Mar 31, 2023
1. ''1 Gross carrying amount and accumulated depreciation have been regrouped and netted in line with deemed cost exemption opted out by the Company as per Ind AS,
with effect from April 1,2015 i.e. date of transition to Ind AS for the Company.
2. The above property, plant and equipment are subject to first pari passu charge on the non current loans from banks and second pari passu charge on the working capital loans, both present and future (refer note 13A).
3. ** The Company has discarded certain assets based on the physical verification conducted. During the year ended on March 31, 2023, the loss on such assets is H 2.16
(net) (March 31,2022: H 1.97) in Building, Furniture & Fixture and Plant & machinery due to wear and tear over a period of time.
4. The amount of borrowing costs capitalised during the year ended March 31, 2023 was H 1.72 (March 31, 2022: H 1.33). The average rate used to determine the amount of borrowing costs eligible for capitalisation was 7.14 %, which is the effective interest rate of the borrowings made specifically to acquire/ construct the qualifying asset (refer note 23).
5. Land includes H 10.36 crore located in Chakdoh, Taluka - Katol, and Bazargaon, Taluka - Nagpur (Rural) District - Nagpur pertaining to protected forest land which is held in the name of Revenue and Forest Department - Government of Maharashtra since 01.01.2020.
1. ''1 Gross carrying amount and accumulated amortisation have been regrouped and netted in line with deemed cost exemption opted out by the Company as per Ind AS,
with effect from April 1, 2015 i.e. date of transition to Ind AS for the Company.
2. ''2 Others represents Cast Booster Technical know-how for limited period of 5 Years, Transfer of Technology (TOT) by the Defence Research and Development
Organisation (DRDO) to the Company for manufacturing of products for Indian Armed Forces for limited period of 10 years and Transfer of Technology of Multi Role Precision Kill Systems by Godavari Explosives Limited for a limited period of 5 years.
3. ** The Company has discarded an asset based on the technical evaluation. During the year ended on March 31,2023 , the loss on such assets is H Nil (March 31,2022:
H 0.38) on software and license.
The Company has lease contracts for Office buildings and Leasehold land. Leases of office building generally have lease terms between 2 and 10 years, while leasehold land generally have lease terms between 30 and 99 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets.
The Company applies the ''short-term lease'' and ''lease of low-value assets'' recognition exemptions for leases.
Current loans to related parties pertain to funds advanced for working capital purposes. The said loans are repayable as per repayment schedule and carry an interest at the rate of 7% - 9% per annum. Whereas non current loans to related parties pertain to funds advanced for business purpose. The said loans are repayable as per the repayment schedule but the management does not intend to recover the same in next year, these loans carry an interest at the rate of 7% - 9% per annum.
(b) Terms/ rights attached to equity shares
The Company has only one class of equity shares having a par value of H 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(c) Equity shares held by ultimate holding/ holding company and/ or their subsidiaries/ associates
The Company being ultimate holding company, there are no shares held by any other holding, ultimate holding company and their subsidiaries/ associates.
Nature and purpose of reserves
1. Securities premium
Securities premium is used to record the premium on issue of shares. This reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
2. Capital reserve
The Company recognizes profit or loss on purchase, sale, issue or cancellation of the Company''s own equity instruments to capital reserve.
3. General reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of the Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. The amount transferred to the general reserve can be utilised only in accordance with the specific requirements of the Companies Act, 2013.
4. Cash flow hedge reserve
The Company uses hedging instruments as part of its management of foreign currency risk and interest rate risk associated with borrowings. For hedging foreign currency and interest rate risk, the Company uses foreign currency forward contracts, foreign currency option contracts and interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedged reserve is reclassified to the statement of profit and loss when the hedged item affects the statement of profit and loss (e.g. interest payments).
5. Retained Earnings
Retained earnings are the profits that the Company has earned till date, less transfers to General Reserve and payment of dividend.
6. Investment in Equity Instruments
The Company has classified certain non-current investments as fair value through other comprehensive income as it is a strategic investmnent and is not held for trading purpose. The cumulative amount is classified to retained earnings when the investment is disposed off.
The above non current loans from banks are secured by first pari passu charge on the property, plant and equipments, both present and future, and second pari passu charge on the Company''s current assets, both present and future. Working capital loans have first Pari Passu charge on the Company''s entire current assets, both present and future, and second pari passu charge on the Company''s property, plant and equipments, both present and future as per security document.
Bank loan contains certain debt covenants relating to Total outside liabilities, tangible net worth, current ratio and debt service coverage ratio (DSCR). The Company has satisfied all debt covenants prescribed in the terms of bank loans.
The major components of tax expense for the year ended March 31, 2023 and March 31,2022 are :
Note 27. Employee Benefit obligationsPost-employment obligations
Gratuity and other post-employment benefit plan
The Company has a defined benefit gratuity plan (funded). The Company''s defined benefit gratuity plan is a final salary plan for the employees, which requires contributions to be made to a separately administered fund.
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. Every employee who has completed at least 5 years of service gets a gratuity on departure @ 15 days (minimum) of the last drawn salary for each year of service. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of
employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy. Under the gratuity plan, Company makes contribution to Solar Industries India Limited employee group gratuity assurance scheme (Post employment benefit plan of the Company) (refer note 29). The scheme is funded with an insurance company in the form of qualifying insurance policy.
The following tables summarized the components of net benefit expense recognized in the statement of profit and loss, other comprehensive income, and the funded status and amount recognized in the balance sheet.
The amounts recognized in the balance sheet and the movements in the net defined benefit obligation over the year are as follows:
The estimates of future salary increases in actuarial valuation taking into consideration inflation, seniority, promotion and other relevant factors such as supply and demand in employment market.
The overall expected rate of return on assets is determined based on the interest rate prevailing in the market on that date, applicable to the period over which the obligation is to be settled.
The expected contribution for defined benefit plan for the next finanacial year will be in line with financial year 2022-23.
Note 28. Commitments and contingencies Capital Commitments |
||
March 31,2023 |
March 31,2022 |
|
Estimated amount of contracts remaining to be executed on capital account (net of advances) |
48.95 |
28.80 |
Contingent liabilities |
||
March 31,2023 |
March 31,2022 |
|
Guarantees |
||
Corporate guarantees given by the Company on behalf of its wholly owned overseas subsidiary in respect of loans taken |
466.91 |
345.10 |
Guarantees given by Company''s Bankers on behalf of the Company, against sanctioned letter of credit (SBLC''s) |
342.71 |
315.81 |
Claims against the Company not acknowledged as debts (Note a) |
||
Excise related matters |
6.24 |
6.95 |
Sales tax / VAT related matters |
1.15 |
1.15 |
Advance License Import and Export obligation |
0.50 |
0.29 |
Note a.
The Company is contesting the demands and the management, including its tax/legal advisors, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. Cash outflows for the above are determinable only on receipt of judgements pending at various forums/authorities.
Note b.
The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash (except of Rs. 4.52 with Nigachem Nigeria Limited relating to March 31, 2022). There have been no guarantees provided or received for any related party receivables or payables. Assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
Note : Balance of guarantees outstanding as at the end of the year in foreign curreny have been converted at the prevailing rate of exchange as at the year end.
F. Mr. Kailash Chandra Nuwal, Executive Director and Vice Chairman of the Company has vacated office of Director with effect from November 7, 2019 on account of failure to make disclosures of his shareholding and directorship in AG Technologies Private Limited in the correct / complete format, either on the date of becoming a director thereof or facilitating, without the prior approval of the Audit Committee, a Rent Agreement between the Company and AG Technologies Private Limited, which was related party. Based on legal opinions obtained, the Company has concluded that the aforesaid act was a violation of section 184(1) and 184(2) of the Companies Act, 2013, Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the ''Policy on Related Party Transactions of the Company''. The Company has intimated the Stock exchanges and filed necessary documents with the Registrar of Companies intimating vacation of office by the said Director. The audit committee during its meeting held on July 31,2020 noted that the said transaction was not pre-approved by the audit committee. Hon''ble NCLT, Mumbai Bench had allowed two prayers of the Shri Kailashchandra Nuwal. The Company had challenged the same before the Hon''ble NCLAT, Delhi Bench, wherein interim order was passed on February 25, 2021 staying the operations of the order passed by Hon''ble NCLT on February 9, 2021. On December 14, 2021, the Hon''ble NCLAT Delhi had dismissed the appeal. The Company challenged the order before the Supreme Court of India by filling an Appeal, in which by way of interim order dated January 10, 2022, Hon''ble Supreme Court has stayed the operation of the impugned orders passed by the Hon''ble NCLT and the Hon''ble NCLAT.
* Amount is less than H 0.01 as at March 31,2023 and March 31,2022.
The Company has identified ''Explosives and its accessories'', as its only primary reportable segment. The Board of Directors of the Company have been identified as the Chief Operating Decision Maker (CODM) as defined under Ind AS 108. CODM reviews overall financial information of the Company together for performance evaluation and allocation of resources and does not review any discrete information to evaluate performance of any individual product or geography.
In accordance with paragraph 4 of Ind AS 108 "Operating Segments" the Company has presented segment, information only in the Consolidated financial statements.
Note 31. Fair value measurements
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The Company has established the following fair value hierarchy that categorises the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on Company specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The following methods and assumptions were used to estimate the fair values:
1. The Company has not disclosed the fair values of financial instruments such as cash and cash equivalents, bank balances, other than cash and cash equivalents, trade receivables, other financial assets (except derivatives), trade payables and other financial liabilities (except derivatives) because their carrying amounts are a reasonable approximation of fair value. Further, for financial assets, the Company has taken into consideration the allowances for expected credit losses and adjusted the carrying values where applicable.
2. The fair values of the quoted investments/ units of mutual fund schemes are based on market price/ net asset value at the reporting date.
3. The Company holds derivative financial instruments to mitigate the risk of changes in exchange rates on foreign currency exposures and changes in interest rates. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on inputs that are directly or indirectly observable in the marketplace. The valuation techniques used to value these derivatives include forward pricing, Option contracts and swap models, using present value calculations. These derivatives are marked to market as on the valuation date. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognised at fair value.
4. The fair values for loans given are calculated based on discounted cash flows using current lending rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments are not materially different from their carrying values.
5. Fair values of the Company''s interest-bearing borrowings are determined by using discounted cash flow method using the current borrowing rates. Fair value of such instruments are not materially different from their carrying values. The own non-performance risk as at March 31,2023 was assessed to be insignificant.
Note 32. Financial risk management objectives and policies
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTPL investments and enters into derivative transactions. It has an integrated financial risk management system which proactively identifies monitors and takes precautionary and mitigation measures in respect of various identified risks.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks, which evaluates and exercises independent control over the entire process of financial risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTPL investments and derivative financial instruments. Market risk is attributable to all market risk sensitive financial instruments. The finance department undertakes management of cash resources, hedging strategies for foreign currency exposures, borrowing mechanism and ensuring compliance with market risk limits.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company borrows funds from domestic and international markets to meet its long-term and short-term funding requirements. It is subject to risks arising from fluctuations in interest rates. To manage this, the Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.
0.5% changes in interest rate will increase/ decrease the borrowing cost by H 1.39 Cr (Pre-tax).
0.5% changes in LIBOR will increase/ decrease the borrowing cost by H Nil.
The Company has investment in Bank Deposits and hence is exposed to interest rate sensitivity. 0.5% changes in interest rate will increase/ decrease interest income by H 0.02.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities and the Company''s net investments in foreign subsidiaries.
When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. The Company hedges its exposure to fluctuations on the translation into INR of its foreign operations by holding net borrowings in foreign currencies and by using foreign currency swaps.In order to hedge the foreign currency risk on foreign payables, the Company has taken foreign exchange forward / call spread contracts, which are as follows.
The impact of increases/ decreases of the BSE/ NSE index on the Company''s equity shares and gain/ loss for the year would be H 0.20 (March 31, 2022: H 0.00*) (Pre-tax). The analysis is based on the assumption that the index has increased by 1% or decreased by 1% with all other variables held constant, and that all the Company''s investments having price risk moved in line with the index.
*Amount is less than H 0.01
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Company only deals with parties which has good credit rating/ worthiness given by external rating agencies or based on Company''s internal assessment.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised as income in the statement of profit and loss.
Cash and cash equivalents and deposits: Balances and deposits with banks are subject to low credit risks due to good credit ratings assigned to the banks.
Investments: The Company limits its exposure to credit risk by generally investing in liquid securities and counterparties that have a good credit ratings. The Company does not expect any credit losses from non-performance by these counter parties, and does not have any significant concentration of exposures to specific industry sectors.
Loans: The Company has given loans to subsidiaries. However there is no counter party risk. (refer note 5)
a. Principal revenue generation activity
The Company is engaged in the manufacturing of complete range of industrial explosives, explosive initiating devices and high energy materials for defence applications.
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer.
The timing of revenue recognition, billings and cash collection results in trade receivables, and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) on the balance sheet as at March 31, 2023.
The company discloses receivables from contracts with customer separately in the balance sheet. To comply with the other disclosures requirements for contract assets and contract liabilities following information is disclosed.
e. Transaction price allocated to the remaining performance obligations
Remaining unsatisfied performance obligations represent the transaction price for goods and services for which the Company has a material right but work has not been performed. Transaction price of the order backlog includes the base transaction price, variable consideration and changes in transaction price. The transaction price of order backlog related to unfilled, confirmed customer orders is estimated at each reporting date. As of March 31, 2023, the aggregate amount of the transaction price allocated to order backlog was H 2,201.56 The Company expects to recognise revenue within two years.
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or given loan or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961)
(viii) The Company has not been declared as Wilful defaulter by any Banks, Financial institution or Other lenders.
Note 39. The financial statements were approved for issue by the Board of Directors on May 03, 2023
Mar 31, 2022
1. 1 Gross carrying amount and accumulated depreciation have been regrouped and netted in line with deemed cost exemption opted out by the Company as per Ind AS, with effect from April 1, 2015 i.e. date of transition to Ind AS for the Company.
2. The above property, plant and equipment are subject to first pari passu charge on the non current loans from banks and second pari passu charge on the working capital loans, both present and future (refer note 13A).
3. ** The Company has discarded certain assets based on the phiysical verification conducted. During the year ended on March 31, 2022, the loss on such assets is H 1.97 (net) in Building, Furniture & Fixture and Plant & machinary due to wear and tear over a period of time.
4. The amount of borrowing costs capitalised during the year ended March 31, 2022 was H 1.33 (March 31, 2021: H 3.89). The average rate used to determine the amount of borrowing costs eligible for capitalisation was 6.50 %, which is the effective interest rate of the borrowings made specifically to acquire/ construct the qualifying asset (refer note 23).
5. Land includes H 10.36 crore located in Chakdoh, Taluka - Katol, and Bazargaon, Taluka - Nagpur (Rural) District - Nagpur pertaining to protected forest land which is held in the name of Revenue and Forest Department -Government of Maharashtra since 01.01.2020
1. 1 Gross carrying amount and accumulated amortisation have been regrouped and netted in line with deemed cost exemption opted out by the Company as per Ind AS, with effect from April 1, 2015 i.e. date of transition to Ind AS for the Company.
2. 2 Others represents Cast Booster Technical know-how for limited period of 5 Years and Transfer of Technology (TOT) by the Defence Research and Development Organisation (DRDO) to the Company for manufacturing of products for India Armed Forces for limited period of 10 years. Addition to others in current year represents Transfer of Technology of Multi Role Precisison Kill Systems by Godavri Explosives Limited for a limited period of 5 years .
