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

Notes to Accounts of Deepak Fertilisers & Petrochemicals Corporation Ltd.

Mar 31, 2023

a) Disclosures relating to fair valuation of investment property

Fair value of the above investment property as at 31 March 2023 is '' 61,432 Lakhs (31 March 2022: '' 1 1,370 Lakhs) based on valuation report obtained by management from an independent registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017.

Fair value Hierarchy

The fair values of investment properties have been determined by an external, independent property valuer, having appropriate recognised professional qualifications and relevant experience in the category of the land parcel being valued. The fair value measurement for the investment property has been categorised as a Level 3 fair value based on the inputs to the valuation techniques used. The investment property constitute of Creaticity Mall, land parcels at Panchagini, Khamgaon, Solapur and vacant land at Yerwada.

Description of valuation technique used

The Company obtains independent valuations of its investment property perodically every three years as per requirement of Ind AS 40. The fair value of the investment property has 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 transaction 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 earned rental income and incurred direct operating expense on the above properties. Details as below :

i) Rental and incidental income earned of '' 1,517 in Lakhs (31 March 2022''911 in Lakhs)

ii) Direct operating expenses (including repairs and maintenance) arising from investment property that generated rental income '' 2,250 in Lakhs (31 March 2022''2,058 Lakhs)

iii) Direct operating expenses (including repairs and maintenance) arising from investment property that did not generate rental income NIL (31 March 2022 NIL).

Other Information:

The company has leases mainly for Corporate building, Director building, guest houses, machines, furniture and Office equipments items. These lease contracts provide for payment to increase each year by inflation.

Company as a Lessor:

The company has given buildings on operating lease, Leases are renewed only on mutual consent and at a prevalent market price. Operating lease rent and incidental income recognised in the Statement of Profit and Loss: '' 1517 Lakhs (31 March 2022: '' 911 Lakhs).[Refer Note no 27]

* Deemed Investement is on account of accounting done in books for fair valuation of corporate guarantee issued to banks on behalf of subsidiary and step-down subsidiary companies.

The company has complied with the number of layers of companies as prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

** Investment in Deepak International Ltd ''69 lakhs (31 March 22- ''69 lakhs) has been fair valued at '' Nil

*** During the year the Company has made additional investment in equity shares of Ishnaya Reality Corporation Limited, making it a wholly owned subsidiary.

Refer Note 36(i) for Fair value measurements of financial assets and liabilities and refer Note 36(ii) for Fair value hierarchy disclosures for financial assets and liabilities.

A During the year Company has converted ICD loan in to Investment in Optionaly Convertible Debentures.

Refer Note 36(i) for Fair value measurements of financial assets and liabilities and refer Note 36(ii) for Fair value hierarchy disclosures for financial assets and liabilities.

Refer Note 37(i) on credit risk of trade receivables, which explains how the Company manages and measures credit quality of trade receivables that are neither past due nor impaired.

Refer Note 39(b) for amount receivable from related parties which includes debts due by companies in which any director is a director or member

Terms and rights attached to equity shares

The Company has only one class of equity shares having par value of '' 10 per share. Holder of each equity share is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees except in the case of overseas shareholders where dividend is paid in respective foreign currencies considering foreign exchange rate applied at the date of remittance. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the Annual General Meeting.

In the event of liquidation of the Company the holders of equity share will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts in proportion to their shareholding. The distribution will be in proportion to the numbers of equity shares held by the shareholder.

Note 20: OTHER EQUITY (Refer Statement of Changes in Equity for Reserves movement)

Nature and purpose of other equity

(a) Securities premium: Amount received in excess of face value of the equity shares is recognized in Securities Premium. The reserve is eligible for utilisation in accordance with the provisions of the Companies Act, 2013.

(b) Capital redemption reserve: The Company had issued redeemable preference shares and as per the provisions of the Act where preference shares are redeemed out of divisible profits, an amount equal to the nominal value of shares so redeemed must be transferred to capital redemption reserve, out of divisible profits.

(c) General reserve: This represents appropriation of profits by the Company to General Reserve and is available for distribution of dividend.

(d) Retained earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.

a) The term loan (i) and (ii) has been availed for financing of Nitric Acid project at Dahej. The term loan is secured by pari passu charge on the land & building and hypothecation of all the present & future immovable fixed assets and intangible assets pertaining to Nitric Acid project at Dahej.

b) The term loan (iii) has been availed to shore up the net working capital of the Company. The term loan is secured by exclusive charge on the immovable property situated at Yerwada Pune belonging to joint operation, M/s Yerrowda Investments Limited (YIL). Corporate Guarantee of M/s Yerrowda Investments Limited (YIL) to the extent of the value of Immovable property is offered to Bank of Baroda.

c) The Company has used the borrowings taken from banks and financial institution for the specific purposes for which they were taken as at the balance sheet date.

d) The Company has registered all the required charges with Registrar of Companies within the statutory period.

(B) Defined Benefit Plans i. Gratuity

The Company operates gratuity plan (funded) wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.The gratuity plan is governed by the payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age.

In accordance with Ind AS 19 “Employee Benefits", an actuarial valuation has been carried out in respect of gratuity. The discount rate assumed is 7.40% p.a. (31 March 2022: 6.90% p.a) which is determined by reference to market yield at the Balance Sheet date on Government bonds. The retirement age has been considered at 60 years (31 March 2022: 60 years), withdrawal rate is 10% p.a. (31 March 2022: 8% p.a.) and mortality table is as per IALM (2012-14) (31 March 2022: IALM (2012-14)).

The estimates of future salary increases, considered in actuarial valuation is 8% p.a. (31 March 2022: 8% p.a), taking into account of inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market.

The plans assets are maintained with Life Insurance Corporation of India in respect of gratuity scheme of the Company. The details of investments maintained by Life Insurance Corporation are not available with the Company hence not disclosed. The expected rate of return on plan assets is 6.90% p.a. (31 March 2022: 6.60% p.a).

Weighted average duration of the plan (based on discounted cash flows using mortality, withdrawal rate and interest rate) is 7.53 years (31 March 2022: 8.22 years)

Expected contribution for next yean

The company intends to contribute '' 493 lakhs in 2023 ('' 478 lakhs in 2022).

RISK EXPOSURE AND ASSET LIABILITY MATCHING

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain long term obligations to make future benefit payments.

1. Liability Risks

a. Asset-Liability Mismatch Risk

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the company is successfully able to neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.

b. Discount Rate Risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practise can have a significant impact on the defined benefit liabilities.

c. Future Salary Escalation and Inflation Risk

Since price inflation and salary growth are linked economically they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainities in estimating this increasing risk.

2. Asset Risks

Plan assets are maintained in a trust fund partly managed by a public sector insurer viz; LIC of India. The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.

ii. Defined pension benefits

The Company has a Post Retirement Benefit plan, which is a defined benefit retirement plan, according to which executives superannuating from the service after ten years of service are eligible for certain benefits like medical, fuel expenses, telephone reimbursement, club membership etc. for specified number of year. The liability is provided for on the basis of an independent acturial valuation.

In accordance with Ind AS 19 “Employee Benefits", an actuarial valuation has been carried out in respect of post retirement benefits. The discount rate assumed is 7.40% p.a. (31 March 2022: 6.90% p.a) which is determined by reference to market yield at the Balance Sheet date on Government bonds. The retirement age has been considered at 60 years (31 March 2022: 60 years), withdrawal rate is 8% p.a. (31 March 2022: 8% p.a.) and mortality table is as per IALM (2012-14) (31 March 2022: IALM (2012-14)).

To comply with the requirement of The Micro, Small And Medium Enterprises Development Act, 2006 (''MSMED Act''), the Company requested its suppliers to confirm whether they are Micro, Small or Medium enterprise as defined in the said MSMED Act. Based on the communications received from such suppliers confirming their coverage as such enterprise, the Company has recognised them for the necessary treatment as provided under the MSMED Act, from the date of receipt of such confirmations.

There is no significant change in the contract asset and contract liabilities.

Performance obligations

“The Company satisfies its performance obligations pertaining to the sale of products at a point in time when the control of goods is actually transferred to the customer. No significant judgment is involved in evaluating when a customer obtains control of promised goods. The contract is a fixed price contract subject to refund due to shortages and discounts during the mode of transportation and do not contain any financing component. The payment is generally due within 30-90 days. The Company is obliged to give refunds due to shortages and discounts. There are no other significant obligations attached in the contract with customer

Transaction price

There is no remaining performance obligation for any contract for which revenue has been recognised till period end. Further, the Company has not applied the practical expedient as specified in para 121 of Ind AS 115 as the Company do not have any performance obligations that have an original expected duration of one year or less or any revenue stream in which consideration from a customer corresponds directly with the value to the customer of the entity''s performance completed to date.

Determining the timing of satisfaction of performance obligations

There is no significant judgement involved in ascertaining the timing of satisfaction of performance obligations, in evaluating when a customer obtains control of promised goods, transaction price and allocation of it to the performance obligations.

Determining the transaction price and the amounts allocated to performance obligations

The transaction price ascertained for the only performance obligation of the Company (i.e. Sale of goods) is agreed in the contract with the customer. There is no variable consideration involved in the transaction price except for refund due to shortages and discounts which is adjusted with revenue.

Note 35(c): EARNINGS PER SHARE (EPS)

Basic EPS amounts are calculated by dividing the profits for the year attributable to equity share holders of the Company by weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity Shares into equity shares.

(ii) Fair value hierarchy

The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets that are not measured at fair value on a recurring basis (but fair value disclosures are required) : The different levels have been defined as follows:

Level 1-Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2-Inputs other than quoted prices included within level-1 that are observable for asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3-Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2023 and 31 March 2022.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged

in a current transaction between willing parties, other than in a forced or liquidation sale.

(iii) Valuation technique to determine fair value

The following methods and assumptions were used to estimate the fair values of financial instruments:

a) 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.

b) The investment measured at fair value and falling under fair value hierarchy Level 3 pertains to investment in equity shares of Avaada MHBudhana Private Limited which is regulated by the terms stated in the share purchase agreement. These shares held by the Company are subject to specific limitations regarding the Company''s ability to sell them and the permissible valuation at which they can be sold. Given the nature of these restrictions and the management''s overall intention concerning the equity shares, the fair value attributed to such shares by the Company is equivalent to their original cost.

c) 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 issuers will issue further units of mutual fund and the price at which issuers will redeem such units from investor.

d) The Company enters into derivative financial instruments with various counterparties, principally banks. The fair value of derivative financial instrument 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.

Note 37: FINANCIAL RISK MANAGEMENT

Risk management framework

The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.

The Company, through three layers of defense namely policies and procedures, review mechanism and assurance aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit committee of the Board with top management oversee the formulation and implementation of the Risk management policies. The risk are identified at business unit level and mitigation plans are identified, deliberated and reviewed at appropriate forums.

The Company has exposure to the following risks arising from financial instruments:

- credit risk;

- liquidity risk; and

- market risk. i. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers, loans and investments.

The carrying amount of financial assets represents the maximum credit risk exposure.

Trade receivables and other financial assets

The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, financial statements, credit agency information, industry information and business intelligence. Sale limits are established for each customer and reviewed annually. Any sales exceeding those limits require approval from the appropriate authority as per policy.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a institutional, dealers or end-user customer, their geographic location, industry trade history with the Company and existence of previous financial difficulties.

Expected credit loss for trade receivables:

The Company based on internal assessment which is driven by the historical experience/ current facts available in relation to default and delays in collection thereof, considers the credit risk for trade receivables to be low. The Company estimates its allowance for trade receivable using lifetime expected credit loss. The balance past due for more than 6 month (net of expected credit loss allowance) is '' 367 Lakhs (31 March 2022: '' 243 Lakhs).

