Mar 31, 2023
Aforesaid post-employment benefit plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment Risk: The present value of the defined benefit liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
Interest Risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s investments.
Longevity Risk: The present value of the defined benefit liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
Salary Risk: The present value of the defined benefit liability is calculated by reference to the future salaries of plan participants. As such, an increase in salary of the plan participants will increase the plan''s liability.
b) Defined contribution plans:
Amount towards Defined Contribution Plans have been recognised under âContributions to Providend, Gratuity and Superannuation Fund (pension) Funds (including provisions)â in Note : 33''4351.15 lakhs for FY 2022-23 ('' 4349.75 lakhs for FY 2021-22).
38. Commitment and contingencies a. Commitments ('' in lakhs] |
||
Particulars |
As at 31 Mar-23 |
As at 31 Mar-22 |
(i) Estimated amount of contracts remaining to be executed on capital accounts and not provided for |
73,585.52 |
14,865.20 |
b. Contingent liabilities ('' in lakhs |
||
Particulars |
As at 31 Mar-23 |
As at 31 Mar-22 |
Claims against the Company not acknowledgement as debt (i) Excise and Customs duty (ii) Central sales tax and value added tax (iii) Income tax (iv) Other (v) Employees / ex-employees, contractual labour - pending before courts |
2,049.34 2,266.03 19,398.16 66,555.71 Not ascertainable |
2,372.72 3,461.20 19,494.38 67,664.30 Not ascertainable |
In respect of the above, the expected outflow will be determined at the time of final resolution of the dispute. c. Contingent Assets
The Company does not have any contingent assets.
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Related Party T ransaction amounts shown in above table are inclusive of taxes. 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 31 March 2023, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31st March, 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.
40. Segment information
For management purposes, the company is organised into business units based on its products and has two reportable segments, as follows:
1. Fertilizer products comprising of Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16), (10:26:26), traded fertilizer products etc.
2. Industrial products comprising of Caprolactam, Nylon-6, Nylon Chips, Melamine, Methanol, traded industrial products etc.
The Chief Operating Decision Maker (âCODMâ) evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by the two operating segments. The CODM reviews revenue and gross profit as the performance indicator for both operating segments.
B. Measurement of fair values & Sensitivity Analysis i) Valuation techniques and significant unobservable inputs
Some of the Company''s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used).
Note 1 : The Company has invested in the equity instruments of various companies. However, the percentage of shareholding of the Company in such investee companies is very low and hence, it has not been provided with future projections including projected profit and loss account by those investee companies. Hence, the independent valuer appointed by the Company has estimated fair value based on available historical Annual Reports of such companies and other information as available in the public domain. Since the future projections are not available, discounted cashflow approach for fair value determination has not been followed.
Note 2 : In case of some companies, there are no comparable companies valuations available and some are recent start up companies. In light of no information available for future projections, capacity utilisation, commencement of operations, etc., the valuation is based on cost approach.
Transfer out of Level 3
There were no movement in level 3 in either directions during the year 2022-23 and 2021-22.
Z. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
⢠Credit risk ;
⢠Liquidity risk ; and
⢠Market risk
i. Risk
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company manages market risk through a Financial risk management committee, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Audit cum finance committee and Board of Directors. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The audit cum finance committee oversees how management monitors compliance with the company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers. The carrying amount of following financial assets represents the maximum credit exposure:
Trade and other receivables
The Company''s exposure to credit is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Revenue department has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the Board of Directors.
During the year 2022-23 and 2021-22, impairment provision was reduced by INR 84.50 Lakhs and INR 17.71 Lakhs respectively
Cash and cash equivalents
The Company held cash and cash equivalents of '' 108257.02 Lakhs at March 31, 2023 ('' 30728.05 Lakhs at March 31, 2022). The cash and cash equivalents are held with approved scheduled banks.
Derivatives
The derivatives deals are done with AD category banks in OTC market and registered brokers in ETCD market. iii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments.Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of company''s investments. Thus, company''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to control the financial risks associated with the Foreign Exchange/ Currency rate movements through a sophisticated Foreign Exchange Risk Management System.
Currency risk
The Company is exposed to currency risk on account of its import payables and borrowings in foreign currency. The functional currency of the Company is Indian Rupee. The Company uses forward exchange contracts, Options and futures to hedge its currency risk, most with a maturity of less than one year from the reporting date.
The company is using derivative instruments which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.
The nature of services and its disclosure of timing of satisfaction of performance obligation is mentioned in para 3.1 of Note No 3. There are no contract assets in the Balance Sheet. Contract Liabilities in the Balance Sheet constitutes advances from customers. The Company expects to recognise such revenue in the next financial year. There were no significant changes in contract liabilities during the reporting period except amount as mentioned in the table and explanation given above. Under the payment terms generally applicable to the Company''s revenue generating activities, prepayments are received only to a limited extent. Typically, payment is due upon or after completion of delivery of the goods.
48. Other Matters
(i) With respect to Fibre Unit and Polymer Unit, the Net Realizable Value is higher compared to its carrying value as on March 31, 2023.
(ii) Previous year figures are regrouped / reclassified wherever required in order to make it comparable in line with the amendments in Schedule III, Division II to the Companies Act, 2013 effective from 1st April, 2021
(iii) Balances of Sundry Creditors, Sundry Debtors, Loans & advances, etc. are subject to confirmation and reconciliation.
(iv) The Company evaluates events and transactions that occur subsequent to the balance sheet date but prior to the financial statements to determine the necessity for recognition and / or reporting of any of these events and transactions in the financial statements. As of 25th May, 2023 there were no subsequent events to be recognized or reported that are not already disclosed.
Mar 31, 2022
1 The Company has commissioned (24 x 2 MTPD) Nylon 6 Compounding plant at a cost of '' 3176.08 Lakhs during FY 2021-22.
2 Asset acquisition includes R&D assets of '' 25.23 lakhs (previous year '' 61.36 lakhs).
3 The Company has leased a portion of its land to Bank of Baroda for bank premises at Fertilizernagar and Sikka and Gas Authority of India Ltd. (GAIL) for establishment of CNG pumping station.
4 The Company has acquired land through Government and also through direct negotiations. The entire land is in possession of the Company. In respect of other portion of land acquired through direct negotiations, compensation has been paid at the negotiated price. The Company also holds possession of a portion of land for which no amount has been paid in absence of receipt of awards.
5 The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with the Company. Thereafter, in terms of resolution passed by GMB, the ownership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regards to the ownership of the jetty with the Company.
The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to sikka jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. At present the Company is in possession of the Jetty and continues to be the owner of the Jetty pending signing of the Agreement.
a) There is no change in the no of shares compare to previous year, except where specifically mentioned above under each case.
b) As per Notification of Govt of Gujarat, Bhavnagar Energy Company Ltd.(BECL) is Merged with Gujarat State Electricity Corpo. Ltd.(GSECL) As per the Merger scheme, the company has received 1 No. of share of GSECL in exchange of 7,12,20,000 No. of shares of BECL. The Fair Value of said investment is '' Nil as on 31st March 2022 & 31st March 2021.
c) The equity shares held by the Company in Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) have been pledged to secure the obligations of TIFERT to their lenders.
d) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities. Refer note 41 for determination of their fair values.
e) The company has provided a loan of USD 2.50 Mn to TIFERT for procurement of critical spares and equipments. Provided loan carries an interest of daily average LIBOR plus a margin of 225 basis points. It was provided with a condition of compulsory conversion in equity shares of TIFERT after 3 years from the date of agreement however the term of loan has been extended for further 2 years by Sponsors on request of TIFERT. Hence, Principal amount of the loan along with unpaid interest will be converted into equity shares of TIFERT at face value after 5 years from the date of agreement and accordingly the same has been classified as Investment, as in substance the nature is of the investment. The Fair Value of said loan is '' Nil as on 31st March 2022 & 31st March 2021.
f) Impairment Loss of '' NIL (PY '' 548.07 Lakhs) was recognised in the carrying value of investment in Karnalyte Resources Ltd under the head âOther Expensesâ in Profit and Loss Account. As share valuation has been carried out considering the Replacement cost method, Investment is categorised at Level 3 of the fair value hierarchy.
(i) The average credit period on sale of goods is 30 to 90 days. No interest is charged on trade receivables up to the expiry of the credit period. Thereafter, interest is charged at 12% per annum on the outstanding balance.
(ii) The company has five customers (GSFC Agrotech Limited, JCT Ltd, SRF Ltd, MIT Ltd & GSCMFL) which represents more than 5% of the total balance of trade receivables.
(iii) The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. Refer note 41 for the provision matrix at the end of the reporting period, ageing of receivable and movement in the expected credit loss allowance.
(iv) The concentration of credit risk is limited due to the fact that the customer base is large and unrelated. Refer note 41 for the credit risk management by the Company.
(v) The above balances include trade receivables from related parties '' 3328.51 Lakhs ('' 6456.39 Lakhs as on 31 March 2021) Refer note 39.
1. Capital Reserve: This reserve has been created from amounts forfeited on shares not fully paid up, scheme of capital subsidy for industries in backwards areas, etc. It is not available for distribution of dividend.
2. Securities Premium: The amount received in excess of face value of the Rights Equity shares issued have been recognised in Share Premium Reserve, etc. It is not available for distribution of dividend.
3. Capital Redemption Reserve: Capital Redemption Reserve has been created against the redemption of preference shares in earlier years. It is not available for distribution of dividend.
4. General Reserve: General Reserve represents a reserve other than capital reserve which is not earmarked for a specific purpose.
5. Retained Earnings: Retained Earnings represents surplus/accumulated earnings of the Company and are available for distribution to shareholders.
6. Other comprehensive income (OCI): OCI comprises items of income and expenses (including reclassification adjustments) that are not recognised in profit or loss as required or permitted by Indian Accounting Standards. The components of OCI include: re-measurements of defined benefit plans, gains and losses arising from investment in equity instruments.
* The provision for Compensated absences pertains to accrued ordinary and sick leave entitlements. The change in carrying amount of the provision results from additional provision recognized net of benefits paid.
**Employees'' Provident Fund Trust of the Company (GSFC-EPFTs) are holding investments aggregating to Rs. 4255 Lakhs in various debt securities issued by IL&FS Group, Dewan Housing Finance Corporation Ltd., Yes Bank Ltd., Reliance Home Finance, Reliance Capital Ltd and SREI Group. As a matter of prudence, the company has made a provision in view of uncertainties regarding recoverability of such investments. In future company will make provision looking to the development in the matter.
37. Employment benefit plansa) The Company operates post employment and other long term employee benefits defined plans as follows:I. Funded II. Unfunded
i. Gratuity i. Post retirement medical benefit scheme
ii. Pension
Aforesaid post-employment benefit plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment Risk: The present value of the defined benefit liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
Interest Risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s investments.
Longevity Risk: The present value of the defined benefit liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
Salary Risk: The present value of the defined benefit liability is calculated by reference to the future salaries of plan participants. As such, an increase in salary of the plan participants will increase the plan''s liability.
b) Defined contribution plans:
Amount towards Defined Contribution Plans have been recognised under "Contributions to Providend, Gratuity and Superannuation Fund (pension) Funds (including provisions)" in Note : 33 '' 4349.75 lakhs for FY 2021-22 ('' 4077.89 lakhs for FY 2020-21).
37. Employment benefit plans (Contd...)
e. The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors.
f. The estimate of mortality rate during employment has been considered as per Indian Assured Lives Mortality (2006-08).
g. Provident Fund contributions are made to Trusts administered by the Company. The interest rate payable to the members of the Trusts shall not be lower than the statutory rate of interest declared by the Central Government under the Employees provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company.
Terms and conditions of transactions with related parties:
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Related Party Transaction amounts shown in above table are inclusive of taxes.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 31 st March 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31st March,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.
For management purposes, the company is organised into business units based on its products and has two reportable segments, as follows:
1. Fertilizer products comprising of Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16), (10:26:26), traded fertilizer products etc.
2. Industrial products comprising of Caprolactam, Nylon-6, Nylon Chips, Melamine, Methanol, traded industrial products etc.
