Notes to Accounts of Triveni Engineering & Industries Ltd.
Mar 31, 2023
(a) Contract assets are initially recognised for revenue earned but not billed pending successful achievement of milestones. Upon achievement of milestones and billing, contract assets are reclassified to trade receivables. A trade receivable represents the Companyâs right to an amount of consideration that is billed to the customer and which become due unconditionally (i.e. only the passage of time is required before payment of the consideration is due). Different businesses of the Company have their different credit terms [refer note 40(i)].
Contract costs incurred to date plus recognised profits or less recognised losses are compared with progress billings raised on the customer - any surplus is considered as contract assets and shown as amounts due from customers under long-duration construction & supply contracts, whereas any shortfall is considered as contract liabilities and shown as the amounts due to customers under long-duration construction & supply contracts. Amounts billed for work performed which will become due upon fulfillment of specified conditions is considered as contract assets and shown as customer
retentions. Amounts received before the related work is performed is considered as contract liabilities and is shown as advances from customers.
(b) Significant changes in contract assets and liabilities:
Increase in contract assets (Due from customers under long-duration construction & supply contracts) has resulted due to substantial work carried out during the current year pending billing due to non-achievement of contractual milestones, mainly in respect of wastewater treatment projects in the industrial segment.
Decrease in contract assets (customer retentions) is mainly due to the release of retentions by the customer upon fulfillment of specified conditions in respect of sewage/wastewater treatment projects in the municipal/industrial segment.
Increase in contract liabilities (Amount due to customers under long-duration construction & supply contracts) is due to the reason that against the billing done during the current year, the revenue recognised in accordance with Ind AS 115 Revenue from Contracts with Customers is lower, mainly in respect of sewage/water treatment projects in the municipal segment.
Increase in contract liabilities (Advances from Customers) is mainly on account of receipt of advance against sugar export orders executed in the following year.
(c) Revenue recognised in relation to contract liabilities:
The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward contract liabilities and how much relates to performance obligations that were satisfied in a prior year.
(i) The cost of inventories recognised as an expense during the year was '' 551546.31 lakhs (31 March 2022: '' 384704.51 lakhs).
(ii) Refer note 18(i) for information on charges created on inventories.
(iii) The mode of valuation of inventories has been stated in note 1(l).
(iv) All inventories are expected to be utilised/sold within twelve months except certain items of stores and spares, which are utilised on need basis. Quantum of such stores and spares, which may be utilised beyond one year, is not determinable and is not expected to be material with reference to the total value of inventories.
(v) For impairment losses recognised during the year refer note 24 & 32.
(vi) I n addition to the cost of inventories recognised as expense as mentioned in (i) above, there are write-downs of inventories to net realisable value amounting to '' 62.57 lakhs [31 March 2022: write-downs of '' 396.91 lakhs] which are also recognised as an expense/income during the year and included in âChanges in inventories of finished goods, stock-in-trade and work-in-progressâ in statement of profit and loss.
(ii) Terms and rights attached to equity shares
The Company has only one class of equity shares with a par value of '' 1/- per share. The holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares are entitled to receive the remaining assets of the Company, after meeting all liabilities and distribution of all preferential amounts, in proportion to their shareholding.
During the year, the Company has completed buy-back of 2,28,57,142 (31 March 2022: Nil) equity shares of '' 1/-each [representing 9.45% of total pre buy-back paid up equity share capital of the Company] from the shareholders of the Company on a proportionate basis, through the tender offer route under the Securities and Exchange Board of India (Buy-back of Securities), Regulations 2018, at a price of '' 350 per equity share for an aggregate amount of '' 80000 lakhs. Accordingly, the Company has extinguished 2,28,57,142 fully paid up equity shares of '' 1 each (in dematerialized form) and the fully paid up equity share capital of the Company (post extinguishment) is 21,88,97,968 shares of '' 1/- each. The Company has funded the buy-back (including transaction costs incurred in relation thereto) from its securities premium, general reserve and retained earnings. In accordance with section 69 of the Companies Act, 2013, the Company has transferred an amount of '' 228.57 lakhs to capital redemption reserve which is equal to the nominal value of the shares bought back from retained earnings.
The aggregate number of equity shares bought back during a period of five financial years immediately preceding the financial year ended 31 March 2023 is 1,61,90,000 equity shares (31 March 2022: 1,61,90,000 equity shares)
(i) Information about individual provisions and significant estimates
(a) Warranty
The Company provides warranties on certain products, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made represent the amount of expected cost of meeting such obligations of rectifications / replacements based on best estimate considering the historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts. It also includes provisions made towards contractual obligations to replace certain parts under an Operation and Maintenance contract. The timing of the outflows is expected to be within a period of two years.
The provision represents costs of materials and services further required for substantially completed construction contracts.
(c) Arbitration / Court-case claims
Represents the provision made towards certain claims awarded against the Company in legal proceedings which have been challenged by the Company before appropriate authorities. The timing of the outflows is uncertain.
(i) Secured by pledge/hypothecation of the stock-in-trade, raw material, stores and spare parts, work-in-progress and trade receivables and second charge created/to be created on the properties of all the Engineering units and immovable property at New Delhi and third charge on the properties of Sugar, Co-Generation and Distillery units of the Company on pari-passu basis. Interest rates on the above loans outstanding as at the year end ranges between 7.35% to 8.45% (weighted average interest rate: 7.45% p.a.).
(ii) Commercial papers issued during the previous year at an interest rate of 4.25% p.a. for a tenor of 80 days, was fully repaid during the current year.
(iii) There are no differences in the figures reported in the quarterly returns/statements filed with the banks vis-a-vis the books of accounts. For the determination of drawing power for sugar stocks, the Company follows the guidelines of the RBI as prescribed for commodities covered under selective credit control.
(i) Capital creditors as at 31 March 2023 include '' 109.87 lakhs (31 March 2022: '' 120.93 lakhs) outstanding balance of micro enterprises and small enterprises (refer note 47).
(ii) Security deposits as at 31 March 2023 include '' 370 lakhs (31 March 2022: '' 390 lakhs) deposits from sugar selling agents which are interest bearing subject to fulfillment of terms and conditions. These deposits are repayable on cessation of contractual arrangements. Interest payable is normally settled annually.
(iii) There are no amounts as at the year end which are due and outstanding to be credited to the Investors Education and Protection Fund.
(i) Description of segments and principal activities
The operating segments are classified under two major businesses which the Company is engaged in, and are briefly described as under:
(a) Sugar : The Company is a manufacturer of white crystal sugar, having seven manufacturing plants situated in the state of Uttar Pradesh. The sugar is sold to wholesalers and institutional users as well as in the export market. The Company uses its captively produced bagasse, generated as a by-product in the manufacturing of sugar, as a feed stock for generating power. Apart from meeting the captive power requirements of sugar plants and distilleries, the surplus power is exported to the state grid. Molasses, another by-product in the manufacturing of sugar, is used as raw material for producing alcohol/ ethanol. The Company sells the surplus molasses and bagasse after meeting its captive requirements.
(b) Distillery : The Company with its two distilleries having total capacity of 400 kilo-litres per day (KLPD) located at Muzaffarnagar and Sabitgarh in the state of Uttar Pradesh, uses molasses produced in manufacture of sugar as the principal raw material in production of ethanol and extra neutral alcohol. During the year, the Company has commissioned a greenfield dual feed 200 KLPD (160 KLPD on grain) distillery at its sugar unit at Milak Narayanpur and a new grain based 60 KLPD distillery at Muzaffarnagar, thereby increasing the Companyâs overall distillation capacity to 660 KLPD. Under its Alcoholic Beverages vertical forming part of this segment, country liquor is produced at the bottling facility in the premises of the existing distillery
at Muzaffarnagar, to facilitate forward integration of distillery operations.
(a) Power transmission : This business segment is focused on high speed and niche low speed gears & gear boxes covering supply to OEMs, after market services and retrofitment of gearboxes, catering to the requirement of power sector, other industrial segments and defence. The manufacturing facility is located at Mysore, Karnataka.
(b) Water/Wastewater treatment : The business segment operates from Noida, Uttar Pradesh and provides engineered-to-order process equipment and comprehensive solutions in the water and wastewater management. This segment includes EPC contracts, Hybrid Annuity Model projects and O&M.
The âOther Operationsâ mainly include selling sugar and certain FMCG products under the Companyâs brand name/private labeling; and retailing of diesel/petrol through a Company operated fuel station.
The above reportable segments have been identified based on the significant components of the enterprise for which discrete financial information is available and reviewed by the chief operating decision maker (CODM) to assess the performance and allocate resources to the operating segments.
There are no geographical segments as the volume of exports is not significant and the major turnover of the Company takes place indigenously. There is no major reliance on few customers or suppliers.
NOTE 37: EMPLOYEE BENEFIT PLANS
(i) Defined contribution plans
(a) The Company contributes to certain defined contribution retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company has no further payment obligations once the contributions have been paid. Following are the schemes covered under defined contributions plans of the Company:
Provident Fund Plan & Employee Pension Scheme: The Company makes monthly contributions at prescribed rates towards Employee Provident Fund/ Employee Pension Scheme administered and managed by the Government of India.
Employee State Insurance: The Company makes prescribed monthly contributions towards Employees State Insurance Scheme.
Superannuation Scheme: The Company contributes towards afund established to provide superannuation benefit to certain employees in terms of Group Superannuation Policies entered into by such fund with the Life Insurance Corporation of India.
National Pension Scheme: The Company makes contributions to the National Pension Scheme fund in respect of certain employees of the Company.
(ii) Defined benefit plan (Gratuity)
(a) The Company operates a defined benefit retirement plan under which the Company pays certain defined benefit by way of gratuity to its employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement/ termination of employment or upon death of an employee, based on the respective employeesâ salary and years of employment with the Company.
The plan typically exposes the Company to number of actuarial risks, the most significant of which are detailed below:
Investment risk: The plan liabilities are calculated using a discount rate set with references to government bond yields as at end of reporting period; if plan assets underperform compared to the government bonds discount rate, this will create or increase a deficit.
Interest risk: A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the planâs debt instruments.
Life expectancy: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants during their employment. A change in the life expectancy of the plan participants will impact the planâs liability.
Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
Attrition rate: The present value of the defined benefit plan liability is impacted by the rate of employee turnover, disability and early retirement of plan participants. A change in the attrition rate of the plan participants will impact the planâs liability.
Majority of the plan assets held comprise amounts invested in traditional plans of group gratuity schemes offered by specified life insurance companies. The investment in traditional group gratuity scheme of life insurance companies ensures protection of the capital sum invested and interest earned. Balance investments comprise a mix of investments comprising central government securities, state government securities, other debt instruments. The Company has a risk management strategy which defines exposure limits and acceptable credit risk rating and are generally held to maturity. The Company, thorugh the Trust, has during the year made a change in its process to manage its investment risks, whereby majority of the plan assets are now invested with specified life insurance companies to manage the investment risk and in return earns either interst thereon at a fixed specified rate or at a rate as declared annually at its discretion by the life insurance companies. The Company does not face any risk of capital erosion on such investments made with the life insurance companies.
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In the event of change in more than one assumption, the impact would be different than stated above. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.
(i) Defined benefit liability (gratuity) and employer contributions
The Company remains committed to fund all gratuity payments falling due and shall strive to gradually reduce the deficit in funding of its obligation in the coming years.
The Company expects to contribute '' 1117.12 lakhs to the defined benefit plan relating to gratuity during the next financial year.
The weighted average duration of the defined gratuity obligation (on discounted cash flow basis) as at 31 March 2023 is 6 years (31 March 2022: 6 years).
The remuneration of key management personnel is determined by the remuneration committee having regard to the performance of individuals, market trends and applicable provisions of Companies Act, 2013.
(iv) Remuneration and outstanding balances of key management personnel does not include long term employee benefits by way of gratuity and compensated absences, which are payable only upon cessation of employment and provided on the basis of actuarial valuation by the Company.
The Company has provided corporate guarantees amounting to '' 15800 lakhs (31 March 2022: '' 10000 lakhs) in connection with loans agreed to be granted by the lender to wholly owned subsidiaries of the Company. Outstanding balance of loans under such lending arrangements as at 31 March 2023 is '' 8886.40 lakhs (31 March 2022: '' 6421.99 lakhs).
(a) Transactions relating to dividends and buyback of shares were on same terms and conditions that applied to other shareholders.
(b) Loans to subsidiaries were given at normal commercial terms & conditions at prevailing market rate of interest.
(c) Other transactions are made on terms equivalent to those that prevail in armâs length transactions.
(d) The outstanding balances at the year-end are unsecured and settlement to take place in cash.
For the purpose of capital management, capital includes net debt and total equity of the Company. The primary objective of the capital management is to maximize shareholdersâ value along with an objective to keep the leverage in check in view of cyclical capital intensive sugar business of the Company.
One of the major businesses of the Company is the sugar business, which is seasonal. The entire production takes place in about six months and is sold throughout the year. It thus necessitates maintaining high levels of sugar inventory requiring high working capital funding. Sugar business being a cyclical business, it is prudent to avoid high leverage and the resultant high finance cost. It is the endeavour of the Company to prune down debts to acceptable levels based on its financial position.
The Company may resort to further issue of capital for projects which can not be fully funded through internal accruals/debt and/or to finance working capital requirements.
The Company monitors capital structure through gearing ratio represented by debt-equity ratio (debt/total equity). In addition to the gearing ratio, the Company also looks at non-current debt to operating profit ratio (non-current debt/EBlTDA) which provides an indication of adequacy of earnings to service the debts. The Company diligently negotiates the terms and conditions of the loans and ensures adherence to all the financial covenants. The Company generally incorporates a clause in loan agreements for prepayment of loans without any premium. The gearing ratio and non-current debt/EBlTDA ratio for the Company as at the end of reporting period were as follows:
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2023 and 31 March 2022.
The Company is not subject to any externally imposed capital requirements.
NOTE 40: FINANCIAL RISK MANAGEMENT
The Companyâs principal financial liabilities comprise borrowings, trade payables and other payables. The main purpose of the financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include loans, trade and other receivables and cash and bank balances. The Company also holds certain investments, measured at fair value through profit or loss and enters into derivative transactions, which are not extensive.
The Companyâs activities expose it mainly to market risk, liquidity risk and credit risk. The monitoring and management of such risks is undertaken by the senior management of the Company and there are appropriate policies and procedures in place through which such financial risks are identified, measured and managed. The Company has a specialised team to undertake derivative activities for risk management purposes and such team has appropriate skills, experience and expertise. It is the Company policy not to carry out any trading in derivative for speculative purposes. The Audit Committee and the Board are regularly apprised of the exposures and risks every quarter and mitigation measures are extensively discussed.
Credit risk is associated with the possibility of a counterparty defaulting on its contractual obligations to pay, resulting in financial loss to the Company. The Company is exposed to credit risks from its operating activities, primarily trade receivables and retentions. The credit risks in respect of deposits with the banks, foreign exchange transactions and other financial instruments are nominal. As required, the Company also advances loans to its subsidiary companies and there is some credit risk associated with it.
The customer credit risk is managed by each business subject to the Companyâs established policy, procedure and controls relating to customer credit risk management. Various businesses require different processes and policies to be followed based on the business risks, industry practice and customer profiles.
In the case of Sugar business, majority of the sales are made either against advance payments or at a very short credit period upto 7-10 days through established sugar agents whereas in Cogeneration, forming part of sugar business, and Distillery, most of the sales are made to Government customers, such as, State Electricity Board (UPPCL) and Oil Marketing Companies (OMCs). There may be delays in receiving payments from UPPCL but the risk in respect of realisation of dues is minimal. In Power transmission business, it is the policy of the Company to receive payment prior to delivery of the material except in the case of some well established OEMs, including group companies and public sector undertakings, where credit up to 90 days is extended. Water business is engaged in Engineering, Procurement and Construction (EPC) business in the municipal and industrial sectors where it is customary to have prescribed retentions which are payable upon completion of the project and after satisfactory performance of the plant.
I n order to contain the business risk especially with respect to long-duration construction & supply contracts, creditworthiness of the customer is ensured through scrutiny of its financials, status of financial closure of the project, if required, market reports and reference checks. The Company remains vigilant and regularly assesses the financial position of customers during execution of contracts with a view to restrict risks of delays and default. In view of its diversified business profile and considering the size of the Company, credit risks from receivables are well contained on an overall basis.
The impairment analysis is performed on each reporting period on individual basis for major customers. In addition, a large number of receivables are grouped and assessed for impairment collectively. The calculation of impairment loss is based on historical data of losses, current conditions and forecasts and future economic conditions. The Companyâs maximum exposure to credit risk at the reporting date is the carrying amount of each financial asset as detailed in note 6, 7, 8, 9 and 12.
In the case of Water and Power transmission businesses, the percentage receivables to external sales is high whereas the overall ratio for the Company is much lower. In the case of EPC projects undertaken by Water business, the receivables are high as per the norms of the industry and terms of the tender. A majority of such projects are executed for the municipalities and before bidding for any contract, the Water business carries out due-diligence to ensure that the customer has made satisfactory funding arrangements. In the case of Power transmission business, negotiated credit is given to reputed OEMs. The percentage receivables to external sales is high due to higher year end sales.
Overall, the credit risk from receivable is low in view of diverse businesses and government customers.
(b) Provision for expected credit losses
Basis as explained above, life time expected credit loss ("ECLâ) is determined on trade receivables except in cases where advance payment terms are prescribed or payment is due from Central / State Government or Government Authorities / entities where there is no track record of short receipts. ECL arising from delays in receiving payments from the Government customers pursuant to sale of goods or under construction contracts are not considered if such delays are commonly prevalent in the industry and / or the delays are not exceeding
one year. All other short receipts, other than arising from expense claims offset by the counter-party, are duly considered in determining ECL. In view of the business model of the Companyâs engineered-to-order products and the profile of trade receivables, the determination of provision based on age analysis may not be realistic and hence, the provision of expected credit loss is determined for the total trade receivables outstanding as on the reporting date. This provision for ECL is made in addition to the specific credit losses, if any, provided on specific financial assets.
The Company uses liquidity forecast tools to manage its liquidity. The Company operates capital intensive sugar business and has obligation to timely make cane price payments within the statutory time period. The Company is able to organise liquidity through own funds and through working capital loans. The Company has good relationship with its lenders, has not defaulted at any point of time in the past and is maintaining healthy credit ratings (viz. short term A1 and long term AA with stable outlook from ICRA), as a result of which it does not experience any difficulty in arranging funds from its lenders. However, when the sugar fundamentals are unfavourable, either due to market forces or due to excessive cane pricing by the Government, the payment of cane price gets delayed though it is the endeavour of the Company to make cane payment on a priority basis. It is the objective and focus of the Company to reduce debts to be able to meet the cyclicalities of the sugar business.
In view of seasonal nature of sugar business, which is a dominant business of the Company, there is a peak build-up of sugar inventories at the year end, resulting in peak working capital requirement. With the liquidation of such inventories over the year, the working capital requirement is gradually reduced. Thus, the current ratio computed at the year end is not a reflection of average and realistic ratio for the year.
(a) Maturities of financial instruments
Maturities of non-derivative financial liabilities:
The following table details the remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amounts disclosed in the table have been drawn up based on the undiscounted cash flows of financial liabilities. The contractual maturity is based on the earliest date on which the Company may be required to pay.
Maturities of derivative financial instruments:
The Company enters into derivative contracts (foreign exchange forward contracts) that are generally settled on a net basis to manage some of its foreign currency exposures. Derivative liabilities (net) of '' 75.86 lakhs as at 31 March 2023 (31 March 2022: Derivative assets (net) 109.21 lakhs), shall mature within one year from reporting date.
The Company is exposed to following key market risks:
(a) Interest rate risk on loans and borrowings
(b) Sugar price risk
(c) Other market risks
Most of the borrowings availed by the Company are subject to interest on floating rate basis linked to the MCLR (Marginal Cost of funds based Lending Rate). In view of the fact that the total borrowings of the Company are quite substantial, the Company is exposed to interest rate risk.
The strategy of the Company to opt for floating interest rates is helpful in maintaining market related realistic rates. Further, most of the loans and borrowings have a prepayment clause through which the loans could be prepaid without any prepayment premium. The said clause helps the Company to arrange debt substitution to bring down the interest costs or to prepay the loans out of the surplus funds held. The interest rate risk is largely mitigated as 99.3% of the long term debts as at 31 March 2023 (31 March 2022: 99.6% of long term debts) comprises loans carrying concessional interest rates/interest subvention.
The sugar prices are dependent inter-alia on domestic and global sugar balance - higher supplies lead to softening of sugar prices whereas higher demand than available supplies lead to hardening of sugar prices. The Company sells most of its sugar in the domestic market where there are no effective mechanism available to hedge sugar prices in view of limited breadth in the commodity exchanges. The Company also exports sugar in the years of surplus production based on Government policy on exports.
Adverse changes in sugar price impact the Company in the following manner:
- The Company values sugar stocks at lower of cost and net realisable value (NRV). In the event, the cost of production of sugar is higher than the NRV, the stocks are written down to NRV leading to recognition of loss on such inventory.
- The Company is a large producer of sugar and even a small variation in the sugar price leads to significant impact on the profitability of the Company.
The cost of production of sugar is generally lower than the net realisable value of sugar and hence, chances of significant losses due to inventory write down are low. Further, the Central Government has prescribed Minimum Selling Price (MSP) for sugar, which is subject to revision from time to time. It ensures that there is no steep decline in the sugar prices.
The other market risks includes Equity price risk and Foreign currency risk.
Equity price risk in respect of listed and non listed equity securities which are susceptible to market price risk arising from uncertainties about future value of the investment securities. In view of nominal value of investments being held by the Company, other than in the subsidiaries which are measured at cost, the magnitude of risk is only nominal.
The Company is exposed to foreign currency exchange risk on certain contracts in connection with export and import of goods and services. The Company mitigates such risk through entering into off-setting derivative contracts with Banks, mainly foreign exchange forward contracts, of appropriate maturity and amounts at adequate intervals. The impact of sensitivity of such foreign exchange fluctuations on the overall financial performance and position of the Company is nominal.
In respect of firm commitments under certain contracts involving receipt of consideration in foreign currency, the Company has chosen to follow hedge accounting to hedge the risks attributable to the cash flows in respect of such firm commitments. The foreign exchange risk arises in respect of the movement in the foreign currency from the time the contract is negotiated/entered into and till the time the consideration under the contract is actually settled. In accordance with its risk management strategy, the Company manages such risks, generally by entering into foreign exchange forward contracts for the appropriate maturity with banks. The risk mitigation strategy involves determination of the timing and the amount of hedge to be taken in a progressive manner, with a view to protect the exchange rate considered at the time of acceptance of the contract. The Company, generally hedges the foreign currency risk directly to INR and for hedge accounting, designates a hedge ratio of generally 1:1 in respect of all such cash flow hedges. Besides monitoring the movements in the foreign exchange market, the Company also takes the advice of outside consultants in arriving at its hedging decision. Refer note 1(s) for further details on accounting policy in respect of hedge accounting.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted unadjusted market prices in active markets for identical assets or liabilities. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
There are no transfers between levels 1 and 2 during the year.
(iii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include the fair value of derivatives (viz. foreign exchange forward contracts) is determined using market observable inputs, including prevalent forward rates for the maturities of the respective contracts and interest rate curves as indicated by banks and third parties.
All of the resulting fair value estimates are included in level 2.
The Corporate finance team has requisite knowledge and skills in valuation of financial instruments. The team headed by Group CFO directly reports to the audit committee on the fair value of financial instruments.
(v) The management considers that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values.
Assets taken under lease mainly includes various residential, office, godown premises and plots of land. These are generally not noncancellable leases (except for few premises) having unexpired period upto sixty six years. Except a few, the leases are generally renewable by mutual consent and on mutually agreeable terms. The Company has given refundable interest free security deposits under certain lease agreements. There is no contingent rent, sublease payments or restriction imposed in the lease agreement.
