market rate of interest.

Fair value hierarchy

The table shown above analyses financial instruments carried at fair value, by valuation method. The different levels have been defined below:

Level 1 - This includes financial instruments measured using quoted prices.

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. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

There are no transfers between level 1, level 2 and level 3 during the year.

Valuation technique used to determine fair value:

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices

- the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

The fair values for security deposists (assets & liabilities) were calculated based on present values of cash flow and the discount rates used were adjusted for counte party or own credit risk. They are classified as level 3 fair values in the fair value hierachy due to the inclusion of unobservable inputs including counterpart credit.

11. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Risk management framework

The Company is exposed to credit risk, liquidity risk and market risk. The Company’s board of directors has the overall responsibility for the management of these risks and is supported by Management Advisory Committee that advises on the appropriate financial risk governance framework. The Company has the risk management policies and systems in place and are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company’s audit committee oversees how management monitors compliance with the risk management policies and procedures, and reviews the adequacy of risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by the Internal Audit. Internal auditors review the compliance with policies and procedures, the results of which are reported to audit committee.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and impact of hedge accounting in the financial statements.

- Credit risk ;

- Liquidity risk ; and

- Market risk

i. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation, and arises from the operating activities primarily (trade receivables) and from its financing activities including cash and cash equivalents, deposits with banks, derivatives and other financial instruments. The carrying amount of financial assets represents the maximum credit exposure and is as follows:

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Company has established a credit policy under which each customer is analysed individually for creditworthiness before the Company’s credit terms are offered. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. Credit limits are established for each customer and reviewed periodically. Any sales order exceeding those limits require approval from the appropriate authority.

The concentration of credit risk is limited in domestic market due to the fact that the customer base is large and unrelated. The Company’s exports are mainly carried out in countries which have stable economic conditions, where the concentration is relatively higher, however the credit risk is low as the customers have good credit ratings.

The Company computes an allowance for impairment of trade receivables based on a simplified approach, that represents its expected credit losses. The Company uses an allowance matrix to measure the expected credit loss of trade receivables. Loss rates are based on actual credit loss experienced over the past 3 years. These loss rates are adjusted by considering the available, reasonable and supportive forward looking information.

The following table provides information about the exposure to credit risk and expected credit loss:

Cash and cash equivalents, deposits with banks and other financial instruments

Credit risk from balances with banks and other financial instruments is managed by Company in accordance with its policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the management, and may be updated throughout the year.

Impairment on cash and cash equivalents, deposits and other financial instruments has been measured on the 12-month expected credit loss basis and reflects the short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk based on external credit ratings of counterparties.

Based on the assessment there is no impairment in the above financial assets.

Derivatives

The derivatives are entered into with banks and financial institution counterparties which have low credit risk based on external credit ratings of counterparties.

Exposure to credit risk:

The gross carrying amount of financial assets, net of impairment losses recognised represent the maximum credit exposure. The maximum exposure to credit risk as at March 31, 2017, March 31, 2016 and April 1, 2015 was as follows:

ii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. Due to the dynamic nature of underlying businesses, the Company maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecast of Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. In addition, the company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

(a) Financing arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

(b) Maturities of financial liabilities

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

iii. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return.

The Company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate risk and market value of its investments. Thus the Company’s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Foreign Currency risk

The company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR). The Company uses forward exchange contracts to hedge its currency risk and are used exclusively for hedging purposes and not for trading and speculative purposes. These forward exchange contracts, carried at fair value, may have varied maturities depending upon the primary host contract requirement and risk management strategy of the Company. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transactions.

The company’s risk management policy is to hedge around 50% to 100% of the net exposure with forward exchange contracts, having a maturity of upto 12 months. The remaining exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short term requirements. Hedging decisions are based on rolling forex cash flow statement prepared and reviewed on a monthly basis. Such contracts are designated as cash flow hedges.

The foreign exchange forward contracts are denominated in the same currency as the highly probable future sales transaction, therefore the hedge ratio is 1:1. The Company’s hedge policy allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective assessments to ensure that an economic relationship exists between the hedged item and the hedged instrument. The Company enters into hedge instruments where the critical terms of hedging instrument are aligned with terms of the hedged item.

Ineffectiveness is recognised on a cash flow hedge where the cumulative change in the value of the hedging instruments exceeds on an absolute basis the change in the value of the hedged item attributable to the hedged risk. Hedge ineffectiveness may arise due to the following:

- the critical terms of the hedging instrument and the hedged item differ (i.e. nominal amounts, timing of the forecast transaction, interest resets changes from what was originally estimated), or

- differences arise between the credit risk inherent within the hedged item and the hedging instrument.

Foreign currency risk exposure -

The currency profile of financial assets and financial liabilities as at March 31, 2017, March 31, 2016 and April 1, 2015 are as below:

Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee at March 31 would have affected the measurement of financial instruments denominated in Foreign Currencies and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. A 1% increase or decrease is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign currency rate.

Interest rate risk

The Company’s main interest rate risk arises from long term foreign currency and working capital borrowings at variable rates. Company’s investments are primarily in fixed deposits which are short term in nature and do not expose it to interest rate risk. The Company regularly evaluates the interest rate hedging requirement to align with interest rate views and defined risk appetite, in order to ensure most cost effective interest rate risk management.

Exposure to interest rate risk

The interest rate profile of the Company’s interest-bearing financial instruments as reported to the management of the Company is as follows.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable-rate instruments

A 50 basis points increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rate. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

iv) Price risk

The Company’s exposure to price risk arises from investment in mutual funds and classified in the balance sheet as fair value through profit and loss. Mutual fund 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. However, due to very short tenor of the underlying portfolio in the liquid schemes, these do not pose any significant price risk.

(d) Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee against US dollars at March 31 would have affected the measurement of foreign forward exchange contract designated as cash flow hedges and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. A 1% increase or decrease is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign currency rate.

12 CAPITAL MANAGEMENT

The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The primary objective of the Company’s Capital management is to maximise shareholder’s value. The Company manages its capital and makes adjustment to it in light of the changes in economic and market conditions.

The Company manages capital using gearing ratio, which is total debt divided by total equity. The gearing at the end of the reporting period was as follows:

13 EVENTS AFTER REPORTING DATE

Refer to Note 14 for the final dividend recommended by the Directors which is subject to the approval of shareholders in the ensuing annual general meeting.