The Chief Operating Decision Maker ("CODM") evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by the two operating segments. The CODM reviews revenue and gross profit as the performance indicator for both operating segments.
Note 1 : The Company has invested in the equity instruments of various companies. However, the percentage of shareholding of the Company in such investee companies is very low and hence, it has not been provided with future projections including projected profit and loss account by those investee companies. Hence, the independent valuer appointed by the Company has estimated fair value based on available historical Annual Reports of such companies and other information as available in the public domain. Since the future projections are not available, discounted cashflow approach for fair value determination has not been followed.
Note 2 : In case of some companies, there are no comparable companies valuations available and some are recent start up companies. In light of no information available for future projections, capacity utilisation, commencement of operations, etc., the valuation is based on cost approach.
ii) Transfers between Levels 1 and 2
There have been no transfers between Level 1 and Level 2 during 2021-22 and 2020-21.
iii) Level 3 fair valuesTransfer out of Level 3
There were no movement in level 3 in either directions during the year 2021-22 and 2020-21.
The Company has exposure to the following risks arising from financial instruments:
⢠Credit risk ;
⢠Liquidity risk ; and
⢠Market risk
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company manages market risk through a Financial risk management committee, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Audit cum finance committee and Board of Directors. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The audit cum finance committee oversees how management monitors compliance with the company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers.
The carrying amount of following financial assets represents the maximum credit exposure:
The Company''s exposure to credit is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Revenue department has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the Board of Directors.
During the year 2021-22 and 2020-21, impairment provision was reduced by INR 17.71 Lakhs and INR 725.05 Lakhs respectively
The Company held cash and cash equivalents of '' 30728.05 Lakhs at March 31, 2022 ('' 19937.62 Lakhs at March 31, 2021). The cash and cash equivalents are held with approved scheduled banks.
The derivatives deals are done with AD category banks in OTC market and registered brokers in ETCD market.
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.
The gross inflows/(outflows) disclosed in the above table represent the contractual undiscounted cash flows relating to derivative financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity. The disclosure shows net cash flow amounts for derivatives that are net cash-settled and gross cash inflow and outflow amounts for derivatives that have simultaneous gross cash settlement.
iv. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of company''s investments. Thus, company''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to control the financial risks associated with the Foreign Exchange/Currency rate movements through a sophisticated Foreign Exchange Risk Management System.
Currency risk
The Company is exposed to currency risk on account of its import payables and borrowings in foreign currency. The functional currency of the Company is Indian Rupee. The Company uses forward exchange contracts, Options and futures to hedge its currency risk, most with a maturity of less than one year from the reporting date.
The company is using derivative instruments which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.
(II) The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise, represented in equivalent USD: USD 8.39 Mn (As at March 31, 2021: USD 0.06 Mn)
(i) The Company has taken various warehouses, godowns, guesthouses and office premises under operating lease or rental agreements. Effective 1st April, 2019, the company has adopted Ind AS 116 and applied to its leases, retrospectively, with the cumulative effect of initially applying the standard on the date of initial application (April 01, 2019). Accordingly, the Company has not restated comparative information and recognized right-of-use assets at an amount equal to the lease liability. Refer Note 5(ii) for details of right-of-use assets and Note 24 for details of Lease Liability. Interest on lease liability Rs 30.91 Lakhs in FY 2021-22 (Rs 29.73 Lakhs in FY 2020-21) has been included in Finance Costs and depreciation on right-of-use assets has been included in Depreciation and amortization expense for the year.
(ii) Rent income includes lease rentals received towards office premises and land leased out for gas station. Such operating lease is generally for a period of three to four years. There are no restrictions imposed by lease arrangements.
The nature of services and its disclosure of timing of satisfaction of performance obligation is mentioned in para 3.1 of Note No 3.There are no contract assets in the Balance Sheet.Contract Liabilities in the Balance Sheet constitutes advances from customers.The Company expects to recognise such revenue in the next financial year.There were no significant changes in contract liabilities during the reporting period except amount as mentioned in the table and explanation given above.Under the payment terms generally applicable to the Company''s revenue generating activities, prepayments are received only to a limited extent. Typically, payment is due upon or after completion of delivery of the goods.
47. Disclosure as per regulation 34(3) and 53(f) of Securities and Exchange Board of India (listing obligations and disclosures requirements) regulations, 2015:
Loans & Advances in the nature of loans to subsidiaries is '' Nil (PY: '' Nil)
(i) With respect to Fibre Unit and Polymer Unit, the Net Realizable Value is higher compared to its carrying value as on March 31, 2022.
(ii) Previous year figures are regrouped / reclassified wherever required in order to make it comparable in line with the amendments in Schedule III, Division II to the Companies Act, 2013 effective from 1st April, 2021
(iii) Balances of Sundry Creditors, Sundry Debtors, Loans & advances, etc. are subject to confirmation and reconciliation.
(iv) The Company evaluates events and transactions that occur subsequent to the balance sheet date but prior to the financial statements to determine the necessity for recognition and / or reporting of any of these events and transactions in the financial statements. As of 26th May, 2022 there were no subsequent events to be recognized or reported that are not already disclosed.
Mar 31, 2018
1. Non-Current Investments (Contd...)
Notes:
* Less than a Thousand
1) There is no change in the no of shares compare to previous year, except where specifically mentioned above under each case.
2) The 54,90,306 no of equity shares of Karnalyte Resources Inc., Canada, held by the Company are pledged to secure the Company''s long term borrowings from bank.
3) As a promoter of Bhavnagar Energy Company Limited (BECL), the Company has signed the Sponsorsâ Support Agreement (SSA) and as per the said Agreement, the promoters collectively shall not, till the final settlement date (being the date on which all obligations under the SSA have been irrevocably and unconditionally paid and discharged in full to the satisfaction of lenders), dispose-off their shareholdings which would result in dilution of their shareholding below 51%.
Government of Gujarat has accorded its approval for carrying out appropriate modifications in the Memorandum & Articles of Association of BECL in pursuance of Section 2(45) & (87) of the Companies Act, 2013, there by converting BECL as Govt. Company by becoming a subsidiary of Gujarat Power Corporation Limited (GPCL)/ Gujarat State Electricity Corporation Limited (GSECL). In view of above, the Company has accorded its approval for amendment of third draft Shareholders Agreement and suitable changes / modifications in the Memorandum & Articles of Association of BECL. The decision for revised percentage of equity contribution in the said Government Company i.e. GPCL/GSECL is under process and the said revision shall be effective from 01.04.2018.
4) The equity shares held by the Company in Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) have been pledged to secure the obligations of TIFERT to their lenders.
5) Company has received 93,82,895 nos of shares of Gujarat Gas Ltd in persuant to scheme of amalgamation and arrangement between the GSPC Gas Company Limited and GSPC Distribution Networks Limited pursuant to the Honourable High Court order. Out of the said shares, 39,47,369 nos of shares are lock-in for a period of 3 years from listing date.
6) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities. Refer note 42 for determination of their fair values.
7) The company has provided a loan of USD 2.50 Mn to TIFERT for procurement of critical spares and equipments. Loan has been provided with a condition of compulsory conversion in equity shares of TIFERT after 3 years from the date of agreement and it carries an interest of daily average LIBOR plus a margin of 225 basis points. Principal amount of the loan along with unpaid interest will be converted into equity shares of TIFERT at face value after 3 years of agreement, accordingly the same has been classified as Investment, as in substance the nature is of the investment.
The average credit period on sale of goods is 30 to 90 days. No interest is charged on trade receivables upto the expiry of the credit period. Thereafter, interest is charged at 15% per annum on the outstanding balance.
The Company does not have any customers who represent more than 5% of the total balance of trade receivables.
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. Refer note 42 for the provision matrix at the end of the reporting period, ageing of receivable and movement in the expected credit loss allowance.
The concentration of credit risk is limited due to the fact that the customer base is large and unrelated. Refer note 42 for the credit risk management by the Company.
For balances relating to related party receivables, refer Note 40.
*As agreed by Department of Fertilizers vide its Office Memorandum dated 16th March, 2017, it has started releasing outstanding subsidy from 01/04/2010 to 17/03/2013 and as required, the Company has submitted cost data for the period 18/03/2013 to 05/03/2017 to Department of Fertilizers âDoFâ to examine the eligibility of GSFC for the payment of subsidy. The same is under process at DoF. The outstanding receivable on account of Ammonium Sulphate subsidy claims related to the period 01/04/2010 to 17/03/2013 is - 26.37 Crores and for 18/03/2013 to 05/03/2017 is - 662.95 Crores as on 31st March 2018.
"If the dividend has not been claimed within 30 days from the date of its declaration, the Company is required to transfer the total amount of the dividend which remains unpaid or unclaimed, to a special account to be opened by the Company in a scheduled bank to be called âUnpaid Dividend Accountâ. The unclaimed dividend lying in such account is required to be transferred to the Investor Education and Protection Fund (IEPF), administered by the Central Government after a period of seven years from the date of declaration. Company has transferred Unclaimed Dividend up to FY 2009 - 2010 to IEPF up to March 31, 2018.â
Notes:
* The loans are secured by mortgage of the underlying assets and are repayable on demand.
Loans and receivables are non-derivative financial assets which generate a fixed or variable interest income for the Company. The carrying value may be affected by changes in the credit risk of the counter parties. These financial assets are carried at amortized cost.
* Expected net realizable value is higher than carrying amount.
The Company decided to sell plant and machinery amounting to Rs, 300.26 Lakhs which is of obsolete technology. The Company expects to sell the same in near future. There is no cost to sell the asset and hence the same is not presented seperately under liabilities.
During the year 2017-2018, company has acquired possession of Residential Property located at, New Delhi against outstanding receivables, value of which amounts to Rs, 403.72 Lakhs.
b) Rights, preferences and restrictions attached to shares Equity shares
The Company has one class of equity shares having a par value of Rs, 2 each. Each shareholder is eligible for one vote per share held. The dividend proposed by Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting. 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.
* The term loan from bank comprises of Rupee Term Loan (RTL) from EXIM bank for 40,000 MTPA Melamine III Project at Baroda Unit of GSFC having tenure of 5 years. The sanctioned limit of the loan is - 500 Crores carrying G-sec rate prevailing as on the date of disbursement with spread of 160 bps (G - sec rate and spread will be reset annually). GSFC has availed - 200 Crore during F.Y. 2017-18 having effective rate of interest 7.855%. This loan is secured by hypothecation of movable fixed assets of the said project. The principal amount of loan is repayable over a period of 15 equal quarterly installments commencing after a moratorium of 18 months from the date of first disbursement which will be due on 01.04.2019.
*The term loan from bank comprise of External Commercial Borrowings (ECB) and are secured by pledge on Shares of Karnalyte Resources Inc, Canada. The principal amount of the loan is repayable over a period of six years in annual instalments with the first instalment due in March 2015 and the interest on the loan is repayable in quarterly instalments over the tenure of the loan. The above loan carries effective interest rates with spread ranging from 175 bps to 190 bps over three months LIBOR. The repayment obligations for these loans have been partially hedged for exchange rate risk and fully hedged for interest rate risk. The last installment of 8 Million ISD is repayable in MarchRs,19.
*The provision for Compensated absences pertains to accrued ordinary and sick leave entitlements. The change in carrying amount of the provision results from additional provision recognized net of benefits paid.
a) The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
* The Cash credit facility from consortium of banks is secured by hypothecation of stock of raw materials, finished products, packing materials, general stores, spares, book debts etc. of the Company.
** The Company issued commercial paper of - 200 crores for 90 days period in 2016-17, has been repaid during the year 2017-18.
Interest rate details for short term borrowings:
(i) Working capital demand loan carries interest rate ranging from 7.00% to 8.00% p.a.
(ii) Cash credit accounts carries interest rates ranging from 8.15% to 11.00% p.a.
(iii) Commercial papers carries interest at ranging from 6.20% to 6.46% p.a.
(iv) Buyers credit carries interest at ranging from 1.04% to 2.35% p.a.
*Dues 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. This has been relied upon by the auditors.