Expected credit loss on financial assets other than trade receivables:

With regards to all financial assets with contractual cash flows other than trade receivable, management believes these to be high quality assets with negligible credit risk. The management believes that the parties from which these financial assets are recoverable, have strong capacity to meet the obligations and hence the risk of default is negligible and accordingly no provision for excepted credit loss has been provided on these financial assets.

ii. Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulties in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to manage liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

The Company''s treasury department is responsible for managing the short term and long term liquidity requirements. Short term liquidity situation is reviewed periodically by treasury. Longer term liquidity position is reviewed on a regular basis by the Board of Directors and appropriate decisions are taken according to the situation.

Exposure to liquidity risk

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

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

a. Currency risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the functional currency of the Company. The currencies in which the Company is exposed to risk are USD, AED and EUR.

The Company follows a natural hedge driven currency risk mitigation policy to the extent possible. Any residual risk is evaluated and appropriate risk mitigating steps are taken, including but not limited to, entering into forward contracts.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in rupees and US dollars with a mix of fixed and floating rates of interest. The Company has exposure to interest rate risk, arising principally on changes in base lending rate and LIBOR rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.

(ii) Sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates for floating rate liabilities assuming the amount of the liability outstanding at the year-end was outstanding for the whole year

If interest rates had been 50 basis points higher / lower and all other variables were held constant, the Company''s profit for the year ended 31 March 2023 before tax would decrease / increase by '' 169 lakhs (for the year ended 31 March 2022: decrease / increase by '' 277 lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

Note 38. CAPITAL MANAGEMENT (a) Risk Management

The Company''s objectives when managing capital are to:

- safeguard its ability to continue as a going concern, so that its can continue to provide returns for its shareholders and benefits for other stakeholders, and

- maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio:

Net debt (total borrowings net of cash and cash equivalents and other bank balances) and divided by Total equity (as shown in the Balance Sheet).

Note 40: CONTINGENT LIABILITIES AND COMMITMENTS

Particulars

31 March 2023

31 March 2022

A. Contingent liabilities

Claims by suppliers not acknowledged as debts1

8,574

7,801

Income Tax Demands

6,557

6,513

Excise/Service Tax/Custom Demands #

5,102

5,105

Sales Tax/ VAT Demands

7,487

6,547

Local Body Tax

1,543

1,543

Penalty on Entry Tax

1,551

1,551

Total

30,814

29,060

B. Capital commitments

Related to Projects

3,596

1,577

Related to Realty

44

6

C. Other Commitments1

Commitments to Supplier

15,672

15,578

Total

19,312

17,162

# includes ''1,881 Lakhs (31 March 2022 : ''1,881 Lakhs) which pertains to service tax liabilities. Company has received a favourable order from CESTAT against which the department has gone into appeal on December 04, 2019.

The company is exposed to commodity price risk because the prices of its purchase of Propylene vary as a result of fluctuations of the natural gas liquid. So, the company has used option contract to hedge its commodity i.e natural gas liquid. This natural gas liquid consists of propane and Butane which is formula linked to the prices of propylene.

For Hedges of this commodity purchases, the company entered into a Hedge relationships where the critical terms of the Hedging instrument match exactly with the terms of the Hedge item. The company therefore performs a qualitative assessment of effectiveness. There were no ineffectiveness during financial years ended 31 March 2023 amd 31 March 2022 in relation to commodity rate hedge.

Pursuant to the provisions of Section 132 and 133A of the Income-tax Act, 1961, a Search Operation was conducted by t he Income Tax Department during the period from 15 November 2018 to 21 November 2018. The Company has received assessments orders and necessary appeals/rectification, as is applicable, have been filed which are pending for disposal. Based on advice of the independent tax experts, management is of the view that aforesaid matters will not have any significant impact on the Company''s financial position and hence no further provision has been recognised as of 31 March 2023. Appropriate disclosure have been made under Contingent liabilities (Note 42).

Note 46

Segment information has been presented in the Consolidated Financial Statements as permitted by Indian Accounting Standard Ind AS 108, Operating Segments as notified under the Companies (Indian Accounting Standard) Rules, 2015.

Note 47

The management based on legal advise is confident that the demand of Entry Tax to the extent of 9.5% of the purchase price of the Natural Gas is revenue neutral since full set-off is available under the MVAT Act. The Company therefore, had made a provision only of 3% of the demand amount including interest. The penalty on the same had been disclosed under contingent liabilities.

Note 48

The Code on Social Security 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

Previous period''s figures have been reclassified/ regrouped wherever necessary.

1

During the previous year the company has received a letter of waiver from a supplier for offtake liability and consequently the company now has to complete its purchase obligation over a period of eight years.

Also refer note 41 for corporate guarantees given to its subsidiaries.


Mar 31, 2022

a) Disclosures relating to fair valuation of investment property

Fair value of the above investment property as at 31 March 2022 is '' 1 1,370 Lakhs (31 March 2021: '' 8,894 Lakhs) based on valuation report obtained by management from an independent registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017.

Fair value Hierarchy

The fair values of investment properties have been determined by an external, independent property valuer, having appropriate recognised professional qualifications and relevant experience in the category of the land parcel being valued.

The fair value measurement for the investment property has been categorised as a Level 3 fair value based on the inputs to the valuation techniques used. The investment property constitute of land parcels at Panchagini, Khamgaon, Sotapur and vacant land at Yerwada.

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 has been derived using the Direct Comparison Method. The direct comparison approach involves a comparison of the investment property to simitar properties that have actually been sold in arms-tength transaction or are offered for sate in the same region. This approach demonstrates what buyers have historically been witting to pay (and setters witting to accept) for simitar properties in an open and competitive market, and is particutarty usefut in estimating the vatue of the tand and properties that are typicatty traded on a unit basis. This approach teads to a reasonabte estimation of the prevaiting price. Given that the comparabte instances are tocated in ctose proximity to the investment property; these instances have been assessed for their tocationat comparative advantages and disadvantages white arriving at the indicative price assessment for investment property.

b) The Company has neither earned any rentat income nor incurred any direct operating expense on the above properties.

Trade receivables have been offered as security against the working capital facilities provided by the banks (refer note 23)

Refer Note 38(i) for Fair value measurements of financial assets and liabilities and refer Note 38(ii) for Fair value hierarchy disclosures for financial assets and liabilities.

Refer Note 39(i) on credit risk of trade receivables, which explains how the Company manages and measures credit quality of trade receivables that are neither past due nor impaired.

Refer Note 41(b) for amount receivable from related parties which includes debts due by companies in which any director is a director or member

The Company''s exposure to customers is diversified and no single customer, other than a subsidiary contributes more than 10% of the outstanding receivables as at 31 March 2022 and 31 March 2021.

Terms and rights attached to equity shares

The Company has only one class of equity shares having par value of '' 10 per share. Holder of each equity share is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees except in the case of overseas shareholders where dividend is paid in respective foreign currencies considering foreign exchange rate applied at the date of remittance. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the Annual General Meeting.

In the event of liquidation of the Company the holders of equity share will be entitled to receive remaining assets of the Company after distribution of all preferential amounts in proportion to their shareholding. The distribution will be in proportion to the numbers of equity shares held by the shareholder

(iii) Aggregate number and class of shares allotted as fully paid up pursuant to contract/agreement without payment being received in cash is 54,76,831 equity shares.Note 21: OTHER EQUITY (Refer Statement of Changes in Equity for Reserves movement)Nature and purpose of other equity

(a) Securities premium: Amount received in excess of face value of the equity shares is recognized in Securities Premium. The reserve is eligible for utilisation in accordance with the provisions of the Companies Act, 2013.

(b) Capital redemption reserve: The Company had issued redeemable preference shares and as per the provisions of the Act where preference shares are redeemed out of divisible profits, an amount equal to the nominal value of shares so redeemed must be transferred to capital redemption reserve, out of divisible profits.

(c) General reserve: This represents appropriation of profits by the Company to General Reserve and is available for distribution of dividend.

(d) Retained earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.

(e) Other comprehensive income : This represents equity instruments carried at fair value through OCI, Hedge income and remeasurement of employee benefits (gratuity & post retirement benefit).

a) The term loan (i) and (ii) has been availed for financing of Nitric Acid project at Dahej. The term loan is secured by pari passu charge on the land & building and hypothecation of all the present & future immovable fixed assets and intangible assets pertaining to Nitric Acid project at Dahej.

b) The term loan (iii) has been availed to shore up the net working capital of the Company. The term loan is secured by exclusive charge on the immovable property situated at Yerwada Pune belonging to joint operation, M/s Yerrowda Investments Limited (YIL). Corporate Guarantee of M/s Yerrowda Investments Limited (YIL) to the extent of the value of Immovable property is offered to Bank of Baroda.

c) The FCCB''s will be pari-passu with the senior unsecured creditors of the Company. The Company has received Tranche 2 subscription amount $15,000,000 during previous financial year Foreign Currency Convertible Bonds (‘‘FCCBs") issued by the Company to International Finance Corporations ("IFC") have been bifurcated into equity and liability components as per the principles of the Indian Accounting Standards. The financial liability component has been measured at amortized cost in the financial statements as per Ind AS 109, Financial Instruments. The FCCBs are convertible into equity shares of the Company at a predetermined price of '' 195 per share at the option of IFC and carry several rights and obligations including adherence to specific financial covenants. The shares issued upon conversion of the FCCB''s will rank paripassu in all respects with the existing shares of the Company. In the event of non-conversion till the end of the stipulated period, the amount raised through the issue of FCCBs is repayable in full to IFC. The FCCBs carry a coupon rate of 4.5% simple interest p.a.(5% p.a. upto March 12, 2021), payable semi annually and 2.25% compound interest p.a.(1.75% p.a. upto March 12, 2021), payable on redemption.

d) I nternational Finance Corporation (IFC), holder of Foreign Currency Convertible Bonds (FCCB), had sent a notice on 23rd June 2021, for conversion of first tranche of USD 15 million FCCB into 54,76,831 Equity Shares of the Company at the rate of '' 195 Per equity share, in accordance with section 4.01 (conversion option) of the FCCB Subscription agreement dated 10th May 2019 as amended on 19th June 2019 and on 15th September 2019. The Company has converted the said FCCB and issued 54,76,831 fully paid-up Equity Shares on 1st July 2021, which are rank pari-passu in all respects with the existing equity shares of the Company and are listed on BSE and NSE.

e) The Company has used the borrowings taken from banks and financial institution for the specific purposes for which they were taken as at the balance sheet date.

f) The Company has registered all the required charges with Registrar of Companies within the statutory period.

(B) Defined Benefit Plansi. Gratuity

The Company operates gratuity plan (funded) wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.The gratuity plan is governed by the payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age.

In accordance with Ind AS 19 "Employee Benefits", an actuarial valuation has been carried out in respect of gratuity. The discount rate assumed is 6.90% p.a. (31 March 2021: 6.60% p.a) which is determined by reference to market yield at the Balance Sheet date on Government bonds. The retirement age has been considered at 60 years (31 March 2021: 60 years), withdrawal rate is 8% p.a. (31 March 2021: 8% p.a.) and mortality table is as per IALM (2012-14) (31 March 2020: IALM (2012-14))

The estimates of future salary increases, considered in actuarial valuation is 8% p.a. (31 March 2021: 8% p.a), taking into account of inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market.

The plans assets are maintained with Life Insurance Corporation of India in respect of gratuity scheme of the Company. The details of investments maintained by Life Insurance Corporation are not available with the Company hence not disclosed. The expected rate of return on plan assets is 6.60% p.a. (31 March 2021: 6.40% p.a).

