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Notes to Accounts of Fine Organic Industries Ltd.
Mar 31, 2025
NOTE 21.21 TERMS/ RIGHTS ATTACHED TO EQUITY SHARES
The Company has one class of equity shares having a par value of '' 5 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
NOTE 21.51 DETAILS OF CALLS UNPAID
There is no calls unpaid.
NOTE 21.61 SUBDIVISION OF SHARES
The Shareholders vide a special resolution passed on November 6, 2017 has approved sub division of shares of the Company in the ratio of 2 shares of face value of ^ 5 each for every existing 1 share of the face value of ^ 10 each wef November 6, 2017.
The requisite approvals for modification of the Memorandum and Articles of Association of the Company had been accorded by the shareholders on November 6, 2017.
(a) Amalgamation Reserve - At the time of business combination under common control, amalgamation adjustment reserve of transferor company becomes amalgamation adjustment reserve of the transferee company. The Company established this reserve at the time of business combinations made in the earlier years.
(b) Retained Earnings represents undistributed accumulated earnings of the Company as on the balance sheet date.
(c) Other Comprehensive Income represents the following -
1. The cumulative gains and losses arising on fair value changes of equity investments measured at fair value through other comprehensive income are recognised in FVOCI - equity instruments reserve
2. The Company uses hedging instruments as part of its management of interest rate risk associated with borrowings. For hedging interest rate risk, the Company uses the interest rate swaps. To the extent this hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedged reserve is reclassified to the statement of profit and loss when the hedged item affects the statement of profit and loss (e.g. interest payments).
3. Remeasurements, comprising of actuarial gains and losses are recognised in full in the statement of other comprehensive income in the reporting period in which they occur. Remeasurements are not reclassified to profit and loss subsequently.
4. The effective portion of gains or losses on a hedging instrument in a cash flow hedge is initially recognized in Other Comprehensive Income (OCI) and on the event of completion/utilization of hedged instrument, it is reclassified to profit or loss.
NOTE 24.1 DISCLOSURE TO CURRENT FINANCIAL LIABILITIES : TRADE PAYABLES Dues to micro and small enterprises
Micro & Small enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) have been identified by the Company on the basis of the information available with the Company and the auditors have relied on the same. Sundry creditors include total outstanding dues of micro and small enterprises amounting to '' 1,978.78 Lakhs (Previous Year: '' 1,779.80 Lakhs). The disclosure pursuant to the MSMED Act based on the books of account is as under:
NOTE 29.1 OTHER DISCLOSURE RELATING TO REVENUE FROM CONTRACTS WITH CUSTOMERS (IND AS 115)
The Company is primarily in the Business of manufacture and sale of Specialty chemicals. AH sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/ delivery. The Company evaluates the credit limits for the trade receivables. The Company does not give a significant credit period resulting in no significant financing component.
Further, the disaggregation of revenue based on geography has been mentioned under segment information. {refer to note no. 43.3}
Through its gratuity plans the Company is exposed to a number of risks, the most significant of which are detailed below:-Interest Risk
A decrease in the bond interest rate will increase the plan liability; however, in case of gratuity plan this will be partially offset by an increase in the return on the plan''s assets.
The present value of Gratuity plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan''s liability.
The present value of the Gratuity plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
For funded plans that rely on Insurers for managing the assets, the value of assets certified by the Insurer may not be the fair value of Instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
NOTE 37.1 CORPORATE SOCIAL RESPONSIBILITY EXPENSES:
The Company has spent an amount of '' 365.44 Lakhs pertaining to FY 2024-25 and '' 363.16 Lakhs pertaining to FY 2023-24 towards various CSR projects for the purpose other than construction/ acquisition of any asset. The Company has transferred '' 715.36 Lakhs (i.e. unspent amount for the ongoing CSR projects of the Company for the FY 2024-25) and '' 474.05 in FY 202324 to a separate bank account specially opened by the Company for the CSR.
The Financial Statements of the Company for the year ended March 31, 2025 has been approved by the Board of Directors in its meeting held on May 8, 2025. For the year ended March 31, 2025, dividend of '' 11/- per share (Total dividend of '' 3,372.60 Lakhs) has been recommended by the Board of Directors at its meeting held on May 8, 2025. The same is subject to the approval of shareholders in the ensuing Annual General Meeting of the Company and therefore proposed dividend has not been recognised as liability as at the Balance Sheet Date in line with Ind AS - 10 "Events after the Reporting Period."
It is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above contingent liabilities pending resolution of the respective proceedings. The Company does not expect any reimbursement in respect of the above contingent liabilities.
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, 2025, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2024: 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.(Disclosure of compansation paid to Key Managerial person)
NOTE 431 OPERATING SEGMENT DISCLOSURE
The Company has identified its reportable segment as "Specialty chemicals" since the Chief Operating Decision Maker (CODM) evaluates the Company''s performance as a single segment in terms of Indian Accounting Standard 108 issued by Ministry of Corporate Affairs (MCA),as prescribed in section 133 read with companies (Indian accounting Standards ) Rule,2015 as amended are indicated below
NOTE 43.1 DISCLOSURE FOR ASSETS OUTSIDE INDIA
The Company does not have any non-current non-financial assets outside India
NOTE 43.21 DISCLOSURE FOR MAJOR CUSTOMERS MORE THAN 10%
With Following customer, the Company has transactions of more than 10% of the revenue
NOTE 43.31 GEOGRAPHIC INFORMATION
The geographic information analyse the Company''s revenue and non-current assets by the Company''s country of domicile and other countries. In presenting the geographical information, segment revenue has been based on the geographic location of customers and segments assets were based on the geographic location of the respective non-current assets.
The product offerings which are part of the specialty chemicals portfolio of the Company are managed on a worldwide basis from India.
NOTE 441 INTERNAL FINANCIAL CONTROL SYSTEM
The Company implements and manages efficient internal control systems to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition, by maintaining proper records and reports in a timely manner. This is supplemented by an extensive programme of internal audit, reviewed by the Management and relevant policies, guidelines and procedures. The internal control is designed to ensure the reliability of financial and other records for preparing precise financial statements, maintaining accountability of assets and more. The Management is committed to regularly reviewing and making relevant amendments to the internal control system, as and when required.
The Company''s process framework provides well-documented standard operating procedures and authorities with adequate built-in controls. The internal control is further enhanced by an extensive programme of internal, external audits and periodic reviews by the Management.
The Company adopts and follows a risk mitigation strategy and reviews risk occurrence to find probable mitigation strategies. The Company''s Risk Management Committee reviews risks and mitigation measures at regular intervals, and accordingly initiates corrective steps at times of need.
For the purposes of the Company''s capital management, capital includes issued equity share capital, all other reserves and borrowed capital less reported cash and cash equivalents.
The primary objective of the Company''s capital management is to maintain an efficient capital structure to reduce the cost of capital, support the corporate strategy and to maximise shareholder''s value.
The Company''s policy is to borrow primarily through banks to maintain sufficient liquidity. The Company also maintains certain undrawn committed credit facilities to provide additional liquidity. These borrowings, together with cash generated from operations are utilised for operations of the Company.
The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally imposed capital requirements.
NOTE 491 FINANCIAL RISK MANAGEMENT FRAMEWORK A] Financial Risk Management
The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally imposed capital requirements.
Market Risks arise due to Changes in Interest rates, Foreign Exchange rates and changes in Market prices.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates. The Company''s exposure to the risk of changes in market rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
The Company''s policy is generally to undertake long-term borrowings using facilities that carry floating-interest rate. The Company manages its interest rate risk by entering into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.
Moreover, the short-term borrowings of the Company do not have a significant fair value or cash flow interest rate risk due to their short tenure.
As the Company does not have exposure to any floating-interest bearing assets its interest income and related cash inflows are not materially affected by changes in market interest rates.
No sensitivity analysis is prepared as the Company does not expect any material effect on the Company''s results arising from the effects of reasonably possible changes to interest rates on interest bearing financial instruments at the end of the reporting period.
(ii) Foreign Currency Risks
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts to hedge its foreign currency exposures in US$ and Euro.
a) Exposure in foreign currency - Hedged
The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any Derivative Instruments for trading and Speculation purposes.
The Company is exposed to the price risk associated with purchasing of the raw materials. The Company typically does not enter into formal long-term arrangements with our vendors. Therefore, fluctuations in the price and availability of raw materials may affect the Company''s business and results of operations. To mitigate this the Company has a risk management strategy in place wherein the senior management reviews the supply chain scenarios, commodity prices and supplier contracts periodically to avoid material impact on profitability of the Company.
Credit Risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments vis., Investments in Equity Shares and Balances with Banks.
The Company holds cash and cash equivalents with banks which are having highest safety rankings and hence has a low credit risk.
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits (generally between 30 to 90 days) and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The outstanding trade receivables due for a period exceeding 180 days as at the year ended March 31, 2025 is 0.75% (P.Y. 1.46%) of the total trade receivables. The Company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain.
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has obtained fund based borrowings from banks. The Company invests its surplus funds in bank fixed deposit which carry low credit risks.
All payments are made on due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The Company has a system of forecasting rolling one month cash inflow and outflow and all liquidity requirements are planned.
Maturity Profile of Financial Liabilities:
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments.
NOTE 511 OTHER STATUTORY INFORMATION
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against The Company for holding any Benami property.
(ii) The Company do not have any transactions with companies struck off during the year
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company do not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.)
(viii) As per the Ministry of Corporate Affairs (MCA) notification, proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, for the financial year commencing April 1, 2023, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled. The interpretation and guidance on what level edit log and audit trail needs to be maintained; evolved during the year and continues to evolve.
The Company uses an Oracle accounting software for maintaining its books of account which has an inbuilt feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the accounting software except for audit trail feature is not enabled at the database level to log any direct or indirect data changes. However, the Company has process and proper mechanism to ensure that any direct access to the data base is granted only through approved person by management of the Company.
Further no instance of audit trail feature being tampered with was noted in respect of the accounting software. The Company is committed to preserve the audit trail as per the statutory requirements for record retention.
(i) On January 18, 2024 early morning, a fire incident occurred in a plant adjacent to the small manufacturing plant at Plot No. W-124-A, Khervai MIDC, Badlapur (E) - 421503, Maharashtra. The fire was spread to our above-mentioned plant and its operations were impacted. The fire was successfully contained within a minimal timeframe, but operations of the said plant were temporarily disrupted. Fortunately, there has been no loss to human life at our plant. This incident led to damage of Property, Plant & Equipment and inventories.
There is adequate insurance coverage for the said plant. The intimation to Insurance Company has already been made on same day and necessary surveys has been done. The primary assessment of loss for book value of assets is '' 56.32 Lakhs, which is disclosed as an exceptional item in profit & loss account of FY 2023-24. The Company is in process of lodging final claim and has received '' 180 Lakhs ( March 31, 2024''30 Lakhs) as on account payment.
