10.1: The Shareholders of GMM Pfaudler Limited ("the Company") in an extra ordinary general meeting held on September 01, 2022, granted approval for acquisition of balance 46% of the paid-up share capital of its existing overseas subsidiary, GMM International S.a.r.l from Pfaudler International S.a.r.l (part of the promoter group) and Millars Concrete Technologies Private Limited (part of the promoter group), for an aggregate consideration of C343.78 Crore (excluding acquisition cost). The acquisition was completed on September 29, 2022 after obtaining all the relevant approvals and settling the consideration as below. Consequent to this, GMM International S.a.r.l has become a wholly owned subsidiary of the Company.
a) The Company paid cash consideration of C149.47 Crore to Pfaudler International S.a.r.l, for the transfer of 1,09,51,360 ordinary shares of GMM International S.a.r.l to the Company,
b) The Company paid cash consideration of C 23.91 Crore to Millars Concrete Technologies Private Limited, for the transfer of 17,51,922 ordinary shares of GMM International S.a.r.l to the Company,
c) The Company issued and allotted 11,04,724 equity shares of the Company having face value of C 2 each, at a price of C1,542.43 per equity share on a preferential basis to Millars Concrete Technologies Private Limited for the transfer of 1,24,84,846 ordinary shares of GMM International S.a.r.l to the Company.
Further acquisition cost amounting to C4.01 Crore is capitalised to investments.
For category wise classification of investments - as per Ind AS 109, Refer Note 39.2
16.1: Trade Receivables are given as security for borrowings as disclosed under Note 20
16.2: Includes Trade Receivables from Related Parties, Refer Note 41
16.3: No trade or other receivables are due from Directors or other officers of the Company either severally or jointly with any other person nor any trade or other receivables are due from firms or private companies in which any director is a partner, a director or a member.
16.4: Trade receivable are collectable between 30-60 days considering business and commercial arrangements with the customers.
16.5: The Company has entered into receivables purchase agreements with banks to unconditionally and irrevocably sell, transfer, assign and convey all the rights, titles and interest of the Company in the receivables as identified. Receivables sold as on March 31, 2024 are of C32.49 Crore and as on March 31, 2023 are Nil. The Company has derecognized these receivables as it has transferred its contractual rights to the banks with substantially all the risks and rewards of ownership and retains no control over these receivables as the banks have the right to further sell and transfer these receivables.
(b) Terms/rights attached to equity shares :
The Company has only one class of equity shares having a par value C2 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(d) Buyback of Shares, Bonus Shares and Shares issued for Consideration other than cash :
1. Pursuant to approval granted by the shareholders of the Company on June 26, 2022 through Postal ballot for issue of Bonus Shares. The Allotment Committee of Board of Directors at their meeting held on July 14, 2022 approved allotment of 2,92,35,000 Equity Shares having face value of C 2 each as fully paid-up Bonus Equity Shares, in the ratio of 2:1 i.e. 2 (Two) Equity Shares having face value of C 2 each for every 1 (One) equity share having face value of C 2 each held by the shareholders of the Company as on July 12, 2022 being the record date.
2. Pursuant to approval granted by the Board of Directors and after obtaining all the relevant approvals on September 01, 2022, the Company has allotted 11,04,724 fully paid-up equity shares of the Company having face value of C 2 each, at a price of C1,542.43 each on a preferential basis to Millars Concrete Technologies Private Limited on September 29, 2022 for consideration other than cash for the transfer of 1,24,84,846 ordinary shares of GMM International S.a.r.l to the Company.
3. The Company has not bought back any shares in the past five years.
(e) Shares reserved for issue under options and contracts :
Refer Note 37 for details of shares to be issued under employee stock option Scheme (ESOP 2021)
Nature and Purpose of Reserves:
Capital Reserve:
Capital Reserve represents excess/short of net assets acquired in business combination. It is not available for the distribution to shareholders as dividend.
Cash Subsidy Reserve:
Cash Subsidy Reserve represents subsidies received from state government. It is not available for distribution as dividend to shareholders.
Securities Premium:
Securities Premium represents Security Premium received at the time of issuance of Equity Shares. Such amount is available for utilisation in accordance with the provisions of the Companies Act, 2013.
General reserve:
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. There is no policy of regular transfer. Items included under General Reserve shall not be reclassified back into the Statement of Profit & Loss.
Share options outstanding reserve:
This reserve relates to share options granted by the Company to its employee stock option scheme. Further information about share-based payments to employees is set out in Note 37.