Weighted average duration of the plan (based on discounted cash flows using mortality, withdrawal rate and interest rate) is 8.22 years (31 March 2021:8.22 years)

Expected contribution for next year:

The company intends to contribute '' 478 Lakhs in 2023 ('' 439 Lakhs in 2022)

RISK EXPOSURE AND ASSET LIABILITY MATCHING

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain long term obligations to make future benefit payments.

1. Liability Risksa. Asset-Liability Mismatch Risk

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration

with the defined benefit liabilities, the company is successfully able to neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.

b. Discount Rate Risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practise can have a significant impact on the defined benefit liabilities.

c. Future Salary Escalation and Inflation Risk

Since price inflation and salary growth are linked economically they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainities in estimating this increasing risk.

2. Asset Risks

Plan assets are maintained in a trust fund partly managed by a public sector insurer viz; LIC of India and partly managed by a private sector insurer viz; India First Life Insurance.

The company has opted for a traditional fund wherein aft assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.

ii. Defined pension benefits

The Company has a Post Retirement Benefit plan, which is a defined benefit retirement plan, according to which executives superannuating from the service after ten years of service are eligible for certain benefits like medical, fuel expenses, telephone reimbursement, club membership etc. for specified number of year The liability is provided for on the basis of an independent acturiaf valuation.

In accordance with Ind AS 19 "Employee Benefits", an actuarial valuation has been carried out in respect of post retirement benefits. The discount rate assumed is 6.90% p.a. (31 March 2021: 6.60% p.a) which is determined by reference to market yield at the Balance Sheet date on Government bonds. The retirement age has been considered at 60 years (31 March 2021: 60 years), withdrawal rate is 8% p.a. (31 March 2021: 8% p.a.) and mortality table is as per IALM (2012-14) (31 March 2021: IALM (2012-14)).

The Company satisfies its performance obligations pertaining to the sate of products at a point in time when the control of goods is actually transferred to the customer No significant judgment is involved in evaluating when a customer obtains control of promised goods. The contract is a fixed price contract subject to refund due to shortages and discounts during the mode of transportation and do not contain any financing component. The payment is generally due within 30-90 days.

The Company is obliged to give refunds due to shortages and discounts. There are no other significant obligations attached in the contract with customer

Transaction price

There is no remaining performance obligation for any contract for which revenue has been recognised till period end. Further, the Company has not applied the practical expedient as specified in para 121 of Ind AS 115 as the Company do not have any performance obligations that have an original expected duration of one year or less or any revenue stream in which consideration from a customer corresponds directly with the value to the customer of the entity''s performance completed to date.

There is no significant judgement involved in ascertaining the timing of satisfaction of performance obligations, in evaluating when a customer obtains control of promised goods, transaction price and allocation of it to the performance obligations.

Determining the transaction price and the amounts allocated to performance obligations

The transaction price ascertained for the only performance obligation of the Company (i.e. Sale of goods) is agreed in the contract with the customer There is no variable consideration involved in the transaction price except for refund due to shortages and discounts which is adjusted with revenue.

Note 37(c): EARNINGS PER SHARE (EPS)

Basic EPS amounts are calculated by dividing the profits for the year attributable to equity shareholders of the Company by weighted average number of equity shares outstanding during the year

Diluted EPS amounts are calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of aft the dilutive potential equity shares into equity shares.

(ii) Fair value hierarchy

The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets that are not measured at fair value on a recurring basis (but fair value disclosures are required) :

The different levels have been defined as follows:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within level-1 that are observable for asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2022 and 31 March 2021.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

(iii) Valuation technique to determine fair value

The following methods and assumptions were used to estimate the fair values of financial instruments:

a) 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 shortterm maturities of these instruments.

b) The investments measured at fair value and falling under fair value hierarchy Level 3 are valued on 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 wide range of possible fair value measurements and cost represents the best estimate of fair values within that ranges.

c) 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 issuers will issue further units of mutual fund and the price at which issuers will redeem such units from investor

d) The Company enters into derivative financial instruments with various counterparties, principally banks. The fair value of derivative financial instrument 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.

Note 39: FINANCIAL RISK MANAGEMENT Risk management framework

The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.

The Company through three layers of defense namely policies and procedures, review mechanism and assurance aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit committee of the Board with top management oversee the formulation and implementation of the Risk management policies. The risk are identified at business unit level and mitigation plans are identified, deliberated and reviewed at appropriate forums.

The Company has exposure to the following risks arising from financial instruments:

- credit risk;

- liquidity risk; and

- market risk.

i. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers, loans and investments.

The carrying amount of financial assets represents the maximum credit risk exposure.

Trade receivables and other financial assets

The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, financial statements, credit agency information, industry information and business intelligence. Sale limits are established for each customer and reviewed annually. Any sales exceeding those limits require approval from the appropriate authority as per policy.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a institutional, dealers or end-user customer, their geographic location, industry trade history with the Company and existence of previous financial difficulties.

Expected credit loss for trade receivables:

The Company based on internal assessment which is driven by the historical experience/current facts available in relation to default and delays in collection thereof, considers the credit risk for trade receivables to be low. The Company estimates its allowance for trade receivable using lifetime expected credit loss. The balance past due for more than 6 month (net of expected credit loss allowance), excluding receivable from group companies is '' 243 Lakhs (31 March 2021: '' 665 Lakhs)

Expected credit loss on financial assets other than trade receivables:

With regards to all financial assets with contractual cash flows other than trade receivable, management believes these to be high quality assets with negligible credit risk. The management believes that the parties from which these financial assets are recoverable, have strong capacity to meet the obligations and hence the risk of default is negligible and accordingly no provision for excepted credit loss has been provided on these financial assets.

ii. Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulties in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to manage liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

The Company''s treasury department is responsible for managing the short term and long term liquidity requirements. Short term liquidity situation is reviewed periodically by treasury. Longer term liquidity position is reviewed on a regular basis by the Board of Directors and appropriate decisions are taken according to the situation.

iii. Market risk

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

a. Currency risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the functional currency of the Company. The currencies in which the Company is exposed to risk are USD, AED and EUR.

The Company follows a natural hedge driven currency risk mitigation policy to the extent possible. Any residual risk is evaluated and appropriate risk mitigating steps are taken, including but not limited to, entering into forward contracts.

b. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in rupees and US dollars with a mix of fixed and floating rates of interest. The Company has exposure to interest rate risk, arising principally on changes in base lending rate and LIBOR rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.

(i) Exposure to interest rate risk

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

(ii) Sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates for floating rate liabilities assuming the amount of the liability outstanding at the year-end was outstanding for the whole year If interest rates had been 50 basis points higher / lower and all other variables were held constant, the Company''s profit for the year ended 31 March 2022 before tax would decrease / increase by '' 277 Lakhs (for the year ended 31 March 2021: decrease / increase by '' 382 Lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

Note 40 : CAPITAL MANAGEMENT (a) Risk Management

The Company''s objectives when managing capital are to:

- safeguard its ability to continue as a going concern, so that its can continue to provide returns for its shareholders and benefits for other stakeholders, and

- maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry the Company monitors capital on the basis of the following gearing ratio:

The company is exposed to commodity price risk because the prices of its purchase of Propylene vary as a result of fluctuations of the natural gas liquid. So, the company has used option contract to hedge its commodity i.e natural gas liquid. This natural gas liquid consists of propane and Butane which is formula linked to the prices of propylene.

For Hedges of this commodity purchases, the company entered into a Hedge relationships where the critical terms of the Hedging instrument match exactly with the terms of the Hedge item. The company therefore performs a qualitative assessment of effectiveness. There were no ineffectiveness during financial years ended 31 March 2022 amd 31 March 2021 in relation to commodity rate hedge.

Pursuant to the provisions of Section 132 and 133A of the Income-tax Act, 1961, a Search Operation was conducted by the Income Tax Department during the period from 15 November 2018 to 21 November 2018. The Company has received assessments orders and necessary appeals/rectification, as is applicable, have been filed which are pending for disposal. Based on advice of the independent tax experts, management is of the view that aforesaid matters will not have any significant impact on the Company''s financial position and hence no further provision has been recognised as of 31 March 2022. Appropriate disclosure have been made under Contingent liabilities (Note 42).

Note 49

Segment information has been presented in the Consolidated Financial Statements as permitted by Indian Accounting Standard Ind AS 108, Operating Segments as notified under the Companies (Indian Accounting Standard) Rules, 2015.

Note 50

The management based on legal advise is confident that the demand of Entry Tax to the extent of 9.5% of the purchase price of the Natural Gas is revenue neutral since full set-off is available under the MVAT Act. The Company therefore, had made a provision only of 3% of the demand amount including interest. The penalty on the same had been disclosed under contingent liabilities.

Note 51

The Code on Social Security 2020 (‘Code'') relating to employee benefits during employment and post- employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

Previous period''s figures have been reclassified/ regrouped wherever necessary.


Mar 31, 2018

1. CORPORATE INFORMATION

Deepak Fertlisers And Petrochemicals Corporation Limited (“the Company”) is a Company domiciled in India, with its registered office at Pune, Maharashtra, India. The Company has been registered under the provisions of the Indian Companies Act and its equity shares are listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (“BSE”) in India.

The Company is primarily engaged in the business of manufacture, trading and sale of bulk chemicals. The Company also has operations in value added real estate.

These standalone financial statements were authorized for issue in accordance with the resolution of the Directors on May 30, 2018.

1. SIGNIFICANT ACCOUNTING POLICIES

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.

1.1 Basis of preparation

The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (‘Ind AS’) notified under the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013 (“the Act”), as amended thereafter and other relevant provisions of the Act.

The standalone financial statements have been prepared on an accrual basis and under the historical cost convention, except for the following assets and liabilities which have been measured at fair value:

- Derivative financial instruments;

- Certain financial assets and liabilities measured at fair value (refer accounting policy on financial instruments); and

- Employee defined benefits plans - plan assets are measured at fair value

The standalone financial statements are presented in Indian Rupees (“INR”), which is also the Company’s functional currency and all values are rounded off to the nearest Lacs, except when otherwise indicated. Wherever, an amount is presented as INR ‘0’ (zero) it construe value less than Rs.50,000.

2.2 Significant accounting estimates, assumptions and judgements

The preparation of the Company’s standalone financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities effected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabiltiies within the next financial year, are described below. The Company has based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Taxes

There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Where the final outcome of these matters is different from the amounts initially recorded, such differences will impact the current and deferred tax provisions in the period in which the tax determination is made. The assessment of probability involves estimation of a number of factors including future taxable income.

Useful lives of Property, plant and equipment (‘PPE’)

The Management reviews the estimated useful lives and residual value of PPE at the end of each reporting period. Factors such as changes in the expected level of usage, number of shifts of production, technological developments and product life-cycle, could significantly impact the economic useful lives and the residual values of PPE, consequently leading to a change in the future depreciation charge.

Defined benefit plans

Employee benefit obligations are determined using independent actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual results in the future. These include the determination of the discount rate, future salary increases, experience of employee departures and mortality rates. Due to the complexities involved in the valuation and its long-term nature, employee benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Litigations

From time to time, the Company is subject to legal proceedings, the ultimate outcome of each being always subject to many uncertainties inherent in litigation. A provision for litigation is made when it is considered probable that a payment will be made and the amount of the charge/ expense can be reasonably estimated. Significant judgement is made when evaluating, among other factors, the probability of unfavourable outcomes and the ability to make a reasonable estimate of the amount of potential loss. Litigation provisions are reviewed at each accounting period and revisions are made for the changes in facts and circumstances.

