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Notes to Accounts of Aditya Birla Real Estate Ltd.
Mar 31, 2026
2.15 Provisions
Provisions are recognised when the company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that the company will be
required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation.
The amount recognised as a provision is the best
estimate of the consideration required to settle the
present obligation at the end of the reporting period,
taking into account the risks and uncertainties
surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present
value of those cash flows (when the effect of the time
value of money is material).
When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is
virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
If the Company has a contract that is onerous, the
present obligation under the contract is recognised and
measured as a provision. However, before a separate
provision for an onerous contract is established, the
Company recognises any impairment loss that has
occurred on assets dedicated to that contract.
An onerous contract is a contract under which the
unavoidable costs (i.e., the costs that the Company
cannot avoid because it has the contract) of meeting
the obligations under the contract exceed the
economic benefits expected to be received under it.
The unavoidable costs under a contract reflect the
least net cost of exiting from the contract, which is the
lower of the cost of fulfilling it and any compensation
or penalties arising from failure to fulfil it
2.16 Cash and cash equivalents
Cash and cash equivalent in the balance sheet
comprise cash at banks and on hand and short-term
deposits with an original maturity of three months
or less, which are subject to an insignificant risk of
changes in value.
For the purpose of the statement of cash flows, cash
and cash equivalents consist of cash and short-term
deposits, as defined above, net of outstanding bank
overdrafts as they are considered an integral part of
the Companyâs cash management.
2.17 Employee Benefits
Defined Contribution plans
For certain employees of the Company, employee
benefit in the form of Provident fund, Employees State
Insurance Contribution and Labour Welfare fund are
defined contribution plans. The Company has no
obligation, other than the contribution payable to the
respective fund. The Company recognizes contribution
payable to the provident fund scheme as an expense,
when an employee renders the related service. If
the contribution payable to the scheme for service
received before the balance sheet date exceeds the
contribution already paid, the deficit payable to the
scheme is recognized as a liability after deducting
the contribution already paid. If the contribution
already paid exceeds the contribution due for services
received before the balance sheet date, then excess
is recognized as an asset to the extent that the pre¬
payment will lead to, for example, a reduction in future
payment or a cash refund.
The Company provides for retirement benefit in the
form of gratuity. The Companyâs liability towards
this benefit is determined on the basis of actuarial
valuation using Projected Unit Credit Method at the
date of balance sheet.
In respect of certain employees, provident fund
contributions are made to a trust administered by the
Company.
Periodic contributions to the Fund are charged to the
Statement of profit and loss. The Company has an
obligation to make good the shortfall, if any, between
the return from the investment of the trust and interest
rate notified by the Government of India. Such shortfall
is recognized in the Statement of profit and loss. The
Companyâs liability is determined on the basis of an
actuarial valuation using the projected unit credit
method.
Remeasurement, comprising of actuarial gains and
losses, the effect of the asset ceiling, excluding
amounts included in net interest on the net defined
benefit liability and the return on plan assets (excluding
amounts included in net interest on the net defined
benefit liability), are recognised immediately in the
balance sheet with a corresponding debit or credit to
retained earnings through OCI in the period in which
they occur. Remeasurement is not reclassified to profit
or loss in subsequent periods.
Past service costs are recognised in profit or loss on
the earlier of:
⢠The date of the plan amendment or curtailment and
⢠The date that the Company recognises related
restructuring costs
Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset. The
Company recognises the following changes in the net
defined benefit obligation as an expense in statement
of profit and loss:
⢠Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non-routine settlements; and
⢠Net interest expense or income
Accumulated leave, which is expected to be utilized
within the next 12 months, is treated as short-term
employee benefit and this is shown under current
provision in the Balance Sheet. The Company
measures the expected cost of such absences as the
additional amount that it expects to pay as a result of
the unused entitlement that has accumulated at the
reporting date.
The Company treats accumulated leave expected to be
carried forward beyond twelve months, as long-term
employee benefit for measurement purposes and this
is shown under long term provisions in the Balance
Sheet. Such long-term compensated absences are
provided for based on the actuarial valuation using the
projected unit credit method at the year-end. Actuarial
gains/losses are immediately taken to the Statement
of Profit and Loss and are not deferred. The Company
presents the leave as a current liability in the balance
sheet, to the extent it does not have an unconditional
right to defer its settlement for 12 months after
the reporting date. Where the Company has the
unconditional legal and contractual right to defer the
settlement for a period beyond 12 months, the same is
presented as non-current liability.
Research expenditure, including overheads, on
research and development, is charged as an expense
in the year in which incurred.
2.19 Employee Share-Based Payments
Equity-settled Transactions Equity-settled share-based
payments to employees are measured by reference to
the fair value of the equity instruments at the grant date
using Black-Scholes Model and Binomial Model. The fair
value, determined at the grant date of the equity settled
share-based payments, is charged to Standalone
Statement of Profit and Loss or recognised as
investments in subsidiary, if ESOP granted to employees
of subsidiary Company on a systematic basis over the
vesting period of the option, based on the Companyâs
estimate of equity instruments that will eventually vest,
with a corresponding increase in other equity
In case of forfeiture/lapse stock option, which is not
vested, amortised portion is reversed by credit to
employee compensation expense. In a situation where
the stock option expires unexercised, the related balance
standing to the credit of the Employee Stock Options
Outstanding Account is transferred within other equity.
Cash-settled Transactions The cost of cash-settled
transactions is measured initially at fair value at the grant
date using a Black-Scholes Merton Formula. This fair
value is expensed over the period until the vesting date
with recognition of a corresponding liability. The liability
is re-measured to fair value at each reporting date up to,
and including the settlement date, with changes in fair
value recognised in employee benefits expense.
The Company has created an Employee Benefit
Trust (EBT) for providing share-based payment to its
employees. The Company uses EBT as a vehicle for
distributing shares to employees under the Employee
Stock Option Scheme. The EBT purchase shares of
the Company from the market, for giving shares to
employees. The Company treats EBT as its extension
and shares held by EBT are treated as treasury shares.
Own equity instruments that are re-acquired (treasury
shares) are recognised at cost and deducted from other
equity. No gain or loss is recognised in the Standalone
statement of profit and loss on the purchase, sale,
issue or cancellation of the Companyâs own equity
instruments. Share options whenever exercised, would
be settled from such treasury shares.
The Companyâs financial statements are presented in
INR, which is also the Companyâs functional currency.
Transactions in foreign currencies are initially recorded
by the Company at INR spot rate at the date, the
transaction first qualifies for recognition. Monetary
assets and liabilities denominated in foreign currencies
are translated at the functional currency spot rates of
exchange at the reporting date.
Exchange differences arising on settlement or
translation of monetary items are recognised in profit
or loss.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial
transactions.
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
Initial recognition and measurement
All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at
fair value through profit or loss, transaction costs
that are attributable to the acquisition of the financial
asset.
For purposes of subsequent measurement, financial
assets are classified in four categories:
⢠Financial Assets at amortised cost
⢠Financial Assets at fair value through other
comprehensive income (FVTOCI)
⢠Financial Assets including derivatives and equity
instruments at fair value through profit or loss
(FVTPL)
⢠Equity instruments measured at fair value
through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A ''debt instrumentâ is measured at the amortised cost
if both the following conditions are met:
a) The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and
b) Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the
principal amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included
in other income in the profit or loss. The losses arising
from impairment are recognised in the profit or loss.
This category generally applies to trade and other
receivables, loans and other financial assets.
All equity investments in scope of Ind AS 109 are
measured at fair value. For all equity instruments, the
Company may make an irrevocable election to present
in other comprehensive income subsequent changes
in the fair value all fair value changes on the instrument,
excluding dividends, are recognized in the OCI. There
is no recycling of the amounts from OCI to P&L, even
on sale of investment. However, the Company may
transfer the cumulative gain or loss within equity. The
Company has made such election on an instrument-
by-instrument basis. The classification is made on
initial recognition and is irrevocable.
A financial asset (or, where applicable, a part of a
financial asset or part of a company of similar financial
assets) is primarily derecognised when:
⢠The rights to receive cash flows from the asset
have expired or
⢠The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a
''pass-through'' arrangement and either (a) the
Company has transferred substantially all the
risks and rewards of the asset, or (b) the Company
has neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.
When the Company has transferred its rights to
receive cash flows from an asset or has entered into
a pass-through arrangement, it evaluates if and to
what extent it has retained the risks and rewards of
ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset,
nor transferred control of the asset, the Company
continues to recognise the transferred asset to the
extent of the Company''s continuing involvement. In
that case, the Company also recognises an associated
liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights
and obligations that the Company has retained.
Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset
and the maximum amount of consideration that the
Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss on the following
financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and
are measured at amortised cost e.g., loans, debt
securities, deposits, trade receivables and bank
balance
b) Financial assets that are equity instruments and
are measured as at FVTOCI
c) Lease receivables under Ind AS 116
d) Trade receivables or any contractual right to
receive cash or another financial asset that result
from transactions that are within the scope of Ind
AS 115
The Company follows ''simplified approachâ for
recognition of impairment loss allowance on:
⢠Trade receivables
⢠All lease receivables resulting from transactions
within the scope of Ind AS 116
The application of simplified approach does not
require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based
on lifetime ECLs at each reporting date, right from its
initial recognition.
For recognition of impairment loss on other financial
assets and risk exposure, the company determines
that whether there has been a significant increase in
the credit risk since initial recognition. If credit risk has
not increased significantly, 12-month ECL is used to
provide for impairment loss. However, if credit risk
has increased significantly, lifetime ECL is used. If, in
a subsequent period, credit quality of the instrument
improves such that there is no longer a significant
increase in credit risk since initial recognition, then
the entity reverts to recognising impairment loss
allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected
life of a financial instrument. The 12-month ECL is a
portion of the lifetime ECL which results from default
events that are possible within 12 months after the
reporting date.
ECL is the difference between all contractual cash
flows that are due to the company in accordance
with the contract and all the cash flows that the entity
expects to receive (i.e., all cash shortfalls), discounted
at the original EIR. When estimating the cash flows, an
entity is required to consider:
⢠All contractual terms of the financial instrument
(including prepayment, extension, call and similar
options) over the expected life of the financial
instrument. However, in rare cases when the
expected life of the financial instrument cannot
be estimated reliably, then the entity is required
to use the remaining contractual term of the
financial instrument
⢠Cash flows from the sale of collateral held or
other credit enhancements that are integral to the
contractual terms
As a practical expedient, the Company uses a provision
matrix to determine impairment loss allowance on
portfolio of its trade receivables. The provision matrix
is based on its historically observed default rates
over the expected life of the trade receivables and
is adjusted for forward-looking estimates. At every
reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates
are analysed.
ECL impairment loss allowance (or reversal)
recognized during the period is recognized as income/
expense in the statement of profit and loss (P&L). This
amount is reflected under the head ''other expenses''
in the P&L. The balance sheet presentation for various
financial instruments is described below:
⢠Financial assets measured as at amortised
cost, contractual revenue receivables and lease
receivables: ECL is presented as an allowance,
i.e., as an integral part of the measurement of
those assets in the balance sheet. The allowance
reduces the net carrying amount. Until the asset
meets write-off criteria, the Company does not
reduce impairment allowance from the gross
carrying amount.
⢠Loan commitments and financial guarantee
contracts: ECL is presented as a provision in the
balance sheet, i.e. as a liability.
⢠Equity instruments measured at FVTOCI: Since
financial assets are already reflected at fair value,
impairment allowance is not further reduced
from its value. Rather, ECL amount is presented
as ''accumulated impairment amount'' in the OCI.
For assessing increase in credit risk and impairment
loss, the Company combines financial instruments on
the basis of shared credit risk characteristics with the
objective of facilitating an analysis that is designed
to enable significant increases in credit risk to be
identified on a timely basis.
The Company does not have any purchased or
originated credit-impaired (POCI) financial assets,
i.e., financial assets which are credit impaired on
purchase/ origination.
Financial liabilitiesInitial recognition and measurement
Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective
hedge, as appropriate.
All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings and
payables, net of directly attributable transaction
costs.
The Companyâs financial liabilities include trade
and other payables, loans and borrowings including
bank overdrafts, financial guarantee contracts and
derivative financial instruments.
The measurement of financial liabilities depends on
their classification, as described below:
Financial liabilities at fair value through profit or loss
Gains or losses on liabilities held for trading are
recognised in the profit or loss. The Company has
not designated any financial liability as at fair value
through profit and loss.
This is the category most relevant to the Company. After
initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the
EIR method. Gains and losses are recognised in profit
or loss when the liabilities are derecognised as well as
through the EIR amortisation process.
Amortised cost is calculated by taking into account
any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the
statement of profit and loss.
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced
by another from the same lender on substantially
different terms, or the terms of an existing liability
are substantially modified, such an exchange or
modification is treated as the derecognition of the
original liability and the recognition of a new liability.
The difference in the respective carrying amounts is
recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the balance sheet
if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to
settle on a net basis, to realise the assets and settle the
liabilities simultaneously.
Derivative financial instruments:
The Company uses derivative financial instruments,
such as forward currency contracts, interest rate
swaps to manage its foreign currency risks and
interest rate risks respectively.
These derivative instruments are designated as cash
flow, fair value or net investment hedges and are
entered into for period consistent with currency. Such
derivative financial instruments are initially recognised
at fair value on the date on which a derivative contract
is entered into and are subsequently re-measured at
fair value. Derivatives are carried as financial assets
when the fair value is positive and as financial liabilities
when the fair value is negative. Any gains or losses
arising from changes in the fair value of derivatives are
recognised in the Statement of profit and loss except
for the effective portion of cash flow hedges, which is
recognised in OCI and later reclassified to profit or loss
when the hedge item affects profit or loss.
For the purpose of hedge accounting, hedges are
classified as:
- Cash flow hedges when hedging the exposure to
variability in cash flows that is either attributable
to a particular risk associated with a recognised
asset or liability or a highly probable forecast
transaction or the foreign currency risk in an
unrecognised firm commitment
At the inception of a hedge relationship, the Company
formally designates and documents the hedge
relationship to which the Company wishes to apply hedge
accounting and the risk management objective and
strategy for undertaking the hedge. The documentation
includes the Companyâs risk management objective and
strategy for undertaking hedge, the hedging/ economic
relationship, the hedged item or transaction, the nature
of the risk being hedged, hedge ratio and how the entity
will assess the effectiveness of changes in the hedging
instrumentâs fair value in offsetting the exposure to
changes in the hedged itemâs fair value or cash flows
attributable to the hedged risk. Such hedges are
expected to be highly effective in achieving offsetting
changes in fair value or cash flows and are assessed on
an ongoing basis to determine that they actually have
been highly effective throughout the financial reporting
periods for which they were designated.
The effective portion of the gain or loss on the hedging
instrument is recognised in OCI in the cash flow hedge
reserve, while any ineffective portion is recognised
immediately in the statement of profit and loss.
The Company uses forward currency contracts
as hedges of its exposure to foreign currency risk
in forecast transactions and firm commitments.
The ineffective portion relating to foreign currency
contracts is recognised in finance costs.
Amounts recognised as OCI are transferred to profit or
loss when the hedged transaction affects profit or loss,
such as when the hedged financial income or financial
expense is recognised or when a forecast sale occurs.
If the hedging instrument expires or is sold, terminated
or exercised without replacement or rollover (as part of
the hedging strategy), or if its designation as a hedge
is revoked, or when the hedge no longer meets the
criteria for hedge accounting, any cumulative gain or
loss previously recognised in OCI remains separately
in equity until the forecast transaction occurs or the
foreign currency firm commitment is met..
The Companyâs investments in its subsidiaries are
carried at cost.
Basic Earnings per share (EPS) amounts are calculated
by dividing the profit for the year attributable to equity
holders by the weighted average number of equity
shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the
profit attributable to equity holders adjusted for the
effects of potential equity shares by the weighted
average number of equity shares outstanding during
the year plus the weighted average number of equity
shares that would be issued on conversion of all the
dilutive potential equity shares into equity shares.
2.25 Cash dividend and non-cash distribution to equity
holders
The Company recognises a liability to make cash or
non-cash distributions to equity holders when the
distribution is authorised and the distribution is no
longer at the discretion of the Company. As per the
corporate laws, a distribution is authorised when it
is approved by the shareholders. A corresponding
amount is recognised directly in equity.
Non-cash distributions are measured at the fair value
of the assets to be distributed with fair value re¬
measurement recognised directly in equity.
Upon distribution of non-cash assets, any difference
between the carrying amount of the liability and the
carrying amount of the assets distributed is recognised
in the statement of profit and loss.