14 NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ‘Statement of cash flows’. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ‘Statement of cash flows’. The amendments are applicable to the company from April 1, 2017.

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The said amendment being only a disclosure requirement has not any impact either on the profit and loss for the period or any assets and liabilities recognised in the balance sheet.

15 FIRST TIME ADOPTION OF IND AS

As stated in note 2, these are the Company’s first financial statements prepared in accordance with Ind AS

The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS statement of financial position at April 01 2015 (the Company’s date of transition). In preparing its opening Ind AS statement of financial position, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Indian GAAP (previous GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.

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.

A. ind AS optional exemptions:

(i) Property, plant and equipment & intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

(ii) investment in subsidiaries, joint ventures and associate

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its investment in subsidiaries, joint ventures and associate as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.

Accordingly, the Company has elected to measure all of its investments in subsidiaries at their previous GAAP carrying value.

(iii) Business combination

As per Ind AS 101, at the date of transition, an entity may elect not to restate business combinations that occurred before the date of transition. If the entity restates any business combinations that occurred before the date of transition, then it restates all later business combinations, and also applies Ind AS 110, Consolidated Financial Statements, from that same date.

The Company has opted to restate business combinations on or after April 1, 2015.

(iv) Share based payment transactions

Ind AS 102 deals with the accounting and disclosure requirements related to share-based payment transactions. The standard addresses three types of share-based payment transactions: equity-settled, cash-settled, and with cash alternatives. A first-time adopter is encouraged, but is not required, to apply Ind AS 102 to: (i) equity instruments that vested before the date of transition to Ind AS, (ii) liabilities arising from share-based payment transactions that were settled before the date of transition to Ind AS. The Company has opted not to apply Ind AS 102 to the equity instruments vested before the date of transition.

(v) Long-term foreign currency monetary items

Under previous GAAP, paragraph 46/46A of AS 11 The Effects of Changes in Foreign Exchange Rates, provided an alternative accounting treatment to companies with respect to exchange differences arising on restatement of long term foreign currency monetary items. Exchange differences on account of depreciable assets could be added/deducted from the cost of the depreciable asset, which would then be depreciated over the balance life of the asset. In other cases, the exchange difference could be accumulated in a foreign currency monetary item translation difference account, and amortised over the balance period of such long term asset/ liability. Ind AS 101 includes an optional exemption that allows a first-time adopter to continue the above accounting treatment in respect of the long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period. The Company has opted the said exemption.

(B) ind AS mandatory exceptions

(i) Estimates

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 April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for Impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

(ii) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

(iii) Hedge accounting

Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in Ind AS 109, at that date. Hedging relationships cannot be designated retrospectively, and the supporting documentation cannot be created retrospectively. As a result, only hedging relationships that satisfied the hedge accounting criteria as of April 1, 2015 are reflected as hedges in the company’s results under Ind AS

The company had designated various hedging relationships as cash flow hedges under the previous GAAP. On date of transition to Ind AS, the entity had assessed that all the designated hedging relationship qualifies for hedge accounting as per Ind AS 109. Consequently, the company continues to apply hedge accounting on and after the date of transition to Ind AS.

(iv) Derecognition of financial assets and liabilities

As per Ind AS 101, an entity should apply the derecognition requirements in Ind AS 109, Financial Instruments, prospectively for transactions occurring on or after the date of transition to Ind AS. However, an entity may apply the derecognition requirements retrospectively from a date chosen by it if 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 principles of Ind AS 109 prospectively.

(v) Impairment of financial assets

An entity shall determine an approximate credit risk at the date when the financial instrument were initially recognised and compare that to the credit risk at the date of transition to Ind ASs. This should be based on reasonable and supportable information that is available without undue cost or effort. If the entity is unable to make this determination without undue cost or effort, it shall recognise a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised.

C. Reconciliation of Equity

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.

D. Notes to first-time adoption:

1. Property, Plant and Equipment:

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 profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. Under previous GAAP the Company capitalised processing costs on borrowings as incurred. At the date of transition, the Company elected to defer processing costs over the expected life of the borrowings which were outstanding on the date of transition. Accordingly as at March 31, 2016, the value of property, plant and equipment was decreased by Rs.84.48 lacs and term loan decreased by Rs.79.33 lacs. In statement of profit and loss for the year ended March 31, 2016 finance cost has increased by Rs.7.07 lacs and depreciation has reduced by Rs.1.92 lacs.

2. Security deposits

Under previous GAAP the Company has carried Security deposits paid to various authorities at cost, while as per Ind AS these are financial assets, and need to be measured at amortised cost using the effective interest rate method less any impairment losses. The company has applied effective interest rate method to those deposits retrospectively which has resulted in a decrease in the value of deposit by Rs.49.42 lacs as at March 31, 2016 (Rs.32.60 lacs as at April 1, 2015) and creation of a prepaid expense asset by Rs.45.78 lacs as at March 31, 2016 (Rs.29.77 lacs as at April 1, 2015). As at April 1, 2015 the balance of retained earnings reduced by Rs.2.82 lacs. In statement of profit and loss for the year ended March 31, 2016 rent expense has increased by Rs.10.26 lacs and interest income has reduced by Rs.9.44 lacs.

3. Trade receivables

As per Ind AS 109, the Company is required to apply expected credit loss model for recognising the allowance for doubtful debts. As a result, the allowance for doubtful debts increased by Rs.4.28 lacs as at March 31, 2016 (April 1, 2015 Rs.285.77 lacs). As at April 1, 2015 the balance of retained earnings reduced by Rs.285.77 lacs. In statement of profit and loss for the year ended March 31, 2016 provision for bad and doubtful debts expense has decreased by Rs.281.49 lacs.

4. Share based payments

Under Indian GAAP, the Company recognised only the intrinsic value of the stock options given under Employee Stock Option Plan (ESOP) as an expense. Ind AS requires the fair value of share options to be determined using an appropriate pricing model for the purpose of recognizing expense over the vesting period. Accordingly, a charge of Rs.665.24 lacs based on fair value of such options outstanding as unvested as at April 1, 2015 has been recognised as a separate component of equity against retained earnings. In statement of profit and loss for the year ended March 31, 2016 employee compensation expense due to fair valuation of options increased by Rs.535.94 lacs.