** includes trade payable to related parties Rs, 5997.95 lakhs (Rs, 7579.65 lakhs as at 31st March,2017).
Aforesaid post-employment benefit plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment Risk: The present value of the defined benefit liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
Interest Risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the planâs investments.
Longevity Risk: The present value of the defined benefit liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.
Salary Risk: The present value of the defined benefit liability is calculated by reference to the future salaries of plan participants. As such, an increase in salary of the plan participants will increase the planâs liability.
b) Defined contribution plans:
Amount towards Defined Contribution Plans have been recognized under âContributions to Providend, Gratuity and Superannuation Fund (pension) Funds (including provisions)â in Note : 34 - 2,876.03 lakhs for financial year 2016-17 (- 2,730.07 lakhs for financial year 2016-17).
e. The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors.
f. The estimate of mortality rate during employment has been considered as per Indian Assured Lives Mortality (2006-08).
g. Provident Fund contributions are made to Trusts administered by the Company. The interest rate payable to the members of the T rusts shall not be lower than the statutory rate of interest declared by the Central Government under the Employees provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. Having regard to the assets of the Fund managed by the Trusts and the return on the investments, the Company does not expect any deficiency in the foreseeable future.
Terms and conditions of transactions with related parties:
The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31st March,2017: 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.
41. Segment information
For management purposes, the company is organized into business units based on its products and has two reportable segments, as follows:
1. Fertilizer products comprising of Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16), (10:26:26), traded fertilizer products etc.
2. Industrial products comprising of Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Methanol, Polymer products, traded industrial products etc.
The Chief Operating Decision Maker (âCODMâ) evaluates the Companyâs performance and allocates resources based on an analysis of various performance indicators by the two operating segments. The CODM reviews revenue and gross profit as the performance indicator for both operating segments.
Note 1: The Company has invested in the equity instruments of various companies. However, the percentage of shareholding of the Company in such investee companies is very low and hence, it has not been provided with future projections including projected profit and loss account by those investee companies. Hence, the independent valuer appointed by the Company has estimated fair value based on available historical Annual Reports of such companies and other information as available in the public domain. Since the future projections are not available, discounted cash flow approach for fair value determination has not been followed.
Note 2: In case of some companies, there are no comparable companies valuations available and some are recent startup companies. In light of no information available for future projections, capacity utilization, commencement of operations, etc., the valuation is based on cost approach.
ii) Transfers between Levels 1 and 2
There have been no transfers between Level 1 and Level 2 during 2017-18 and 2016-17
iii) Level 3 fair values Reconciliation of Level 3 fair values
The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.
Transfer out of Level 3
There were no movement in level 3 in either directions during the year 2017-18 and 2016-17.
C. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk ;
- Liquidity risk ; and
- Market risk
i. Risk
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The Company manages market risk through a Financial risk management committee, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Audit cum finance committee and Board of Directors. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.
The Companyâs risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The audit cum finance committee oversees how management monitors compliance with the companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers.
The carrying amount of following financial assets represents the maximum credit exposure:
Trade and other receivables
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Revenue department has established a credit policy under which each new customer is analysed individually for creditworthiness before the Companyâs standard payment and delivery terms and conditions are offered. The Companyâs review includes external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the Board of Directors.
Goods are sold subject to retention of title clauses, so that in the event of non-payment the Company may have a secured claim. The Company does not otherwise require collateral in respect of trade and other receivables.
Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behavior and extensive analysis of customer credit risk, including underlying customersâ credit ratings if they are available.
During the year 2017-18 and 2016-17, an impairment provision of INR (3,358.34) Lakhs and INR 3,640.66 Lakhs was created respectively.
Cash and cash equivalents
The Company held cash and cash equivalents of INR 5033.05 Lakhs at March 31, 2018, (INR 4,357.87 Lakhs at March 31, 2017). The cash and cash equivalents are held with approved scheduled banks.
Derivatives
The derivatives deals are done with AD category banks in OTC market and registered brokers in ETCD market.
iii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.
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 estimated interest payments and exclude the impact of netting agreements.
The gross inflows/(outflows) disclosed in the above table represent the contractual undiscounted cash flows relating to derivative financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity. The disclosure shows net cash flow amounts for derivatives that are net cash-settled and gross cash inflow and outflow amounts for derivatives that have simultaneous gross cash settlement.
iv. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Companyâs income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of companyâs investments. Thus, companyâs exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to control the financial risks associated with the Foreign Exchange/Currency rate movements through a sophisticated Foreign Exchange Risk Management System.
Currency risk
The Company is exposed to currency risk on account of its import payables and borrowings in foreign currency. The functional currency of the Company is Indian Rupee. The Company uses forward exchange contracts, Options and futures to hedge its currency risk, most with a maturity of less than one year from the reporting date.
The company is using derivative instruments which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.
Sensitivity analysis
A reasonably possible strengthening (weakening) of the Indian Rupee against US dollars at March 31 would have affected the measurement of financial instruments denominated in US dollars and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. ('' in lakhs)
Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.
Exposure to interest rate risk
Companyâs interest rate risk arises from borrowings. Company has long term borrowings at variable rate of interest However, the same is hedged through interest rate swaps. The interest rate profile of the Companyâs interest-bearing financial instruments as reported to the management of the Company is as follows.
Capital Management
The Company manages its capital to ensure that it will be able to continue as a Going Concern while maximizing the return to stakeholders through optimization of the Debt and Equity Balance.
The Company is subject to externally imposed capital requirements as part of its debt covenants such as maintaining an interest coverage ratio of 4 times, a Debt Service Coverage ratio of 1.75 times, Net external debt to EBDITA ratio of 2.75 times, Total leverage ratio of 1.5 times and an external gearing ratio of 1 time.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital by computing the above ratios on an annual basis and ensuring that the same is in Compliance with the requirements of the Financial Covenants.
45. Details on derivative instruments and unheeded foreign currency exposure
(I) (a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.
(b) Interest rate swaps to hedge against fluctuations in interest rate changes: No. of contracts:1, Amount: USD 8.00 Mn Principal (As at 31 March, 2017: No. of contracts:1, Amount: USD 16.00 Mn Principal)
(c) Currency Futures (other than forward exchange contracts stated above) which are not intended for trading or speculative purposes but for hedge purposes to hedge against fluctuations in changes in exchange rate.
Note: Figures in brackets relate to the previous year
(II) The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise, represented in equivalent USD: USD 12.11 Mn (As at March 31, 2017: USD 0.73 Mn)
46. Leases
(i) The Company has taken various warehouses, god owns, guesthouses and office premises under operating lease or rental agreements. These are generally cancellable having a term of one year extendable for further one year on the discretion of the Company and are of rental nature. Payments are recognized in the statement of profit and loss under Note 34 - Other expenses.
(ii) Rent income includes lease rentals received towards office premises and land leased out for gas station. Such operating lease is generally for a period of three to four years. There are no restrictions imposed by lease arrangements.
8. Disclosure as per regulation 34(3) and 53(f) of Securities and Exchange Board of India (listing obligations and disclosures requirements) regulations, 2015:
Loans & Advances in the nature of loans to subsidiaries is Rs, Nil (PY: Rs, Nil)
9. Events occurring after the reporting period
(a) Announcement of Plan for Discontinue of Operation at Fibre Unit.
Management is considering shutting down of its Fibre unit situated at Kosamba, Dist. Surat and has made public announcement for the same on April 20, 2018. Closure of loss making unit will help Company in improving bottom-line.
This shutting down however is subject to the approval of Board of Directors, which shall be sought in due course of time. Management is evaluating the option of shifting whole of the operations to other units or to dispose off the same.
As informed by the management its value in use is higher in case operations are shifted to other unit and also its Net Realizable value is higher compare to its carrying value as on March 31, 2018.
As it being an Non Adjusting event, no adjustment has been carried out for the above mentioned event in the financial statement.
(b) Escalation of Urea Concession Rates.
Ministry of Chemical & Fertilizers vide its letter date April 26, 2018 has revised provisional concession Rates & Sales Tax for Urea on account of escalation for the period April 01, 2016 to December 31, 2017. Hence Revenue from Operations for the quarter under audit has been increased by - 76.07 Crores (Rs, 12.76 Crores related to FY 2016 - 17, - 39.24 Crores related to the period Aprilâ17 to Decemberâ17) & - 24.07 Crores related to Q4 17-18.
As it being a Adjusting event, adjustment has been carried out for the above mentioned event in the financial statement. Concession Rates & Sales Tax for Urea on account of escalation for the period April 01, 2016 to December 31, 2017.
Mar 31, 2017
Notes
1 The Company has commissioned 15000 MTPA Nylon-6 II plant & 20000 MTPA WSF plant at a cost Rs 131.59 crores and Rs 36.03 crores respectively during 2016-17.
2 Asset acquisition includes R&D assets of Rs 9.09 lakhs (previous year Rs 16.80 lakhs).
3 The Company has acquired land through Government and also through direct negotiations. The entire land is in possession of the Company. In respect of portion of land for which the Company has still not received the award/sale deed, the advance paid to land owners have been treated as land. In respect of other portion of land acquired through direct negotiations, compensation has been paid at the negotiated price. The Company also holds possession of a portion of land for which no amount has been paid in absence of receipt of awards.
4 The Company has leased a portion of its land to Bank of Baroda for bank premises at Fertilizer agar and Sikka and Gas Authority of India Ltd. (GAIL) for establishment of CNG pumping station.
5 Buildings include Rs.0.02 lakh being the value of shares in Co-operative Housing Societies.
6 The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with the Company. Thereafter, in terms of resolution passed by GMB, the ownership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regards to the ownership of the jetty with the Company.The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to sikka jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. Pending finalization of the Captive Jetty Agreement, no provision is considered necessary in respect of various claims against the Company and counter-claims of the Company (both the amounts not determined). At present the Company is in possession of the Jetty and continues to be the owner of the Jetty pending signing of the Agreement.
7 The company has availed the deemed cost exemption in relation to the Property, Plant & Equipment on the date of transition i.e. 1 April 2015 and hence the net block carrying amount has been considered as the gross block carrying amount on that date.
Refer note below for the gross block value and the accumulated depreciation on April 1, 2015 under the IGAAP.
Notes:
1) The 54,90,306 no of equity shares of Karnalyte Resources Inc., Canada, held by the Company are pledged to secure the Companyâs long term borrowings from bank.
2) As a promoter of Bhavnagar Energy Company Limited (BECL), the Company has signed the Sponsorsâ Support Agreement (SSA) and as per the said Agreement, the promoters collectively shall not, till the final settlement date (being the date on which all obligations under the SSA have been irrevocably and unconditionally paid and discharged in full to the satisfaction of lenders), dispose-off their shareholdings which would result in dilution of their shareholding below 51%.
3) The equity shares held by the Company in Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) have been pledged to secure the obligations of TIFERT to their lenders. The principal amount Rs 2,555.94 lakhs of the convertible term loan and accrued interest Rs 261.16 lakhs thereon converted into fully paid 8,04,848 no. of equity shares of TND 10 each at par during the year 2015-16.
4) Company has received 93,82,895 nos of shares of Gujarat Gas Ltd in persuant to scheme of amalgamation and arrangement between the GSPC Gas Company Limited and GSPC Distribution Networks Limited pursuant to the Honorable High Court order. Out of the said shares, 39,47,369 nos of shares are lock-in for a period of 3 years from listing date.
5) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities. Refer note 42 for determination of their fair values.
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. Refer note 42 for the provision matrix at the end of the reporting period, ageing of receivable and movement in the expected credit loss allowance.
The concentration of credit risk is limited due to the fact that the customer base is large and unrelated. Refer note 42 for the credit risk management by the Company.
For balances relating to related party receivables, refer Note 40.
a) Rights, preferences and restrictions attached to shares
Equity shares
The Company has one class of equity shares having a par value of '' 2 each. Each shareholder is eligible for one vote per share held. The dividend proposed by Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting. 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.
