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Notes to Accounts of SRF Ltd.

Mar 31, 2023

(i) Borrowing cost capitalised during the year is '' 44.98 crores (Previous year: '' 17.85 crores) with a capitalisation rate ranging from 0.49% to 3.82% (Previous year: 0.40% to 3.55%).

(ii) The industrial freehold land measuring 32.41 acres at the Company''s plant in Gummudipoondi, Tamil Nadu had been acquired by the Company w.e.f. January 01, 2001 pursuant to a scheme of amalgamation sanctioned by the Hon''ble High court of Judicature at Madras and the Hon''ble High court of Delhi. Out of the said land, there is a dispute on a land parcel of 2.74 acres. Based on the legal documentation available, the Company is of the view that the said dispute is not tenable.

(iii) Capital expenditure incurred during the year includes '' 7.22 crores (Previous year: '' 8.49 crores) on account of research and development. Depreciation for the year includes depreciation on assets deployed in research and development as per note 41 (a) below.

(iv) Refer to note 15.1 for information on PPE pledged as security by the Company. Additionally, non funded working capital facilities from banks amounting to '' 19.66 crores (Previous year: '' 37.80 crores) are secured by hypothecation of Captive Power Plant (CPP) and HFC134A plant situated at Dahej in the state of Gujarat.

(v) Refer to note 41 (c) for additions / adjustments on account of exchange difference during the year.

(vi) Disposals during the previous year include property, plant and equipment classified as assets held for sale. Refer note 40.

(i) The cost of inventories recognised as an expense includes '' 5.46 crores (Previous year: '' 3.18 crores) in respect of write-downs of inventory to net realisable value. The write downs is included in "Changes in inventories of finished goods, work-in-progress and stock-in-trade".

(ii) Refer Note 15.1 for information on inventories pledged as security by the Company.

(iii) The method of valuation of inventories has been stated in note 1.B.12

(iii) The Company has entered into receivables purchase agreements with banks to unconditionally and irrevocably sell, transfer, assign and convey all the rights, titles and interest of the Company in the receivables as identified. Receivables sold as on March 31, 2023 are of '' 1,020.76 crores (Previous year: '' 714.62 crores). The Company has derecognized these receivables as it has transferred its contractual rights to the banks with substantially all the risks and rewards of ownership and retains no control over these receivables as the banks have the right to further sell and transfer these receivables with notice to the Company.

(iv) At March 31, 2023, the carrying amount of the receivable from the Company''s most significant customer was '' 118.98 crores (Previous year: '' 113.21 crores)

(v) Refer Note 15.1 for information on trade receivables pledged as security by the Company.

There are no buy back of equity shares during the period of five years immediately preceding the reporting date.

Bonus shares issued during the five years preceding the reporting date

* During the previous year, the Company had issued and allotted 236,980,820 fully paid up Bonus Equity shares of '' 10 each in the ratio of 4:1 (i.e. 4 Bonus Equity shares for every 1 existing equity share of the Company) to the shareholders who held shares on October 14, 2021 (Record date).

Terms/ rights attached to equity shares :

The Company has only one class of equity shares having a par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the Company.

During the year ended March 31, 2023, first interim dividend of '' 3.60 per share and second interim dividend of '' 3.60 per share were recognised as distributions to equity shareholders, aggregating '' 213.43 crores (Previous year: first interim dividend of '' 12 per share (before issue of bonus shares) and second interim dividend of '' 4.75 per share (post issue of bonus shares), aggregating '' 211.89 crores).

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

The Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in the fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow hedging reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.

This reserves represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amount reclassified to retained earnings when those assets have been disposed of.

Securities premium represents the amount received in excess of the face value upon issue of equity shares. The same may be, inter-alia, utilised for issue of fully paid bonus shares or for buy-back of equity shares by the Company, in accordance with the provisions of the Act.

The cost of hedging reserve reflects gain or loss on the portion excluded from the designated hedging instrument that relates to the forward element of forward contracts. It is initially recognised in other comprehensive income and accounted for similarly to gains or losses in the cash flow hedging reserve.

CURRENT BORROWINGS

Short term borrowings are either payable in installments within one year or repayable on demand. For short

term borrowings, interest rate ranges from 0.26% to 4.05%.

Terms of repayment

1 Rupee term loans of '' 140.63 crores are repayable in 9 quarterly instalments from April 2023 (Previous year: '' 203.13 crores repayable in 13 quarterly instalments from April 2022).

2 Foreign currency term loan of '' 188.83 crores are repayable in 8 quarterly instalments from May 2023 (Previous year: '' 265.87 crores are repayable in 12 quarterly instalments from May 2022).

3 Foreign currency term loan of '' 44.04 crores are repayable in 3 quarterly instalments from April 2023 (Previous year: '' 94.66 crores are repayable in 7 quarterly instalments from April 2022).

4 Foreign currency term loan of '' 109.67 crores are repayable in 5 half yearly instalments from April 2023 (Previous year: '' 141.40 crores are repayable in 7 half yearly instalments from April 2022).

5 Foreign currency term loan of '' 26.82 crores are repayable in 1 quarterly instalments in April 2023 (Previous year: '' 109.29 crores are repayable in 5 quarterly instalments from April 2022).

6 Foreign currency term loan of '' 287.57 crores are repayable in 2 half yearly instalments from September 2023 and then 12 monthly instalments from April 2024 onwards. (Previous year: '' 288.99 crores is repayable in 4 half yearly instalments from September 2022 and then 12 monthly instalments from April 2024 onwards).

7 Foreign currency term loan of '' 246.63 crores are repayable in one bullet instalment in March 2025 (Previous year: '' 227.19 crores are repayable in one bullet instalment in March 2025).

8 Foreign currency term loan of '' 232.12 crores are repayable in 16 quarterly instalments from June

2023 (Previous year: '' 227.19 crores are repayable in 17 quarterly instalments from March 2023).

9 Foreign currency term loan of '' 205.52 crores are repayable in 16 quarterly instalments from February

2024 (Previous year: Nil).

10 Foreign currency term loan of '' 616.54 crores are repayable in 9 quarterly instalments from February

2025 (Previous year: Nil).

11 Rupee term loans from banks of '' 8.22 crores was repaid in the current year (Previous year: '' 8.22 crores repayable in 2 quarterly instalments from June 2022).

12 Redeemable non convertible debenture of '' 250 crores was repaid in the current year (Previous year: '' 250 crores repayable in one bullet instalment in September 2022).

13 Foreign currency term loan from banks of '' 23.67 crores was repaid in the current year (Previous year: '' 23.67 crores is repayable in 1 quarterly instalment in June 2022).

14 Foreign currency term loan from banks of '' 15.00 crores was repaid in the current year (Previous year: '' 15.00 crores is repayable in one bullet instalment in June 2022).

As per the relevant accounting standards, the Company continues to reassess its MAT utilization and its recognition. Basis current profitability and reassessment of certain tax positions, the Company has recognized an additional MAT credit of '' 94.13 crores pertaining to earlier years (including '' 74.02 crores which was previously written off during the year 2020-21), and the same has also been utilised in current financial year.

(i) The tax rate used for the current year reconciliation above is the corporate tax rate of 34.944% (Previous year: 34.944%) payable by corporate entities in India on taxable profits under the Indian tax law.

(ii) During the year, the Company has received a favourable income tax assessment order pertaining to a prior year. Based on the Order, the Company has recognised interest income of '' 20.15 crores as other income and has written back '' 32.17 crores as ''Adjustment in relation to earlier years'' in the statement of profit and loss. Tax adjustments, if any, in relation to the pending assessments for certain other years, and involving a similar matter, will be considered in the year in which a requisite level of certainty is achieved.

(iii) As per the relevant accounting standards, the Company continues to reassess its MAT utilization and its recognition. Basis current profitability and reassessment of certain tax positions, the Company has recognized an additional MAT credit of '' 94.13 crores (including '' 74.02 crores which was previously written off during the year 2020-21), and the same has also been utilised in current financial year.

(iv) Previous year figures of Income Tax in relation to earlier years includes tax credit of '' 15.42 crores which is related to finalization and determination of deduction/allowance claimed for earlier years under Chapter-VIA of the Income-tax Act, 1961, for generation of power from captive power plants which is based on finalization of transfer pricing study /tax audit reports of the previous years.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b. (i) The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty / service tax / goods and service tax amounting to '' 18.59 crores (Previous year: '' 18.86 crores) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

(ii) The Company has received a notice for assessment year 2018-19 on April 13, 2022 on account of non deduction of TDS on foreign payments involving an amount of '' 14.34 crores. Based on the facts of the case and the Company''s assessment, the Company is of the view that the proposed adjustments are not likely to sustain.

(i) Assessment / rectification orders received for assessment years 2017-18 and 2018-19 in which adjustments amounting to '' 277.31 crores and '' 167.43 crores respectively were made on account of transfer pricing adjustments, research and development expenditure and others etc. (in line with earlier years) and a demand of '' 1.20 crores and '' 11.03 crores was raised. These orders have a tax implication of '' 95.97 crores and '' 57.94 crores respectively (primarily due to reduction in MAT credit entitlement eligible for accumulation / subsequent utilization). The Company has filed appeal before Income Tax Appellate Tribunal against the said orders. Pursuant to a direction of the Hon''ble Delhi High Court, the Department of Scientific and Industries Research (DSIR) has approved the said R&D expenditure for which rectification is pending before Assessing Officer. Based on the facts of the case and the management''s assessment, the Company is of the view that the proposed adjustments are not likely to sustain.

(ii) Intimation order u/s 143(1) received for assessment year 2021-22 in which adjustments of '' 307.03 crores have been made with a corresponding demand of '' 130.74 crores. Also a refund of '' 56.91 crores for different assessment years has been adjusted against the said demand. In view of the Company, these adjustments are technical errors for which the Company has filed rectification application before Assessing Officer and an appeal before CIT(Appeals). Based on the facts of the case and the management''s assessment, the Company is of the view that the proposed adjustments are not likely to sustain.

**** Amount deposited against contingent liability '' 9.05 crore (Previous year: '' 0.42 crore). Contingent liability includes demand by Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd. (MPPKVV Ltd) of '' 8.73 Crores (Previous year: '' 8.12 crores).

d. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made.

(i) Superannuation fund

The Company makes contributions to a Trust which in turn contributes to ICICI Prudential Life Insurance Company Limited. Apart from being covered under the Gratuity Plan described below, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee''s salary. From November 1, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

(ii) Provident fund administered through Regional Provident Fund Commissioner

All employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognised Provident Fund Trust. For other employees contributions are made to the Regional Provident Fund Commissioners. The Government mandates the annual yield to be provided to the employees on their corpus. This plan is considered as a Defined Contribution Plan. For the first category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government and these are considered as Defined Benefit Plans and are accounted for on the basis of an actuarial valuation.

33.2 Defined benefit plans

The Company sponsors funded defined benefit plans for qualifying employees. The defined benefit plans are administered by separate funds which are legally separate from the Company. These plans are:

(a) Gratuity

(b) Provident fund for certain category of employees administered through a recognised provident fund trust

(i) These plans typically expose the company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. Actuarial valuations involve making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

Gratuity:

Plan assets comprises primarily of investment in HDFC Group Unit Linked Plan fund and ICICI Prudential Life Fund. The average duration of the defined benefit obligation is 9.07 years (Previous year: 9.12 years). The Company expects to make a contribution of '' 11.64 crores (Previous year: '' 10.58 crores) to the defined benefit plans during the next financial year.

Long Term Retention Pay

The Company has a Long Term Retention Pay Plan which covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three year blocks subject to achievement of certain performance ratings. The Company also has a scheme for talent retention of certain identified employees under which an incentive is payable over a period of three years.

34 EMPLOYEE SHARE BASED PAYMENTS

The Company has an Employee Share Purchase Scheme (SRF Long Term Share Based Incentive Plan) to provide equity settled share based payments to eligible employees. The expenses related to the grant of shares under the Scheme are accounted for on the basis of fair value of the share on the grant date (which is the market price of the Company''s share on the date of grant less exercise price). The fair value so determined is expensed on a straight line basis over the remaining tenure over which the employees renders their services.

35 SEGMENT REPORTING

Based on the guiding principles laid down in Indian Accounting Standard (Ind AS) - 108 "Segment Reporting", the Chairman & Managing Director of the Company is the Chief Operating Decision Maker (CODM) and for the purposes of resource allocation and assessment of segment performance the business of the Company is segregated in the segments below:

• Technical Textiles business: includes nylon tyre cord fabric, belting fabric, polyester tyre cord fabric and industrial yarns and its research and development

• Chemicals business: includes refrigerant gases, industrial chemicals, speciality chemicals, fluorochemicals & allied products and its research and development.

• Packaging Film business: includes polyester films and polypropylene films.

• Others: includes coated fabric, laminated fabric and other ancillary activities.

Segment revenue, results and capital employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments. These amounts relate to continuing operations, unless otherwise stated.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, trade receivables, inventories and property plant and equipment and intangible assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

During the previous year, Company had issued and allotted 236,980,820 fully paid up Bonus Equity shares of '' 10 each in the ratio of 4:1 (i.e. 4 Bonus Equity shares for every 1 existing equity share of the Company) to the shareholders who held shares on October 14, 2021 (Record date). Accordingly, basic and diluted earnings per share had been calculated based on the weighted average number of shares outstanding in the previous year, as adjusted by issuance of bonus shares.

38 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

38.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as a going concern and provide reasonable return to the shareholders by maintaining a reasonable balance between debt and equity. The capital structure of the Company consists of net debt (borrowings net of cash and cash equivalents, deposit accounts with maturity beyond three months upto twelve months and current investments) and total equity of the Company. The Company is not subject to any externally imposed capital requirements. The Company''s management reviews the capital structure of the Company on periodic basis. As part of its review, the management considers the cost of capital and risk associated with each class of capital. The Company also evaluates its gearing measures using Debt Equity Ratio to arrive at an appropriate level of debt and accordingly evolves its capital structure.

The following methods/ assumptions are used to estimate the fair values:

(a) Fair valuation of financial assets and liabilities with short term maturities is considered as approximate to respective carrying amount due to the short term maturities of these instruments.

(b) Fair valuation of non-current financial assets and financial liabilities has been disclosed to be same as carrying value as there is no significant difference between carrying value and fair value.

(c) Fair value of other long-term borrowings is estimated by discounting future cash flows using current rates (applicable to instruments with similar terms, currency, credit risk and remaining maturities) to discount the future payouts.

(d) The fair value is determined by using the valuation model/ technique with observable/ non-observable inputs and assumptions.

(e) Investment value excludes investment in subsidiaries which are shown at cost in balance sheet as per Ind AS 27 "Separate financial statements".

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

Level 1:

Quoted prices in the active market: This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market.

Level 2:

Valuation techniques with significant observable inputs: This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly. This level of hierarchy consists of over the counter (OTC) derivative contracts, open ended mutual funds, bonds and debentures.

Level 3:

Valuation techniques with significant unobservable inputs: This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value is determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main item in this category are unquoted equity instruments.

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions are used to estimate the fair values:

(i) Investments in mutual funds and bonds / debentures: Fair value is determined by reference to quotes from the financial institutions.

(ii) Derivative contracts: The Company has entered into various foreign currency contracts and interest rate swaps contracts to manage its exposure to fluctuations in foreign exchange rates and interest rate respectively. These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the authorized dealers banks and quoted forward exchange rates at the balance sheet date.

38.3 Financial Risk Management

The Company is exposed to various financial risks arising from its underlying operations and finance activities. The Company is primarily exposed to market risk (i.e. interest rate and foreign currency risk) and to credit risk and liquidity risk. The Company''s Corporate Treasury function plays the role of monitoring financial risk arising from business operations and financing activities.

Financial risk management within the Company is governed by policies and guidelines approved by the senior management and the Board of Directors. These policies and guidelines cover interest rate risk, foreign currency risk, credit risk and liquidity risk. Company policies and guidelines also cover areas such as cash management, investment of excess funds and the raising of short and long-term debt. Compliance with the policies and guidelines is managed by the Corporate Treasury function within the Company. Review of the financial risk is done on a monthly basis by the Chairman and Managing Director and on a quarterly basis by the Board of Directors. The objective of financial risk management is to contain, where deemed appropriate, exposures on net basis to the various types of financial risks mentioned above in order to limit any negative impact on the Company''s results and financial position.

In accordance with its financial risk management policies, the Company manages its market risk exposures by using specific type of financial instruments duly approved by the Board of Directors as and when deemed appropriate. It is the Company''s policy and practice neither to enter into derivative transactions for speculative purpose, nor for any purpose unrelated to the underlying business. The Board of Directors / Chairman and Managing Director reviews and approves policies for managing each of the above risks.

38.3.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk and foreign currency risk. Financial instruments affected by market risk includes loans and borrowings, deposits, investments and derivative financial instruments. The Company enters into derivative contracts as approved by the Board to manage its exposure to interest rate risk and foreign currency risk.

A. Foreign Currency Risk Management

Foreign currency risk also known as Exchange Currency Risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Foreign currency risk in the Company is attributable to Company''s operating activities, investing activities and financing activities.

In the operating activities, the Company''s exchange rate risk primarily arises when revenue / costs are generated in a currency that is different from the reporting currency (transaction risk). In compliance with the Board approved policy, the Company manages the net exposure on a rolling 12 month basis and for exposures between 12 to 36 months, hedging is done based on specific exposure. The information is monitored by the Audit committee and the Board of Directors on a quarterly basis. This foreign currency risk exposure of the Company are mainly in U.S. Dollar (USD), Euro (EUR), Japanese Yen (JPY) and British Pound Sterling (GBP). The Company''s exposure to foreign currency changes for all other currencies is not material.

Foreign currency sensitivity analysis

The Company is mainly exposed to changes in USD, EUR, JPY and GBP exchange rates.

The following table details the Company''s sensitivity to a 1% increase and decrease in the '' against the relevant foreign currency. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for 1% change in foreign currency rates. This analysis assumes that all other variables, in particular interest rates, remain constant. A positive number below indicates an increase in profit before tax or vice-versa.

Foreign exchange derivative and non-derivative financial instruments

The Company uses derivative as well as non-derivative financial instruments for hedging financial risks that arise from its commercial business or financing activities. The Company''s Corporate Treasury team manages its foreign currency risk by hedging transactions that are expected to occur within of 1 to 36 months for hedges of forecasted sales, purchases, loans and liabilities and capital expenditures. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. All identified exposures are managed as per the policy duly approved by the Board of Directors.

B. Interest Rate Risk Management

Interest rate risk arises from movements in interest rates which could have effects on the Company''s net income or financial position. Changes in interest rates may cause variations in interest income and expenses resulting from interest-bearing assets and liabilities. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a portfolio of fixed and variable rate loans and borrowings. The Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts, calculated by reference to an agreed principal amount outstanding at the time of inception of the swap. Out of the total long term borrowings, the amount of fixed interest loan is '' 676.02 crores and floating interest loan is '' 1422.36 crores (Previous year: Fixed interest loan '' 938.35 crores and Floating interest loan '' 916.26 crores).

The following table details the Company''s sensitivity to a 1% increase and decrease in the '' against the relevant foreign currency. The sensitivity analysis includes only outstanding forward exchange contracts as tabulated above and adjusts their translation at the period end for 1% change in forward rates. A positive number below indicates an increase in profit before tax or vice-versa.

Managing interest rate benchmark reform and associated risks

A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as ''IBOR reform''). The Company had certain financial instruments which are impacted by the IBOR reform. During the previous year, the Company had renegotiated all working capital facilities agreements and moved to new benchmarks, wherever IBOR reforms had mandated.

As per the IBOR reform regulations, USD LIBOR based contracts entered into on or before December 31, 2021 are allowed to continue utilising the facility until the maturity date, provided such date is before June 30, 2023. As at March 31, 2023, the Company has two long term loan arrangements which are USD LIBOR benchmark linked and maturing after June 2023. The management of the Company has planned to prepay one of these loans and for the other loan, move to Secured Overnight Financing Rate (SOFR) benchmark prior to June 2023. Any related IRS contract would accordingly be amended. All the EUR denominated long term loans of the Company which are linked to EURIBOR have relevant benchmark replacement/ fall back clauses and do not require any amendment.

The management does not envisage any significant impact on the consolidated financial statements due to the migration.

Interest Rate Swap Contracts

Under interest rate swap (IRS) contracts, the Company agrees to exchange the difference between fixed and floating rate interest amounts calculated on the agreed notional principal amounts. Such contracts enables the Company to mitigate the risk of changing interest rates.

Each of the above trades are in the nature of cash flow hedges and are effective hedges. The mark to market on these trades is therefore routed through Cash flow Hedge Reserve. The interest rate swap and the interest payments on the loan are paid simultaneously and are charged off to the statement of profit and loss.

38.3.2 Credit Risk Management

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables, loans and other financial assets) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Company does not require collateral in respect of trade receivables, loans and contract assets.

Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with counterparties who meet the parameters specified in Investment Policy of the Company. The investment policy specifies the limits of investment in various categories of products so as the minimize the concentration of risks and therefore mitigate financial loss due to counterparty''s potential failure.

The derivatives are entered into with reputed and well established bank and financial institution counterparties.

The cash and cash equivalents and other bank balances are held with banks, financial institution and other counterparties, which are rated AA or above. The Company considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties.

The Company limits its exposure to credit risk by investing in liquid debt securities and only with counterparties that have a credit rating of at least AA or above. The Company permits exposure in corporate bonds only upto the specified amount as per its Board policy. Also, mutual fund investments are permitted only in those funds where the corpus size is more than '' 2,000 crores. The Company monitors its investment portfolio on continuous basis to assess whether there has been a significant increase in credit risk whether or not reflected in the published ratings.

Expected credit loss on financial assets:

To manage credit risk for trade receivables, the Company establishes credit approvals and credit limits, periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.

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

38.3.3 Liquidity Risk Management

Liquidity risk is the risk of non-availability of financial facilities available to the Company to meet its financial obligations. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of money market instruments, bank overdrafts, bank loans, debentures and other types of facilities. The liquidity management is governed by the Board approved liquidity management policy. Any deviation from the policy has to be approved by the Treasury Management comprising of Chairman and Managing Director, Chief Financial Officer and Treasury Head. The Company assesses the concentration of risk with respect to refinancing its debt, guarantee given and funding of its capital expenditure according to needs of the future. The Company manages its liquidity by holding appropriate volumes of liquid assets which are available for its disposal on T 1 basis and by maintaining open credit lines with banks.

40 Assets classified as held for sale (a) Description:

During the previous year, the management had decided to dispose off inoperative assets related to Industrial Yarn Unit. Accordingly, these assets were classified as assets held for sale in terms of Ind AS 105- "Non-current assets held for sale and discontinued operations" and recognised at their estimated fair value. Till March 31, 2021, these assets were reported under "Technical textiles business segment" in accordance with the requirements of Ind AS 108 - "Operating Segments" in the financial statements.

The Company has secured bank loans that contain loan covenants. A future breach of any covenants may require the Company to repay the loans earlier than their original payment date.These covenants are monitored by the treasury department and regularly reported to management to ensure compliance with the agreement.

The Company also participates in a supply chain financing arrangement (SCF) with the principal purpose of facilitating efficient payment processing of supplier invoices. The SCF allows the Company to centralise payments of trade payables to the bank rather than paying each supplier individually. While the SCF does not extend payment terms beyond the normal terms agreed with other suppliers that are not participating, the programme assists in making cash outflows more predictable. Also refer note 18.

Also refer note 10 for receivables purchase agreements entered into by the Company as a part of its liquidity risk management policy.

(e) The Company has established a comprehensive system of maintenance of information and documents as required by transfer pricing legislation under section 92D for its international transactions as well as specified domestic transactions. Based on the transfer pricing regulations/ policy, the transfer pricing study for the year ended March 31, 2023 is to be conducted on or before due date of the filing of return and the Company will further update above information and records based on the same and expects these to be in existence latest by that date. Management believes that all the above transactions are at arm''s length price and the aforesaid legislations will not have impact on the financial statement, particularly on the amount of tax expense and provision for taxation.

(iv) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.

(v) The Company is not declared a wilful defaulter by any bank or financial institution or any other lender.

(vi) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(vii) The Company has complied with the number of layers prescribed under section 2(87) of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017.

(viii) There are no funds which 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 persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(ix) There are no funds which have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall:

a) directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(x) 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 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(xi) The Company has not traded or invested in crypto currency or virtual currency during the financial year.

(xii) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.


Mar 31, 2022

(i) Borrowing cost capitalised during the year '' 17.85 Crores (Previous year: '' 7.62 Crores) with a capitalisation rate ranging from 0.40% to 3.55% (Previous year: 3.22% to 8.09%).

(ii) The industrial freehold land measuring 32.41 acres at the Company''s plant in Gummudipoondi, Tamil Nadu had been acquired by the Company w.e.f. January 01, 2001 pursuant to a scheme of amalgamation sanctioned by the Hon''ble High court of Judicature at Madras and the Hon''ble High court of Delhi. Out of the said land, there is a dispute on a land parcel of 2.74 acres. Based on the legal documentation available, the Company is of the view that the said dispute is not tenable.

(iii) Capital expenditure incurred during the year includes '' 8.49 Crores (Previous year: '' 13.46 Crores) on account of research and development. Depreciation for the year includes depreciation on assets deployed in research and development as per note 41 (a) below.

(iv) Refer to note 15.1 for information on PPE pledged as security by the Company. Additionally, non funded working capital facilities from banks amounting to '' 37.80 Crores (Previous year: '' 58.50 Crores) are secured by hypothecation of Captive Power Plant (CPP) and HFC134A plant situated at Dahej in the state of Gujarat.

(v) Refer to note 41 (c) for additions / adjustments on account of exchange difference during the year.

(vi) The Company accounts for all capitalisation of property, plant and equipment through capital work in progress and, therefore, the movement in capital work-in-progress is the difference between closing and opening balance of capital work-in-progress as adjusted by additions in property, plant and equipment and intangible assets.

(vii) Disposals during the current year include property, plant and equipment classified as assets held for sale. Refer note 40 below.

(i) The cost of inventories recognised as an expense includes '' 3.18 Crores (Previous year: '' 10.35 Crores) in respect of write-downs of inventory to net realisable value.

(ii) Refer Note 15.1 for information on inventories pledged as security by the Company.