Mar 31, 2024
NOTE 12.11 DISCLOSURE TO OTHER NON CURRENT ASSETS - CAPITAL ADVANCES
The Company has given an advance of '' 2,420 Lakhs to MIDC for the allotment of a plot at Pale, Ambernath, which is disclosed under Capital advances. The MIDC has issued an allotment letter, however, the Company is still unable to take possession of the said plot, as so far the MIDC has not created any of the basic infrastructure facilities such as water, electricity, roads etc. The Company is very positive about receiving possession after confirmation from relevant authorities.
Upon possession, the Company plans to setup a centralised warehousing facility, however, the Company shall carry out a feasibility study and then decide upon the appropriate action to be taken for the said plot. The present value of the said plot as per the ready reckoner rate as at March 31, 2024 is higher than the advance given.
NOTE 21.21 TERMS/ RIGHTS ATTACHED TO EQUITY SHARES
The Company has one class of equity shares having a par value of '' 5 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in the case of an interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after the distribution of all preferential amounts, in proportion to their shareholding.
NOTE 21.51 DETAILS OF CALLS UNPAID
There are no calls unpaid.
NOTE 21.61 SUBDIVISION OF SHARES
The Shareholders vide a special resolution has approved the subdivision of shares of the Company in the ratio of 2 shares of face value of '' 5 each for every existing 1 share of the face value of '' 10 each.
The requisite approvals for modification of the Memorandum and Articles of Association of the Company had been accorded by the shareholders on November 06, 2017.
(a) Amalgamation Reserve - At the time of business combination under common control, amalgamation adjustment reserve of the transferor company becomes amalgamation adjustment reserve of the transferee company. The Company established this reserve at the time of business combinations made in the earlier years.
(b) Retained Earnings represents undistributed accumulated earnings of the Company as on the balance sheet date.
(c) Other Comprehensive Income represents the following -
1. The cumulative gains and losses arising on fair value changes of equity investments measured at fair value through other comprehensive income are recognised in FVOCI - equity instruments reserve
2. The Company uses hedging instruments as part of its management of interest rate risk associated with borrowings. For hedging interest rate risk, the Company uses the interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedged reserve is reclassified to the statement of profit and loss when the hedged item affects the statement of profit and loss (e.g. interest payments).
3. Remeasurements, comprising of actuarial gains and losses are recognized in full in the statement of other comprehensive income in the reporting period in which they occur. Remeasurements are not reclassified to profit and loss subsequently.
NOTE 23.11 DISCLOSURE TO NON CURRENT FINANCIAL LIABILITIES : BORROWINGS
(i) The foreign currency borrowing was secured against exclusive charge on specific Land & Building and Plant & Machinery of the borrower at plot no. N-42/1, MIDC, Anand Nagar, Additional Ambernath Industrial Area, Ambernath - 421501, Maharashtra.
(ii) During the FY 2023-24 the loan was completely repaid and as of Mar 31, 2024 the charge on assets were completely released.
NOTE 26.11 DISCLOSURE TO CURRENT FINANCIAL LIABILITIES : TRADE PAYABLES Dues to micro and small enterprises
Micro & Small enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) have been identified by the Company on the basis of the information available with the Company and the auditors have relied on the same. Sundry creditors include total outstanding dues of micro and small enterprises amounting to '' 1,779.80 Lakhs (Previous Year: '' 1,871.45 Lakhs). The disclosure pursuant to the MSMED Act based on the books of account is as under:
NOTE 31.11 OTHER DISCLOSURE RELATING TO REVENUE FROM CONTRACTS WITH CUSTOMERS (IND AS 115)
The Company is primarily in the Business of manufacture and sale of Specialty chemicals. AH sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/ delivery. The Company evaluates the credit limits for the trade receivables. The Company does not give a significant credit period resulting in no significant financing component.
The Company makes contributions towards provident fund and other retirement benefits to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefit.
The Company has used the Projected Unit Credit (PUC) actuarial method to assess the Plan''s liabilities, including those related to death-in-service benefits. Under the PUC method, a ''Projected accrued benefit'' is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the plan. The ''projected accrued benefit'' is based on the Plan''s accrual formula and upon the service as at the beginning or end of the year, but using a member''s final compensation, projected to the age at which the employee is assumed to leave active service. The Plan Liability is the actuarial present value of the ''projected accrued benefits'' as at the end of the year for the Plan''s active members.
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below has been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of the Sensitivity Analysis is given below:
Through its gratuity plans the Company is exposed to a number of risks, the most significant of which are detailed below:-
A decrease in the bond Interest rate will increase the plan liability; however, In case of gratuity plan this will be partially offset by an increase in the return on the plan''s assets.
Longevity Risk
The present value of Gratuity plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan''s liability.
Salary Risk
The present value of the Gratuity plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
For funded plans that rely on Insurers for managing the assets, the value of assets certified by the Insurer may not be the fair value of Instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status, If there are significant changes in the discount rate during the inter-valuation period.
NOTE 38.11 CORPORATE SOCIAL RESPONSIBILITY EXPENSES:
The Company has spent an amount of '' 363.16 Lakhs pertaining to FY 2023-24 and '' 478.05 Lakhs pertaining to FY 2022-23 towards various CSR projects for the purpose other than construction/ acquisition of any asset. The Company has transferred '' 474.05 Lakhs (i.e. unspent amount for the ongoing CSR projects of the Company for the FY 2023-24) Nil in FY 2022-23 to a separate bank account specially opened by the Company for the CSR.
|
NOTE 42 CONTINGENT LIABILITIES AND COMMITMENTS |
('' in lakhs) |
|
|
Particulars |
For the Year Ended March 31, 2024 |
For the Year Ended March 31, 2023 |
|
Contingent Liabilities |
||
|
Income tax liability that may arise in respect of matters in appeal |
826.35 |
610.12 |
|
Indirect tax liability that may arise in respect of matters in appeal |
27.16 |
27.16 |
|
Commitments |
||
|
Estimated contracts remaining to be executed on capital account not provided |
803.82 |
1,822.04 |
|
Bank Guarantee |
1,430.55 |
1,219.31 |
The Financial Statements of the Company for the year ended March 31, 2024 have been approved by the Board of Directors in its meeting held on May 10, 2024. For the year ended March 31, 2024, dividend of '' 10/- per share (Total dividend of '' 3066 Lakhs) has been proposed by the Board of Directors at its meeting held on May 10, 2024. The same is subject to the approval of shareholders in the ensuing Annual General Meeting of the Company and therefore proposed dividend has not been recognised as liability as at the Balance Sheet Date in line with Ind AS - 10 "Events after the Reporting Period.
It is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above contingent liabilities pending resolution of the respective proceedings. The Company does not expect any reimbursement in respect of the above contingent liabilities.
NOTE 43 | RELATED PARTY TRANSACTIONS DISCLOSURE:
The Disclosure pertaining to the related parties as required by Indian Accounting Standard 24 issued by Ministry of Corporate Affairs (MCA), as prescribed in section 133 read with companies (Indian accounting Standards ) Rule,2015 as amended are indicated below
The Company has identified its reportable segment as "Specialty chemicalsâ since the Chief Operating Decision Maker (CODM) evaluates the Company''s performance as a single segment in terms of Indian Accounting Standard 108 issued by the Ministry of Corporate Affairs (MCA), as prescribed in section 133 read with companies (Indian Accounting Standards) Rule,2015 as amended are indicated below
NOTE 44.11 DISCLOSURE FOR ASSETS OUTSIDE INDIA
The Company does not have any non-current non-financial assets outside India
NOTE 44.31 DISCLOSURE FOR MAJOR CUSTOMERS MORE THAN 10%
The geographic information analyses the Company''s revenue and non-current assets by the Company''s country of domicile and other countries. In presenting the geographical information, segment revenue has been based on the geographic location of customers and segments assets were based on the geographic location of the respective non-current assets.
The product offerings which are part of the speciality chemicals portfolio of the Company are managed on a worldwide basis from India.
The Company has disaggregated its revenue from contracts with customers and trade receivables on a geographical basis as under:
The Company implements and manages efficient internal control systems to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition, by maintaining proper records and reports in a timely manner. This is supplemented by an extensive programme of internal audit, reviewed by the Management and relevant policies, guidelines and procedures. The internal control is designed to ensure the reliability of financial and other records for preparing precise financial statements, maintaining accountability of assets and more. The Management is committed to regularly reviewing and making relevant amendments to the internal control system, as and when required.
The Company''s process framework provides well-documented standard operating procedures and authorities with adequate built-in controls. The internal control is further enhanced by an extensive programme of internal, external audits and periodic reviews by the Management.
The Company adopts and follows a risk mitigation strategy and reviews risk occurrence to find probable mitigation strategies. The Company''s Risk Management Committee reviews risks and mitigation measures at regular intervals and accordingly initiates corrective steps at times of need.
For the purposes of the Company''s capital management, capital includes issued equity share capital, all other reserves and borrowed capital less reported cash and cash equivalents.
The primary objective of the Company''s capital management is to maintain an efficient capital structure to reduce the cost of capital, support the corporate strategy and to maximise shareholder''s value.
The Company''s policy is to borrow primarily through banks to maintain sufficient liquidity. The Company also maintains certain undrawn committed credit facilities to provide additional liquidity. These borrowings, together with cash generated from operations are utilised for operations of the Company.
The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally imposed capital requirements.
No changes were made to the objectives, policies or processes for managing capital during the years ended March 31, 2024 and March 31, 2023.
NOTE 51 | FINANCIAL RISK MANAGEMENT FRAMEWORK A] Financial Risk Management
The Company monitors capital on the basis of the cost of capital. The Company is not subject to any externally imposed capital requirements.
Market Risks arise due to changes in Interest rates, Foreign Exchange rates and changes in Market prices.
(i) Interest Rate Risks
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates. The Company''s exposure to the risk of changes in market rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
The Company''s policy is generally to undertake long-term borrowings using facilities that carry floating-interest rate. The Company manages its interest rate risk by entering into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.
Moreover, the short-term borrowings of the Company do not have a significant fair value or cash flow interest rate risk due to their short tenure.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts to hedge its foreign currency exposures in USD and Euro.
a) Exposure in foreign currency - Hedged
The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any Derivative Instruments for Trading and Speculation purposes.
The Company is exposed to the price risk associated with purchasing of the raw materials. The Company typically does not enter into formal long-term arrangements with our vendors. Therefore, fluctuations in the price and availability of raw materials may affect the Company''s business and results of operations. To mitigate this the Company has a risk management strategy in place wherein the senior management reviews the supply chain scenarios, commodity prices and supplier contracts periodically to avoid material impact on the profitability of the Company.
Credit Risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Investments in Equity Shares and Balances with Banks.
The Company holds cash and cash equivalents with banks which are having highest safety rankings and hence have a low credit risk.