*The term loan from bank comprise of External Commercial Borrowings (ECB) and are secured by pledge on Shares of Karnalyte Resources Inc, Canada. The principal amount of the loan is repayable over a period of six years in annual installments with the first installment due in March 2015 and the interest on the loan is repayable in quarterly installments over the tenure of the loan. The above loan carries effective interest rates with spread ranging from 175 bps to 190 bps over three months LIBOR. The repayment obligations for these loans have been partially hedged for exchange rate risk and fully hedged for interest rate risk. The loan repayment schedule is as under.
Notes:
a) The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
b) Deferred tax assets have not been recognized in respect of those losses for which the company may not be used to offset taxable profits elsewhere in the company, they have arisen in fair valuation of investments, and there are no other tax planning opportunities or other evidence of recoverability in the near future. If the company were able to recognize all unrecognized deferred tax assets, the comprehensive income would have been increased by INR 1762.13 lacs for the year ended March 31, 2016.
* The Cash credit facility from consortium of banks is secured by hypothecation of stock of raw materials, finished products, packing materials, general stores, spares, book debts etc. of the Company.
** The Company has availed Inter-Corporate Loan of Rs. 400 crores from Gujarat State Financial Services Limited @ 9% p.a. for 90 days period during financial year 2015-16.
*** The Company has issued commercial paper of Rs.200 crores for 90 days period.
*Dues 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. This has been relied upon by the auditors.
** includes trade payable to related parties Rs 7579.65 lakhs (Rs 4875.08 lakhs as at 31st March,2016 and Rs 3186.18 lakhs as at 1st April, 2015).
10. Earnings per share ( EPS):
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.
The following reflects the income and share data used in the basic and diluted EPS computations:
Note -11: Employment benefit plans
a) The Company operates post employment and other long term employee benefits defined plans as follows: I. Funded II. Unfunded
i. Gratuity i. Post retirement medical benefit scheme
ii. Pension
Aforesaid post-employment benefit plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment Risk: The present value of the defined benefit liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
Interest Risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s investments.
Longevity Risk: The present value of the defined benefit liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
Salary Risk: The present value of the defined benefit liability is calculated by reference to the future salaries of plan participants. As such, an increase in salary of the plan participants will increase the plan''s liability.
b) Defined contribution plans:
Amount towards Defined Contribution Plans have been recognized under "Contributions to Provided, Gratuity and Superannuation Fund (pension) Funds (including provisions)â in Note : 34 Rs 2730.07 lakhs for financial year 2016-17 (Rs. 2,521.06 lacs for financial year 2015-16).
c. The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors.
d. The estimate of mortality rate during employment has been considered as per Indian Assured Lives Mortality (2006-08).
e. Provident Fund contributions are made to Trusts administered by the Company. The interest rate payable to the members of the T rusts shall not be lower than the statutory rate of interest declared by the Central Government under the Employees provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. Having regard to the assets of the Fund managed by the Trusts and the return on the investments, the Company does not expect any deficiency in the foreseeable future.
The Company had provided a sponsor guarantee for USD 41.1 million (proportionate to the shareholding of 15%) towards the borrowings of Tunisian Indian Fertilizers S.A. (TIFERT), a company based in Tunisia, manufacturing phosphoric acid. In March 2017, TIFERT has requested reschedulement of installment due to the lenders and delayed the payment. The same was not agreed to by the Lenders and the acceleration notice was served on TIFERT by lenders on 28 March 2017. The loan installment was immediately paid on 31 March 2017 by TIFERT. However, on 4 April 2017 the lenders followed up with call notice on shareholders towards guaranteed amount (GSFC''s share USD 34.38 million outstanding as on date). The Company along with other shareholders of TIFERT are in discussion with the Lenders to resolve the matter with regard to liquidity situation and operational improvements of TIFERT and also to find a solution for meeting the future debt obligations of TIFERT. Based on communication exchanged with Lenders and operational improvement initiatives taken by TIFERT, the Company reasonably considers that TIFERT would be in a position to meet the debt obligations and it is unlikely that such an event of payment under guarantee amount will arise. The Company''s obligation under this financial guarantee if that amount is claimed by the counterparty to the guarantee is subject to a maximum amount as mentioned herein above.
Note - 12 Related party transactions
The company is controlled by Government of Gujarat and Gujarat state Investment Limited and hence, the Company is Government related entity as per Ind AS 24 âRelated Party Disclosuresâ.
Terms and conditions of transactions with related parties:
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31st March,2016: Nil & 1 April 2015: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
Note - 13. Segment information
For management purposes, the company is organized into business units based on its products and has two reportable segments, as follows:
1. Fertilizer products comprising of Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16), (10:26:26), traded fertilizer products etc.
2. Industrial products comprising of Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Methanol, Polymer products, traded industrial products etc.
The Chief Operating Decision Maker (âCODMâ) evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by the two operating segments. The CODM reviews revenue and gross profit as the performance indicator for both operating segments.
Note 1: The Company has invested in the equity instruments of various companies. However, the percentage of shareholding of the Company in such investee companies is very low and hence, it has not been provided with future projections including projected profit and loss account by those investee companies. Hence, the independent valuer appointed by the Company has estimated fair value based on available historical Annual Reports of such companies and other information as available in the public domain. Since the future projections are not available, discounted cash flow approach for fair value determination has not been followed.
Note 2: In case of some companies, there are no comparable companies valuations available and some are recent startup companies. In light of no information available for future projections, capacity utilization, commencement of operations, etc., the valuation is based on cost approach.
ii) Transfers between Levels 1 and 2
There have been no transfers between Level 1 and Level 2 during 2016-17 and 2015-16
iii) Level 3 fair values Reconciliation of Level 3 fair values
The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.
During 2015-16, the Company received 93,82,895 nos. of shares of Gujarat Gas Ltd (quoted) in lieu of shares held in GSPC Gas Company Ltd and GSPC Distribution Networks Ltd.
Transfer out of Level 3
There were no movement in level 3 in either directions during the year 2016-17 and 2015-16.
C. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk ;
- Liquidity risk ; and
- Market risk
i. Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company manages market risk through a Financial risk management committee, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Audit cum finance committee and Board of Directors. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.
The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The audit cum finance committee oversees how management monitors compliance with the company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers.
The carrying amount of following financial assets represents the maximum credit exposure:
Trade and other receivables
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Revenue department has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the Board of Directors.
Goods are sold subject to retention of title clauses, so that in the event of non-payment the Company may have a secured claim. The Company does not otherwise require collateral in respect of trade and other receivables.
Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behavior and extensive analysis of customer credit risk, including underlying customers'' credit ratings if they are available.
During the year 2016-17 and 2015-16, an impairment provision of INR 3,640.66 and INR 1,774.58 was created respectively .
Cash and cash equivalents
The Company held cash and cash equivalents of INR 4357.87 at March 31, 2017, INR 3,086.41 Lacs at March 31, 2016 (April 1, 2015: INR 3269.87 lacs). The cash and cash equivalents are held with approved scheduled banks.
Derivatives
The derivatives deals are done with AD category banks in OTC market and registered brokers in ETCD market.
The gross inflows/(outflows) disclosed in the above table represent the contractual undiscounted cash flows relating to derivative financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity. The disclosure shows net cash flow amounts for derivatives that are net cash-settled and gross cash inflow and outflow amounts for derivatives that have simultaneous gross cash settlement.
iv. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of company''s investments. Thus, company''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to control the financial risks associated with the Foreign Exchange/Currency rate movements through a sophisticated Foreign Exchange Risk Management System. Currency risk
The Company is exposed to currency risk on account of its import payables and borrowings in foreign currency. The functional currency of the Company is Indian Rupee. The Company uses forward exchange contracts, Options and futures to hedge its currency risk, most with a maturity of less than one year from the reporting date. The company is using derivative instruments which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.
Capital Management
The Company manages its capital to ensure that it will be able to continue as a Going Concern while maximizing the return to stakeholders through optimization of the Debt and Equity Balance.
The Company is subject to externally imposed capital requirements as part of its debt covenants such as maintaining an interest coverage ratio of 4 times, a Debt Service Coverage ratio of 1.75 times, Net external debt to EBDITA ratio of 2.75 times, Total leverage ratio of 1.5 times and an external gearing ratio of 1 time.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital by computing the above ratios on an annual basis and ensuring that the same is in Compliance with the requirements of the Financial Covenants.
*The above amount includes outstanding subsidy on Ammonium Sulphate fertilizer Rs 98656 lakhs (previous year Rs 84375 lakhs), pending finality of matter in the court.
In March, 2013, the Department of Fertilizers (DoF) had sought to recover subsidy on Ammonium Sulphate (AS subsidy) under the Nutrient Based Subsidy Scheme (NBS Scheme) and stopped further disbursal of the AS subsidy to the Company, against which the Company had filed a writ petition in the Honorable Delhi High Court. However, The company was also in dialogue with DoF and took various steps for resolution of the matter. The matter progressed well during the year and finally in March 17, Government accepted the claim of the Company favorably. Consequently, company has withdrawn the writ petition. The DoF has agreed to release the Company''s withheld AS subsidy of Rs. 28,837 lacs for the period from 1st April 2010 to 17th March 2013 (after adjusting Rs. 3,378 lacs). Further, the DoF, vide its Office Memorandum dated 15th March, 2017, has allowed AS produced by the Company to be included in the NBS Scheme effective from 6th March 2017. As regards, the Company''s AS subsidy claims for the period from 18th March 2013 to 5th March 2017 of Rs. 66,287 lacs, the DoF, in coordination with Fertilizer Industry Coordination Committee (FICC) has agreed to examine the eligibility of the claims based on the cost data provided by the Company. In April / May, 2017, the Company has submitted the cost data and is reasonably certain that its AS subsidy claims for the staid period, which claims are in line with the claims recently agreed for period from 1st April 2010 to 17th March 2013, will be agreed by the DoF. The outstanding receivable on account of the AS subsidy was Rs. 98,656 lacs, Rs. 84,083 lacs and Rs. 65,247 lacs as on 31st March 2017, 31st March 2016 and 1st April 2015, respectively.
(b) Interest rate swaps to hedge against fluctuations in interest rate changes: No. of contracts:"!, Amount: USD 16.00 Mn Principal (As at 31 March, 2016: No. of contracts:2, Amount: USD 30.67 Mn Principal)
(c) Currency Futures (other than forward exchange contracts stated above) which are not intended for trading or speculative purposes but for hedge purposes to hedge against fluctuations in changes in exchange rate.
Note: Figures in brackets relate to the previous year (II) The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise, represented in equivalent USD: USD 0.73 Mn (As at March 31, 2016: USD 6.06 Mn)
Note - 48 Transition to Ind AS:
These financial statements, for the year ended 31 March 2017, are the first the company has prepared in accordance with Ind-AS. For periods up to and including the year ended 31 March 2016, the company prepared its financial statements in accordance with Indian GAAP, including accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended).
The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS balance sheet at 1 April 2015 (the âtransition dateâ).
In preparing our opening Ind AS balance sheet, we have adjusted amounts reported in financial statements prepared in accordance with IGAAP. An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, we did not revise estimates previously made under IGAAP except where required by Ind AS.
I. First time adoption of Ind AS
The Standalone financial statements for the year ended March 31, 2017 and year ended March 31, 2016 have been prepared in accordance with Ind AS as issued and effective as at March 31, 2017 and March 31, 2016 respectively. The Company''s opening Ind AS balance sheet was prepared as at 1 April 2015, the Company''s date of transition to Ind AS. In preparing the opening balance sheet, the Company has applied the mandatory exceptions and certain optional exemptions from full retrospective application of Ind AS in accordance with the guidance in Ind AS 101 - ''First Time Adoption of Indian Accounting Standards''.
This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements to Ind AS, in the opening balance sheet as at April 1, 2015 and in the financial statements as at and for the year ended 31 March 2016 and as at and for the period ended March 31, 2017.