A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed
by the occurrence or non-occurrence of one or more
uncertain future events beyond the control of the
company or a present obligation that is not recognized
because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent
liability also arises in extremely rare cases where
there is a liability that cannot be recognized because
it cannot be measured reliably. The company does
not recognize a contingent liability but discloses its
existence in the financial statements.
2B. SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
The preparation of the Companyâs separate
financial statements requires management to make
judgements, estimates and assumptions that affect
the reported amounts of revenues, expenses, assets
and liabilities, and the accompanying disclosures, and
the disclosure of contingent liabilities. Uncertainty
about these assumptions and estimates could result
in outcomes that require a material adjustment to
the carrying amount of assets or liabilities affected in
future periods. Difference between actual results and
estimates are recognised in the periods in which the
results are known / materialised.
The key assumptions concerning the future and other
key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described
below. The Company has based its assumptions and
estimates on parameters available when the financial
statements were prepared. Existing circumstances
and assumptions about future developments, however,
may change due to market changes or circumstances
arising that are beyond the control of the Company.
Such changes are reflected in the assumptions when
they occur.
The Companyâs obligation on account of gratuity
and compensated absences is determined based
on actuarial valuations. An actuarial valuation
involves making various assumptions that may
differ from actual developments in the future.
These include the determination of the discount
rate, future salary increases and mortality rates.
Due to the complexities involved in the valuation
and its long-term nature, these liabilities are highly
sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
The parameter most subject to change is the
discount rate. In determining the appropriate
discount rate, the management considers the
interest rates of government bonds in currencies
consistent with the currencies of the post¬
employment benefit obligation.
The mortality rate is based on publicly available
mortality tables. Those mortality tables tend
to change only at interval in response to
demographic changes. Future salary increases
and gratuity increases are based on expected
future inflation rates.
Further details about gratuity obligations are
given in Note 36.
b) Fair value measurement of financial instruments
When the fair values of financial assets and
financial liabilities recorded in the balance sheet
cannot be measured based on quoted prices in
active markets, their fair value is measured using
valuation techniques including the DCF model.
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 43 and 44 for further disclosures.
c) Useful Lives of Property, Plant & Equipment:
The Company uses its technical expertise
along with historical and industry trends for
determining the economic life of an asset/
component of an asset. The useful lives are
reviewed by management periodically and
revised, if appropriate. In case of a revision, the
unamortised depreciable amount is charged over
the remaining useful life of the assets.
Current tax: Current income tax assets and
liabilities are measured at the amount expected
to be recovered from or paid to the taxation
authorities. As stated in Note 16, tax expense is
calculated using applicable tax rates and tax laws
that have been enacted or substantively enacted.
In arriving at taxable profit and tax bases of assets
and liabilities, the Company recognised taxability
of amounts in accordance with tax enactments,
case law and opinions of tax counsel, as relevant.
Where differences arise on tax assessment, these
are booked in the period in which they are agreed
or on final closure of assessment.
Deferred tax: Deferred tax is provided using the
liability method on temporary difference between
the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes
at the reporting date.
The above valuation of the investment properties are in accordance with the Ready Reckoner rates prescribed by
the Government of Maharashtra for the purpose of levying stamp duty. The Independent Valuer has referred to the
publications and Government website for Ready Reckoner rates. Suitable adjustments if required have been made to
account for availability of FSI in land parcels in Mumbai in accordance with the guidelines prescribed by the Department
of Registrations and Stamps. The adjustments related to floors, lifts and other factors are not considered for valuation of
commercial property. Since the valuation is based on the published Ready Reckoner rates, the Company has classified the
same under Level 2.
Directors vide its resolution dated January 16, 2023 and also by Shareholders through postal ballot via remote
e-voting on March 09, 2023 in terms of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations,
2021. Accordingly the Company has considered the related expenses amounting to INR 5.99 Crores (31 March
2025 - INR 11.78 Crores) incurred during the year ended 31 st March, 2026 as deemed capital contribution in the
subsidiary Company in accordance with Ind AS 102 ''Share Based Paymentsâ.
ii) During the year, the Company has made an investment of INR 100 Crore into the equity share capital of Birla
Estates Private Limited, its wholly owned subsidiary, through subscription to 10,00,00,000 equity shares of face
value INR 10 each at par.
(i) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities.
These equity shares are designated as FVTOCI as they are not held for trading purpose and are not in similar
line of business as the Company. Thus disclosing their fair value fluctuation in profit and loss will not reflect the
purpose of holding. Refer Note 44 for determination of their fair values.
(ii) Investments in unquoted investments includes investment in Industry House Limited (IHL) amounting to Rs
31.39 Crore (31 March 2025 INR 29.73 Crore).The Company is holding 35.28% of equity shares in IHL. As the
Company does not have significant influence over Industry House Limited, the Company has not considered it
as an associate as per Ind AS 28 "Investments in Associates and Joint Ventures" and hence not consolidated.
(i) No trade receivable are due from directors or other officers of the Company either severally or jointly with any other
person. Nor any trade receivable are due from firms or private companies respectively in which any director is a partner
or a director or a member. Trade receivables are non interest bearing and are generally on terms of 7 to 120 days of credit
period.
(ii) Trade receivables ageing schedule
(i) Short term fixed deposits are varying between three months and twelve months, depending on the immediate cash
requirements and earn interest at the respective short term deposit rate. Interest rate is between 3.00% to 7.25% (31
March 2025 - 4.75% to 7.25%)
(ii) Current accounts includes INR 96.63 Crores (31 March 2025 : INR 25.53 Crores) held in escrow account for a project under
Real Estate (Regulation and Development) Act, 2016 ("RERA"). The money can be utilised for payments of the specified
projects only.
NoteI. Details of Security:1. Loans covered in Sr. No. 9 & 10 :
(i) First pari passu charge on present and future movable fixed assets of borrower''s Pulp and Paper unit at Lalkuan,
Uttarakhand.
2. Loans covered in Sr. No. 8 :
(i) First pari passu charge on current assets (including documents of title to goods/ related receivables).
3. Loans covered in Sr. No. 11 & 12 :
(i) Registered Mortgage on Project Land and structure thereon.
(ii) Hypothecation of future scheduled receivables of the project and all insurance both present & future of the
project only
(iii) Hypothecation of Escrow account and all investments in respect thereof.
Bank loan and NCDs contain certain debt covenants relating to total term loan to tangible net worth, fixed asset coverage
ratio, net debt to equity ratio, debt service coverage ratio, total debt to EBITDA and interest coverage ratio. The Company
is compliant with the said covenants during the year ended 31 March 2026. The Company has also satisfied all other debt
covenants prescribed in the terms of bank loan and NCDs.
The Company has not defaulted in repayment of borrowing and interest thereon.
(i) Unclaimed dividend amounting to Rs 0.05 crore (31 March 2025 INR 0.05 crore) is pending on account of litigation among
claimants / notices from the tax recovery officer.
(ii) Derivative financial instruments:
The Company entered into foreign exchange forward contracts with the intention of hedging foreign exchange risk of
expected sales and purchases, these contracts are not designated as hedge and are measured at fair value through profit
or loss.
Derivative instruments at fair value through profit or loss reflect the negative change in fair value of those foreign exchange
forward contracts that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of
foreign currency risk for expected sales and purchases.
(iii) Changes in liabilities arising from financing activities (excluding lease liabilities)
(i) Working capital demand loan form Banks of INR 65.52 Crores (31 March 2025 INR 107.75 crores) are secured against
a first and pari passu charge over the current assets (including documents of title to goods/related receivables) and
collateral security on a pari-passu basis over the present and future property plant and equipments (plant and machinery)
of Century Pulp and Paper.
(ii) Line of credit from banks of INR 25 crores (31 March 2025 INR 50.00 crores) are secured against a first and pari passu
charge with other facility by way of registered mortgage on the property, project, future scheduled receivable of the project
on the companyâs Birla Niyaara Project.
(iii) Cash credit / Overdraft facility of INR 0.30 crores (31 March 2025 INR 61.41 crores) are secured against a first and
pari passu charge with other facility by way of registered mortgage on the property, project, future scheduled
receivable of the project and all insurance proceed, both present and future, on security of all rights, title, interest,
claims, benefits, demands under the project documents of both present and future, on the escrow and DSR
account of the project including all monies credited / deposited therein and all investment in respect thereof.
All such sold units of secured project, booking of which are subsequently cancelled by customer shall continue to stand
mortgaged to the lender.
NOTE 21E | REMAINING PERFORMANCE OBLIGATION
In case of residential units, the Company satisfies the performance obligation and recognises revenue at a point in time i.e.,
upon handover of the residential units. Since the said performance obligation is not satisfied as at March 31,2026, no revenue
has been recognised by the Company on sale of residential units. The Company expects to recognise revenue on sale of
residential units in the following time band:
a. Post discontinuation of the Companyâs Textiles business, the economic advantages to its Joint Venture ("JV"), Birla Advanced
Knits Private Limited, such as common utilities, shared manpower and integrated operations with Siro yarn spinning, were
lost; accordingly, the entity became non-viable and the JVâs business operations were discontinued. Both the JV partners
had an obligation to contribute equally towards the liabilities of the JV in excess of their respective investments. Accordingly,
the Company had recognised a provision aggregating to Rs. 114 Cr during the year ended March 31, 2025 towards its
exposure in the JV. As a result the company has made provision of diminution in value of Rs 25 Cr and balance Rs. 89 Cr was
disclosed as other current financial liabilities as obligation towards share of liability in joint venture for the year ended march
31,2025 ( Refer note 15). The contribution towards the aforesaid provision was made during the year.
Derivatives not designated as hedging instruments
The Company holds derivative financial instruments such as foreign currency forward to mitigate the risk of changes in
exchange rate on foreign currency exposure. The counterparty for these contracts is generally a Bank or a Financial Institution.
These derivative financial instrument are valued based on quoted prices for similar asset and liabilities in active markets or
inputs that is directly or indirectly observable in the marketplace.
NOTE 31 | EARNINGS PER SHARE (EPS):
Thereafter, the Company has contributed amount aggregating to Rs. 13.50 Crore for the year ended March 31, 2026,
towards the JVâs working capital requirements, which has been fully impaired and recognised as an exceptional item,
considering the exposure in the JV
b. The company was entitled to Worli West Colony comprises C. S. No. 1,546 leasehold land admeasuring 25,543.68 sq mtrs
(equivalent to 6.31 acres). Company had filed a writ Petition before the High Court of Bombay seeking a formal conveyance
of the land in its favor. The Honâble High Court of Bombay had passed a judgment dated March 14, 2022 inter alia directing
MCGM to execute a formal conveyance in favor of the Company. MCGM filed an appeal in the Honâble Supreme Court
against the said High Court Judgement and the Honâble Supreme Court had allowed the said Appeal. Pursuant to Supreme
Court Judgement the company had surrendered the land parcel to local authority, and as a result the company had written
off INR 42.89 Cr. pertaining to the said property during the previous year.
c. The Government of India has consolidated 29 existing labour legislations into a united framework comprising four Labour
Codes viz. the Code on Wages, 2019, the Code on Social Security, 2020, the Industrial Relations Code, 2020 and the
Occupational Safety, Health and Working Conditions Code, 2020 (collectively referred to as the "New Labour Codes").
These Codes have been made effective from 21st November, 2025. The corresponding supporting rules under these
Codes are yet to be notified. The labour codes, amongst other things, introduce changes including a uniform definition of
wages and enhanced benefits relating to leave.
The Company has assessed the financial implications of these changes, resulting in an increase in gratuity and leave
liability by Rs 36.23 Cr (both continuing and discontinued operations). Considering that the impact arising out of enactment
of the new legislation is an event of a non-recurring nature, the Company has presented this incremental amount as
"Impact of Labour Codes" under "Exceptional Items" in the statement of profit and loss for the year ended March 31,2026.
During the financial year 2017-18, the Company had entered into an agreement with Grasim Industries Limited (''GILâ)
granting right to manage and operate the Companyâs Viscose Filament Yarn (''VFYâ) business, which is part of Textile
segment, for a duration of 15 years commencing from February 1, 2018. As a part of consideration, GIL has paid an
upfront Royalty of INR 605.00 crores. In addition GIL has also paid the carrying value of net working capital and the interest
free security deposit of INR 200.00 crores which is repayable after 15 years With effect from February 1, 2018, GIL have
right to use the VFY business assets including its intangible assets for a period of 15 years from the above date. The
Company is recognizing royalty income over the period of 15 years
Pursuant to the agreement, GIL shall incur all capital expenditure and commitments involving capital expenditure as may
be necessary for the proper, optimum and profitable operation of the VFY Business. In this regard, Company has agreed
that all improvement/ capital expenditure done by GIL during the tenure of agreement will be transferred to the Company,
at such fair value as may be agreed between the Company and GIL.
(i) INR 3.48 Crore (31 March 2025 INR 3.29 Crore) due to micro and small enterprises registered under the Micro, Small and
Medium Enterprises Development Act, 2006 (MSMED Act). There are no other amounts paid / payable towards interest /
principal under the MSMED; and
(ii) The above information has been determined to the extent such parties have been identified on the basis of the information
available with the Company regarding the status of suppliers under the MSMED Act.
NOTE 35 | DISCONTINUED OPERATIONS(A) Textile Division
During the financial year 2023-24, the Company had discontinued operations at its Bharuch Textile Division business
(''Division''). Accordingly, the said Division is disclosed as discontinued operations in the financial statements. During the
year, the Company carried out an assessment of the recoverable amount of its building. Based on the evaluation of expected
future economic benefits, the Company has recognised an impairment loss of INR 59.24 Cr. (March 31,2025: NIL).
Pursuant to approval of Board of Directors ("Board") of the Company at their meeting held on March 31,2025, the company
had executed a business transfer agreement (BTA) with the ITC Ltd. for sale and transfer of the Companyâs pulp and paper
undertaking operated under the name of Century Pulp and paper. In terms of the requirements of Accounting Standards
(Ind AS), the assets and liabilities which would be transferred are presented as held for sale and the Pulp and Paper
business have been presented as ''Discontinued Operationsâ.
(a) Defined Contribution Plans:
The Companyâs contribution to Provident Fund and Superannuation Fund aggregating INR 7.09 Crores (31 March
2025: INR 7.12 Crores) has been recognised in the Statement of Profit and Loss under the head Employee benefits
expense.
(b) Defined Benefit Plans:(i) Gratuity
The Company has a defined benefit gratuity plan (funded).The Companyâs defined benefit gratuity plan is a final
salary plan for employees, which requires contributions to be made to a separately administered fund. The gratuity
plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of
service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service
and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees, which
consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the
administration of the plan assets and for the definition of the investment strategy.
Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-
liability matching strategy and investment risk management policy. This includes employing the use of annuities
and longevity swaps to manage the risks. The Board of Trustees decides its contribution based on the results of this
annual review. Generally, it aims to have a portfolio mix of equity instruments, property and debt instruments. The
Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on
valuation performed) will arise.
The significant actuarial assumptions used for the purposes of the actuarial valuations were as follows:
The Company has used accounting software for maintaining its books of account which has a feature of recording audit
trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software,
except that audit trail feature is not enabled for direct changes to data for users with certain privileged access rights to
the SAP HANA application and/or the underlying HANA database. Further no instance of audit trail feature being tampered
with was noted in respect of other software. Additionally, the audit trail of prior years has been preserved by the Company
as per the statutory requirements for record retention to the extent it was enabled and recorded in respective years.
The weighted average duration of the defined benefit obligation as at 31 March 2026 is 4.25 years (31 March 2025
5.23 years)
(ii) Provident Fund
In case of certain employees, the Provident fund contribution is made to trusts administered by the Company. In
terms of guidance note issued by the Institute of Actuaries of India, the Actuary has provided a valuation of Provident
fund liability based on the assumptions listed and determined that there is no shortfall as at 31 March 2026.
The assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic
approach are:
The amounts shown above represents the best possible estimates arrived at on the basis of available information. The
uncertainties are dependent on the outcome of the different legal processes. The timing of future cash flows will be
determinable only on receipt of judgments / decisions pending with various forums/authorities. The Company does not
expect any reimbursements against the above.
Note : The Government of India has consolidated 29 existing labour legislations into a united framework comprising four
Labour Codes viz. the Code on Wages, 2019, the Code on Social Security, 2020, the Industrial Relations Code, 2020 and
the Occupational Safety, Health and Working Conditions Code, 2020 (collectively referred to as the "New Labour Codes").
These Codes have been made effective from 21st November, 2025. The corresponding supporting rules under these
Codes are yet to be notified. The labour codes, amongst other things, introduce changes including a uniform definition of
wages and enhanced benefits relating to leave.
* The Company has made provision for diminution in value of Investment during the year.