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits (generally between 30 to 90 days) and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The outstanding trade receivables due for a period exceeding 180 days as at the year ended March 31, 2024 is 1.46% (P.Y. 0.39%) of the total trade receivables. The Company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain.
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has obtained fund based borrowings from banks. The Company invests its surplus funds in bank fixed deposit which carries low credit risks.
All payments are made on due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The Company has a system of forecasting rolling one month cash inflow and outflow and all liquidity requirements are planned.
Maturity Profile of Financial Liabilities:
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments.
(i) On January 18, 2024 early morning, a fire incident occurred in a plant adjacent to the small manufacturing plant at Plot No. W-124-A, Khervai MIDC, Badlapur (E) - 421503, Maharashtra. The fire was spread to our above-mentioned plant and its operations were impacted. The fire was successfully contained within a minimal timeframe, but operations of the said plant were temporarily disrupted. Fortunately, there has been no loss to human life at our plant. This incident led to damage of Property, Plant & Equipment and inventories.
There is adequate insurance coverage for the said plant. The intimation to Insurance Company has already been made on same day and necessary surveys has been done. The primary assessment of loss for book value of assets is '' 56.32 Lakhs, which is disclosed as an exceptional item in profit & loss account. The Company is in process of lodging final claim and has received '' 30 Lakhs as on account payment.
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company do not have any transactions with companies struck off during the year
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(viii) As per the Ministry of Corporate Affairs (MCA) notification, proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, for the financial year commencing April 1, 2023, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled. The interpretation and guidance on what level edit log and audit trail needs to be maintained; evolved during the year and continues to evolve.
The Company uses an Oracle accounting software for maintaining its books of account which has an inbuilt feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the accounting software except for audit trail feature is not enabled at the database level to log any direct or indirect data changes. However, the Company has process and proper mechanism to ensure that any direct access to the data base is granted only through approved person by management of the Company.
Further no instance of audit trail feature being tampered with was noted in respect of the accounting software. The Company is committed to preserve the audit trail as per the statutory requirements for record retention.
Mar 31, 2023
DISCLOSURE TO OTHER NON CURRENT ASSETS - CAPITAL ADVANCES
The Company has given an advance of '' 2,420 Lakhs to MIDC for allotment of a plot at Pale, Ambernath, which is disclosed under Capital advances. The MIDC has issued an allotment letter, however, the company is still unable to take possession of the said plot, as so far the MIDC has not created any of the basic infrastructure facilities such as water, electricity, roads etc. Upon possession, the Company plans to setup a centralised warehousing facility, however, the Company shall carry out a feasibility study and then decide upon the appropriate action to be taken for the said plot. Present value of the said plot as per the ready reckoner rate as at March 31, 2023 is higher than the advance given.
N33EB TERMS/ rights attached to equity shares
The Company has one class of equity shares having a par value of '' 5 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
N33EB DETAILS of calls unpaid
There is no calls unpaid.
The Shareholders vide a special resolution has approved sub division of shares of the Company in the ratio of 2 shares of face value of '' 5 each for every existing 1 share of the face value of '' 10 each.
The requisite approvals for modification of the Memorandum and Articles of Association of the Company had been accorded by the shareholders on November 6, 2017.
NOTEEQB aggregate number of bonus shares issued, shares issued for consideration other than cash
DURING THE PERIOD OF FIVE YEARS IMMEDIATELY PRECEDING THE REPORTING DATE
(i) The Company has issued 2,80,000 Equity Shares of '' 10 Each in Financial year 2016-17 for consideration other than cash to the shareholders of Fine Research & Development Centre Private Limited ("FRDCPL") and Fine Specialty Surfactants Private Limited ("FSSPL") on account of Amalgamation.
(ii) During the year ended March 31, 2018, the Company has issued 1,02,19,992 Equity shares of '' 10 each (Pre Subdivision of shares) pursuant to the bonus issue of shares vide special resolution approved by the shareholders dated October 16, 2017.
The Company has allotted 2 (Two) Fully paid up equity shares of '' 10 each for every 1 (One) Equity share held by the shareholders (Including shares issued to the shareholders on account of amalgamation with FRDCPL & FSSPL). Later on as per special resolution dated November 6, 2017, such shares are sub divided into the ratio of 2 (Two) shares of face value of '' 5 each for every existing 1 (One) share of the face value of '' 10 each.
(a) Amalgamation Reserve - At the time of business combination under common control,amlagamation adjustment reserve of transferor company becomes amlagamation adjustment reserve of the transferee company.The Company established this reserve at the time of business combinations made in the earlier years.
(b) Retained Earnings represents undistributed accumulated earnings of the Company as on the balance sheet date.
(c) Other Comprehensive Income represents the following -
1. The cumulative gains and losses arising on fair value changes of equity investments measured at fair value through other comprehensive income are recognised in FVOCI - equity instruments reserve
2. The Company uses hedging instruments as part of its management of interest rate risk associated with borrowings. For hedging interest rate risk, the Company uses the interest rate swaps. To the extent this hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedged reserve is reclassified to the statement of profit and loss when the hedged item affects the statement of profit and loss (e.g. interest payments).
3. Remeasurements, comprising of actuarial gains and losses are recognised in full in the statement of other comprehensive income in the reporting period in which they occur. Remeasurements are not reclassified to profit and loss subsequently.
NSDEESE OTHER DISCLOSURE RELATING TO REVENUE FROM CONTRACTS WITH CUSTOMERS (IND AS 115)
The Company is primarily in the Business of manufacture and sale of Specialty chemicals. AH sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/ delivery. The Company evaluates the credit limits for the trade receivables. The Company does not give significant credit period resulting in no significant financing component.
The Company makes contributions towards provident fund and other retirement benefits to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefit.
The Company has used the Projected Unit Credit (PUC) actuarial method to assess the Plan''s liabilities, including those related to death-in-service benefits. Under the PUC method, a ''Projected accrued benefit'' is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the plan. The ''projected accrued benefit'' is based on the Plan''s accrual formula and upon the service as at the beginning or end of the year, but using a member''s final compensation, projected to the age at which the employee is assumed to leave active service. The Plan Liability is the actuarial present value of the ''projected accrued benefits'' as at the end of the year for the Plan''s active members.
Through its gratuity plans the Company is exposed to a number of risks, the most significant of which are detailed below:-Interest Risk
A decrease in the bond Interest rate will increase the plan liability; however, In case of gratuity plan this will be partially offset by an increase In the return on the plan''s assets.
The present value of Gratuity plan liability is calculated by reference to the best estimate of the mortality of plan participants. An Increase in the life expectancy of the plan participants will increase the plan''s liability.
The present value of the Gratuity plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
For funded plans that rely on Insurers for managing the assets, the value of assets certified by the Insurer may not be the fair value of Instruments backing the liability. In such cases, the present value of the assets is Independent of the future discount rate. This can result In wide fluctuations in the net liability or the funded status If there are significant changes In the discount rate during the inter-valuation period.
|
LOOSES CONTINGENT LIABILITIES AND COMMITMENTS |
('' in lakhs) |
|
|
Particulars |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
|
Contingent Liabilities |
||
|
Income tax liability that may arise in respect of matters in appeal |
610.12 |
574.97 |
|
Indirect taxes liability that may arise in respect of matters in appeal |
27.16 |
27.16 |
|
Commitments |
||
|
Estimated contracts remaining to be executed on capital account not provided |
1,822.04 |
1,488.25 |
|
Bank Guarantee |
1,219.31 |
758.61 |
The Financial Statements of the Company for the year ended March 31, 2023 has been approved by the Board of Directors in its meeting held on May 24, 2023. For the year ended March 31, 2023, dividend of '' 9/- per share (Total dividend of '' 2759.40 lakhs) has been proposed by the Board of Directors at its meeting held on May 24, 2023. The same is subject to the approval of shareholders in the ensuing Annual General Meeting of the Company and therefore proposed dividend has not been recognised as liability as at the Balance Sheet Date in line with Ind AS - 10 "Events after the Reporting Period."
It is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above contingent liabilities pending resolution of the respective proceedings. The Company does not expect any reimbursement in respect of the above contingent liabilities.
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, 2023, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2022: 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.(Disclosure of compensation paid to Key Managerial person)
LOOSES OPERATING SEGMENT DISCLOSURE
The Company has identified its reportable segment as "Specialty chemicals" since the Chief Operating Decision Maker (CODM) evaluates the Company''s performance as a single segment in terms of Indian Accounting Standard 108 issued by Ministry of Corporate Affairs (MCA),as prescribed in section 133 read with companies (Indian accounting Standards ) Rule,2015 as amended are indicated below
NOTEE5B DISCLOSURE FOR ASSETS OUTSIDE INDIA
The Company does not have any non current non financial assets outside India
N3D3B33 geographic information
The geographic information analyses the Company''s revenue and non-current assets by the Company''s country of domicile and other countries. In presenting the geographical information, segment revenue has been based on the geographic location of customers and segments assets were based on the geographic location of the respective non-current assets.
The product offerings which are part of the Specialty chemicals portfolio of the Company are managed on a worldwide basis from India.
EOTEE9 INTERNAL FINANCIAL CONTROL SYSTEM
The Company implements and manages efficient internal control systems to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition, by maintaining proper records and reports in a timely manner. This is supplemented by an extensive programme of internal audit, reviewed by the Management and relevant policies, guidelines and procedures. The internal control is designed to ensure the reliability of financial and other records for preparing precise financial statements, maintaining accountability of assets and more. The Management is committed to regularly reviewing and making relevant amendments to the internal control system, as and when required.
The Company''s process framework provides well-documented standard operating procedures and authorities with adequate built-in controls. The internal control is further enhanced by an extensive programme of internal, external audits and periodic reviews by the Management.
The Company adopts and follows a risk mitigation strategy and reviews risk occurrence to find probable mitigation strategies. The Company''s Risk Management Committee reviews risks and mitigation measures at regular intervals, and accordingly initiates corrective steps at times of need.
INOQE53 CAPITAL MANAGEMENT
For the purposes of the Company''s capital management, capital includes issued equity share capital, all other reserves and borrowed capital less reported cash and cash equivalents.
The primary objective of the Company''s capital management is to maintain an efficient capital structure to reduce the cost of capital, support the corporate strategy and to maximise shareholder''s value.
The Company''s policy is to borrow primarily through banks to maintain sufficient liquidity. The Company also maintains certain undrawn committed credit facilities to provide additional liquidity. These borrowings, together with cash generated from operations are utilised for operations of the Company.
The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally imposed capital requirements.
INOBE59 FINANCIAL RISK MANAGEMENT FRAMEWORK A] Financial Risk Management
The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally imposed capital requirements.
Market Risks arise due to Changes in Interest rates, Foreign Exchange rates and changes in Market prices.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates. The Company''s exposure to the risk of changes in market rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
The Company''s policy is generally to undertake long-term borrowings using facilities that carry floating-interest rate. The Company manages its interest rate risk by entering into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.