(iii) The method of valuation of inventories has been stated in note 1.B.12

(iii) The Company has entered into receivables purchase agreements with banks to unconditionally and irrevocably sell, transfer, assign and convey all the rights, titles and interest of the Company in the receivables as identified. Receivables sold as on March 31, 2022 are of '' 714.62 Crores (Previous year: '' 343.46 Crores). The Company has derecognized these receivables as it has transferred its contractual rights to the banks with substantially all the risks and rewards of ownership and retains no control over these receivables as the banks have the right to further sell and transfer these receivables with notice to the Company.

(iv) During the previous year the Company had sold, with recourse, trade receivables amounting to '' 47.15 Crores to a bank for cash proceeds. These trade receivables were not derecognised because the Company retained substantially all of the risks and rewards, primarily credit risk. The amounts received on such transfer were recognised as a secured bank loan (refer note 15).

(v) No customer represents more than 10% (Previous year: Nil) of the total balances of trade receivables.

There are no buy back of equity shares during the period of five years immediately preceding the reporting date.

Bonus shares issued during the five years preceding the reporting date

A During the current year, the Company has issued and allotted 236,980,820 fully paid up Bonus Equity shares of '' 10 each in the ratio of 4:1 (i.e. 4 Bonus Equity shares for every 1 existing equity share of the Company) to the shareholders who held shares on October 14, 2021 (Record date).

* During the year ended March 31, 2021, the Company had issued 1,764,705 fully paid up equity shares equivalent to 3.07% of the existing paid up equity capital of the Company to Qualified Institutional Buyers in accordance with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. These shares were issued at an issue price of '' 4,250 per share (including securities premium of '' 4,240 per share) for an aggregate consideration of '' 750 Crores. The proceeds (net of share issue expenses of '' 11.99 Crores charged off against securities premium) were utilised for repayment of borrowings.

Terms/ rights attached to equity shares :

The Company has only one class of equity shares having a par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the Company.

During the year ended March 31, 2022, first interim dividend of '' 12 per share (before issue of bonus shares) and second interim dividend of '' 4.75 per share (post issue of bonus shares) were recognised as distributions to equity shareholders, aggregating '' 211.89 Crores (Previous year: '' 24 per share before issue of bonus shares, aggregating '' 141.31 Crores).

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

The amount that can be distributed as dividend by the Company to its equity shareholders is determined based on the financial statements of the Company and also considering the requirements of the Companies Act, 2013.

The Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in the fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow hedging reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.

The general reserve is created from time to time on transfer of profits from retained earnings. General reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income. Items included in general reserve will not be reclassified subsequently to profit and loss.

Capital Redemption Reserve is a statutory, non-distributable reserve into which amounts are transferred following the redemption or purchase of a company''s own shares. The reserve is utilised in accordance with the provisions of the Act.

Securities premium represents the amount received in excess of the face value upon issue of equity shares. The same may be, inter-alia, utilised for issue of fully paid bonus shares or for buy-back of equity shares by the Company, in accordance with the provisions of the Act. During the previous year, expenses amounting to '' 11.99 Crores incurred on issue of equity shares under Qualified Institutional Placement have been charged off against securities premium (Refer note 13.1).

The cost of hedging reserve reflects gain or loss on the portion excluded from the designated hedging instrument that relates to the forward element of forward contracts. It is initially recognised in other comprehensive income and accounted for similarly to gains or losses in the cash flow hedging reserve.

The Company has allotted equity shares to certain employees under an employee share purchase scheme. The employee share based payment reserve is used to recognise the value of equity settled share based payments provided to such employees as part of their remuneration. Refer note 34 for further details of the scheme.

This reserves represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amount reclassified to retained earnings when those assets have been disposed of.

* Above amount of borrowings are net of upfront fees paid '' 2.39 Crores (Previous year: '' 2.84 Crores).

A Out of a term loan of '' 227.91 Crores obtained towards the end of the current year, unutilised balance of '' 200 Crores as on March 31, 2022 has been temporarily invested in fixed deposit with a bank. There was no such loan / amount in previous year.

Terms of repayment

1) Reedemable non convertible debenture of '' 250 Crores is repayable in one bullet instalment in September 2022 (Previous year: '' 250 Crores repayable in one bullet instalment in September 2022).

2) Rupee term loan from bank of '' 38.50 Crores was prepaid in current year in October 2021 (Previous year: '' 38.50 Crores repayable in 3 half yearly instalments from August 2021).

3) Rupee term loan from bank of '' 8.22 Crores is repayable in 2 quarterly instalments from June 2022 (Previous year: '' 24.66 Crores repayable in 6 quarterly instalments from June 2021).

4) Rupee term loan from bank of '' 6.00 Crores was prepaid in current year in October 2021 (Previous year: '' 6.00 Crores repayable in 3 annual instalments from December 2021).

5) Rupee term loan from bank of '' 203.13 Crores is repayable in 13 quarterly instalments from April 2022 (Previous year: '' 250.00 Crores repayable in 16 quarterly instalments from July 2021).

6) Foreign currency term loan from bank of '' 23.67 Crores is repayable in 1 quarterly instalment in June 2022 (Previous year: '' 114.30 Crores repayable in 5 quarterly instalments from June 2021).

7) Foreign currency term loan from bank of '' 265.87 Crores is repayable in 12 quarterly instalments from May 2022 (Previous year: '' 361.33 Crores repayable in 16 quarterly instalments from May 2021).

8) Foreign currency term loan from bank of '' 94.66 Crores is repayable in 7 quarterly instalments from April 2022 (Previous year: '' 143.69 Crores repayable in 11 quarterly instalments from April 2021).

9) Foreign currency term loan from others of '' 141.40 Crores is repayable in 7 half yearly instalments from April 2022 (Previous year: '' 175.59 Crores repayable in 9 half yearly instalments from April 2021).

10) Foreign currency term loan from bank of '' 15.00 Crores is repayable in one bullet instalment in June 2022 (Previous year: '' 15.00 Crores is repayable in one bullet instalment in June 2022).

11) Foreign currency term loan from bank of '' 109.29 Crores is repayable in 5 quarterly instalments from April 2022 (Previous year: '' 145.82 Crores repayable in 12 quarterly instalments from April 2021).

12) Foreign currency term loan from bank of '' 288.99 Crores is repayable in 4 half yearly instalments from September 2022 and then 12 monthly instalments from April 2024 onwards (Previous year: '' 290.77 Crores repayable in 5 half yearly instalments from March 2022 and then 12 monthly instalments from April 2024 onwards).

13) Foreign currency term loan from bank of '' 227.19 Crores is repayable in one bullet instalment in March 2025 (Previous year: Nil).

14) Foreign currency term loan from bank of '' 227.19 Crores is repayable in 17 quarterly instalments from March 2023 (Previous year: Nil).

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

(i) The tax rate used for the current year reconciliation above is the corporate tax rate of 34.944% (Previous year: 34.944%) payable by corporate entities in India on taxable profits under the Indian tax law.

(ii) Income tax in relation to earlier years includes tax credit of '' 15.42 Crores (Previous year: tax expense of '' 1.62 Crores) which is related to finalization and determination of deduction / allowance claimed for earlier years under Chapter-VIA of the Income-tax Act, 1961, for generation of power from captive power plants which is based on finalization of transfer pricing study / tax audit reports of the previous year.

b. (i) The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty / service tax / goods and service tax amounting to '' 18.86 Crores (Previous year: '' 18.58 Crores) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

(ii) The Company has received a notice for assessment year 2018-19 on April 13, 2022 on account of non deduction of TDS on foreign payments involving an amount of '' 14.34 Crores. Based on the facts of the case and the Company''s assessment, the Company is of the view that the proposed adjustments are not likely to sustain.

(iii) Besides the above, the Company has received final assessment orders for assessment years 2017-18 and 2018-19 on April 30,2022 in which adjustments amounting to '' 277.31 Crores and '' 323.09 Crores respectively were made on account of transfer pricing adjustments, research and development expenditure and others etc. (in line with earlier years) and a demand of '' 1.20 Crores and '' 96.71 Crores respectively has been raised. The Company plans to file rectification application towards certain computation errors and for rest of the issues, appeal will be filed

d. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made.

(ii) The Company has other commitments, for purchases / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any long term contracts including derivative contracts for which there will be any material foreseeable losses which have not been provided for.

(iii) Export obligation under advance license scheme on duty free import of specific raw materials, remaining outstanding is '' 721.78 Crores (Previous year: '' 619.36 Crores).

The expenses incurred on account of the above defined contribution plans have been included in Note 25 "Employee Benefits Expenses" under the head "Contribution to provident and other funds".

(i) Superannuation fund

The Company makes contributions to a Trust which in turn contributes to ICICI Prudential Life Insurance Company Limited. Apart from being covered under the Gratuity Plan described below, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee''s salary. From November 1, 2006, the

Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

(ii) Provident fund administered through Regional Provident Fund Commissioner

All employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognised Provident Fund Trust. The Company has an obligation to fund any shortfall on the yield of the trust''s investments over the administered interest rates on an annual basis. For other employees contributions are made to the Regional Provident Fund Commissioners. The Government mandates the annual yield to be provided to the employees on their corpus. This plan is considered as a Defined Contribution Plan. For the first category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government and these are considered as Defined Benefit Plans and are accounted for on the basis of an actuarial valuation.

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. Actuarial valuations involve making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.


33.2 Defined benefit plans

The Company sponsors funded defined benefit plans for qualifying employees. The defined benefit plans are administered by separate funds which are legally separate from the Company. These plans are:

(a) Gratuity

(b) Provident fund for certain category of employees administered through a recognised provident fund trust

(i) These plans typically expose the company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Interest Risk

The current service cost and the net interest expenses for the year are included in Note 25 "Employee Benefits Expenses" under the head "Contribution to provident and other funds".

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

Gratuity:

Plan assets comprises primarily of investment in HDFC Group Unit Linked Plan fund and ICICI Prudential Life Fund. The average duration of the defined benefit obligation is 9.12 years (Previous year: 9.14 years). The Company expects to make a contribution of '' 10.58 Crores (Previous year: '' 8.76 Crores) to the defined benefit plans during the next financial year.

Provident fund:

The plan assets have been primarily invested in government securities and corporate bonds.

(viii) Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of reporting period, while holding all other assumptions constant.

(i) Long Term Retention Pay

The Company has a Long Term Retention Pay Plan which covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three year blocks subject to achievement of certain performance ratings. The Company also has a scheme for talent retention of certain identified employees under which an incentive is payable over a period of three years.

34 EMPLOYEE SHARE BASED PAYMENTS

The Company has an Employee Share Purchase Scheme (SRF Long Term Share Based Incentive Plan) to provide equity settled share based payments to eligible employees. The expenses related to the grant of shares under the Scheme are accounted for on the basis of fair value of the share on the grant date (which is the market price of the Company''s share on the date of grant less exercise price). The fair value so determined is expensed on a straight line basis over the remaining tenure over which the employees renders their services.

35 SEGMENT REPORTING

Based on the guiding principles laid down in Indian Accounting Standard (Ind AS) - 108 "Segment Reporting", the Chairman & Managing Director of the Company is the Chief Operating Decision Maker (CODM) and for the purposes of resource allocation and assessment of segment performance the business of the Company is segregated in the segments below:

• Technical Textiles business: includes nylon tyre cord fabric, belting fabric, polyester tyre cord fabric and industrial yarns and its research and development

• Chemicals business: includes refrigerant gases, industrial chemicals, speciality chemicals, fluorochemicals & allied products and its research and development.

• Packaging Film business: includes polyester films and polypropylene films.

• Others: includes coated fabric, laminated fabric and other ancilliary activities.

Segment revenue, results and capital employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments. These amounts relate to continuing operations, unless otherwise stated. (Refer to note 40 with regard to information in relation to discontinued operations).

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, trade receivables, inventories and property plant and equipment and intangible assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

* These shares have a lock in period upto November 30, 2022 and are pledged for a period upto October 31, 2026.

A During the current year, the Nomination and Remuneration Committee based upon the recommendations of the management released 300,000 equity shares from pledge, resulting into immediate vesting of these shares. As a result, an additional amount of '' 6.72 Crores has been recognised in the statement of profit and loss.

# Includes amount of '' 17.50 Crores (Previous year: Nil) towards witholding tax on equity shares granted under the above scheme.

During the current year, the Company has issued and allotted 236,980,820 fully paid up Bonus Equity shares of '' 10 each in the ratio of 4:1 (i.e. 4 Bonus Equity shares for every 1 existing equity share of the Company) to the shareholders who held shares on October 14, 2021 (Record date). Accordingly, basic and diluted earnings per share has been calculated based on the weighted average number of shares outstanding in the current and previous year, as adjusted by issuance of bonus shares.

38 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 38.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as a going concern and provic reasonable return to the shareholders by maintaining a reasonable balance between debt and equit The capital structure of the Company consists of net debt (borrowings net of cash and cash equivalent deposit accounts with maturity beyond three months upto twelve months and current investments) ar total equity of the Company. The Company is not subject to any externally imposed capital requirement The Company''s management reviews the capital structure of the Company on periodic basis. As part its review, the management considers the cost of capital and risk associated with each class of capita The Company also evaluates its gearing measures using Debt Equity Ratio to arrive at an appropriate lev of debt and accordingly evolves its capital structure.

The following methods/ assumptions were used to estimate the fair values:

(a) Fair valuation of financial assets and liabilities with short term maturities is considered as approximate to respective carrying amount due to the short term maturities of these instruments.

(b) Fair valuation of non-current financial assets has been disclosed to be same as carrying value as there is no significant difference between carrying value and fair value.

(c) The fair value of other long-term borrowings is estimated by discounting future cash flows using current rates (applicable to instruments with similar terms, currency, credit risk and remaining maturities) to discount the future payouts.

(d) The fair value is determined by using the valuation model/ technique with observable/ non-observable inputs and assumptions.

(e) Investment value excludes investment in subsidiaries which are shown at cost in balance sheet as per Ind AS 27 "Separate financial statements".

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

Level 1:

Quoted prices in the active market: This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market.

Level 2:

Valuation techniques with significant observable inputs: This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly. This level of hierarchy consists of over the counter (OTC) derivative contracts, open ended mutual funds, bonds and debentures.

Level 3:

Valuation techniques with significant unobservable inputs: This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value is determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main item in this category are unquoted equity instruments.

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

(i) Investments in mutual funds and bonds / debentures: Fair value is determined by reference to quotes from the financial institutions.

(ii) Derivative contracts: The Company has entered into various foreign currency contracts and interest rate swaps contracts to manage its exposure to fluctuations in foreign exchange rates and interest rate respectively. These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the authorized dealers banks and forward exchange rates at the balance sheet date.

(iii) Unquoted equity investments: Fair value is determined based on the recoverable value as per agreement with the investee.

In the operating activities, the Company''s exchange rate risk primarily arises when revenue / costs are generated in a currency that is different from the reporting currency (transaction risk). In compliance with the Board approved policy, the Company manages the net exposure on a rolling 12 month basis and for exposures between 12 to 36 months, hedging is done based on specific exposure. The information is monitored by the Audit committee and the Board of Directors on a quarterly basis. This foreign currency risk exposure of the Company are mainly in U.S. Dollar (USD), Euro (EUR), Japanese Yen (JPY) and British Pound Sterling (GBP). The Company''s exposure to foreign currency changes for all other currencies is not material.

Sensitivity of the fair value measurement to changes in unobservable inputs for financial instruments in Level 3 level of hierarchy is insignificant.

38.3 Financial Risk Management

The Company is exposed to various financial risks arising from its underlying operations and finance activities. The Company is primarily exposed to market risk (i.e. interest rate and foreign currency risk) and to credit risk and liquidity risk. The Company''s Corporate Treasury function plays the role of monitoring financial risk arising from business operations and financing activities.

Financial risk management within the Company is governed by policies and guidelines approved by the senior management and the Board of Directors. These policies and guidelines cover interest rate risk, foreign currency risk, credit risk and liquidity risk. Company policies and guidelines also cover areas such as cash management, investment of excess funds and the raising of short and long-term debt. Compliance with the policies and guidelines is managed by the Corporate Treasury function within the Company. Review of the financial risk is done on a monthly basis by the Managing Director and on a quarterly basis by the Board of Directors. The objective of financial risk management is to contain, where deemed appropriate, exposures on net basis to the various types of financial risks mentioned above in order to limit any negative impact on the Company''s results and financial position.

In accordance with its financial risk management policies, the Company manages its market risk exposures by using specific type of financial instruments duly approved by the Board of Directors as and when deemed appropriate. It is the Company''s policy and practice neither to enter into derivative transactions for speculative purpose, nor for any purpose unrelated to the underlying business. The Board of Directors / Managing Director reviews and approves policies for managing each of the above risks.

38.3.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk and foreign currency risk. Financial instruments affected by market risk includes loans and borrowings, deposits, investments and derivative financial instruments. The Company enters into derivative contracts as approved by the Board to manage its exposure to interest rate risk and foreign currency risk.

A. Foreign Currency Risk Management

Foreign currency risk also known as Exchange Currency Risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Foreign currency risk in the Company is attributable to Company''s operating activities, investing activities and financing activities.

Foreign currency sensitivity analysis

The Company is mainly exposed to changes in USD, EUR, JPY and GBP exchange rates.

The following table details the Company''s sensitivity to a 1% increase and decrease in the '' against the relevant foreign currency. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for 1% change in foreign currency rates. A positive number below indicates an increase in profit before tax or vice-versa.

* Includes sensitivity on long-term foreign currency monetary items on which Para D13 AA of Ind AS 101 has been applied. Accordingly, the exchange loss/ (gain) arising on long term foreign currency monetary items relating to acquisition of depreciable assets will be added to/ deleted from the cost of such assets/ capital work in progress and will be depreciated over the balance useful life of assets.


Foreign exchange derivative and non-derivative financial instruments

The Company uses derivative as well as non-derivative financial instruments for hedging financial risks that arise from its commercial business or financing activities. The Company''s Corporate Treasury team manages its foreign currency risk by hedging transactions that are expected to occur within of 1 to 36 months for hedges of forecasted sales, purchases, loans and liabilities and capital expenditures. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. All identified exposures are managed as per the policy duly approved by the Board of Directors.

B. Interest Rate Risk Management

Interest rate risk arises from movements in interest rates which could have effects on the Company''s net income or financial position. Changes in interest rates may cause variations in interest income and expenses resulting from interest-bearing assets and liabilities. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a portfolio of fixed and variable rate loans and borrowings. The Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts, calculated by reference to an agreed principal amount outstanding at the time of inception of the swap. Out of the total long term borrowings, the amount of fixed interest loan is '' 938.35 Crores and floating interest loan is '' 916.26 Crores (Previous year: Fixed interest loan '' 898.59 Crores and Floating interest loan '' 917.02 Crores).

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate long term borrowings, as follows:

The following table details the Company''s sensitivity to a 1% increase and decrease in the '' against the relevant foreign currency. The sensitivity analysis includes only outstanding forward exchange contracts as tabulated above and adjusts their translation at the period end for 1% change in forward rates. A positive number below indicates an increase in profit before tax or vice-versa.

In case of increase in interest rate by above mentioned percentage, there would be a comparable negative impact on the profit before tax as mentioned above.

Managing interest rate benchmark reform and associated risks

A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as ''IBOR reform''). The Company has exposures to USD-LIBOR and EUR-IBOR on its financial instruments. The Company has renegotiated all working capital facilities agreements and have moved to new benchmarks, wherever IBOR reforms had mandated.

As per the IBOR reform regulations, USD LIBOR based contracts entered into on or before December 31, 2021 are allowed to continue utilising the facility until the maturity date, provided such date is before June 30, 2023. The Company has certain loans which falls under this category and accordingly, the management has taken a decision to continue on 1 Month / 3 Months / 6 Months LIBOR. All the EUR denominated long term loans of the Company are linked to EURIBOR and thus not impacted by IBOR reforms.

The Company has two loans (USD-LIBOR benchmark linked) which are maturing after June 2023 and the management has planned to migrate these loans to SOFR (secured overnight financing rate) benchmark prior to June 2023, along with IRS contract, if any. The management does not envisage any significant impact on the financial statements due to the migration.

Interest Rate Swap Contracts

Under interest rate swap (IRS) contracts, the Company agrees to exchange the difference between fixed and floating rate interest amounts calculated on the agreed notional principal amounts. Such contracts enables the Company to mitigate the risk of changing interest rates.

Each of the above trades are in the nature of cash flow hedges and are effective hedges. The mark to market on these trades is therefore routed through Cash flow Hedge Reserve. The interest rate swap and the interest payments on the loan are paid simultaneously and are charged off to the statement of profit and loss.

38.3.2 Credit Risk Management

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables, loans and other financial assets) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with counterparties who meet the parameters specified in Investment Policy of the Company. The investment policy is reviewed by the Company''s Board of Directors on an annual basis and if required, the same may be updated during the year. The investment policy specifies the limits of investment in various categories of products so as the minimize the concentration of risks and therefore mitigate financial loss due to counterparty''s potential failure.

Expected credit loss on financial assets:

To manage credit risk for trade receivables, the Company establishes credit approvals and credit limits, periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.

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

38.3.3 Liquidity Risk Management

Liquidity risk is the risk of non-availability of financial facilities available to the Company to meet its financial obligations. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of money market instruments, bank overdrafts, bank loans, debentures and other types of facilities. The liquidity management is governed by the Board approved liquidity management policy. Any deviation from the policy has to be approved by the Treasury Management comprising of Managing Director, Chief Financial Officer and Treasury Head. The Company assesses the concentration of risk with respect to refinancing its debt, guarantee given and funding of its capital expenditure needs of the future. The Company manages its liquidity by holding appropriate volumes of liquid assets which are available for its disposal on T 1 basis and by maintaining open credit lines with banks / financial institutions.

40 Assets held for sale

(a) Description:

During the current year, the management has decided to dispose off inoperative assets related to Industrial Yarn Unit. Accordingly, these assets have been classified as assets held for sale in terms of Ind AS 105-"Non-current assets held for sale and discontinued operations" and recognised at their estimated fair value. Till previous year, these assets were reported under "Technical textiles business segment" in accordance with the requirements of Ind AS 108 - "Operating Segments" in the financial statements.

(c) The Company has elected to continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items as described in Para D13 AA of Ind AS 101. Accordingly, exchange loss/ (gain) arising on all long term monetary items financed or re-financed on or before March 31, 2016 relating to acquisition of following depreciable assets are added to/ adjusted from the cost of such assets/ capital work in progress and will be depreciated over the balance useful life of such assets.

(e) The Company has established a comprehensive system of maintenance of information and documents as required by transfer pricing legislation under section 92D for its international transactions as well as specified domestic transactions. Based on the transfer pricing regulations/ policy, the transfer pricing study for the year ended March 31, 2022 is to be conducted on or before due date of the filing of return and the Company will further update above information and records based on the same and expects these to be in existence latest by that date. Management believes that all the above transactions are at arm''s length price and the aforesaid legislations will not have impact on the financial statement, particularly on the amount of tax expense and provision for taxation.

A Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, the unspent amount was subsequently deposited in a "Unspent CSR Account" and also utilised during the year ended March 31, 2022.

* This includes '' 18.68 Crores pertaining to current year and '' 0.37 Crore pertaining to previous year. In accordance with the above amended rules, the Company had taken credit for '' 0.37 Crore for excess CSR expenditure incurred during financial year 2019-20 and adjusted the same towards the CSR obligation for financial year 2020-21. However, the Ministry of Corporate Affairs (MCA), through its circular dated August 25, 2021, clarified that the companies cannot set off excess CSR amount spent prior to financial year 2020-21. Accordingly, an amount of '' 0.37 crore has been transferred to one of the specified funds prescribed under Schedule VII to the Companies Act, 2013 before September 30, 2021.

(iv) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(v) The Company is not declared a wilful defaulter by any bank or financial institution or any other lender.

(vi) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(vii) The company has complied with the number of layers prescribed under section 2(87) of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017.

(viii) There are no funds which 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 persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(ix) There are no funds which have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall:

a) directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(x) 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 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(xi) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(h) The figures for the previous year have been regrouped wherever necessary to comply with amendments in Schedule III of the Companies Act, 2013.


Mar 31, 2021

Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has identified twelve months as its operating cycle for the purpose of current / non current classification of assets and liabilities.

3. Property, plant and equipment (PPE)

Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation and accumulated impairment losses, if any.

All items of property, plant and equipment have been measured at fair value at the date of transition to Ind AS. The Company have opted such fair valuation as deemed cost at the transition date i.e. April 1, 2015.

Cost of acquisition or construction is inclusive of freight, duties, non-recoverable taxes, incidental expenses and interest on loans attributable to the acquisition of qualifying assets, up to the date of commissioning of the assets.

Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for qualifying assets, upto the date of commissioning of the assets.

Likewise, when a major inspection for faults is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria is satisfied. All other repair and maintenance costs are recognised in the statement of profit and loss as incurred.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items of property, plant and equipment and depreciated accordingly.

Assets are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Capital Work in Progress: Project under which assets are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable interest.

Spare parts are capitalized when they meet the definition of PPE, i.e., when the Company intends to use these for a period of more than 12 months.

4. Depreciation

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation has been provided on the cost of assets less their residual values on straight line method on the basis of estimated useful life of assets determined by the Company which are different from the useful life as prescribed in Schedule II of the 2013 Act. The estimated useful life of the assets have been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc. and are as under:

Roads

40-50 years

Buildings (including temporary structures)

5-60 years

Plant and equipment

2-40 years

Furniture and fixtures

3-20 years

Office equipment

3-20 years

Vehicles

4-5 years

for the year ended March 31, 2021

(All amounts in '' Crores, unless otherwise stated)

Freehold land is not depreciated.

Depreciation is calculated on a pro rata basis except assets costing upto '' 5,000 each, which are fully depreciated in the year of purchase.

An item of property, plant and equipment or any significant part initially recognised of such item of property plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.

The estimated useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

5. Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost.

Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.

Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The useful lives considered are as follows:

The Company has elected to continue with the carrying value of all of its intangibles assets recognised as on April 1, 2015 measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.

The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.

An intangible asset is derecognised on disposal or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.

6. Research and development expenditure Expenditure on research and development of products is included under the natural heads of expenditure in the year in which it is incurred except which relate to development activities whereby research findings are applied to a plan or designfor the production of new or substantially improved products and processes.