3. ** The Company has discarded an asset based on the technical evaluation. During the year ended on March 31, 2022, the loss on such assets is H 0.38 on software and license.
The Company has lease contracts for Office buildings and Leasehold land. Leases of office building generally have lease terms between 2 and 10 years, while leasehold land generally have lease terms between 30 and 99 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets.
The Company applies the ''short-term lease'' and ''lease of low-value assets'' recognition exemptions for leases.
As at March 31, 2022, the Company intends to dispose off freehold land as it has no future plans to utilise the same in the next 12 months. It was previously held for setting up a manufacturing plant. No impairment loss was recognised on reclassification of the freehold land held for sale.
1. Loans are non derivative financial assets which generate a fixed interest income for the Company. The carrying value may be affected by changes in the credit risk of the counterparties.
2. No Loans receivable are due from directors or other officers of the Company either severally or jointly with any other person, nor any loans receivable are due from firms or private companies respectively in which any director is a partner, a director or a member, except for the balances disclosed in the notes below.
3. Current loans to related parties pertain to funds advanced for working capital purposes. The said loans are repayable as per repayment schedule and carry an interest at the rate of 9% per annum. Whereas non current loans to related parties pertain to funds advanced for business purpose. The said loans are repayable as per the repayment schedule but the management does not intend to recover the same in next year, these loans carry an interest at the rate of 7% - 9% per annum.
Derivative instruments at fair value through profit or loss reflect the positive change in fair value of those foreign exchange option/forward contracts that are not designated in hedge relationship, but are, nevertheless, intended to reduce the level of foreign currency risk for foreign currency borrowing and trade payables.
1. No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person, nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.
2. Trade receivables are non-interest bearing and are generally on terms of 0 to 180 days.
3. There are no "unbilled" trade receivables, hence the same are not disclosed in the ageing schedule.
The Company has only one class of equity shares having a par value of H 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
The Company being ultimate holding company, there are no shares held by any other holding, ultimate holding company and their subsidiaries/ associates.
As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents the legal ownership of shares.
Securities premium is used to record the premium on issue of shares. This reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
The Company recognizes profit or loss on purchase, sale, issue or cancellation of the Company''s own equity instruments to capital reserve.
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of the Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. The amount transferred to the general reserve can be utilised only in accordance with the specific requirements of the Companies Act, 2013.
The Company uses hedging instruments as part of its management of foreign currency risk and interest rate risk associated with borrowings. For hedging foreign currency and interest rate risk, the Company uses foreign currency forward contracts, foreign currency option contracts and interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedged reserve is reclassified to the statement of profit and loss when the hedged item affects the statement of profit and loss (e.g. interest payments.)
Retained earnings are the profits that the Company has earned till date, less transfers to General Reserve and payment of dividend.
The above non current loan from banks are secured by first pari passu charge on the property, plant and equipments, both present and future, and second pari passu charge on the Company''s current assets, both present and future. Working capital loans have first Pari Passu charge on the Company''s entire current assets, both present and future, and second pari passu charge on the Company''s property, plant and equipments, both present and future as per security document.
Bank loan contains certain debt covenants relating to total outside liabilities, tangible net worth, current ratio and debt service coverage ratio (DSCR) . The Company has satisfied all debt covenants prescribed in the terms of bank loans.
The major components of tax expense for the year ended March 31, 2022 and March 31, 2021 are :
1. * Trade payables are non-interest bearing and are normally settled within 0-60 days term.
2. For trade payables due to Micro and Small enterprises development, refer note 37.
3. For terms and conditions with related parties, refer note 29B.
4. For explanations on the Company''s credit risk management processes, refer note 32.
5. # Acceptances represents credit availed by the Company from banks for payment to suppliers for raw materials purchased by the
Company. The arrangements are generally interest-bearing and are payable within six months to one year.
6. There are no "unbilled" trade payables, hence the same are not disclosed in the ageing schedule.
Note 27. Employee Benefit obligations
The Company has a defined benefit gratuity plan (funded). The Company''s defined benefit gratuity plan is a final salary plan for the employees, which requires contributions to be made to a separately administered fund.
Note 27. Employee Benefit obligations (Contd..)
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed 5 years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. Every employee who has completed at least 5 years of service gets a gratuity on departure @ 15 days (minimum) of the last drawn salary for each year of service. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy. Under the gratuity plan, Company makes contribution to Solar Industries India Limited employee group gratuity assurance scheme (Post employment benefit plan of the Company) (refer note 29). The scheme is funded with an insurance company in the form of qualifying insurance policy.
The following tables summarized the components of net benefit expense recognized in the statement of profit and loss, other comprehensive income, and the funded status and amount recognized in the balance sheet.
The estimates of future salary increases in actuarial valuation taking into consideration inflation, seniority, promotion and other relevant factors such as supply and demand in employment market.
The overall expected rate of return on assets is determined based on the interest rate prevailing in the market on that date, applicable to the period over which the obligation is to be settled.
The expected contribution for defined benefit plan for the next finanacial year will be in line with financial year 2021-22.
1. Liabilities are very sensitive to discount rate, salary inflation and withdrawal rate.
2. Liabilities are very less sensitive due to change in mortality assumptions. Hence, sensitivities due to change in mortality are ignored.
3. The base liability is calculated at discount rate of 6.81% per annum and salary inflation rate of 8.00% per annum for all future years.
The Company is contesting the demands and the management, including its tax/legal advisors, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. Cash outflows for the above are determinable only on receipt of judgements pending at various forums/authorities.
The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash except Nigachem Nigeria Limited of H 4.52 for March 31, 2022 (previous year H 0.93). There have been no guarantees provided or received for any related party receivables or payables. Assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
Note 29. Related Party Information (Contd..)
E. Mr. Kailash Chandra Nuwal, Executive Director and Vice Chairman of the Company has vacated office of Director with effect from November 7, 2019 on account of failure to make disclosures of his shareholding and directorship in AG Technologies Private Limited in the correct / complete format, either on the date of becoming a director thereof or facilitating, without the prior approval of the Audit Committee, a Rent Agreement between the Company and AG Technologies Private Limited, which was related party.
Based on legal opinions obtained, the Company has concluded that the aforesaid act was a violation of section 184(1) and 184(2) of the Companies Act, 2013, Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the ''Policy on Related Party Transactions of the Company''. The Company has intimated the Stock exchanges and filed necessary documents with the Registrar of Companies intimating vacation of office by the said Director.
The audit committee during its meeting held on July 31, 2020 noted that the said transaction was not preapproved by the audit committee.
Hon''ble NCLT, Mumbai Bench had allowed two prayers of the Shri Kailashchandra Nuwal. The Company had challenged the same before the Hon''ble NCLAT, Delhi Bench, wherein interim order was passed on February 25, 2021 staying the operations of the order passed by Hon''ble NCLT on February 9, 2021. On December 14, 2021, the Hon''ble NCLAT Delhi had dismissed the appeal. The Company challenged the order before the Supreme Court of India by filling an Appeal, in which by way of interim order dated January 10, 2022, Hon''ble Supreme Court has stayed the operation of the impugned orders passed by the Hon''ble NCLT and the Hon''ble NCLAT.
The Company has identified ''Explosives and its accessories'', as its only primary reportable segment. The Board of Directors of the Company have been identified as the Chief Operating Decision Maker (CODM) as defined under Ind AS 108. CODM reviews overall financial information of the Company together for performance evaluation and allocation of resources and does not review any discrete information to evaluate performance of any individual product or geography.
In accordance with paragraph 4 of Ind AS 108 "Operating Segments" the Company has presented segment, information only in the Consolidated financial statements.
Note 31. Fair value measurements
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The Company has established the following fair value hierarchy that categorises the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on Company specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The following methods and assumptions were used to estimate the fair values:
1. The Company has not disclosed the fair values of financial instruments such as cash and cash equivalents, bank balances, other than cash and cash equivalents, trade receivables, other financial assets (except derivatives), trade payables and other financial liabilities (except derivatives) because their carrying amounts are a reasonable approximation of fair value. Further, for financial assets, the Company has taken into consideration the allowances for expected credit losses and adjusted the carrying values where applicable.
2. The fair values of the quoted investments/ units of mutual fund schemes are based on market price/ net asset value at the reporting date.
3. The Company holds derivative financial instruments to mitigate the risk of changes in exchange rates on foreign currency exposures and changes in interest rates. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on inputs that are directly or indirectly observable in the marketplace. The valuation techniques used to value these derivatives include forward pricing, Option contracts and swap models, using present value calculations. These derivatives are marked to market as on the valuation date. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognised at fair value.
4. The fair values for loans given are calculated based on discounted cash flows using current lending rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments are not materially different from their carrying values. They are classified as level 2 fair values in the fair value hierarchy.
5. Fair values of the Company''s interest-bearing borrowings are determined by using discounted cash flow method using the current borrowing rates. Fair value of such instruments are not materially different from their carrying values, accordingly non-current borrowings are classified as level 2 fair values in the fair value hierarchy. The own non-performance risk as at March 31, 2022 was assessed to be insignificant.
Note 32. Financial risk management objectives and policies
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTPL investments and enters into derivative transactions. It has an integrated financial risk management system which proactively identifies monitors and takes precautionary and mitigation measures in respect of various identified risks.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks, which evaluates and exercises independent control over the entire process of financial risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTPL investments and derivative financial instruments.
Market risk is attributable to all market risk sensitive financial instruments. The finance department undertakes management of cash resources, hedging strategies for foreign currency exposures, borrowing mechanism and ensuring compliance with market risk limits.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company borrows funds from domestic and international markets to meet its long-term and short-term funding requirements. It is subject to risks arising from fluctuations in interest rates. To manage this, the Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities and the Company''s net investments in foreign subsidiaries.
When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency.
The Company hedges its exposure to fluctuations on the translation into INR of its foreign operations by holding net borrowings in foreign currencies and by using foreign currency swaps.In order to hedge the foreign currency risk on foreign payables, the Company has taken foreign exchange forward / call spread contracts, which are as follows.
The Company has borrowings (long term) in foreign currency amounting to H Nil (March 31, 2021: H 13.00). Accordingly, in order to hedge the foreign currency risk on these foreign payables, the Company has taken foreign exchange forward / call spread contracts, which are as follows:
Nominal value of forward contracts & option contracts that hedge monetary labilities in foreign currencies, and for which no hedge accounting is applied, are recognised in the Statement of profit and loss.
The Company''s listed and non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Company only deals with parties which has good credit rating/ worthiness given by external rating agencies or based on Company''s internal assessment.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised as income in the statement of profit and loss.
Cash and cash equivalents and deposits: Balances and deposits with banks are subject to low credit risks due to good credit ratings assigned to the banks.
Investments: The Company limits its exposure to credit risk by generally investing in liquid securities and counterparties that have a good credit ratings. The Company does not expect any credit losses from nonperformance by these counter parties, and does not have any significant concentration of exposures to specific industry sectors.
Loans: The Company has given loans to subsidiaries. However there is no counter party risk. (refer note 5)
Trade and other receivables:
The Company measures the expected credit loss of trade receivables and loans from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends.
Liquidity risk is the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s finance department is responsible for liquidity, funding as well as settlement management and then processes related to such risks are overseen by senior management through rolling forecasts on the basis of expected cash flows.
For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents and bank balances.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.
Revenue expenditure incurred on R&D has been included in the respective account heads in the Statement of Profit and Loss.
Note 35. Revenue from operations
The Company is engaged in the manufacturing of complete range of industrial explosives, explosive initiating devices and high energy materials for defence applications.
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer.
The timing of revenue recognition, billings and cash collection results in trade receivables, and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) on the Balance Sheet as at March 31, 2022.
Remaining unsatisfied performance obligations represent the transaction price for goods and services for which the Company has a material right but work has not been performed. Transaction price of the order backlog includes the base transaction price, variable consideration and changes in transaction price. The transaction price of order backlog related to unfilled, confirmed customer orders is estimated at each reporting date. As of March 31, 2022, the aggregate amount of the transaction price allocated to order backlog was H 2,625.96 The Company expects to recognise revenue within two years.
The outbreak of Coronavirus (COVID-19) pandemic globally and in India has caused significant disturbance and slowdown of economic activity. During the year ended March 31, 2022, there is no significant impact on the operations of the Company.The Company has taken into account the possible impact of COVID-19 in preparation of financial statements, including its assessment of recoverable value of its assets based on internal and external information upto the date of approval of these financial statements and current indicators of future economic conditions.
Note 39. Compliance with approved Scheme(s) of Arrangements
Pursuant to Composite Scheme of Arrangement and Amalgamation ("Scheme") approved under section 230 to 232 with section 66 of Companies Act, 2013 by the Hon''ble National Company Law Tribunal, Mumbai bench, Blastec (India) Private Limited (Transferor, BIPL and Wholly owned subsidiary of the Company) merged with Emul Tek Private Limited (Transferee, ETPL and Wholly owned subsidiary of the Company). The appointed date of the Scheme is April 1, 2021 and the effective date of the Scheme is September 21, 2021. The BIPL reduced the face value of each equity share from H 100 per equity to H 10 per equity by writing-off against retained earnings along with utilisation of securities premium and general reserve. Upon the Scheme becoming effective, the Company, being the shareholder of BIPL has received equity shares of ETPL at par without any further application or deed and issue. The Company has transferred the cost of investment of BIPL of H 5.41 crores to cost of investment in ETPL in the financial statements.
Note 40. Other Statutory Information:
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or given loan or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vii) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(viii) The Company has not been declared as Wilful defaulter by any Banks, Financial institution or Other lenders. Note 41. The financial statements were approved for issue by the Board of Directors on May 03, 2022.
Mar 31, 2021
1Gross carrying amount and accumulated depreciation have been regrouped and netted in line with deemed cost exemption opted out by the Company as per Ind AS, with effect from April 1, 2015 i.e. date of transition to Ind AS for the Company.
The above property, plant and equipment are subject to first pari passu charge on the non current loans from banks and second pari passu charge on the working capital loans, both present and future (refer note 13A).
The amount of borrowing costs capitalised during the year ended March 31, 2021 was H 3.89 (March 31, 2020: H 1.38). The average rate used to determine the amount of borrowing costs eligible for capitalisation was 7.64 %, which is the effective interest rate of the borrowings made specifically to acquire/ construct the qualifying asset (refer note 23).
Land includes H 10.36 crore located in Chakdoh, Taluka - Katol, and Bazargaon, Taluka - Nagpur (Rural) District - Nagpur pertaining to protected forest land
The Company has lease contracts for Office buildings and Leasehold land. Leases of office building generally have lease terms between 2 and 10 years, while leasehold land generally have lease terms between 30 and 99 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets.
The Company applies the âshort-term lease'' and âlease of low-value assets'' recognition exemptions for leases.
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
1. Loans are non derivative financial assets which generate a fixed interest income for the Company. The carrying value may be affected by changes in the credit risk of the counterparties.
2. No Loans receivable are due from directors or other officers of the Company either severally or jointly with any other person, nor any loans receivable are due from firms or private companies respectively in which any director is a partner, a director or a member, except for the balances disclosed in the notes below.
