Mar 31, 2023
Impairment testing of goodwill
The carrying amount of Goodwill of H 1,082.42 Lakh (March 31, 2022: H 1,082.42 Lakh) acquired pursuant to Business Transfer Agreement to Biscuit Business Unit (CGU) for impairment testing.
The Company performs annual impairment test for carrying value of goodwill. The Company considers the relationship between its market capitalisation based on other comparable companies and its book value, among other factors, when reviewing for indicators of impairment.
The recoverable amount of the Biscuit Business Unit (CGU) has been determined based on a value in use calculation using cash flow projections from financial projections approved by senior management of the Company, which are part of overall business plan covering a five-year period. The pre-tax discount rate applied to cash flow projections for impairment testing during the current year is 21.72% and cash flows beyond the five-year period are extrapolated using a 3.00% growth rate which is consistent with the industry forecasts. As a result of the analysis, management did not identify any impairment for this CGU and accordingly, there is no need for impairment of goodwill.
The management believes that any reasonably possible change in the key assumptions on which recoverable amount is based, would not cause the carrying amount to exceed the recoverable amount of the cash generating unit.
Key assumptions used for value in use calculations:
The calculation of value in use for the CGU is most sensitive to the following assumptions:
EBITDA margins: EBITDA margins are estimated based on the trend of actual EBITDA of Biscuit Business Unit for past 1 year preceding the beginning of the budget period.
Discount Rate: Discount rates represent the current market assessment of the risks specific to the CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Company and the CGU and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Companyâs investors. The cost of debt is based on the interest-bearing borrowings the Company is obliged to service. CGU specific risk is incorporated by applying individual beta factor. The beta factor is evaluated annually based on publicly available market data. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate.
Growth rates used to extrapolate cash flows beyond the forecast period
The Company has considered growth rate of 3.00% to extrapolate cash flows beyond the forecast period which is in line with the industry forecasts.
Note: The Company has entered into an agreement on December 5, 2016 to sale 18.1890 acres land situated at Taluka Alibagh, District Raigad for consideration of H 345.77 Lakh. As per the terms of the agreement, the Company is required to bear the conversion expenses upto H 3.75 Lakh per acre and also carry out certain improvements over the said land which shall be reimbursed by the purchaser. The Company has received part of the consideration by way of advance payment. The Company has also entered into contract for the purpose of undertaking the improvements agreed upon and paid an advance to the contractor. The Corporate Insolvency Resolution Process [âCIRPâ] was initiated in respect of Company under the provisions of the IBC by an order of the Honâble National Company Law Tribunal, Mumbai dated December 8, 2017 delivered on December 15, 2017 and a moratorium as per Section 14 of the Code was declared. The Resolution Plan was approved by the Honâble National Company Law Tribunal, Mumbai and a moratorium was in effect till September 6, 2019. The Collector of Alibagh has sent notices to the Company regarding the condition of not putting the land situated at Taluka Alibagh for industrial use in 15 years period. The company has filed an appeal in the case with the Honâble Supreme Court of India seeking to quash the notices issued during moratorium. The Honâble Supreme Court vide its order dated November 29, 2022 ordered the Company to purse its defences and remedies in accordance with law in respect of the said notices with the Collector of Alibagh. The Company continues to disclose the land and the advances paid for improvement of land and classify it as assets held for sale [Refer Note 10] and the amount of advance received form the buyer has been classified as Liabilities directly associated with assets classified as held for sale [Refer Note 20], till the final outcome of the said notices issued by the Collector, Alibagh. The Collector of Alibagh has not taken any action on the said notices till date.
(e) Rights, Preferences and Restrictions attached to shares
Equity Shares: The Company has one class of equity shares having a par value of H 2 per share. Each shareholder is eligible for one vote per share held. 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.
(f) For reconciliation of number of shares outstanding at the beginning and at the end of the year - [Refer Note (a) of SOCIE.]
(g) 76,301 Equity shares of the Company are held by Ruchi Soya Industries Limited Beneficiary Trust for the benefit of the Company and its successor. The investment Cost of acquisition of these treasury shares have been netted of from the Equity Share Capital and Securities premium account as per the provisions of Ind AS. The Dividend of earlier period received by the Trust in respect of these shares is included under the head âDividendâ under âOther Incomeâ.
(h) During the year ended March 31, 2020, in consideration for the amalgamation of the Patanjali Consortium Adhigrahan Private Limited, the Company has issued: -
1 (one) equity shares of face value of H 2 for every 1 (one) equity share of face value of H 7 of SPV, aggregating 29,25,00,000 equity shares of H 5,850.00 Lakh are issued.
1 (one) 0.0001% cumulative redeemable preference share of face value of H 100 each for every 1 (one) 0.0001% cumulative redeemable preference share of face value of H 100 each of the SPV, aggregating 4,50,00,000 preference share of H 45,000.00 Lakh are issued.
1 (one) 9% cumulative non-convertible debenture of face value of H 10,00,000 for every 1 (one) 9% cumulative non-convertible debenture of face value of H 10,00,000 each of SPV, aggregating 4,500 debentures of H 45,000.00 Lakh are issued.
(i) In terms of regulation 38 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a listed entity is mandatorily required to comply with the minimum public shareholding (âMPSâ) requirements as specified in rule 19(2) and rule 19A of the Securities Contracts (Regulation) Rules, 1957 (âSCR Rulesâ). In this regard, rule 19A(5) of SCR Rules inter alia provides that where as a result of implementation of the resolution plan approved under section 31 of Insolvency and bankruptcy Code, 2016, public shareholding in a listed company falls below twenty-five percent then such company shall bring the public shareholding to twenty-five per cent within a maximum period of three years from the date of such shortfall and if the public shareholding falls below ten percent then the same shall be increased to at least ten percent, within a maximum period of twelve months (earlier âeighteen monthsâ time-period was there when the Company was preparing to come up with further public offer so as to increase the public shareholding and the said time line âeighteen monthsâ was substituted with âtwelve monthsâ w.e.f. 18.06.2021) from the date of such shortfall. However, the Company could achieve public shareholding to the extent of 19.18% only on completion of further public offering during the year 2022-23.
(j) In terms of SEBI circular no. CFD/CMD/CIR/P/ 2017/115 dated October 10, 2017, shareholding of promoters and promoter group in the Company has been freezed for non-compliance with minimum public shareholding requirements as per Regulation 38 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Rules 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957, as amended (âMPSâ).
I NATURE AND PURPOSE OF RESERVES
(i) Capital Redemption Reserve
Capital Redemption Reserve was created out of profits of the Company for the purpose of redemption of shares.
Securities Premium account is created on recording of premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
The same is Created out of Surplus profits transferred as per the provisions of the Act, it is utilised as per provisions of the Act.
Capital Reserve amounting to H 15,662.53 Lakh was created on :
(a) amalgamation with Palm tech India Ltd by H 1,087.07 Lakh, and
(b) On 3,53,25,000 share warrants issued in an earlier year on preferential basis by H 2,241.69 Lakh. Holders of 64,00,000 warrants exercised the option and were allotted equity shares. Holders of balance 2,89,25,000 warrants did not exercise their option which was lapsed, on expiry on 18 months from the date of issue of warrants. Consequently, the amount of H 2,241.69 Lakh paid by these warrant holders were forfeited and transferred to capital reserve.
(c) ? 12,333.78 Lakh arising pursuant to amalgamation of Patanjali Consortium Adhigrahan Private Limited, a special purpose vehicle with and into the Company.
(d) ? 3,646.68 Lakh arising pursuant to slump purchase of Food Division of Patanjali Ayurved Limited as per BTA.
The same is created out of profits over the years and shall be utilised as per the provisions of the Act.
The company has elected to recognise changes in fair value of certain class of investments in other comprehensive income. These
fair value changes are accumulated within this reserve and shall be adjusted on derecognition of investment.
E. Interest rates on above term loans from 6.95% to 10.60% p.a.
F (i) Preference Share: 4,50,00,000 Nos. 0.0001% Non-Convertible Redeemable Cumulative Preference Share of H 100/- each were issued to the Patanjali Ayurved Limited in accordance with the Resolution Plan as approved by the Honâble NCLT Mumbai. The same are repayable on December 16, 2031. Out of these, 2,70,77,460 Nos. amounting to H 27,077.46 Lakh have been early reedemed out of further public issue proceeds.
D. Term loans referred to in (a) above and current maturities of long term borrowings referred in Note 17 (a)
H Nil (Previous year H 2,26,200.00/- Lakh) [including current maturities of H Nil (Previous year H 17,424.00/- Lakh)] are secured by way of first pari passu charge on all immovable and movable non current assets, present and future, of the Company. First pari passu charge over all the rights, titles, interest, benefits, claims and demand whatsoever, present or future. First pari passu charge on intangibles, goodwill, uncalled capital, present and future. Second pari passu charge over all current assets (both present & future). Pledge of 100% of fully paid up equity shares of the Company held by the promoters, on a pari passu basis, to lenders. Assignment of all rights of RSIL in and under the Take or Pay Agreement between Patanjali Ayurved Limited and RSIL. Letter of comfort backed by board resolution issued by Patanjali Ayurved Limited, Patanjali Parivahan Pvt Ltd, Yogakshem Sansthan and Patanjali Gramudyog Nayas, and Personal Guarantees of the Directors of Patanjali Ayurved Limited.
Term Loans are repayable in door to door 9.5 years from the date of first disbursement. In case, repayable is not completed within door to door 9.5 years, the promoter will infuse additional resources to liquidate the term loans. The term loans agreement, inter-alia, include an option to convert the outstanding amounts into equity shares of the Company in the event of default under the Facility Agreements or any other finance documents. These term loans were prepaid fully out of further public issue proceeds.
D (i) Working Capital Loans loan are secured by first pari passu hypothecation charge over all current assets (both present & future) of the Company including Raw Materials, Stock in Process, Finished Goods, Receivables, Book Debts, and Other Current Assets wherever stored or in transit.
(ii) Working Capital Loans and Buyers Credit are repayable on demand.
(iii) The Bank have the right to convert the debt into equity in conformity with RBI guidelines including Circular DBR.No.BP.BC. 45/21.04.048/2018-19 dated June 7, 2019 on Resolution of Stressed Assets as may be amended or modified or supplemented from time to time.
(iv) Carrying interest at SOFR Spread and repayable between April 2023 to June 2023.
E (i) Working Capital Loans and Short term loan are secured by first pari passu charge over all current assets (both present & future) of the Company. Second pari passu charge on all immovable and movable non current assets, present and future. Second pari passu charge over all the rights, titles, interest, benefits, claims and demand whatsoever, present or future. First pari passu charge on intangibles, goodwill, uncalled capital, present and future. Pledge of 100% of fully paid up equity shares of the Company held by the promoters, on a pari passu basis, to lenders. Assignment of all rights of RSIL in and under the Take or Pay Agreement between Patanjali Ayurved Limited and RSIL. Letter of comfort backed by board resolution issued by Patanjali Ayurved Limited, Patanjali Parivahan Pvt Ltd, Yogakshem Sansthan and Patanjali Gramudyog Nayas, and Personal Guarantee of the Directors of Patanjali Ayurved Limited.
(ii) Working Capital Loans are repayable on demand and Short term loan to repayable in 12 months. In case, repayable is not completed within 12 months, the promoter will infuse additional resources to liquidate the short term loan.
(iii) The above short term loans and working capital loan, inter-alia, include an option to convert the outstanding amounts into equity shares of the Company in the event of default under the Facility Agreements or any other finance documents.
(iv) Represents amount due under factoring services on TReDS platform for MSMEâs as per RBI guidelines.
(I) There are no amounts due for payment to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as at the year end.
(II) Includes H 10,064.58 Lakh payable to DBS Bank Limited and H 2,918.47 Lakh payable to ICICI Bank Limited pursuant to on-going case at Honâble Supreme Court
which are mentioned below.
DBS Bank: DBS Bank. had filed an application before Honâble National Company Law Tribunal, Mumbai (âNCLTâ) seeking a prayer to set-aside the decision of Committee of Creditors of the Company to the extent of the distribution of proceeds of the Resolution Plan and to restrain the Resolution Applicant from distributing the proceeds of the Resolution Plan. NCLT ordered against DBS Bank by dismissing the application. NCLT order was challenged before the Honâble National Company Law Appellate Tribunal (âNCLATâ) and NCLAT dismissed the appeal. NCLAT order has now been challenged before Supreme Court by DBS Bank. Since, there was no stay or order against the distribution of proceeds of Resolution Plan, the proceeds have been distributed in terms of Escrow Agreement and the Resolution Plan has been successfully implemented. There is no further liability of the Company or the Resolution Applicant towards DBS Bank.
ICICI Bank: The erstwhile Resolution Professional, Mr. Shailendra Ajmera, had filed an application before Honâble National Company Law Tribunal, Mumbai
(âNCLTâ) seeking a prayer to reverse the preferential transactions undertaken by ICICI Bank Limited. NCLT vide its order dated March 12, 2019 directed ICICI
Bank Limited to reverse the said transactions and deposit in the bank account of the Company, the amount withdrawn in such preferential transactions. ICICI Bank Limited had subsequently challenged the order of NCLT before National Company Law Appellate Tribunal (âNCLATâ). NCLAT passed the order in favour of ICICI Bank Limited by setting aside the order of NCLT. NCLAT order has now been challenged by the erstwhile Resolution Professional before Supreme Court which is still pending. The Company had filed an application before the Supreme Court seeking substitution of Resolution Professional of the Company with Ruchi Soya Industries Limited since the corporate insolvency resolution process has been completed. The said application has been allowed by the Supreme Court and RSIL is now the Appellant.
Liability against CIRP Payables is amount payable to financial and operational creditors is kept in separate escrow accounts. As per escrow agreement any amount unpaid in this Account is deemed to be utilised and the Company has no right, title and claim on the same.
(iii) Pursuant to the Resolution Plan, liabilities related to foreign financial and operational creditors are partially/fully extinguished. In respect of write back pertaining to foreign creditors, advances and loans process of obtaining approval from Reserve Bank of India (RBI) are still in process.
(iv) Other financial liabilities includes (a) Agency & other deposits H 5.00 Lakh [Previous year H 5.00 Lakh] (b) Creditors for capital expenditure H 5.42 Lakh [Previous year H 75.66 Lakh] (c) Retention money payable H 0.38 Lakh [Previous year H 0.30 Lakh] (d) Others H NIL [Previous year H 0.05 Lakh] due to Related parties. [Refer Note 36]
A. Defined Contribution Plans:
The Company has certain defined contribution plans. Contributions are made to provident fund in India for employees at the specified rate as per regulations. The contributions are made to registered provident fund administered by the Government of India. The obligation of the Company is limited to the amount contributed and it Company has no further contractual, or any constructive obligation. The Company has recognised H 1,450.51 Lakh [Previous Year H 983.51 Lakh] towards contribution to Provident Fund and H 76.19 Lakh [Previous Year H 45.00 Lakh] towards Employee State Insurance in Profit and Loss account.
Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination/resignation is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number completed years of service. The gratuity plan is a funded plan and Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at March 31, 2023. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
The leave obligations cover the Companyâs liability for casual, sick & earned leave. The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Companyâs financial statements as at balance sheet date:
The discount rate is based on the prevailing market yields of Government Securities (G. Sec.) as at the Balance Sheet date for the estimated term of the obligations.
Estimates of future salary increases have been done on the basis of current salary suitably projected for future, beginning one year after the valuation date, the period is validated based on the available information as to the salary revision date other than the date one year after the valuation date, taking into consideration the general trend in inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
Interest rate risk: A fall in the discount rate which is linked to the G. Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the planâs liability.
Investment Risk: The present value of the defined benefit plan 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. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
Note - 31 Contingent liabilities and commitments (H in Lakh) |
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Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
A Contingent liabilities |
36,720.55 8,306.35 26,417.85 166.52 1,967.62 |
|
a) Letters of Credit Outstanding |
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Letters of Credit opened in favour of suppliers |
- |
|
b) Guarantees |
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Outstanding bank Guarantees (Bank Guarantees are provided under contractual/legal obligations) |
6,511.87 |
|
c) Disputed Demand in appeal of Income Tax (No cash out flow in near future) |
26,417.85 |
|
d) Other Money for which Company is contingently liable |
- |
|
e) The Company is a party to a review petition filed in the Andhra Pradesh High Court against decision of Andhra Pradesh Government to procure fresh fruit bunches from oil palm farmers at a significantly higher oil extraction ratio than previous years. The issue relates to Ampapuram & Pedapuram oil palm processing units of the Company and is subjudice and currently resolved. The amount involved in the said matter is H NIL for the year ended March 31, 2023 (Previous year H 642.00 Lakh). |
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B Commitments |
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Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) |
2,085.06 |
C As per approved resolution plan, the contingent liabilities and commitments, claims and obligations, stand extinguished and accordingly no outflow of economic benefits is expected in respect thereof. The Resolution plan, among other matters provide that upon the approval of this Resolution Plan by the National Company Law Tribunal (NCLT) and settlement and receipt of the payment towards the IRP Costs and by the creditors in terms of this plan, all the liabilities demands, damages, penalties, loss, claims of any nature whatsoever (whether admitted/verified/submitted/rejected or not, due or contingent, asserted or unasserted, crystallised or uncrystallised, known or unknown, disputed or undisputed, present or future) including any liabilities, losses, penalties or damages arising out of non-compliances, to which the Company is or may be subject to and which pertains to the period on or before the Effective Date (i.e. September 6, 2019) and are remaining as on that date shall stand extinguished, abated and settled in perpetuity without any further act or deed. The Resolution plan further provides that implementation of resolution plan will not affect the rights of the Company to recover any amount due to the Company and there shall be no set off of any such amount recoverable by the Company against any liability discharged or extinguished.
On divestment of shares of Gemini Edibles and Oil Pvt. Ltd. in an earlier year, pursuant to the Share Purchase Agreement, the Company paid an amount of H 2,836.52 Lakh to the said Company by way of deposit which is refundable on receipt of various incentives by the said Company from Government authorities. Of the total amount paid, the Company has received refund of H 2,320.81 Lakh till March 31, 2023. Subsequent to year end March 31, 2023, the Company has received refund of H 364.22 Lakh and balance amount of H 151.48 Lakh has been written off in the statement of profit and loss account.
Ruchi J-Oil Private Limited (âRuchi J-Oilâ) is under liquidation, financial statements after March 31, 2019 are not available of âRuchi J-Oilâ and management of the Company expects to recover the carrying amount of investment, therefore in view of the management no consolidated financial statements are required to be prepared and presented.
Note - 34 Segment Reporting A. General Information
(a) Factors used to identify the entityâs reportable segments, including the basis of organisation
Based on the criterion as mentioned in Ind-As-108-âOperating Segmentâ, the Company has identified its reportable segments, as follows:
⢠Segment-1 Edible Oils #
⢠Segment-2 Food & FMCG #
⢠Segment-3 Wind Power Generation
Unallocable - All the segments other than segments identified above are collectively included in this segment.
The Chief Operating Decision Maker (âCODMâ) evaluates the Companyâs performance and allocates resources based on an analysis of various performance indicators by operating segments. The CODM reviews revenue and gross profit as the performance indicator for all of the operating segments.
During the year ended March 31, 2023, the NCLT vide order June 27, 2022 quashed reassessment proceedings initiated vide notices u/s 148 for assessment years 2013-14, 2015-16 and 2016-17. Thereafter, inspite of NCLT order, the Income Tax Officer, completed the reassessment proceedings and demands aggregating to H 9,289.22 lakh have been raised on the Company . Further, during the year, for assessment year 2013-14 penalty has also been levied u/s 271(1)(c) of the IT Act consequent to the reassessment order passed wherein a demand of H 1,476.88 lakh have been raised on the Company. Accordingly, reassessment orders raising demand for assessment year 2015-16 & 2016-17 & penalty order for assessment year 2013-14 have been challenged by the Company before the NCLT and the same is pending as on date.
Further, for the year ended March 31, 2022, income tax assessments for Assessment Years 2017-18, 2018-19 and 2019-20 have been completed and demands aggregating to H 2,82,706.93 lakh had been raised on the Company. Accordingly, these demands had been challenged by the Company before NCLT and same has been quashed by NCLT vide order dated 11.04.2022. Post receiving the NCLT order the company has also applied for order giving effect to NCLT order before the Income Tax Officer. Further, in respect of demand of H 2,77,173.66 lakh pertaining to assessment year 2018-19 the Company as a prudent measure have also applied for rectification of errors apparent from records. It is understood that the Income Tax Department has preferred an appeal against the said orders of NCLT with High Court of Bombay and the same are pending as on date.
The above demands, penalties pertain to the period prior to the effective date (i.e. September 6, 2019) of the Resolution Plan as approved by the Honâble National Company Law Tribunal, Mumbai (âNCLTâ). As per the orders dated September 4, 2019 of the Honâble NCLT, Mumbai, â .... However, it is to be made clear that while approving the resolution plan, we have dealt with every aspect of the resolution plan in details and all the claims which have been admitted during CIRP are being dealt with by us in terms of the resolution plan. Anyone who has not filed its claim then he will not have any right to agitate the same after the approval of the resolution plan.â In respect of above demands, no claims were submitted by the Income Tax Department during the corporate insolvency resolution process.
In view of above, the Company does not expect any liability on account of above demands.
The shareholders of the Company approved a preferential issue of 1,86,70,213 Equity Shares at a price of H 7 per share to Ashav Advisory LLP (âAALâ) in February 2020, subject to receipt of necessary approvals ( including stock exchanges and the lenders of Company ). The Company did not received final approvals in this regard from the Stock Exchanges, Lenders and Securities Exchange Board of India (âSEBIâ). Aggrieved by this, AAL filed an appeal before the Hoâble Securities Appellate Tribunal at Mumbai (âSATâ) which has been dismissed by the SAT. AAL challenged the SAT order in Honâble Supreme Court of India. The matter is currently pending.
B. Fair Valuation Techniques used to determine Fair Value
The Company maintains procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the fair values:
(i) Fair value of trade receivable, cash and cash equivalents, other bank balances, current borrowings, trade payables, other current financial assets and other current financial liabilities are approximate at their carrying amounts largely due to the short-term maturities of these instruments.
(ii) The fair values of non-current borrowings are approximate at their carrying amount due to interest bearing features of these instruments.
(iii) The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
(iv) Fair values of quoted financial instruments are derived from quoted market prices in active markets.
(v) Fair value of forward contract are derived on the basis of mark-to-market as provided by the respective bank.
(vi) Fair value of open purchase and sale contracts is based on commodity prices listed on NCDEX stock exchange and prices available on Solvent Extractorâs association (SEA) along with quotations from brokers and adjustments made for grade and location of commodity and in case of Commodity futures it is based on commodity prices listed on MCX/NCDEX/ACE stock exchange.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows :
Level 1: Quoted prices / published NAV (unadjusted) in active markets for identical assets or liabilities. It includes fair value of financial instruments traded in active markets and are based on quoted market prices at the balance sheet date and financial instruments like mutual funds for which net assets value (NAV) is published by mutual fund operators at the balance sheet date.
Level 2: Inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). It includes fair value of the financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on the Company specific estimates. If all significant inputs required to fair value an instrument are observable then instrument is included in level 2.
Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Note - 41 Financial risk management
The Company has exposure to the following risks arising from financial instruments:
(i) Market risk
(a) Currency risk;
(b) Interest rate risk;
(c) Commodity Risk;
(d) Equity Risk;
(ii) Credit risk ; and
(iii) Liquidity risk ;
The Companyâs activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Companyâs primary risk management focus is to minimise potential adverse effects of risks on its financial performance. The Companyâs risk management assessment policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management of these policies and processes are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Board of Directors and the Audit Committee are responsible for overseeing these policies and processes.
Market risk is the risk of changes in the market prices on account of foreign exchange rates, interest rates and Commodity prices, which shall affect the Companyâs income or the value of its holdings of its financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the returns.
The fluctuation in foreign currency exchange rates may have potential impact on the profit and loss account, where any transaction has more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the entity.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in U.S. dollar and Euro, against the respective functional currencies (INR) of Patanjali Foods Limited (Formerly known as Ruchi Soya Industries Limited).
The Company, as per its risk management policy, uses foreign exchange and other derivative instruments primarily to hedge foreign exchange. The Company does not use derivative financial instruments for trading or speculative purposes.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to market risk for changes in interest rates relates to borrowings from banks and others.
For details of the Companyâs short-term and long term loans and borrowings, Refer Note 13(a), 13(c) and 17(a) of these financial statements.
Interest rate sensitivity - fixed rate instruments
The Companyâs fixed rate borrowings Preference Shares issued to Patanjali Ayurved Limited @ 0.0001% and Debentures issued to Patanjali Ayurved Limited @ 9% and Investments into Preference Shares of GHI Energy Private Limited @ 6% are carried at fair value. Interest rate gets fixed in respect of short term borrowing at the time of availment, hence there is no interest rate risk associated with such borrowing. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flow will fluctuate because of a change in market interest rates.
Interest rate sensitivity - variable rate instruments
A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit or loss by amounts shown below. This analysis assumes that all other variables, in particular, foreign currency exchange rates, remain constant. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date.
The prices of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as demand and supply, import and exports, weather, government policies, changes in global demand resulting from population growth and changes in standards of living and global production of similar and competitive crops. During its ordinary course of business, the value of the Companyâs open sales and purchases commitments and inventory of raw material changes continuously in line with movements in the prices of the underlying commodities. To the extent that its open sales and purchases commitments do not match at the end of each business day, the Company is subjected to price fluctuations in the commodities market.
While the company is exposed to fluctuations in agricultural commodities prices, its policy is to minimise its risks arising from such fluctuations by hedging its purchases either through direct sale of similar commodity or through futures contracts on the commodity exchanges.
In the course of hedging its purchases either through direct sale or through futures contracts, the company may also be exposed to the inherent risk associated with trading activities conducted by its personnel. Commodities price risk is the financial risk which effects company performance and company strategically manages it, by judicious usage of short term and long-term price contracts, hedging through derivatives product on various commodity exchanges. The company has in place a robust, well-designed risk management policy and governance framework to effectively safeguard its interest from price volatility and minimise risk exposure.
To hedge commodity related risk, the open outstanding position of forward/future as on March 31, 2023 is Crude Palm Oil 44,450.00
MT and Soya Degum Oil 4,082.40 MT.
To hedge commodity related risk, the open outstanding position of forward/future as on March 31, 2022 is Nil.
Equity Price Risk is related to the change in market reference price of the investments in equity securities. The fair value of some of the Companyâs investments in Fair value through Other Comprehensive Income securities exposes the Company to equity price risks. In general, these securities are not held for trading purposes. These investments are subject to changes in the market price of securities. The fair value of equity securities as of March 31, 2023, was H 2,371.58 Lakh [Previous Year 2,766.97 Lakh]. A Sensex standard deviation of 5% [Previous Year 7%] would result in change in equity prices of securities held as of March 31, 2023 by H 118.58 Lakh. [Previous Year H 193.69 Lakh]
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 customer. The Company establishes an allowance for doubtful debts, impairment and expected credit loss that represents its estimate on expected credit loss model.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
Expected credit loss assessment for customers as at March 31, 2023 and March 31, 2022
Exposures to customers outstanding at the end of each reporting year are reviewed by the Company to determine expected credit losses. Impaired amounts are based on lifetime expected losses based on the best estimate of the management. The impairment loss related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company has been taking measures to ensure that the Companyâs cash flow from business borrowing is sufficient to meet the cash requirements for the Companyâs operations. The Company managing its liquidity needs by monitoring forecasted cash inflows and outflows in day to day business. Liquidity needs are monitored on various time bands, on a day to day and week to week basis, as well as on the basis of a rolling 30 day projections. Net cash requirements are compared to available working capital facilities in order to determine headroom or any short falls. Presently companyâs objective is to maintain sufficient cash to meet its operational liquidity requirements.
Note - 42A. Capital Management
For the purpose of Companyâs capital management, capital includes issued capital and all other equity reserves. The primary objective of the Companyâs capital management is to maximise shareholders value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.
The Company monitors capital using gearing ratio, which is net debt divided by total equity. Net debt are non-current and current debts (including preference shares liabilities) as reduced by cash and cash equivalents. Equity comprises all components including other comprehensive income.
The Company holds cash and cash equivalents with credit worthy banks of H 80,309.77 Lakh as at March 31, 2023 [Previous Year H 37,495.57 Lakh]. The credit worthiness of such banks is evaluated by the management on an on-going basis and is considered to be good.
C. Derivatives
The derivatives are entered into with credit worthy on counterparties. The credit worthiness of such counterparties is evaluated by the management on an on-going basis and is considered to be good.
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counter-parties that have a good credit rating. The Company does not expect any losses from non-performance by these counter-parties apart from those already given in financials, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.
The Company has paid dividend of H 5/- per equity share of H 2/- each and 0.0001% per Non-Convertible Cumulative Redeemable Preference Share of H 100 each for the financial year ended March 31, 2022.
In order to achieve the overall objective of capital management amongst other things, aims to ensure that it meets critical covenants attached to interest bearing loans, there have been breaches in the critical covenants in current year.
â The Company needs to obtain external rating from an external credit rating agency, update the same at regular intervals and submit the same to the bank failing which penal interest will be levied.
The Serious Fraud Investigation Office (SFIO), New Delhi had started investigation into the affairs of Ruchi Soya Industries Limited in the year 2018 and it is still ongoing. Certain information have been sought from the company. Enforcement Directorate (ED) has sought certain information about the Company and its certain transactions with erstwhile foreign subsidiary and one overseas party for the period prior to the effective date (i.e. September 6, 2019) of the Resolution Plan as approved by Honâble National Company Law Tribunal (''NCLT"), Mumbai. ED has also sought certain information in connection with outstanding Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS) related mostly to Pre CIRP period. The Company is fully co-operating with the both the authorities.