Moreover, the short-term borrowings of the Company do not have a significant fair value or cash flow interest rate risk due to their short tenure.
As the Company does not have exposure to any floating-interest bearing assets its interest income and related cash inflows are not materially affected by changes in market interest rates.
No sensitivity analysis is prepared as the Company does not expect any material effect on the Company''s results arising from the effects of reasonably possible changes to interest rates on interest bearing financial instruments at the end of the reporting period.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts to hedge its foreign currency exposures in US$ and Euro.
a) Exposure in foreign currency - Hedged
The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any Derivative Instruments for trading and Speculation purposes.
The company is exposed to the price risk associated with purchasing of the raw materials. . The Company typically does not enter into formal long-term arrangements with our vendors. Therefore, fluctuations in the price and availability of raw materials may affect the Company''s business and results of operations. To mitigate this the Company has a risk management strategy in place wherein the senior management reviews the supply chain scenarios, commodity prices and supplier contracts periodically to avoid material impact on profitability of the company.
Credit Risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Investments in Equity Shares and Balances with Banks.
The Company holds cash and cash equivalents with banks which are having highest safety rankings and hence has a low credit risk.
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits (generally between 30 to 90 days) and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The outstanding trade receivables due for a period exceeding 180 days as at the year ended March 31, 2023 is 0.39% (P.Y. 0.18%) of the total trade receivables. The Company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain.
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has obtained fund based borrowings from banks. The Company invests its surplus funds in bank fixed deposit which carry low credit risks.
All payments are made on due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The Company has a system of forecasting rolling one month cash inflow and outflow and all liquidity requirements are planned.
Maturity Profile of Financial Liabilities:
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments.
U033E3 OTHER STATUTORY INFORMATION
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against The Company for holding any Benami property.
(ii) The Company do not have any transactions with companies struck off during the year
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
Mar 31, 2022
NOTE 7.^ DIMINUTION IN VALUE OF THE INVESTMENT IN A JOINT VENTURE
The Company has fully provided for the diminution in the value of its investment in the Joint Venture Entity "FineADD Ingredients GmbH", in view of its decision not to proceed with the Joint Venture and accordingly recorded the provision for the balance amount of ^ 120.73 lakhs in the books of account. The Joint Venture is in the process of liquidation.
The Company has given an advance of ^ 2,420 lakhs to MIDC for allotment of a plot at Pale, Ambernath, which is disclosed under Capital advances. The MIDC has issued an allotment letter, however, the company is still unable to take possession of the said plot, as so far the MIDC has not created any of the basic infrastructure facilities such as water, electricity, roads etc. Upon possession, the Company plans to setup a centralised warehousing facility, however, the Company shall carry out a feasibility study and then decide upon the appropriate action to be taken for the said plot. Present value of the said plot as per the ready reckoner rate & the valuation report dated November 1, 2021 obtained by the Company is higher than the advance given and accordingly, no provision is required to be made.
Note 19.2 - Terms/ rights attached to equity shares
The Company has one class of equity shares having a par value of ^ 5 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
Note 19.5 - Details of calls unpaid
There is no calls unpaid.
Note 19.6 - Subdivision of shares
The Shareholders vide a special resolution has approved sub division of shares of the Company in the ratio of 2 shares of face value of ^ 5 each for every existing 1 share of the face value of ^ 10 each.
The requisite approvals for modification of the Memorandum and Articles of Association of the Company had been accorded by the shareholders on November 6, 2017.
Note 19.7 - Aggregate number of bonus shares issued, shares issued for consideration other than cash during the period of five years immediately preceding the reporting date
(i) The Company has issued 2,80,000 Equity Shares of ^ 10 Each in Financial year 2016-17 for consideration other than cash to the shareholders of Fine Research & Development Centre Private Limited ("FRDCPL") and Fine Speciality Surfactants Private Limited ("FSSPL") on account of Amalgamation.
(ii) During the year ended March 31, 2018, the Company has issued 1,02,19,992 Equity shares of ^ 10 each (Pre Subdivision of shares) pursuant to the bonus issue of shares vide special resolution approved by the shareholders dated October 16, 2017.
The Company has allotted 2 (Two) Fully paid up equity shares of ^ 10 each for every 1 (One) Equity share held by the shareholders (Including shares issued to the shareholders on account of amalgamation with FRDCPL & FSSPL).
Later on as per special resolution dated November 6, 2017, such shares are sub divided in to the ratio of 2 (Two) shares of face value of ^ 5 each for every existing 1 (One) share of the face value of ^ 10 each.
(a) Amalgamation Reserve - At the time of business combination under common control, amlagamation adjustment reserve of transferor company becomes amlagamation adjustment reserve of the transferee company. The Company established this reserve at the time of business combinations made in the earlier years.
(b) Retained Earnings represents undistributed accumulated earnings of the Company as on the balance sheet date.
(c) Other Comprehensive Income represents the following -
1. The cumulative gains and losses arising on fair value changes of equity investments measured at fair value through other comprehensive income are recognised in FVOCI - equity instruments reserve
2. The Company uses hedging instruments as part of its Management of interest rate risk associated with borrowings. For hedging interest rate risk, the Company uses the interest rate swaps. To the extent this hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedged reserve is reclassified to the statement of profit and loss when the hedged item affects the statement of profit and loss (e.g. interest payments).
3. Remeasurements, comprising of actuarial gains and losses are recognised in full in the statement of other comprehensive income in the reporting period in which they occur. Remeasurements are not reclassified to profit and loss subsequently.
Note 24.1 - Disclosure to Current Financial Liabilities : Trade Payables Dues to micro and small enterprises
Micro & Small enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) have been identified by the Company on the basis of the information available with the Company and the auditors have relied on the same. Sundry creditors include total outstanding dues of micro and small enterprises amounting to ^ 904.87 lakhs (Previous Year: ^ 318.49 lakhs). The disclosure pursuant to MSMED Act based on the books of account is as under:
Note 29.1 - Other disclosure relating to Revenue from Contracts with Customers (Ind AS 115)
The Company is primarily in the Business of manufacture and sale of Specialty chemicals. AH sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/ delivery. The Company evaluates the credit limits for the trade receivables. The Company does not give significant credit period resulting in no significant financing component.
Further, disaggregation of revenue based on geography has been mentioned under segment information.
{refer to note no. 42.3}
The Company makes contributions towards provident fund and other retirement benefits to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefit.
The Company has used the Projected Unit Credit (PUC) actuarial method to assess the Plan''s liabilities, including those related to death-in-service benefits. Under the PUC method, a ''Projected accrued benefit'' is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the plan. The ''projected accrued benefit'' is based on the Plan''s accrual formula and upon the service as at the beginning or end of the year, but using a member''s final compensation, projected to the age at which the employee is assumed to leave active service. The Plan Liability is the actuarial present value of the ''projected accrued benefits'' as at the end of the year for the Plan''s active members.
Through its gratuity plans the Company is exposed to a number of risks, the most significant of which are detailed below: Interest Risk
A decrease in the bond interest rate will increase the plan liability; however, in case of gratuity plan this will be partially offset by an increase in the return on the plan''s assets.
Longevity Risk
The present value of Gratuity plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan''s liability.
Salary Risk
The present value of the Gratuity plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
Investment Risk
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
Note 36.1 - Corporate Social Responsibility Expenses:
The Company has spent an amount of '' 235.96 Lakhs pertaining to F.Y. 2021-22 and '' 115.64 Lakhs pertaining to F.Y. 2020-21, during the year ended March 31, 2022 and '' 242.20 Lakhs during the year ended March 31, 2021 respectively towards various CSR projects for the purpose other than construction/ acquisition of any asset. The Company has transferred '' 163.92 Lakhs (i.e. unspent amount for the ongoing CSR projects of the Company for the F.Y. 2021-22) to a separate bank account specially opened by the Company for the CSR. The Company already have '' 40.50 Lakhs (i.e. unspent amount for the ongoing CSR projects of the Company for the F.Y. 2020-21) in a separate bank account specially opened by the Company for the CSR.
The Financial Statements of the Company for the year ended March 31, 2022 has been approved by the Board of Directors in its meeting held on May 27, 2022. For the year ended March 31, 2022, dividend of ^ 9 per share (Total dividend of ^ 2759.40 lakhs) has been proposed by the Board of Directors at its meeting held on May 27, 2022. The same is subject to the approval of shareholders in the ensuing Annual General Meeting of the Company and therefore proposed dividend has not been recognised as liability as at the Balance Sheet Date in line with Ind AS - 10 "Events after the Reporting Period."
It is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above contingent liabilities pending resolution of the respective proceedings. The Company does not expect any reimbursement in respect of the above contingent liabilities.
Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2021:
'' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. (Disclosure of compansation paid to key managerial person).
NOTE 42| OPERATING SEGMENT DISCLOSURE
The Company has identified its reportable segment as "Specialty chemicals" since the Chief Operating Decision Maker (CODM) evaluates the Company''s performance as a single segment in terms of Indian Accounting Standard 108 issued by Ministry of Corporate Affairs (MCA), as prescribed in section 133 read with companies (Indian accounting Standards ) Rule, 2015 as amended are indicated below
Note 42.1 - Disclosure for assets outside India
The Company does not have any non current non financial assets outside India note 42.2- disclosure for major customers more than 10%
There are no transactions with single external customer which amounts to 10% or more of the Company ''s revenue. note 42.3- geographic information
The geographic information analyses the Company''s revenue and non-current assets by the Company''s country of domicile and other countries. In presenting the geographical information, segment revenue has been based on the geographic location of customers and segments assets were based on the geographic location of the respective non-current assets.
The product offerings which are part of the specialty chemicals portfolio of the Company are managed on a worldwide basis from India.
note 43| internal financial control system
The Company implements and manages efficient internal control systems to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition, by maintaining proper records and reports in a timely manner. This is supplemented by an extensive programme of internal audit, reviewed by the Management and relevant policies, guidelines and procedures. The internal control is designed to ensure the reliability of financial and other records for preparing precise financial statements, maintaining accountability of assets and more. The Management is committed to regularly reviewing and making relevant amendments to the internal control system, as and when required.
The Company''s process framework provides well-documented standard operating procedures and authorities with adequate built-in controls. The internal control is further enhanced by an extensive programme of internal, external audits and periodic reviews by the Management.
The Company adopts and follows a risk mitigation strategy and reviews risk occurrence to find probable mitigation strategies. The Company''s Risk Management Committee reviews risks and mitigation measures at regular intervals, and accordingly initiates corrective steps at times of need.
NOTE 48| CAPITAL MANAGEMENT
For the purposes of the Company''s capital Management, capital includes issued equity share capital, all other reserves and borrowed capital less reported cash and cash equivalents.
