Mar 31, 2023
a) Disclosures relating to fair valuation of investment property
Fair value of the above investment property as at March 31,2023 is '' 260 crore (2022: '' 260 crore) based on external valuation.
The fair value of investment property has been determined by external independent registered valuers as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued.
The fair value measurement for all of the investment property has been categorised as a level 3 fair value based on the inputs to the valuation techniques used.
The Company obtains independent valuations of its investment property after every three years. The fair value of the investment property have been derived using the Direct Comparison Method. The direct comparison approach involves a comparison of the investment property to similar properties that have actually been sold in arms-length distance from investment property or are offered for sale in the same region. This approach demonstrates what buyers have historically been willing to pay (and sellers willing to accept) for similar properties in an open and competitive market, and is particularly useful in estimating the value of the land and properties that are typically traded on a unit basis. This approach leads to a reasonable estimation of the prevailing price. Given that the comparable instances are located in close proximity to the investment property; these instances have been assessed for their locational comparative advantages and disadvantages while arriving at the indicative price assessment for investment property.
b) The Company has not earned any material rental income on the above properties.
Goodwill of'' 46 crore (2022: '' 46 crore) relates to the precipitated silica business. The estimated value in use of the CGU is based on future cash flows of forecasted period of 20 years and discount rate of 11.8%, which consider the operating and macro-economic environment in which the entity operates.
An analysis of the sensitivity of the change in key parameters (operating margin, discount rates and long term average growth rate), based on reasonably probable assumptions, did not result in any probable scenario in which the recoverable amount of the CGU would decrease below the carrying amount.
The Company has issued one class of ordinary shares at par value of '' 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential accounts, in proportion to their shareholding.
1) Provision for asset retirement obligation includes provision towards site restoration expense and decomissioning charges. The timing of the outflows is expected to be within a period of one to thirty years from the date of balance sheet.
2) Provision for litigations and others represents management''s best estimate of outflow of economic resources in respect of water charges, entry tax, land revenue and other disputed items including direct taxes, indirect taxes and other claims. The timing of outflows is uncertain and will depend on the cessation of the respective cases
The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
Expenses relating to short-term leases and low value assets have been disclosed under rent in note 29(d).
The incremental borrowing rate of Nil (2022: 8.00% p.a. to 9.50% p.a.) has been applied to lease liabilities recognised in the Standalone
Balance Sheet.
34. Employee benefits obligations
(a) The Company makes contributions towards provident fund, in substance a defined benefit retirement plan and towards pension fund and superannuation fund which are defined contribution retirement plans for qualifying employees. The provident fund is administered by the Trustees of the Tata Chemicals Limited Provident Fund and the superannuation fund is administered by the Trustees of the Tata Chemicals Limited Superannuation Fund. The Company is liable to pay to the provident fund to the extent of the amount contributed and any shortfall in the fund assets based on Government specified minimum rates of return relating to current services. The Company recognises such contribution and shortfall if any as an expense in the year incurred.
On account of the above contribution plans, a sum of '' 10 crore (2022: '' 10 crore) has been charged to the Standalone Statement of Profit and Loss.
(b) The Company makes annual contributions to the Tata Chemicals Employees'' Gratuity Trust and to the Employees'' Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, for funding the defined benefit plans for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement or death while in employment or on termination of employment. Employees, upon completion of the vesting period, are entitled to a benefit equivalent to either half month, three fourth month and full month salary last drawn for each completed year of service depending upon the completed years of continuous service in case of retirement or death while in employment. In case of termination, the benefit is equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. Vesting occurs upon completion of five years of continuous service.
The trustees of the trust fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. They are tasked with periodic reviews of the solvency of the fund and play a role in the long-term investment, risk management and funding strategy.
The Company also provides post retirement medical benefits to eligible employees under which employees at Mithapur who have retired from service of the Company are entitled for free medical facility at the Company hospital during their lifetime. Other employees are entitled to domiciliary treatment exceeding the entitled limits for the treatments covered under the Health Insurance Scheme upto slabs defined in the scheme. The floater mediclaim policy also covers retired employees based on eligibility, for such benefit.
The Company provides pension, housing / house rent allowance and medical benefits to retired Managing and Executive Directors who have completed ten years of continuous service in Tata Group and three years of continuous service as Managing Director/Executive Director or five years of continuous service as Managing Director/Executive Director. The directors are entitled upto seventy five percent of last drawn salary for life and on death 50% of the pension is payable to the spouse for the rest of his/her life.
Family benefit scheme is applicable to all permanent employees in management, officers and workmen who have completed one year of continuous service. In case of untimely death of the employee, nominated beneficiary is entitled to an amount equal to the last drawn salary (Basic Salary, DA and FDA) till the normal retirement date of the deceased employee.
The most recent actuarial valuations of plan assets and the present values of the defined benefit obligations were carried out at March 31,2023. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
The following tables set out the funded status and amounts recognised in the Company''s Standalone Financial Statements as at March 31,2023 for the Defined Benefit Plans.
The Company operates Provident Fund Schemes and the contributions are made to recognised funds maintained by the Company. The Company is required to offer a defined benefit interest rate guarantee on provident fund balances of employees. The interest rate guarantee is payable to the employees for the year when the exempt fund declares a return on provident fund investments which is less than the rate declared by the Regional Provident Fund Commissioner (RPFC) on the provident fund corpus for their own subscribers. The Actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the below provided assumptions, shortfall between plan assets as the end of the year and the present value of funded obligation has been recognised in the Standalone Balance Sheet and Other Comprehensive Income.
(d) The defined benefit scheme is administered by a fund that is legally separated from the Company. Responsibility for governance of the scheme lies with the board of trustees. The board of trustees must be composed of representatives of the Company and scheme participants in accordance with the scheme rules and on timely basis, the board of trustees reviews the level of funding for the scheme as required by legislation. Such a review includes the asset-liabilities matching strategy and investment risk management policy and is used to determine the schedule of contributions payable by and agreed with the Company.
The Company sells its products mainly within India where the conditions prevailing are uniform. Since the sales outside India are below threshold limit, no separate geographical segment disclosure is considered necessary.
All non-current assets in the nature of property, plant and equipment (including capital work in progress) and intangible assets (including those under development) are domiciled in india.
All assets and liabilities for which fair value is measured or disclosed in the Standalone Financial Statements are categorised within the fair value hierarchy, described as follows:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The following tables provides the fair value measurement hierarchy of the Company''s financial assets and liabilities that are measured at fair value or where fair value disclosure is required.
The following methods and assumptions were used to estimate the fair values of financial instruments:
(i) The management assessed that fair value of cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
(ii) The fair values of the equity investment which are quoted, are derived from quoted market prices in active markets. The Investments measured at fair value (FVTOCI) and falling under fair value hierarchy Level 3 are valued on the basis of valuation reports provided by external valuers with the exception of certain investments, where cost has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair values within that range. The Company considers Comparable Companies Method (CCM) method and the illiquidity discount based on its assessment of the judgement that market participants would apply for measurement of fair value of unquoted investments. In the CCM method, the Company would find comparable listed entities in the market and use the same PE multiple (ranging from 9.80 to 20.60) for determining the fair value of the investment.
(iii) The fair values of investments in mutual fund units is based on the net asset value (''NAV'') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.
(iv) The Company enters into derivative financial instruments with various counterparties, principally banks. The fair value of derivative financial instruments is based on observable market inputs including currency spot and forward rate, yield curves, currency volatility, credit quality of counterparties, interest rate and forward rate curves of the underlying instruments etc. and use of appropriate valuation models.
(v) The fair value of non-current borrowings carrying floating-rate of interest is not impacted due to interest rate changes, and will not be significantly different from their carrying amounts as there is no significant change in the under-lying credit risk of the Company (since the date of inception of the loans).
The Company is exposed to market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company''s risk management strategies focus on the un-predictability of these elements and seek to minimise the potential adverse effects on its financial performance. The Company''s senior management which is supported by a Treasury Risk Management Group (''TRMG'') manages these risks. TRMG advises on financial risks and the appropriate financial risk governance framework for the Company and provides assurance to the Company''s senior management that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All hedging activities are carried out by specialist teams that have the appropriate skills, experience and supervision. The Company''s policy is not to trade in derivatives for speculative purposes.
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: currency risk, interest rate risk and other price risk, such as equity price risk and commodity risk. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Financial instruments affected by market risk include loans and borrowings, deposits, investments, forex receivable, forex payables and derivative financial instruments.
Foreign currency risk management
Foreign exchange risk arises on future commercial transactions and on all recognised monetary assets and liabilities, which are denominated in a currency other than the functional currency of the Company. The Company''s management has set a policy wherein exposure is identified, a benchmark is set and monitored closely, and accordingly suitable hedges are undertaken. The policy also includes mandatory initial hedging requirements for exposure above a threshold.
The Company''s foreign currency exposure arises mainly from foreign exchange imports, exports and foreign currency borrowings, primarily with respect to USD.
Based on the movements in the foreign exchange rates historically and the prevailing market conditions as at the reporting date, the Company''s Management has concluded that the above mentioned rates used for sensitivity are reasonable benchmarks.
Equity price risk management
The Company''s exposure to equity price risk arises from investment held by the Company and classified as FVTOCI. In general, these investments are strategic investments and are not held for trading purposes. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis.
If prices of quoted equity securities had been 5% higher / (lower), the OCI for the year ended March 31,2023 and 2022 would increase / (decrease) by '' 218 crore respectively.
Credit risk is the risk that a 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 and other receivables and from its financing activities, including loans given, deposits with banks and financial institutions, investment in mutual funds, foreign exchange transactions and other financial instruments.
The carrying amount of financial assets represents the maximum credit exposure, being the total of the carrying amount of balances with banks, short term deposits with banks, short term investment, trade and other receivables and other financial assets excluding equity investments.
The Company considers a financial asset to be in default when:
- the debtor is unlikely to pay its credit obligations to the Company in full, without recourse actions such as security realizations, etc.
- the financial asset is 120 days past due.
The financial guarantee disclosed under note 41.1 (b) represents the maximum exposure to credit risk under such contracts. Trade and other receivables
Trade and other receivables of the Company are typically unsecured and derived from sales made to a large number of independent customers. Customer credit risk is managed by each business unit subject to established policies, procedures and control relating to customer credit risk management. Before accepting new customer, the Company has appropriate level of control procedures to assess the potential customer''s credit quality. The credit-worthiness of its customers are reviewed based on their financial position, past experience and other relevant factors. The credit period provided by the Company to its customers generally ranges from 0-60 days. Outstanding customer receivables are reviewed periodically. Provision is made based on expected credit loss method or specific identification method.
The credit risk related to the trade receivables is mitigated by taking security deposits / bank guarantee / letter of credit - as and where considered necessary, setting appropriate credit terms and by setting and monitoring internal limits on exposure to individual customers.
There is no substantial concentration of credit risk as the revenue and trade receivables from any of the single customer do not exceed 10% of Company revenue and trade receivables, except as disclosed in note 35.1.
For certain other receivables, where recoveries are expected beyond twelve months of the balance sheet date, the time value of money is appropriately considered in determining the carrying amount of such receivables.
Credit risk from balances/investments with banks and financial institutions is managed in accordance with the Company''s treasury risk management policy. Investments of surplus funds are made only with approved counterparties and within limits assigned to each counterparty. The limits are assigned based on corpus of investable surplus and corpus of the investment avenue. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
Financial guarantees disclosed in note 41.1(b) have been provided as corporate guarantees to financial institutions and banks that have extended credit facilities to the Company''s subsidiaries. In this regard, the Company does not foresee any significant credit risk exposure.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as and when required.
The Treasury Risk Management Policy includes an appropriate liquidity risk management framework for the management of the short-term, medium-term and long term funding and cash management requirements. The Company manages the liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Company invests its surplus funds in bank fixed deposit and liquid schemes of mutual funds, which carry no/negligible mark to market risks.
The below table analyses the Company''s non-derivative financial liabilities as at the reporting date, into relevant maturity groupings based on the remaining period (as at that date) to the contractual maturity date. The amounts disclosed in the below table are the contractual undiscounted cash flows.
All the derivative financial liabilities are included in the above analysis, as their contractual maturity dates are essential for the understanding of the timing of the under-lying cash flows.
The capital structure of the Company consists of net debt and total equity of the Company. The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to stakeholders through an optimum mix of debt and equity within the overall capital structure. The Company''s risk management committee reviews the capital structure of the Company considering the cost of capital and the risks associated with each class of capital.
The Company monitors capital using the metric of Net Debt to Equity. Net Debt is defined as borrowings less cash and cash equivalents, fixed deposits and readily redeemable investments. As on balance sheet date there is no net debt.
(a) Claims not acknowledged by the Company relating to the cases contested by the Company and which, in the opinion of the Management, are not likely to devolve on the Company relating to the following areas:
'' in crore |
||
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
(i) Excise, Customs and Service Tax @ |
42 |
42 |
(ii) Sales Tax @ |
39 |
39 |
(iii) Labour and other claims against the Company not acknowledged as debt |
11 |
11 |
(iv) Income Tax (pending before Appellate authorities in respect of which the Company is in appeal) ** |
634 |
618 |
(v) Income Tax (decided in Company''s favor by Appellate authorities and Department is in further appeal) |
16 |
16 |
(b) Guarantees provided by the Company to third parties on behalf of subsidiaries aggregates Nil ('' Nil) (2022: USD 34.20 million & GBP 120.00 million ('' 1,453 crore)).
** The Company has on-going disputes with income tax authorities mainly pertaining to disallowance of expenses and the computation of, or eligibility of the Company''s availment of certain tax incentives or allowances. Most of these disputes and/or disallowances are repetitive in nature spanning across multiple years. All the Tax demands are being contested by the company.
@ Excise Duty cases include disputes pertaining to reversal of input tax credit on common input, refund of duty paid under protest. Custom Duty cases include disputes pertaining to import of capital equipment against scripts, tariff classification issues, denial of FTA benefit. VAT/CST/Entry Tax cases include disputes pertaining to Way Bill, reversal/disallowance of input tax credit, pending declaration forms. All the Tax demands are being contested by the company.
It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgments / decisions pending with various forums/ authorities.
The company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in the Standalone Financial Statements.
41.2 Contingent assets |
'' in crore |
|
Particulars |
As at |
As at |
March 31, 2023 |
March 31, 2022 |
|
Income Tax (pending before Appellate authorities in respect of which the Company is in appeal) |
29 |
46 |
42 (b). Note on Ultimate Beneficiaries
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
No funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Parties ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
42 (c). Borrowing based on security of current assets
The Company has obtained borrowings from bank on basis of security of current assets wherein the quarterly returns/ statements of current assets as filed with bank are in agreement with the books.
42 (e). Disclosures pursuant to regulation 34 (3) of securities and exchange board of india (listingobligations and disclosure requirements) regulations, 2015 and section 186 of the companies act, 2013.
i) Investment in perpetual instrument (note 8(b))
Tata International Limited has utilised the funds for its debt refinancing and general corporate purposes. Term of this investment is perpetual in nature and carries initial interest rate of 9.20% p.a. Maximum balance outstanding during the year is '' 150 crore (2022: Nil)
Surplus funds have been invested with various corporates (un-related parties). It is repayable within 1 year and carries interest rate in the range of 7.00% to 7.25% p.a. Maximum balance outstanding during the year is '' 39 crore (2022: Nil)
Surplus funds have been invested with various corporates (un-related parties). It is repayable within 1 year and carries interest rate in the range of 6.65% to 8.15% p.a. Maximum balance outstanding during the year is '' 350 crore (2022: Nil)
iv) Particulars of investments in Subsidiaries, Joint ventures and associates and other investments are given in note 8.
v) The Company has not provided any guarantee or security covered under Section 186 and accordingly, the disclosure requirements to that extent does not apply to the Company.
vi) In line with Circular No 04/2015 issued by Ministry of Corporate Affairs dated 10/03/2015, loans given to employees as per the Company''s policy are not considered for the purposes of disclosure under Section 186(4) of the Companies Act, 2013.
43. Approval of Standalone Financial Statements
The Standalone Financial Statements were approved for issue by the board of directors on May 3, 2023.
Mar 31, 2022
a) Disclosures relating to fair valuation of investment property
Fair value of the above investment property as at March 31,2022 is '' 259.74 crore (2021: 273.39 crore) based on external valuation.
The fair value of investment property has been determined by external independent registered valuers as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued.
The fair value measurement for all of the investment property has been categorised as a level 3 fair value based on the inputs to the valuation techniques used.
The Company obtains independent valuations of its investment property after every three years. The fair value of the investment property have been derived using the Direct Comparison Method. The direct comparison approach involves a comparison of the investment property to similar properties that have actually been sold in arms-length distance from investment property or are offered for sale in the same region. This approach demonstrates what buyers have historically been willing to pay (and sellers willing to accept) for similar properties in an open and competitive market, and is particularly useful in estimating the value of the land and properties that are typically traded on a unit basis. This approach leads to a reasonable estimation of the prevailing price. Given that the comparable instances are located in close proximity to the investment property; these instances have been assessed for their locational comparative advantages and disadvantages while arriving at the indicative price assessment for investment property.
b) The Company has not earned any material rental income on the above properties.
Goodwill of '' 45.53 crore (2021: '' 45.53 crore) relates to the precipitated silica business. The estimated value in use of the CGU is based on future Cash Flows of forecasted period of 20 years and discount rate of 13%, which consider the operating and macro-economic environment in which the entity operates.
An analysis of the sensitivity of the change in key parameters (operating margin, discount rates and long term average growth rate), based on reasonably probable assumptions, did not result in any probable scenario in which the recoverable amount of the CGU would decrease below the carrying amount.
The Company has issued one class of ordinary shares at par value of '' 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential accounts, in proportion to their shareholding.
1) Provision for asset retirement obligation includes provision towards site restoration expense and decomissioning charges. The timing of the outflows is expected to be within a period of one to thirty years from the date of balance sheet.
2) Provision for litigations and others represents management''s best estimate of outflow of economic resources in respect of water charges, entry tax, land revenue and other disputed items including direct taxes, indirect taxes and other claims. The timing of outflows is uncertain and will depend on the cessation of the respective cases.
The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the Company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
Exceptional gain from discontinued operations for the year ended March 31,2022 is in respect of subsidy for previous years pertaining to the erstwhile fertilizer business, which is received in the current period from the transferor pursuant to the Business transfer agreement.
Expenses relating to short-term leases and low value assets have been disclosed under rent in note 29(e).
The incremental borrowing rate of 8.00% p.a. to 9.00% p.a. (2021: 8.00% p.a. to 9.50% p.a.) has been applied to lease liabilities recognised
in the Standalone Balance Sheet.
34. Employee benefits obligations
(a) The Company makes contributions towards provident fund, in substance a defined benefit retirement plan and towards pension fund and superannuation fund which are defined contribution retirement plans for qualifying employees. The provident fund is administered by the Trustees of the Tata Chemicals Limited Provident Fund and the superannuation fund is administered by the Trustees of the Tata Chemicals Limited Superannuation Fund. The Company is liable to pay to the provident fund to the extent of the amount contributed and any shortfall in the fund assets based on Government specified minimum rates of return relating to current services. The Company recognises such contribution and shortfall if any as an expense in the year incurred.
On account of the above contribution plans, a sum of '' 9.79 crore (2021: '' 10.11 crore) has been charged to the Standalone Statement of Profit and Loss.
(b) The Company makes annual contributions to the Tata Chemicals Employees'' Gratuity Trust and to the Employees'' Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, for funding the defined benefit plans for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement or death while in employment or on termination of employment. Employees, upon completion of the vesting period, are entitled to a benefit equivalent to either half month, three fourth month and full month salary last drawn for each completed year of service depending upon the completed years of continuous service in case of retirement or death while in employment. In case of termination, the benefit is equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. Vesting occurs upon completion of five years of continuous service.
The trustees of the trust fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. They are tasked with periodic reviews of the solvency of the fund and play a role in the long-term investment, risk management and funding strategy.
The Company also provides post retirement medical benefits to eligible employees under which employees at Mithapur who have retired from service of the Company are entitled for free medical facility at the Company hospital during their lifetime. Other employees are entitled to domiciliary treatment exceeding the entitled limits for the treatments covered under the Health Insurance Scheme upto slabs defined in the scheme. The floater mediclaim policy also covers retired employees based on eligibility, for such benefit.
The Company provides pension, housing / house rent allowance and medical benefits to retired Managing and Executive Directors who have completed ten years of continuous service in Tata Group and three years of continuous service as Managing Director/ Executive Director or five years of continuous service as Managing Director/Executive Director. The directors are entitled upto seventy five percent of last drawn salary for life and on death 50% of the pension is payable to the spouse for the rest of his/her life.