The Company has given certain portion of its office / factory premises under operating leases [including lease of investment property (refer note 4)]. These leases are not non-cancellable and are extendable by mutual consent and at mutually agreeable terms. The gross carrying amount, accumulated depreciation and depreciation recognised in the statement of profit and loss in respect of such portion of the leased premises are not separately identifiable. There is no impairment loss in respect of such premises. No contingent rent has been recognised in the statement of profit and loss. There are no minimum future lease payments as there are no non-cancellable leases. Lease income is recognised in the statement of profit and loss under "Other incomeâ (refer note 24). Lease income earned by the Company from its investment properties and direct operating expenses arising on the investment properties for the year is set out in note 4.
|
NOTE 44: COMMITMENTS |
||
|
As at |
As at |
|
|
31-Mar-23 |
31-Mar-22 |
|
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (after adjusting advances aggregating to '' 295.87 lakhs (31 March 2022: '' 1413.12 lakhs)) |
5737.98 |
6125.01 |
|
NOTE 45: CONTINGENT LIABILITIES AND CONTINGENT ASSETS Contingent liabilities |
|||
|
As at 31-Mar-23 |
As at 31-Mar-22 |
||
|
Claims against the Group not acknowledged as debts: |
|||
|
(i) âClaims (excluding further interest thereon) which are being contested by the Company and in respect of which the Company has paid amounts aggregating to '' 370.83 lakhs (31 March 2022: '' 693.49 lakhs), under protest pending final adjudication of the cases: |
9374.18 |
7940.70 |
|
|
Sl. Particulars No. |
Amount of contingent Amount paid liability |
||
|
31-Mar-23 31-Mar-22 31-Mar-23 31-Mar-22 |
|||
|
1 Sales tax 29.04 243.41 14.52 88.52 2 Excise duty 552.23 545.18 288.76 279.74 3 GST 63.32 - 0.42 - 4 Interest on delayed 5973.50 5973.50 - -payment of cane price * 5 Others 2756.09 1178.61 67.13 325.23 * Amount of contingent liability on account of interest on delayed payment of cane price for the sugar seasons 2012-13, 2013-14 and 2014-15 in respect of which the Honâble Allahabad High Court had passed an order directing the Cane Commissioner of the State to decide the matter afresh, taking into consideration certain additional factors. The Cane Commissioner is understood to have filed an affidavit in a contempt proceeding, specifying interest rates on delayed cane price payments but no such order of the Cane Commissioner has been served on the Company or industry association and such order, if served, may be legally challenged. |
|||
|
(ii) The Company is contingently liable in respect of short provision against disputed income tax liabilities (excluding determination of final interest payable thereon) of '' 2637.14 lakhs (31 March 2022: '' 2565.11 lakhs) against which '' 748.36 lakhs (31 March 2022: '' 698.92 lakhs) stands paid. The disputed income tax liability mainly arises on the issue of taxability of unrealised incentives, majority of which have been held to be non-taxable in the first appeal filed by the Company against which the Department has filed appeals before the Tribunal. |
2637.14 |
2565.11 |
|
|
(iii) Liability arising from claims / counter claims/ interest in arbitration/ court cases, claims of certain employees/ex-employees and in respect of service tax, if any, on certain activities of the Company which are being contested by the Company. |
Indeterminate |
Indeterminate |
|
|
The amount shown above represent the best possible estimates arrived at on the basis of available information. The uncertainties, possible payments and 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. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal position against such disputes. |
|||
Based on management analysis, there are no material contingent assets as at 31 March 2023 and as at 31 March 2022.
The Government of Uttar Pradesh vide its order dated 24 December 2021 imposed regulatory fees of '' 20/quintal on sale/ transfer of molasses. UP Sugar Mills Association has challenged the imposition of the regulatory fees before the Honâble Allahabad High Court. Pending final outcome of the matter, the Company, on a conservative basis, accounted for the liability aggregating to '' 1674.74 lakhs (including '' 636.33 lakhs till 31 March 2022) in respect of fee paid on sale/transfer of molasses and molasses held in stock. This has resulted in the profit before tax of current financial year being adversely impacted by an amount of '' 1216.74 lakhs and balance '' 458.00 lakhs is included in the carrying value of sugar inventories.
NOTE 47: DISCLOSURES OF MICRO ENTERPRISES AND SMALL ENTERPRISES
Based on the intimation received by the Company from its suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006, the relevant information is provided here below:
|
31-Mar-23 |
31-Mar-22 |
|
|
The principal amount and the interest due thereon remaining unpaid to any supplier at the end of each accounting year; as at the end of the year (i) Principal amount (refer note 19 & 20) |
971.67 |
919.10 |
|
(ii) Interest due on above |
- |
- |
|
The amount of interest paid by the buyer in terms of section 16 of Micro, Small and |
- |
- |
|
Medium Enterprises Development Act, 2006 (27 of 2006), along with the amount of the payment made to the supplier beyond the appointed day during each accounting year. The amount of interest due and payable for the period of delay in making payment |
||
|
(which has been paid but beyond the appointed day during the year) but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006 The amount of interest accrued and remaining unpaid at the end of each accounting |
||
|
year; and The amount of further interest remaining due and payable even in the succeeding |
||
|
years, until such date when the interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006 |
NOTE 50: RECENT ACCOUNTING PRONOUNCEMENTS
Ministry of Corporate Affairs, vide notification dated 31 March 2023, has made following amendments to Ind AS which are effective from 1 April 2023 and applicable to the Company:
(i) Ind AS 1 Presentation of Financial Statements: Amendment requires companies to disclose their "material accounting policy informationâ instead of their "significant accounting policiesâ and prescribes circumstances under which an accounting policy information shall be considered to be material.
(ii) Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors: The amendment has replaced the definition of "change in acounting estimateâ with the definition of "accounting estimatesâ and included other amendments to help entities distinguish changes in accounting estimates from changes in accounting policies.
(iii) I nd AS 12 Income Taxes: Exemption for initial recognition of deferred tax is now narrowed and exclude transactions which gives rise to equal taxable and deductible temporary differences. The amendment seeks to reduce diversity in the reporting of deferred tax on leases and decommissioning obligations.
The Company intends to adopt these standards when they become effective. Based on preliminary assessment, the Company does not expect these amendments to have any significant impact on its financial statements.
The Company has reclassified certain items of financials of comparative year to conform to this yearâs classification, however, impact of these reclassification are not material.
NOTE 52: APPROVAL OF STANDALONE FINANCIAL STATEMENTS
The standalone financial statements were approved for issue by the Board of Directors on 25 May 2023 subject to approval of shareholders.
Mar 31, 2022
(a) Contract assets are initially recognised for revenue earned but not billed pending successful achievement of milestones. Upon achievement of milestones and billing, contract assets are reclassified to trade receivables. A trade receivable represents the Company''s right to an amount of consideration that is billed on the customer and which become due unconditionally (i.e. only the passage of time is required before payment of the consideration is due). Different businesses of the Company have their different credit terms [refer note 41(i)].
Contract costs incurred to date plus recognised profits or less recognised losses are compared with progress billings raised on the customer - any surplus is considered as contract assets and shown as amounts due from customers under long-duration construction & supply contracts, whereas any shortfall is considered as contract liabilities and shown as the amounts due to customers under long-duration construction & supply contracts. Amounts of revenue earned for service work performed
pending billing on customers is also considered as contract assets and shown as unbilled revenue. Amounts billed for work performed which will become due upon fulfillment of specified conditions is considered as contract assets and shown as customer retentions. Amounts received before the related work is performed is considered as contract liabilities and is shown as advances from customers.
(b) Significant changes in contract assets and liabilities:
I ncrease in contract assets (Due from customers under long-duration construction & supply contracts) has resulted due to substantial work carried out during the current year pending billing due to non-achievement of contractual milestones, mainly in respect of sewage/wastewater treatment projects in the municipal/industrial segment.
I ncrease in contract assets (customer retentions) mainly attributable to significant billing done during the current year upon achieving contractual milestones, mainly in respect of sewage treatment projects in the municipal segment. As per the contractual terms, a specified percentage of the billing will be retained by the customer and will become due upon fulfillment of specified conditions.
Decrease in contract liabilities (Amount due to customers under long-duration construction & supply contracts) is due to the reason that against the billing done during the current year, the revenue recognised in accordance with Ind AS 115 Revenue from Contracts with Customers is higher, mainly in respect of sewage/water/wastewater treatment projects in the municipal/ industrial segment.
Increase in contract liabilities (Advances from Customers) is mainly on account of receipt of mobilsation advance against new order for sewage treatment in the municipal segment.
(c) Revenue recognised in relation to contract liabilities:
The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward contract liabilities and how much relates to performance obligations that were satisfied in a prior year.
(i) The cost of inventories recognised as an expense during the year was '' 384704.51 lakhs (31 March 2021: '' 397630.43 lakhs)
(ii) Refer note 19(i) for information on charges created on inventories.
(iii) The mode of valuation of inventories has been stated in note 1(l).
(iv) All inventories are expected to be utilised/sold within twelve months except certain items of stores and spares, which are utilised on need basis. Quantum of such stores and spares, which may be utilised beyond one year, is not determinable and is not expected to be material with reference to the total value of inventories.
(v) For impairment losses recognised during the year refer note 25 & 33.
(vi) In addition to the cost of inventories recognised as expense as mentioned in (i) above, there are write-downs of inventories to net realisable value amounting to '' 396.91 lakhs [31 March 2021: write-downs of '' 31.52 lakhs] which are also recognised as an expense/income during the year and included in âChanges in inventories of finished goods, stock-in-trade and work-inprogress'' in statement of profit and loss.
The activities of Aqwise Wise Water Technologies Ltd. (âAqwiseâ), an erstwhile associate of the Company, based in Israel, had been severely impacted due to the Covid-19 pandemic. The Company alongwith other shareholders of Aqwise had accordingly agreed to divest their entire equity stake in favour of G.E.S. Global Environmental Solutions Ltd. (âGESâ) under an agreement dated 25 March 2021. Consequently, the Company has classified its equity investment held in Aqwise (along with the loan agreed to be converted into equity) as âAssets held for saleâ. The Company had provided for an impairment loss of '' 2319.87 lakhs during the previous year against the carrying cost of such investment. Such investment does not form part of any segment assets.
During the current year, the Company alongwith other shareholders of Aqwise have divested their entire equity stake in Aqwise. In view of considerable claims submitted by GES towards the consideration payable to the shareholders in terms of the above said agreement, the Company does not expect to receive any consideration amount and hence the amount receivable against the divestment has now been fully provided (refer note 9 & 34).
(ii) Terms and rights attached to equity shares
The Company has only one class of equity shares with a par value of ''1/- per share. The holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
I n the event of liquidation of the Company, the holders of equity shares are entitled to receive the remaining assets of the Company, after meeting all liabilities and distribution of all preferential amounts, in proportion to their shareholding.
(i) Information about individual provisions and significant estimates
(a) Warranty
The Company provides warranties on certain products, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made represent the amount of expected cost of meeting such obligations of rectifications / replacements based on best estimate considering the historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts. It also includes provisions made towards contractual obligations to replace certain parts under an Operation and Maintenance contract. The timing of the outflows is expected to be within a period of two years.
The provision represents costs of materials and services required for integration of water treatment package at the site (the revenue of which has been fully recognised), prior to commissioning.
(c) Arbitration / Court-case claims
Represents the provision made towards certain claims awarded against the Company in legal proceedings which have been challenged by the Company before appropriate authorities. The timing of the outflows is uncertain.
(i) Secured by pledge/hypothecation of the stock-in-trade, raw material, stores and spare parts, work-in-progress and trade receivables and second charge created/to be created on the properties of all the Engineering units and immoveable property at New Delhi and third charge on the properties of Sugar, Co-Generation and Distillery units of the Company on pari-passu basis. Interest rates on the above loans outstanding as at the year end majorly ranges between 4.25% to 7.50% (weighted average interest rate: 4.72% p.a.).
(ii) Commercial papers issued at the interest rate of 4.25% p.a. for a tenor of 80 days, to be fully repaid on May 2022.
(iii) There are no differences in the figures reported in the quarterly returns/statements filed with the banks vis-a-vis the books of accounts. For the determination of drawing power for sugar stocks, the Company follows the guidelines of the RBI as prescribed for commodities covered under selective credit control.
(i) Capital creditors as at 31 March 2022 include ''120.93 lakhs (31 March 2021: ''24.74 lakhs) outstanding balance of micro enterprises and small enterprises (refer note 47).
(ii) Security deposits as at 31 March 2022 include ''390 lakhs (31 March 2021: ''364 lakhs) deposits from sugar selling agents which are interest bearing subject to fulfillment of terms and conditions. These deposits are repayable on cessation of contractual arrangements. Interest payable is normally settled annually.
(iii) There are no amounts as at the year end which are due and outstanding to be credited to the Investors Education and Protection Fund.
(i) Description of segments and principal activities
The operating segments are classified under two major businesses which the Company is engaged in, and are briefly described as under:
(a) Sugar : The Company is a manufacturer of white crystal sugar, having seven manufacturing plants situated in the states of Uttar Pradesh. The sugar is sold to wholesalers and industrial users. The Company uses its captively produced bagasse, generated as a by-product in the manufacturing of sugar, as a feed stock for generating power and apart from meeting the power and steam requirements of the associated sugar units, also exports power to the state grid. Molasses, another by-product in the manufacturing of sugar, is used as raw material for producing alcohol/ethanol. The Company sells the surplus molasses and bagasse after meeting its captive requirements.
(b) Distillery : The Company with its two distilleries having total capacity of 320 kilo-litres per day located at Muzaffarnagar, Uttar Pradesh and Sabitgarh, Uttar Pradesh, uses captive molasses produced in manufacture of sugar as the principal raw material in production of various categories of alcohol. The Company also, under its Alcoholic Beverages vertical forming part of this segment, produces country liquor at its bottling facility in the premises of its existing distillery in Muzaffarnagar, Uttar Pradesh, to facilitate forward integration of distillery operations. The Company, during the current year, has undertaken to expand its distillery operations by way of setting up a new 160 kilo-litres per day capacity dual feed distillery at Milak Narayanpur, Uttar Pradesh and a new 60 kilo-litres per day capacity grain based distillery at Muzaffarnagar, Uttar Pradesh, which is under progress as at 31 March 2022.
(a) Power transmission : This business segment is focused on all high speed and niche low speed products - supply of new equipment, after market services and retrofitment of gearboxes, catering to the requirement of power sector, defence and other industrial segments. The manufacturing facility is located at Mysore, Karnataka.
(b) Water/Wastewater treatment : The business segment operates from Noida, Uttar Pradesh and provides engineered-to-order process equipment and comprehensive solutions in the water and wastewater management. This segment includes EPC contracts, Hybrid Annuity Model projects and O&M.
The âOther Operations'' mainly include selling of own manufactured sugar and trading of other FMCG products, under the Company''s brand name/private labeling and retailing of diesel/petrol through a Company operated fuel station. It also includes a turnkey project relating to steam turbines which was awarded to it pursuant to bids tendered prior to demerger of steam turbine business.
The above reportable segments have been identified based on the significant components of the enterprise for which discrete financial information is available and are reviewed by the Chief operating decision maker (CODM) to assess the performance and allocate resources to the operating segments.
There are no geographical segments as the volume of exports is not significant and the major turnover of the Company takes place indigenously. There is no major reliance on few customers or suppliers.
NOTE 38: EMPLOYEE BENEFIT PLANS
(i) Defined contribution plans
(a) The Company contributes to certain defined contribution retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company has no further payment obligations once the contributions have been paid. Following are the schemes covered under defined contributions plans of the Company:
Provident Fund Plan & Employee Pension Scheme: The Company makes monthly contributions at prescribed rates towards Employee Provident Fund/ Employee Pension Scheme administered and managed by the Government of India.
Employee State Insurance: The Company makes prescribed monthly contributions towards Employees State Insurance Scheme.
Superannuation Scheme: The Company contributes towards a fund established to provide superannuation benefit to certain employees in terms of Group Superannuation Policies entered into by such fund with the Life Insurance Corporation of India.
National Pension Scheme: The Company makes contributions to the National Pension Scheme fund in respect of certain employees of the Company.
(ii) Defined benefit plan (Gratuity)
(a) The Company operates a defined benefit retirement plan under which the Company pays certain defined benefit by way of gratuity to its employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement/ termination of employment or upon death of an employee, based on the respective employees'' salary and years of employment with the Company.
The plan typically exposes the Company to number of actuarial risks, the most significant of which are detailed below:
Investment risk: The plan liabilities are calculated using a discount rate set with references to government bond yields as at end of reporting period; if plan assets underperform compared to the government bonds discount rate, this will create or increase a deficit. The investments in plan assets are made in accordance with pattern of investment prescribed by central government and ensures that the funds are invested in a balanced mix of investments comprising central government securities, state government securities, other debt instruments as well as equity instruments. Most of the plan investments is in fixed income securities with high grades and in government securities. The Company has a risk management strategy which defines exposure limits and acceptable credit risk rating.
Interest risk: A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plan''s debt instruments.
Life expectancy: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants during their employment. A change in the life expectancy of the plan participants will impact the planâs liability.
Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
Attrition rate: The present value of the defined benefit plan liability is impacted by the rate of employee turnover, disability and early retirement of plan participants. A change in the attrition rate of the plan participants will impact the planâs liability.
The investible funds of the Gratuity Plan are invested in accordance with the investment pattern and norms prescribed by the Ministry of Finance, Government of India. The investment pattern mandates that the investible funds are invested across the permitted investments in the prescribed pattern, whereby the investment risk is spread across various categories of investment comprising sovereign government securities, state development loans monitored by the Reserve Bank of India, investment grade rated debt securities issued by private and public sector companies, fixed-deposit with banks fulfilling the prescribed norms, units of debt and equity mutual funds. The investments made are generally on held-to-maturity basis. It is the endeavour of the Company to mitigate risk by investing only in high-quality debt securities and in mutual funds after undertaking due diligence. There has been no change in the process used by the Company to manage its risks from prior periods.
The above sensitivity analysis are based on a charge in an assumption while holding all others assumptions constant. In the event of change in more than one assumption, the impact would be different than the stated above. The methods any types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.
(i) Defined benefit liability (gratuity) and employer contributions
The Company remains committed to fund all gratuity payments falling due and shall strive to gradually reduce the deficit in funding of its obligation in the coming years.
The Company expects to contribute ''946.99 lakhs to the defined benefit plan relating to gratuity during the next financial year.
The weighted average duration of the defined gratuity obligation (on discounted cash flow basis) as at 31 March 2022 is 6 years (31 March 2021: 6 years).
(iii) The President had given his assent to The Code on Social Security, 2020 (âCode'') in respect of employee benefits (during employment and post-employment) in September 2020. The Code may impact the contributions made by the Company towards Provident Fund and Gratuity. However, the date on which the Code will come into effect has not yet been notified. The Company would assess and give effect to the implications, if any, arising from the implementation of the Code, in the period in which, the Code becomes effective and the related rules are notified.
(iv) Remuneration and outstanding balances of key management personnel does not include long term employee benefits by way of gratuity and compensated absences, which are currently not payable and are provided on the basis of actuarial valuation by the Company.
(v) The Company has provided a corporate guarantee amounting to ''10000 lakhs (31 March 2021: ''10000 lakhs) in connection with a loan agreed to be granted by the lender to a wholly owned subsidiary of the Company, Mathura Wastewater Management Private Limited (MWMPL). Outstanding balance of loan under such lending arrangement as at 31 March 2022 is ''6421.99 lakhs (31 March 2021: ''5035.10 lakhs).
(a) Transactions relating to dividends and buyback of shares were on same terms and conditions that applied to other shareholders.
(b) Loans to subsidiary and associate were given at normal commercial terms & conditions at prevailing market rate of interest.
(c) Sales to and purchases from related parties, including rendering/availment of service, are made on terms equivalent to those that prevail in arm''s length transactions. All other transactions were made on normal commercial terms and conditions and at market rates.
(d) The outstanding balances at the year-end are unsecured and settlement occurs in cash.
For the purpose of capital management, capital includes net debt and total equity of the Company. The primary objective of the capital management is to maximize shareholder value along with an objective to keep the leverage in check in view of cyclical capital intensive sugar business of the Company.
One of the major businesses of the Company is the sugar business, a seasonal industry, where the entire production occurs in about six months which is sold throughout the year. Thus, it necessitates keeping high levels of sugar inventory requiring high working capital funding. Sugar business being also a cyclical business, it is prudent to avoid high leverage and the resultant high finance cost. It is the endeavour of the Company to prune down debts to acceptable levels based on its financial position.
The Company may resort to further issue of capital when the funds are required to make the Company stronger financially or to invest in projects meeting the ROI expectations of the Company.
The Company monitors capital structure through gearing ratio represented by debt-equity ratio (debt/total equity). In addition to the gearing ratio, the Company also looks at non-current debt to operating profit ratio (non-current debt/EBlTDA) which gives an indication of adequacy of earnings to service the debts. The Company carefully negotiates the terms and conditions of the loans and ensures adherence to all the financial covenants. With a view to arrive at the desired capital structure based on the financial
NOTE 41: FINANCIAL RISK MANAGEMENT
The Company''s principal financial liabilities comprise borrowings, trade payables and other payables. The main purpose of the financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include loans, trade and other receivables and cash and bank balances that derive directly from its operations. The Company also holds investments measured at fair value through profit or loss and enters into derivative transactions, which are not extensive.
The Company''s activities expose it mainly to market risk, liquidity risk and credit risk. The monitoring and management of such risks is undertaken by the senior management of the Company and there are appropriate policies and procedures in place through which such financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Company has specialised teams to undertake derivative activities for risk management purposes and such team has appropriate skills, experience and expertise. It is the Company policy not to carry out any trading in derivative for speculative purposes. The Audit Committee and the Board are regularly apprised of these risks every quarter and each such risk and mitigation measures are extensively discussed.
Credit risk is associated with the possibility of a counterparty defaulting on its contractual obligations to pay, resulting in financial loss to the Company. The Company is exposed to credit risks from its operating activities, primarily trade receivables. The credit risks in respect of deposits with the banks, foreign exchange transactions and other financial instruments are nominal. As required, the Company also advances loans to its subsidiary companies and there is some credit risk associated with it. As far as practicable, the Company endeavours to take reasonable security to mitigate the credit risk.
The customer credit risk is managed by each business subject to the Company''s established policy, procedure and controls relating to customer credit risk management. Various businesses require different processes and policies to be followed based on the business risks, industry practice and customer profiles.
I n the case of Sugar business, majority of the sales are made either against advance payments or at a very short credit period upto 7-10 days through established sugar agents whereas in Cogeneration, forming part of sugar business, and Distillery, most of the sales are made to Government customers, such as, State Electricity Board (UPPCL) and Oil Marketing
Companies (OMCs). There may be delays, generally not exceeding one year, in receiving payments from UPPCL but the risk in respect of realisation of dues is minimal. In Power transmission business, it is the policy of the Company to receive payment prior to delivery of the material except in the case of some well established OEMs, including group companies and public sector undertakings, where the credit up to 90 days is extended. Water business is engaged in Engineering, Procurement and Construction (EPC) business in the municipal and industrial sectors where it is customary to have prescribed retentions which are payable upon completion of the project and after satisfactory performance of the plant.
In order to contain the business risk especially with respect to long-duration construction & supply contracts, creditworthiness of the customer is ensured through scrutiny of its financials, status of financial closure of the project, if required, market reports and reference checks. The Company remains vigilant and regularly assesses the financial position of customers during execution of contracts with a view to restrict risks of delays and default. In view of its diversified business profile and considering the size of the Company, credit risks from receivables are well contained on an overall basis.