3. Current loans to related parties pertain to funds advanced for working capital purposes. The said loans are repayable on demand and carry an interest at the rate of 9% per annum. Whereas non current loans to related parties pertain to funds advanced for business purpose. The said loans are repayable on demand but the management does not intend to recover the same in next year, these loans carry an interest at the rate of 9% per annum.
4. Loans to others includes funds advanced to unrelated third parties wherein the said loans are either repayable on demand or as per the repayment schedule agreed within the contractual terms with such third party. The said loans carries an interest at the rate of 9% per annum.
The Company has only one class of equity shares having a par value of H 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
The Company being ultimate holding company, there are no shares held by any other holding, ultimate holding company and their subsidiaries/ associates.
The Company recognizes profit or loss on purchase, sale, issue or cancellation of the Company''s own equity instruments to capital reserve.
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of the Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. The amount transferred to the general reserve can be utilised only in accordance with the specific requirements of the Companies Act, 2013.
The Company uses hedging instruments as part of its management of foreign currency risk and interest rate risk associated with borrowings. For hedging foreign currency and interest rate risk, the Company uses foreign currency forward contracts, foreign currency option contracts and interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedging reserve is reclassified to the statement of profit and loss when the hedged item affects the statement of profit and loss (e.g. interest payments).
Retained earnings are the profits that the Company has earned till date, less transfers to General Reserve and payment of dividend.
Post-employment obligations
Gratuity and other post-employment benefit plan
The Company has a defined benefit gratuity plan (funded). The Company''s defined benefit gratuity plan is a final salary plan for the employees, which requires contributions to be made to a separately administered fund.
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. Every employee who has completed at least 5 years of service gets a gratuity on departure @ 15 days (minimum) of the last drawn salary for each year of service. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy. Under the gratuity plan, Company makes contribution to Solar Industries India Limited employee group gratuity assurance scheme (Post employment benefit plan of the Company) (refer note 29). The scheme is funded with an insurance company in the form of qualifying insurance policy.
The following tables summarized the components of net benefit expense recognized in the statement of profit and loss, other comprehensive income, and the funded status and amount recognized in the balance sheet.
The amounts recognized in the balance sheet and the movements in the net defined benefit obligation over the year are as follows:
The Company is contesting the demands and the management, including its tax/legal advisors, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. Cash outflows for the above are determinable only on receipt of judgements pending at various forums/authorities.
The Code on Social Security, 2020 (âCode'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. Assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
*Amount is less than H 0.01 as at March 31, 2021 and March 31, 2020
"This aforesaid amount does not includes amount in respect of gratuity and leave since the actuarial valuation has been taken for the Company as a whole and individual amounts are not determinable.
"Conversion of loan into investment in March 31, 2020
D. Mr. Kailash Chandra Nuwal, Executive Director and Vice Chairman of the Company has vacated office of Director with effect from November 7, 2019 on account of failure to make disclosures of his shareholding and directorship in AG Technologies Private Limited in the correct / complete format, either on the date of becoming a director thereof or facilitating, without the prior approval of the Audit Committee, a Rent Agreement between the Company and AG Technologies Private Limited, which was (and continued to be) related party. Based on legal opinions obtained, the Company has concluded that the aforesaid act was a violation of section 184(1) and 184(2) of the Companies Act, 2013, Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the âPolicy on Related Party Transactions of the Company''. The Company has intimated the Stock exchanges and filed necessary documents with the Registrar of Companies intimating vacation of office by the said Director. The audit committee during its meeting held on July 31, 2020 noted that the said transaction was not pre-approved by the audit committee. Based on legal evaluation, the Company believes that there are no other legal non-compliance due to vacation of office by the said Director. Hon''ble NCLT, Mumbai Bench had allowed two prayers of the Shri Kailashchandra Nuwal. However Hon''ble NCLAT vide order dated February 25, 2021, stayed the operation of the said order of Hon''ble NCLT.
The Company has identified ''Explosives and its accessories'', as its only primary reportable segment. The Board of Directors of the Company have been identified as the Chief Operating Decision Maker (CODM) as defined under Ind AS 108. CODM reviews overall financial information of the Company together for performance evaluation and allocation of resources and does not review any discrete information to evaluate performance of any individual product of geography.
In accordance with paragraph 4 of Ind AS 108 "Operating Segments" the Company has presented segment, information only in the Consolidated financial statements.
Note 31. Fair value measurements
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The Company has established the following fair value hierarchy that categorises the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on Company specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The following methods and assumptions were used to estimate the fair values:
1. The Company has not disclosed the fair values of financial instruments such as cash and cash equivalents, bank balances, other than cash and cash equivalents, trade receivables, other financial assets (except derivatives) , trade payables and other financial liabilities (except derivatives) because their carrying amounts are a reasonable approximation of fair value. Further, for financial assets, the Company has taken into consideration the allowances for expected credit losses and adjusted the carrying values where applicable.
2. The fair values of the quoted investments/ units of mutual fund schemes are based on market price/ net asset value at the reporting date.
3. The Company holds derivative financial instruments to mitigate the risk of changes in exchange rates on foreign currency exposures and changes in interest rates. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on inputs that are directly or indirectly observable in the marketplace. The valuation techniques used to value these derivatives include forward pricing, Option contracts and swap models, using present value calculations. These derivatives are marked to market as on the valuation date. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognised at fair value.
4. The fair values for loans given are calculated based on discounted cash flows using current lending rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments are not materially different from their carrying values. They are classified as level 2 fair values in the fair value hierarchy.
5. Fair values of the Company''s interest-bearing borrowings are determined by using discounted cash flow method using the current borrowing rates. Fair value of such instruments are not materially different from their carrying values, accordingly non-current borrowings are classified as level 2 fair values in the fair value hierarchy. The own non-performance risk as at March 31,2021 was assessed to be insignificant.
The carrying value and fair value of financial instruments by categories including the quantitative disclosures of fair value measurement hierarchy as at March 31, 2021 is as follows:
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTPL investments and enters into derivative transactions. It has an integrated financial risk management system which proactively identifies monitors and takes precautionary and mitigation measures in respect of various identified risks.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks, which evaluates and exercises independent control over the entire process of financial risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTPL investments and derivative financial instruments.
Market risk is attributable to all market risk sensitive financial instruments. The finance department undertakes management of cash resources, hedging strategies for foreign currency exposures, borrowing mechanism and ensuring compliance with market risk limits.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to therisk of changes in marketinterestratesrelates primarilyto the Company''slong-term debt obligations withfloating interestrates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company borrows
0.5% changes in interest rate will increase/ decrease the borrowing cost by H 0.46 (Pre-tax)
0.5% changes in LIBOR will increase/ decrease the borrowing cost by H 0.06
The Company has investment in Bank Deposits and hence is exposed to interest rate sensitivity. 0.5% changes in interest rate will increase/ decrease interest income by H 0.01
"Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities and the Company''s net investments in foreign subsidiaries.
When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. The Company hedges its exposure to fluctuations on the translation into INR of its foreign operations by holding net borrowings in foreign currencies and by using foreign currency swaps.
The Company has borrowings (long term) in foreign currency amounting to H 13.00 (March 31,2020: H 40.36). Accordingly, in order to hedge the foreign currency risk on these borrowings, the Company has taken foreign exchange forward / call spread contracts, which are as follows:
Nominal value of forward contracts & option contracts that hedge monetary labilities in foreign currencies, and for which no hedge accounting is applied, are recognised in the Statement of profit and loss.
The Company''s listed and non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.
The impact of increases/ decreases of the BSE/ NSE index on the Company''s equity shares and gain/ loss for the year would be H Nil (March 31, 2020: H 0.00*) (Pre-tax). The analysis is based on the assumption that the index has increased by 1% or decreased by 1% with all other variables held constant, and that all the Company''s investments having price risk moved in line with the index.
*Amount is less than H 0.01
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Company only deals with parties which has good credit rating/ worthiness given by external rating agencies or based on Company''s internal assessment.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised as income in the statement of profit and loss.
Cash and cash equivalents and deposits: Balances and deposits with banks are subject to low credit risks due to good credit ratings assigned to the banks.
Investments: The Company limits its exposure to credit risk by generally investing in liquid securities and counterparties that have a good credit ratings. The Company does not expect any credit losses from non-performance by these counter parties, and does not have any significant concentration of exposures to specific industry sectors.
Loans: The Company has given loans to subsidiaries. However there is no counter party risk. (refer note 5)
The Company measures the expected credit loss of trade receivables and loans from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends.
1. Capital Expenditure incurred on R&D is included in property, plant and equipment and depreciation is provided on the same at the respective applicable rates.
2. Revenue expenditure incurred on R&D has been included in the respective account heads in the Statement of Profit and Loss.
Note 35. Revenue from operations
The Company is engaged in the manufacturing of complete range of industrial explosives, explosive initiating devices and high energy materials for defence applications.
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer.
The timing of revenue recognition, billings and cash collection results in trade receivables, and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) on the balance sheet as at March 31,2021.
The company discloses receivables from contracts with customer separately in the balance sheet. To comply with the other disclosures requirements for contract assets and contract liabilities following information is disclosed.
Remaining unsatisfied performance obligations represent the transaction price for goods and services for which the Company has a material right but work has not been performed. Transaction price of the order backlog includes the base transaction price, variable consideration and changes in transaction price. The transaction price of order backlog related to unfilled, confirmed customer orders is estimated at each reporting date. As of March 31,2021, the aggregate amount of the transaction price allocated to order backlog was H 1,155.07 The Company expects to recognise revenue within the range from 90% to 95% of the order backlog through 2021-22.
Note 37. The outbreak of Coronavirus (COVID-19) pandemic globally and in India has caused significant disturbance and slowdown of economic activity.
The Company has made an assessment of the impact of the pandemic on its operations and the carrying value of current and non-current assets and financial position based on the internal and external sources of information and indicators of economic forecasts. Based on such assessment, the Company is confident of recovering the carrying value of these assets as at March 31,2021 and fulfil its obligations as and when they fall due.
The future impact of the global health pandemic may be different from that estimated as at the date of approval of these financial statements and the Company will continue to closely monitor any material changes to future economic conditions.
Note 38. The financial statements were approved for issue by the Board of Directors on May 27, 2021
Mar 31, 2019
Note:
Derivative instruments at fair value through profit or loss reflect the positive change in fair value of those foreign exchange option/forward contracts that are not designated in hedge relationship, but are, nevertheless, intended to reduce the level of foreign currency risk for foreign currency borrowing.
Note 11. Equity Share Capital (contd.)
In theevent of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(c) Equity Shares held by Ultimate Holding/ Holding Company and/ or their Subsidiaries/ Associates
The Company being ultimate holding company, there are no shares held by any other holding, ultimate holding company and their subsidiaries/ associates.
Nature and Purpose of Reserves
1. Securities Premium
Securities premium is used to record the premium on issue of shares. This reserve can be utilized only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
2. Capital Reserve
The Company recognizes profit or loss on purchase, sale, issue or cancellation of the Company''s own equity instruments to capital reserve.
3. General Reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of the Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. The amount transferred to the general reserve can be utilized only in accordance with the specific requirements of the Companies Act, 2013.
4. Cash Flow Hedge Reserve
The Company uses hedging instruments as part of its management of foreign currency risk and interest rate risk associated with borrowings. For hedging foreign currency and interest rate risk, the Company uses foreign currency forward contracts, foreign currency option contracts and interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognized in the cash flow hedging reserve. Amounts recognized in the cash flow hedging reserve is reclassified to the statement of profit and loss when the hedged item affects the statement of profit and loss (e.g. interest payments).
The above foreign currency working capital loans and Buyer''s credit from Banks carries an interest rate of LIBOR 28 bps to 130 bps Security
The above noncurrent loans from banks are secured by first pari passu charge on the property, plant and equipments, both present and future, and second pari passu charge on the Company''s current assets, both present and future. Working capital loans have first Pari Passu charge on the Company''s entire current assets, both present and future, and second pari passu charge on the Company''s entire property, plant and equipments, both present and future.
Loan Covenants
Bank loan contains certain debt covenants relating to debt-equity ratio, net borrowings to EBITDA ratio, interest coverage ratio, debt service coverage ratio (DSCR), gearing ratio & fixed asset coverage ratio. The Company has satisfied all debt covenants prescribed in the terms of bank loans.
The other loans do not carry any debt covenants. The Company has not defaulted on any loans payable.
Note 2. Employee Benefit Obligations Post-employment obligations
Gratuity and other post-employment benefit plan
The Company has a defined benefit gratuity plan (funded). The Company''s defined benefit gratuity plan is a final salary plan for the employees, which requires contributions to be made to a separately administered fund.
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. Every employee who has completed at least 5 years of service gets a gratuity on departure @ 15 days (minimum) of the last drawn salary for each year of service. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy . Under the gratuity plan, Company makes contribution to Solar Industries India Limited employee group gratuity assurance scheme (Post employment benefit plan of the Company) (refer note 29). The scheme is funded with an insurance company in the form of qualifying insurance policy.
The following tables summarized the components of net benefit expense recognized in the statement of profit and loss, other comprehensive income, and the funded status and amount recognized in the balance sheet.
Note 3. Commitments and Contingencies (contd.)
Note a
The Company is contesting the demands and the management, including its tax/legal advisors, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. Cash outflows for the above are determinable only on receipt of judgments pending at various forums/authorities.
Note b
There are numerous interpretative issues relating to the Supreme Court (SC) judgment on PF dated 28th February, 2019. The Company does not expect to have a significant impact of the above ruling. The company will evaluate and update its provision, on receiving further clarity on the subject.
Note 4. Group Information
A Names of related parties and related party relationship :
I Subsidiaries and associates Indian subsidiaries
1 Economic Explosives Limited
2 Blastec (India) Private Limited
3 Emul Tek Private Limited
4 Solar Defence Limited (Note - i)
5 Solar Defence Systems Limited (Note - i)
Overseas subsidiary
1 Solar Overseas Mauritius Limited
Overseas step down subsidiaries
1 Solar Mining Services Pty Limited, South Africa
2 Nigachem Nigeria Limited
3 Solar Overseas Netherlands B.V.
4 Solar Explochem Zambia Limited
5 Solar Patlayici Maddeler Sanayi Ve Ticaret Anonim Sirketi
6 P.T. Solar Mining Services (Note - i)
7 Solar Explochem (Ghana) Limited (Note - ii)
8 PATSAN Patlayici Maddeler Sanayi Ve Ticaret Anonim Sirketi (Note - ii)
9 Solar Nitro Ghana Limited (Note - i)
10 Solar Madencilik Hizmetleri A.S
11 Solar Overseas Netherlands Cooperative U.A
12 Solar Overseas Singapore Pte Ltd
13 Solar Industries Africa Limited
14 Solar Nitro Zimbabwe (Private) Limited (Note - i & iv)
15 Solar Nitro Chemicals Limited (Note - i)
16 Solar Mining Services Pty Ltd, Australia*
17 Solar Industrias Mozambique LDA (Note - iii)
Associates / Joint Ventures
1 Solar Bhatgaon Extension Mines Pvt. Limited (Note - i)
2 SMS Bhatgaon Mines Extension Pvt. Limited (Note - i)
Note - i: The entity has not commenced its business operations
Note - ii: The entity is under liquidation
Note - iii: The entity liquidated on October 18, 2018
Note - iv: The entity is incorporated on October 10, 2018
*Formerly known as Australian Explosives Technologies Group Pty Limited
II Key Management Personnel (KMP)
Shri Satyanarayan Nuwal (Chairman and Executive Director)
Shri Kailashchandra Nuwal (Vice Chairman and Executive Director)
Shri Manish Nuwal (Managing Director and CEO)
Shri Roomie Dara Vakil (Executive Director) (Resigned w.e.f. May 11, 2018)
Shri Suresh Menon (Executive Director) (Appointed w.e.f. May 11, 2018)
Shri Anil Kumar Jain (Executive Director)
Shri Nilesh Panpaliya (Chief Financial Officer)
Smt Khushboo Pasari (Company Secretary and Compliance Officer)
III Non Executive Directors #
Shri Anant Sagar Awasthi Shri Dilip Patel Shri Ajai Nigam Shri Amrendra Verma Smt Madhu Vij
# Non executive Independent Directors were only paid sitting fees for attending Board & Board Committee meetings for the year 2018-19.