Family benefit scheme is applicable to all permanent employees in management, officers and workmen who have completed one year of continuous service. In case of untimely death of the employee, nominated beneficiary is entitled to an amount equal to the last drawn salary (Basic Salary, DA and FDA) till the normal retirement date of the deceased employee.
The most recent actuarial valuations of plan assets and the present values of the defined benefit obligations were carried out at March 31,2022. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
(a) Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.
(b) The estimates of future salary increases considered in actuarial valuation take into account the inflation, seniority, promotion and other relevant factors.
The Company operates Provident Fund Schemes and the contributions are made to recognised funds maintained by the Company. The Company is required to offer a defined benefit interest rate guarantee on provident fund balances of employees. The interest rate guarantee is payable to the employees for the year when the exempt fund declares a return on provident fund investments which is less than the rate declared by the Regional Provident Fund Commissioner (RPFC) on the provident fund corpus for their own subscribers. The Actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the below provided assumptions, shortfall between plan assets as the end of the year and the present value of funded obligation has been recognised in the Standalone Balance Sheet and Other Comprehensive Income.
The defined benefit scheme is administered by a fund that is legally separated from the Company. Responsibility for governance of the scheme lies with the board of trustees. The board of trustees must be composed of representatives of the Company and scheme participants in accordance with the scheme rules and on timely basis, the board of trustees reviews the level of funding for the scheme as required by legislation. Such a review includes the asset-liabilities matching strategy and investment risk management policy and is used to determine the schedule of contributions payable by and agreed with the Company.
The Company sells its products mainly within India where the conditions prevailing are uniform. Since the sales outside India are below threshold limit, no separate geographical segment disclosure is considered necessary.
All non-current assets in the nature of property, plant and equipment (including capital work in progress) and intangible assets (including those under development) are domiciled in india.
The Company has one customer whose revenue represents 31% (2021: 33%) of the Company''s total revenue and trade receivable represents 33% (2021: 28%) of the Company''s total trade receivables.
Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.
All assets and liabilities for which fair value is measured or disclosed in the Standalone Financial Statements are categorised within the fair value hierarchy, described as follows:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The following methods and assumptions were used to estimate the fair values of financial instruments:
(i) The management assessed that fair value of cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
(ii) The fair values of the equity investment which are quoted, are derived from quoted market prices in active markets. The Investments measured at fair value (FVTOCI) and falling under fair value hierarchy Level 3 are valued on the basis of valuation reports provided by external valuers with the exception of certain investments, where cost has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair values within that range.
The Company considers Comparable Companies Method (CCM) method and the illiquidity discount based on its assessment of the judgement that market participants would apply for measurement of fair value of unquoted investments. In the CCM method, the Company would find comparable listed entities in the market and use the same PE multiple (ranging from 6.70 to 19.88) for determining the fair value of the investment.
(iii) The fair values of investments in mutual fund units is based on the net asset value (''NAV'') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.
(iv) The Company enters into derivative financial instruments with various counterparties, principally banks. The fair value of derivative financial instruments is based on observable market inputs including currency spot and forward rate, yield curves, currency volatility, credit quality of counterparties, interest rate and forward rate curves of the underlying instruments etc. and use of appropriate valuation models.
(v) The fair value of non-current borrowings carrying floating-rate of interest is not impacted due to interest rate changes, and will not be significantly different from their carrying amounts as there is no significant change in the under-lying credit risk of the Company (since the date of inception of the loans).
The Company is exposed to market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company''s risk management strategies focus on the un-predictability of these elements and seek to minimise the potential adverse effects on its financial performance. The Company''s senior management which is supported by a Treasury Risk Management Group (''TRMG'') manages these risks. TRMG advises on financial risks and the appropriate financial risk governance framework for the Company and provides assurance to the Company''s senior management that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives.
All hedging activities are carried out by specialist teams that have the appropriate skills, experience and supervision. The Company''s policy is not to trade in derivatives for speculative purposes.
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: currency risk, interest rate risk and other price risk, such as equity price risk and commodity risk. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Financial instruments affected by market risk include loans and borrowings, deposits, investments, forex receivable, forex payables and derivative financial instruments.
Foreign exchange risk arises on future commercial transactions and on all recognised monetary assets and liabilities, which are denominated in a currency other than the functional currency of the Company. The Company''s management has set a policy wherein exposure is identified, a benchmark is set and monitored closely, and accordingly suitable hedges are undertaken. The policy also includes mandatory initial hedging requirements for exposure above a threshold.
The Company''s foreign currency exposure arises mainly from foreign exchange imports, exports and foreign currency borrowings, primarily with respect to USD.
Based on the movements in the foreign exchange rates historically and the prevailing market conditions as at the reporting date, the Company''s Management has concluded that the above mentioned rates used for sensitivity are reasonable benchmarks.
Interest rate risk management
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 rates. The Company''s exposure to the risk of changes in market rates relates primarily to the Company''s non-current debt obligations with floating interest rates.
The Company''s policy is generally to undertake non-current borrowings using facilities that carry floating-interest rate. The Company manages its interest rate risk by entering 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.
Moreover, the short-term borrowings of the Company do not have a significant fair value or cash flow interest rate risk due to their short tenure.
As the Company does not have exposure to any floating-interest bearing assets, or any significant long-term fixed-interest bearing assets, its interest income and related cash inflows are not affected by changes in market interest rates.
Interest rate sensitivity
No sensitivity analysis is prepared as the Company does not expect any material effect on the Company''s results arising from the effects of reasonably possible changes to interest rates on interest bearing financial instruments at the end of the reporting period.
Equity price risk management
The Company''s exposure to equity price risk arises from investment held by the Company and classified as FVTOCI. In general, these investments are strategic investments and are not held for trading purposes. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis.
Equity price sensitivity analysis
If prices of quoted equity securities had been 5% higher / (lower), the OCI for the year ended March 31,2022 and 2021 would increase / (decrease) by '' 217.74 crore and '' 131.71 crore respectively.
Credit risk management
Credit risk is the risk that a 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 and other receivables and from its financing activities, including deposits with banks and financial institutions, investment in mutual funds, foreign exchange transactions and other financial instruments.
The carrying amount of financial assets represents the maximum credit exposure, being the total of the carrying amount of balances with banks, short term deposits with banks, short term investment, trade and other receivables and other financial assets excluding equity investments.
The Company considers a financial asset to be in default when:
- the debtor is unlikely to pay its credit obligations to the Company in full, without recourse actions such as security realizations, etc.
- the financial asset is 120 days past due.
The financial guarantee disclosed under note 41.1 (b) represents the maximum exposure to credit risk under such contracts.
Trade and other receivables
Trade and other receivables of the Company are typically unsecured and derived from sales made to a large number of independent customers. Customer credit risk is managed by each business unit subject to established policies, procedures and control relating to customer credit risk management. Before accepting new customer, the Company has appropriate level of control procedures to assess the potential customer''s credit quality. The credit-worthiness of its customers are reviewed based on their financial position, past experience and other relevant factors. The credit period provided by the Company to its customers generally ranges from 0-60 days. Outstanding customer receivables are reviewed periodically. Provision is made based on expected credit loss method or specific identification method.
The credit risk related to the trade receivables is mitigated by taking security deposits / bank guarantee / letter of credit - as and where considered necessary, setting appropriate credit terms and by setting and monitoring internal limits on exposure to individual customers.
There is no substantial concentration of credit risk as the revenue and trade receivables from any of the single customer do not exceed 10% of Company revenue and trade receivables, except as disclosed in note 35.1.
For certain other receivables, where recoveries are expected beyond twelve months of the balance sheet date, the time value of money is appropriately considered in determining the carrying amount of such receivables.
Financial instruments and cash deposits
Credit risk from balances/investments with banks and financial institutions is managed in accordance with the Company''s treasury risk management policy. Investments of surplus funds are made only with approved counterparties and within limits assigned to each counterparty. The limits are assigned based on corpus of investable surplus and corpus of the investment avenue. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
Financial guarantees
Financial guarantees disclosed in note 41.1(b) have been provided as corporate guarantees to financial institutions and banks that have extended credit facilities to the Company''s subsidiaries. In this regard, the Company does not foresee any significant credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as and when required.
The Treasury Risk Management Policy includes an appropriate liquidity risk management framework for the management of the short-term, medium-term and long term funding and cash management requirements. The Company manages the liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual Cash Flows, and by matching the maturity profiles of financial assets and liabilities. The Company invests its surplus funds in bank fixed deposit and liquid schemes of mutual funds, which carry no/negligible mark to market risks.
The below table analyses the Company''s non-derivative financial liabilities as at the reporting date, into relevant maturity groupings based on the remaining period (as at that date) to the contractual maturity date. The amounts disclosed in the below table are the contractual undiscounted Cash Flows.
The capital structure of the Company consists of net debt and total equity of the Company. The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to stakeholders through an optimum mix of debt and equity within the overall capital structure. The Company''s risk management committee reviews the capital structure of the Company considering the cost of capital and the risks associated with each class of capital.
The Company monitors capital using the metric of Net Debt to Equity. Net Debt is defined as borrowings less cash and cash equivalents, fixed deposits and readily redeemable investments. As on balance sheet date there is no net debt.
(b) Guarantees provided by the Company to third parties on behalf of subsidiaries aggregates USD 34.20 million & GBP 120.00 million ('' 1,452.67 crore) (2021: USD 91.80 million & GBP 105.60 million ('' 1,735.10 crore)).
** The Company has on-going disputes with income tax authorities mainly pertaining to disallowance of expenses and the computation of, or eligibility of the Company''s availment of certain tax incentives or allowances. Most of these disputes and/or disallowances are repetitive in nature spanning across multiple years. All the Tax demands are being contested by the Company.
@ Excise Duty cases include disputes pertaining to reversal of input tax credit on common input, refund of duty paid under protest. Custom Duty cases include disputes pertaining to import of capital equipment against scripts, tariff classification issues, denial of FTA benefit. VAT/CST/Entry Tax cases include disputes pertaining to Way Bill, reversal/disallowance of input tax credit, pending declaration forms. All the Tax demands are being contested by the Company.
It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgments / decisions pending with various forums/authorities.
The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in the Standalone Financial Statements.
42(b). Note on Ultimate Beneficiaries
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).
The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
Mar 31, 2019
1. Corporate information
Tata Chemicals Limited (the âCompanyâ) is a public limited company domiciled in India. Its shares are listed on two stock exchanges in India; the Bombay Stock Exchange (âBSEâ) and the National Stock Exchange (âNSEâ). The Company is a diversified business dealing basic chemistry products, consumer products and specialty products. The Company has a global presence with key subsidiaries in United States of America (âUSAâ), United Kingdom (âUKâ) and Kenya that are engaged in the manufacture and sale of soda ash, industrial salt and related products.
2. A) Recent accounting pronouncements which are not yet effective
Ind AS 116 - Leases:
The Company is required to adopt Ind AS 116, Leases from April 1, 2019. Ind AS 116 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard - i.e. lessors continue to classify leases as finance or operating leases. It replaces existing leases guidance, Ind AS 17, Leases.
The Company in in the process of completing its detailed assessment and the quantitative impact of adoption of Ind AS 116 on the Financial Statements in the period of initial application is not reasonably estimable as at present.
i. Leases in which the Company is a lessee
The Company will recognise new assets and liabilities for its operating leases of offices, warehouse and factory facilities. The nature of expenses related to those leases will now change because the Company will recognise a depreciation charge for right-of-use assets and interest expense on lease liabilities.
Previously, the Company recognised operating lease expense on a straight-line basis over the term of the lease, and recognised assets and liabilities only to the extent that there was a timing difference between actual lease payments and the expense recognised.
In addition, the Company will include the payments due under the lease in its lease liability and apply Ind AS 36, Impairment of Assets to determine whether the right-of-use asset is impaired and to account for any impairment.
ii. Transition
The Company plans to apply Ind AS 116 initially on April 1, 2019, using the modified retrospective approach. Therefore, the cumulative effect of adopting Ind AS 116 will be recognised as an adjustment to the opening balance of retained earnings at April 1, 2019, with no restatement of comparative information.
The Company plans to apply the practical expedient to grandfather the definition of a lease on transition. This means that it will apply Ind AS 116 to all contracts entered into before April 1, 2019 and identified as leases in accordance with Ind AS 17.
Amendments to Ind AS 12 - Income Taxes (Appendix C - Uncertainty over Income Tax Treatments):
This interpretation, which will be effective from April 1, 2019, clarifies how entities should evaluate and reflect uncertainties over income tax treatments, in particular when assessing the outcome a tax authority might reach with full knowledge and information if it were to make an examination. The Company is in the process of evaluating the impact of this amendment on its standalone financial statements.
B) Business combination
The transaction to acquire the precipitated silica business of M/s Allied Silica Limited, situated in Cuddalore, Tamil Nadu on a slump sale and going concern basis was consummated through a Business Transfer Agreement (âBTAâ) on June 18, 2018.
The consideration of Rs. 123.19 crore is towards property, plant and equipment and the normalised net working capital of which Rs.6.37 crore is outstanding as payable as at March 31, 2019 on account of contingent consideration (Subject to compliance with conditions mentioned in the BTA by June-19).
Identifiable assets acquired and liabilities recognised on the date of acquisition are based on their fair values as presented below.
* determined on a provisional basis considering depreciated replacement cost and will be revised in FY 20, based on external valuers report and settlement of contingent consideration.
The resultant provisional goodwill amounts to Rs.48.00 crore. Goodwill paid reflects the premium for gaining immediate entry to markets and access to a start-up facility, with all the regulatory permits and clearances which will enable the Company to participate in the silica market. The goodwill recognised is expected to be deductible for income tax purposes.
The Company incurred acquisition related costs of Rs. 1.51 crore on transfer fees, legal fees, valuation costs, etc which are included in other expenses.
Footnotes:
a) Disclosures relating to fair valuation of investment property
Fair value of the above investment property as at March 31, 2019 is Rs.49.45 crore based on external valuation.
Fair Value Hierarchy
The fair value of investment property has been determined by external independent property valuers, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued.
The fair value measurement for all of the investment property has been categoried as a level 3 fair value based on the inputs to the valuation techniques used.
Description of valuation technique used
The Company obtains independent valuations of its investment property after every three years as per requirement of Ind AS 40. The fair value of the investment property have been derived using the Direct Comparison Method. The direct comparison approach involves a comparison of the investment property to similar properties that have actually been sold in arms-length distance from investment property or are offered for sale in the same region. This approach demonstrates what buyers have historically been willing to pay (and sellers willing to accept) for similar properties in an open and competitive market, and is particularly useful in estimating the value of the land and properties that are typically traded on a unit basis. This approach leads to a reasonable estimation of the prevailing price. Given that the comparable instances are located in close proximity to the investment property; these instances have been assessed for their locational comparative advantages and disadvantages while arriving at the indicative price assessment for investment property.
b) The Company has not earned any material rental income on the above properties.
Footnotes:
(i) The Board of Directors of the Company has approved the Scheme of Amalgamation (âSchemeâ) under the provisions of Section 234 read with Sections 230 to 232 of the Companies Act, 2013 for the merger of Bio Energy Venture - 1 (Mauritius) Pvt. Ltd., a wholly owned subsidiary of the Company, with the Company, subject to necessary statutory and regulatory approvals, including the National Company Law Tribunal. The Scheme is in the process of being filed.
(ii) Consequent to Tata Industries Limited (âTILâ) obtaining approval of its shareholders at the General Meeting held on 27 March, 2019, the Company along with Tata Sons Private Limited will exercise joint control over the key activities of TIL. Accordingly, the investment in TIL has been reclassified as a Joint Venture.
(iii) Shares can be transferred only with the prior approval of the Board of Directors of Tata Teleservices Ltd.
* value below Rs.50,000/-
(iii) The cost of inventories recognised as an expense includes Rs. 2.96 crore (2018: Rs.7.67 crore) in respect of write-down of inventories to net realisable value, and has been reduced by Rs.0.10 crore(2018: Rs.4.17 crore) in respect of reversal of such write-down. Reversal of previous write-downs have been largely as a result of increased selling prices of certain products.
(iv) Inventories have been offered as security against the working capital facilities provided by the bank.
(ii) Terms/ rights attached to equity shares
The Company has issued one class of ordinary shares at par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential accounts, in proportion to their shareholding.
Footnotes:
(i) Unsecured redeemable Non-convertible debentures having face value of Rs. 10 lakhs each are redeemable at par on July 2, 2019 and bear interest rate of 10% per annum. This has been disclosed in note 17 within the heading current maturity of non-current borrowings under other financial liabilities (current).
(ii) The External Commercial Borrowings (âECBâ) are due for repayments during October 2019 Rs.438.85 crore (2018: Rs.413.60 crore) (USRS. 63.46 million) and bear interest of LIBOR plus spread of 1.95% semiannually. Current portion due for repayment within one year Rs.438.85 crore (2018: Rs.412.36 crore). This amount has been disclosed in note 17 within the heading current maturities of non current borrowings under other financial liabilities (current).
Footnote:
(i) Loans from banks on Cash Credit carry an interest ranging from 8.70% p.a. to 9.10% p.a. and are secured by way of hypothecation of stocks of raw materials, finished products, stores and work-in-process as well as book debts.
Nature of provisions :
1) Provision for asset retirement obligation includes provision towards site restoration expense and decomissioning charges. The timing of the outflows is expected to be within a period of one to thirty years from the date of balance sheet.
2) Provision for warranty relates to certain products that fail to perform satisfactorily during the warranty period. Provision made as at respective year ends represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within a period of one year from the date of balance sheet.
3) Provision for others represents managementâs best estimate of outflow of economic resources in respect of water charges, entry tax, land revenue and other disputed items including direct taxes, indirect taxes and other claims. The timing of outflows is uncertain and will depend on the cessation of the respective cases.
(ii) On adoption of Ind AS 115 - Revenue from Contracts with Customers with effect from April 1, 2018, the Company has evaluated its performance obligations relating to freight arrangements on sales to customers. Consequently following the cumulative effect method, freight and forwarding charges and revenue from operations are higher by Rs. 172.54 crore for the year ended March 31, 2019 (comparatives have not been restated); however, these do not have any impact on the profit.
(iii) For operating segments revenue, geographical segments revenue, revenue from major products and revenue from major customers refer note 35.1.
(iv) Sales includes excise duty upto June 30, 2017 and hence figures are not comparable.
(ii) Amount required to be spent by the Company during the year on CSR is Rs. 19.86 crore (2018: Rs. 16.80 crore) whereas the Company has spent Rs. 25.68 crore (2018: Rs. 14.28 crore). The Company has spent the following amounts during the year on the activities other than construction/acquisition of any asset.
(iii) Amount includes Contribution of Rs. 10 crore (2018: Rs. Nil) to Progressive Electoral Trust (The Objects of the Trust inter alia, include holding by the Trustees ofâ Distribution Fundsâ for distribution to political parties).
(iv) Expenditure incurred on Scientific Research and Development activities @
3. Discontinued operations
(I) Disposal of Phosphatic Fertilisers business and Trading business of bulk and non-bulk fertilisers
On June 1, 2018, the Company consummated the sale and transfer of its Phosphatic Fertiliser Business located at Haldia and the Trading Business comprising bulk and non-bulk fertilisers to IRC Agrochemicals Private Limited (âIRCâ) as per Business Transfer Agreement dated November 6, 2017.
Exceptional gain includes pre-tax loss of Rs.65.40 crore towards the shortfall between the carrying value of net Property, plant and equipment (âPPEâ) and the recoverable value for the year ended March 31, 2018.
(II) Disposal of urea and customised fertilisers business
During the previous year, the Company entered into an agreement with Yara Fertilisers India Private limited (âYara Indiaâ) to transfer its Urea Business (which comprises of manufacturing facilities for urea and customised fertilisers at Babrala, Uttar Pradesh), by way of a slump sale.
On January 12, 2018, the Company consummated the sale and transfer of its Urea and Customised Fertilisers Business to Yara India as contemplated in the Scheme of Arrangement dated August 10, 2016. The pre-tax gain of Rs. 1,279.39 crore for the year ended March 31, 2018 is included under exceptional gain for discontinued operations.
Footnotes:
(i) (a) The Department of Fertilizers, Government of India, has notified âSpecial Banking Arrangementâ scheme to address the concern of delay in subsidy disbursement. This arrangement has been made by the Government with the State Bank of India Consortium (SBI Consortium). Loans under this scheme are secured by hypothecation of subsidy receivables.