Such development costs are capitalised if they can be reliably measured, the product or process is technically and commercially feasible and the Company has sufficient resources to complete the development and to use or sell the asset.

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses, if any. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset. During the period of development, the asset is tested for impairment annually.

7. Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Company''s cash-generating units that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to

the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

3. Impairment of tangible and intangible assets other than goodwill The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use.

Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

Impairment loss is recognised when the carrying amount of an asset or CGU exceeds its recoverable amount. In such cases, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified,

an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

The Company bases its impairment calculation on detailed budgets and forecast, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of 5 years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after 5th year. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, Company extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.

9. Leasing

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease

if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assess whether:

- the contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

- the Company has the right to obtain substantially all of the economic benefits from use of the asset through the period of use; and

- the Company has the right to direct the use of the asset. The Company has this right when it has the decisionmaking rights that are most relevant to changing how and for what purpose the asset is used. In rare cases, where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:

• the Company has the right to operate the asset; or

• the Company designed the asset in a way that predetermines how and for what purpose it will be used

An entity shall reassess whether a contract is, or contains, a lease only if the terms and conditions of the contract are changed.

At inception or on reassessment of a contract that contains a lease component, the Company allocates

the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

Company as lessee

The Company accounts for assets taken under lease arrangement in the following manner:

The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentive received.

The right of use asset is subsequently depreciated using the straight line method from the commencement date to the end of the lease term. The estimated useful lives of right-of-use assets are determined on the basis of remaining lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company''s incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise the fixed payments, including in-substance fixed payments.

The lease liability is measured at amortised cost using the effective interest method.

It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Short-term leases and leases of low-value assets

The Company has elected not to recognise right-of use assets and lease liabilities for short term leases that have a lease term of 12 months or less and leases of low value assets. The Company recognises the lease payments associated with these leases as an expense on a straight- line basis over the lease term.

10. Borrowing costs

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. Borrowing costs incurred for the period from commencement of activities relating to construction/ development of the qualifying asset upto the date of capitalisation of such asset are

added to the cost of the asset. All other borrowing costs are expensed in the period in which they occur.

In case of a specific borrowing taken for the purpose of acquisition, construction or production of a qualifying asset, the borrowing costs capitalised shall be the actual borrowing costs incurred during the period less any interest income earned on temporary investment of specific borrowing pending expenditure on qualifying asset.

In case funds are borrowed generally and such funds are used for the purpose of acquisition, construction or production of a qualifying asset, the borrowing costs capitalised are calculated by applying the weighted average capitalisation rate on general borrowings outstanding during the period, to the expenditures incurred on the qualifying asset.

If any specific borrowing remains outstanding after the related asset is ready for its intended use, that borrowing is considered part of the funds that are borrowed generally for calculating the capitalisation rate.

11. Foreign Currencies

Transactions in foreign currencies are recorded on initial recognition at the exchange rate prevailing on the date of the transaction.

(i) Monetary assets and liabilities denominated in foreign currency remaining unsettled at the end of the year, are translated at the closing rates prevailing on the Balance Sheet date. Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of transaction. Any gains or losses arising

due to differences in exchange rates at the time of translation or settlement are accounted for in the Statement of Profit and Loss either under the head foreign exchange fluctuation or interest cost, as the case may be, except those relating to exchange differences arising from cash flow hedges to the extent that the hedges are effective and those covered below.

(ii) Exchange differences pertaining to long term foreign currency loans obtained or re-financed on or before March 31, 2016:

Exchange differences on long-term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance useful life of the assets.

(iii) Exchange differences pertaining to long term foreign currency loans obtained or re-financed on or after April 1, 2016:

The exchange differences pertaining to long term foreign currency loans obtained or re-financed on or after April 1, 2016 is treated in accodance with Ind AS 21/ Ind AS 109. Refer point (i) above.

12. Inventories

Inventories are valued at cost or net

realisable value, whichever is lower.

The basis of determining the cost for various

categories of inventory are as follows:

(a) Raw materials, packing materials and stores and spares (including fuel) -Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on

weighted average basis. The aforesaid items are valued at Net Realisable Value if the finished products in which they are to be incorporated are expected to be sold at a loss.

(b) Traded goods, Stock in progress and finished goods- Direct cost plus appropriate share of overheads.

(c) By products - At estimated realisable value

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

13. Provisions, contingent liabilities and contingent assets Provisions

The Company recognises a provision when there is a present obligation (legal or constructive) as a result of past events and it is more likely than not that an outflow of resources would be required to settle the obligation and a reliable estimate can be made.

When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain.

The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent liabilities and commitments are reviewed by the management at each balance sheet date.

Contingent assets

Contingent assets are neither recognised nor disclosed in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

14. Revenue recognition

a) Sale of goods

Revenue from sale of products is recognised upon transfer of control of products to customers at the time of shipment to or receipt of goods by the customers. Service income is recognised as and when the underlying services are performed. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time.

Revenues are measured based on the transaction price, which is the consideration, net of tax collected from customers and remitted to government authorities such as goods and services tax and applicable discounts and allowances.

Any fees including upfront fees received in relation to contract manufacturing arrangements is recognised on straight line basis over the period over which the Company satisfies the underlying performance obligations. Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled revenue (only act of invoicing is pending) when there is unconditional right to receive cash as per contractual terms. Advance from customers ("contract liability") is recognised when the Company has received consideration from the customer before it delivers the goods.

b) Interest and dividend income Interest income is recognised when it is probable that the economic benefits will flow to the Company using the effective interest rate and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding.

Dividend income from investments is recognised when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).

c) Export Incentives

The benefit accrued under the Duty Drawback scheme and other schemes as per the Export and Import Policy in

respect of exports made under the said Schemes is included under the head "Revenue from Operations" under ''Export and other Incentives''. Also refer policy on "government grants".

L5. Taxation

Income tax expense represents the sum of

current tax and deferred tax.

a) Current tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss i.e. in other comprehensive income or in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

b) Deferred tax

Deferred tax is provided on temporary differences between the tax bases of assets and liabilities and their carrying amounts at the reporting date.

Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.

Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off.

The Company considers whether it is probable that a taxation authority will accept an uncertain tax treatment. If the Company concludes that it is probable that the taxation authority will accept an uncertain tax treatment, the Company determines the taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatment used or planned to be used in its income tax filings. However, if the Company concludes that it is not probable that the taxation authority will accept an uncertain tax treatment, the Company reflects the effect of uncertainty in determining the related taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates.

16. Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

A government grant that becomes receivable as compensation for expenses or losses incurred in a previous period. Such a grant is recognised in profit or loss of the period in which it becomes receivable.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate.

Government grants related to assets are presented in the balance sheet as deferred income and is recognised in profit or loss on a systematic basis over the expected useful life of the related assets.

17. Employee benefits Short-term employee benefits

Wages and salaries including non monetary benefits that are expected to be settled

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss i.e. in other comprehensive income or in equity.

Deferred tax assets/liabilities are not recognised for below mentioned temporary differences:

(i) At the time of initial recognition of goodwill;

(ii) Initial recognition of assets or liabilities (other than in a business combination) at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT asset is recognised in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

within the operating cycle after the end of the period in which the related services are rendered, are measured at the undiscounted amount expected to be paid.

Defined contribution plans Provident fund administered through Regional Provident Fund Commissioner, Superannuation Fund and Employees'' State Insurance Corporation are defined contribution schemes. Contributions to such schemes are charged to the statement of profit and loss in the year when employees have rendered services entitling them to contributions. The Company has no obligation, other than the contribution payable to such schemes.

Defined benefit plans

The Company has defined benefit gratuity plan and provident fund for certain category of employees administered through a recognised provident fund trust. Provision for gratuity and provident fund for certain category of employees administered through a recognised provident fund trust are determined on an actuarial basis at the end of the year and charged to Statement of Profit and Loss, other than remeasurements. The cost of providing these benefits is determined using the projected unit credit method.

Remeasurements, comprising of actuarial gains and losses and the effect of the asset ceiling, (excluding amounts included in net interest on the net defined benefit liability and return on plan assets), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to statement of profit and loss in subsequent periods.

Other long-term employee benefits The Company also has other long-term employee benefits in the nature of compensated absences and long term retention pay. Provision for compensated absences and long term retention pay are determined on an actuarial basis at the end of the year and charged to Statement of Profit and Loss. The cost of providing these benefits is determined using the projected unit credit method.

Share based payments Equity settled share based payments to employees under SRF Long Term Share Based Incentive Plan (SRF LTIP) are measured at the fair value (which is the market price less exercise price) of the equity instruments on the grant date. This compensation expense is amortised over the remaining tenure over which the employees renders their service on a straight line basis.

18. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

19. Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.

Financial assets not classified as measured at amortised cost or FVTOCI as are measured at FVTPL. Financial assets included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.

Equity Investments

All equity investments in the scope of Ind AS 109 are measured at fair value.

Equity instruments which are held for trading are measured at fair value through profit and loss.

For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in other comprehensive income. The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in other comprehensive income. This cumulative gain or loss is not reclassified to statement of profit and loss on disposal of such instruments.

Investments representing equity interest in subsidiaries are carried at cost less any provision for impairment.

Derecognition

A financial asset (or, where applicable, a part of a financial asset) is primarily derecognised (i.e. removed from the balance sheet) when:

20. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

A) Financial assets

Initial recognition and measurement All financial assets are recognised initially at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset.

Subsequent measurement For purposes of subsequent measurement, financial assets of the Company are classified in three categories:

a) At amortised cost

b) At fair value through profit and loss (FVTPL)

c) At fair value through other comprehensive income (FVTOCI)

Financial Asset is measured at amortised cost if both the following conditions are met:

a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in other income in the statement of profit and loss.

a) The rights to receive cash flows from the asset have expired, or

b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (i) the Company has transferred substantially all the risks and rewards of the asset, or (ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay. Any gain or loss on derecognition is recognised in profit or loss.

When the Company has retained substantially all the risks and rewards of ownership of the transferred asset,

the Company continues to recognise the transferred asset in its entirety and recognises a financial liability for the consideration received.

Impairment of financial assets The Company recognizes loss allowance using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all financial assets with contractual cash flows other than trade receivable, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECL (or reversal) that is required to adjust the loss allowance at the reporting date is recognised as an impairment gain or loss in the Statement of Profit and Loss.

B) Financial liabilities and Equity instruments Initial recognition and measurement All financial liabilities are recognised initially at fair value, net of directly attributable transaction costs, if any.

The Company''s financial liabilities includes borrowings, trade and other payables including financial guarantee contracts and derivative financial instruments.

Subsequent measurement Borrowings

Borrowings are subsequently measured at amortised cost. Any differences between the proceeds (net of transaction costs) and the redemption/repayment amount is recognised in profit and loss over the period of the borrowings using the effective interest rate method.

Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid.

Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Financial guarantee contracts Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified entity fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

Equity instrument

Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Debt or equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

21. Derivative and non derivative financial instruments and hedge accounting Initial recognition and subsequent measurement The Company uses derivative financial instruments (such as forward currency contracts, interest rate swaps and full currency swaps) or non derivative financial assets / liabilities to hedge its foreign currency risks and interest rate risks. The Company has opted for "Hedge Accounting" for all its derivative as well as non-derivative financial instrument used for hedging. Accordingly, at the inception of the hedge the Company formally designates a hedge relationship between the ''hedging instrument'' and ''hedged item'' which determines the initial recognition of the financial intrument as Fair Value Hedge or Cashflow hedge. The documentation includes the Compnay''s risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in the hedging instrument''s fair value in offsetting the exposure to changes in the hedged item''s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated. These financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at

fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognised in OCI and later reclassified to profit and loss when the hedge item affects profit or loss.

For the purpose of hedge accounting, hedges are classified as:

a) Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability.

b) Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.

Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:

Fair value hedges

The change in the fair value of a hedging instrument is recognised in the statement of profit and loss. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the statement of profit and loss.

If the hedged item is derecognised, the unamortised fair value is recognised immediately in profit or loss. When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the

firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in statement of profit and loss.

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit and loss.

The Company uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments. The ineffective portion relating to foreign currency contracts is recognised in the statement of profit and loss. In some cases, the Company separates the premium element and the spot element of a forward contract and designates only the change in fair value of the spot element of forward exchange contracts as the hedging instrument in cash flow hedging relationships. In such cases, the changes in the fair value of the premium element of the forward contract or the foreign currency basis spread of the financial instrument is accumulated in a separate component of equity as ''cost of hedging'' The changes in the fair value of such premium element or foreign currency basis spread are reclassified to profit or loss as a reclassification adjustment on a straight-line basis over the period of the forward contract or the financial instrument.

The Company also designates non derivative financial liabilities, such as foreign currency borrowings from banks, as hedging instruments for the hedge of foreign currency risk associated with highly probable forecasted transactions and, accordingly, applies cash flow hedge accounting for such relationships.

Amounts recognised as other comprehensive income are transferred to profit or loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognised or when a forecast transaction occurs.

If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, the hedge accountig will be discontinued prospectively. Any cumulative gain or loss previously recognised in other comprehensive income remains separately in other equity if the forecast transaction or the foreign currency firm commitment is expected to occur else the amount shall be immediately reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment.

22. Fair value measurement

The Company measures some of its financial instruments at fair value at each balance sheet date.

Fair value is the price 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 fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

a) In the principal market for the asset or liability, or

b) In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing

the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. 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. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

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

b) 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).

c) Level 3—Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of

assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

23. Segment Reporting

Based on "Management Approach" as defined in Ind AS 108 -Operating Segments, the Chief Operating Decision Maker evaluates the Company''s performance and allocates the resources based on an analysis of various performance indicators by business segments. Inter segment sales and transfers are reflected at market prices.

Unallocable items includes general corporate income and expense items which are not allocated to any business segment.

Segment Policies:

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the standalone financial statements of the Company as a whole. Common allocable costs are allocated to each segment on an appropriate basis.

24. Dividend

The Company recognises a liability to make cash distributions to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

25. Non-current assets held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. The appropriate level of management must be committed

to a plan to sell, an active programme to locate a buyer and complete the plan has been initiated, the sale is considered highly probable and is expected within one year from the date of classification.

Non-current assets (or disposal groups) held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Assets and liabilities classified as held for sale are presented separately from other assets and liabilities in the balance sheet. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.

A discontinued operation is a component of the Company that either has been disposed of, or is classified as held for sale, and:

a) Represents a separate major line of business or geographical area of operations,

b) Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or

c) Is a subsidiary acquired exclusively with a view to resale.

Discontinued operations are excluded from the results of continuing operations and are presented separately in the statement of profit and loss.

26. Recent pronouncements

On March 24, 2021, the Ministry of Corporate Affairs ("MCA") through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021. Key amendments relating to Division II which relate to companies whose financial statements are required to comply with Companies (Indian Accounting Standards) Rules 2015 are:

Balance Sheet

• Certain additional disclosures in the statement of changes in equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period.

• Specified format for disclosure of shareholding of promoters.

• Specified format for ageing schedule of trade receivables, trade payables, capital work-in-progress and intangible asset under development.

• If a company has not used funds for the specific purpose for which it was borrowed from banks and financial institutions, then disclosure of details of where it has been used.

• Specific disclosure under ''additional

regulatory requirement'' such as

compliance with approved schemes of arrangements, compliance with number of layers of companies, title deeds of immovable property not held in name of company, loans and advances to promoters, directors, key managerial personnel (KMP) and related parties, details of benami property held etc.

Statement of profit and loss:

• Additional disclosures relating to

Corporate Social Responsibility (CSR), undisclosed income and crypto or

virtual currency specified under the

head ''additional information'' in the

notes forming part of the standalone financial statements.

The amendments are extensive and the Company will evaluate the same to give effect to them as required by law


Mar 31, 2019

Notes:

(i) Borrowing cost capitalised during the year Rs,31.36 Crores (Previous year: Rs,31.25 Crores) with a capitalisation rate ranging from 7.24% to 8.80% (Previous year: 7.24% to 8.59%).

(ii) Conveyancing of buildings and other superstructures located at Company''s plant at Malanpur, in the state of Madhya Pradesh including immovable machinery is linked to Stamp duty litigation against the Company (Refer to note 31(a) below).

(iii) Out of the Industrial Freehold land measuring 32.41 acres at the Company''s plant in Gummidipoondi, the Company does not have clear title to 2.43 acres.

(iv) Capital expenditure incurred during the year includes Rs,4.06 Crores (Previous year: Rs,16.03 Crores) on account of research and development. Depreciation for the year includes depreciation on assets deployed in research and development as per note 40 (a) below.

(v) Refer to note 15.1 for information on PPE pledged as security by the Company.

(vi) Refer to note 40 (c) for additions / adjustments on account of exchange difference during the year.

(vii) The Company has got a possession letter in respect of its registered office building located at Mayur Vihar, New Delhi. However, execution of the conveyance deed in name of the Company is under process.

(vii) The Company accounts for all capitalization of property, plant and equipment through capital work in progress and therefore the movement in capital work-in-progress is the difference between closing and opening balance of capital work-in-progress as adjusted in additions to property, plant and equipment and intangible assets.

Notes

(i) The cost of inventories recognised as an expense includes Rs,3.45 Crores (Previous year: Rs,1.64 Crores) in respect of write-downs of inventory to net realisable value.

(ii) Refer Note 15.1 for information on inventories pledged as security by the Company.

(iii) The method of valuation of inventories has been stated in note 1.B.12

(iii) The Company has entered into receivables purchase agreements with banks to unconditionally and irrevocably sell, transfer, assign and convey all the rights, titles and interest of the Company in the receivables as identified. Receivables sold as on March 31, 2019 are of Rs,315.41 Crores (Previous year: Rs,437.72 Crores). The Company has derecognized these receivables as it has transferred its contractual rights to the banks with substantially all the risks and rewards of ownership and retains no control over these receivables as the banks have the right to further sell and transfer these receivables with notice to the Company.

(iv) No customer represents more than 10% (Previous year: one customer represents 11.31%) of the total balances of trade receivables.

(v) Refer Note 15.1 for information on inventories pledged as security by the Company.

The disclosures regarding details of specified bank notes held and transacted during the period November 8, 2016 to December 31, 2016 have not been made since the requirement does not pertain to financial year ended March 31, 2019.

Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs,10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the Company.

During the year ended March 31, 2019, the amount of interim dividend recognised as distributions to equity shareholders was Rs,12 per share (Previous year: Rs,12 per share).

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

The general reserve is created from time to time on transfer of profits from retained earnings. General reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income. Items included in general reserve will not be reclassified subsequently to profit and loss.

The amount that can be distributed as dividend by the Company to its equity shareholders is determined based on the financial statements of the Company and also considering the requirements of the Companies Act, 2013. The amounts reported above are not distributable in entirety.

The Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in the fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow hedging reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.

Capital Redemption Reserve is a statutory, non-distributable reserve into which amounts are transferred following the redemption or purchase of a company''s own shares. The reserve is utilised in accordance with the provisions of the Act.

Capital reserve represents amounts received pursuant to Montreal Protocol Phaseout Programme of refrigerant gases.

The Company has issued non-convertible debentures and as per the provisions of the Act, it is required to create debenture redemption reserve out of the profits of the Company available for payment of dividend.

The Company has allotted equity shares to certain employees under an employee share purchase scheme. The employee share based payment reserve is used to recognise the value of equity settled share based payments provided to such employees as part of their remuneration. Refer note 34 for further details of the scheme.

This reserves represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amount reclassified to retained earnings when those assets have been disposed of.

# Includes Rs,400.00 Crores (Previous year: Rs,100.00 Crores) for Commercial Paper issued by the Company. The maximum amount due during the year is Rs,400.00 Crores (Previous year: Rs,300.00 Crores).

There have been no breach of covenants mentioned in the loan agreements during the reporting periods.

Current Borrowings

Short term borrowings are payable in one installment within one year. For short term borrowings in foreign currency, interest rates range from Euribor 15 bps to Euribor 18 bps and from Libor to Libor 50 bps . For rupee denominated short term loans taken during the year interest rate is at 6.28% to 8.25%.

Terms of repayment

1) Reedemable non convertible debenture of Rs, 300 Crores (Previous year: Rs, 300 Crores) are repayable in one bullet instalment in June 2020.

2) Rupee term loans of Rs, 1.97 Crores (Previous year: Rs, 6.02 Crores repayable in 3 half yearly instalments from September 2018) are repayable in 1 half yearly instalment in September 2019.

3) Rupee term loans of Rs, 46.50 Crores (Previous year: Rs, 48.50 Crores repayable in 9 half yearly instalments from August 2018) are repayable in 7 half yearly instalment from August 2019.

4) Rupee term loans of 3.74 Crores were repaid in current year (Previous year: Rs, 3.74 Crores repayable in 1 half yearly instalments in September 2018).

5) Rupee term loans ofRs, 149.55 Crores (Previous year: Rs, 149.85 Crores repayable in 18 instalments from June 2018) are repayable in 14 quarterly instalment from June 2019.

6) Rupee term loans of Rs, 200.00 Crores (Previous year: Nil) are repayable in 2 annual instalments from August 2020.

7) Rupee term loans of Rs, 20.00 Crores (Previous year: Nil) are repayable in 5 annual instalments from December 2019.

8) Foreign currency term loan of Rs, 172.74 Crores (Previous year: Nil) are repayable in 8 quarterly instalments from September 2020.

9) Foreign currency term loan of Rs,387.90 Crores (Previous year: Rs,403.57 Crores repayable in 19 quarterly instalments from August 2020) are repayable in 19 quarterly instalments from August 2020.

10) Foreign currency term loan of Rs,172.74 Crores (Previous year: Nil) are repayable in 14 quarterly instalments from July 2020.

11) Foreign currency term loan of Rs,34.55 Crores (Previous year: Rs,58.63 Crores repayable in 4 half yearly instalments from September 2018) are repayable in 2 half yearly instalments from September 2019.

12) Foreign currency term loan of Rs,30.72 Crores (Previous year: Rs,57.93 Crores repayable in 4 half yearly instalments from July 2018) are repayable in 2 half yearly instalments from July 2019.

13) Foreign currency term loan of Rs,138.18 Crores (Previous year: Rs,162.88 Crores repayable in 5 half yearly instalments from March 2019) are repayable in 4 half yearly instalments from September 2019.

14) Foreign currency term loan of Rs,239.54 Crores (Previous year: Rs,260.62 Crores repayable in 15 half yearly instalments from April 2018) are repayable in 13 half yearly instalments from April 2019.

15) Foreign currency term loan of Rs,6.52 Crores were repaid in the current year (Previous year: Rs,6.52 Crores is repayable in one yearly instalment in October 2018).

16) Foreign currency term loan of Rs,26.06 Crores were repaid in current year (Previous year: Rs,26.06 Crores is repayable in one yearly instalment in December 2018).

17) Foreign currency term loan of Rs,158.91 Crores (Previous year: Rs,149.86 Crores is repayable in one bullet instalment in April 2019) are repayable in one bullet instalment in April 2019.

18) Foreign currency term loan of Rs,15.00 Crores (Previous year: Rs,15.00 Crores is repayable in one bullet instalment in June 2022) are repayable in one bullet instalment in June 2022.

19) Foreign currency term loan of Rs,162.89 Crores were repaid in current year (Previous year: Rs,162.89 Crores are repayable in one bullet instalment in March 2020).

17 Deferred Tax (Net)

The following is the analysis of deferred tax assets / (liabilities) presented in balance sheet

The tax rate used for the current year reconciliation above is the corporate tax rate of 34.944% (Previous year: 34.608%) payable by corporate entities in India on taxable profits under the Indian tax law.

*This amount includes tax credit of Rs,24.76 Crores (Previous year: Rs,33.97 Crores) which is related to finalization and determination of deduction/allowance claimed for earlier years under Chapter-VIA of the Income-tax Act, 1961, for generation of power from captive power plants which is based on opinion from external tax experts and consultants and finalization of transfer pricing study /tax audit reports of the earlier years.

*Amount deposited Rs,6.16 Crores (Previous year: Rs,7.49 Crores)

**Amount deposited Rs,2.57 Crores (Previous year: Rs,21.76 Crores)

***Amount deposited Rs,0.09 Crores (Previous year: Rs,0.08 Crores)

****Amount deposited Rs,7.14 Crores (Previous year: Rs,6.07 Crores)

*****In the matter of acquisition of the Tyrecord Division at Malanpur from CEAT Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated November 7, 2001 assessed the value of the subject matter of the Deed of Conveyance dated June 13, 1996 at Rs,303.00 Crores and levied a stamp duty of Rs,23.73 Crores and imposed a penalty of Rs,5.09 Crores. The said demand was challenged before the Hon''ble High Court of Madhya Pradesh Bench at Gwalior. The Hon''ble High Court of Madhya Pradesh accepted the case of the Company that the subject matter of the Deed of Conveyance dated June 13, 1996 is only the superstructures valued at Rs,27.76 Crores and not the entire undertaking valued at Rs,303.00 Crores as claimed by the State. Consequently, the Hon''ble High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated November 29, 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Hon''ble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Hon''ble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal. Since then, the Department has filed appeal which has been admitted. Matter will be listed in due course.

@As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of '' Nil Crores (Previous year: Rs,20.64 Crores) and '' Nil Crores (Previous year: Rs,0.38 Crores) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty / service tax amounting to Rs,20.10 Crores (Previous year: Rs,23.51 Crores) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

c On February 28, 2019, a judgment of the Supreme Court of India interpreting certain statutory defined contribution obligations of employees and employers (the "India Defined Contribution Obligation") altered historical understandings of such obligations, extending them to cover additional portions of the employee''s income to measure obligations under Employees Provident Fund Act, 1952. There is significant uncertainty as to how the liability should be calculated as it is impacted by multiple variables, including the period of assessment, the application with respect to certain current and former employees and whether interest and penalties may be assessed. owing to the aforesaid uncertainty, the Company has not considered any probable obligations for periods prior to date of aforesaid judgment. The Company is further evaluating its next course of action in this matter.

^Converted using closing exchange rate - USD 69.0950, Euro 77.580 and ZAR 4.761 AAConverted using closing exchange rate - USD 65.1550 and ZAR 5.5546

*However liability of SRF Limited was restricted up to Guarantee amount which is USD 22 Million (Rs,143.34 Crores) **The loan under the said guarantee has been repaid in March 2019 and the Company is in the process of withdrawing this guarantee

***Represents the guarantee under working capital line, however, this has not been utilised by the subsidiary.

e The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.