20.2: All the above mentioned loans have been secured and a charge has been filed with the Ministry of Corporate Affairs in favor of Axis Trustee Services Limited, on behalf of all the lenders. The details of security is as under:
a) The term loan lenders shall have a first ranking pari passu charge over the immovable properties, moveable fixed assets and a second ranking pari passu charge over the current assets.
b) The working capital lenders shall have a first ranking pari passu charge over the current assets and a second ranking pari passu charge over the immovable properties and moveable properties.
20.3: Secured by charge over immovable property and movable property located at Hyderabad.
20.4: Secured by charge over movable and immovable property located at Vatva (Ahmedabad) Gujarat.
20.5: Instalments falling due within a year in respect of all the above Loans aggregating INR 70.43 Crore (Previous Year 2022-23: INR 60.19 Crore) have been grouped under "Current Maturities of Long term borrowings".
20.6: With regards to the working capital loans, the Company has been duly submitting with all banks from whom such facilities are taken, the quarterly statements comprising details of said current assets viz. raw material, stores and spares, finished goods, book debts and reduced by relevant trade payables. The said quarterly statements are in agreement with the unaudited books of account of the Company of the respective quarters and there are no material discrepancies.
21.2: The Company leases mainly Land, Buildings Office premises & Warehouses. As per Ind AS 116, contracts and related assets that fulfill the definition of a lease are recognized and shown separately as respective Right of Use assets. Such assets are valued by the present value of the discounted lease payments less accumulated amortizations over the lease period. The Buildings, office premises & warehouses leases typically run for a period of 3 to 5 years. Land leases are entered into for a longer periods.
21.3: Amortisation on above leases are accounted for in Depreciation and amortisation expense in the Statement of Profit and Loss (Refer Note 7).
21.4: Interest expenses for lease liabilities are reported in the Finance cost in the Statement of Profit and Loss (Refer Note 32).
23.1: Includes Trade Payables from Related Parties, Refer Note 41.
23.2:The Company has entered into a Supply Chain Financing arrangement underwhich its suppliers can elect to receive a early payment of their invoice from the bank and the bank receives the settlement from the Company at a later date. The principal purpose of this arrangement is to facilitate efficient payment processing and enable the Company's suppliers to receive a payment before their due date.
These balances are classified as Acceptances under Trade Payables as the terms are similar to those agreed with the suppliers. The related payments are shown as Cash Flow from operating activities as they continue to be part of the normal operating cycle of the Company.
Note:
24.1: The amount of Unclaimed Dividend reflects the position as at March 31, 2024. During the year, the Company has transferred an amount of C 0.04 Crore (Previous year C 0.04 Crore) to the Investors' Education and Protection Fund in accordance with the provisions of section 125 of the Companies Act, 2013.
26.1: Provision for employee benefits includes amount payable to employees on account of Gratuity and compensated absences. Movement of Provision for employee benefits is disclosed under Note 36.
26.2: As per the contractual terms with customers, the Company provides warranty to the customers for 18 months from date of sales or 12 months from date of installation which ever is earlier. The provision is made for such returns/ rejections on the basis of historical warranty trends as per the policy of the Company.
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Note 34: Contingent Liabilities & Commitments Particulars
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As at March 31, 2024
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(D in Crores)
As at March 31, 2023
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A) Contingent Liabilities not provided for:
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1. Claim against the Company not acknowledged as debts
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i) Demands relating to Indirect Taxes:
Various show cause notices received from authorities in respect of
a) Payment of service tax under reverse charge mechanism during FY 2011-12 to FY 2017-18.
b) Sales tax matters for FY 2006-07 to FY 2008-09.
c) E way bill matters for FY 2023-24
Company has filed appeal in respect of above matters.
Against the above, the Company has paid C0.55 Crore. The expected outflow will be determined at the time of final outcome.
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0.90
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0.70
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Note 34: Contingent Liabilities & Commitments (Contd.) Particulars
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As at March 31, 2024
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(D in Crores)
As at March 31, 2023
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ii) Demand on account of Income Tax matters where Income Tax Department has perferred appeals :
a) Disallowance of warranty provision for AY 2007-08 and 2008-09
b) Upward adjustment in Arms Length Price for AY 2010-11, 2011-12 and 2012-13.
The above were decided in favour of the Company by Commissioner Income Tax (Appeals) (CIT(A)) which was preferred by Income tax department to IncomeTax Appellete Tribunal (ITAT). ITAT had set aside the issue to the Assessing Officer/CIT(A) for fresh adjudication.
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5.03
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5.03
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iii) Demand on account of Income Tax matters where the Company has preferred appeals.