Fixed interest rate of 7.80% per annum out of which 6.84% per annum shall be borne by the Government and repaid in April 2018. The remaining 0.96% per annum shall be borne by the Company and will be recovered upfront for 60 days from the Company at the time of disbursement of the facility. Balance as at March 31, 2019 : Rs. Nil [2018 : Rs.307.95 crore].
(b) Cash credit (Secured) of Rs. Nil (2018: Rs. 2.13 crore)
(ii) Subsidy receivables and borrowings related to Phosphatic fertilisers and Trading business along with the related revenue and expenses are disclosed as discontinued operations. These receivables and borrowings are not transferred on disposal of business. (note 9)
4. Finance leases
Finance lease commitments
The Company has finance lease contracts for certain items of plant and machinery and vehicles. The Companyâs obligations under finance leases are secured by the lessorâs title to the leased assets.
Future minimum lease payments (âMLPâ) under finance lease contracts together with the present value of the net MLP are, as follows:
5. Employee benefits obligations
(a) The Company makes contributions towards provident fund, in substance a defined benefit retirement plan and towards pension fund and superannuation fund which are defined contribution retirement plans for qualifying employees. The provident fund is administered by the Trustees of the Tata Chemicals Limited Provident Fund and the superannuation fund is administered by the Trustees of the Tata Chemicals Limited Superannuation Fund. The Company is liable to pay to the provident fund to the extent of the amount contributed and any shortfall in the fund assets based on Government specified minimum rates of return relating to current services. The Company recognises such contribution and shortfall if any as an expense in the year incurred.
On account of the above contribution plans, a sum of Rs. 11.78 crore (2018: Rs. 14.62 crore) has been charged to the Statement of Profit and Loss.
(b) The Company makes annual contributions to the Tata Chemicals Employeesâ Gratuity Trust and to the Employeesâ Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, for funding the defined benefit plans for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement or death while in employment or on termination of employment. Employees, upon completion of the vesting period, are entitled to a benefit equivalent to either half month, three fourth month and full month salary last drawn for each completed year of service depending upon the completed years of continuous service in case of retirement or death while in employment. In case of termination, the benefit is equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. Vesting occurs upon completion of five years of continuous service.
The Company also provides post retirement medical benefits to eligible employees under which employees at Mithapur who have retired from service of the Company are entitled for free medical facility at the Company hospital during their lifetime. Other employees are entitled to domiciliary treatment exceeding the entitled limits for the treatments covered under the Health Insurance Scheme upto slabs defined in the scheme. The floater mediclaim policy also covers retired employees based on eligibility, for such benefit.
The Company provides pension, housing / house rent allowance and medical benefits to retired Managing and Executive Directors who have completed ten years of continuous service in Tata Group and three years of continuous service as Managing Director/Executive Director or five years of continuous service as Managing Director/Executive Director. The directors are entitled upto seventy five percent of last drawn salary for life and on death 50% of the pension is payable to the spouse for the rest of his/her life.
Family benefit scheme is applicable to all permanent employees in management, officers and workmen who have completed one year of continuous service. In case of untimely death of the employee, nominated beneficiary is entitled to an amount equal to the last drawn salary (Basic Salary, DA and FDA) till the normal retirement date of the deceased employee.
The most recent actuarial valuations of plan assets and the present values of the defined benefit obligations were carried out at March 31, 2019. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
(a) Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.
(b) The estimates of future salary increases considered in actuarial valuation take into account the inflation, seniority, promotion and other relevant factors.
6. The details of the Companyâs post-retirement and other benefit plans for its employees given above are certified by the actuary and relied upon by the Auditors.
(c ) The Company operates Provident Fund Schemes and the contributions are made to the recognised funds maintained by the Company. The Company is required to offer a defined benefit interest rate guarantee on provident fund balances of employees. The interest rate guarantee is payable to the employees for the year when the exempt fund declares a return on provident fund investments which is less than the rate declared by the Regional Provident Fund Commissioner (RPFC) on the provident fund corpus for their own subscribers. The Actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the below provided assumptions, shortfall between plan assets as the end of the year and the present value of funded obligation has been recognised in the Balance Sheet and Other Comprehensive Income.
7. Segment information
7.1 Continuing operations
(a) Information about operating segments
Based on the recommendations of the Audit Committee, post divestment of the Fertiliser business, the Board of Directors has approved the revised segment reporting, from April 1, 2018, as under:
- Basic chemistry products : Soda Ash and other bulk chemicals
- Consumer products : Branded consumer products such as salt, pulses, spices, etc.
- Specialty products : Nutrition solutions, agri Solutions and advanced materials
Inter segment pricing is determined on an armâs length basis using transfer pricing principles. The corresponding information for the previous periods presented in these financial statements have been restated.
(b) Information about geographical areas
The Company sells its products mainly within India where the conditions prevailing are uniform. Since the sales outside India are below threshold limit, no separate geographical segment disclosure is considered necessary.
All non-current assets in the nature of property, plant and equipment (including capital work in progress) and intangible assets (including those under development) are domiciled in india.
(c) Revenue from major products
The following is an analysis of the Companyâs segment revenue from continuing operations from its major products
(d) Revenue from major customers
No single customers contributed 10% or more to the Companyâs revenue for the year ended March 31, 2019 and March 31, 2018.
(e) Other note
Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.
(b) Information about geographical area
Discontinued operations sells its products within India where the conditions prevailing are uniform.
(c) Revenue from major products
Discontinued operations segment deals in one product group i.e fertilisers and other agri inputs.
(d) Revenue from major customers
No single customers contributed 10% or more to the Companyâs revenue for the year ended March 31, 2019 and March 31, 2018.
(b) Fair value hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The following tables provides the fair value measurement hierarchy of the Companyâs financial assets and liabilities that are measured at fair value or where fair value disclosure is required.
(d) Valuation technique to determine fair value
The following methods and assumptions were used to estimate the fair values of financial instruments:
(i) The management assessed that fair value of cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
(ii) The fair values of the equity investment which are quoted, are derived from quoted market prices in active markets. The Investments measured at fair value and falling under fair value hierarchy Level 3 are valued on the basis of valuation reports provided by external valuers with the exception of certain investments, where cost has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair values within that range.
(iii) The fair values of investments in mutual fund units is based on the net asset value (âNAVâ) as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.
(iv) The Company enters into derivative financial instruments with various counterparties, principally banks. The fair value of derivative financial instruments is based on observable market inputs including currency spot and forward rate, yield curves, currency volatility, credit quality of counterparties, interest rate and forward rate curves of the underlying insturments etc. and use of appropriate valuation models.
(v) The fair value of non-current borrowings carrying floating-rate of interest is not impacted due to interest rate changes, and will not be significantly different from their carrying amounts as there is no significant change in the under-lying credit risk of the Company (since the date of inception of the loans).
(vi) The fair values of the 10% unsecured redeemable non-convertible debenture (included in current maturities of non-current borrowings) are derived from quoted market prices. The Company has no other non-current borrowings with fixed-rate of interest.
(e) Financial risk management objectives
The Company is exposed to market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Companyâs risk management strategies focus on the un-predictability of these elements and seek to minimise the potential adverse effects on its financial performance. The Companyâs senior management which is supported by a Treasury Risk Management Group (âTRMGâ) manages these risks. TRMG advises on financial risks and the appropriate financial risk governance framework for the Company and provides assurance to the Companyâs senior management that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives.
All hedging activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. The Companyâs policy is not to trade in derivatives for speculative purposes.
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: currency risk, interest rate risk and other price risk, such as equity price risk and commodity risk. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Financial instruments affected by market risk include loans and borrowings, deposits, investments and derivative financial instruments.
Foreign currency risk management
Foreign exchange risk arises on future commercial transactions and on all recognised monetary assets and liabilities, which are denominated in a currency other than the functional currency of the Company. The Companyâs management has set a policy wherein exposure is identified, a benchmark is set and monitored closely, and accordingly suitable hedges are undertaken. The policy also includes mandatory initial hedging requirements for exposure above a threshold.
The Companyâs foreign currency exposure arises mainly from foreign exchange imports, exports and foreign currency borrowings, primarily with respect to USD.
As at the end of the reporting period , the carrying amounts of the Companyâs foreign currency denominated monetary assets and liabilities in respect of the primary foreign currency i.e. USD and derivative to hedge the exposure, are as follows:
Foreign currency sensitivity analysis
The following table demonstrate the sensitivity to a reasonable possible change in USD exchange rate, with all other variables held constant. The impact on the Companyâs profit before tax due to changes in the fair value of monetary assets and liabilities and derivatives is as follows:
Based on the movements in the foreign exchange rates historically and the prevailing market conditions as at the reporting date, the Companyâs Management has concluded that the above mentioned rates used for sensitivity are reasonable benchmarks.
Interest rate risk management
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 rates. The Companyâs exposure to the risk of changes in market rates relates primarily to the Companyâs non-current debt obligations with floating interest rates.
The Companyâs policy is generally to undertake non-current borrowings using facilities that carry floating-interest rate. The Company manages its interest rate risk by entering 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.
Moreover, the short-term borrowings of the Company do not have a significant fair value or cash flow interest rate risk due to their short tenure.
As the Company does not have exposure to any floating-interest bearing assets, or any significant long-term fixed-interest bearing assets, its interest income and related cash inflows are not affected by changes in market interest rates.
As at the end of reporting period, the Company had the following long term variable interest rate borrowings and derivatives to hedge the interest rate risk as follows:
Interest rate sensitivity
No sensitivity analysis is prepared as the Company does not expect any material effect on the Companyâs results arising from the effects of reasonably possible changes to interest rates on interest bearing financial instruments at the end of the reporting period.
Equity price risk management
Equity price risk is related to the change in market price of the investments in quoted equity securities. The Companyâs exposure to equity price risk arises from investment held by the Company and classified as FVTOCI. In general, these investments are strategic investments and are not held for trading purposes. Reports on the equity portfolio are submitted to the Companyâs senior management on a regular basis.
Equity price sensitivity analysis
I f prices of quoted equity securities had been 5% higher / (lower), the OCI for the year ended March 31, 2019 and 2018 would increase/ (decrease) by Rs.98.94 crore and Rs.85.94 crore respectively.
Credit risk management
Credit risk is the risk that a 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 and other receivables and from its financing activities, including deposits with banks and financial institutions, investment in mutual funds and other financial instruments.
The carrying amount of financial assets represents the maximum credit exposure, being the total of the carrying amount of balances with banks, short term deposits with banks, short term investment, trade and other receivables and other financial assets excluding equity investments.
Trade and other receivables
Trade and other receivables of the Company are typically unsecured and derived from sales made to a large number of independent customers. Customer credit risk is managed by each business unit subject to established policies, procedures and control relating to customer credit risk management. Before accepting new customer, the Company has appropriate level of control procedures to assess the potential customerâs credit quality. The credit-worthiness of its customers are reviewed based on their financial position, past experience and other relevant factors. The credit period provided by the Company to its customers generally ranges from 0-60 days. Outstanding customer receivables are reviewed periodically.
The credit risk related to the trade receivables is mitigated by taking security deposits / bank guarantee / letter of credit - as and where considered necessary, setting appropriate credit terms and by setting and monitoring internal limits on exposure to individual customers.
There is no substantial concentration of credit risk as the revenue and trade receivables from any of the single customer do not exceed 10% of Company revenue.
For certain other receivables, where recoveries are expected beyond twelve months of the balance sheet date, the time value of money is appropriately considered in determining the carring amount of such receivables.
Financial instruments and cash deposits
Credit risk from balances/investments with banks and financial institutions is managed in accordance with the Companyâs treasury risk management policy. Investments of surplus funds are made only with approved counterparties and within limits assigned to each counterparty. The limits are assigned based on corpus of investable surplus and corpus of the investment avenue. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
Financial guarantees
Financial guarantees disclosed in note 41.1(b) have been provided as corporate guarantees to financial institutions and banks that have extended credit facilities to the Companyâs subsidiaries. In this regard, the Company does not foresee any significant credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.
The Treasury Risk Management Policy includes an appropriate liquidity risk management framework for the management of the Companyâs short-term, medium-term and long term funding and cash management requirements. The Company manages the liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Company invests its surplus funds in bank fixed deposit and liquid schemes of mutual funds, which carry no/negligible mark to market risks.
The below table analyses the Companyâs non-derivative financial liabilities as at the reporting date, into relevant maturity groupings based on the remaining period (as at that date) to the contractual maturity date. The amounts disclosed in the below table are the contractual undiscounted cash flows.
All the derivative financial liabilities are included in the above analysis, as their contractual maturity dates are essential for the understanding of the timing of the under-lying cash flows.
8. Capital management
The capital structure of the Company consists of net debt and total equity. The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to stakeholders through an optimum mix of debt and equity within the overall capital structure. The Companyâs risk management committee reviews the capital structure of the Company considering the cost of capital and the risks associated with each class of capital.
9.1 Contingent liabilities
(a) Claims not acknowledged by the Company relating to the cases contested by the Company and which, in the opinion of the Management, are not likely to devolve on the Company relating to the following areas:
Item (i) to (vii)) above includes Rs.100.11crore (2018: Rs.136.65 crore) relating to discontinued operations.
(b) Guarantees provided by the Company to third parties on behalf of subsidiaries aggregates USRS. 54 million & GBP 2.76 million (Rs.398.39 crore) (2018: USRS. 124.80 million & GBP 2.76 million (Rs.838.82 crore)).
(c) The Honâble Supreme Court of India (âSCâ) by their order dated February 28, 2019, in the case of Surya Roshani Limited & others v/s EPFO, set out the principles based on which allowances paid to the employees should be identified for inclusion in basic wages for the purposes of computation of Provident Fund contribution. Subsequently, a review petition against this decision has been filed and is pending before the SC for disposal.
In view of management, any additional financial liability for the period from date of the SC order (February 28, 2019) to March 31, 2019 is not significant.
I n addition, pending the outcome of the review petition and directions from the EPFO, the impact for past periods, if any, is not ascertainable and consequently no financial effect has been provided for in the accounts.
10. Approval of financial statements
The financial statements were approved for issue by the board of directors on May 3, 2019.
Mar 31, 2018
1. Corporate information
Tata Chemicals Limited (the âCompanyâ) is a public limited company domiciled in India. Its shares are listed on two stock exchanges in India; the Bombay Stock Exchange (âBSEâ) and the National Stock Exchange (âNSEâ). The Company is a diversified business dealing in inorganic chemicals, fertilisers, other agri inputs, consumer and nutritional solutions business sectors. The Company has a global presence with key subsidiaries in United States of America (âUSAâ), United Kingdom (âUKâ) and Kenya that are engaged in the manufacture and sale of soda ash, industrial salt and related products.
2. Recent accounting pronouncements and business combination
2.1 Recent accounting pronouncements
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
On 28 March, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards)
Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.
The amendment will come into force from 1 April, 2018. The Company is evaluating the requirements of the amendment and its effect on the financial statements.
Ind AS 115- Revenue from contracts with customers:
On 28 March, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115, Revenue from contracts with customers. The core principle of the new standard is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognised at the date of initial application (Cumulative catch-up approach)
The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1 April, 2018. The Company is evaluating the requirements of the amendment and its effect on the financial statements.
2.2 Business combination
Subsequent to balance sheet date, the Company has signed a Business Transfer Agreement with M/s. Allied Silica Limited to acquire their business of precipated silica, on a slump sale basis for a consideration of Rs.123 crore (subject to fulfilment of certain agreed conditions and milestones). The effect of the transfer will be reflected in the financial information of the period in which the deal is consummated post fulfilment of agreed conditions.
3. Discontinued operations
(I) Disposal of urea and customised fertilisers business
During the previous year, the Company entered into an agreement with Yara Fertilisers India Private Limited (âYara Indiaâ) to transfer its Urea Business (which comprises of manufacturing facilities for urea and customised fertilisers at Babrala, Uttar Pradesh), by way of a slump sale.
On 12 January, 2018, the Company consummated the sale and transfer of its Urea and Customised Fertilisers Business to Yara India as contemplated in the Scheme of Arrangement dated 10 August, 2016. The pre-tax gain of Rs.1,279.39 crore for the year ended 31 March, 2018 is included under exceptional gain for discontinued operations.
(II) Disposal of Phosphatic Fertilisers business and Trading business of bulk and non-bulk fertilisers
The Company has entered into an agreement with IRC Agrochemicals Private Limited (âIRCâ) and Indorama Holdings BV, Netherlands (Parent company of IRC) to transfer its Phosphatic Fertilisers business and Trading business (which comprises of manufacturing facilities for phosphatic fertilisers at Haldia Plant), by way of a slump sale for a consideration of Rs.375.00 crore (subject to certain adjustments). The effect of the transfer will be reflected in the financial information of the period in which the deal is consummated post receipt of all the requisite regulatory approvals.
4. Finance leases
Finance lease commitments
The Company has finance lease contracts for certain items of plant and machinery and vehicles. The Companyâs obligations under finance leases are secured by the lessorâs title to the leased assets.
Future minimum lease payments (âMLPâ) under finance lease contracts together with the present value of the net minimum lease payments are, as follows:
5. Employee benefits obligations
(a) The Company makes contribution towards provident fund, in substance a defined contribution retirement benefit plan and towards pension fund, superannuation fund, a defined contribution retirement plan for qualifying employees. The provident fund is administered by the Trustees of the Tata Chemicals Limited Provident Fund and the superannuation fund is administered by the Trustees of the Tata Chemicals Limited Superannuation Fund. The Company is liable to pay to the provident fund to the extent of the amount contributed and any shortfall in the fund assets based on Government specified minimum rates of return relating to current services. The Company recognises such contribution and shortfall if any as an expense in the year incurred.
On account of the above contribution plans, a sum of Rs.14.62 crore (2017: Rs.15.00 crore) has been charged to the Statement of Profit and Loss.
(b) The Company makes annual contributions to the Tata Chemicals Employeesâ Gratuity Trust and to the Employeesâ Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, for funding the defined benefit plans for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement or death while in employment or on termination of employment. Employees, upon completion of the vesting period, are entitled to a benefit equivalent to either half month, three fourth month and full month salary last drawn for each completed year of service depending upon the completed years of continuous service in case of retirement or death while in employment. In case of termination, the benefit is equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. Vesting occurs upon completion of five years of continuous service.
The Company also provides post retirement medical benefits to eligible employees under which employees at Mithapur who have retired from service of the Company are entitled for free medical facility at the Company hospital during their lifetime. Other employees are entitled to domiciliary treatment exceeding the entitled limits for the treatments covered under the Health Insurance Scheme upto slabs defined in the scheme. The floater mediclaim policy also covers retired employees based on eligibility, for such benefit.
The Company provides pension, housing / house rent allowance and medical benefits to retired Managing and Executive Directors who have completed ten years of continuous service in Tata Group and three years of continuous service as Managing Director/ Executive Director or five years of continuous service as Managing Director/Executive Director. The directors are entitled upto seventy five percent of last drawn salary for life and on death 50% of the pension is payable to the spouse for the rest of his/her life.
Family benefit scheme is applicable to all permanent employees in management, officers and workmen who have completed one year of continuous service. In case of untimely death of the employee, nominated beneficiary is entitled to an amount equal to the last drawn salary (Basic Salary, DA and FDA) till the normal retirement date of the deceased employee.
The most recent actuarial valuations of plan assets and the present values of the defined benefit obligations were carried out at 31 March, 2018. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
The following tables set out the funded status and amounts recognised in the Companyâs financial statements as at 31 March, 2018 for the Defined Benefit Plans.
6 The details of the Companyâs post-retirement and other benefit plans for its employees given above are certified by the actuary and relied upon by the Auditors.
(a) Information about geographical areas
The Company sells its products mainly within India where the conditions prevailing are uniform. Since the sales outside India are below threshold limit, no separate geographical segment disclosure is considered necessary.
All non-current assets in the nature of property, plant and equipment (including capital work in progress) and intangible assets (including those under development) are domiciled in india.
(b) Revenue from major products
The following is an analysis of the Companyâs revenue from continuing operations from its major products
(c) Major Customer
No single customers contributed 10% or more to the Companyâs revenue for the year ended 31 March, 2018 and 31 March, 2017.
(d) Other notes
(i) Management has identified one reportable business segments, namely:
- Inorganic Chemicals: Comprising soda ash, marine chemicals, caustic soda, cement, bulk chemicals and salt.
- Others: Comprising pulses, spices, water purifiers and nutritional solutions.
(ii) Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.
7.1 Segment information
Discontinued operations (note 31)
(a) Information about operating segment
(b) Information about geographical area
Discontinued operations sells its products within India where the conditions prevailing are uniform.
(c) Revenue from major products
Discontinued operations segment deals in one product group i.e fertilisers and other agri inputs.