II. Exemptions from retrospective application
Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
(a) Deemed cost for Property, Plant and Equipment (PPE) and Intangible assets The Company has elected to measure all the items of PPE and intangible assets at its previous GAAP carrying values which shall be the deemed cost as at the date of transition. As per FAQs issued by Accounting Standards Board (ASB) by Ind AS Transition Facilitation Group of IndAS (IFRS) Implementation Committee of ICAI, deemed cost, is the amount used as a surrogate for the cost or depreciated cost and for the purpose of subsequent depreciation or amortisation, deemed cost becomes the cost as the starting point. Information regarding gross block of assets, accumulated depreciation and provision for impairment under Previous GAAP has been disclosed by way of a note forming part of the financial statements. (Refer Note 5)
(b) Deemed cost for Investments in subsidiaries and jointly controlled entities The Company has elected to measure its investments in subsidiaries and joint ventures at its previous GAAP carrying values which shall be the deemed cost as at the date of transition.
(c) Determining whether an arrangement contains a lease The Company has applied Appendix C of Ind AS 17 Determining whether an arrangement contains a lease, to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.
The remaining voluntary exemptions as per Ind AS 101-First time adoption either do not apply or are not relevant to the Company.
III. Exceptions from full retrospective application:
The Company has applied the following mandatory exceptions from retrospective application.
Estimates -On an assessment of the estimates made under Indian GAAP the Company has concluded that there was no necessity to revise the estimates under Ind AS except where estimates were required by Ind AS and not required by Previous GAAP or the basis of measurement were different. The remaining mandatory exceptions either do not apply or are not relevant to the Company.
(e) Thre were no significant reconciliation items between cash flows prepared under India GAAP and those prepared under Ind AS.
Notes to the reconciliation:
1 Deferred tax assets (net) :
Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind-AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind-AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.
2 FVTOCI financial assets: Under Indian GAAP, long term investments were measured at cost less diminution in value which is other than temporaray. Under Ind AS, these financial assets have been classified as FVTOCI. On the date of transition to Ind AS, these financial assets have been measured at their fair value and the restatement gain / (loss) has been taken to Other Comprehensive Income (OCI).
3 Employee benefits : Both under Indian GAAP and Ind-AS, the company recognized 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 excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Further, under Ind AS, past service cost is recognized as expense when the plan amendment occures while under previous GAAP, the same was recognized as expense on a straight-line basis over the average period until the benefits become vested.
4 Proposed dividend: Under Indian GAAP, dividends on equity shares recommended by the Board of Directors after the end of the reporting period but before the financial statements were approved for issue were recognized in the financial statements as a liability. Under Ind AS, such dividends are recognized when declared by the members in a General Meeting.
5 Loans and borrowings: Under Indian GAAP, transaction costs incurred in connection with interest bearing loans and borrowings are amortized upfront and charged to profit or loss for the period. Under Ind-AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method. All borrowings are subsequently measured at amortized cost.
6 Fair valuation of derivatives: Under Indian GAAP, accounting for derivative contracts was done per AS-
11. Accounting for derivative contracts, other than those covered under AS-11, are marked to market on a portfolio basis, and the net loss after considering the offsetting effect on the underlying hedge item is charged to the Income Statement. Net gains on derivative transactions are ignored. Under Ind AS, the open derivative contracts have been fair valued as on the date of transition and subsequently as at 31 March 2016 and as at 31 March 2017 as per the provisions of Ind AS 109.
7 Lease: Under Indian GAAP, upfront amount paid for interests in land was recorded as lease hold land under Property Plant and Equipments, whereas under Ind AS, it is classified as an operating lease and prepayment for the operating lease is recognized as non-current asset and amortized over the period of lease.
8 Asset Retirement Obligation: Under Ind AS, the initial estimates of the costs of dismantling and of removing the item of Property, Plant and Equipment and restoring the site on which it is located is required to be included in the cost of the respective item of property, plant and equipment. Under previous GAAP, there was no such requirement and cost incurred as and when was charged to Statement of profit and loss.
9 Machinery Spares: The adjustments relates to recognition of spare parts in accordance with Ind AS 16 when they meet the definition of property, plant and equipment. Under previous GAAP, these items were carried as inventory. The adjustment is on account of depreciation on classifying the same as property, plant and equipment from the date they are available for use.
10 Allowance for Doubtful Debt: Under Ind AS, expected life time credit provision is made on trade receivables. Under previous GAAP, the provision for doubtful debts was made using ageing analysis and an individual assessment of recoverability.
11 Interest free deposits: Under Indian GAAP, interest free security deposits (that are refundable on completion of the contract) are recorded at their transaction value. Under Ind AS, all financial assets are to be recorded at fair value. Accordingly, the company has fair valued these security deposits under Ind AS. Difference between the fair value and the transaction value of the security deposits has been recognized in prepaid expenses.
12 Current tax assets and liabilities: Taxation recoverable and taxation liabilities grouped under Long term loans and advances and Short term provision respectively in Indian GAAP has been shown separately on the face of Balance Sheet in Ind AS.
13 Sale of goods
(i) Excise duty:
Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of statement of profit and loss.
(ii) Cash discounts to customers:
Under Indian GAAP, cash discounts given to customers were presented as part of other expenses. Under Ind AS, the same has been netted off from revenue.
(iii) Swap of similar goods:
Under Indian GAAP, the goods exchanged or swapped which are of similar in nature and in value terms were recorded as Revenue and Purchases respectively. Under Ind AS, When goods or services are exchanged or swapped for goods or services which are of a similar nature and value, the exchange is not regarded as a transaction which generates revenue, and hence such transactions has been set off against each other which has no impact on statement of profit and loss.
14 Fair valuation of guarantee given: The adjustment relates to the fair value of the guarantee given by the Company based on the fee that it would be required to pay to a market participant, i.e. a bank to provide a similar guarantee.
Mar 31, 2016
1. Employees Benefits
a) The Company operates post employment and other long term employee
benefits defined plans as follows:
I Funded II Unfunded
i. Gratuity i. Leave Encashment Benefit
ii. Pension ii. Post Retirement Medical Benefit Scheme (PRMBS)
b) Defined contribution plans:
Amount towards Defined Contribution Plans have been recognised under
''''Contributions to Providend, Gratuity and Superannuation Fund
(pension) Funds (including provisions)'''' in Note:25 Rs 2521.06 lakhs
(2014-1 5 Rs 1873.98 lakhs)
2. Related Party Transactions
Related Party Disclosures as required by AS-18 "Related Party
Disclosures" are given below :
1. Relationship :
(a) Subsidiary Company : GSFC Agrotech Ltd.
(b) Associate Company :
(i) Vadodara Enviro Channel Ltd.
(Erstwhile Effluent Channel Project Ltd.)
(ii) Gujarat Green Revolution Company Ltd.
(iii) Gujarat Data Electronics Ltd.
(c) Key Managerial Personnel and their relatives:
(i) Dr. S K Nanda - Chairman cum Managing Director upto 31/01/2016
(ii) Shri. AMTiwari -Managing Director w.e.f. 01/02/2016
(iii) Shri V D Nanavaty - Sr VP (Finance) & CFO
(iv) Shri V V Vachharajani- Company Secretary & VP (Legal)
(d) Others : GSFC Education Society
2. Details of transactions with related parties :
3. Details on derivative instruments and unhedged
I. foreign currency exposures
(a) Forward exchange contracts and options (being derivative
instruments), which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
(i) Outstanding forward exchange contracts entered into by the Company
as on 31 March, 2016
(b) Interest rate swaps to hedge against fluctuations in interest rate
changes: No. of contracts:2, Amount: 30.67 Mn USD Principal (As at 31
March, 2015 :No of contracts 2, Amount :37.33 Mn USD Principal)
(c) Currency Futures (other than forward exchange contracts stated
above) which are not intended for trading or speculative purposes but
for hedge purposes to hedge against fluctuations in changes in exchange
rate.
II. The year-end foreign currency exposures that have not been hedged
by a derivative instrument or otherwise, represented in equivalent USD:
USD 8.62 Mn (As at March 31, 2015: : USD 7.08 Mn)
4. Subsidy on Ammonium Sulphate:
Department of Fertilizers (DoF) vide Office Memorandum dated 18th
March, 2013 had sought to recover subsidy on Ammonium Sulphate
fertilizer produced by the Company, under the Nutrient Based Subsidy
scheme of Govt. of India w.e.f. April 1, 2010, and also to stop further
disbursal of subsidy on said fertilizer.
The management believes that since its Ammonium Sulphate (AS), is
specifically covered in the Nutrient Based Subsidy (NBS) Policy right
from inception of the scheme w.e.f.1-4-2010, it has been allowed to
upload various data on Fertilizers Monitoring System website of DoF.
The Company filed a writ petition in the Honourable Delhi High Court
and obtained a stay. The company is trying to resolve matter with
Government of India. DoF has also presented its view in the Honourable
Delhi high Court about amicable settlement in the matter. The Company
has already made representation to DoF for releasing interim subsidy
and as per the last order of the court dated 11th May 2016, DoF has
confirmed to a decision for disposing of the representation within a
period of six weeks and has adjourned the date of next hearing to July
18, 2016.
Following amounts already have been recognised in the books of accounts
for respective years/periods and the management strongly believes that
amounts mentioned below are recoverable or not required to be paid back
to government in case already received.
Such subsidy received from the Department of Fertilizers amounting to
Rs. 26,866 lakhs for the period from April 1, 2010 to November 30, 2011
has been accounted for as Net sales/ Income from operations in the
respective accounting periods.
Net sales/ Income from operations and trade receivables in the
financial statements include amounts of such subsidy as under:
Based on the given scenario, management of the Company believes that
there is no ground for removing AS from NBS and has been done in
arbitrary and discriminatory manner and amount accounted as above is
recoverable from the DoF.
5. Previous Year''s Figures
Previous year''s figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s
classification/disclosures.
Mar 31, 2015
Note 1:
Rights, preferences and restrictions attached to shares
Equity shares
The Company has one class of equity shares having a par value of Rs.
2/- each. Each shareholder is eligible for one vote per share held. The
dividend proposed by Board of Directors is subject to approval of
shareholders in the ensuing Annual General Meeting. 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.
During the year ended 31st March, 2015, the amount of per share
dividend recognized as distributions to equity shareholders was Rs.
2.20 (31st March, 2014: Rs. 2/-) per equity share of face value of Rs.
2 each.
Note 2:
The Company has acquired land through Government and also through
direct negotiations. The entire land is in possession of the Company.
In respect of portion of land for which the Company has still not
received the award/sale deed, the advance paid to land owners have been
treated as land. In respect of other portion of land acquired through
direct negotiations, compensation has been paid at the negotiated
price. The Company also holds possession of a portion of land for which
no amount has been paid in absence of receipt of awards.
b) The Company has leased a portion of its land to Bank of Baroda for
bank premises at Fertilizernagar and Sikka and Gas Authority of India
Ltd. (GAIL) for establishment of CNG pumping station.
c) Buildings include Rs.0.02 lakh being the value of shares in
Co-operative Housing Societies.
d) The Company established Sikka Jetty at its own cost, which is in
operation since 1987. After due discussion with Gujarat Maritime Board
(GMB), a consensus was arrived at establishing ownership of jetty with
the Company. Thereafter, in terms of resolution passed by GMB, the
onwership of the jetty at Sikka was transferred to the Company.
However, during 1994, GMB has reversed its earlier decision not
supported by resolution and contended that the ownership of the jetty
rests with GMB. The Company has made representation to the appropriate
authority with regards to the ownership of the jetty with the Company.
The matter of deciding the status of Jetty was under examination at GMB
& Government of Gujarat levels since long back. Various meetings were
also held and after due diligence on the matter, it is decided by the
Board of GMB supported by a resolution to assign the status of Captive
Jetty to sikka jetty and the Company has to sign Captive Jetty
Agreement with GMB. The matter is under discussion with GMB
authorities. Pending finalization of the Captive Jetty Agreemnt, no
provision is considered necessary in respect of various claims against
the Company and counter-claims of the Company (both the amounts not
determined). At present the Company is in possession of the Jetty and
continues to be the onwer of the Jetty pending signing of the
Agreement.
e) Consequent upon enactment of Schedule-II of the New Company''s
Act,2013, the Fixed Assets have been reclassified. In the respect of
the fixed assets having completed their useful life, an amount of
Rs.2133.29 Lakhs has been adjusted against the opening balance of
retained earnings.