(iii) The Company has other commitments, for purchases / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any long term contracts including derivative contracts for which there will be any material foreseeable losses.

(iv) The Company has recognized grant in respect of duty paid on procurement of capital goods under post EPCG scheme of Central Government which allows refund of such duty in the form of freely transferable duty credit scrips upon meeting of requisite export obligation. The Company expects to meet its export obligations in future years. Export obligation as on March 31, 2019 is Rs,25.18 Crores (Previous year: Rs,145.68 Crores).

32 Related Party Transactions 32.1 Description of related parties

Holding Company Key management personnel (KMP)

KAMA Holdings Limited Mr. Arun Bharat Ram

Mr. Ashish Bharat Ram

Subsidiaries Mr. Kartik Bharat Ram

SRF Holiday Home Limited Mr. Vinayak Chatterjee *

SRF Global BV Mr. Tejpreet S Chopra

SRF Industries (Thailand) Limited Mr. Lakshman Lakshminarayan

SRF Industex Belting (Pty) Limited Mr. Vellayan Subbiah

SRF Flexipak (South Africa) (Pty) Limited Mr. Pramod Bhasin **

SRF Europe Kft A Dr. Meenakshi Gopinath

SRF Employees Welfare Trust Mr. Pramod Gopaldas Gujarathi

Ms. Bharti Gupta Ramola ***

Fellow subsidiaries #

KAMA Realty (Delhi) Limited Enterprises over which KMP have significant

Shri Educare Limited influence #

SRF Foundation

Post Employment Benefit Plans Trust Karm Farms LLP

SRF Limited Officers Provident Fund Trust Srishti Westend Greens Farms LLP

SRF Employees Gratuity Trust SRF Welfare Trust

SRF Officers Gratuity Trust Statkraft BLP Solar Solutions Private Limited

* up to March 31, 2019 ** up to February 4, 2019 *** from February 4, 2019 A from April 25, 2018

from June 27, 2018 up to April 16, 2018

# Only with whom the Company had transactions during the year

The expenses incurred on account of the above defined contribution plans have been included in Note 25 "Employee Benefits Expenses" under the head "Contribution to provident and other funds".

(i) Superannuation fund

The Company makes contributions to a Trust which in turn contributes to ICICI Prudential Life Insurance Company Limited. Apart from being covered under the Gratuity Plan described below, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee''s salary. From November 1, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

(ii) Provident fund administered through Regional Provident Fund Commissioner

All employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognised Provident Fund Trust. The Company has an obligation to fund any shortfall on the yield of the trust''s investments over the administered interest rates on an annual basis. For other employees contributions are made to the Regional Provident Fund Commissioners. The Government mandates the annual yield to be provided to the employees on their corpus. This plan is considered as a Defined Contribution Plan. For the first category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government and these are considered as Defined Benefit Plans accounted for on the basis of an actuarial valuation.

33.2 Defined benefit plans

The Company sponsors funded defined benefit plans for qualifying employees. The defined benefit plans

are administered by separate funds which are legally separate from the Company. These plans are:

(a) Gratuity

(b) Provident fund for certain category of employees administered through a recognised provident fund trust

(i) These plans typically expose the company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. Actuarial valuations involve making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

The current service cost and the net interest expenses for the year are included in Note 25 "Employee Benefits Expenses" under the head "Contribution to provident and other funds".

Gratuity:

Plan assets comprises primarily of investment in HDFC Group Unit Linked Plan fund. The average duration of the defined benefit obligation is 23 years (Previous year: 23 years). The Company expects to make a contribution of Rs,7.01 Crores (Previous year: Rs,6.54 Crores) to the defined benefit plans during the next financial year.

Provident fund:

The plan assets have been primarily invested in government securities and corporate bonds.

(viii) Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of reporting period, while holding all other assumptions constant.

(i) Long Term Retention Pay

The Company has a Long Term Retention Pay Plan which covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three year blocks subject to achievement of certain performance ratings. The Company also has a scheme for talent retention of certain identified employees under which an incentive is payable over a period of three years. Based on actuarial valuation, the Company has accrued the above mentioned amounts.

34 Employee Share Based Payments

The Company has an Employee Share Purchase Scheme (SRF Long Term Share Based Incentive Plan) to provide equity settled share based payments to certain employees. The expenses related to the grant of shares under the Scheme are accounted for on the basis of fair value of the share on the grant date (which is the market price of the Company''s share on the date of grant less exercise price). The fair value so determined is expensed on a straight line basis over the remaining tenure over which the employees renders their services.

35 Segment Reporting

Based on the guiding principles laid down in Indian Accounting Standard (Ind AS) - 108 "Segment Reporting", the Managing Director of the Company is the Chief Operating Decision Maker (CODM) and for the purposes of resource allocation and assessment of segment performance the business of the Company is segregated in the segments below:

- Technical Textiles business: includes nylon tyre cord fabric, belting fabric, polyester tyre cord fabric and industrial yarns and its research and development

- Chemicals business: includes refrigerant gases, chloromethane, pharmaceuticals, fluorochemicals & allied products and its research and development.

- Packaging Film business: includes polyester films.

- Others: includes coated fabric, laminated fabric and engineering plastics.

Effective April 1, 2018, the Company realigned its operating segments based on requirements under Ind AS 108 - Operating Segments. Accordingly, Laminated Fabrics business and Coated Fabrics business from "Technical Textiles Business" segment and Engineering Plastics business from "Chemicals and Polymers Business" segment have been regrouped to "Others" segment. Also "Chemicals and Polymers Business" segment has been renamed to "Chemicals Business" segment. Relevant comparative information has been restated to give effect to the above changes.

Segment revenue, results and capital employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, trade receivables, inventories and property plant and equipment and intangible assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

37 Operating Lease

The Company has entered into operating lease agreements for various premises taken for accommodation of Company''s officers/ directors, various offices of the Company, lands and certain equipments. These arrangements are both cancellable and non-cancellable in nature and range between two to ninety nine years. The future minimum lease payments under non-cancellable operating leases are as under: -

38 Financial Instruments and Risk Management

38.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as a going concern and provide reasonable return to the shareholders by maintaining a reasonable balance between debt and equity. The capital structure of the Company consists of net debt (borrowings net of cash and cash equivalents) and total equity of the Company. The Company is not subject to any externally imposed capital requirements. The Company''s management reviews the capital structure of the Company on periodic basis. As part of its review, the management considers the cost of capital and risk associated with each class of capital. The Company also evaluates its gearing measures using Debt Equity Ratio to arrive at an appropriate level of debt and accordingly evolves its capital structure.

The following table provides the details of the debt and equity at the end of the reporting periods

(b) Fair valuation of non-current financial assets has been disclosed to be same as carrying value as there is no significant difference between carrying value and fair value.

(c) Fair value of quoted financial instruments (listed debentures) is based on quoted market price at the reporting date. The fair value of other long-term borrowings is estimated by discounting future cash flows using current rates (applicable to instruments with similar terms, currency, credit risk and remaining maturities) to discount the future payouts.

(d) The fair value is determined by using the valuation model/ technique with observable/ non-observable inputs and assumptions. Based on computation, the management has assessed that the carrying values approximates their fair values.

(e) Investment value excludes investment in subsidiaries which are shown at cost in balance sheet as per Ind AS 27 "Separate financial statements".

There are no transfers between Level 1, Level 2 and Level 3 during the year ended March 31, 2019 and March 31, 2018.

Level 1:

Quoted prices in the active market: This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market. This category consists of non convertible debentures.

Level 2:

Valuation techniques with significant observable inputs: This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly. This level of hierarchy consists of over the counter (OTC) derivative contracts and open ended mutual funds.

Level 3:

Valuation techniques with significant unobservable inputs: This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value is determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main item in this category are unquoted equity instruments and financial guarantees contracts.

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

(i) Investments in mutual funds and non-convertible debentures: Fair value is determined by reference to quotes from the financial institutions.

(ii) Derivative contracts: The Company has entered into various foreign currency contracts and interest rate swaps contracts to manage its exposure to fluctuations in foreign exchange rates and interest rate respectively. These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the authorized dealers banks and forward exchange rates at the balance sheet date.

(iii) Unquoted equity investments: Fair value is determined based on the recoverable value as per agreement with the investee.

(iv) Financial guarantee contracts: Financial guarantee contracts are recognised initially as a liability at fair value determined based on comparative quotations from banks for provision of similar guarantees.

Sensitivity of the fair value measurement to changes in unobservable inputs for financial instruments in Level 3 level of hierarchy is insignificant.

38.3 Financial Risk Management

The Company is exposed to various financial risks arising from its underlying operations and finance EC activities. The Company is primarily exposed to market risk (i.e. interest rate and foreign currency risk) and H > to credit risk and liquidity risk. The Company''s Corporate Treasury function plays the role of monitoring IT financial risk arising from business operations and financing activities

Financial risk management within the Company is governed by policies and guidelines approved by the H m senior management and the Board of Directors. These policies and guidelines cover interest rate risk, IS foreign currency risk, credit risk and liquidity risk. Company policies and guidelines also cover areas such as cash management, investment of excess funds and the raising of short and long-term debt. Compliance with the policies and guidelines is managed by the Corporate Treasury function within the Company. Review of the financial risk is done on a monthly basis by the Managing Director and on a quarterly basis by the Board of Directors. The objective of financial risk management is to contain, where deemed appropriate, exposures on net basis to the various types of financial risks mentioned above in order to limit any negative impact on the Company''s results and financial position.

In accordance with its financial risk management policies, the Company manages its market risk exposures by using specific type of financial instruments duly approved by the Board of Directors as and when deemed appropriate. It is the Company''s policy and practice neither to enter into derivative transactions for speculative purpose, nor for any purpose unrelated to the underlying business. The Board of Directors / Managing Director reviews and approves policies for managing each of the above risks.

38.3.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk and foreign currency risk. Financial instruments affected by market risk includes loans and borrowings, deposits, investments and derivative financial instruments. The Company enters into derivative contracts as approved by the Board to manage its exposure to interest rate risk and foreign currency risk.

A. Foreign Currency Risk Management

Foreign currency risk also known as Exchange Currency Risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Foreign currency risk in the Company is attributable to Company''s operating activities and financing activities.

In the operating activities, the Company''s exchange rate risk primarily arises when revenue / costs are generated in a currency that is different from the reporting currency (transaction risk). The Company manages the Net exposure on a rolling 12 month basis and hedges the exposures based on a duly approved policy by the Board. The information is monitored by the Audit committee and the Board of Directors on a quarterly basis. This foreign currency risk exposure of the Company are mainly in U.S. Dollar (USD), Euro (EUR), Japanese Yen (JPY) and British Pound Sterling (GBP). The Company''s exposure to foreign currency changes for all other currencies is not material.

Foreign currency sensitivity analysis

The Company is mainly exposed to changes in USD, EUR, JPY and GBP exchange rates.

The following table details the Company''s sensitivity to a 1% increase and decrease in the '' against the relevant foreign currency. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for 1% change in foreign currency rates. A positive number below indicates an increase in profit before tax or vice-versa.

^Includes sensitivity on long-term foreign currency monetary items on which Para D13 AA of Ind AS 101 has been applied. Accordingly, the exchange loss/ (gain) arising on long term foreign currency monetary items relating to acquisition of depreciable assets will be added to/ deleted from the cost of such assets/ capital work in progress and will be depreciated over the balance useful life of assets.

Foreign exchange derivative contracts

The Company uses derivative financial instruments exclusively for hedging financial risks that arise from its commercial business or financing activities. The Company''s Corporate Treasury team manages its foreign currency risk by hedging transactions that are expected to occur within of 1 to 15 months for hedges of forecasted sales, purchases and capital expenditures. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. All identified exposures are managed as per the policy duly approved by the Board of Directors.

The following table details the foreign currency derivative contracts outstanding at the end of the reporting period:

The following table details the Company''s sensitivity to a 1% increase and decrease in the '' against the relevant foreign currency. The sensitivity analysis includes only outstanding forward exchange contracts as tabulated above and adjusts their translation at the period end for 1% change in foreign currency rates. A positive number below indicates an increase in profit before tax or vice-versa.

B. Interest Rate Risk Management

Interest rate risk arises from movements in interest rates which could have effects on the Company''s net income or financial position. Changes in interest rates may cause variations in interest income and expenses resulting from interest-bearing assets and liabilities. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a portfolio of fixed and variable rate loans and borrowings. The Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts, calculated by reference to an agreed principal amount outstanding at the time of inception of the swap. Out of the total long term borrowings, the amount of fixed interest loan is '' 853 Crores and floating interest loan is Rs,1,215 Crores (Previous year: Fixed interest loan Rs,939 Crores and Floating interest loan '' 873 Crores).

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate long term borrowings, as follows:

In case of increase in interest rate by above mentioned percentage, there would be a comparable impact on the profit before tax as mentioned above would be negative.

Interest Rate Swap Contracts

Under interest rate swap (IRS) contracts, the Company agrees to exchange the difference between fixed and floating rate interest amounts calculated on the agreed notional principal amounts. Such contracts enables the Company to mitigate the risk of changing interest rates.

The following table details the IRS contracts outstanding at the end of the reporting period:

Each of the above trades are in the nature of cash flow hedges and are effective hedges. The mark to market on these trades is therefore routed through Cash flow Hedge Reserve. The interest rate swap and the interest payments on the loan are paid simultaneously and are charged off to the statement of profit and loss.

38.3.2 Credit Risk Management

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables, loans and other financial assets) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with counterparties who meet the parameters specified in Investment Policy of the Company . The investment policy is reviewed by the Company''s Board of Directors on an annual basis and if required, the same may be updated during the year. The investment policy specifies the limits of investment in various categories of products so as the minimize the concentration of risks and therefore mitigate financial loss due to counterparty''s potential failure.

Expected credit loss on financial assets:

To manage credit risk for trade receivables, the Company establishes credit approvals and credit limits, periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.

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

Other than financial assets mentioned above, none of the Company''s financial assets are either impaired or past due, and there are no indications that defaults in payments obligation would occur.

38.3.3 Liquidity Risk Management

Liquidity risk is the risk of non-availability of financial facilities available to the Company to meet its financial obligations. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of money market instruments, bank overdrafts, bank loans, debentures and other types of facilities. The liquidity management is governed by the Board approved liquidity management policy. Any deviation from the policy has to be approved by the Treasury Management comprising of Managing Director, Chief Financial Officer and Treasury Head. The Company assesses the concentration of risk with respect to refinancing its debt, guarantee given and funding of its capital expenditure needs of the future. The Company manages its liquidity by holding appropriate volumes of liquid assets which are available for its disposal on T 1 basis and by maintaining open credit lines with banks / financial institutions.

The table below analyze the Company''s financial liabilities into relevant maturity profiles based on their contractual maturities:

(c) The Company has elected to continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items as described in Para D13 AA of Ind AS 101. Accordingly, exchange loss/ (gain) arising on all long term monetary items financed or re-financed on or before March 31, 2016 relating to acquisition of following depreciable assets are added to/ adjusted from the cost of such assets/ capital work in progress and will be depreciated over the balance useful life of such assets.

The cumulative exchange loss/ (gain) added/ (adjusted) and remaining unamortised as at March 31, 2019 is Rs,132.49 Crores (Previous year: Rs,79.51 Crores).

(e) The Company has established a comprehensive system of maintenance of information and documents as required by transfer pricing legislation under section 92D for its international transactions as well as specified domestic transactions. Based on the transfer pricing regulations/ policy, the transfer pricing study for the year ended March 31, 2019 is to be conducted on or before due date of the filing of return and the company will further update above information and records based on the same and expects these to be in existence latest by that date. Management believes that all the above transactions are at arm''s length price and the aforesaid legislations will not have impact on the financial statement, particularly on the amount of tax expense and provision for taxation.

(f) The Company was required to spend Rs,10.38 Crores (Previous year: Rs,9.56 Crores) on corporate social responsibility activities under section 135 of the Companies Act, 2013 out of which Rs,10.38 Crores (Previous year: Rs,5.00 Crores) has been spent.

(g) On May 11, 2019, the Company has entered into business transfer agreement for sale of its Engineering Plastics Business for a consideration of Rs,320 Crores (subject to working capital adjustments), upon completion of closing conditions. The statutory and legal formalities are expected to be completed within 6 months from the date of signing. This business was reported under "Others segment".


Mar 31, 2018

THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

(Rs. in lakhs)

Particulars

31 March 2018

31 March 2017

(viii) Major categories of Plan Assets (as percentage of Total Plan Assets)

Funds managed by Insurer

100%

100%

Total

100%

100%

(ix) Sensitivity Analysis:

Significant actuarial assumptions for the determination of the defined benefit of obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

(Rs. in lakhs)

Particulars

31 March 2018

31 March 2017

Decrease

Increase

Decrease

Increase

Change in Discount Rate by -/ 1%

290.01

264.70

294.58

266.17

Change in Salary Growth Rate by-/ 1 %

264.62

289.85

266.67

293.76

Change in Attrition Rate by-/ 50%

277.25

276.52

281.34

278.53

Change in Mortality Rate by-/ 10%

276.84

276.84

279.78

279.75

(x) Maturity Profile of Defined Benefit Obligation:

Weighted average duration (based on discounted cash flows)

5 years

5 years

(Rs. in lakhs)

31 March 2018

31 March 2017

Expected cash flows over the next (valued on undiscounted basis):

1 year

39.05

34.72

2 to 5 years

170.68

170.46

6 to 10 years

152.05

153.11

More than 10 years

56.27

63.32

(xi) General descriptions of Significant Defined plans:

The Company operates gratuity plan wherein every employee is entitled to the benefit as per scheme of the Company, for each completed year of service. The same is payable on retirement or termination whichever is earlier. The benefit vests only after five years of continuous service. The scheme is funded with an insurance company in the form of qualifying insurance policy.

(2) Provident Fund (PF) :

In accordance with Indian Accounting Standard 19, actuarial valuation was done in respect of the aforesaid defined benefit plan of Provident fund based on the following assumptions:-

(Rs. in lakhs)

31 March 2018

31 March 2017

0)

Actuarial assumptions

Mortality rate

Indian Assured Lives Mortality (2006-08)

Indian Assured Lives Mortality (2006-08)

Discount rate (per annum)

7.70%

7.00%

Interest rate guarantee (per annum)

8.55%

8.65%

Attrition rate based on ages :

Upto 30 years

3.00%

3.00%

31 to 40 years

2.00%

2.00%

Above 40 years

1.00%

1.00%

(ii)

Assets and liabilities recognised in the balance sheet

Present value of the defined benefit obligation at the end of the year

273.04

267.04

Less: Fair value of plan assets at the end of the year

(274.07)

(266.67)

Net liability recognised

(1.03)

0.37

Recognised under provisions

Current assets

1.03

-

Current provisions

-

0.37

(iii)

Major categories of Plan Assets (as percentage of Total Plan Assets)

Government of India securities

8%

8%

State Government securities

23%

20%

High quality corporate bonds

28%

26%

Equity shares of listed companies

9%

10%

Property

0%

0%

Special Deposit Scheme

26%

26%

Funds managed by Insurer

2%

6%

Bank balance and others

4%

4%

Total

100%

100%

(iv) Sensitivity Analysis:

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

(Rs. in lakhs)

Particulars

31 March 2018

31 March 2017

Decrease

Increase

Decrease

Increase

Change in Discount Rate by -/ 1%

273.74

272.34

267.48

266.35

Change in Interest Rate guarantee by

-/ 1%

268.58

277.66

263.05

271.42

31 March 2018

31 March 2017

(V) Maturity Profile of Defined Benefit Obligation:

Weighted average duration (based on discounted cash flows)

7 years

7 years

(3) Other Long Term Benefits:

Compensated absences recognised in the Statement of profit and loss for the current year, under the employee cost in Note 27, is Rs. 8.03 lakhs (31 March 2017: Rs. 11.29 lakhs).

39 Segment reporting

a) Primary segment: Business segment

The Company is primarily enagaged in manufacturing of bearings and other activities having similar economic characteristics, primarily operated out of India and regularly reviewed by the Chief Operating Decision Maker for assessment of Company''s performance and resource allocation. For the purpose of disclosure of segment information, the Company considers these operations as a single business segment as all the product groups are mainly having similar risks and returns.

The information relating to revenue from external customers and location of non-current assets of its single reportable segment has been disclosed as below:

b) Secondary segment: Geographical segment

Secondary segments have been identified with reference to geographical areas in which company operates. Composition of secondary segments is as follows:

i) within India

ii) outside India (Rs in lakhs)

Particulars

Year ended 31 March 2018

Year ended 31 March 2017

1) Segment revenue

- Within India

3,866.99

3,732.40

- Outside India

61.16

33.46

2) Carrying amount of segment assets

- Within India

915.97

944.55

- Outside India

-

-

The Company has two customers who contributed more than 10% of the Company''s total revenue during the current and previous year. The revenue from such major customers during the year is Rs. 2,661.54 lakhs (31 March 2017: Rs. 2,596.02 lakhs).

40 Earnings per share

in lakhs)

Particulars

Year ended 31 March 2018

Year ended 31 March 2017

Net profit after tax for the year

822.02

661.60

Profit attributable to equity share holders

822.02

661.60

Weighted average number of equity shares outstanding during the year

3,611,540

3,611,540

Basic and Diluted earnings per share (Rs.)

22.76

18.32

Face value per Share (?)

10.00

10.00

Note:

The Company does not have any outstanding dilutive potential equity shares as at 31 March 2018 and 31 March, 2017. Consequently, basic and diluted earnings per share of the Company remains the same.

(Rs. in lakhs)

Particulars

31 March 2018

31 March 2017

41 Contribution towards Corporate Social Responsibility (CSR)

Average net profit of the Company for last three financial years

844.92

675.69

Prescribed CSR expenditure (2% of the average net profit as computed above)

Details of CSR expenditure during the financial year

16.90

13.51

Total amount to be spent for the financial year

16.90

13.51

Amount spent

16.15

13.50

Amount unspent

0.75

0.01

42 First time adoption of Ind AS

A First Ind AS Financial statements

These are the Company''s first separate financial statements prepared in accordance with Ind AS applicable as at 31 March 2018.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2014 and other relevant provisions of the Act (previous GAAP or Indian GAAP).

An explanation of how the transition from previous GAAP to Ind AS has affected the company''s financial position and financial performance is given below. All the adjustments on account of Ind AS are non-cash in nature, hence there is no material impact on the Cash Flow Statement.

i) Optional exemptions availed Deemed cost

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

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

Business combinations

The Company has availed the business combination exemption on first time adoption of Ind AS and accordingly the business combinations prior to date of transition have not been restated to the accounting prescribed under Ind AS 103 - Business combinations.

The Company applies the requirements of Ind AS 103 - Business combinations to business combinations occurring after the date of transition to Ind AS.

ii) Mandatory exceptions applied Estimates

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

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP except where Ind AS required a different basis for estimates as compared to the previous GAAP.

De-recognition of financial assets and liabilities

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

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

Classification and measurement of financial assets

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

The Company has classified its financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

B First time adoption reconciliations

Equity as at

Equity as at

Reconciliation of equity from previous

Note

31 March 2017

01 April 2016

GAAPto Ind AS Equity as per previous GAAP GAAP adjustments:

1,991.06

1,488.23

Impact on account of reversal of proposed dividend on equity share and tax thereon

B.I

_

86.93

Impact due to reclassification of cumulative preference share to financial liability

B.2

_

(25.00)

Total - GAAP adjustments

-

61.93

Equity as per Ind AS

1,991.06

1,550.16

Reconciliation of total comprehensive income / (loss) for the year

(Rs in lakhs)

Note

31 March 2017

Net profit / (loss) after tax as per previous GAAP

658.95

GAAP adjustments:

Dividend on preference shares treated as finance costs

B.2

(0.71)

Impact of recognising actuarial loss on defined benefit obligations in OCI

B.3

5.02

Impact of deferred taxes on the above adjustments

B.4

(1.66)

Total - GAAP adjustments

2.65

Net profit / (loss) after tax as per Ind AS

661.60

Impact of recognising actuarial loss on defined benefit obligations in other comprehensive income

B.3

(5.02)

Impact of deferred taxes on the above adjustments

B.4

1.66

Total comprehensive income / (loss) after tax as per Ind AS

658.24

Explanations to reconciliations

B.1 Impact on account of reversal of proposed dividend on equity share and tax thereon

Previous GAAP - Dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events and accordingly, provision for proposed dividend was recognised as a liability.

Ind AS - Dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs. 86.93 lakhs as at 01 April 2016 included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity has been increased by an equivalent amount.

B.2 Impact due to reclassification of cumulative preference share to financial liability Previous GAAP - Preference shares are treated as a part of share capital.

Ind AS - Since the preference shares are redeemable in nature, the same will be treated as financial liability and is to be measured at amortised cost as per Ind AS 109. Any dividend payable and tax thereon to be considered as finance cost.

Consequent to this change, the impact on equity at transition date is Rs (25) lakhs and impact in the Statement of profit and loss for the year ended 31 March 2017 is Rs (0.71) lakhs.

B.3 Impact of recognising actuarial gains / (losses) on defined benefit obligations in other comprehensive income

Previous GAAP - Actuarial gains / (losses) on defined benefit obligations is recognised in the Statement of profit and loss.

I nd AS - Actuarial gains / (losses )on defined benefit obligations is recognised in other comprehensive income (OCI). Consequently, actuarial loss of Rs 5.02 lakhs has been recognised in OCI during the year ended 31 March 2017.

B.4 Impact on account of deferred taxes

The impact of transition adjustments together with Ind AS mandate of using balance sheet approach (against profit and loss approach in the previous GAAP) for computation of deferred tax has impacted the reserves on date of transition, with consequential impacts to the Statement of profit and loss for the subsequent periods.

Consequent to the change, the impact of Rs 1.66 lakhs was shifted from the Statement of profit and loss to OCI for the year ended 31 March 2017.

43 Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006:

(i) An amount of Rs. 4.50 lakhs (31 March 2017 Rs. 1.39 lakhs, 01 April 2016 Rs. 3.70 lakhs) was due and outstanding to suppliers as at the end of the accounting year on account of principal and interest respectively.

(ii) No interest was paid during the year in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was paid to the supplier beyond the appointed day.