Key Managerial Personnel are entitled to post-employment benefits and other long term employee benefits recognised
as per Ind AS 19 - ''Employee Benefitsâ in the financial statements. As these employee benefits are lump sum amounts
provided on the basis of actuarial valuation, the same is included above on payment basis.
The sales, purchases, rental income, overhead recovery, job work charges, management fee from, rental expense to and
all other transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions.
The loans to related parties are generally for a term of 3-5 years, repayable out of project cashflows, at interest rates of 8%
to 8.50% per annum. Outstanding balances at the year-end are unsecured and interest free and the settlement will occur
in cash.
There have been no guarantees provided or received, for any related party receivables or payables except for corporate
guarantees given for Borrowing from Non Banking Financial Companies and dues of Land Owner of Wholly owned
Subsidiary and step down Subsidiary respectively. For the year ended 31 March 2026, the Company has not recorded any
impairment of receivables relating to amounts owed by related parties (31 March 2025: INR Nil) except for impairment of
Investment in Joint venture. This assessment is undertaken each financial year through examining the financial position
of the related party and the market in which the related party operates
The remuneration of directors and key executives is determined by the nomination and remuneration committee having
regard to the performance of individuals and market trends
F. The Board of Directors monitors the operating results of its business units separately for the purpose of making decisions
about resource allocation and performance assessment.
G. No single customer contributed 10% or more to the Companyâs revenue for the year ended 31 March 2026 and 31 March
2025
H. The accounting policies of the reportable segments are the same as the Companyâs accounting policies described in note
2A.
Segment profit / (loss) represents the profit / (loss) before finance cost and tax earned by each segment without allocation
of central administration costs and directorsâ salaries, investment income and finance costs. This is the measure reported
to the chief operating decision maker for the purposes of allocation and assessment of segment performance.
For the purpose of the Companyâs capital management, equity includes issued equity capital, convertible preference shares,
share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the
Companyâs capital management is to maximize the shareholder value. The Companyâs Capital Management objectives
are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may
be available in future so as to maximize shareholdersâ value. The Company is monitoring capital using debt equity ratio
as its base which is debt to equity. The Companyâs policy is to keep debt equity ratio below two and infuse capital if and
when required through issue of new shares and/or better operational results and efficient working capital management.
NOTE 43 | FINANCIAL RISK MANAGEMENT FRAMEWORK
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other
payables. The Companyâs principal financial assets include loans, trade and other receivables and cash and cash
equivalents that derive directly from its operations. The Company also holds FVTOCI
Mar 31, 2025
September 24, 2024 and March 07, 2025 passed a resolution approving grant of 42,439 (March 31,2024: 12,27,535) stock options to the eligible employees of its Wholly Owned Subsidiary viz. Birla Estates Private Limited under CTIL Employee Stock Option Scheme 2023 (''the Schemeâ). This Scheme has been approved by the Board of Directors vide its resolution dated January 16, 2023 and also by Shareholders through postal ballot via remote e-voting on March 09, 2023 in terms of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. Accordingly the Company has considered the related expenses amounting to Rs. 11.78 Crores (31 March 2024 - Rs. 11.16 Crores) incurred till 31 March, 2025 as deemed capital contribution in the subsidiary Company in accordance with Ind AS 102 ''Share Based Paymentsâ.
Note: Post discontinuation of the Companyâs Textiles business, the economic advantages to its Joint Venture (JV) Birla Advanced Knits Private Limited like common utility, shared manpower & integrated operations with Siro yarn spinning were lost, hence entity became non-viable and the said JV business operations have been stopped. Therefore, both the JV partners have decided to sell their respective investments in the JV. Both the JV partners have an obligation to contribute equally towards the liabilities of the JV in excess of their respective investments. Accordingly, the Company has recognised provision aggregating to Rs. 114 Cr. towards its exposure in JV. As a result the company has made provision for diminution in value of investment of INR 25 Cr. and balance of INR 89 Cr. is disclosed as other current financial liability as obligation towards share of liabilities in joint venture (Refer note no. 15).
(i) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities. These equity shares are designated as FVTOCI as they are not held for trading purpose and are not in similar line of business as the Company. Thus disclosing their fair value fluctuation in profit and loss will not reflect the purpose of holding. Refer Note 44 for determination of their fair values.
(ii) Investments in unquoted investments includes investment in Industry House Limited (IHL) amounting to Rs 29.73 Crore (31 March 2024 Rs. 28.41 Crore).The Company is holding 35.28% of equity shares in IHL. As the Company does not have significant influence over Industry House Limited, the Company has not considered it as an associate as per Ind AS 28 " Investments in Associates and Joint Ventures" and hence not consolidated.
The Company has elected to recognise changes in the fair value of certain investments in equity securities in OCI. These changes are accumulated within the FVOCI equity investment reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
The Company has CTIL Option Scheme 2023 (The Scheme) under which options to subscribe for the Companyâs shares have been granted to the eligible employees of its wholly owned Subsidiary viz. Birla Estates Private Limited. The Employee stock options reserve is used to recognise the value of equity settled share-based payments provided to its eligible employees. The said reserve shall be utilised by the Company for issue of its equity shares against the right exercisable by the eligible employees under the scheme.
I. Details of Security:1. Loans covered in Sr. No. 8 & 9 :
(i) First pari passu charge on present and future movable fixed assets of borrower''s Pulp and Paper unit at Lalkuan, Uttarakhand.
2. Loans covered in Sr. No. 7 :
(i) First pari passu charge on current assets (including documents of title to goods/ related receivables).
3. Loans covered in Sr. No. 10 & 11 :
(i) Registered Mortgage on Project Land and structure thereon.
(ii) Hypothecation of future scheduled receivables of the project and all insurance both present & future of the project only
(iii) Hypothecation of Escrow account and all investments in respect thereof.
Bank loan and NCDs contain certain debt covenants relating to total term loan to tangible net worth, fixed asset coverage ratio, net debt to equity ratio, debt service coverage ratio, total debt to EBITDA and interest coverage ratio. The Company is compliant with the said covenants during the year ended 31 March 2025. The Company has also satisfied all other debt covenants prescribed in the terms of bank loan and NCDs.
The Company has not defaulted in repayment of borrowing and interest thereon.
(i) Unclaimed dividend amounting to Rs 0.05 crore (31 March 2024 Rs. 0.05 crore) is pending on account of litigation among claimants / notices from the tax recovery officer.
(ii) Derivative financial instruments:
The Company entered into foreign exchange forward contracts with the intention of hedging foreign exchange risk of expected sales and purchases, these contracts are not designated as hedge and are measured at fair value through profit or loss.
Derivative instruments at fair value through profit or loss reflect the negative change in fair value of those foreign exchange forward contracts that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for expected sales and purchases.
(iii) Changes in liabilities arising from financing activities (excluding lease liabilities)
Under the Export Promotion Capital Goods (EPCG) Scheme, the Company received Government grant for the purchase of certain items of property, plant and equipments. As per the EPCG scheme the Company has an obligation to export up to 6 times of grant amount. As and when the Company fulfils the export obligation, proportionate grant is released to the Statement of profit and loss (Refer Note 39).
(i) Cash credit / Overdraft facility form Banks of Rs. 107.75 Crores (31 March 2024 Rs. 8.50 crores) are secured against a first and pari passu charge over the current assets (including documents of title to goods/related receivables) and collateral security on a pari-passu basis over the present and future property plant and equipments (plant and machinery) of Century Pulp and Paper.
(ii) Line of credit from banks of Rs. 50.00 crores (31 March 2024 Rs. 25.00 crores) are secured against a first and pari passu charge with other facility by way of registered mortgage on the property, project, future scheduled receivable of the project on the companyâs Birla Niyaara Project.
(iii) Cash credit / Overdraft facility of Rs. 61.41 crores (31 March 2024 Rs. 0.44 crores) are secured against a first and pari passu charge with other facility by way of registered mortgage on the property, project, future scheduled receivable of the project and all insurance proceed, both present and future, on security of all rights, title, interest, claims, benefits, demands under the project documents of both present and future, on the escrow and DSR account of the project including all monies credited / deposited therein and all investment in respect thereof.
All such sold units of secured project, booking of which are subsequently cancelled by customer shall continue to stand mortgaged to the lender.
Derivatives not designated as hedging instruments
The Company holds derivative financial instruments such as foreign currency forward to mitigate the risk of changes in exchange rate on foreign currency exposure. The counterparty for these contracts is generally a Bank or a Financial Institution. These derivative financial instrument are valued based on quoted prices for similar asset and liabilities in active markets or inputs that is directly or indirectly observable in the marketplace.
32 Revenue expenditure on research and development activities relating to Government recognised in-house research and development laboratories incurred and charged out during the year through the natural heads of account, aggregate Rs. Nil crores (31 March 2024: Rs.2.88 crores).
33 During the financial year 2017-18, the Company had entered into an agreement with Grasim Industries Limited (''GIL'') granting right to manage and operate the Company''s Viscose Filament Yarn (''VFY'') business, which is part of Textile segment, for a duration of 15 years commencing from February 1, 2018. As a part of consideration, GIL has paid an upfront Royalty of Rs 605.00 crores. In addition GIL has also paid the carrying value of net working capital and the interest free security deposit of Rs 200.00 crores which is repayable after 15 years. With effect from February 1, 2018, GIL have right to use the VFY business assets including its intangible assets for a period of 15 years from the above date. The Company is recognizing royalty income over the period of 15 years.
Pursuant to the agreement, GIL shall incur all capital expenditure and commitments involving capital expenditure as may be necessary for the proper, optimum and profitable operation of the VFY Business. In this regard, Company has agreed that all improvement/ capital expenditure done by GIL during the tenure of agreement will be transferred to the Company, at such fair value as may be agreed between the Company and GIL.
NOTE 34 | TRADE PAYABLES
(i) Rs 3.29 Crore (31 March 2024 Rs. 4.19 Crore) due to micro and small enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). There are no other amounts paid / payable towards interest / principal under the MSMED; and
(ii) The above information has been determined to the extent such parties have been identified on the basis of the information available with the Company regarding the status of suppliers under the MSMED Act.
NOTE 35 | DISCONTINUED OPERATIONS(A) Textile Division
During the quarter ended June 30, 2023, the Company had initiated the process to restructure its operations at its Bharuch Textile Division business (''Division'') which includes outsourcing Greige Fabric from the third party instead of manufacturing it in the plant. Subsequently, during the previous year, Board of Directors had approved the proposal for discontinuation of complete operations of the said Division. Accordingly, results of the said Division is disclosed as discontinued operations in the financial results. Further the Group is evaluating all the available option including the sale of plant and machineries and hence the non current assets of the said division is not classified as asset held for sale. As the operations were discontinued, during the previous year, the Company had assessed the recoverability of Property, plant and equipment and other assets of the said Division and recognized a provision aggregating to INR 214.00 Crores as Loss on measurement to net realizable value.
The Company had obtained the valuation report from registered valuer to assess the net realizable value of assets, Plant and Machinery had been valued at realisable value of existing machinery based on market prices. In case of building the entire remaining written down value was provided for impairment on conservative basis since the building was specifically designed for textile business and may not be of any significant use for the potential purchaser.
Pursuant to approval of Board of Directors ("Board") of the Company at their meeting held on March 31,2025, the company has executed a business transfer agreement (BTA) with the ITC Ltd. for sale and transfer of the Companyâs pulp and paper undertaking operated under the name of Century Pulp and paper. In terms of the requirements of Accounting Standards (Ind AS), the assets and liabilities which would transferred is presented as held for sale and the results of the Pulp and Paper business have been presented as ''Discontinued Operationsâ. Consequently, the financial results of the Company for the comparative periods and for the year ended 31st March, 2024 have been presented accordingly.
a Post discontinuation of the Companyâs Textiles business, the economic advantages to its Joint Venture (JV) Birla Advanced Knits Private Limited like common utility, shared manpower & integrated operations with Siro yarn spinning were lost, hence entity became non-viable and the said JV business operations have been stopped. Therefore, both the JV partners have decided to sell their respective investments in the JV. Both the JV partners have an obligation to contribute equally towards the liabilities of the JV in excess of their respective investments. Accordingly, the Company has recognised provision aggregating to Rs. 114 Cr. towards its exposure in JV.
b The company was entitled to Worli West Colony comprises C. S. No. 1,546 leasehold land admeasuring 25,543.68 sq mtrs (equivalent to 6.31 acres). Company had filed a writ Petition before the High Court of Bombay seeking a formal conveyance of the land in its favor. The Honâble High Court of Bombay had passed a judgment dated March 14, 2022 inter alia directing MCGM to execute a formal conveyance in favor of the Company. MCGM filed an appeal in the Honâble Supreme Court against the said High Court Judgement and the Honâble Supreme Court has allowed the said Appeal. Pursuant to Supreme Court Judgement the company has surrendered a land parcel to local authority, and as a result the company has written off Rs. 42.89 Cr. pertaining to the said property.
~36| DISCLOSURES PURSUANT TO - "EMPLOYEE BENEFITS"(a) Defined Contribution Plans:
The Companyâs contribution to Provident Fund and Superannuation Fund aggregating Rs. 7.12 Crores (31 March 2024: Rs.4.26 Crores) has been recognised in the Statement of Profit and Loss under the head Employee benefits expense.
(b) Defined Benefit Plans:(i) Gratuity
The Company has a defined benefit gratuity plan (funded).The Companyâs defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy.
Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. This includes employing the use of annuities and longevity swaps to manage the risks. The Board of Trustees decides its contribution based on the results of this annual review. Generally, it aims to have a portfolio mix of equity instruments, property and debt instruments. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The weighted average duration of the defined benefit obligation as at 31 March 2025 is 5.23 years (31 March 2024 5.56 years)
(ii) Provident Fund
In case of certain employees, the Provident fund contribution is made to trusts administered by the Company. In terms of guidance note issued by the Institute of Actuaries of India, the Actuary has provided a valuation of Provident fund liability based on the assumptions listed and determined that there is no shortfall as at 31 March 2025.
The assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are:
37 The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled for direct changes to data for users with certain privileged access rights to the SAP HANA application and/or the underlying HANA database. Further no instance of audit trail feature being tampered with was noted in respect of other software.
|
38 CONTINGENT LIABILITIES (i) Contingent liabilities (to the extent not provided for) ('' in Crores) |
||
|
Particulars |
As at 31 March 2025 |
As at 31 March 2024 |
|
Contingent liabilities - Continuing Operations |
||
|
(a) (i) Claims against the Company not acknowledged as debts in respect of : |
||
|
- Custom Duty, Service Tax and Excise Duty |
8.79 |
11.22 |
|
- Sales Tax , Goods & Service Tax and Entry Tax |
35.20 |
16.72 |
|
- Others |
4.61 |
5.93 |
|
(ii) Claims not acknowledged as debts jointly with other members of "Business Consortium of Companies" in which the Company had an interest (proportionate) |
28.16 |
27.34 |
|
(b) Disputed income tax matters under appeal |
138.99 |
133.34 |
|
(c) Indirect exposure upon the Company |
||
|
- Guarantee given |
1,300.00 |
900.00 |
|
(d) The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant. |
Amount not determinable |
Amount not determinable |
The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties are dependent on the outcome of the different legal processes. The timing of future cash flows will be determinable only on receipt of judgments / decisions pending with various forums/authorities. The Company does not expect any reimbursements against the above.
|
39 COMMITMENTS |
('' in Crores) |
|
|
Particulars |
As at |
As at |
|
31 March 2025 |
31 March 2024 |
|
|
(a) Capital commitments |
||
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) |
270.14 |
176.35 |
|
(b) Other commitments |
||
|
The Company has imported capital goods under the Export promotion capital goods scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified exports in the future years |
11.42 |
2.83 |
Key Managerial Personnel are entitled to post-employment benefits and other long term employee benefits recognised as per Ind AS 19 - ''Employee Benefitsâ in the financial statements. As these employee benefits are lump sum amounts provided on the basis of actuarial valuation, the same is included above on payment basis.
The sales, purchases, rental income, overhead recovery, job work charges, management fee from, rental expense to and all other transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. The loans to related parties are generally for a term of 3-5 years, repayable out of project cashflows, at interest rates of 8% to 8.50% per annum. Outstanding balances at the year-end are unsecured and interest free and the settlement will occur in cash.
There have been no guarantees provided or received, for any related party receivables or payables except for corporate guarantees given for Borrowing from Non Banking Financial Companies and dues of Land Owner of Wholly owned Subsidiary and step down Subsidiary respectively. For the year ended 31 March 2025, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2024: INR Nil) except for impairment of Investment in Joint venture. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
The remuneration of directors and key executives is determined by the nomination and remuneration committee having regard to the performance of individuals and market trends.