Note 3:
a) As one of the promoters of the Gujarat Chemical Port Terminal
Company Limited (GCPTCL), the Company has given undertaking to ICICI
Bank for not to transfer, assign, dispose off, pledge, charge or create
any lien or in any way encumber Company''s existing or future
shareholding in the GCPTCL in favour of any person so long as money
remains due by GCPTCL to ICICI Bank or till the project is duly
completed, whichever is later.
b) The equity shares held by the Company in Tunisian Indian Fertilizers
S.A., Tunisia (TIFERT) have been pledged to secure the obligations of
TIFERT to their lenders. During the year, TIFERT has commissioned the
phosphoric acid plant and has commenced production. Pursuant to the
shareholders'' agreement in this respect, the day to day operations have
been assumed by the Tunisian partners and the Company has accordingly
discontinued the same as Joint venture, and accordingly treating its
investments in TIFERT under other Investments as per AS-13 -
"Accounting for Investments".
c) The Company has consented for the proposed scheme of amalgamation
and arrangement between the GSPC Gas Company Limited and GSPC
Distribution Networks Limited.
d) As a promoter of Bhavnagar Energy Company Limited (BECL), the
Company has signed the Sponsors'' Support Agreement (SSA) and as per the
said Agreement, the promoters collectively shall not, till the final
settlement date (being the date on which all obligations under the SSA
have been irrevocably and unconditionally paid and discharged in full
to the satisfaction of lenders), dispose-off their shareholdings which
would result in dilution of their shareholding below 51 %.
e) The equity shares of Karnalyte Resources Inc., Canada, held by the
Company are pledged to secure the Company''s long term borrowings from
bank.
f) For basis of valuation refer Note 1 - Significant accounting
policies
Note 4:
Contingent Liabilities
(Rs. in lakhs)
Particulars As at 31st March
2015 2014
Claims against the Company not
acknowledgement as debt
(i) Excise Duty 4,404 4,454
(ii) Central Sales Tax and Value Added Tax 4,309 3,076
(iii) Income Tax 2,904 3,965
(iv) Other Claims by :
- Statutory Corporations 1,122 3,826
- Department of Fertilizers, total Refer note Refer
amount not quantifiable, no.36 note
demands stayed, matter pending no.36
with High Courts
- Employees/ex-employees,
contractual labour -
pending before courts Not Not
ascert ascert
ainable ainable
It is not practicable for the Company
to estimate the timings of cash
flow, if any, in respect of the above.
Guarantees
The Company has provided sponsor''s
Guarantee towards the borrowing of
Tunisian Indian Fertilizers
S.A., Tunisia (TIFERT) upto 15% of
the amount due and outstanding 32,391 31,102
Note 5:
Employees Benefits
a) The Company operates post employment and other long term employee
benefits defined plans as follows:
I Funded II Unfunded
i. Gratuity i. Leave Encashment Benefit
ii. Pension ii. Post Retirement Medical Benefit
Scheme (PRMBS)
b) Defined contribution plans:
Amount towards Defined Contribution Plans have been recognised under
"Contributions to Providend, Gratuity and Superannuation Fund (pension)
Funds (including provisions)'''' in Note:25 Rs 1873.98 lakhs (2013-14 Rs
1751.76 lakhs)
Note 6:
Related Party Transactions
Related Party Disclosures as required by AS-18 "Related Party
Disclosures" are given below :
1. Relationship :
(a) Subsidiary Company : GSFC Agrotech Ltd.
(b) Associate Company :
(i) Vadodara Enviro Channel Ltd.
(Erstwhile Effluent Channel Project Ltd.)
(ii) Gujarat Green Revolution Company Ltd.
(c) Key Managerial Personnel and their relatives:
(i) Shri Atanu Chakraborty - Managing Director up to 31/10/2014
(ii) Dr. S K Nanda - Chairman cum Managing Director w.e.f. 01/11/2014
(iii) Shri V D Nanavaty - Sr VP (Finance) & CFO
(iv) Shri V V Vachharajani- Company Secretary & VP (Legal)
(d) Others : GSFC Education Society
Note 6:
Details on derivative instruments and unhedged I. foreign currency
exposures
(a) Forward exchange contracts and options (being derivative
instruments), which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
(b) Interest rate swaps to hedge against fluctuations in interest rate
changes: No. of contracts:2, Amount: 37.33 Mn USD Principal (As at 31
March, 2014 :No of contracts 2, Amount :44 Mn USD Principal)
(c) Currency Futures (other than forward exchange contracts stated
above) which are not intended for trading or speculative purposes but
for hedge purposes to hedge against fluctuations in changes in exchange
rate.
II. The year-end foreign currency exposures that have not been hedged
by a derivative instrument or otherwise, represented in equivalent USD:
USD 7.08 Mn (As at March 31,2014: : USD 4.87 Mn)
Note 7:
Previous Year''s Figures
Previous year''s figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s
classification
Mar 31, 2014
1. Contingent Liabilities
(Rs. in lakhs)
As At 31st March
2014 2013
Claims against the Company not
acknowledgement as debt
(i) Excise and Customs Duty 4,454 4,659
(ii) Sales Tax, Interest on Turnover Tax
and Purchase Tax 3,076 3,233
(iii) Income Tax 3,965 4,013
(iv) Other Claims by :
- Statutory Corporations 3,826 4,097
- Department of Fertilizers, total amount
not quantifiable, demands stayed,
matter pending with High Courts
- Employees/ex-employees, contractual labour -
pending before courts Not ascer
-tainable Not ascerta
-inable
- Third party claims relating to disputes
from contracts 752 752
It is not practicable for the Company to estimate the timings of cash
flow, if any, in respect of the above.
Guarantees
The Company has provided sponsor''s Guarantee towards the Borrowing of
the Joint Venture Company, Tunisian Indian Fertilizers S.A., Tunisia
(TIFERT) upto 15% of the amount due and outstanding 31,102 28,146
2. Employees Benefits
(a) The Company operates post employment and other long term employee
benefits defined plans as follows:
I Funded II Unfunded
i. Gratuity i. Leave Encashment Benefit
ii. Pension ii. Post Retirement Medical Benefit
Scheme (PRMBS)
3. Assumptions :
a. Discount Rate (per annum)
b. Estimated Rate of return on Plan Assets (per annum)
c. The estimates of future salary increases considered in actuarial
valuation take account of inflation, seniority, promotion and other
relevant factors.
d. Provident Fund contributions are made to Trusts administered by the
Company. The interest rate payable to the members of the Trusts shall
not be lower than the statutory rate of interest declared by the
Central Government under the Employees Provident Funds and
Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made
good by the Company. Having regard to the assets of the Fund managed by
the Trusts and the return on the investments, the Company does not
expect any deficiency in the foreseeable future.
i) SECONDARY SEGMENT INFORMATION :
The Company operates mainly in Indian market and there are no
reportable geographical segments.
ii) OTHER DISCLOSURES :
1. The Products and Services covered under each business segment are
as under :
Fertilizer Products :
Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate
Sulphate, NPK (12:32:16)(10:26:26), traded fertilizer products etc.
Industrial Products :
Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine,
Methanol, Polymer products, traded industrial products etc.
2. Segment revenue, results, assets and liabilities include the
respective amounts identifiable to each of the segment and amounts
allocated on reasonable basis.
4. Related Party Transactions
Related Party Disclosures as required by AS-18 "Related Party
Disclosures" are given below :
1. Relationship :
(a) Subsidiary Company : GSFC Agrotech Ltd. (Incorporated on
02.04.2012)
(b) Associate Company :
(i) Vadodara Enviro Channel Ltd.
(Erstwhile Effluent Channel Project Ltd.) (ii) Gujarat Green Revolution
Company Ltd.
(c) Directors and their relatives :
Shri Atanu Chakraborty - Managing Director
(d) Others :
GSFC Education Society
2. Details of transactions with related parties :
5. Interest in Subsidiary and Joint Venture
The Company incorporated a wholly owned subsidiary - GSFC Agrotech
Limited (GATL) during the year ended 31 March 2013 for undertaking
investment in new schemes. The Company considers the subsidiary to be
not material in terms of its investment and the level of operations as
at 31 March 2014 and hence consolidated financial statements are not
prepared.
Value of Imported and Indigenous Raw Materials and Spare Parts consumed
and percentage thereof to total consumption:
Balance of certain creditors and debtors/advances are subject to
confirmation/reconciliation and consequential adjustments, if any.
6. Details on derivative instruments and unhedged foreign currency
exposures
I.(a)Forward exchange contracts and options (being derivative
instruments), which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
(i) Outstanding forward exchange contracts entered into by the Company
as on 31st March, 2014 :
(b) Interest rate swaps to hedge against fluctuations in interest rate
changes:
No. of contracts: 2, Amount: 44Mn USD Principal (As at 31st March,
2013: No. of contracts: 2, Amount: 44Mn USD Principal)
(c) Currency Futures (other than forward exchange contracts stated
above) which are not intended for trading or speculative purposes but
for hedge purposes to hedge against fluctuations in changes in exchange
rate :
II. The year-end foreign currency exposures that have not been hedged
by a derivative instrument or otherwise, represented in equivalent USD
: USD 4.87 Mn. (As at March 31, 2013: NIL)
7. Previous Year''s Figures
Previous year''s figures have been regrouped/reclass- ified wherever
necessary to correspond with the current year''s
classification/disclosures.
Mar 31, 2013
1. Related Party Transactions
Related Party Disclosures as required by AS-18 "Related Party
Disclosures" are given below :
1. Relationship :
(a) Subsidiary Company :
GSFC Agrotech Ltd.
(Incorporated on 02.04.2012)
(b) Associate Company :
(i) Vadodara Enviro Channel Ltd.
(Erstwhile Effluent Channel Project Ltd.)
(ii) Gujarat Green Revolution Company
(c) Joint Venture :
Tunisian Indian Fertilizers, S.A. (TIFERT)
(d) Directors and their relatives :
Shri Atanu Chakraborty - Managing Director
(e) Others :
GSFC Education Society
2. Interest in subsidiary and Joint Venture
The Company has incorporated a wholly owned subsidiary - GSFC Agrotech
Limited (GATL) during the year ended 31 March 2013 for undertaking
investment in new schemes. GATL''s business blue print was under
consideration and no commercial operations has commenced during the
year. The Company considers the subsidiary to be not material in terms
of its investment and the level of operations as at 31 March 2013 and
hence consolidated financial statements are not prepared.
The proportionate share of assets, liabilities, income and expenditure
of subsidiary-GSFC Agrotech Limited and Jointly Controlled Entity-
Tunisian Indian Fertilizers, S.A. (TIFERT) are given below :-
3. Details on derivative instruments and unhedged foreign currency
exposures
I. (a) Forward exchange contracts and options (being derivative
instruments), which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
(i) Outstanding forward exchange contracts entered into by the Company
as on 31 March, 2013 :
4. Previous Years Figures
Previous year''s figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s
classification/disclosures.
Mar 31, 2012
A) Rights, preferences and restrictions attached to shares
Equity shares
The Company has one class of equity shares having a par value of Rs.
10/- each. Each shareholder is eligible for one vote per share held.
The dividend proposed by Board of Directors is subject to approval of
shareholders in the ensuing Annual General Meeting. 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.
During the year ended 31st March, 2012, the amount of per share
dividend recognized as distributions to equity shareholders was Rs.
7.50 (31st March, 2011: Rs. 7/- per equity share).
Notes :
a) The Company has acquired land through Government and also through
direct negotiations. The entire land is in possession of the Company.
