Mar 31, 2023
37 Significant Accounting Judgements, Estimates and Assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions, as described below, that affect the reported amounts and the disclosures. The Company based its assumptions and estimates on parameters available when the financial statements were prepared and are reviewed at each Balance Sheet date. Uncertainty about these assumptions and estimates could result in outcomes that may require a material adjustment to the reported amounts and disclosures. Information about critical judgements in applying accounting policies, as well as estimates and assumptions that have the most significant effect on the financial statements is as follows:
The Company has considered the possible risk that may result from the pandemic relating to COVID-19 on the carrying amounts of assets including inventories, receivables, investments and other financial and non-financial assets. As per the assessment carried out by the management based on the internal and external information available upto the date of approval of these standalone financial statements, the Company does not foresee any uncertainty related to recoverability or liquidation of the aforesaid assets and also about the ability of the nonfinancial assets to generate future economic benefits.
However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration. The impact of the global health pandemic may be different from that estimated as at the date of approval of these standalone financial statements and the Company will continue to closely monitor any material changes to future economic conditions.
The cost of the employment benefit plans and their present value are determined using actuarial valuations which involves making various assumptions that may differ from actual developments in the future. For further details refer note 38.
The fair value of unquoted investments are determined using valuation methods which involves making various assumptions that may differ from actual developments in the future. For further details refer note 43.
Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts and incentives. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer.
The Company estimates the fair value of points/awards accrued under the incentive schemes based on application of budgeted incentive payout rate or based on the fair value of the products against which such points/awards could be redeemed. Refer notes 25 and 26 for further details.
The Company estimates the provision for warranty based on past trend of actual issues of batteries under warranty. As at 31 March 2023, the estimated liability towards warranty amounted to approximately H 222.74 crs (PY: H 207.65 crs). For further details refer note 27.
The provision towards warranty is not discounted as the management, based on past trend, expects to use the provision within twelve months after the Balance Sheet date.
The likelihood of outcome of litigations and tax disputes are estimated by the management based on past experiences, legal advice, other public information etc. For further details, refer note 27.
38 Gratuity and Other Post Employment Benefit Plans
The Company provides for gratuity, a defined benefit retirement plan (âthe Gratuity Planâ) covering eligible employees of Company. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and the tenure of employment with the Company. Gratuity is funded through a Group managed trust. Trustees administer contributions made to the Trust and contributions are invested in a scheme with the Life Insurance Corporation of India.
The Company operates defined benefit pension plan for certain categories of employees. These plans are managed through a group managed trust. The Company also operates post retirement medical benefit plan, a defined benefit plan which is unfunded.
Other retirement benefit plans include contribution to provident fund and pension fund (for certain categories of employees).
The trustees of the trust fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. Each year, the Board of Trustees reviews the level of funding in the respective plans. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees decides its contribution based on the results of this annual review.
VIII In 2023-24 the Company expects to contribute H 10 crs (2022-23: H 8.09 crs) to gratuity and H NIL (2022-23: NIL) to Pension funds.
IX Healthcare cost trend rates have no effect on the amounts recognised in the Statement of Profit and Loss, since the benefit is in the form of a fixed amount as per the various grades, which is not subject to change.
X The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
XI The Company makes contribution to provident fund, superannuation fund and employeesâ state insurance schemes, which are defined contribution plans. Total contribution to the aforesaid funds during the year aggregated to H 32.68 crs (2021-22 - H 30.71 crs).
(H in Crores) |
||
Particulars |
March 31,2023 |
March 31,2022 |
(ii) Contingent Liabilities |
||
Guarantees excluding financial guarantees |
||
Outstanding Bank Guarantees / Indemnity Bonds |
55.92 |
55.99 |
Claims against the company not acknowledged as debt |
||
Sales Tax demands |
6.55 |
6.52 |
Excise Duty demands |
4.82 |
4.82 |
Income Tax demands |
3.05 |
3.05 |
Claim from a landlord, an appeal whereby is pending in Hon''ble Bombay High Court |
Not Ascertainable |
Not Ascertainable |
70.34 |
70.38 |
The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its standalone financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its standalone financial statements. The company does not expect the impact to be material.
The Company has identified two operating segments viz, Automotive and Industrial. As per Ind AS - 108, due to similar nature of products, production process, customer types, etc., the two operating segments have been aggregated as single operating segment of âstorage batteries and allied productsâ during the year. The analysis of geographical segments is based on the areas in which customers of the Company are located.
A number of the accounting policies and disclosures require the measurement of fair values of assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values. The Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Management assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
The Companyâs financial liabilities comprise capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs financial assets include trade and other receivables, cash and cash equivalents and investment.
The Company has a Risk Management Committee that ensures that risks are identified, measured and managed in accordance with Risk Management Policy of the Company. The Board of Directors also review these risks and related risk management policy.
The market risks and credit risks are further explained below:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include investments, trade payables, trade receivables, etc.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities. Such foreign currency exposures are not hedged by the Company. The Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on the Company.
The Companyâs listed and non-listed securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the securities price risk through diversification and by placing limits on individual and total securities. Reports on the investment portfolio are submitted to the Companyâs management on a regular basis. The Companyâs Board of Directors reviews and approves all investment decisions.
The Company is affected by the price volatility of certain commodities. Its operating activity is manufacturing of batteries and therefore requires supply of lead. Due to significant volatility in the lead price, the Company enters into purchase contract with vendors wherein the prices are linked to the quoted London Metal Exchange rates. Similarly, the Companyâs selling price of batteries to OEM/institutional customers is linked to such rates. Further, the Company also uses recycled lead which is not directly exposed to LME price movement, thereby reduces the risk of lead price volatility to some extent.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables). The maximum exposure to credit risk is equal to the carrying value of financial assets.
A significant part of the Companyâs sales are under the âcash and carryâ model which entails no credit risk. For others, an impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data of credit losses. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 5 and 11 as the Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are from several industries.
The Companyâs historical experience of collecting receivables and the level of default indicate that credit risk is low and generally uniform across markets; consequently, trade receivables are considered to be a single class of financial assets. All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the counterparty etc. Loss allowances and impairment is recognised, where considered appropriate by responsible management.
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Companyâs approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31 March 2023 and 31 March 2022. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.
The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and mutual funds with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.
The following table shows the maturity analysis of the Companyâs financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.
The Companyâs objective when managing capital (defined as net debt and equity) is to safeguard the Companyâs ability to continue as a going concern in order to provide returns to shareholders and benefit for other stakeholders, while protecting and strengthening the balance sheet through the appropriate balance of debt and equity funding. The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions and strategic objectives of the Company.
The Company leases out its investment property and some machinery. The Company has classified these leases as operating leases, because they do not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Note 3 sets out information about the operating leases of investment property.
The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be paid after the reporting date.
The Company leases warehouses, office premises and guest houses which are considered to be short-term leases. The Company has elected not to recognise right-of-use assets and lease liabilities for these leases.
The Company leases office and IT equipment which are of low-value. The Company has elected not to recognise right-of-use assets and lease liabilities for the same.
Lease payments for short-term leases and leases of low-value assets not included in the measurement of the lease liability are classified as cash flows from operating activities.
ii. Right-of-use and lease liabilities recognised in the financial statements represents the Companyâs lease of solar power plant facilities for obtaining solar power in its factories. The lease is for a period of 25 years. The consideration for use of solar power plant is variable based on the electricity units generated by the plants and consumed by the Company. Lease liability has been recognised for the minimum guaranteed payment, as set out in the respective power purchase agreements. The future cash outflows to which the lessee is potentially
exposed that are not reflected in the measurement of lease liabilities pertaining to variable payments for such power purchase agreements are not expected to be significant.
50 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the funding party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
The National Company Law Tribunal at Kolkata Bench has, vide order dated February 17, 2023 read with subsequent corrigendum order dated February 22, 2023, sanctioned a Scheme of Arrangement (âthe Schemeâ) with respect to merger of Chloride Power Systems & Solutions Limited (CPSSL) (wholly owned subsidiary of the Company) with the Company w.e.f. the appointed date i.e. April 01,2022. The aforesaid order was filed with the Registrar of Companies, Kolkata on March 29, 2023. In accordance with the requirements of Para 9(iii) of Appendix C of IND AS 103, the audited standalone financial results of the Company in respect of prior periods have been restated.
52 The Board of Directors of the Company in their meeting held on September 3, 2021, and the members of the Company, in the Extraordinary General Meeting held on September 29, 2021, had approved divestment of entire equity shareholding held by the Company in Exide Life Insurance Company Limited (ELIC), a material wholly-owned subsidiary of the Company, in favour of HDFC Life Insurance Company Limited (HLIC), subject to necessary approvals from relevant regulatory/governmental authorities.
The Board of Directors of HLIC, in its meeting held on September 3, 2021, and the members of the HLIC, in the Extraordinary General Meeting held on September 29, 2021, had accorded their approval for acquisition of entire equity shareholding of ELIC, subject to requisite regulatory approvals.
Post receipt of such requisite regulatory approvals, the aforesaid transaction was completed on January 1,2022, and the Company divested its entire equity shareholding in ELIC in favour of HLIC on that date for the agreed consideration. Resulting net gain on disposal of investments in ELIC has been disclosed as exceptional item in these standalone financial statements.
Mar 31, 2022
36 Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions, as described below, that affect the reported amounts and the disclosures. The Company based its assumptions and estimates on parameters available when the financial statements were prepared and are reviewed at each Balance Sheet date. Uncertainty about these assumptions and estimates could result in outcomes that may require a material adjustment to the reported amounts and disclosures. Information about critical judgements in applying accounting policies, as well as estimates and assumptions that have the most significant effect on the financial statements is as follows:
The Company has considered the possible risk that may result from the pandemic relating to COVID-19 on the carrying amounts of assets including inventories, receivables, investments and other financial and nonfinancial assets. As per the assessment carried out by the management based on the internal and external information available upto the date of approval of these standalone financial statements, the Company does
not foresee any uncertainty related to recoverability or liquidation of the aforesaid assets and also about the ability of the non-financial assets to generate future economic benefits.
However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration. The impact of the global health pandemic may be different from that estimated as at the date of approval of these standalone financial statements and the Company will continue to closely monitor any material changes to future economic conditions.
The cost of the employment benefit plans and their present value are determined using actuarial valuations which involves making various assumptions that may differ from actual developments in the future.
For further details refer note 37.
The fair value of unquoted investments are determined using valuation methods which involves making various assumptions that may differ from actual developments in the future. For further details refer note 42.
Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts and incentives. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer.
The Company estimates the fair value of points/ awards accrued under the incentive schemes based on application of budgeted incentive payout rate or based on the fair value of the products against which such points/awards could be redeemed. Refer notes 24 and 25 for further details.