Company has preferred appeal before CIT(A) in respect of:
a) Disallowance of education expenditure under Section 143 (3) for AY 2013-14
b) Disallowance of commission paid to non-resident due to non deduction of Tax deducted at source for AY 2017-18
c) Penalty proceedings under section 271I for failure to furnish information or furnishing inaccurate information under section 195 for AY 2018-19.
Note: In respect of above matters, Management has assessed that no liability is likely to devolve on the Company and hence no provision has made in the books of accounts.
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0.17
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0.16
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B) Commitments
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Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)
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2.18
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2.78
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Note 36: Employee Benefits
As per Ind AS 19 “Employee benefits”, the disclosures as defined in the Accounting Standard are given below: Defined Contribution Plans
The Company operates defined contribution retirement benefit plans for all qualifying employees in the form of provident fund, superannuation fund, family pension fund and Employee State's Insurance.
Compensated absences and earned leaves
The Company's current policy permits eligible employees to accumulate compensated absences up to a prescribed limit and receive cash in lieu thereof in accordance with the terms of the policy.
Defined Benefit Plans
The Company operates a defined benefit plan in form of gratuity plan covering eligible employees, which provide a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and the tenure of employment.
Other long term employee benefit plan
Through its gratuity plans the Company is exposed to a number of risks, the most significant of which are detailed below:
These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.
Investment risk
The present value of the defined benefit plan liability (denominated in Indian Rupee) is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities and other debt instruments.
Interest risk
A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan's debt investments.
Longevity risk
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability.
Salary risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan liability.
In respect of the Defined Benefit Obligation Plan and Compensated absences and earned leaves, the most recent
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligations has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
N Asset-liability matching strategies :
In respect of gratuity and Leave encashment plan, the Company contributes to the insurance fund based on estimated liability of the next financial year end. The projected liability statement is obtained from the actuarial valuer.
Note 37: Share based payments
Equity settled share option plan
The Company has instituted Employee Stock Option Scheme (ESOP 2021) to designated employees of the Company and its Subsidiaries. In accordance with the terms of the plan, as approved by shareholders through Postal Ballot on December 02, 2021, designated employees with the Company may be granted options to purchase equity shares.
Each employee share option converts into one equity share of the Company on exercise. Payment of the Exercise Price shall be made by a crossed cheque, or a demand draft drawn in favor of the Company or in such other manner as the Committee may decide from time to time. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time during the set exercise period. The Options not exercised within the Exercise Period shall lapse and the Employee shall have no right over such lapsed or cancelled Options. Options stands cancelled if the employee leaves the Company before the options vest.
Appraisal process for determining the eligibility of the Employees will be based on designation, criticality, high potential, performance linked parameters such as work performance and such other criteria as may be determined by the Committee at its sole discretion, from time to time.
Expected volatility was determined by calculating the historical volatility of the Company's share price on NSE based on the price data for last 12 months up to the date of grant. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
The Company has recognised expenses of C 0.87 Crore and C0.99 Crore related to equity-settled share-based payment transactions in 2023-24 and 2022-23 respectively on a net basis after considering recharge of C 1.54 Crore and C 1.83 Crore respectively from subsidiary companies for the grant of shares to the employees of subsidiary companies.
Note 39: Financial Instruments
39.1 Capital Management :
For the purposes of the Company's capital management, capital includes issued capital and all other equity. The primary objective of the Company's capital management is to maximise shareholder value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.
The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings less cash and short-term deposits (including other bank balance). The Company is not subject to any externally imposed capital requirement.
In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period. No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2024 and March 31, 2023.
39.3 Financial risk management objectives
The Company's corporate treasury function provides services to the business, coordinates access to domestic and international financial market, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of the risk. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
39.3.1 Market Risk management
Market risk refers to the possibility that changes in the market rates may have impact on the Company's profits or the value of its holding of financial instruments. The Company is exposed to market risks on account of foreign exchange rates, interest rates and underlying investment prices.
The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and investment prices.
(a) Foreign currency exchange rate risk:
The Company's foreign currency risk arises from its foreign operations, investments in foreign subsidiaries, foreign currency transactions. The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/ liabilities are denominated in a currency other than the functional currency of the Company.
Since a major part of the Company's revenue and its costs are in Indian Rupees , any movement in currency rates would not have major impact on the Company's performance. Consequently, the overall objective of the foreign currency risk management is to minimize the short term currency impact on its revenue and cash-flow in order to improve the predictability of the financial performance.