Since the above matters relates the period prior to the effective date (i.e. September 6, 2019) of Resolution Plan, the management is of the view that in terms of provisions of section 32 A of the Insolvency and Bankruptcy Code, 2016, Company shall not have any financial implication on it.
i) As approved by the Board of Directors on June 9, 2021, in respect of purchase of right of contract manufacturing business of breakfast cereal products Patanjali Ayurved Limited has assigned its rights and obligations under the contract manufacturing agreements in favour of the Company. One time consideration paid of H 350.00 Lakh have been accounted as âIntangible Assetsâ.
ii) The Company and Patanjali Ayurved Limited (âPALâ) entered into Contract Manufacturing Agreement with Patanjali Ayurved Limited for manufacture of nutraceutical products for the Company and also to enter into a Brand License Agreement to use âPatanjaliâ Brand for the nutraceutical products of the Company on the terms and conditions mentioned in the respective Agreements.
iii) Accounting and disclosures on Business Combinations as per Ind AS 103:- The Board of Directors of the Company at its meeting held on May 10, 2021 approved the signing of the Business Transfer Agreement (âBTAâ) with Patanjali Natural Biscuits Private Limited to acquire its business of manufacturing, packing and labelling of biscuits, cookies, rusk and other associated bakery products. The Company has a strong presence in the soya foods and edible oils segment. This acquisition will create a unique opportunity for the Company to participate and create value in the biscuit, cookies, rusk and other associated bakery product category in India.
Accounting and disclosures on Business Combinations as per Ind AS 103 :- The Board of Directors of the Company at its meeting held on May 18, 2022 approved the signing of the Business Transfer Agreement (âBTAâ) with Patanjali Ayurved Limited ("PAL") to acquire its food retail business ("Food Retail Business Undertaking") including manufacturing plants. The Company has a strong presence in the soya foods and edible oils segment. This acquisition will create a unique opportunity for the Company to participate and create value in the various types of food product category in India.
Pursuant to BTA, as amended, entered with Patanjali Ayurved Limited (PAL), with effect from July 1, 2022 (âAcquisition Dateâ), the Company has acquired Food Retail Business (âFood Retail Business Undertakingâ) as a going concern on a Slump Sale basis for a cash consideration of H 69,000 Lakh. Accordingly, on acquisition date, all the assets acquired including intangible assets identified aggregating to H 73,733.69 Lakh are accounted at fair value in accordance with IND AS 103 on Business Combinations, differential amount of H 3,646.68 Lakh after considering effects of deferred tax liabilities are credited to Capital Reserve. Subsequent to in-principal approval of PALâs lenders, No Objection Certificate from Lead Banker in respect of said transfer has been received and from other lenders the same is being obtained. The expenses incurred in connection with Business acquisition amounting to H 1,140.00 Lakh are charged to the statement of profit and loss account. The Following is the summary of total assets acquired by the Company at the date of acquisition:-
The Company has issued 6,61,53,846 equity shares of face value of H 2 each for cash at an issue price of H 650 (including share premium of H 648 per share) per equity shares aggregating to H 4,30,000 Lakh by the way of further public offering (FPO). On April 8, 2022, these equity shares of the Company have been listed on BSE Limited and National Stock Exchange of India Limited. Post allotment of aforesaid shares, the paid up equity share capital of the Company have been increased to H 7,238.37 Lakh divided into 36,19,18,552 equity shares (net of treasury shares) of face value of H 2 each from H 5,915.29 Lakh divided into 29,57,64,706 equity shares (net of treasury shares). Issue related expenses has been adjusted against Security Premium.
With effect from June 24, 2022, the Companyâs name has been changed from âRuchi Soya Industries Limitedâ to âPatanjali Foods Limitedâ as per approval received from Ministry of Corporate Affairs (âMCAâ) and shareholders.
Note - 50Events after the reporting period :-
The Board of Directors has recommended dividend of H 6/- per equity share of H 2/- each for the financial year ended March 31, 2023. This payment of dividend is subject to approval of members of the Company at ensuing Annual General Meeting of the Company.
Note - 51 Relationship with Struck off Companies
There is no balance outstanding as on March 31, 2023 on account of any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
Note - 52 Other Statutory Information
(a) No proceeding has been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
(b) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
(c) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(d) The Company have not traded or invested in Crypto Currency or Virtual Currency during the financial year.
(e) The Company has not been declared a wilful defaulter by any bank or financial institution or other lender (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
(f) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
The figures for the previous year have been re-grouped/ re-arranged, wherever necessary, to correspond with the current year classification/ disclosures. The same are strictly not comparable due to acquisition of Food Retail Business as mentioned in note 47 (B).
Mar 31, 2022
Reclassifications consequent to amendments to Schedule III
The Ministry of Corporate Affairs amended the Schedule III to the Companies Act, 2013 on March 24, 2021 to increase the transparency and provide additional disclosures to users of financial statements. These amendments are effective from April 1, 2021
Consequent to above, the Company has changed the classification/presentation of (i) current maturities of long-term borrowings (ii) Lease liability (iii) security deposits, in the current year.
The current maturities of long-term borrowings has now been included in the âCurrent borrowingsâ line item. Previously, current maturities of long-term borrowings was included in âother financial liabilitiesâ line item.
The lease liabilities has now been included in the separate âLease liabilitiesâ line item. Previously, lease liability was included in âother financial liabilitiesâ line item.
Further, security deposits (which meet the definition of a financial asset as per Ind AS 32) have been included in âother financial assetsâ line item. Previously, these deposits were included in âloansâ line item.
Further, An amount has also been reclassified from trade payable to current borrowing.
(v) The Company in accordance with the Indian Accounting Standard (Ind AS -36) on âImpairment of Assetsâ carried out an exercise of identifying the assets that may have been impaired in accordance with the said Ind AS. On the basis of review carried out by the management, the management has provided for impairment amounting to '' 366.16 Lakh (Previous Year '' NIL) on property, plant and equipment during the year ended March 31, 2022.
(vi) Property, plant and equipment are pledged/hypothecated as security [Refer note 13(a) and 16(a)]
(vii) Buildings include '' 0.02/- Lakh [ Previous Year '' 0.02/- Lakh] being cost of Shares in Co-operative Societies. Title deeds in respect of shares amounting to '' 0.01/- Lakh are in the process of transfer.
(I) AH the intellectual property rights, including brands, trademarks, copyrights, registered in the name of Company and/or
used by the Company. After the corporate insolvency resolution process all such intellectual property rights continue to be solely and exclusively owned and used by the Company. The Company does not expects any impacts of application/ petition filed in relation to ownership and/or usage by the Company of the intellectual property rights, including arbitration petition filed.
The above said preference shares were due for redemption on December 28, 2021. GHI Energy Private Limited extended the last date of redemption of preference shares by seven years. Honâble National Company Law Tribunal, Chennai bench, stayed the operation of special resolution extending tenure of above said preferences shares. In view of management, no provision for impairment is required, at this stage.
(i) Bank balances in current accounts includes amount payable to financial and operational creditors aggregating to '' 16,307.54 Lakh (Previous year '' 16,307.54 Lakh) is kept in separate escrow accounts. As per escrow agreement any amount unpaid in this Account is deemed to be utilised and the Company has no right, title and claim on the same.
(ii) Bank balances in current accounts includes share application money pending allotment to '' 1,29,732.46 Lakh (Previous year '' NIL) is kept in separate escrow accounts.
(i) The above advances includes advance of '' 1,453.88 Lakh (Previous year '' 2,054.96 Lakh) are due by private companies in which director of the Company are director and/or shareholder and '' 2.03 Lakh (Previous year '' 0.18 Lakh) due by officer of the Company. [Refer Note 35]
(ii) This includes '' 2,718.28 Lakh (Previous year '' Nil) payment made in relation to further public offering (FPO) which will be adjusted against issue proceeds, as per IND AS, on completion of FPO.
The Company has entered into an agreement on December 5, 2016 to sale 18.1890 acres land situated at Taluka Alibagh, District Raigad for consideration of '' 345.77 Lakh. As per the terms of the agreement, the Company is required to bear the conversion expenses upto '' 3.75 Lakh per acre and also carry out certain improvements over the said land which shall be reimbursed by the purchaser. The Company has received part of the consideration by way of advance payment. The Company has also entered into contract for the purpose of undertaking the improvements agreed upon and paid an advance to the contractor. The Collector of Alibagh has sent notices to the Company regarding the condition of not putting the land for industrial use in 15 years period. The company has filed an appeal in the case with the Principal bench of Honâble National Company Law Appellate Tribunal to quash the notices. The Corporate Insolvency Resolution Process [âCIRPâ] was initiated in respect of Company under the provisions of the IBC by an order of the Honâble National Company Law Tribunal, Mumbai dated December 8, 2017 delivered on December 15, 2017 and a moratorium as per Section 14 of the Code was declared. The Resolution Plan was approved by the Honâble National Company Law Tribunal, Mumbai and a moratorium was in effect till September 6, 2019. The matter is pending at Honâble National Company Law Tribunal, Mumbai. Therefore, the Company continues to disclose the land and the advances paid for improvement of land and classify it as assets held for sale [Refer Note 10] and the amount of advance received form the buyer has been classified as Liabilities directly associated with assets classified as held for sale [Refer Note 19], till the final outcome of the said matter.
Equity Shares: The Company has one class of equity shares having a par value of '' 2 per share. Each shareholder is eligible for one vote per share held. 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.
(f) For reconciliation of number of shares outstanding at the beginning and at the end of the year - [Refer Note (a) of SOCIE.]
(g) 76,301 Equity shares of the Company are held by Ruchi Soya Industries Limited Beneficiary Trust for the benefit of the Company and its successor. The investment Cost of acquition of these treasury shares have been netted of from the Equity Share Capital and Securities premium account as per the provisions of Ind AS. The Dividend of earlier period received by the Trust in respect of these shares is included under the head âDividendâ under âOther Incomeâ.
(h) During the year ended March 31, 2020, in consideration for the amalgamation of the Patanjali Consortium Adhigrahan Private Limited, the Company has issued: -
1 (one) equity shares of face value of '' 2 for every 1 (one) equity share of face value of '' 7 of SPV, aggregating 29,25,00,000 equity shares of '' 5,850.00 Lakh are issued.
1 (one) 0.0001% cumulative redeemable preference share of face value of '' 100 each for every 1 (one) 0.0001% cumulative redeemable preference share of face value of '' 100 each of the SPV, aggregating 4,50,00,000 preference share of '' 45,000.00 Lakh are issued.
1 (one) 9% cumulative non-convertible debenture of face value of '' 10,00,000 for every 1 (one) 9% cumulative non-convertible debenture of face value of '' 10,00,000 each of SPV, aggregating 4,500 debentures of '' 45,000.00 Lakh are issued.
Capital Redemption Reserve was created out of profits of the Company for the purpose of redemption of shares.
Securities Premium account is created on recording of premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
The same is Created out of Surplus profits transferred as per the provisions of the Act, it is utilised as per provisions of the Act.
Capital Reserve amounting to '' 15,662.53 Lakh was created on :
a) amalgamation with Palm tech India Ltd by '' 1,087.07 Lakh, and
b) On 3,53,25,000 share warrants issued in an earlier year on preferential basis by '' 2,241.69 Lakh. Holders of 64,00,000 warrants exercised the option and were allotted equity shares. Holders of balance 2,89,25,000 warrants did not exercise their option which was lapsed, on expiry on 18 months from the date of issue of warrants. Consequently, the amount of '' 2,241.69 Lakh paid by these warrant holders were forfeited and transferred to capital reserve.
c) '' 12,333.78 Lakh arising pursuant to amalgamation of Patanjali Consortium Adhigrahan Private Limited, a special purpose vehicle with and into the Company.
The same is created out of profits over the years and shall be utilised as per the provisions of the Act.
The company has elected to recognise changes in fair value of certain class of investments in other comprehensive income. These fair value changes are accumulated within this reserve and shall be adjusted on derecognition of investment.
'' 2,26,200.00/- Lakh (including current maturities of '' 17,424.00/- Lakh) are secured by way of first pari passu charge on all immovable and movable non current assets, present and future, of the Company. First pari passu charge over all the rights, titles, interest, benefits, claims and demand whatsoever, present or future. First pari passu charge on intangibles, goodwill, uncalled capital, present and future. Second pari passu charge over all current assets (both present & future). Pledge of 100% of fully paid up equity shares of the Company held by the promoters, on a pari passu basis, to lenders. Assignment of all rights of RSIL in and under the Take or Pay Agreement between Patanjali Ayurved Limited and RSIL. Letter of comfort backed by board resolution issued by Patanjali Ayurved Limited, Patanjali Parivahan Pvt Ltd, Yogakshem Sansthan and Patanjali Gramudyog Nayas, and Personal Guarantees of the Directors of Patanjali Ayurved Limited.
Term Loans are repayable in door to door 9.5 years from the date of first disbursement. In case, repayable is not completed within door to door 9.5 years, the promoter will infuse additional resources to liquidate the term loans.
The term loans agreement, inter-alia, include an option to convert the outstanding amounts into equity shares of the Company in the event of default under the Facility Agreements or any other finance documents.
(i) Working Capital Loans are secured by first pari passu charge over all current assets (both present & future) of the Company. Second pari passu charge on all immovable and movable non current assets, present and future. Second pari passu charge over all the rights, titles, interest, benefits, claims and demand whatsoever, present or future. First pari passu charge on intangibles, goodwill, uncalled capital, present and future. Pledge of 100% of fully paid up equity shares of the Company held by the promoters, on a pari passu basis, to lenders. Assignment of all rights of RSIL in and under the Take or Pay Agreement between Patanjali Ayurved Limited and RSIL. Letter of comfort backed by board resolution issued by Patanjali Ayurved Limited, Patanjali Parivahan Pvt Ltd, Yogakshem Sansthan and Patanjali Gramudyog Nayas, and Personal Guarantee of the Directors of Patanjali Ayurved Limited.
(ii) Working Capital Loans are repayable in 24 months from the date of loan disbursement. In case, repayable is not completed within 24 months, the promoter will infuse additional resources to liquidate the working capital loans.
(iii) The above working capital loan, inter-alia, include an option to convert the outstanding amounts into equity shares of the Company in the event of default under the Facility Agreements or any other finance documents.
D (i) Working Capital Loans and Short term loan are secured by first pari passu charge over all current assets (both present & future) of the Company. Second pari passu charge on all immovable and movable non current assets, present and future. Second pari passu charge over all the rights, titles, interest, benefits, claims and demand whatsoever, present or future. First pari passu charge on intangibles, goodwill, uncalled capital, present and future. Pledge of 100% of fully paid up equity shares of the Company held by the promoters, on a pari passu basis, to lenders. Assignment of all rights of RSIL in and under the Take or Pay Agreement between Patanjali Ayurved Limited and RSIL. Letter of comfort backed by board resolution issued by Patanjali Ayurved Limited, Patanjali Parivahan Pvt Ltd, Yogakshem Sansthan and Patanjali Gramudyog Nayas, and Personal Guarantee of the Directors of Patanjali Ayurved Limited.
(ii) Working Capital Loans are repayable on demand and Short term loan To be repayable in 12 months. In case, repayable is not completed within 12 months, the promoter will infuse additional resources to liquidate the short term loan.