(iii) No amount of interest is due and payable for the period of delay in making payment but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006.

(iv) No interest was accrued and unpaid at the end of the accounting year.

(v) No further interest remaining due and payable even in the succeeding years for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.

The above information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

Short-term borrowings

44 Net debt reconciliation

Net debt (including cash and cash equivalents) as at 01 April 2017

69.92

Cash flows

(62.23)

Interest paid

(0.83)

Finance cost

0.83

Increase in book overdraft

(7.69)

Net debt as at 31 March 2018

This is a summary of significant accounting policies and other explanatory information referred to in our report of even date

For Walker Chandiok & Co LLP

For and on behalf of the Board of Directors

Chartered Accountants Firm

Registration No. 001076N / N500013

H. S. Zaveri
Director

S. C. Rangani
Director

J. D. Diwan
Director

DIN : 00003948

DIN : 00209069

DIN : 01565319

Adi P. Sethna

Partner

Vivek Sahai

Arvinder Kohli

Claude Rose

Membership No.: 108840

Director DIN : 01717502

Director DIN : 08135020

Director DIN : 01494440

Kamlesh Sondigala

Company Secretary

Place: Mumbai

Place: Mumbai

Date : 17 May 2018

Date : 17 May 2018


Mar 31, 2018

THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

(Rs. in lakhs)

Particulars

31 March 2018

31 March 2017

(viii) Major categories of Plan Assets (as percentage of Total Plan Assets)

Funds managed by Insurer

100%

100%

Total

100%

100%

(ix) Sensitivity Analysis:

Significant actuarial assumptions for the determination of the defined benefit of obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

(Rs. in lakhs)

Particulars

31 March 2018

31 March 2017

Decrease

Increase

Decrease

Increase

Change in Discount Rate by -/ 1%

290.01

264.70

294.58

266.17

Change in Salary Growth Rate by-/ 1 %

264.62

289.85

266.67

293.76

Change in Attrition Rate by-/ 50%

277.25

276.52

281.34

278.53

Change in Mortality Rate by-/ 10%

276.84

276.84

279.78

279.75

(x) Maturity Profile of Defined Benefit Obligation:

Weighted average duration (based on discounted cash flows)

5 years

5 years

(Rs. in lakhs)

31 March 2018

31 March 2017

Expected cash flows over the next (valued on undiscounted basis):

1 year

39.05

34.72

2 to 5 years

170.68

170.46

6 to 10 years

152.05

153.11

More than 10 years

56.27

63.32

(xi) General descriptions of Significant Defined plans:

The Company operates gratuity plan wherein every employee is entitled to the benefit as per scheme of the Company, for each completed year of service. The same is payable on retirement or termination whichever is earlier. The benefit vests only after five years of continuous service. The scheme is funded with an insurance company in the form of qualifying insurance policy.

(2) Provident Fund (PF) :

In accordance with Indian Accounting Standard 19, actuarial valuation was done in respect of the aforesaid defined benefit plan of Provident fund based on the following assumptions:-

(Rs. in lakhs)

31 March 2018

31 March 2017

0)

Actuarial assumptions

Mortality rate

Indian Assured Lives Mortality (2006-08)

Indian Assured Lives Mortality (2006-08)

Discount rate (per annum)

7.70%

7.00%

Interest rate guarantee (per annum)

8.55%

8.65%

Attrition rate based on ages :

Upto 30 years

3.00%

3.00%

31 to 40 years

2.00%

2.00%

Above 40 years

1.00%

1.00%

(ii)

Assets and liabilities recognised in the balance sheet

Present value of the defined benefit obligation at the end of the year

273.04

267.04

Less: Fair value of plan assets at the end of the year

(274.07)

(266.67)

Net liability recognised

(1.03)

0.37

Recognised under provisions

Current assets

1.03

-

Current provisions

-

0.37

(iii)

Major categories of Plan Assets (as percentage of Total Plan Assets)

Government of India securities

8%

8%

State Government securities

23%

20%

High quality corporate bonds

28%

26%

Equity shares of listed companies

9%

10%

Property

0%

0%

Special Deposit Scheme

26%

26%

Funds managed by Insurer

2%

6%

Bank balance and others

4%

4%

Total

100%

100%

(iv) Sensitivity Analysis:

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

(Rs. in lakhs)

Particulars

31 March 2018

31 March 2017

Decrease

Increase

Decrease

Increase

Change in Discount Rate by -/ 1%

273.74

272.34

267.48

266.35

Change in Interest Rate guarantee by

-/ 1%

268.58

277.66

263.05

271.42

31 March 2018

31 March 2017

(V) Maturity Profile of Defined Benefit Obligation:

Weighted average duration (based on discounted cash flows)

7 years

7 years

(3) Other Long Term Benefits:

Compensated absences recognised in the Statement of profit and loss for the current year, under the employee cost in Note 27, is Rs. 8.03 lakhs (31 March 2017: Rs. 11.29 lakhs).

39 Segment reporting

a) Primary segment: Business segment

The Company is primarily enagaged in manufacturing of bearings and other activities having similar economic characteristics, primarily operated out of India and regularly reviewed by the Chief Operating Decision Maker for assessment of Company''s performance and resource allocation. For the purpose of disclosure of segment information, the Company considers these operations as a single business segment as all the product groups are mainly having similar risks and returns.

The information relating to revenue from external customers and location of non-current assets of its single reportable segment has been disclosed as below:

b) Secondary segment: Geographical segment

Secondary segments have been identified with reference to geographical areas in which company operates. Composition of secondary segments is as follows:

i) within India

ii) outside India (Rs in lakhs)

Particulars

Year ended 31 March 2018

Year ended 31 March 2017

1) Segment revenue

- Within India

3,866.99

3,732.40

- Outside India

61.16

33.46

2) Carrying amount of segment assets

- Within India

915.97

944.55

- Outside India

-

-

The Company has two customers who contributed more than 10% of the Company''s total revenue during the current and previous year. The revenue from such major customers during the year is Rs. 2,661.54 lakhs (31 March 2017: Rs. 2,596.02 lakhs).

40 Earnings per share

in lakhs)

Particulars

Year ended 31 March 2018

Year ended 31 March 2017

Net profit after tax for the year

822.02

661.60

Profit attributable to equity share holders

822.02

661.60

Weighted average number of equity shares outstanding during the year

3,611,540

3,611,540

Basic and Diluted earnings per share (Rs.)

22.76

18.32

Face value per Share (?)

10.00

10.00

Note:

The Company does not have any outstanding dilutive potential equity shares as at 31 March 2018 and 31 March, 2017. Consequently, basic and diluted earnings per share of the Company remains the same.

(Rs. in lakhs)

Particulars

31 March 2018

31 March 2017

41 Contribution towards Corporate Social Responsibility (CSR)

Average net profit of the Company for last three financial years

844.92

675.69

Prescribed CSR expenditure (2% of the average net profit as computed above)

Details of CSR expenditure during the financial year

16.90

13.51

Total amount to be spent for the financial year

16.90

13.51

Amount spent

16.15

13.50

Amount unspent

0.75

0.01

42 First time adoption of Ind AS

A First Ind AS Financial statements

These are the Company''s first separate financial statements prepared in accordance with Ind AS applicable as at 31 March 2018.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2014 and other relevant provisions of the Act (previous GAAP or Indian GAAP).

An explanation of how the transition from previous GAAP to Ind AS has affected the company''s financial position and financial performance is given below. All the adjustments on account of Ind AS are non-cash in nature, hence there is no material impact on the Cash Flow Statement.

i) Optional exemptions availed Deemed cost

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

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

Business combinations

The Company has availed the business combination exemption on first time adoption of Ind AS and accordingly the business combinations prior to date of transition have not been restated to the accounting prescribed under Ind AS 103 - Business combinations.

The Company applies the requirements of Ind AS 103 - Business combinations to business combinations occurring after the date of transition to Ind AS.

ii) Mandatory exceptions applied Estimates

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

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP except where Ind AS required a different basis for estimates as compared to the previous GAAP.

De-recognition of financial assets and liabilities

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

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

Classification and measurement of financial assets

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

The Company has classified its financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

B First time adoption reconciliations

Equity as at

Equity as at

Reconciliation of equity from previous

Note

31 March 2017

01 April 2016

GAAPto Ind AS Equity as per previous GAAP GAAP adjustments:

1,991.06

1,488.23

Impact on account of reversal of proposed dividend on equity share and tax thereon

B.I

_

86.93

Impact due to reclassification of cumulative preference share to financial liability

B.2

_

(25.00)

Total - GAAP adjustments

-

61.93

Equity as per Ind AS

1,991.06

1,550.16

Reconciliation of total comprehensive income / (loss) for the year

(Rs in lakhs)

Note

31 March 2017

Net profit / (loss) after tax as per previous GAAP

658.95

GAAP adjustments:

Dividend on preference shares treated as finance costs

B.2

(0.71)

Impact of recognising actuarial loss on defined benefit obligations in OCI

B.3

5.02

Impact of deferred taxes on the above adjustments

B.4

(1.66)

Total - GAAP adjustments

2.65

Net profit / (loss) after tax as per Ind AS

661.60

Impact of recognising actuarial loss on defined benefit obligations in other comprehensive income

B.3

(5.02)

Impact of deferred taxes on the above adjustments

B.4

1.66

Total comprehensive income / (loss) after tax as per Ind AS

658.24

Explanations to reconciliations

B.1 Impact on account of reversal of proposed dividend on equity share and tax thereon

Previous GAAP - Dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events and accordingly, provision for proposed dividend was recognised as a liability.

Ind AS - Dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs. 86.93 lakhs as at 01 April 2016 included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity has been increased by an equivalent amount.

B.2 Impact due to reclassification of cumulative preference share to financial liability Previous GAAP - Preference shares are treated as a part of share capital.

Ind AS - Since the preference shares are redeemable in nature, the same will be treated as financial liability and is to be measured at amortised cost as per Ind AS 109. Any dividend payable and tax thereon to be considered as finance cost.

Consequent to this change, the impact on equity at transition date is Rs (25) lakhs and impact in the Statement of profit and loss for the year ended 31 March 2017 is Rs (0.71) lakhs.

B.3 Impact of recognising actuarial gains / (losses) on defined benefit obligations in other comprehensive income

Previous GAAP - Actuarial gains / (losses) on defined benefit obligations is recognised in the Statement of profit and loss.

I nd AS - Actuarial gains / (losses )on defined benefit obligations is recognised in other comprehensive income (OCI). Consequently, actuarial loss of Rs 5.02 lakhs has been recognised in OCI during the year ended 31 March 2017.

B.4 Impact on account of deferred taxes

The impact of transition adjustments together with Ind AS mandate of using balance sheet approach (against profit and loss approach in the previous GAAP) for computation of deferred tax has impacted the reserves on date of transition, with consequential impacts to the Statement of profit and loss for the subsequent periods.

Consequent to the change, the impact of Rs 1.66 lakhs was shifted from the Statement of profit and loss to OCI for the year ended 31 March 2017.

43 Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006:

(i) An amount of Rs. 4.50 lakhs (31 March 2017 Rs. 1.39 lakhs, 01 April 2016 Rs. 3.70 lakhs) was due and outstanding to suppliers as at the end of the accounting year on account of principal and interest respectively.

(ii) No interest was paid during the year in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was paid to the supplier beyond the appointed day.

(iii) No amount of interest is due and payable for the period of delay in making payment but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006.

(iv) No interest was accrued and unpaid at the end of the accounting year.

(v) No further interest remaining due and payable even in the succeeding years for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.

The above information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

Short-term borrowings

44 Net debt reconciliation

Net debt (including cash and cash equivalents) as at 01 April 2017

69.92

Cash flows

(62.23)

Interest paid

(0.83)

Finance cost

0.83

Increase in book overdraft

(7.69)

Net debt as at 31 March 2018

This is a summary of significant accounting policies and other explanatory information referred to in our report of even date

For Walker Chandiok & Co LLP

For and on behalf of the Board of Directors

Chartered Accountants Firm

Registration No. 001076N / N500013

H. S. Zaveri
Director

S. C. Rangani
Director

J. D. Diwan
Director

DIN : 00003948

DIN : 00209069

DIN : 01565319

Adi P. Sethna

Partner

Vivek Sahai

Arvinder Kohli

Claude Rose

Membership No.: 108840

Director DIN : 01717502

Director DIN : 08135020

Director DIN : 01494440

Kamlesh Sondigala

Company Secretary

Place: Mumbai

Place: Mumbai

Date : 17 May 2018

Date : 17 May 2018


Mar 31, 2018

A Corporate Information

SRF Limited (“the Company”) is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 2013 (“the 2013 Act”). The Company’s equity shares are listed at the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The registered office of the Company is situated at The Galleria, DLF Mayur Vihar, Unit No. 236 & 237, Second Floor, Mayur Vihar Place, Noida Link Road, Mayur Vihar Phase I Extn, Delhi - 110091. The Company’s parent and ultimate holding company is KAMA Holdings Limited.

The principal activities of the Company are manufacturing, purchase and sale of technical textiles, chemicals & polymers and packaging films.

The financial statements were approved for issue in accordance with a resolution of the directors on May 17, 2018.

B. Significant accounting judgements, estimates and assumptions

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Actual results may differ from the estimates.

Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods affected.

(i) Significant accounting judgements

In the process of applying the Company’s accounting policies, management has made the following judgements, which have the significant effect on the amounts recognised in the financial statements:

(a) Contingent Liabilities

In ordinary course of business, the Company faces claims by various parties. The Company assesses such claims and monitors the legal environment on an ongoing basis, with the assistance of external legal counsel, wherever necessary. The Company records a liability for any claims where a potential loss probable and capable of being estimated and discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable, the Company provides disclosures in the financial statements but does not record a liability in its financial statements unless the loss becomes probable.

(ii) Significant estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) Defined benefit plans/ Other Long term employee benefits

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

The parameter most subject to change is the discount rate. The management considers the interest rates of government securities based on expected settlement period of various plans. Further details about various employee benefit obligations are given in Note 34.

(b) Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws and the amount and timing of future taxable income. The Company establishes provision, based on reasonable estimates. The amount of such provisions is based on various factors such as experience of previous tax audits and differing interpretations of tax regulation by the taxable entity and the responsible tax authority. Such differences in interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective domicile of the Companies.

(c) useful lives of Property, plant and equipment and Intangible assets

The Company reviews the estimated useful lives at the end of each reporting period.

Notes:

(i) Borrowing cost capitalised to capital work in progress during the year Rs.31.25 Crores (2017: Rs.11.85 Crores).

(ii) The deed of assignment in respect of freehold land at Manali, Chennai has been executed in respect of 135.02 acres (2017: 135.02 acres). In addition to aforesaid extent, 1.47 acres were handed over to SRF limited under a land delivery receipt. During the previous year the Company has sold 1.03 acres of land. Thus, the Company is in possession of 135.46 acres of industrial land at Manali, Chennai.

(iii) Conveyancing of buildings and other superstructures located at Company’s plant at Malanpur in the state of Madhya Pradesh including immovable machinery is linked to the Stamp duty matter (Refer to note 31 below).

(iv) Out of the Industrial Free hold land measuring 32.41 acres at the Company’s plant in Gummidipoondi, the Company does not have clear title to 2.43 acres.

(v) Capital expenditure incurred during the year includes Rs.16.03 Crores (2017 - Rs.65.27 Crores) on account of research and development. Depreciation for the year includes depreciation on assets deployed in research and development as per note 39 (a) below.

(vi) Capital work in progress includes pre-operative expenses of Rs.20.13 Crores (2017: Rs.6.35 Crores)

(vii) Refer to note 15.1 for information on PPE pledged as security by the Company.

(viii) Refer to note 39 (c) for additions / deletions on account of exchange difference during the year.

(ix) Refer to note 31 (e) for information on PPE charged as security by the Company

Allocation of goodwill to cash generating units (CGu):

Goodwill has been allocated for impairment testing purposes to the following cash generating units.

- Engineering plastics business

- Industrial yarn business

Engineering plastics units

The recoverable amount of this CGU is determined based on a value in use calculation which use cash flow projections based on financial budget approved by the directors of the Company covering a five year period and a discount rate of 10% per annum (2017: 10%). Cash flow projections during the budget period are based on the same expected gross margins and raw materials price inflation throughout the budget period.

Based on the above impairment testing no impairment losses have been recognised.

Industrial yarn unit

The recoverable amount of this CGU is determined based on a value in use calculation which use cash flow projections based on financial budget approved by the directors of the Company covering a five year period and a discount rate of 10% per annum (2017: 10%). Cash flow projections during the budget period are based on the same expected gross margins and raw materials price inflation throughout the budget period.

Based on the above impairment testing no impairment losses have been recognised.

Terms/ rights attached to equity shares :

The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the Company.

During the year ended March 31, 2018, the amount of interim dividend recognised as distributions to equity shareholders was Rs.12 per share (2017: Rs.12 per share).

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

The Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in the fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow hedging reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.

The Company has issued non-convertible debentures and as per the provisions of the 2013 Act, it is required to create debenture redemption reserve out of the profits of the Company available for payment of dividend.

This reserves represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amount reclassified to retained earnings when those assets have been disposed of.

Current Borrowings

Short term borrowings are payable in one installment within one year. For short term borrowings in foreign currency, interest rates range from Euribor 15 bps to Euribor 18 bps and from Libor to Libor 50 bps. For rupee denominated short term loans taken during the year interest rate is at 6.28% to 8.25%.

1.1 Dues To micro, small and medium enterprises

Sundry Creditors include the following dues to micro and small enterprises covered under “The Micro, Small and Medium Enterprises Development Act, 2006” (MSMED) to the extent such parties have been identified from the available information.

* The Company has recognized grant in respect of duty paid on procurement of capital goods under EPCG scheme of Central Government which allows refund of such duty in the form of freely transferable duty credit scrips upon meeting of requisite export obligation. The Company expects to meet its export obligations in future years. Export obligation as on March 31, 2018 is Rs.145.68 Crores (Previous Year - Rs.104.93 Crores).

* Consequent to introduction of Goods and Services Tax (GST) with effect from July 1, 2017, Central Excise, Value Added Tax (VAT) etc. have been subsumed into GST. In accordance with Indian Accounting Standard-18 on Revenue and Schedule III of the Companies Act, 2013, unlike Excise Duties, levies like GST, VAT etc. are not part of revenue. Accordingly, the figures for the periods upto June 30, 2017 are not strictly relatable to those thereafter. The following additional information is being provided to facilitate such understanding.

The tax rate used for the current year reconciliation above is the corporate tax rate of 34.608% (2017: 34.608%) payable by corporate entities in India on taxable profits under the Indian tax law.

*This amount includes tax credit of Rs.33.97 Crores which is related to finalization and determination of deduction claimed for earlier years of benefits as per Section 80-IA of the Income-tax Act, 1961, for generation of power from captive power plants which is based on court judgments, opinion from external tax experts, finalization of transfer pricing study and cost audit of the respective years.

2 Contingent Liabilities and Commitments

a. Claims against the Company not acknowledged as debts:

* Amount deposited Rs.7.49 Crores (2017 : Rs.8.60 Crores)

** Amount deposited Rs.21.76 Crores (2017 : Rs.12.39 Crores)

*** Amount deposited Rs.0.08 Crores (2017 : Rs.0.08 Crores)

**** Amount deposited Rs.6.07 Crores (2017 : Rs.6.48 Crores)

***** In the matter of acquisition of the Tyrecord Division at Malanpur from CEAT Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs.303.00 Crores and levied a stamp duty of Rs.23.73 Crores and imposed a penalty of Rs.5.09 Crores. The said demand was challenged before the Hon’ble High Court of Madhya Pradesh Bench at Gwalior. The Hon’ble High Court of Madhya Pradesh accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs.27.76 Crores and not the entire undertaking valued at Rs.303.00 Crores as claimed by the State. Consequently, the Hon’ble High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Hon’ble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Hon’ble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal. Since then, the Department has filed appeal which has been admitted. Matter will be listed in due course.

@ As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs.20.64 Crores (2017 : Rs.20.64 Crores) and Rs.0.38 Crore (2017 : Rs.0.38 Crore) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b. The Company had received demand for payment of Central Sales Tax (CST), Value Added Tax (VAT) and Entry Tax aggregating to Rs.123.11 Crores including interest and penalty of Rs.34.38 Crores for the period 2004 to 2013 in respect of sales from its manufacturing facility in Special Economic Zone (SEZ) in Madhya Pradesh to Domestic Tariff Area (DTA). The Company had already paid on the same products Rs.51.37 Crores as Additional Countervailing Duty (ACVD) to the Central Government. The Company had filed writ petitions against all such demands, on which the Hon’ble High Court of Madhya Pradesh (“Court”) has granted stay.

In respect of such demands, the Company made representation to Government of Madhya Pradesh and its regulatory authorities, based on such representation the Company is allowed certain benefits and concessions in respect of such demand.

The Management is of view that the overall matter has been resolved and no material liability is likely to fructify on the Company.

c. The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty / service tax amounting to Rs.23.51 Crores (2017 : Rs.23.95 Crores) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

d. Liability on account of bank guarantees of Rs.123.79 Crores (2017 : Rs.120.13 Crores)

e. The Company has issued a Counter Indemnity to HSBC Ltd., India for an amount of US$ 40.50 Million (Previous Year US$ 40.50 Million) to secure the Standby Documentary Credit (SBDC) Facility of the same amount issued by the said bank in favour of HSBC Bank (Mauritius) Limited. This SBDC is further secured by a charge by way of an equitable mortgage on the immoveable properties of the Company at Manali, Tamil Nadu. Basis of this SBDC, HSBC Bank (Mauritius) Limited has entered into a loan agreement for a term loan of US$ 40 Million (Previous year US$ 40 Million) with SRF Global BV, the wholly owned subsidiary of the Company. Outstanding loan amounts to US$ 40 Million (2017 : US$ 40 Million)

g. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.

(iii) The Company has other commitments, for purchases / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any long term contracts including derivative contracts for which there will be any material foreseeable losses.

(iv) The Company has recognized grant in respect of duty paid on procurement of capital goods under EPCG scheme of Central Government which allows refund of such duty in the form of freely transferable duty credit scrips upon meeting of requisite export obligation. The Company expects to meet its export obligations in future years. Export obligation as on March 31, 2018 is Rs.145.68 Crores (Previous Year -Rs.104.93 Crores).

3 Employee Benefits

3.1 Defined contribution plans:

Amounts recognized in the statement of profit and loss are as under:

The expenses incurred on account of the above defined contribution plans have been included in Note 25 “Employee Benefits Expenses” under the head “Contribution to provident and other funds”

(i) Superannuation fund

The Company makes contributions to a Trust which in turn contributes to ICICI Prudential Life Insurance Company Limited.

Apart from being covered under the Gratuity Plan described below, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee’s salary. From November 1, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

(ii) Provident fund administered through Regional Provident Fund Commissioner

All employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognised Provident Fund Trust. For other employees contributions are made to the Regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus. This plan is considered as a Defined Contribution Plan. For the first category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government and these are considered as Defined Benefit Plans accounted for on the basis of an actuarial valuation.

3.2 Defined benefit plans

The Company sponsors funded defined benefit plans for qualifying employees. The defined benefit plans are administered by separate funds which are legally separate from the Company. These plans are:

(a) Gratuity

(b) Provident fund for certain category of employees administered through a recognised provident fund trust

(i) These plans typically expose the company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. An actuarial valuations involves making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

(viii)Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of reporting period, while holding all other assumptions constant.

If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs.2.45 Crores (Increase by Rs.2.64 Crores) (as at March 31, 2017: decrease by Rs.2.23 Crores (increase by Rs.2.41 Crores))

If the expected salary growth increases (decreases) by 50 basis points, the defined benefit obligation would increase by Rs.2.63 Crores (decrease by Rs.2.46 Crores) (as at March 31, 2017 : increase by Rs.2.39 Crores (decrease by Rs.2.24 Crores))

3.3 Other long-term employee benefit

Amounts recognized in the statement of profit and loss in note 25 “ Employee Benefits expense” under the head “Salaries and wages, including bonus” are as under:

(i) Long Term Retention Pay

The Company has a Long Term Retention Pay Plan which covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three year blocks subject to achievement of certain performance ratings. The Company also has a scheme for talent retention of certain identified employees under which an incentive is payable over a period of three years. Based on actuarial valuation, the Company has accrued the above mentioned amounts.

4 Segment reporting

Based on the guiding principles laid down in Indian Accounting Standard (Ind AS) - 108 “Segment Reporting”, the Managing Director of the Company is the Chief Operating Decision Maker (CODM) and for the purposes of resource allocation and assessment of segment performance the business of the Company is segregated in the segments below:

- Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development

- Chemicals and Polymers business: includes refrigerant gases, chloromethane, pharmaceuticals, fluorochemicals & allied products, engineering plastics business and its research and development

- Packaging Film Business includes polyester films.

Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, trade receivables, inventories and property plant and equipment and intangible assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

Non-current segment assets includes property, plant and equipments, capital work in progress, intangible assets, goodwill and other non current assets.

No single customer contributed 10% or more to the company’s revenue for both 2017-18 and 2016-17

5 Operating Lease

The Company has entered into operating lease agreements for various premises taken for accommodation of Company’s officers / directors, various offices of the Company, lands & certain equipments. These arrangements are both cancellable and non-cancellable in nature and range between two to ninety nine years. The future minimum lease payments under non-cancellable operating leases are as under:-

6 financial Instruments and risk Management

6.1Capital Management

The Company manages its capital to ensure that it will be able to continue as a going concern and provide reasonable return to the shareholders through maintaining reasonable balance between debt and equity. The capital structure of the Company consists of net debt (borrowings net of cash and cash equivalents) and total equity of the Company. The Company is not subject to any externally imposed capital requirements. The Company’s management reviews the capital structure of the Company on a periodic basis. As part of review, the management considers the cost of capital and risk associated with each class of capital. The Company also evaluates its gearing measures like Debt Equity Ratio, Debt Service Coverage Ratio, Interest Service Coverage Ratio, Debt to EBIDTA Ratio to arrive at an appropriate level of debt and accordingly evolve its capital structure.

Level 1:

Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market. This category consists of open ended mutual funds.

Level 2:

Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly. This level of hierarchy consists of over the counter (OTC) derivative contracts.

Level 3:

Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main item in this category are unquoted equity instruments and financial guarantees contracts.