5. Short term provisions

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. Therefore, the liability of Rs.2,139.02 lacs (including dividend distribution tax) for financial year 201415 has been derecognised against retained earnings.

6. Deferred tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences, which was not required under Indian GAAP.

In addition, the various transitional adjustments lead to different temporary differences resulting in recognition of deferred tax. Deferred tax assets of Rs.115.85 lacs were created as at April 1, 2015 due to Ind AS adjustments and correspondingly balance of retained earnings increased. For the year ended March 31, 2016 deferred tax expense recognised in statement of profit and loss was increased by Rs.84.38 lacs and in other comprehensive income increased by Rs.131.95 lacs..

7. 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 profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2016 decreased by Rs.26.18 lacs. There is no impact on the total equity as at March 31, 2016.

8. 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 the 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 March 31, 2016 by Rs.10,107.07 lacs. There is no impact on the total equity and profit.

9. Effective portion of cash flow hedge reserve

Under Ind AS, effective portion of cash flow hedge reserve are recognised in other comprehensive income. As a result, income recognised in other comprehensive income for the year ended March 31, 2016 is Rs.355.09 lacs. There is no impact on the total equity as at March 31, 2016.

10. There is no significant reconciliation items between cash flow prepared under Previous GAAP and those prepared under Ind AS.


Mar 31, 2015

A. The difference between the issued and subscribed capital is on account of less number of shares allotted in right issue in earlier years.

b. Terms/ rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of Rs.1 per share (Previous Year Rs. 1 per share). Each holder of Equity Shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except 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.

During the year ended March 31, 2015, the Company has declared 130% Final dividend and 120% Interim dividend on Equity Shares of face value of Rs.1 each to the Equity Shareholders, which is recognised as distribution to the Equity Shareholders. (Previous Year Final dividend of 100% and Interim dividend of 100% on face value of Rs.1 per share).

c. Issue of Shares under ESOP Scheme

During the year ended March 31, 2015, the Company has issued 467,102 Equity Shares of Rs. 1 each (Previous Year 649,930 Equity Shares of Rs. 1 each), as per exercise price to PII ESOP Trust (Trust), set up to administer Employee Stock Option Plan. Out of total Equity Shares issued to the Trust 423,458 Equity Shares of face value of Rs. 1 each (Previous Year 521,961 Equity Shares of face value of Rs. 1 each) have been allocated by the Trust to respective employees upon exercise of Stock Option from time to time. As on March 31, 2015, 278,458 Equity Shares of face value of Rs. 1 per share (Previous Year 234,814 of face value of Rs. 1 each) are pending to be allocated to employees upon exercise of Stock option. (Refer Note 33).

d. Split of Shares

Pursuant to the approval of the shareholders through postal ballot dated April 03, 2013, the Company has sub-divided the existing Equity Shares of Rs. 5 each fully paid up into 5 Equity Shares of Rs. 1 each.

e. Pursuant to the approval by the Honourable High Court of Jodhpur to the scheme of amalgamation vide its formal order dtd. March 27, 2015, the Company has taken following actions:- i) Authorised Share Capital stands increased to Rs. 7,230 lacs divided into 223,000,000 Equity Shares of Rs. 1 each; 5,000,000 Preference Shares of Rs. 100 each.

ii) Investment held by Parteek Finance & Investment Co. Ltd. (Transferor Company) in PI Industries Ltd. representing 73,851,390 Equity Shares have been cancelled and fresh Equity Shares of 73,851,390 Equity Shares have been issued to the shareholders of the Transferor Company.

1. NOTE ON AS 30 ADOPTION

The Company has adopted Accounting Standard 30 (AS 30) " Financial Instruments: Recognition and Measurement" during the Financial year 2011-12. Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative financial instruments, the net foreign exchange exposure over a period of one year against the committed order in hand hedged through forward contracts, are designated as effective cash flow hedges and marked to market loss/gain arising on said foreign currency instruments are transferred to "Cash Flow Hedge Reserve" directly in the Balance Sheet under Reserves & Surplus and later the same is reclassified in the Statement of Profit & Loss upon the occurrence of the hedging transaction. Accordingly marked to market gain of Rs. 188.30 lacs (Previous Year gain of Rs. 411.31 lacs) arising on foreign currency instruments qualifying for hedge accounting as on March 31, 2015 has been transferred to Cash Flow Hedge Reserve Account.

2. GRATUITY & OTHER LONG TERM COMPENSATED ABSENCES

As per Accounting Standard (AS)- 15 "Employee Benefits", the disclosure of employee benefits as defined in the accounting standard is given below:

a) Defined Contribution Plans

The Company has recognised an expense of Rs. 579.92 lacs (Previous Year Rs. 449.10 lacs) towards the defined contribution plan.

3. AMALGAMATION

Pursuant to the sanction of the Honourable High Court of Jodhpur to the Scheme of Amalgamation, the assets and liabilities of Parteek Finance & Investment Co. Ltd. (Holding Company of PI Industries Ltd. whose principal business is core investment) (Transferor Company) have been merged with PI Industries Ltd. (Transferee Company) with effect from the appointed date of April 01, 2014 in accordance with the Scheme so sanctioned. The amalgamation has been accounted for under the "Purchase Method" as prescribed by Accounting Standard 14 (AS-14) notified by the Government of India. Accordingly, as on the appointed date the excess of net asset value of Transferor Company over the merger consideration amounting to Rs. 1.37 lacs has been recognised as Capital Reserve (see table below) in the books of Transferee Company. Further as per the requirement of relevant statute the statutory balances in the books of Transferor Company is recorded at their carrying value in the books of Transferee Company.

4. EMPLOYEE STOCK OPTION PLANS

The Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows:

In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company (including subsidiary companies) with an intent to attract and retain talent in the organization. The aforesaid scheme was duly approved by shareholders in its EGM held on January 21, 2011 and is administered through independent trust. During the year, Compensation Committee of the Board granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.

5. SEGMENT INFORMATION

The Company is engaged in the business of chemical which is a single business segment and constitutes the primary segment. Accordingly, no separate disclosure is required to be given as per Accounting Standard AS-17.