The primary objective of the Company''s capital Management is to maintain an efficient capital structure to reduce the cost of capital, support the corporate strategy and to maximise shareholder''s value.
The Company''s policy is to borrow primarily through banks to maintain sufficient liquidity. The Company also maintains certain undrawn committed credit facilities to provide additional liquidity. These borrowings, together with cash generated from operations are utilised for operations of the Company.
The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally imposed capital requirements.
NOTE 49| FINANCIAL RISK MANAGEMENT FRAMEWORK A) Financial Risk Management
The Company''s activities primarily expose it to various risks such as Market Risks, Credit Risk and Liquidity Risk. Those are explained below :
1) Market Risk
Market Risks arise due to Changes in Interest rates, Foreign Exchange rates and changes in Market prices.
(i) Interest Rate Risks
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates. The Company''s exposure to the risk of changes in market rates relates primarily to the Company''s long-term debt obligations with floating interest rates.
The Company''s policy is generally to undertake long-term borrowings using facilities that carry floating-interest rate. The Company manages its interest rate risk by entering into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.
Moreover, the short-term borrowings of the Company do not have a significant fair value or cash flow interest rate risk due to their short tenure.
As the Company does not have exposure to any floating-interest bearing assets its interest income and related cash inflows are not materially affected by changes in market interest rates.
No sensitivity analysis is prepared as the Company does not expect any material effect on the Company''s results arising from the effects of reasonably possible changes to interest rates on interest bearing financial instruments at the end of the reporting period.
(ii) Foreign Currency Risks
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts to hedge its foreign currency exposures in US$ and Euro.
a) Exposure in foreign currency - Hedged
The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any Derivative Instruments for trading and Speculation purposes.
(iii) Market Price Risks
The Company is affected by the price stability of certain commodities. Purchases of Raw Materials from our top 2 suppliers constitute approximately 39.09% of our total purchases made from all suppliers. We do not enter into supplier contracts for duration of period of more than 3-6 months. If suppliers do not supply us, there can be no assurance that we will be able to identify alternative suppliers in future at similar cost. Any disruption in the supply of the raw materials could disrupt our manufacturing operations, which could have a material adverse effect on our business, results of operations and financial condition.
The Company''s total imports of raw materials is approximately 31.00% (P.Y.: 26.29%) of the total raw material consumed. The cost of our imported raw material affected by the fluctuation in the rate of foreign exchange of the currency in which we purchase these raw materials (primarily in US$) and the Rupee.The Company has a risk Management framework aimed at prudently managing the price risk arising from the volatility in commodity prices and freight costs and tries to pass on increases in the costs to its customers to whatever extent possible.
2) Credit Risk
Credit Risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Investments in Equity Shares and Balances with Banks.
The Company holds cash and cash equivalents with banks which are having highest safety rankings and hence has a low credit risk.
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits (generally between 30 to 90 days) and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The outstanding trade receivables due for a period exceeding 180 days as at the year ended March 31, 2022 is 0.18% (P.Y. 0.57%) of the total trade receivables. The Company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain.
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has obtained fund based borrowings from banks. The Company invests its surplus funds in bank fixed deposit which carry low credit risks.
All payments are made on due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The Company has a system of forecasting rolling one month cash inflow and outflow and all liquidity requirements are planned.
Maturity to Financial Liabilities:
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments.
NOTE 5^ OTHER STATUTORY INFORMATION
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company do not have any transactions with companies struck off during the year
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company does not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
Mar 31, 2018
1. CORPORATE INFORMATION
Fine Organic Industries Limited {Formerly known as âFine Organic Industries Private Limitedâ} is a public limited Company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. The Company was converted into Public Company with effect from 2nd November, 2017 and consequently the name of the Company has changed from Fine Organic Industries Private Limited to Fine Organic Industries Limited. The registered office of the Company is situated in the State of Maharashtra.
The standalone Financial Statements were approved and authorised for issue with the resolution of the Board of Directors on 13th August, 2018 and are subject to the approval of Shareholders in the Annual General Meeting.
The Company carries on business, in India and abroad, as manufacturers, processors, suppliers, distributors, dealers, importers, exporters of flavours, perfumes and flavouring chemicals, oil and colours, surface active agents, emulsifiers, preservatives, clouding agents, textile auxiliaries, lubricants, oleo chemicals and their derivatives, fatty acids and their derivatives, salt and esters. It also develops, processes, manufactures, deals in and carries on business in India and abroad in fine and heavy chemicals, oils, fats, dyes, dyestuffs, dye retardants, dye assistants, organic and inorganic chemicals.
The Company has completed Initial Public offering (IPO) of 76,64,994 shares of Rs.5/- each at an offer price of Rs.783/- per Equity Share aggregating to Rs.6,00,16,90,302/, through offer for sale. Equity shares of the Company are listed on 2nd July, 2018 on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE).
The Company has following investments in subsidiaries and Joint Venture:
2. Basis OF pREpARATION:
2.1 Statement of compliance
The accompanying standalone Financial Statements have been prepared in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2017 notified under section 133 of the Companies Act, 2013, (the âActâ) and other relevant provisions of the Act.
The Companyâs standalone Financial Statements up to and for the year ended 31st March, 2017 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006 notified under the section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Act.
These Financial Statements are the first standalone Financial Statements of the Company under Ind AS. Previous period numbers for the year ended 31st March, 2017 in the Financial Statements have been restated to confirm to Ind AS. Accordingly, the date of transition to Ind AS is 1st April, 2016.
As these are the Companyâs first standalone Financial Statements prepared in accordance with Ind AS, Ind AS 101, âFirst-time adoption of Indian Accounting Standardsâ has been applied. An explanation of how the transition to Ind AS has affected the previously reported Financial position, Financial performance and cash flows of the Company is provided in Note no. 51.
2.2 Functional and presentation currency
These standalone Financial Statements are presented in Indian rupees, which is also the Companyâs functional currency. All amounts have been reported in â, unless otherwise indicated.
2.3 basis of measurement
The standalone Financial Statements have been prepared on a historical cost basis, except for the following:
- certain Financial assets and liabilities (including derivative instruments) that are measured at fair value; and
- net defined benefit assets/ liabilities that are measured at fair value of plan assets less present value of defined benefit obligations.
2.4 use of estimates and judgements
The preparation of the standalone Financial Statements in accordance with Ind AS requires use of judgements, estimates and assumptions, which affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates is recognised prospectively.
Assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31st March, 2018 are as follows:
a) property, plant and equipment
Useful lives of tangible assets are based on the life prescribed in Schedule II of the Act, which in the opinion of the Management represent the useful lives as they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturerâs warranties and maintenance support
b) Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.
c) Recognition of deferred tax assets
Deferred tax assets are recognised for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax base, and unutilised business loss and depreciation carry-forward and tax credits. Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carryforward and unused tax credits could be utilised.
d) contingent Liabilities, commitments and Litigations
contingent liabilities
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events.
Litigation
From time to time, the Company is subject to legal proceedings the ultimate outcome of each being always subject to many uncertainties inherent in litigation. A provision for litigation is made when it is considered probable that a payment will be made and the amount of the loss can be reasonably estimated. Significant judgement is made when evaluating, among other factors, the probability of unfavourable outcome and the ability to make a reasonable estimate of the amount of potential loss. Litigation provisions are reviewed at each accounting period and revisions made for the changes in facts and circumstances.
2.5 measurement of fair values
The Companyâs accounting policies and disclosures require the measurement of fair values, for both Financial and non-Financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values, which includes overseeing all significant fair value measurements, including Level 3 fair values by the Management. 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 such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a Financial asset or a Financial liability, the Company uses observable market data as far as possible. 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).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
2.6 Operating cycle
An operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.
Based on the nature of services and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current - non-current classification of assets and liabilities.
2.7 Current / Non-current classification
An entity shall classify an asset as current when:
a) It expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;
b) It holds the asset primarily for the purpose of trading;
c) It expects to realise the asset within twelve months after the reporting period; or
d) the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
An entity shall classify all other assets as non-current.
An entity shall classify a liability as current when-
a) It expects to settle the liability in its normal operating cycle;
b) It holds the liability primarily for the purpose of trading;
c) The liability is due to be settled within twelve months after the reporting period; or
d) It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
An entity shall classify all other liabilities as non-current.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
note 3.1 - disclosures for assets transferred from amalgamating companies appearing in âOther non current Assetsâ
(i) Income tax refund Receivable as at 1st April, 2016 includes Rs.5.32 lakhs from FSSPL and Rs.12.16 lakhs from FRDCPL transferred from amalgamating Companies.
(ii) Security Deposits as at 1st April, 2016 includes Rs.4.47 lakhs from FSSPL and Rs.3.12 lakhs from FRDCPL transferred from amalgamating Companies.
(iii) Prepaid Rent on Leasehold Land as at 1st April, 2016 includes Rs.109.70 lakhs from FRDCPL transferred from amalgamating Companies.
Note 4.1 - disclosures for assets transferred from amalgamating companies appearing in âInventoriesâ
(i) Raw Materials and Packing Materials as at 1st April, 2016 includes Rs.91.64 lakhs from FSSPL and Rs.3.19 lakhs from FRDCPL transferred from amalgamating Companies.
(ii) Semi-Finished Goods as at 1st April, 2016 includes Rs.15.00 lakhs from FRDCPL transferred from amalgamating Company.
(iii) Finished goods as at 1st April, 2016 includes Rs.46.76 lakhs from FSSPL transferred from amalgamating Company.
(iv) Consumables as at 1st April, 2016 includes Rs.4.76 lakhs from FSSPL transferred from amalgamating Company.
Note 4.2 - Disclosures for inventories lost due to fire
Total inventories worth Rs.67.76 lakhs was lost due to fire at Dombivli plant of amalgamating Company FSSPL in FY 2016-17 and same is not included in above inventories. Detailed note on the same is given in Note no.44 of the financial statement.
Note 5.1 - Disclosures for assets transferred from amalgamating companies appearing in âTrade Receivablesâ
(i) Trade Receivables (Considered good) as at 1st April, 2016 includes Rs.109.20 lakhs from FSSPL transferred from amalgamating Company.
(ii) Allowance for Expected Credit Loss on trade receivables transferred from amalgamating Company FSSPL have been calculated at Rs.3.76 lakhs and is included above as at 1st April, 2016.
note 6.1 - disclosures for assets transferred from amalgamating companies appearing in âcash and cash equivalentsâ
(i) Balance with bank in current account as at 1st April, 2016 includes Rs.126.81 lakhs from FSSPL and Rs.298.80 lakhs from FRDCPL transferred from amalgamating Companies.
(ii) Balance with bank in fixed deposit as at 1st April, 2016 includes Rs.314.78 lakhs from FSSPL transferred from amalgamating Company.