In respect of portion of land for which the Company has still not
received the award/sale deed, the advance paid to land owners have been
treated as land. In respect of other portion of land acquired through
direct negotiations, compensation has been paid at the negotiated
price. The Company also holds possession of a portion of land for which
no amount has been paid in absence of receipt of awards.
b) The Company has leased a portion of its land to Bank of Baroda for
bank premises at Fertilizer agar and Sikka and Gas Authority of India
Ltd. (GAIL) for establishment of CNG pumping station.
c) Buildings include Rs.0.02 lakh being the value of shares in
Co-operative Housing Societies.
d) The addition in Leasehold Land of Rs.528 lakhs (Previous year Rs.441
lakhs) is for Wind Mill Project taken on lease for a period of 20
years.
e) The Company established Sikka Jetty at its own cost, which is in
operation since 1987. After due discussion with Gujarat Maritime Board
(GMB), a consensus was arrived at establishing ownership of jetty with
GSFC. Thereafter, in terms of resolution passed by GMB, the ownership
of the jetty at Sikka was transferred to the Company. However, during
1994, GMB has reversed its earlier decision not supported by resolution
and contended that the ownership of the jetty rests with GMB. The
Company has made representation to the appropriate authority with
regards to the ownership of the jetty with the Company.
The matter of deciding the status of Jetty was under examination at GMB
& Government of Gujarat levels since long back. Various meetings were
also held and after due diligence on the matter, it is decided by the
Board of GMB supported by a resolution to assign the status of Captive
Jetty to sikka jetty and the Company has to sign Captive Jetty
Agreement with GMB. The matter is under discussion with GMB
authorities. Pending finalization of the Captive Jetty Agreement, no
provision is considered necessary in respect of various claims against
the Company and counter-claims of the Company (both the amounts not
determined). At present the Company is in possession of the Jetty and
continues to be the owner of the Jetty till the Captive Jetty Agreement
is signed.
Notes :
a) As one of the promoters of the Gujarat Industries Power Company Ltd.
(GIPCL), the Company has given undertaking to Industrial Development
Bank of India (IDBI), Power Finance Corporation Ltd. (PFC) and Gujarat
Industrial Investment Corporation Ltd. (GIIC) for non disposal of and
non creation of a charge against the Company's investment in the shares
of the said company during the pendency of loans given to GIPCL by
IDBI, PFC and GIIC.
b) As one of the promoters of the Gujarat Chemical Port Terminal
Company Limited (GCPTCL), the Company has given undertaking to ICICI
Bank for not to transfer, assign, dispose off, pledge, charge or create
any lien or in any way encumber company's existing or future
shareholding in the GCPTCL in favour of any person so long as money
remains due by GCPTCL to ICICI Bank or till the project is duly
completed, whichever is later.
c) The ordinary shares of Tunisian Indian Fertilizers S.A., Tunisia
(TIFERT) held by the Company and included under Investment have been
pledged to secure the obligations of TIFERT to their lenders.
d) As per the Security and Exchange Board of India (Issue of Capital
and Disclosure Requirements) Regulation 2009 ("ICDR Regulations"),
the Company has given consent for lock-in of its shareholding of equity
shares in Gujarat State Petroleum Corporation Ltd. for a period of one
year or for such other time as may be required from the date of
allotment of Public issue.
e) As a promoter of Bhavnagar Energy Company Limited (BECL), the
Company has signed the Sponsors' Support Agreement (SSA) and as per the
said Agreement, the promoters collectively shall not, till the final
settlement date (being the date on which all obligations under the SSA
have been irrevocably and unconditionally paid and discharged in full
to the satisfaction of lenders), dispose-off their shareholdings which
would result in dilution of their shareholding below 51 %.
For basis of valuation refer Note 1 - Significant Accounting Policies.
1. Contingent Liabilities
(Rs.in lakhs)
2011-12 2010-11
Claims against the Company not
acknowledgement as debt
Disputed Excise and Customs
Duty (net of provision) 5,326 4,516
Disputed demand of Sales Tax,
Interest on Turnover Tax &
Purchase Tax against which the
Company has preferred appeals 3,556 462
Claims by Statutory Corporations
and others not acknowledged
as debt 4,264 4,111
Disputed gas price/royalty on
gas with ONGC 752 752
Claims by employees/ex-
employees
pending before courts Not ascertainable Not ascertainable
The Industrial Tribunal,
Vadodara vide its award
dated 27/01/2009 in reference
(IT) No.88/1999 directed the
Company to pay to the concerned
employees 50% of the amount
calculated by working out
double the amount qua the extra
hours relating to the overtime
done by concerned employees
i.e. Supervisors and Sr.
Supervisors during the period
from 01/01/2001 to 31/03/2009.
It has further been directed
that the aforesaid would be
effective upto March-2009 and
thereafter if the concerned
employees i.e. Supervisors and
Sr. Supervisors are made to
work overtime then in that
situation such overtime wages
would have to be paid at double
the rate. The Industrial Tribunal's
award has been challenged by the
Company in the Hon'ble High Court
of Gujarat and the Hon'ble High Court
has granted Ad-interim relief
thereby stayed the implementation,
operations and execution of the
award dated 27/01/2009. Vide an order
dated 11/03/2010, the Hon'ble
High Court has confirmed the interim
relief granted earlier till
final disposal of the petition.
Aggrieved by the said order, the
Grade-II Employees' Union filed the
Letters Patent Appeal before the
Division Bench of the High Court,
which has been dismissed by the Div.
Bench.
The Company has not provided
liability at this juncture as the
matter can be proceeded if required,
on merit at both the High
Court and Supreme Court stages 839 839
Guarantees
The Company has provided sponsor's
Guarantee towards the borrowing of
the joint venture company, Tunisian
Indian Fertilizers S.A., Tunisia
(TIFERT) upto 15% of the amount due
and outstanding 26,473 18,237
ii) SECONDARY SEGMENT INFORMATION :
The Company operates mainly in Indian market and there are no
reportable geographical segments.
iii) OTHER DISCLOSURES :
1. The Products and Services covered under each business segment is as
under :
Fertilizer Products :
Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate
Sulphate, NPK (12:32:16X10:26:26), traded fertilizer products etc.
Industrial Products :
Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine,
Polymer products, traded industrial products etc.
2. Segment revenue, results, assets and liabilities include the
respective amounts identifiable to each of the segment and amounts
allocated on reasonable basis.
2. Related Party Transactions
Related Party Disclosures as required by AS-18 "Relatec Party
Disclosures are given below :
1. Relationship :
(a) Associate Company :
Vadodara Enviro Channel Ltd.
(Erstwhile Effluent Channel Project Ltd.)
(b) Joint Venture :
Tunisian Indian Fertilizers, S.A. (TIFERT)
(c) Directors and their relatives :
Shri H. V. Patel
- Managing Director upto 13-07-11
Shri Atanu Chakraborty
- Managing Director w.e.f. 13-07-11
3. Joint Ventures
As on 31st March, 2012, the Company is holding 15% shares in a Joint
Venture Company, Tunisian Indian Fertilizers, S.A. (TIFERT),
incorporated in Tunisia and the proportionate share in the Assets,
Liabilities, Income and Expenditure as per their Financial Year ending
on 31st December 2011 are given below :
Balance of certain creditors and debtors/advances are subject to
confirmation/reconciliation and consequential adjustments, if any.
4. Previous Years Figures
The Revised Schedule VI has become effective from 1st April, 2011 for
the preparation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statements. Previous year's figures have been regrouped / reclassified
wherever necessary to correspond with the current year's
classification/disclosure. The adoption of Revised Schedule VI for
previous year figures does not impact recognition and measurement
principles followed for preparation of financial statements.
Mar 31, 2011
1. Contingent Liabilities not provided for :
2010-11 2009-10
Rs. in lakhs
(a) Disputed Excise Duty and
Customs Duty (net of provision). 626 487
(b) Disputed demand of Sales Tax and
Interest on Turnover Tax &
Purchase Tax against which the Company has
preferred appeals. 462 1580
(c) Claims by Statutory Corporations and
others disputed and not acknowledged as debt. 4111 4208
(d) Disputed gas price/royalty on
gas with ONGC. 752 752
(e) Claims by employees/ex- employees pending
before courts. Not ascertainable
(f) The Industrial Tribunal, Vadodara vide its
award dated 27/01/2009 in reference (IT) No.
88/1999 directed the Company to pay to the
concerned employees 50% of the amount calculated
by working out double the amount qua the extra
hours relating to the overtime done by
concerned employees i.e. Supervisors and
Sr. Supervisors during the period from 01/01/
2001 to 31/03/2009. It has further been
directed that the aforesaid would be effective
upto March-2009 and thereafter if the concerned
employees i.e. Supervisors and Sr. Supervisors
are made to work overtime then in that situation
such overtime wages would have to be paid at
double the rate. The Industrial Tribunal's
award has been challenged by the Company in the
Hon'ble High Court of Gujarat and the Hon'ble
High Court has granted Ad-interim relief there by
stayed the implementation, operations and execution
of the award dated 27/01/2009. Vide an order dated
11/03/2010, the Hon'ble High Court has confirmed
the interim relief granted earlier till final
disposal of the petition. Aggrieved by the said
order, the Grade-II Employees' Union filed the
Letters Patent Appeal before the Division Bench of
the High Court, which has been
dismissed by the Div. Bench.
The Company has not provided
liability at this juncture as the
matter can be proceeded, if
required, on merit at both the
High Court and Supreme Court
stages. 839 839
(g) The Company has provided
sponsor's Guarantee towards
the borrowing of the joint venture
company, Tunisian Indian
Fertilizers S.A., Tunisia (TIFERT)
upto 15% of the amount due and
outstanding. 18237 9256
2. Estimated amount of contracts
remaining to be executed on capital
accounts, net of advances. 9831 12063
3. In respect of LSHS consumed for production of Steam, which is used
for manufacturing fully exempted fertilizers, Central Excise
authorities had issued various Show- Cause Notices (SCNs) denying
MODVAT Credit availed by the Company from 1997 till 2001. The Company
litigated against such denial and the Hon. Supreme Court gave
favourable order against one of the SCNs in July 2008 upholding the
MODVAT credit eligibility of the Company. Thereafter, the Company
requested Excise authorities to adjudicate pending the Show Cause
Notices on the basis of Supreme Court order. However, Commissioner,
Central Excise & Customs, Vadodara adjudicated the matter in November
2010, against the Company on various grounds and ordered the Company to
pay Rs. 3436.60 Lacs for Cenvet availed on LSHS and interest on the
same of Rs. 453.78 Lacs. The Company has appealed to the CESTAT
against this order. The Company has not provided liability at this
juncture.
4. (a) As one of the promoters of the Gujarat Industries Power Company
Ltd.(GIPCL), the Company has given undertaking to Industrial
Development Bank of India (IDBI), Power Finance Corporation Ltd. (PFC)
and Gujarat Industrial Investment Corporation Ltd. (GIIC) for non
disposal of and non creation of a charge against the Company's
investment in the shares of the said company during the pendency of
loans given to GIPCL by IDBI, PFC and GIIC.
(b) As one of the promoters of the Gujarat Chemical Port Terminal
Company Limited (GCPTCL), the Company has given undertaking to ICICI
Bank for not to transfer, assign, dispose off, pledge, charge or create
any lien or in any way encumber Company's existing or future
shareholding in the GCPTCL in favour of any person so long as money
remains due by GCPTCL to ICICI Bank or till the project is duly
completed, whichever is later.
(c) The ordinary shares of Tunisian Indian Fertilizers S.A., Tunisia
(TIFERT) held by the Company and included under Investment (Schedule-6)
have been pledged to secure the obligations of TIFERT to their lenders.
(d) As per the Security and Exchange Board of India (Issue of Capital
and Disclosure Requirements) Regulation 2009 ("ICDR Regulations"), the
Company has given consent for lock-in of its shareholding of equity
shares in Gujarat State Petroleum Corporation Ltd. for a period of one
year or for such other time as may be required from the date of
allotment of Public Issue.
5. The Sundry Creditors in Schedule-11 includes Rs. 60.05 lakhs
(previous year Rs. 184.49 lakhs) due to Micro, Small and Medium
Enterprises and Rs. 46443.09 lakhs due to other creditors. As per the
provisions of "The Micro, Small and Medium Enterprises Development Act,
2006", the principal amount payable to Micro, Small and Medium
Enterprises is Rs. 60.05 lakhs and no interest due thereon is remaining
unpaid as on 31st March, 2011. This information has been determined to
the extent such parties have been identified on the basis of
information available with the Company.