The Company estimates the provision for warranty based on past trend of actual issues of batteries under warranty. As at 31 March 2022, the estimated liability towards warranty amounted to approximately H 207.44 crs (PY: H 214.21 crs). For further details refer note 26.
The provision towards warranty is not discounted as the management, based on past trend, expects to use the provision within twelve months after the Balance Sheet date.
The likelihood of outcome of litigations and tax disputes are estimated by the management based on past experiences, legal advice, other public information etc. For further details, refer note 26.
37 Gratuity and Other Post employment Benefit Plans
The Company provides for gratuity, a defined benefit retirement plan (''the Gratuity Plan'') covering eligible
employees of Company. The Gratuity Plan provides a lumpsum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the Company. Gratuity is funded through a Group managed trust. Trustees administer contributions made to the Trusts and contributions are invested in a scheme with the Life Insurance Corporation of India.
The Company operates defined benefit pension plan for certain categories of employees. These plans are managed through a group managed trust. The Company also operates post retirement medical benefit plan, a defined benefit plan which is unfunded.
Other retirement benefit plans include contribution to provident fund and pension fund (for certain categories of employees).
The trustees of the trust fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. Each year, the Board of Trustees reviews the level of funding in the respective plans. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees decides its contribution based on the results of this annual review.
VIII In 2022-23 the Company expects to contribute H 8.00 crs (2021-22: H 9.00 crs) to gratuity and H Nil (2021-22: H 0.17 crs) to Pension funds.
IX Healthcare cost trend rates have no effect on the amounts recognised in the Statement of Profit and Loss, since the benefit is in the form of a fixed amount as per the various grades, which is not subject to change.
X The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
XI The Company makes contribution to provident fund, superannuation fund and employees'' state insurance schemes, which are defined contribution plans. Total contribution to the aforesaid funds during the year aggregated to H 30.43 crs (202021 - H 28.93 crs).
The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its standalone financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its standalone financial statements. The company does not expect the impact to be material.
Notes : (1) Interim dividend for the year 2021-22 amounting to H 78.18 crs was paid during the year (Interim dividend for the year 2020-21 amounting to H 78.18 crs was paid during the previous year) to Chloride Eastern Limited, UK.
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.
There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (PY: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
The Company has identified two operating segments viz, Automotive and Industrial. As per Ind AS - 108, due to similar nature of products, production process, customer types, etc., the two operating segments have been aggregated as single operating segment of "storage batteries and allied products" during the year. The analysis of geographical segments is based on the areas in which customers of the Company are located.
The Company primarily operates in India and therefore the analysis of geographical segment is demarcated into its Indian and Overseas operations as under:
The Company is not reliant on revenues from transactions with any single external customer and does not receive 10% or more of its revenues from transactions with any single external customer.
42 Financial instruments - Fair values and risk management
A number of the accounting policies and disclosures require the measurement of fair values of assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values. The Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Management assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
43 Financial Risk Management Objectives and policies
The Company''s financial liabilities comprise capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s financial assets include trade and other receivables, cash and cash equivalents and investment.
The Company has a Risk Management Committee that ensures that risks are identified, measured and managed in accordance with Risk Management Policy of the Company. The Board of Directors also review these risks and related risk management policy. The market risks and credit risks are further explained below:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include investments, trade payables, trade receivables, etc.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities. Such foreign currency exposures are not hedged by the Company. The Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on the Company.
Foreign currency sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in exchange rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities.
The Company''s listed and non-listed securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the securities price risk through diversification and by placing limits on individual and total securities. Reports on the investment portfolio are submitted to the Company''s management on a regular basis. The Company''s Board of Directors reviews and approves all investment decisions.
The following table shows the effect of price changes in securities measured at FVTPL
The Company is affected by the price volatility of certain commodities. Its operating activity is manufacturing of batteries and therefore requires supply of lead. Due to significant volatility in the lead price, the Company enters into purchase contract with vendors wherein the prices are linked to the quoted London Metal Exchange rates. Similarly, the Company''s selling price of batteries to OEM/institutional customers is linked to such rates. Further, the Company also uses recycled lead which is not directly exposed to LME price movement, thereby reduces the risk of lead price volatility to some extent.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables). The maximum exposure to credit risk is equal to the carrying value of financial assets.
A significant part of the Company''s sales are under the ''cash and carry'' model which entails no credit risk. For others, an impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data of credit losses. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 5 and 11 as the Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are from several industries.
The Company''s historical experience of collecting receivables and the level of default indicate that credit risk is low and generally uniform across markets; consequently, trade receivables are considered to be a single class of financial assets. All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the counterparty etc. Loss allowances and impairment is recognised, where considered appropriate by responsible management.
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31 March 2022 and 31 March 2021. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.
The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and mutual funds with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.
The following table shows the maturity analysis of the Company''s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.
The Company''s objective when managing capital (defined as net debt and equity) is to safeguard the Company''s ability to continue as a going concern in order to provide returns to shareholders and benefit for other stakeholders, while protecting and strengthening the balance sheet through the appropriate balance of debt and equity funding. The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions and strategic objectives of the Company.
The Company leases out its investment property and some machinery. The Company has classified these leases as operating leases, because they do not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Note 2b sets out information about the operating leases of investment property.
The Company leases warehouses, office premises and guest houses which are considered to be short-term leases. The Company has elected not to recognise right-of-use assets and lease liabilities for these leases.
The Company leases office and IT equipment which are of low-value. The Company has elected not to recognise right-of-use assets and lease liabilities for the same.
Lease payments for short-term leases and leases of low-value assets not included in the measurement of the lease liability are classified as cash flows from operating activities.
ii. Right-of-use and lease liabilities recognised in the financial statements represents the Company''s lease of solar power plant facilities for obtaining solar power in its factories. The lease is for a period of 25 years. The consideration for use of solar power plant is variable based on the electricity units generated by the plants and consumed by the Company. Lease liability has been recognised for the minimum guaranteed payment, as set out in the respective power purchase agreements. The future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of lease liabilities pertaining to variable payments for such power purchase agreements are not expected to be significant.
49 The Board of Directors of the Company in their meeting held on September 3, 2021, and the members of the Company, in the Extraordinary General Meeting held on September 29, 2021, had approved divestment of entire equity shareholding
held by the Company in Exide Life Insurance Company Limited (ELIC), a material wholly-owned subsidiary of the Company, in favour of HDFC Life Insurance Company Limited (HLIC), subject to necessary approvals from relevant regulatory/ governmental authorities.
The Board of Directors of HLIC, in its meeting held on September 3, 2021, and the members of the HLIC, in the Extraordinary General Meeting held on September 29, 2021, had accorded their approval for acquisition of entire equity shareholding of ELIC, subject to requisite regulatory approvals.
Post receipt of such requisite regulatory approvals, the aforesaid transaction was completed on January 1, 2022, and the Company divested its entire equity shareholding in ELIC in favour of HLIC on that date for the agreed consideration. Resulting net gain on disposal of investments in ELIC has been disclosed as exceptional item in these standalone financial statements.
50 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the funding party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
51 The Board of Directors of the Company at its meeting held on 29 March 2022 approved a scheme of amalgamation of Chloride Power Systems & Solutions Limited ("the Transferor Company"), a wholly owned subsidiary, with the Company ("the Transferee Company"). The Company is in the process of filing necessary application to relevant regulatory/ government authorities.
Mar 31, 2021
the financial statements were prepared and are reviewed at each Balance Sheet date. Uncertainty about these assumptions and estimates could result in outcomes that may require a material adjustment to the reported amounts and disclosures. Information about critical judgements in applying accounting policies, as well as estimates and assumptions that have the most significant effect on the financial statements is as follows:
35 Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions, as described below, that affect the reported amounts and the disclosures. The Company based its assumptions and estimates on parameters available when
The Company has considered the possible risk that may result from the pandemic relating to COVID-19 on the carrying amounts of assets including inventories, receivables, investments and other financial and nonfinancial assets. As per the assessment carried out by the management based on the internal and external information available upto the date of approval of these standalone financial statements, the Company does not foresee any uncertainty related to recoverability or liquidation of the aforesaid assets and also about the ability of the non-financial assets to generate future economic benefits.
However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration. The impact of the global health pandemic may be different from that estimated as at the date of approval of these standalone financial statements and the Company will continue to closely monitor any material changes to future economic conditions.
The cost of the employment benefit plans and their present value are determined using actuarial valuations which involves making various assumptions that may differ from actual developments in the future. For further details refer Note 36.
( c ) Fair value measurement of investments
The fair value of unquoted investments are determined using valuation methods which involves making various assumptions that may differ from actual developments in the future. For further details refer Note 41.
(d) Customer''s loyalty programme
Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts and incentives. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer.
The Company estimates the fair value of points/ awards accrued under the incentive schemes based on application of budgeted incentive payout rate or based on the fair value of the products against which such points/awards could be redeemed. Refer note 23 and 24 for further details.
(e) Warranty provisioning
The Company estimates the provision for warranty based on past trend of actual issues of batteries under warranty. As at 31 March 2021, the estimated liability towards warranty amounted to approximately H 214.21 crs (PY: H 239.64 crs). For further details refer Note 25. The provision towards warranty is not discounted as the management, based on past trend, expects to use the provision within twelve months after the Balance Sheet date.
(f) Provision for litigations and tax disputes
The likelihood of outcome of litigations and tax disputes are estimated by the management based on past experiences, legal advice, other public information etc. For further details, refer Note 25.
X The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
XI The Company makes contribution to provident fund, superannuation fund and employees'' state insurance schemes, which are defined contribution plans. Total contribution to the aforesaid funds during the year aggregated to H 28.93 crs (2019-20 - H 25.93 crs).
Notes : (1) Interim dividend for the year 2020-21 amounting to H 78.18 crs was paid during the year (Final dividend for the year 2018-19 amounting to H 31.28 crs and Interim Dividend for the year 2019-20 amounting to H 160.29 crs was paid during the previous year) to Chloride Eastern Limited, UK.
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2021, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (PY: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
The Company has identified two operating segments viz, Automotive and Industrial. As per Ind AS - 108, due to similar nature of products, production process, customer types, etc., the two operating segments have been aggregated as single operating segment of "storage batteries and allied products" during the year. The analysis of geographical segments is based on the areas in which customers of the Company are located.
41 Financial instruments - Fair values and risk management
A number of the accounting policies and disclosures require the measurement of fair values of assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. The Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Management assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2 : inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
The Company''s financial Liabilities comprise short-term borrowings, capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s financial assets include trade and other receivables, cash and cash equivalents and investment.
The Company has a Risk Management Committee that ensures that risks are identified, measured and managed in accordance with Risk Management Policy of the Company. The Board of Directors also review these risks and related risk management policy.