The impairment analysis is performed on each reporting period on individual basis for major customers. In addition, a large number of receivables are grouped and assessed for impairment collectively. The calculation of impairment loss is based on historical data of losses, current conditions and forecasts and future economic conditions. The Company''s maximum exposure to credit risk at the reporting date is the carrying amount of each financial asset as detailed in note 6, 7, 8, 9 and 12.
I n the case of Water and Power transmission businesses, the percentage receivables to external sales is high whereas the overall ratio for the Company is much lower. In the case of EPC projects undertaken by Water business, the receivables are high as per the norms of the industry and terms of the tender. A majority of such projects are executed for the municipalities and before bidding for any contract, the Water business carries out due-diligence to ensure that the customer has made satisfactory funding arrangements. In the case of Power transmission business, negotiated credit is given to reputed OEMs. The percentage receivables to external sales is high due to higher year end sales.
Overall, the credit risk from receivable is low in view of diverse businesses and government customers.
(b) Provision for expected credit losses
Basis as explained above, life time expected credit loss (âECLâ) is determined on trade receivables except in cases where advance payment terms are prescribed or payment is due from Central / State Government or Government Authorities / entities where there is no track record of short receipts. ECL arising from delays in receiving payments from the Government customers pursuant to sale of goods or under construction contracts are not considered if such delays are commonly prevalent in the industry and / or the delays are not exceeding one year. All other short receipts, other than arising from expense claims, are duly considered in determining ECL. In view of the business model of the
Company''s engineered-to-order products and the profile of trade receivables, the determination of provision based on age analysis may not be realistic and hence, the provision of expected credit loss is determined for the total trade receivables outstanding as on the reporting date. This provision for ECL is made in addition to the specific credit losses, if any, provided on specific financial assets.
The Company uses liquidity forecast tools to manage its liquidity. The Company operates capital intensive sugar business and has obligation to timely make cane price payments within the statutory time period. The Company is able to organise liquidity through own funds and through working capital loans. The Company has good relationship with its lenders, has not defaulted at any point of time in the past and is maintaining healthy credit ratings (viz. short term A1 and long term AA with stable outlook from ICRA), as a result of which it does not experience any difficulty in arranging funds from its lenders. However, when the sugar fundamentals are unfavourable, either due to market forces or due to excessive cane pricing by the Government, the payment of cane price gets delayed. However, it is the endeavour of the Company to make cane payment on a priority basis. It is the objective and focus of the Company to reduce debts to be able to meet the cyclicalities of the sugar business.
Apart from cyclical sugar business, the Company has alternate revenue streams in the form of distillery and engineering business, which, to a large extent, offset the impact of sugar cyclicalities.
In view of seasonal nature of sugar business, which is a dominant business of the Company, there is a peak build-up of sugar inventories at the year end, resulting in peak working capital requirement. With the liquidation of such inventories over the year, the working capital requirement is gradually reduced. Thus, the current ratio computed at the year end is not a reflection of average and realistic ratio for the year.
Maturities of derivative financial instruments:
The Company enters into derivative contracts (mainly foreign exchange forward contracts) that are settled on a net basis to manage some of its foreign currency exposures. Derivative asset (net) of ''109.21 lakhs as at 31 March 2022 (31 March 2021: Derivative asset (net) ''35.92 lakhs), shall mature within one year from reporting date.
The Company is exposed to following key market risks:
(a) Interest rate risk on loans and borrowings
(b) Sugar price risk
(c) Other market risks
Most of the borrowings availed by the Company are subject to interest on floating rate basis linked to the MCLR (Marginal Cost of funds based Lending Rate). In view of the fact that the total borrowings of the Company are quite substantial, the Company is exposed to interest rate risk.
The strategy of the Company to opt for floating interest rates is helpful in maintaining market related realistic rates. Further, most of the loans and borrowings have a prepayment clause through which the loans could be prepaid without any prepayment premium. The said clause helps the Company to arrange debt substitution to bring down the interest costs or to prepay the loans out of the surplus funds held. The interest rate risk is largely mitigated as 99.6% of the long term debts as at 31 March 2022 (31 March 2021: 98% of long term debts) comprises loans carrying concessional interest rates/interest subvention.
The sugar prices are dependent inter-alia on domestic and global sugar balance - higher supplies lead to softening of sugar prices whereas higher demand than available supplies lead to hardening of sugar prices. The Company sells most of its sugar in the domestic market where there are no effective mechanism available to hedge sugar prices in view of limited breadth in the commodity exchanges. The Company also exports sugar in the years of surplus production based on Government policy and incentives being offered.
Adverse changes in sugar price impact the Company in the following manner:
- The Company values sugar stocks at lower of cost and net realisable value (NRV). In the event, the cost of production of sugar is higher than the NRV, the stocks are written down to NRV leading to recognition of loss on such inventory.
- The Company is a large producer of sugar and even a small variation in the sugar price leads to significant impact on the profitability on the Company.
However, in view of sugar operations being highly efficient, the cost of production is generally lower than the net realisable value of sugar and hence, chances of significant losses due to inventory write down are low. Further, the Central Government has prescribed Minimum Selling Price (MSP) for sugar, which is revised from time to time. It ensures that there is no steep decline in the sugar prices.
The other market risks includes Equity price risk and Foreign currency risk.
Equity price risk in respect of listed and non listed equity securities which are susceptible to market price risk arising from uncertainties about future value of the investment securities. In view of nominal value of investments being held by the Company, other than in the subsidiaries and associates which are measured at cost, the magnitude of risk is only nominal.
The Company is exposed to foreign currency exchange risk generally on certain contracts in connection with export and import of goods and services (and foreign currency loans advanced by it till the previous year). The Company mitigates such risk through entering into off-setting derivative contracts with Banks, mainly foreign exchange forward contracts, of appropriate maturity and amounts at adequate intervals. The impact of sensitivity of such foreign exchange fluctuations on the overall financial performance and position of the Company is nominal.
In respect of firm commitments under certain contracts involving receipt of consideration in foreign currency, the Company has chosen to follow hedge accounting to hedge the risks attributable to the cash flows in respect of such firm commitments. The foreign exchange risk arises in respect of the movement in the foreign currency from the time the contract is negotiated/entered into and till the time the consideration under the contract is actually settled. In accordance with its risk management strategy, the Company manages such risks, generally by entering into foreign exchange forward contracts for the appropriate maturity with banks. The risk mitigation strategy involves determination of the timing and the amount of hedge to be taken in a progressive manner, with a view to protect the exchange rate considered at the time of acceptance of the contract. The Company, generally hedges the foreign currency risk directly to '' and for hedge accounting, designates a hedge ratio of generally 1:1 in respect of all such cash flow hedges. Besides monitoring the movements in the foreign exchange market, the Company also takes the advice of outside consultants in arriving at its hedging decision. Refer note 1(s) for further details on accounting policy in respect of hedge accounting.
Level 1: Level 1 Hierarchy includes financial instruments measured using quoted unadjusted market prices in active markets for identical assets or liabilities. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. There are no transfers between levels 1 and 2 during the year.
(iii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include the fair value of derivatives (viz. foreign exchange forward contracts) is determined using market observable inputs, including prevalent forward rates for the maturities of the respective contracts and interest rate curves as indicated by banks and third parties.
All of the resulting fair value estimates are included in level 2.
(iv) Valuation processes
The Corporate finance team has requisite knowledge and skills in valuation of financial instruments. The team headed by Group CFO directly reports to the audit committee on the fair value of financial instruments.
(v) The management considers that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values.
As Lessee
The Company had acquired a land with original lease term of ninety years and had paid one-time payment of lease charges (i.e. the market value of the land) in respect of this lease at the inception of lease. There are no further future lease maintenance payments, no contingent rent or restriction imposed under the lease agreement and the Company has transfer rights in respect of such land. In terms of criteria specified in Ind AS 116 Leases, such lease has been recognised as Right-of-use assets (refer note 3).
Apart from above mentioned lease, assets taken under lease mainly includes various residential, office, godown premises and plots of land. These are generally not non-cancellable leases (except for few premises) having unexpired period upto nine years. The leases are renewable by mutual consent and on mutually agreeable terms. The Company has given refundable interest free security deposits under certain lease agreements. There is no contingent rent, sublease payments or restriction imposed in the lease agreement. In terms of criteria specified in AS 116 Leases, for some of these leases (i.e. leases other than with short term period or low value assets), present value of all future lease payments has been recognised as Right-of-use assets and lease liabilities with the charge for depreciation on Right-of-use assets and interest on lease liabilities in the statement of profit and loss (refer note 3 & 30) and for other leases, yearly lease payments has been expensed off on straight line basis over lease term as rent expenses (refer note 33).
The Company has given certain portion of its office / factory premises under operating leases [including lease of investment property (refer note 4)]. These leases are not non-cancellable and are extendable by mutual consent and at mutually agreeable terms. The gross carrying amount, accumulated depreciation and depreciation recognised in the statement of profit and loss in respect of such portion of the leased premises are not separately identifiable. There is no impairment loss in respect of such premises. No contingent rent has been recognised in the statement of profit and loss. There are no minimum future lease payments as there are no non-cancellable leases. Lease income is recognised in the statement of profit and loss under âOther incomeâ (refer note 25). Lease income earned by the Company from its investment properties and direct operating expenses arising on the investment properties for the year is set out in note 4.
|
NOTE 45: COMMITMENTS |
||
|
As at |
As at |
|
|
31-Mar-22 |
31-Mar-21 |
|
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (after adjusting advances aggregating to ''1413.12 lakhs (31 March 2021: ''1671.66 lakhs)) |
6125.01 |
9530.44 |
|
NOTE 46: CONTINGENT LIABILITIES AND CONTINGENT ASSETS Contingent liabilities |
||||||
|
As at 31-Mar-22 |
As at 31-Mar-21 |
|||||
|
Claims against the Company not acknowledged as debts: (i) Claims which are being contested by the Company and in respect of which the Company has paid amounts aggregating to ''693.49 lakhs (31 March 2021: ''439.01 lakhs), excluding interest, under protest pending final adjudication of the cases: |
7940.70 |
7852.59 |
||||
|
Sl. Particulars No. |
Amount of contingent liability |
Amount paid |
||||
|
31-Mar-22 |
31-Mar-21 |
31-Mar-22 |
31-Mar-21 |
|||
|
1 Sales tax 2 Excise duty 3 Others* |
243.41 545.18 7152.11 |
531.51 312.73 7008.35 |
88.52 279.74 325.23 |
95.91 275.74 67.36 |
||
|
* Amount of contingent liability includes ''5973.50 lakhs as at 31 March 2022 (31 March 2021 : ''5973.50 lakhs) in respect of interest on delayed payment of cane price for the sugar seasons 2012-13, 2013-14 and 2014-15 in respect of which the Hon''ble Allahabad High Court had passed an order directing the Cane Commissioner of the State to decide the matter afresh, taking into consideration certain additional factors. The Cane Commissioner is understood to have filed an affidavit in a contempt proceeding, specifying interest rates on delayed cane price payments but no such order of the Cane Commissioner has been served on the Company or industry association and such order, which if served may be legally challenged. |
||||||
|
(ii) The Company is contingently liable in respect of short provision against disputed income tax liabilities (excluding determination of final interest payable thereon) of ''2565.11 lakhs (31 March 2021: ''3060.70 lakhs) against which ''698.92 lakhs (31 March 2021: ''1666.79 lakhs) stands paid. The disputed income tax liability mainly arises on the issue of taxability of unrealised incentives, majority of which have been held to be non-taxable in the first appeal filed by the Company against which the Department has filed appeals before the Tribunal. |
2565.11 |
3060.70 |
||||
|
(iii) Liability arising from claims / counter claims/ interest in arbitration/ court cases, claims of certain employees/ex-employees and in respect of service tax, if any, on certain activities of the Company which are being contested by the Company. |
Indeterminate |
Indeterminate |
||||
|
The amount shown above represent the best possible estimates arrived at on the basis of available information. The uncertainties, possible payments and 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. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal position against such disputes. |
||||||
|
Contingent assets Based on management analysis, there are no material contingent assets as at 31 March 2022 and as at 31 March 2021. |
||||||
|
NOTE 47: DISCLOSURES OF MICRO ENTERPRISES AND SMALL ENTERPRISES Based on the intimation received by the Company from its suppliers regarding their status under the Micro, Enterprises Development Act, 2006, the relevant information is provided here below: |
Small and Medium |
|
|
31-Mar-22 |
31-Mar-21 |
|
|
The principal amount and the interest due thereon remaining unpaid to any supplier at |
||
|
the end of each accounting year; as at the end of the year |
||
|
(i) Principal amount (refer note 20 & 21) |
919.10 |
563.31 |
|
(ii) Interest due on above |
- |
- |
|
The amount of interest paid by the buyer in terms of section 16 of Micro, Small and |
- |
- |
|
Medium Enterprises Development Act, 2006 (27 of 2006), along with the amount of the |
||
|
payment made to the supplier beyond the appointed day during each accounting year. |
||
|
The amount of interest due and payable for the period of delay in making payment (which |
- |
- |
|
has been paid but beyond the appointed day during the year) but without adding the |
||
|
interest specified under the Micro, Small and Medium Enterprises Development Act, 2006 |
||
|
The amount of interest accrued and remaining unpaid at the end of each accounting |
- |
- |
|
year; and |
||
|
The amount of further interest remaining due and payable even in the succeeding years, |
- |
- |
|
until such date when the interest dues above are actually paid to the small enterprise, |
||
|
for the purpose of disallowance of a deductible expenditure under section 23 of the |
||
|
Micro, Small and Medium Enterprises Development Act, 2006 |
||
NOTE 51: ADDITIONAL REGULATORY INFORMATION UNDER SCHEDULE III
The Company has made the relevant disclosures to the extent applicable under note 3, 4, 5, 19, 48 and 49.
NOTE 52: RECENT ACCOUNTING PRONOUNCEMENTS
Ministry of Corporate Affairs, vide notification dated 23 March 2022, has made following amendments to Ind AS which are effective from 1 April 2022:
(i) Ind AS 103 Business Combinations: Reference to the Conceptual Framework
(ii) Ind AS 109 Financial instruments: Annual improvements to Ind AS (2021)
(iii) Ind AS 16 Property, Plant & Equipment: Proceeds before intended use
(iv) Ind AS 37 Provisions, Contingent liabilities and Contingent assets: Onerous contracts - Costs of fulfilling a contract
The Company intends to adopt these standards when they become effective. Based on preliminary assessment, the Company does not expect these amendments to have any significant impact on its financial statements.
The Company has reclassified certain items of financials of comparative year to conform to this yearâs classification, however, impact of these reclassification are not material.
NOTE 54: APPROVAL OF STANDALONE FINANCIAL STATEMENTS
The standalone financial statements were approved for issue by the Board of Directors on 14 May 2022 subject to approval of shareholders.
Mar 31, 2018
CORPORATE INFORMATION
Triveni Engineering & Industries Limited (âthe Companyâ) is a company limited by shares, incorporated and domiciled in India. The Companyâs equity shares are listed at two recognised stock exchanges in India (BSE and NSE). The registered office of the Company is located at Deoband, Distt. Saharanpur, Uttar Pradesh - 247554. The Company is engaged in diversified businesses mainly categorised into two segments - Sugar & allied businesses and Engineering business. Sugar & allied businesses primarily comprise manufacture of sugar, cogeneration and distillery. Engineering business primarily comprises manufacture of high speed gears, gearboxes and providing water treatment solutions.
NOTE 1: CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of standalone financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Companyâs accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.
(a) Critical accounting judgments
In the process of applying the Companyâs accounting policies, management has made the following judgements, which has the most significant effect on the amounts recognised in the standalone financial statements:
(i) Land under finance lease
The office premises and the workshop of water business group of the Company is constructed upon land acquired from a third party which was initially acquired by that third party under a lease term of ninety years allotted by the Noida Authority. The said land was acquired by paying a consideration which reflected the prevalent market price and upfront payment of all future lease rentals. There are no further lease rental obligations upon the Company to be paid to the Authority. There are no restrictions on usage or transfer of the land to any party by the Company. In view of aforesaid facts and circumstances, the Company has classified this land as a finance lease. Another property at New Delhi was acquired under a perpetual lease. There are no restriction on usage and transfer of the property, Accordingly, this property has also been classified under finance lease.
(ii) Interest on delayed payment of cane price
The State Government of Uttar Pradesh (âState Governmentâ) had, based on the financial hardships of sugar mills arising due to mismatch of cane price and sugar price, waived interest on delayed payments of cane price for the seasons 2012-13, 2013-14 and 2014-15 in accordance with the provisions of Section 17(3) of UP Sugar Cane (Regulations of Supply and Purchase) Act, 1953. In a Public Interest Litigation, the Honâble Allahabad High Court has passed an order on 9 March 2017 directing the Cane Commissioner to decide the issue afresh taking into consideration certain factors. Against the order of High Court, the State Government had preferred an appeal before the Supreme Court which has been dismissed. In the absence of any order passed by the Commissioner and based on discussions with legal experts and industry association, it is felt that the interest may not be imposed by the State Government on sugar mills in view of acute financial hardships experienced by the sugar mills during the aforesaid relevant years. Accordingly, no provision to this effect has been considered necessary.
(iii) Society commission
In the cane price package offered by the State Government of Uttar Pradesh (âState Governmentâ) to sugar mills, the State Government had reduced rate of commission payable to cane societies for sugar season 2012-13 and 2014-15 by way of notification dated 12 June 2015 and for 2015-16 vide notifications dated 5 February 2016, to provide relief to the Sugar Industry in view of disparity in the cane price and the market outlook of the sugar prices. In the writ petitions filed by certain cane societies against such reduction in commission rates, the Honâble Allahabad High Court has held that these notifications cannot have retrospective applicability. The reduction in the rate of commission payable being part of the relief package announced by the State Government, the Company believes that the State Government is not likely to pass the cost burden upon the sugar industry and instead, may explore other ways to meet the outcome of the order of the Court. Accordingly, no provision to this effect has been considered necessary.
(b) Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
(i) Fair value measurements and valuation processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. When the fair values of these assets and liabilities cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques by engaging third party qualified external valuers or internal valuation team to perform the valuation. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See note 4, 6, 9 and 42 for further disclosures.
(ii) Employee benefit plans
The cost of employee benefits under the defined benefit plan and other long term employee benefits as well as the present value of the obligation there against 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, attrition and mortality rates. Due to the complexities involved in the valuation and its long-term nature, obligation amount is highly sensitive to changes in these assumptions.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans, the management considers the market yields on government bonds. Future salary increases are based on expected future inflation rates and expected salary trends in the industry. Attrition rates are considered based on past observable data of employees leaving the services of the Company. The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. See note 38 for further disclosures.
(iii) Impairment of trade receivables
The Company has a stringent policy of ascertaining impairment, if any, as result of detailed scrutiny of major cases and through determining expected credit losses. Despite best estimates and periodic credit appraisals of customers, the Companyâs receivables are exposed to delinquency risks due to material adverse changes in business, financial or economic conditions that are expected to cause a significant change to the partyâs ability to meet its obligations. All such parameters relating to impairment or potential impairment are reviewed at each reporting date. See note 41(i) for further disclosures.
(iv) Revenue and cost estimation for construction contracts
The revenue recognition pertaining to construction contracts are determined on proportionate completion method based on actual construction contract costs incurred till balance sheet date and total budgeted construction contract costs. An estimation of total budgeted construction contract cost involves making various assumptions that may differ from the actual developments in the future. These include delays in execution due to unforeseen reasons, inflation rate, future material rates, future labour rates etc. The estimates/assumptions are made considering past experience, market/inflation trends and technological developments etc. All such estimates/ assumptions are reviewed at each reporting date.
(v) Provision for warranty claims
The Company, in the usual course of sale of its products, gives warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the specified warranty period. Provisions made represent the amount of expected cost of meeting such obligations of rectifications / replacements based on best estimate considering the historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts. The assumptions made in relation to the current period are consistent with those in the prior years.
(vi) Provision for litigations and contingencies
The provision for litigations and contingencies are determined based on evaluation made by the management of the present obligation arising from past events the settlement of which is expected to result in outflow of resources embodying economic benefits, which involves judgements around estimating the ultimate outcome of such past events and measurement of the obligation amount.
(vii) Useful life and residual value of plant, property equipment and intangible assets
The useful life and residual value of plant, property equipment and intangible assets are determined based on technical evaluation made by the management of the expected usage of the asset, the physical wear and tear and technical or commercial obsolescence of the asset. Due to the judgements involved in such estimations, the useful life and residual value are sensitive to the actual usage in future period.
(viii) Recognition of deferred tax assets for unused tax credit
Deferred tax assets are recognised for unused tax credit to the extent that it is probable that taxable profit would be available against which the losses could be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax optimisation strategies.
(iv) All inventories are expected to be utilised/sold within twelve months except certain items of stores and spares, which are utilised on need basis. Quantum of such stores and spares, which may be utilised beyond one year, is not determinable and is not expected to be material with reference to the total value of inventories.
(v) For impairment losses recognised during the year refer note 33.
(vi) In addition to the cost of inventories recognised as expense as mentioned in note 11(i) above, there are write-downs of inventories to net realisable value amounted to â21970.87 lakhs (31 March 2017: â Nil) which are also recognised as an expense during the year and included in âChanges in inventories of finished goods, stock-in-trade and work-in-progressâ in standalone statement of profit and loss.
The above represents portion of the land in the state of Uttar Pradesh which was intended to be disposed of by the Company, However, sale of such land, which was to be transferred to a subsidiary company under an agreement to sell, could not be effected on account of certain technical reasons and hence are classified as Investment Property in current year since it is now held for such purposes (refer note 4). The asset does not form part of any segment assets.
(ii) Terms and rights attached to equity shares
The Company has only one class of equity shares with a par value of Rs. 1/- per share. The holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares are entitled to receive the remaining assets of the Company, after meeting all liabilities and distribution of all preferential amounts, in proportion to their shareholding.
(i) Information about individual provisions and significant estimates
(a) Warranty
The company provides warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made represent the amount of expected cost of meeting such obligations of rectifications / replacements based on best estimate considering the historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts. The timing of the outflows is expected to be within the period of two years,
(b) Cost to completion
The provision represents costs of materials and services required for integration of water treatment package at the site (the revenue of which has been fully recognised), prior to commissioning,
(c) Arbitration / Court-case Claims
Represents the provision made towards certain claims awarded against the company in legal proceedings which have been challenged by the Company before appropriate authorities. The timing of the outflows is uncertain,
(ii) Movement in provisions
Movement in each class of provision are set out below:
(i) Cash credit/working capital demand loans from banks are secured by pledge/hypothecation of the stock-in-trade, raw material, stores and spare parts, work-in-progress and trade receivables and second charge created/to be created on the properties of all the Engineering units and third charge on the properties of Sugar, Co-Generation and Distillery units of the Company on pari-passu basis. It also included working capital demand loans of â1 5000 lakhs availed during last year with outstanding balance as at 31 March 2018 â Nil (31 March 2017: Rs. 1 5000 lakhs, which were secured by sub-servient charge on the current assets of the Company by way of hypothecation. Interest rates on cash credits and working capital demand loans availed at the year end majorly ranges between 8.5% to 9.85% (weighted average interest rate : 8.62% p.a.).
(ii) The weighted average effective interest rate on foreign currency loans (buyersâ credits) from banks is 2.72% per annum.
(ii) Unrecognised deductible temporary differences, unused tax losses and unused tax credits
Deferred tax assets have not been recognised in respect of following items, because it is not probable that future taxable profit will be available against which the Company can use the benefit therefrom,
NOTE 2: SEGMENT INFORMATION
(i) Description of segments and principal activities
The operating segments are classified under two major businesses which the Company is engaged in, and are briefly described as under:
Sugar & Allied Business
(a) Sugar : The Company is a manufacturer of white crystal sugar, having seven manufacturing plants situated in the states of Uttar Pradesh. The sugar is sold to wholesalers and industrial users. The Company sells the surplus molasses and bagasse, which are produced as by-products in the manufacturing of sugar, after meeting its captive requirements. The Company also sells the surplus power incidentally produced at three of its sugar units.