(d) Major Customer
No single customers contributed 10% or more to the discontinued operations of the Companyâs revenue for the year ended 31 March, 2018 and 31 March, 2017.
7.2 Reconciliation of information on reportable segment to Balance sheet and Statement of Profit and Loss (a) Reconciliation of profit for the year as per Statement of Profit and Loss
(d) Valuation technique to determine fair value
The following methods and assumptions were used to estimate the fair values of financial instruments:
(i) The management assessed that fair value of cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
(ii) The fair values of the equity investment which are quoted, are derived from quoted market prices in active markets. The Investments measured at fair value and falling under fair value hierarchy Level 3 are valued on the basis of valuation reports provided by external valuers with the exception of certain investments, where cost has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair values within that range.
(iii) The Company enters into derivative financial instruments with various counterparties, principally banks. The fair value of derivative financial instruments is based on observable market inputs including currency spot and forward rate, yield curves, currency volatility, credit quality of counterparties, interest rate and forward rate curves of the underlying insturments etc. and use of appropriate valuation models.
(iv) The fair value of non-current Borrowings carrying floating-rate of interest is not impacted due to interest rate changes, and will not be significantly different from their carrying amounts as there is no significant change in the under-lying credit risk of the Company (since the date of inception of the loans).
(v) The fair values of the 10% unsecured redeemable non-convertible debenture (included in non-current borrowings) are derived from quoted market prices. The Company has no other long-term borrowings with fixed-rate of interest.
(e) Financial risk management objectives
The Company is exposed to market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Companyâs risk management strategies focus on the un-predictability of these elements and seek to minimise the potential adverse effects on its financial performance. The Companyâs senior management which is supported by a Treasury Risk Management Group (âTRMGâ) manages these risks. TRMG advises on financial risks and the appropriate financial risk governance framework for the Company and provides assurance to the Companyâs senior management that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives.
All hedging activities are carried out by specialist teams that have the appropriate skills, experience and supervision. The Companyâs policy is not to trade in derivatives for speculative purposes.
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: currency risk, interest rate risk and other price risk, such as equity price risk and commodity risk. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Financial instruments affected by market risk include loans and borrowings, deposits, investments and derivative financial instruments.
Foreign currency risk management
Foreign exchange risk arises on future commercial transactions and on all recognised monetary assets and liabilities, which are denominated in a currency other than the functional currency of the Company. The Companyâs management has set a policy wherein exposure is identified, a benchmark is set and monitored closely, and accordingly suitable hedges are undertaken. The policy also includes mandatory initial hedging requirements for exposure above a threshold.
The Companyâs foreign currency exposure arises mainly from foreign exchange imports, exports and foreign currency borrowings, primarily with respect to USD.
As at the end of the reporting period , the carrying amounts of the Companyâs foreign currency denominated monetary assets and liabilities in respect of the primary foreign currency i.e. USD and derivative to hedge the exposure, are as follows:
* includes exposure relating to discontinued operation.
The Companyâs exposure to foreign currency changes for all other currencies is not material.
Foreign currency sensitivity analysis
The following table demonstrate the sensitivity to a reasonable possible change in USD exchange rate, with all other variables held constant. The impact on the Companyâs profit before tax due to changes in the fair value of monetary assets and liabilities and derivatives is as follows:
Interest rate risk management
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 rates. The Companyâs exposure to the risk of changes in market rates relates primarily to the Companyâs non-current debt obligations with floating interest rates.
The Companyâs policy is generally to undertake non-current borrowings using facilities that carry floating-interest rate. The Company manages its interest rate risk by entering 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.
Moreover, the short-term borrowings of the Company do not have a significant fair value or cash flow interest rate risk due to their short tenure.
As the Company does not have exposure to any floating-interest bearing assets, or any significant long-term fixed-interest bearing assets, its interest income and related cash inflows are not affected by changes in market interest rates.
As at the end of reporting period, the Company had the following long term variable interest rate borrowings and derivatives to hedge the interest rate risk as follows:
Interest rate sensitivity
No sensitivity analysis is prepared as the Company does not expect any material effect on the Companyâs results arising from the effects of reasonably possible changes to interest rates on interest bearing financial instruments at the end of the reporting period.
Equity price risk management
Equity price risk is related to the change in market price of the investments in quoted equity securities. The Companyâs exposure to equity price risk arises from investment held by the Company and classified as FVTOCI. In general, these investments are strategic investments and are not held for trading purposes. Reports on the equity portfolio are submitted to the Companyâs senior management on a regular basis.
Equity price sensitivity analysis
If prices of quoted equity securities had been 5% higher / (lower), the OCI for the year ended March 31, 2018 and 2017 would increase / (decrease) by Rs.85.94 crore and Rs.82.70 crore respectively.
Credit risk management
Credit risk is the risk that a 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, investment in mutual funds, foreign exchange transactions and other financial instruments.
The carrying amount of financial assets represents the maximum credit exposure, being the total of the carrying amount of balances with banks, short term deposits with banks, short term investment, trade receivables and other financial assets excluding equity investments.
Trade receivables
Trade receivables of the Company are typically unsecured and derived from sales made to a large number of independent customers. Customer credit risk is managed by each business unit subject to established policies, procedures and control relating to customer credit risk management. Before accepting any new customer, the Company has appropriate level of control procedures to assess the potential customerâs credit quality. The credit-worthiness of its customers are reviewed based on their financial position, past experience and other relevant factors. The credit period provided by the Company to its customers generally ranges from 0-60 days. Outstanding customer receivables are reviewed periodically.
The credit risk related to the trade receivables is mitigated by taking security deposits / bank guarantee / letter of credit - as and where considered necessary, setting appropriate credit terms and by setting and monitoring internal limits on exposure to individual customers.
There is no substantial concentration of credit risk as the revenue and trade receivables from any of the single customer do not exceed 10% of Company revenue.
Financial instruments and cash deposits
Credit risk from balances/investments with banks and financial institutions is managed in accordance with the Companyâs treasury risk management policy. Investments of surplus funds are made only with approved counterparties and within limits assigned to each counterparty. The limits are assigned based on corpus of investable surplus and corpus of the investment avenue. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
Financial guarantees
Financial guarantees disclosed in note 41.1(b) have been provided as corporate guarantees to financial institutions and banks that have extended credit facilities to the Companyâs subsidiaries. In this regard, the Company does not foresee any significant credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as and when required.
The Treasury Risk Management Policy includes an appropriate liquidity risk management framework for the management of the shortterm, medium-term and long term funding and cash management requirements. The Company manages the liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Company invests its surplus funds in bank fixed deposit and liquid schemes of mutual funds, which carry no/negligible mark to market risks.
The below table analyses the Companyâs non-derivative financial liabilities as at the reporting date, into relevant maturity groupings based on the remaining period (as at that date) to the contractual maturity date. The amounts disclosed in the below table are the contractual undiscounted cash flows.
All the derivative financial liabilities are included in the above analysis, as their contractual maturity dates are essential for the understanding of the timing of the under-lying cash flows.
8. Capital management
The capital structure of the Company consists of net debt and total equity of the Company. The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to stakeholders through an optimum mix of debt and equity within the overall capital structure. The Companyâs risk management committee reviews the capital structure of the Company considering the cost of capital and the risks associated with each class of capital.
9. Contingent liabilities and assets
9.1 Contingent liabilities
(a) Claims not acknowledged by the Company relating to cases contested by the Company and which, in the opinion of the Management, are not likely to devolve on the Company relating to the following areas:
10. Approval of financial statements
The financial statements were approved for issue by the board of directors on 18 May, 2018.
Mar 31, 2017
1. RECENT ACCOUNTING PRONOUNCEMENTS Standards issued but not yet effective
I n March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7 - Statement of cash flows and Ind AS 102 - Share-based payment. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to Ind AS 7 - Statement of cash flows and Ind AS 102 - Share-based payment, respectively. The amendments are applicable from 1 April, 2017.
Amendment to Ind AS 7:
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement.
The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the fair values, but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.
The requirements of the amendment have no impact on the financial statements as the standard is not applicable to the Company.
2. TRANSITION TO IND AS
The Company has prepared financial statements which comply with Ind AS applicable for period ending on 31 March, 2017, together with the comparative period data as at and for the year ended 31 March, 2016, as described in the summary of significant accounting policies (note 2 of the financial statements). In preparing these financial statements, the Company''s opening Balance Sheet was prepared as at 1 April, 2015 (Transition Date''), the Company''s date of transition to Ind AS.
This note explains the principal adjustments made by the Company in restating its financial statements prepared on the basis of the Previous GAAP, including the Balance Sheet as at 1 April, 2015 and the financial statements as at and for the year ended 31 March, 2016 to Ind AS.
A. Optional exemptions availed:
In preparing the financial statements, the Company has applied the below mentioned optional exemptions as prescribed under Ind AS 101 - First-time Adoption of Indian Accounting Standards and applicable from the Transition date:
i Deemed cost
I nd AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its PPE 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 after making necessary adjustments for decommissioning liabilities.
This exemption can also be used for Intangible assets covered under Ind AS 38 - Intangible Assets. Accordingly, the Company has opted to consider the carrying value of its PPE and intangible assets as recognized in the Previous GAAP on date of transition as deemed cost after adjusting decommissioning liabilities.
The Company has elected to recognize the decommissioning liability, within the scope of Ind AS 16 - Property, Plant and Equipment, by measuring the liability in accordance with Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets, as at the Transition date.
ii Investments in subsidiaries, joint venture and associates
The Company has elected to consider the carrying cost of equity investments in subsidiaries, joint venture and associates as per the Previous GAAP as the deemed cost as at the Transition date.
iii Designation of previously recognized financial instruments
Ind AS 101 permits an entity to designate particular equity investments (other than equity investments in subsidiaries, joint arrangements and associates) as FVTOCI based on facts and circumstances at the date of transition to Ind AS. The Company has opted to avail this exemption to designate certain equity investments as FVTOCI on the date of Transition.
iv Leases
Ind AS17 - Leases requires an entity to assess whether a contract or an arrangement is in the nature of a lease arrangement. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and recognized arrangements having embedded leases based on facts and circumstances existing as at the date of Transition.
B. Reconciliations
An explanation of how the transition from the Previous GAAP to Ind AS has affected the Company''s equity, Statement of Profit and Loss and other comprehensive income and Cash Flows is set out in the following tables and notes that accompany the tables.
B3 Explanation of material adjustments to
Statement of cash flow for the year ended 31 March, 2016:
There are no material adjustments to Statement of Cash Flows as reported under the Previous GAAP except for decrease in cash from financing activities and corresponding increase in cash from operating activities of '' 505.00 crore for the year ended 31 March, 2016. Consequent to the classification of suppliers'' credit as a part of borrowings, the cash flows arising in this regard have been classified as a part of ''Cash flows used in financing activities''.
C Notes to reconciliations: 1 Fair valuation of investments FVTOCI Investments
In respect of FVTOCI investments, fair value adjustment under Ind AS has resulted in an increase in equity under Ind AS by Rs, 1,425.98 crore and Rs, 1,666.89 crore as of 31 March, 2016 and 1 April, 2015, respectively.
FVTPL Investments
In respect of FVTPL investments, fair value adjustment under Ind AS has resulted in an increase in profit before tax under Ind AS by Rs, 56.31 crore for the year ended 31 March, 2016.
3 Fair valuation of derivative contracts
Under Ind AS, all derivative contracts need to be recognized at fair values, with changes in fair value, recognized in the profit or loss or in the OCI depending upon whether the derivative contract has been designated under hedging relationship. Under the Indian GAAP, only derivatives which were within the scope of AS 11 were recognized.
This difference has resulted in a decrease in equity under Ind AS by Rs, 17.00 crore and Rs, 19.67 crore as of 31 March, 2016 and 1 April, 2015, respectively.
4 Proposed dividend and dividend tax thereof
Under the Previous GAAP, proposed dividends including Dividend Distribution Tax are recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind
AS, a proposed dividend is recognized as a liability in the period in which it is declared by the Company (usually when approved by share holders in a general meeting) or paid.
In case of the Company, the declaration of dividend occurs after period end. Therefore, the liability of Rs, 382.02 crore for the year ended on 31 March, 2015 recorded for proposed dividend has been derecognized against retained earnings on 1 April, 2015. The proposed dividend for the year ended on 31 March, 2016 of Rs, 301.67 crore recognized under Indian GAAP was reduced from other payables with a corresponding impact in the retained earnings.
5 Remeasurements of defined benefit plans
Under the Previous GAAP, actuarial gains and losses, are charged to profit or loss, however under Ind AS, they form part of remeasurement of defined benefit liability/asset and are recognized in OCI. As a result Rs, 8.95 crore have been recognized in the OCI net of tax, for the year ended 31 March, 2016.
6 Provisions/Asset retirement obligation liability
The provision amount of asset retirement obligation is discounted to present value under Ind AS.
7 Arrangements in the nature of lease
The Company has identified certain arrangements in the nature of lease which have an element of finance lease. Under the Previous GAAP, in the absence of any specific guidance, the Company did not identify leases contained in such arrangements.
These differences mentioned above in note 5 and note 6 have resulted in a decrease in equity under Ind AS by Rs, 28.01 crore and Rs, 33.68 crore as of 31 March, 2016 and 1 April, 2015, respectively.
8 Deferred tax
Various transitional adjustments resulted in temporary differences between taxable profits and accounting profits. Tax adjustments includes deferred tax impact on account of difference between the Previous GAAP and Ind AS on the adjustments discussed above in notes 1 to 6.
(i) Loans to employees includes Rs, *(2016 and 2015: Rs, *) due from officer of the Company. Maximum balance outstanding during the year is Rs, *(previous Rs, *).
* value below Rs, 50,000
(ii) The Company had extended an unsecured subordinate loan to Tata Power Renewable Energy Limited (''TPREL'') for the purpose of setting up a 25 MW photovoltaic solar power plant and associate infrastructure at Mithapur, Gujarat. The loan carries an interest rate based on State Bank of India base rate plus 1.25%. In the year 2015-16, TPREL has repaid the entire loan along with the accrued interest.
(ii) The cost of inventories recognized as an expense in form of raw material consumption, stores consumption, trading purchases, packing materials consumption and power and fuel consumption during the year in respect of the continuing operations was Rs, 3,800.59 crore (previous year: Rs, 5,674.69 crore)
(iii) The cost of inventories recognized as an expense includes Rs, 35.47 crore (previous year: Rs, 37.06 crore) in respect of write-down of inventories to net realizable value and has been reduced by Rs, 2.55 crore (previous year: Rs,1.53 crore) in respect of reversal of such write-down. Reversal of previous write-downs have been largely as a result of increased selling prices of certain products.
(iv) Inventories have been offered as security against the working capital loans provided by the bank.
(ii) Terms/ rights attached to equity shares
The Company has issued one class of ordinary shares at par value of Rs, 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential accounts, in proportion to their shareholding.
Note:
This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amounts reclassified to retained earnings when those assets have been disposed off._
Footnotes:
Details of term loans and other borrowings as at 31 March, 2017 are stated below:
(i) Unsecured redeemable Non-convertible debentures having face value of Rs, 10 lakh each are redeemable at par on 2 July, 2019 and bears interest rate of 10% per annum.
(ii) The External Commercial Borrowings (ECB) are due for repayments on 22 October, 2018 Rs, 410.31 crore (2016: Rs, 419.20 crore and 2015: Rs, 395.44 crore) (USD 63.27 million) and on 21 October, 2019 Rs, 411.54 crore (2016: Rs, 420.45 crore and 2015: Rs, 396.65 crore)(USD 63.46 million) and bear interest of LIBOR plus spread of 1.95%, payable semiannually.
Current portion due for repayment within one year is Rs, 410.31 crore (USD 63.27 million) (2016: Rs, 397 crore (USD 60 million) and 2015: Rs, NIL) and bears interest of LIBOR plus spread of 1.95% (2016: LIBOR plus spread of 1.65%), payable semiannually. This has been disclosed in note 17 within the heading current maturity of long term debt under other financial liabilities (current).
(iii) The Company has entered into an agreement with the Department of Biotechnology (DBT) for a project on boosting crop health and yield. DBT has approved a loan of Rs, 0.15 crore (2016: Rs, 0.15 crore). The Company has received three installments of this loan aggregating to Rs, 0.11 crore (2016: Rs, 0.11 crore). The loan bears interest of 2% per annum repayable in 10 equal half yearly installments. Current portion has been disclosed in note 17. The entire loan amount has been repaid during the current year.
(i) Loans from banks on Cash Credit and Working Capital Demand Loan are secured by way of hypothecation of stocks of raw materials, finished products, stores and work-in-progress as well as book debts.
(ii) Buyer''s credit due for payment within 180 days bears interest of ''LIBOR plus spread'' of 1.26% per annum (2016 : 0.87% per annum and 2015: 0.75 % per annum) secured against current assets.
(iii) Suppliers'' credit due for payment within 180 days bears interest of ''LIBOR plus spread'' of 1.31% per annum (2016 : 0.81% per annum and 2015: 0.72 % per annum) secured against current assets.
(iv) During the year 2017, unsecured working capital demand loan of '' 50 crore was availed by the Company which would be repaid in May 2017. The loan bears interest of one month T-bill 0.05% per annum..
(v) The Department of Fertilizers, Government of India, has notified ''Special Banking Arrangement'' scheme to address the concern of delay in subsidy disbursement. This arrangement has been made by the Government with the State Bank of India Consortium (SBI Consortium). Loans under this scheme are secured by hypothecation of subsidy receivables.
Fixed interest rate of 8.00% per annum out of which 6.25% per annum shall be borne by the Government and repaid in April 2017. The remaining 1.75% per annum shall be borne by the Company and will be recovered upfront for 60 days from the company at the time of disbursement of the facility.
Footnotes:
(i) The External Commercial Borrowing (ECB) is due for repayments on 23 October, 2017 Rs, 410.31 crore (USD 63.27 million) and bear interest of LIBOR plus spread of 1.95%, payable annually.
(ii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company except for Rs,.0.53 crore (2016 : Rs, 0.44 crore and 2015 Rs,.0.33 crore), wherein legal disputes with regards to ownership have remained unresolved.
Nature of provisions :
1) Assets retirement obligation includes provision towards site restoration expense and decomissioning charges.
2) Warranty: The Company gives warranties on certain products that fail to perform satisfactorily during the warranty period. Provision made as at 31 March, 2017 represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within a period of one year from the date of Balance Sheet.
3) Provision for others represents management''s best estimate of outflow of economic resources in respect of water charges, entry tax, land revenue and other disputed items including direct taxes, indirect taxes and other claims.
(i) For details relating to discontinued operation (urea and customized fertilizer business at Babrala, Uttar Pradesh) refer note 31.
(ii) The Company has identified assets relating to non-current assets to be disposed of and classified the same as assets held for sale. No impairment loss has been recognized on the date of classification or as at reporting date. The Company expects that the fair value (estimated based on the recent market prices of similar assets in similar locations) less costs to sell is higher than the carrying amount.
NOTE 9: GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS
(a) The Company makes contribution towards provident fund, in substance a defined contribution retirement benefit plan and towards pension fund, superannuation fund, a defined contribution retirement plan for qualifying employees. The provident fund is administered by the Trustees of the Tata Chemicals Limited Provident Fund and the superannuation fund is administered by the Trustees of the Tata Chemicals Limited Superannuation Fund. The Company is liable to pay to the provident fund to the extent of the amount contributed and any shortfall in the fund assets based on government specified minimum rates of return relating to current services. The Company recognize such contribution and shortfall if any as an expense in the year incurred.
On account of the above contribution plans, a sum of Rs, 15.00 crore (previous year Rs, 14.28 crore) has been charged to the Statement of Profit and Loss.
(b) The Company makes annual contributions to the Tata Chemicals Employees'' Gratuity Trust and to the Employees'' Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, for funding the defined benefit plans for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement or death while in employment or on termination of employment. Employees, upon completion of the vesting period, are entitled to a benefit equivalent to either half month, three fourth month and full month salary last drawn for each completed year of service depending upon the completed years of continuous service in case of retirement or death while in employment. In case of termination, the benefit is equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. Vesting occurs upon completion of five years of continuous service.
The Company also provides post retirement medical benefits to eligible employees under which employees at Mithapur who have retired from service of the Company are entitled for free medical facility at the Company hospital during their lifetime. Other employees are entitled to domiciliary treatment exceeding the entitled limits for the treatments covered under the Health Insurance Scheme up to slabs defined in the scheme. The floater medic aim policy also covers retired employees based on eligibility, for such benefit.