6. CONTINGENT LIABILITIES (Rs. in Lacs)

Particulars March 31, 2015 March 31, 2014

Disputed Taxation demands not acknowledged as debts:

- Sales Tax 124.42 119.06

- Excise Duty 310.50 509.17

- Income Tax 935.59 689.47

- ESI 6.09 6.09

Anti Dumping Duty - 230.44

Counter Guarantee to GIDC 32.85 32.85

Bill Discounted - 2,382.45

7. DEFERRAL/ CAPITALISATION OF EXCHANGE DIFFERENCE

Pursuant to notification dated March 31, 2009 and December 29, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Company decided to exercise the option of accounting for Exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period or reported in the previous financial statements in so far as they relate to the acquisition of depreciable capital assets by addition to/ deduction from the cost of the asset and depreciate the same over the balance life of the asset. Accordingly, the current year exchange losses amounting to Rs. 290.37 lacs (Previous Year Rs. 1,120.50 lacs) have been adjusted to the cost of fixed assets/CWIP.

8. In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of loans, advances and other current assets, in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet and provisions has been made for all known liabilities.

9. Figures of previous year have been regrouped and/ or rearranged wherever necessary to make them comparable with those of the current year.


Mar 31, 2014

1. SHARE CAPITAL

a. The difference between the issued and subscribed capital is on account of less number of shares allotted in right issue in earlier years.

b. Terms/ rights attached to Equity Shares The Company has only one class of Equity Shares having a par value of Rs.1 per share (Previous Year Rs.5 per share). Each holder of Equity Shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting except interim dividend.

During the year ended 31st March 2014, the Company has declared 100% final dividend and 100% interim dividend on Equity Shares of face value of Rs.1 each to the equity shareholders, which is recognised as distribution to the equity shareholders. (Previous Year Final dividend of 100% on face value of Rs.1 per share post split)

c. Issue of Shares through Qualified Institutional Placement (QIP) During the previous year ending 31st March 2013, the Company has raised an amount of Rs.11,732.70 lacs through Qualified Institutional Placement (QIP) route: accordingly 1,924,656 Equity Shares @ Rs.609.60 per share have been allotted on 31st January 2013. The Company has received the listing/ trading approvals from Stock Exchange for aforementioned allotment.

d. Issue of Shares under ESOP Scheme During the year ended 31st March 2014, the Company has issued 649,930 Equity Shares of Rs.1 each (Previous Year 118,796 Equity Shares of Rs.5 each), as per exercise price to PII ESOP Trust (Trust), set up to administer Employee Stock Option Plan. Out of total Equity Shares issued to the Trust 521,961 Equity Shares of face value of Rs.1 each (Previous Year 97,427 Equity Shares of face value of Rs.5 each) have been allocated by the Trust to respective employees upon exercise of Stock Option from time to time. As on 31st March 2014, 234,814 Equity Shares of face value of Rs.1 per share (Previous Year 106,845 of face value of Rs.1 each post split) are pending to be allocated to employees upon exercise of Stock option. (Refer Note 32)

e. Split of Shares Pursuant to the approval of the shareholders through postal ballot dated 3rd April 2013, the Company has sub-divided the existing Equity Shares of Rs.5 each fully paid up into 5 Equity Shares of Rs.1 each.

f. Shareholdings of the Holding Company Pursuant to Delhi High Court Order, some of the promoter companies have merged w.e.f 1st January 2013, resulting in making PI Industries Ltd. subsidiary of Parteek Finance & Investment Co. Ltd. The said Promoter Company holds 73,851,390 Equity Shares which is 54.26% of the total shareholding of the Company.

g. Reconciliation of Shares outstanding at the beginning and at the end of the reporting period Issued Share Capital

i. Shares reserved for issue under option

Shares reserved for issue under ESOP - Refer Note 32

l. The Board has approved the draft scheme of amalgamation between Parteek Finance & Investment Co. Ltd. (which is holding Company of PI Industries Ltd.) and PI Industries Ltd. subject to requisite regulatory approvals. Under this scheme there would be no change in the promoters share holding of the Company.

3. LONG-TERM BORROWINGS

a. Foreign Currency Loan includes:

ECB from Standard Chartered Bank amounting to USD 133.33 lacs carrying interest rate of 90 days LIBOR plus 2.75% is outstanding as on 31st March, 2014 and is repayable in balance 10 Quarterly instalments of USD 13.33 lacs each. The loan is secured by first exclusive charge on movable fixed assets of the Company situated at Jambusar and first pari passu charge on the movable fixed assets of the Company, situated at 237, GIDC, Panoli and second pari passu charge on all the currents assets of the Company.

b. Deposits from Directors, shareholders and others carries interest ranging from 9% to 11% per annum depending upon the amount of deposit. Non- cumulative deposits have a maturity period of two years and are paid interest at the interval of every six months. Cumulative deposits have maturity period of three years and the interest is compounded six monthly.

c. As on the Balance sheet date there is no default in repayment of loans and interest.

4. OTHER ASSETS

*Deposits includes Rs.184.84 lacs (Previous Year Rs.170.42 lacs) towards security deposit lodged with the Rajasthan excise department and Rs.4.23 lacs (Previous Year Rs.3.91 lacs) lodged with Commercial Taxes Kottayam, Rs.1.31 lacs (Previous Year Rs.1.21 lacs) lodged with Assistant Excise & Taxation Commissioner, Solan, Rs.0.57 lacs (Previous Year Rs.0.53 lacs) lodged with Superintendent, Prohibition & Excise Account, Jambusar and Rs.0.55 lacs (Previous Year Rs.0.51 lacs) lodged with UKAI right Bank Canal Division.

* Includes Fixed deposits with more than twelve months maturity from date of acquisition: Rs.191.51 lacs (Previous Year Rs.176.58 lacs); and Fixed deposits upto 3 months maturity from date of acquisition: Rs. Nil (Previous Year Rs. Nil)

5. NOTE ON AS 30 ADOPTION

The Company has adopted Accounting Standard 30 (AS 30) "Financial Instruments: Recognition and Measurement" during the Financial year 2011-12. Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative financial instruments, the net foreign exchange exposure over a period of one year against the committed order in hand hedged through forward contracts, are designated as effective cash flow hedges and marked to market loss/gain arising on said foreign currency instruments are transferred to "Cash Flow Hedge Reserve" directly in the Balance Sheet under Reserves & Surplus and later the same is reclassified in the Statement of Profit & Loss upon the occurrence of the hedging transaction. Accordingly marked to market gain of Rs.411.31 lacs (Previous Year gain of Rs.132.80 lacs) arising on foreign currency instruments qualifying for hedge accounting as on 31st March 2014 has been transferred to Cash Flow Hedge Reserve Account.