(b) Co-generation : This segment uses captively produced bagasse, generated as a by-product in the manufacture of sugar, as a feed stock and apart from meeting the power and steam requirements of the associated sugar units, also exports power to the state grid. It has installed capacity of 68 MW spread over Khatauli and Deoband sugar mills,
(c) Distillery : The 160 kilo-litres per day capacity distillery located at Muzaffarnagar, Uttar Pradesh, uses captive molasses produced in manufacture of sugar as the principal raw material in production of various categories of alcohol,
Engineering Business
(a) Gears : This business segment is focused on all high speed and niche low speed products - supply of new equipment as well as providing replacement solutions for power sector, having its manufacturing facility located at Mysore, Karnataka,
(b) Water/Wastewater treatment : The business segment operates from Noida, Uttar Pradesh and provides engineered to order process equipment and comprehensive solutions in the water and wastewater management.
The âOther Operationsâ mainly include trading of various packaged fast moving consumer goods under the Companyâs brand name (including sugar) and retailing of diesel/petrol through a Company operated fuel station. It also operate a turnkey project relating to steam turbines which was awarded to it pursuant to bids tendered prior to demerger of business of steam turbine.
The above reportable segments have been identified based on the significant components of the enterprise for which discrete financial information is available and are reviewed by the Chief operating decision maker (CODM) to assess the performance and allocate resources to the operating segments
There are no geographical segments as the volume of exports is not significant and the major turnover of the Company takes place indigenously. There is no major reliance on a few customers or suppliers,
NOTE 3: EMPLOYEE BENEFIT PLANS
(i) Defined contribution plans
(a) The Company operates defined contribution retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company has no further payment obligations once the contributions have been paid. Following are the schemes covered under defined contributions plans of the Company:
Provident Fund Plan & Employee Pension Scheme: The Company makes monthly contributions at prescribed rates towards Employee Provident Fund/ Employee Pension Scheme to fund administered and managed by the Government of India. The Company has also set up provident fund Trust to secure the provident fund dues in respect of certain employees of the Company. The provident fund is administered by the concerned trustees. The rules of the Companyâs provident fund administered by the Trust, require that if the Board of Trustees are unable to pay interest at the rate declared by the Employeesâ Provident Fund Organisation, Government of India, under para 60 of the Employeesâ Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company when determined. Having regard to the assets of the fund and the return on the investments, the Company does not expect any deficiency as at the year end and accordingly, such plan has been considered by the Company in substance to be a defined contribution plan.
Employee State Insurance: The Company makes prescribed monthly contributions towards Employees State Insurance Scheme.
Superannuation Scheme: The Company contributes towards a fund established to provide superannuation benefit to certain employees in terms of Group Superannuation Policies entered into by such fund with the Life Insurance Corporation of India.
National Pension Scheme: The Company makes contributions to the National Pension Scheme fund in respect of certain employees of the Company,
(ii) Defined benefit plans
(a) The Company operates a defined benefit retirement plan under which the Company pays certain defined benefit by way of gratuity to its employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement/ termination of employment or death of an employee, based on the respective employeesâ salary and years of employment with the Company,
(b) Risk exposure
The plan typically exposes the Company to number of actuarial risks, the most significant of which are detailed below: Investment risk: The plan liabilities are calculated using a discount rate set with references to government bond yields as at end of reporting period; if plan assets under perform compared to the government bonds discount rate, this will create or increase a deficit. The investments in plan assets are made in accordance with pattern of investment prescribed by central government and ensures that the funds are invested in a balanced mix of investments comprising central government securities, state government securities, other debt instruments as well as equity instruments. Most of the plan investments is in fixed income securities with high grades and in government securities. The Company has a risk management strategy which defines exposure limits and acceptable credit risk rating.
Interest risk: A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the planâs debt instruments.
Life expectancy: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants during their employment. A change in the life expectancy of the plan participants will impact the planâs liability.
Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
Attrition rate: The present value of the defined benefit plan liability is impacted by the rate of employee turnover, disability and early retirement of plan participants. A change in the attrition rate of the plan participants will impact the planâs liability.
(c) The significant actuarial assumptions used for the purposes of the actuarial valuations were as follows:
The investible funds of the Gratuity Plan are invested in accordance with the investment pattern and norms prescribed by the Ministry of Finance, Government of India. The investment pattern mandates that the investible funds are invested across the permitted investments in the prescribed pattern, whereby the investment risk is spread across various categories of investment comprising sovereign government securities, state development loans monitored by the Reserve Bank of India, investment grade rated debt securities issued by private and public sector companies, fixed-deposit with banks fulfilling the prescribed norms, units of debt and equity mutual funds. The investments made are generally on held-to-maturity basis. It is the endeavour of the Company to mitigate risk by investing only in high-quality debt securities and in mutual funds after undertaking due diligence.
There has been no change in the process used by the Company to manage its risks from prior periods.
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practise, this is unlikely to occur, and changes in some of the assumptions may be correlated. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period,
(i) Defined benefit liability and employer contributions
The Company remains committed to fund all gratuity payments falling due and shall strive to gradually reduce the deficit in funding of its obligation in the coming years,
The Company expects to contribute Rs. 245.07 lakhs to the defined benefit plan relating to gratuity during the next financial year,
The weighted average duration of the defined gratuity obligation as at 31 March 2018 is 9.2 years (31 March 2017: 9.5 years).
The expected maturity analysis of undiscounted defined benefit obligation as at 31 March 2018 is as follows:
NOTE 4: RELATED PARTY TRANSACTIONS
(i) Related parties where control exists
Subsidiaries
- Wholly owned
Triveni Energy Systems Limited Triveni Engineering Limited Triveni Entertainment Limited Svastida Projects Limited Triveni Industries Limited
- Others
Triveni Sugar Limited
The remuneration of key managerial personnel is determined by the remuneration committee having regard to the performance of individuals, market trends and applicable provisions of Companies Act, 2013.
(iv) Remuneration and oustanding balances of KMP does not include long term employee benefits by way of gratuity and compensated absences, which are currently not payable and are provided on the basis of actuarial valuation by the Company,
(v) Terms & conditions:
The sales to and purchases from related parties, including rendering/availment of service, are made on terms equivalent to those that prevail in armâs length transactions. The outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided to or received for any related party receivable or payables. The Company has not recorded any impairment of receivables relating to amounts owed by related parties for the year ended 31 March 2018 and 31 March 2017 other than that stated above.
NOTE 5: CAPITAL MANAGEMENT
For the purpose of capital management, capital includes net debt and total equity of the Company. The primary objective of the capital management is to maximize shareholder value along with an objective to keep the leverage in check in view of cyclical capital intensive sugar business of the Company.
One of the major businesses of the Company is the sugar business, which is a seasonal industry, where the entire production is made in about five months and then sold throughout the year. Thus, it necessitates keeping high sugar inventory levels requiring high working capital funding. Sugar business being a cyclical business, it is prudent to avoid high leverage and the resultant high finance cost. It is the endeavour of the company to prune down debts to acceptable levels based on its financial position,
The Company may resort to further issue of capital when the funds are required to make the company stronger financially or to invest in projects meeting the ROI expectations of the Company.
The Company monitors capital structure through gearing ratio represented by debt-equity ratio (debt/total equity). The gearing ratios for the Company as at the end of reporting period were as follows:
In addition to the above gearing ratio, the Company also looks at operating profit to total debt ratio (EBITDA/Total Debts) which gives an indication of adequacy of earnings to service the debts. The Company carefully negotiates the terms and conditions of the loans and ensures adherence to all the financial covenants. With a view to arrive at the desired capital structure based on the financial condition of the Company, the Company normally incorporates a clause in loan agreements for prepayment of loans without any premium,
Further, no changes were made in the objectives, policies or process for managing capital during the years ended 31 March 2018 and 31 March 2017.
The Company is not subject to any externally imposed capital requirements.
NOTE 6: FINANCIAL RISK MANAGEMENT
The Companyâs principal financial liabilities comprise loans and borrowings, trade payables and other payables. The main purpose of the financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include loans, trade and other receivables and cash and bank balances that derive directly from its operations. The Company also holds investments measured at fair value through profit or loss and enters into derivative transactions, which are not extensive.
The Companyâs activities expose it mainly to market risk, liquidity risk and credit risk. The monitoring and management of such risks is undertaken by the senior management of the Company and there are appropriate policies and procedures in place through which such financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. The Company has specialised teams to undertake derivative activities for risk management purposes and such team has appropriate skills, experience and expertise. It is the Company policy not to carry out any trading in derivative for speculative purposes. The Audit Committee and the Board are regularly apprised of these risks every quarter and each such risk and mitigation measures are extensively discussed,
(i) Credit risk
Credit risk arises when a counterparty defaults on its contractual obligations to pay, resulting in financial loss to the Company, The Company is exposed to credit risks from its operating activities, primarily trade receivables. The credit risks in respect of deposits with the banks, foreign exchange transactions and other financial instruments are nominal.
(a) Credit risk management
The customer credit risk is managed by each business subject to the Companyâs established policy, procedure and controls relating to customer credit risk management. Various businesses require different processes and policies to be followed based on the business risks, industry practice and customer profiles.
In the case of Sugar business, majority of the sales are made either against advance payments or on very short credit period upto 7-10 days to reputed customers whereas in Cogeneration and Distillery, most of the sales are made to Government customers, such as, State Electricity Board (UPPCL) and Oil Marketing Companies (OMCs). There may be delays, generally not exceeding one year, in receiving payments from UPPCL but the risk in respect of realisation of dues is minimal. In Gear business, it is the policy of the Company to receive payment prior to delivery of the material except in the case of some well established OEMs, including group companies and public sector undertakings, where the credit up to 90 days is extended, Water business is engaged in EPC business with municipal and industrial sector where it is customary to have prescribed retentions which are payable upon completion of the project and after satisfactory performance of the plant,
In order to contain the business risk, creditworthiness of the customer is ensured through scrutiny of its financials, status of financial closure of the project, if required, market reports and reference checks. The Company remains vigilant and regularly assesses the financial position of customers during execution of contracts with a view to restrict risks of delays and default. In view of its diversified business profile and considering the size of the Company, credit risks from receivables are well contained on an overall basis,
The impairment analysis is performed on each reporting period on individual basis for major customers. In addition, a large number of receivables are grouped and assessed for impairment collectively. The calculation of impairment loss is based on historical data of losses, current conditions and forecasts and future economic conditions. The Companyâs maximum exposure to credit risk at the reporting date is the carrying amount of each financial asset as detailed in note 6, 7, 8 and 9.
The business wise receivable position as at the end of the year is provided here below:
Receivables in excess of 10% of individual business receivables majorly comprises receivables from UPPCL which forms 16.85% of total receivables of the Company as on 31 March 2018 and 26 % as on 31 March 2017. It can be observed that the concentration of risk in respect of trade receivables is moderate on an overall basis. Further, its customers are located in several jurisdictions and industries and operate in largely independent markets. The Company does not hold any collateral as security for such receivables.
(b) Provision for expected credit losses
Basis as explained above, life time expected credit loss (âECLâ) is determined on trade receivables except in cases where advance payment terms are prescribed or payment is due from Central / State Government or Government Authorities / entities where there is no track record of short receipts. ECL arising from delays in receiving payments from the Government customers pursuant to sale of goods or under construction contracts are not considered if such delays are commonly prevalent in the industry and / or the delays are not exceeding one year. All other short receipts other than arising from expense claims are duly considered in determining ECL. In view of the business model of the Company, engineered-to-order products and the profile of trade receivables, the determination of provision based on age analysis may not be a realistic and hence, the provision of expected credit loss is determined for the total trade receivables outstanding as on the reporting date. This provision for ECL is made in addition to the specific credit losses, if any, provided on specific financial assets.
(ii) Liquidity risk
The Company uses liquidity forecast tools to manage its liquidity. The Company operates capital intensive sugar business and has obligation to timely make cane price payments within the statutory time period. The Company is able to organise liquidity through own funds and through working capital loans. The company has good relationship with its lenders and has not defaulted at any point of time in the past, as a result of which it does not experience any difficulty in arranging funds from its lenders. However, when the sugar fundamentals are unfavourable, either due to market forces or due to excessive cane pricing by the Government, the payment of cane price gets delayed. However, it is the endeavour of the Company to make cane payment on a priority basis. It is the objective and focus of the Company to reduce debts to be able to meet the cyclicalities of the sugar business.
Apart from cyclical sugar business, the Company has alternate revenue streams in the form of cogeneration, distillery and engineering business, which, to a large extent, offset the impact of sugar cyclicalities.
In view of seasonal nature of sugar business, which is a dominant business of the Company, there is a peak build-up of sugar inventories at the year end, resulting in peak working capital requirement. With the liquidation of such inventories over the year, the working capital requirement is gradually reduced. Thus, the current ratio computed at the year end is not a reflection of average and realistic ratio for the year,
(a) Maturities of financial instruments
Maturities of non-derivative financial liabilities:
The following tables detail the remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities. The contractual maturity is based on the earliest date on which the Company may be required to pay,
Maturities of derivative financial instruments:
The Company enters into derivative contracts (viz. foreign exchange forward contracts, foreign currency swaps and interest rate swaps) to manage some of its foreign currency exposures and interest rate exposures that are settled on a net basis, Derivative asset (net) are of Rs. 87.86 lakhs as at 31 March 2018. All derivative assets/ liabilities shall mature within one year from the reporting date except derivative liability â0.96 lakhs , in respect of foreign currency swap & interest rate swap taken to hedge foreign currency borrowing, which shall be settled alongwith payment of such borrowing in six equal quarterly instalments ending on July 2019 (31 March 2017 : derivative liability (net) Rs. 84.88 lakhs shall mature within one year from reporting date).
(iii) Market risk
The Company is exposed to following key market risks:
(a) Interest rate risk on loans and borrowings
(b) Sugar price risk
(c) Other market risks
(a) Interest rate risk
Most of the borrowings availed by the Company are subject to interest on floating rate basis linked to the Base Rate or MCLR (marginal cost of funds based lending rate) or LIBOR. In view of the fact that the total borrowings of the Company are quite substantial, the Company is exposed to interest rate risk,
The above strategy of the Company to opt for floating interest rates is helpful in maintaining market related realistic rates, Further, most of the loans and borrowings have a prepayment clause through which the loans could be prepaid without any prepayment premium. The said clause helps the Company to arrange debt substitution to bring down the interest costs or to prepay the loans out of the surplus funds held.
While declining interest rates would be beneficial to the Company, adverse interest rate fluctuations could increase the finance cost. The total impact, in respect of borrowings on floating interest rate basis, is limited as per sensitivity analysis provided here under:
The above sensitivity has been computed after excluding the impact of change in interest rates of the floating interest rate foreign currency borrowing of USD 53,76,344.09 @ 6 months LIBOR plus 1.95% (as at 31 March 2018 @ 4.1955% p.a.) since same has been hedged through interest rate swap @ fixed interest rate 8.5% p.a.
(b) Sugar price risk
In the Sugar business being carried out by the Company, sugar is produced during the season commencing from October/ November till March/April. Sugar so produced during the season of around 130 to 150 days, is sold throughout the year. The sugar inventories are at the highest level as at the end of the financial year and these are normally stated at cost or net realizable value, whichever is lower.
The Company is exposed to sugar price risk in respect of the inventories held at the year-end as any decline in prices below the carrying amount will inflict losses to the Company. There are no effective hedging mechanisms available in view of limited breadth in the commodity exchange market and hence the Company follows a strategy of selling sugar based upon market forecasts and holding cost of inventories, subject to minimum floor limits.
(c) Other market risks
The other market risks includes Equity price risk and Foreign currency risk, Equity price risk in respect of listed and non listed equity securities which are susceptible to market price risk arising from uncertainties about future value of the investment securities. In view of nominal value of investments being held by the Company, other than in the subsidiaries and associates which are measured at cost, the magnitude of risk is only nominal,
The Company is exposed to foreign currency risk mainly on account of foreign currency borrowings, foreign exchange trades being minimal. The foreign currency borrowing is for a period of more than a year and the Company is exposed to foreign exchange fluctuation risks during this period. As per policy, the foreign currency borrowings are hedged through foreign exchange forward contracts / foreign currency swap contracts to capture the interest arbitrage over domestic interest rates.
All the above contracts are maturing within one year except for foreign currency swap, taken to hedge foreign currency borrowing, which shall be settled alongwith payment of such borrowing in six equal quarterly instalments ending on July 2019.
Sensitivity
The following table demonstrate the sensitivity of net unhedged foreign currency exposures relating to financial instruments to reasonably possible changes in foreign currency exchange rates, with all other variables held constant.
Further, the change in foreign currency rates will impact the fair value of the derivatives and correspondingly impact the profit or loss, but there will not be any impact over the hedge period as the derivatives will enable capturing the hedged rates and the budgeted profitability would remain unchanged.
Further, the impact of change in foreign currency rates (assuming forward premium to remain unchanged) on the fair valuation of derivatives (excluding derivatives which have hedged the foreign currency denominated receivables and payables) as at the end of the year, is demonstrated in the table below. However, apart from the impact on the profit or loss due to fair value changes of the derivatives, the derivatives will help the Company in capturing the hedged rates including forward premium and the budgeted profitability will remain unaffected.
(ii) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at fair value. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table,
Level 1: Level 1 hierarchy includes financial instruments measured using quoted unadjusted market prices in active markets for identical assets or liabilities. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting date,
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2,
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3, There are no transfers between levels 1 and 2 during the year
(iii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the fair value of derivatives (viz. foreign exchange forward contracts, foreign currency swaps and interest rate swaps) is determined using market observable inputs, including prevalent forward rates for the maturities of the respective contracts and interest rate curves as indicated by banks and third parties,
- the fair value of bonds, determined using observable market data of yield to maturity and coupon rates of securities.
All of the resulting fair value estimates are included in level 2,
(iv) Valuation processes
The Corporate finance team has requisite knowledge and skills in valuation of financial instruments. The team headed by Group CFO directly reports to the audit committee on the fair value of financial instruments,
(v) Fair value of financial assets and liabilities that are not measured at fair value (but fair value disclosures are required)
Except as detailed in the following table, the management considers that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values
(a) The fair values for trade receivables and trade payables which are expected to be settled after twelve months (including those which are within the operating cycle) are computed based on discounted cash flows. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk. The carrying amounts of the remaining trade receivables and trade payables are considered to be the same as their fair values, due to their short-term nature.
Note :
* The Company had availed the remissions in respect of certain taxes and duties under UP Sugar Industry Promotion Policy, 2004 (âthe Policyâ) issued by the state Government of Uttar Pradesh. The Policy was pre-maturely terminated on 4 June 2007 and the Company challanged such termination and non-grant of prescribed incentives under the Policy before the Lucknow bench of Allahabad High Court. Pending final adjudication in the matter, the High Court vide its interim order dated 9 May 2008 permitted limited protection of remissions which were being enjoyed on the date when the Policy was revoked. Apart from these remissions, the Company was also eligible for reimbursement of certain expenses and a capital subsidy equivalent to 10% of the amount of investment made in establishment and expansion of sugar and allied industry.
As the prescribed incentive period of 10 years under the Policy had expired and it was taking considerable time for final adjudication of the matter in the courts, the Company had written-off â14002.46 lakh during FY 2016-17 appearing as recoverable from the state Government of UP on account of aforesaid reimbursement of expenses and capital subsidy earlier accounted by it under the Policy. Accordingly, deferred government grant of Rs. 5455.72 lakhs as on 31 March 2016, pertaining to the capital subsidy, was also written back. Consequently, there was a net impact of Rs. 8546.74 lakhs which had been classified under exceptional items in FY 2016-17.
NOTE 7: LEASES
(i) Obligations under finance leases
The Company has acquired certain lands under lease, classified as finance leases. Original lease term in respect of one of the land is ninety years whereas another land is on perpetual lease basis. The Company had paid one time payment of lease charges in respect of these leases and there are no further future lease maintenance payments under the lease agreement. There is no contingent rent or restriction imposed in the lease agreement.
(ii) Operating lease arrangements As Lessee
The Company has taken various residential, office and godown premises under operating lease. These are generally not non-cancellable leases (except for few premises) having unexpired period upto eight years. The leases are renewable by mutual consent and on mutually agreeable terms. The Company has given refundable interest free security deposits under certain lease agreements. There is no contingent rent, sublease payments or restriction imposed in the lease agreement.
As Lessor
The Company has given certain portion of its office / factory premises under operating leases (including lease for investment properties (refer note 4)). These leases are not non-cancellable and are extendable by mutual consent and at mutually agreeable terms. The gross carrying amount, accumulated depreciation and depreciation recognised in the statement of profit and loss in respect of such portion of the leased premises are not separately identifiable. There is no impairment loss in respect of such premises. No contingent rent has been recognised in the standalone statement of profit and loss. There are no minimum future lease payments as there are no non-cancellable leases. Lease income is recognised in the statement of profit and loss under âOther incomeâ (refer note 25). Rental income earned by the Company from its investment properties and direct operating expenses arising on the investment properties for the year is set out in note 4,
NOTE 8: DISCLOSURES REQUIRED UNDER SECTION 22 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006
Based on the intimation received by the Company from its suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006, the relevant information is provided here below:
(i) Represents amount incurred/ advanced by the Company to support initial expenses of the Subsidiary, repayable on demand,
NOTE 9: DISCLOSURE FOR CERTIFIED EMISSION REDUCTIONS AND RENEWABLE ENERGY CERTIFICATES
(i) In accordance with the Guidance Note on Accounting for self-generated Certified Emission Reductions (CERs), issued by the Institute of Chartered Accountants of India, the Company has recognised the CERs held by it as inventories in its financial statements. Disclosures as required under the Guidance Note are as under:
(a) 86,562 (31 March 201 7: 86,562) CERs (net of fee for UNFCCC adaptation fund) have been held as inventory by the Company as at the end of the year.
(b) There are no CERs under certification as on the date of the financial statements;
(c) The Companyâs Deoband and Khatauli Phase-I projects are registered as Clean Development Mechanism (CDM) projects with United Nations Framework Convention on Climate Change (UNFCCC) and it is not feasible to identify specific items of machinery/equipment as an âemission reduction equipmentâ. Accordingly, details of depreciation and operation & maintenance costs, pertaining to emission reducing equipment have not been provided.
(ii) During the year, the National Load Despatch Centre (NLDC) has issued 8,420 (31 March 201 7: 58,525) Renewable Energy Certificates (RECs) to the Company under the Central Electricity Regulatory Commission Regulation on RECs. At the close of the year Nil (31 March 201 7: 1,22,728) RECs remained unsold and are held as inventories in the financial statements,
NOTE 10: STANDARDS ISSUED BUT NOT YET EFFECTIVE
The Ministry of Corporate Affairs (MCA) vide notification dated 28 March 2018 has issued the Companies (Indian Accounting Standards) Amendment Rules, 2018 which has come up with omission of Ind AS 11 Construction Contracts & Ind AS 18 Revenue with the introduction of Ind AS 115 Revenue from Contracts with Customers and amendments in various other Ind ASs. These amendments are effective for accounting periods beginning on or after 1 April 2018 and the Company intends to adopt these amendments when they become effective. The new Ind AS that are issued, but not yet effective, upto the date of issuance of the Companyâs standalone financial statements are disclosed below:
Ind AS 115 Revenue from Contracts with Customers : Ind AS 115 establishes a five-step model to account for reveue arising from contracts with customers. Under Ind AS 115 revenue is recognised when (or as) the entity satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer (i.e. when (or as) the customer obtains control of that asset) at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under Ind AS. Either a full retrospective application or a modified retrospective application is required for accounting periods commencing on or after 1 April 2018. The Company is in process of evaluating the requirements of the said standard and its impact on its standalone financial statements.