The Company provides pension, housing / house rent allowance and medical benefits to retired Managing and Executive Directors who have completed ten years of continuous service in Tata Group and three years of continuous service as Managing Director/Executive Director or five years of continuous service as Managing Director/Executive Director. The directors are entitled up to seventy five percent of last drawn salary for life and on death 50% of the pension is payable to the spouse for the rest of his/her life.
Family benefit scheme is applicable to all permanent employees in management, officers and workmen who have completed one year of continuous service. In case of untimely death of the employee, nominated beneficiary is entitled to an amount equal to the last drawn salary (Basic Salary, DA and FDA) till the normal retirement date of the deceased employee.
The most recent actuarial valuations of plan assets and the present values of the defined benefit obligations were carried out at 31 March, 2017. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
The following tables set out the funded status and amounts recognized in the Company''s financial statements as at 31 March, 2017 for the Defined Benefit Plans.
10 Risk exposure :
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below :
Investment risk: If future investment returns on assets are lower than assumed in valuation, the scheme''s assets will be lower, and the funding level higher, than expected:
Changes in bond yields: A decrease in yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans'' bond holdings:
Longevity risk: If improvements in life expectancy are greater than assumed, the cost of benefits will increase because pensions are paid for longer period than expected. This will mean the funding level will be higher than expected:
Inflation risk: I f inflation is greeted than assumed, the cost of benefits will increase as pension increases and deferred revaluations are linked to inflation:
(a) Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.
(b) The estimates of future salary increases, considered in actuarial valuation, take into account the inflation, seniority, promotion and other relevant factors.
(c) Valuation technique to determine fair value
The following methods and assumptions were used to estimate the fair values of financial instruments:
(i) The management assesses that fair value of cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
(ii) The fair values of the equity investment which are quoted, are derived from quoted market prices in active markets. The Investments measured at fair value and falling under fair value hierarchy Level 3 are valued on the basis of valuation reports provided by external valuers with the exception of certain investments, where cost has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair values within that range. The carrying value of those investments are individually immaterial.
(iii) The Company enters into derivative financial instruments with various counterparties, principally banks. The fair value of derivative financial instruments is based on observable market inputs including currency spot and forward rate, yield curves, currency volatility, credit quality of counterparties, interest rate and forward rate curves of the underlying instruments etc. and use of appropriate valuation models.
(iv) The fair value of the long-term borrowings carrying floating-rate of interest is not impacted due to interest rate changes and will not be significantly different from their carrying amounts as there is no significant change in the under-lying credit risk of the Company (since the date of inception of the loans).
(v) The fair values of the 10% unsecured redeemable nonconvertible debentures (included in long term borrowings) are derived from quoted market prices. The Company has no other long-term borrowings with fixed-rate of interest.
(d) Financial risk management objectives
The Company is exposed to market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company''s risk management strategies focus on the un-predictability of these elements and seek to minimize the potential adverse effects on its financial performance. The Company''s senior management which is supported by a Treasury Risk Management Group (''TRMG'') manages these risks. TRMG that advises on financial risks and the appropriate financial risk governance framework for the Company and provides assurance to the Company''s senior management that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives.
All hedging activities are carried out by specialist teams that have the appropriate skills, experience and supervision. The Company''s policy is not to trade in derivatives for speculative purposes.
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: currency risk, interest rate risk and other price risk, such as equity price risk and commodity risk. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Financial instruments affected by market risk include loans and borrowings, deposits, investments and derivative financial instruments.
Foreign currency risk management
Foreign exchange risk arises on future commercial transactions and on all recognized monetary assets and liabilities, which are denominated in a currency other than the functional currency of the Company. The Company''s management has set policy wherein exposure is identified, benchmark is set and monitored closely, and accordingly suitable hedges are undertaken. Policy also includes mandatory initial hedging requirements for exposure above a threshold.
The Company''s foreign currency exposure arises mainly from foreign exchange imports, exports and foreign currency borrowings, primarily with respect to USD.
Based on the movements in the foreign exchange rates historically and the prevailing market conditions as at the reporting date, the Company''s Management has concluded that the above mentioned rates used for sensitivity are reasonable benchmarks.
The Company''s exposure to foreign currency changes for all other currencies is not material.
Interest rate risk management
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 rates. The Company''s exposure to the risk of changes in market rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
The Company''s policy is generally to undertake long-term borrowings using facilities that carry floating-interest rate. The Company manages its interest rate risk by entering 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.
Moreover, the short-term borrowings of the Company do not have a significant fair value or cash flow interest rate risk due to their short tenure.
As the Company does not have exposure to any floating-interest bearing assets, or any significant long-term fixed-interest bearing assets, its interest income and related cash inflows are not affected by changes in market interest rates.
Interest rate sensitivity
No sensitivity analysis is prepared as the Company does not expect any material effect on the Company''s results arising from the effects of reasonably possible changes to interest rates on interest bearing financial instruments at the end of the reporting period.
Equity price risks management
Equity price risk is related to the change in market price of the investments in quoted equity securities. The Company''s exposure to equity price risk arises from investment held by the Company and classified as FVTOCI. In general, these investments are strategic investments and are not held for trading purposes. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis.
Equity price sensitivity analysis
If prices of quoted equity securities had been 5% higher / (lower), the Other Comprehensive Income for the year ended March 31, 2017 and 2016 would increase / (decrease) by Rs, 82.70 crore and Rs, 63.19 crore respectively.
Credit risk management
Credit risk is the risk that a 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, investment in mutual funds, foreign exchange transactions and other financial instruments.
The carrying amount of financial assets represents the maximum credit exposure, being the total of the carrying amount of balances with banks, short term deposits with banks, short term investment, trade receivables and other financial assets excluding equity investments.
Trade receivables
Trade receivables of the Company are typically unsecured and derived from sales made to a large number of independent customers. Customer credit risk is managed by each business unit subject to established policies, procedures and control relating to customer credit risk management. Before accepting any new customer, the Company has appropriate level of control procedures to assess the potential customer''s credit quality. The credit-worthiness of its customers are reviewed based on their financial position, past experience and other relevant factors. The credit period provided by the Company to its customers generally ranges from 0-60 days. Outstanding customer receivables are reviewed periodically .
The credit risk related to the Trade receivables is mitigated by taking security deposits / bank guarantee / letter of credit - as and where considered necessary, setting appropriate credit terms and by setting and monitoring internal limits on exposure to individual customers.
There is no substantial concentration of credit risk as the Revenue / Trade receivables pertaining to any of the single customer do not exceed 10% of Company revenue.
Financial instruments and cash deposits
Credit risk from balances/investments with banks and financial institutions is managed in accordance with the Company''s treasury risk management policy. Investments of surplus funds are made only with approved counterparties and within limits assigned to each counterparty. The limits are assigned based on corpus of investable surplus and corpus of the investment avenue. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
Financial guarantees
Financial guarantees disclosed in note 41.1 (b) have been provided as corporate guarantees to financial institutions and banks that have extended credit facilities to the Company''s subsidiaries. In this regard, the Company does not foresee any significant credit risk exposure.
All the derivative financial liabilities are included in the above analysis, as their contractual maturity dates are essential for the understanding of the timing of the under-lying cash flows.
NOTE 38: CAPITAL MANAGEMENT
The capital structure of the Company consists of net debt and total equity of the Company. The Company manages its capital to ensure that the Company will be able to continue as going concern while maximizing the return to stakeholders through an optimum mix of debt and equity within the overall capital structure. The Company''s risk management committee reviews the capital structure of the Company considering the cost of capital and the risks associated with each class of capital.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as and when required.
The Treasury Risk Management Policy includes an appropriate liquidity risk management framework for the management of the short-term, medium-term and long term funding and cash management requirements. The Company manages the liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Company invests its surplus funds in bank fixed deposit and liquid schemes of mutual funds, which carry no/negligible mark to market risks.
The below table analyses the Company''s non-derivative financial liabilities as at the reporting date, into relevant maturity groupings based on the remaining period (as at that date) to the contractual maturity date. The amounts disclosed in the below table are the contractual un-discounted cash flows.
Subsidiaries
NOTE 11: RELATED PARTY DISCLOSURE
(a) Related parties and their relationship (as defined under IndAS-24 Related Party Disclosures)
Direct
1 Rallis India Limited, India
2 Bio Energy Venture - 1 (Mauritius) Pvt. Ltd, Mauritius Indirect
1 Rallis Chemistry Exports Limited, India
2 Met helix Life Sciences Limited, India
3 Zero Waste Agro Organics Limited (ZWAOL), India
4 PT Met helix Life sciences Indonesia (PTLI), Indonesia @
5 Valley Holdings Inc., United States of America
6 Tata Chemicals North America Inc., United States of America
7 General Chemical International Inc., United States of America
8 NHO Canada Holdings Inc., United States of America
9 Tata Chemicals (Soda Ash) Partners (TCSAP), United States of America **
10 Tata Chemicals (Soda Ash) Partners Holdings(TCSAPH), United States of America **
11 TCSAP LLC,United States of America
12 General Chemical Canada Holding Inc., Canada *
13 General Chemical (Great Britain) Limited, United Kingdom
14 Home field Pvt UK Limited, United Kingdom
15 Homefield 2 UK Limited, United Kingdom
16 Tata Chemicals Africa Holdings Limited, United Kingdom
17 Tata Chemicals Europe Holdings Limited, United Kingdom
18 Tata Chemicals Europe Limited, United Kingdom
19 Winning ton CHP Limited, United Kingdom
20 Brunner Mond Group Limited, United Kingdom
21 Brunner Mond Limited , United Kingdom
22 Tata Chemicals Magadi Limited, United Kingdom
23 Northwick Resource Management Limited, United Kingdom
24 Brunner Mond Generation Company Limited , United Kingdom
25 Goshutes Holdings (UK) Limited, United Kingdom
26 TCNA (UK) Limited, United Kingdom
27 British Salt Limited, United Kingdom
28 Cheshire Salt Holdings Limited, United Kingdom
29 Cheshire Salt Limited, United Kingdom
30 Brine field Storage Limited, United Kingdom
31 Cheshire Cavity Storage 2 Limited, United Kingdom
32 Cheshire Compressor Limited, United Kingdom
33 Irish Feeds Limited, United Kingdom
34 New Cheshire Salt Works Limited, United Kingdom
35 Grown Energy Zambeze Holdings Pvt. Ltd, Mauritius #
36 Tata Chemicals International Pte. Limited, Singapore
37 Tata Chemicals (South Africa) Proprietary Limited, South Africa
38 Grown Energy (Pty) Limited, South Africa #
39 Magadi Railway Company Limited, Kenya
40 Grown Energy Zambeze Limited, Mozambique #
41 Alcad, United States of America **
Joint Ventures Direct
1 Indo Maroc Phosphor S.A., Morocco
Indirect
1 The Block Salt Company Limited, United Kingdom (Holding by New Cheshire Salt Works Limited)
2 JOil (S) Pte. Ltd and its subsidiaries (Holding by Tata Chemicals International Pte. Limited)
3 Natronx Technologies LLC, United States of America (Holding by TCSAP)
Associate
Indirect
1 Crystal Peak Minerals Inc., Canada (Upton 24 May, 2016)
Other related parties
1 Tata Chemicals Ltd Provident Fund
2 Tata Chemicals Ltd Emp Pension Func
3 Tata Chemicals Superannuation Fund
4 Tata Chemicals Employees Gratuity Trust
5 TCL Employees Gratuity Fund
Key Management Personnel
1 Mr. R. Mukundan, Managing Director and CEO
2 Mr P K Ghose , Executive Director and CFO ( Up to 30 September, 2015)
Promoter Group
Tata Sons Limited, India
List of subsidiaries and joint ventures of Tata Sons Limited @@
1 Advinus Therapeutics Limited
2 Indian Rotorcraft Limited
3 TATA AIG General Insurance Company Limited
4 Tata Auto comp Systems Limited
5 Tata Auto comp Hendrickson
6 Tata Capital Forex Limited
7 Tata Capital Financial Services Limited
8 TC Travel and Services Limited
9 Tata International Limited
10 Tata International Singapore Pte Limited
11 Tata Consultancy Services Limited
12 Tata Interactive Systems (Division of Tata Industries Limited)
13 TATA AIA Life Insurance Company Limited
14 Tata Business Support Services Limited
15 Tata Consulting Engineers Limited
16 Infiniti Retail Limited
17 TASEC Limited (formerly TAS-AGT Systems Limited)
18 Tata Strategic Management Group (Division of Tata Industries Limited)
19 Tata Industries Limited
20 Tata Undistorted Limited (formerly Tata Industrial Services Limited)
21 Tata Teleservices Limited
22 Ecofirst Services Limited
23 Tata Realty and Infrastructure Limited
24 Tata Investment Corporation Limited
25 Ewart Investments Limited
26 Simto Investment Company Limited
27 Tata International Limited
@@ The above list includes the Companies with whom Tata Chemicals Limited has entered into the transactions during the course of the year.
* General Chemical Canada Holding Inc. has been dissolved during the year ended 31 March, 2017.
** A general partnership formed under the laws of the State of Delaware (USA).
*** General Chemical (Great Britain) Limited has been dissolved during the year ended 31 March, 2016.
@ PT Met helix Life sciences Indonesia was incorporated in the year 2016-17.
# During the year ended 31 March, 2016, the Company''s wholly owned subsidiary Bio Energy Venture - 1 (Mauritius) Pvt. Ltd, had entered into an agreement for sale of its entire stake in Grown Energy Zambeze Holdings Pvt. Ltd. and its subsidiaries. The administrative approvals in the respective jurisdictions for effecting the proposed sale are awaited.
The above contingent liability include Rs, 0.78 crore (2016 : Rs, 0.90 crore and 2015: Rs, 1.75 crore) relating to assets held for discontinued operation.
(b) Guarantees provided by the Company to third parties on behalf of subsidiaries aggregates USD 408.40 million & GBP 2.76 million (Rs, 2670.77 crore) [2016 : USD 408.40 million & GBP 2.76 million (Rs, 2,732.17 crore)] [2015 : USD 360.40 million and GBP 2.76 million (Rs, 2,277.99 crore)].
NOTE 12: APPROVAL OF FINANCIAL STATEMENTS
These financial statements were approved for issue by the Board of Directors on 26 May, 2017.
Mar 31, 2015
(i) Management has identified three reportable business segments,
namely :
- Inorganic chemicals: comprising soda ash, marine chemicals, caustic
soda, cement, bulk chemicals and salt.
- Fertilisers: comprising fertilisers including urea and phosphatic.
- Other agri inputs: comprising traded seeds, pesticides, speciality
crop nutrients
- Others: comprising pulses, spices, water purifiers and nutritional
solutions
Segments have been identified and reported taking into account the
nature of products, the integration of manufacturing processes, the
organisation structure and the internal financial reporting systems.
(ii) Segment revenue, results, assets and liabilities include the
respective amounts identifiable to each of the segments and amounts
allocated on a reasonable basis.
(iii) Related party disclosure:
(a) Related Parties and their relationship (as defined under AS-18
Related Party Disclosures)
Subsidiaries Joint Ventures Associate
Direct
Rallis India Limited, India
Bio Energy Venture - 1 (Mauritius) Private Limited,
Mauritius
Direct EPM Mining Venture
Indo Maroc Phosphore Inc., Canada
S. A., Morocco
Indirect
Homefield Private UK Limited, United Kingdom Tata Chemicals Africa
Holdings Limited, United Kingdom Tata Chemicals South Africa
(Proprietary) Limited, South Africa Tata Chemicals Magadi Limited,
United Kingdom Magadi Railway Company Limited, Kenya
Indirect
Alcad, United States of America
JOil (S) Pte. Limited, Singapore
The Block Salt Company Limited, United Kingdom
Natronx Technologies LLC, United States of America
Kemex B.V., Netherlands @
Homefield 2 UK Limited, United Kingdom
Tata Chemicals Europe Holdings Limited, United Kingdom
Cheshire Salt Holdings Limited, United Kingdom
Cheshire Salt Limited, United Kingdom
British Salt Limited, United Kingdom
Brinefield Storage Limited, United Kingdom
Cheshire Cavity Storage 2 Limited, United Kingdom
Cheshire Compressor Limited, United Kingdom
Irish Feeds Limited, United Kingdom
New Cheshire Salt Works Limited, United Kingdom
Brunner Mond Group Limited, United Kingdom
Tata Chemicals Europe Limited, United Kingdom
Winnington CHP Limited
Brunner Mond B.V., Netherlands@
Brunner Mond Generation Company Limited, United Kingdom
Brunner Mond Limited, United Kingdom
Northwich Resource Management Limited, United Kingdom
Gusiute Holdings (UK) Limited, United Kingdom
Tata Chemicals North America (UK) Limited, United Kingdom*
Valley Holdings Inc., United States of America Tata Chemicals North
America Inc., United States of America General Chemical International
Inc., United States of America General Chemical Great Britain Limited,
United Kingdom NHO Canada Holdings Inc., United States of America
General Chemical Canada Holding Inc., Canada GCSAP Canada Inc.,
Canada***
Tata Chemicals (Soda Ash) Partners Holdings (TCSAPH), United States of
America **
TCSAP LLC, United States of America
Tata Chemicals (Soda Ash) Partners (TCSAP), United States of America **
Tata Chemicals International Pte. Limited, Singapore
Grown Energy Zambeze Holdings Private Limited, Mauritius
Grown Energy (Pty) Limited, South Africa
Grown Energy Zambeze Limitada, Mozambique
Rallis Chemistry Exports Limited, India
Metahelix Life Sciences Limited (Metahelix), India
Zero Waste Agro Organics Limited (ZWAOL), India##
Brunner Mond B.V. and Kemax B.V. ceased to exist with effect from
December 11,2013.
Tata Chemicals North America (UK) Limited, a subsidiary was
incorporated on 22nd August, 2014
a general partnership formed under the laws of the State of Delaware
(USA).
GCSAP Canada Inc. dissolved as a subsidiary with effect from 28th
May, 2014.
Rallis has acquired additional equity shares, consequent to which
share has increased to 73.59% from during the year.
Key Management Personnel:
Mr. R. Mukundan, Managing Director Mr. P. K. Ghose, Executive Director
& CFO Promoter Group Tata Sons Limited, India
51.02% in ZWAOL
(iv) Employee benefit obligations:
(a) The Company makes contribution towards provident fund, in substance
a defined contribution retirement benefit plan and towards pension,
superannuation fund, a defined contribution retirement plan for
qualifying employees. The provident fund is administered by the
Trustees of the Tata Chemicals Limited Provident Fund and the
superannuation fund is administered by the Trustees of the Tata
Chemicals Limited Superannuation Fund. Under the schemes, the Company
is required to contribute a specified percentage of salary to the
retirement benefit schemes to fund the benefit.
On account of the above Contribution Plans, a sum of Rs 12.78 crore
(previous year Rs 12.02 crore) has been charged to the Statement of
Profit and Loss.
(b) The Company makes annual contributions to the Tata Chemicals
Employees'' Gratuity Trust and to the Employees'' Group Gratuity-cum-Life
Assurance Scheme of the Life Insurance Corporation of India, for
funding the defined benefit plans for qualifying employees. The scheme
provides for lump sum payment to vested employees at retirement or
death while in employment or on termination of employment. Employees,
upon completion of the vesting period, are entitled to a benefit
equivalent to either half month, three fourth month and full month
salary last drawn for each completed year of service depending upon the
completed years of continuous service in case of retirement or death
while in employment. Incase of termination, the benefit is equivalent
to fifteen days salary last drawn for each completed year of service in
line with the Payment of Gratuity Act, 1972. Vesting occurs upon
completion of five years of continuous service.
The Company also provides post retirement medical benefits to eligible
employees under which employees at Mithapur who have retired from
service of the Company are entitled for free medical facility at the
Company hospital during their lifetime. Other employees are entitled to
domiciliary treatment exceeding the entitled limits for the treatments
covered under the Health Insurance Scheme upto slabs defined in the
scheme. The floater mediclaim policy also covers retired employees
based on eligibility, for such benefit.
The Company provides pension, housing / house rent allowance and
medical benefits to retired Managing and Executive Directors who have
completed ten years of continuous service in Tata Group and three years
of continuous service as Managing Director/Executive Director or five
years of continuous service as Managing Director/Executive Director.
The directors are entitled to seventy five percent of last drawn salary
for life and on death 50% of the pension is payable to the wife for the
rest of her life.
Family benefit scheme is applicable to all permanent employees in
management, officers and workmen who have completed one year of
continuous service. Incase of untimely death of the employee, nominated
sbeneficiary is entitled to an amount equal to the last drawn salary
till the normal retirement date of the deceased employee.