Sensitivity of Level 3 financial instruments are insignificant.

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) for investments in mutual funds declared by mutual fund house.

Derivative contracts: The Company has entered into various foreign currency contracts and interest rate swaps contracts to manage its exposure to fluctuations in foreign exchange rates and interest rate respectively. These financial exposures are managed in accordance with the Company’s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the Authorised Dealers Banks.

Unquoted equity investments: Fair value is derived on the basis of income approach, in this approach the discounted cash flow method is used to capture the present value of the expected future economic benefits to be derived from the ownership of these investments.

6.2Financial risk Management

The Company is exposed to various financial risks arising from its underlying operations and finance activities. The Company is primarily exposed to market risk (i.e. interest rate and foreign currency risk) and to credit risk and liquidity risk. The Company’s Corporate Treasury function plays the role of monitoring financial risk arising from business operations and financing activities.

Financial risk management within the Company is governed by policies and guidelines approved by the senior management and the Board of Directors. These policies and guidelines cover interest rate risk, foriegn currency risk, credit risk and liquidity risk. Company policies and guidelines also cover areas such as cash management, investment of excess funds and the raising of short and long-term debt. Compliance with the policies and guidelines is managed by the Corporate Treasury function within the Company. Review of the financial risk is done on a monthly basis by the Managing Director and on a quarterly basis by the Board of Directors. The objective of financial risk management is to contain, where deemed appropriate, exposures on net basis to the various types of financial risks mentioned above in order to limit any negative impact on the Company’s results and financial position.

In accordance with its financial risk policies, the Company manages its market risk exposures by using specific type of financial instruments duly approved by the Board of Directors as and when deemed appropriate. It is the Company’s policy and practice neither to enter into derivative transactions for speculative purpose, nor for any purpose unrelated to the underlying business. The Board of Directors / Managing Director reviews and approves policies for managing each of the above risks.

6.3.1 Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk includes loans and borrowings, deposits, investments and derivative financial instruments. The Company enters into the derivative contracts as approved by the Board to manage its exposure to interest rate risk and foreign currency risk.

A. foreign Currency risk Management

Foreign currency risk also known as Exchange Currency Risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Foreign currency risk in the Company is attributable to Company’s operating activities and financing activities.

In the operating activities, the Company’s exchange rate risk primarily arises when revenue / costs are generated in a currency that is different from the reporting currency (transaction risk). The Company manages the Net exposure on a rolling 12 month basis and hedges the exposures based on a duly approved policy by the Board. The information is monitored by the Audit committee and the Board of Directors on a quarterly basis. This foreign currency risk exposure of the Company are mainly in U.S. Dollar (USD), Euro (EUR) and Japanese Yen (JPY). The Company’s exposure to foreign currency changes for all other currencies is not material.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting periods expressed in Rs., are as follows:

Foreign currency sensitivity analysis

The Company is mainly exposed to USD, EUR and (JPY)

The following table details the Company’s sensitivity to a 1% increase and decrease in the ‘ against the relevant foreign currency. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for 1% change in foreign currency rates. A positive number below indicates an increase in profit before tax or vice-versa.

Foreign exchange derivative contracts

The Company uses derivative financial instruments exclusively for hedging financial risks that arise from its commercial business or financing activities. The Company’s Corporate Treasury team manages its foreign currency risk by hedging transactions that are expected to occur within of 12 to 15 months for hedges of forecasted sales, purchases and capital expenditures. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. All identified exposures are managed as per the policy duly approved by the Board of Directors.

B. Interest rate risk Management

Interest rate risk arises from movements in interest rates which could have effects on the Company’s net income or financial position. Changes in interest rates may cause variations in interest income and expenses resulting from interest-bearing assets and liabilities. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a agreed portfolio of fixed and variable rate loans and borrowings. The company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed principal amount outstanding at the time of inception of the swap. Out of the total borrowings, the amount of fixed interest loan is Rs.939 Crores and floating interest loan is Rs.873 Crores (March 31, 2017 : Fixed interest loan Rs.481 Crores and Floating interest loan Rs.808 Crores)

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

In case of increase in interest rate by above mentioned percentage, there would be a comparable impact on the profit before tax as mentioned above would be negative.

Interest rate Swap Contracts

Under interest rate swap (IRS) contracts, the Company agrees to exchange the difference between fixed and floating rate interest amounts calculated on the agreed notional principal amounts. Such contracts enables the Company to mitigate the risk of changing interest rates.

The following table details the IRS contracts outstanding at the end of the reporting period:

6.3.2 Credit risk Management

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

To manage trade receivables, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with counterparties who meet the parameters specified in Investment Policy of the Company . The investment policy is reviewed by the Company’s Board of Directors on an annual basis and if required, the same may be updated during the year. The investment policy specifies the limits of investment in various categories of products so as the minimize the concentration of risks and therefore mitigate financial loss due to counterparty’s potential failure.

Other than financial assets mentioned above, none of the Company’s financial assets are either impaired or past due, and there were no indications that defaults in payment obligations would occur.

6.3.3 Liquidity risk Management

Liquidity risk is the risk of non-availability of financial facilities available to the Company to meet its financial obligations. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of money market instruments, bank overdrafts, bank loans, debentures and other types of facilities. The liquidity management is governed by the Board approved liquidity management policy. Any deviation from the policy has to be approved by the Treasury Management comprising of Managing Director, Chief Financial Officer and Treasury Head. The Company assesses the concentration of risk with respect to refinancing its debt, guarantee given and funding of its capital expenditure needs of the future. The Company manages its liquidity by holding appropriate volumes of liquid assets which are available to its disposal on T 1 basis and by maintaining open credit lines with banks / financial institutions.

The table below analyses the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities:

c) The Company has elected to continue policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items as described in Para D13 AA of Ind AS 101. Accordingly, exchange difference loss / (gain) of Rs.4.62 Crores arising on all long term monetary items financed or re-financed on or before March 31, 2016 relating to acquisition of depreciable assets are added to / deleted from the cost of such assets/capital work in progress and will be depreciated over the balance useful life of assets. The unamortised portion carried forward as at March 31, 2018 is Rs.79.51 Crores.

e) The Company has established a comprehensive system of maintenance of information and documents as required by transfer pricing legislation under section 92D for its international transactions as well as specified domestic transactions. Based on the transfer pricing regulations/policy, the transfer pricing study for the year ended March 31, 2018 is to be conducted on or before due date of the filing of return and the company will further update above information and records based on the same and expects these to be in existence latest by that date. Management believes that all the above transactions are at arm’s length price and the aforesaid legislations will not have impact on the financial statement, particularly on the amount of tax expense and provision for taxation.

f) During the financial year 2017-18, the Company has incurred Rs.5.00 Crores (previous year - Rs.7.60 Crores), on corporate social responsibility activities under section 135 of the Companies Act, 2013.


Mar 31, 2017

There have been no breach of covenants mentioned in the loan agreements during the reporting periods.

* Amount deposited Rs, 8.60 Crores (2016 : Rs, 4.57 Crores; 2015 : Rs, 4.47 Crores)

** Amount deposited Rs, 12.39 Crore (2016 : Rs, 0.02 Crore; 2015 Rs, 0.16 Crore)

*** Amount deposited Rs, 0.08 Crore (2016 :Rs, 0.08 Crore; 2015 :Rs, Nil)

**** Amount deposited Rs, 6.48 Crores (2016 Rs, 3.38 Crores; 2015 Rs, 4.32 Crores)

***** In the matter of acquisition of the Tyrecord Division at Malanpur from CEAT Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs, 303.00 Crores and levied a stamp duty of Rs, 23.73 Crores and imposed a penalty of Rs, 5.09 Crores. The said demand was challenged before the Hon’ble High Court of Madhya Pradesh Bench at Gwalior. The Hon’ble High Court of Madhya Pradesh accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs, 27.76 Crores and not the entire undertaking valued at Rs, 303.00 Crores as claimed by the State. Consequently, the Hon’ble High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Hon’ble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Hon’ble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal.

@ As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs, 20.64 Crores (2016 : Rs, 20.64 Crores; 2015 : Rs, 20.64 Crores) and Rs, 0.38 Crore (2016 :Rs, 0.38 Crore; 2015 : Rs, 0.38 Crore) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b. The Company had received demand for payment of Central Sales Tax (CST), Value Added Tax (VAT) and Entry Tax aggregating to Rs, 123.11 Crores (2016 :Rs, 121.06 Crores; 2015:Rs, 111.38 Crores) including interest and penalty of Rs, 34.38 Crores (2016 : Rs, 34.38 Crores;2015 : Rs, 34.38 Crores) for the period from 2004 to 2013 in respect of sales from its manufacturing facility in Special Economic Zone (SEZ) in Madhya Pradesh to the Domestic Tariff Area (DTA). The Company had already paid on the same products Rs, 51.37 Crores as Additional Countervailing Duty (ACVD) to the Central Government, based on Company’s view that ACVD was payable as per extant policies and Legislations of the Centre and the State.

The Company had filed writ petitions against all such demands, on which Hon’ble High Court of Madhya Pradesh (“Court”) has granted stay subject to payment of 10 % of the total demand in cash and bank guarantee for the remaining 90% of the total demand. The said deposit of cash as well as bank guarantee has been made by the Company. The Management is of the view which is also confirmed by legal opinion that Company has a good case on merits and is confident of getting relief from the Court and, accordingly, no provision has been created.

c. The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty / service tax amounting to Rs, 23.95 Crores (2016 :Rs, 38.87 Crores; 2015 : Rs, 29.11 Crores) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

d. Liability on account of bank guarantees of Rs, 120.13 crores (2016: 7.85 crores; 2015: Rs, 5.47 crores)

e. The Company has issued a Counter Indemnity to HSBC Ltd., India for an amount of US$ 40.50 Million (Previous Year US$ 40.50 Million) to secure the Standby Documentary Credit (SBDC) Facility of the same amount issued by the said bank in favour of HSBC Bank (Mauritius) Limited. This SBDC is further secured by a charge by way of an equitable mortgage on the immoveable properties of the Company at Manali, Basis of this SBDC, HSBC Bank (Mauritius) Limited has entered into a loan agreement for a term loan of US$ 40 Million (Previous year US$ 40 Million) with SRF Global BV, the wholly owned subsidiary of the Company.

f. The Company has entered into agreements with banks for assignment of trade receivables without recourse to them for value upto a maximum limit of Rs, 379.79 Crores. The assigned receivables as at the year end is Rs, 185.46 Crores (March 31, 2016 : Rs, 160.35 Crores; April 1, 2015 : 95.24 Crores)

h. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.

(iii) The Company has other commitments, for purchases / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any long term contracts including derivative contracts for which there will be any material foreseeable losses.

(iv) The Company has recognized grant in respect of duty paid on procurement of capital goods under EPCG scheme of Central Government which allows refund in the form of freely transferable duty credit scrips of the duty paid upon meeting of export obligation of six times of the duty paid on capital goods procured. The Company expects to meet its export obligations in future years. Export obligation as on March 31, 2017 is Rs, 104.93 crores.

1 RELATED PARTY TRANSACTIONS

2 Description of related parties

Holding Company Key management personnel

KAMA Holdings Limited Mr. Arun Bharat Ram

Mr. Ashish Bharat Ram

Subsidiaries Mr. Kartik Bharat Ram

SRF Overseas Limited# Mr. K. Ravichandra’

SRF Holiday Home Limited Mr. Vinayak Chatterjee

SRF Energy LimitedA Mr. Tejpreet S Chopra

SRF Fluorochemicals LimitedA Mr. L.Laxshman

SRF Fluor Private LimitedA Mr. Vellayan Subbiah

SRF Global BV Mr. Pramod Bhasin

SRF Industries (Thailand) Limited Ms. Meenakshi Gopinath

SRF Industex Belting (Pty) Limited Mr. Pramod Gopaldas Gujarathi**

SRF Flexipak (South Africa) (Pty) Limited

Fellow subsidiaries Enterprises over which KMP have significant

influence

KAMA Realty (Delhi) Limited SRF Foundation

Shri Educare Limited Karm Farms LLP

Shri Educare Maldives Private Limited Srishti Westend Greens Farms LLP

SRF Transnational Holdings Limited SRF Welfare Trust

Post Employment Benefit Plans Trust

SRF Limited Officers Provident Fund Trust SRF Employees Gratuity Trust SRF Officers Gratuity Trust

# Liquidated during the year *upto March 31, 2017 **from April 1, 2017 ALiquidated during FY 2015-16

(i) Superannuation fund

The Company makes contributions to a Trust which in turn contributes to ICICI Prudential Life Insurance Company Limited.

Apart from being covered under the Gratuity Plan described below, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee’s salary. From November 1, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

(ii) Provident fund administered through Regional Provident Fund Commissioner

All employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognized Provident Fund Trust. For other employees contributions are made to the Regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus. This plan is considered as a Defined Contribution Plan. For the first category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government and these are considered as Defined Benefit Plans accounted for on the basis of an actuarial valuation.

34.2 Defined benefit plans

The Company sponsors funded defined benefit plans for qualifying employees. The defined benefit plans are administered by separate funds which are legally separate from the Company. These plans are:

(a) Gratuity

(b) Provident fund for certain category of employees administered through a recognized provident fund trust

(i) These plans typically expose the company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment. Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. An actuarial valuations involves making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

(viii) Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of reporting period, while holding all other assumptions constant.

If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs, 2.23 Crores (Increase by Rs, 2.41 Crores) (as at March 31, 2016: decrease by Rs, 1.82 Crores (increase by Rs, 1.96 Crores))

If the expected salary growth increases (decreases) by 50 basis points, the defined benefit obligation would increase by Rs, 2.39 Crores (decrease by Rs, 2.24 Crores) (as at March 31, 2016: increase by Rs, 1.96 Crores (decrease by Rs, 1.84 Crores ))

(i) Long Term Retention Pay

The Company has a Long Term Retention Pay Plan which covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three year blocks subject to achievement of certain performance ratings. The Company also has a scheme for talent retention of certain identified employees under which an incentive is payable over a period of three years. Based on actuarial valuation, the Company has accrued the above mentioned amounts.

3 SEGMENT REPORTING

Based on the guiding principles laid down in Indian Accounting Standard (Ind AS) - 108 “Segment Reporting”, the Managing Director of the Company is the Chief Operating Decision Maker (CODM) and for the purposes of resource allocation and assessment of segment performance the business of the Company is segregated in the segments below:

- Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development

- Chemicals and Polymers business: includes refrigerant gases, chloromethane, pharmaceuticals, fluorochemicals & allied products, engineering plastics business and its research and development.

- Packaging Film Business includes polyester films.

Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, trade receivables, inventories and property, plant and equipment, net of allowances and provisions, which

are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

4 OPERATING LEASE

The Company has entered into operating lease agreements for various premises taken for accommodation of Company''s officers / directors, various offices of the Company, lands & certain equipments. These arrangements are both cancellable and non-cancellable in nature and range between two to ninety nine years. The future minimum lease payments under non-cancellable operating leases are as under:

5 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

6 Capital Management

The Company manages its capital to ensure that it will be able to continue as a going concern and provide reasonable return to the shareholders through maintaining reasonable balance between Debt and equity. The capital structure of the Company consists of net debt (borrowings net of cash and cash equivalents) and total equity of the Company. The Company is not subject to any externally imposed capital requirements. The Company’s management reviews the capital structure of the Company on a periodic basis. As part of review, the management considers the cost of capital and risk associated with each class of capital. The Company also evaluates its gearing measures like Debt Equity Ratio, Debt Service Coverage Ratio, Interest Service Coverage Ratio, Debt to EBIDTA Ratio to arrive at an appropriate level of debt and accordingly evolve its capital structure.

* Investments (Level 1 - Mutual Funds, Level 3 - Unquoted equity instruments)

** Other financial assets (Level 2 - Hedging Instruments)

*** Other Financial Liabilities (Level 2 - Hedging Instruments, Level 3 - Financial Guarantee contracts)

Level 1:

Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market. This category consists of open ended mutual funds.

Level 2:

Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly. This level of hierarchy consists of over the counter (OTC) derivative contracts.

Level 3:

Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main item in this category are unquoted equity instruments and financial guarantees contracts.

Sensitivity of Level 3 financial instruments are insignificant

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) for investments in mutual funds declared by mutual fund house.

Derivative contracts: The Company has entered into various foreign currency contracts and interest rate swaps contracts to manage its exposure to fluctuations in foreign exchange rates and interest rate respectively. These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the Authorized Dealers Banks.

Unquoted equity investments: Fair value is derived on the basis of income approach, in this approach the discounted cash flow method is used to capture the present value of the expected future economic benefits to be derived from the ownership of these investments.

credit risk and liquidity risk. Company policies and guidelines also cover areas such as cash management, investment of excess funds and the raising of short and long-term debt. Compliance with the policies and guidelines is managed by the Corporate Treasury function within the Company. Review of the financial risk is done on a monthly basis by the Managing Director and on a quarterly basis by the Board of Directors. The objective of financial risk management is to contain, where deemed appropriate, exposures on net basis to the various types of financial risks mentioned above in order to limit any negative impact on the Company’s results and financial position.

In accordance with its financial risk policies, the Company manages its market risk exposures by using specific type of financial instruments duly approved by the Board of Directors as and when deemed appropriate. It is the Company’s policy and practice neither to enter into derivative transactions for speculative purpose, nor for any purpose unrelated to the underlying business. The Board of Directors / Managing Director reviews and approves policies for managing each of the above risks.

7 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk includes loans and borrowings, deposits, investments and derivative financial instruments. The Company enters into the derivative contracts as approved by the Board to manage its exposure to interest rate risk and foreign currency risk.

A. Foreign Currency Risk Management

Foreign currency risk also known as Exchange Currency Risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Foreign currency risk in the Company is attributable to Company’s operating activities and financing activities.

In the operating activities, the Company’s exchange rate risk primarily arises when revenue / costs are generated in a currency that is different from the reporting currency (transaction risk). The Company manages the Net exposure on a rolling 12 month basis and hedges the exposures based on a duly approved policy by the Board. The information is monitored by the Audit committee and the Board of Directors on a quarterly basis. This foreign currency risk exposure of the Company are mainly in U.S. Dollar (USD) and Euro (EUR). The Company’s exposure to foreign currency changes for all other currencies is not material.

Foreign currency sensitivity analysis

The Company is mainly exposed to USD and EUR

The following table details the Company’s sensitivity to a 1% increase and decrease in the '' against the relevant foreign currency. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for 1% change in foreign currency rates. A positive number below indicates an increase in profit before tax or vice-versa.

Foreign exchange derivative contracts

The Company uses derivative financial instruments exclusively for hedging financial risks that arise from its commercial business or financing activities. The Company’s Corporate Treasury team manages its foreign currency risk by hedging transactions that are expected to occur within of 12 to 15 months for hedges of forecasted sales, purchases and capital expenditures. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. All identified exposures are managed as per the policy duly approved by the Board of Directors.

* Sensitivity on the above derivative contracts in respect of foreign currency exposure is insignificant

B. Interest Rate Risk Management

Interest rate risk arises from movements in interest rates which could have effects on the Company’s net income or financial position. Changes in interest rates may cause variations in interest income and expenses resulting from interest-bearing assets and liabilities. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a agreed portfolio of fixed and variable rate loans and borrowings. The company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed principal amount outstanding at the time of inception of the swap. Out of the total borrowings, the amount of fixed interest loan is Rs, 481 Crores and floating interest loan is Rs, 808 Crores (March 31, 2016: Fixed interest loan Rs, 734 Crores and Floating interest loan Rs, 758 Crores ; April 1, 2015: Fixed interest loan Rs, 512 Crores and Floating interest loan Rs, 798 Crores)

In case of increase in interest rate by above mentioned percentage, there would be a comparable impact on the profit before tax as mentioned above would be negative.

Interest Rate Swap Contracts

Under interest rate swap (IRS) contracts, the Company agrees to exchange the difference between fixed and floating rate interest amounts calculated on the agreed notional principal amounts. Such contracts enables the Company to mitigate the risk of changing interest rates.

* Sensitivity on the above IRS contracts in respect of interest rate exposure is insignificant Each of the above trades are in the nature of cash flow hedges and therefore hedge effective. The mark to market on these trades is therefore routed through Cash flow Hedge Reserve. The interest rate swap and the interest payments on the loan are paid simultaneously and are charged off to profit and loss.

8 Credit Risk Management

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

To manage trade receivables, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with counter parties who meet the parameters specified in Investment Policy of the Company . The investment policy is reviewed by the Company’s Board of Directors on an annual basis and if required, the same may be updated during the year. The investment policy specifies the limits of investment in various categories of products so as the minimize the concentration of risks and therefore mitigate financial loss due to counter party’s potential failure.

Other than financial assets mentioned above, none of the Company’s financial assets are either impaired or past due, and there were no indications that defaults in payment obligations would occur

9 Liquidity Risk Management

Liquidity risk is the risk of non-availability of financial facilities available to the Company to meet its financial obligations. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of money market instruments, bank overdrafts, bank loans, debentures and other types of facilities. The liquidity management is governed by the Board approved liquidity management policy. Any deviation from the policy has to be approved by the Treasury Management comprising of Managing Director, Chief Financial Officer and Treasury Head. The Company assesses the concentration of risk with respect to refinancing its debt, guarantee given and funding of its capital expenditure needs of the future. The Company manages its liquidity by holding appropriate volumes of liquid assets which are available to its disposal on T 1 basis and by maintaining open credit lines with banks / financial institutions.

* including Current Maturity of noncurrent borrowing ** includes financial guarantee contracts

10 FIRST TIME ADOPTION OF IND AS

These are the Company’s first financial statements prepared in accordance with Ind AS. The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to the certain mandatory exceptions and certain optional exemptions availed by the Company. Applicable mandatory exceptions and optional exemptions are as under:

A Mandatory Exceptions:

1 Estimates

The estimates as at April 1, 2015 and as at March 31, 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:

(i) Fair Value through other comprehensive Income(FVTOCI) - unquoted equity shares

(ii) Impairment of financial assets based on expected credit loss model

The estimates used by the Company to present these amounts are in accordance with the Ind AS which reflects conditions as at April 1, 2015, the date of transition to Ind AS and as at March 31, 2016.

2 Derecognition of financial assets:

The company has applied the de-recognition requirements in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

3 Classification and measurement of financial instruments:

i. Financial Instruments: (Loan to employees and security deposits paid) :

Financial assets / liabilities like loan to employees and security deposits paid, has been classified and measured at mortised cost on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

ii. Financial Instruments: (Investment in Equity shares other than investment in subsidiaries):

The Company has designated investment in equity shares other than in subsidiaries held as at April 1, 2015 as fair value through Other Comprehensive Income.

iii. Impairment of financial assets: (Trade receivables and other financial assets)

The Company has applied the impairment requirements of Ind AS 109 retrospectively, however as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date.

B Optional Exemptions:

1 Deemed cost for property, plant and equipment and intangible assets

The Company has elected to continue with the carrying value of all of its intangibles assets recognized as on April 1, 2015 measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date. In case of property, plant and equipment, the Company has elected to recognize it on fair value as on April 1, 2015 and use that as its deemed cost as of transition date.

2 Long Term Foreign Currency Monetary Items: (Long term foreign currency borrowings)

The Company has elected to continue policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items as described in Para D13 AA of Ind AS 101. Accordingly, Exchange differences pertaining to long term foreign currency loans obtained or re-financed on or before March 31, 2016 relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance useful life of the assets.

3 Arrangements containing a lease

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based on conditions in place as at the date of transition.

4 Investment in subsidiaries:

The Company has elected this exemption and opted to continue with the carrying value of investment in subsidiaries as recognized in its Indian GAAP financials, as deemed cost at the date of transition.

5 Designate of previously recognized financial instrument

The Company has elected this exemption and opted to:

- Designate financial asset at FVTPL as per Ind AS 109 based on facts and circumstances that exist as on transition date;

- Designate an investment in equity shares as FVTOCI, as per Ind AS 109, based on facts and circumstances exist on transition date.

6 Business combinations:

Ind AS 103 Business Combinations has not been applied to acquisitions of subsidiaries, which are considered business under Ind AS that occurred before April 1, 2015. Use of this exemption means that the Indian GAAP carrying amounts of assets and liabilities, that are required to be recognized under Ind AS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with respective Ind AS. The Company recognizes all assets acquired and liabilities assumed in a past business combination, except (i) certain financial assets and liabilities that were derecognized and that fall under the de recognition exception, and (ii) assets and liabilities that were not recognized in the acquirer’s consolidated balance sheet under its previous GAAP and that would not qualify for recognition under Ind AS in the individual balance sheet of the acquirer. Assets and liabilities that do not qualify for recognition under Ind AS are excluded from the opening Ind AS balance sheet. The Company did not recognize or exclude any previously recognized amounts as a result of Ind AS recognition requirements. The Company has tested the goodwill for impairment at the transition date based on the conditions as of the transition date.

11 Notes to first time adoption

(a) “The Company has elected to recognize its property, plant and equipment (PPE) on fair value as on April 1, 2015 and use that as its deemed cost as of transition date. As on the transition date such fair value adjustment amounting to Rs, 49.49 Crores is done in retained earnings in the opening balance sheet and corresponding changes in depreciation amounting to Rs, 18.36 Crores in financial year 2015-16 and gain of Rs, 1.61 Crores on disposal of such PPE has been adjusted in the statement of profit and loss.

Spares, other than insurance spares were classified as inventory under existing IGAAP. However under Ind-AS, spare parts are recognized in accordance with this Ind AS when they meet the definition of property, plant and equipment. Such stores and spares amounting to Rs, 33.93 Crores have been capitalized under Ind AS at the transition date. In relation to spares reclassified from stores and spares to Property, plant and equipment as on transition date, there is no consumption under Indian GAAP during FY 15-16. Under Ind AS for the year ended March 31, 2016, the Company has recorded Rs, 1.33 Crores as the depreciation on such spares in statement of profit or loss.

(b) Under previous GAAP, the leasehold land was considered as part of property, plant and equipment and treated as perpetual lease. Accordingly, in FY 2015-16 no amortization was charged. As per Ind AS-17 leasehold land of Rs, 95.50 Crores has now been classified as operating lease and the premium paid on leasehold land is amortized over the period of the lease which amounts to Rs, 1.00 crores in financial year 2015-16. The proportionate unamortized amount of Rs, 5.39 Crores up to the date of transition is adjusted against retained earnings in the opening balance sheet.