Fair value measurement of financial instruments

W hen the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash flow (“DCF”) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing their fair values. Judgements include consideration of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair values of financial instruments.

Impairment of financial assets

The Company assesses impairment based on the expected credit loss (“ECL”) model on trade receivables. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward looking estimates are analysed.

Impairment of non-financial assets

T he Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assets’ recoverable amount. An assets’ recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset unless the asset does not generate cashflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and it is written down to its recoverable amount. In assessing value in use, the estimated future cashflows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risk specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken in account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share price for publicly traded entities or other available fair value indicators.

Note 3: OTHER EQUITY

Nature and purpose of other equity

(a) Securities premium reserve: The amount received in excess of face value of the equity shares is recognized in securities premium reserve.

(b) Capital redemption reserve: The Company had issued redeemable preference shares and as per the provisions of the Act where preference shares are redeemed out of divisible profits, an amount equal to the nominal value of shares so redeemed must be transferred to capital redemption reserve, out of divisible profits.

(c ) Debenture redemption reserve: The Company has issued non convertible debentures and as per the provisions of the Act the Company is required to create debenture redemption reserve out of the divisible profits at least equal to 25% of the nominal value of debenture issued. The debenture redemption reserve is allowed to be released to retained earnings on completion of the redemption of debentures.

(d) General reserve: This represents appropriation of profits by the Company and is available for distribution of dividend.

(e) Retained earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.

After the reporting date, the following dividend (excluding dividend distribution tax) was proposed by the Directors subject to the approval at the Annual General Meeting; the dividends have not been recognised as a liability. Dividends would attract dividend distribution tax when declared or paid.

Buyer’s credits are generally due within 180 days and carry variable rate of interest (Average Interest rate for the year 1.73 % (31 March 2017 - 1.17%, 1 April 2016 - 0.77% ) and are secured by a first charge by way of hypothecation of stocks of raw materials, finished goods, consumable stores and book debts.

Short term loan from bank is repayable on 24 May 2018, carries interest rate of 7.90% (1 April 2016 - 9.45%) and is secured by a first charge by way of hypothecation of stock of raw materials, finished goods and consumable stores and book debts.

Cash credit is repayable on demand and carries variable rate of interest (Average interest rate for the year is 8.39% (31 March 2017 - 9.44%, 1 April 2016 - 9.93%). Cash credit facilities sanctioned by banks including working capital demand loans and are secured by a first charge by way of hypothecation of stocks of raw materials, finished goods, consumable stores and book debts.

Commercial paper borrowings carry variable interest rate. Average rate for the year is 6.77% ( 31 March 2017 - 7.38% , 1 April 16 - 8.51%). Debtors bill discounting is availed at interest rate of 8.5% and is secured by hypothecation of debtors and stocks.

(A) Defined Contribution Plans

The Company has defined contribution plans such as provident fund, employee state insurance, employee pension scheme, employee superannuation fund wherein specified percentage is contributed to them. During the year, the Company has contributed following amounts to:

(B) Defined Benefit Plans

i. Gratuity

In accordance with Ind AS 19 “Employee Benefits”, an actuarial valuation has been carried out in respect of gratuity. The discount rate assumed is 7.50% p.a. (31 March 2017: 7.80% p.a.;1 April 2016: 8.00% p.a.) which is determined by reference to market yield at the Balance Sheet date on Government bonds. The retirement age has been considered at 60 years (31 March 2017: 60 years; 1 April 2016: 60 years) and mortality table is as per IALM (2006-08) (31 March 2017: IALM (2006-08); 1 April 2016: IALM (2006-08)).

The estimates of future salary increases, considered in actuarial valuation is 5% p.a. (31 March 2017: 5% p.a.; 1 April 2016: 5% p.a.), taking into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The plans assets are maintained with Life Insurance Corporation of India in respect of gratuity scheme of the Company. The details of investments maintained by Life Insurance Corporation are not available with the Company, hence not disclosed. The expected rate of return on plan assets is 7.50% p.a. (31 March 2017: 7.80% p.a.; 1 April 2016: 8.00% p.a.).

The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant.

ii. Defined pension benefits

The Company has a Post Retirement Benefit plan, which is a defined benefit retirement plan, according to which executives superannuating from the service after ten years of service are eligible for certain benefits like medical, fuel expenses, telephone reimbursement, club membership etc. for specified number of years. The liability is provided for on the basis of an independent acturial valuation.

In accordance with Ind AS 19 “Employee Benefits”, an actuarial valuation has been carried out in respect of post retirement benefits. The discount rate assumed is 7.50% p.a. (31 March 2017: 7.80% p.a.:1 April 2016: 8.00% p.a.) which is determined by reference to market yield at the Balance Sheet date on Government bonds. The retirement age has been considered at 60 years (31 March 2017: 60 years; 1 April 2016: 60 years) and mortality table is as per IALM (2006-08) (31 March 2017: IALM (2006-08); 1 April 2016: IALM (2006-08)).

Details of Micro and Small Enterprises as defined under MSMED ACT, 2006

To comply with the requirement of The Micro, Small And Medium Enterprises Development Act, 2006, the Company requested its suppliers to confirm whether they are covered as Micro or Small enterprise as is defined in the said Act. Based on the communications received from such suppliers confirming their coverage as such enterprise, the Company has recognised them for the necessary treatment as provided under the Act, from the date of receipt of such confirmations.

Note 4: DISCLOSURE OF SPECIFIED BANK NOTES (SBN) IN FINANCIAL STATEMENTS (AMENDMENT TO SCHEDULE III)

The MCA has amended division I and division II of the Schedule III. As per the amendment, each company needs to disclose the details of Specified Bank Notes held and transacted during the period from 8 November 2016 to 30 December 2016 in the prescribed format.

(ii) Fair value hierarchy

The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets that are not measured at fair value on a recurring basis (but fair value disclosures are required):

The different levels have been defined as follows:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within level-1 that are observable for asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

(iii) Valuation process to determine fair value

The following methods and assumptions were used to estimate the fair values of financial instruments:

i) The fair values of investments in debt and government securities is based on the current bid price of respective investment as at the Balance Sheet date.

ii) T he 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 issuers will issue further units of mutual fund and the price at which issuers will redeem such units from investors.

Note 5(a): FINANCIAL RISK MANAGEMENT

Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.

The Company, through three layers of defense namely policies and procedures, review mechanism and assurance aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit committee of the Board with top management oversee the formulation and implementation of the Risk management policies. The risk are identified at business unit level and mitigation plans are identified, deliberated and reviewed at appropriate forums.

The Company has exposure to the following risks arising from financial instruments:

- credit risk;

- liquidity risk; and

- market risk.

i. Credit risk

T redit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers, loans and investments.

The carrying amount of financial assets represents the maximum credit risk exposure.

Trade receivables and other financial assets

The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the payment and delivery terms and conditions are offered. The Company’s review includes external ratings, if they are available, financial statements, credit agency information, industry information and business intelligence. Sale limits are established for each customer and reviewed annually. Any sales exceeding those limits require approval from the appropriate authority as per policy.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a institutional, dealers or end-user customer, their geographic location, industry, trade history with the Company and existence of previous financial difficulties.

Expected credit loss for trade receivables:

The Company based on internal assessment which is driven by the historical experience/ current facts available in relation to default and delays in collection thereof, the credit risk for trade receivables is considered low. The Company estimates its allowance for trade receivable using lifetime expected credit loss. The balance past due for more than 6 month (net of expected credit loss allowance), excluding receivable from group companies is Rs.1,254 lacs (31 March 2017: Rs.926 lacs, 1 April 2016: Rs.879 lacs).

Expected credit loss on financial assets other than trade receivables:

With regards to all financial assets with contractual cash flows other than trade receivable, management believes these to be high quality assets with negligible credit risk. The management believes that the parties from which these financial assets are recoverable, have strong capacity to meet the obligations anThence the risk of default is negligible and accordingly no provision for excepted credit loss has been provided on these financial assets.

ii. Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulties in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Comapny’s reputation.

The Company’s trasury department is responsible for managing the short term and long term liquidity requirements. Short term liquidity situation is reviewed daily by treasury. Longer term liquidity position is reviewed on a regular basis by the Board of Directors and appropriate decisions are taken according to the situation.

Exposure to liquidity risk

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

iii. Market risk

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

Currency risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the functional currency of the Company. The currencies in which the Company is exposed to risk are USD, AED and EUR.

The Company follows a natural hedge driven currency risk mitigation policy to the extent possible. Any residual risk is evaluated and appropriate risk mitigating steps are taken, including but not limited to, entering into forward contracts.

Exposure to currency risk

(i) The Company’s exposure to foreign currency risk at the end of the reporting period is presented in Note no 45.

(ii) The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and forward contracts.

Interest rate risk

A nterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in rupees and US dollars with a mix of fixed and floating rates of interest. The Company has exposure to interest rate risk, arising principally on changes in base lending rate and LIBOR rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.

Exposure to interest rate risk

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

Sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates for floating rate liabilities assuming the amount of the liability outstanding at the year-end was outstanding for the whole year.

A f interest rates had been 50 basis points higher / lower and all other variables were held constant, the Company’s profit for the year ended 31 March 2018 would decrease / increase by Rs.97 lacs (for the year ended 31 March 2017: decrease / increase by Rs.2 lacs). This is mainly attributable to the Company’s exposure to interest rates on its variable rate borrowings.

Note 6: CAPITAL MANAGEMENT

(a) Risk Management

The Company’s objectives when managing capital are to:

- a afeguard its ability to continue as a going concern, so that its can continue to provide returns for its shareholders and benefits for other stakeholders, and

- maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio:

A et debt (total borrowings net of cash and cash equivalents and other bank balances) and divided by Total ‘equity’ (as shown in the Balance Sheet).

Note 7(a): NAMES OF THE RELATED PARTIES AND RELATIONSHIP

A. ASSOCIATES

1 Ishanya Brand Services Limited

2 Ishanya Realty Corporation Limited

3 Mumbai Modern Terminal Market Complex Private Limited

4 Desai Fruits and Vegetables Private Limited

B. SUBSIDIARIES

1 Smartchem Technologies Limited (STL)

2 Platinum Blasting Services Pty Limited [PBS]

(Subsidiary of STL)

3 Australian Mining Explosives Pty Limited (Subsidiary of PBS)

4 RungePincockMinarco India Private Limited

5 Yerrowda Investments Limited

6 Deepak Mining Services Private Limited

7 Deepak Nitrochem Pty.Limited

8 SCM Fertichem Limited

9 Performance Chemiserve Private Limited (Subsidiary of STL)

C. JOINTLY CONTROLLED OPERATIONS

1 Yerrowda Investments Limited

D. KEY MANAGEMENT PERSONNEL

(a) Executive directors

Mr Sailesh Chimanlal Mehta

(b) Non-executive directors

Ms Parul Sailesh Mehta Mr Partha Sarathi Bhattacharyya Mr Rajendra Ambalal Shah Mr Madhumilan Parshuram Shinde

Non-executive Independent directors

Mr Berjis Minoo Desai (From 07 July 2017)

Mr Ashok Kumar Purwaha (From 07 July 2017)

Mr MThesh Ramchand Chhabria (From 07 July 2017)

Mr Sewak Ram Wadhwa

Mr Anil Chandanmal Singhvi (From 07 July 2017)

Mr Urmilkumar Purushottamdas Jhaveri Mr Anil Sachdev Mr Pranay Dhansukhlal Vakil Mr D. Basu (till 8 June 17)

Mr N C Singhal (till 7 May 2017)

Dr. S Rama Iyer (till 2 June 2017)

(c) Company Secretary

Mr K Subharaman

(d) Chief Finance Officer

Mr Vipin Agarwal (upto 2 November 2017)

Mr Amitabh Bhargava (w.e.f. 2 November 2017)

E. ENTITIES OVER WHICH KEY MANAGERIAL PERSONNEL ARE ABLE TO EXERCISE SIGNIFICANT INFLUENCE:

1 Blue Shell Investments Private Limited

2 Nova Synthetic Limited

3 The Lakaki Works Private Limited

4 Superpose Credits And Capital Private Limited

5 Storewell Credits And Capital Private Limited

6 High Tide Investments Private Limited

7 Deepak Asset Reconstruction Private Limited

8 Mahadhan Investment and Finance Private Limited

9 Ishanya Foundation

10 Deepak Foundation

11 Mahadhan Farm Technologies Private Limited

12 Robust Marketing Services Private Limited

F. RELATIVES OF KEY MANAGEMENT PERSONNEL

1 Mr Yeshil Mehta

G ENTERPRISES OVER WHICH RELATIVES OF KEY MANAGEMENT PERSONAL ARE ABLE TO EXERCISE SIGNIFICANT INFLUENCE

1 Deepak Nitrite Limited

*Includes customs duty amounting to Rs.9,347 Lacs on duty free import of fertiliser during the period 2005-06 to 2009-10. Under the applicable policy of Government on subsidy, any customs duty needs to be reimbursed by Government.