The market risks and credit risks are further explained below:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include FVTOCI investments, trade payables, trade receivables, etc.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities. Such foreign currency exposures are not hedged by the Company. The Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on the Company.
The following table demonstrates the sensitivity to a reasonably possible change in exchange rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities.
The Company is affected by the price volatility of certain commodities. Its operating activity is manufacturing of batteries and therefore requires supply of lead. Due to significant volatility in the lead price, the Company enters into purchase contract with vendors wherein the prices are linked to the quoted London Metal Exchange rates. Similarly, the Company''s selling price of batteries to OEM/institutional customers is linked to such rates. As the Company''s significant revenue is linked to cost of lead, the impact of change in lead prices on Company''s profit is not expected to be significant.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables). The maximum exposure to credit risk is equal to the carrying value of financial assets.
Trade receivables
A significant part of the Company''s sales are under the ''cash and carry'' model which entails no credit risk. For others, an impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data of credit losses. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 5 and 10 as the Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are from several industries.
The Company''s listed and non-listed securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the securities price risk through diversification and by placing limits on individual and total securities. Reports on the investment portfolio are submitted to the Company''s management on a regular basis. The Company''s Board of Directors reviews and approves all investment decisions.
The Company''s historical experience of collecting receivables and the Level of default indicate that credit risk is Low and generally uniform across markets; consequently, trade receivables are considered to be a single class of financial assets. All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the counterparty etc. Loss allowances and impairment is recognised, where considered appropriate by responsible management.
The maturity analysis of the Company''s lease liabilities based on contractually agreed undiscounted cash flows is given in Note 44.
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31 March 2021 and 31 March 2020. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.
The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and mutual funds with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.
The following table shows the maturity analysis of the Company''s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.
The Company''s objective when managing capital (defined as net debt and equity) is to safeguard the Company''s ability to continue as a going concern in order to provide returns to shareholders and benefit for other stakeholders, while protecting and strengthening the balance sheet through the appropriate balance of debt and equity funding. The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions and strategic objectives of the Company.
The Company leases out its investment property and some machinery. The Company has classified these leases as operating leases, because they do not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Note 2b sets out information about the operating leases of investment property.
The Company Leases warehouses, office premises and guest houses which are considered to be short-term Leases. The Company has elected not to recognise right-of-use assets and lease liabilities for these leases.
The Company leases office and IT equipment which are of low-value. The Company has elected not to recognise right-of-use assets and Lease LiabiLities for the same.
Lease payments for short-term leases and leases of low-value assets not included in the measurement of the lease LiabiLity are cLassified as cash fLows from operating activities.
ii. Right-of-use and lease liabilities recognised in the financial statements represents the Company''s lease of solar power plant facilities for obtaining solar power in its factories. The lease is for a period of 25 years. The consideration for use of soLar power pLant is variabLe based on the eLectricty units generated by the pLants and consumed by the Company. Lease liability has been recognised for the minimum guaranteed payment, as set out in the respective power purchase agreements. The future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of Lease LiabiLities pertaining to variabLe payments for such power purchase agreements are not expected to be significant.
46 Exceptional Item for previous year represents the amount towards duty/tax paid under the Sabka Vishwas - (Legacy Dispute Resolution) Scheme, 2019.
Mar 31, 2019
1. CORPORATE INFORMATION
Exide Industries Limited (the company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 2013. Its shares are listed on three recognised stock exchanges in India. The registered office of the company is located at Exide House, 59E Chowringhee Road, Kolkata, 700020. The Company is primarily engaged in the manufacturing of Storage Batteries and allied products in India.
2. BASIS OF PREPARATION
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the âActâ) and other relevant provisions of the Act.
The financial statements were authorised for issue by the Companyâs Board of Directors on 30 April 2019.
These financial statements are presented in Indian Rupees (INR), which is also the Companyâs functional currency. All amounts have been rounded-off to the nearest crore, unless otherwise indicated.
The financial statements have been prepared on the historical cost basis except for:
- Certain financial assets and liabilities, which are measured at fair value
- Net defined benefit (asset)/ liability, which are measured at Fair Value of plan assets less present value of defined benefit obligations
a) Terms / rights attached to equity shares
The company has only one class of Equity Shares having a Par Value of Re. 1 per share. Each Holder of Equity Shares is entitled to one Vote per share. The company declares and pays dividends in Indian Rupee. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of Liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(i) Sales are net of price adjustments settled during the year by the Company and discounts, trade incentives, VAT, Sales Tax, GST etc.
(ii) Sale of goods includes excise duty collected from customers of Rs Nil (PY: Rs. 273.48 crs).
(iii) Post the applicability of Goods and Service Tax (GST) with effect from July 1, 2017, revenue from operations are disclosed net of GST. Accordingly, the revenue from operations for year ended March 31, 2019 are not comparable with the previous years figure.
Geographic location is based on the location of customers excluding export incentive.
Information about major customers:
No single customer represents 10% or more of the Companyâs total revenue during the year ended March 31, 2019 and March 31, 2018.
ii) Rent and hire charges include Rs. 35.92 crs (PY Rs. 32.47 crs) towards lease of residential apartments, Office premises and Godowns. These are cancellable leases, renewable by mutual agreement. The lease term is for various number of years and renewable for further periods as per the lease agreements. There are no sub-leases.
The Company has spent Rs. 19.22 crs (PY: Rs. 18.30 crs) towards various schemes of Corporate Social Responsibility as prescribed under Sec. 135 of the Companies Act, 2013. The details are:
I. Gross amount required to be spent by the Company during the year Rs. 18.98 crs ( PY: Rs. 17.64 crs)
3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions, as described below, that affect the reported amounts and the disclosures. The Company based its assumptions and estimates on parameters available when the financial statements were prepared and are reviewed at each Balance Sheet date. Uncertainty about these assumptions and estimates could result in outcomes that may require a material adjustment to the reported amounts and disclosures. Information about critical judgements in applying accounting policies, as well as estimates and assumptions that have the most significant effect on the financial statements is as follows:
(a) Employee benefit plans
The cost of the employment benefit plans and their present value are determined using actuarial valuations which involves making various assumptions that may differ from actual developments in the future. For further details refer Note 36.
(b) Fair value measurement of investments
The fair value of unquoted investments are determined using valuation methods which involves making various assumptions that may differ from actual developments in the future. For further details refer Note 41.
(c) Revenue recognition and customerâs loyalty programme
Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts and incentives. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer.
The Company uses judgement to determine an appropriate standalone selling price for a performance obligation. The Company allocates the transaction price to each performance obligation on the basis of the relative standalone selling price of each distinct product or service promised in the contract.
The Company estimates the fair value of points awarded under the incentive schemes based on past trend of similar incentive schemes and by applying a budgeted incentive payout rate. Inputs include making assumptions about expected redemption rates, the mix of products that will be available for redemption in the future and customer preferences. Refer note 23 and 24 for further details.
(d) Warranty, Non discounting to warranty
The Company estimates the provision for warranty based on past trend of actual issues of batteries under warranty. As at 31 March 2019, the estimated liability towards warranty aggregated to Rs. 211.31 crs (PY: Rs. 175.18 crs). For further details refer Note 25. The provision towards warranty is not discounted as the management, based on past trend, expects to use the provision within twelve months after the Balance Sheet date.
(e) Provision for litigations and tax disputes
The likelihood of outcome of litigations and tax disputes are estimated by the management based on past experiences, legal advice, other public information etc. For further details, refer Note 25.
I In 2019-20 the Company expects to contribute Rs 4.00 crs (2018-19: Rs 9.00 crs) to gratuity and Rs 3.60 crs (2018-19: Rs 3.50 crs) to Pension funds.
II Healthcare cost trend rates have no effect on the amounts recognised in the statement of profit and loss, since the benefit is in the form of a fixed amount as per the various grades, which is not subject to change.
III The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
IV The Company makes contribution to provident fund, superannuation fund and employeesâ state insurance schemes, which are defined contribution plans. Total contribution to the aforesaid funds during the year aggregated to Rs 25.20 crs (2017-18 - Rs 23.29 crs).
* Includes a Demand of Rs 32.60 crs plus penalties, as applicable, for the period June 2006-May 2009 on the grounds that Excise Duty was payable on the MRP of batteries. The Company has contested applicability of The Standards of Weights & Measures Act, 1976 and Rules thereunder, the applicability of which is still to be adjudicated by the Honâble Supreme Court. Meanwhile, Company has been granted a stay on this Excise Duty demand by CESTAT, Kolkata.
The Supreme Court, in a judgement dated 28 Feb 2019, has stipulated the components of salary that need to be taken into account for computing the contribution to provident fund under the Employees Provident Fund Act, 1952. The company will account for the impact of the judgement after clarification is obtained in interpreting aspects of the judgement and after knowing the effective date of its application. The company does not expect the impact to be material.
Notes : (1) Final dividend amounting to Rs 31.28 crs was paid for the year 2017-18 (Rs 31.28 crs for the year 2016-17) and Rs 62.55 crs towards Interim Dividend for 2018-19 (Rs 62.55 crs for Interim Dividend 2017-18) to Chloride Eastern Limited, UK.
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2019, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (PY: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
4. SEGMENT REPORTING
The Company has identified two operating segments viz, Automotive and Industrial. As per Ind AS - 108, due to similar nature of products, production process, customer types, etc., the two operating segments have been aggregated as single operating segment of âstorage batteries and allied productsâ during the year. The analysis of geographical segments is based on the areas in which customers of the Company are located.
5. FINANCIAL INSTRUMENTS
- FAIR VALUES AND RISK MANAGEMENT
A. Measurement of fair values
A number of the accounting policies and disclosures require the measurement of fair values of assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. The Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Management assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
The fair value of equity securities designated as Fair value through other comprehensive income is determined using Level 3 inputs like discounted cash flows, net asset value approach. Significant unobservable inputs comprise long term growth rates, market conditions of the specific industry etc. However, the changes in the fair values due to changes in unobservable inputs will not be material to the financial statements.
6. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Companyâs financial liabilities comprise short-term borrowings, capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs financial assets include trade and other receivables, cash and cash equivalents and investment.
The Company has a Risk Management Committee that ensures that risks are identified, measured and managed in accordance with Risk Management Policy of the Company. The Board of Directors also review these risks and related risk management policy.
The market risks and credit risks are further explained below:
I) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include FVTOCI investments, trade payables, trade receivables, etc.
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities. Such foreign currency exposures are not hedged by the Company. The Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on the Company.
Foreign currency sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities.
(ii) Equity price risk
The Companyâs investments in listed and non-listed equity securities and mutual funds are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments / mutual funds. Reports on the investment portfolio are submitted to the Companyâs management on a regular basis. The Companyâs Board of Directors reviews and approves all investment decisions.