(c) Under previous GAAP, transaction costs incurred in connection with borrowings are amortized over the period of borrowings. Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in profit or loss over the tenure of the borrowings as part of interest expense using effective interest rate method. Further, as per previous GAAP such unamortized amount was disclosed as prepaid assets which as per Ind AS now are netted off with the related borrowings.

(d) Under previous GAAP in respect of defined benefit plan, actuarial gains and losses were recognized in profit or loss. Under Ind AS, the actuarial gains and losses forming part of re-measurement of the net defined benefit liability / asset is recognized in other comprehensive income. Consequently, the tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of profit or loss. There is no impact on the total equity.

(e) Under previous GAAP, goodwill is amortized. Under Ind AS, goodwill is not amortized but to be tested for impairment. Accordingly, adjustment has been passed for reversal of amortization of Rs, 0.37 Crore booked under Indian GAAP for the year ended March 31, 2016.

(f) Under previous GAAP, deferred payment consideration payable in relation to a business combination was recorded at the contractual value. Under Ind AS such consideration is required to be measured at fair value. Difference between carrying amount of liability and fair value at the transition date is recorded in retained earnings. For the year ended on March 31, 2016, increase in interest cost was charged in the statement of profit and loss.

(g) Under previous GAAP, revenue from sale of goods was presented net of excise duty under revenue from operations. Whereas, under Ind AS, revenue from sale of goods includes excise duty. The corresponding excise duty expense of Rs, 305.55 Crores is presented separately on the face of the statement of profit and loss. The change does not affect total equity as on April 1, 2015 and March 31, 2016 and profit for the year ended March 31, 2016.

(h) Under previous GAAP, cash discount was shown under other expenses. However, under Ind AS, sale of goods is presented net of cash discount of Rs, 7.40 Crores. Thus sale of goods under Ind AS has decreased for the year ended March 31, 2016 with a corresponding decrease in other expenses. The change does not affect total equity as on April 1, 2015 and March 31, 2016 and profit for the year ended March 31, 2016.

(i) Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Difference between the fair value and transaction value of the security deposits has been recognized as prepaid rent is amortized over the lease period on straight line basis. Notional interest income on such deposits is recognized over the lease period using effective interest method. There is no impact on retained earnings at the transition date. For the year ended March 31, 2016 the amortization of expense and interest income was taken to statement of profit and loss under the head other expenses and other income respectively.

(j) Under the previous GAAP, the loan given by the Company to its employees were carried at book value. However, under Ind AS, these loans are required to be measured initially at fair value on the date of transition and subsequently at amortized cost. Difference between the fair value and transaction value of such loan to employees has been recognized as prepaid employee benefit expense is amortized over the loan period on straight line basis. Notional interest income on such loans is recognized over the loan period using effective interest method. There is no impact on retained earnings at the transition date. For the year ended March 31, 2016 the amortization of such prepaid personnel expenditure and interest income was taken to statement of profit and loss under the head employee benefit expense and other income respectively.

(k) Under the previous GAAP, investment in mutual funds were classified as current investments based on the intended holding period and readability. Current investments were carried at lower of cost and net realizable value. Under Ind AS, these investments are required to be measured at fair value through profit & loss (FVTPL). The resulting fair value changes of these investments Rs, 1.56 Crores have been recognized in retained earnings as at the date of transition and subsequently Rs, 1.47 Crores in the profit and loss for the year ended March 31, 2016.

(l) Under previous GAAP, financial guarantees were not recognized in the balance sheet. The guarantee commission charged by the Company was recorded as income on accrual basis. Under Ind AS, financial guarantee contracts are accounted as financial liabilities and measured initially at fair value and subsequently as given in note 1.B.20. Accordingly, as at April 1, 2015 a financial liability has been recognized with a corresponding debit to the retained earnings and differential impact for the year ended March 31, 2016 was taken in statement of profit and loss.

(m) Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income, expense, gains, or losses are required to be presented in other comprehensive income.

(n) The transition from Indian GAAP to Ind-AS had no significant impact on cash flows generated by the Company.

(o) Under Ind AS, effective portion of fair value gains and losses of hedging instruments designated in a cash flow hedge relationship is recognized in other comprehensive income and taken to FVTOCI reserve in equity, whereas under previous GAAP there was no such concept of other comprehensive income and all such gains and losses were directly recognized in cash flow hedge reserves in other equity. Consequently, the tax effect of the same has also been recognized in other comprehensive income under FVTOCI reserve.

(p) Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity. Such adjustments amounting to Rs, 51.83 Crores as at March 31, 2016 and Rs, 58.12 Crores as at April 1, 2015.

(q) Under previous GAAP, MAT credit forms part of non-current assets which as per the requirements of Ind AS 12 has been shown as a part of deferred tax liabilities (net). (As at March 31, 2016: Rs, 95.43 Crores, As at April 1, 2015: Rs, 76.16 Crores)

(r) Grouping of Mark to Market (MTM) of interest rate swaps designated in hedge relationship through Other Comprehensive Income. (As at March 31, 2016: Rs, 1.70 Crores, As at April 1, 2015: Rs, 1.60 Crores)

(c) The Company has elected to continue policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items as described in Para D13 AA of Ind AS 101. Accordingly, exchange difference gain of Rs, 19.68 Crores arising on all long term monetary items financed or re-financed on or before March 31, 2016 relating to acquisition of depreciable assets are deducted from the cost of such assets/capital work in progress and will be depreciated over the balance useful life of assets. The unamortized portion carried forward as at March 31, 2017 is Rs, 81.53 Crores.

(e) The Company has established a comprehensive system of maintenance of information and documents as required by transfer pricing legislation under section 92D for its international transactions as well as specified domestic transactions. Based on the transfer pricing regulations/policy, the transfer pricing study for the year ended March 31, 2017 is to be conducted on or before due date of the filing of return and the company will further update above information and records based on the same and expects these to be in existence latest by that date. Management believes that all the above transactions are at arm’s length price and the aforesaid legislations will not have impact on the financial statement, particularly on the amount of tax expense and provision for taxation.

(f) During the financial year 2016-17, the Company has incurred Rs, 7.60 Crores (previous Year - Rs, 8.75 Crores), being the amount required to be spent on corporate social responsibility activities under section 135 of the Companies Act 2013.

(g) Details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016


Mar 31, 2016

1 : Out of 4,054,376 number of issued equity shares of Rs. 10 each, calls are not made on 442,836 number of shares.

(2) Rights attached to equity shares :

(3) Right to receive dividend as may be approved by the Board / Annual General Meeting.

(4) The equity shares are not repayable except in the case of a buy back, reduction of capital or winding up in terms of the provision of the Companies Act, 2013.

(5) Every member of the Company holding equity shares has a right to attend the General Meeting of the Company and has a right to speak and on a show of hands, has one vote if he is present in person and on a poll shall have the right to vote in proportion to his share of the paid-up capital of the Company.

(6) Terms of redemption of 11% cumulative redeemable preference share of Rs. 100 :

In the year ended 31st March, 2008 the Company had re-negotiated the coupon rate from 9% to 2% with effect from 18th Sept, 2002 to 31st March, 2005 and at 6% from 1st April, 2005 onwards and the repayment terms extended to 12 years repayable @ Rs. 20 per year (face value Rs.100 each) at the end of 8th, 9th, 10th, 11th and 12th year or such earlier years as the Company may deem fit. Till the completion of 12th year, the Company repaid Rs. 950 lakhs and re-negotiated the redemption terms of the Preference Shares . As per the revised terms, balance of Rs 50 lakhs was to be redeemed equally over the period of two years on 18th June, 2015 and 18th June, 2016 with an enhanced coupon rate of 11% p.a. effective 18th June, 2014 till its redemption. As per the revised terms Company repaid Rs 25 Lakh on 18th June 2015 and will redeem balance Rs 25 lakhs on 18th June, 2016. Also pursuant to section 55 of the Companies Act, 2013, the Company has transferred Rs. 25 lakhs from current year profits (Rs. 150 lakhs in previous year) to Capital Redemption Reserve.

Considering the improved financial results the board has decided to accrue current years dividend (18th June 2015 to 31st March 2016 amounting Rs 2.16 lakhs) on 11% cumulative redeemable preference shares and pay arrears on 11% cumulative redeemable preference shares @ 6% for the period from 1st April, 2011 to 17th June, 2014 and @ 11% from 18th June 2014 to 17th June 2015 aggregating Rs. 87.75 lakhs.(Previous year : for the period 1st April, 2007 to 31st March 2011 @ 6% aggregating Rs. 230.56 Lakhs). After considering the effect of dividend, as stated above, arrears of cumulative dividends on the 11% Cumulative Redeemable preference Shares, considering the revised coupon rates is Rs. Nil lakhs (as at 31.03.2015 : Rs. 86.57 lakhs)

7. Additional information to the financial statements :

(a) Contingent liabilities not provided for :

(i) The Company had received an Order dated 6th September, 2004 from the Employees Provident Fund Organization raising a demand of Rs. 161.36 lakhs including interest of Rs. 46.73 lakhs for default in making payment of Employees Provident Fund and allied dues for the period April, 1986 to February, 2003. The Company has been making contributions to the ''SNL Officers Provident Fund Trust'' and ''SNL Employee''s Provident Fund Trust'', being Trusts formed by the Company in earlier years; these Trusts have net assets of Rs. 139.26 lakhs and Rs. 78.79 lakhs respectively as at 31st March, 2015 as reflected in their audited balance sheets. As per the order, the existence of the said Trusts and the act of switching over from Employees trust to the Officers trust on salary exceeding the statutory limit fixed by the Employees Provident Fund and Miscellaneous Act,1952, have been considered volatize of the Act. The authorities had attached one of the Company''s bank accounts and had recovered an amount of Rs. 2.75 lakhs in an earlier year. The Company has contested the above demand and on a writ petition filed by the Company in the High Court of Jharkhand, Ranchi, the High Court has directed the authorities not to take coercive steps till the disposal of the petition. The Company denies all the allegations made against it since the Company had made the necessary applications to grant exemption to the Trusts which was neither granted nor rejected in spite of several reminders from time to time. In view of the facts of the case, the Company does not expect any liability in this regard.

(b) Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006 :

(i) An amount of 3.70 lacs and Rs. Nil was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.

(ii) No interest was paid during the year in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was paid to the supplier beyond the appointed day.

(iii) No amount of interest is due and payable for the period of delay in making payment but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006

(iv) No interest was accrued and unpaid at the end of the accounting year.

(v) No further interest remaining due and payable even in the succeeding years for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

(8) Related party disclosures:

(i) Names of related parties and nature of relationship where control exists:

Holding Company : - NRB Bearings Limited

Fellow Subsidiary : - NRB Bearings (Thailand) Limited

Company over which relatives of KMP are able to exercise

significant influence : - NRB Industrial Bearings Limited

Key Management Personnel : - Ms. H. S. Zaveri

- Mr. S. C. Rangani

The estimate of future salary escalations considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

9. Funds maintained with LIC 100% 100%

The above information is certified by the actuary.

10. Notes:

. Compensated absences recognized in the statement of profit and loss for the current year, under the employee cost in note 21, is Rs. 13.09 lakhs and for previous year was Rs. 12.27 lakhs.

11. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2016

1 : Out of 4,054,376 number of issued equity shares of Rs. 10 each, calls are not made on 442,836 number of shares.

(2) Rights attached to equity shares :

(3) Right to receive dividend as may be approved by the Board / Annual General Meeting.

(4) The equity shares are not repayable except in the case of a buy back, reduction of capital or winding up in terms of the provision of the Companies Act, 2013.

(5) Every member of the Company holding equity shares has a right to attend the General Meeting of the Company and has a right to speak and on a show of hands, has one vote if he is present in person and on a poll shall have the right to vote in proportion to his share of the paid-up capital of the Company.

(6) Terms of redemption of 11% cumulative redeemable preference share of Rs. 100 :

In the year ended 31st March, 2008 the Company had re-negotiated the coupon rate from 9% to 2% with effect from 18th Sept, 2002 to 31st March, 2005 and at 6% from 1st April, 2005 onwards and the repayment terms extended to 12 years repayable @ Rs. 20 per year (face value Rs.100 each) at the end of 8th, 9th, 10th, 11th and 12th year or such earlier years as the Company may deem fit. Till the completion of 12th year, the Company repaid Rs. 950 lakhs and re-negotiated the redemption terms of the Preference Shares . As per the revised terms, balance of Rs 50 lakhs was to be redeemed equally over the period of two years on 18th June, 2015 and 18th June, 2016 with an enhanced coupon rate of 11% p.a. effective 18th June, 2014 till its redemption. As per the revised terms Company repaid Rs 25 Lakh on 18th June 2015 and will redeem balance Rs 25 lakhs on 18th June, 2016. Also pursuant to section 55 of the Companies Act, 2013, the Company has transferred Rs. 25 lakhs from current year profits (Rs. 150 lakhs in previous year) to Capital Redemption Reserve.

Considering the improved financial results the board has decided to accrue current years dividend (18th June 2015 to 31st March 2016 amounting Rs 2.16 lakhs) on 11% cumulative redeemable preference shares and pay arrears on 11% cumulative redeemable preference shares @ 6% for the period from 1st April, 2011 to 17th June, 2014 and @ 11% from 18th June 2014 to 17th June 2015 aggregating Rs. 87.75 lakhs.(Previous year : for the period 1st April, 2007 to 31st March 2011 @ 6% aggregating Rs. 230.56 Lakhs). After considering the effect of dividend, as stated above, arrears of cumulative dividends on the 11% Cumulative Redeemable preference Shares, considering the revised coupon rates is Rs. Nil lakhs (as at 31.03.2015 : Rs. 86.57 lakhs)

7. Additional information to the financial statements :

(a) Contingent liabilities not provided for :

(i) The Company had received an Order dated 6th September, 2004 from the Employees Provident Fund Organization raising a demand of Rs. 161.36 lakhs including interest of Rs. 46.73 lakhs for default in making payment of Employees Provident Fund and allied dues for the period April, 1986 to February, 2003. The Company has been making contributions to the ''SNL Officers Provident Fund Trust'' and ''SNL Employee''s Provident Fund Trust'', being Trusts formed by the Company in earlier years; these Trusts have net assets of Rs. 139.26 lakhs and Rs. 78.79 lakhs respectively as at 31st March, 2015 as reflected in their audited balance sheets. As per the order, the existence of the said Trusts and the act of switching over from Employees trust to the Officers trust on salary exceeding the statutory limit fixed by the Employees Provident Fund and Miscellaneous Act,1952, have been considered volatize of the Act. The authorities had attached one of the Company''s bank accounts and had recovered an amount of Rs. 2.75 lakhs in an earlier year. The Company has contested the above demand and on a writ petition filed by the Company in the High Court of Jharkhand, Ranchi, the High Court has directed the authorities not to take coercive steps till the disposal of the petition. The Company denies all the allegations made against it since the Company had made the necessary applications to grant exemption to the Trusts which was neither granted nor rejected in spite of several reminders from time to time. In view of the facts of the case, the Company does not expect any liability in this regard.

(b) Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006 :

(i) An amount of 3.70 lacs and Rs. Nil was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.

(ii) No interest was paid during the year in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was paid to the supplier beyond the appointed day.

(iii) No amount of interest is due and payable for the period of delay in making payment but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006

(iv) No interest was accrued and unpaid at the end of the accounting year.

(v) No further interest remaining due and payable even in the succeeding years for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

(8) Related party disclosures:

(i) Names of related parties and nature of relationship where control exists:

Holding Company : - NRB Bearings Limited

Fellow Subsidiary : - NRB Bearings (Thailand) Limited

Company over which relatives of KMP are able to exercise

significant influence : - NRB Industrial Bearings Limited

Key Management Personnel : - Ms. H. S. Zaveri

- Mr. S. C. Rangani

The estimate of future salary escalations considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

9. Funds maintained with LIC 100% 100%

The above information is certified by the actuary.

10. Notes:

. Compensated absences recognized in the statement of profit and loss for the current year, under the employee cost in note 21, is Rs. 13.09 lakhs and for previous year was Rs. 12.27 lakhs.

11. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2015

1) Rights attached to equity shares :

(i) Right to receive dividend as may be approved by the Board / Annual General Meeting.

(ii) The equity shares are not repayable except in the case of a buy back, reduction of capital or winding up in terms of the provision of the Companies Act, 2013.

(iii) Every member of the Company holding equity shares has a right to attend the General Meeting of the Company and has a right to speak and on a show of hands, has one vote if he is present in person and on a poll shall have the right to vote in proportion to his share of the paid-up capital of the Company.

2) Terms of redemption of 11% cumulative redeemable preference share of Rs. 100:

In the year ended 31st March, 2008 the Company had re-negotiated the coupon rate from 9% to 2% with effect from 18th Sept, 2002 to 31st March, 2005 and at 6% from 1st April, 2005 onwards and the repayment terms extended to 12 years repayable @ Rs. 20 per year (face value Rs.100 each) at the end of 8th, 9th, 10th, 11th and 12th year or such earlier years as the Company may deem fit. Till the completion of 12th year, the Company repaid Rs. 950 lakhs and re-negotiated the redemption terms of the Preference Shares . As per the revised terms, balance of Rs 50 lakhs will be redeemed equally over the period of two years on 18th June, 2015 and 18th June, 2016 with an enhanced coupon rate of 11% p.a. effective 18th June, 2014 till its redemption. Also pursuant to section 55 of the Companies Act, 2013, the Company has transferred Rs. 150 lakhs from current year profits (Rs. 200 lakhs in previous year) to Capital Redemption Reserve.

Considering the improved financial results the board has decided to pay dividend in arrears on 11% cumulative redeemable preference shares @ 6% for the period from 1st April, 2007 to 31st March, 2011 aggregating Rs. 230.56 lakhs.(Previous year : for the period 1st April, 2006 to 31st March 2007 @ 6% aggregating Rs. 60.00 Lakhs). After considering the effect of dividend , as stated above, arrears of cumulative dividends on the 11% Cumulative Redeemable preference Shares, considering the revised coupon rates is Rs. 86.57 lakhs (as at 31.03.2014 : Rs. 310.25 lakhs)

3. Additional information to the financial statements:

(a) Contingent liabilities not provided for :

The Company had received an Order dated 6th September, 2004 from the Employees Provident Fund Organisation raising a demand of Rs. 161.36 lakhs including interest of Rs. 46.73 lakhs for default in making payment of Employees Provident Fund and allied dues for the period April, 1986 to February, 2003. The Company has been making contributions to the ''SNL Officers Provident Fund Trust'' and ''SNL Employee''s Provident Fund Trust'', being Trusts formed by the Company in earlier years; these Trusts have net assets of Rs. 122.20 lakhs and Rs. 69.64 lakhs respectively as at 31st March, 2014 as reflected in their audited balance sheets. As per the order, the existence of the said Trusts and the act of switching over from Employees trust to the Officers trust on salary exceeding the statutory limit fixed by the Employees Provident Fund and Miscellaneous Act,1952, have been considered violative of the Act. The authorities had attached one of the Company''s bank accounts and had recovered an amount of Rs. 2.75 lakhs in an earlier year. The Company has contested the above demand and on a writ petition filed by the Company in the High Court of Jharkhand, Ranchi, the High Court has directed the authorities not to take coercive steps till the disposal of the petition. The Company denies all the allegations made against it since the Company had made the necessary applications to grant exemption to the Trusts which was neither granted nor rejected in spite of several reminders from time to time. In view of the facts of the case, the Company does not expect any liability in this regard.

(b) There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose. The auditors have relied on the representation made by the management.

(c) Related party disclosures:

(i) Names of related parties and nature of relationship where control exists:

Holding Company : - NRB Bearings Limited

Fellow Subsidiary : - NRB Bearings (Thailand) Limited

Company over which relatives of KMP are able to exercise

significant influence : - NRB Industrial Bearings Limited

Key Management Personnel : - Ms. H. S. Zaveri

- Mr. S. C. Rangani

4.Notes:

a. The company''s best estimate of contributions expected to be paid to the plan during the annual period beginning after 31st March, 2015 is Rs. 17.12 lakhs and for previous year was Rs. 8.37 lakhs.

b. Compensated absences recognized in the statement of profit and loss for the current year, under the employee cost in note 22, is Rs. 12.27 lakhs and for previous year was Rs. 2.63 lakhs.

5) Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2014

1. Contingent liabilities not provided for

a. Claims against the Company not acknowledged as debts:

As at As at March 31, 2014 March 31, 2013 (Rs.lakhs) (Rs.lakhs)

Excise duty, customs duty and service tax*@ 6182.32 6290.11

Sales Tax and entry tax (refer note ''b'' below)**@ 9615.65 9602.63

Income Tax**** 676.63 778.79

Stamp Duty***** 2881.55 2881.55

Others *** 940.73 576.39

* Amount deposited Rs. 455.85 lakhs (Previous year - Rs. 448.69 lakhs)

** Amount deposited Rs. 16.60 lakhs (Previous Year - Rs. 9.75 lakhs)

*** Amount deposited Rs. 8.00 lakhs (Previous Year – Rs. 8.00 lakhs)

**** Amount deposited Rs. 162.41 lakhs (Previous year – Rs. 501.65 lakhs)

***** In the matter of acquisition of the Tyrecord Division at Malanpur from Ceat Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs. 30300 lakhs and levied a stamp duty of Rs. 2372.50 lakhs and imposed a penalty of Rs. 509.05 lakhs. The said demand was challenged before the High Court of Madhya Pradesh Bench at Gwalior. The High Court accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs. 2776.18 lakhs and not the entire undertaking valued at Rs. 30300 lakhs as claimed by the State. Consequently, the High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29 November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Hon''ble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Hon''ble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal.

@ As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs. 2064.30 lakhs (Previous Year - Rs. 2064.30 lakhs) and Rs. 38.00 lakhs (Previous Year - Rs. 38.00 lakhs) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b. The Company had received demand notices from the Commercial Tax Department, Government of Madhya Pradesh ("State Government") for payment of Central Sales Tax (CST), Value Added Tax (VAT) and Entry Tax aggregating to Rs. 9491 lakhs (including interest and penalty) for the period from 2007 to 2013 in respect of sales from its manufacturing facility in Special Economic Zone (SEZ) in Madhya Pradesh to the Domestic Tariff Area (DTA).

In terms of the Policy of the Government of Madhya Pradesh and Madhya Pradesh SEZ Act, 2003, the Unit was exempt from local state taxes and levies. The Company has paid Additional Countervailing Duty (ACVD), to counter balance CST/ VAT, aggregating to Rs. 4831 lakhs for the period from 2007 to 2013 on sales from the SEZ to the DTA under the Customs laws pursuant to the Special Economic Zone Act 2005, MP SEZ Act, 2003 and the Policy of Centre and Madhya Pradesh State. The Company had filed a writ petition before the Indore Bench of the Hon''ble High Court of Madhya Pradesh ("Court") against the said demands.

The Company contended that while State is demanding local taxes, the Centre in its reply has stated that ACVD is payable and therefore this amounts to double taxation.

The Court has directed the State Government not to take any coercive steps for recovery of demand.

The matter is sub judice and is listed for further proceedings on 12 May 2014. The Management of the Company, based on the facts of the case and opinion received by the Company from legal experts, is confdent of getting a relief in the matter from the Court and, accordingly, has not made any provision for the said disputed demands.

c. Liability on account of Bank Guarantees Rs. 445.74 lakhs (Previous Year – Rs. 823.82 lakhs)

e. Guarantees given to banks for repayment of financial facilities availed by others – Rs. 250.00 lakhs (Previous Year – Rs. 250.00 lakhs). Outstanding amount as at the year-end is Rs. 99.99 lakhs (Previous Year – Rs. 66.69 lakhs).

f. The Company has been served with show cause notices regarding certain transactions as to why additional customs/excise duty amounting to Rs. 369.15 lakhs (Previous year - Rs. 266.79 lakhs) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

2. Capital and other commitments

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) amounts to Rs. 5283.16 lakhs (Previous Year - Rs. 16989.76 lakhs).

Further, the Company is to make the following investments:

i) Capital expenditure projects for Packaging Films Business in South Africa and Thailand – Rs. Nil (Previous Year – USD 33.06 million i.e. equivalent to Rs. 17944.97 lakhs).

ii) SRF Holiday Home Limited – Rs. 72.50 lakhs (Previous Year – Rs. 120.00 lakhs)

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments/contracts, which may have a material impact on the financial statements.

3. Managerial remuneration

As there is a global contribution to gratuity fund, the amount applicable to an individual employee is not ascertainable and accordingly, contribution to gratuity fund in respect of directors has not been considered in the above computation. Further, the liability on account of compensated absences in respect of directors has not been considered above, since the provision is based on an actuarial basis for the Company as a whole.

4. Employee benefits

The Company has classifed various benefits provided to employees as under: i) Defined contribution plans

a) Superannuation fund

b) Provident fund administered through Regional Provident Fund Commissioner

c) Employees'' State Insurance Corporation

The expenses incurred on account of the above benefits have been included in Note 25 "Employee benefits Expenses" under the head "Contribution to provident and other funds"

ii) Defined benefit plans a) Gratuity

b) Compensated absences – earned leaves

c) Provident fund for certain category of employees administered through a recognised provident fund trust

The Company''s best estimate of the contribution expected to be paid in the next year is Rs. 474.37 lakhs (Previous Year – Rs. 583.13 lakhs) for gratuity and Rs. 344.93 lakhs (Previous Year - Rs. 380.34 lakhs) for leave encashment.

Long Term Retention Pay

The Company has a Long Term Retention Pay Plan. The plan covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three years which commenced from financial year 2010-11 subject to achievement of certain performance ratings. Based on actuarial valuation, the Company has accrued Rs. 212.79 lakhs (Previous Year – Rs. 244.71 lakhs) towards this plan till 31 March 2014.

Superannuation - Defined Contribution Plan where contributions are made to a Trust which in turn contributes to ICICI Prudential Life Insurance Co. Limited

Apart from being covered under the Gratuity Plan described above, the employees of the Company also participate in a Defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee''s salary. From 1 November 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

Provident Fund

In addition to the above benefits, all employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognised Provident fund trust. For other employees contributions are made to the regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus. This plan is considered as a Defined Contribution Plan. For the frst category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government and these are considered as Defined benefit Plans accounted for on the basis of an actuarial valuation. The details of the valuation are as below:

5. Segment reporting

A. Business segments

Based on the guiding principles laid down in Accounting Standard (AS) - 17 "Segment Reporting", the Company''s business segments include:

- Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development.