F. The Board of Directors monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
G. No single customer contributed 10% or more to the Companyâs revenue for the year ended 31 March 2025 and 31 March 2024
H. The accounting policies of the reportable segments are the same as the Companyâs accounting policies described in note 2A.
Segment profit represents the profit before finance cost and tax earned by each segment without allocation of central administration costs and directorsâ salaries, investment income and finance costs. This is the measure reported to the chief operating decision maker for the purposes of allocation and assessment of segment performance.
For the purpose of the Companyâs capital management, equity includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximize the shareholder value. The Companyâs Capital Management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholdersâ value. The Company is monitoring capital using debt equity ratio as its base which is debt to equity. The Companyâs policy is to keep debt equity ratio below two and infuse capital if and when required through issue of new shares and/or better operational results and efficient working capital management.
~43| FINANCIAL RISK MANAGEMENT FRAMEWORK
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The Companyâs principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions. The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees these risks management. The Companyâs senior management provides assurance that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the companyâs policies and risk objectives. All derivative activities for risk management purposes are carried out by teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Credit risk is the risk that counter party will not meet its obligation under a financial instrument or customer contract leading to a financial loss. The Company is exposed to credit risk mainly from trade receivables and other financial assets. The Company only deals with parties which has good credit ratings / worthiness based on companyâs internal assessment.
The Company has divided parties in two grades based on their performance.
Good: parties with a positive external rating (if available) and stable financial position with no past default is considered in this category.
Doubtful: parties where the company doesnât have information on their financial position or has past trend of default are considered under this category.
The Company has not acquired any credit impaired asset. There was no modification in any financial assets.
Customer credit is managed by each business division subject to the Companyâs established policy procedures and control related to customer credit risk management.
Total Trade Receivables as on March 31, 2025 is Rs. 50.54 crores ( March 31, 2024 Rs. 142.34 crores). The company does not have higher concentration of credit risk to a single customer.
The ageing analysis of the receivables are considered from the date of invoice (Refer note 10).
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets and their credit worthiness are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets and their credit worthiness are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
The Company has recognised loss allowance provision on trade receivables amounting to Rs.13.91 crores during the year (31 March 2024 Rs.9.27 crores) as there was no reasonable expectations of recovery and were outstanding for more than 360 days from becoming due.
Credit risk from balances with banks is managed by Companyâs treasury department in accordance with the Company policy. Investment of surplus funds are made only in approved Mutual Funds and that too in liquid funds. As soon as the fund reaches to a reasonable level the Company repays its working capital borrowing by redeeming the liquid fund. The other financial assets are from various forum of Government authorities and are released by Government authorities on completion of relevant terms and conditions for the release of outstanding.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risks - interest rate risk, currency risk and other price risk in a fluctuating market environment. Financial instrument affected by market risks includes loans and borrowings, deposits, FVTOCI Investments, derivatives and other financials assets.
The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.
The sensitivity analyses in the following sections relates to the outstanding balance as at 31 March 2025 and 31 March 2024
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2025.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2025 and 31 March 2024.
This is the risk that the Company may suffer losses as a result of adverse exchange rate movement during the relevant period. As a policy, Company is covering all foreign exchange risk on account of import and loans so that Company may not be put to any loss situation due to adverse fluctuations in currency rates. There is periodical review of foreign exchange transactions and hedging by the Companyâs executives.
The following tables demonstrate the sensitivity to a reasonably possible change in USD, EUR, JPY and GBP exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due
The Company manages interest rate risk by having a balanced portfolio of fixed and variable rate of interest on loans and borrowings. To manage this, Company has issued fixed rate bonds and loans taken from banks are linked to MCLR rate of the bank, which are variable.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Companyâs profit before tax is affected through the impact on floating rate borrowings, as follows:
The Company is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.
C. LIQUIDITY RISK(i) Liquidity risk management
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows on daily, monthly and yearly basis. The Company ensures that there is a free credit limit available at the start of the year which is sufficient for repayments getting due in the ensuing year. Loan arrangements, credit limits with various banks including working capital and monitoring of operational and working capital issues are always kept in mind for better liquidity management
(ii) Maturities of financial liabilities
The following tables detail the Companyâs 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 based on the earliest date on which the Company can be required to pay.
To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.
Valuation technique and key input used: Fair value is determined using discounted future cash flows, which are estimated at the end of the reporting period, discounted at a rate that reflects the credit risk of the Company.
The fair values of the quoted instruments (Investment in Mutual fund units and Equity shares) are based on the price quotations at the reporting date.
The fair values of the unquoted equity instruments have been estimated using a replacement cost method. The valuation requires management to make certain assumptions about the assets, liabilities, investments of Investee Company. The probabilities of the various assumptions can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments based on the best information available to the Company.
The Company has significant leasing arrangements in respect of operating leases for premises. These are non cancellable leases with a lock in period of minimum three years. Most of the leases are renewable for a further period on mutually agreeable terms and also include escalation clauses on renewal. The Company has entered into operating leases for its Investment property. These typically have lease terms of between 1 to 4 years. The Company has recognized an amount of Rs. 145.96 Crore (31 March 2024 Rs. 145.70 Crore) as rental income for operating lease during the year ended March 31,2025 Future minimum rentals receivable under non-cancellable operating leases are, as follows:
~46| SHARE BASED PAYMENTS (ESOP) (IND AS 102)
During the year, the Nomination and Remuneration Committee of the Board of Directors of the Holding Company has approved on September 24, 2024 and March 07, 2025, an aggregate grant of 42,439 (March 31, 2024: 12,27,535) stock options to the eligible employees of Birla Estates Private Limited, a Wholly Owned Subsidiary of the Holding Company under CTIL Employee Stock Option Scheme 2023 (''the Schemeâ).
The Scheme is implemented through the CTIL Employee Welfare Trust. The Trust had purchased 12,52,480 equity shares of the Holding Company from market as per the Scheme. The Holding Company considered Trust as its extension and shares held by the said Trust are treated as treasury shares which has been adjusted with the other equity. The details of the Scheme are given hereunder:
~48| OTHER STATUTORY INFORMATION
(i) No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year
in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(viii) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
49. Figures less than Rs 50,000 have been shown at actuals in brackets, since the figures are rounded off to the nearest lakh.
Mar 31, 2024
(i) During the year ended 31 March 2024 and 31 March 2023, no impairment indicators existed for any of its Cash Generating Unit (CGU) relating to continuing operations and accordingly no provision for impairment has been recognised for continuing operations. The recoverable amount based on value in use was determined at each CGU level for continuing operations. However the Company has recognised the impairment provision on property, plant and equipments of discontinued operations (Refer Note No 35).
(ii) Capitalised borrowing cost : No borrowing costs are capitalised on property, plant and equipments under construction (31 March, 2023-Nil).
(iii) Title deeds
(a) All title deeds of immovable properties included in property, plant and equipments are held in the name of the Company as at 31st March 2024.
(b) Refer note 14 and note 18 for details of pledge and securities.
(iii) Out of the total land under Investment Properties, 6.31 acres of land amounting to '' 0.01 crores, which was allotted to the Company on lease under the Poorer Class Accommodation Scheme 1898 as amended by 1913 Act and 1925 Act, which stated that in the event of no default being made in complying with the conditions of the lease, then on expiry of the lease all the right, title and interest shall vest with the Company. The lease expired in the year 1955 and the Company has filed a petition for execution of formal deed of conveyance, refer details below
The above valuation of the investment properties are in accordance with the Ready Reckoner rates prescribed by the Government of Maharashtra for the purpose of levying stamp duty. The Independent Valuer has referred to the publications and Government website for Ready Reckoner rates. Suitable adjustments if required have been made to account for availability of FSI in land parcels in Mumbai in accordance with the guidelines prescribed by the Department of Registrations and Stamps. The adjustments related to floors, lifts and other factors are not considered for valuation of commercial property. Since the valuation is based on the published Ready Reckoner rates, the Company has classified the same under Level 2.
Note : The Nomination and Remuneration Committee of the Board of Directors of the Company has approved on June 22, 2023 and December 01, 2023 grant of 12,27,535 stock options in aggregate to the eligible employees of Wholly Owned Subsidiary viz. Birla Estates Private Limited under CTIL Employee Stock Option Scheme 2023 (''the Schemeâ). This Scheme has been approved by the Board of Directors vide its resolution dated January 16, 2023 and also by Shareholders through postal ballot via remote e-voting on March 09, 2023 in terms of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. Accordingly the Company has considered the related expenses amounting to '' 11.16 Crores (31 March 2023 - Nil) incurred till 31 March, 2024 as deemed capital contribution in the subsidiary Company in accordance with Ind AS 102 ''Share Based Payments''.
(i) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities. These equity shares are designated as FVTOCI as they are not held for trading purpose and are not in similar line of business as the Company. Thus disclosing their fair value fluctuation in profit and loss will not reflect the purpose of holding. Refer Note 44 for determination of their fair values
(ii) Investments in unquoted investments includes investment in Industry House Limited (IHL) amounting to '' 28.41 Crore (31 March 2023''26.79 Crore).The Company is holding 35.28% of equity shares in IHL. As the Company does not have significant influence over Industry House Limited, the Company has not considered it as an associate as per Ind AS 28 " Investments in Associates and Joint Ventures" and hence not consolidated. The Companyâs share of profit of Industry House Limited is insignificant.
(i) Short term fixed deposits are varying between three months and twelve months, depending on the immediate cash requirements and earn interest at the respective short term deposit rate. Interest rate is between 3.10% to 8.00% (31 March 2023 - 4.40% to 8.00%)
(ii) Current accounts includes '' 12.30 Crores (31 March 2023 : '' 1.07 Crores) held in escrow account for a project under Real Estate (Regulation and Development) Act, 2016 ("RERA"). The money can be utilised for payments of the specified projects only.
General Reserves is used from time to time to transfer profits from Retained earnings for appropriation purpose. This reserve will be utilised in accordance with the provisions of the Companies Act, 2013.
(e) Other Comprehensive Income
FVOCI equity investments:
The Company has elected to recognise changes in the fair value of certain investments in equity securities in OCI. These changes are accumulated within the FVOCI equity investment reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
The Company has CTIL Option Scheme 2023 (The Scheme) under which options to subscribe for the Companyâs shares have been granted to the eligible employees of its wholly owned Subsidiary viz. Birla Estates Private Limited. The Employee stock options reserve is used to recognise the value of equity settled share-based payments provided to its eligible employees. The said reserve shall be utilised by the Company for issue of its equity shares against the right exercisable by the eligible employees under the scheme.
2. Loans covered in Sr. No. 5 :
First pari passu charge on the present and future movable fixed assets of the Companyâs Birla Century unit at Bharuch Gujarat and Pulp & Paper unit at Lalkuan, Uttarakhand. Negative lien on the present and future immovable fixed assets of the Companyâs Birla Century unit at Bharuch Gujarat and Pulp & Paper unit at Lalkuan, Uttarakhand.
Bank loan and NCDs contain certain debt covenants relating to total term loan to tangible net worth, fixed asset coverage ratio, net debt to equity ratio, debt service coverage ratio, total debt to EBITDA and interest coverage ratio. The Company is compliant with the said covenants during the year ended 31 March 2024. The Company has also satisfied all other debt covenants prescribed in the terms of bank loan and NCDs.
The Company has not defaulted in repayment of borrowing and interest thereon.
(i) Unclaimed dividend amounting to '' 0.05 crore (31 March 2023''0.05 crore) is pending on account of litigation among claimants / notices from the tax recovery officer.
(ii) Derivative financial instruments:
The Company entered into foreign exchange forward contracts with the intention of hedging foreign exchange risk of expected sales and purchases, these contracts are not designated as hedge and are measured at fair value through profit or loss.
Derivative instruments at fair value through profit or loss reflect the negative change in fair value of those foreign exchange forward contracts that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for expected sales and purchases.
(i) Cash credit / Overdraft facility form Banks of '' 8.50 Crores (31 March 2023 '' 19.82 crores) are secured against a first and pari passu charge over the current assets (including documents of title to goods/related receivables) and collateral security on a pari-passu basis over the present and future property plant and equipments (plant and machinery) of Birla Century (Gujarat), Century Pulp and paper.
(ii) Cash credit / Overdraft facility of '' 0.44 crores (31 March 2023 '' 113.87 crores) & Line of credit from banks are secured against a first and pari passu charge with other facility by way of registered mortgage on the property, project, future scheduled receivable of the project and all insurance proceed, both present and future, on security of all rights, title, interest, claims, benefits, demands under the project documents of both present and future, on the escrow and DSR account of the project including all monies credited / deposited therein and all investment in respect thereof. All such sold units of secured project, booking of which are subsequently cancelled by customer shall continue to stand mortgaged to the lender.
~30| HEDGING ACTIVITIES AND DERIVATIVES Derivatives not designated as hedging instruments
The Company holds derivative financial instruments such as foreign currency forward to mitigate the risk of changes in exchange rate on foreign currency exposure. The counterparty for these contracts is generally a Bank or a Financial Institution. These derivative financial instrument are valued based on quoted prices for similar asset and liabilities in active markets or inputs that is directly or indirectly observable in the marketplace.
32 Revenue expenditure on research and development activities relating to Government recognised in-house research and development laboratories incurred and charged out during the year through the natural heads of account, aggregate '' 2.88 crores (31 March 2023: '' 4.35 crores).
33 During the financial year 2017-18, the Company had entered into an agreement with Grasim Industries Limited (''GIL'') granting right to manage and operate the Companyâs Viscose Filament Yarn (''VFY'') business, which is part of Textile segment, for a duration of 15 years commencing from February 1, 2018. As a part of consideration, GIL has paid an upfront Royalty of '' 605.00 crores. In addition GIL has also paid the carrying value of net working capital and the interest free security deposit of '' 200.00 crores which is repayable after 15 years. With effect from February 1,2018, GIL have right to use the VFY business assets including its intangible assets for a period of 15 years from the above date. The Company is recognizing royalty income over the period of 15 years.
Pursuant to the agreement, GIL shall incur all capital expenditure and commitments involving capital expenditure as may be necessary for the proper, optimum and profitable operation of the VFY Business. In this regard, Company has agreed that all improvement/ capital expenditure done by GIL during the tenure of agreement will be transferred to the Company, at such fair value as may be agreed between the Company and GIL.
(i) '' 4.19 Crore (31 March 2023 '' 17.04 Crore) due to micro and small enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). There are no other amounts paid / payable towards interest / principal under the MSMED; and
(ii) The above information has been determined to the extent such parties have been identified on the basis of the information available with the Company regarding the status of suppliers under the MSMED Act.
~35| DISCONTINUED OPERATIONSTextile Division
During the quarter ended June 30, 2023, the Company had initiated the process to restructure its operations at its Bharuch Textile Division business (''Division'') which includes outsourcing Greige Fabric from the third party instead of manufacturing it in the plant. Subsequently, during the year, Board of Directors have approved the proposal for discontinuation of complete operations of the said Division. Accordingly, results of the said Division is disclosed as discontinued operations in the financial results. Further the Company is evaluating all the available option including the sale of plant and machineries and hence the non current assets of the said division is not classified as asset held for sale. As the operations are discontinued, during the year, the Company has assessed the recoverability of Property, plant and equipment and other assets of the said Division and recognized a provision aggregating to '' 214.00 Crores as Loss on measurement to net realizable value.
The Company has obtained the valuation report from registered valuer to assess the net realizable value of assets, Plant and Machinery has been valued at realisable value of existing machinery based on market prices. In case of building the entire remaining written down value is provided for impairment on conservative basis since the building are specifically designed for textile business and may not be of any significant use for the potential purchaser.
During the previous year ended 31 March 2023, the Company had transferred its leasehold land in Gujarat to Grasim Industries Limited for a consideration of '' 215.85 Crores resulting in a net gain of '' 134.21 Crores as an exceptional item after adjusting non-usage charges amounting to '' 21.64 Crores and transfer fees amounting to '' 37.52 Crores paid to Gujarat Industrial Development Corporation. Further, tax on such gain amounting to '' 25.64 Crores was included in the current tax for the previous year.
(a) Defined Contribution Plans:
The Companyâs contribution to Provident Fund and Superannuation Fund aggregating '' 4.26 Crores (31 March 2023:
'' 5.92 Crores) has been recognised in the Statement of Profit and Loss under the head Employee benefits expense.
(i) Gratuity
The Company has a defined benefit gratuity plan (funded).The Companyâs defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy.
Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. This includes employing the use of annuities and longevity swaps to manage the risks. The Board of Trustees decides its contribution based on the results of this annual review. Generally, it aims to have a portfolio mix of equity instruments, property and debt instruments. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
(ii) Provident Fund
In case of certain employees, the Provident fund contribution is made to trusts administered by the Company. In terms of guidance note issued by the Institute of Actuaries of India, the Actuary has provided a valuation of Provident fund liability based on the assumptions listed and determined that there is no shortfall as at 31 March 2024.
The assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are:
|
38 CONTINGENT LIABILITIES (i) Contingent liabilities (to the extent not provided for) ('' in Crores) |
||
|
Particulars |
As at 31 March 2024 |
As at 31 March 2023 |
|
Contingent liabilities - Continuing Operations |
||
|
(a) (i) Claims against the Company not acknowledged as debts in respect of : |
||
|
- Custom Duty, Goods & Service Tax and Excise Duty |
11.77 |
11.22 |
|
- Sales Tax and Entry Tax |
16.17 |
11.00 |
|
- Others |
5.93 |
6.29 |
|
(ii) Claims not acknowledged as debts jointly with other members of "Business Consortium of Companies" in which the Company had an interest (proportionate) |
27.34 |
26.51 |
|
(b) Disputed income tax matters under appeal |
133.34 |
133.34 |
|
(c) Indirect exposure upon the Company |
||
|
- Guarantee given to Subsidiary Company (Refer Note 40) |
900.00 |
200.00 |
|
(d) The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant. |
Amount not determinable |
Amount not determinable |
The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties are dependent on the outcome of the different legal processes. The timing of future cash flows will be determinable only on receipt of judgments / decisions pending with various forums/authorities. The Company does not expect any reimbursements against the above.
|
39 COMMITMENTS |
('' in Crores) |
|
|
Particulars |
As at 31 March 2024 |
As at 31 March 2023 |
|
Capital commitments |
||
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) |
176.35 |
50.56 |
|
(a) Other commitments |
||
|
The Company has imported capital goods under the Export promotion capital goods scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified exports in the future years |
2.83 |
74.70 |
Finance income and costs, and fair value gains and losses on financial assets are not allocated to individual segments as the underlying instruments are managed on a group basis.
Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a group basis.
Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties.
F. The Board of Directors monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
G. No single customer contributed 10% or more to the Companyâs revenue for the year ended 31 March 2024 and 31 March 2023
H. The accounting policies of the reportable segments are the same as the Companyâs accounting policies described in note 2A.
Segment profit represents the profit before finance cost and tax earned by each segment without allocation of central administration costs and directorsâ salaries, investment income and finance costs. This is the measure reported to the chief operating decision maker for the purposes of allocation and assessment of segment performance.
For the purpose of the Companyâs capital management, equity includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximize the shareholder value. The Companyâs Capital Management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholdersâ value. The Company is monitoring capital using debt equity ratio as its base which is debt to equity. The Companyâs policy is to keep debt equity ratio below two and infuse capital if and when required through issue of new shares and/or better operational results and efficient working capital management.
~43| FINANCIAL RISK MANAGEMENT FRAMEWORK
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The Companyâs principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions. The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees these risks management. The Companyâs senior management provides assurance that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the companyâs policies and risk objectives. All derivative activities for risk management purposes are carried out by teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Credit risk is the risk that counter party will not meet its obligation under a financial instrument or customer contract leading to a financial loss. The Company is exposed to credit risk mainly from trade receivables and other financial assets. The Company only deals with parties which has good credit ratings / worthiness based on companyâs internal assessment.
The Company has divided parties in two grades based on their performance.
Good: parties with a positive external rating (if available) and stable financial position with no past default is considered in this category.
Doubtful: parties where the company doesnât have information on their financial position or has past trend of default are considered under this category.
The Company has not acquired any credit impaired asset. There was no modification in any financial assets.
(i) Trade receivables
Customer credit is managed by each business division subject to the Companyâs established policy procedures and control related to customer credit risk management.
Export customers are mainly against Letter of Credit and/or insurance cover on export outstanding is also taken. Generally deposits are taken from domestic debtors. Apart from deposit there is a commission agent area wise. In case any customer defaults the amount is first recovered from deposits, then from the agentâs commission. Each outstanding customer receivables are regularly monitored and if outstanding is above due date the further shipments are controlled and can only be released if there is a proper justification. The carrying amount and fair value of security deposit amounts to '' 59.46 crores (31 March 2023: '' 73.69 crores) as it is payable on demand. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets and their credit worthiness are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
The Company has recognised loss allowance provision on trade receivables amounting to '' 9.27 Crs during the year (31 March 2023''14.49 Crs) as there was no reasonable expectations of recovery and were outstanding for more than 360 days from becoming due.
(ii) Other Financial Assets
Credit risk from balances with banks is managed by Companyâs treasury department in accordance with the Company policy. Investment of surplus funds are made only in approved Mutual Funds and that too in liquid funds. As soon as the fund reaches to a reasonable level the Company repays its working capital borrowing by redeeming the liquid fund. The other financial assets are from various forum of Government authorities and are released by Government authorities on completion of relevant terms and conditions for the release of outstanding.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risks - interest rate risk, currency risk and other price risk in a fluctuating market environment. Financial instrument affected by market risks includes loans and borrowings, deposits, FVTOCI Investments, derivatives and other financials assets.
The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.
The sensitivity analyses in the following sections relates to the outstanding balance as at 31 March 2024 and 31 March 2023
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2024.
The sensitivity of the relevant profit or loss before tax item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2024 and 31 March 2023
(i) Currency Risk
This is the risk that the Company may suffer losses as a result of adverse exchange rate movement during the relevant period. As a policy, Company is covering all foreign exchange risk on account of import and loans so that Company may not be put to any loss situation due to adverse fluctuations in currency rates. There is periodical review of foreign exchange transactions and hedging by the Companyâs executives.
The following tables demonstrate the sensitivity to a reasonably possible change in USD, EUR and GBP exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives. The Company evaluates exchange rate exposure arising from foreign currency transactions. The company follows established risk management policies and standard operating procedures. The companyâs exposure to foreign
(ii) Interest rate risk
The Company manages interest rate risk by having a balanced portfolio of fixed and variable rate of interest on loans and borrowings. To manage this, Company has issued fixed rate bonds and loans taken from banks are linked to MCLR rate of the bank, which are variable.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Companyâs profit before tax is affected through the impact on floating rate borrowings, as follows:
(iii). Equity Price Risk
The Company is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.
(i) Liquidity risk management
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows on daily, monthly and yearly basis. The Company ensures that there is a free credit limit available at the start of the year which is sufficient for repayments getting due in the ensuing year. Loan arrangements, credit limits with various banks including working capital and monitoring of operational and working capital issues are always kept in mind for better liquidity management
(ii) Maturities of financial liabilities
The following tables detail the Companyâs 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 based on the earliest date on which the Company can be required to pay.
To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.
(iii) Maturities of financial assets
The following table details the Companyâs expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Companyâs liquidity risk management as the liquidity is managed on a net asset and liability basis.
The management assessed that cash and cash equivalents, trade receivables, trade payables, cash credit and all other current financial assets and liabilities approximates their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
(i) Receivables are evaluated by the company based on parameters such as interest rates and individual credit worthiness of the customer. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
(ii) The fair value of loans from banks and other financial liabilities, security deposit, as well as other financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(iii) The fair values of the unquoted equity instruments have been estimated using a net adjusted fair value method. The valuation requires management to make certain assumptions about the assets, liabilities, investments of Investee Company. The probabilities of the various assumptions can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments based on the best information available to the Company.
(iv) The fair values of quoted equity instruments are derived from quoted market prices in active markets.
(v) The Company enters into foreign exchange forward contracts which are valued using valuation techniques, which employs the use of market observable inputs.
(vi) The fair value of floating rate borrowings are determined by using discounted cash flow method using discount rate that reflects the issuerâs borrowing rate at the end of the reporting period. As the Companyâs interest rates changes with the change in market interest rate, there is no material difference in carrying value and fair value. The own non performance risk as at 31 March 2024 was assessed to be insignificant.
~46| SHARE BASED PAYMENTS (ESOP)
During the year, the Nomination and Remuneration Committee ("Committee") of the Board of Directors of the Company has approved on 22nd June, 2023, and 01st December 2023, grant of 12,27,535 Stock Options in aggregate to the eligible employee(s) of Wholly Owned Subsidiary of the Company viz. Birla Estates Private Limited under the CTIL Employee Stock Option Scheme 2023 (''the Schemeâ).
The Scheme is implemented through the CTIL Employee Welfare Trust. The Trust has purchased 12,52,480 equity shares of the Company from market as per the Scheme. The Company considered Trust as its extension and shares held by the said Trust are treated as treasury shares which has been adjusted with the other equity. The details of the Scheme are given hereunder:
(a) Due to discontinuation of textile business during the year, the Company has assessed the recoverability of Property, plant and equipment and other assets of the said Division and recognized a provision aggregating to '' 214.00 Crores as Loss on measurement to net realizable value and in previous year, the Company has recorded exceptional gain on account of transfer of leasehold land of ''134.21 crores. Accordingly, all ratios related to cash flows, revenue and profitability of the Company has been impacted as compared to previous year.
~48| OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
49. The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled for direct changes to data for users with certain privileged access rights to the SAP HANA application and/or the underlying HANA database. Further no instance of audit trail feature being tampered with was noted in respect of the software.
50. Figures less than '' 50,000 have been shown at actuals in brackets, since the figures are rounded off to the nearest lakh.
Mar 31, 2023
(i) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities. These equity shares are designated as FVTOCI as they are not held for trading purpose and are not in similar line of business as the Company. Thus disclosing their fair value fluctuation in profit and loss will not reflect the purpose of holding. Refer Note 44 for determination of their fair values
(ii) Investments in unquoted investments includes investment in Industry House Limited (IHL) amounting to '' 26.79 Crore (31 March 2022''27.38 Crore). The Company is holding 35.28% of equity shares in IHL. As the Company does not have significant influence over Industry House Limited, the Company has not considered it as an associate as per Ind AS 28 "Investments in Associates and Joint Ventures" and hence not consolidated. The Companyâs share of profit of Industry House Limited is insignificant.
Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability as at 31 March 2023.
General Reserves is used from time to time to transfer profits from Retained earnings for appropriation purpose. This reserve will be utilised in accordance with the provisions of the Companies Act, 2013.
(e) Other Comprehensive Income FVOCI equity investments:
The Company has elected to recognise changes in the fair value of certain investments in equity securities in OCI. These changes are accumulated within the FVOCI equity investment reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
Repayment of loan covered above is due on Feb-2025, however as per the term & conditions of NCD put option shall be exercisable by debenture holders at the end of 2 (two) years from the date of Allotment. Hence the said NCD has been classified as current.
Details of Security:1. Loans covered in Sr. No. 1 :
First pari passu charge on present and future plant and machineries of Birla Century, Pulp and Paper divisions and excluding Furniture and Fixtures and vehicles of the said divisions.
2. Loans covered in Sr. No. 4 :
First pari passu charge on the present and future movable fixed assets of the Borrower''s Birla Century unit at Bharuch Gujarat and Pulp & Paper unit at Lalkuan, Uttarakhand. Negative lien on the present and future immovable fixed assets of the Borrower''s Birla Century unit at Bharuch Gujarat and Pulp & Paper unit at Lalkuan, Uttarakhand.
There was modification in security details of above term loan where by Freehold land admeasuring 25,323.78 sq. meters and the Birla Centurion building thereon situated at Worli, Lower Parel Divisions, Mumbai was released during the year.
Bank loan and NCDs contain certain debt covenants relating to total term loan to tangible net worth, fixed asset coverage ratio, net debt to equity ratio and interest coverage ratio. The Company is compliant with the said covenants during the year ended 31 March 2023. The Company has also satisfied all other debt covenants prescribed in the terms of bank loan and NCDs.
The Company has not defaulted in repayment of borrowing and interest thereon.
(i) Unclaimed dividend amounting to '' 0.05 crore (31 March 2022''0.05 crore) is pending on account of litigation among claimants / notices from the tax recovery officer.
(ii) Derivative financial instruments:
The Company entered into foreign exchange forward contracts with the intention of hedging foreign exchange risk of expected sales and purchases, these contracts are not designated as hedge and are measured at fair value through profit or loss.
Derivative instruments at fair value through profit or loss reflect the negative change in fair value of those foreign exchange forward contracts that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for expected sales and purchases.
(i) Cash credit / Overdraft facility form Banks of '' 19.82 Crores (31 March 2022''0.50 crores) are secured against a first and pari passu charge over the current assets (including documents of title to goods/related receivables) and collateral security on a pari-passu basis over the present and future property plant and equipments (plant and machinery) of Birla Century (Gujarat), Century Pulp and paper.
(ii) Cash credit / Overdraft facility of '' 113.87 crores (31 March 2022 '' Nil) & Line of credit from banks are secured against a first and pari passu charge with other facility by way of registered mortgage on the property, project, future scheduled receivable of the project and all insurance proceed, both present and future, on security of all rights, title, interest, claims, benefits, demands under the project documents of both present and future, on the escrow and DSR account of the project including all monies credited / deposited therein and all investment in respect thereof.
All such sold units of secured project, booking of which are subsequently cancelled by customer shall continue to stand mortgaged to the lender.
(a) The above information has been provided as available with the company to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the MSMED Act.
(b) Trade payables are non interest bearing and are normally settled on 60-90 days terms. Acceptances are interest bearing and have an average term of six months. There are no other amounts paid / payable towards interest / principal under the MSMED.
(c) Trade payables Ageing Schedule
~30| HEDGING ACTIVITIES AND DERIVATIVES Derivatives not designated as hedging instruments
The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from 1 to 12 months.
Derivatives designated as hedging instruments Cash flow hedges Foreign currency risk:
Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges against forecast sales / purchases in US dollars. This forecast transactions are highly probable since purchase order already issued / projection of counter party available with the Company and hence expected to be utilised in near term. The foreign exchange contract balances vary with the level of expected foreign currency sales / purchases and changes in foreign exchange forward rate. The long term swap by way of foreign currency sales has been done on the basis of historical business with buyers and comprises 50% of projected sales.
32 Revenue expenditure on research and development activities relating to Government recognised in-house research and development laboratories incurred and charged out during the year through the natural heads of account, aggregate '' 4.35 crores (31 March 2022: '' 3.83 crores).
33 During the financial year 2017-18, the Company had entered into an agreement with Grasim Industries Limited (''GIL'') granting right to manage and operate the Companyâs Viscose Filament Yarn (''VFYâ) business, which is part of Textile segment, for a duration of 15 years commencing from February 1, 2018. As a part of consideration, GIL has paid an upfront Royalty of '' 605.00 crores. In addition GIL has also paid the carrying value of net working capital and the interest free security deposit of '' 200.00 crores which is repayable after 15 years. With effect from February 1,2018, GIL have right to use the VFY business assets including its intangible assets for a period of 15 years from the above date. The Company is recognizing royalty income over the period of 15 years.
Pursuant to the agreement, GIL shall incur all capital expenditure and commitments involving capital expenditure as may be necessary for the proper, optimum and profitable operation of the VFY Business. In this regard, Company has agreed that all improvement/ capital expenditure done by GIL during the tenure of agreement will be transferred to the Company, at such fair value as may be agreed between the Company and GIL.
(i) '' 17.04 Crore (31 March 2022 '' 10.71 Crore) due to micro and small enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). There are no other amounts paid / payable towards interest / principal under the MSMED; and
(ii) The above information has been determined to the extent such parties have been identified on the basis of the information available with the Company regarding the status of suppliers under the MSMED Act.
~35| DISCONTINUED OPERATIONSYarn and Denim division (sold during the previous year)
During the previous year ended 31 March 2022, the Company has sold all the assets of its Yarn and Denim division (''Y&D'') to a third party for a consideration of '' 62.00 crore and has recognised a gain of '' 17.63 crore net of provision for termination benefits and other restructuring costs.
During the year ended 31 March 2023, the Company has transferred its leasehold land in Gujarat to Grasim Industries Limited for a consideration of '' 215.85 Crores resulting in a net gain of '' 134.21 Crores as an exceptional item after adjusting non-usage charges amounting to '' 21.64 Crores and transfer fees amounting to '' 37.52 Crores paid to Gujarat Industrial Development Corporation. Further, tax on such gain amounting to '' 25.64 Crores is included in the current tax for the year.
~36| DISCLOSURES PURSUANT TO - "EMPLOYEE BENEFITS"(a) Defined Contribution Plans:
The Company''s contribution to Provident Fund and Superannuation Fund aggregating '' 5.92 Crores (31 March 2022: '' 5.06 Crores) has been recognised in the Statement of Profit and Loss under the head Employee benefits expense.
(b) Defined Benefit Plans:(i) Gratuity
The Company has a defined benefit gratuity plan (funded).The Companyâs defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy.
Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. This includes employing the use of annuities and longevity swaps to manage the risks. The Board of Trustees decides its contribution based on the results of this annual review. Generally, it aims to have a portfolio mix of equity instruments, property and debt instruments. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
|
38 CONTINGENT LIABILITIES (i) Contingent liabilities (to the extent not provided for) ('' in Crores) |
||
|
Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
|
Contingent liabilities - Continuing Operations |
||
|
(a) (i) Claims against the Company not acknowledged as debts in respect of : |
||
|
- Custom Duty and Excise Duty |
11.22 |
11.01 |
|
- Sales Tax and Entry Tax |
11.00 |
10.27 |
|
- Others |
6.29 |
6.05 |
|
(ii) Claims not acknowledged as debts jointly with other members of "Business Consortium of Companies" in which the Company had an interest (proportionate) (b) Disputed income tax matters under appeal |
26.51 133.34 |
24.86 115.44 |
|
(c) Indirect exposure upon the Company |
||
|
- Guarantee given |
200.00 |
200.00 |
|
(d) The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant. |
Amount not determinable |
Amount not determinable |
The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties are dependent on the outcome of the different legal processes. The timing of future cash flows will be determinable only on receipt of judgments / decisions pending with various forums/authorities. The Company does not expect any reimbursements against the above.
|
39 COMMITMENTS ('' in Crores) |
||
|
Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
|
Capital commitments |
||
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) (a) Other commitments The Company has imported capital goods under the Export promotion capital goods scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified exports in the future years |
50.56 |
35.82 |
|
74.70 |
165.78 |
|
F. The Board of Directors monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
G. No single customer contributed 10% or more to the Companyâs revenue for the year ended 31 March 2023 and 31 March 2022
H. The accounting policies of the reportable segments are the same as the Companyâs accounting policies described in note 2A.
Segment profit represents the profit before finance cost and tax earned by each segment without allocation of central administration costs and directorsâ salaries, investment income and finance costs. This is the measure reported to the chief operating decision maker for the purposes of allocation and assessment of segment performance.
For the purpose of the Companyâs capital management, equity includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximize the shareholder value. The Companyâs Capital Management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholdersâ value. The Company is monitoring capital using debt equity ratio as its base which is debt to equity. The Companyâs policy is to keep debt equity ratio below two and infuse capital if and
~43| FINANCIAL RISK MANAGEMENT FRAMEWORK
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The Companyâs principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees these risks management. The Companyâs senior management provides assurance that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the companyâs policies and risk objectives. All derivative activities for risk management purposes are carried out by teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Credit risk is the risk that counter party will not meet it obligation under a financial instrument or customer contract leading to a financial loss. The Company is exposed to credit risk mainly from trade receivables and other financial assets. The Company only deals with parties which has good credit ratings / worthiness based on companyâs internal assessment.
The Company has divided parties in two grades based on their performance.
Good: parties with a positive external rating (if available) and stable financial position with no past default is considered in this category.
Doubtful: parties where the company doesnât have information on their financial position or has past trend of default are considered under this category.
The Company has not acquired any credit impaired asset. There was no modification in any financial assets.
(i) Trade receivables
Customer credit is managed by each business division subject to the Companyâs established policy procedures and control related to customer credit risk management.
Export customers are mainly against Letter of Credit and/or insurance cover on export outstanding is also taken. Generally deposits are taken from domestic debtors. Apart from deposit there is a commission agent area wise. In case any customer defaults the amount is first recovered from deposits, then from the agentâs commission. Each outstanding customer receivables are regularly monitored and if outstanding is above due date the further shipments are controlled and can only be released if there is a proper justification. The carrying amount and fair value of security deposit amounts to '' 73.69 crores (31 March 2022: '' 53.11 crores) as it is payable on demand.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets and their credit worthiness are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
Credit risk from balances with banks is managed by Companyâs treasury department in accordance with the Company policy. Investment of surplus funds are made only in approved Mutual Funds and that too in liquid funds. As soon as the fund reaches to a reasonable level the Company repay its working capital borrowing by redeeming the liquid fund. The other financial assets are from various forum of Government authorities and are released by Government authorities on completion of relevant terms and conditions for the release of outstanding.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risks - interest rate risk, currency risk and other price risk in a fluctuating market environment. Financial instrument affected by market risks includes loans and borrowings, deposits, FVTOCI Investments, derivatives and other financials assets.
The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.
The sensitivity analyses in the following sections relates to the outstanding balance as at 31 March 2023 and 31 March 2022
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2023.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2023 and 31 March 2022
(i) Currency Risk
This is the risk that the Company may suffer losses as a result of adverse exchange rate movement during the relevant period. As a policy, Company is covering all foreign exchange risk on account of import and loans so that Company may not be put to any loss situation due to adverse fluctuations in currency rates. There is periodical review of foreign exchange transactions and hedging by the Companyâs executives.
Foreign Currency Sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD, EUR and GBP exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives. The Company evaluates exchange rate exposure arising from foreign currency transactions. The company follows established risk management policies and standard operating procedures. The companyâs exposure to foreign currency changes for all other currencies is not material.
The Company manages interest rate risk by having a balanced portfolio of fixed and variable rate of interest on loans and borrowings. To manage this, Company has issued fixed rate bonds and loans taken from banks are linked to MCLR rate of the bank, which are variable.
(iii) Equity Price Risk
The Company is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.
(i) Liquidity risk management
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows on daily, monthly and yearly basis. The Company ensures that there is a free credit limit available at the start of the year which is sufficient for repayments getting due in the ensuing year. Loan arrangements, credit limits with various banks including working capital and monitoring of operational and working capital issues are always kept in mind for better liquidity management
The following tables detail the Companyâs 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 based on the earliest date on which the Company can be required to pay.
To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.
The management assessed that cash and cash equivalents, trade receivables, trade payables, cash credit and all other current financial assets and liabilities approximates their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
(i) Receivables are evaluated by the company based on parameters such as interest rates and individual credit worthiness of the customer. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
(ii) The fair value of loans from banks and other financial liabilities, security deposit, as well as other financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(iii) The fair values of the unquoted equity instruments have been estimated using a net adjusted fair value method. The valuation requires management to make certain assumptions about the assets, liabilities, investments of Investee Company. The probabilities of the various assumptions can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments based on the best information available to the Company.
(iv) The fair values of quoted equity instruments are derived from quoted market prices in active markets.
(v) The Company enters into foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs.
(vi) The fair value of floating rate borrowings are determined by using discounted cash flow method using discount rate that reflects the issuer''s borrowing rate at the end of the reporting period. As the Company''s interest rates changes with the change in market interest rate, there is no material difference in carrying value and fair value. The own non performance risk as at 31 March 2023 was assessed to be insignificant.
The Company has significant leasing arrangements in respect of operating leases for premises. These are non cancellable leases with a lock in period of minimum three years. Most of the leases are renewable for a further period on mutually agreeable terms and also include escalation clauses on renewal. The Company has entered into operating leases for its Investment property. These typically have lease terms of between 1 to 4 years. The Company has recognized an amount of '' 124.73 Crore (31 March 2022''126.45 Crore) as rental income for operating lease during the year ended 31 March 2023.
[47] OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
48 The Company has defined process to take daily back-up of books of account maintained electronically and maintain the logs of the back-up of such books of account however in few cases daily back-up was failed because of technical issue and manual back-up has been taken on the next day. Management has taken adequate steps to configure systems to ensure that back up for books of account is taken on daily basis even in case of technical failure.
49 Figures less than '' 50,000 have been shown at actuals in brackets, since the figures are rounded off to the nearest lakh.
Mar 31, 2022
(i) During the year ended 31 March 2022 and 31 March 2021, no impairments indicator existed for any of its Cash Generating Unit (CGU) and accordingly no provision for impairment has been recognised.
(ii) Capitalised borrowing cost :
No borrowing costs are capitalised on property, plant and equipments under construction
(iii) Title deeds
(a) All title deeds of immovable properties included in property, plant and equipments are held in the name of the Company as at 31st March 2022.
(b) Refer note 14 and note 18 for details of pledge and securities.
The above valuation of the investment properties are in accordance with the Ready Reckoner rates prescribed by the Government of Maharashtra for the purpose of levying stamp duty. The Independent Valuer has referred to the publications and Government website for Ready Reckoner rates. Suitable adjustments if required have been made to account for availability of FSI in land parcels in Mumbai in accordance with the guidelines prescribed by the Department of Registrations and Stamps. The adjustments related to floors, lifts and other factors are not considered for valuation of commercial property. Since the valuation is based on the published Ready Reckoner rates, the Company has classified the same under Level 2.
(i) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities. These equity shares are designated as FVTOCI as they are not held for trading purpose and are not in similar line of business as the Company. Thus disclosing their fair value fluctuation in profit and loss will not reflect the purpose of holding. Refer Note 44 for determination of their fair values.
(ii) Investments in unquoted investments includes investment in Industry House Limited (IHL) amounting to '' 27.38 Crore (31 March 2021 '' 25.64 Crore). The Company is holding 35.28% of equity shares in IHL. As the Company does not have significant influence over Industry House Limited, the Company has not considered it as an associate as per Ind AS 28 âInvestments in Associates and Joint Venturesâ and hence not consolidated. The Company''s share of profit of Industry House Limited is insignificant.
(i) Cost of inventories recognised as an expense includes '' 3.07 Crores (31 March 2021''1.01 Crores) in respect of write-downs of inventory to net realisable value.
(ii) For charge created on inventories refer Note 14 and 18
(iii) Real estate inventory includes borrowing costs during the year of '' 31.87 Crores (31 March 2021''18.62 Crores)
(i) No trade receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade receivable are due from firms or private companies respectively in which any director is a partner or a director or a member. Trade receivables are non interest bearing and are generally on terms of 7 to 120 days of credit period.
Short term fixed deposits are varying between three months and twelve months, depending on the immediate cash requirements and earn interest at the respective short term deposit rate. Interest rate is between 4.40% to 6.00%
(i) Securities premium is used to record the excess of the amount received over the face value of the shares. This reserve will be utilised in accordance with the provisions of the Companies Act, 2013.
The Company was required to create a Debenture Redemption Reserve out of the profits which are available for payment of dividend for the purpose of redemption of debentures. Pursuant to Companies (Share Capital and Debentures) Amendment Rules, 2019 dated 16 August, 2019, the Company is not required to create Debenture Redemption Reserve (DRR). Accordingly, the Company has not created DRR during the year and DRR created till FY 2020 were transferred to retained earnings on redemption of debentures in the previous year.
Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability as at 31 March 2022.
(d) General Reserves
General Reserves is used from time to time to transfer profits from Retained earnings for appropriation purpose. This reserve will be utilised in accordance with the provisions of the Companies Act, 2013.
(e) Other Comprehensive Income FVOCI equity investments:
The Company has elected to recognise changes in the fair value of certain investments in equity securities in OCI. These changes are accumulated within the FVOCI equity investment reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
Details of Security:
1. Loans covered in Sr. No. 1 & 2 :
First pari passu charge on present and future plant and machineries of Birla Century, Pulp and Paper divisions and excluding Furniture and Fixtures and vehicles of the said divisions.
2. Loans covered in Sr. No. 3 :
First pari passu charge on the present and future movable fixed assets of the Borrower''s Birla Century unit at Bharuch Gujarat and Pulp & Paper unit at Lalkuan, Uttarakhand. First pari passu security interest on Freehold land admeasuring 25,323.78 sq. meters and the Birla Centurion building thereon situated at Worli, Lower Parel Divisions, Mumbai. Negative lien on the present and future immovable fixed assets of the Borrower''s Birla Century unit at Bharuch Gujarat and Pulp & Paper unit at Lalkuan, Uttarakhand.
Bank loan and NCDs contain certain debt covenants relating to total term loan to tangible net worth, fixed asset coverage ratio, net debt to equity ratio and interest coverage ratio. The Company is compliant with the said covenants during the year ended 31 March 2022. The Company has also satisfied all other debt covenants prescribed in the terms of bank loan and NCDs.
The Company has not defaulted in repayment of borrowing and interest thereon.
(i) Unclaimed dividend amounting to '' 0.05 Crore (31 March 2021''0.04 Crore) is pending on account of litigation among claimants / notices from the tax recovery officer.
(ii) Derivative financial instruments:
The Company entered into foreign exchange forward contracts with the intention of hedging foreign exchange risk of expected sales and purchases, these contracts are not designated as hedge and are measured at fair value through profit or loss.
Nature of security
(i) Working capital loans from banks are secured against a first and pari passu charge over the current assets (including documents of title to goods/related receivables) and collateral security on a pari-passu basis over the present and future property plant and equipments (plant and machinery) of Birla Century (Gujarat), Century Pulp and paper.
(a) The above information has been provided as available with the company to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the MSMED Act.
(b) Trade payables are non interest bearing and are normally settled on 60-90 days terms. Acceptances are interest bearing and have an average term of six months. There are no other amounts paid / payable towards interest / principal under the MSMED.
The Company has not transferred the amount remaining unspent in respect of ongoing projects, to a special account, till the date of the report. However, the period for such transfer i.e., thirty days from the end of the financial year as permitted under sub section (6) of section 135 of the Companies Act, has not elapsed till date.
There are no unspent amount as at year end towards other than ongoing projects (31 March 2021: Nil)
30 HEDGING ACTIVITIES AND DERIVATIVES
Derivatives not designated as hedging instruments
The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from 1 to 12 months.
Derivatives designated as hedging instruments Cash flow hedges Foreign currency risk:
Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges against forecast sales / purchases in US dollars. This forecast transactions are highly probable since purchase order already issued / projection of counter party available with the Company and hence expected to be utilised in near term. The foreign exchange contract balances vary with the level of expected foreign currency sales / purchases and changes in foreign exchange forward rate. The long term swap by way of foreign currency sales has been done on the basis of historical business with buyers and comprises 50% of projected sales.
32 Revenue expenditure on research and development activities relating to Government recognised in-house research and development laboratories incurred and charged out during the year through the natural heads of account, aggregate '' 3.83 Crores (31 March 2021: '' 4.13 Crores).
33 During the financial year 2017-18, the Company had entered into an agreement with Grasim Industries Limited (''GIL'') granting right to manage and operate the Company''s Viscose Filament Yarn (''VFY'') business, which is part of Textile segment, for a duration of 15 years commencing from February 1, 2018. As a part of consideration, GIL has paid an upfront Royalty of '' 605.00 Crores. In addition GIL has also paid the carrying value of net working capital and the interest free security deposit of '' 200.00 Crores which is repayable after 15 years. With effect from February 1, 2018, GIL have right to use the VFY business assets including its intangible assets for a period of 15 years from the above date. The Company is recognizing royalty income over the period of 15 years.
Pursuant to the agreement, GIL shall incur all capital expenditure and commitments involving capital expenditure as may be necessary for the proper, optimum and profitable operation of the VFY Business. In this regard, Company has agreed that all improvement/ capital expenditure done by GIL during the tenure of agreement will be transferred to the Company, at such fair value as may be agreed between the Company and GIL.
(i) '' 10.71 Crore (31 March 2021''14.93 Crore) due to micro and small enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). There are no other amounts paid / payable towards interest / principal under the MSMED; and
(ii) The above information has been determined to the extent such parties have been identified on the basis of the information available with the Company regarding the status of suppliers under the MSMED Act.
35. DISCONTINUED OPERATIONS Yarn and Denim division
During the year ended 31 March 2022, the Company has sold all the assets of its Yarn and Denim division (''Y&D'') to a third party for a consideration of '' 62.00 Crore and has recognised a gain of '' 17.63 Crore net of provision for termination benefits and other restructuring costs.
36. DISCLOSURES PURSUANT TO - âEMPLOYEE BENEFITSâ
(a) Defined Contribution Plans:
The Company''s contribution to Provident Fund and Superannuation Fund aggregating '' 5.06 Crores (31 March 2021: '' 4.96 Crores) has been recognised in the Statement of Profit and Loss under the head Employee benefits expense.
(b) Defined Benefit Plans:
(i) Gratuity
The Company has a defined benefit gratuity plan (funded).The Company''s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy.
Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. This includes employing the use of annuities and longevity swaps to manage the risks. The Board of Trustees decides its contribution based on the results of this annual review. Generally, it aims to have a portfolio mix of equity instruments, property and debt instruments. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The weighted average duration of the defined benefit obligation as at 31 March 2022 is 11.48 years (31 March 2021 9.97 years)
(ii) Provident Fund
In case of certain employees, the Provident fund contribution is made to trusts administered by the Company. In terms of guidance note issued by the Institute of Actuaries of India, the Actuary has provided a valuation of Provident fund liability based on the assumptions listed and determined that there is no shortfall as at 31 March 2022.
|
38 CONTINGENT LIABILITIES |
||
|
(i) Contingent liabilities (to the extent not provided for) |
||
|
Particulars |
As at 31 March 2022 ('' in Crores) |
As at 31 March 2021 ('' in Crores) |
|
Contingent liabilities - Continuing Operations |
||
|
(a) (i) Claims against the Company not acknowledged as debts in respect of : |
||
|
- Custom Duty and Excise Duty |
11.01 |
11.00 |
|
- Sales Tax and Entry Tax |
10.27 |
5.73 |
|
- Others |
6.05 |
6.16 |
|
(ii) Claims not acknowledged as debts jointly with other members of "Business Consortium of Companiesâ in which the Company had an interest (proportionate) |
24.86 |
24.86 |
|
(b) Disputed income tax matters under appeal |
115.44 |
60.20 |
|
(c) Indirect exposure upon the Company |
||
|
- Guarantee given |
200.00 |
200.00 |
|
(d) The Code on Social Security, 2020 (âCode'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant. |
Amount not determinable |
Amount not determinable |
The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties are dependent on the outcome of the different legal processes. The timing of future cash flows will be determinable only on receipt of judgments / decisions pending with various forums/ authorities. The Company does not expect any reimbursements against the above.
|
39 COMMITMENTS |
||
|
As at |
As at |
|
|
Particulars |
31 March 2022 |
31 March 2021 |
|
('' in Crores) |
('' in Crores) |
|
|
Capital commitments |
||
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of Advances) |
35.82 |
103.98 |
|
(a) Other Commitments |
||
|
The Company has imported capital goods under the Export promotion capital goods scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified exports in the future years |
165.78 |
235.49 |
Adjustments & Eliminations:
Finance income and costs, and fair value gains and losses on financial assets are not allocated to individual segments as the underlying instruments are managed on a group basis.
Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a group basis.
Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties.
G. No single customer contributed 10% or more to the Company''s revenue for the year ended 31 March 2022 and 31 March 2021
H. The accounting policies of the reportable segments are the same as the Company''s accounting policies described in note 2A.
Segment profit represents the profit before finance cost and tax earned by each segment without allocation of central administration costs and directors'' salaries, investment income and finance costs. This is the measure reported to the chief operating decision maker for the purposes of allocation and assessment of segment performance.
For the purpose of the Company''s capital management, equity includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximize the shareholder value. The Company''s Capital Management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholders'' value. The Company is monitoring capital using debt equity ratio as its base which is debt to equity. The Company''s policy is to keep debt equity ratio below two and infuse capital if and when required through issue of new shares and/or better operational results and efficient working capital management.
43. FINANCIAL RISK MANAGEMENT FRAMEWORK
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The Company''s principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees these risks management. The Company''s senior management provides assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
A. Credit Risk
Credit risk is the risk that counter party will not meet it obligation under a financial instrument or customer contract leading to a financial loss. The Company is exposed to credit risk mainly from trade receivables and other financial assets. The Company only deals with parties which has good credit ratings / worthiness based on company''s internal assessment.
The Company has divided parties in two grades based on their performance.
Good: parties with a positive external rating (if available) and stable financial position with no past default is considered in this category.
Doubtful: parties where the company doesn''t have information on their financial position or has past trend of default are considered under this category.
The Company has not acquired any credit impaired asset. There was no modification in any financial assets.
(i) Trade receivables
Customer credit is managed by each business division subject to the Company''s established policy procedures and control related to customer credit risk management.
Export customers are mainly against Letter of Credit and/or insurance cover on export outstanding is also taken. Generally deposits are taken from domestic debtors. Apart from deposit there is a commission agent area wise. In case any customer defaults the amount is first recovered from deposits, then from the agent''s commission. Each outstanding customer receivables are regularly monitored and if outstanding is above due date the further shipments are controlled and can only be released if there is a proper justification. The carrying amount and fair value of security deposit amounts to '' 53.11 Crores (31 March 2021: '' 48.00 Crores) as it is payable on demand.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets and their credit worthiness are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
The Company has recognised loss allowance provision on trade receivables amounting to '' 1.60 Crs during the year (31 March 2021''3.31 Crs) as there was no reasonable expectations of recovery and were outstanding for more than 360 days from becoming due.
Credit risk from balances with banks is managed by Company''s treasury department in accordance with the Company policy. Investment of surplus funds are made only in approved Mutual Funds and that too in liquid funds. As soon as the fund reaches to a reasonable level the Company repay its working capital borrowing by redeeming the liquid fund. The other financial assets are from various forum of Government authorities and are released by Government authorities on completion of relevant terms and conditions for the release of outstanding.
B. MARKET RISK
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risks - interest rate risk, currency risk and other price risk in a fluctuating market environment. Financial instrument affected by market risks includes loans and borrowings, deposits, FVTOCI Investments, derivatives and other financials assets.
The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.
The sensitivity analyses in the following sections relates to the outstanding balance as at 31 March 2022 and 31 March 2021
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2022.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2022 and 31 March 2021
(i) Currency Risk
This is the risk that the Company may suffer losses as a result of adverse exchange rate movement during the relevant period. As a policy, Company is covering all foreign exchange risk on account of import and loans so that Company may not be put to any loss situation due to adverse fluctuations in currency rates. There is periodical review of foreign exchange transactions and hedging by the Company''s executives.
Foreign Currency Sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD and EUR exchange rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives. The Company evaluates exchange rate exposure arising from foreign currency transactions. The company follows established risk management policies and standard operating procedures. The company''s exposure to foreign currency changes for all other currencies is not material.
The Company manages interest rate risk by having a balanced portfolio of fixed and variable rate of interest on loans and borrowings. To manage this, Company has issued fixed rate bonds and loans taken from banks are linked to MCLR rate of the bank, which are variable.
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.
(iii) Equity Price Risk
The Company is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.
C. LIQUIDITY RISK
(i) Liquidity risk management
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows on daily, monthly and yearly basis. The Company ensures that there is a free credit limit available at the start of the year which is sufficient for repayments getting due in the ensuing year. Loan arrangements, credit limits with various banks including working capital and monitoring of operational and working capital issues are always kept in mind for better liquidity management
(ii) Maturities of financial liabilities
The following tables detail the Company''s 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 based on the earliest date on which the Company can be required to pay.
(iii) Maturities of financial assets
The following table details the Company''s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.
The management assessed that cash and cash equivalents, trade receivables, trade payables, cash credit and all other current financial assets and liabilities approximates their carrying amounts largely due to the shortterm maturities of these instruments.
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
(i) Receivables are evaluated by the company based on parameters such as interest rates and individual credit worthiness of the customer. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
(ii) The fair value of loans from banks and other financial liabilities, security deposit, as well as other financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(iii) The fair values of the unquoted equity instruments have been estimated using a net adjusted fair value method. The valuation requires management to make certain assumptions about the assets, liabilities, investments of Investee Company. The probabilities of the various assumptions can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments based on the best information available to the Company.
(iv) The fair values of quoted equity instruments are derived from quoted market prices in active markets.
(v) The Company enters into foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs.
(vi) The fair value of floating rate borrowings are determined by using discounted cash flow method using discount rate that reflects the issuer''s borrowing rate at the end of the reporting period. As the Company''s interest rates changes with the change in market interest rate, there is no material difference in carrying value and fair value. The own non performance risk as at 31 March 2022 was assessed to be insignificant.
Lessor - Operating Lease:
The Company has significant leasing arrangements in respect of operating leases for premises. These are non cancellable leases with a lock in period of minimum three years. Most of the leases are renewable for a further period on mutually agreeable terms and also include escalation clauses on renewal. The Company has entered into operating leases for its Investment property. These typically have lease terms of between 1 to 4 years. The Company has recognized an amount of '' 126.45 Crore (31 March 2021''128.57 Crore) as rental income for operating lease during the year ended 31 March 2022.
(a) Mainly on account of classification of long term NCD as current borrowings
(b) During the previous year, on account of covid outbreak and various government restrictions, operations of the Company were impacted significantly. During the year, the situation has improved and accordingly, cashflows and profitability of company has also improved as compared to previous year and almost reached to pre covid level. Accordingly, all ratios related to cash flows, revenue and profitability of the Company has been improved as compared to previous year.
47. OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961
48. Figures less than '' 50,000 have been shown at actuals in brackets, since the figures are rounded off to the nearest lakh.
Mar 31, 2019
NOTES TO THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019
41. SEGMENT INFORMATION
A. INFORMATION ABOUT BUSINESS SEGMENT - PRIMARY
in Crore)
|
Sr. No. |
Particulars |
Textiles |
Pulp and Paper |
Real Estate |
Others |
Total |
|||||
|
2018-19 |
2017-18 |
2018-19 |
2017-18 |
2018-19 |
2017-18 |
2018-19 |
2017-18 |
2018-19 |
2017-18 |
||
|
1. |
Segment Revenue |
||||||||||
|
Sales of products |
814.95 |
1,396.25 |
2,642.75 |
2,228.84 |
159.14 |
135.23 |
16.54 |
97.15 |
3,633.38 |
3,857.47 |
|
|
Less: Inter Segment Revenue |
- |
3.48 |
0.08 |
67.17 |
3.07 |
0.83 |
- |
- |
3.15 |
71.48 |
|
|
Net Sales from Continuing Operations |
814.95 |
1,392.77 |
2,642.67 |
2,161.67 |
156.07 |
134.40 |
16.54 |
97.15 |
3,630.23 |
3,785.99 |
|
|
Sales from Discontinued Operations: |
|||||||||||
|
Textiles |
- |
86.78 |
|||||||||
|
Cement |
4,692.40 |
4,306.15 |
|||||||||
|
8,322.63 |
8,178.92 |
||||||||||
|
2. |
Result |
||||||||||
|
Segment Result of Continuing Operations |
78.82 |
151.54 |
613.64 |
372.60 |
215.04 |
132.16 |
3.52 |
13.21 |
911.02 |
669.51 |
|
|
Profit/floss) from Discontinued Operations: |
|||||||||||
|
Textiles |
(74.64) |
(49.45) |
|||||||||
|
Cement |
341.41 |
199.05 |
|||||||||
|
1,177.79 |
819.11 |
||||||||||
|
3. |
Other Information |
||||||||||
|
Segment Assets® |
961.62 |
998.28 |
3,142.92 |
3,135.52 |
1,538.18 |
1,484.83 |
37.64 |
39.78 |
5,680.36 |
5,658.41 |
|
|
Segment Assets Discontinued Operations: |
|||||||||||
|
Textiles |
2.23 |
- |
|||||||||
|
Cement |
3,992.71 |
4,015.98 |
|||||||||
|
Add: Unallocated common Assets |
457.22 |
656.94 |
|||||||||
|
Total Assets |
10,132.52 |
10,331.33 |
|||||||||
|
Segment Liabilities® |
1,017.11 |
1,078.24 |
547.39 |
535.14 |
129.86 |
149.43 |
12.55 |
14.33 |
1,706.91 |
1,777.14 |
|
|
Segment Liabilities Discontinued Operations: |
|||||||||||
|
Textiles |
42.95 |
- |
|||||||||
|
Cement |
1,034.93 |
1,174.65 |
|||||||||
|
Add: Unallocated Common Liabilities |
4,042.62 |
4,631.65 |
|||||||||
|
Total Liabilities |
6,827.41 |
7,583.44 |
|||||||||
|
4. |
Capital Expenditure during the year (excluding advances) |
24.42 |
77.10 |
18.00 |
28.46 |
59.55 |
65.42 |
101.97 |
170.98 |
||
|
Add: Unallocated Capital Expenditure |
101.97 |
107.62 278.60 |
|||||||||
|
5. |
Depreciation and amortisation * |
48.53 |
50.55 |
111.95 |
116.80 |
31.75 |
31.23 |
0.25 |
0.25 |
192.48 |
198.83 |
|
Add: Unallocated Depreciation |
0.52 |
114.92 |
|||||||||
|
193.00 |
313.75 |
||||||||||
* Includes charged to Cost of Raising and transporting Limestone and Laterite. @ Includes projects under implementation. Adjustments & Eliminations:
Finance income and costs, and fair value gains and losses on financial assets are not allocated to individual segments as the underlying instruments are managed on a group basis.
Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a group basis. Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties
|
B. RECONCILIATION OF PROFIT |
(Rs in Crores) |
|
|
Particulars |
Year Ended 31 March 2019 |
Year Ended 31 March 2018 |
|
Segment profit [A] |
911.02 |
669.51 |
|
Unallocable lncome/(Expense)[B]: |
||
|
Employee Benefit Expense |
(16.78) |
(14.78) |
|
Depreciation & Amortisation Expense |
(0.52) |
(0.48) |
|
Other Expense |
(50.79) |
(25.33) |
|
Other Income |
24.26 |
19.15 |
|
Total |
(43.83) |
(21.44) |
|
Finance Cost [C] |
(95.89) |
(211.81) |
|
Inter-segment Profit/(Loss) (elimination) [D] |
- |
3.80 |
|
Profit before tax from Continuing Operations [A B C D] |
771.30 |
440.06 |
|
Profit from Discontinued Operations |
266.77 |
149.60 |
|
Total Profit before Taxes |
1,038.07 |
589.66 |
|
Add/(Less): Taxes |
||
|
Income Tax (Charge)/Credit |
(357.00) |
(218.00) |
|
Profit after Tax |
681.07 |
371.66 |
|
C. RECONCILIATION OF ASSETS & LIABILITIES |
(Rs in Crores) |
|
|
Particulars |
As at 31 March 2019 |
As at 31 March 2018 |
|
1. A. Segment Operating Assets |
9,675.30 |
9,674.30 |
|
Unallocated Assets |
||
|
B. Non-current Assets |
||
|
Property, Plant and Equipments |
39.28 |
39.60 |
|
Other Intangible Assets |
- |
0.01 |
|
Financial Assets: |
||
|
Non-Current Investments |
265.39 |
223.41 |
|
Others |
0.41 |
|
|
Non-Current Tax |
53.08 |
98.71 |
|
Other Non-Current Assets |
11.75 |
3.61 |
|
Total Non-Current Assets (B) |
369.50 |
365.75 |
|
C. Current Assets |
||
|
Financial Assets: |
||
|
Cash and Cash Equivalents |
12.64 |
189.31 |
|
Bank balances other than above cash & cash equivalents |
64.69 |
60.39 |
|
Others |
6.90 |
31.66 |
|
84.23 |
281.36 |
|
|
Other Current Assets |
3.49 |
9.83 |
|
Total Current Assets (C) |
87.72 |
291.19 |
|
Total Unallocated Assets (B Q |
457.22 |
656.94 |
|
TOTAL ASSETS (A B C) |
10,132.52 |
10,331.33 |
|
41. SEGMENT INFORMATION (contd.) |
(Rs in Crores) |
|
|
Particulars |
As at 31 March 2019 |
As at 31 March 2018 |
|
II. A. Segment Operating Liabilities |
2,784.79 |
2,951.79 |
|
Unallocated Liabilities |
||
|
B. Non-Current Liabilities |
||
|
Financial Liabilities: |
||
|
Borrowings |
1,812.98 |
2,392.42 |
|
Deferred Tax Liability (Net) |
336.31 |
217.32 |
|
Total Non-Current Liabilities (B) |
2,149.29 |
2,609.74 |
|
C. Current Liabilities |
||
|
Financial Liabilities: |
||
|
Short Term Borrowings |
1,036.05 |
1,451.13 |
|
Cash Credit Facilities |
108.48 |
11.44 |
|
1,144.52 |
1,462.57 |
|
|
Trade Payables |
2.15 |
6.75 |
|
Other Financial Liabilities |
2.96 |
59.46 |
|
Current Maturities of long term debts |
608.82 |
478.84 |
|
Other Current Liabilities |
7.91 |
10.63 |
|
Provisions |
126.53 |
3.66 |
|
Total Current Liabilities (C) |
1,892.89 |
2,021.91 |
|
Total Unallocated Liability (B C) |
4,042.18 |
4,631.65 |
|
Total LIABILITIES (A B C) |
6,826.97 |
7,583.44 |
|
D. SECONDARY SEGMENT |
(Rs in Crores) |
|
|
I. Geographic information |
Year Ended 31 March 2019 |
Year Ended 31 March 2018 |
|
Revenue from external customers |
||
|
India |
3,200.56 |
3,158.89 |
|
Outside India |
429.67 |
401.05 |
|
Total revenue as per consolidated statement of profit or loss |
3,630.23 |
3,785.99 |
|
II. Non-current operating assets |
As at 31 March 2019 |
As at 31 March 2018 |
|
India |
4,704.87 |
7,290.56 |
|
Outside India |
- |
- |
|
Total |
4,704.87 |
7,290.56 |
Non-current assets for this purpose consist of property, plant and equipment, investment properties and intangible assets.