(iii) Commodity price risk
The Company is affected by the price volatility of certain commodities. Its operating activity is manufacturing of batteries and therefore requires supply of lead. Due to significant volatility in the lead price, the Company enters into purchase contract with vendors wherein the prices are linked to the quoted London Metal Exchange rates. Similarly, the Companyâs selling price of batteries to OEM customers is linked to such rates. As the Companyâs significant revenue is linked to cost of lead, the impact of change in lead prices on Companyâs profit is not expected to be significant.
II) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables). The maximum exposure to credit risk is equal to the carrying value of financial assets.
Trade receivables
A significant part of the Companyâs sales are under the âcash and carryâ model which entails no credit risk. For others, an impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data of credit losses. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 5 and 10 as the Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are from several industries.
The Companyâs historical experience of collecting receivables and the level of default indicate that credit risk is low and generally uniform across markets; consequently, trade receivables are considered to be a single class of financial assets. All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the counterparty etc. Loss allowances and impairment is recognised, where considered appropriate by responsible management.
III) Liquidity risk
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Companyâs approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31 March 2019 and 31 March 2018. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.
The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and mutual funds with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.
7. CAPITAL MANAGEMENT
The Companyâs objective when managing capital (defined as net debt and equity) is to safeguard the Companyâs ability to continue as a going concern in order to provide returns to shareholders and benefit for other stakeholders, while protecting and strengthening the balance sheet through the appropriate balance of debt and equity funding. The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions and strategic objectives of the Company.
8. The Board of Directors at its meeting held on April 30, 2019 have recommended a final dividend of Rs. 0.80 (80% ) per equity share of face value of Re 1 each for the financial year ended March 31, 2019. The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognized as a liability.
9. LIST OF SUBSIDIARIES OF THE COMPANY
The Company has following subsidiaries for which the Company prepares Consolidated Financial Statements as per Ind AS 110 âConsolidated Financial Statementsâ. These subsidiaries have been accounted at cost in these separate financial statements of the Company.
10. Exceptional Item for current year represents profit on sale of property at Guindy, Tamil Nadu and for previous year represents expenses incurred towards settlement of dispute with Exide Technologies,USA, in relation to the usage of the name or mark âExideâ in India.
11. The disclosures regarding details of specified bank notes held and transacted during 8th November 2016 to 30th December 2016 has not been made in these financial statements since the requirement does not pertain to financial year ended 31 March 2019.
Mar 31, 2018
1. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgments, estimates and assumptions, as described below, that affect the reported amounts and the disclosures. The Company based its assumptions and estimates on parameters available when the financial statements were prepared and are reviewed at each Balance Sheet date. Uncertainty about these assumptions and estimates could result in outcomes that may require a material adjustment to the reported amounts and disclosures. Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect on the financial statements is as follows:
(a) Employee benefit plans
The cost of the employment benefit plans and their present value are determined using actuarial valuations which involves making various assumptions that may differ from actual developments in the future. For further details refer Note 37.
(b) Fair value measurement of investments
The fair value of unquoted investments are determined using valuation methods which involves making various assumptions that may differ from actual developments in the future. For further details refer Note 42.
(c) Deferral of Revenue (customer''s incentive scheme)
The Company estimates the fair value of points awarded under the incentive schemes based on past trend of similar incentive schemes and by applying a budgeted incentive payout rate. Inputs include making assumptions about expected redemption rates, the mix of products that will be available for redemption in the future and customer preferences. As at March 31, 2018, the estimated liability towards unredeemed points amounted to approximately Rs. 62.32 crs (PY: Rs. 54.97 crs)
(d) Warranty, Non discounting to warranty
The Company estimates the provision for warranty based on past trend of actual issues of batteries under warranty. As at March 31, 2018, the estimated liability towards warranty amounted to approximately Rs. 175.18 crs (PY: Rs. 178.13 crs) The provision towards warranty is not discounted as the management, based on past trend, expects to use the provision within twelve months after the Balance Sheet date.
(e) Provision for litigations and tax disputes
The likelihood of outcome of litigations and tax disputes are estimated by the management based on past experiences, legal advice, other public information etc. For further details, refer Note 26.
2. GRATUITY AND OTHER POST EMPLOYMENT BENEFIT PLANS
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of The Payment of Gratuity Act, 1972. The scheme is funded with an insurance company. The Company provides certain post-retirement medical benefits (PRMB) to the employees qualifying for such benefits under the scheme upto March 31, 2006, and accordingly the number of beneficiaries is frozen on that date. This benefit is unfunded.
The Company has a Pension plan, a part of the liability whereof upto March 31, 2003, for employees as on that date is in the nature of a defined benefit plan. From April 1, 2003 onwards, pension remains as a defined contribution liability which is funded annually with an insurance company.
The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of earned leave for encashment upon retirement/separation. This is an unfunded plan.
The following tables summaries the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the Post - retirement benefit plans:
VII. Actuarial Assumptions
1. Discount Rate 7 % p.a (March 31, 2017: 7% p.a.)
2. Expected rate of return on plan assets 7 % p.a (March 31, 2017: 7% p.a.)
3. Mortality pre retirement Indian Assured Lives Mortality (2006-08) (modified) Ult.
4. Mortality post retirement LIC (1996-98) Ultimate
5. Employee Turnover Rate 2.00%
VIII. In 2018-19 the Company expects to contribute Rs. 9.00 crs (2017-18: Rs. 8.00 crs) to gratuity and Rs. 3.50 crs (2017-18: Rs. 4.00 crs) to Pension funds.
IX. Healthcare cost trend rates have no effect on the amounts recognized in the statement of profit and loss, since the benefit is in the form of a fixed amount as per the various grades, which is not subject to change.
X. The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
XI. The Company makes contribution to provident fund, superannuation fund and employees'' state insurance schemes, which are defined contribution plans. Total contribution to the aforesaid funds during the year aggregated to Rs. 23.29 crs (201617 - Rs. 23.38 crs).
A. Where control exists_
1. Subsidiaries Chloride Batteries S.E. Asia Pte. Limited, Singapore. (CBSEA)_
Chloride International Limited (CIL)
Chloride Power Systems and Solutions Limited (CPSSL)
Espex Batteries Limited, UK (Espex)
Associated Battery Manufacturers (Ceylon) Ltd , Sri Lanka (ABML) Chloride Metals Limited (CML) _Exide Life Insurance Company Limited (ELI)
2. Enterprise / Individuals having a direct or CNoride Eastern Urnh^ uk:. (cel)
. i- . .i ^ Chloride Eastern Industries Pte Limited, Sinqapore (CEIL) indirect C^l-d over the Company LIEC Holdings SA, Switzerland _Mr. S B Raheia
B. Others_
1. Key Management Personnel Mr. G Chatterjee, Whole Time Director
(As on March 31, 2018) M^ A K T''T Directol\
Mr. Subir Chakraborty, Whole Time Director
Mr. Arun Mittal, Whole Time Director
Mr. Bharat D. Shah, Director
Mr. R.B.Raheja, Director
Mr. Nawshir H. Mirza, Director
Mr. Vijay Agarwal, Director
Mr. Sudhir Chand, Director
Ms. Mona N. Desai, Director
Mr. Surin S. Kapadia, Director (w.e.f. October 25, 2017)
Mr. Jitendra Kumar, Company Secretary
2. Name of the Companies / firms / in which Directors / Sha[ini Conslmction Comply Private Umrted
Key Management Personnel have significant influence PeninsuiaDEstates Pr|vate Limited
Raheja QBE General Insurance Company Limited
with whom transactions have happened during the year
3. Employees Trusts where there is significant influence:
Notes : (1) Final dividend amounting to Rs. 31.28 crs was paid for the year 2016-17 (Rs. 31.28 crs for the year 2015-16) and Rs. 62.55 crs towards Interim Dividend for 2017-18 (Rs. 62.55 crs for Interim Dividend 2016-17) to Chloride Eastern Limited, UK.
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (PY: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
4. SEGMENT REPORTING
The Company has identified two operating segments viz, Automotive and Industrial. As per Ind AS - 108, due to similar nature of products, production process, customer types, etc., the two operating segments have been aggregated as single operating segment of âstorage batteries and allied products" during the year. The analysis of geographical segments is based on the areas in which customers of the Company are located.
The Company is not reliant on revenues from transactions with any single external customer and does not receive 10% or more of its revenues from transactions with any single external customer.
5. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT A. Measurement of fair values
A number of the accounting policies and disclosures require the measurement of fair values of assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. The Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Management assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
6. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company''s financial liabilities comprise short-term borrowings, capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s financial assets include trade and other receivables, cash and cash equivalents, investment.
The Company has a Risk Management Committee that ensures that risks are identified, measured and managed in accordance with Risk Management Policy of the Company. The Board of Directors also review these risks and related risk management policy. The market risks and credit risks are further explained below:
I) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include FVTOCI investments, trade payables, trade receivables, etc.
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities. Such foreign currency exposures are not hedged by the Company. The Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on the Company.
Foreign currency sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in exchange rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities.
(ii) Equity price risk
The Company''s listed and non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments / mutual funds. Reports on the investment portfolio are submitted to the Company''s management on a regular basis. The Company''s Board of Directors reviews and approves all investment decisions.
II) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables).
Trade receivables
A significant part of the Company''s sales are under the ''cash and carry'' model which entails no credit risk. For others, an impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data of credit losses. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 5 and 10 as the Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are from several industries.
The Company''s historical experience of collecting receivables and the level of default indicate that credit risk is low and generally uniform across markets; consequently, trade receivables are considered to be a single class of financial assets. All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the counterparty, etc. Loss allowances and impairment is recognized, where considered appropriate by responsible management.
7. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
III) Liquidity risk
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended March 31, 2018 and March 31, 2017. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.
The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and mutual funds with appropriate maturities to optimize the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.
The following table shows the maturity analysis of the Company''s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.
8. CAPITAL MANAGEMENT
The Company''s objective when managing capital (defined as net debt and equity) is to safeguard the Company''s ability to continue as a going concern in order to provide returns to shareholders and benefit for other stakeholders, while protecting and strengthening the balance sheet through the appropriate balance of debt and equity funding. The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions and strategic objectives of the Company.
9. The Board of Directors at its meeting held on May 7, 2018 have recommended a dividend of Re. 0.80 (80%) per equity share of face value of Re. 1 each for the financial year ended March 31, 2018. The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognized as a liability.
10. LIST OF SUBSIDIARIES OF THE COMPANY
The Company has following subsidiaries for which the Company prepares Consolidated Financial Statements as per Ind AS 110 âConsolidated Financial Statements". These subsidiaries have been accounted at cost in these separate financial statements of the Company.