The Company has not entered into any other transactions with its Non Executive Independent Directors or the enterprises over which they have significant influence.
IV Enterprises, over which control or significant influence is exercised by individuals listed in ''II'' above (with whom transactions have taken place)
Solar Synthetics Private Limited Solar Enlightenment Foundation
V Other related parties
Solar Industries India Limited employee group gratuity assurance scheme (Post employment benefit plan of the Company)
Refer note 27 for information on transactions with post employment benefit plan mentioned above
VI Enterprises, over which control or significant influence is exercised by individuals listed in âII'' above (other than IV above)
Mahakal Infrastructures Private Limited*
Mahakal Project Private Limited*
Nagpur Infrastructure Private Limited Solar Processors (Bhilwara) Limited Gulmohar Developers and Constructions Private Limited Sun Developers and Constructions Private Limited Sunbeam Developers and Constructions Private Limited Sundrop Realtors Private Limited*
Sunland Infracon Private Limited*
Sunlight Infraventures Private Limited*
Sundrop Developers and Ventures LLP Commercial Sales Corporation
VII Entities with Joint control
Astra Resources (Pty) Limited
*The entities are under process of striking off.
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2019, the Company has recorded an impairment of receivables relating to amounts owed by related parties of H Nil (March 31, 2018: H 4.30). 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.
*This aforesaid amount does not includes amount in respect of gratuity and leave since the actuarial valuation has been taken for the Company as a whole and individual amounts are not determinable.
Note 5. Segment Information
The Company has identified ''Explosives and its accessories'', as its only primary reportable segment. The Board of Directors of the Company have been identified as the Chief Operating Decision Maker (CODM) as defined under Ind AS 108. CODM reviews overall financial information of the Company together for performance evaluation and allocation of resources and does not review any discrete information to evaluate performance of any individual product of geography.
In accordance with paragraph 4 of Ind AS 108 "Operating Segments" the Company has presented segment, information only in the Consolidated financial statements.
Note 6. Fair Value Measurements
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The Company has established the following fair value hierarchy that categorizes the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on Company specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The following methods and assumptions were used to estimate the fair values:
1. The Company has not disclosed the fair values of financial instruments such as cash and cash equivalents, bank balances, other than cash and cash equivalents, trade receivables, other financial assets (except derivatives) , trade payables and other financial liabilities (except derivatives) because their carrying amounts are a reasonable approximation of fair value. Further, for financial assets, the Company has taken into consideration the allowances for expected credit losses and adjusted the carrying values where applicable.
2. The fair values of the quoted investments/ units of mutual fund schemes are based on market price/ net asset value at the reporting date.
3. The Company holds derivative financial instruments to mitigate the risk of changes in exchange rates on foreign currency exposures and changes in interest rates. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on inputs that are directly or indirectly observable in the marketplace. The valuation techniques used to value these derivatives include forward pricing and swap models, using present value calculations. These derivatives are marked to market as on the valuation date. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.
4. The fair values for loans given are calculated based on discounted cash flows using current lending rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments are not materially different from their carrying values. They are classified as level 2 fair values in the fair value hierarchy.
5. Fair values of the Company''s interest-bearing borrowings are determined by using discounted cash flow method using the current borrowing rates. Fair value of such instruments are not materially different from their carrying values, accordingly non-current borrowings are classified as level 2 fair values in the fair value hierarchy. The own non-performance risk as at March 31, 2019 was assessed to be insignificant.
Note 7. Financial Risk Management Objectives and Policies
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTPL investments and enters into derivative transactions. It has an integrated financial risk management system which proactively identifies monitors and takes precautionary and mitigation measures in respect of various identified risks.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks, which evaluates and exercises independent control over the entire process of financial risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTPL investments and derivative financial instruments.
Market risk is attributable to all market risk sensitive financial instruments. The finance department undertakes management of cash resources, hedging strategies for foreign currency exposures, borrowing mechanism and ensuring compliance with market risk limits.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company is not very significantly exposed to interest rate risks except the variations in LIBOR rates as most of borrowings are linked to LIBOR. To manage this, the Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.
0.5% changes in LIBOR will increase/ decrease the borrowing cost by RS,0.86 (Pre-tax)
The Company does not have significant investment in Bank Deposits and hence not significantly exposed to Interest rate sensitivity.
Note 8. Financial Risk Management Objectives and Policies (contd.)
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities and the Company''s net investments in foreign subsidiaries.
When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency.
The Company hedges its exposure to fluctuations on the translation into INR of its foreign operations by holding net borrowings in foreign currencies and by using foreign currency swaps.
a) Derivative outstanding as at the reporting date
The Company has borrowings(short term and long term) in foreign currency amounting to RS,171.31 (March 31, 2018: RS,145.83). Accordingly, in order to hedge the foreign currency risk on these borrowings, the Company has taken foreign exchange forward / call spread contracts, which are as follows:
Nominal value of forward contracts & option contracts that hedge monetary labilities in foreign currencies, and for which no hedge accounting is applied, are recognized in the Statement of profit and loss.
Note 9. Financial Risk Management Objectives and Policies (contd.)
Equity Price Risk
The Company''s listed and non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.
The impact of increases/ decreases of the BSE/ NSE index on the Company''s equity shares and mutual funds and gain/ loss for the year would be RS,0.30 (March 31, 2018: RS,0.08) (Pre-tax). The analysis is based on the assumption that the index has increased by 1% or decreased by 1% with all other variables held constant, and that all the Company''s investments having price risk moved in line with the index.
Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Company only deals with parties which has good credit rating/ worthiness given by external rating agencies or based on Company''s internal assessment.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized as income in the statement of profit and loss.
Cash and cash equivalents and deposits: Balances and deposits with banks are subject to low credit risks due to good credit ratings assigned to the banks.
Investments: The Company limits its exposure to credit risk by generally investing in liquid securities and counterparties that have a good credit ratings. The Company does not expect any credit losses from non-performance by these counter parties, and does not have any significant concentration of exposures to specific industry sectors.
Loans: The Company has given loans to subsidiaries. However there is no counter party risk. (refer note 5)
Trade and Other Receivables:
The Company measures the expected credit loss of trade receivables and loans from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends.
Note 10. Financial Risk Management Objectives and Policies (contd.)
No significant changes in estimation techniques or assumptions were made during the reporting period.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s finance department is responsible for liquidity, funding as well as settlement management and then processes related to such risks are overseen by senior management through rolling forecasts on the basis of expected cash flows.
Maturity profile of financial liabilities
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date
Note 11. Capital Management
For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximize the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents and bank balances.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.
No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2019.
Note 12. Research & Development Expenditure:
1. Capital Expenditure incurred on R&D is included in property, plant and equipment and depreciation is provided on the same at the respective applicable rates.
2. Revenue expenditure incurred on R&D has been included in the respective account heads in the Statement of Profit and Loss.
c. Contract Balances
The timing of revenue recognition, billings and cash collection results in trade receivables, and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) on the balance sheet as at March 31, 2019.
The company discloses receivables from contracts with customer separately in the balance sheet. To comply with the other disclosures requirements for contract assets and contract liabilities following information is disclosed.
Increase/ (decrease) in contract liability is mainly on account of receipt from customers and revenue recognized during the year.
f. Transaction Price Allocated to the Remaining Performance Obligations
Remaining unsatisfied performance obligations represent the transaction price for goods and services for which the Company has a material right but work has not been performed. Transaction price of the order backlog includes the base transaction price, variable consideration and changes in transaction price. The transaction price of order backlog related to unfilled, confirmed customer orders is estimated at each reporting date. As of March 31, 2019, the aggregate amount of the transaction price allocated to order backlog was RS,917.85. The Company expects to recognize revenue within the range from 90% to 95% of the order backlog througRs,2019-20.
Note 13. Exceptional items
Chhattisgarh Mineral Development Corporation (CMDC), SMS Infrastructure Limited (SMS) and the Company (SOLAR) entered into a joint venture agreement (JVA) dated September 12, 2008 to develop and operate the coal block. As per the tender condition, the Company made a payment of H 45.11 to CMDC for coal mining project. Following companies namely (i) Bhatgaon Mines Private Limited (âBMPLâ); and (ii) Bhatgaon Extension Mines Private Limited (âBEMPLâ) were incorporated for this purpose and transactions made by the Company before forming of the aforesaid companies were incorporated in the books of BEMPL and BMPL and reflected as loan given in Company''s books. The Company made further payments of RS,12.09 to BEMPL, BMPL, and other JV companies (SPVs) for coal block business purposes.
On July 19, 2013, CMDC terminated the JVA citing failure on part of SOLAR and SMS to perform their obligations. Further, the coal blocks got de-allocated by Ministry of Coal due to unsatisfactory progress. Due to de-allocation of coal blocks and considering the uncertainty, the Board of Directors of the Company approved not to charge interest on loans given to BEMPL and BMPL from FY 2012-13. Due to termination of JVA, SOLAR and SMS initiated arbitration proceedings against CMDC for recovery of their investments. Arbitration was awarded in favour of SOLAR and SMS vide order dated April 9, 2018 and accordingly, CMDC made a payment of RS,73.60 including interest of RS,19.16 to BMPL.
The said amount received by BMPL was apportioned between SOLAR and SMS in the ratio of their respective investments made. Accordingly, the Company has received an amount of RS,51.15 (including interest of RS,13.30) as against the total investments of RS,57.19 (in form of loans to BEMPL
& BMPL disclosed under Note 5 as âNon current loans'' amounting to RS,56.05 and other receivables from SPVs disclosed under Note 6 as âOther financial assets'' amounting to RS,1.14). Accordingly, the Company has recognized interest income of RS,13.30 and written off the balance amount of RS,19.35, and disclosed the net amount of H 6.05 under exceptional items in the Statement of profit and loss.
Note : Dues to Micro & Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by management. This has been relied upon by the auditors.
Note 14. The financial statements were approved for issue by the Board of Directors on May 09, 2019
Mar 31, 2018
1. Amortized cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in other income using effective interest rate method.
2. Fair value through profit and loss:
Assets that do not meet the criteria of amortized cost are measured at fair value through Profit and Loss. Interest income from these financial assets is included in other income.
B. Equity instruments:
The Company measures its equity investment other than in subsidiaries and associates at fair value through profit and loss. However, where the Company''s management makes an irrevocable choice on initial recognition to present fair value gains and losses on specific equity investments in other comprehensive income (currently no such choice made), there is no subsequent reclassification, on sale or otherwise, of fair value gains to the statement of profit and loss.
C. De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognized (i.e. removed from the Company''s balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
ii) Financial liabilities
Classification
The Company classifies its financial liabilities in the following measurement categories:
- those to be measured subsequently at fair value through the Statement of Profit and Loss, and
- those measured at amortized cost Measurement
A. Financial liabilities at amortized cost
Financial liabilities at amortized cost represented by borrowings, trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost.
B. Financial liabilities at fair value through profit and loss:
Financial liabilities at fair value through profit and loss are measured at fair value with all changes recognized in the statement of profit and loss.
C. Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative amortisation.
iii) Derivative financial instruments and hedge accounting
The Company uses derivative financial instruments, such as forward currency contracts, foreign currency option contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks, respectively. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognized in OCI and later reclassified to profit or loss when the hedge item affects profit or loss or treated as basis adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability.
For the purpose of hedge accounting, hedges are classified as:
- Fair value hedges when hedging the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment
- Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognized firm commitment
- Hedges of a net investment in a foreign operation
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the company''s risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument''s fair value in offsetting the exposure to changes in the hedged item''s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
iv) Impairment of financial assets
The Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on financial assets. The Company measures the ECL associated with its assets based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, the Company follows âsimplified approach'' for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss (P&L). This amount is reflected under the head âother expenses'' in the P&L.
j. Revenue
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Based on the Educational Material on Ind AS 18 issued by the ICAI, the Company has assumed that recovery of excise duty flows to the Company on its own account. This is for the reason that it is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not. Since the recovery of excise duty flows to the Company on its own account, revenue includes excise duty only.
However, sales tax /value added tax (VAT) / Goods and service tax (GST) is not received by group on its own account. Rather, it is tax collected as value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognized.
i) Sale of goods
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
ii) Sale of projects
Revenue from the sale of projects is recognized when the significant risks and rewards of ownership of the project have passed to the buyer which generally will be at the time of sale. Revenue from sale of projects is measured at the fair value of the consideration received or receivable.
iii) Interest Income
Interest income is recognized on a time proportion basis taking into account the carrying amount and the effective interest rate. Interest income is included under the head âOther income'' in the statement of profit and loss.
iv) Dividends
Revenue is recognized when the Company''s right to receive the dividend is established by the reporting date. Dividend income is included under the head âOther income'' in the statement of profit and loss.
k. Government grants
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Government grant received in the form of sales tax subsidy has been considered as revenue grant and the same has been recognized in the statement of profit and loss.
When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as a government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
l. Foreign currency translation
i) Functional and presentation currency
The financial statements are presented in Indian rupee (INR), which is Company''s functional and presentation currency.
ii) Transactions and balances
Transactions in foreign currencies are recognized at the prevailing exchange rates on the transaction dates. Realized gains and losses on settlement of foreign currency transactions are recognized in Statement of Profit and Loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognized in the Statement of Profit and Loss.
m. Inventories
Inventories are valued at the lower of cost and net realizable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
(i) Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.
(ii) Finished goods and work in progress: cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity but excluding borrowing costs. Cost is determined on weighted average basis.
(iii) Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
n. Retirement and other employee benefits
(i) Provident Fund
Provident fund is a defined contribution plan covering eligible employees. The Company and the eligible employees make a monthly contribution to the provident fund maintained by the Regional Provident Fund Commissioner equal to the specified percentage of the basic salary of the eligible employees as per the scheme. The contributions to the provident fund are charged to the statement of profit and loss for the period/year when the contributions are due. The Company has no obligation, other than the contribution payable to the provident fund.
(ii) Gratuity
Gratuity is a defined benefit obligation plan operated by the Company for its employees covered under Company Gratuity Scheme. The cost of providing benefit under gratuity plan is determined on the basis of actuarial valuation using the projected unit credit method at the reporting date. The scheme is funded with an insurance company in the form of qualifying insurance policy. Remeasurements, comprising of actuarial gains and losses are recognized in full in the statement of other comprehensive income in the reporting period in which they occur. Remeasurements are not reclassified to profit and loss subsequently.
(iii) Leave encashment
Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit for measurement purposes. The
Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Re-measurements, comprising of actuarial gains and losses are recognized in full in the statement of profit and loss.