6. GRATUITY & OTHER LONG TERM COMPENSATED ABSENCES

As per Accounting Standard (AS)- 15 "Employee Benefits", the disclosure of employee benefits as defined in the accounting standard is given below:

a) Defined Contribution Plans

The Company has recognised an expense of Rs.449.10 lacs (Previous Year Rs.400.02 lacs) towards the defined contribution plan.

7. EMPLOYEE STOCK OPTION PLANS

The Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows:

In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company (including subsidiary companies) with an intent to attract and retain talent in the organization. The aforesaid scheme was duly approved by shareholders in its EGM held on 21st January, 2011 and is administered through independent trust. During the year, Compensation Committee of the Board granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.

The stock based compensation cost calculated as per the intrinsic value method for the financial year 2013-14 is Rs.59.93 lacs (Previous Year Rs.54.93 lacs). If the stock-based compensation cost was calculated as per the fair value method, the total cost to be recognised in the financial statements for the year 2013-14 would be Rs.378.63 lacs (Previous Year Rs.241.02 lacs). The effect of adopting the fair value method on the net income and earnings per share is presented below:

8. SEGMENT INFORMATION

The Company is engaged in the business of chemical which is a single business segment and constitutes the primary segment. Accordingly, no separate disclosure is required to be given as per Accounting Standard AS-17.

Secondary Segment information (Geographical Segments)

The Company is organised into two key geographical segment based upon the location of its customer within India (domestic) and outside

India (export)

9. RELATED PARTY DISCLOSURES

Related party disclosures, as required by Accounting Standard-18, is as below:

a) List of Related Parties

i Enterprises which control the entity

Parteek Finance & Investment Co. Ltd. (Holding Company w.e.f 01.01.2013)

ii Where control exists during the year

Subsidiaries - (a) PILL Finance and Investments Ltd., (b) PI Life Science Research Ltd. and (c) PI Japan Co. Ltd.

iii Enterprises in respect of which reporting enterprise is an associate

(a) Lucrative Leasing Finance and Investment Company Ltd. (Upto 31.12.2012)

(b) Parteek Finance and Investment Company Ltd. (Upto 31.12.2012)

iv Key Managerial Personnel & their relatives (KMP) (a) Key Managerial Personnel (KMP)

Mr. Salil Singhal Chairman & Managing Director

Mr. Mayank Singhal Managing Director & CEO

Mr. Anurag Surana Whole-time Director (Till 15th September 2012)

Mr. Rajnish Sarna Whole-time Director (From 07th November 2012)

v Enterprises over which KMP and their relatives are able to exercise significant influence

(a) Samaya Investment and Trading Pvt. Ltd (Upto 31.12.2012)

(b) Wolkem India Ltd.

(c) Secure Meters Ltd.

(d) Salil Singhal (HUF)

(e) Singhal Foundation

(f) PI Foundation

(g) PII ESOP Trust (Trust)

38. CONTINGENT LIABILITIES

(Rs. in Lacs)

March 31, 2014 March 31, 2013

Disputed Taxation demands not acknowledged as debts:

- Sales Tax 119.06 128.13

- Excise Duty 509.17 84.99

- Income Tax 689.47 536.42

- Custom Duty – 71.08

- ESI 6.09 5.08

Anti Dumping Duty 230.44 230.44

Counter Guarantee to GIDC 32.85 32.85

Bill Discounted 2,382.45 3,171.14

10. DERIVATIVES INSTRUMENTS AND HEDGED/ UNHEDGED FOREIGN CURRENCY EXPOSURE i) All financial and derivative contracts entered into by the Company are for hedging purposes

11. DEFERRAL/ CAPITALISATION OF EXCHANGE DIFFERENCE

Pursuant to notification dated March 31, 2009 and December 29, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Company decided to exercise the option of accounting for Exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period or reported in the previous financial statements in so far as they relate to the acquisition of depreciable capital assets by addition to/ deduction from the cost of the asset and depreciate the same over the balance life of the asset. Accordingly, the current year exchange losses amounting to Rs.1,120.50 lacs (Previous Year Rs.640 lacs) have been adjusted to the cost of fixed assets/CWIP.

12. In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of loans, advances and other current assets, in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet and provisions has been made for all known liabilities.

13. Figures of previous year have been regrouped and/ or rearranged wherever necessary to make them comparable with those of the current year.


Mar 31, 2013

1. COMMENCEMENT OF COMMERCIAL PRODUCTION AT SEZ UNIT

The Company has commenced commercial production at its newly commissioned unit located at SEZ, Jambusar in the State of Gujarat starting from January 2013.

2. NOTE ON AS 30 ADOPTION

The Company has adopted Accounting Standard 30 (AS 30) "Financial Instruments: Recognition and Measurement" during the Financial year 2011-12. Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative financial instruments, the net foreign exchange exposure over a period of one year against the committed order in hand hedged through forward contracts, are designated as effective cash flow hedges and marked to market loss/gain arising on said foreign currency instruments are transferred to "Cash Flow Hedge Reserve" directly in the Balance Sheet under Reserves & Surplus and later the same is reclassified in the Statement of Profit & Loss upon the occurrence of the hedging transaction. Accordingly marked to market gain of Rs. 132.80 lacs (Previous Year loss of Rs. 492.60 lacs) arising on foreign currency instruments qualifying for hedge accounting as on March 31, 2013 has been transferred to Cash Flow Hedge Reserve Account.

3 NOTE ON ADOPTION OF REVISED SCHEDULE VI

These financial statements comprising the Balance Sheet and Statement of Profit & Loss and Notes have been prepared in accordance with Revised Schedule VI which has been made applicable for financial year commencing on or after April 1, 2011, vide MCA''s notification no. S.O. 653(E) dated March 30, 2011.

4. GRATUITY & LEAVE ENCASHMENT

As per Accounting Standard (AS) - 15 "Employee Benefits", the disclosure of employee benefits as defined in the accounting standard is given below:

a) Defined Contribution Plans

The Company has recognised an expense of Rs. 400.02 Lacs (Previous Year Rs. 356.83 lacs) towards the defined contribution plan.