(iii) Cash on hand as at 1st April, 2016 includes Rs.4.10 lakhs from FSSPL and Rs.3.49 lakhs from FRDCPL transferred from amalgamating Companies.
note 7.1 - disclosures for assets transferred from amalgamating companies appearing in âOther bank balancesâ
(i) Balance with bank in fixed deposit as at 1st April, 2016 includes Rs.261.48 lakhs from FSSPL and Rs.0.05 lakhs from FRDCPL transferred from amalgamating Companies.
note 8.1 - disclosures for assets transferred from amalgamating companies appearing in âcurrent Financial Assets : Loansâ
(i) Loan to employees as at 1st April, 2016 includes Rs.6.15 lakhs from FSSPL and Rs.4.24 lakhs from FRDCPL transferred from amalgamating Companies.
note 9.1 - disclosures for assets transferred from amalgamating companies appearing in âcurrent Financial Assets : Othersâ
(i) Security Deposits to Trade Creditors as at 1st April, 2016 includes Rs.0.05 lakhs from FSSPL transferred from amalgamating Company.
* Balances with Government Authorities primarily include amounts realisable from the excise, service tax, value added tax and customs authorities of India, the unutilised excise input credits on purchases and amounts paid under protest relating to indirect tax matters. These are generally realised within one year or regularly utilised to offset the excise duty liability on goods manufactured by the Company. Accordingly, these balances have been classified as âOther Current Assetsâ.
Note 10.1 - Disclosures for assets transferred from amalgamating companies appearing in âOther current Assetsâ
(i) Prepaid Expenses as at 1st April, 2016 includes Rs.4.29 lakhs from FSSPL and Rs.4.09 lakhs from FRDCPL transferred from amalgamating Companies.
(ii) Prepaid Rent on Leasehold Land (Current Portion) as at 1st April, 2016 includes Rs.1.31 lakhs from FRDCPL transferred from amalgamating Company.
(iii) Balance with Statutory / Government Authorities as at 1st April, 2016 includes Rs.4.27 lakhs from FSSPL transferred from amalgamating Company.
(iv) Gratuity Fund Balance with LIC of India as at 1st April, 2016 includes Rs.11.19 lakhs from FSSPL and Rs.6.78 lakhs from FRDCPL transferred from amalgamating Companies.
(v) Other Advances as at 1st April, 2016 includes Rs.4.44 lakhs from FSSPL and Rs.3.22 lakhs from FRDCPL transferred from amalgamating Companies.
Note 11.1 - Terms/ rights attached to equity shares
The Company has one class of equity shares having a par value of Rs.5 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
Note 11.2 - Details of shares reserved for options and contracts / commitments for sale of shares / disinvestment
The Company has not reserved any shares for issue of options and contracts / commitments for sale of shares / disinvestment.
Note 11.3 - Details of calls unpaid
There is no calls unpaid, thus such disclosure is not applicable.
Note 11.4 - Subdivision of shares
(i) The Shareholders vide a special resolution has approved sub division of shares of the Company in the ratio of 2 shares of face value of Rs.5/- each for every existing 1 share of the face value of Rs.10/- each.
The requisite approvals for modification of the Memorandum and Articles of Association of the Company had been accorded by the shareholders on 6th November, 2017.
Note 11.5 - Aggregate number of bonus shares issued, shares issued for consideration other than cash during the period of five years immediately preceding the reporting date
(i) The Company has issued 28,30,000 Equity Shares of Rs.10 Each (Post Subdivision of shares) for consideration other than cash to the shareholders of Oleofine Organics India Private Limited (âOOIPLâ) on account of Amalgamation.
(Previous year: 28,30,000 Equity shares of Rs.10 each).
(ii) The Company has issued 2,80,000 Equity Shares of Rs.10 Each for consideration other than cash to the shareholders of Fine Research & Development Centre Private Limited (âFRDCPLâ) and Fine Speciality Surfactants Private Limited (âFSSPLâ) on account of Amalgamation. (Previous year: NIL Equity shares of Rs.10 each)
(iii) During the year ended 31st March, 2018, the Company has issued 1,02,19,992 Equity shares of Rs.10 each (Pre Subdivision of shares) pursuant to the bonus issue of shares vide special resolution approved by the shareholders dated 16th October, 2017. The Company has allotted 2 Fully paid up equity shares of Rs.10/- each for every 1 Equity shares held by the shareholders (Including shares issued to the shareholders on account of amalgamation with OOIPL, FRDCPL & FSSPL).
Later on as per special resolution dated 6th November, 2017 such shares are sub divided in to the ratio of 2 shares of face value of Rs.5/- each for every existing 1 share of the face value of Rs.10/- each.
(#) Under the erstwhile Indian Companies Act, 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act, 2013, the requirement to mandatory transfer a specified percentage of the net profit to general reserve has been withdrawn though the Company may transfer such percentage of its profits for the financial year as it may consider appropriate. Declaration of dividend out of such reserve shall not be made except in accordance with rules prescribed in this behalf under the Act.
(A) Amalgamation Reserve {Refer to note no. 42}
($) Retained Earnings are the profits that the Company has earned till date, less any transfer to general reserve, dividends or other distributions paid to shareholders.
(2) Denoted as amount below â1,000/-
* Loans from banks on Cash Credit, packing credit and term loan are secured by way of hypothecation of stocks of raw materials, finished products, stores, work-in-progress and book debts.
Note 12.1 - Disclosures for liabilities transferred from amalgamating companies appearing in âTrade payablesâ
(i) Outstanding due to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management.
(ii) Total Trade payables as at 1st April, 2016 includes Rs.110.11 lakhs from FSSPL and Rs.25.62 lakhs from FRDCPL transferred from amalgamating Companies.
Note 13.1 - Disclosures for liabilities transferred from amalgamating companies appearing in âcurrent Financial Liabilities : Othersâ
(i) Trade / Security Deposits as at 1st April, 2016 includes Rs.2.78 lakhs from FSSPL transferred from amalgamating Company.
Note 14.1 - Disclosures for liabilities transferred from amalgamating companies appearing in âOther current Liabilitiesâ
(i) Statutory dues payable as at 1st April, 2016 includes Rs.12.70 lakhs from FSSPL and Rs.2.81 lakhs from FRDCPL transferred from amalgamating Companies.
(ii) Advances from customers as at 1st April, 2016 includes Rs.6.70 lakhs from FSSPL transferred from amalgamating Company.
(iii) Other Liabilities as at 1st April, 2016 includes Rs.2.75 lakhs (Dues to directors) from FSSPL transferred from amalgamating Company.
Note 15.1 - Disclosures for liabilities transferred from amalgamating companies appearing in âcurrent Liabilities : Provisionsâ
(i) Employees benefit as at 1st April, 2016 includes Rs.2.68 lakhs from FSSPL and Rs.0.61 lakhs from FRDCPL transferred from amalgamating Companies.
Note 16.1 - Disclosures for liabilities transferred from amalgamating companies appearing in âcurrent Tax Liabilities (Net)â
(i) Provision for Income tax (Net of taxes paid) at 1st April, 2016 includes Rs.10.45 lakhs (Advance tax paid over provisions for tax) from FSSPL and Rs.88.77 lakhs (Advance tax paid over provisions for tax) from FRDCPL transferred from amalgamating Companies.
Note 17.1 - In accordance with Ind AS 18 on âRevenueâ and Schedule III to the Companies Act, 2013, sales upto period ended 30th June, 2017 were reported gross of excise duty and net of value added tax (VAT)/central Sales tax (CST) and service tax. Excise duty was reported as separate expense. Consequent to the introduction of Goods & Services Tax (GST) with effect from 1st July, 2017 excise duty, VAT, sales tax, service tax, etc. have been subsumed into GST and the same are not recognised as a part of sales as per the requirement of Ind AS18. Accordingly Revenue from operations in the current year is not comparable with that of the previous year.
Note 17.2 - The Company had certain pending/unexecuted turnkey contracts on the date of implementation of Goods and Service Tax (GST) as of 1st July, 2017, wherein contract prices were arrived at based on taxes and duty structure prevailing before implementation of GST. Pending revision/reset of contract prices in accordance with GST regime, the Revenue from Operations pertaining to such turnkey contracts has been recognised based on fair assessment and evaluation of impact of GST on the contract prices. In the opinion of the Management, this is not likely to have any material impact upon revision/resetting of the contract prices by the customers.
As per Indian Accounting Standard 19 âEmployee Benefitsâ the disclosures as defined are given below:
A] Defined Contribution Plans
The Company makes contributions towards provident fund and other retirement benefits to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefit.
Contribution to Defined Contribution Plans, recognised as expense for the year is as under:
B] Defined Benefits Plans
The Company has used the Projected Unit Credit (PUC) actuarial method to assess the Planâs liabilities, including those related to death-in-service benefits. Under the PUC method, a âProjected accrued benefitâ is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the plan. The âprojected accrued benefitâ is based on the Planâs accrual formula and upon the service as at the beginning or end of the year, but using a memberâs final compensation, projected to the age at which the employee is assumed to leave active service. The Plan Liability is the actuarial present value of the âprojected accrued benefitsâ as at the end of the year for the Planâs active members.
(vii) Sensitivity Analysis
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of Sensitivity Analysis is given below:
(ix) Risk Factors
Through its gratuity plans the Company is exposed to a number of risks, the most significant of which are detailed below. Interest risk
A decrease in the bond interest rate will increase the plan liability; however, In case of gratuity plan this will be partially offset by an increase in the return on the planâs assets.
Longevity risk
The present value of Gratuity plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the planâs liability.
Salary risk
The present value of the Gratuity plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
Investment risk
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
note 18.1 - corporate Social Responsibility Expenses
As per Section 135 of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility (CSR) Committee. The Company has specified the project in education field, promoting preventive healthcare and sanitation. Modalities of utilisation of funds on the specified project and monitoring and reporting mechanism has been defined.
(a) Gross amount required to be spent by Company during the year is Rs.216.50 lakhs
(b) In accordance with Rule 4(2) of CSR Rules, 2014 the said funds will be utilised as per the CSR policy *Order from Honourable Supreme court relating to Appeal for A.Y 2009-2010 against this liability has been communicated Post closure of current financial year .The Determination of liability is pending and formal communication is still awaited .Necessary accounting entries will be passed in the books of accounts post receipt of order and demand notice from the department .
The Financial Statements of the Company for the year ended 31st March, 2018 has been approved by the Board of Directors in its meeting held on 13th August, 2018. For the year ended 31st March, 2018, dividend of Rs.7/-per share (Total dividend of Rs.2,583.11 lakhs including Dividend Distribution Tax of Rs.436.92 lakhs) has been proposed by the Board of Directors at its meeting held on 13th August, 2018. The same is subject to the approval of shareholders in the ensuing Annual General Meeting of the Company and therefore proposed dividend (including dividend distribution tax) has not been recognised as liability as at the Balance Sheet Date in line with Ind AS - 10 âEvents after the Reporting Period.â
(#) Rs.49.42 lakhs for FY 2016-17 pertaining to amalgamating Company FSSPL.