(iii) The above short term loans and working capital loan, inter-alia, include an option to convert the outstanding amounts into equity shares of the Company in the event of default under the Facility Agreements or any other finance documents.
(i) There are no amounts due for payment to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as at the year end.
(ii) Includes '' 10,064.58 Lakh payable to DBS Bank Limited and '' 2,918.47 Lakh payable to ICICI Bank Limited pursuant to on-going case at Honâble Supreme Court which are mentioned below.
DBS Bank: DBS Bank. had filed an application before Honâble National Company Law Tribunal, Mumbai (âNCLTâ) seeking a prayer to set-aside the decision of Committee of Creditors of the Company to the extent of the distribution of proceeds of the Resolution Plan and to restrain the Resolution Applicant from distributing the proceeds of the Resolution Plan. NCLT ordered against DBS Bank by dismissing the application. NCLT order was challenged before the Honâble National Company Law Appellate Tribunal (âNCLATâ) and NCLAT dismissed the appeal. NCLAT order has now been challenged before Supreme Court by DBS Bank. Since, there was no stay or order against the distribution
of proceeds of Resolution Plan, the proceeds have been distributed in terms of Escrow Agreement and the Resolution Plan has been successfully implemented. There is no further liability of the Company or the Resolution Applicant towards DBS Bank.
ICICI Bank: The erstwhile Resolution Professional, Mr. Shailendra Ajmera, had filed an application before Honâble National Company Law Tribunal, Mumbai (âNCLTâ) seeking a prayer to reverse the preferential transactions undertaken by ICICI Bank Limited. NCLT vide its order dated March 12, 2019 directed ICICI Bank Limited to reverse the said transactions and deposit in the bank account of the Company, the amount withdrawn in such preferential transactions. ICICI Bank Limited had subsequently challenged the order of NCLT before National Company Law Appellate Tribunal (âNCLATâ). NCLAT passed the order in favour of ICICI Bank Limited by setting aside the order of NCLT. NCLAT order has now been challenged by the erstwhile Resolution Professional before Supreme Court which is still pending. The Company had filed an application before the Supreme Court seeking substitution of Resolution Professional of the Company with Ruchi Soya Industries Limited since the corporate insolvency resolution process has been completed. The said application has been allowed by the Supreme Court and RSIL is now the Appellant.
Liability against CIRP Payables is amount payable to financial and operational creditors is kept in separate escrow accounts. As per escrow agreement any amount unpaid in this Account is deemed to be utilised and the Company has no right, title and claim on the same.
(iii) Pursuant to the Resolution Plan, liabilities related to foreign financial and operational creditors are partially/fully extinguished. In respect of write back pertaining to foreign creditors, advances and loans process of obtaining approval from Reserve Bank of India (RBI) are still in process.
(iv) Other financial liabilities includes (a) Agency & other deposits '' 5.00 Lakh [Previous year '' 5.00 Lakh] (b) Creditors for capital expenditure '' 75.66 Lakh [Previous year '' NIL] (c) Retention money payable '' 0.30 Lakh [Previous year '' NIL] (d) Others '' 0.05 Lakh [Previous year '' NIL] due to Related parties. [Refer Note 35]
A. Defined Contribution Plans:
The Company has certain defined contribution plans. Contributions are made to provident fund in India for employees at the specified rate as per regulations. The contributions are made to registered provident fund administered by the Government of India. The obligation of the Company is limited to the amount contributed and it Company has no further contractual, or any constructive obligation. The Company has recognised '' 983.51 Lakh [Previous Year '' 745.40 Lakh] towards contribution to Provident Fund and '' 45.00 Lakh [Previous Year '' 55.90 Lakh] towards Employee State Insurance in Profit and Loss account.
a) Gratuity
Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination/resignation is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number completed years of service. The gratuity plan is a funded plan and Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at March 31, 2022. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
The leave obligations cover the Companyâs liability for casual, sick & earned leave. The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.
The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset) liability and its components
The discount rate is based on the prevailing market yields of Government Securities (G. Sec.) as at the Balance Sheet date for the estimated term of the obligations.
Estimates of future salary increases have been done on the basis of current salary suitably projected for future, beginning one year after the valuation date, the period is validated based on the available information as to the salary revision date other than the date one year after the valuation date, taking into consideration the general trend in inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the planâs liability
Investment Risk: The present value of the defined benefit plan 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. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company
Assumptions regarding future mortality have been based on published statistics and mortality tables. The current longevities underlying the values of the defined benefit obligation at the reporting date were as follows :
C As per approved resolution plan, the contingent liabilities and commitments, claims and obligations, stand extinguished and accordingly no outflow of economic benefits is expected in respect thereof. The Resolution plan, among other matters provide that upon the approval of this Resolution Plan by the National Company Law Tribunal (NCLT) and settlement and receipt of the payment towards the IRP Costs and by the creditors in terms of this plan, all the liabilities demands, damages, penalties, loss, claims of any nature whatsoever (whether admitted/verified/submitted/rejected or not, due or contingent, asserted or unasserted, crystallised or uncrystallised, known or unknown, disputed or undisputed, present or future) including any liabilities, losses, penalties or damages arising out of non-compliances, to which the Company is or may be subject to and which pertains to the period on or before the Effective Date (i.e. September 6, 2019) and are remaining as on that date shall stand extinguished, abated and settled in perpetuity without any further act or deed. The Resolution plan further provides that implementation of resolution plan will not affect the rights of the Company to recover any amount due to the Company and there shall be no set off of any such amount recoverable by the Company against any liability discharged or extinguished.
31 On divestment of shares of Gemini Edibles and Oil Pvt. Ltd. in an earlier year, pursuant to the Share Purchase Agreement, the Company paid an amount of '' 2,836.52 Lakh to the said Company by way of deposit which is refundable on receipt of various incentives by the said Company from Government authorities. Of the total amount paid, the Company has received refund of '' 2,320.81 Lakh till March 31, 2022. The Company expects to recover the balance amount of '' 515.71 Lakh fully. Accordingly, no provision for impairment is considered necessary in this regards.
32 Ruchi J-Oil Private Limited (âRuchi J-Oilâ) is under liquidation, financial statements after March 31, 2019 are not available of âRuchi J-Oilâ and management of the Company expects to recover the carrying amount of investment, therefore in view of the management no consolidated financial statements are required to be prepared and presented.
33 SEGMENT REPORTING A. General Information
(a) Factors used to identify the entityâs reportable segments, including the basis of organisation
Based on the criterion as mentioned in Ind-As-108- âOperating Segmentâ, the Company has identified its reportable segments, as follows:
⢠Segment-1 Seed Extractions
⢠Segment-2 Oils & Vanaspati
⢠Segment-3 Others (Food Products, etc.)
⢠Segment-4 Wind Power Generation
Unallocable - All the segments other than segments identified above are collectively included in this segment.
The Chief Operating Decision Maker (âCODMâ) evaluates the Companyâs performance and allocates resources based on an analysis of various performance indicators by operating segments. The CODM reviews revenue and gross profit as the performance indicator for all of the operating segments.
The assets and liabilities that can not be allocated between segments are shown as unallocable assets and liabilities, respectively.
By products related to each segment have been included under the respective segment.
Extraction is considered as the primary product resulting from the solvent extraction process and crude oil as the secondary product. While computing segment results, all costs related to solvent extraction process are charged to the extraction segment and recovery on account of crude oil is credited to the said segment. Credit for recovery of crude oil is taken on the basis of average monthly market price.
During the year ended March 31, 2022, the Company has considered âOil and Vanaspatiâ as single segment. Food products portfolio, nutraceuticals products and various other products are now considered as a part of âOtherâ (Food products, etc) segment. It is based on internal reorganization of its business segments, increased focus and business review carried out by the Managing Director (Chief Operating Decision Maker - CODM) of the Company. Pursuant to the above change, the Company has restated segment information of comparative previous year in consonance with Ind AS 108 - Operating Segmentsâ, including related disclosures.
37 During the year ended March 31, 2022, income tax assessments for Assessment Years 2017-18, 2018-19 and 2019-20 have been completed and demands aggregating to '' 2,82,706.93 lakh have been raised on the Company. These demands pertain to the period prior to the effective date (i.e. September 6, 2019) of the Resolution Plan as approved by the Honâable National Company Law Tribunal, Mumbai (âNCLTâ).
The Resolution plan, among other matters provide that upon the approval of this Resolution Plan by the NCLT and settlement and receipt of the payment towards the IRP Costs and by the creditors in terms of this plan, all the liabilities demands, damages, penalties, loss, claims of any nature whatsoever (whether admitted/verified/submitted/rejected or not, due or contingent, asserted or unasserted, crystallised or uncrystallised, known or unknown, disputed or undisputed, present or future) including any liabilities, losses, penalties or damages arising out of non-compliances, to which the Company is or may be subject to and which pertains to the period on or before the Effective Date (i.e. September 6, 2019) and / or are remaining as on that date shall stand extinguished, abated and settled in perpetuity without any further act or deed.
As per the orders dated September 4, 2019 of the Honâble NCLT, Mumbai, â____However, it is to be made clear that while
approving the resolution plan, we have dealt with every aspect of the resolution plan in details and all the claims which have been admitted during CIRP are being dealt with by us in terms of the resolution plan . Anyone who has not filed its claim then he will not have any right to agitate the same after the approval of the resolution plan.â In respect of above demands, no claims were submitted by the Income Tax Department during the corporate insolvency resolution process.
Accordingly, these demands have been challenged by the Company before NCLT. In addition the Company has also preferred an appeal before the CIT (A) against these demands. Further, in respect of demands of '' 2,77,173.66 lakh pertaining to assessment year 2018-19 the Company as a prudent measure have also applied for rectification of errors apparent from records.
In view of above, the Company does not expect any liability on account of above demands.
38 The shareholders of the Company approved a preferential issue of 1,86,70,213 Equity Shares at a price of '' 7 per share to Ashav Advisory LLP (âAALâ) in February 2020, subject to receipt of necessary approvals ( including stock exchanges and the lenders of Company ). The Company did not received final approvals in this regard from the Stock Exchanges, Lenders and Securities Exchange Board of India (âSEBIâ). Aggrieved by this, AAL filed an appeal before the Hoâble Securities Appellate Tribunal at Mumbai (âSATâ) which has been dismissed by the SAT. AAL challenged the SAT order in Honâble Supreme Court of India. The matter is currently pending.
B. Fair Valuation Techniques used to determine Fair Value
The Company maintains procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the fair values:
(i) Fair value of trade receivable, cash and cash equivalents, other bank balances, current borrowings, trade payables, other current financial assets and other current financial liabilities are approximate at their carrying amounts largely due to the short-term maturities of these instruments.
(ii) The fair values of non-current borrowings are approximate at their carrying amount due to interest bearing features of these instruments.
(iii) The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
(iv) Fair values of quoted financial instruments are derived from quoted market prices in active markets.
(v) Fair value of forward contract are derived on the basis of mark-to-market as provided by the respective bank.
(vi) Fair value of open purchase and sale contracts is based on commodity prices listed on NCDEX stock exchange and prices available on Solvent Extractor5 s association (SEA) along with quotations from brokers and adjustments made for grade and location of commodity and in case of Commodity futures it is based on commodity prices listed on MCX/ NCDX/ACE stock exchange.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows :
Level 1 : Quoted prices / published NAV (unadjusted) in active markets for identical assets or liabilities. It includes fair value of financial instruments traded in active markets and are based on quoted market prices at the balance sheet date and financial instruments like mutual funds for which net assets value (NAV) is published by mutual fund operators at the balance sheet date.
Level 2 : Inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). It includes fair value of the financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on the Company specific estimates. If all significant inputs required to fair value an instrument are observable then instrument is included in level 2.
Level 3 : Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
The Companyâs activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Companyâs primary risk management focus is to minimize potential adverse effects of risks on its financial performance. The Companyâs risk management assessment policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management of these policies and processes are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Board of Directors and the Audit Committee are responsible for overseeing these policies and processes.
Market risk is the risk of changes in the market prices on account of foreign exchange rates, interest rates and Commodity prices, which shall affect the Companyâs income or the value of its holdings of its financial instruments . The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the returns.
The fluctuation in foreign currency exchange rates may have potential impact on the profit and loss account, where any transaction has more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the entity.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in U.S. dollar and Euro, against the respective functional currencies ( INR) of Ruchi Soya Industries Limited.
The Company, as per its risk management policy, uses foreign exchange and other derivative instruments primarily to hedge foreign exchange and interest rate exposure. The Company does not use derivative financial instruments for trading or speculative purposes.
Exposure to currency risk
The summary quantitative data about the Companyâs exposure to currency risk as reported by the management of the Company is as follows:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to market risk for changes in interest rates relates to borrowings from banks and others.
For details of the Companyâs short-term and long term loans and borrowings, Refer Note 13(a), 13(c) and 16(a) of these financial statements.
The Companyâs fixed rate borrowings Preference Shares issued to Patanjali Ayurved Limited @ 0.0001% and Debentures issued to Patanjali Ayurved Limited @ 9% and Investments into Preference Shares of GHI Energy Private Limited @ 6% are carried at fair value. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flow will fluctuate because of a change in market interest rates.
A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit or loss by amounts shown below. This analysis assumes that all other variables, in particular, foreign currency exchange rates, remain constant. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date.
The prices of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as weather, government policies, changes in global demand resulting from population growth and changes in standards of living and global production of similar and competitive crops. During its ordinary course of business, the value of the Companyâs open sales and purchases commitments and inventory of raw material changes continuously in line with movements in the prices of the underlying commodities. To the extent that its open sales and purchases commitments do not match at the end of each business day, the Company is subjected to price fluctuations in the commodities market.
While the Company is exposed to fluctuations in agricultural commodities prices, its policy is to minimise its risks arising from such fluctuations by hedging its sales either through direct purchases of a similar commodity or through futures contracts on the commodity exchanges.
In the course of hedging its sales either through direct purchases or through futures, the Company may also be exposed to the inherent basis risk associated with having positions in physical as well as in futures market. The Company has in place a risk management policy to minimize such risk exposure.
To hedge commodity related risk, the open outstanding position of forward/future as on March 31, 2022 is Nil.
To hedge commodity related risk, the open outstanding position of forward/future as on March 31, 2021 is Crude palm oil 18,220 MT (Sale), Soya Refined Oil 1,455 MT (Sale), Soybean seed 16,005 MT (Buy), Mustard seed 1,900 MT (Sale).
Equity Price Risk is related to the change in market reference price of the investments in equity securities. The fair value of some of the Companyâs investments in Fair value through Other Comprehensive Income securities exposes the Company to equity price risks. In general, these securities are not held for trading purposes. These investments are subject to changes in the market price of securities. The fair value of equity securities as of March 31, 2022, was '' 2,766.97 Lakh [Previous Year 1,708.77 Lakh] . A Sensex standard deviation of 7% [Previous Year 16%] would result in change in equity prices of securities held as of March 31, 2022 by '' 193.69 Lakh.[Previous Year '' 273.40 Lakh]
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 customer. The Company establishes an allowance for doubtful debts, impairment and expected credit loss that represents its estimate on expected credit loss model.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
Exposures to customers outstanding at the end of each reporting year are reviewed by the Company to determine expected credit losses. Impaired amounts are based on lifetime expected losses based on the best estimate of the management. The impairment loss related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances.