5. EMPLOYEE STOCK OPTION PLANS

The Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows:

In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association & performance as well as to motivate them to contribute to the growth & profitability of the Company (including subsidiary companies) with an intent to attract & retain talent in the organization. The aforesaid scheme was duly approved by shareholders in their EGM held on January 21, 2011 and is administered through independent trust. During the year, Compensation Committee of the Board granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.

6. RELATED PARTY DISCLOSURES

Related party disclosures, as required by Accounting Standard-18, is as below: a) List of Related Parties

i Enterprises which control the entity

Parteek Finance & Investment Co. (Holding Company w.e.f. January 1, 2013)

ii Where control exists during the year

Subsidiaries - (a) PILL Finance and Investments Ltd., (b) PI Life Science Research Ltd. and (C) PI Japan Co. Ltd.

iii Enterprises in respect of which reporting enterprise is an associate

(a) Lucrative Leasing Finance and Investment Company Ltd., (b) Parteek Finance and Investment Company Ltd. (Upto December 31, 2012)

iv Key Managerial Personnel & their relatives (KMP)

(a) Key Managerial Personnel (KMP)

Mr. Salil Singhal Chairman & Managing Director

Mr. Mayank Singhal Managing Director & CEO

Mr. Anurag Surana Whole-time Director (till September 15, 2012)

Mr. Rajnish Sarna Whole-time Director (from November 7, 2012)

7. CONTINGENT LIABILITIES (Rs. in Lacs)

March 31, 2013 March 31, 2012

Disputed Taxation demands not acknowledged as debts:

- Sales Tax 128.13 176.41

- Excise Duty 84.99 84.99

- Income Tax 536.42 243.06

- Custom Duty 71.08 71.08

- ESI 5.08 -

Anti Dumping Duty 230.44 230.44

Counter Guarantee to GIDC 32.85 32.85

Bill Discounted 3,171.14 -

8. DEFERRAL/ CAPITALISATION OF EXCHANGE DIFFERENCE

Pursuant to notification dated March 31, 2009 and December 29, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Company decided to exercise the option of accounting for Exchange differences arising on reporting of long-term foreign currency monetary items at rates different from those at which they were initially recorded during the period or reported in the previous financial statements in so far as they relate to the acquisition of depreciable Capital Assets by addition to/ deduction from the cost of the asset and depreciate the same over the balance life of the asset. Accordingly, the current year exchange losses amounting to Rs. 640 lacs (Previous Year Rs. 124.32 lacs) have been adjusted to the cost of fixed assets/CWIP.

9. EVENT OCURRING AFTER THE BALANCE SHEET DATE

Subsequent to the Balance Sheet date, the Company has sub-divided its existing Equity Shares of Rs. 5 each fully paid up into 5 Equity Shares of Rs. 1 each, pursuant to the approval of the shareholders through postal ballot results declared on April 3, 2013.

10. In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of loans, advances and other current assets, in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet and provisions has been made for all known liabilities.

11. Figures of previous year have been regrouped and/ or rearranged wherever necessary to make them comparable with those of the current year.


Mar 31, 2012

A. The issued share capital of previous year includes fractional coupons of Rs. 5/- each fully paid, allotted as bonus shares in earlier years.

b. The difference between the issued and subscribed capital is on account of less number of shares allotted in right issue in earlier years.

c. Terms/ rights attached to Equity shares

The Company has only one class of equity shares having a par value of Rs. 5 per share (Previous Year Rs. 10 per share). Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting except interim dividend.

During the year ended 31st March 2012, the Company had declared interim dividend of Rs. 2 per share of face value of Rs. 5/- each to the equity shareholders and final dividend of Rs. 3 per share is recognised as distribution to the equity shareholders at the year end (Previous year Rs. 4 per share of face value of Rs. 10/- each).

d Terms/ rights attached to Preference shares

As per the terms of the issue, the holder of CCPS had option to convert its preference shares into equity within 18 months of the date of issue i.e. 24th October 2009. The CCPS carried a coupon rate of 0.01% p.a. and had lock in period of one year.

e Terms of securities convertible into equity

Compulsorily Convertible Preference Shares (CCPS)

Refer Note 1(d)

As per the terms of issue

(i) 1250000 CCPS were converted into 370826 equity shares of Rs. 10 each at a premium of Rs. 327.085 per share during the previous year, and

(ii) the balance 810000 preference shares have been converted into 311658 equity shares of Rs. 10/- each, allotted to both Standard Chartered Private Equity (Mauritius) Limited and Standard Chartered Private Equity (Mauritius) II Limited equally, at a premium of Rs. 249 .9003 per share.

Optionally Convertible Debentures (OCDs)

Refer Note 3 (a)

During the year 1025030 equity shares were issued and allotted by the Company to Standard Chartered Investments and Loans (India) Limited at a premium of Rs. 249.9003 per equity share of face value on conversion of 2664053 OCDs and the balance 275947 OCDs were redeemed.

f Fractional Shares

During the year 18 fractional shares were sold off in the market on 15th October 2011 at prevailing market price and the proceeds were reimbursed to the beneficiaries.

g Split of Shares

Pursuant to the approval of the shareholders in their meeting held on 16th July 2011, the Company has sub-divided the existing equity shares of Rs. 10/- each fully paid up into 2 equity shares of Rs. 5/- each.

a. On 24th October 2009, the Company had issued 29,40,000 Optionally Convertible Debentures (OCD) of Rs. 100/- each to Standard Chartered Invest- ments and Loans (India) Ltd., on preferential basis. The OCD had lock in period of one year from the date of allotment. The OCD were optionally con- vertible into equity shares within the period of 18 months from the date of allotment as per the terms of issue. The uncovered portion of OCD, if any, shall be redeemed at the end of 18 months or may be further extended by another 18 months, if mutually agreed.

b. Indian Rupee Loan from Banks includes:

- Loan amounting to Rs. 248.99 lacs outstanding as on 31st March 2012 from State Bank of Bikaner & Jaipur Bank carrying interest rate of BPLR minus 1.25% repayable in balance 4 Quarterly installments of Rs. 62.50 lacs each which would be repaid by March 2013. The loan is secured by first pari passu charge on the fixed assets and second charge on the current assets of the Company. Further, the entire loan sanctioned amounting to Rs. 1750 lacs is guaranteed by personal guarantee of the Chairman and Managing Director (CMD) and Managing Director (MD) of the Company.