Note 8: RESTATEMENT DUE TO CORRECTION OF ERRORS

During the year 2017-2018, the Company discovered certain errors (refer table iii) in it’s Standalone financial statements as of 1 April 2016. The errors have been corrected by restating each of the affected financial statement line items for prior periods. The following tables summarizes the impact on the Standalone financial statements;

(iv) The comparative information for the year ended 31 March 2017 and opening retained earning as at 1 April 2016 have been restated in relation to the Standalone Ind AS financial statements due to the following reasons:

a. The Company had proposed a Scheme of Arrangement (Scheme) for demerger of fertilisers and Technical Ammonium Nitrate (TAN) business into a wholly owned subsidiary Company, M/s. Smartchem Technologies Limited. The National Company Law Tribunal (NCLT) on 30th March, 2017 granted approval to the Scheme and the Order of NCLT was received by the Company on 13th April, 2017. Post compliance of further requirements of the Order, the Company filed the same with Registrar of Companies on 1st May, 2017. The Scheme as approved by NCLT, provides that the demerger will be effective retrospectively from 1st January, 2015.

Do give effect of the scheme of TAN and Fertilisers business as an ‘adjusting event’ with an effective date of 1st January 2015 based on a re-examination of Ind AS 10 by Management in view of clarifications issued by Ind AS Transition Facilitation Group (“ITFG”) 14 issue no 4 issued on 1st February, 2018.

b. Provision of Rs. 5,200 Lacs adjusted against opening retained earnings as on 1st April, 2016, for entry tax and Maharashtra Value Added Tax retention amounts based on demand notices raised by the Sales tax authorities, contested by the Company, for the years 2012-2016 since the matters pertains to the prior years.

c. Declassification of an amount of Rs.7,963 Lacs classified as building in the previous years to land as required by Ind AS 16, and accordingly reversal of accumulated depreciation on building of Rs.1,012 Lacs in retained earnings as of 1st April, 2016 and reversal of depreciation on buildings of Rs.142 Lacs charged during the year ended 31st March, 2017.

Note 9: LEASES

The Company has taken premises on operating lease for a period of one to five years. The future lease payment of such operating lease is as follows:

Note 10: The previous year figures of 31 March 2017 and 1 April 2016 have been audited by a firm other than B S R & Associates LLP.

Note 11: Segment information has been presented in the Consolidated Financial Statements as permitted by Indian Accounting Standard Ind AS 108, Operating Segments as notified under the Companies (Indian Accounting Standard) Rules, 2015.

Note 12: Previous year figures have been regrouped wherever necessary, to correspond with the current period’s classification / disclosure.


Mar 31, 2017

THE COMPANY AND NATURE OF ITS OPERATIONS:

Deepak Fertilisers and Petrochemicals Corporation Limited having corporate office in Pune, Maharashtra, India carries on business in fertilisers, agri services, bulk chemicals, mining, chemical and value added real estate. The Company is a public limited company and is listed on the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited.

(i) Contractual obligations: The company does not have any contractual obligations in relation to investment properties as the same are not let out

(ii) Fair value

Estimation of fair value

The Company obtains independent valuations for its investment properties at least annually. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company considers information from a variety of sources including:

- Current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences

- Discounted cash flow projections based on reliable estimates of future cash flows

- Capitalised income projections based upon a property’s estimated net market income, and a capitalisation rate derived from an analysis of market evidence

The fair values of investment properties have been determined by an Independent Valuer. The main inputs used are the rental growth rates, expected vacancy rates, terminal yields and discount rates based on comparable transactions and industry data. All resulting fair value estimates for investment properties are included in level 3.

(i) Trade Receivable includes Rs.52,366.86 Lacs (31st March, 2016 Rs.79,476.73 Lacs, 1st April, 2015 Rs.33,498.73 Lacs) towards fertiliser subsidy receivable from the Government of India.

(ii) The carrying amounts of the trade receivables is net of receivables de-recognised under structured finance arrangements without recourse of Rs.36,149.92 lacs ( 31st March, 2016 Rs.24,250.33 Lacs, 1st April, 2015 Rs.17,213.03 Lacs ) and bills discounted of Rs.20,779.03 Lacs (31st March, 2016 ‘ NIL, 1st April, 2015 ‘ NIL)

Terms and rights attached to equity shares

The Company has only one class of issued Equity Shares having at par value of Rs.10 per share. Each holder of Equity Shares is entitled to one vote per Share.

The Company declares and pays dividend in Indian Rupees except in the case of overseas Shareholders where dividend is paid in respective foreign currencies considering foreign exchange rate applied at the date of remittance. The dividend proposed by the Board of Directors is subject to the approval of Shareholders in the ensuring Annual General Meeting.

In the event of liquidation of the Company the holders of Equity Share will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts in proportion to their shareholding.

Details of Micro and Small Enterprises as define munder MSMED ACT, 2006

To comply with the requirement of The Micro, Small And Medium Enterprises Development Act, 2006, the Company requested its suppliers to confirm it whether they are covered as Micro, Small or Medium enterprise as is defined in the said Act. Based on the communications received from such suppliers confirming their coverage as such enterprise, the Company has recognised them for the necessary treatment as provided under the Act, from the date of receipt of such confirmations.

(i) Leave Obligations

The leave obligations cover the Company’s liability for sick and earned leave.

The amount of the provision of Discontinuing & Continuing Operations Rs.608.07 Lacs (31st March, 2016 - Rs.377.35 Lacs, 1st April, 2015 - Rs.298.64 Lacs) is presented as current, though the Company does not have an unconditional right to defer settlement for any of these obligations, as based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The amounts that reflect leave that is not expected to be taken or paid within the next 12 months is shown under current portion.

Post Retirement Benefits & Gratuity

(i) The Company has a Post Retirement Benefit plan, which is a defined benefit retirement plan, according to which executives superannuating from the service after ten years of service are eligible for certain benefits like medical, fuel, telephone reimbursement, club membership etc. for specified number of years. The liability is provided for on the basis of an independent actuarial valuation.

(ii) The Company has an obligation towards Gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payments to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The plan is managed by a Trust and the fund is invested with recognised Insurance Companies under their Group Gratuity scheme. The Company makes annual contributions to Gratuity fund and recognises the liability for Gratuity benefits payable in future based on an independent actuarial valuation.

i) Sensitivity Analysis

The key assumption and sensitivity of the defined benefit obligation to changes in the weighted principal assumption is:

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant acturial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.

NOTE 1: DISCLOSURE OF SBNS IN FINANCIAL STATEMENTS (AMENDMENT TO SCHEDULE III)

The MCA has amended division I and division II of the Schedule III. As per the amendment, each company needs to disclose the details of Specified Bank Notes held and transacted during the period from 8th November, 2016 to 30th December, 2016 in the prescribed format.

(i) 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 table provides the fair value measurement hierarchy of the Company’s financials assets and liabilities that are measured at fair value or where fair value disclosure is required:

(ii) Valuation process to determine fair value

The following methods and assumptions were used to estimate the fair values of financial instruments:

i) The carrying amounts of cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current financial assets and liabilities are considered to be the same as their fair values, due to their short-term nature.

ii) The fair values of the equity investment which are quoted, are derived from quoted market prices in active markets. In the case of the investment measured at fair value and falling under fair value hierarchy Level 3, cost has been considered as an appropriate estimate of fair value. The carrying value of those investments are individually immaterial.

iii) The Company enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. The fair value of derivative financial instruments is based on observable market inputs including currency spot and forward rate, yield curves, currency volatility, interest rate curves 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 underlying credit risk of the Company (since the date of inception of the loans).

v) The fair values of the unsecured redeemable non-convertible debenture (included in long term borrowings) are derived from quoted market prices/discounting using current market interest rates. The Company has no other long-term borrowings with fixed-rate of interest.

Note 2: FINANCIAL RISK MANAGEMENT Year ended 31st March, 2017:

(A) Expected Credit Loss

(a) Expected credit loss for trade receivables under simplified approach

(B) Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. These limits vary by location to take into account the liquidity of the market in which the entity operates. In addition, the Company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

(i) Financing Arrangements

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

The bank overdraft facilities may be drawn at any time and are repayable on demand. The bank loan facilities may be drawn at any time in ‘ and have an average maturity of 1 year (2016 -1 year, 2015 1 year).

(ii) Maturities of Financial Liabilities

The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for:

- all non-derivative financial liabilities, and

- net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

(C) Foreign Currency Risk Exposure

(i) The Company’s exposure to foreign currency risk at the end of the reporting period is presented in Note no 48

(ii) Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and hedges thereof. There is no impact on other components of equity as the company has not designated foreign forward exchange contracts, foreign exchange option contracts as cash flow hedges.

(D) Cash flow and fair value interest rate risk

The Company’s main interest rate risk arises from long-term borrowings with variable rates, which exposes the Company to cash flow interest rate risk. During 31st March, 2016 and 31st March, 2017, the Company’s borrowings at variable rate were mainly denominated in INR, USD

The Company’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

The Company manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps in case of ECBs. Under these swaps, the Company agrees with other parties to exchange, at specified intervals (mainly half yearly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.

(i) Interest Rate Exposure

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

(ii) Sensitivity

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of changes in interest rates. Other components of equity change as a result of an increase/decrease in the fair value of the cash flow hedges related to borrowings.

Note 3: Effective 15th May, 2014, domestic gas supply to the Company was arbitrarily stopped pursuant to an order passed by the Ministry of Petroleum and Natural Gas. The Company successfully challenged the same before the Hon’ble Delhi High Court, which by its orders dated 7th July, 2015 and 19th October, 2015 directed the Government of India (GOI) to restore the gas supply. Review petition filed by the GOI, challenging the said order, has been rejected by the Court by an order dated 2nd February, 2016. Subsequently, the GOI filed an affidavit before Delhi High Court stating that Inter Ministerial Committee (IMC) has decided to recommend supply of pooled gas to the Company, subject to approval of competent authority. In the meantime, during the quarter, SLP filed by GOI against above orders of Delhi High Court is disposed off by Hon’ble Supreme Court without granting any relief to the petitioner (GOI).