- Chemicals and Polymers business: includes refrigerant gases, chloromethanes, pharmaceuticals, certified Emissions Reductions & Allied products, Engineering Plastics business and its research and development.

- Packaging Film Business includes Polyester Films.

Segment revenue, Results and Capital Employed include the respective amounts identifable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets/liabilities can be directly attributed to individual segments, the carrying amount of certain assets/liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

6. Foreign currency exposure

SRF has three diverse businesses with transactions both in the nature of imports and exports. This provides a natural hedge against the exchange rate fuctuations. As per the board mandated policy, hedging is done the basis of net exposure. Further, with respect to volatility in interest rates, certain hedging transactions are entered into by the Company. Various kind of instruments are used for hedging which are mandated as per regulatory requirements and board guidelines.

7. In the previous year, pursuant to the adoption of Guidance Note on Accounting for Self-Generated certified Emission Reductions (CER) effective 1 April 2012, the stock of CER as on 1 April 2012 has been recognised at cost amounting to Rs. 135.22 lakhs, net of tax of Rs. 43.87 lakhs, by adjusting ''Surplus in statement of Profit and loss'' by Rs. 91.35 lakhs.

8. The Company had opted to apply the provisions under paragraph 46A of Accounting Standard (AS) - 11 "The Effects of Changes in Foreign Exchange Rates" with effect from 1 April 2013. Accordingly, exchange difference of Rs. 4872.23 lakhs, arising on all long term monetary items relating to acquisition of depreciable assets are added to the cost of Fixed Assets/Capital Work in Progress and will be depreciated over the balance useful life of the assets. The unamortised portion carried forward as at 31 March 2014 is Rs. 4514.50 lakhs. As a result of such change, the net Profit after tax for the year is higher by Rs. 2297.53 lakhs.

9. The Company has established a comprehensive system of maintenance of information and documents as required by transfer pricing legislation under section 92D for its international transactions as well as specified domestic transactions. Based on the transfer pricing regulations/policy, the transfer pricing study for the year ended 31 March 2014 is to be conducted on or before due date of the fling of return and the Company will further update above information and records based on the same and expects these to be in existence latest by that date. Management believes that all the above transactions are at arm''s length price and the aforesaid legislations will not have impact on the financial statement, particularly on the amount of tax expense and provision for taxation.

10. Previous year''s fgures have been regrouped/reclassified, wherever necessary, to correspond with the current year''s classification/ disclosure.


Mar 31, 2013

1 Corporate information:

SNL Bearings Limited, established in 1983, is engaged in the manufacture and marketing of antifriction bearing products. The holding company NRB Bearings acquired the company on June 01, 2000.

2 Additional information to the fnancial statements:

(a) Contingent liabilities not provided for :

(i) The Company had received an Order dated 6th September, 2004 from the Employees Provident Fund Organisation raising a demand of Rs. 161.36 lakhs including interest of Rs. 46.73 lakhs for default in making payment of Employees Provident Fund and allied dues for the period April, 1986 to February, 2003. The Company has been making contributions to the ''SNL Offcers Provident Fund Trust'' and ''SNL Employee''s Provident Fund Trust'', being Trusts formed by the Company in earlier years; these Trusts have net assets of Rs. 91.68 lakhs and Rs. 55.30 lakhs respectively as at 31st March, 2012 as refected in their audited balance sheets. As per the order, the existence of the said Trusts and the act of switching over from Employees trust to the Offcers trust on salary exceeding the statutory limit fxed by the Employees Provident Fund and Miscellaneous Act,1952, have been considered violative of the Act. The authorities had attached one of the company''s bank accounts and had recovered an amount of Rs. 2.75 lakhs in an earlier year. The company has contested the above demand and on a writ petition fled by the company in the High Court of Jharkhand, Ranchi, the High Court has directed the authorities not to take coercive steps till the disposal of the petition. The Company denies all the allegations made against it since the company had made the necessary applications to grant exemption to the Trusts which was neither granted nor rejected in spite of several reminders from time to time. In view of the facts of the case, the company does not expect any liability in this regard.

(ii) Provident fund and other matters in respect of workers: Nil, (as at 31.03.2012 : Rs. 5.05 lakhs).

(iii) Disputed penalty claim by the Central Excise and Service Tax Department vide order C.V.No. (65) (12) 79/SNL/Denovo/Adjn/Ran/11 dated January 8, 2013 under section 78 of the Finance Act, 1994 amounting to Rs. 1,170,248/- and an addtional penality of Rs 2,000/- for non-compliance with rules 4 & 7 of the Service Tax Rules, 1994, in respect of failure to pay service tax on lease rent received for leasing of equipments during the fnancial periods ending March 31, 2003, 2004, 2005 and 2006. Further, interest is also levied on the above dues by the said depatment in terms of section 75 of the Finance Act, 1994. The Company has, in earlier years, paid the service tax dues amounting to Rs.1,170,248/- against show cause notice C.V.No. V(4)65/ADJ/RAN/06/3208 dated May 22, 2007 in respect of the said service tax liability on lease rent received. Further, during the year the Company has paid Rs.294,562/- in terms of proviso to section 78 under protest in respect of the penalty claim as discussed above. The Company is of the view that the order will be settled in their favor and accordingly has not made any provison in the books of account for the year ended March 31, 2013.

(b) There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose. The auditors have relied on the representation made by the management.

(c) Related party disclosures:

(i) Names of related parties and nature of relationship where control exists: Holding Company: - NRB Bearings Limited

Fellow Subsidiary : - NRB Bearings (Thailand) Limited

Group Company : - NRB Industrial Bearings Limited

Key Management Personnel : - Ms. H. S. Zaveri

- Ms. A. A. Gowariker

- Mr. S. C. Rangani

- M r. J. S. Maini

- M r. V. S. Iyer

VII Notes:

a. The company''s best estimate of contributions expected to be paid to the plan during the annual period beginning after 31st March, 2013 is Rs. Nil.

b. Compensated absences recognized in the statement of proft and loss for the current year, under the employee cost in note 24, is Rs. 4.91 lakhs and for previous year was Rs. 2.84 lakhs.

3 Previous year''s fgures have been regrouped / reclassifed wherever necessary to correspond with the current year''s classifcation / disclosure.


Mar 31, 2012

1. Contingent Liabilities Not Provided For

a) Claims against the Company not acknowledged as debts:

As at March 31, 2012 As at March 31, 2011 (Rs lakhs) (Rs lakhs)

Excise duty, customs duty and service tax* @ 5924.08 5865.44

Sales Tax** @ 1225.28 925.42

Income Tax 356.82 976.37

Stamp Duty**** 2881.55 2881.55

Others *** 474.33 94.43

* Amount deposited Rs 315.92 lakhs (Previous year - Rs 315.92 lakhs)

** Amount deposited Rs 7.16 lakhs (Previous Year - Rs 7.16 lakhs)

*** Amount deposited Rs 8.00 lakhs (Previous Year – Rs 8.00 lakhs)

**** In the matter of acquisition of the Tyrecord Division at Malanpur from Ceat Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs 30300 lakhs and levied a stamp duty of Rs 2372.50 lakhs and imposed a penalty of Rs 509.05 lakhs. The said demand was challenged before the High Court of Madhya Pradesh Bench at Gwalior. The High Court accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs 2776.18 lakhs and not the entire undertaking valued at Rs 30300.00 lakhs as claimed by the State. Consequently, the High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Hon'ble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Hon'ble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal.

@ As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs 1793.81 lakhs (Previous Year - Rs 1793.81

lakhs) and Rs 38.00 lakhs (Previous Year - Rs 38.00 lakhs) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b) Liability on account of Bank Guarantees Rs 1260.26 lakhs (Previous Year – Rs 1137.53 lakhs)

c) Guarantees given to banks for repayment of financial facilities availed by wholly owned subsidiaries:

(i) USD 20.00 million (Previous Year – USD 20.00 million). Outstanding amount as at the year-end is USD 20.00 million (Previous Year – USD 20.00 million)

(ii) Nil (Previous Year – AED 10.35 million) and Nil (Previous Year – Euro 0.20 million). Outstanding amount as at the year-end is Nil (Previous Year – Nil)

(iii) USD 15.00 million (Previous Year – Nil). Outstanding amount as at the year-end is USD 13.00 million (Previous Year – Nil).

(iv) USD 16.00 million (Previous Year – Nil). Outstanding amount as at year end is EURO 11.25 million (Previous Year – Nil).

(v) EURO 3.50 million (Previous Year – Nil). Outstanding amount as at year end is EURO 3.50 million (Previous Year – Nil)

d) Guarantees given to banks for repayment of financial facilities availed by others – Rs 250.00 lakhs (Previous Year – Nil). Outstanding amount as at the year-end is Nil (Previous Year – Nil).

e) The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty amounting to Rs 72.24 lakhs (Previous year - Rs 76.04 lakhs) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

2. Capital and other commitments

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) amounts to Rs 10233.03 lakhs (Previous Year - Rs 12965.89 lakhs).

Further, the Company is to make the following investments:

i) Capital expenditure projects for Packaging Films Business in South Africa and Thailand – USD 89.50 million (equivalent to Rs 45528.65 lakhs) (Previous Year – Nil).

ii) SRF Holiday Home Limited – Rs 309.00 lakhs (Previous Year – Rs 353.00 lakhs)

The Company has other commitments, for purchase / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments / contracts, which might have material impact on the financial statements.

3. Employee Benefits

The Company has classified various benefits provided to employees as under: i) Defined contribution plans

a) Superannuation fund

b) Provident fund administered through Regional Provident Fund Commissioner

c) Employees' State Insurance Corporation

The expenses incurred on account of the above benefits have been included in Note 25 "Employee Benefits Expenses" under the head "Contribution to provident and other funds"

ii) Defined benefit plans

a) Gratuity

b) Compensated absences – earned leaves

c) Provident fund for certain category of employees administered through a recognized provident fund trust

Long Term Retention Pay

The Company has a Long Term Retention Pay Plan extending over 3 years. The plan covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three years starting from financial year 2010-11 subject to achievement of certain performance ratings. Based on the management estimate, the Company has accrued Rs 259.39 lakhs (Previous Year – Rs 295.52 lakhs) towards this plan till March 31, 2012.

Superannuation - Defined Contribution Plan where contributions are made to a Trust which in turn contributes to ICICI Prudential Life Insurance Co. Limited

Apart from being covered under the Gratuity Plan described above, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee's salary. From 1st November, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

Provident Fund - Defined Contribution Plan

In addition to the above benefits, all employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognized Provident fund trust. For other employees contributions are made to the regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus. For the first category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government.

4. Segment Reporting

A. Business Segments

Based on the guiding principles laid down in Accounting Standard (AS) - 17 "Segment Reporting", the Company's business segments include:

- Technical Textiles Business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development

- Chemicals and Polymers Business: includes refrigerant gases, chloromethanes, pharmaceuticals, Certified Emissions Reductions & Allied products, Engineering Plastics business and its research and development.

- Packaging Film Business includes Polyester Films.

Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under: -

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

5. The Revised Schedule VI has become effective from April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified, wherever necessary, to correspond with the current year's classification / disclosure.


Mar 31, 2011

1. CAPITAL COMMITMENTS

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) amounts to Rs. 12965.89 lakhs (Previous Year - Rs. 4283.70 lakhs).

Further, the Company is to make investment in the following companies

i) SRF Cord GmbH - Nil (Previous Year – Euro 98000).

ii) SRF Holiday Home Limited – Rs. 353.00 lakhs (Previous Year – Nil)

2. CONTINGENT LIABILITIES NOT PROVIDED FOR

a. Claims against the Company not acknowledged as debts:

As at As at March 31, 2011 March 31, 2010 (Rs. lakhs) (Rs. lakhs)

Excise duty, customs duty and service tax *@ 5865.44 5652.81

Sales Tax** @ 925.42 249.38

Income Tax 976.37 897.00

Stamp Duty**** 2881.55 2881.55

Others*** 94.43 210.10

* Amount deposited Rs. 315.92 lakhs (Previous year - Rs. 222.60 lakhs)

** Amount deposited Rs. 7.16 lakhs (Previous Year - Rs. 7.16 lakhs)

*** Amount deposited Rs. 8.00 lakhs (Previous Year – Rs. 119.06 lakhs)

**** In the matter of acquisition of the Tyrecord Division at Malanpur from Ceat Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs. 30300.00 lakhs and levied a stamp duty of Rs. 2372.50 lakhs and imposed a penalty of Rs. 509.05 lakhs. The said demand was challenged before the High Court of Madhya Pradesh Bench at Gwalior. The High Court accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs. 2776.18 lakhs and not the entire undertaking valued at Rs. 30300.00 lakhs as claimed by the State. Consequently, the High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Honble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Honble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal.

@ As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs. 1793.81 lakhs (Previous Year - Rs. 1813.21 lakhs) and Rs. 38.00 lakhs (Previous Year - Rs. 28.10 lakhs) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company.

b. Liability on account of Bank Guarantees Rs. 1137.53 lakhs (Previous Year – Rs. 745.04 lakhs)

c. Guarantees given to a bank for repayment of financial facilities availed by wholly owned subsidiaries:

(i) Nil [Previous Year – Baht 900.00 millions (Equivalent to USD 27.81 millions)] and Nil (Previous Year – USD 6.00 millions). Outstanding amount as at the year end is Nil [Previous Year – Baht 825.70 millions (Equivalent to USD 25.52 millions)]

(ii) USD 20 million (Previous Year – Nil). Outstanding amount as at the year end is USD 20 million (Previous Year – Nil)

(iii) AED 10.35 million (Previous Year – Nil) and Euro 0.2 million (Previous Year – Nil). Outstanding amount as at the year end is Nil (Previous Year – Nil)

d. The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty amounting to Rs. 76.04 lakhs (Previous year - Rs. 416.29 lakhs) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

3. MANAGERIAL REMUNERATION

As there is a global contribution to gratuity fund, the amount applicable to an individual employee is not ascertainable and accordingly, contribution to gratuity fund in respect of directors has not been considered in the above computation. Further, the liability on account of compensated absences in respect of directors has not been considered above, since the provision is based on an actuarial basis for the Company as a whole.

4. DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES

Sundry Creditors include the following dues to micro and small enterprises covered under "The Micro, Small and Medium Enterprises Development Act, 2006" (MSMED) to the extent such parties have been identified from the available information.

5. RELATED PARTY DISCLOSURES UNDER AS-18 "RELATED PARTY DISCLOSURES"

As per Accounting standard AS –18 "Related Party Disclosures" the Companys related parties and transactions with them are disclosed below:

A. NAME OF RELATED PARTY AND NATURE OF RELATED PARTY RELATIONSHIP

By virtue of control Joint Venture Key Management Enterprises over which (c) have (Subsidiaries) Personnel significant influence

(a) (b) (c) (d)

SRF Overseas Limited Jingde Yangtze- Mr. Arun Bharat KAMA Holdings Limited*

SRF Transnational Holdings Ganga Fluorine Ram, Bhairav Farms Private Limited* Limited Chemical Co. Chairman Narmada Farms Private Limited*

SRF Properties Limited Limited Mr. Ashish Bharat SRF Polymers Investments

SRF Holiday Home Limited (upto February 26, Ram Limited*

SRF Energy Limited 2011) Managing Director KAMA Realty (Delhi) Limited*

SRF Fluorochemicals Limited (Refer note 11 Mr. Kartikeya Bharat Shri Educare Limited

SRF Fluor Private Limited below) Ram Shri Educare Maldives Private

SRF Global BV Deputy Managing Limited

SRF Tech Textile BV Director SRF Foundation

SRF Technical Textiles (Thailand) Mr. K. Ravichandra, Karm Farms Private Limited* Limited Whole Time Srishti Westend Greens Farms SRF Industex Belting (Pty) Limited Director Private Limited*

* Pursuant to the Scheme of Arrangement between Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited ("the transferor companies") and Srishti Westend Greens Farms Private Limited, Karm Farms Private Limited, KAMA Realty (Delhi) Limited and KAMA Holdings Limited ("the transferee companies") and their respective shareholders and creditors :-

a) real estate divisions of Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited was transferred and vested in Srishti Westend Greens Farms Private Limited, Karm Farms Private Limited and KAMA Realty (Delhi) Limited respectively ; and

b) investment divisions of Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited were transferred and vested in KAMA Holdings Limited with effect from March 31, 2011.

The transferor companies had conducted their business in respect of their respective real estate divisions and investment divisions in trust and on behalf of the respective transferee companies from the appointed date of the said Scheme - April 1, 2010

6. EMPLOYEE BENEFITS

The Company has classified various benefits provided to employees as under:

i) Defined contribution plans

a) Superannuation fund

b) Provident fund

c) Employees State Insurance Corporation

The expenses incurred on account of the above benefits have been included in Schedule 12 "Manufacturing and other expenses" under the head "Contribution to provident fund, superannuation, employees state insurance, gratuity and other funds"

ii) Defined benefit plans

a) Gratuity

b) Compensated absences – earned leaves

The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards.

Long Term Retention Pay

The Company has a Long Term Retention Pay Plan extending over 3 years. The plan covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three years starting from financial year 2010-11 subject to achievement of certain performance ratings. Based on the management estimate, the Company has accrued Rs. 295.52 lakhs (Previous Year – Rs. 93.00 lakhs) towards this plan till March 31, 2011.

Superannuation - Defined Contribution Plan where contributions are made to a Trust which in turn contributes to ICICI Prudential Life Insurance Co. Limited

Apart from being covered under the Gratuity Plan described above, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employees salary. From 1st November, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

Provident Fund - Defined Contribution Plan

In addition to the above benefits, all employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognized Provident fund trust. For other employees contributions are made to the regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus. For the first category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government

7. SEGMENT REPORTING

A. Business Segments

Based on the guiding principles laid down in Accounting Standard (AS) - 17 "Segment Reporting", the Companys business segments include:

- Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development

- Chemicals and Polymers business: includes refrigerant gases, chloromethanes, pharmaceuticals, Certified Emissions Reductions & Allied products, Engineering Plastics business and its research and development.

- Packaging Film Business includes Polyester Films.

Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

8. FOREIGN CURRENCY EXPOSURE

SRF has entered into long term contracts for the transfer / sale of Certified Emission Reductions (CERs) with reputable global buyers. The cash flow from these sales forms the mainstay of SRFs multi-year capital expansion plan, and as such these cash flows need to be both stable and secure. To ensure stability of revenues in foreign currency from the transfer / sale of CERs, the Company has entered into forward contracts with banks to part sell Euros to be earned out of future CER sales.

9. Schedules 1 to 8 form an integral part of the Balance Sheet, Schedules 9 to 13 form and integral part of the Profit and Loss Account and Schedule 14 and the Statement of Additional Information form an integral part of the Balance Sheet and Profit and Loss Account.

10. Previous year figures have been regrouped / recast / rearranged, wherever necessary, to conform to current year classifications.


Mar 31, 2010

1. cApitAl commitments

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) amounts to Rs 4283.70 lakhs (Previous Year - Rs 16608.87 lakhs).

The Company is to make investments in the joint venture JingdeYangtze-Ganga Fluorine Chemical Co Limited up to USD 2.65 million (Previous Year – USD 2.65 million).The Company has made an application to the People’s Republic of China seeking an extension to the original timeline which was 15th March, 2010 for effecting this investment. further, the Company is to make investment in the following companies

i) SRF Fluorochemicals Limited – Nil (Previous Year - Rs 5.00 lakhs)

ii) SRF Energy Limited – Nil (Previous Year - Rs 5.00 lakhs)

iii) SRF Cord GmbH – Euro 98000 (Previous Year - Euro 196000)

2. contingent liAbilities not provided for

a. Claims against the Company not acknowledged as debts:

As at March 31, 2010 As at March 31, 2009 Rs lakhs Rs lakhs Excise duty, customs duty and service tax * @ 5652.81 5713.25 Sales Tax ** @ 249.38 231.57 Income Tax 897.00 749.00 Stamp Duty **** 2881.55 2881.55 Others *** 210.10 94.43

Amount deposited Rs 222.60 lakhs (Previous year - Rs 240.35 lakhs)

** Amount deposited Rs 7.16 lakhs (Previous Year - Rs 52.00 lakhs)

*** Amount deposited Rs 119.06 lakhs (Previous Year - Nil)

**** In the matter of acquisition of the Tyrecord Division at Malanpur from Ceat Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs 30300 lakhs and levied a stamp duty of Rs 2372.50 lakhs and imposed a penalty of Rs 509.05 lakhs.The said demand was challenged before the High Court of Madhya Pradesh Bench at Gwalior. The High Court accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs 2776.18 lakhs and not the entire undertaking valued at Rs 30300 lakhs as claimed by the State. Consequently, the High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Hon’ble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Hon’ble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal.

@ As per Business Transfer Agreement with KAMA Holdings Limited (formerly SRF Polymers Limited), the liabilities of Rs 1813.21 lakhs (Previous Year -

Rs 1821.93 lakhs) and Rs 28.10 lakhs (Previous Year - Rs 28.10 lakhs) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.

All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or fnancial position of the Company.

b. Liability on account of Bank Guarantees Rs 745.04 lakhs (Previous Year – Rs 625.75 lakhs)

c. Guarantee given to a bank for repayment of fnancial facilities availed by a wholly owned subsidiary:

(i) Baht 900.00 millions (Equivalent to USD 27.81 millions) (PreviousYear - Nil) and USD 6.00 millions (PreviousYear – Nil). Outstanding amount as at the year end is Baht 825.70 millions (Equivalent to USD 25.52 millions) (Previous Year – Nil)

(ii) Nil (PreviousYear - USD 45.00 millions) outstanding amount as at the year end is Nil (PreviousYear - USD 32.00 millions)

d. (i) The Company has received a notice from Officer on Special Duty, Diversion Tax, Bhind, imposing Diversion Tax of Rs 197.00 lakhs (PreviousYear – Rs 197.00 lakhs) for converting the agricultural land into Industrial land.The Company has been advised that the above notice will not be sustained since the land has been acquired from Government Authority and no Diversion Tax is payable on Government land.

(ii) The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty amounting to Rs 416.29 lakhs (Previous year - Rs 297.59 lakhs) should not be levied.The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.

4. The Company had, in the previous year, acquired the Engineering Plastics Business and Industrial Yarn Business from KAMA

Holdings Limited (formerly SRF Polymers Limited) on a going concern basis with effect from January 1, 2009 under a Business Transfer Agreement (BTA) at a consideration of Rs 15031.26 lakhs.

5. dues to micro, smAll And medium enterprises

Sundry creditors include Rs 164.45 lakhs (PreviousYear – Rs 57.87 lakhs) due to micro and small enterprises covered under “The Micro, Small and Medium Enterprises Development Act, 2006” to the extent such parties have been identified from the available information.The Company has not received any claim for interest from any party covered under the said Act.

6. Related PaRty disclosu Res unde R as-18 “Related PaRty disclosuRes”

As per Accounting standard AS -18 “Related Party Disclosures” the Company’s related parties and transactions with them are disclosed below:

7. EMPLOYEE BENEFITS

The Company has classified various benefits provided to employees as under:

i) Defined contribution plans

a) Superannuation fund

b) Provident fund

c) Employees’ State Insurance Corporation

The expenses incurred on account of the above benefits have been included in Schedule 12 “Manufacturing and other expenses” under the head “Contribution to provident fund, superannuation, employees’ state insurance, gratuity and other funds”

ii) Defined benefit plans

a) Gratuity

b) Compensated absences - earned leaves

In accordance with Accounting Standard (AS) - 15 (Revised 2005), actuarial valuation was obtained from the actuary in respect of the aforesaid defined benefit plans using Projected Unit Credit Method. The details of the same are as follows:-

The Company’s best estimate of the contribution expected to be paid in the next year is Rs 120.83 lakhs (Previous Year – Rs (67.79) lakhs) for gratuity and Rs 122.74 lakhs (Previous Year - Rs 22.18 lakhs) for leave encashment.

Long Term Retention Pay

During the year, the Company has introduced a Long Term retention Pay Plan extending over 3 years. The plan covers employees selected on the basis of their current band and their long term value to the Company. The incentive is payable in three years starting from fnancial year 2010-11 subject to achievement of certain performance ratings. Based on the management estimate, the Company has accrued Rs 93 lakhs (Previous Year – Nil) towards this plan till March 31,2010.

Superannuation - Defined Contribution Plan where contributions are made to a Trust which in turn contributes to ICICI Prudential Life Insurance Co. Limited.

Apart from being covered under the Gratuity Plan described above, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company.The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employee’s salary. From 1st November, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefitThus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.

Provident Fund - Defined Contribution Plan

In addition to the above benefits, all employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognised Provident fund trust. For other employees contributions are made to the regional Provident Fund Commissioners as per law.The Government mandates the annual yield to be provided to the employees on their corpus. For the frst category of employees (covered by the Trust), the Company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government

8. segment reporting

A. Business Segments

Based on the guiding principles laid down in Accounting Standard (AS) - 17 “Segment Reporting”, the Company’s business segments include:

- Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development

- Chemicals and Polymers business: includes refrigerant gases, chloromethanes, pharmaceuticals, Certified Emissions Reductions & Allied products, Engineering Plastics business and its research and development.

- Packaging film Business includes Polyester films.

Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable.

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under: -

a) Segment revenue and expenses

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis.All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fxed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

9. operAting le Ases

The Company has entered into operating lease agreements for various premises taken for accommodation of Company’s officers / directors and various offices of the Company. These arrangements are both cancellable and non-cancellable in nature and range between three to fve years. As at March 31, 2010, the future minimum lease payments under non- cancellable operating leases as set out below: -

10. Schedules 1 to 14 and the statement of additional information form an integral part of the fnancial statements.

11. Previous year fgures have been regrouped / recast / rearranged, wherever necessary, to conform to current year classifications. The fgures for the previous year are inclusive of the Engineering Plastics Business and Industrial Yarn Business for the period from January 1, 2009 to March 31,2009 acquired from KAMA Holdings Limited (formerly SRF Polymers Limited), whereas the current year fgures are for whole year.Therefore, the corresponding fgures of the previous year are not comparable with those of the current year.

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