11. Exceptional Item represents expenses incurred towards settlement of dispute with Exide Technologies, USA, in relation to the usage of the name or mark âExide" in India.
12. The disclosures regarding details of specified bank notes held and transacted during November 8, 2016 to December 30, 2016 has not been made since the requirement does not pertain to financial year ended March 31, 2018. Corresponding amounts as appearing in the audited Standalone Ind AS financial statements for the period ended March 31, 2017 have been disclosed.
13. The financial statements of the previous year were audited by a firm of chartered accountants other than B S R & Co. LLP.
Mar 31, 2017
a. Investments in equity shares / units
Under Indian GAAP, all investments in equity shares / units were measured at cost. As explained in accounting policy in 1(d) below, under Ind-AS, investments in shares / units (other than investments in subsidiaries) are accounted for at fair value. These estimates are based on conditions existing on the respective Balance Sheet dates.
b. Dividend
Under Indian GAAP, proposed final dividends including Dividend Distribution Taxes (DDT) are recognised as a liability in the period to which they relate, irrespective of when they are approved. Under Ind AS, such dividend is recognised as a liability when approved by shareholders.
c. Deferral of Revenue (Customers incentive scheme)
Under Indian GAAP, provision towards customer incentive was recognised at cost. As explained in accounting policy 1(k) below, under Ind-AS, incentive payable is accounted for at fair value. These estimates are based on conditions existing on the respective Balance Sheet dates.
d. Deferred Tax
Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the Balance Sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the Balance Sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.
Further, the various transitional adjustments arising on adoption of Ind-AS also create temporary differences, deferred tax adjustments whereon are also recognised and recorded in Retained Earnings, Statement of Profit and Loss or OCI along with the corresponding item of adjustment.
e. Goodwill amortization
Under Indian GAAP, the acquired goodwill was amortised over the period of 5 years. However, under IND AS, acquired goodwill is not amortised, but tested for impairment. Accordingly, amortisation of goodwill has been reversed.
f. Re-classifications and other miscellaneous items
The Company has done the following reclassifications as per the requirements of Ind-AS:
i) Re-Measurement gain/loss on defined benefit plans are re-classified from Statement of Profit and Loss to OCI
ii) Assets / liabilities which do not meet the definition of financial asset / financial liability have been reclassified to other Assets / liabilities.
iii) Allowance for doubtful debts accounted for based on trend of historical default rates as per Ind-AS 109 - Financial Instruments.
iv) Warranty cost, earlier being netted off with cost of raw material consumed, has been re-classified to other expenses. Similarily, excise duty on warranty, earlier netted off with Sales, has now been reclassified to other expenses.
v) The Company has re-classified Unpaid dividend balance from cash and cash equivalents to other bank balances.
vi) Excise duty on sales of goods earlier netted off with sales has been disclosed as a separate item in expenses
vii) The Company has made Provision for site restoration liabilities and provided Interest thereon as per Ind-AS 37 - Provisions, Contingent Liabilities and Contingent Assets.
g. Other comprehensive income
Ind-AS requires preparation of Statement of Other Comprehensive Income in addtion to Statement of Profit and Loss.
h. Ind-AS 101 Exemptions applied
The Company has adopted following exemptions from retrospective application of certain requirements under Ind-AS, as allowed by Ind-AS 101 - First-time Adoption of Indian Accounting Standards
(i) The Company has opted not to apply Ind-AS 103-Business Combinations, to acquisitions occurred before April 1, 2015.
(ii) The Company has elected to continue with carrying value as recognised in its Indian GAAP Financial Statements of following items as deemed cost at the transition date, viz., April 1, 2015 in accordance with Ind-AS 101- First-time Adoption of Indian Accounting Standards.
A. Property Plant and Equipments
B. Intangible Assets
C. Investment in subsidiaries
(iii) The Company has designated investment in equity instruments (other than investment in subsidairies and investment in mutual funds) held at April 1, 2015 as FVTOCI investments and investment in mutual funds as FVTPL instruments.
Corporate Information
Exide Industries Limited (the company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 2013. Its shares are listed on three recognised stock exchanges in India. The registered office of the company is located at Exide House, 59E Chowringhee Road, Kolkata, 700020. The Company is primarily engaged in the manufacturing of Storage Batteries and allied products in India.
These separate financial statements were authorised for issue in accordance with a resolution of the Directors on May 4, 2017.
Basis of preparation
For all periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
These financial statements for the year ended March 31, 2017 have been prepared in accordance with Indian Accounting Standards (âInd-ASâ) consequent to the notification of The Companies (Indian Accounting Standards) Rules, 2015 (the Rules) issued by the MCA. These are the first Ind-AS financial statements of the Company, wherein the Company has restated its Balance Sheet as at April 1, 2015 and financial statements for the year ended and as at March 31, 2016 also as per Ind-AS.
The financial statements have been prepared on a historical cost basis, except for certain investments measured at fair value (refer accounting policy on investments).
1.1 Allocation of Goodwill to cash-generating units
The carrying value of goodwill pertained to Home UPS business which was acquired by the Company in 2011-12. The management impaired the goodwill amounting to Rs. 3.89 crs since the Home UPS business is very volatile and highly competitive. No other write down of the assets of Home UPS business is considered necessary.
1.2 For Intangible assets exisiting as on April 1, 2015, i.e. date of transition to Ind AS, the company has used Indian GAAP carrying value as deemed cost as permitted by Ind-AS 101 - First Time Adoption. Accordingly, the net WDV as per Indian GAAP as on April 1, 2015 has been considered as Gross Block under Ind-AS. The accumulated amortisation so netted off as on April 1, 2015, is as below -
2 Current Provisions
(a) There are other tax disputes / litigations amounting to Rs. 6.22 crs (March 31, 2016: Rs. 4.26 crs, April 1, 2015: Rs. 3.32 crs) against which the Company has also deposited money under protest and made provision there - against. Such deposits and provisions have been netted off in these financial statements.
(b) There are also provisions against Income Tax claims amounting to Rs. 12.80 crs (March 31, 2016: Rs. 10.52 crs, April 1, 2015: Rs. 8.37 crs) which is included in Note 7 i (b), against which the Company has also created deferred tax assets as disclosed in Note 21.
3 Revenue from operations
(i) Sales are net of price adjustments settled during the year by the Company and discounts, trade incentives, VAT, Sales Tax etc.
(ii) Sale of goods includes excise duty collected from customers of Rs. 970.27 crs (PY: Rs. 879.93 crs).
4 Other expenses
i) The Company has a full-fledged Research and Development Center and it has thereby been able to improve manufacturing efficiency and product quality. During the year, a sum of Rs. 22.67 crs. (PY Rs. 16.73 crs), including capital expenditure Rs. 4.23 crs. (PY Rs. 2.09 crs), was spent on Research and Development work.
ii) Rent and Hire charges include Rs. 25.53 crs (PY Rs. 23.35 crs) towards lease of residential apartments, office premises and godowns. These are cancellable leases, renewable by mutual agreement. The lease term is for various numbers of years and renewable for further periods, as per the lease agreements, at the option of the company. In lease agreements, escalation clauses are present ; however there are no restrictions imposed by the lease arrangements . There are no sub-leases.
5 Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions, as described below, that affect the reported amounts and the disclosures. The Company based its assumptions and estimates on parameters available when the financial statements were prepared and reviewed at each Balance Sheet date. Uncertainty about these assumptions and estimates could result in outcomes that may require a material adjustment to the reported amounts and disclosures.
(a) Employee benefit plans
The cost of the employment benefit plans and their present value are determined using actuarial valuations which involves making various assumptions that may differ from actual developments in the future. For further details refer to Note 37.
(b) Fair value measurement of investments
The fair value of unquoted investments are determined using valuation methods which involves making various assumptions that may differ from actual developments in the future. For further details refer Note 42.
(c) Deferral of Revenue (customerâs incentive scheme)
The Company estimates the fair value of points awarded to its sales agents under incentives schemes, based on past trends of similar incentive schemes and by applying a budgeted incentive payout rate. Inputs include assumptions about expected redemption rates, the mix of products that will be available for redemption in the future and customer preferences. As at March 31, 2017, the estimated liability towards unredeemed points amounted to approximately Rs. 54.97 crs (March 31, 2016: Rs. 95.73 crs, April 1, 2015: Rs. 40.16 crs)
(d) Warranty
The Company estimates the provision for warranty based on past trend of actual issues of batteries under warranty. As at March 31, 2017, the estimated liability towards warranty amounted to approximately Rs. 178.13 crs (March 31, 2016: Rs. 163.39 crs, April 1, 2015: Rs. 155.92 crs)
The provision towards warranty is not discounted as the management, based on past trend, expects to use the provision within twelve months after the Balance Sheet date.
6 Gratuity and Other Post employment Benefit Plan
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favourable than the provisions of The Payment of Gratuity Act, 1972. The scheme is funded with an insurance company.
The Company provides certain post-retirement medical benefits (PRMB) to the employees qualifying for such benefits under the scheme upto March 31, 2006, and accordingly the number of beneficiaries is frozen on that date. This benefit is unfunded.
The Company has a Pension plan, a part of the liability whereof upto March 31, 2003, for employees as on that date is in the nature of a defined benefit plan. From April 1, 2003 onwards, pension remains as a defined contribution liability which is funded annually with an insurance company.
The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of earned leave for encashment upon retirement/ separation. This is an unfunded plan.
The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the Balance Sheet for the Post - retirement benefit plans .
Notes : (1) Final dividend amounting to Rs. 31.28 crs was paid for the year 2015-16 (Rs. 27.37 crs for the year 2014-15) and Rs. 62.55 crs towards Interim Dividend for 2016-17 (Rs. 62.55 crs for Interim Dividend 2015-16) to Chloride Eastern Limited, UK.
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2016: Nil, April 1, 2015: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
7 Segment Reporting
The Company has identified two operating segments viz, Automotive and Industrial. As per Ind AS - 108, due to similar nature of products, production process, customer types, etc., the two operating segments have been aggregated as single operating segment of âstorage batteries and allied productsâ during the year. The analysis of geographical segments is based on the areas in which customers of the Company are located.
8 Financial Risk Management Objectives and policies
The Companyâs financial liabilities comprise short-term borrowings, capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs financial assets include trade and other receivables, cash and cash equivalents, investment in subsidiaries and deposits. The Company also holds investments.
The Company has a Risk Management Committee that ensures that risks are identified, measured and managed in accordance with Risk Management Policy of the Company. The Board of Directors also review these risks and related risk management policy.
The market risks and credit risks are further explained below:
I) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include FVTOCI investments, trade payables, trade receivables, etc.
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities. Such foreign currency exposures are not hedged by the Company. The Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on the Company.