The Company presents the entire leave encashment liability as a current liability in the balance sheet, since employee is entitled to avail leave anytime and hence the company does not have an unconditional right to defer its settlement for twelve months after the reporting date.
o. Income taxes
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in statement of profit and loss.
Deferred income taxes reflect the impact of temporary differences between tax base of assets and liabilities and their carrying amounts. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except deferred tax liability arising from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, affects neither accounting nor taxable profit/loss at the time of transaction. Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses, except deferred tax assets arising from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, affects neither accounting nor taxable profit/loss at the time of transaction. Deferred tax assets are recognized only to the extent that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available against which such deferred tax assets can be realized.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.
Deferred tax relating to items recognized outside the statement of profit and loss is recognized in co-relation to the underlying transaction either in other comprehensive income or directly in equity.
Minimum alternate tax (MAT) credit is recognized as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount is written down to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
p. Segment reporting
(i) Identification of segment
Operating segments are reported in the manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company.
(ii) Segment accounting policies
The Company has identified âExplosives and its accessories'', as its only primary reportable segment. The Board of Directors of the Holding Company have been identified as the Chief Operating Decision Maker (CODM) as defined under Ind AS 108. CODM reviews overall financial information of the Company together for performance evaluation and allocation of resources and does not review any discrete information to evaluate performance of any individual product or geography.
The Company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the Company as a whole. In accordance with paragraph 4 of Ind AS 108- âOperating Segmentsâ the Company has disclosed segment information only on basis of the consolidated financial statements which are presented together along with the standalone financial statements.
q. Earnings per share (EPS)
Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the reporting period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any occurred during the reporting period, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year, are adjusted for the effects of all dilutive potential equity shares.
The number of shares and potential dilutive equity shares are adjusted retrospectively for all periods presented for any bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
r. Provisions
A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on the best estimate required to settle the obligation at the reporting date. If the effect of time value of money is material, provisions are discounted using a current pretax rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
s. Contingent liability
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.
t. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
u. Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2âValuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3âValuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
v. Non-current assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decisions to sell will be withdrawn. Management must be committed to the sale expected within one year from the date of classification.
For these purposes, sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance. The criteria for held for sale classification is regarded met only when the assets is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets, its sale is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale of the asset to be highly probable when:
- The appropriate level of management is committed to a plan to sell the asset ,
- An active programme to locate a buyer and complete the plan has been initiated (If applicable),
- The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
- The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
- Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Non-Current assets held for sale are measured at the lower of their carrying amount and the fair value less costs to sell. Assets and liabilities classified as held for sale are presented separately in the balance sheet.
Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortized.
w. Significant accounting estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Useful Lives of Property, Plant & Equipment
The Company uses its technical expertise along with historical trends for determining the useful life of an asset/ component of an asset which are different from the useful life prescribed in Schedule II to the Companies Act, 2013. The useful lives are reviewed by management periodically and revised, if appropriate. In case of a revision, the unamortized depreciable amount is charged over the remaining useful life of the assets.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
Taxes
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
x. Recent accounting pronouncements
Standards issued but not effective Ind AS 115 Revenue from Contracts with Customers
Ind AS 115 was notified on March 28, 2018 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The new revenue standard will supersede all current revenue recognition requirements under Ind AS. This new standard requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Ind AS 115 is effective for the Company in the first quarter of financial year 2018-19 using either one of two methods:
(i) retrospectively to each prior reporting period presented in accordance with Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors, with the option to elect certain practical expedients as defined within Ind AS 115 (the full retrospective method); or (ii) retrospectively with the cumulative effect of initially applying Ind AS 115 recognized at the date of initial application (April 01, 2018) and providing certain additional disclosures as defined in Ind AS 115 (the modified retrospective method).
The Company continues to evaluate the available transition methods and its contractual arrangements. The ultimate impact on revenue resulting from the application of Ind AS 115 will be subject to assessments that are dependent on many variables, including, but not limited to, the terms of the contractual arrangements and the mix of business. The Company''s considerations also include, but are not limited to, the comparability of its financial statements and the comparability within its industry from application of the new standard to its contractual arrangements. The Company continues to evaluate the changes to accounting system and processes, and additional disclosure requirements that may be necessary. A reliable estimate of the quantitative impact of Ind AS 115 on the financial statements will only be possible once the implementation project has been completed. This standard will come into force from accounting period commencing on or after April 01, 2018, hence do not impact the standalone financial statements for the year ended March 31, 2018.
Amendments to Ind AS 112 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure requirements in Ind AS 112
The amendments clarify that the disclosure requirements in Ind AS 112, other than those in paragraphs B10-B16, apply to an entity''s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal Company that is classified) as held for sale.
The amendment are effective retrospectively for annual periods beginning on or after April 01, 2018, the Company will assess and apply the amendment effective for annual periods beginning on or after April 01, 2018, as applicable.
Amendments to Ind AS 12 Recognition of Deferred Tax Assets for Unrealized Losses
The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.
Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognized in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact.
These amendments are effective for annual periods beginning on or after April 01, 2018, the Company will assess and apply the amendment effective for annual periods beginning on or after April 01, 2018, as applicable.
Transfers of Investment Property â Amendments to Ind AS 40
The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management''s intentions for the use of a property does not provide evidence of a change in use.
Entities should apply the amendments prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance with Ind AS 8 is only permitted if it is possible without the use of hindsight.
The amendments are effective for annual periods beginning on or after April 01, 2018, the Company will assess and apply the amendment effective for annual periods beginning on or after April 01, 2018, as applicable.
Ind AS 28 Investments in Associates and Joint Ventures - Clarification that measuring investees at fair value through profit or loss is an investment-by-investment choice
The amendments clarify that:
An entity that is a venture capital organization, or other qualifying entity, may elect, at initial recognition on an investment-by-investment basis, to measure its investments in associates and joint ventures at fair value through profit or loss.
If an entity, that is not itself an investment entity, has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate''s or joint venture''s interests in subsidiaries. This election is made separately for each investment entity associate or joint venture, at the later of the date on which:
(a) the investment entity associate or joint venture is initially recognized; (b) the associate or joint venture becomes an investment entity; and (c) the investment entity associate or joint venture first becomes a parent.
The amendments should be applied retrospectively and are effective from April 01, 2018. These amendments are not applicable to the Company.
Appendix B to Ind AS 21 Foreign Currency Transactions and Advance Consideration
The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration.
Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognized on or after:
(i) The beginning of the reporting period in which the entity first applies the Appendix, or
(ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix.
The Appendix is effective for annual periods beginning on or after April 01, 2018, the Company will assess and apply the amendment effective for annual periods beginning on or after April 01, 2018, as applicable.
1 The National Company Law Tribunal (NCLT) has approved merger of Solar Mines & Minerals Limited and Solar Mining Resources Limited (Transferor companies) with Economic Explosives Limited (Transferee company) effective from April 1, 2017. Considering both Transferor and Transferee company are wholly owned subsidiaries of the Company and as part of the Scheme, upon Scheme coming into effect, all the shares of two transferor Companies held by the Company, on the effective date shall stand cancelled and extinguished. Accordingly, investment in transferee companies have been charged to income statement.
Notes:
1. Loans are non derivative financial assets which generate a fixed or variable interest income for the group. The carrying value may be affected by changes in the credit risk of the counterparties.
2. Non-current unsecured loans to other includes amounts which are outstanding for more than 12 months and as approved by board, no interest is charged on the same. The Company has filed a litigation against the counterparty for recovery of the said amount. Subsequent to the balance sheet date, the Company has received the award of the arbitration in its favour. Accordingly, the management believes that this amount would be recovered in full, however, since the counterparty carries the right to appeal against the outcome of the arbitration with higher authorities, the timing of such recovery is uncertain and hence the same is continued to be classified as non-current.
3. No Loans receivable are due from directors or other officers of the company either severally or jointly with any other person, nor any loans receivable are due from firms or private companies respectively in which any director is a partner, a director or a member, except for the balances disclosed in the notes below.
4. Loans to subsidiaries / step-down subsidiaries pertain to funds advanced to the said related parties for regular working capital requirements. The said loans are repayable on demand and carry an interest rate at the rate of 9% per annum.
5. Loans to others includes funds advanced to unrelated third parties wherein the said loans are either repayable on demand or as per the repayment schedule agreed within the contractual terms with such third party. The said loans carry an interest rate @ 12% per annum.
Notes:
1. Derivative instruments at fair value through profit or loss reflect the positive change in fair value of those foreign exchange option/forward contracts that are not designated in hedge relationship, but are, nevertheless, intended to reduce the level of foreign currency risk for foreign currency borrowing.
No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person, nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member, except for the balances disclosed in the notes below.
Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.
(b) Terms/ rights attached to equity shares
The Company has only one class of equity shares having a par value of H2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(c) Equity shares held by ultimate holding/ holding company and/ or their subsidiaries/ associates
The Company being ultimate holding company, there are no shares held by any other holding, ultimate holding company and their subsidiaries/ associates.
As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents the legal ownership of shares.
The above foreign currency from Banks carries an interest rate of LIBOR 100 to 300 bps The Indian rupee long term loan from Bank carries an interest rate of 3% 1year MCLR
The above foreign currency loans and Buyer''s credit from Banks carries an interest rate of LIBOR 30 bps to LIBOR 300 bps Security
The above noncurrent loans from banks are secured by first pari passu charge on the tangible movable and immovable fixed assets and second pari passu charge on the Company''s current asset. Working capital loans have first Pari Passu charge on Company''s entire current asset, both present and future and second Pari Passu charge on Company''s entire fixed assets, both present and future.
Loan covenants
Bank loan contains certain debt covenants relating to debt-equity ratio, net borrowings to EBITDA ratio, interest coverage ratio, debt service coverage ratio (DSCR), gearing ratio & fixed asset coverage ratio. The Company has satisfied all debt covenants prescribed in the terms of bank loans.
The other loans do not carry any debt covenants.
The Company has not defaulted on any loans payable.
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
During the year ended March 31, 2018 and March 31, 2017, the Company has paid dividend to its shareholders. This has resulted in payment of DDT to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence DDT paid is charged to equity.
Sale of products includes excise duty collected from customers of RS,32.08 (March 31, 2017 : RS,115.91). Sale of products net of excise duty is RS,1,230.54 (March 31, 2017 : RS,1,094.29). Revenue from operations for periods up to June 30, 2017 includes excise duty. From July 1, 2017 onwards the excise duty and most indirect taxes in India have been replaced with Goods and Service Tax (GST). The Company collects GST on behalf of the Government. Hence, GST is not included in revenue from operations. In view of the aforesaid change in indirect taxes, revenue from operations for the year ended March 31, 2018 is not comparable to the year ended March 31, 2017.
Post-employment obligations
Gratuity and other post-employment benefit plan
The Company has a defined benefit gratuity plan (funded). The Company''s defined benefit gratuity plan is a final salary plan for the employees, which requires contributions to be made to a separately administered fund.
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. Every employee who has completed at least 5 years of service gets a gratuity on departure @ 15 days (minimum) of the last drawn salary for each year of service. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy . Under the gratuity plan, Company makes contribution to Solar Industries India Limited employee group gratuity assurance scheme (Post employment benefit plan of the Company) (refer note 30). The scheme is funded with an insurance company in the form of qualifying insurance policy.
The following tables summarized the components of net benefit expense recognized in the statement of profit and loss, other comprehensive income, and the funded status and amount recognized in the balance sheet.
Note 1: The entity has not commenced its business operations
Note 2: In continuation of the efforts to realign the group structure and consolidate the multi layered structure, the board has decided to dissolve these companies. Note 3: The entity is under liquidation.
Note 4: The entities have been merged with Economic Explosives Limited with effect from April 1, 2017 pursuant to NCLT order dated March 16, 2018
(a) Majority owned and controlled subsidiaries of Solar Overseas Netherlands Cooperatie U.A.
(b) Majority owned and controlled subsidiaries of Solar Overseas Netherlands B.V.
(c) Majority owned and controlled subsidiaries of Solar Overseas Mauritius Limited
(d) Majority owned and controlled subsidiary of Solar Industries Africa Limited
(e) Majority owned and controlled subsidiary of Solar Overseas Singapore PTE Limited
âLiquidated on December 06, 2017 A Incorporated on December 22, 2017
# Incorporated on January 25, 2018
A Names of related parties and related party relationship :
I Subsidiaries and associates
Note no. 29 provides the information about the group''s structure including the details of the subsidiaries, step down subsidiaries and associate companies
II Key Management Personnel (KMP)
Shri Satyanarayan Nuwal (Chairman and Executive Director)
Shri Kailashchandra Nuwal (Executive Director)
Shri Manish Nuwal (Managing Director and CEO)
Shri Roomie Dara Vakil (Executive Director)
Shri Anil Kumar Jain (Executive Director)
Shri Nilesh Panpaliya (Chief Financial Officer)
Smt Khushboo Pasari (Company Secretary)
III Non Executive Independent Directors*
Shri Anant Sagar Awasthi Shri Dilip Patel Shri Ajai Nigam Shri Amrendra Verma Smt Madhu Vij
*Non executive independent directors were only paid sitting fees for attending Board & Board Committee meetings for the year 2017-18. Company has not entered into any other transactions with its Non Executive Independent Directors or the enterprises over which they have significant influence.
IV Enterprises, over which control or significant influence is exercised by individuals listed in âII'' above (with whom transactions have taken place)
Solar Synthetics Private Limited Commercial Sales Corporation
V Other related party
Solar Industries India Limited employee group gratuity assurance scheme (Post emplyoment benefit plan of the Company)
Refer to Note 27 for information on transactions with post emplyoment benefit plan mentioned above
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2018, the Company has recorded an impairment of receivables relating to amounts owed by related parties of H4.30 (March 31, 2017: H2.80). 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.
* This aforesaid amount does not includes amount in respect of gratuity and leave since the actuarial valuation has been taken for the Company as a whole and individual amounts are not determinable.
The Company has identified ''Explosives and its accessories'', as its only primary reportable segment. The Board of Directors of Company have been identified as the Chief Operating Decision Maker (CODM) as defined under Ind AS 108. CODM reviews overall financial information of the Company together for performance evaluation and allocation of resources and does not review any discrete information to evaluate performance of any individual product of geography.
In accordance with paragraph 4 of Ind AS 108 "Operating Segments", the Company has presented segment, information only in the Consolidated financial statements.
NOTE 32. FAIR VALUE MEASUREMENTS
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The Company has established the following fair value hierarchy that categorizes the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on Company specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The following methods and assumptions were used to estimate the fair values:
1. The Company has not disclosed the fair values of financial instruments such as cash and cash equivalents, bank balances, other than cash and cash equivalents, trade receivables, other financial assets (except derivatives) , trade payables and other financial liabilities (except derivatives) because their carrying amounts are a reasonable approximation of fair value. Further, for financial assets, the Company has taken into consideration the allowances for expected credit losses and adjusted the carrying values where applicable.
2. The fair values of the quoted investments/ units of mutual fund schemes are based on market price/ net asset value at the reporting date.
3. The Company holds derivative financial instruments to mitigate the risk of changes in exchange rates on foreign currency exposures and changes in interest rates. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on inputs that are directly or indirectly observable in the marketplace. The valuation techniques used to value these derivatives include forward pricing and swap models, using present value calculations. These derivatives are marked to market as on the valuation date. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.