With respect to the Company's financial instruments (as given above), a 5% increase / decrease in relation to foreign currency rate on the underlying would have resulted in increase / decrease of C 1.61 Crore and C 0.04 Crore in the Company's profit before tax for the year ended March 31, 2024 and March 31, 2023 respectively.
(b) Interest rate risk
Interest rate risk refers to the possibility that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. The Company's policy is to maintain a balance of fixed and floating interest rate borrowings and the proportion of fixed and floating rate debt is determined by current market interest rates. The borrowings of the Company are principally denominated in Indian Rupees and US dollars with mix of fixed and floating rates of interest. These exposures are reviewed by appropriate levels of management at regular interval. The company have outstanding borrowings of C265.23 Crore and C331.14 Crore at the end of March 31, 2024 and March 31, 2023 respectively.
As at March 31, 2024, NIL of the Company's Borrowings are at fixed rate of interest (March 31, 2023 : NIL).
The impact of increase/decrease of 50 basis points in interest rates would result in decrease / increase of C1.59 Crore (C1.29 Crore) in the Company's net profit before tax for the year ended March 31, 2024 and March 31, 2023 respectively.
(c) Other price risk
The Company is exposed to price risks arising from its investments which are held for strategic as well as trading purposes.
The sensitivity analysis have been determined based on the exposure to price risks for Investments in equity shares of other companies and mutual funds at the end of the reporting period.
If prices had been 5% higher/lower:
Profit before tax for the year ended March 31, 2024 would increase/decrease by C Nil (for the year ended March 31, 2023 by C 0.00 # Crore) as a result of the change in fair value of investments.
# Amount less then C 50,000
39.3.2 Credit risk management
Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Financial instruments that are subject to concentrations of credit risk materially consists of trade receivables.
All trade receivables are subject to credit risk exposure. The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of
the industry and country, in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through established policies, controls relating to credit approvals and procedures for continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company does not have significant concentration of credit risk related to trade receivables except the details given below for the customers contribute to more than 5% of total outstanding accounts receivable as at any reporting period end.
At March 31, 2024, the Company has 5 customers (March 31, 2023: 4 customers) that owed the Company amounting to C 79.51 Crore (March 31, 2023: C 113.88 Crore) aggregating to 33% (March 31, 2023: 43%) of the total amount receivable.
Exposure to credit risk:
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk is C 322.76 Crore and C349.95 Crore as at March 31, 2024 and March 31, 2023 respectively, being the total of the carrying amount of balances with banks, bank deposits, trade receivables, other financial assets and investments excluding investments in subsidiary companies, and these financial assets are of good credit quality including those that are past due.
39.3.3 Liquidity risk management:
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Company's short, medium and longterm funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. 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. The table below include only principal cash flows in relation to non-derivative financial liabilities.
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. 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 remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.
Terms and conditions of transactions with Related Parties
Outstanding balances of related parties at the year end are unsecured and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. During the current year, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. 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.
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.
Note 45: Other Statutory Information
1 No transactions to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III:
a) Crypto currency or virtual currency
b) Undisclosed income
c) Struck off Companies
d) Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder
e) Relating to borrowed funds:
(i) Wilful defaulter
(ii) Utilization of borrowed funds
(iii) Discrepancy in utilization of borrowings
(iv) 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.
(v) The Company has not received any fund from any person(s) or entity(ies), including foreign entities
(Funding Party) with the understandin (whether recorded in writing or otherwise) that the Company shall:
(a) Directly or indirectly lend or invest in other person 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.
2 The Ministry of Corporate Affairs(MCA) has issued a notification(Companies(Accounts) Amendments Rules,2021) which is effective from April 01,2023, state that every Company registered in India which uses accounting software for maintaining its books of account shall use only such accounting software which has a feature of recording audit trail of each and every transaction, and further creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Company uses a SaaS ERP as a primary accounting software for maintaining books of account, which has a feature of recording audit trail edit logs facility and that has been operative throughout the financial year for the transactions recorded in the software impacting books of account at application level. The database of the software is operated by third party software service provider hence audit trail at the database level is not applicable.
Note 46: Segment Information
The Company publishes Standalone financial statements along with the Consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the audited Consolidated financial statements for year ended March 31, 2024.
Note 47: Proposed Dividend
The Board of Directors, in their meeting held on May 22, 2024 have recommended a final dividend of C 1 per share, subject to approval by shareholders of the Company.
Note 48: Approval of financial statements
The financial statements for the year ended March 31, 2024 were approved for issue by the Board of Directors on May 22, 2024.
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