The Company holds cash and cash equivalents with credit worthy banks of '' 37,495.57 Lakh as at March 31, 2022 [Previous Year '' 4,627.05 Lakh].The credit worthiness of such banks is evaluated by the management on an on-going basis and is considered to be good.
The derivatives are entered into with credit worthy on counterparties. The credit worthiness of such counterparties is evaluated by the management on an on-going basis and is considered to be good.
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counter-parties that have a good credit rating. The Company does not expect any losses from non-performance by these counter-parties apart from those already given in financials, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company has been taking measures to ensure that the Companyâs cash flow from business borrowing is sufficient to meet the cash requirements for the Companyâs operations. The Company managing its liquidity needs by monitoring forecasted cash inflows and outflows in day to day business. Liquidity needs are monitored on various time bands, on a day to day and week to week basis, as well as on the basis of a rolling 30 day projections. Net cash requirements are compared to available working capital facilities in order to determine headroom or any short falls. Presently companyâs objective is to maintain sufficient cash to meet its operational liquidity requirements.
41 CAPITAL MANAGEMENT
For the purpose of Companyâs capital management, capital includes issued capital and all other equity reserves. The primary objective of the Companyâs capital management is to maximise shareholders value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.
45 The Serious Fraud Investigation Office (SFIO) , New Delhi had started investigation into the affairs of Ruchi Soya Industries Limited in the year 2018 and it is still ongoing. Certain information have been sought from the company. Enforcement Directorate (ED) has sought certain information about the Company and its certain transactions with erstwhile foreign subsidiary and one overseas party for the period prior to the effective date (i.e. September 6, 2019) of the Resolution Plan as approved by Honâble National Company Law Tribunal (âNCLTâ), Mumbai. The Company is fully co-operating with the both the authorities.
Since the above matters relates the period prior to the effective date (i.e. September 6, 2019) of Resolution Plan, the management is of the view that in terms of provisions of section 32 A of the Insolvency and Bankruptcy Code, 2016, Company shall not have any financial implication on it.
46
i) As approved by the Board of Directors on June 9, 2021, in respect of purchase of right of contract manufacturing business of breakfast cereal products Patanjali Ayurved Limited has assigned its rights and obligations under the contract manufacturing agreements in favour of the Company. One time consideration paid of '' 350.00 Lakh have been accounted as âIntangible Assetsâ.
ii) The Company and Patanjali Ayurved Limited (âPALâ) entered into Contract Manufacturing Agreement with Patanjali Ayurved Limited for manufacture of nutraceutical products for the Company and also to enter into a Brand License Agreement to use âPatanjaliâ Brand for the nutraceutical products of the Company on the terms and conditions mentioned in the respective Agreements.
iii) Accounting and disclosures on Business Combinations as per Ind AS 103 :- The Board of Directors of the Company at its meeting held on May 10, 2021 approved the signing of the Business Transfer Agreement (âBTAâ) with Patanjali Natural Biscuits Private Limited to acquire its business of manufacturing, packing and labelling of biscuits, cookies, rusk and other associated bakery products. The Company has a strong presence in the soya foods and edible oils segment. This acquisition will create a unique opportunity for the Company to participate and create value in the biscuit, cookies, rusk and other associated bakery product category in India.
47 Pursuant to further public offering (FPO) of the Company it has allocated 19,843,153 Equity Shares to the Anchor Investors at issue price of '' 650 per equity share. Till March 31, 2022, the Company received '' 1,29,732.47 Lakh from Anchor Investors as share application money pending allotment '' 1,28,980.49 Lakh has been classified into equity as share application money pending allotment and balance '' 751.97 Lakh share application money to the extent refundable is separately shown under Other financial liabilities. As at March 31, 2022, these proceeds were lying in the Escrow Account.
48 EVENTS AFTER THE REPORTING PERIOD
(i) Subsequent to the March 31, 2022, the Company has completed further public offering (FPO) of 6,61,53,846 equity shares of face value of '' 2 each for cash at an issue price of '' 650 per equity shares aggregating to '' 4,30,000 Lakh consisting of fresh issue of equity shares by the Company. Post allotment of aforesaid shares, the paid up equity share capital of the Company have been increased to '' 7,238.37 Lakh divided into 36,19,18,552 equity shares (net of treasury shares) of face value of '' 2 each from '' 5,915.29 Lakh divided into 29,57,64,706 equity shares (net of treasury shares).
These equity shares are listed on BSE Limited and National Stock Exchange of India Limited.
(ii) The Company has received approval from Ministry of Corporate Affairs (âMCAâ) for making available the name âPatanjali Foods Limitedâ for change in present name of the Company and obtaining the approval of the shareholders is under process.
(iii) The Board of Directors of the Company at its meeting held on May 18, 2022, approved signing of the Business Transfer Agreement with Patanjali Ayurved Limited to acquire the food retail business of PAL (âFood Retail Business Undertakingâ) including manufacturing plants, as a going concern on a slump sale basis, for cash consideration of '' 69,000 Lakh subject to certain adjustments.
(iv) The Board of Directors has recommended dividend of '' 5/- per equity share of '' 2/- each for the financial year ended March 31, 2022. This payment of dividend is subject to approval of members of the Company at ensuing Annual General Meeting of the Company.
49 RELATIONSHIP WITH STRUCK OFF COMPANIES
There is no balance outstanding as on March 31, 2022 on account of any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
50 OTHER STATUTORY INFORMATION
(a) No proceeding has been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
(b) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
(c) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(d) Registration and satisfaction of charge :-
The Company had availed a term loan facility of USD 20.00,000 from ING Bank N.V The same was repaid and no dues certificate was issued by ING Bank N.V. The required forms as per the provisions of Companies Act, 1956 for registration of satisfaction of charge were filed with the Registrar of Companies, Maharashtra, Mumbai on June 10, 2000. However, the satisfaction of charge is still pending.
As per the Index of charges on MCA website, the charge for '' 27.00 Lakh was created on March 30, 1983 by General Foods Limited (since amalgamated with the Company in the year 2006) in favour of Madhya Pradesh Audhyogik Vikas Nigam Limited. The same was also modified on February 25, 1984. Since no amount is outstanding against the said charge, the Company is in process to get âNo dues certificateâ from Charge holder to file required forms with MCA for satisfaction of charge.
51
The figures for the previous year have been re-grouped/ re-arranged, wherever necessary, to correspond with the current year classification/disclosures.
Mar 31, 2021
The Company has entered into an agreement on December 5, 2016 to sale 18.1890 acres land situated at Taluka Alibag, District Raigad for consideration of '' 345.77 Lakh. As per the terms of the agreement, the Company is required to bear the conversion expenses upto '' 3.75 Lakh per acre and also carry out certain improvements over the said land which shall be reimbursed by the purchaser. The Company has received part of the consideration by way of advance payment. The Company has also entered into contract for the purpose of undertaking the improvements agreed upon and paid an advance to the contractor. The Collector of Alibagh has sent notices to the Company regarding the condition of not putting the land for industrial use in 15 years period. The company has filed a case with the Mumbai bench of Honâble National Company Law Board Tribunal to quash the notices. The Corporate Insolvency Resolution Process [âCIRPâ] was initiated in respect of Company under the provisions of the IBC by an order of the Honâble National Company Law Tribunal, Mumbai dated December 8, 2017 delivered on December 15, 2017 and a moratorium as per Section 14 of the Code was declared. The Resolution Plan was approved by the Honâble National Company Law Tribunal , Mumbai and a moratorium was in effect till September 6, 2019. The matter is pending at Honâble National Company Law Tribunal, Mumbai. Therefore, the Company continues to disclose the land and the advances paid for improvement of land and classify it as assets held for sale [Refer Note 10] and the amount of advance received form the buyer has been classified as Liabilities directly associated with assets classified as held for sale [Refer Note 19], till the final outcome of the said matter.
Equity Shares: The Company has one class of equity shares having a par value of '' 2 per share. Each shareholder is eligible for one vote per share held. 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.
As per the resolution plan approved by Honâble National Company Law Tribunal, Mumbai Bench vide its orders dated July 24, 2019 and September 4, 2019 under section 31 of the Insolvency and Bankruptcy Code, 2016, the paid up equity share capital of the company was reduced and consolidated. Every shareholder holding 100 equity shares of '' 2/- each got 1 equity share of '' 2/-. The fractional shares were allotted in favour of SBICAP Trustee Company Limited, acting as Trustee for Ruchi Soya Fractional Shares Settlement Trust. Ruchi Soya Industries Limited Beneficiary Trust (âthe Trust") was holding 76,30,115 Shares of '' 2/- each (pre reduction and consolidation) and the same were held in the name of Mr. Dinesh Shahra, Trustee of Trust at that time. Out of 76,30,115 shares, 199 Shares were freeze by NSE as per SEBI Circular No. SEBI/HO/CFD/ CMD/CIR/P/2016/116 dated October 26, 2016. Remaining 76,29,916 shares were shifted in the new demat account of the Trust opened with the PAN of Trust. As per the Scheme of reduction and consolidation, 76,299 Shares (new) were allotted in favour of Mr. Dinesh Shahra (in the capacity of Trustee of the Trust) and 0.16 share being fraction was allotted to SBICAP Trustee Company Limited. Against 199 Shares, 1 share was allotted to Mr. Dinesh Shahra (in the capacity of Trustee of Trust) and 0.99 share, being fraction was allotted to SBICAP Trustee Company Limited. Mr. Kumar Rajesh has been appointed Trustee of the Trust in place of Mr. Dinesh Shahra. Pursuant to Schemes u/s. 391-394 of the Companies Act, 1956 then applicable approved by the Honâble High Court of judicature at Mumbai and Delhi in an earlier year 76,301 Equity shares of the Company are held by a Trust for the benefit of the Company and its successor. The investment Cost of acquition of these treasury shares have been netted of from the Equity Share Capital and Securities premium account as per the provisions of Ind AS. The Dividend of earlier period received by the Trust in respect of these shares is included under the head âDividendâ under âOther Incomeâ.
pursuant to amalgamation, the company has issued equity share capital. (Refer note no. 32 g)
NATURE AND PURPOSE OF RESERVES
(i) Capital Redemption Reserve
Capital Redemption Reserve was created out of profits of the Company for the purpose of redemption of shares.
Securities Premium account is created on recording of premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
The same is Created out of Surplus profits transferred as per the provisions of the Act, it is utilised as per provisions of
the Act.
Capital Reserve amounting to '' 15,662.53 Lakh was created on :
a) amalgamation with Palm tech India Ltd by '' 1,087.07 Lakh, and
b) On 3,53,25,000 share warrants issued in an earlier year on preferential basis by '' 2,241.69 Lakh. Holders of 64,00,000 warrants exercised the option and were allotted equity shares. Holders of balance 2,89,25,000 warrants did not exercise their option which was lapsed, on expiry on 18 months from the date of issue of warrants. Consequently, the amount of '' 2,241.69 Lakh paid by these warrant holders were forfeited and transferred to capital reserve.
c) '' 12,333.78 Lakh arising pursuant to amalgamation of Patanjali Consortium Adhigrahan Private Limited, a special purpose vehicle with and into the Company. [Refer Note 32(g)]
The company has elected to recognise changes in fair value of certain class of investments in other comprehensive
income. These fair value changes are accumulated within this reserve and shall be adjusted on derecognition of
investment.
(vi) Retained Earnings
The same is created out of profits over the years and shall be utilised as per the provisions of the Act.
'' 2,37,201.50/- Lakh (including current maturities of '' 11,001.50/- Lakh) are secured by way of first pari passu charge on all immovable and movable non current assets, present and future, of the Company. First pari passu charge over all the rights, titles, interest, benefits, claims and demand whatsoever, present or future. First pari passu charge on intangibles, goodwill, uncalled capital, present and future. Second pari passu charge over all current assets (both present & future). Pledge of 100% of fully paid up equity shares of the Company held by the promoters, on a pari passu basis, to lenders. Assignment of all rights of RSIL in and under the Take or Pay Agreement between Patanjali Ayurved Limited and RSIL. Letter of comfort backed
F Working capital loans referred to in (b) above and current maturities of Working capital loans referred in Note 16 (c)
(i) Working Capital Loans are secured by first pari passu charge over all current assets (both present & future) of the Company. Second pari passu charge on all immovable and movable non current assets, present and future. Second pari passu charge over all the rights, titles, interest, benefits, claims and demand whatsoever, present or future. First pari passu charge on intangibles, goodwill, uncalled capital, present and future. Pledge of 100% of fully paid up equity shares of the Company held by the promoters, on a pari passu basis, to lenders. Assignment of all rights of RSIL in and under the Take or Pay Agreement between Patanjali Ayurved Limited and RSIL. Letter of comfort backed by board resolution issued by Patanjali Ayurved Limited, Patanjali Parivahan Pvt Ltd, Yogakshem Sansthan and Patanjali Gramudyog Nayas, and Personal Guarantee of the Directors of Patanjali Ayurved Limited.
(ii) Working Capital Loans are repayable in 24 months from the date of loan disbursement. In case, repayable is not completed within 24 months, the promoter will infuse additional resources to liquidate the working capital loans.
(iii) The above working capital loan, inter-alia, include an option to convert the outstanding amounts into equity shares of the Company in the event of default under the Facility Agreements or any other finance documents.
(i) Working Capital Loans and Short term loan are secured by first pari passu charge over all current assets (both present & future) of the Company. Second pari passu charge on all immovable and movable non current assets, present and future. Second pari passu charge over all the rights, titles, interest, benefits, claims and demand whatsoever, present or future. First pari passu charge on intangibles, goodwill, uncalled capital, present and future. Pledge of 100% of fully paid up equity shares of the Company held by the promoters, on a pari passu basis, to lenders. Assignment of all rights of RSIL in and under the Take or Pay Agreement between Patanjali Ayurved Limited and RSIL. Letter of comfort backed by board resolution issued by Patanjali Ayurved Limited, Patanjali Parivahan Pvt Ltd, Yogakshem Sansthan and Patanjali Gramudyog Nayas, and Personal Guarantee of the Directors of Patanjali Ayurved Limited.
(ii) Working Capital Loans are repayable on demand and Short term loan To be repayable in 12 months. In case, repayable is not completed within 12 months, the promoter will infuse additional resources to liquidate the short term loan.
(iii) The above short term loans and working capital loan, inter-alia, include an option to convert the outstanding amounts into equity shares of the Company in the event of default under the Facility Agreements or any other finance documents.
There are no amounts due for payment to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as at the year end.
Includes '' 10,064.58 Lakh payable to DBS Bank Limited and '' 2,918.47 Lakh payable to ICICI Bank Limited pursuant to on-going case at Honâble Supreme Court which are mentioned below.