- Loan amount of Rs. 111.10 lacs outstanding as on 31st March 2012 from Axis Bank carrying interest rate of BPLR minus 3.25% would be repaid in June 2012. The loan is secured by first pari passu charge on the existing and future fixed assets and second charge on the current assets of the Company. The loan amount sanctioned amounting to Rs. 2000 lacs is guaranteed by personal guarantee by the Managing Director (MD) of the Company.

- Loan from HDFC Bank outstanding amounting to Rs. 328.12 lacs carrying interest rate @ HDFC -CPLR plus 0.25 basis points and is repayable in balance 3 Quarterly installments of Rs. 109.37 lacs each. The same would be repaid by December 2012. The loan is secured by first pari passu charge on the fixed assets of the Company. The loan sanctioned amounting to Rs. 1750 lacs is guaranteed by personal guarantee of the Chairman and Managing Director (CMD) and Managing Director (MD) of the Company.

- Loan from IDBI Bank outstanding amounting to Rs. 225 lacs carrying interest rate of BPLR minus 1.5% and is repayable in 9 Quarterly installments of Rs. 25 lacs which would be repaid by June 2014. The loan is secured by first mortgage and charge on all movable and immovable properties, both present and future of the Company and second charge on the current assets of the Company . Further, the entire loan amount sanctioned amounting to Rs. 500 lacs is guaranteed by irrevocable and unconditional guarantee of Managing Director (MD) of the Company.

- Loan amounting to Rs. 825 lacs is outstanding from IDBI Bank as on 31st March 2012 which carries interest rate of BPLR minus 1%. This amount is repayable in 11 Quarterly installments of Rs. 75.00 lacs each and the same would be repaid by December 2014.The loan is secured by first pari passu charge on all movable and immovable assets and second charge on the current assets of the Company. Further, the loan sanctioned amounting to Rs. 1500 lacs is guaranteed by personal guarantee of the Managing Director (MD) of the Company.

c. Foreign Currency Loans includes:

- ECB from Standard Chartered Bank amounting to USD 200 lacs carrying interest rate of 90 days LIBOR plus 2.75% and is repayable in 15 Quarterly installments of USD 13.33 lacs each beginning from April 2013. The loan is secured by first exclusive charge on movable and immovable fixed assets of the Company situated at Jambusar, Gujarat.

d. Loans from Financial Institutions includes:

Term Loan from Financial Institutions includes loan amounting to Rs. 1000 lacs from EXIM bank at interest on PLR rate, repayable in 8 quarterly installment of Rs. 125 lacs and would be repaid by 31st March 2014. The loan is secured by Pari passu first charge over the entire fixed assets including immovable properties of the Company both present and future (excluding assets, which are exclusively charged to other lenders) and Pari passu second charge over the entire current assets of the Company, pari passu with all the existing lenders, excluding assets exclusively charged to other lenders.

e. Deferred Tax Sales Tax Loan is Interest Free which was payable in 5 yearly installments of Rs. 23.50 lacs each beginning from 30th May 2006. The last installment was paid on 13th April 2011.

f. Deposits from Directors, shareholders and others carries interest ranging from 9% to 11% depending upon the amount of deposit. Non- cummulative deposits have a maturity period of two years and are paid interest at the interval of every six months. Cummulative deposits have maturity period of three years and the interest is compounded six monthly.

g. As on the Balance sheet date there is no default in repayment of loans and interest.

a. Working capital loans are secured by way of first charge on pari passu basis by hypothecation of stocks of raw materials, finished and semi finished goods, stores and spares not related to plant and machinery, bills receivable, book debts and all other movable properties and additionally secured by way of second charge on all the immovable properties of the Company in favour of the consortium bankers.

b. The working capital loans were secured by personal guarantee of the directors of the Company till 31st March 2011. The same does not carry any guarantee as on the reporting date.

* Deposit account includes Rs. 366.55 Lacs (Previous Year Rs.277.75 lacs ) towards margin money pledged with banks for Bank Guarantees and Letter of Credit.

* Includes Fixed deposits with more than twelve months maturity from date of acquisition: Rs.366.55 lacs (Previous Year Rs. 277.75 lacs); and Fixed deposits upto 3 months maturity from date of acquisition: Rs. NIL (Previous Year Rs. NIL)

** Not available for use by the Company as they represent corresponding unclaimed dividend liabilities.

1 In the opinion of the management and to the best of their knowledge and belief, the value on realisation of loans, advances and other current assets, in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet and provisions has been made for all known liabilities.

2 DISCONTINUED OPERATIONS

The Company has entered into a Business Transfer Agreement on 20th December, 2010 for selling its polymer division as a going concern on slump sale basis for net sale consideration of Rs. 6,659.63 lacs This transaction was concluded on 11th April 2011. The Company recognised profit of Rs. 2,279.18 lacs (Net of taxes) on account of sale of the business.

*Pursuant to the approval of the shareholders in their meeting held on 16th July 2011, the Company has sub-divided the existing equity shares of Rs. 10/- each fully paid up into 2 equity shares of Rs. 5/- each. Further, in accordance with Accounting Standard (AS-20), the earning per share for the current and comparative period has been recomputed after adjusting for the sub-division of the shares.

3 NOTE ON AS 30 ADOPTION

The Company has adopted Accounting Standard 30 (AS 30) " Financial Instruments: Recognition and Measurement". Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative financial instruments, the net foreign exchange exposure over a period of one year against the committed order in hand hedged through forward contracts, are designated as effective cash flow hedges and marked to market loss/gain arising on said foreign currency instruments are transferred to "Cash Flow Hedge Reserve" directly in the Balance Sheet under Reserves & Surplus and later the same is reclassified into Profit & Loss account upon the occurrence of the hedging transaction. Accordingly marked to market loss of Rs. 492.60 lacs arising on foreign currency instruments qualifying for hedge accounting as on 31st March 2012 has been transferred to Cash Flow Hedge Reserve Account.

4 NOTE ON ADOPTION OF REVISED SCHEDULE VI

These financial Statements comprising the balance sheet and statement of profit and loss and notes have been prepared in accordance with Revised Schedule VI which has been made applicable for financial year commencing on or after 1st April, 2011, vide MCA's notification no. S.O. 653(E) dated 30th March, 2011.