It is not practicable for the Company to estimate the timings of the cash outflows, if any, in respect of the above contingent liabilities pending resolution of the respective proceedings. The Company does not expect any reimbursement in respect of the above contingent liabilities.
note 19 - related party transactions disclosure:
The Disclosure pertaining to the related parties as required by Indian Accounting Standard 24 issued by Ministry of Corporate Affairs (MCA), as applicable, are indicated below:
Note: Related parties relationship is as identified by the Company on the basis of information available with the management and accepted by the auditor.
The transactions with 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 31st March, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31st March, 2017: â 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.
NOTE 20 - BUSINESS cOMBINATIONS
In accordance with Ind AS 101 provisions related to first time adoption, the Company has elected to apply Ind AS 103 Accounting for Business Combinations prospectively from 1st April, 2016 (transition date). As such, Indian GAAP balances relating to business combinations entered into before that date, including goodwill, if any, have been carried forward.
Note 20.1 - Scheme of Arrangement (Merger) between the company, Fine Research & Development centre Private Limited (FRDcpL) and Fine Speciality Surfactants private Limited (FSSpL)
The Scheme of amalgamation for the merger of Fine Research & Development Centre Private Limited (FRDCPL) and Fine Speciality Surfactants Private Limited (FSSPL) (âthe amalgamating Companiesâ) with the Company was approved by the Board of Directors in its meeting held on 20th January, 2016 with an appointed date of 1st April, 2015. The said scheme has been approved by National Company Law Tribunal (âNCLTâ) and final order has been received on 22nd June, 2017. This accounting for amalgamation is accounted as per the scheme and in accordance with Accounting Standard 14 âAmalgamationâ notified under the Companies Act, 2013. Further, in terms of the Scheme, 2,80,000 equity shares of Rs.10 each of the Company are pending to be issued and allotted as fully paid up to the shareholders of the amalgamating Companies.
Fine Research & Development Centre Private Limited (FRDCPL) is a Private Limited Company incorporated in India on under the provisions of the Companies Act, 1956. The registered office of the Company is situated in the state of Maharashtra. The Company is engaged in undertaking scientific and industrial research and development.
Fine Speciality Surfactants Private Limited (FSSPL) is a Private Limited Company incorporated in India under the provisions of the Companies Act, 1956. The registered office of the Company is situated in the state of Maharashtra. The Company carries on business as manufacturers, importers, exporters, merchants, distributors, commission agents, brokers, wholesale and retail dealers and producers of oil-based chemicals, their intermediates, co-products and finished products and fine chemicals and other related products.
Pursuant to the aforesaid Scheme of amalgamation, the authorised equity share capital of the Company stands increased by the authorised equity share capital of the amalgamating Company aggregating Rs.520.00 lakhs (52,00,000 equity shares of face value of Rs.10 each).
Accounting treatment
The Business Combination has been accounted by using the Pooling of Interest method in accordance with the said approved Scheme of Amalgamation and Accounting Standard 14 âAmalgamationâ, which is also consistent with Ind AS 103 on âBusiness Combinationsâ, since the entities before and after the amalgamation are under common control. Since the Company originally did not have any investments in the amalgamating Companies, there is no further adjustment required in terms of Ind AS 103.
The Company has restated the financial information as at 1st April, 2016 being the beginning of the preceding period for which the financial statements are prepared and accordingly recorded all the assets, liabilities and reserves of the amalgamating Companies at their respective book values as appearing in the their books of account as on 1st April, 2015, the details of which are as follows:
During the period between the appointed date and the effective date as FSSPL and FRDCPL carried on the existing business in âtrustâ on behalf of the Company, all vouchers, documents, etc., for the period are in the name of FSSPL and FRDCPL. The title deeds for leasehold land, building, licenses, agreements, loan documents, etc., are being transferred in the name of the Company. However, credit has not been taken for claims arising as a consequence of the amalgamation in respect of levies/taxes of such claims pending settlement. The income accruing and expenses incurred by FSSPL and FRDCPL during the period 1st April, 2016 to 31st March, 2017 have also been incorporated in these accounts. The effect of Income accruing and Expenditure incurred by FSSPL & FRDCPL for the period from 1st April, 2015 to 31st March, 2016 has been considered in the balance of Profit & Loss account.
In terms of the Scheme, the Equity Shares when issued and allotted by the Company shall rank for dividend, voting rights and in all respects pari-passu with the existing Equity Shares of the Company. Accordingly, the appropriation for the proposed dividend includes dividend on 2,80,000 Equity Shares, which have been allotted to the shareholders of FSSPL and FRDCPL. {Refer to note no. 20}.
NOTE 21 - operating SEGMENT DIScLOSuRE
The Company has identified âManufacturing of Speciality Chemicalsâ as the only operating segment in terms of Indian Accounting Standard 108 issued by Ministry of Corporate Affairs (MCA).
Note 21.1 - Disclosure for assets outside India
The Company does not have any non current non financial assets outside India Note 43.2 - Disclosure for major customers more than 10%
There are no transactions with single external customer which amounts to 10% or more of the Companyâs revenue.
NOTE 22 - INSuRANcE cLAIM AGAINST FIRE AT DOMBIVLI pLANT
A Major fire broke at the premises of the amalgamating Company FSSPLâs factory located at W260 / 261, MIDC Phase 2, Dombivli, District Thane - 421204, on 26th May, 2016, gutting the entire building of the factory. The said premises held certain plant & equipment as well as the Books of Account, Computers holding financial and accounting data, financial records, and related documents. No salvage was possible in respect of building premises. The Company is adequately insured for the property restoration. The cost of reinstatement of damage will be recovered from the insurance Company, subject to the adjustment on account of expected deductions from claim amounts.
The Company has also taken insurance in respect of Loss of Profit with The Oriental Insurance Company Limited to cover the period of interruption for up to the date of incident. The Company had lodged the insurance claim on 26th May, 2016 and preferred a claim with the insurers for the loss of building, stock and Profit. The surveyor has issued a provisional loss assessment report on 21st July, 2016. The Company has received rupees one crore as a provisional claim in FY 2016-17 against the loss of Stock and building. Since the claim finalisation was pending, the loss on account of the carrying cost of fixed assets as well as stock in trade is adjusted against the provisional claim amount received and the balance is carried forward as Other Current liabilities as âInsurance claim received pending settlement / allocationâ in FY 2016-17 {Refer Note No. 26}.
Further, during the year the Company has received discharge voucher of Rs.88.26 lakhs in the name of Amalgamating Company âFine Speciality Surfactants Private Limitedâ towards full and final settlement of claim. However, Company has written letter to insurance Company dated 6th March, 2018 to intimate the credit of insurance claim in the name of Amalgamated Company. The Company has accounted income for Rs.118.12 lakhs and shown insurance claim receivable of Rs.88.26 lakhs under head of âOther Current Assetsâ {Refer Note No. 19}.
NOTE 23 - INTERNAL FINANciAL cONTROL SYSTEM
The Management Team headed by Executive Director looks in to day-to-day operations of the Company, and no significant deficiencies or material weakness has been observed in the operation and Financial Control and processes of the Company. The Company is in the process of documenting an Internal Control framework mechanism commensurate with the size of the Company and nature of its activities.
NOTE 24 - OpERATING LEASE
The Companyâs significant leasing arrangements are in respect of operating leases for job working and building premises (residential, offices, godowns etc.) Out of these leasing arrangements, some are non-cancellable for a period ranging between 1 to 3 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as âRentâ in the statement of Profit and Loss.
With regard to some non-cancellable operating leases, the future minimum rentals are as follows:
NOTE 25 - FAIR VALUE HIERARcHY
The following table provides the fair value measurement hierarchy of the companyâs assets and liabilities.
Note 25.1 - Quantitative disclosures fair value measurement hierarchy for assets and liabilities as at 31st March, 2018
*Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
**Level 2 - Inputs other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
***Level 3 - inputs for the asset or liability that are not based on observable market data
*Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
**Level 2 - Inputs other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
***Level 3 - inputs for the asset or liability that are not based on observable market data
Note 25.2 - measurement of Fair Value : Valuation techniques
The following table shows the valuation techniques used in measuring Level 2 and 3 fair values for assets and liabilities carried at fair value through profit or loss
NOTE 26 - FINANciAL RISK MANAGEMENT FRAMEWORK
A) capital Management
Capital comprises of Issued Equity Share Capital and Reserves attributable to the Equity Share Holders of the Company. The Company borrows capital only for Working Capital purposes. The primary objective of the Companyâs Capital Management is to maximise the Share Holder Value. There are no externally imposed capital requirements. The Company allocates its capital for distribution as dividend or re-investment into business based on its long term financial plans.
B) Financial Risk Management
The Companyâs activities primarily expose it to various risks such as Market Risks, Credit Risk and Liquidity Risk. Those are explained below :
i) Market Risk
Market Risks arise due to Changes in Interest rates, Foreign Exchange rates and changes in Market prices. These are explained below :
Interest Rate Risks
The Company borrows funds in Indian Rupees, to meet short term funding requirements. Interest on Short term borrowings is subject to floating interest rate and are repriced regularly and hence the Company is exposed to Interest rate risks. However, since the borrowings are not significant, the Company does not see any major risk.
If the interest rates had been 1% higher / lower and all other variables held constant, impact on the Companyâs profit for the year ended 31st March, 2018 will not be significant.
Foreign currency Risks
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts to hedge its foreign currency exposures in USD and Euro.
a) Exposure in foreign currency - Hedged
The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any Derivative Instruments for trading and Speculation purposes.
The Forward Exchange Contracts used for hedging foreign exchange currency exposure and outstanding as at reporting date as at under :
Price Risks
The Company is affected by the price stability of certain commodities. Purchases of Raw Materials from our top 2 suppliers constitute approximately 45% of our total purchases made from all suppliers. We do not enter into supplier contracts of duration of more than 6 months. If suppliers do not supply us, there can be no assurance that we will be able to identify alternative suppliers in future at similar cost. Any disruption in the supply of the raw materials could disrupt our manufacturing operations, which could have a material adverse effect on our business, results of operations and financial condition.
The Companyâs total imports of raw materials is approximately 27.97% of the total raw material consumed. The cost of our imported raw material affected by the fluctuation in the rate of foreign exchange of the currency in which we purchase these raw materials (primarily in USD) and the Rupee. The Company has a risk management framework aimed at prudently managing the price risk arising from the volatility in commodity prices and freight costs and tries to pass on increases in the costs to its customers to whatever extent possible..
ii) credit Risk
Credit Risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Investments in Equity Shares and Balances with Banks.
The Company holds cash and cash equivalents with banks which are having highest safety rankings and hence has a low credit risk.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits (generally between 30 to 90 days) and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31st March, 2018 is 0.29% of the total trade receivables. The Company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain.
iii) Liquidity Risk
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has obtained fund and non-fund based working capital lines from two banks. The Company invests its surplus funds in bank fixed deposit which carry low credit risks.