Note 4: The Department of Fertilisers (DoF), Ministry of Chemicals and Fertilisers, had withheld subsidy, due to the Company in accordance with applicable Nutrient Based Subsidy (NBS) scheme of GOI, alleging undue gain arising to Company on account of supply of cheap domestic gas since challenged by the Company before the Hon’ble High Court of Bombay. Based on the directive of the Hon’ble Court, DoF agreed to release subsidy withheld except a sum of Rs.310 Crores pending final decision. Recently DoF has advised release of the aforesaid sum against a Bank Guarantee taking a favourable view on the request made by the company.

Note 5: GAIL has claimed a sum of Rs.357 crores in respect of supply of domestic natural gas for the period July 2006 to May 2014, alleging usage for manufacture of products other than Urea. As per contracts entered into between Company and GAIL, the purchase of gas was clearly intended, supplied and utilised for industrial applications. It has been in the full knowledge of the Department of Fertilisers, Government of India that the Company; as per the Industrial License, since its inception was never engaged in the manufacture of Urea. The Company has strongly challenged the claim currently being raised by GAIL as untenable, unsustainable, contractually unfounded, invalid and barred by limitation of time. Arbitration proceedings have since commenced. The Company has obtained legal advice and accordingly no provisioning is considered necessary.

Note 6: The Company has made significant capital investments in Ishanya Mall. The said Mall has been incurring losses due to larger break-even period associated with the operations of the Mall which is extended due to continuing adverse economic environment since the launch of the Mall in 2007-08. The management of the Company continues to be hopeful of turnaround in performance of the Mall in the coming years due to expected improvements in the economic environment and strategic initiatives being planned in this regard. The Company has, however, in accordance with the requirements of Indian Accounting Standard 36-”Impairment of Assets”, carried out impairment review of carrying value of the assets of the Mall, which has not indicated any impairment in its value.

Note 7: SCHEME OF ARRANGEMENT

In an endeavour to sharpen the strategic future of each of its business verticals and focus on shareholders’ wealth enhancement, the Company had proposed a Scheme of Arrangement for demerger of fertilisers and technical ammonium nitrate business into a wholly owned subsidiary Company, M/s. Smartchem Technologies Limited. The National Company Law Tribunal (NCLT) on 30th March,2017 granted approval to the Scheme and the Order of NCLT was received by the Company on 13th April, 2017. Post compliance of further requirements of the Order, the Company filed the same with Registrar of Companies on 1st May, 2017, being the date from which the Order became operational. The Scheme as approved by NCLT, provides that the demerger will be effective retrospectively from 1st January, 2015.

The businesses that are being de-merged have been disclosed as ‘Discontinuing Operations’ in the standalone financial statements for the year ended 31st March 2017, as per the requirements of Ind AS 105.

Note 8: LEASES

The Company has taken premises on operating lease for a period of one to ten years. The future lease payment of such operating lease is as follows:

Note 9: DISCLOSURE REQUIRED UNDER SECTION 186(4) OF COMPANIES ACT, 2013

Loans and advance to related parties includes loan given to a subsidiary. The particulars of which are disclosed below as required by Section 186(4) of Companies Act, 2013.

Note 10: FIRST-TIME ADOPTION OF IND AS Transition to Ind AS

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

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

Exemptions and exceptions availed

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

Ind AS optional exemptions

1. Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated. The Company has applied same exemption for investment in associates and joint ventures.

2. Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties.

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

3. Designation of previously recognised financial instruments

Financial assets and financial liabilities are classified as fair value through profit and loss or fair value through other comprehensive come based on facts and circumstances as at the date of transition to Ind AS i.e. 1st April, 2015. Financial assets and liabilities are recognised at fair value as at the date of transition to Ind AS i.e. 1st April, 2015 and not from the date of initial recognition.

4. Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.

The Company has elected to apply this exemption for such contracts/arrangements.

5. Investments in subsidiaries and associates

The Company has elected to apply previous GAAP carrying amount for its investment in subsidiaries and associates and at deemed cost at the date of transition to Ind AS, except for investment in Desai Fruits and Vegetables Pvt. Ltd. (an associate) where the Company has elected to use fair value as deemed cost on the date of transition to Ind AS.

Ind AS mandatory exceptions

1. Hedge accounting

Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in Ind AS 109, at that date. Hedging relationships cannot be designated retrospectively, and the supporting documentation cannot be created retrospectively. As a result, only hedging relationships that satisfied the hedge accounting criteria as of 1st April, 2015 are reflected as hedges in the Company’s results under Ind AS, primarily being interest rate swap. Under Ind AS, the Company has chosen to not follow hedge accounting for such hedging relationships relating to foreign exchange forward & option contracts.

2. Estimates

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

Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Investment in financial instruments carried at FVPL or FVOCI;

- Investment in debt instruments carried at FVPL; and

- Impairment of financial assets based on expected credit loss model.

3. Derecognition of financial assets and liabilities

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

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

4. Classification and measurement of financial assets

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

Note 11: RECONCILIATION OF TOTAL EQUITY AS AT 31ST MARCH, 2016 AND 1ST APRIL, 2015

Notes to first-time adoption a Proposed dividend

Under Previous GAAP, proposed dividends including Dividend Distribution Tax (DDT) are recognised as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognised as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid.

In the case of the Company, the declaration of dividend for March 2015 had ocurred after period end. Therefore, the liability of Rs.4,101.08 lacs for the year ended on 31st March, 2015 recorded for dividend has been reversed with corresponding adjustment to retained earnings. Correspondingly, total equity increased by this amount. b Fair value adjustments on investments

Current investments: Under Previous GAAP, current investments in equity instruments such as mutual funds and government securities are recognized at cost or net realizable value, whichever is lower. Long-term investments in equity instruments are recorded at cost unless there is an other than temporary decline in the value of investments.

Ind-AS 101 allows considering fair value as deemed cost for the Company’s investment in subsidiaries, associates. This choice is available for each investment individually. The deemed cost for all investment in equity instruments has been considered as the cost under the Previous GAAP except for Desai Fruits and Vegetables Private Limited (an associate) wherein the Company has their fair value as deemed cost. Consequently, fair value adjustment amounting to Rs.2,033 lacs has been considered as on the transition date thereby leading to a decrease in retained earnings as on that date.

The Company holds investment in government securities with the objective of both collecting contractual cash flows which give rise on specified dates to cash flows that are solely payments of interest on principal amount outstanding and selling financial asset. The resulting fair value changes of these investments have been recognised in retained earnings as at the date of transition and subsequently in Other Comprehensive Income for the year ended 31st March, 2016 (Rs.57.52 lacs). This resulted an increase in retained earnings as at 31st March, 2016 by Rs. Nil (1st April, 2015: Rs.19.12 lacs). c Financial guarantees: The Company has issued certain financial guarantees to banks in relation to loans availed by a step down subsidiary from these banks. Ind AS requires liability from such financial guarantees to be recorded initially at fair value. The amortisation of financial guarantee has resulted in a gain amounting to Rs.39.72 lacs as at 31st March, 2016 (1st April, 2015: Rs.21.27 lacs). d Provision for expected credit loss under Ind AS 109

Under Previous GAAP, the Company has created provision for impairment of receivables which comprises only in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss (ECL) model. The total ECL provision amounting to Rs.211.08 lacs considered as on the transition date has been adjusted against the retained earnings. Impact of Rs.117.04 lacs for the year ended 31st March, 2016 has been charged of to the Statement of profit and loss. e Adjustment relating to loan processing fees

Under previous GAAP, loan processing fees have been expensed out to Statement of Profit and Loss Account but under Ind AS, such loan processing fees have to be amortised on effective interest rate basis over the loan period. The Company under previous GAAP had capitalised such fees to fixed assets as per AS 16. Under IND AS, amortisation of such fees has resulted in a decrease in retained earnings at 31st March, 2016 and 1st April, 2015. f Fair Valuation of derivative contracts

The Company hedges its foreign currency risk by entering into forward and option contracts which are fair valued through profit and loss under Ind AS as the same are not designated as hedges for the purposes of financial reporting. This has resulted into a decrease in retained earnings by Rs.78.24 lacs as at 31st March, 2016 (1st April, 2015: Rs.134.67 lacs)

The Company has entered into interest rate swap which is fair valued through other comprehensive income under Ind AS as the same is designated as a cash flow hedge. This has resulted in decrease in retained earnings by Rs.30.99 lacs as at 31st March, 2016 (1st April, 2015: Rs.200.47 lacs). g Actuarial loss transferred to Other Comprehensive Income

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of statement of profit and loss. As a result of this change, the profit for the year ended 31st March, 2016 has increased by Rs.23.35 lacs. There is no impact on total equity.

h Others

These adjustments pertain to fair valuation of security deposits which has resulted into an increase in retained earnings by Rs.6.45 lacs as at 31st March, 2016 (1st April, 2015: Rs.0.16 lacs).

The adjustment also includes provision for decommissioning liabilities on lease hold land as required under Ind AS 16 added to the cost of property, plant and equipment amounting to Rs.28.70 lacs which was adjusted against the retained earnings.

i Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit and loss but are shown in the Statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans and net gain on cash flow hedge.

j Deferred tax

The various transitional adjustments have led to temporary differences and accordingly, the Company has accounted for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.

Note 12 In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7 - Statement of cash flows 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 and will be given effect to from the financial year subsequent to evaluation by the Company.

Note 13 Previous year’s figure have been re-grouped wherever necessary to conform to current year’s grouping.

Note 14 Previous year figures are given in bracket/Itallics.


Mar 31, 2016

Note-1. Exceptional items in previous year represented cost of voluntary separation scheme to employees at Taloja Unit.

Note-2. DISCLOSURE REQUIRED UNDER SECTION 186 (4) OF COMPANIES ACT, 2013

a. Included in loans and advance to related parties is a loan given to a subsidiary the particulars of which are disclosed below as required by Sec 186(4) of Companies Act, 2013.

Note-3. During the year Platinum Blasting Services Pty. Ltd. (a subsidiary of Smartchem Technologies Limited, which in turn is a wholly owned subsidiary of the Company), has acquired entire ownership interest for consideration amounting to '' 1,850 Lacs (AUD 37 Lacs) in Australian Mining Explosives Pty. Ltd. (AME), an Australian Company engaged in the business of storage and handling of Technical Ammonium Nitrate.

Note-4. The Company has made significant capital investments in Ishanya Mall. The said Mall has been incurring losses due to larger break-even period associated with the operations of the Mall which is extended due to continuing adverse economic environment since the launch of the Mall in 2007-08. The management of the Company continues to be hopeful of turnaround in performance of the Mall in the coming years due to expected improvements in the economic environment and strategic initiatives being planned in this regard. As in the past the Company has in accordance with the requirements of Accounting Standard 28- "Impairment of Assets", carried out impairment review of carrying value of the assets of the Mall, which has not indicated any impairment in its value.

Note-5. The Company has long-term investment in Desai Fruits and Vegetables Private Limited (JV) which is strategic in nature.

During the year ended 31st March, 2014, consequent to losses incurred by JV and substantial erosion of net worth, the Company made provision of Rs, 507.09 Lacs for diminution in value of the investment that was assessed to be other than temporary nature. Due to subsequent improvement in operating performance, as a result of various strategic initiatives taken by the management of JV, the management of the Company reassessed the carrying value of the investment in JV and being of the opinion that diminution in value was of temporary in nature, reversed the said provision in the financial year ended on 31st March, 2015. There is no change in the said assessment of the management as at 31st March, 2016.