Foreign currency sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in USD exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities. The Companyâs exposure to foreign currency changes for all other currencies is not material.
ii) Commodity price risks
The Company is affected by the price volatility of certain commodities. Its operating activity is manufacturing of batteries and therefore requires supply of lead. Due to significant volatility in the lead price, the Company enters into purchase contract with vendors wherein the prices are linked to the quoted London Metal Exchange rates. Similarly, the Companyâs selling price of batteries to OEM customers is linked to such rates. As the Companyâs significant revenue is linked to cost of lead, the impact of change in lead prices on Companyâs profit is not expected to be significant.
iii) Equity price risks
The Companyâs listed and non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments / mutual funds. Reports on the investment portfolio are submitted to the Companyâs management on a regular basis. The Companyâs Board of Directors reviews and approves all investment decisions.
II) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables).
Trade receivables
A significant part of the Companyâs sales are under the âcash and carryâ model which entails no credit risk. For others, an impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data of credit losses. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 5 and 10 as the Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are from several industries.
9 Capital Management
The Companyâs objective when managing capital (defined as net debt and equity) is to safeguard the Companyâs ability to continue as a going concern in order to provide returns to shareholders and benefit for other stakeholders, while protecting and strengthening the Balance Sheet through the appropriate balance of debt and equity funding. The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions and strategic objectives of the Company.
10 List of subsidiaries of the Company
The Company has following subsidiaries for which the Company prepares Consolidated Financial Statements as per Ind AS 110 âConsolidated Financial Statementsâ. These subsidiaries have been accounted at cost in these separate financial statements of the Company.
Mar 31, 2015
1. SHARE CAPITAL
c) Terms / rights attached to equity shares
The company has only one class of Equity Shares having a Par Value of
Re 1 per share. Each Holder of Equity Shares is entitled to one Vote
per share. The company declares and pays dividends in Indian Rupee. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
In the event of Liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
During the year ended March 31, 2015, the amount of per share Dividend
recognised as distributions to equity shareholders was Rs. 2.20 (PY Rs.
1.80 per share)
2. GRATUITY AND OTHER POST EMPLOYMENT BENEFIT PLANS
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service is entitled to Gratuity on
terms not less favourable than the provisions of The Payment of
Gratuity Act, 1972. The scheme is funded with an insurance company.
The Company provides certain post-retirement medical benefits (PRMB) to
the employees qualifying for such benefits under the scheme upto March
31, 2006, and accordingly the number of beneficiaries is frozen on that
date. This benefit is unfunded.
The Company has a Pension plan, a part of the liability whereof upto
March 31, 2003, for employees as on that date is in the nature of a
defined benefit plan. From April 1, 2003 onwards, pension remains as a
defined contribution liability which is funded annually with an
insurance company.
The Company also extends benefit of compensated absences to the
employees, whereby they are eligible to carry forward their entitlement
of earned leave for encashment upon retirement/separation. This is an
unfunded plan.
The following tables summarise the components of net benefit expense
recognised in the statement of profit and loss and the funded status
and amounts recognised in the balance sheet for the Post - retirement
benefit plans.
3 GRATUITY AND OTHER POST EMPLOYMENT BENEFIT PLANS
IX The estimates of future salary increases considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market
X Contribution to Provident and Other Funds includes Rs. 18.82 Crores
(Rs. 16.85 Crores) paid towards Defined Contribution Plans
4. SEGMENT REPORTING
As the Company's business activity falls within a single primary
business segment, viz "Storage Batteries and allied products", no
separate segment information is disclosed. Secondary information is
reported geographically.
5. RELATED PARTY DISCLOSURE: i) Particulars of related parties :
1. Subsidiaries
Chloride Batteries S.E. Asia Pte. Limited, Singapore. (CBSEA) Chloride
International Limited (CIL)
Chloride Power Systems & Solutions Limited (CPSSL)
Espex Batteries Limited, UK (ESPEX)
Associated Battery Manufacturers (Ceylon) Ltd, Sri Lanka (ABML)
Chloride Metals Limited (CML)
Chloride Alloys India Limited (CAIL)
Exide Life Insurance Company Limited (ELI)
2. Enterprise / Individuals having a direct or
indirect control over the Company
Chloride Eastern Limited, UK. (CEL)
Chloride Eastern Industries Pte Limited, Singapore (CEIL)
LIEC Holdings SA, Switzerland
Mr. S B Raheja
3. Key Management Personnel
(As on March 31, 2015)
Mr. P K. Kataky, Whole Time Director
Mr. G. Chatterjee, Whole Time Director
Mr. A. K. Mukherjee, Whole Time Director
Mr. Nadeem Kazim, Whole Time Director
Mr. Subir Chakraborty, Whole Time Director
Mr. Supriya Coomer, Company Secretary
4. Name of the Companies / firms / in which
Directors / Key Management Personnel
have significant influence with whom
transactions have happened during the year.
Shalini Construction Company Private Limited
Peninsula Estates Private Limited
Raheja QBE General Insurance Company Limited
6. Previous year figures have been regrouped / rearranged where
necessary.
Mar 31, 2014
1. GRATUITY AND OTHER POST EMPLOYMENT BENEFIT PLANS
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service is entitled to Gratuity on
terms not less favourable than the provisions of The Payment of
Gratuity Act, 1972. The scheme is funded with an insurance company.
The Company provides certain post-retirement medical benefits (PRMB) to
the employees qualifying for such benefits under the scheme upto 31
March 2006, and accordingly the number of beneficiaries is frozen on
that date. This benefit is unfunded.
The Company has a Pension plan, a part of the liability whereof upto 31
March 2003, for employee as on that date is in the nature of a defined
benefit plan. From 1 April 2003 onwards, pension remains as a defined
contribution liability which is funded annually with an insurance
company.
The Company also extends benefit of compensated absences to the
employees, whereby they are eligible to carry forward their entitlement
of earned leave for encashment upon retirement/separation. This is an
unfunded plan.
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the Post - retirement
benefit plans.
VIII Healthcare cost trend rates have no effect on the amounts
recognised in the profit and loss account, since the benefit is in the
form of a fixed amount as per the various grades, which is not subject
to change.
IX. The estimates of future salary increases considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
X. Contribution to Provident and Other Funds includes Rs. 16.85 crs
(Rs. 16.48 crs) paid towards Defined Contribution Plans.
2. SEGMENT REPORTING
As the Company''s business activity falls within a single primary
business segment, viz "Storage Batteries and allied products", no
separate segment information is disclosed. Secondary information is
reported geographically.
Geographical Segments
The Company primarily operates in India and therefore the analysis of
geographical segment is demarcated into its Indian and Overseas
operations as under:
As at As at
31st March,
2014 31st March,
2013
3 CONTINGENT LIABILITIES
Outstanding Bank Guarantees /
Indemnity Bonds 17.97 18.24
Sales Tax demands 24.37 15.14
Excise Duty demands 34.12* 34.32
Service Tax demands
Income Tax demands 6.82 4.46
Other claims being disputed by the Company 0.44 0.44
Claim from a landlord, an appeal whereby
is pending in Hon''ble Bombay High Court
Not Not Ascertainable Ascertainable 83.72 72.60
4 ACTUARIAL METHOD AND ASSUMPTIONS FOR THE LIFE INSURANCE BUSINESS
Liability for policies in force (''the Liability'') is determined by the
Appointed Actuary in accordance with generally accepted actuarial
practice as well as the requirements of the Insurance Act, 1938 and the
regulations notified bylRDA and relevant actuarial practice standards
issued by Institute of Actuaries of India.
(a) Traditional Individual Business
The Liability on a policy is calculated based using the ''Gross Premium
Method'', representing the present value of expected future outgo
including benefits (including future bonuses for participating
policies) and future expenses less present value of expected future
premium. Further, a reserve for death claims that may have been
Incurred but are Not yet Reported to the Company (IBNR) is also
maintained. The reserves for the Best Years Retirement Plan, ING New
Best Year Retirement Plan and ING Assured Return have been set up as
the sum of the policy fund balances as at 31 March 2014 plus additional
reserves for excess of expenses over policy charges. The assumptions
used for calculating the liability are provided below: i. Mortality &
Morbidity:
Mortality is considered according to the Indian Assured Lives Mortality
Table (2006-08) - Modified Ultimate and varies between 99% and 217.5%
of the table (last year 90% and 135% of Indian Assured Lives Mortality
Table (1994-96)). Morbidity assumption is based on the CIBT 93 Table.
For term products, mortality assumption varies between 51%-145% of the
Indian Assured Lives Mortality Table (2006-08) - Modified Ultimate
(Last Year mortality assumptions for term products were 35%-90% of the
Indian Assured Lives Mortality Table (1994-96)) ii. Expenses:
Appropriate allowance for maintenance expenses increasing with
inflation has been made. Provision for initial and renewal commission
has been made at actual rates payable. iii. Valuation discount rate:
Between 5.5% to 6.75% p.a. for all products (Last Year between 5.5% to
6.5% p.a. for all products). Assumptions on future bonus rates for
participating business have been set to be consistent with valuation
interest rate assumptions. iv. Lapses:
Future policy lapses have been assumed based on the type of policy and
the duration for which the policy has been in force. The lapse rates
are based on current experience of the company.
Margins for Adverse Deviation
The assumptions allow for suitable Margins for Adverse Deviation in the
mortality, morbidity, expenses, lapses and valuation discount rate
assumption! as required under regulations and actuarial practice
standards issued by The Institute of Actuaries of India
(b) Linked Individual Business
The reserves held under the unit-linked products are the fund balances
(unit reserve) as at 31 March 2014 plus non- unit reserves. Additional
adjustments have also been made to allow for the following :
a. Unearned Premium Reserve in respect of mortality charge/rider
charge deducted from the policyholder''s account every month.
b. IBNR reserve for death claims incurred but not reported to company
as on the valuation date.
c. Reserve to meet the guarantees for unit linked products.
d. Non Unit reserves are calculated by discounting future non unit
cash flow, determined based on assumptions given below:
i. Mortality & Morbidity:
Mortality is considered according to the Indian Assured Lives Mortality
Table (2006-08) - Modified Ultimate and varies between 99% and 145%
(varies by age), (last year 90% of Indian Assured Lives Mortality Table
(1994-96) of the table). ii. Expenses:
Appropriate allowance for maintenance expenses increasing with
inflation has been made. Provision for initial and renewal commission
has also been made at actual rates payable. iii. Valuation discount
rate (for setting up of Non unit reserve): 4.5% p.a. (last year 4.5%
p.a.) iv. Unit growth rate: 4% to 10% (last year 4% to 10%) depending
on the type of fund. Margins for Adverse Deviation
The assumptions allow for suitable Margins for Adverse Deviation in the
mortality, morbidity, expenses, lapses and valuation discount rate
assumptions as required under regulations
(c) Group Business:
Unearned Premium method for reserving is adopted for the Group yearly
renewable term product. The Group Single Premium Mortgage/Credit
products have been valued using the Gross Premium Method with allowance
for future expected expenses. Provision for IBNR reserve has also been
made as appropriate.