The most recent actuarial valuations of plan assets and the present
values of the defined benefit obligations were carried out at 31st
March, 2015. The present value of the defined benefit obligations and
the related current service cost and past service cost, were measured
using the Projected Unit Credit Method.
The following tables set out the funded status and amounts recognised
in the Company''s financial statements as at 31st March, 2015 for the
Defined Benefits Plans.
(a) Discount rate is based on the prevailing market yields of Indian
Government securities as at the Balance Sheet date for the estimated
term of the obligations.
(b) Expected rate of return on plan assets is based on the average long
term rate of return expected on investments of the Fund during the
estimated term of the obligations.
(c) The estimates of future salary increases, considered in actuarial
valuation, take into account the inflation, seniority, promotion and
other relevant factors.
(vi) Disclosure as required by AS - 29 "Provisions, Contingent
Liabilities and Contingent Assets" in respect of provisions as at 31st
March, 2015
(a) The Company has made provision for various obligations and disputed
liabilities based on its assessment of the amount it estimates to incur
to meet such obligations, details of which are given below.
(b) Nature of provisions:
(i) Warranty: The Company gives warranties on certain products that
fail to perform satisfactorily during the warranty period. Provision
made as at March 31,2015 represents the amount of the expected cost of
meeting such obligations of rectification/replacement. The timing of
the outflows is expected to be within a period of one year from the
date of Balance Sheet.
(ii) Provision for site restoration expenses is in respect of
afforestation and bio-diversity charges.
(iii) Other provisions represent mainly provision for litigations that
are expected to materialise in respect of matters in appeal and
expected tax liability in respect of indirect and other taxes.
(viii) Contingent liabilities and commitments (to the extent not
provided for):
(i) Contingent liabilities:
(a) Guarantees:
(i) Bank Guarantees issued by Banks on behalf of the Company Rs 208.45
crore (previous year Rs 130.46 crore).
These are covered by the charge created in favour of the Company''s
bankers by way of hypothecation of stocks and debtors.
(ii) Guarantees provided by the Company to third parties on behalf of
subsidiaries aggregates USD 360.40 million and GBP 2.76 million (Rs
2,277.99 crore) (previous year USD 390.40 million (Rs 2,339.08 crore)).
The purpose of the guarantees are as follows:
(a) USD 344.40 million, Rs 2,152.50 crore (previous year USD 374.40
million, Rs 2,243.21 crore) has been provided as security for the term
loans from banks to Homefield Pvt. UK Limited, Tata Chemicals Magadi
Limited and Tata Chemicals International Pte. Limited.
(b) USD 10 million, Rs 62.50 crore (previous year USD 10 million, Rs
59.92 crore) and USD 6 million, Rs 37.50 crore (previous year USD 6
million, Rs 35.95 crore) has been provided as security for the interest
rate swap and working capital loan respectively taken by Tata Chemicals
International Pte. Limited from banks.
(c) GBP 2.76 million, Rs 25.49 crore (previous year GBP Nil, '' Nil) has
been provided to the Secretary of State for Business, Innovation and
Skills, Department for Business, Innovation and Skills, London as
parent guarantee in connection with the grant received by Tata
Chemicals Europe Limited under the Industrial Development Act 1982.
(b) Claims not acknowledged by the Company relating to cases contested
by the Company and which, in the opinion of the Management, are not
likely to devolve on the Company relating to the following areas:
(Rsin crore)
As at As at
2014-15 2013-14
(i) Excise and Customs 21.70 7.31
(ii) Sales Tax 9.75 9.47
(iii) Demand for utility charges 18.38 56.61
(iv) Labour and other claims against
the Company not acknowledged as
debt 8.79 5.63
(v) Income Tax (pending before Appellate
authorities in respect of which the
Company is in appeal) 160.29 140.60
(vi) Income Tax (decided in Company''s
favour by Appellate authorities
and Department is in further appeal) 46.93 35.76
(c) Various claims pending before
Industrial Tribunals and Labour
Courts of which amounts are indeterminate.
(ii) Commitments:
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs 77.38 crore (previous year Rs 24.47
crore).
(b) For commitments related to derivatives and leases refer note 28
(vii) and 28 (ix) respectively (ix) Operating leases:
As a lessee
(a) General description of significant leasing arrangements :
The payments made by the Company as lessee in accordance with
operational leasing contracts or rental agreements are expensed
proportionally during the lease or rental period respectively. The
Company has entered into operating lease arrangement for storage tank
from a vendor. The leases are non cancellable and are for a period of
15 years with an option for renewal by a further period of 10 years
based on mutual agreements of all the parties.
(d) The lease deposit of Rs. Nil (previous year Rs 25 crore) for plant
and machinery remaining with the lessors is provided over the useful
life of the asset and consequently a net amount of Rs. Nil (previous year
Rs. Nil) has been charged to the Statement of Profit and Loss on the
principle of matching of revenue and costs.
(xi) Details of unutilised amounts out of issue of securities for the
specific purpose:
During 2010-11, the Company issued Equity shares to Tata Sons Limited
amounting to Rs 363.40 crore to fund various growth plans and projects.
As at 31st March, 2015, this balance of Rs 363.40 crore (previous year
Rs 363.40 crore) is pending utilisation for the specified activities
and this unutilised amount has been kept invested in bank fixed
deposits / money market mutual funds, pending final utilisation.
Includes Rs 0.42 crore (previous year Rs (0.62) crore) pertaining to
wages, salaries and other revenue account
Includes Rs. Nil crore (previous year Rs. 0.64 crore) pertaining to
wages, salaries and other revenue account
Includes Rs 7.50 crore (previous year Rs 5.11 crore) pertaining to
wages, salaries and other revenue account
Includes Rs 9.86 crore (previous year Rs 8.26 crore) pertaining to
wages, salaries and other revenue account
(xvii) Remittances in foreign currencies for dividends:
The Company has remitted during the year Rs 0.39 crore (previous year
Rs 0.01 crore) in foreign currencies on account of dividends and does
not have information as to the extent to which other remittances, if
any, in foreign currencies on account of dividends have been made by /
on behalf of non-resident shareholders.
(xx) The figures in light print are for previous year.
(xxi) Asterisk (*) denotes figures below Rs 50,000.
(xxii) Previous year''s figures have been regrouped / reclassified
wherever necessary to make them comparable with the current year''s
figures.
Mar 31, 2014
NOTE 1. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid time
deposits that are readily convertible into known amounts of cash and
which are subject to insignificant risk of changes in value.
(iv) Employee benefit obligations:
(a) The Company makes contribution towards provident fund, in substance
a defined contribution retirement benefit plan and towards pension,
superannuation fund, a defined contribution retirement plan for
qualifying employees. The provident fund is administered by the
Trustees of the Tata Chemicals Limited Provident Fund and the
superannuation fund is administered by the Trustees of the Tata
Chemicals Limited Superannuation Fund. Under the schemes, the Company
is required to contribute a specified percentage of salary to the
retirement benefit schemes to fund the benefit.
On account of the above Contribution Plans, a sum of Rs. 12.01 crore
(previous year Rs. 11.79 crore) has been charged to the Statement of
Profit and Loss.
(b) The Company makes annual contributions to the Tata Chemicals
Employees'' Gratuity Trust and to the Employees'' Group Gratuity-cum-Life
Assurance Scheme of the Life Insurance Corporation of India, both are
funded defined benefit plans for qualifying employees. The scheme
provides for lump sum payment to vested employees at retirement, death
while in employment or on termination of employment as per the
Company''s Gratuity Scheme. Vesting occurs upon completion of five l years
of service.
The Company is also providing post retirement medical Benefits to
qualifying employees. Similarly, the Company provides pension, housing
/ house rent allowance and medical Benefits to retired Managing and
Executive Directors.
The most recent actuarial valuations of plan assets and the present
values of the defined benefit obligations were carried out at 31st
March, 2014. The present value of the defined benefit obligations and
the related current service cost and past service cost, were measured
using the Projected Unit Credit Method.
The following tables set out the funded status and amounts recognised
in the Company''s financial statements as at 31st March, 2014 for the
Defined Benefits Plans.
(b) Expected rate of return on plan assets is based on the average long
term rate of return expected on investments of the Fund during the
estimated term of the obligations.
(c) The estimates of future salary increases, considered in actuarial
valuation, take into account the inflation, seniority, promotion and
other relevant factors.
(d) The figures in light print are for previous year.
(viii) Contingent liabilities and commitments (to the extent not
provided for):
(i) Contingent liabilities:
(a) Guarantees:
(i) Bank Guarantees issued by Banks on behalf of the Company Rs. 297.93
crore (previous year Rs. 267.96 crore). These are covered by the charge
created in favour of the Company''s bankers by way of hypothecation of
stocks and debtors.
(ii) Guarantees provided to third parties on behalf of subsidiaries USD
390.40 million (Rs. 2,339.08 crore) (previous year USD 388.30 million
(Rs.2,107.89 crore)).
(b) Claims not acknowledged by the Company relating to cases contested
by the Company and which, in the opinion of the Management, are not
likely devolve on the Company relating to the following areas:
(Rs. in crore)
As at As at
2013-14 2012-13
(i) Excise and Customs 7.31 3.26
(ii) Sales Tax 9.47 11.40
(iii) Demand for utility charges 56.61 56.69
(iv) Labour and other
claims against the Company not
acknowledged as debt 3.71 2.39
(v) Income Tax (pending before
Appellate authorities in
respect of which
the Company is in appeal) 140.60 188.98
(vi) Income Tax (decided in
Company''s favour by Appellate
authorities and Department is
in further appeal) 35.76 37.33
(c) Various claims pending before Industrial Tribunals and Labour
Courts of which amounts are indeterminate.
(ii) Commitments:
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 24.47 crore (previous year Rs. 37.40 crore).
(b) Capital commitment towards investment in joint ventures Rs. 34.39
crore (previous year Rs. 31.15 crore).
(c) For commitments related to derivatives and leases refer note 28
(vii) and 28 (ix) respectively.
(ix) Operating leases: As a lessee
(a) General description of significant leasing arrangements:
The payments made by the Company as lessee in accordance with
operational leasing contracts or rental agreements are expensed
proportionally during the lease or rental period respectively. The
Company has entered into operating lease arrangement for storage tank
from a vendor. The leases are non-cancellable and are for the period 15
years and may be renewed for a further period of 10 years based on
mutual agreements of the parties.
(d) The lease deposit of Rs. 25 crore (previous year Rs. 25 crore) for
plant and machinery remaining with the lessors is provided over the
useful life of the asset and consequently a net amount of Rs. Nil
(previous year Rs. 1.57 crore) has been charged to the Statement of Prof
t and Loss on the principle of matching of revenue and costs.
(xi) Details of unutilised amounts out of issue of securities for the
specific purpose:
During 2010-11, the Company has issued equity shares to Tata Sons
Limited amounting to Rs. 363.40 crore to fund Company''s various growth
projects. As at 31st March, 2014, this balance of Rs. 363.40 crore (31st
March, 2013 Rs. 363.40 crore) is pending utilisation for the specified
activities and this unutilised amount has been kept invested in bank
fixed deposits / money market mutual funds, pending f nal utilisation.
(xx) Scheme of arrangement between erstwhile Homefield International
Pvt. Ltd. "Homefield", a wholly owned subsidiary of the Company, with
the Company:
(a) The scheme of arrangement (the "Scheme") between the erstwhile
Homefield International Pvt. Ltd. ("Homefield"), a wholly owned
subsidiary of the Company, with the Company was approved by the
Honourable High Court of Judicature at Bombay (the "Hon. High Court")
vide its order dated 7th March, 2014. The Scheme came into effect after
the order of the Hon. High Court was f led with the Registrar of
Companies, Mumbai, i.e. 29th April, 2014, (the "Effective Date") but
took legal force and effect retrospectively from is 1st April, 2013
(the "Appointed Date").
(b) Thus the business of Homefield was deemed to be transferred to the
Company with effect from 1st April, 2013. The transfer was recorded
using the "Pooling of Interest" method as set out in the Accounting
Standard (AS) 14 on accounting for amalgamations. Accordingly:
i. the assets and liabilities of Homefield as at 31st March, 2013,
were transferred to the Company at their respective book values;
ii. the reserves of Homefield as on that date were recorded in the
same form and at the same values as appearing in the financial
statements of Homefield as at and for the year ended 31st March, 2013;
iii. the inter-company balances as on that date were cancelled; and
iv. the investments appearing in the books of account of the Company
were cancelled against the share capital of Homefield with no residual
surplus or def cit (as all the shares of Homefield were held by the
Company).
(xxi) Asterisk (*) denotes f gures below Rs. 50,000.
(xxii) Previous year''s f gures have been regrouped / reclassif ed
wherever necessary to make them comparable with the current year''s
figures.
Mar 31, 2013
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid time
deposits that are readily convertible into known amounts of cash and
which are subject to insignificant risk of changes in value.
(i) Contingent Liabilities and commitments (to the extent not
provided for):
1. Contingent Liabilities:
(a) Guarantees:
(i) Bank Guarantees issued by Banks on behalf of the Company Rs. 267.96
crores (previous year Rs. 163.39 crores). These are covered by the
charge created in favour of the Company''s bankers by way of
hypothecation of stocks and debtors.
(ii) Guarantees provided to third parties on behalf of subsidiaries USD
388.30 million (Rs. 2,107.89 crores) (previous year USD 138.30 million
(Rs. 703.60 crores))
(b) Claims not acknowledged by the Company relating to cases contested
by the Company and which, in the opinion of the Management, are not
likely to devolve on the Company relating to the following areas:
2. Commitments:
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 37.40 crores (previous year Rs. 59.67
crores).
(b) Capital commitment towards investment in joint ventures Rs. 31.15
crores (previous year Rs. 41.84 crores).
(c) For commitments related to derivatives and leases refer note 28
(vi) and 28 (viii) respectively.
(viii) Operating Leases:
As a lessee
(a) General description of significant leasing arrangements:
The payments made by the Company as lessee in accordance with
operational leasing contracts or rental agreements are expensed
proportionally during the lease or rental period respectively. The
Company has entered into operating lease arrangement for storage tank
from a vendor. The leases are non-cancellable and are for the period 15
years and may be renewed for a further period of 10 years based on
mutual agreements of the parties.
(d) The lease deposit of Rs. 25.00 crores (previous year Rs. 25.00
crores) for plant and machinery remaining with the lessors is provided
over the useful life of the asset and consequently a net amount of Rs.
1.57 crores (previous year Rs. 2.20 crores) has been charged to the
Statement of Profit and Loss on the principle of matching of revenue
and costs.
(ii) Details of unutilised amounts out of issue of securities for the
specific purpose:
During 2010-11, the Company has issued Equity shares to Tata Sons
Limited amounting to Rs. 363.40 crores to fund Company''s various growth
projects. As at 31st March, 2013, this balance of Rs. 363.40 crores
(31st March, 2012 Rs. 363.40 crores) is pending utilisation for the
specified activities and this unutilised amount has been kept invested
in bank fixed deposits / money market mutual funds, pending final
utilisation.
(iii) Remittances in Foreign Currencies for Dividends:
The Company has remitted during the year Rs. 41.22 crores (previous
year Rs. 39.05 crores) in foreign currencies on account of dividends
and does not have information as to the extent to which other
remittances, if any, in foreign currencies on account of dividends have
been made by / on behalf of non-resident shareholders.
(iv) The Company at its Board meeting held on 8th February, 2013,
approved the Scheme of Amalgamation (''the Scheme'') of Homefield
International Pvt. Ltd.(''Homefield International Pvt. Ltd.'') which is a
wholly owned subsidiary of the Company with its registered office in
Mauritius. No shares of the Company will be issued and allotted in lieu
or exchange of the equity shares of Homefield International Pvt. Ltd.
under the Scheme. The appointed date of the Scheme is 1st April, 2013.
A petition is being filed with the High Court of Judicature at Bombay
for approval of the Scheme. No effect has been given in the financial
statements pending the High Court approval.
(v) During the year ended 31st March, 2013, the Company has recognised
subsidy income of Rs. 44.91 crores on Opening stock as on 1st April,
2011 of Raw Materials for Phosphatic and Potassic Fertilisers based on
communication issued by Department of Fertilizers vide letter no.
23011/1/2010 - MPR (Pt) dated 22.08.12 with respect to earlier Office
Memorandum dated 11th July, 2011 on mopping up of Subsidy increase
under NBS Policy.
(vi) Asterisk (*) denotes figures below Rs. 50,000.
(vii) Previous year''s figures have been regrouped / reclassified
wherever necessary to make them comparable with the current year''s
figures.
Mar 31, 2012
Note 1: Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid time
deposits that are readily convertible into known amounts of cash and
which are subject to insignificant risk of changes in value.
Notes :
(a) Reconciliation of the number of shares and amount outstanding at
the beginning and at the end of the reporting period:
(i) Based on approval of the members of the Company, in August 2010,
the Company has issued 1,15,00,000 equity shares on a preferential
basis to Tata Sons Limited (the promoter entity). (b) The equity
shares of the Company have voting rights and are subject to the
preferential rights as prescribed under law or those of the preference
shareholders, if any. The equity shares are also subject to
restrictions as prescribed under the Companies Act 1956.
Notes :
(a) Deferred tax asset of Rs. 39.27 crores (previous year Rs. 8.08 crores)
have been adjusted on, exchange gain/loss on long term foreign currency
monetary asset/liability have been offset against " Foreign currency
monetary translation difference account".'
Notes :
(a) Provision for compensation under employee separation scheme (ESS)
has been calculated on the basis of the net present value of the future
monthly payments of pension.
(b) During the year, the Company entered into an agreement with
Department of Science and Technology for creation of Capital Assets for
Sulphate of Potash (SOP) Project. For the above Project, the Company
has received its first installment of Government Grant amounting to Rs.
8.50 crores which has been retained in a separate bank account and
included in "Other payables" above.
Notes :
(a) Loans from banks on cash credit are secured by hypothecation of
stocks of raw materials, finished products, stores and work-in-process
as well as book debts.
Notes :
(a) According to information available with the Management and relied
upon by the auditors, on the basis of intimation received from
suppliers regarding their status under the Micro, Small and Medium
Enterprises Development Act, 2006 (MSMED Act), the Company has amounts
due to Micro and Small Enterprises under the said Act as at 31st March,
2012 as follows :
Notes:
(a) The external commercial borrowing is due for repayments on 4th
June, 2012 and 4th December, 2012 in installments of Rs. 448.66 crores
(USD 95 million) and Rs. 459.00 crores (USD 95 million) respectively.
Notes :
(a) During the year ended 31st March 2012 the Company exercised the
option granted vide notification F.No.17/133/2008/CL- V dated 29th
December, 2011 issued by the Ministry of Corporate Affairs and
accordingly, the exchange differences arising on revaluation of long
term foreign currency monetary items have been recognised over the
shorter of the loan repayment period and 31st March, 2020. The
unamortised balance as at 31st March 2012 of Rs. 81.72 crores (net of
tax) (previous year 7 Nil (net of tax)) is presented as "Foreign
Currency Monetary item Translation Difference Account" (FCMTDA).
(ii) Related Party Disclosure :
(a) Related Parties and their relationship (As identified by the
Management)
Subsidiaries Joint Ventures Associates Key Management
Direct Direct EPM Mining Venture Inc, Personnel
Homefield International Pvt. Limited, Indo Maroc Phosphore S. A.,
Canada # Mr. R. Mukundan,
Mauritius Morocco Managing Director
Wyoming 1 (Mauritius) Pvt. Ltd., Khet-Se Agri Produce India Pvt. Ltd.,
Mr. P. K. Ghose,
Mauritius India Executive Director & CFO
Rallis India Limited, India *
Indirect Indirect Promoter Group
Bio Energy Venture - 1 Alcad, United State of America Tata Sons Limited
(Mauritius) Pvt. Ltd, Mauritius Kemex B.V., Netherlands
Homefield Pvt. UK Limited, Joil (S) Pte. Ltd, Singapore
United Kingdom The Block Salt Company Limited,
Tata Chemicals Africa Holdings Limited, United Kingdom
United Kingdom Natronx Technologies LLC,
Tata Chemicals South Africa Pty Limited, United States of America #
South Africa
Tata Chemicals Magadi Limited, United Kingdom
Magadi Railway Company Limited, Kenya
Homefield 2 UK Limited, United Kingdom
Tata Chemicals (Europe) Holdings Limited, United Kingdom
Cheshire Salt Holdings Limited, United Kingdom
Cheshire Salt Limited, United Kingdom
British Salt Limited, United Kingdom
Brinefield Storage Limited, United Kingdom
Broomco (4118) Limited, United Kingdom
Broomco (4119) Limited, United Kingdom
Broomco (4120) Limited, United Kingdom
Cheshire Cavity Storage 2 Limited, United Kingdom
Cheshire Compressor Limited, United Kingdom
Irish Feeds Limited, United Kingdom
New Cheshire Salt Works Limited, United Kingdom
Brunner Mond Group Limited, United Kingdom
Tata Chemicals Europe Limited, United Kingdom
Brunner Mond B.V., Netherland
Brunner Mond Generation Company Limited, United Kingdom
Brunner Mond Limited, United Kingdom
Northwich Resource Management Limited, United Kingdom
Gusiute Holdings (UK) Limited, United Kingdom
Valley Holdings Inc., United States of America
Tata Chemicals North America Inc., United States of America
General Chemical International Inc, United States of America
General Chemical Great Britain Limited, United States of America
NHO Canada Holdings Inc, United States of America
General Chemical Canada Holding Inc, Canada
TCSAP Holdings, United State of America **
TCSAP LLC, United State of America
Tata Chemicals (Soda Ash) partners (TCSAP), United State of America **
GCSAP Canada Inc, Canada
Tata Chemicals Asia Pacific Pte. Limited, Singapore
Grown Energy Zambeze Holdings Pvt. Ltd, Mauritius
Grown Energy (Proprietary) Limited, South Africa
Grown Energy Zambeze Limitada, Mozambique
Rallis Chemistry Exports Limited, India
Metahelix Life Sciences Ltd (Metahelix), India
Dhaanya Seeds Ltd, India
* Rallis India Limited is a listed company.