NOTE 11: COMPARATIVES
(i) Goods and Services Tax (âGSTâ) has been implemented with effect from July 1, 2017 and therefore, revenue from operations for the period from July 1, 2017 to March 31, 2018 are net of GST. Revenue from operations and expenses for the year ended March 31, 2017 being inclusive of excise duty are not comparable with corresponding figures for the year ended March 31, 2018.
(ii) The Company has reclassified certain items of financials of comparative year to confirm this yearâs classification, however, impact of these reclassification are not material.
NOTE 12: APPROVAL OF STANDALONE FINANCIAL STATEMENTS
The standalone financial statements were approved for issue by the Board of Directors on 24 May 2018 subject to approval of shareholders.
Mar 31, 2017
CORPORATE INFORMATION
Triveni Engineering & Industries Limited (âthe Companyâ) is a company limited by shares, incorporated and domiciled in India. The Companyâs equity shares are listed at two recognised stock exchanges in India (BSE and NSE). The registered office of the Company is located at Deoband, Distt. Saharanpur, Uttar Pradesh - 247554. The Company is engaged in diversified businesses mainly categorised into two segments - Sugar & allied businesses and engineering business. Sugar & allied businesses primarily comprise manufacture of sugar, cogeneration and distillery. Engineering business primarily comprises high speed gears, gearboxes and water treatment solutions.
Note 1: Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Companyâs accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.
(a) Critical accounting judgments
In the process of applying the Companyâs accounting policies, management has made the following judgements, which has the most significant effect on the amounts recognised in the financial statements:
(i) Accumulated un-utilised cenvat credit
The distillery at Muzaffarnagar utilises molasses as the principal raw material in the manufacture of its finished products. Molasses is subject to specific rate of excise duty whereas the output products are either subject to ad-valorem excise duty or are exempted from the levy of excise duty. Due to the excise duty structure on inputs and outputs, provision prescribed in the excise laws to reverse excise duty on the inputs on the sale of exempted products and cenvat credit availed on the capital goods, the unutilised cenvat credit balances had substantially increased and in view of slow pace of liquidation of such balances, a provision for impairment was considered to the extent of Rs.829.36 Lakhs.
With the recent legislation passed by the Parliament on the Goods and Services Tax (âGSTâ), the Company has been legally advised that under the GST laws, the unuilised cenvat credit accumulated at the distillery, which is registered (inter-alia along with other businesses) in the state of Uttar Pradesh, can be utlised to discharge the GST liability against supply of any goods/ services by the Company under the same registration. Accordingly the entire unutilised cenvat credit of Rs.4,127.13 lakhs pertaining to the distillery would, in the opinion of management be utilised within a short period upon GST coming into effect and hence, the impairment loss, earlier recognised by the Company, has been reversed during the year.
(ii) subsidy recoverable under u.p sugar promotion policy 2004
The Company had accounted for capital subsidy and reimbursements of certain expenses as prescribed under UP Sugar Industry Promotion Policy, 2004 (âthe Policyâ), issued by the state government of Uttar Pradesh. The Policy was pre-maturely terminated on 4 June 2007 and no eligible subsidy under the Policy was paid by the
UP government to the Company. The Company had challenged such termination of policy and non grant of prescribed subsidy/ incentives to the Company under the Policy before the Lucknow bench of Allahabad High Court. Pending final adjudication in the matter, the High Court vide its interim order dated 9 May 2008 has permitted limited protection of remissions which were being enjoyed on the date when the Policy was revoked.
The matter has been pending before the High Court for a long period and during the year, the prescribed incentive period of ten years under the Policy has also been expired. In the opinion of the management, the time frame for completion of legal proceedings is uncertain and it is expected that the final adjudication in the matter will happen only at the higher court. In view of uncertainties involved and protracted delays in completion of legal proceedings, the management has decided to write-off subsidy amount of Rs.14,002.46 lakhs appearing as recoverable from UP government as on 31 March 2016 along-with write-back of related deferred government grant of Rs.5,455.72 lakhs.
(iii) Recognition of unutilised tax credits
The Company, in respect of certain years in the past, had paid taxes on book profits under section 115JB of the Income-tax Act, 1961 (MAT). As per the provisions of Income-tax Act, 1961,such MAT credit prior to Finance Act, 2017 was allowed to be carried forward for ten years for adjustment against normal tax liability of the Company. In view of continuous losses incurred by the Company in the past few years and substantial rebate u/s 80IA of the Income-tax Act, 1961, available to the Company, the utilisation of such MAT credit was considered to be uncertain and accordingly, unexpired amount of Rs.3,529.67 lakhs as at 31 March 2017 was considered impaired and written off in earlier years.
During the year, the Company has reviewed the position in light of the following facts, information and other developments as at the reporting date:
- In the Finance Act, 2017, period of carry forward of MAT credit has been
increased to fifteen years from ten years earlier, providing additional five years for adjustment of MAT credit.
- Due to change in the business fundamentals in the Sugar business, the operations of the Company have turned around and have become profitable. The Company has achieved significant profitability during the current year. Further, the outlook for future looks promising in view improved fundaments and substantial increase in operational efficiencies of the Company.
- Under Ind AS 12 Income taxes, it is permitted to recognise unutilised tax credits to the extent of available taxable temporary differences against which the unused tax credit can be utilised.
In view of the above position and circumstances, the management is convinced that the MAT credit entitlement of the Company, shall be utilised within the prescribed period available for utilisation. Accordingly, MAT credit of Rs.5,865.30 lakhs, including unexpired amount of Rs.3,529.67 lakhs derecognisedin earlier years, has been recognised during the year resulting in lower deferred tax charge for the year by the equivalent amount.
(iv) Lands under finance lease
The office premises and the workshop of water business group of the Company is constructed upon land acquired from the third party which was initially acquired by that third party under a lease term of ninety years allotted by the Noida Authority. The said land was acquired by paying the consideration which reflected the prevalent market price and upfront payment of all future lease rentals. There are no further lease rental obligations upon the Company to be paid to the Authority. There are no restrictions on usage or transfer of the land to any party by the Company. In view of aforesaid facts and circumstances, the Company has classified this land as a finance lease. Another property at New Delhi was acquired under a perpetual lease. There are no restriction on usage and transfer of the property. Accordingly, this property has also been classified under
finance lease.
(v) Interest on delayed payment of cane price
The State Government had, based on the financial hardships of sugar mills due to mismatch of cane price and sugar price, waived interest on delayed payments of cane price for the seasons 2012-13, 2013-14 and 2014-15 in accordance with the provisions of Section 17(3) of UP Sugar Cane (Regulations of Supply and Purchase Act, 1953. In a Public Interest Litigation, Allahabad High Court has passed an order on 9 March 2017 directing the Cane Commissioner to decide the issue afresh taking into consideration certain factors. No order has yet been passed by the Commissioner and based on discussions with legal experts and industry association, it is felt that the possibility of such liability is remote and hence no provision is considered necessary.
(b) Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
(i) Fair value measurements and valuation processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. When the fair values of these assets and liabilities cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques by engaging third party qualified external valuers or internal valuation team to perform the valuation. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See note 4, 6, 9 and 42 for further disclosures.
(ii) Employee benefit plans
The cost of the defined benefit plans and
other long term employee benefits and the present value of the obligation thereon 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, attrition and mortality rates. Due to the complexities involved in the valuation and its long-term nature, obligation amount is highly sensitive to changes in these assumptions.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans, the management considers the interest rates of government bonds. Future salary increases are based on expected future inflation rates and expected salary trends in the industry. Attrition rates are considered based on past observable data on employees leaving the services of the Company. The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. See note 38 for further disclosures.
(iii) Impairment of trade receivables
The Company has a stringent policy of ascertaining impairments, if any, as result of detailed scrutiny of major cases and through determining expected credit losses. Despite best estimates and periodic credit appraisals of customers, the Companyâs receivables are exposed to delinquency risks due to material adverse changes in business, financial or economic conditions that are expected to cause a significant change to the partyâs ability to meet its obligations. All such parameters relating to impairment or potential impairment are reviewed at each reporting date. See note 41(i) for further disclosures.
(iv) revenue and cost estimation for construction contracts
The revenue recognition pertaining to construction contracts are determined based on actual construction contract costs incurred till balance sheet date and total budgeted construction contract costs. An estimation of total budgeted construction contract cost involves making various assumptions that may differ from the actual developments in the future. These include delays in execution due to unforeseen reasons, inflation rate, future material rates, future labour rates etc. The estimates/ assumptions are made considering past experience, market/inflation trends and technological developments etc.All such estimates/ assumptions are reviewed at each reporting date.
(v) provision for warranty claims
The Company, in the usual course of sale of its products, gives warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the specified warranty period. Provisions made represent the amount of expected cost of meeting such obligations of rectifications / replacements based on best estimate considering the historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts. The assumptions made in relation to the current period are consistent with those in the prior years.
(vi) provision for litigations and contingencies
The provision for litigations and contingencies are determined based on evaluation made by the management of the present obligation arising from past events the settlement of which is expected to result in outflow of resources embodying economic benefits, which involves judgements around estimating the ultimate outcome of such past events and measurement of the obligation amount.
(vii) useful life and residual value of plant, property equipment and intangible assets
The useful life and residual value of plant, property equipment and intangible assets are determined based on technical evaluation made by the management of the expected usage of the asset, the physical wear and tear and technical or commercial obsolescence of the asset. Due to the judgements involved in such estimations, the useful life and residual value are sensitive to the actual usage in future period.
NOTE 2: PROPERTY, PLANT AND EQUIPMENT AND CAPITAL WORK-IN-PROGRESS
Notes:
(i) Leasehold land
The original lease term in respect of a parcel of land acquired under finance lease was ninety years whereas another land at Delhi is for a perpetual lease term. These leases of lands have been classified as finance lease in terms of criteria specified in Ind AS 17 Leases, including the facts that the market value of the land (as on the date of transaction) had been paid to the lessor at the inception of the lease and the Company has transfer rights in respect of such lands.
(ii) restrictions on property, plant and equipment
Refer note 16 & 20(i) for information on charges created on property, plant and equipment. Further, freehold land includes land having carrying amount of Rs.13.13 lakhs for which transfer of titles in the name of the Company is pending.
(iii) Contractual commitments
Refer note 45 for disclosure of contractual commitments for the acquisition of property, plant and equipment.
(iv) Capital work-in-progress
Capital work-in-progress mainly comprises workshop expansion pertaining to water/waste-water treatment business of the Company.
(v) Impairment loss
The impairment loss relates to expenditure incurred on construction of residential buildings at certain factories, which were under progress till financial year 2011-12. However, the said project was subsequently discontinued and the entire expenditure incurred was recognised as an impairment loss in the statement of profit & loss considering no possible future economic benefits flowing from the project.
(vi) deemed cost
The Company has availed exemption provided under Ind AS 101 First-time Adoption of Indian Accounting Standards and considered the carrying value of property, plant and equipment measured under previous GAAP as the deemed cost as on 1 April 2015. Accordingly, the cost as on 1 April 2015, net of accumulated depreciation, has been considered as the deemed cost. The information on gross block and accumulated depreciation as on 1 April 2015 is provided here-under:
note 3: investment property
(i) Description about investment properties Investment properties consist of:
(a) various parcels of freehold land located, mostly in the states of Uttar Pradesh and Gujarat.
(b) an office flat owned by the Company having carrying amount of Rs.0.12 lakhs, constructed by a Society on a leasehold land at Mumbai
(iii) Restrictions on realisability and contractual obligations
The Company has no restrictions (other than transfer of titles in the name of the Company pending in respect of freehold land having carrying amount of Rs.381.47 lakhs) on the realisability of its investment properties and no contractual obligations to either purchase, construct or develop investment properties or for repairs, maintenance and enhancements.
(iv) Fair value
* The majority of parcels of land owned by the Company are situated in the sugar belts of Uttar Pradesh. In view of slowdown in real estate and industrial activities, the circle rates are not reflective of the fair value. Further, the fair value cannot be determined realistically in the absence of transactions of similar properties (including size) in the vicinity of the subject properties. The land at Vill. Dhanot Dist. Gandhinagar Gujarat is a small plot of uncultivated land, situated at a remote location and hence there is a difficulty in carrying out realistic fair value thereof.
Estimation of fair value of office flat at Mumbai
The valuation of the office flat situated at Mumbai has been carried by a registered approved valuer, conversant with and having knowledge of real estate activities in the concerned area, based on prevalent rates and other observable market inputs (Level 2 fair value).
The Company has availed exemption provided under Ind AS 101 First-time Adoption of Indian Accounting Standards and considered the carrying value of computer software measured under previous GAAP as the deemed cost as on 1 April 2015. Accordingly, the cost as on 1 April 2015, net of accumulated amortisation, has been considered as the deemed cost. The gross carrying amount and accumulated amortisation as on 1 April 2015 in respect of above intangible assets were Rs.1,653.30 lakhs and Rs.1,534.68 lakhs respectively.
(i) The cost of inventories recognised as an expense during the year was Rs.231,279.71 lakhs (31 March 2016: Rs.179,345.81 lakhs)
(ii) Refer note 20(i) for information on charges created on inventories.
(iii) The mode of valuation of inventories has been stated in note 1(m).
(iv) All inventories are expected to be utilised/sold within twelve months except certain items of stores and spares , which are utilised on need basis. Quantum of such stores and spares, which may be utilised beyond one year, is not determinable and is not expected to be material with reference to the total value of inventories.
(v) For impairment losses recognised during the year refer note 33.
The above represents carrying value of land intended to be disposed of by the Company. The Company had, in earlier years, acquired certain freehold land in the state of Uttar Pradesh for setting up a sugar factory. In view of change in circumstances, the Company has shelved such plans. Pursuant to such decision, it has transferred the major portion of the land to its wholly owned subsidiary companies during financial year 2015-16. The sale of a portion of the land, which was to be transferred to another subsidiary under an agreement to sell, could not be effected on account of certain technical reasons which the Company is in the process of resolving. The asset does not form part of any segment assets. No impairment loss was recognised on reclassification of the Land as held for sale as the contractual sale price of such land is higher than the carrying amount.
Terms and rights attached to equity shares
The Company has only one class of equity shares with a par value of Rs.1/- per share. The holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares are entitled to receive the remaining assets of the Company, after meeting all liabilities and distribution of all preferential amounts, in proportion to their shareholding.
(i) Security deposits as at 31 March 2017 include Rs.298.00 lakhs (31March 2016 : Rs.252.00 lakhs, 1 April 2015: Rs.240.00 lakhs) deposits from sugar selling agent which are interest bearing subject to fulfilment of terms and conditions. These deposits are repayable on cessation of contractual arrangements. Interest payable is normally settled annually.
(ii) There are no amounts as at the end of the year which are due and outstanding to be credited to the Investors Education and Protection Fund.
NOTE 4: PROVISIONS
(i) Information about individual provisions and significant estimates
(a) Warranty
The Company provides warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made represent the amount of expected cost of meeting such obligations of rectifications / replacements based on best estimate considering the historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts. The timing of the outflows is expected to be within the period of two years.
(b) Cost to completion
The provision represents costs of materials and services required for integration of water treatment package at the site, prior to commissioning.
(c) Arbitration / Court-case Claims
Represents the provision made towards certain claims awarded against the company in legal proceedings which have been challenged by the Company before appropriate authorities. The timing of the outflows is uncertain.
(ii) Movement in provisions
Movement in each class of provision are set out below:
note 5: CURRENT BORROWINGS
(i) Cash credit/working capital demand loans from banks are secured by pledge/hypothecation of the stock-in-trade, raw material, stores and spare parts, work-in-progress and trade receivables and second charge created/to be created on the properties of all the Engineering units and third charge on the properties of Sugar, Co-Generation and Distillery units of the Company on pari-passu basis. It includes working capital demand loans of Rs.15,000.00 lakhs availed during current year with outstanding balance as at 31 March 2017 Rs.15,000.00 lakhs, which are secured by sub-servient charge on the current assets of the Company by way of hypothecation. Interest rates on cash credits and working capital demand loans applicable at the year end ranges from 10.10% to 12.40%.
(ii) The weighted average effective interest rate on foreign currency loans (buyersâ credits) from banks is 2.57% per annum (as at 31 March 2016: 1.86% per annum; as at 1 April 2015: 1.55% per annum).
note 6: INCOME TAX EXPENSE
(i) Income tax recognised in profit or loss
NOTE 7: SEGMENT INFORMATION
(i) description of segments and principal activities
The operating segments are classified under two major businesses which the Company is engaged in, and are briefly described as under:
Sugar & Allied Business
(a) sugar: The Company is a manufacturer of white crystal sugar, having seven manufacturing plants situated in the states of Uttar Pradesh. The sugar is sold to wholesalers and industrial users. The Company sells the surplus molasses and bagasse, which are produced as by-products in the manufacturing of sugar, after meeting its captive requirements. The Company also sells the surplus power incidentally produced at three of its sugar units.
(b) Co-generation: This segment uses captively produced bagasse, generated as a by-product in the manufacture of sugar, as a feed stock and apart from meeting the power and steam requirements of the associated sugar units, also exports power to the state grid. It has installed capacity of 68 MW spread over Khatauli and Deoband sugar mills.
(c) distillery: The 160 kilo-litres per day capacity distillery located at Muzaffarnagar, Uttar Pradesh, uses captive molasses produced in manufacture of sugar as the principal raw material in production of various categories of alcohol.
Engineering Business
(a) High speed Gears: This business segment manufactures high speed gears and gear boxes at the manufacturing facility located at Mysore, Karnataka.
(b) Water/Wastewater treatment: The business segment operates from Noida, Uttar Pradesh and provides engineered to order process equipment and comprehensive solutions in the water and wastewater management.
The âOther Operationsâ mainly include trading of various packaged fast moving consumer goods under the Companyâs brand name (including sugar) and retailing of diesel/petrol through a Company operated fuel station. It also operate a turnkey project relating to steam turbines which was awarded to it pursuant to bids tendered prior to demerger of business of steam turbine.
The above reportable segments have been identified based on the significant components of the enterprise for which discrete financial information is available and are reviewed by the Chief operating decision maker (CODM) to assess the performance and allocate resources to the operating segments.
There are no geographical segments as the volume of exports is not significant and the major turnover of the Company takes place indigenously. There is no major reliance on a few customers or suppliers.
- The accounting policies of the reportable segments are the same as the Companyâs accounting policies described in note 1.
- All assets are allocated to reportable segments other than investments, loans, certain financial assets and current and deferred tax assets. Segment assets include all assets directly attributable to the segments and portion of the enterprise assets that can be allocated on a reasonable basis to the segments.
- All liabilities are allocated to reportable segments other than borrowings, certain financial liabilities, current and deferred tax liabilities. Segment liabilities include All liabilities directly attributable to the segments and portion of the enterprise liabilities that can be allocated on a reasonable basis to the segments.
note 8: EMPLOYEE BENEFIT PLANS
(i) Defined contribution plans
(a) The Company operates defined contribution retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company has no further payment obligations once the contributions have been paid. Following are the schemes covered under defined contributions plans of the Company:
Provident Fund Plan & Employee Pension Scheme: The Company makes monthly contributions at prescribed rates towards Employee Provident Fund/ Employee Pension Scheme to fund administered and managed by the Government of India. The Company has also set up provident fund Trust to secure the provident fund dues in respect of certain employees of the Company. The provident fund is administered by the concerned trustees . The rules of the Companyâs provident fund administered by the Trust, require that if the Board of Trustees are unable to pay interest at the rate declared by the Employeesâ Provident Fund Organisation, Government of India, under para 60 of the Employeesâ Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company when determined. Having regard to the assets of the fund and the return on the investments, the Company does not expect any deficiency as at the year end and accordingly, such plan has been considered by the Company in substance to be a defined contribution plan.
Employee State Insurance: The Company makes prescribed monthly contributions towards Employees State Insurance Scheme.
Superannuation Scheme: The Company contributes towards a fund established to provide superannuation benefit to certain employees in terms of Group Superannuation Policies entered into by such fund with the Life Insurance Corporation of India.
National Pension Scheme: The Company makes contributions to the National Pension Scheme fund in respect of certain employees of the Company.
(b) The expense recognised during the period towards defined contribution plans are as follows:
(ii) Defined benefit plans
(a) The Company operates a defined benefit retirement plan under which the Company pays certain defined benefit by way of gratuity to its employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement/ termination of employment or death of an employee, based on the respective employeesâ salary and years of employment with the Company.
(b) Risk exposure
The plan typically exposes the Company to number of actuarial risks, the most significant of which are detailed below:
Investment risk: The plan liabilities are calculated using a discount rate set with references to government bond yields as at end of reporting period; if plan assets under perform compared to the government bonds discount rate, this will create or increase a deficit. The investments in plan assets are made in accordance with pattern of investment prescribed by central government and ensures that the funds are invested in a balanced mix of investments comprising central government securities, state government securities, other debt instruments as well as equity instruments. Most of the plan investments is in fixed income securities with high grades and in government securities. The Company has a risk management strategy which defines exposure limits and acceptable credit risk rating.
Interest risk: A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the planâs debt instruments.
Life expectancy: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during their employment. A change in the life expectancy of the plan participants will impact the planâs liability.
Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
Attrition rate: The present value of the defined benefit plan liability is impacted by the rate of employee turnover, disability and early retirement of plan participants. A change in the attrition rate of the plan participants will impact the planâs liability.
(c) The significant actuarial assumptions used for the purposes of the actuarial valuations were as follows:
(d) Amounts recognised in statement of profit & loss in respect of the defined benefit plan are as follows:
The current service cost and the net interest expense for the year are included in the âEmployee benefits expenseâ line item in the statement of profit & loss. The remeasurement of the net defined benefit liability is included in other comprehensive income.
(e) Amounts included in the balance sheet arising from the entityâs obligation in respect of the defined benefit plan is as follows:
The investible funds of the Gratuity Plan are invested in accordance with the investment pattern and norms prescribed by the Ministry of Finance, Government of India. The investment pattern mandates that the investible funds are invested across the permitted investments in the prescribed pattern, whereby the investment risk is spread across various categories of investment comprising sovereign government securities, state development loans monitored by the Reserve Bank of India, investment grade rated debt securities issued by private and public sector companies, fixed-deposit with banks fulfilling the prescribed norms, units of debt and equity mutual funds. The investments made are generally on held-to-maturity basis. It is the endeavour of the Company to mitigate risk by investing only in high-quality debt securities and in mutual funds after undertaking due diligence. There has been no change in the process used by the Company to manage its risks from prior periods.
(h) sensitivity analysis
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practise, this is unlikely to occur, and changes in some of the assumptions may be correlated. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.
(g) Defined benefit liability and employer contributions
The Company remains committed to fund all gratuity payments falling due and shall strive to gradually reduce the deficit in funding of its obligation in the coming years.
The Company expects to contribute Rs.371.34 lakhs (31 March 2016: Rs.108.03 lakhs; 1 April 2015: Rs.112.46 lakhs ) to the defined benefit plan relating to gratuity during the next financial year.
The weighted average duration of the defined gratuity obligation as at 31 March 2017 is 9.5 years (31 March 2016: 9.4 years).
The expected maturity analysis of undiscounted defined benefit obligation as at 31 March 2017 is as follows:
note 9: RELATED PARTY TRANSACTIONS
(i) RELATED PARTIES WHERE CONTROL EXISTS
(a) Mr. Dhruv M. Sawhney, Chairman & Managing Director (Key Management person)
(b) Subsidiaries
- Wholly owned
Triveni Energy Systems Limited Triveni Engineering Limited Triveni Entertainment Limited Svastida Projects Limited Triveni Industries Limited
- Others
Triveni Sugar Limited
The remuneration of key managerial personnel is determined by the remuneration committee having regard to the performance of individuals, market trends and applicable provisions of Companies Act, 2013.