(d) Linked group business:
The reserves held under the unit-linked products are the fund balances
as at 31 March 2014.
(e) Reinsurance Credit
The reinsurance credit is calculated on unearned premium basis, based
on the expected reinsurance premium outgo.
5 INVESTMENTS OF LIFE INSURANCE BUSINESS
The Company is maintaining separate funds for Shareholders and
Policyholders as per Section 11 (1B) of the Insurance Act, 1938.
Investments and related incomes are segregated between Participating,
Non Participating, Unit Linked, Annuity and Pension funds. In respect
of policyholder funds, the allocation of cash / securities to
policyholder is done on a daily basis.
Investments under Section 7 of the Insurance Act, 1938 are in "8.20%
GSEC 12-02-2024 OIL BOND (Face Value Rs 12.11 crs)" having Book Value
of Rs 11.90 crs and Market Value Rs 11.35 crs.
As on 31 March 2014, none of the investments of the Company have been
classified as non-performing as per the income recognition norms issued
by the IRDA.
As on 31 March 2014, none of the investments of the Company have been
classified / categorised in the definition of Loans & Advances as per
circular no 32/2/F&A/Circular/l 69/Jan/2006-07. In view of this, the
company has not made any provisions.
6 In the current year IVL has exceeded the limits for expenses of
management as per Section 40B of the Insurance Act, 1938 read with Rule
17D of the Insurance Rules, 1939. The company has articulated its
expense position vis-d-vis business plans, constraints and also
submitted that it would not be able to meet the requirements in the
financial year 2013- 14. Subsequently the company has been granted one
year extension to comply with requirement by the IRDA i.e. up to the
Financial Year ending 2014-15.
7 IVL became a Subsidiary of EIL on 22nd March , 2013 and hence
Statement of Consolidated Profit and Loss for FY 12-13 included line by
line consolidation of Profit and Loss of IVL only for 10 days from 22nd
of March 2013 to 31 st of March 2013, as against full year numbers of
IVL in current year .Consequently, the figure of CY are not comparable
with the figures of previous year to that extent.
8 Previous year figures have been regrouped / rearranged where
necessary.
Mar 31, 2013
1. GRATUITY AND OTHER POST EMPLOYMENT BENEFIT PLANS
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service is entitled to Gratuity on
terms not less favourable than the provisions of The Payment of
Gratuity Act, 1972. The scheme is funded with an insurance company.
The Company provides certain post-retirement medical benefits (PRMB) to
the employees qualifying for such benefits under the scheme upto 31
March 2006, and accordingly the number of beneficiaries is frozen on
that date. This benefit is unfunded.
The Company has a Pension plan, a part of the liability whereof upto 31
March 2003 is in the nature of a defined benefit plan. From 1 April
2003 onwards, pension remains as a defined contribution liability which
is funded annually with an insurance company.
The Company also extends benefit of compensated absences to the
employees, whereby they are eligible to carry forward their entitlement
of earned leave for encashment upon retirement/separation. This is an
unfunded plan.
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the Post - retirement
benefit plans.
2. SEGMENT REPORTING
As the Company''s business activity falls within a single primary
business segment, viz " Storage Batteries and allied products", no
separate segment information is disclosed. Secondary information is
reported geographically. Geographical Segments
The Company primarily operates in India and therefore the analysis of
geographical segment is demarcated into its Indian and Overseas
operations as under:
3 ACQUISITION OF ADDITIONAL STAKE IN ING VYSYA LIFE INSURANCE COMPANY
LIMITED
During the year, the Company acquired the remaining 50% shares of ING
Vysya Life Insurance Company Limited (IVL) from the other shareholders,
after obtaining necessary approvals from Competition Commission of
India (CCI) and Insurance Regulatory and Development Authority (IRDA),
at a consideration of Rs 549.33 Crores. Consequent to such acquisition
of shares, IVL has now become a wholly owned subsidiary of the Company
4 CONTINGENT LIABILITIES
Outstanding Bank Guarantees/Indemnity Bonds 18.24 15.93
Sales Tax demands 15.14 1.53
Excise Duty demands 34.32* 33.77
Service Tax demands - 0.77
Income Tax demands 4.46 6.50
Other claims being disputed by the Company 0.44 0.45
Claim from a landlord , an appeal whereby
is pending in Hon''ble Bombay High Court Not Not
Ascertainable Ascertainable
72.60 58.95
* Includes a Demand of Rs 32.60 crs plus penalties, as applicable, for
the period June 2006-May 2009 on the grounds that Excise Duty was
payable on the MRP of batteries.The Company has contested applicability
of The Standards of Weights & Measures Act,1976 and Rules thereunder,
the applicability of which is still to be adjudicated by the Hon''ble
Supreme Court.
5 PREVIOUS YEAR FIGURES HAVE BEEN REGROUPED / REARRANGED WHERE
NECESSARY.
Mar 31, 2012
A) Terms / rights attached to equity shares
The company has only one class of Equity Shares having a Par Value of
Re 1 per share. Each Holder of Equity Shares is entitled to one Vote
per share. The company declares and pays dividends in Indian Rupee.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
In the event of Liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
During the year ended 31st March 2012, the amount of per share Dividend
recognized as distributions to equity shareholders was Rs 1.50 (PY Rs
1.50 per share)
i) The Company has a full-fledged Research and Development Center and
it has thereby been able to considerably further its efficiency. During
the year, a sum of Rs. 12.05 crs. (Rs. 9.76 crs), including capital
expenditure Rs. 0.94 crs. (Rs. 1.09 crs), was spent on Research and
Development work.
ii) Stores and Spares consumed is exclusive of Rs. 0.46 crs (Rs 0.45
crs) being the amounts allocated to other heads of expenses.
iii) Rent and Hire charges include Rs 0.54 crs (Rs. 0.62 crs) towards
lease of residential apartments. These are cancellable leases,
renewable by mutual agreement. Generally, there is no escalation clause
and no other restrictions imposed by the lease arrangements. There are
no sub-leases.
1. GRATUITY AND OTHER POST EMPLOYMENT BENEFIT PLANS
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service is entitled to Gratuity on
terms not less favorable than the provisions of The Payment of
Gratuity Act, 1972. The scheme is funded with an insurance company.
The Company provides certain post-retirement medical benefits (PRMB) to
the employees qualifying for such benefits under the scheme upto 31
March 2006, and accordingly the number of beneficiaries is frozen on
that date. This benefit is unfunded.
The Company has a Pension plan, a part of the liability whereof upto 31
March 2003 is in the nature of a defined benefit plan. From 1 April
2003 onwards, pension remains as a defined contribution liability which
is funded annually with an insurance company.
The Company also extends benefit of compensated absences to the
employees, whereby they are eligible to carry forward their entitlement
of earned leave for encashment upon retirement/separation. This is an
unfunded plan. The following tables summarise the components of net
benefit expense recognized in the profit and loss account and the
funded status and amounts recognized in the balance sheet for the
respective plans.
I. In 2012-13 the Company expects to contribute Rs. 5.00 crs (Rs 5.00
crs) to gratuity and Rs 0.50 crs (Rs 1.00 crs) to Pension.
II. Healthcare cost trend rates have no effect on the amounts
recognized in the profit and loss account, since the benefit is in the
form of a fixed amount as per the various grades, which is not subject
to change
III. The estimates of future salary increases considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market
IV. Contribution to Provident and Other Funds includes Rs 14.94 crs (Rs
13.60 crs) paid towards Defined Contribution Plans
2.SEGMENT REPORTING
As the Company's business activity falls within a single significant
primary business segment, viz "Storage Batteries and allied
products', no separate segment information is disclosed. Secondary
information is reported geographically.
3. UTILISATION OF MONEY RAISED THROUGH PRIVATE PLACEMENT
During the financial year 2009-10, the Company had raised Rs 529.91
crores (net) by issuing shares to Qualified Institutional Buyers to
generate funds for its capital expenditure, acquisitions and for
general corporate purposes. Entire amount of Rs 529.91 crs (Rs 295.88
crores) has been used for the stated purpose and unutilized balance as
at 31st March, 2012 is Rs Nil (Rs 234.03 crs).
* Includes a Demand of Rs 32.60 crs plus penalties, as applicable, for
the period June 2006-May 2009 on the grounds that Excise Duty was
payable on the MRP of batteries. The Company has contested this demand
largely on grounds of non-applicability of The Standards of Weights &
Measures Act, 1976 and Rules there under, the applicability of which is
still to be adjudicated by the Hon'ble Supreme Court. Pending the
adjudication, the demand has been treated as Contingent Liability in
these Financial Statements.
The above information exclude particulars in respect of certain
non-resident shareholders for whom dividend warrants were sent to the
shareholders' banks in India in Indian Rupees, with prior approval of
the Reserve Bank of India.
Mar 31, 2011
OTHERS
a. Sales are net of price adjustments for earlier years, settled
during the year by the Company and discounts, trade incentives etc.
b. Excise duty includes Rs. 18.82 crs. (Rs. 8.83 crs) paid on
batteries issued towards warranty claims.
c. The Company has a full-fledged Research and Development Center and
it has thereby been able to considerably further its efficiency. During
the year, a sum of Rs. 9.76 crs. (Rs. 11.55 crs), including capital
expenditure Rs. 1.09 crs. (Rs. 2.73 crs), was spent on Research and
Development work.
d. Stores and Spares consumed is exclusive of Rs. 0.45 crs (Rs. 0.37
crs) being the amounts allocated to other heads of expenses.
e. The amounts due to Micro and Small enterprises are as follows:-
1. Principal Amount Rs. 5.29 crs (Rs. 5.44 crs)
Interest due on above Rs. 0.01 crs (Rs. 0.02 crs)
2. Amount of interest paid in
terms of Sec. 16 of the Micro,
Small and Medium Enterprise
Development Act 2006 Rs. nil (Rs. nil)
3. Amount of interest due and
payable for the period of
delay Rs. 0.01 crs (Rs. 0.02 crs)
4. Amount of interest accrued
and remaining unpaid as at
31st March 2011 Rs. 0.03 crs (Rs. 0.02 crs)
5. Amount of further interest
remaining due and payable
in the succeeding year Rs. nil (Rs. nil)
f. Diminution, based on the net worth as per the latest audited
accounts of the relevant Company or market value, in the value of
certain long term unquoted/quoted investments as on the Balance Sheet
date, being temporary in nature, has not been provided.
i. Materials consumed (Schedule 16) includes warranty costs Rs. 77.27
crs (Rs. 28.81 crs) and is net of exchange fluctuation Gain Rs. 15.48
crs. (Rs. 18.52 crs.), export incentives Rs. 6.63 crs. (Rs. 5.10 crs.),
and purchase tax set-off Rs. Nil. (Rs. 0.64 crs).
l. During the last year, the Company had raised Rs. 529.91 crores (net)
by issuing shares to Qualified Institutional Buyers to generate funds
for its capital expenditure, acquisitions and for general corporate
purposes. Out of above Rs. 295.88 crores have been used for the stated
purpose and balance of Rs. 234.03 crores remain temporarily invested in
mutual funds as at 31st March, 2011.
n. BUSINESS SEGMENT
As the Companys business activity falls within a single primary
business segment, viz. Lead Acid Storage Batteries, the disclosure
requirements of Accounting Standard-17 "Segment Reporting", issued by
the Institute of Chartered Accountants of India are not applicable.
q. The Company has paid Rs. 0.62 crs (Rs. 0.49 crs) towards lease of
residential apartments. These are cancellable leases, renewable by
mutual agreement. Generally, there is no escalation clause and no other
restrictions imposed by the lease arrangements. There are no
sub-leases.
r. Gratuity, compensated absences and other post-employment benefit
plans The Company has a defined benefit gratuity plan. Every employee
who has completed five years or more of service is entitled to Gratuity
on terms not less favourable than the provisions of The Payment of
Gratuity Act, 1972. The scheme is funded with an insurance company.