4. The fair values for loans given are calculated based on discounted cash flows using current lending rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments are not materially different from their carrying values. They are classified as level 2 fair values in the fair value hierarchy.
5. Fair values of the Company''s interest-bearing borrowings are determined by using discounted cash flow method using the current borrowing rates. Fair value of such instruments are not materially different from their carrying values, accordingly non-current borrowings are classified as level 2 fair values in the fair value hierarchy. The own non-performance risk as at March 31, 2018 was assessed to be insignificant.
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTPL investments and enters into derivative transactions.
It has an integrated financial risk management system which proactively identifies monitors and takes precautionary and mitigation measures in respect of various identified risks.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTPL investments and derivative financial instruments.
Market risk is attributable to all market risk sensitive financial instruments. The finance department undertakes management of cash resources, hedging strategies for foreign currency exposures, borrowing mechanism and ensuring compliance with market risk limits.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company is not very significantly exposed to interest rate risks except the variations in LIBOR rates as most of borrowings are linked to LIBOR. To manage this, the Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.
0.5% changes in LIBOR will increase/ decrease the borrowing cost by H0.76 (Pre-tax)
The Company does not have significant investment in Bank Deposits and hence not significantly exposed to Interest rate sensitivity.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities and the Company''s net investments in foreign subsidiaries.
When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency.
The Company hedges its exposure to fluctuations on the translation into INR of its foreign operations by holding net borrowings in foreign currencies and by using foreign currency swaps.
* Amount is less than SEK 0.01 in March 31, 2018 Equity price risk
The Company''s listed and non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.
The impact of increases/ decreases of the BSE/ NSE index on the Company''s equity shares and mutual funds and gain/ loss for the year would be RS,0.08 (March 31, 2017: RS,0.44) (Pre-tax). The analysis is based on the assumption that the index has increased by 1% or decreased by 1% with all other variables held constant, and that all the Company''s investments having price risk moved in line with the index.
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Company only deals with parties which has good credit rating/ worthiness given by external rating agencies or based on Company''s internal assessment.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized as income in the statement of profit and loss.
Cash and cash equivalents and deposits: Balances and deposits with banks are subject to low credit risks due to good credit ratings assigned to the banks.
Investments: The Company limits its exposure to credit risk by generally investing in liquid securities and counterparties that have a good credit ratings. The Company does not expect any credit losses from non-performance by these counter parties, and does not have any significant concentration of exposures to specific industry sectors.
Loans: The Company has given loans to subsidiaries and certain unrelated parties. However there is no counter party risk. Except in case of some non-current loans which were under arbitration proceeding wherein the company has received favourable order. Management believes that this amount would be recovered in full however the timing of recovery is uncertain. (refer Note 5 for details)
Trade and other receivables:
The Company measures the expected credit loss of trade receivables and loans from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends.
No significant changes in estimation techniques or assumptions were made during the reporting period.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s finance department is responsible for liquidity, funding as well as settlement management and then processes related to such risks are overseen by senior management through rolling forecasts on the basis of expected cash flows.
For the purpose of Company''s capital management, capital includes issued equity capital, securities pr
Mar 31, 2017
Note 1: The entity has not commenced its business operations
Note 2: During the financial year under review, in continuation of the efforts to realign the group structure and consolidate the multi layered structure, the Board has decided to dissolve these Companies.
Note 3: Under liquidation
(a) Majority owned and controlled subsidiaries of Solar Overseas Netherlands Cooperative U.A.
(b) Majority owned and controlled subsidiaries of Solar Overseas Netherlands B.V.
(c) Majority owned and controlled subsidiaries of Solar Overseas Mauritius Limited
(d) Majority owned and controlled subsidiary of Solar Industries Africa Limited
(e) Majority owned and controlled subsidiary of Solar Overseas Singapore PTE Limited âSubsidiary since September, 2016
@ Subsidiary since April, 2015
* Subsidiary since July, 2016
Note 4: Employee Benefit obligations
(i) Post-employment obligations
a) Gratuity
The Company operate a defined benefit plan viz. namely gratuity for its employees. Under the gratuity plan, every employee who has completed at least 5 years of service gets a gratuity on departure @ 15 days (minimum) of the last drawn salary for each year of service. The scheme is funded with an insurance company in the form of qualifying insurance policy.
The following tables summarized the components of net benefit expense recognized in the statement of profit and loss, other comprehensive income, and the funded status and amount recognized in the balance sheet.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in employment market.
The overall expected rate of return on assets is determined based on the interest rate prevailing in the market on that date, applicable to the period over which the obligation is to be settled.
Notes :
1. Liabilities are very sensitive to discount rate, salary inflation and attrition rate.
2. Liabilities are very less sensitive due to change in mortality assumptions. Hence, sensitivities due to change in mortality are ignored.
*The Company is contesting the demands and the management, including its tax/legal advisors, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised.
Note 5: Related Party Disclosures
A Names of related parties and related party relationship :
I Subsidiaries and associates
Note no. 27 provides the information about the group''s structure including the details of the subsidiaries, step down subsidiaries and associate companies
II Key Management Personnel (KMP)
Shri S.N. Nuwal Shri K.C. Nuwal Shri Manish Nuwal Shri R D Vakil Shri Anil Kumar Jain Shri Nilesh Panpaliya Smt Khushboo Pasari
Note 6: Related Party Disclosures (Contd...)
III Non executive directors*
Shri Anant Sagar Awasthi Shri Dilip Patel Shri Ajai Nigam Shri Amrendra Verma Smt Madhu Vij
* Non Executive Independent Directors were only paid sitting fees for attending Board & Board Committee meetings for the year 2016-17.
Company has not entered into any other transactions with its Non Executive Independent Directors or the enterprises over which they have significant influence.
IV Enterprises, over which control or significant influence is exercised by individuals listed in ''IIâ above (with whom transactions have taken place)
Solar Synthetics Private Limited Commercial Sales Corporation
V Enterprises, over which control or significant influence is exercised by individuals listed in ''IIâ above (other than IV above)
Solar Initiating Systems Limited
Mahakal Infrastructures Private Limited
Mahakal Project Private Limited
Nagpur Infrastructure Private Limited
Solar Processors (Bhilwara) Limited
Gulmohar Developers and Constructions Private Limited
Sun Developers and Constructions Private Limited
Sunbeam Developers and Constructions Private Limited
Sundrop Realtors Private Limited
Sunland Infracon Private Limited
Sunlight Infraventures Private Limited
VI Other related party
Solar Industries India Limited employee group gratuity assurance scheme (Post employment benefit plan of the Company)
Refer to Note 28 for information on transactions with post employment benefit plan mentioned above
* Amount is less than H1 lakh in March 31, 2016.
* Amount is less than lakh in March 31, 2017.
Note 7: Segment Information
In accordance with paragraph 4 of Ind AS 108 "Operating Segmentsâ, the Company has presented segmental information only on the basis
of the Consolidated financial statements.
Note 8: Fair Value Measurements
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
1 The Company has not disclosed the fair values of financial instruments such as cash and cash equivalents, bank balances, bank deposits, trade receivables, other financial assets (except derivatives) , trade payables, other financial liabilities (except derivatives), current borrowings, because their carrying amounts are a reasonable approximation of fair value. Further, for financial assets, the Company has taken into consideration the allowances for expected credit losses and adjusted the carrying values where applicable.
2 The Company has not disclosed the fair value of Investments in subsidiaries, since the same are valued at cost. For carrying values refer note 4 of the financial statements.
3 For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
4 The Company holds derivative financial instruments to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on inputs that are directly or indirectly observable in the marketplace. The valuation techniques used to value these derivatives include forward pricing and swap models, using present value calculations. These derivatives are marked to market as on the valuation date.
5 The fair values for loans given were calculated based on cash flows discounted using a current lending rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments are not materially different from their carrying values. They are classified as level 3 fair values in the fair value hierarchy.
6 Fair values of the Company''s interest-bearing borrowings are determined by using discounted cash flow method using the current borrowing rates. The non-current borrowings are classified as level 3 fair values in the fair value hierarchy due to inclusion of unobservable inputs including own credit risk. The own non-performance risk was assessed to be insignificant.
A. Fair Value Hierarchy
Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2- Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3- Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
Note 9: Financial risk management objectives and policies
The Company''s financial assets includes loans, trade receivables, cash and cash equivalents that comes directly from its operations and financial liabilities comprises of borrowings, trade and other payables, and financial guarantee contracts. It has an integrated financial risk management system which proactively identifies monitors and takes precautionary and mitigation measures in respect of various identified risks.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks, which evaluates and exercises independent control over the entire process of financial risks. All the derivative activities for risk management purposes are managed by experienced teams. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken.
Market Risk
Market Risk is the risk that the future value of a financial instrument will fluctuate due to moves in the market factors. The most common types of market risks include
- interest rate risk,
- foreign currency risk and
- equity price risk.
Market risk is attributable to all market risk sensitive financial instruments. The finance department undertakes management of cash resources, hedging strategies for foreign currency exposures, borrowing mechanism and ensuring compliance with market risk limits.
Interest Rate Risk
Interest rate risk is the risk that the future cash flows or the fair value of a financial instrument will fluctuate because of changes in market interest rates. The Company manages its interest rate risk by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio. The Company is not very significantly exposed to interest rate risks except the variations in LIBOR rates as most of borrowings are linked to LIBOR.
0.5% changes in Interest Rate will increase/ decrease the borrowing cost by H0.95 lacs.
The Company does not have significant investment in Bank Deposits and hence not significantly exposed to Interest rate sensitivity.
Foreign Currency Risk
Foreign Currency risk is the risk that the future earnings or fair values of future cash flows will fluctuate because of changes in foreign exchange rates. The Company operates globally and portion of the business is transacted in USD and Euro. The Company evaluates exchange rate exposure and manages it by using derivatives like Foreign-exchange forward contracts to hedge the foreign exchange risk.
Derivative instruments and unheeded foreign currency exposures
Equity price risk
The Company''s investments in quoted equity shares and mutual funds are subject to market price risk arising from uncertainties about future values of the invested securities. The Company manages the equity price risk through diversification. The portfolio reports are submitted to senior management on regular basis and the board of directors reviews and approves all investments.
The impact of increases/ decreases of the BSE/ NSE index on the Company''s equity shares and mutual funds and gain/ loss for the period would be RS,0.44 crore (March 31, 2016: RS,0.06 crore). The analysis is based on the assumption that the index has increased by 1% or decreased by 1% with all other variables held constant, and that all the Company''s investments having price risk moved in line with the index.
Credit risk
Credit risk arises from the possibility that the counter party may not be able to settle their obligation as agreed. To manage this, the Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are periodically reviewed on the basis of such information.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized as income in the statement of profit and loss.
Cash and cash equivalents and deposits: Balances and deposits with banks are subject to low credit risks due to good credit ratings assigned to the banks.
Note 10: Financial risk management objectives and policies (Contd...)
Investments: The Company limits its exposure to credit risk by generally investing in liquid securities and counterparties that have a good credit ratings. The group does not expect any credit losses from non-performance by these counter parties, and does not have any significant concentration of exposures to specific industry sectors.
Loans: The Company has given loans to associates and subsidiaries and certain unrelated parties. However there is no counter party risk. Except in case of some non-current loans where arbitration proceeding are on-going and the management believes that this amount would be recovered in full however the timing of recovery is uncertain. (Refer note no. 5 of the financial statements for details)
Trade and other receivables:
The Company measures the expected credit loss of trade receivables and loans from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends.
No significant changes in estimation techniques or assumptions were made during the reporting period.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s finance department is responsible for liquidity, funding as well as settlement management and then processes related to such risks are overseen by senior management through rolling forecasts on the basis of expected cash flows.
Note 11 (a): Capital Management
For the purpose of Company''s capital management, capital includes issued share capital, share premium and all other equity reserves. The primary objective of capital management is to maximize shareholder value. The Company consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and risk managements of the underlying assets.
Note 12(b): Research & Development Expenditure:
1. Capital Expenditure incurred on R&D is included in Fixed Assets and depreciation is provided on the same at the respective applicable rates.
Note 13: First- time adoption of Ind AS
These financial statements, for the year ended March 31, 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2015, the Group prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP)
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.
A Exemptions and exceptions applied
Ind AS 101 allows first- time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
A.1 Ind AS optional exemptions
A.1.1 Business Combinations (Ind AS 103)
Ind AS 101 provides the option to apply Ind AS 103, prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.
The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated. The Company has applied same exemption for investment in associates.
A.1.2 Deemed cost
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 recognized 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.
Accordingly, the Company has elected to measure all of its property, plant and equipment at their previous GAAP carrying value.
A.1.3 Use of deemed cost for investments in subsidiaries and associates
Ind AS 101 permits a first-time adopter to elect to continue the previous GAAP carrying amount at the date of transition and use that as its deemed cost of investment as at the date of transition.
Accordingly, the Company has elected to measure all its investments in subsidiaries and associates at their previous GAAP carrying value. A.2 Ind AS mandatory exceptions A.2.1 Estimates
An entity''s estimates in accordance with Ind AS as at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates 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 following items in accordance with Ind AS at the date of transition as these were not required under Indian GAAP:
Investment in equity instruments carried at FVPL or FVOCI; and Impairment of financial assets based on expected credit loss model.
A.2.2 Reconciliations between previous GAAP and Ind AS
The following reconciliations provide a quantification of the effect of significant differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:
equity as at April 1, 2015; equity as at March 31, 2016;
total comprehensive income for the year ended March 31, 2016; and
explanation of material adjustments to cash flow statements In the reconciliations mentioned above, certain reclassifications have been made to Previous GAAP financial information to align with the Ind AS presentation.
Notes to First-time adoption:
Note 14 Fair valuation of mutual fund and equity investments
Under Ind AS, investments in equity instruments (other than investments in subsidiaries) and mutual funds are required to be measured at fair value. The resulting fair value changes of these investments have been recognized in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended March 31, 2016.
Note 15 Fair valuation of derivatives
Under Ind AS, derivatives which are not designated as hedging instruments are fair valued with resulting changes being recognized in profit or loss. The impact in equity and profit is on account of fair valuation of forward foreign exchange contracts.
Note 16 Trade receivables
As per Ind AS 109, the Company is required to apply expected credit loss model for recognizing the allowance for doubtful debts. Consequently, the total equity as at March 31, 2016 and April 1, 2015 decreased and profit for the year ended March 31, 2016 has also been decreased
Note 17 Proposed dividend
Under Ind AS, dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity has been increased.
Note 18 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.
Also, deferred tax have been recognized on the adjustments made on transition to Ind AS.
Note 19 Retained earnings
Retained earnings as at April 1, 2015 has been adjusted consequent to the above Ind AS transition adjustments.
Note 20 Other comprehensive income
Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP. Further the Company has reconciled Indian GAAP profit or loss to total comprehensive income as per Ind AS.
Note 21 Statement of cash flows
The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended March 31, 2016 as compared with the previous GAAP.
Note 22 Discount and incentives directly relatable to revenue
Under previous GAAP, the discounts and incentives on sales were shown as other expenses. Under Ind AS, these are required to be netted off against revenue. There is no impact on the total equity and profit.
Specified Bank Notes (SBNs) is defined as Bank Notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees.