5 EMPLOYEES STOCK OPTION PLANS

The Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows:

In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company (including subsidiary companies) with an intent to attract and retain talent in the organization, The aforesaid scheme was duly approved by shareholders in its EGM held on 21st January, 2011 and is administered through independent trust. During the year, Compensation Committee of the Board granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.

The stock based compensation cost calculated as per the intrinsic value method for the financial year 2011-12 is Rs. 108.95 lacs. If the stock-based compensation cost was calculated as per the fair value method, the total cost to be recognised in the financial statements for the year 2011-12 would be Rs 369.93 lacs. The effect of adopting the fair value method on the net income and earnings per share is presented below:

6 RELATED PARTY DISCLOSURES

Related party disclosure, as required by Accounting Standard-18, is as below:

a) List of Related Parties

i Where control exists during the year:

Subsidiaries - (a) PILL Finance and Investments Ltd, (b) PI Life Science Research Ltd. and (c ) PI Japan Co.Ltd.

ii Enterprises in respect of which reporting enterprise is an associate:

(a) Lucrative Leasing Finance and Investment Company Ltd; (b) Parteek Finance and Investment Company Ltd;

iii Key Managerial Personnel & their relatives (KMP):

(a) Key Managerial Personnel (KMP):

Mr. Salil Singhal Chairman & Managing Director

Mr. Mayank Singhal Managing Director & CEO

Mr. Anurag Surana Whole time Director

7 CONTINGENT LIABILITIES (Rs.in Lacs)

31st March 31st March 2012 2011

Disputed Taxation demands not acknowledged as debts

- Sales Tax 176.41 162.81

- Excise Duty 84.99 84.99

- Income Tax 243.06 -

- Custom Duty 71.08 -

Anti Dumping Duty 230.44 230.44

Counter Guarantee to GIDC 32.85 32.85

8 DEFERRAL / CAPITALISATION OF EXCHANGE DIFFERENCE

Pursuant to notification dated March 31, 2009 and December 29, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Company decided to exercise the option of accounting for Exchange differences arising on reporting of long term foreign currency monetary items at rates dif- ferent from those at which they were initially recorded during the period or reported in the previous financial statements in so far as they relate to the acquisition of depreciable capital assets by addition to/ deduction from the cost of the asset and depreciate the same over the balance life of the asset. Accordingly, the current year exchange losses amounting to Rs. 124.32 lacs have been adjusted to the cost of fixed assets/CWIP.

The unamortised amount of exchange fluctuation as on the reporting date is Rs. 164.11 lacs (Previous Year Rs. 43. 29 lacs)

9 Figures of previous year have been regrouped and/ or rearranged wherever necessary to make them comparable with those of the current year.


Mar 31, 2010

Particulars Amount (Rs in Lacs) 31.03.2010 31.03.2009 1 Contingent Liabilities in raspect of

Bills discouted - 241.59

Disputed Taxation demands not acknowledged as debts

- Sales Tax 140.01 12S.83

-Excise Duty 84.99 84.99

Counter Guarantee to GlDC 32.85 32.85

2 Donation includes an amount of Rs. 5 lacs (Previous Year Rs. Nil] paid to Rajasthan Pradesh, Congress Committee, a recognised political party.

3 Soles include export incentives of Rs. 134,35 lacs (Previous Year Rs. 61,31 lacs} and insurance claims of Rs. 9.75 Iocs (Previous Year Rs.9.81 lacs)

4 In the opinion of the management and to the besl of their knowledge and belief, the value on realisation of loons, advances and other current assets in the Ordinary course of business will not the less then the amount al which they are stated in the Balance Sheet and provision has been made for all known liabilities.

5 During the currenl year, the Company has recognised MAT credit entitlement pf Rs. 76-54 lacs (Previous Year Rsr1 30-62 lacs) related to earlier year, Current tax is net of this MAT credit entitlement

6 Consequent to the announcement issued by the lnstitute of Chartered Accountants; of India in March, 2008 on Accounting (or Derivatives, the Company, as a matter of prudence, has not recognized marked to markei foreign currency gain of Rs. 58.71 lacs on the outstanding forward contract as at 31st March, 2010.

7 As per Accounting Standard (As)- 15 Employee Benefits", the disclosure of employee benefits as defined in the accounting standard is given below:

8) Defined Contribution PIans:-

The Company has recognised an expense of Rs. 289.44 Lacs {Previous Year Rs. 325.39 Iacs) towards the defined contribution.

9 Derivative Instruments and Hedged/ Unhedged Foreign Currency Exposure

i) All financial and derivative contracts entered into by the Company are for hedging purposes,

ii) Forward Contract outstanding as at Balance Sheet date

10 Related party disclosure; as required by Accounting Standard-18, is as below: (a) List of Related Parties

I. Where control exists during the year:

Subsidiaries PILL Finance and investments Ltd, PI Life Science Research Ltd. and PI Japan Co. Ltd, Partnership Firm- J & K Pesticides and Chemicals Corporation (Previous Year).

ii. Enterprises in respect of which reporting enterprise is on associate; Lucrative Leasing Finance and Investment Company Ltd;

Porteek Finance and Investment Company Ltd.

iii. Key Managerial Personnel (KMP):

Mr. Salil Singhal Chairman & Managing Director

Mr. Mayank Singhal Managing Director & CEO

Mr. Anurag Surono Whole time Director

Mr. Junichi Nakano Whole time Director

Relatives of Key Managerial Personnel:-

Relation with Key Managerial

Personnel Mr.Salil Singhal Mr. Mayank Singhal

Father Salil Singhal

Mother Saraswati Singhal Madhu Singhal

Wife Madhu Singhal

Sister Pooja Singhal Shefali Khushlani Son Mayank SinghaI

Daughter Pooja Singhal

Shefali Khushlani

iv. Enter-prises over which KMP and their relatives are able to exercise significant influence :-

Samaya Investment and Tradirig Pvt. Ltd Hycron Electronics; PI Apparels Pvt. Ltd, Wolkem India Ltd,; Secure Meters Ltd.; Salil Singhal (HJF) and Singhal Foundation.

The Following transaction. were corned out with related parties in the ordinary course of business:

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