DBS Bank: DBS Bank. had filed an application before Honâble National Company Law Tribunal, Mumbai (âNCLTâ) seeking a prayer to set-aside the decision of Committee of Creditors of the Company to the extent of the distribution of proceeds of the Resolution Plan and to restrain the Resolution Applicant from distributing the proceeds of the Resolution Plan. NCLT ordered against DBS Bank by dismissing the application. NCLT order was challenged before the Honâble National Company Law Appellate Tribunal (âNCLATâ) and NCLAT dismissed the appeal. NCLAT order has now been challenged before Supreme Court by DBS Bank. Since, there was no stay or order against the distribution of proceeds of Resolution Plan, the proceeds have been distributed in terms of Escrow Agreement and the Resolution Plan has been successfully implemented. There is no further liability of the Company or the Resolution Applicant towards DBS Bank.
ICICI Bank: The erstwhile Resolution Professional, Mr. Shailendra Ajmera, had filed an application before Honâble National Company Law Tribunal, Mumbai (âNCLTâ) seeking a prayer to reverse the preferential transactions undertaken by ICICI Bank Limited. NCLT vide its order dated March 12, 2019 directed ICICI Bank Limited to reverse the said transactions and deposit in the bank account of the Company, the amount withdrawn in such preferential transactions. ICICI Bank Limited had subsequently challenged the order of NCLT before National Company Law Appellate Tribunal (âNCLATâ). NCLAT
) Financial Statement for the year ended March 31, 2021
passed the order in favour of ICICI Bank Limited by setting aside the order of NCLT. NCLAT order has now been challenged by the erstwhile Resolution Professional before Supreme Court which is still pending. The Company had filed an application before the Supreme Court seeking substitution of Resolution Professional of the Company with Ruchi Soya Industries Limited since the corporate insolvency resolution process has been completed. The said application has been allowed by the Supreme Court and RSIL is now the Appellant.
Liability against CIRP Payables is amount payable to financial and operational creditors is kept in separate escrow accounts. As per escrow agreement any amount unpaid in this Account is deemed to be utilised and the Company has no right, title and claim on the same.
ii) Pursuant to the Resolution Plan, liabilities related to foreign financial and operational creditors are partially/fully extinguished. Accordingly approval application for the same is filed in RBI.
v) Other financial liabilities include '' NIL [Previous Year '' 11.34 Lakh] due to Related parties. [Refer Note 38]
The Company has certain defined contribution plans. Contributions are made to provident fund in India for employees at the specified rate as per regulations. The contributions are made to registered provident fund administered by the Government of India. The obligation of the Company is limited to the amount contributed and it Company has no further contractual, or any constructive obligation. The Company has recognised '' 745.40 Lakh [Previous Year '' 768.84 Lakh] towards contribution to Provident Fund and '' 55.90 Lakh [Previous Year '' 85.25 Lakh] towards Employee State Insurance in Profit and Loss account.â
a) Gratuity
Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination/resignation is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number completed years of service. The gratuity plan is a funded plan and Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at March 31, 2021. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
The leave obligations cover the Companyâs liability for casual, sick & earned leave. The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Companyâs financial statements as at balance sheet date:
Pursuant to the Resolution Plan submitted by the Consortium of Patanjali Ayurved Limited, Divya Yog Mandir Trust (through its business undertaking, Divya Pharmacy), Patanjali Parivahan Private Limited and Patanjali Gramudhyog Nyas (Collectively referred to as the âResolution Applicantâ) and its approval by the Honâable National Company Law Tribunal, Mumbai bench, vide their orders dated July 24, 2019 and September 4, 2019 for the corporate insolvency of the Company, which is implemented from December 18, 2019 (i.e. closing date as defined under the resolution plan) otherwise as stated in below notes, the following consequential impacts have been given in accordance with approved resolution plan / Accounting Standards during the previous year ended March 31, 2020:-
a) The existing directors of the Company as on the date of order have stand replaced by the new Board of Directors from their office with effect from December 18, 2019. As on closing date Board consist of Acharya Balkrishna (Chairman and Managing Director), Swami Ramdev (Non-Executive Director), Ram Bharat (Whole Time Director), Rajat Sharma (Independent Director), Girish Ahuja (Independent Director), Bhavna Shah (Independent Director).
b) The erstwhile promoter group has been reclassified as public shareholders under regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
c) The authorised share capital of the Patanjali Consortium Adhigrahan Private Limited as on closing date i.e. December 18, 2019 is merged with the authorised share capital of the Company. As a result, authorised share capital of the Company is increased from 25,305.00 Lakh consisting of 1,01,02,50,000 equity shares of '' 2 each and 51,00,000 preference shares of '' 100 each to '' 95,305.00 Lakh consisting of 2,11,20,50,000 equity shares of '' 2 each and 5,30,64,000 preference shares of '' 100 each.
d) With effect from December 17, 2019, the existing issued, subscribed and paid up equity share capital of the Company has been reduced from '' 6,682.01 Lakh divided into 33,41,00,722 equity shares of '' 2 each to '' 66.82 Lakh divided into 33,41,007 equity share of '' 2 each thereby reducing the value of issued, subscribed and paid up equity share capital of the Company by '' 6,615.19 Lakh. Further, with effect from December 17, 2019, the existing issued, subscribed, paid up 2,00,000 cumulative
redeemable preference shares of '' 100 each stand fully cancelled and extinguished. As prescribed in the Resolution Plan, the reduction in the share capital of the Company amounting to '' 6,632.75 Lakh is adjusted against the debit balance as appearing in its profit and loss account (i.e. retained earnings).
e) In respect of de-recognition of operational and financial creditors, difference amounting to '' 7,52,560.48 Lakh between the carrying amount of financial liabilities extinguished and consideration paid, is recognised in statement of profit or loss account in accordance with âInd AS - 109â on âFinancial Instrumentsâ prescribed under section 133 of the Companies Act, 2013 and accounting policies consistently followed by the Company and disclosed as an âExceptional itemsâ. Further, these write back includes foreign parties of creditors, advances and lenders for which intimations / obtaining approval of Reserve Bank of India (RBI) are under process.
f) Out of funds received amounting to '' 4,35,000 Lakh, '' 4,23,500 Lakh was to be utilised towards settlement of claims of creditors and '' 11,500 Lakh for improving the operations of the Company. Out of above, as on March 31, 2021, amount of '' 4,07,192.46 Lakh (Previous year '' 4,01,770.38 Lakh) has been used to settle existing secured financial creditors, unsecured financial creditors (other than related parties), statutory dues, operational creditors (other than a related party) CIRP costs and pending utilisation '' 16,307.54 Lakh (Previous year '' 21,729.62 Lakh) is kept in separate escrow accounts. As per escrow agreement any amount unpaid in this account is deemed to be utilised and the Company has no right, title and claim on the same.
g) Amalgamation of the Patanjali Consortium Adhigrahan Private Limited, a special purpose vehicle with and into the Company:-
i. On and from the closing date i.e. December 18, 2019 , all assets amounting to '' 4,40,416.97 Lakh, liabilities amounting to '' 3,32,233.19 Lakh stand transferred and vested in the Company with effect from the closing date.
ii. In consideration for the amalgamation, the Company has issued: -
1 (one) equity shares of face value of '' 2 for every 1 (one) equity share of face value of '' 7 of SPV, aggregating 29,25,00,000 equity shares of '' 5,850.00 Lakh are issued.
1 (one) 0.0001% cumulative redeemable preference share of face value of '' 100 each for every 1 (one) 0.0001% cumulative redeemable preference share of face value of '' 100 each of the SPV, aggregating 4,50,00,000 preference share of '' 45,000.00 Lakh are issued.
1 (one) 9% cumulative non-convertible debenture of face value of '' 10,00,000 for every 1 (one) 9% cumulative nonconvertible debenture of face value of '' 10,00,000 each of SPV, aggregating 4,500 debentures of '' 45,000.00 Lakh are issued.
Consequent to the foregoing, the paid-up equity share capital and preference share capital of the Company is increased to '' 5,916.82 Lakh and '' 45,000 Lakh, respectively.
As per approved resolution plan, the contingent liabilities and commitments, claims and obligations, stand extinguished and accordingly no outflow of economic benefits is expected in respect thereof. The Resolution plan, among other matters provide that upon the approval of this Resolution Plan by the National Company Law Tribunal (NCLT) and settlement and receipt of the payment towards the IRP Costs and by the creditors in terms of this plan, all the liabilities demands, damages, penalties, loss, claims of any nature whatsoever (whether admitted/verified/submitted/rejected or not, due or contingent, asserted or unasserted, crystallised or uncrystallised, known or unknown, disputed or undisputed, present or future) including any liabilities, losses, penalties or damages arising out of non-compliances, to which the Company is or may be subject to and which pertains to the period on or before the Effective Date (i.e. September 06, 2019) and are remaining as on that date shall stand extinguished, abated and settled in perpetuity without any further act or deed. The Resolution plan further provides that implementation of resolution plan will not affect the rights of the Company to recover any amount due to the Company and there shall be no set off of any such amount recoverable by the Company against any liability discharged or extinguished.
On divestment of shares of Gemini Edibles and Oil Pvt. Ltd. in an earlier year, pursuant to the Share Purchase Agreement, the Company paid an amount of '' 2,836.52 Lakh to the said Company by way of deposit which is refundable on receipt of various incentives by the said Company from Government authorities. Of the total amount paid, the Company has received refund of '' 2,320.81 Lakh till March 31, 2021. The Company expects to recover the balance amount of '' 515.71 Lakh fully. Accordingly, no provision for impairment is considered necessary in this regards.
Ruchi J Oil Private Limited (âRuchi J Oilâ) is under liquidation, financial statements for the year ended March 31, 2021 are not available of âRuchi J Oilâ and management of the Company expects to recover the carrying amount of investment, therefore in view of the management no consolidated financial statements are required to be prepared and presented.
General Information
(a) Factors used to identify the entityâs reportable segments, including the basis of organisation
Based on the criterion as mentioned in Ind-As-108-ââOperating Segmentââ, the Company has identified its reportable segments, as follows:
⢠Segment-1 Seed Extractions
⢠Segment-2, Vanaspati
⢠Segment-3, Oils
⢠Segment-4, Food Products
⢠Segment-5, Wind Power Generation
⢠Segment-6, Others
Unallocable - All the segments other than segments identified above are collectively included in this segment.
The Chief Operating Decision Maker (âCODMâ) evaluates the Companyâs performance and allocates resources based on an analysis of various performance indicators by operating segments. The CODM reviews revenue and gross profit as the performance indicator for all of the operating segments.
The assets and liabilities that can not be allocated between segments are shown as unallocable assets and liabilities, respectively.
Extraction is considered as the primary product resulting from the solvent extraction process and crude oil as the secondary product. While computing segment results, all costs related to solvent extraction process are charged to the extraction segment and recovery on account of crude oil is credited to the said segment. Credit for recovery of crude oil is taken on the basis of average monthly market price.
. Fair Valuation Techniques used to determine Fair Value
The Company maintains procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the fair values:
(i) Fair value of trade receivable, cash and cash equivalents, other bank balances, current borrowings, trade payables, other current financial assets and other current financial liabilities are approximate at their carrying amounts largely due to the short-term maturities of these instruments.
(ii) The fair values of non-current borrowings are approximate at their carrying amount due to interest bearing features of these instruments.
(iii) The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
(iv) Fair values of quoted financial instruments are derived from quoted market prices in active markets.
(v) Fair value of forward contract are derived on the basis of mark-to-market as provided by the respective bank.
(vi) Fair value of open purchase and sale contracts is based on commodity prices listed on NCDEX stock exchange and prices available on Solvent Extractorâs association (SEA) along with quotations from brokers and adjustments made for grade and location of commodity and in case of Commodity futures it is based on commodity prices listed on MCX/ NCDX/ACE stock exchange.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows :
Level 1: Quoted prices / published NAV (unadjusted) in active markets for identical assets or liabilities. It includes fair value of financial instruments traded in active markets and are based on quoted market prices at the balance sheet date and financial instruments like mutual funds for which net assets value (NAV) is published by mutual fund operators at the balance sheet date.
Level 2: Inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). It includes fair value of the financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on the Company specific estimates. If all significant inputs required to fair value an instrument are observable then instrument is included in level 2.
Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
The Companyâs activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Companyâs primary risk management focus is to minimize potential adverse effects of risks on its financial performance. The Companyâs risk management assessment policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management of these policies and processes are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Board of Directors and the Audit Committee are responsible for overseeing these policies and processes.
Market risk is the risk of changes in the market prices on account of foreign exchange rates, interest rates and Commodity prices, which shall affect the Companyâs income or the value of its holdings of its financial instruments . The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the returns.
The fluctuation in foreign currency exchange rates may have potential impact on the profit and loss account, where any transaction has more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the entity.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in U.S. dollar and Euro, against the respective functional currencies ( INR) of Ruchi Soya Industries Limited.
The Company, as per its risk management policy, uses foreign exchange and other derivative instruments primarily to hedge foreign exchange and interest rate exposure. The Company does not use derivative financial instruments for trading or speculative purposes.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to market risk for changes in interest rates relates to borrowings from banks and others.
For details of the Companyâs short-term and long term loans and borrowings, Refer Note 13(a), 13(b), 16(a) and 16(c) of these financial statements.
The Companyâs fixed rate borrowings Preference Shares issued to Patanjali Ayurved Limited @ 0.0001% and Debentures issued to Patanjali Ayurved Limited @ 9% in the year 2019-2020 and Invetsments into Preference Shares of GHI Energy Private Limited @ 6% in the year 2011-2012 are carried at fair value. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flow will fluctuate because of a change in market interest rates.
A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit or loss by amounts shown below. This analysis assumes that all other variables, in particular, foreign currency exchange rates, remain constant. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date.
The prices of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as weather, government policies, changes in global demand resulting from population growth and changes in standards of living and global production of similar and competitive crops. During its ordinary course of business, the value of the Companyâs open sales and purchases commitments and inventory of raw material changes continuously in line with movements in the prices of the underlying commodities. To the extent that its open sales and purchases commitments do not match at the end of each business day, the Company is subjected to price fluctuations in the commodities market.
While the Company is exposed to fluctuations in agricultural commodities prices, its policy is to minimise its risks arising from such fluctuations by hedging its sales either through direct purchases of a similar commodity or through futures contracts on the commodity exchanges.
In the course of hedging its sales either through direct purchases or through futures, the Company may also be exposed to the inherent basis risk associated with having positions in physical as well as in futures market. The Company has in place a risk management policy to minimize such risk exposure.
To hedge commodity related risk, the open outstanding position of forward/future as on March 31, 2021 is Crude palm oil 18,220 MT (Sale), Soya Refind Oil 1,455 MT (Sale), Soyabean seed 16,005 MT (Buy), Mustard seed 1,900 MT (Sale).
Equity Price Risk is related to the change in market reference price of the investments in equity securities. The fair value of some of the Companyâs investments in Fair value through Other Comprehensive Income securities exposes the Company to equity price risks. In general, these securities are not held for trading purposes. These investments are subject to changes in the market price of securities. The fair value of equity securities as of March 31, 2021, was '' 1,708.77 Lakh [Previous Year 583.33 Lakh] . A Sensex standard deviation of 16% [Previous Year 7%] would result in change in equity prices of securities held as of March 31, 2021 by '' 273.40 Lakh.[Previous Year '' 40.83 Lakh].