** a general partnership formed under the laws of the State of Delaware
(USA)
# Arising out of acquisitions during the year.
Wyoming 2 (Mauritius) Pvt. Limited merged with Wyoming 1 (Mauritius)
Pvt. Limited w.e.f. 4th November, 2011
Bio Energy Venture - 2 (Mauritius) Pvt. Ltd merged with Bio Energy
Venture - 1 (Mauritius) Pvt. Ltd w.e.f. 21st November, 2011
Wyoming 1 (Mauritius) Pvt. Limited merged with the Company w.e.f. 1st
Janurary, 2012
Rallis Australasia Pty. Limited had liquidated as at 31st December,
2011
General Chemical (Soda Ash) Inc and Bayberry Management Corporation
dissolved as at 11th January, 2012
(ii) Related Party Disclosure :
(a) Related Parties and their relationship (As identified by the
Management)
Subsidiaries Joint Ventures Associates Key Management
Direct Direct EPM Mining Venture Inc, Personnel
Homefield International Pvt. Limited, Indo Maroc Phosphore S. A.,
Canada # Mr. R. Mukundan,
Mauritius Morocco Managing Director
Wyoming 1 (Mauritius) Pvt. Ltd., Khet-Se Agri Produce India Pvt. Ltd.,
Mr. P. K. Ghose,
Mauritius India Executive Director & CFO
Rallis India Limited, India *
Indirect Indirect Promoter Group
Bio Energy Venture - 1 Alcad, United State of America Tata Sons Limited
(Mauritius) Pvt. Ltd, Mauritius Kemex B.V., Netherlands
Homefield Pvt. UK Limited, Joil (S) Pte. Ltd, Singapore
United Kingdom The Block Salt Company Limited,
Tata Chemicals Africa Holdings Limited, United Kingdom
United Kingdom Natronx Technologies LLC,
Tata Chemicals South Africa Pty Limited, United States of America #
South Africa
Tata Chemicals Magadi Limited, United Kingdom
Magadi Railway Company Limited, Kenya
Homefield 2 UK Limited, United Kingdom
Tata Chemicals (Europe) Holdings Limited, United Kingdom
Cheshire Salt Holdings Limited, United Kingdom
Cheshire Salt Limited, United Kingdom
British Salt Limited, United Kingdom
Brinefield Storage Limited, United Kingdom
Broomco (4118) Limited, United Kingdom
Broomco (4119) Limited, United Kingdom
Broomco (4120) Limited, United Kingdom
Cheshire Cavity Storage 2 Limited, United Kingdom
Cheshire Compressor Limited, United Kingdom
Irish Feeds Limited, United Kingdom
New Cheshire Salt Works Limited, United Kingdom
Brunner Mond Group Limited, United Kingdom
Tata Chemicals Europe Limited, United Kingdom
Brunner Mond B.V., Netherland
Brunner Mond Generation Company Limited, United Kingdom
Brunner Mond Limited, United Kingdom
Northwich Resource Management Limited, United Kingdom
Gusiute Holdings (UK) Limited, United Kingdom
Valley Holdings Inc., United States of America
Tata Chemicals North America Inc., United States of America
General Chemical International Inc, United States of America
General Chemical Great Britain Limited, United States of America
NHO Canada Holdings Inc, United States of America
General Chemical Canada Holding Inc, Canada
TCSAP Holdings, United State of America **
TCSAP LLC, United State of America
Tata Chemicals (Soda Ash) partners (TCSAP), United State of America **
GCSAP Canada Inc, Canada
Tata Chemicals Asia Pacific Pte. Limited, Singapore
Grown Energy Zambeze Holdings Pvt. Ltd, Mauritius
Grown Energy (Proprietary) Limited, South Africa
Grown Energy Zambeze Limitada, Mozambique
Rallis Chemistry Exports Limited, India
Metahelix Life Sciences Ltd (Metahelix), India
Dhaanya Seeds Ltd, India
* Rallis India Limited is a listed company.
** a general partnership formed under the laws of the State of Delaware
(USA)
# Arising out of acquisitions during the year.
Wyoming 2 (Mauritius) Pvt. Limited merged with Wyoming 1 (Mauritius)
Pvt. Limited w.e.f. 4th November, 2011
Bio Energy Venture - 2 (Mauritius) Pvt. Ltd merged with Bio Energy
Venture - 1 (Mauritius) Pvt. Ltd w.e.f. 21st November, 2011
Wyoming 1 (Mauritius) Pvt. Limited merged with the Company w.e.f. 1st
Janurary, 2012
Rallis Australasia Pty. Limited had liquidated as at 31st December,
2011
General Chemical (Soda Ash) Inc and Bayberry Management Corporation
dissolved as at 11th January, 2012
(iii) Employee Benefit Obligations :
(a) The Company makes contribution towards provident fund in substance
a defined contribution retirement benefit plan and towards pension,
superannuation fund, a defined contribution retirement plan for
qualifying employees. The provident fund is administered by the
Trustees of the Tata Chemicals Limited Provident Fund and the
superannuation fund is administered by the Trustees of the Tata
Chemicals Limited Superannuation Fund. Under the schemes, the Company
is required to contribute a specified percentage of salary to the
retirement benefit schemes to fund the benefit.
On account of the above Contribution Plans, a sum of Rs. 5.70 crores
(previous year Rs. 4.67 crores) has been charged to the Statement of
Profit and Loss.
(b) The Company makes annual contributions to the Tata Chemicals
Employees' Gratuity Trust and to the Employees' Group Gratuity-cum-Life
Assurance Scheme of the Life Insurance Corporation of India, both are
funded defined benefit plans for qualifying employees. The scheme
provides for lump sum payment to vested employees at retirement, death
while in employment or on termination of employment as per the
Company's Gratuity Scheme. Vesting occurs upon completion of five years
of service.
The Company is also providing post retirement medical benefits to
qualifying employees. Similarly, the Company provides pension, housing
/ house rent allowance and medical benefits to retired Managing and
Executive Directors.
The most recent actuarial valuations of plan assets and the present
values of the defined benefit obligations were carried out at 31st
March, 2012. The present value of the defined benefit obligations and
the related current service cost and past service cost, were measured
using the Projected Unit Credit Method.
The following tables set out the funded status and amounts recognised
in the Company's financial statements as at 31st March, 2012 for the
Defined Benefits Plans.
1 Changes in the defined benefit obligation: Projected defined benefit
obligation
At the beginning of the year
Current service cost
Interest cost
Actuarial (gain) / loss
Past service cost
Benefits paid
At the end of the year
2 Changes in the fair value of plan assets: Fair value of plan assets
At the beginning of the year
Expected return on plan assets
Employer's contributions
Actuarial gain / (loss)
Benefits paid
At the end of the year
(Asset)/Liability (net)
3 Net employee benefit expense (recognised in Employee Cost) for the
year :
Current service cost
Interest defined benefit obligation
Expected return on plan assets
Net actuarial (gain) / loss recognised in the year
Past service cost
Total expenses recognised in the statement of profit and loss
Expected Employer's contribution next year
Actual Return on Plan Assets
4 Categories of plan assets as a percentage of the fair value of total
plan assets :
Government of India Securities
Corporate Bonds
Equity Shares of Listed Companies
Others
Total
5 Assumptions used in accounting for gratuity and compensated absences,
long service awards, post retirement medical benefits, directors'
retirement obligations and family benefit scheme :
Discount rate
Expected rate of return on plan assets
Increase in Compensation cost
Increase in cost of award Healthcare cost increase rate Pension
increase rate
(a) Discount rate is based on the prevailing market yields of Indian
Government securities as at the Balance Sheet date for the estimated
term of the obligations.
(b) Expected rate of return on plan assets is based on the average long
term rate of return expected on investments of the Fund during the
estimated term of the obligations.
(c) The estimates of future salary increases, considered in actuarial
valuation, take into account the inflation, seniority, promotion and
other relevant factors.
(d) The figures in light print are for previous year.
6 Effect of Change in Assumed Health Care Cost Trend Rate :
Effect on the aggregate of the service cost and interest cost
Effect on defined benefit obligation
7 Experience Adjustments :
Defined Benefit Obligation
Plan Assets
Surplus / (Deficit)
Experience Adjustments on Plan Liabilities
Experience Adjustments on Plan Assets
Defined Benefit Obligation
Plan Assets
Surplus / (Deficit)
Experience Adjustments on Plan Liabilities
Experience Adjustments on Plan Assets
8 The details of the Company's post-retirement and other benefit plans
for its employees given above are certified by the actuary and relied
upon by the Auditors.
(iv) The proportionate share of assets, liabilities, income and
expenditure, contingent liabilities and capital commitments of the
Joint Ventures are as given below :
(v) Disclosure as required by AS 29 "Provisions, Contingent Liabilities
and Contingent Assets" in respect of provisions as at 31st March, 2012
The company has made provision for various obligations and disputed
liabilities based on its assessment of the amount it estimates to
incurre to meet such obligations, details of which are given below.
(b) The year end foreign currency exposures that have not been hedged
by a derivative instrument or otherwise are as under:
(i) Export receivables Rs. 7.12 crores (USD 1.40 million) (previous year
Rs.7.58 crores (USD 1.7 million)).
(ii) Accounts payable Rs. 49.04 crores (USD 9.64 million) (previous year Rs.
46.87 crores (USD 10.51 million)).
(iii) Liability arising out of cross currency swap Rs. 1,399.06 crores
(USD 275 million) (previous year Rs.1,226.36 crores (USD 275 million)).
(iv) Contingent Liabilities and commitments (to the extent not
provided for) (i) Contingent Liabilities :
(a) Guarantees:
(i) Bank Guarantees issued by Banks on behalf of the Company Rs. 163.39
crores (previous year Rs. 193.96 crores). These are covered by the charge
created in favour of the Company's bankers by way of hypothecation of
stocks and debtors.
(ii) Guarantees provided to third parties on behalf of subsidiaries USD
138.30 million (Rs. 703.60 crores) (previous year USD 138.30 million (Rs.
616.75 crores)).
(b) Claims not acknowledged by the Company relating to cases contested
by the Company and which, in the opinion of the Management, are not
likely devolve on the Company relating to the following areas :
(Rs. in crores)
As at As at
2011-12 2010-11
(i) Excise and Customs 4.21 73.92
(ii) Sales Tax 89.11 81.06
(iii) Demand for utility charges 56.86 56.83
(iv) Labour and other claims
against the Company
not acknowledged as debt 1.89 1.94
(v) Income Tax (Pending before
Appellate authorities
in respect of which the
Company is in appeal) 186.72 239.23
(vi) Income Tax (Decided in
Company's favour by Appellate
authorities and Department is
in further appeal) 37.33 37.33
(c) Various claims pending before Industrial Tribunals and Labour
Courts of which amounts are indeterminate.
(ii) Commitments:
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 59.67 crores (previous year Rs. 141.87
crores).
(b) Capital commitment towards investment in joint ventures Rs. 42 crores
(previous year Rs. 72 crores).
(c) For commitments related to leases and derivatives refer note 28
(viii) and 28 (vi) respectively.
(viii) Operating Leases : As a lessee
(a) General description of significant leasing arrangements :
The payments made by the Company as lessee in accordance with
operational leasing contracts or rental agreements are expensed
proportionally during the lease or rental period respectively. The
Company has entered into operating lease arrangement for storage tank
from a vendor. The leases are non cancellable and are for the period 15
years and may be renewed for a further period of 10 years based on
mutual agreements of the parties.
(b) Total of minimum lease payments
The total of future minimum lease payments under non-cancellable
operating leases for a period : Not later than one year
Later than one year and not later than five years Later than five years
(c) Lease payments recognised in the Statement of Profit and Loss for
the year
(d) The lease deposit of Rs. 25 crores (previous year Rs. 25 crores) for
plant and machinery remaining with the lessors is provided over the
useful life of the asset and consequently a net amount of Rs. 2.20 crores
(previous year Rs. 2.17 crores) has been charged to the Statement of
Profit and Loss on the principle of matching of revenue and costs.
(v) Details of unutilised amounts out of issue of securities for the
specific purpose.
During 2010-11, the Company has issued equity shares to Tata Sons
Limited amounting to Rs. 363.40 crores to fund Company's various growth
projects. As at 31st March, 2012, this balance of Rs. 363.40 crores (31st
March, 2011 Rs. 363.40 crores) is pending utilisation for the specified
activities and this unutilised amount has been kept invested in bank
fixed deposits / money market mutual funds, pending final utilisation.
(vi) Value of Imports (C.I.F. Value) :
(a) Raw Materials, fuel and traded products
(b) Stores, components and spare parts
(c) Capital goods
(vii) Expenditure in Foreign Currencies :
(a) Technical know how fees @
(b) Interest #
(c) Payments on other accounts #
@ Expenditure Rs. 0.35 crores (previous year Rs. 6.55 crores) at gross of
TDS and Rs.3.34 crores (previous year Rs. 9.29 crores) net of TDS for the
year 2011-12.
# Expenditure at gross of TDS for the year 2011-12 and 2010-11.
(viii) Remittances in Foreign Currencies for Dividends :
The Company has remitted during the year Rs. 39.05 crores (previous year
Rs.29.85 crores) in foreign currencies on account of dividends and does
not have information as to the extent to which other remittances, if
any, in foreign currencies on account of dividends have been made by /
on behalf of non-resident shareholders.
(a) Number of Non-Resident Shareholders
(b) Number of Ordinary Shares held by them
(c) Gross amount of dividend (Rs. in crores)
(d) Year ended to which the dividend related
(ix) Earnings in Foreign Exchange :
(a) Export of goods on F.O.B. basis
(b) Interest
(c) Miscellaneous Income
(d) Dividend
(x) Value of imported and indigenous raw materials, stores,
components and spare parts consumed:
(a) Imported
(b) Indigenous #
# Includes Rs. 15.43 crores (previous year Rs. 12.03 crores) pertaining to
wages, salaries and other revenue accounts.
(xi) Scheme of Arrangement between erstwhile Wyoming 1 (Mauritius)
Pvt. Ltd., a wholly owned subsidiary of the Company, with the Company :
(a) The Scheme of Arrangement between erstwhile Wyoming 1 (Mauritius)
Pvt. Ltd. (Wyoming 1), a wholly owned subsidiary of the Company, with
the Company was approved by the Honourable High Court of Mumbai, vide
its order dated 4th May, 2012. The certified copy of the said High
Court order has been received and filed with the Registrar of
Companies, Mumbai and the said Scheme became effective on 23rd May,
2012.
(b) Accordingly, the Scheme has been given effect in the accounts and
assets and liabilities and reserves of Wyoming 1, at their respective
book value are appearing in the audited financial statements as at 31st
December, 2011, have been transferred to and vested in the Company,
along with profit for the period from 1st January, 2012 to 31st March,
2012 recognised in the Statement of Profit and Loss for the year ended
31st March, 2012. (the appointment date "date of the Scheme being 1st
January, 2012")
(c) The summarised Statement of Profit and Loss relating to Wyoming 1
operations for the period from 1st January to 31st March is as under.
Statement of Profit and Loss for the period 1st January, 2012 to 31st
March, 2012
(e) As Wyoming 1 is a wholly owned subsidiary of the Company, no
shares of the Company has been issued and allotted in lieu or exchange
of the equity shares of Wyoming 1 under the Scheme. 720,240,000 equity
shares of the Wyoming 1 held by the company stands cancelled.
(f) In view of the aforesaid amalgamation, the figures for the current
year are not comparable to those of the previous year.
(xii) For the year ended 31st March, 2012, the Company has not
recognised subsidy income of Rs. 44.91 crores on Opening stock as at 1st
April, 2011 of Raw Materials for Phosphatic & Potassic Fertilisers, in
accordance with the Office Memorandum dated 11th July, 2011 issued by
the Department of Fertilisers (DOF) which provides for the Subsidy on
such Opening Stocks at old rates applicable to FY. 2010-11.
Based on the legal opinion made available, the said Office Memorandum
is being represented against / contested. Had the Company recognised
the subsidy income from sales made from such Opening Stocks as per the
prevalent Nutrient Based Subsidy (NBS) policy without giving effect to
the said Office Memorandum, the Sales / Income from operations and Net
Profit After Tax would have been higher by Rs. 44.91 crores and Rs. 33.64
crores respectively for the year ended 31st March, 2012.
(xiii) Asterisk (*) denotes figures below Rs. 50,000.
(xiv) During the year ended 31st March, 2012, the Revised Schedule VI
notified under the Companies Act 1956, has become applicable to the
company, for preparation and presentation of financial statements,
hence financial statements have been prepared as per notified Schedule
VI. This has significantly impacted the disclosure and presentation
made in the Financial statements. previous year figures have been
regrouped/reclassified wherever necessary to correspond with the year's
classification/disclosure.
Mar 31, 2011
1 Segment Reporting :
Segment information has been presented in the Consolidated Financial
Statements as permitted by Accounting Standards (AS-17) on Segment
Reporting as notified under the Companies (Accounting Standards) Rules,
2006.
2 Related Party Disclosure :
(a) Related Parties and their relationship
Subsidiaries Direct
Homefield International Pvt. Limited,
Mauritius
Wyoming 1 (Mauritius) Pvt. Ltd.,
Mauritius
Bio Energy Venture - 1 ( Mauritius) Pvt. Ltd.,
Mauritius
Rallis India Limited, India
Joint Ventures Direct
Indo Maroc Phosphore S. A.,
Morocco
Khet-Se Agri Produce India
Pvt. Ltd., India
Key Management Personnel
Mr. R. Mukundan, Managing Director
Mr. P. K. Ghose, Executive Director & CFO
Mr. Kapil Mehan (upto 31August, 2010), Executive Director
Indirect
Tata Chemicals Asia Pacific Pte. Limited,
Singapore
Homefield Pvt. UK Limited, United Kingdom
Homefield 2 UK Limited, United Kingdom
Tata Chemicals (Europe) Holding Limited*,
United Kingdom
Brunner Mond Group Limited,
Brunner Mond (UK) Limited,
United Kingdom
Brunner Mond Limited, United Kingdom
The Magadi Soda Company Limited,
United Kingdom
Brunner Mond (South Africa) (Pty) Limited,
South Africa
Northwich Resource Management Limited,
United Kingdom
Brunner Mond Generation Company Limited,
United Kingdom
Tata Chemicals Africa Holdings Limited**,
United Kingdom
Magadi Railway Company Limited, Kenya
Brunner Mond B.V., Netherlands
Wyoming 2 (Mauritius) Pvt. Limited,
Mauritius
Gusiute Holdings (UK) Limited,
United Kingdom
Valley Holdings Inc., United States of America
General Chemical Industrial Products Inc.,
United States of America
General Chemical International Inc.,
United States of America
NHO Canada Holdings Inc.,
United States of America
General Chemical (Soda Ash) Inc.,
United States of America
Bayberry Management Corporation,
United States of America
Alcad, United State of America
Kemex B.V., Netherlands
JOil (S) Pte. Ltd, Singapore
The Block Salt Company Limited #, United Kingdom
Lake Natron Resources Limited, Tanzania (upto 15th December,
United Kingdom 2009)
Indirect
General Chemicals (Soda Ash) Partners,
United States of America
General Chemical (Great Britain) Limited,
United Kingdom
General Chemical Canada Holding Inc.,
Canada
GCSAP Canada Inc, Canada
GCSAP Holdings, United States of America
GCSAP LLC, United States of America
Bio Energy Venture - 2 ( Mauritius) Pvt. Ltd.,
Mauritius
Grown Energy Zambeze Holdings Pvt. Ltd.,
Mauritius
Grown Energy (Proprietary) Limited*,
South Africa
Grown Energy Zambeze Limitada*,
Mozambique
Rallis Australasia Pty Limited***, Australia
Rallis Chemistry Exports Limited, India
Metahelix Life Sciences Ltd*, India
Dhaanya Seeds Ltd*, India
British Salt Limited*, United Kingdom
Cheshire Salt Holdings Limited*,
United Kingdom
Cheshire Salt Limited*, United Kingdom
Brinefield Storage Limited*, United Kingdom
Broomco (4118) Limited*, United Kingdom
Broomco (4119) Limited*, United Kingdom
Broomco (4120) Limited*, United Kingdom
Cheshire Cavity Storage 2 Limited*,
United Kingdom
Cheshire Compressor Limited*, United Kingdom
Irish Feeds Limited*, United Kingdom
New Cheshire Salt Works Limited*,
United Kingdom
*Companies which became subsidiaries / incorporated during the year.