Note-6. During the year the Company was required to spend Rs, 392.00 Lacs of which the Company has incurred CSR expenses of Rs, 167.89 Lacs (Rs, 83 Lacs), which includes contribution/donation of Rs, 167.86 Lacs (Rs, 80.50 Lacs) to a related party, which are engaged in activities eligible under Section 135 of Companies Act, 2013 read with Schedule VII thereto and other expenses of Rs, 0.03 Lacs (Rs, 2.50 Lacs) which are directly incurred by the Company.

Note-7. SCHEME OF ARRANGEMENT, AMALGAMATION, RESTRUCTURING ETC.

(a) With a view to paving the way for future growth strategic objective and unlocking the shareholder''s value, the Board of Directors of the Company at its meeting held on 29th March, 2016 approved the Scheme of arrangement between Deepak Fertilizers And Petrochemicals Corporation Limited and its wholly owned subsidiaries, SCM Fertichem Limited and Smartchem Technologies Limited (''the Scheme''), under sections 391 to 394 of the Companies Act, 1956. The Scheme provides for the transfer of Fertilizer and TAN undertaking (''the Undertakings'') of the Company to SCM Fertichem Limited for a slump exchange consideration of '' 74,300 Lacs followed by transfer and vesting of the said Undertakings into Smart hem Technologies Limited by way of de-merger for a consideration to be discharged by issue of one equity share of Smart hem Technologies Limited for every equity share held in SCM Fertichem Limited. The appointed date as per the Scheme is 1st January, 2015.

(b) The Board of Directors of the Company at its meeting held on 5th November, 2015 approved a Scheme of Amalgamation of SCM Solider Limited, a wholly owned subsidiary, with the Company. The appointed date as per the Scheme is 1st April, 2015.

Both these Schemes are subject to the sanction of Hon''ble Bombay High Court, other requisite approvals from competent authorities band will be given effect to in the respective financial statements upon receiving the said approvals.

Note-8. The long-term settlement with the Employees Union at Taloja Plant expired on 30th September, 2015. Pending finalization thereof the Company has made estimated provision for liabilities on this account based on the past experience.

Note-9. A The Company has taken residential accommodation, office premises and warehouses on lease/rental basis. Lease period varies from one month to twelve months. These lease are cancellable in nature. Lease rental recognized in the Statement of Profit and Loss is Rs, 1,647.82 Lacs (Rs, 1,041.20 Lacs).

Note-10. The Company had in the previous year made Investments of Rs, 18,000 Lacs in Non-Convertible Debentures of its wholly owned subsidiary, SCM Soilfert Limited, which acquired equity shares of Mangalore Chemicals & Fertilizers Limited (MCFL). Equity shares of MCFL were sold during the year and debentures were fully redeemed.

Note-11. Provisions for others included in Note 7 represents provision towards price differences. The outflow on this account is expected within a year.

Note-12. Previous year''s figures have been re-grouped wherever necessary to conform to current year''s grouping.

Note-13. Previous year figures are given in bracket.

Segment information

1. Primary segment reporting (by business segments)

Composition of business segment

Segment Products covered

a) Chemicals Ammonia, Methanol, DNA, C NA, CO2, TAN, IPA, Propane, Bulk and Speciality Chemicals

b) Bulk Fertilizers NP, MOP, DAP, Ammonium Sulphate, Mixtures, SSP, Sulphur, Micronutrients,

SSF, Bio Fertilizers, Fruits, Vegetables, Pesticides

c) Realty Real Estate Business

d) Others Windmill Power

2. Inter-segment Sales Pricing: Inter-segment revenue has been recognized as estimated under Excise Regulations.

3. Secondary Segment Information: There are no reportable geographical segments since the Company caters mainly to needs of Indian Markets.

Shri Somnath Patil resigned as a member of the Committee w.e.f. 22nd January, 2016.

Shri Vipin Agarwal was inducted as a member of the Committee w.e.f. 22nd January, 2016.

Shri Mandar Velankar, Asst. Company Secretary acts as Secretary to all the Committees of the Board of Directors.

- SHARE AND DEBENTURE TRANSFER COMMITTEE

The composition of the Share and Debenture Transfer Committee consits of a. Shri. S. C. Mehta b. Smt. Parul S. Mehta c. Shri. Vipin Agarwal d. Shri. Pranav Thakkar. The Committee has been constituted for considering the proposal of transfer, transmission, transposition of shares, issue of split, consolidated share certificates, remat of shares etc. During the year under review 51 meetings of Share and Debenture Transfer Committee were held.

- PERFORMANCE EVALUATION OF BOARD, COMMITTEES AND DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Regulation 19 of SEBI (Listing Obligation and Disclosure Requirement) Regulations 2015, the Board has carried out the annual performance evaluation of the Chairman, Directors, Board as well as its Committees for FY 2015-16.


Mar 31, 2013

THE COMPANY AND NATURE OF ITS OPERATIONS :

Deepak Fertilisers And Petrochemicals Corporation Limited having Corporate Office in Pune, Maharashtra, India, carries on business in fertilisers, agri services, bulk and speciality chemicals, mining chemicals and value added real estate.

Note-1 CONTINGENT LIABILITIES (Rs. in Lacs)

Liabilities classified and considered contingent due to contested claims and legal disputes

As at As at 31st March, 2013 31st March, 2012

Claim by suppliers 3,308.37 2,610.52

Income tax demands 665.08 2,131.50

Excise demands 2,212.28 2,295.06

Sales tax /VAT demands 2,585.14 1,747.58

Total 8,770.87 8,784.66

Note-2 The Company has imported capital goods under the Export Promotion Capital Goods (EPCG) Scheme of the Government of India, at concessional rates of duty on an understanding to fulfill quantified exports against which future obligation aggregates to Rs. 941.84 Lacs (Rs. Nil) over a period of eight years from the date of license.

Contingent Assets are not recognised or disclosed in the financials statements.

Note-3 Gas Authority of India Limited (GAIL) supplier to the Company of natural gas, one of the main raw materials, has effected the supplies at provisional rate as indicated in the invoices. However, according to the Company any revision in Natural Gas price will be only prospective as per the existing convention/practice followed by Government of India.

Note-4A The long term settlement with the Employees Union at Taloja Plant expired on 30th September, 2011. Pending finalisation thereof the Company has made estimated provision for liabilities on this account based on the past experience.

Note-4B The Company has made significant capital investments in Ishanya Mall. The same Mall has been incurring losses due to larger break-even period associated with the operations of the Mall which is extended due to continuing adverse economic environment since the launch of the Mall in 2007-08. The management of the Company is hopeful of turnaround in performance of the Mall in the coming years due to expected improvements in the economic environment, opening up of FDI Investments in Multi-Brand Retail and strategic initiative being planned in this regard. The Company has, however, in accordance with the requirements of Accounting Standard - 28 "Impairment of Assets", carried out impairment review of carrying value of the assets of the Mall, which has not indicated any impairment in its value.

Note-5 The Company has taken residential accommodation, office premises and warehouses on lease / rental basis.

Non-cancellable lease period varies from 3 months to 6 months. These lease are cancellable in nature. Lease rental recognised in the Statement of Profit and Loss is Rs. 1,113.58 Lacs.

Note-6 Clause 32 of the Listing Agreement disclosures

Loans and advances in the nature of loans to subsidiaries / entity in which Deepak Fertilisers And Pertrochemicals Corporation Limited has significant influence

Note-7 Previous year''s figures have been re-grouped wherever necessary to conform to current year''s grouping. Note-49 Previous year''s figures are given in brackets.


Mar 31, 2012

A. Terms/Rights attached with Equity Shares

The Company has only one class of Equity Shares having a par value of Rs 10/- per share. Each holder of Equity Shares is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees except in the case of overseas shareholders where dividend is paid in respective foreign currencies considering foreign exchange rate applied at the date of remittance. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

During the year ended 31st March, 2012 the amount of dividend per share recognized as distribution to equity shareholders is Rs 5.50 (31st March 2011, Rs 5.00).

In the event of liquidation of the Company the holders of Equity Share will be entitled to receive remaining assets of the Company, after distribution of all preferential distribution in proportion to the number of Equity Shares held by the shareholders.

(*) Represents relief/incentive granted by Government of India by way of refund of 90% of Customs Duty paid on NP Projects Imports. This amount is being adjusted against depreciation over the remaining useful life of the Fixed Assets of NP Project.

Note: The Company has entered into option contract to cover its risk towards foreign exchange exposure on External Commercial Borrowings. The marked to market loss of Rs Nil (Previous Year: Rs 221.80 Lacs) has been provided in the accounts.

Note: (i) Cash Credit facilities sanctioned by Banks including Working Capital Demand Loan and Buyer's Credit are secured by a first charge by way of hypothecation of stocks of raw materials, finished goods, stock-in-process, consumable stores and book debts.

(ii) Cash Credit is repayable on demand and carries variable interest (average for the year 13.25%).

(iii) Buyer's credits are generally due within 180 days and carry variable interest (average for the year 1.81%).

The aggregate amount of unclaimed dividend of previous years' as on 31st March, 2012 was Rs 372.73 Lacs (Previous Year: Rs327.18 Lacs). In accordance with the provisions of Section 205A (5) of the Companies Act, 1956, the dividend unclaimed for a period of seven years from the date of transfer to the Unpaid Dividend Account shall be credited to the Investor Protection and Education Fund.

Notes:

(a) Freehold land includes:

- Rs 3,600 Lacs (Previous Year Rs 3,600 Lacs) represented by 24,000 Equity Shares of Rs 10/- each in a company, which is the legal owner of the land in respect of which the Company has acquired exclusive rights of development.

- Rs 1,046.42 Lacs (Previous Year: Rs 815 Lacs) represented by 1,38,888 Equity Shares (Previous Year: 8,024) of Rs 10/- each in the said company, which is the legal owner of the land on which the Company has been granted the rights of use and occupation by virtue of the shares so held.

(b) Buildings include a sum of Rs 11,572.87 Lacs (Previous Year: Rs 3,308.87 Lacs) represented by 38,236 (Previous Year: 17,628) Equity Shares of Rs 10/- each in a company which is the legal owner of the buildings in respect of which the Company has an exclusive right of use and occupation by virtue of the shares so held.

(c) Gross Block of Plant and Machinery includes:

- Rs.421.63 Lacs (Previous Year: Rs 421.63 Lacs) being the cost of Fixed Assets, ownership of which does not vest with the Company, being amortized over 60 months.

- Rs.6,212.61 Lacs (Previous Year: Rs 4,564.61 Lacs) towards foreign exchange fluctuation on Long Term Loans.

(d) During the year, the Company has acquired additional equity shares of an associate company viz: Yerrowda Investments Ltd. (YIL) by virtue of which The said company has become the Company's subsidiary under the Companies Act, 1956. However, since these shares represent indefeasible and perpetual occupancy rights in the immovable properties owned by the said company, the cost of acquisition thereof is treated as part of fixed assets in consonance with the past practice.

(e) Impairment of Assets: The Company has examined carrying cost of its identified Cash Generating Units (CGU) by comparing present value of estimated future cash flows from such CGUs, in terms of Accounting Standard-28 on Impairment of Assets, according to which no provision for impairment is required as assets of none of CGUs are impaired during the Financial Year ended 31st March, 2012.

1. Contingent liabilities (Rs.in Lacs)

Liabilities classified and considered contingent due to contested claims and legal 31st March 2012 31 st March 2011

dispute

Claim by Supplier 2,610.52 5,963.81

Income Tax demands 2,131.50 1,152.77

Excise demands 2,295.06 1,574.16

Sales Tax/VAT demands 1,747.58 1,657.20

TOTAL 8,784.66 10,347.94

2. Gas Authority of India Limited (GAIL) supplier to the Company of natural gas, one of the main raw materials, has affected the supplies at provisional rate as indicated in the invoices. According to the Company any revision in Natural Gas price will be only prospective as per the existing convention/practice followed by Government of India.