All payments are made on due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The Company has a system of forecasting rolling one month cash inflow and outflow and all liquidity requirements are planned. Exposure to liquidity risk:
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments
NOTE 27 - FIRST Time ADOpTION OF IND AS
These are the Companyâs first standalone financial statements prepared in accordance with Ind AS. The accounting policies set out in Note no. 3 have been applied in preparing the financial statements for the year ended 31st March, 2018, the comparative information presented in these financial statements for the year ended 31st March, 2017 and in the preparation of an opening Ind AS balance sheet at 1st April, 2016 (the Companyâs date of transition).
In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standard Rules), 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has impacted the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.
Note 27.1 - Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions in the transition from previous GAAP to Ind AS.
Ind AS optional exemptions
a) Deemed cost
Ind AS 101 permits a first time adopter to elect to measure an item of property, plant and equipment at the date of transition to Ind AS at its fair value and use that fair value as its deemed cost at that date. The exemption can also be used for intangible assets covered by Ind AS 38 âIntangible Assetsâ.
b) Designation of previously recognised equity instruments
Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS.
The Company has elected to apply this exemption for its investment in certain equity instruments (other than its subsidiaries).
c) Investments in subsidiaries
Ind AS 101 permits a first time adopter to elect to measure its investment in subsidiaries at fair value of such investments at the Companyâs date of transition to Ind AS or previous GAAP carrying amount at that date and use that as its deemed cost as on the date of transition.
The Company has decided not to measure its investment in subsidiaries at fair value and accordingly investment in Fine Organics (USA) Inc. & Fine Organics Europe BVBA are valued at cost as at 1st April, 2016.
d) Exchange differences on long-term foreign currency monetary items
Under previous GAAP exchange differences arising on reporting of long-term foreign currency monetary items (i) relating to acquisition of depreciable capital assets were allowed to be adjusted to the carrying amount of such assets (to be adjusted over the balance life of the related asset) and (ii) in other cases were allowed to be accumulated in a âForeign Currency Monetary item Translation Difference Accountâ (to be adjusted over the balance period of the related long term monetary asset/ liability).
Ind AS 101 includes an optional exemption that allows a first time adopter to continue with the above accounting policy in respect of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of first Ind AS financial reporting period i.e. 1st April, 2017 or to discontinue with such policy.
Ind AS mandatory exceptions
a) Estimates
An entityâs estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1st April, 2016 are consistent with the estimates as at the same date made inconformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP.
- Investments in equity instruments carried at FVPL and OCI
- Impairment of financial assets based on expected credit loss model
b) Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS. The Company has assessed the same accordingly.
Reconciliations between previous GAAp and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.
Note 27.3 - Working note for first time adoption to Ind AS
A) Fair Value of Investment in Equity Instruments other than subsidiaries and joint ventures
Under the previous GAAP the application of the relevant accounting standard resulted in all these investment being carried at cost
Under Ind AS, financial assets representing investment in equity shares of entities other than subsidiaries, associates and joint venture as well as debt securities have been fair valued. The Company has recognised investment in equity shares of The Saraswat Co-operative bank at fair value based on the data available. The Company has designated the investment in at FVOCI because this equity shares represents investment that Company intends to hold for long term.
This result as increase in investment of equity instruments of Saraswat Co-Operative Bank Limited by Rs.4.83 lakhs and accordingly Other Comprehensive income recorded as at 1st April, 2016 i.e. On transition date.
Further, such investment of equity instruments has increased by Rs.0.08 lakhs and accordingly Other Comprehensive income recorded for the year ended 31st March, 2017.
The Company has kept fair value of investment in equity instruments of Saraswat Co-Operative Bank Limited as Rs.5.15 lakhs (Same as 31st March, 2017) due to non availability of the latest audited balance sheet.
B) Proposed Dividend
Under previous IGAAP dividend proposed by the Board of Directors after the reporting date but before the approval of financial statement were considered to be adjusting event as per AS 4 and accordingly recognised as liability at the reporting date (along with DDT).
As per Para 12 of the Ind AS 10 âEvents after reporting periodâ, if an entity declares dividends to holders of equity instruments (as defined in Ind AS 32, Financial Instruments: Presentation) after the reporting period, the entity shall not recognise those dividends as a liability at the end of the reporting period.
As per Para 13 of the Ind AS 10 âEvents after reporting periodâ, If dividends are declared after the reporting period but before the financial statements are approved for issue, the dividends are not recognised as a liability at the end of the reporting period because no obligation exists at that time. Such dividends are disclosed in the notes in accordance with Ind AS 1, Presentation of Financial Statements.
From the above explanation dividend so proposed by the Board of Directors are considered to be non-adjusting event. Accordingly, provision for proposed dividend and DDT recognised under previous IGAAP has been reversed.
Consequently, the Company has reversed Rs.2,767.62 lakhs from retained earning and current provision for the year 31st March, 2017.
Subsequently, the Company has recorded and paid the dividend in the year ended 31st March, 2018.
c) Excise Duty
Under previous IGAAP revenue from sale of goods was presented net off Excise duty on sales.
As per Para 8 of Ind AS 18 âRevenueâ, Revenue includes only the gross inflows of economic benefits received and receivable by the entity on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the entity and do not result in increases in equity. Therefore, they are excluded from revenue.
From the above explanation it is concluded that the revenue from sale of goods is presented inclusive of Excise duty since Excise duty is payable at the time of manufacturing and the same is collected on behalf of third party and therefore the same is presented in the statement of profit and loss as an expense.
This has resulted in an increase in revenue from operations and expenses for the year. Total comprehensive income for the year ended and equity as at 31st March, 2017 has remained unchanged.
Accordingly, excise duty of Rs.3,673.47 lakhs has been added to Revenue from operation for the year ended 31st March, 2017 and excise duty separately disclosed as expenses in statement of profit and loss.
D) Trade Receivables
As per Ind AS 109, the Company is required to apply expected credit loss model for recognising the allowance on trade receivable. As a result, the allowance for expected credit loss was recognised amounting to Rs.199.32 lakhs as at 31st March, 2017 (1st April, 2016 - Rs.180.52 lakhs) and consequently, total equity as at 31st March, 2017 and 1st April, 2016 decreased by an equivalent amount. The profit for the year ended 31st March, 2017 decreased by Rs.18.80 lakhs for allowance for expected credit loss on trade receivable as compare to 1st April, 2016.
E) Leasehold Land
As per Ind AS 17, the premium paid on leasehold land which is in the nature of an operating lease is considered as prepayment of lease charges and same is charged to Statement of Profit and Loss over the period of lease. This resulted in increase of lease rental expense and decrease in depreciation for 31st March, 2017 by Rs.25.07 lakhs Further, reclassification of leasehold land has been done from âProperty, Plant & Equipmentsâ to âOther Non Current Assetsâ under the head of âPrepaid Rent on Leasehold Landâ. Further, lease rent for 1 year is classified as âOther Current Assetâ under the head of Prepaid Expenses. Earlier, Under AS -19 on âLeasesâ, leasehold Land was excluded and hence not classified accordingly.
In the process of transition to Ind AS, lease period and balance value was recalculated and Rs.1.96 lakhs has been credited to retained earning as depreciation on leasehold land was excess charged in IGAAP.
F) Interest free advances to Subsidiaries
Under the previous GAAP interest free advances to subsidiaries were recorded at their transaction value. Under Ind AS 109, all financial assets are required to be recognised at fair value. Accordingly, the Company has fair valued these advances. Difference between the fair value and transaction value of the advances has been recognised as increased in Investment in subsidiaries.
Consequent to this change, the amount of advances decreased and Investment in subsidiaries increased by Rs.284.55 lakhs as at 31st March, 2017 (1st April, 2016 Rs.105.02 lakhs). The profit for the year and total equity as at 31st March, 2017 increased by 35.64 lakhs due to the notional interest income and simultaneously, advances to subsidiaries were increased by same amounts. (In 1st April, 2016, such interest income adjusted in retained earning by increasing Rs.30.19 lakhs)
G) Remeasurement of Defined Benefit Plans
Both under Indian GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, remeasurements comprising of actuarial gains and losses are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus, the employee benefit cost for 31st March, 2017 is reduced by Rs.31.97 lakhs and remeasurement gains/ losses on defined benefit plans has been recognised in the OCI net of tax.
H) Expenses Directly Attributable to Sales
Under previous GAAP expenses directly attributable to sales were recognised as an expense. Under Ind AS 18, such expenses are presented under revenue from sale of goods.
Accordingly, the Company has shown sales commission of Rs.860.49 lakhs is disclosed under the head of sale of goods for the year ended 31st March, 2017.
I) Premium on Forward contract hedging
Under previous GAAP premium / discount on forward contract for hedging of trade receivables was amortised over a period of the contract and accordingly Company had amortised Rs.17.77 lakhs premium for the year ended 31st March, 2017.
However, as per Ind AS 109 - âFinancial Instrumentsâ forward contracts needs to be recognised at fair value as on the date of balance sheet and accordingly Company has revalued outstanding forward contracts as on 31st March, 2017 and reversed the existing amortisation of premium of Rs.17.77 lakhs
J) Security Deposits and Interest income on Security Deposits
The Company has paid interest free security deposits for factory premises to Associate firm of Rs.18.00 lakhs As per Indian GAAP the Company has recognised the security deposit under other non-current assets. As per Ind AS 109,
(i) the security deposits are to be recognised at fair value,
(ii) interest income on such security deposits are to be recognised through effective interest method and
(iii) lease expense to be amortised over the period of lease on a straight line basis.
Accordingly, the Company has recognised the security deposit at present value using the market rate of interest and the difference between the transaction value and fair value of the deposit amount is shown as prepaid rent. This has resulted in decrease of security deposits and increase of non-current and current prepaid rent expenses as at 31st March, 2018 by Rs.5.19 lakhs
Further, as per Ind AS 109, the Company has to recognise interest income on such security deposits through effective interest method and the excess of the principal amount of the deposit over its fair value is accounted for as prepaid rent expense and amortised over the lease term on a straight-line basis. Accordingly, the Company has recognised income on such security deposits through effective interest method and amortised the lease expenses over the period of lease on a straight line basis.
Includes Directorships of public limited companies or a private company that is either a holding or subsidiary company of a public company registered under the Companies Act 1956 / the Companies Act, 2013 other than Fine Organic Industries Limited.
The foreign currency term loan was secured against equitable mortgage over Land & Building and Plant & Machinery.
note 28.1 - disclosures for liabilities transferred from amalgamating companies appearing in ânon current Financial Liabilities: borrowingsâ
(i) Loan from directors as at 1st April, 2016 includes Rs.19.87 lakhs from FSSPL and Rs.394.56 lakhs from FRDCPL transferred from amalgamating Companies.
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