(iv) Amounts payable to key managerial personnel do not include provision towards post employment benefits and other long term benefits since these amounts have not become payable to them as at the reporting date.
(v) All outstanding balances are unsecured and settled in cash.
(vi) Terms & conditions:
The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. The outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided to or received for any related party receivable or payables. The Company has not recorded any impairment of receivables relating to amounts owed by related parties for the year ended 31 March 2017 and 31 March 2016 other than that stated above.
note 10: capital MANAGEMENT
For the purpose of capital management, capital includes net debt and total equity of the Company. The primary objective of the capital management is to maximize shareholder value along with an objective to keep the leverage in check in view of cyclical capital intensive sugar business of the Company.
One of the major businesses of the Company is the sugar business, which is a seasonal industry, where the entire production is made in about 5 months and then sold throughout the year. Thus, it necessitates keeping high sugar inventory levels requiring high working capital funding. Sugar business being a cyclical business, it is prudent to avoid high leverage and the resultant high finance cost. It is the endeavour of the company to prune down debts to acceptable levels based on its financial position.
The Company may resort to further issue of capital when the funds are required to make the company stronger financially or to invest in projects meeting the ROI expectations of the Company.
The Company monitors capital structure through gearing ratio represented by debt-equity ratio (debt/total equity). The gearing ratios for the Company as at the end of reporting period were as follows:
In addition to the above gearing ratio, the Company also looks at operating profit to total debt ratio (EBITDA/Total Debts) which gives an indication of adequacy of earnings to service the debts. The Company carefully negotiates the terms and conditions of the loans and ensures adherence to all the financial covenants. With a view to arrive at the desired capital structure based on the financial condition of the Company, the Company normally incorporates a clause in loan agreements for prepayment of loans without any premium.
Further, no changes were made in the objectives, policies or process for managing capital during the years ended 31 March 2017 and 31 March 2016.
The Company is not subject to any externally imposed capital requirements
note 11: FINANCIAL RISK MANAGEMENT
The Companyâs principal financial liabilities comprise loans and borrowings, trade payables and other payables. The main purpose of the financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include loans, trade and other receivables and cash and bank balances that derive directly from its operations. The Company also holds investments measured at fair value through profit or loss and enters into derivative transactions, which are not extensive.
The Companyâs activities expose it mainly to market risk, liquidity risk and credit risk. The monitoring and management of such risks is undertaken by the senior management of the Company and there are appropriate policies and procedures in place through which such financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. The Company has specialised teams to undertake derivative activities for risk management purposes and such team has appropriate skills, experience and expertise. It is the Company policy not to carry out any trading in derivative for speculative purposes. The Audit Committee and the Board are regularly apprised of these risks every quarter and each such risk and mitigation measures are extensively discussed.
(i) Credit risk
Credit risk arises when a counterparty defaults on its contractual obligations to pay, resulting in financial loss to the Company. The Company is exposed to credit risks from its operating activities, primarily trade receivables. The credit risks in respect of deposits with the banks, foreign exchange transactions and other financial instruments are nominal.
(a) Credit risk management
The customer credit risk is managed by each business subject to the Companyâs established policy, procedure and controls relating to customer credit risk management. Various businesses require different processes and policies to be followed based on the business risks, industry practice and customer profiles.
In the case of Sugar business, majority of the sales are made either against advance payments or on a very short credit period upto 7-10 days to reputed customers whereas in Cogeneration and Distillery, most of the sales are made to Government customers, such as, State Electricity Board (UPPCL) and Oil Marketing Companies (OMCs). There may be delays, generally not exceeding one year, in receiving payments from UPPCL but the risk in respect of realisation of dues is minimal. In Gear business, it is the policy of the Company to receive payment prior to delivery of the material except in the case of some well established OEMs, including group companies and public sector undertakings, where the credit up to 90 days is extended. Water business is engaged in EPC business with municipal and industrial sector where it is customary to have prescribed retentions which are payable upon completion of the project and after satisfactory performance of the plant.
In order to contain the business risk, the creditworthiness of the customer is ensured through scrutiny of its financials, status of financial closure of the project, if required, market reports and reference checks. The Company remains vigilant and regularly assesses the financial position of customers during execution of contracts with a view to restrict risks of delays and default. In view of its diversified business profile and considering the size of the Company, credit risks from receivables are well contained on an overall basis.
The impairment analysis is performed on each reporting period on individual basis for major customers. In addition, a large number of receivables are grouped and assessed for impairment collectively. The calculation of impairment loss is based on historical data of losses, current conditions and forecasts and future economic conditions. The Companyâs maximum exposure to credit risk at the reporting date is the carrying amount of each financial asset as detailed in note 6, 7, 8 and 9.
The business wise receivable position as at the end of the year is provided here below:
Receivables in excess of 10% of individual business receivables majorly comprise receivables from UPPCL which forms 26% of total receivables of the Company as on 31 March 2017, 25 % as on 31 March 2016 and 21% as on 1 April 2015. It can be observed that the concentration of risk in respect of trade receivables is moderate on an overall basis. Further, its customers are located in several jurisdictions and industries and operate in largely independent markets. The Company does not hold any collateral as security for such receivables.
(b) provision for expected credit losses
As explained above, life time expected credit loss (âECLâ) is determined on trade receivables except in cases where advance payment terms are prescribed or payment is due from Central / State Government or Government Authorities / entities where there is no track record of short receipts. ECL arising from delays in receiving payments from the Government customers pursuant to sale of goods or under construction contracts are not considered if such delays are commonly prevalent in the industry and / or the delays are not exceeding one year. All other short receipts other than arising from expense claims are duly considered in determining ECL. In view of the business model of the Company, engineered-to-order products and the profile of trade receivables, the determination of provision based on age analysis may not be a realistic and hence, the provision of expected credit loss is determined for the total trade receivables outstanding as on the reporting date.This provision for ECL is made in addition to the specific credit losses, if any, provided on specific financial assets.
Provision matrix (%, amounts) of ECL for trade receivables, other than specific credit losses separately recognised - for the year ended 31 March 2017/2016/2015
(ii) Liquidity risk
The Company uses liquidity forecast tools to manage its liquidity. The Company operates capital intensive sugar business and has obligation to timely make cane price payments within the statutory time period. The Company is able to organise liquidity through own funds and through working capital loans. The Company has good relationship with its lenders and has not defaulted at any point of time in the past, as a result of which it does not experience any difficulty in arranging funds from its lenders. However, when the sugar fundamentals are unfavourable, either due to market forces or due to excessive cane pricing by the Government, the payment of cane price gets delayed. However, it is the endeavour of the Company to make cane payment on a priority basis. It is the objective and focus of the Company to reduce debts to be able to meet the cyclicalities of the sugar business.
Apart from cyclical sugar business, the Company has alternate revenue streams in the form of cogeneration, distillery and engineering business, which, to a large extent, offset the impact of sugar cyclicalities.
Table hereunder provides the current ratios of the Company as at the year end
In view of seasonal nature of sugar business, which is a dominant business of the Company, there is a peak build-up of sugar inventories at the year end, resulting in peak working capital requirement. With the liquidation of such inventories over the year, the working capital requirement is gradually reduced. Thus, the current ratio computed at the year end is not a reflection of average and realistic ratio for the year.
(a) Maturities of financial instruments
Maturities of non-derivative financial liabilities:
The following tables detail the remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities. The contractual maturity is based on the earliest date on which the Company may be required to pay.
Maturities of derivative financial instruments:
The Company enters into foreign exchange forward contracts to manage some of its foreign currency exposures that are settled on a net basis. Derivative liability as at 31 March 2017 of Rs.84.88 lakhs (31 March 2016 : derivative asset Rs.0.38 lakhs; 1 April 2015 : derivative liability Rs.53.97 lakhs ) shall mature within one year ( 31 March 2016: within one year; 1 April 2015 : within one year) from the reporting date.
(iii) Market risk
The Company is exposed to following key market risks:
(a) Interest rate risk on loans and borrowings
(b) Sugar price risk
(c) Other market risks
(a) Interest rate risk
Most of the borrowings availed by the Company are subject to interest on floating rate basis linked to the Base Rate or MCLR (marginal cost of funds based lending rate). In view of the fact that the total borrowings of the Company are quite substantial, the Company is exposed to interest rate risk.
The above strategy of the Company to opt for floating interest rates is helpful in declining interest scenario, which is presently the case. Further, most of the loans and borrowings have a prepayment clause through which the loans could be prepaid without any pre payment premium. The said clause helps the Company to arrange debt substitution to bring down the interest costs or to prepay the loans out of the surplus funds held.
While adverse interest rate fluctuations could increase the finance cost, the total impact, in respect of borrowings on floating interest rate basis, is limited as per sensitivity analysis provided here under:
(b) sugar price risk
In the Sugar business being carried out by the Company, sugar is produced during the season commencing from October/November till March/April. Sugar so produced during the season of around 130 to 150 days, is sold throughout the year. The sugar inventories are at the highest level as at the end of the financial year and these are normally stated at cost or net realizable value, whichever is lower.
The Company is exposed to sugar price risk in respect of the inventories held at the year-end as any decline in prices below the carrying cost will inflict losses to the Company. There are no effective hedging mechanisms available in view of limited breadth in the commodity exchange market and hence the Company follows a strategy of selling sugar based upon market forecasts and holding cost of inventories, subject to minimum floor limits.
(c ) The other market risks include: (a) Foreign currency risks - in view of minimal foreign exchange trades, such risks are nominal; and (b) Equity price risk in respect of listed and non listed equity securities which are susceptible to market price risk arising from uncertainties about future value of the investment securities. In view of nominal value of investments being held by the Company, other than in the subsidiaries and associates which are measured at cost, the magnitude of risk is only nominal.
note 12: FAIR VALUE MEASUREMENTS
(i) Financial instruments by category
(ii) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at fair value. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Financial assets and liabilities measured at fair value - recurring fair value measurements
Level 1: Level 1 hierarchy includes financial instruments measured using quoted unadjusted market prices in active markets for identical assets or liabilities. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Equity shares of NBI Industrial Finance Co. Ltd. have been listed on stock exchange during the year. Accordingly, valuation of investment in equity shares of NBI Industrial Finance Co. Ltd is upgraded to level 1 hierarchy during the year from level 2 in previous year. For other financial assets, there are no transfers between levels 1 and 2 during the year.
(iii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the fair value of foreign exchange forward contracts is determined using market observable inputs, including prevalent forward rates for the maturities of the respective contracts and interest rate curves as indicated by banks and third parties.
- the fair value of the unquoted equity instruments, determined using observable data of other comparable listed companies.
- the fair value of bonds, determined using observable market data of yield to maturity and coupon rates of securities.
All of the resulting fair value estimates are included in level 2.
(iv) Valuation processes
The Corporate finance team has requisite knowledge and skills in valuation of financial instruments. The team headed by Group CFO directly reports to the audit committee on the fair value of financial instruments.
(v) Fair value of financial assets and liabilities that are not measured at fair value (but fair value disclosures are required)
Except as detailed in the following table, the management considers that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values
(a) The fair values for trade receivables and trade payables which are expected to be settled after twelve months (including those which are within the operating cycle) are computed based on discounted cash flows. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk. The carrying amounts of the remaining trade receivables and trade payables are considered to be the same as their fair values, due to their short-term nature.
note 13: government GRANTs (i) up sugar promotion policy, 2004
(a) The Company had accounted for capital subsidy and reimbursements of certain statutory levies and expenses as prescribed under UP Sugar Industry Promotion Policy, 2004 (â the Policyâ), issued by the state government of Uttar Pradesh and also availed prescribed exemption of taxes and duties. The Policy was pre-maturely terminated on 4 June 2007 and the Company has challenged such termination and non grant of prescribed incentives under the Policy before the Lucknow bench of Allahabad High Court. Pending final adjudication in the matter, the High Court vide its interim order dated 9 May 2008 had permitted limited protection of remissions which were being enjoyed on the date when the Policy was revoked.
(b) In accordance with the aforesaid position:
i) The Company had accounted for recoverable incentives aggregating to Rs.14,002.46 lakhs upto 31 March 2016 (1 April 2015: Rs.14,002.46 lakhs) including capital subsidy of Rs.10,470.00 lakhs (1 April 2015 : Rs.10,470.00 lakhs)
ii) The Company has availed remissions of Rs.4,158.38 lakhs upto 31 March 2017 (31 March 2016: Rs.3,631.51 lakhs; 1 April 2015: Rs.3,591.14 lakhs).
iii) The Company has, on account of uncertainty, not accounted for reimbursable incentives of Rs.9,483.42 lakhs upto 31 March 2017 (31 March 2016 : Rs.7,936.82 lakhs ; 1 April 2015 : Rs.8,132.78 lakhs) from October 2010 onwards.
(c) Capital subsidy of Rs.10,470.00 lakhs, as referred to in b(i) above was accounted for during financial year 2005-06 by crediting to capital reserve account considering the grant to be in the nature of promoterâs contribution. As per the principles of Ind AS, which have become applicable to the Company from 1 April 2016, such grant is required to be presented in the balance sheet by setting up the grant as deferred income to be recognised/amortised in the profit or loss over the useful lives of the assets comprised in the projects eligible for the aforesaid grant/subsidy. Accordingly, grant of Rs.5811.62 lakhs remaining to be amortised as on the transition date (1 April 2015), was credited to deferred government grant for amortisation in the subsequent period.
(d) During the current year, the Company has decided to write-off amount of Rs.14,002.46 lakhs as appearing recoverable from the state government of UP as on 31 March 2016, as the prescribed incentive period of 10 years under the Policy has expired and it may take considerable time before the final adjudication in the matter takes place. Accordingly, deferred government grant of Rs.5,455.72 lakhs as on 31 March 2016, pertaining to the capital subsidy, is also written back and consequently, there is a net impact of Rs.8,546.74 lakhs which has been classified under exceptional items.
NOTE 14: LEASES
(i) Obligations under finance leases
The Company has acquired certain lands under lease, classified as finance leases. Original lease term in respect of one of the land is ninety years whereas another land is on perpetual lease basis. The Company had paid one time payment of lease charges in respect of these leases and there are no further future lease maintenance payments under the lease agreement. There is no contingent rent or restriction imposed in the lease agreement.
(ii) Operating lease arrangements As Lessee
The Company has taken various residential, office and godown premises under operating lease. These are generally not non-cancellable leases (except for few premises) having unexpired period upto eight years. The leases are renewable by mutual consent and on mutually agreeable terms. The Company has given refundable interest free security deposits under certain lease agreements. There is no contingent rent, sublease payments or restriction imposed in the lease agreement.
As Lessor
The Company has given certain portion of its office / factory premises under operating leases (including lease for investment properties (refer note 4). These leases are not non-cancellable and are extendable by mutual consent and at mutually agreeable terms. The gross carrying amount, accumulated depreciation and depreciation recognised in the statement of profit and loss in respect of such portion of the leased premises are not separately identifiable. There is no impairment loss in respect of such premises. No contingent rent has been recognised in the statement of profit and loss. There are no minimum future lease payments as there are no non-cancellable leases. Lease income is recognised in the statement of profit and loss under âOther incomeâ (refer note 25). Rental income earned by the Company from its investment properties and direct operating expenses arising on the investment properties for the year is set out in note 4.
note 15: DISCLOSURE FOR CERTIFIED EMISSION REDUCTIONS AND RENEWABLE ENERGY CERTIFICATES
(i) In accordance with the Guidance Note on Accounting for self-generated Certified Emission Reductions (CERs), issued by the Institute of Chartered Accountants of India, the Company has recognised the CERs held by it as inventories in its financial statements. Disclosures as required under the Guidance Note are as under:
(a) 86,562 (31 March 2016: 86,562; 1 April 2015: 86,562) CERs (net of fee for UNFCCC adaptation fund) have been held as inventory by the Company as at the end of the year.
(b) There are no CERs under certification as on the date of the financial statements;
(c) The Companyâs Deoband and Khatauli Phase-I projects are registered as Clean Development Mechanism (CDM) projects with United Nations Framework Convention on Climate Change (UNFCCC) and it is not feasible to identify specific items of machinery/equipment as an âemission reduction equipmentâ. Accordingly, details of depreciation and operation & maintenance costs, pertaining to emission reducing equipment have not been provided.
(ii) During the year, the National Load Despatch Centre (NLDC) has issued 58,525 (31 March 2016: 74,993) Renewable Energy Certificates (RECs) to the Company under the Central Electricity Regulatory Commission Regulation on RECs. At the close of the year 122,728 (31 March 2016: 132,665; 1 April 2015: 106,533) RECs remained unsold and are held as inventories in the financial statements.
note 16: DISCLOSURE ON SPECIFIED BANK NOTES (SBNS)
Pursuant to MCA notification G.S.R. 308(E) dated 30 March 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from 8 November 2016 to 30 December 2016, the denomination wise SBNs and other notes as per the notification is given below:
(i) For the purposes of this clause, the term âSpecified Bank Notesâ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated 8 November 2016.
(ii) Permitted receipts for SBN represents amount received from sale of fuel at petrol pump
(iii) Permitted payments for SBNs represents exchange of SBNs over the counter at the Bank
note 17: SCHEME OF DEMERGER
The Board of Directors of the Company had approved a Scheme of Arrangement ( âthe Schemeâ) framed under the provisions of section 391-394 of Companies Act 1956, whereby it was proposed to demerge the sugar business, comprising of sugar manufacture, cogeneration of power and distillation of alcohol, (âDemerged Undertakingâ) of the Company to its wholly owned subsidiary company, Triveni Industries Limited (âResulting Companyâ). The Board of Directors, in the board meeting held on 9 February 2017, reviewed the progress of the said Scheme, the proceedings of which were pending in the National Company Law Tribunal (NCLT) for the sanction of the Scheme. In view of the unforeseen changes in business prospects and uncertainties prevailing in the near to medium term in the engineering business of the Company, in the overall interest of all stakeholders, the said scheme has been withdrawn by the Company as decided by the Board of Directors.
NOTE 18: FIRST TIME ADOPTION OF IND As Transition to Ind As
These are the Companyâs first financial statements prepared in accordance with Ind AS.
The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS balance sheet as at 1 April 2015 (the transition date). In preparing its opening Ind AS balance sheet, the Company has made adjustment to the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provision of the Act (previous GAAP or Indian GAAP). Further, in view of the classification of current and non-current items adopted in accordance with the criteria specified in Ind AS 1 Presentation of Financial Statements the corresponding figures of the previous years have been appropriately reclassified wheresoever necessary. An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.
a. exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A.1 Ind As optional exemptions
A.1.1 Business combinations
Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.
The Company has elected to apply Ind AS 10
Mar 31, 2016
1. In accordance with Schedule II of the Companies Act 2013, the Company has, during the year, separately assessed the useful lives of the major components forming part of its fixed assets and charged depreciation on such components over their separate useful lives. Consequent thereto-
a) the depreciation charge for the current year is higher by Rs, 99.79 lakhs; and
b) an amount of Rs, 7.18 lakhs, being the carrying value of components, the useful lives of which have expired prior to 01/04/2015, has been adjusted with the opening reserves in accordance with the Guidance Note on Accounting for Depreciation in Companies in the context of Schedule II to the Companies Act,2013.
2. (a) The Company had, in respect of eligible projects, accounted for capital subsidy as well as remissions and reimbursement of certain statutory levies and other expenses, in accordance with and as prescribed under the U.P. Sugar Industry Promotion Policy 2004 (âPolicy") issued by the State Government of U.P. Till the beginning of the current financial year, the Company had for accounted recoverable incentives, aggregating to Rs, 14,002.46 lakhs (previous year Rs, 14,002.46 lakhs) including capital subsidy of Rs, 10,470.00 lakhs (previous year Rs, 10,470.00 lakhs) credited to capital reserves, and had availed remission of Rs, 3,591.14 lakhs (previous year Rs, 3,570.27 lakhs)
On premature termination of the Policy by the State Government with effect from June 4, 2007, the Company has challenged before the Lucknow Bench of the Allahabad High Court, the action of the State Government in withdrawing the said Policy and not granting the incentives to the Company. Pending final adjudication in the matter, the High Court vide its interim order dated 09.05.2008 has permitted limited protection of remissions which were being enjoyed on the date when the Policy was revoked.
Accordingly, during the current year, the Company has accounted for only remissions of Rs, 40.37 lakhs (previous year Rs, 20.88 lakhs) as permitted by the High Court in the interim order. Eligible reimbursements of Rs, 541.07 lakhs (previous year Rs, 793.61 lakhs) have however not been accounted for during the current year. The amount of reimbursements not accounted for, net of reduction in the cane commission by Rs, 737.03 lakhs till the end of the current year aggregate to Rs, 7,936.82 lakhs (previous year Rs, 8,132.78 lakhs) which will be accounted for in accordance with the final order of the High Court.
(b) During the year, the Company has accounted for subsidy aggregating to Rs, 2,642.73 lakhs (Previous year: Rs, 17,067.89 lakhs comprising reimbursement of commission on cane purchased during the season 2015-16 in terms of Press Release dated 18.01.2016, reimbursement of commission on cane purchased and subsidy of Rs, 28.60/qtl both pertaining to season 2014-15 as per notification dated 12.11.2014 issued by the State Government of Uttar Pradesh. Further, purchase tax payable at Rs, 2/qtl of cane purchased has been remitted by the State Government for the seasons 2015-16 as well as for 2014-15. Pending announcement of details with respect to determination of further subsidy applicable as per the Press Release dated 18.01.2016, if any, for the season 2015-16, no additional subsidy has been considered by the Company.
(c) The Central Government has announced a cane production subsidy of Rs, 4.50 per quintal of cane purchased by the sugar mills, which is payable on the condition that the sugar mills export at least 80% of their minimum indicative export quota (MIEQ) notified on 18.09.2015 and upon production of ethanol (in cases where the sugar mills also have distillery capacities) of at least of 80% of the notified targets by 30.09.2016. Based upon the facts that export of sugar has already been undertaken and expected production of ethanol against firm orders placed by oil marketing companies for supply of ethanol, the Company has accounted for an amount of Rs, 1,994.50 lakhs towards the cane subsidy and has incurred a loss of Rs, 1,724.15 lakhs in fulfillment of its export obligations through third party exports. The net income of Rs, 270.35 lakhs (after offsetting the loss on fulfillment of export obligation) has been depicted under the head âOther Income" in the statement of profit and loss.
(d) The Company had availed loans aggregating Rs, 12,626.00 lakhs during financial year 2012-14 under the âScheme for Extending Financial Assistance to Sugar Undertakings, 2014" notified by the Government of India. Under the said scheme interest subvention @ 12% per annum is granted by the Government on such loan. The loan outstanding as at the end of the year is Rs, 12,379.44 lakhs (previous year Rs, 12,626.00 lakhs).
(e) During the current year, the Company has availed loans aggregating to Rs, 1 1,450.50 lakhs under the âScheme of extending soft loan to sugar mills". Interest subvention @ 10% p.a. is granted by the Government of India for one year on such loans.
3. Cost of material consumed for the year is net of Rs, 1,747.30 lakhs, being reversal of cane commission pertaining to season 2012-13 consequent to reduction in cane commission rates notified by the State Government of Uttar Pradesh.
The amount of contribution expected to be made to the Gratuity Fund during the year ended March 31, 2017 is Rs, 108.03 lakhs (Rs, 112.46 lakhs).
Contributions to provident fund also include contributions in respect of certain employees which are made to trust administered by the Company. In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of provident fund liability for the year ended 31.03.2016 and determined that there is no shortfall as at 31.03.2016. The disclosures and assumptions with respect to defined benefit provident fund plan are as under:
4. Pursuant to compliance of Accounting Standard (AS) 18 âRelated Party Disclosures", the relevant information is provided here below :
a) Related party where control exists
(i) Mr D.M. Sawhney, Chairman & Managing Director (Key Management person).