**Name of Transcontinental Holdings Limited changed to this name w.e.f.
December 12, 2010.
*** Has applied for voluntary liquidation as on 31st March, 2011. The
Company expects to recover amount higher than the
carrying value of the investment.
# Joint Venture arising out of acquitions during the year.
3 Employee Benefit Obligations :
(a) The Company makes contribution towards provident fund, a defined
benefit retirement plan and towards pension, superannuation fund, a
defined contribution retirement plan for qualifying employees. The
provident fund is administered by the Trustees of the Tata Chemicals
Limited Provident Fund and the superannuation fund is administered by
the Trustees of the Tata Chemicals Limited Superannuation Fund. Under
the schemes, the Company is required to contribute a specified
percentage of salary to the retirement benefit schemes to fund the
benefit.
On account of Defined Contribution Plans, a sum of 7 4.67 crores
(previous year Rs. 5.19 crores) has been charged to the Profit and Loss
Account. On account of Provident Fund contribution, a sum of Rs. 5.51
crores (previous year Rs. 4.95 crores) has been charged to Profit and
Loss Account.
(b) The Company makes annual contributions to the Tata Chemicals
Employees Gratuity Trust and to the Employees Group Gratuity-cum-Life
Assurance Scheme of the Life Insurance Corporation of India, both are
funded defined benefit plans for qualifying employees. The scheme
provides for lump sum payment to vested employees at retirement, death
while in employment or on termination of employment as per the
Companys Gratuity Scheme. Vesting occurs upon completion of five
years of service.
The Company is also providing post retirement medical benefits to
qualifying employees. Similarly, the Company provides pension, housing
/ house rent allowance and medical benefits to retired Managing and
Executive Directors.
The most recent actuarial valuations of plan assets and the present
values of the defined benefit obligations were carried out at 31 March,
2011. The present value of the defined benefit obligations and the
related current service cost and past service cost, were measured using
the Projected Unit Credit Method.
The following tables set out the funded status and amounts recognised
in the Companys financial statements as at 31 March, 2011 for the
Defined Benefits Plans other than Provident Fund. According to the
Management, in consultation with the actuary, actuarial valuation
cannot be applied to reliably measure provident fund liabilities in the
absence of guidance from the Actuarial Society of India.
(a) Discount rate is based on the prevailing market yields of Indian
Government securities as at the Balance Sheet date for the estimated
term of the obligations.
(b) Expected rate of return on plan assets is based on the average long
term rate of return expected on investments of the Fund during the
estimated term of the obligations.
(c) The estimates of future salary increases, considered in actuarial
valuation, take into account the inflation, seniority, promotion and
other relevant factors.
(d) The figure in light print are for previous year.
(viii) The details of the Companys post-retirement and other benefit
plans for its employees are given above, which are certified by the
actuary and relied upon by the Auditors.
4. During the year 2009-10, the Company got notices for conversion of
USD 42.756 million FCCBs into ordinary shares at a conversion price of
Rs. 230.78 per ordinary share at a fixed exchange rate of Rs. 43.65 = USD1.
Pursuant to this, the Company had issued 80,86,912 Ordinary share of
Face Value Rs. 10 in the year 2009-10.
5 Derivative Instruments :
(a) As on 31st March, the Company has the following derivative
instruments outstanding:
(i) Forward currency exchange contracts USD-INR amounting to USD 24.67
million ( previous year USD Nil) for the purpose of hedging its
exposures to foreign currency loans
(ii) Forward currency exchange contracts USD- INR amounting to USD
112.49 million (previous year USD 87.41 million) for the purpose of
hedging its exposures to foreign currency acceptances
(iii) Accounts payable USD Nil, CHF Nil & EUR Nil (previous year USD
2.89 million, CHF 0.19 million & EUR 0.19 million)
(iv) Forward currency exchange contracts USD-INR 58.16 million, EUR-INR
2.6 million & EUR-USD 0.45 million (previous year USD Nil) for the
purpose of hedging highly probable forcast transactions.
(v) Currency options contracts USD- INR amounting to USD 78 million
(previous year USD 26 million) with an intent to hedge its exposures to
foreign currency loans
(vi) Full Currency Swap to hedge against fluctuations in exchange rates
USD 76 million (previous year Notional principal USD 76 million)
(vii) Cross Currency Swap to hedge against fluctuations in exchange
rates and Interest rates USD 475 million (previous year Notional
principal USD 475 million)
(viii) Long Term Forward Contract USD-INR 71 million (previous year
USD-INR 35 million) to hedge against fluctuation in exchange rates for
the purpose of hedging its exposure to foreign currency long term loans
(b) The year end foreign currency exposures that have not been hedged
by a derivative instrument or otherwise are as under:
(i) Export receivables USD 1.7 million (previous year USD 4.41 million
)
(ii) Acceptances USD NIL million (previous year USD 8.78 million)
(iii) Accounts payable USD 10.51 million (previous year USD 28.59
million)
(iv) Liability arising out of cross currency swap USD 275 million
(previous year USD 382 million).
6 (a) Estimated amount of contracts remaining to be executed on
capital account and not provided for Rs. 141.87 crores (previous year Rs.
56.15 crores).
(b) Capital commitment towards investment in joint ventures Rs. 72 crores
(previous year Rs. 85.44 crores).
7 Contingent Liabilities :
(a) Guarantees:
(i) Bank Guarantees issued by Banks on behalf of the Company Rs. 193.96
crores (previous year 5 91.85 crores). These are covered by the charge
created in favour of the Companys bankers by way of hypothecation of
stocks and debtors.
(ii) Guarantees provided to third parties on behalf of subsidiaries USD
138.30 million (Rs. 616.75 crores) (previous year USD 136.80 million (Rs.
614.23 crores))
(c) The lease deposit of Rs. 25 crores (previous year Rs. 25 crores) for
plant and machinery remaining with the lessors is provided over the
useful life of the asset and consequently a net amount of Rs. 2.17 crores
(previous year Rs. 2.17 crores ) has been charged to the Profit and Loss
Account on the principle of matching of revenue and costs.
(d) General description of significant leasing arrangements :
The payments made by the Company as lessee in accordance with
operational leasing contracts or rental agreements are expensed
proportionally during the lease or rental period respectively. The
Company has entered into operating lease arrangement for storage tank
from a vendor. Till previous year the lease arrangement also included
power plants.
8 (a) Provision for compensation under Employee Separation Scheme
(ESS) has been calculated on the basis of the net present value of the
future monthly payments of pension.
(b) An amount of (Rs. 0.56 crore) (previous year Rs. 0.27 crore) is payable
under the scheme within one year.
9 Remittances in foreign currencies for Dividends :
The Company has remitted during the year Rs. 29.85 crores (previous year
Rs. 21.80 crores) in foreign currencies on account of dividends and does
not have information as to the extent to which other remittances, if
any, in foreign currencies on account of dividends have been made by /
on behalf of non-resident shareholders.
10 Sales includes subsidy income of Rs. 2,376.73 crores (previous year Rs.
2,059.69 crores)
11 During the year ended 31st March 2009 the Company had exercised the
option granted vide notification F.No.17/33/ 2008/CL-V dated March 31,
2009 issued by the Ministry of Corporate Affairs and accordingly, the
exchange differences arising on revaluation of long term foreign
currency monetary items for the year ended 31st March, 2008, 2009 and
2010 have been recognised over the shorter of the maturity period of
the loan or 31st March, 2011. The unamortised balance as at the Balance
Sheet date of Rs. Nil (net of tax) (previous year Rs. 7.89 crores) is
presented as "Foreign Currency Monetary item Translation Difference
Account" (FCMTDA).
12 Insurance claim
(a) Insurance claim includes Rs. 36.09 crores towards estimated loss of
profit for the year ended 31st March, 2011 pertaining to Companys
Fertilizer Plant at Babrala (on account of temporary disruption due to
fault in Synthesis Converter in the ammonia plant upto 31st August,
2010).
(b) The devastating rain fall coupled with cyclonic wind in the months
of July & August 2010 in and around Mithapur plant, the stocks of salt,
Soda Ash and also the salt works were damaged due to flooding of water.
The Company has adequate coverage towards cost of damaged property and
stock. The work for the restoration of property is in progress and
Insurance claims for both the damages have been lodged. The claim for
loss of stocks Rs. 2.04 crores has been recognized in the books, based on
the estimates.
13 Based on approval of the members of the Company, in August 2010, the
Company has issued 1,15,00,000 equity shares on a preferential basis to
Tata Sons Limited (the promoter entity).
14 Asterisk (*) denotes figures below Rs. 50,000.
15 Previous years figures have been regrouped / reclassified wherever
necessary to make them comparable with the current years figures.
Mar 31, 2010
1 Segment Reporting :
Segment information has been presented in the Consolidated Financial
Statements as permitted by Accounting Standards (AS-17) on Segment
Reporting as notified under the Companies (Accounting Standards) Rules,
2006.
2 Related Party Disclosure :
(a) Related Parties and their relationship
Subsidiaries Joint Ventures Key Management Personnel
Direct Direct
Homefield International
Pvt. Limited, Indo Maroc Phosphore
S. A., Mr. R. Mukundan, Managing Director
Mauritius Morocco
Wyoning 1
(Mauritius) Pvt.
Ltd., Khet-Se Agri Produce
India Mr. P. K. Ghose, Executive
Director & CFO
Mauritius Pvt. Ltd., India
Bio Energy Venture
- 1 ( Mauritius) Mr. Kapil Mehan, Executive Director
Pvt. Ltd., Mauritius
Rallis India Limited,
India ( w.e.f, Novà 2009)
Indirect Indirect
Homefield Pvt. UK Limited, UK Kemex B.V., Netherlands
Brunner Mond Group Limited, UK Alcad, USA
Brunner Mond (UK) Limited, UK JOil (S) Pte. Ltd, Singapore
Brunner Mond Limited, UK
The Magadi Soda Company Limited, Kenya
Brunner Mond (South Africa) Pty Limited,
South Africa
Northwich Resource Management
Limited, UK
Brunner Mond Generation Limited, UK
Transcontinental Holdings Limited, UK
Magadi Railway Company Limited, Kenya
Brunner Mond B.V., Netherlands
Wyoming 2 (Mauritius) Pvt. Ltd., Mauritius
Gusiute Holdings (UK) Ltd., UK
Valley Holdings Inc., USA
General Chemical Industrial Products
Inc., USA
General Chemical International Inc., USA
NHO Canada Holdings Inc., USA
General Chemical (Soda Ash) Inc., USA
Bayberry Management Corporation, USA
General Chemicals (Soda Ash)
Partners LLC, USA
General Chemical (Great Britain) Ltd., UK
General Chemical Canada Holding Inc.,
Canada
Tata Chemicals Asia Pacific Pte. Limited,
Singapore
Bio Energy Venture - 2 ( Mauritius) Pvt. Ltd,
Mauritius
Grown Energy Zambeze Holdings Pvt. Ltd,
Mauritius
GCSAP Holdings LLC, USA
GCSAP LLC, USA
GCSAP Canada Inc, Canada
Rallis Australasia Pty Limited, Australia
Rallis Chemistry Exports Limited, India
3 Employee Benefit Obligations :
(a) The Company makes contribution towards provident fund, a defined
benefit retirement plan and towards superannuation fund, a defined
contribution retirement plan for qualifying employees. The provident
fund is administered by the Trustees of the Tata Chemicals Limited
Provident Fund and the superannuation fund is administered by the
Trustees of the Tata Chemicals Limited Superannuation Fund. Under the
schemes, the Company is required to contribute a specified percentage
of salary to the retirement benefit schemes to fund the benefit.
On account of Defined Contribution Plans, a sum of Rs. 5.19 crores
(previous year Rs. 5.63 crores) has been charged to the Profit and Loss
Account. On account of Provident Fund contribution, a sum of Rs. 4.95
crores (previous year Rs. 4.50 crores) has been charged to Profit and
Loss Account.
(b) The Company makes annual contributions to the Tata Chemicals
Employeesà Gratuity Trust and to the Employeesà Group Gratuity-cum-Life
Assurance Scheme of the Life Insurance Corporation of India, both are
funded defined benefit plans for qualifying employees. The scheme
provides for lump sum payment to vested employees at retirement, death
while in employment or on termination of employment as per the
CompanyÃs Gratuity Scheme. Vesting occurs upon completion of five years
of service.
The Company is also providing post retirement medical benefits to
qualifying employees. Similarly, the Company provides pension, housing
/ house rent allowance and medical benefits to retired Managing and
Executive Directors.
The most recent actuarial valuations of plan assets and the present
values of the defined benefit obligations were carried out at 31 March,
2010. The present value of the defined benefit obligations and the
related current service cost and past service cost, were measured using
the Projected Unit Credit Method.
4 (a) During the year 2004-05, the Company had issued Foreign Currency
Convertible Bonds (FCCBs) of a face value of USD 1,000 each aggregating
to USD 150 million. As per the terms of the issue, the holders had an
option to convert the FCCB into Ordinary Shares at a conversion rate of
Rs. 231.375 per Ordinary Share at a fixed exchange rate conversion of
Rs. 43.65 = USD 1, from 13 March, 2005 to 22 January, 2010. The
conversion price was subject to certain adjustments for Corporate
actions and consequently the conversion price was changed to Rs.230.78
per ordinary share. Further, under certain conditions the Company had
an option of early redemption in whole but not in part. (b) During the
year 2009-10, the Company got notices for conversion of USD 42.756
million (previous year USD 6.215 million) FCCBs into ordinary shares at
a conversion price of Rs.230.78 per ordinary share at a fixed exchange
rate of Rs.43.65 = USD1. Pursuant to this, the Company has issued
80,86,912 (previous year 11,75,510) Ordinary share of Face Value Rs.10.
(c) Exchange loss of Rs Nil (previous year exchange loss of Rs 9.72
crores) on account of year end translation of liability denominated in
foreign currency, relating to premium on redemption of FCCBs has been
debited to the Securities Premium Account.
5 Derivative Instruments :
(a) As on 31st March, the Company has the following derivative
instruments outstanding:
(i) Forward currency exchange contracts USD-INR amounting to USD Nil
for the purpose of hedging its exposures to foreign currency loans (
previous year USD 134.96 million)
(ii) Forward currency exchange contracts USD- INR amounting to USD
87.41 million for the purpose of hedging its exposures to foreign
currency acceptances (previous year USD 40.90 million)
(iii) Accounts payable USD 2.89 million, CHF 0.19 million & EUR 0.19
million (previous year USD 80.13 million)
(iv) Currency options contracts USD- INR amounting to USD 26 million
with an intent to hedge its exposures to foreign currency loans
(previous year USD 65 million). FCCBs outstanding as on 31 March, 10 is
USD Nil million (previous year USD 43.906 million)
(v) Full Currency Swap to hedge against fluctuations in exchange rates
USD 76 million (previous year Notional principal USD 75 million)
(vi) Cross Currency Swap to hedge against fluctuations in exchange
rates and Interest rates USD 475 million (previous year Notional
principal USD 475 million)
(vii) Long Term Forward Contract USD-INR 35 million (previous year nil)
to hedge against fluctuation in exchange rates for the purpose of
hedging its exposure to foreign currency long term loans (Previous year
USD Nil million)
(b) The year end foreign currency exposures that have not been hedged
by a derivative instrument or otherwise are as under:
(i) Export receivables USD 4.41 million (previous year USD 1.05 million
)
(ii) Foreign Currency Loans USD Nil (previous year USD 12.83 million)
(iii) Loans and Advances USD Nil (previous year USD 73.43 million)
(iv) Acceptances USD 8.78 million (previous year USD 7.19 million)
(v) Accounts payable USD 116 million (previous year USD 234.67 million)
(vi) Liability arising out of cross currency swap USD 382 million
(previous year USD 425 million).
11 (a) Estimated amount of contracts remaining to be executed on
capital account and not provided for Rs. 56.15 crores (previous year
Rs.36.68 crores).
(b) Capital commitment towards investment in joint venture Khet-Se Agri
Produce India Private Limited Rs. 43.69 crores (previous year Rs.43.69
crores).
(c) Capital commitment towards investment in proposed project at
Mozambique Rs. 41.75 crores (previous year Rs. 16.36 crores).
6 Contingent Liabilities :
(a) Guarantees:
(i) Bank Guarantees issued by Banks on behalf of the Company Rs. 91.85
crores (previous year Rs. 212.51 crores). These are covered by the
charge created in favour of the CompanyÃs bankers by way of
hypothecation of stocks and debtors.
(ii) Guarantees provided to third parties on behalf of subsidiaries USD
136.80 million (Rs. 614.23 crores) (previous year USD 150 million (Rs.
760.80 crores))
7 Operating Leases :
(c) The lease deposit of Rs. 25 crores (previous year Rs.25 crores) for
plant and machinery remaining with the lessors is provided over the
useful life of the asset and consequently a net amount of Rs. 2.17
crores (previous year Rs.2.17 Crores ) has been charged to the Profit
and Loss Account on the principle of matching of revenue and costs.
(d) General description of significant leasing arrangements :
The payments made by the Company as lessee in accordance with
operational leasing contracts or rental agreements are expensed
proportionally during the lease or rental period respectively. The
Company has entered into operating lease arrangement for storage tank
from a vendor. Till previous year the lease arrangement also included
power plants.
8 (a) Provision for compensation under Employee Separation Scheme
(ESS) has been calculated on the basis of the net present value of the
future monthly payments of pension.
(b) An amount of Rs. 0.27 crore (previous year Rs.0.87 crore) is
payable under the scheme within one year.
9 Sales includes subsidy income of Rs. 2059.69 crores (previous year
Rs. 4,683.58 crores)
10 During the previous year the Company had exercised the option
granted vide notification F.No.17/33/2008/CL-V dated March 31, 2009
issued by the Ministry of Corporate Affairs and accordingly the
exchange differences arising on revaluation of long term foreign
currency monetary items for the year ended 31st March, 2008, 2009 and
2010 have been recognised over the shorter of the maturity period of
the loan or 31st March, 2011. The unamortised balance as at the Balance
Sheet date of Rs. 7.89 crores (net of tax) (previous year Rs. 237.39
crores) is presented as ÃForeign Currency Monetary item Translation
Difference Accountà (FCMTDA).
11 Rallis India Limited (Rallis) had become an associate of the Company
in August 2009. Consequent to the preferential allotment of 9,80,000
equity shares by Rallis to the Company in November 2009, the effective
holding of the Company in Rallis has become 50.06%. Accordingly, Rallis
has become a subsidiary of the Company from associate from that date.
12 Insurance claim for loss of profits
The production at CompanyÃs Fertilizer Plant at Babrala has been
temporarily disrupted due to fault in Synthesis Converter in ammonia
plant. The Company has adequate insurance coverage towards cost of
repairs and loss of profits. Insurance claim for loss of profit has
been accrued for the affected period based on the ManagementÃs
estimates.
13 Strike at Haldia Plant
The operations at Haldia plant were disrupted due to strike by contract
labour during the period 24th February to 26th March, 2010. While the
workforce has resumed duty, the disputed matter is pending with the
additional labour commissioner.
14 Asterisk (*) denotes figures below Rs.50,000.
15 Previous yearÃs figures have been regrouped / reclassified wherever
necessary to make them comparable with the current yearÃs figures.