E. REVENUE FROM MAJOR PRODUCTS AND SERVICES (Rs in Crores)
The following is an analysis of the Company revenue from continuing operations from its major products and services:
|
Sale of Products |
Year Ended 31 March 2019 |
Year Ended 31 March 2018 |
|
Cotton Fabric |
684.90 |
531.15 |
|
Cotton Yarn |
77.97 |
82.79 |
|
Rayon Yarn |
- |
602.97 |
|
Tyre Yarn and Fabric |
- |
135.91 |
|
Pulp & Paper (including Paper Board/Straw Board) |
2,642.65 |
2,161.66 |
|
Others |
19.05 |
128.85 |
|
Rental Services |
205.66 |
142.66 |
|
Total |
3,630.23 |
3,785.99 |
Composition of the business segment Name of the Segment Types of products/services Comprises of:
|
(a) |
Textiles |
Yarn, Fabric, Viscose filament yarn, Tyre yarn & leasing of Viscose filament yarn & Tyre yarn plant |
|
(b) |
Pulp and Paper |
Pulp, writing & printing paper, tissue paper and multi-layer packaging board |
|
(c) |
Cement |
Cement and clinker. |
|
(d) |
Real Estate |
Leased Properties |
|
(e) |
Others |
Salt works and Chemicals |
F. The Board of Director monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
G. No single customer contributed 10% or more to the Company''s revenue for the year ended 31 March 2019 and 31 March 2018
H. The accounting policies of the reportable segments are the same as the Company''s accounting policies described in note 2A. Segment profit represents the profit before finance cost and tax earned by each segment without allocation of central administration costs and directors'' salaries, investment income and finance costs. This is the measure reported to the chief operating decision maker for the purposes of allocation and assessment of segment performance.
42. CAPITAL MANAGEMENT
For the purpose of the Company''s capital management, equity includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximise the shareholder value. The Company''s Capital Management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholders'' value. The Company is monitoring capital using debt equity ratio as its base which is debt to equity. The company''s policy is to keep debt equity ratio below two and infuse capital if and when required through issue of new shares and/or better operational results and efficient working capital management.
In order to achieve the aforesaid objectives, the Company has demerge its Cement Units to Ultra Tech Cement Limited along with a debt of Rs3000 Crore. Hence post demerger Company will become Debt light Company. Business focus will now be shifted to Real Estate, Paper and Textile and any capex will be done on the basis of optimum IRR.
Debt-to-equity ratio are as follows:
|
(Rs in Crores) |
||
|
31 March 2019 |
31 March 2018 |
|
|
Debt (A)* |
3,538.18 |
4,369.28 |
|
Equity (B) |
3,305.50 |
2,747.89 |
|
Debt to Equity Ratio (A/B) |
1.07 |
1.59 |
*lncludes debt pertaining to descontinued operations
43. FINANCIAL RISK MANAGEMENT FRAMEWORK
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The Company''s principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management provides assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
A. CREDIT RISK
Credit risk is the risk that counter party will not meet it obligation under a financial instrument or customer contract leading to a financial loss. The Company expose to credit risk mainly from trade receivables and other financial assets. The group only deals with parties which has good credit ratings/worthiness based on company''s internal assessment.
The Company has divided parties in two grades based on their performance.
Good: parties with a positive external rating (if available) and stable financial position with no past default is considered in this category.
Doubtful: parties where the company doesn''t have information on their financial position or has past trend of default are considered under this category.
The Company has not acquired any credit impaired asset. There was no modification in any financial assets.
(i) Trade receivables:
Customer credit is managed by each business division subject to the Company''s established policy procedures and control related to customer credit risk management.
Export customers are mainly against Letter of Credit and/or insurance cover on export outstanding is also taken. Generally deposits are taken from domestic debtors. Apart from deposit there is a commission agent area wise. In case any customer defaults the amount is first recovered from deposits, then from the agent''s commission. Each outstanding customer receivables are regularly monitored and if outstanding is above due date the further shipments are controlled and can only be released if there is a proper justification. The carrying amount and fair value of security deposit amounts to Rs 46.48 Crores (31 March 2018: Rs 269.02 Crores) as it is payable on demand.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets and their credit worthiness are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
The Company has written off trade receivables amounting to Rs 0.75 Crs during the year (31 March 2018 Rs 0.46 Crs) as there was no reasonable expectations of recovery and were outstanding for more than 360 days from becoming due.
|
As at 31 March 2019 |
Less Than 180 Days |
More Than 180 Days |
|
Expected loss rate |
0.15% |
85.16% |
|
Gross carrying amount |
202.12 |
13.74 |
|
Loss allowance provision |
0.31 |
11.70 |
|
(Rs in Crores) |
||
|
As at 31 March 2018 |
Less Than 180 Days |
More Than 180 Days |
|
Expected loss rate |
0.29% |
44.71% |
|
Gross carrying amount |
411.49 |
20.05 |
|
Loss allowance provision |
1.19 |
8.96 |
|
Reconciliation of loss allowance provision for Trade Receivables |
(Rs in Crores) |
|
|
Particulars |
31 March 2019 |
31 March 2018 |
|
Balance as at beginning of the year |
10.15 |
10.05 |
|
Impairment losses recognised in the year based on lifetime expected credit losses |
- |
- |
|
On receivables originated in the year |
8.67 |
0.56 |
|
For Discontinued Operations |
(6.06) |
|
|
Amounts written off during the year as uncollectible |
(0.75) |
(0.46) |
|
Amounts recovered during the year |
- |
- |
|
Balance at end of the year (Continuing Operations) |
12.01 |
10.15 |
(ii) Other Financial Assets
Credit risk from balances with banks is managed by Company''s treasury department in accordance with the Company policy. Investment of surplus funds are made only in approved Mutual Funds & that too in liquid funds. As soon as the fund reaches to a reasonable level the Company repay its working capital borrowing by redeeming the liquid fund. The other financial assets are from various forum of Government authorities and are released by Government authorities on completion of relevant terms and conditions for the release of outstanding.
B. MARKET RISK
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risks - interest rate risk, currency risk and other price risk in a fluctuating market environment. Financial instrument affected by market risks includes loans and borrowings, deposits, FVTOCI Investments, derivatives and other financial assets.
The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.
The sensitivity analyses in the following sections relate to the position as at 31 March 2019 and 31 March 2018
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2019.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2019 and 31 March 2018
(i) Currency Risk
This is the risk that the Company may suffer losses as a result of adverse exchange rate movement during the relevant period. As a policy, Company is covering all foreign exchange risk on account of import and loans so that Company may not be put to any loss situation due to adverse fluctuations in currency rates. There is periodical review of foreign exchange transactions and hedging by the Company''s executives.
Foreign Currency Sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD and EUR exchange rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives. The Company evaluates exchange rate exposure arising from foreign currency transactions. The company follows established risk management policies and standard operating procedures. The company''s exposure to foreign currency changes for all other currencies is not material.
|
Currency |
Change in rate |
Effect on profit before tax |
|
|
USD |
5% |
(6.17) |
|
|
31 March 2019 |
USD |
-5% |
6.17 |
|
EUR |
5% |
0.20 |
|
|
EUR |
-5% |
(0.20) |
|
|
USD |
5% |
(5.63) |
|
|
31 March 2018 |
USD |
-5% |
5.63 |
|
EUR |
5% |
(0.16) |
|
|
EUR |
-5% |
0.16 |
|
|
Outstanding foreign currency exposures |
(Rs in Crores) |
||
|
As at 31 March 2019 |
As at 31 March 2018 |
||
|
Trade Receivables |
|||
|
USD |
0.50 |
0.47 |
|
|
Euro |
0.13 |
- |
|
|
Others |
0.01 |
- |
|
|
Trade Payables USD |
1.93 |
0.25 |
|
|
Euro |
0.01 |
0.05 |
|
|
Others |
- |
0.01 |
|
|
Borrowings USD |
. |
2.16 |
|
|
Others |
|||
|
USD |
- |
0.21 |
|
|
Euro |
- |
0.01 |
|
|
Others |
_ |
(ii) Interest rate risk
The Company manages interest rate risk by having a balanced portfolio of fixed and variable rate of interest on loans and borrowings. To manage this, Company has issued fixed rate bonds and loans taken from banks are linked to MCLR rate of the bank, which are variable.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:
|
Currency |
Increase/ decrease in basis points |
Effect on profit before tax |
|
|
31 March 2019 |
INR |
50 |
7.41 |
|
INR |
-50 |
(7.41) |
|
|
31 March 2018 |
INR |
50 |
9.81 |
|
INR |
-50 |
(9.81) |
(Rs in Crores)
|
Particulars |
Total Borrowings |
Floating rate Borrowings |
Fixed rate Borrowings |
|
INR |
2,421.88 |
1,482.40 |
939.48 |
|
Total as at 31 March 2019 |
2,421.88 |
1,482.40 |
939.48 |
|
INR Total as at 31 March 2018 |
2,906.71 |
1,962.47 |
944.24 |
|
2,906.71 |
1,962.47 |
944.24 |
Includes debt pertaining to discontinued operations
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.
(iii) Equity Price Risk
The Company is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.
C. LIQUIDITY RISK
(i) Liquidity risk management
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows on daily, monthly and yearly basis. The Company ensures that there is a free credit limit available at the start of the year which is sufficient for repayments getting due in the ensuing year. Loan arrangements, credit limits with various banks including working capital and monitoring of operational and working capital issues are always kept in mind for better liquidity management
(ii) Maturities of financial liabilities
The following tables detail the Company''s 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 based on the earliest date on which the Company can be required to pay.
To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.
|
(Rs in Crores) |
||||||
|
As at 31 March 2019 |
On Demand |
Less than 1 Year |
1-3 Years |
3-5 Years |
5 Years and above |
Total |
|
(a) Non-Derivative financial instruments |
||||||
|
Long term borrowings * |
- |
- |
1,004.46 |
299.39 |
509.13 |
1,812.98 |
|
Short term borrowings: * |
||||||
|
Cash Credit Facilities/Working Capital Loan |
108.70 |
- |
- |
- |
- |
108.70 |
|
Pre-shipment, Post-shipment facilities |
- |
43.01 |
- |
- |
- |
43.01 |
|
Bill Discounting with Bank |
- |
3.78 |
- |
- |
- |
3.78 |
|
Commercial Paper |
- |
988.42 |
- |
- |
- |
988.42 |
|
Trade payables: |
||||||
|
Trade payables - Micro and small enterprises |
- |
6.70 |
- |
- |
- |
6.70 |
|
Trade payables - other than micro and small |
- |
506.31 |
- |
- |
- |
506.31 |
|
enterprises |
||||||
|
Other financial liabilities: |
||||||
|
Deposits from dealers and agents |
46.48 |
- |
- |
- |
- |
46.48 |
|
Deposits against rental arrangements |
- |
47.79 |
79.12 |
12.21 |
- |
139.12 |
|
Current maturities of long-term debt * |
- |
608.83 |
- |
- |
- |
608.83 |
|
Other Interest Accrued |
- |
31.60 |
- |
- |
- |
31.60 |
|
Unclaimed/Unpaid dividends |
- |
2.16 |
- |
- |
- |
2.16 |
|
Creditors for Capital Supplies/Services |
- |
21.40 |
- |
- |
- |
21.40 |
|
Other current liabilities |
- |
1.85 |
0.50 |
- |
- |
2.35 |
|
(b) Derivative financial instruments |
||||||
|
Derivatives not designated as a hedging instruments |
- |
2.96 |
- |
- |
- |
2.96 |
|
Total |
155.18 |
2,264.91 |
1,084.08 |
311.60 |
509.13 '' |
1,324.80 |
|
*lncludes debt pertaining to discontinued operations |
||||||
|
(Rs in Crores) |
||||||
|
As at 31 March 2018 |
On Demand |
Less than 1 Year |
1-3 Years |
3-5 Years |
5 Years and above |
Total |
|
(a) Non-Derivative financial instruments |
||||||
|
Long term borrowings |
- |
- |
1,824.58 |
316.84 |
802.60 |
2,944.02 |
|
Short term borrowings |
||||||
|
Cash Credit Facilities/Working Capital Loan |
11.86 |
- |
- |
- |
- |
11.86 |
|
Pre-shipment, Post-shipment facilities |
- |
57.12 |
- |
- |
- |
57.12 |
|
Bill Discounting with Bank |
- |
7.80 |
- |
- |
- |
7.80 |
|
Buyer''s credit |
- |
147.33 |
- |
- |
- |
147.33 |
|
Commercial Paper |
- |
1,238.46 |
- |
- |
- |
1,238.46 |
|
Trade payables |
||||||
|
Trade payables - Micro and small enterprises |
- |
3.74 |
- |
- |
- |
3.74 |
|
Trade payables - other than micro and small |
- |
644.76 |
- |
- |
- |
644.76 |
|
enterprises |
||||||
|
Acceptances |
- |
33.30 |
- |
- |
- |
33.30 |
|
Other financial liabilities |
||||||
|
Deposits from dealers and agents |
269.02 |
- |
- |
- |
269.02 |
|
|
Deposits against rental arrangements |
16.71 |
24.94 |
27.90 |
11.35 |
80.90 |
|
|
Other long term liabilities |
- |
- |
- |
- |
0.50 |
0.50 |
|
Current maturities of long-term debt |
- |
718.10 |
- |
- |
- |
718.10 |
|
Other Interest accrued |
- |
128.10 |
- |
- |
- |
128.10 |
|
Unclaimed/Unpaid dividends |
- |
2.50 |
- |
- |
- |
2.50 |
|
Creditors for Capital Supplies/Services |
- |
38.10 |
- |
- |
- |
38.10 |
|
Other current liabilities |
- |
179.59 |
- |
- |
- |
179.59 |
|
(b) Derivative financial instruments |
||||||
|
Foreign exchange forward contracts |
- |
20.93 |
- |
- |
- |
20.93 |
|
Total |
280.88 |
3,236.54 |
1,849.52 |
344.74 |
814.45 |
6,526.13 |
(iii) Maturities of financial assets
The following table details the Company''s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.
(Rs in Crores)
|
As at 31 March 2019 |
On Demand |
Less than 1 Year |
1-3 Years |
3-5 Years |
5 Years and above |
Total |
|
(a) Non-Derivative financial instruments |
||||||
|
Trade Receivables |
- |
203.86 |
- |
- |
203.86 |
|
|
Other Bank Balances |
- |
64.99 |
- |
- |
64.99 |
|
|
Other financial Assets |
||||||
|
Security Deposits |
- |
3.35 |
- |
- |
6.92 |
10.27 |
|
Interest subsidy and Interest receivable |
- |
8.15 |
- |
- |
- |
8.15 |
|
Claims and other receivable |
- |
3.32 |
- |
- |
- |
3.32 |
|
Unbilled Revenue |
- |
7.32 |
3.29 |
0.10 |
- |
10.71 |
|
Loan to Subsidiary |
- |
3.52 |
- |
- |
- |
3.52 |
|
Others |
- |
4.89 |
- |
- |
- |
4.89 |
|
Finance Lease Receivables |
- |
1.98 |
4.49 |
- |
- |
6.47 |
|
(b) Derivative financial instruments |
||||||
|
Held for trading derivatives carried at FVTPL |
- |
0.03 |
- |
- |
- |
0.03 |
|
Total |
- |
301.12 |
7.78 |
0.10 |
6.92 |
315.92 |
|
(Rs in Crores) |
||||||
|
As at 31 March 2018 |
On Demand |
Less than 1 Year |
1-3 Years |
3-5 Years |
5 Years and above |
Total |
|
(a) Non-Derivative financial instruments |
||||||
|
Trade Receivables |
- |
421.47 |
- |
- |
- |
421.47 |
|
Other Bank Balances |
- |
60.39 |
- |
- |
- |
60.39 |
|
Other financial Assets |
||||||
|
Security Deposits |
- |
20.44 |
25.20 |
- |
- |
45.64 |
|
Advances recoverable in cash |
- |
0.40 |
- |
- |
- |
0.40 |
|
Interest subsidy and Interest receivable |
- |
8.55 |
- |
- |
- |
8.55 |
|
Subsidy/Incentive receivables |
- |
146.32 |
190.67 |
85.92 |
- |
422.91 |
|
Unbilled Revenue |
- |
22.91 |
- |
- |
- |
22.91 |
|
Claims and other receivable |
- |
7.22 |
9.51 |
- |
- |
16.73 |
|
Others |
- |
1.07 |
- |
- |
||
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