(ii) Subsidiaries Wholly owned
Triveni Energy Systems Limited Triveni Engineering Limited Triveni Entertainment Limited Svastida Projects Limited Triveni Industries Limited *1
Triveni Sugar Limited (formerly known as Bhudeva Projects Limited) *2 Others
Triveni Sugar Limited (formerly known as Bhudeva Projects Limited) *2
*1 Incorporated during the year.
*2 Ceased to be wholly owned subsidiary w.e.f. 23.07.2015.
b) The details of related parties with whom transactions have taken place during the Year :
i) Subsidiaries (Group A)
Wholly owned
Triveni Energy Systems Limited (TESL)
Triveni Engineering Limited (TEL)
Triveni Entertainment Limited (TENL)
Svastida Projects Limited (SPL)
Triveni Industries Limited (TIL)
Triveni Sugar Limited (formerly known as Bhudeva Projects Limited) (TSL)
Others
Triveni Sugar Limited (formerly known as Bhudeva Projects Limited) (TSL)
ii) Associates (Group B)
Triveni Turbine Limited (TTL)
Aqwise-Wise Water Technologies Limited (AWTL)
iii) Key Management Person (Group C)
Mr D.M. Sawhney, Chairman & Managing Director (DMS)
Mr.Tarun Sawhney, Vice Chairman and Managing Director (TS)
iv) Relatives of Key Management Person (Group D)
Mr Nikhil Sawhney (NS - Son of DMS)
v) Companies/Parties in which key management person or his relatives have substantial interest/significant influence (Group E)
Kameni Upaskar Limited (KUL)
TOFSL Trading & Investments Limited (TOFSL)
Tirath Ram Shah Charitable Trust (TRSCT)
5. (a) The Company has taken various residential, office and go down premises under operating lease. These are generally not non-cancelable leases having unexpired period up to 4 years. The leases are renewable by mutual consent and on mutually agreeable terms. The Company has given refundable interest free security deposits under certain lease agreements. There is no contingent rent or restriction imposed in the lease agreement. Lease payments under operating lease are recognized in the statement of profit and loss under âOther expenses" in Note No. 25. The minimum future lease payments under non-cancellable leases are as under :
(b) The Company has given certain portion of its office / factory premises under operating leases. These leases are not non-cancelable and are extendable by mutual consent and at mutually agreeable terms. The gross carrying amount, accumulated depreciation and depreciation recognized in the statement of profit and loss in respect of such portion of the leased premises are not separately identifiable. There is no impairment loss in respect of such premises. No contingent rent has been recognized in the statement of profit and loss. There are no minimum future lease payments as there are no non-cancellable leases. Lease income is recognized in the statement of profit and loss under âOther Income" in Note No.20.
Figures in brackets relate to previous year.
(b) Nature of provisions:
Warranties: The Company gives warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made represent the amount of expected cost of meeting such obligations of rectifications / replacements. The timing of the outflows is expected to be within the period of two years.
Cost to completion: The provision represents costs of materials and services required for integration of water treatment package at the site, prior to commissioning.
Arbitration /Court-case Claims: Represents the provision made towards certain claims awarded against the company in legal proceedings which have been challenged by the Company before appropriate authorities. The timing of the outflows is uncertain.
Loss on foreign exchange derivatives: Provision is made for mark-to-market losses on derivative contracts outstanding at the year-end which were entered into for hedging certain firm commitments or highly probable forecast transactions. The timing of the outflows is expected to be within the period of one year.
(c) Disclosure in respect of contingent liabilities is given as part of Note No.32
(i) In accordance with the Accounting Standard (AS) 17 "Segment Reporting" the Company''s operations have been categorized into 5 major business segments, which constitute 97.81 % (96.34%) of the total turnover of the Company. These business segments are classified under the two major businesses in which the Company is engaged in, and are briefly described hereunder:
Sugar & Allied Businesses
a) Sugar: The Company is a manufacturer of white crystal sugar, having seven manufacturing plants situated in the State of Uttar Pradesh. After meeting the captive requirements, the Company sells the surplus molasses and biogases, which are produced as a by-product in the manufacture of sugar. The Company also sells the surplus power produced at three of its sugar units.
b) Co-generation : The business segment, apart from meeting part of the power and steam requirements of the associated sugar units, also exports power to the State grid. It has installed capacity of 68 MW spread over Khatauli and Deoband sugar mills.
c) Distillery : The 160 kilo-liters per day capacity distillery located at Muzaffarnagar, Uttar Pradesh, uses the molasses produced in manufacture of sugar as the principal raw material in production of various categories of alcohol.
Engineering Businesses
a) High Speed Gears : This business segment manufactures high speed gears and gear boxes at the manufacturing facility located at Mysore, Karnataka.
b) Water/Wastewater Treatment : This business segment operates from Noida, Uttar Pradesh and provides engineered to order process equipment and comprehensive solutions in the water and wastewater management.
(ii) The âOther Operations âmainly include execution of a turnkey project relating to installation of Steam Turbine based power evacuation system, trading of various packaged fast moving consumer goods under the Company''s brand name (including sugar) and retailing of diesel/petrol through a Company operated fuel station.
(iii There are no geographical segments as the volume of exports is not significant and the major turnover of the Company takes place indigenously. There is no major reliance on a few customers or suppliers.
(iv) Inter-segment transfers are priced based on competitive market prices or determined to yield a desired margin or agreed on a negotiated basis. These are then eliminated on consolidation.
(v) Segment result is the segment revenue less segment expenses. Segment expenses include all expenses directly attributable to the segments and portion of the enterprise expenses that can be allocated on a reasonable basis to the segments. Interest expense is not included in segment expenses and accordingly, segment liabilities do not include any corresponding borrowings.
Figures in brackets relate to previous year.
Note 1. There are no repayment schedule for the loans and advances to subsidiary companies mentioned above, which are repayable on demand.
6. (a) In accordance with the Guidance Note on Accounting for Self-generated Certified Emission Reductions (CERs), issued by the
Institute of Chartered Accountants of India, the Company has recognized the CERs held by it as inventories in its financial statements. Disclosures as required under the Guidance Note are as under:
i) 86562 (previous year 86562) CERs (net of fee for UNFCCC adaptation fund) have been held as inventory by the Company as at the end of the year.
ii) There are no CERs under certification as on the date of the financial statements;
iii) The Company''s Deoband and Khatauli Phase-I projects are registered as Clean Development Mechanism (CDM) projects with United Nations Framework Convention on Climate Change (UNFCCC) and it is not feasible to identify specific items of machinery/equipment as an âemission reduction equipment" Accordingly, details of depreciation and operation & maintenance costs, pertaining to emission reducing equipment have not been provided.
(b) During the year, the National Load Dispatch Centre (NLDC) has issued 55443 (previous year 54275) Renewable Energy Certificates (RECs) to the Company under the Central Electricity Regulatory Commission Regulation on RECs. At the close of the year 142005 (previous year 106533) RECs remained unsold and are held as inventories in the financial statements.
7. The Board of Directors of the Company have approved a Scheme of Arrangement ( âthe Scheme") framed under the provisions of section 391-394 of Companies Act 1956, whereby it is proposed to demerge the Sugar Business, comprising of sugar manufacture, cogeneration of power and distillation of alcohol, (âDemerged Undertaking") of the Company to its wholly owned subsidiary company, Triveni Industries Limited (âResulting Company"). With effect from the appointed date on 1/04/2016, the Demerged Undertaking shall stand vested with the Resulting Company and all the assets and liabilities pertaining to the Demerged Undertaking shall stand transferred to the Resulting Company. The process regarding approval of the Scheme is under progress at the relevant stock exchanges. As per the Scheme, in consideration for the transfer of the Demerged Undertaking, the shareholders of the Company shall be issued one fully paid-up equity share in the Resulting Company for every one equity share held by them in the Company on the record date to be fixed for this purpose.
8. Exceptional item of Rs, 1,012.80 lakhs in the statement of profit and loss represents profit on sale of land, including Rs, 839.20 lakhs towards profit on land transferred to wholly owned subsidiary companies.
9. The figures of the previous year have been regrouped/rearranged to the extent necessary to make them comparable with the figures of current year.
Any material default in the financial obligations to and by the Company, or substantial non-payment for goods sold / services provided by the Company.
Mar 31, 2015
Contingent assets are not recognized.
1. Contingent Liabilities (To The extent not provided For)
(a) Claims against the Company not acknowledged as debts (as certified
by the management)
(Rs,in Lacs)
31.03.2015 31.03.2014
i) Claims which are being contested
by the company and in respect of
which 2,208.25 2,175.75
the company has paid amounts
aggregating to Rs. 471.80 lacs
(previous period Rs. 468.89 lacs)
excluding interest under protest
pending final
adjudication of the cases:
Sl. Particulars Amount of Amount
paid
no. contingent
liability
01. Sales Tax 295.20 91.92
(220.22) (94.36)
02. Excise Duty 1,189.61 340.42
(1,232.91) (331.31)
03. Others 723.44 39.46
(722.62) (43.22)
Figures in brackets relates to
previous period.
ii) The Company is contingently
liable in respect of short provision
against 4,409.28 4,409.28
disputed income tax liabilities of Rs.
4,409.28 lacs (previous period
Rs. 4,409.28 lacs) against which Rs.
2,844.88 lacs (previous period
Rs. 2,711.88 lacs) stands paid.
The disputed income tax liability
mainly arises from additions made
on a/c of unrealized incentives
against which the Company has fled
appeals. In the event such
liability finally materializes
Rs. 3,524.20 lacs (previous period Rs.
3,524.20 lacs) will be adjusted
against the capital reserve.
iii) Statutory levies against
which remission has
been availed under U.P. Sugar 3,591.14 3,570.27
Industry Promotion Policy 2004,
issued by the State Government of
Uttar Pradesh [refer note 35(a)]
iv) Liability arising from claims
/ counter claims / Interest in
arbitration / court Indeterminate
Indeterminate cases, claims of
certain employees / ex-employees
and in respect of service tax,
if any, on certain activities of
the Company which are being
contested by the Company.
The amount shown above represent the best possible estimates arrived at
on the basis of available information. The uncertainties, possible
payments and 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. The Company engages reputed professional advisors to
protect its interests and has been advised that it has strong legal
position against such disputes.
(b) Guarantees / surety given on behalf of companies Rs. 1,688.13 lacs
(previous period Rs. 1,818.15 lacs), including a corporate guarantee of Rs.
1,647.13 lacs (previous period Rs. 1,777.15 lacs) equivalent to GBP 17.62
lacs (previous period GBP 17.62 lacs) given on behalf of an associate
company as a surety for due performance of its obligations under a
contract awarded by an overseas customer and in respect of which, the
associate company has fully indemnified the Company against any claims,
damages or expenses, including legal costs. The guarantees have been
given in the normal course of operations of these companies and are not
expected to result in any loss to the Company on the basis of such
companies fulfilling their ordinary commercial obligations.
c) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 3,525.70 lacs (previous period Rs. 48.70
lacs), after adjusting advances aggregating to Rs. 409.78 lacs (previous
period Rs. 83.59 lacs).
2. In accordance with Schedule II of the Companies Act 2013, the
estimated useful lives of tangible fixed assets have been technically
assessed and revised by the management with effect from April 1, 2014.
Consequent to the above- (a) the depreciation charge for the year is
lower by Rs.1,819.91 lacs.
(b) carrying amounts of Rs. 2,093.90 lacs in respect of fixed assets , the
revised useful lives of which had expired prior to
April 1, 2014, has been adjusted to the extent of Rs. 1,382.18 lacs
against general reserves and the balance Rs. 711.72 lacs against deferred
tax liability.
3. The Company had, in earlier years, revalued a property at New
Delhi and certain plant and machinery installed at its sugar unit at
Deoband. The increase in value consequent to such revaluation was
credited to revaluation reserve in the accounts and depreciation
proportionate to such increase in value was adjusted each year from the
revaluation reserve created initially. During the current year, the
Company has reversed the entire revaluation reserve appearing in the
books as at the commencement of the year. Accordingly, the net book
value of building and plant & machinery has been reduced by Rs. 1,506.14
lacs and Rs. 1.51 lacs respectively to reflect the reversal of revaluation
of these assets. Further, the Company has, during the year, reclassified
the amounts aggregating to Rs. 235.59 lacs paid on acquisition and
subsequent improvement of title pertaining to the property at New
Delhi, under leasehold land, earlier capitalized under building.
Accordingly, excess depreciation charged on building in earlier years
aggregating to Rs. 44.54 lacs has been written back during the year.
4. (a) The Company had, in respect of eligible projects,
accounted for capital subsidy as well as remissions and reimbursement
of certain statutory levies and other expenses, in accordance with and
as prescribed under the U.P. Sugar Industry Promotion Policy 2004
("Policy") issued by the State Government of U.P. Till the beginning of
the current financial year, the Company had accounted for recoverable
incentives, aggregating to Rs.14,002.46 lacs (previous period Rs. 14,002.46
lacs) including capital subsidy of Rs. 10,470.00 lacs (previous period Rs.
10,470.00 lacs) credited to capital reserves, and had availed remission
of Rs. 3,570.27 lacs (previous period Rs. 3,314.22 lacs).
On premature termination of the Policy by the State Government with
effect from June 4, 2007, the Company has challenged before the Luck now
Bench of the Allahabad High Court, the action of the State Government
in withdrawing the said Policy and not granting the incentives to the
Company. Pending fnal adjudication in the matter, the High Court vide
its interim order dated 09.05.2008 has permitted limited protection of
remissions which were being enjoyed on the date when the Policy was
revoked.
Accordingly, during the current year, the Company has accounted for
only remissions of Rs. 20.88 lacs(previous period Rs. 256.04 lacs), net of
reversals of Rs. Nil (previous period Rs. 170.26 lacs) in respect of
certain incentives earlier excess booked, as permitted by the High
Court in the interim order. Eligible reimbursements of Rs. 793.61 lacs
(previous period Rs. 2,342.29 lacs) have however not been accounted for
during the current year and the aggregate of such reimbursements not
accounted for till the end of the current year aggregating to Rs. 8,132.78
lacs (previous period Rs. 7,339.17 lacs) shall be accounted for in
accordance with the fnal order of the High Court.
(b) The Company had availed loans aggregating
Rs. 12,626.00 lacs during financial year 2012-14 under the "Scheme for
Extending Financial Assistance to Sugar Undertakings, 2014" notified by
the Government of India. Under the said scheme interest subvention @
12% per annum is granted by the Government on such loan. The loan
outstanding as at the end of the year is Rs. 12,626.00 lacs (previous
period Rs. 12,626.00 lacs).
(c) During the year the Company has accounted subsidy of Rs. 3,624.21
lacs (Previous period Rs. 2,743.39 lacs) towards amount reimbursed /
reimbursable by the State Government of Uttar Pradesh in respect of
commission on purchase of cane.
(d) The State Government of Uttar Pradesh, vide notification dated
12.11.2014, had inter-alia announced cash subsidy for the Sugar
Industry against the notified state advised cane price for the season
2014-15. The quantum of subsidy was linked to the average selling
prices of sugar and its by-products during the period 1/10/2014 to
31/05/2015. In view of the selling prices of the relevant products
having prevailed (and expected to during the balance period) well below
the threshold limits specified in the notification, the Company has
during the year accounted for the prescribed subsidies aggregating to Rs.
13,443.68 lacs in respect of cane purchased by it during the season
2014-15 up to the end of the financial year.
(e) During the year, the State Government of Uttar Pradesh has also
provided a subsidy of Rs. 6 per quintal of cane purchased during the
sugar season 2013-14. Accordingly, the Company has received subsidy
amount of Rs. 2,793.45 lacs during the year which has been adjusted
against the cost of material consumed.
5. Cost of material consumed is net of Rs. 217.03 lacs being refund
received during the year (previous period Rs. 323.50 lacs being reversal
of provision) in respect of administration charges on captive consumption
of molasses paid by the Company in earlier years.
6. Due to decline in the free sugar prices below the cost of
production of sugar, the sugar inventories held by certain unit(s) of
the Company as on 31.03.2015 have been valued at their net realizable
value. The impact of write down of inventories during the year is Rs.
11,109.47 lacs (previous period Rs. 5,536.24 lacs).
7. The Company has made provisions for the employee benefits in
accordance with the Accounting Standard (AS) 15 "Employees Benefits".
During the year/period, the Company has recognized the following
amounts in its financial statements:
8. Pursuant to compliance of Accounting Standard (AS) 18 "Related
Party Disclosures", the relevant information is provided here below :
a) related party where control exists
(i) Mr D.M. Sawhney, Chairman & Managing Director (Key Management
person).
(ii) Wholly owned subsidiaries
Triveni Energy Systems Limited
Triveni Engineering Limited
Triveni Entertainment Limited *1
Bhudeva Projects Limited
Svastida Projects Limited
b) The details of related parties with whom transactions have taken
place during the Year : i) wholly owned subsidiaries (group A)
Triveni Energy Systems Limited (TESL) Triveni Engineering Limited (TEL)
Triveni Entertainment Limited (TENL) *1 Bhudeva Projects Limited (BPL)
Svastida Projects Limited (SPL)
ii) Associates (group B)
Triveni Turbine Limited (TTL)
Aqwise-Wise Water Technologies Limited (AWTL)
Triveni Entertainment Limited (TENL) *1
TOFSL Trading & Investments Limited (TOFSL) *2
The Engineering & Technical Services Limited (ETS) *2
iii) Key Management person (group C)
Mr D.M. Sawhney, Chairman & Managing Director (DMS) Mr.Tarun Sawhney,
Vice Chairman and Managing Director (TS)
iv) relatives of Key Management person (group d)
Mrs Rati Sawhney (RS Â Wife of DMS)
Mr Nikhil Sawhney (NS Â Son of DMS)
v) Companies / parties in which key management person or his relatives
have substantial interest / significant influence (group e)
Kameni Upaskar Limited (KUL)
The Engineering & Technical Services Limited (ETS)
TOFSL Trading & Investments Limited (TOFSL)
Subhadra Trade & Finance Limited (STFL)
Tirath Ram Shah Charitable Trust (TRSCT) *1 Was an associate till
19.3.2014 and thereafter became a subsidiary company *2 Ceased to be
Associates during the previous period
9. 2,00,000 stock options had been granted to certain employees of the
Company on April 30, 2010, prior to the demerger of its steam turbine
business and vesting of the same in M/s Triveni Turbine Ltd. (TTL).
This included 40,000 options granted to an employee whose services were
transferred to TTL. In respect of the remaining employees to whom stock
options had been earlier granted, in accordance with the Scheme of
Arrangement, and in line with the best practices, adjustment has been
made by the Company for the corporate action of demerger, by adjusting
the exercise price of such options, so as to ensure that the fair value
of options immediately prior to and immediately subsequent to the
corporate action remains unchanged.
10. a) In accordance with the Guidance Note on Accounting for
Self-generated Certified Emission Reductions (CERs), issued by the
Institute of Chartered Accountants of India, the Company has recognized
the CERs held by it as inventories in its financial statements.
Disclosures as required under the Guidance Note are as under:
i) 86562 (previous period 86562) CERs (net of fee for UNFCCC adaptation
fund) have been held as inventory by the Company as at the end of the
year ;
ii) There are no CERs under certification as on the date of the financial
statements;
iii) The Company's Deoband and Khatauli Phase-I projects are registered
as Clean Development Mechanism (CDM) projects with United Nations
Framework Convention on Climate Change (UNFCCC) and it is not feasible
to identify specific items of machinery/equipment as an "emission
reduction equipment". Accordingly, details of depreciation and
operation & maintenance costs, pertaining to emission reducing
equipment have not been provided.
b) During the year the National Load Despatch Centre (NLDC) has issued
54275 (previous period 95752) Renewable Energy Certificates (RECs) to
the Company under the Central Electricity Regulatory Commission (CERC)
Regulation on RECs. At the close of the year 106533 (previous period
84350) RECs remained unsold and are held as inventory. However, since
no cost has been incurred by the Company in respect of the RECs lying
in inventory, the value of such inventories has been considered as Nil
in accounts.
11. The figures of the previous period have been regrouped/rearranged to
the extent necessary. Previous accounting year of the Company was for a
period of eighteen months ended on 31/3/2014. Accordingly, the
previous period figures given in these financial statements in so far as
relating to the items of income and expenses and cashfows are for a
period of eighteen months ended on that date and are therefore, not
comparable with the current year fgures.
Sep 30, 2012
A) Terms/rights attached to equity shares
The Company has only one class of equity shares with a par value of Rs.
1/- per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares are entitled to receive the remaining assets of the Company,
after meeting all liabilities and distribution of all preferential
amounts, in proportion to their shareholding.
Note: Upon demerger of the steam turbine undertaking of the Company and
its vesting in Triveni Turbine Ltd., under a Scheme of Arrangement,
pending execution of necessary documents and modification of charge,
the term loans extended to the Company, as above, as well as those
transferred to Triveni Turbine Ltd., relating to the steam turbine
undertaking and outstanding at the year end amounting to Rs. 1,388.80
lacs (previous year: Rs. 4,442.30 lacs) are secured, as mentioned above,
against the assets of the Company.
* Represents deferred tax asset in respect of unabsorbed depreciation
of Rs. 2,329.95 lacs and business loss of Rs. 321.62 lacs which has arisen
mainly on account of an exceptional charge in respect of arrears of
cane price. The Company is hopeful of earning sufficient taxable income
in near future to enable it to avail the benefit of such unabsorbed
depreciation and business loss.
Cash credit from banks is secured by pledge/hypothecation of the
stock-in-trade, raw material, stores and spare parts, work-in-progress
and receivables and second charge created/to be created on the
properties of all the Engineering units and third charge on the
properties of Sugar, Co-generation and Distillery units of the Company
on pari-passu basis.
Includes
*1 Land costing Rs. 358.90 lacs (previous year : Rs. 416.95 lacs) pending
transfer in the name of the Company.
*2 Transferred to Revaluation Reserve Rs. 32.49 lacs (previous year :
Rs. 32.49 lacs).
*3 Depreciation capitalised during the year amounting to Rs. 5.10 lacs
(previous year : Rs. Nil).
* In view of the fair value of the shares of the Company, calculated on
the basis of average of the weekly closing prices on the National Stock
Exchange during the period of six months ended 30.09.2012, being lower
than the exercise price of the stock options granted under ESOP 2009
Scheme (Refer Note No. 33), the options granted to the employees are
not considered dilutive in nature.
1. Contingent liabilities and commitments (to the extent not provided
for)
a) Claims against the Company not acknowledged as debts
(Rs. in Lacs)
30.09.2012 30.09.2011
i) Claims which are being contested by
the company and in respect of which the 2,566.29 2,682.15
company has paid amounts aggregating to
Rs. 613.76 lacs (previous year :
Rs. 651.39 lacs) under protest pending
final adjudication of the cases:
Sl. Particulars Amount of
contingent Amount
paid
no. liability
01. Sales Tax 430.29 226.43
(507.51) (245.01)
02. Excise Duty 1,451.82 327.90
(1,375.36) (354.20)
03. Others 684.18 59.43
(799.28) (52.18)
Figures in brackets relates to previous year.
ii) The Company is contingently liable
in respect of short provision against
disputed 4,587.50 4,587.50
income tax liabilities of Rs. 4,587.50
lacs (previous year: Rs. 4,587.50 lacs)
against which Rs. 3,881.93 lacs
(previous year : Rs. 3,672.90 lacs)
stands paid and the balance amount has
been stayed till disposal of first
appeal. The disputed income tax
liability includes Rs. 3,733.21 lacs
towards unrealised incentives. In the
event such liability finally
materializes, Rs. 3,524.20 lacs will be
adjusted against the corresponding
capital reserve.
iii) Statutory levies against which
remission has been availed under
U.P. Sugar Industry 3,320.27 2,479.19
Promotion Policy 2004 issued by the
State Government of Uttar Pradesh
[refer note - 40(a)]
iv) Liability arising from
claims / counter claims/ Interest
in arbitration/ Court cases, claims Indeterminate Indeterminate
of certain employees/ex-employees
and in respect of service tax, if
any, on certain activities of the
Company which are being contested
by the Company.
v) Differential cane price for the
sugar season 2007-08 pending
disposal of the matter by - 7,895.80
the Hon''ble Supreme Court. As
against price of Rs. 1,250/MT
advised by the State Govt. of
Uttar Pradesh, the Company had
accounted for and discharged its
liability at Rs. 1,100/ MT in
accordance with the interim order
passed by the Supreme Court.