The disclosures with respect to '' Permitted receipts'' , ''Permitted payments'' , ''Amount deposited in Banks'' and ''Closing Cash in Hand as on Dec 30, 2016 is understood to be applicable in case of SBN''s only.
Mar 31, 2016
Note - 1.
As Per Accounting Standard (AS) 17 on "Segment Reporting "we are having only one segment hence segment reporting not applicable.
2.(1) The Board of Directors of the Company in previous years decided to write off interest income from companies related to
Bhatgaon Coal Blocks. The company has written off interest income of Rs. 30.00 Crores in earlier years. The Board of Directors
decided not to charge the interest on outstanding loans.
2. (2) During the year company has purchased shares of its subsidiary M/s. Emul Tek Pvt Ltd at value of Rs. 0.80 Crores, Blastec
(India) Pvt Limited of Rs. 0.50 Crores. and M/s. Solar Defence Ltd at value of Rs. 0.05 Crores.
2. (3) Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s
classification /disclosure.
2 (4) Significant accounting policies and practice adopted by the company are disclosed in the statement annexed to these
financial statement as Annexture-1
2 (5) Expenditure related to Corporate Social Responsibility as per Section 135 of the Companies Act, 2013 read with Schedule
VII thereof : of Rs. 2.23 Crores
2 (8) During the year Purchases of Stock in trade shown on consumption basis.
2(9) As on 31.03.16 company has given Financial Guarantee of $3.38 Crores for its wholly owned overseas subsidiary.
IV Notes
1 Every Employee who has completed Minimum five years of service is entitled to Gratuity at 15 days salary for each completed
year of services. The scheme is funded with insurance companies in the form of Qualified insurance Policies.
2 Provident fund for certain eligible employees is managed by the Providend fund authorities.The contribuition by the employer
and employee together with the interest accumulated thereon are payable to employees at the time of seperation from the company
or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the employee.
3 The minimum interest rate payable by the LIC to the beneficiaries every year is being notified by the LIC.
Mar 31, 2014
1 (1) RELATED PARTY DISCLOSURES :-
As Per Accounting Standard 18, the disclosures of transactions with the
related parties are given below :- (i) List of related parties where
control exists & related parties with whom transactions have taken
place & relationships:-
SR NAME OF RELATED PARTY
NO.
SUBSIDIARIES :-
1 Economic Explosives Ltd
2 Solar Mines & Minerals Ltd
3 Solar Mining Resources Ltd
4 Navbharat Coalfields Ltd
OVERSEAS SUBSIDIARIES:-
1 Solar Overseas Mauritius Ltd
2 Solar Explochem Mauritius Ltd
3 Solar Overseas Netherlands Cooperative U.A_
4 Solar Overseas Netherlands B.V.
5 ILCI Patlayici Maddeler Sanayi Ve Ticaret Anonim Sirketi
6 PATSAN Pattlayici Maddeler Sanayi Ve Ticaret
7 Solar Overseas Singapore Pte Ltd
8 Solar Nigachem Nigeria Ltd
9 Nigachem Nigeria Ltd
10 Solar Explochem Zambia Ltd
11 Solar Mining Services Australia Pty Ltd
12 Solar Nitrochemicals Ltd
13 Solar Industries Mocambique LDA
14 Solar Explochem (Ghana) Ltd
15 PT. Solar Mining Services
16 Australian Explosive Technologies Group Pty Ltd
ASSOCIATES:-
1 Solar Synthetics Private Limited
2 Mahakal Infrastructures Pvt Ltd
3 Mahakal Project Pvt Ltd
4 Nagpur Infrastructure Pvt Ltd
5 Solar Bhatgaon Extension Mines Pvt Ltd
6 SMS Bhatgaon Mines Extension Pvt Ltd
7 Bhatgaon Extension Mines Pvt Ltd_
8 Bhatgaon Mines Pvt Ltd
9 Solar Initiating Systems Ltd
10 Madanpur North Coalfelds Ltd
11 Solar Processors Ltd_
KEY MANAGEMENT PERSONNEL:-
1 Shri S.N. Nuwal
2 Shri K.C. Nuwal
3 Shri Manish Nuwal
4 Shri K.S. Talesra
5 Shri R.D. Vakil
2) As Per Accounting Standard ( AS ) 17 on "Segment Reporting",
segment information has been provided under the Notes to Consolidated
FINANCIAL Statements.
3) Research and Developement expenses incurred during the year :-
a. Rs. 270.75/- Lakhs (Previous year Rs. 274.63 Lakhs) in the nature of
revenue expenditure.
b. Rs. 711.73/- Lakhs (Previous year Rs. 950.49 Lakhs) in the nature of
capital expenditure have been included under the appropriate account
heads.
4) cONTINGENT LIABILITIES & cOMMITMENTS :-
Particular 2014 2013
1) In respect of counter guarantees given by bank 5,815.12 7,020.38
2) In respect of excise matters in dispute / under
appeal 623.94 530.78
3) In respect of SALES tax deferement 947.01 947.01
4) In respect of income tax matters in
dispute/ under appeal 149.51 135.26
5) In respect of SALES tax matters in
dispute/ under appeal 353.96 100.07
5 (1) Company has given Long term Loan to M/s. Bhatgaon extension
Mines Pvt. Ltd Rs. 3877.38 Lakhs and Bhatgaon Mines Pvt Ltd Rs. 4724.38
Lakhs. Management has taken decision not to charge interest for the
current FINANCIAL year.
6 (2) During the year Company has made provision for doubtful advances
in respect of interest provided in earlier year of Rs. 1000.14 Lakhs of
Bhatgaon extension Mines Pvt Ltd and Bhatgaon Mines Pvt.Ltd. the total
provision made till date is Rs. 2000.28 Lakhs.
7 (1) During the year Company has acquired 24,500 shares of M/s. Solar
Mines & Minerals Ltd at value of Rs. 2.45 Lakhs.
8 (2) During the year Company has executed a contract with ilci
Patlayici Maddeler Sanayi Ve ticaret Anonim Sirketi, turkey of Rs. 823.16
Lakhs for supply of Continuous emulsion Plant for manufacturing of
package explosives.
9) FINANCIAL & Derivative Instruments
a) Derivative contracts entered into by the Company as on 31st
March,2014
10) the Ministry of Corporate Affairs, Government of india, vide
General Circular No.2 and 3 dated 8th February 2011 and 21st February
2011 respectively has granted exemption from COMPLIANCE with section
212 of the Companies Act, 1956, subject to fulfillment of conditions
stipulated in the circulars and hence is entitled to the exepmtion.
Necessary information relating to the SUBSIDIARIES has been included in
the Consolidated FINANCIAL Statement.
Mar 31, 2013
Note - 1
As Per Accounting Standard (AS) 17 on "Segment Reporting", segment
information has been provided under the Notes to Consolidated Financial
Statements.
Note - 2 RESEARCH AND DEVELOPMENT EXPENSES INCURRED DURING THE YEAR
a. Rs.274.63 lacs (Previous year Rs.153.91 lacs) in the nature of
revenue expenditure.
b. Rs.950.49 lacs (Previous year Rs.567.97 lacs) in the nature of
capital expenditure have been included under the appropriate account
heads.
Note - 3 CONTINGENT LIABILITIES & COMMITMENTS
(Amount in Rs. lacs)
Particulars F.Y. F.Y.
2012-13 2011-12
1) In respect of counter guarantees given by bank 7020.38 3077.62
2) In respect of excise matters in dispute /
under appeal 530.78 488.52
3) In respect of sales tax deferment 947.01 1,323.56
4) In respect of income tax matters in dispute/
under appeal 135.26 18.24
5) In respect of sales tax matters in dispute/
under appeal 100.07 136.50
Note - 4
1) Company has given Long Term Loan to M/s. Bhatgaon Extension Mines
Pvt. Ltd. Rs.3876.47 lacs and Bhatgaon Mines Pvt. Ltd. Rs.4713.60 lacs.
Management has taken decision not to charge interest for the current
financial year.
2) Company has made provision for doubtful advances in respect of
interest provided in earlier year of Rs.1000.14 lacs of Bhatgaon
Extension Mines Pvt. Ltd. and Bhatgaon Mines Pvt. Ltd.
Note - 5 FINANCIAL & DERIVATIVE INSTRUMENTS
a) Derivative contracts entered into by the Company as on 31st March,
2013
I) For hedging Currency and interest rate related risks:
Nominal amounts of derivative contracts entered into by the Company and
outstanding as on 31st March, 2013 amounting to Rs.3648.29 Lacs
(Previous year Rs.9217 lacs) Category wise breakup is given below:-
Note - 6
The Ministry of Corporate Affairs, Government of India, vide General
Circular No.2 and 3 dated 8th February 2011 and 21st February 2011
respectively has granted exemption from compliance with section 212 of
the Companies Act, 1956, subject to fulfilment of conditions stipulated
in the circulars and hence is entitled to the exemption. Necessary
information relating to the subsidiaries has been included in the
Consolidated Financial Statement.
Mar 31, 2012
# Working Capital loans are secured by hypothecation of entire stocks,
raw material, stock in process, finished goods, consumables, stores &
spares, book debts, outstanding money receivables, entire current asset
of company- current & future, paripassu second charges on fixed assets,
claims & bills, receivables.
* (i) Fixed Deposit with bank include deposit of Rs 235.52 lacs
maturity more than 12 months & held as security against borrowing of
less than 12 months period.
(ii) FDR of Rs 14870.02 lacs held as margin money or security against
the borrowing & other commitments of
Note 1 RELATED PARTY DISCLOSURES
As Per Accounting Standard 18 , the disclosures of transactions with
the related parties are given below
(I) List of related parties where control exists & related parties with
whom transactions have taken place & relationships :
SR
NO. NAME OF RELATED PARTY
SUBSIDIARIES :
1. Economic Explosives Ltd
2. Solar Mines & Minerals Ltd
3 Solar Mining Resources Ltd
4 Navbharat Coalfields Ltd
OVERSEAS SUBSIDIARIES:
1. Solar Overseas Mauritius Ltd
2. Solar Explochem Mauritius Ltd
3. Solar Netherlands Corporate U.A
4. Solar Netherlands Overseas B.V.
5. ILCI Patlayici Maddeler Sanayi Ve Ticaret Anonim Sirketi
6. PATSAN Pattlayici Maddeler Sanayi Ve Ticaret
7. Solar Overseas Singapore Pte Ltd
8. Solar Nigachem Nigeria Ltd
9. Nigachem Nigeria Ltd
10. Solar Explochem Zambia Ltd
11. Solar Mining Services Australia Pty Ltd
12. Solar Nitrochemicals Ltd
13. PT. Solar Mining Resources
14. Solar Agro Florestal LDA
15. Solar Induatries Mocambique LDA
16. Solar Recursos Minerals LDA
17. Solar Explochem (Ghana) Ltd
ASSOCIATES:
1 Solar Synthetic Pvt Ltd
2 Mahakal Infrastructures Pvt Ltd
3 Mahakal Project Pvt Ltd
4 Nagpur Infrastructure Pvt Ltd
5 Solar Bhatgaon Extension Mines Pvt Ltd
6 SMS Bhatgaon Mines Extension Pvt Ltd
7 Bhatgaon Extension Mines Pvt Ltd
8 Bhatgaon Mines Pvt Ltd
9 Solar Initiating Systems Ltd
10 Madanpur North Coalfields Ltd
11 Solar Processors Ltd
12 Australian Explosive Technologies Group Pty Ltd
13 Navbharat Fuse
KEY MANAGEMENT PERSONNEL:
1. Shri S.N. Nuwal
2. Shri K.C. Nuwal
3. Shri Manish Nuwal
4. Shri K.S. Talesra
5. Shri R.D. Vakil
Note 2
As Per Accounting Standard (AS) 17 on " Segment Reporting ", segment
information has been provided under the Notes to Consolidated Financial
Statements.
Note 3
Research and Development expenses incurred during the year :
a. Rs. 153.91 lacs (Previous year Rs. 81.35 lacs) in the nature of
revenue expenditure;
b. Rs. 567.97 lacs (Previous year Rs. 37.53 lacs) in the nature of
capital expenditure have been included under the appropriate account
heads.
Note 4 CONTINGENT LIABILITIES & COMMITMENTS
(Rs. in Lacs)
Particulars F.Y. 11-12 F.Y.10-11
1) IN RESPECT OF COUNTER GUARANTEES GIVEN
BY BANK 3,077.62 3,038.79
2) IN RESPECT OF EXCISE MATTERS IN DISPUTE
/ UNDER APPEAL 488.52 261.71
3) IN RESPECT OF SALES TAX DEFEREMENT 1,323.56 2,076.18
PAYABLE AS PER NPV BASIS - 536.05
4) IN RESPECT OF INCOME TAX MATTERS IN
DISPUTE/ UNDER APPEAL 18.24 18.24
5) IN RESPECT OS SALES TAX MATTERS IN DISPUTE/
UNDER APPEAL 136.50 85.87
6) DUTY IMPOSED BY CCI FOR VOILATING SEC 3
OF COMPETION ACT ** 1,134.00 -
** The Competition Commission Of India (CCI) has upheld the contention
of Coal India Ltd (CIL) against explosive manufactures. CIL had
contended by the manufactures for collective boycott of electronic
reverse auction held by CIL in January 2010 covered as violation under
sec 3 of Competiton Act.
CCI has fined the ten explosives manufacturers 3% of the average of
their annual turnover for the last three financial years , for
violating sec 3 of the Competition Act.
The unanimous order of the CCI held that there was a concerted action
among the explosives manufacturers not to participate in the CIL
reverse auction , which resulted in a collective boycott of the auction
& manipulation of the bidding process , in violation of sec 3(3)(b) of
the Competition Act.
Note 5 Financial & Derivales Instruments
a) Derivative contracts entered into by the Company and outstanding as
on 31st March,2012.
i.) For hedging Currency and Interest Rate Related Risks:
Nominal amounts of derivative contracts entered into by the Company and
outstanding as on 31st March amount to Rs. 9217 Lacs
b) Foreign Currency exposures that are not hedged by derivative
instruments as on 31st March, 2012 amount to Rs NIL (Previous Year Rs.
NIL).
Note 6
The Ministry of Corporate Affiaris , Government of India , vide General
Circular No. 2 and 3 dated 8th February 2011 and 21 st February 2011
respectively has granted a general exemption from complaiance with
section 212 of the Companies Act , 1956 , subject to fulfillent of
conditions stipulated in the circular. The Company has satisfied the
conditions stipulated in the circular and hence is entitled to the
exemptiion. Necessary informationrelating to the subsidiaries has been
included in the Consolidated Financial Statement.
Mar 31, 2011
1. Contingent Liability
Amount in Rs. Lacs
FY 2010-11 FY 2009-10
01 In respect of counter guarantees
given to Bank Rs. 3,038.79 3,701.43
02 In respect of Excise matters in
dispute / under Appeal Rs. 261.71 140.74
03 In respect of Sales Tax Deferment Rs. 2,076.18 3,233.17
Payable as per NPV basis - 820.80 Lacs
04 In respect of Income Tax matters
in dispute / under Appeal Rs. 18.24
05 In respect of Sales Tax matters
in dispute / under Appeal Rs. 85.87
5. Related party disclosures required as per AS-18 on ` Related
Parties disclosures' issued by the Institute of Chartered Accountants
of India, are below for the year ended on 31st March, 2011.