The Company provides certain Post-Retirement Medical Benefits (PRMB) to
the employees qualifying for such benefits under the scheme upto 31
March 2006, and accordingly the number of beneficiaries is frozen on
that date. This benefit is unfunded.
The Company has a Pension plan, a part of the liability whereof upto 31
March 2003 is in the nature of a defined benefit plan. From 1 April
2003 onwards, pension remains as a defined contribution liability which
is funded annually with an insurance company.
The Company also extends benefit of compensated absences to the
employees, whereby they are eligible to carry forward their entitlement
of earned leave for encashment upon retirement/separation. This is an
unfunded plan.
V. In 2011-12 the Company expects to contribute Rs. 5.00 crs to
gratuity and Rs. 1.00 crs to Pension.
VII. Actuarial Assumptions
1. Discount Rate 8.00% p.a (7.50%)
2. Expected rate of return
on plan assets 9.00% p.a (8.00%)
3. Mortality pre retirement Standard Table LIC
(1994-96) Ultimate
4. Mortality Post retirement Mortality for annuitants
LIC (1996-98) Ultimate
5. Employee Turnover Rate 10.00% (10.00%)
VIII. Healthcare cost trend rates have no effect on the amounts
recognised in the profit and loss account, since the benefit is in the
form of a fixed amount as per the various grades, which is not subject
to change
IX. The estimates of future salary increases considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market
X. Contribution to Provident and Other Funds includes Rs. 13.60 crs
(Rs. 12.51 crs) paid towards Defined Contribution Plans
s. Related Party Disclosure:
i) Particulars of related parties :
1. Subsidiaries : Chloride Batteries S.E. Asia Pte.
Limited, Singapore (CBSEA)
Chloride International Limited (CIL)
Caldyne Automatics Limited (Caldyne)
Espex Batteries Limited, UK (Espex)
Associated Battery Manufacturers
(Ceylon) Ltd., Sri Lanka (ABML)
Chloride Metals Limited (CML-Formerly
Tandon Metals Limited)
Leadage Alloys India Limited
Exide Batteries (Pvt) Limited
(Subsidiary of CBSEA)
2. Associate Companies : ING VYSYA Life Insurance Company
Limited (IVL)
3. Enterprise/Individuals
having a direct : Chloride Eastern Limited, UK. (CEL)
or indirect controls over the company
Chloride Eastern Industries Pte Limited,
Singapore (CEIL)
LIEC Holdings SA, Switzerland
Mr. S B Raheja
4. Key Management
Personnel : Mr. T V Ramanathan
(As on 31st March, 2011) Mr. G Chatterjee
Mr. P K Kataky
Dr. S K Mittal (upto 30 April, 2010)
Mr. A K Mukherjee
Mr. Nadeem Kazim
Mr. Supriya Coomer
5. Name of the Companies
/firms/ : Nil
in which Directors/Key
Management Personnel
have significant influence
with whom transactions
have happened
during the year.
v. Exceptional item of Rs. 46.93 crores represents gain on transfer of
land which was no longer in use.
w. Other income in Schedule 14 includes Rs. 20.65 crores being gain
arising on account of premature payment of deferred sales tax loan in
terms of Net Present Value (NPV) Scheme of the Government of Tamilnadu.
The Company has been granted the above in terms of order no.
743/2011/A8 dated 29th March, 2011 issued by Joint Commissioner (CT),
Chennai (East) Division.
Mar 31, 2010
I. CONTINGENCIES
Contingent liabilities not provided for in respect of
- Outstanding Bank Guarentees/lndemnity Bonds 10.09 10.24
- Sales Tax demands 1.03 0.11
- Excise Duty demands 0.77 0.62
- Other claims being disputed by the Company 0.50 0.54
- Claim from a landlord, an appeal whereby is pending in Honble
Bombay High Court Not ascertainable Not ascertainable
II. OTHERS
a. Sales are net of price adjustments for earlier years, settled
during the year by the Company and discounts, trade incentives etc
(after adjustment of excess provision written back amounting to Rs.
9.93 crs.).
b. Excise duty includes Rs. 8.83 crs. (Rs. 11.96 crs) paid on
batteries issued towards warranty claims.
c. The Company has a full-fledged Research and Development Center and
its has thereby been able to considerably further its efficiency.
During the year, a sum of Rs. 11.55 crs. (Rs. 9.38 crs), including
capital expenditure Rs. 2.73 crs. (Rs. 1.80 crs), was spent on Research
and Development work.
d. Stores and Spares consumed is exclusive of Rs. 0.37 crs (Rs. 0.29
crs) being the amounts allocated to other heads of expenses.
f. Diminution, based on the net worth as per the latest audited
accounts of the relevant Company or market value, in the value of
certain long term unquoted/quoted investments as on the Balance Sheet
date, being temporary in nature, has not been provided.
g. Details of amount payable (when due) to Investor Education &
Protection Fund are as follows (Schedule -11)
i. Materials consumed (Schedule 16) includes warranty costs Rs. 28.81
crs (Rs. 37.59 crs) and is net of exchange fluctuation Gain Rs. 18.18
crs. (Includes Exchange Loss Rs. 40.64 crs.), export incentives Rs.
5.10 crs. (Rs. 4.64 crs.), and purchase tax set-off Rs.0.64 crs. (Rs.
nil).
I. During the year, the Company has issued 5 crores shares of Re 1 each
to Qualified Institutional Buyers (QIBs) at a premium of Rs. 106.90 to
generate funds for its capital expenditure, acquisitions and for
general corporate purposes. The total sum received aggregated to
Rs.539.50 crores (including Rs.534.50 crores towards Securities
premium). Pending utilization of the money for the purposes mentioned
above, the Company has temporarily invested the funds in mutual funds
after adjusting share issue expenses of Rs 9.59 crores (including
Auditors remuneration of Rs. 0.27 crores).
n. BUSINESS SEGMENT
As the Companys business activity falls within a single primary
business segment, viz. lead Acid Storage Batteries, the disclosure
requirements of Accounting Standard-17 "Segment Reporting", issued by
the Institute of Chartered Accountants of India are not applicable.
q. The Company has paid Rs. 0.49 crs (Rs. 0.52 crs) towards lease of
residential apartments. These are cancellable leases, renewable by
mutual agreement. Generally, there is no escalation clause and no other
restrictions imposed by the lease arrangements. There are no
sub-leases.
r. Gratuity, compensated absences and other post-employment benefit
plans
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service is entitled to Gratuity on
terms not less favourable than the provisions of The Payment of
Gratuity Act, 1972. The scheme is funded with an insurance company.
The Company provides certain Post-Retirement Medical Benefits (PRMB) to
the employees qualifying for such benefits under the scheme upto 31
March 2006, and accordingly the number of beneficiaries is frozen on
that date. This benefit is unfunded.
The Company has a Pension plan, a part of the liability whereof upto 31
March 2003 is in the nature of a defined benefit plan. From 1 April
2003 onwards, pension remains as a defined contribution liability which
is funded annually with an insurance company.
The Company also extends benefit of compensated absences to the
employees, whereby they are eligible to carry forward their entitlement
of earned leave for encashment upon retirement/separation. This is an
unfunded plan.
V. In 2010-11 the Company expects to contribute Rs. 5.00 crs to
gratuity and Rs. 1.00 crs to Pension.
VIII. Healthcare cost trend rates have no effect on the amounts
recognised in the profit and loss account, since the benefit is in the
form of a fixed amount as per the various grades, which is not subject
to change.
IX. The estimates of future salary increases considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
X. Contribution to Provident and Other Funds includes Rs. 12.51 crs
(Rs. 10.26 crs) paid towards Defined Contribution Plans.
s. The Ministry of Corporate Affairs, Government of India vide its
letter no. 47/68/2010-CL-lll dated 19th March, 2010, has exempted the
Company from attaching the Annual Reports and other particulars of its
subsidiary companies along with the Annual Report of the Company
required u/s 212 of the Companies Act, 1956.
v. Related Party Disclosure:
i) Particulars of related parties :
1. Subsidiaries
Chloride Batteries S.E. Asia Pte. Limited, Singapore (CBSEA)
Chloride International Limited (CIL)
Caldyne Automatics Limited (Caldyne)
Espex Batteries Limited, UK (Espex)
Associated Battery Manufacturers (Ceylon) Ltd., Sri Lanka (ABML)
Chloride Metals Limited (CML-Formerly Tandon Metals Limited)
Leadage Alloys India Limited
Exide Batteries (Pvt) Limited (Subsidiary of CBSEA)
2. Associate Companies :
INGVYSYA Life Insurance Company Limited (I VL)
CEIL Motive Power Pty Limited, Australia (Upto 24th August, 2009)
3. Enterprise/Individuals having a direct :
Chloride Eastern Limited, UK. (CEL) or indirect controls over the
company Chloride Eastern Industries Pte Limited, Singapore (CEIL) LIEC
Holdings SA, Switzerland Mr. S B Raheja
4. Key Management Personnel : Mr. T V Ramanathan
Mr. G Chatterjee
Mr. P K Kataky
Dr. S K Mittal
Mr. A K Mukherjee
Mr. Nadeem Kazim
Mr. Supriya Coomer
5. Name of the Companies/firms/ : Nil
in which Directors/Key Management
Personnel have significant influence
with whom transactions have happened
during the year
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article