3. Details of Micro and Small Enterprises as defined under MSMED Act, 2006

To comply with the requirement of The Micro, Small And Medium Enterprises Development Act, 2006, the Company requested its suppliers to confirm it whether they are covered as Micro, Small or Medium enterprise as is defined in the said Act. Based on the communications received from such suppliers confirming their coverage as such enterprise, the Company has recognized them for the necessary treatment as provided under the Act, from the date of receipt of such confirmations and there is no default in payment to such enterprise as specified in the said Act. However, the amounts outstanding as well as interest applicable are insignificant and hence not separately disclosed.

4. Previous year's figures have been re-grouped wherever necessary to conform to current year's grouping.

5. The Financial Statements for the year ended 31st March, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Financial Statements for the year ended 31st March, 2012 has been prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI does not impact recognition and measurement principles followed for preparation of Financial Statements.

6. Inter-segment Sales Pricing: Inter-segment revenue has been recognized as estimated under Excise Regulations.

7. Secondary Segment Information: There are no reportable geographical segments since the Company caters mainly to needs of Indian Markets.


Mar 31, 2011

1. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 5,495.09 Lacs (Previous Year: Rs. 10,092.26 Lacs).

2. The following liabilities are classified and considered contingent due to contested claims and legal disputes:

. Claims by Suppliers Rs. 5,963.81 Lacs (Previous Year : Rs. 5,825.04 Lacs). Taxes & Duties

. Income Tax demands Rs. 1,152.77 Lacs (Previous Year : Rs. 1,152.77 Lacs).

. Excise demands : Rs. 1,574.16 Lacs (Previous Year: Rs. 920.13 Lacs).

. Sales Tax / VAT demands Rs. 1,657.20 Lacs (Previous Year : Rs. 704.59 Lacs).

3. Gas Authority of India Limited (GAIL) supplier to the Company of natural gas, one of the main raw materials, has effected the supplies at provisional rate as indicated in the invoices. However, according to the Company any revision in Natural Gas price will be only prospective as per the existing convention/practice followed by Government of India.

4. Exceptional items represent:

. Amortisation of VRS Compensation paid Rs. Nil (Previous Year: Rs. 54.98 Lacs).

. Gains arising on transfer of rights in unusable surplus land amounting Rs. Nil (Previous Year: Rs. 3,551.80 Lacs).

. Cost of assets discarded or in the process of being discarded under restructuring of the real estate business Rs. 338.09 Lacs (Previous Year: Rs. 992.46 Lacs).

5. The Company has sold part of the Fertiliser Bonds (issued in lieu of fertiliser subsidy) pursuant to the decision of Government of India to buy back outstanding bonds in two tranches in 2010-11 and 2011-12 at a price to be decided later and compensate the Company atleast 50% of the loss incurred on such sale. Accordingly, the Company has accounted for the loss of Rs. 199.52 Lacs (net of 50% compensation receivable from Government of India) and the same has been shown under operating and other expenses. Consequently the provision towards Mark to Market loss made earlier on such bonds amounting to Rs. 525.18 Lacs has been reversed and shown under Operating and other expenses.

6. In respect of long term investment in listed securities, the diminution in value is estimated on the basis of appraisal made by Portfolio Managers.

7. The Company has entered into option contract to cover its risk towards foreign exchange exposure on External Commercial Borrowing taken during the year. The marked to market loss of Rs. Nil (Previous Year: Rs. 221.80 Lacs) has been provided in the accounts.

8. IMPAIRMENT OF ASSETS: The Company has examined carrying cost of its identified Cash Generating Units (CGU) by comparing present value of estimated future cash flows from such CGUs, in terms of Accounting Standard-28 on Impairment of Assets, according to which no provision for impairment is required as assets of none of CGUs are impaired during the financial year ended 31st March, 2011.

9. (i) Sundry Debtors include due from companies in which some of the Directors are Directors/Members: Rs. 691.03 (payable) on the basis of provisional discount (Previous Year receivable: Rs. 319.35 Lacs) maximum amount due during the year: Rs. 279.34 Lacs (Previous Year: Rs. 954.80 Lacs).

(ii) Loans and Advances include:

. Security deposit of Rs. 200 Lacs (Previous Year: Rs. 200 Lacs) placed with Vice-Chairman & Managing Director towards lease of residential premises.

. Due from officers Rs. 0.30 Lacs (Previous Year : Rs. 4.42 Lacs) Maximum amount due during the year Rs. 4.42 Lacs (Previous Year: Rs. 8.54 Lacs).

10. To comply with the requirement of The Micro, Small And Medium Enterprises Development Act, 2006, the Company requested its suppliers to confirm it whether they are covered as Micro, Small or Medium enterprise as is defined in the said Act. Based on the communications received from such suppliers confirming their coverage as such enterprise, the Company has recognised them for the necessary treatment as provided under the Act, from the date of receipt of such confirmations and there is no default in payment to such enterprise as specified in the said Act. However, the amounts outstanding as well as interest applicable are insignificant and hence not separately disclosed.

11. The aggregate amount of unclaimed dividend of previous years as on 31st March, 2011 was Rs. 327.18 Lacs (Previous Year: Rs. 292.59 Lacs). In accordance with the provisions of Section 205A (5) of the Companies Act, 1956, the dividend unclaimed for a period of seven years from the date of transfer to the unpaid dividend account shall be credited to the Investor Education and Protection Fund.

12. Segment Reporting - Refer Annexure - A.

13. Related Party Disclosures - Refer Annexure - B.

14. Statutory dues not deposited on account of dispute - Refer Annexure - C.

15. Previous years figures have been re-grouped wherever necessary to conform to current years grouping.


Mar 31, 2010

1 Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs.l2,578,721/- (Previous year Rs.21,873,473/-)

2 Contingent liability in respect of:

i. Disputed demands of excise authorities Rs.6,185,062/- (Previous year Rs.6,964,013/-)

Pending before the Commissioner of Central Excise (Appeals) Rs. 1,939,003/-, (Previous Year Rs.l,939,003/-)

Pending before High Court of Bombay, at Goa Rs. 2,882,439/-, (Previous Year Rs.2,882,439/-)

Pending before CESTAT Rs. 1,066,076/-, (Previous Year Rs. 1,566,335/-)

Pending filing appeal with CESTAT Rs.297,544/- (Previous year Rs.576,236/-).

The Company is confident of defending the above demands and expects no liability on this count.

ii. Claims against the Company not acknowledged as debts Rs.3,410,000/- (Previous year Rs. 9,943,810/-)

Claim raised by Delhi Transport Corporation Rs. Nil (Previous year Rs. 6,533,810/-) pending before the Delhi High Court. During the year, the matter was decided against the company and the liability has since been settled.

Claim raised by a customer Rs.3,235,000 /- (Previous Year Rs. 3,235,000/-) towards disputed penal charges for delay in meeting delivery deadlines.

Penalty proposed to be levied by the Securities and Exchange Board of India Rs. 175,000/- (Previous Year Rs.l75,000/-) for alleged violation of regulation 6 and 8 of SEBI (Substantial acquisition of shares and takeovers) Regulations 1997 (pending before the Adjudicating Officer) notice dated 21.07.2004.

The Company is confident of defending the above demands and expects no liability on these counts.

iii. Appeal by the Income Tax Dept against the order of Income Tax Appellate Tribunal (ITAT)- amount shown in the appeal Rs.37,329,969/- (Previous year Rs. 37,329,969/-)

The Income Tax Department has gone in appeal against the Order of the ITAT in respect of depreciation not claimed by the Company in

Assessment Year 1990-91, the income tax liability on which is stated to be computed by the department at Rs. 3,732,996 which, due to a typographical error, has been shown as Rs. 37,329,969/- in the appeal.

The Company is confident of defending the above demand and expects no liability on this count.

iv. Disputed demand of Rs. 1,000,000/- (Previous year Rs. 1,000,000/-) as and by way of damages, for alleged breach of agreement to sell the Bungalow situated at Panaii.Goa.

Appeal pending before High Court of Bombay at Goa

v. Bills discounted with a bank Rs.729,614,768/- (Previous year Rs.548,413,885/-)

Notes:

The above remuneration excludes contribution to gratuity and leave encashment as the incremental liability has been accounted for the company as a whole.

The above remuneration is in excess of the limits specified in Schedule XIII of the Companies Act, 1956 and hence is subject to approval of Central Government under Section 198/309 of the Companies Act, 1956.The company is in the process of making the application to the Central Government.

2 Computation of net profits as per Section 349 read with Section 309(5} and Section 198 of the Companies Act, 1956.

3 Operating Lrase Rentals;

The company has taken certain sheds and residential premises on cancelable operating lease basis. Amount of lease rentals charged to Profit and loss account in respect of such cancelable operating leases are Rs.2,024,483/- (Previous Year Rs. 1,927,605/-).

Segment Information

(a) Segment information for primary segment reporting (by business segment)

The Company has two business segments:-

i) Pressing Division - Manufacturing of pressed parts, components, sub-assemblies and assemblies for various range of automobiles.

ii) Bus body Building Division - Manufacturing of Bus bodies and component parts for Bus bodies.

(b) Inter-segment Transfer Pricing

Inter-segment transfers are made at transfer price.

(c) Common Expenses

Common Expenses are allocated to different segments on reasonable basis as considered appropriate.

4 The Company has exported bus bodfes and component parts thereof of the sales value of Rs. 506,997,266/- (Previous year Rs. 1,826,448,746/-) through a merchant exporter.

5 The excise duty related to the difference between the opening and closing stock of finished goods is disclosed separately in the "Schedule 12 - Other Income" as "Excise Duty".

6 Warranty Provision

Warranty pertains to replacement of defective parts and expenses incurred in relation to rectification of workmanship defects.

7 In the financial year ending 31st March 2007,the company issued 1,481,913 equity shares of Rs. 10 each on Rights basis at a premium of Rs.465/- per share aggregating to Rs. 703,908,675/- The objects of the issue were to substantially increase capacity, upgrade and modernise the Bus Body building facilities and shift the existing presses from the main Sheet Metal Pressing unit (at Honda,Goa) to a location in or around Pune.

The Rights issue closed for subscription on 20th Apn1,2007 and shares were allotted on 19th May,2007. The management had then decided to shift the pressing unit to Dharwar (Karnataka) instead of Pune.

Further, at the AGM held on 8th August, 2009, the members have approved utilisation of the unspent amount as on the date of AGM for other purposes such as funding incremental working capital needs, new business opportunities, in-organic growth and to invest in group companies.

The statement of proceeds from the Rights Issue and utilisation thereof is as under:

8 The company had opted for sales tax deferral scheme under the 1988 Package Scheme of incentive of Bombay Sales Tax Act, 1959 under certificate of entitlement No 412302/S/R-31B/1069 dated 4/2/2000. The total sales tax collected and deferred under the said scheme aggregated to Rs 48,428,000/-. The repayment under the scheme was due from 2010 onwards. During the previous year the Company settled the full liability by paying an amount of Rs.20,830,269/- being the NPV (Net Present Value) calculated in accordance with the provisions of the said act. The differential amount of Rs. 27,597,731/- had been accounted as income and disclosed as an "exceptional item" in the Profit and loss account.

9 Hitherto, the company was valuing the inventory of Components, Stores and Spares on FIFO Basis. During the year, the company has changed the method to weighted average. The impact of the change is not material.

10 Figures of the previous year have been regrouped wherever necessary to correspond with those of the current year.

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