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 customer. The Company establishes an allowance for doubtful debts, impairment and expected credit loss that represents its estimate on expected credit loss model.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
Exposures to customers outstanding at the end of each reporting year are reviewed by the Company to determine expected credit losses. Impaired amounts are based on lifetime expected losses based on the best estimate of the management. The impairment loss related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances.
The Company holds cash and cash equivalents with credit worthy banks of '' 4,627.05 Lakh as at March 31, 2021 [Previous Year '' 15,379.99 Lakh].The credit worthiness of such banks is evaluated by the management on an on-going basis and is considered to be good.
The derivatives are entered into with credit worthy on counterparties. The credit worthiness of such counterparties is evaluated by the management on an on-going basis and is considered to be good.
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counter-parties that have a good credit rating. The Company does not expect any losses from non-performance by these counter-parties apart from those already given in financials, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company has been taking measures to ensure that the Companyâs cash flow from business borrowing is sufficient to meet the cash requirements for the Companyâs operations. The Company managing its liquidity needs by monitoring forecasted cash inflows and outflows in day to day business. Liquidity needs are monitored on various time bands, on a day to day and week to week basis, as well as on the basis of a rolling 30 day projections. Net cash requirements are compared to available working capital facilities in order to determine headroom or any short falls. Presently companyâs objective is to maintain sufficient cash to meet its operational liquidity requirements.
The 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.
For the purpose of Companyâs capital management, capital includes issued capital and all other equity reserves. The primary objective of the Companyâs capital management is to maximise shareholders value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.
The Company has received communication dated May 10, 2018 from Serious Fraud Investigation Office (SFIO), Ministry of Corporate Affairs, New Delhi regarding investigation into the affairs of the Company under section 212 (1) of the Companies Act, 2013. Certain information as sought were submitted to SFIO.
Subsequent to year end, a) The Company has acquired biscuits and associated bakery products business including the manufacturing facilities from Patanjali Natural Biscuits Private Limited under a business transfer agreement for slump consideration of '' 6,002.50 Lakh on a going concern basis; b) The Company and Patanjali Ayurved Limited entered into agreements for manufacturing of nutraceuticals products, assignment of contract manufacturing related to noodles and breakfast cereals and usage of brand license of Patanjali; c) The Company has filed Draft Red Herring Prospectus dated June 12, 2021 with the Securities and Exchange Board of India for Further Public Offering of equity shares for an amount aggregating up to '' 4,30,000 Lakh.
The figures for the previous year have been re-grouped/ re-arranged, wherever necessary, to correspond with the current yearâs classification/disclosure.
Mar 31, 2018
Notes to Financial Statement for the Year Ended March 31, 2018
NOTE - 41
FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT
A. Accounting classification and fair values (Rs in Lakhs)
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities if the carrying amount is a reasonable approximation of fair value. A substantial portion of the Company''s long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Accordingly, the carrying value of such long-term debt approximates fair value.
Carrying amount |
Fair value |
|||||||||
(i) March 31, 2018 |
Note No. |
FVTPL |
FVTOCI |
Total Fair Value |
Amortised Cost |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
Non Current assets |
||||||||||
Financial assets |
||||||||||
(i) Investments |
5(a) |
1,693.24 |
1,693.24 |
1,778.24 |
3,471.48 |
1,417.98 |
272.76 |
2.50 |
1,693.24 |
|
(ii) Loans |
5(b) |
- |
3,912.67 |
3,912.67 |
- |
|||||
(iii) Others |
5(c) |
930.69 |
930.69 |
- |
||||||
Current assets |
||||||||||
Financial assets |
||||||||||
(i) Investments |
8(a) |
1,571.26 |
1,571.26 |
8.37 |
1,579.63 |
110.58 |
1,460.68 |
1,571.26 |
||
(ii) Trade receivables |
8(b) |
24,961.47 |
24,961.47 |
- |
||||||
(iii) Cash and cash equivalents |
8(c) |
3,701.34 |
3,70134 |
- |
||||||
(iv) Bank Balance other than above |
8(d) |
13,942.15 |
13,942.15 |
- |
||||||
(v) Loans |
8(e) |
- |
559.03 |
559.03 |
- |
|||||
(vi) Others |
8(f) |
100.19 |
100.19 |
1,943.03 |
2,04322 |
100.19 |
100.19 |
|||
1,671.45 |
1,693.24 |
3,364.69 |
51,736.99 |
55,101.68 |
1,528.56 |
1,833.63 |
2.50 |
3,364.69 |
||
Non Current liabilities |
||||||||||
Financial liabilities |
||||||||||
(i) Borrowings |
13 |
153.68 |
153.68 |
5,622.00 |
5,775.68 |
153.68 |
153.68 |
|||
Current liabilities |
||||||||||
Financial liabilities |
||||||||||
(i) Borrowings |
16(a) |
659,209.83 |
659,209.83 |
- |
||||||
(ii) Trade payables |
16(b) |
290,791.90 |
290,791.90 |
- |
||||||
(iii) Other Financial liability |
16(c) |
490.74 |
490.74 |
252,432.78 |
252,923.52 |
490.74 |
490.74 |
|||
644.42 |
- |
644.42 |
1,208,056.51 |
1,208,700.93 |
- |
644.42 |
- |
644.42 |
||
Carrying amount |
Fair value |
|||||||||
(ii) March 31, 2017 |
Note No. |
FVTPL |
FVTOCI |
Total Fair Value |
Amotised Cost |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
Non Current assets |
||||||||||
Financial assets |
||||||||||
(i) Investments |
5(a) |
1,642.70 |
1,642.70 |
7,135.53 |
8,77823 |
1,401.13 |
235.56 |
6.01 |
1,642.70 |
|
(ii) Loans |
5(b) |
6,559.01 |
6,559.01 |
- |
||||||
(iii) Others |
5(c) |
938.76 |
938.76 |
- |
||||||
Current assets |
||||||||||
Financial assets |
||||||||||
(i) Investments |
8(a) |
100.22 |
100.22 |
8.37 |
108.59 |
100.22 |
100.22 |
|||
(ii) Trade receivables |
8(b) |
- |
507,528.11 |
507,528.11 |
- |
|||||
(iii) Cash and cash equivalents |
8(c) |
- |
8,156.33 |
8,15633 |
- |
|||||
(iv) Bank Balance other than above |
8(d) |
- |
6,199.66 |
6,199.66 |
- |
|||||
(v) Loans |
8(e) |
- |
1,119.10 |
1,119.10 |
- |
|||||
(vi) Other |
8(f) |
4,597.33 |
4,597.33 |
703.35 |
5,300.68 |
4,597.33 |
4,597.33 |
|||
4,697.55 |
1,642.70 |
6,34025 |
538,348.22 |
544,688.47 |
1,501.35 |
4,832.89 |
6.01 |
6,340.25 |
Carrying amount |
Fair value |
|||||||||
(ii) March 31, 2017 |
Note No. |
FVTPL |
FVTOCI |
Total Fair Value |
Amotised Cost |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
Non Current liabilities |
||||||||||
Financial liabilities |
||||||||||
(i) Borrowings |
13 |
- |
6,061.75 |
6,061.75 |
- |
|||||
Current liabilities |
||||||||||
Financial liabilities |
||||||||||
(i) Borrowings |
16(a) |
- |
455,592.08 |
455,592.08 |
- |
|||||
(ii) Trade payables |
16(b) |
518,070.32 |
518,070.32 |
- |
||||||
(iii) Other Financial liability |
16(c) |
1,194.92 |
1,194.92 |
181,864.56 |
183,059.48 |
1,194.92 |
1,194.92 |
|||
1,194.92 |
- |
1,194.92 |
1,161,588.71 |
1,162,783.63 |
- |
1,194.92 |
- |
1,194.92 |
B. Measurement of fair values
Valuation techniques and significant unobservable inputs
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used.
Financial instruments measured at fair value
Type |
Valuation technique |
Currency Futures |
Based on exchange rates listed on NSE/MCX stock exchange |
Commodity futures |
Based on commodity prices listed on MCX/ NCDX/ACE stock exchange |
Forward contracts |
Based on FEDAI Rates |
Interest rate swaps |
Based on Closing Rates provided by Banks |
Open purchase and sale contracts |
Based on commodity prices listed on NCDEX stock exchange, and prices Available on Solvent Extractor''s association (SEA) along with quotations from brokers and adjustments made for grade and location of commodity |
Options |
Based on Closing Rates provided by Banks |
NOTE - 42
I FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT
Financial risk management
The Company has exposure to the following risks arising from financial instruments: (i) Market risk
(a) Currency risk;
(b) Interest rate risk;
(c) Commodity Risk;
(d) Equity Risk; (ii) Credit risk ; and (iii) Liquidity risk;
Risk management framework
The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company''s primary risk management focus is to minimize potential adverse effects of risks on its financial performance. The Company''s risk management assessment policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management of these policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Board of Directors and the Audit Committee are responsible for overseeing these policies and processes.
(i) Market risk
Market risk is the risk of changes in the market prices on account of foreign exchange rates, interest rates and Commodity prices, which shall affect the Company''s income or the value of its holdings of its financial instruments . The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the returns.
(a) Currency risk
The fluctuation in foreign currency exchange rates may have potential impact on the profit and loss account, where any transaction has more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the entity.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in U.S. dollar and Euro, against the respective functional currencies (Rs) of Ruchi Soya Industries Limited.
The Company, as per its risk management policy, uses foreign exchange and other derivative instruments primarily to hedge foreign exchange and interest rate exposure. The Company does not use derivative financial instruments for trading or speculative purposes.
Exposure to currency risk
The summary quantitative data about the Company''s exposure to currency risk as reported by the management of the Company is as follows:
(Rs. In Lakh)
Particulars |
March 31, 2018 |
March 31, 2017 |
|||||
EUR Exposure in lNR |
USD Exposure in lNR |
AUD Exposure in lNR |
EUR Exposure in lNR |
MYR Exposure in lNR |
USD Exposure in INR |
AUD Exposure in INR |
|
Receivable net exposure |
|||||||
Trade receivables* |
3,852.85 |
1,31,149.86 |
4.21 |
4,138.82 |
- |
1,57,129.80 |
12.97 |
Net statement of financial position exposure |
3,852.85 |
1,31,149.86 |
4.21 |
4,138.82 |
- |
1,57,129.80 |
12.97 |
Forward exchange contracts against exports |
- |
9,707.80 |
- |
- |
- |
26,807.22 |
- |
Receivable net exposure |
3,852.85 |
1,21,442.06 |
4.21 |
4,138.82 |
- |
1,30,322.58 |
12.97 |
Payable net exposure |
|||||||
Borrowings |
- |
27,731.67 |
- |
- |
- |
83,618.32 |
- |
Trade payables and other financial liabilities |
3,19,984.19 |
5.51 |
4,77,621.83 |
||||
Statement of financial position exposure |
- |
3,47,715.86 |
- |
- |
5.51 |
5,61,240.15 |
- |
Forward exchange contracts against imports and foreign currency payables |
11,319.67 |
6,853.90 |
|||||
Currency option contracts |
- |
- |
- |
- |
- |
- |
- |
Payable net exposure |
- |
3,36,396.19 |
- |
- |
5.51 |
5,54,386.25 |
- |
Total net exposure on Receviables /(Payables) |
3,852.85 |
(2,14,954.13) |
4.21 |
4,138.82 |
(5.51) |
(4,24,063.67) |
12.97 |
Sensitivity analysis
A 1% strenghtening / weakening of the respective foreign currencies with respect to functional currency of Company would result in increase or decrease in profit or loss as shown in table below. The following analysis has been worked out based on the exposures as of the date of statements of financial position.
Profit/ (Loss) March 31, 2018 |
Profit/ (Loss) March 31, 2017 |
|||
Effect in Indian Rupees |
Strengthening |
Weakening |
Strengthening |
Weakening |
EUR |
38.53 |
(38.53) |
41.39 |
(41.39) |
USD |
(2,149.54) |
2,149.54 |
(4,240.64) |
4,240.64 |
AUD |
0.04 |
(0.04) |
0.13 |
(0.13) |
MYR |
- |
- |
(0.06) |
0.06 |
* Excluding provision for doubtful debts Rs. 1,30,674.31/- Lak
i(b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to market risk for changes in interest rates relates to borrowings from financial institutions and others. The Company manages its interest rate risk arising from foreign currency floating rate loans by using interest rate swaps as hedges of variability in cash flows attributable to interest rate risk.
For details of the Company''s short-term and long term loans and borrowings, Refer Note 13(a), 16 (a) and 16(c) of these financial statements.
Interest rate sensitivity - fixed rate instruments
The Company''s fixed rate borrowings Preference Shares issued to Ruchi Infrastructure Limited @ 6% in the year 2010-2011 and Investments into Preference Shares of GHI Energy Private Limited @ 6% in the year 2011-2012 are carried at fair value. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flow will fluctuate because of a change in market interest rates.
Interest rate sensitivity - variable rate instruments
A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased /(decreased) equity and profit or loss by amounts shown below. This analysis assumes that all other variables, in particular, foreign currency exchange rates, remain constant. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date.
(Rs In Lakh)
|
A. March 31, 2018 |
A. March 31, 2017 |
Particulars |
Impact on Profit/ (loss) before tax |
|
100 bp increase |
100 bp decrease |
|
On account of Variable Rate Borrowings from Banks |
(7,964.19) |
7,964.19 |
Sensitivity |
(7,964.19) |
7,964.19 |
B. March 31, 2017 |
||
Impact on Profit/ (loss) before tax |
||
Particulars |
100 bp increase |
100 bp decrease |
On account of Variable Rate Borrowings from Banks |
(5,266.99) |
5,266.99 |
Sensitivity |
(5,266.99) |
5,266.99 |
(c) Commodity risk
The prices of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as whether, government policies, changes in global demand resulting from population growth and changes in standards of living and global production of similar and competitive crops. During its ordinary course of business, the value of the Company''s open sales and purchases commitments and inventory of raw material changes continuously in line with movements in the prices of the underlying commodities. To the extent that its open sales and purchases commitments do not match at the end of each business day, the Company is subjected to price fluctuations in the commodities market.
While the Company is exposed to fluctuations in agricultural commodities prices, its policy is to minimise its risks arising from such fluctuations by hedging its sales either through direct purchases of a similar commodity or through futures contracts on the commodity exchanges. The prices on the commodity exchanges are generally quoted up to twelve months forward.
In the course of hedging its sales either through direct purchases or through futures, the Company may also be exposed to the inherent risk associated with trading activities conducted by its personnel. The Company has in place a risk management system to manage such risk exposure.