6. (a) No provision has been considered necessary towards the income
tax demand of Rs. 5719 lakhs for the assessment years 1987-88, 1992-93,
1997-98, 1999-2000, 2004-05, 2005-06, 2006-07 and 2008-09 as the same
is disputed in appeals and the Company is hopeful of succeeding in the
said appeals.
7. The Company established Sikka Jetty at its own cost, which is in
operation since 1987. After due discussion with Gujarat Maritime Board
(GMB), a consensus was arrived at establishing ownership of jetty with
GSFC. Thereafter, in terms of resolution passed by GMB, the ownership
of the jetty at Sikka was transferred to the Company. However, during
1994, GMB has reversed its earlier decision not supported by resolution
and contended that the ownership of the jetty rests with GMB. The
Company has made representation to the appropriate authority with
regard to the ownership of the jetty with the Company.
The matter of deciding the status of Jetty was under examination at GMB
& Government of Gujarat levels since long back. Various meetings were
also held and after due diligence on the matter, it is decided by the
Board of GMB supported by a resolution to assign the status of Captive
Jetty to Sikka Jetty and the Company has to sign Captive Jetty
Agreement with GMB. The matter is under discussion with GMB
authorities. Pending finalization of the Captive Jetty Agreement, no
provision is considered necessary in respect of various claims against
the Company and counter-claims of the Company (both the amounts not
determined).
At present the Company is in possession of the Jetty and continues to
be the owner of the Jetty till the Captive Jetty Agreement is signed.
8. During the year, based on a favourable decision of the Court,
pertaining to the year 1997-98, the Company has accounted subsidy on
DAP amounting to Rs. 761.87 lakhs in Sales and interest thereon
amounting to Rs. 688.33 lakhs in Other Income.
9. Disclosures pursuant to Accounting Standard - 15 (Revised)
"Employee Benefits" :
(a) The Company operates post employment and other long term employee
benefits defined plans as follows:
I Funded
i. Gratuity
ii. Pension
II Unfunded
i. Leave Encashment Benefit
ii. Post Retirement Medical Benefit Scheme (PRMBS)
(c) The estimates of future salary increases considered in actuarial
valuation take account of inflation, seniority, promotion and other
relevant factors.
(d) Provident Fund contributions are made to Trusts administered by the
Company. The interest rate payable to the members of the Trusts shall
not be lower than the statutory rate of interest declared by the
Central Government under the Employees Provident Funds and
Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made
good by the Company. Having regard to the assets of the Fund managed by
the Trusts and the return on the investments, the Company does not
expect any deficiency in the foreseeable future.
10. Long term wage settlement at Baroda unit of the Company has
expired in December 2010. Pending negotiation for wage settlement, no
provision has been made for the period January to March 2011.
11. Related Party Disclosures :
Related Party Disclosures as required by AS-18 "Related Party
Disclosures" are given below :
1. Relationship :
(a) Associate Company :
Effluent Channel Project Ltd.
(b) Joint Venture :
Tunisian Indian Fertilizers, S.A. (TIFERT)
(c) Directors and their relatives :
Shri H. V. Patel - Managing Director
15. Balance of certain creditors and debtors/advances are subject to
confirmation/reconciliation and consequential adjustments, if any.
ii) SECONDARY SEGMENT INFORMATION :
The Company operates mainly in Indian market and there are no
reportable geographical segments.
iii) OTHER DISCLOSURES :
1. The Products and Services covered under each business segment is as
under :
Fertilizer Products :
Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate
Sulphate, NPK (12:32:16)(10:26:26), traded fertilizer products etc.
Industrial Products :
Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine,
Polymer products, traded industrial products etc.
2. Segment revenue, results, assets and liabilities include the
respective amounts identifiable to each of the segment and amounts
allocated on reasonable basis.
12. Previous year's figures have been regrouped wherever necessary.
Mar 31, 2010
1. Contingent Liabilities not provided for :
2009-10 2008-09
Rs. in lakhs
(a) Disputed Excise Duty and
Customs Duty (net of provision). 487 478
(b) Disputed demand of Sales Tax
and Interest on Turnover Tax &
Purchase Tax against which the
Company has preferred appeals. 1580 1004
(c) Claims by Statutory
Corporations and others disputed
and not acknowledged as debt. 4208 4666
(d) Claim by ONGC for royalty on
gas. 81 81
(e) Claims by employees/ex-
employees pending before
courts. Not ascertainable
(f) The Industrial Tribunal,
Vadodara vide its award dated
27/01/2009 in reference (IT)
No.88/1999 directed the Company
to pay to the concerned
employees 50% of the amount
calculated by working out double
the amount qua the extra hours
relating to the overtime done by
concerned employee i.e. Supervisors
and Sr. Supervisors during the
period from 01/01/2001 to 31/03/2009.
It has further been directed that
the aforesaid would be effective upto
March-2009 and thereafter if the
concerned employees i.e. Supervisors
and Sr. Supervisors are made to
work overtime then in that situation
such overtime wages would have to
be paid at double the rate. The
Industrial Tribunals award has been
challenged by the Company in the
Honble High Court of Gujarat and the
Honble High Court has granted Ad-
interim relief thereby stayed the
implementation, operations and
execution of the award dated 27/
01/2009. The Company has not provided
liability at this juncture as the
matter can be proceeded, if required,
on merit at both the High Court
and Supreme Court stages. 839 839
(g) The Company has provided sponsors
Guarantee towards the borrowing
of the joint venture
2009-10 2008-09
Rs. in lakhs
Company, Tunisian Indian
Fertilizers S.A., Tunisia
(TIFERT) upto 15% of the
amount due and outstanding. 9256 Nil
2. Estimated amount of
contracts remaining to be
executed on capital
accounts, net of advances. 12063 5984
3. (a) ONGC had submitted an application in Civil Court
before Civil Judge (S.D.) Baroda for the recovery of gas price
difference. The Company has challenged the same. However, as per the
legal opinion, the aforesaid application for recovery is not tenable in
law in the said Civil Misc. Application.
(b) Pending decision of Ministry of Petroleum and Natural Gas and
Ministry of Fertilizers with regard to demanded higher price of gas by
Oil & Natural Gas Commission (ONGC) for the period from1982 to
29-1-1987, the Company has provided and continued for the liability at
the prices notified by Central Government in 1987 (net of amount
recoverable through Retention Price Scheme and others). The Company is
contingently liable for the price difference of Rs. 671 lakhs (net of
amount recoverable) between the demanded higher price and the liability
accounted for.
(c) The Company has filed a Petition in the Honble High Court of
Gujarat to ensure uninterrupted gas supply from GAIL on which Honble
High Court has ordered to maintain status quo for gas supply.
4. (a) As one of the promoters of the Gujarat Industries
Power Company Ltd.(GIPCL), the Company has given undertaking to
Industrial Development Bank of India (IDBI), Power Finance Corporation
Ltd. (PFC) and Gujarat Industrial Investment Corporation Ltd. (GIIC)
for non disposal of and non creation of a charge against the Companys
investment in the shares of the said company during the pendency of
loans given to GIPCL by IDBI, PFC and GIIC.
(b) As one of the promoters of the Gujarat Chemical Port Terminal
Company Limited (GCPTCL), the Company has given undertaking to ICICI
Bank for not to transfer, assign, dispose off, pledge, charge or create
any lien or in any way encumber Companys existing or future
shareholding in the GCPTCL in favour of any person so long as money
remains due by GCPTCL to ICICI Bank or till the project is duly
completed, whichever is later.
(c) The ordinary shares of Tunisian Indian Fertilizers S.A., Tunisia
(TIFERT) held by the Company and included under Investment (Schedule-6)
have been pledged to secure the obligations of TIFERT to their lenders.
(d) As per the Security and Exchange Board of India (Issue of Capital
and Disclosure Requirements) Regulation 2009 ("ICDR Regulations"), the
Company has given consent for lock-in of its shareholding of equity
shares in Gujarat State Petroleum Corporation Ltd. for a period of one
year or for such other time as may be required from the date of
allotment of Public Issue.
5. The Sundry Creditors in Schedule-11 includes Rs. 184.49 lakhs
(previous year Rs. 207.36 lakhs) due to Micro, Small and Medium
Enterprises and Rs.36039.46 lakhs due to other creditors. As per the
provisions of "The Micro, Small and Medium Enterprises Development Act,
2006", the principal amount payable to Micro, Small and Medium
Enterprises is Rs. 184.49 lakhs and no interest due thereon is
remaining unpaid as on 31st March, 2010. This information has been
determined to the extent such parties have been identified on the basis
of information available with the Company.
6. (a) No provision has been considered necessary towards the income
tax demand of Rs. 5387 lakhs for the assessment years 1987-88, 1992-93,
1997-98, 1999-2000, 2004-05, 2005-06 and 2008-09 as the same is
disputed in appeals and the Company is hopeful of succeeding in the
said appeals.
7. Extra Duty Deposits equivalent to 5% of CIF value levied on
consignments of Caprolactam Expansion Project and capitalised is
subject to adjustment on final assessment by special valuation branch
of Customs Department.
8. The Company established Sikka Jetty at its own cost, which is in
operation since 1987. After due discussion with Gujarat Maritime Board
(GMB), a consensus was arrived at establishing ownership of jetty with
GSFC. Thereafter, in terms of resolution passed by GMB, the ownership
of the jetty at Sikka was transferred to the Company. However, during
1994, GMB has reversed its earlier decision not supported by resolution
and contended that the ownership of the jetty rests with GMB. The
Company has made representation to the appropriate authority with
regard to the ownership of the jetty with the Company.
The matter of deciding the status of Jetty was under examination at GMB
& Government of Gujarat levels since long back. Various meetings were
also held and after due diligence on the matter, it is decided by the
Board of GMB supported by a resolution to assign the status of Captive
Jetty to Sikka Jetty and the Company has to sign Captive Jetty
Agreement with GMB. The matter is under discussion with GMB
authorities. Pending finalization of the Captive Jetty Agreement, no
provision is considered necessary in respect of various claims against
the Company and counter-claims of the Company (both the amounts not
determined).
At present the Company is in possession of the Jetty and continues to
be the owner of the Jetty till the Captive Jetty Agreement is signed.
9. Pending notification by Government of India of final rates of
concession from July 2009 onwards on DAP & Complex Fertilizers, the
Company has accounted downward impact of Rs. 5389 lakhs as difference
between the estimated final rate of concession and the base rate of
concession.
(d) Provident Fund contributions are made to Trusts administered by the
Company. The interest rate payable to the members of the Trusts shall
not be lower than the statutory rate of interest declared by the
Central Government under the Employees Provident Funds and
Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made
good by the Company. Having regard to the assets of the Fund managed by
the Trusts and the return on the investments, the Company does not
expect any deficiency in the foreseeable future.
10. In the matter of Contract labourers, various issues regarding
permanency and equal pay for equal work are under litigation and
pending before Honble High Court and before the Industrial Tribunal.
To amicably resolve these issues, the Company and the Chemical Mazdoor
Panchayat Union has executed a Memorandum of Understanding and
accordingly has estimated and provided for the liability for Rs.
3736.68 lakhs in the Personnel Expenses Schedule 16.
11. Balance of certain creditors and debtors/advances are subject to
confirmation/reconciliation and consequential adjustments, if any.
ii) SECONDARY SEGMENT INFORMATION :
The Company operates mainly in Indian market and there are no
reportable geographical segments.
iii) OTHER DISCLOSURES :
1. The Products and Services covered under each business segment is as
under :
Fertilizer Products :
Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate
Sulphate, NPK (12:32:16)(10:26:26), traded fertilizer products etc.
Industrial Products :
Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine,
Polymer products, traded industrial products etc.
2. Segment revenue, results, assets and liabilities include the
respective amounts identifiable to each of the segment and amounts
allocated on reasonable basis.
12. Previous years figures have been regrouped wherever necessary.
13. Additional information pursuant to the relevant provisions of
paragraphs 3 and 4 of Part-II of Schedule-VI to the Companies Act, 1956
is as per Annexure-I.
14. Balance sheet abstract and companys general business profile in
terms of Part-IV of Schedule-VI to the Companies Act, 1956 is as per
Annexure-II.
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