1. Holding Company : NIL
2. Subsidiaries : a) Economic Explosives Limited
b) Solar Mines & Minerals Ltd.
c) Solar Mining Resources Ltd.
d) Navbharat Coalfields Ltd.
3. Fellow Subsidiaries : NIL
4. Overseas
Subsidiaries : a) Solar Overseas Mauritius Limited
b) Solar Agro Florestal LDA*
c) Solar Industries Mocambique LDA*
d) Solar Recursos Minerals LDA*
5. Fellow Overseas
Subsidiaries a) Solar Explochem Mauritius Ltd.*
b) Solar Netherlands Corporatie U.A.
c) Solar Netherlands Overseas B.V.
d) Ilci Patlayici Maddeler Sanayi VeTicaret
Anonim Sirketi
e) PATSAN Pattlayici Maddeler Sanayi Ve Ticaret
f) Solar Overseas Singapore Pte Limited
g) Solar Nigachem Nigeria Limited*
h) Nigachem Nigeria Limited
i) Solar Explochem Zambia Limited
j) Solar Mining Services Australia Pty Ltd.*
k) Solar Nitrochemicals Limited*
l) P T. Solar Mining Resources*
6. Associates a) Solar Synthetics Private Limited
b) Mahakal Infrastructures Private Limited
c) Mahakal Project Private Limited
d) Nagpur Infrastructure Private Limited
e) Solar Bhatgaon Extension Mines Private
Limited
f) SMS Bhatgaon Mines Extension Private Limited
g) Bhatgaon Extension Mines Private Limited
h) Bhatgaon Mines Private Limited
i) Sunbeam Explosives Limited
j) Sunrise Explosives Limited
k) Solar Initiating Systems Limited
l) Madanpur North Coal Fields Limited
m) Solar Processors Limited
n) Commercial Sales Corporation
o) Australian Explosive Technologies Group PtyLtd
* Note: The Company has not commenced any business operations, hence
financial performance is not available.
6. Key Management Personnel : a) Shri.S.N.Nuwal
b) Shri K.C.Nuwal
c) Shri Manish Nuwal
d) Shri K.S. Talesra
e) Shri R.D.Vakil
7. Employee retirement benefits
Contributions to Provident Fund are deposited with the appropriate
authorities and charged to the Profit and Loss Account as incurred. The
Company has made provision for gratuity based on 15 days' salary for
each completed year of service.
8. In earlier year the Company has supplied explosives to Coal India
Ltd from 1st March, 2006 to 30th June, 2006 as per old rate contract
rates on confirmation from Coal India Ltd that new rate contract will
be issued effective from 1st March, 2006 Coal India Ltd has issued new
rate contract w.e.f 29th July, 2006 without covering the period From
1st March, 2006 to 30th June, 2006. The Company has protested and now
this is sub Juidice at Hon. Calcutta High Court on the ground that
since no rate contract has been issued for 01.03.06 to 30.06.06 so
rates of old rate contract shall be applied. During the year Hon.
Calcutta High Court has given an order asking Bank Guarantee against
such deductions and company has submitted the same which is included in
contingent liability. The court has passed an order for release of
payment against Bank Guarantee for Cartridge & Accessories Division
only and allowed full deduction for Bulk Division pending final
decision in the matter by the Hon. Calcutta High Court.
9. During the year company has traded Ammonium Nitrate of Rs. 5101.71
Lacs.
10. Company has made investment during FY 2008-09 in two SPV companies
along with SMS Infrastructure Pvt.Ltd. to enter into Joint Venture with
CMDC for mining work and separate Joint venture companies is formed in
which the stake of CMDC is 51%. The stake of Solar Industries India
ltd. in SPV Company is as follows.
Solar Bhatgaon Ext.Mines Pvt.Ltd. 49%
SMS Bhatgaon Mines Extension Pvt.Ltd. 49%
11. During the year the Company has invested $ 70.00 Lacs in its
foreign subsidiary Solar Overseas Mauritius Ltd.further Solar Overseas
Mauritius Ltd.has invested in Solar Netherlands Corporatie U.A., Solar
Netherlands Overseas B.V., Ilci Patlayici Maddeler Sanayi VeTicaret
Anonim, PATSAN Pattlayici Maddeler Sanayi Ve Ticaret, Solar Overseas
Singapore Pte Limited , Nigachem Nigeria Limited, Solar Explochem
Zambia Limited
12. During the year the Company has executed the turnkey project of
installation of Bulk Explosive Manufacturing Plant for its associate
company Nigachem Nigeria Limited. of Rs. 626.79 Lacs
13. During the year the Company has provided Rs. 546.90 Lacs against
Powder Factor deductions for its supplies of explosives to Coal India
Ltd.
14. Sundry Creditor includes outstanding balance of M/s Citco Waren
Handel Sgesellschaft & Quantum Fertilizers Ltd. Rs. 6787.26 Lacs which
includes payment outstanding against Buyers Credit is Rs. 6787.26 Lacs.
15. Some of the customers and suppliers accounts are pending for
confirmation/reconciliation and the same have been taken as per the
balances appearing in the books. Any differences arising on account of
such reconciliations, which are not likely to be material, will be
accounted for as and when these reconciliations are completed.
16. Capital work in progress in Fixed Assets
Company has got status of "Mega Project" from Government of
Maharashtra. Company has made investment in Fixed Assets. Project work
is not completed, hence shown under Capital WIP.
Civil Construction worth Rs. 471.36 Lacs, Plant & Machinery worth Rs.
693.78 Lacs, Electric Installation worth Rs. 49.65 Lacs, and other work
in progress Rs. 409.67 Lacs.
17. Excise Duty shown under expenditure represents the aggregate of
the difference between Excise Duty on the Opening and Closing Stock of
Finished Goods.Excise Duty deducted from Sales represents Excise Duty
paid.
18. Sundry Creditors for goods and expenses include dues to Micro
Small & Medium Scale Business Entities aggregating to Rs. 95.44 Lacs
The names of Micro Small & Medium Scale Business Entities (to the
extent of information available with the management- to whom the
Company owes a sum exceeding Rs. 1 lac each Basic Chemical Industry,
Kalinga Wrappers, Sunrise Technologies,Welset Plast Extrusion
Pvt.Ltd.,Sankhala Industries,Bharat Solar Cable,Rudraksha Allied
Chemical Pvt.Ltd.,Hindustan Gum & Chemicals Ltd.,Gujrat Polymers,Anupam
Colours Pvt.Ltd.,Geeta Packaging Industries, Shree Gajanan Agro
Industries,Maxwell Poly Products,Sachin Polypack & Gayatri Packaging
Industries. None of the aforesaid outstanding is due for payment as at
31st March, 2011 as per agreed terms.
19. Export Incentive receivable under duty free credit entitlement
included under the head Loans & Advances is pending due to disposal for
some procedural aspects with Government. Shortfall / excess if any will
be taken into accounts as and when it is determined.
20. Manufacturing sales includes input material sales
21. Disclosure as required by Accounting Standard 19 "Leases" issued
by the institute of Chartered Accounts of India are given below:
Being the Company is Lessee:
(i) The Company's significant leasing arrangements are in respect of
godown / residential / office premises (including furniture and
fittings therein, as applicable-. The aggregate lease rental payable is
charged to Profit and Loss Account as Rent.
(ii) The Leasing arrangements, which are cancelable at any time on
month to month basis and in some cases between 11 months to 5 years,
are usually renewable by mutual consent on mutually agreeable terms.
Under these arrangements generally refundable interest free deposits
have been given.
22. All known liabilities have been taken into consideration.
23. The previous years figures have been regrouped/reclassified where
necessary, to conform to the current year's presentation.
Mar 31, 2010
1. Contingent Liability
01 In respect of of counter guarantees
given to Bank Rs. 3701.43 Lacs
02 In respect of Excise matters in dispute /
under Appeal Rs. 140.74
Lacs
03 In respect of Sales Tax Deferment Rs. 3233.17
Lacs Payable as per NPV basis -1117.17 Lacs
2. Related party disclosures required as per AS-18 on Related Parties
disclosures issued by the Institute of Chartered Accountants of India,
are below for the year ended on 31.03.2010
1. Holding Company: NIL
2. Subsidiaries: a) Economic Explosives Limited.
b) Solar Components Private.Limited
c) Solar Mines & Minerals Ltd
d) Solar Mining Resources Ltd
e) Navbharat Coalfields Ltd.
3. Fellow Subsidiaries NIL
4. Overseas Subsidiaries a) Solar Nitrochemicals Limited *
b) Solar Nigachem Nigeria Limited *
c) PT.Solar Mining Resources *
d) Solar Recursos Minerals LDA *
e) Solar Industrias Mocambique LDA *
f) Solar Agro Florestal LDA *
g) Solar Overseas Mauritius Limited
h) Solar Overseas Netherlands
Cooperatie U.A.
5. Associates :
a) Solar Synthetics Private Limited
b) Commercial Sales Corporation
c) Mahakal Infrastructures Private
Limited
d) Mahakal Projects Private Limited
e) Nagpur Infrastructure Pvt. Ltd.
f) Solar Bhatgaon Extension Mines
Pvt. Ltd.
g) SMS Bhatgaon Mines Extension Pvt. Ltd
h) Bhatgaon Extension Mines Pvt. Ltd.
i) Bhatgaon Mines Pvt. Ltd.
j) Sunbeam Explosives Ltd.
k) Sunrise Explosives Ltd.
I) Solar Initiating Systems Ltd.
m) Madanpur North Coal Fields Ltd.
n) Solar Processors Ltd.
o) Solar Explochem Zambia Limited
p) Solar Mining Services Pty. Limited
q) Solar Overseas Singapore Pte Limited
*Note : The Company has not commenced any business operations, hence
financial performance is not available.
6. Key Management Personnel a) Shri.S.N.Nuwal
b) Shri K.C.Nuwal
c) Shri Manish Nuwal
d) Shri K.S. Talesra
e) Shri R.D.Vakil
8. Employee retirement benefits
Contributions to Provident Fund are deposited with the appropriate
authorities and charged to the Profit and Loss Account as incurred. The
Company has made provision for gratuity based on 15 days salary for
each completed year of service.
9. Sales Tax Provision at NPV basis of Rs.353.81 Lacs is included in
Sales Tax Expenses.
11. PAYMENT MADE TO AUDITORS :
i) As Audit fees - Rs.16.00 Lacs
ii) Legal matters - Rs. 5.42 Lacs
iii) As VAT Audit Fees - Rs. 1.25 Lacs
10. In earlier year the Company has supplied explosives to
Coal India Ltd from 01.03.06 to 30.06.06 as per old rate contract rates
on confirmation from Coal India Ltd that new rate contract will be
issued effective from 01.03.06 Coal India Ltd has issued new rate
contract w.e.f 29.07.06 without covering the period From 01.03.06 to
30.06.06. The Company has protested and now this is sub Juidice at
Hon.Calcutta High Court on the ground that since no rate contract has
been issued for 01.03.06 to 30.06.06.so rates of old rate contract
shall be applied.During the year Hon. Calcutta High Court has given an
order asking Bank Guarantee against such deductions and company has
submitted the same which is included in contingent liability. The court
has passed an order for release of payment against Bank Guarantee for
Cartridge & Accessories Division only and allowed full deduction for
Bulk Division pending final decision in the matter by the Hon.Calcutta
High Court.
11. During the year company has written off bad debts of Rs. 521.09
Lacs.
12. During the year company has traded Ammonium Nitrate of Rs 9544.67
Lacs.
13. Company has made investment during 2008-09 in two SPV companies
along with SMS Infrastucture Pvt. Ltd. to enter into Joint Venture with
CMDC for mining work and seprate Joint venture companies is formed in
which the stake of CMDC is 51 %. The stake of Solar Industries India
ltd. in SPV Company is as follows.
Solar Bhatgaon Ext.Mines Pvt.Ltd. 49%
SMS Bhatgaon Mines Extension Pvt.Ltd. 49%
14. Company has raised ECB for itsexpansion project of domestic as
well as overseas USD 9 Million (Rs 41,19,22,500/-) from DBS Bank
Singapore. The proposed utilization of this fund will be 3 Million
USD in overseas JV/WOS. The ECB is approved by RBI under automatic
route. Balance 6 Million will be used in Domestic expansion work.
15. Company got rated P1+ for Short term Borrowings/ Commercial Paper.
Company has issued Commercial Papers by earmarking existing working
capital limits of State Bank of India & Bank of India worth Rs. 25
crore from Allahabad Bank.
16. During the year the Company has invested $ 1500000 in its foreign
subsidiary Solar Overseas Mauritius Ltd
17. Solar Overseas Mauritius has invested $ 500000 in Solar Overseas
Netherland.
18. During the year the Company has executed the turnkey project of
installation of Bulk Explosive Manufacturing Project of Rs. 277.60 Lacs
for its associate company Solar Explochem Zambia Ltd.
19. During the year the Company has provided Rs. 746.95 Lacs against
Powder Factor deductions for its supplies of explosives to Coal India
Ltd.
20. Sundry Creditor includes outstanding balance of M/s Transmmonia AG
Rs. 7828.72 Lacs which includes payment outstanding against Buyers
Credit is Rs. 5246.31 Lacs.
21. POWER CONSUMPTION
Electricity consumption : 3942211 Units
22. Some of the customers and suppliers accounts are pending for
confirmation/reconciliation and the same have been taken as per the
balances appearing in the books. Any differences arising on account of
such reconciliations, which are not likely to be material, will be
accounted for as and when these reconciliations are completed.
23. Capital work in progress in Fixed Assests
Company has got status of "Mega Project" from Government of
Maharashtra. Company has made investment in Fixed Assets. Project work
is not completed, hence shown under Capital WIP.
Civil Construction worth Rs. 522.12 Lacs, Plant & Machinery worth Rs.
823.53, Electric Installation worth Rs. 97.06 Lacs, and other work in
progress Rs. 137.98 Lacs. :
24. Excise Duty shown under expenditure represents the aggregate of
Excise Duty borne by the Company and the difference between Excise Duty
on the Opening and Closing Stock of Finished Goods.
25. Sundry Creditors for goods and expenses include dues to Small
Scale Industrial Undertakings aggregating to Rs. 20.47 Lacs The names
of Small Scale Industrial Undertakings (to the extent of information
available with the management) to whom the Company owes a sum exceeding
Rs. 1 Lacs each Basic Chemical Industry, Kalinga Wrappers, Sunrise
Technologies. None of the aforesaid outstanding are due for payment as
at 31st March, 2010.
26. Export Incentive receivable under duty free credit entitlement
included under the head Loans & Advances is pending due to disposal for
some procedural aspects with Government. Shortfall / excess if any
will be taken into accounts as and when it is determined.
27. Disclosure as required by Accounting Standard 19 "Leases" issued
by the institute of Chartered Accounts of India are given below:
Being the Company is Lessee:
(i) The Companys significant leasing arrangements are in respect of
godowns / residential / office premises (including furniture and
fittings therein, as applicable). The aggregate lease rental payable
are charged to Profit an Loss Account as Rent.
(ii) The Leasing arrangements, which are cancelable at any time on
month to month basis and in some cases between 11 months to 5 years,
are usually renewable by mutual consent on mutually agreeable terms.
Under these arrangements generally refundable interest free deposits
have been given.
28. All known liabilities have been taken into consideration.
29. The previous years figures have been regrouped/ reclassified where
necessary, to conform to the current years presentation.