At the balance sheet date, a 1% increase/decrease of the commodities price indices, with all other variables remaining constant, would result in (decrease)/increase in profit before tax and equity by the amounts as shown below:
(Rs In Lakh) |
||||
Profit/(loss) |
Profit/(loss) |
|||
March 31, 2018 |
March 31, 2017 |
|||
Increase |
Decrease |
Increase |
Decrease |
|
Effect of (increase) / decrease in prices |
(33.32) |
33.32 |
(657.69) |
657.69 |
Profit before taxes |
||||
Assumptions used for calculation |
||||
Inventory |
Commodity price * 1% |
|||
Derivative contract |
Rate * 1% |
i(d) Equity risk
Equity Price Risk is related to the change in market reference price of the investments in equity securities. The fair value of some of the Company''s investments in Fair value through Other Comprehensive Income securities exposes the Company to equity price risks. In general, these securities are not held for trading purposes. These investments are subject to changes in the market price of securities. The fair value of equity securities as of March 31, 2018, was Rs 1,417.98/- Lakh [ Previous Year 1401.13/- Lakh] . Asensex standard deviation of 5% [Previous Year 5% ] would result in change in equity prices of securities held as of March 31, 2018 by Rs. 70.90/-Lakh.[ Previous Year Rs. 70.06/-Lakh ]
(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 customer. The Company establishes an allowance for doubtful debts and impairment that represents its estimate on expected loss model.
A, Trade and other receivables
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business.
Summary of the Company''s exposure to credit risk by age of the outstanding from various customers is as follows:
(Rs. In Lakh) |
||
Particulars |
As at March 31, 2018 |
As at March 31, 2017 |
Neither past due nor impaired |
||
Past due but not impaired |
||
Past due 0-90 days |
22,909.11 |
2,39,909.57 |
Past due 91-180 days |
980.48 |
90,616.97 |
Past due more then 180 days |
1,537.13 |
3,89,358.13 |
25,426.72 |
7,19,884.67 |
Expected credit loss assessment for customers as at March 31, 2018 and March 31, 2017
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine expected credit losses. Impaired amounts are based on lifetime expected losses based on the best estimate of the managment. The impairment loss related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances.The Company has made further provision for doubtful debts.
The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows.
(Rs. In Lakh)
March 31, 2018 |
|
Balance as at April 1, 2017 |
2,13,946.42 |
Impairment loss recognised as per ECL/ Provision for doubtful debts |
4,42,614.37 |
Balance as at March 31, 2018 |
6,56,560.79 |
The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows.
(Rs. In Lakh)
March 31, 2017 |
|
Balance as at April 1, 2016 |
79,555.01 |
Impairment loss recognised as per ECL |
1,40,615.26 |
Amounts written off |
6,223.85 |
Balance as at March 31, 2017 |
2,13,946.42 |
B. Cash and cash equivalents
The Company holds cash and cash equivalents with credit worthy banks and financial institutions of Rs. 3,701.34/- Lakh as at March 31, 2018 previous Year Rs. 8,156.33/- Lakh). The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be good.
C. Derivatives
The derivatives are entered into with credit worthy banks and financial institution on counterparties. The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be good.
D. Investments
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counter-parties that have a good credit rating. The Company does not expect any losses from non-performance by these counter-parties apart from those already given in financials, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.
Financial instruments â Fair values and risk management (iii) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. Liquidity crises has led to default in repayment of principle and interest to lenders. The Company has been taking measures to ensure that the Company''s cash flow from business borrowing is sufficient to meet the cash requirements for the Company''s operations. The Company managing its liquidity needs by monitoring forecasted cash inflows and outflows in day to day business. Liquidity needs are monitored on various time bands, on a day to day and week to week basis, as well as on the basis of a rolling 30 day projections. Net cash requirements are compared to available working capital facilities in order to determine headroom or any short falls. Presently company''s objective is to maintain sufficient cash to meet its operational liquidity requirements. Exposure to liquidity risk
The table below analyses the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for:
* all non derivative financial liabilities
* net and gross settled derivative financial instruments for which the contractual maturites are essential for the understanding of the timing of the cash flows.
(Rs In Lakh) |
||||||||
Carrying amount |
Contractual cash flows |
|||||||
A |
As at March 31, 2018 |
Total |
1 year or less |
1-2 years |
2-5 years |
More than 5 years |
||
(i) |
Non-derivative financial liabilities |
|||||||
Secured term loans and borrowings |
7,16,671.80 |
7,16,641.80 |
7,16,641.80 |
|||||
Unsecured term loans and borrowings |
5,918.62 |
5,918.62 |
296.62 |
501.07 |
4,662.20 |
458.73 |
||
Redemable preference shares |
153.68 |
200.00 |
- |
- |
200.00 |
- |
||
Trade payables |
2,90,791.90 |
2,90,791.90 |
2,90,791.90 |
- |
- |
- |
||
Other financial liabilities (repayable on demand) |
1,94,674.19 |
1,94,674.19 |
1,94,674.19 |
|||||
(ii) |
Derivative financial liabilities |
|||||||
Foreign exchange forward contract |
||||||||
Outflow |
28.95 |
28.95 |
||||||
- Inflow |
36.79 |
36.79 |
||||||
Commodity contracts |
490.74 |
490.74 |
490.74 |
- |
- |
- |
||
B |
As at March 31, 2017 |
|||||||
(i) |
Non-derivative financial liabilities |
|||||||
Secured term loans and borrowings |
4,57,988.92 |
4,57,988.92 |
4,57,988.92 |
- |
- |
- |
||
Unsecured term loans and borrowings |
62,762.57 |
62,762.57 |
56,900.83 |
239.75 |
4,559.29 |
1,062.70 |
||
Redemable preference shares |
200.00 |
200.00 |
200.00 |
|||||
Trade payables |
5,18,070.32 |
5,18,070.32 |
5,18,070.32 |
|||||
Other financial liabilities (repayable on demand) |
1,22,681.94 |
1,22,681.94 |
1,22,681.94 |
- |
- |
- |
||
(ii) |
Derivative financial liabilities |
|||||||
Foreign exchange forward contract |
||||||||
- Outflow |
32,218.92 |
32,218.92 |
- |
- |
- |
|||
- Inflow |
33,661.12 |
33,661.12 |
- |
- |
- |
|||
Commodity contracts |
1,194.92 |
1,194.92 |
1,194.92 |
Note :
The 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.
NOTE - 43
CAPITAL MANAGEMENT
The Company''s objective when managing the capital is to safeguard the Company''s ability to continue as a going concern. In order to provide the return to shareholders and benefits to other stakeholder''s and to maintain an optimal capital structure to redue the capital.
The Company monitors capital using a ratio of ''adjusted net debt" to ''total equity1. For this purpose, adjusted net debt is defined as total debt, comprising interest-bearing loans and borrowings and obligations under finance leases, less cash and cash equivalents. Equity comprises of Equity share capital and other equity. However, in view of certain adverse factors and liquidity problems faced by the Company, the net worth of the Company has been fully eroded and the Comany is presently under CIRP process and thereby continue to operate as a going concern.
The Company''s adjusted net debt to adjusted equity ratio was as follows:
(Rs. In Lakh)
A. |
Particulars |
As at March 31, 2018 |
As at March 31, 2017 |
Non-current Borrowings |
5,775.68 |
6,061.75 |
|
Current Borrowings |
6,59,209.83 |
4,55,592.08 |
|
Current Maturity : |
|||
From banks |
- |
22,495.70 |
|
From State Government |
296.62 |
151.09 |
|
Finance lease obligations |
12.47 |
25.49 |
|
Interest accrued |
76,684.29 |
12,100.61 |
|
Term Loans from Banks : |
|||
Rupee Loans |
32,088.20 |
19,329.77 |
|
Foreign Currency Loans |
25,361.30 |
17,180.57 |
|
Total Debt |
7,99,428.39 |
5,32,937.06 |
|
Less : Cash and cash equivalent |
3,701.34 |
8,156.33 |
|
Adjusted net debt |
7,95,727.05 |
5,24,780.73 |
|
Total equity |
(4,54,859.48) |
1,02,370.61 |
|
Adjusted net debt to adjusted equity ratio |
(1.75) |
5.13 |
B. Dividends
No dividend is paid by the Company in last three Years.
C. Loan Covenants
In order to achieve this overall objective, the Company capital management amongs other things, aims to ensure that it meets financial covenants attached to the interest bearing loan and borrowings that defined capital structure requirments. There have been breaches in the financial convenants of interest bearing loan and borrowings in the current period and previous periods. The lenders have declared the borrowings has non-performing assets as per prudential norms of Reserve Bank of India. [ Refer
NOTE - 44
The National Company Law Tribunal ("NCLT"), Mumbai Bench, vide order dated on 15th December 2017 ("Insolvency Commencement Date") has initiated Corporate Insolvency Resolution Process ("CIRP") u/s 7 of the Insolvency and Bankruptcy Code, 2016 ("the Code") based on application filed by Standard Chartered Bank and DBS Bank Ltd, financial creditors of the Company. Mr. Shailendra Ajmera IP Registration No. IBBI/IPA-001/IP-P00304/2017-18/10568 was appointed as Interim Resolution Professional ("IRP") to manage affairs of the Company in accordance with the provisions of Code. In the first meeting of Committee of Creditors ("CoC") held on 12th January 2018, Mr. Shailendra Ajmera had been confirmed as Resolution Professional ("RP") for the Company.As per section 134 of the Companies Act, 2013, the financial statements of the Company are required to be authenticated by the Chairperson of the Board of Directors, where authorised by the Board or at least two directors, of which one shall be managing director or the CEO (being a director), the CFO and Company Secretary where they are appointed. Pursuant to the NCLT order for commencement of the CIRP and in line with the provisions of the Code, the powers of the Board of Directors stand suspended and be exercised by IRP / RP. These Standalone Financial Statement for the year ended 31st March 2018 have been prepared by the management of the Company and certified by Mr. Anil Singhal, Chief Financial Officer (''CFO'') and Mr Ramjilal Gupta, Company Secretary (''CS''). While these financial statement pertain to the year ended 31st March 2018, the RP has not received any certification, representation, undertaking or statement from the erstwhile Managing Director or any other Dkectors (the power of Board of Dkectors stands suspended in accordance with the Code) for the period prior to commencement of the Corporate Insolvency Resolution Process (''CIRP'') i.e. prior to December 15, 2017 (''Insolvency Commencement Date''). Consequently, the RP is not in a position to certify on its own the truthfulness, fairness, accuracy or completeness of the financial statements prepared for such period during the financial year of 2017-18 that is prior to insolvency commencement date.
This financial statement were placed before the RP, the CFO and the Company Secretary on 7th June 2018 for thek consideration. Accordingly, the audited financial statement were considered and recommended in the meeting. In view thereof, the RP, in reliance of such examination by and the representations, clarifications and explanations provided by the CFO, has approved the same. The CFO has provided the certifications and representations with responsibility in respect of various secretarial, compliance and board matters pertaining to the period prior to Insolvency Commencement Date.
The RP has approved these financial Statement only to the limited extent of discharging the powers of the Board of Directors of the Company (suspended during CIRP) which has been conferred upon him in terms of provisions of Section 17 of the Code.
NOTE - 45
The carrying value of tangible assets (including capital work in progress of Rs 2,812.25 Lakhs) and intangible assets as at 31st March 2018 is Rs 3,87,337.51 Lakhs and Rs 1,51,634.33 Lakhs, respectively. As explained in note no.44 above the Company is under CIRP and the RP is required to invite submission of resolution plans from potential resolution applicants, which shall be put up for necessary approvals before the Committee of Creditor (''CoC'') and the NCLT The CIRP is not yet concluded and hence, the final outcome is yet to be ascertained. The company has not taken into consideration any impact on the value of the tangible and intangible assets, if any, in preparation of Financial Statements as required by Ind-AS 10 on "Events after the reporting period". Further, the Company has also not made full assessment of impairment as required by Ind AS 36 on Impairment of Assets, if any, as at 31st March 2018 in the value of tangible and intangible assets.
NOTE - 46
One of the customers who remitted Rs. 1,189.24 Lakhs in one of the bank account of the Company has not yet reflected in Company''s bank account. Necessary reconciliation process is being carried out. However, pending reconciliation, the trade receivable is higher by an equivalent amount as at 31st March 2018.
NOTE - 47
The Demat Statement as at 31st March 2018 which is evidence of ownership for certain investments amounting to Rs. 1417.98 Lakhs has not been provided by the depository participant.
NOTE - 48
In respect of Company''s borrowings from banks and financial institutions aggregating Rs. 1,78,660.55 Lakh, bank balances (current account and term deposits) aggregating Rs. 13,43.39 Lakhs, balance confirmations as at 31st March 2018 has not been received by the Company. In accordance with the Code, public announcement was made calling upon the financial creditors and operational creditors of the company to submit their claims with the Interim Resolution Professional (''IRP) by December 29, 2017. In accordance with the Code, the IRP/RP has to receive, collate and admit the claims submitted against the Company. Such claims can be submitted to the IRP/RP during CIRP, till the approval of a resolution plan by the CoC. Pursuant to the claims received on December 29, 2017, the CoC was formed on January 5, 2018, and the list of such creditors was duly notified to the NCLT and uploaded on the company website. Thereafter, there could be regular revisions to the list in view of the claims received and the RP is in the process of receiving, collating, verifying, seeking clarifications, sending communications for unreconciled balance, seeking additional documents to substantiate whole or part of the unreconciled balances on such claims.
In respect of claims submitted by the financial creditors as on 15th December 2017, the same is exceeding amount appearing in the books of accounts. To the extent the process for submission and reconciliation of claims as on the Insolvency Commencement Date remains an on-going process, no accounting impact in the books of accounts has been made in respect of excess, short or non-receipts of claims for operational and financial creditors.
NOTE - 49
(i) The Company has not recognised interest payable, after the insolvency commencement date i.e. 15th December 2017, on borrowings from banks and financial institutions, customer advance, inter corporate deposits received and security deposits amounting to Rs. 345,61.14 Lakh. The same is not in compliance with Ind AS - 23 on "Borrowing Cost" read with Ind AS - 109 on "Financial Instruments".
(ii) In respect of trade payables, customers advances, certain trade receivables and borrowings denominated and payables/ receivables in foreign currency and outstanding at insolvency commencement date i.e. 15th December 2017 and which are continued to remain outstanding as at 31st March 2018 are not restated at foreign currency closing rate as at 31st March 2018 having an impact on exchange difference loss (net) of Rs. 1,926.86 Lakhs. The same is not in compliance with Ind AS â 21 on "The Effects of Changes in Foreign Exchange Rates" that requires foreign currency monetary items shall be translated using the closing rate.
(iii) Had provision for interest and exchange difference would be recognised, finance cost, total expenses, loss for the year and total comprehensive income would have been higher by Rs. 36,488 Lakhs having consequential impact on other current financial liability and other equity.
NOTE - 50
The Company had given corporate financial guarantees to the lenders of Ruchi Worldwide Limited, a subsidiary. This subsidiary defaulted in repayment of their loan obligations and lenders have invoked corporate guarantees and initiated recovery of outstanding dues. The Company has received claim aggregating to Rs. 47,500.00 Lakhs from lenders on account of invocation of guarantees. The Company has assessed the changes in risk/expected cash shortfall to determine expected credit loss allowance to be recognised in respect of these financial guarantees, as a result total provision towards financial guarantee obligation amounting to Rs. 10,489.64 Lakhs has been made for the year ended 31st March 2018.
NOTE - 51
The corresponding figure for 31st March, 2017 have been regrouped /reclassified in order to confirm to the presentation for the current year.
As per our report of even date attached |
For Ruchi Soya Industries Limited |