The amounts shown above represent the best possible estimates arrived
at on the basis of available information. The uncertainties, possible
payments and 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. The Company engages reputed professional advisors to
protect its interests and has been advised that it has strong legal
position against such disputes.
b) Guarantees / surety given on behalf of certain associate companies Rs.
1,566.74 lacs (previous year Rs. 41.00 lacs), including a corporate
guarantee of Rs. 1,525.74 lacs (GBP 17,61,821) given during the year on
behalf of an associate company as a surety for due performance of its
obligations under a contract awarded by an overseas customer and in
respect of which, the associate company has fully indemnified the
Company against any claims, damages or expenses, including legal costs.
The guarantees have been given in the normal course of operations of
these companies and are not expected to result in any loss to the
Company on the basis of such companies fulfilling their ordinary
commercial obligations.
c) Outstanding commitments for capital expenditure are Rs. 1,168.11 lacs
(previous year Rs. 707.25 lacs) after adjusting advance amounting to Rs.
631.84 lacs ( previous year Rs. 223.73 lacs).
2. Pursuant to the Employees Stock Option Scheme (ESOP 2009) framed
by the Company, 2,00,000 stock options had been granted to eligible
employees of the Company during the financial year 2009-10. Subsequent
thereto, under a Scheme of Arrangement (Scheme) between the Company,
M/s Triveni Turbine Ltd. (TTL) and their respective shareholders and
creditors, which was duly approved by the Hon''ble High Court of
Allahabad vide its order dated 19.04.2011, the employees of the Steam
Turbine Undertaking (including those who were granted stock options
under ESOP 2009) became the employees of TTL. In the Scheme, two
alternatives were stated for dealing with the ESOP 2009 and the
preferred alternative was subject to the approval of the Stock
Exchanges / SEBI. Since the Company is unable to get any response /
approval to the preferred alternative, it is in the process of
implementing the second alternative whereby the options if exercised
would result in grant of shares in only the respective company in which
such employee is employed. This would, inter-alia, necessitate
splitting of the exercise price of the options between TTL and the
Company on an equitable basis and amending the entitlements of shares
to be granted on exercise of the options.
Pending final determination in the matter as aforesaid, the required
disclosures of the ESOP 2009 are as under:
* Refers to the exercise price and the market price on date of grant of
the options by the Company, prior to the demerger of the Steam Turbine
undertaking of the Company.
The options outstanding as at the end of the year have a weighted
average contractual life of 13 months and are exercisable at the grant
price of Rs. 108.05, Pending final determination in the matter regarding
modification of ESOP 2009 as stated above, the exercise price of Rs.
108.05 is without considering any modification/adjustment which may be
required to be carried out post demerger of the steam turbine
undertaking of the Company.
c) Fair Valuation
The fair value of options used to compute proforma net income and
earning per equity share has been done by an independent firm of
Chartered Accountants on the date of grant of options using Black
Scholes Model.
The weighted average fair value of each option of the Company as on the
date of grant, works out to Rs. 56.60 (Rs. 56.60), which had been arrived
at without considering the subsequent demerger of the steam turbine
undertaking of the Company.
Had the compensation cost for the stock options granted under ESOP 2009
been determined based on fair value approach, the Company''s net
profit/loss and earning per share would have been as per the proforma
amounts indicated below:
* The compensation expenses for the year on fair value basis has been
computed without considering the effect of any modification/ adjustment
which may be required to be made to ESOP 2009 to give effect to the
demerger of the steam turbine division.
3. Based on the intimation received by the Company from its suppliers
regarding their status under the Micro, Small and Medium Enterprises
Development Act, 2006, the relevant information is provided here
below:-
4. a) The Company has taken various residential, office and godown
premises under operating lease. These are generally not non-cancelable
and the unexpired period ranges upto 4 years and renewable by mutual
consent on mutually agreeable terms. The Company has given refundable
interest free security deposits under certain agreements. There is no
contingent rent or restriction imposed in the lease agreement. Lease
payments under operating lease are recognised in the statement of
profit and loss as "Rent" under "Other Expenses" (Refer Note No. 25).
b) The Company has also given certain portion of its office/factory
premises under operating leases. These leases are not non-cancellable
and are extendable by mutual consent and at mutually agreeable terms.
The gross carrying amount, accumulated depreciation and depreciation
recognised in the statement of profit and loss in respect of such
portion of the leased premises are not separately identifiable. There
is no impairment loss in respect of such premises. No contingent rent
has been recognised in the statement of profit and loss.
5. Pursuant to compliance of Accounting Standard (AS) 18 "Related
Party Disclosures", the relevant information is provided here below :
a) Related party where control exists
(i) Mr. D.M. Sawhney, Chairman & Managing Director (Key Management
Personnel).
(ii) Wholly owned subsidiaries
Upper Bari Power Generation Limited (UBPGL) *1 Triveni Energy Systems
Limited (TESL)
Triveni Engineering Limited (TEL)
*1 Ceased to be subsidiary during the year.
b) The details of related parties with whom transactions have taken
place during the year :
i) Wholly owned Subsidiaries (Group A)
Upper Bari Power Generation Limited (UBPGL) *1 Triveni Energy Systems
Limited (TESL)
Triveni Engineering Limited (TEL)
*1 Ceased to be subsidiary during the year.
ii) Associates (Group B)
Triveni Turbine Limited (TTL)
TOFSL Trading & Investments Limited (TOFSL)
The Engineering & Technical Services Limited (ETS)
Triveni Entertainment Limited (TENL)
Aqwise-Wise Water Technologies Limited (AWTL)
iii) Key Management Person (Group C)
Mr. D M Sawhney, Chairman & Managing Director (DMS)
Mr. Tarun Sawhney, Joint Managing Director (TS)
iv) Key Management person relatives (Group D)
Mrs. Rati Sawhney (RS - wife of DMS)
Mr. Nikhil Sawhney (NS - son of DMS).
v) Companies/Parties in which key management person or his relatives
have substantial interest/significant influence (Group E)
Kameni Upaskar Limited (KUL)
Tirath Ram Shah Charitable Trust (TRSCT)
6. The Company has made a provision for employee benefits in
accordance with the Accounting Standard (AS) 15 "Employees Benefits".
During the year, the Company has recognised the following amounts in
its financial statements:
7. (a) The Company had, in respect of eligible projects, accounted
for capital subsidy, remissions and reimbursement of certain statutory
levies and expenses, in accordance with and as prescribed under the
U.P. Sugar Industry Promotion Policy 2004 ("Policy") issued by the
State Government of Uttar Pradesh. Till September 30, 2011, the Company
had accounted for recoverable incentives (including capital subsidy of
Rs. 10,470.00 lacs credited to capital reserves) aggregating to Rs.
14,002.46 lacs (previous year Rs. 14,002.46 lacs) and had availed
remission of Rs. 2,479.20 lacs (previous year Rs. 1,735.54 lacs).
On premature termination of the Policy by the State Government with
effect from June 4, 2007, the Company had challenged the action of the
State Government in withdrawing the said Policy and not granting the
incentives to the Company, before the Lucknow Bench of the Allahabad
High Court. Pending final adjudication in the matter, the Hon''ble
High Court vide its interim order dated 09.05.2008 had permitted
limited protection of remissions which were being enjoyed on the date
when the Policy was revoked.
Accordingly, during the current year, the Company has accounted for
only remissions of Rs. 841.07 lacs (previous year Rs. 743.65 lacs) as
permitted by the High Court in its interim order. Eligible
reimbursements of Rs. 2,171.53 lacs (previous year Rs. 1,487.29 lacs) have
however not been accounted for during the year and the aggregate of
such reimbursements not accounted for till the end of the year
aggregates to Rs. 4,996.88 lacs (previous year Rs. 2,825.35 lacs) and shall
be accounted for in accordance with the final order of the High Court.
(b) The Company had availed loans aggregating to Rs. 9,432.00 lacs
(previous year Rs. 9,432.00 lacs) under the "Scheme for Extending
Financial Assistance to Sugar Undertakings, 2007" notified by the
Government of India. Under the said scheme Interest subvention @ 12%
per annum is granted by the Government on such loan. The outstanding
loans as at the end of the year were Rs. Nil (previous year Rs. 2,076.12
lacs).
b) Nature of provisions:
Warranties : The Company gives warranties on certain products and
services, undertaking to repair or replace the items that fail to
perform satisfactorily during the warranty period. Provisions made as
at September 30, 2012 represent the amount of expected cost of meeting
such obligations of rectification / replacement. The timing of the
outflows is expected to be within the period of two years.
Cost to completion: The provision represents costs of materials and
services required for integeration of water treatment package at the
site, prior to commissioning.
Administrative charges on Molasses : The provision represents disputed
liability towards administrative charges on molasses captively consumed
by the Company. The dispute is currently pending adjudication before
the Supreme Court, which has in the interim stayed the recovery of such
charges.
Arbitration / Court-case Claims: Provision has been made against
certain claims awarded against the company in legal proceedings which
have been challenged by the Company before appropriate authorities.
Loss on foreign exchange derivatives: Provision is made for
mark-to-market losses on derivative contracts outstanding at the
year-end which were entered into for hedging certain firm commitments
or highly probable forecast transactions.
Others: Represents provision made for deficiency in company managed
provident fund trusts for the benefit of its employees.
c) Disclosure in respect of contingent liabilities is given as part of
Note No. 32.
Note 1. There are no repayment schedule for the loans and advances to
subsidiary companies mentioned above, which are repayable on demand.
In respect of loan to Triveni Turbine Ltd., each tranche of loan is
repayable in twelve quarterly instalments, subject to its option to
accelerate the repayment.
8. Pursuant to the undertaking given by the Company to Securities
Exchange Board of India in connection with granting relaxation of Rule
19(2)(b) of the Securities Contracts (Regulation) Rules,1957 for
listing of equity shares of Triveni Turbine Limited (TTL), the
Company''s investment in the equity shares of TTL will remain under a
lock-in period till November 29, 2014.
9. Plant and machinery at Deoband unit existing as on 1st
November,1986 was revalued during the financial year 1986-87 by an
approved valuer, to reflect the assets at their fair value. A property
at Delhi, earlier held as stock-in-trade, was revalued during the
financial year 1999-00, at estimated market value and converted to
fixed assets. The increase in the value of such assets over their book
values, consequent to the revaluation, had been credited to revaluation
reserve in the respective year of revaluation. The revalued assets are
stated net of accumulated depreciation thereon.
10. Pending completion of procedural formalities, the titles to
certain assets, transferred to Triveni Turbine Ltd.(TTL) pursuant to a
duly approved Scheme of Arrangement framed under sections 391 to 394 of
the Companies Act, 1956, could not, where necessary, be transferred in
the name of TTL and are being held in trust by the Company.
11. In accordance with the Guidance Note on Accounting for
Self-generated Certified Emission Reductions (CERs), issued by the
Institute of Chartered Accountants of India, the Company has recognised
the CERs held by it as inventories in its financial statements.
Disclosures as required under the Guidance Note are as under:
a) 58,816 CERs (net of UNFCCC adaptation fund) have been held as
inventory by the Company;
b) 28,312 CERS are under certification as on the date of the financial
statements;
c) The Company''s Deoband and Khatauli Phase-I projects are registered
as Clean Development Mechanism (CDM) projects with United Nations
Framework Convention on Climate Change (UNFCCC) and it is not feasible
to identify specific items of machinery/equipment as an "emission
reduction equipment" . Accordingly, details of depreciation and
operation & maintenance costs, pertaining to emission reducing
equipment have not been provided.
12. The Company has during the year has made a long-term strategic
investment by acquiring 13,008 equity shares (representing 25.04%
equity stake) in Aqwise-Wise Water Technologies Ltd., a company
registered in Israel, engaged in providing water treatment solutions,
using proprietary technology. The investment is synergistic to the
water/waste water business being carried out by the Company.
13. Due to decline in the free sugar prices and the levy sugar price
being much lower than the cost of production of sugar, the sugar
inventories held by certain unit(s) of the Company as on 30.09.2012
have been valued at the net realisable value. Accordingly sugar
inventories have been written down by Rs. 571.27 lacs (previous year Rs.
102.03 lacs).
e. Remittance in foreign currencies for dividend:
The Company has not remitted any amount in foreign currencies on
account of dividend during the year and does not have information as to
the extent to which remittances, if any, in foreign currencies on
account of dividend have been made by/on behalf of non-resident
shareholders. The particulars of dividend payable to non-resident
shareholders (including non-resident Indian shareholders) which were
declared during the year are as under:
Sep 30, 2010
1. Contingent liabilities (to the extent not provided for)
a) Claims against the Company not acknowledged
as debts (Rs. in Million)
As on As on
30.09.10 30.09.09
i) Claims which are being contested by the
Company and in respect of which the 249.50 242.17
Company has paid amounts aggregating toRs. 85.57 Million (Rs. 84.35
Million) under protest pending final adjudication of the cases:
Sl. Particulars Amount of Contingent Amount Paid
No. Liability
1 Sales TaRs. 48.00 22.98
(32.74) (22.10)
02 ERs.cise Duty 151.12 58.88
(167.01) (58.59)
03 Others 50.38 3.71
(42.42) (3.66)
The outflow arising from these claims is uncertain and is after
adjusting likely reimbursement of Rs. 12.02 Million (Rs. 12.02 Million)
from customers in respect of Central ERs.cise demands on account of
denial of benefit under Notification No.6/2000.
ii) The Company is contingently liable in respect of short provision
against disputed income 464.78 21.85 taRs. liabilities ofRs. 464.78
Million (Rs. 21.85 Million) against whichRs. 365.84 Million stands paid,
mostly through adjustment and the balance amount has been stayed till
disposal of first appeal. The disputed income taRs. liability includesRs.
374.51 Million towards unrealized incentives. In the event such
liability finally materialises,Rs. 353.61 Million will be adjusted
against the corresponding capital reserve. In case the said incentives
are ultimately not realized, a deduction from taRs.able income to that
extent would be available to the Company in subsequent years.
iii) Differential cane price for the sugar season 2007-08 pending
disposal of the matter by 789.56 789.56 the Honble Supreme Court. As
against price ofRs. 1250/MT advised by the State Government, the Company
had accounted for and discharged its liability atRs.1100/MT in
accordance with the interim order passed by the Supreme Court.
iv) Indeterminate liability arising from claims/counter claims/Interest
in arbitration/court cases, claims alleging infringement of technical
know-how/copyrights, claims of some employees/eRs.-employees and in
respect of service taRs., if any, on certain activities of the Company
which are being contested by the Company.
b) Guarantees/surety given on behalf of
(i) Subsidiary Company
(IncludingRs. Nil (Rs. 5.00 Million) for availing of credit facilities,
against which dues 0.10 5.10 outstandingRs. Nil)
(ii) Other companies 4/00 4.00
c) The amounts shown in item 2(a) represent the best possible estimates
arrived at on the basis of available information. The uncertainties,
possible payments and 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 can not be predicted
accurately. The Company engages reputed professional advisors to
protect its interests and has been advised that it has strong legal
position against such disputes.
The amounts shown in item 2(b) above represent guarantees given in the
normal course of operations of these companies and are not eRs.pected to
result in any loss to the Company on the basis of such companies
fulfilling their ordinary commercial obligations.
2. Advances recoverable in cash or in kind in schedule 11 "Loans
&Advances" include
a) Due from the Company Secretary-Rs. Nil (Rs. Nil). MaRs.imum amount due at
any time during the yearRs. 0.04 Million (Rs. 0.01 Million).
b)Rs. 0.02 Million (Rs. 0.02 Million) on account of Security Deposit paid
to the Managing Director.
3. Estimated amount of Contracts remaining to be eRs.ecuted on capital
account and not provided for:
Rs.209.80 Million (Rs. 225.49 Million) after adjusting advances paid
amounting toRs. 85.72 Million (Rs. 58.67 Million).
4. a) The Company had, in respect of eligible projects, accounted for
capital subsidy and remissions and reimbursement of certain statutory
levies and eRs.penses, in accordance with and as prescribed under U.P.
Sugar Industry Promotion Policy 2004 ("Policy") issued by the State
Government of Uttar Pradesh. Till September 30, 2009, the Company had
accounted for recoverable incentives ofRs. 1400.25 Million (including
capital subsidy) and had availed of remissions ofRs. 125.46 Million
under the Policy.
On premature termination of the Policy by the State Government with
effect from June 4,2007, the Company has challenged the action of the
State Government in withdrawing the said Policy and not granting the
incentives to the Company, in the Lucknow Bench of the Allahabad High
Court. Pending final adjudication in the matter, the High Court vide
its interim order dated 09.05.2008 has permitted limited protection of
remissions which were being enjoyed on the date when the Policy was
revoked.
The Company has been legally advised that it continues to be entitled
to all the benefits under the Policy. However, during the current
year, the Company has accounted for only remissions ofRs. 48.10 Million
as permitted by the High Court in the interim order and further
eligible reimbursements ofRs. 133.81 Million will be accounted for in
accordance with the final order of the High Court.
b) The Company had availed of a loan amounting toRs. 943.20 Million (Rs.
943.20 Million) under the "Scheme for ERs.tending Financial Assistance to
Sugar Undertakings 2007" notified by the Government of India. Under the
said scheme interest subvention @ 12% per annum is granted by the
Government on such loan. The outstanding loan as at the end of the year
amounts toRs. 681.76 Million (Rs. 943.20 Million)
5. Plant and machinery at Deoband unit eRs.isting as on 1st November,
1986 was revalued during the financial year 1986-87. The revaluation
had been conducted by an approved valuer, to reflect the assets at
their present value. A property at Delhi, earlier held as stock in
trade was revalued during the financial year 1999-00, at estimated
market value and converted to fiRs.ed assets. The increase in the value
of such assets over their book values, consequent to the revaluation,
had been credited to revaluation reserve in the respective year of
revaluation. The revalued assets are stated net of accumulated
depreciation thereon.
6. Information regarding Related Party Transactions:
a) Related party where control exists
i) Mr DM Sawhney, Chairman & Managing Director (Key Management person).
ii) Wholly owned subsidiaries Triveni Turbine Limited Upper Bari Power
Generation Limited Triveni Energy Systems Limited Triveni Engineering
Limited GETriveni Limited
b) The details of related parties with whom transactions have taken
place during the year:
i) Wholly owned Subsidiaries (Group A)
Triveni Turbine Limited (TTL)
Upper Bari Power Generation Limited (UBPGL)
Triveni Energy Systems Limited (TESL)
Triveni Engineering Limited (TEL)
GE Triveni Limited (GETL)
ii) Associates (Group B)
TOFSLTrading & Investments Limited (TO FSL)
The Engineering &Technical Services Limited (ETS)
Triveni Entertainment Limited (TENL)
Carvanserai Limited (CL)*
* ceased to be an associate company during the year
iii) Key Management Persons (Group C)
Mr D M Sawhney, Chairman & Managing Director (DMS)
Mr. Tarun Sawhney, ERs.ecutive Director - Whole Time (TS)
Mr. Nikhil Sawhney, ERs.ecutive Director- Whole Time (NS)
iv) Key Management Person relative (Group D)
Mrs Rati Sawhney (Wife of DMS) (RS)
v) Companies/Parties in which key management Person or his relatives
have substantial interest/significant influence (Group E)
Kameni Upaskar Limited (KUL)
Tirath Ram Shah Charitable Trust (TRSCT)
7. The Company has taken various residential, office and godown
premises under operating leases. These are generally not non-
cancelable and the uneRs.pired period ranges between 6 months to 6 years
and are renewable by mutual consent on mutually agreeable terms. The
Company has given refundable interest free security deposits under
certain agreements. There is no contingent rent or restriction imposed
in the lease agreement.
a) Lease payments under operating lease are recognized in the Profit &
Loss Account under "Rent" in Schedule 21.
b) There are no minimum future lease payments under non-cancelable
operating lease.
8. Depreciation charged to the profit & loss account is net of Rs. 5.94
Million (Rs. 23.66 Million) being write back of eRs.cess depreciation
charged in earlier years.
9. The Board of Directors of the Company have approved a Scheme of
Arrangement ("Scheme") framed under the provisions of section 391-394
of the Companies Act, 1956, whereby it is proposed to demerge the Steam
Turbine business ("Demerged Undertaking") of the Company to its wholly
owned subsidiary company, Triveni Turbine Ltd.("Resulting Company").
With effect from the appointed date on 01.10.2010, the Demerged
Undertaking shall stand vested with the Resulting Company and all the
assets and liabilities pertaining to the Demerged Undertaking shall
stand transferred to the Resulting Company. The legal process regarding
the sanction of the Scheme by the Honble High Court of Allahabad, is
under progress. As per the Scheme, In consideration for the transfer of
the Demerged Undertaking, the shareholders of the Company shall be
issued one fully paid-up equity share in the Resulting Company for
every one equity share held by them in the Company, on the record date
to be fiRs.ed for this purpose.
10. ERs.ceptional/ Non-Recurring Income (net) ofRs. 450.86 Million
(Previous Year : Net charge ofRs. 121.58 Million) comprises the
following:
i) Profit ofRs. 439.56 Million (Rs.170.94 Million) on the sale of long
term trade investment.
ii) Provision ofRs. 88.70 Million (Rs. 114.21 Million) against amounts
recoverable in disputed matters, mostly relating to project/sugar
machinery business earlier carried out by the Company.
iii) Provision no longer required and written back ofRs. 100 Million in
respect of Loans and Advances to Triveni Turbine Limited (earlier known
as Triveni Retail Ventures Ltd.), a wholly owned subsidiary company, in
view of the proposed demerger of the steam turbine business of the
Company and its consequent merger with Triveni Turbine Ltd. (Previous
year: Provision made ofRs.100 Million).
iv)Rs. Nil (Rs. 78.31 Million) paid for consultancy charges to assess
feasibility of new businesses synergistic to the eRs.isting engineering
business.
10. The Company has incurred an expenditure ofRs. 42.97 Million (Rs. 48.01
Million), including capital expenditure ofRs. 10.37 Million [Rs. 22.58
Million) in respect of Research and Development activities in respect
of its turbine manufacturing operations. Additionally, the Company has
also incurred cane development expenditure ofRs. 89.07 Million (Rs. 99.27
Million) in respect of its sugar units, including capital expenditure
ofRs. 32.21 Million (Rs. Nil). The capital expenditure has been
capitalized under fiRs.ed assets and the other expenditure has been
charged to the Profit & Loss A/c under various heads.
11. On account of the net realizable value of sugar stocks being lower
than their cost of production, the sugar inventories held by the
Company on 30.09.2010 have been valued at their net realizable value.
The consequent write-down of inventories has adversely impacted the
profitability of the year byRs. 558.15 Million.
12. Previous year figures have been rearranged wherever necessary to
make them comparable with the current years figures. Figures given in
brackets relate to the previous year.
13. Schedule 1 to 26 form an integral part of the Balance Sheet and
Profit & Loss Account
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on Triveni Engineering & Industries Ltd.
-
Triveni Engineering & Industries Ltd. Tools
- Bulk Deals
- Block Deals
-
Triveni Engineering & Industries Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- BSE Price History
- NSE Price History
-
Triveni Engineering & Industries Ltd. Key Financial Ratios
- Ratios
-
Triveni Engineering & Industries Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
Triveni Engineering & Industries Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
Triveni Engineering & Industries Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
Triveni Engineering & Industries Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
