The fair value of value of investment property is Rs 84487.55 ( March 31,2023 is Rs 127687.55) based on market assessable data.
The best evidence of fair value is current prices in an active market for similar properties. Though the Company measures investment property using cost based measurement, the fair value of investment property has been determined by external, independent registered valuer as defined under Rule 2 of the Compaines (Registered valuers and valution) Rules, 2017 having appropriate recognised professional qualification and recent experience in the location and category of the property valued. The major inputs used are location, locality, facilities, amenities, quality of construction, residual life of building, business potential, supply and demand, local nearby enquiry, market feedback of investigation and Ready Reckoner published by the Government. The Company does not have any restriction on the realisability of its investment property and no contractual obligation to purchase, construct and develop immovable property. There is no mortgage on the above mentioned investment property.
All resulting fair value estimates for investment properties are included in level 3.
The Company's exposure to credit currency risks and loss allowances related to other financial assets are disclosed in note 35 For details of current assets hypothecated against borrowings of the Company refer note 19.
* Amount due from wholly owned subsidiaries of HGHL Holding Limited and IDL Explosive Limited.
i. Pursuant to the board approval, the Company entered into a Memorandum of Understanding (MoU) dated March 27, 2024 with Squarespace Builders Private Limited, Hyderabad (Squarespace) for sale of Scheduled Property of 264.50 acres of land situated at Kukatpally, Hyderabad, for a total consideration of Rs. 341800 of which 32 acres of land is under joint development agreement (JDA). The monetization will take place over a period of 18 months in tranches, subject to fulfilment of certain covenants. Squarespace has paid a sum of Rs. 10000 before March 31,2024 in this regard (Refer note 23). The Company has an obligation to carry out certain activities and obtain requisite approvals for certain portion of land before handing over possession to Squarespace and accordingly, the classification of said land as “Non-current assets held for sale” is not required as per Ind AS 105, except for land property of 32 acre valued at Rs.11854.27 as on March 31,2024 and disclosed appropriately in the financial statements.
i) In 2012-13, Inter-Corporate Loan (ICL) of Rs. 3103.87 (As at March 31, 2023: Rs. 3103.87) was given to IDL Explosives Limited (Wholly owned subsidiary Company). During the year 2017-18, the loan was mutually agreed to be repaid by March 31,2024. Subsequently, during the year 2023-24, the Board of Directors of IDL Explosives Limited had proposed to extend the repayment date till April 1,2027 and the same was approved by the Company vide letter dated March 29, 2024. Interest rate on the above is in the range of 8.25% to 8.40% to per annum (2022-23: 7.95 %- to 8.25% per annum). The above ICL has been disclosed at fair value. During the year, Company has given an additional Inter Corporate Loan (ICL) of Rs 5200 to IDL Explosives Limited (Wholly owned subsidiary Company) for a period of eleven months or repayable on demand as mutually agreed at an interest rate of 8.40% P.A
ii) The Company has given Inter Corporate Loan to Hinduja Group Limited. During the current year loan outstanding amounting to Rs.36328.50 (2022-23: Rs.33150) after netting of the repayment of loan. The said loan is repayable on demand or eleven months which ever is earlier as mutually agreed. ICL shall carry an interest rate of 8.40% P.A. (2022-23: 8% to 8.4%).
iii) Refer note 42 for disclosure pursuant to Section 186 of the Companies Act, 2013 and under Regulation 34(3)of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.
d. Rights, preferences and restrictions attached to equity shares:
The Company has one class of equity shares having a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution shall be according to the members right and interest in the Company.
During the five years period ended March 31, 2024 no shares have been bought back/ issued for consideration other than Cash and no bonus shares have been issued.
There are no shares reserved for issue under options and contracts / commitments for sale of shares/disinvestment.
Note: Refer statement of changes in equity for movement in other reserves General reserve :
General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.
Retained earnings:
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
Capital reserve:
During amalgamation, the excess of net assets taken, over the cost of consideration paid is treated as capital reserve.
Details of Security:
Cash credit facilities from Consortium banks are secured by hypothecation of all current assets of the Company including raw materials, finished goods, stock-in-process, stores and spares (not relating to plant and equipment) and present and future book debts of the Company ranking pari-passu and collateral security by (i) first pari-passu charge by way of equitable mortgage on the land owned by the Company admeasuring 8 acres situated at Kukatpally, Hyderabad and (ii) second pari-passu charge on buildings, plant and equipment of Energetics Division at Hyderabad charged to other term/working capital lenders. Interest rate for the above is in the range of 7.9% - 10% (2022-23: 7.9% - 10%)
The provisions for indirect taxes and legal matters comprises of numerous separate cases that arise in the ordinary course of business. These provisions have not been discounted as it is not practicable for company to estimate the timing of provision utilisation and cash outflows, if any pending resolution.
The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated August 26, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2024 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest , if any , that may be payable in accordance with the provisions of Micro , Small and Medium Enterprises Development Act, 2006 (‘MSMED Act') is not expected to be material. The Company has not received any claim for interest from any supplier under the said MSMED Act.
This information is required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 and has been determined to the extent such parties have been identified on the basis of information available with the Company. Auditors have placed reliance on such information provided by the management.
The Company's exposure to currency and liquidity risks related to trade payables is disclosed in note 35.The Company's exposure to related party is disclosed in note 38.
Fair value hierarchy Level 1
Includes financial instruments measured using quoted prices. This includes listed equity instruments and the mutual funds. The fair value of all equity instruments which are traded in stock exchanges is valued using the closing price as at the reporting period and the mutual funds are valued using closing NAV.
Level 2
The fair value of financial instruments not actively traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity specific estimates. If the significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
i) The carrying values of current financial liabilities and current financial assets are taken as their fair value because of their short term nature.
ii) The carrying values of non-current financial liabilities and non-current financial assets are taken as their fair value based on their discounted cash flows.
iii) The carrying values of non-current financial liabilities and non-current financial assets excluding investment in subsidiaries is reasonable approximation of fair value
iv) The Company has used quoted market price for determining fair value of investments in equity instruments and mutual funds.
v) There have been no transfers between level 1, level 2 and level 3 for year ended March 31, 2024 and March 31, 2023 respectively
Significant estimate:
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The company uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period.
Note 35 Financial risk management objectives and policies
1. Financial risk management framework
The Company has exposure to the following risks arising from financial instruments
(i) Credit risk
(ii) Liquidity risk
(iii) Market risk
(iv) Commodity Price Risk
Risk management framework
The Company's Board of Directors has the overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and Company's activities.
The Company's audit committee oversees how management monitors compliance with the Company's Risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad-hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
(i) Credit Risk
Credit risk is the risk of financial loss arising from counter-party failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. The entities within the Company have a policy of dealing only with credit worthy counter parties and obtaining sufficient collateral, where appropriate as a means of mitigating the risk of financial loss from defaults. Financial instruments that are subject to credit risk and concentration thereof principally consist of trade receivables, loans receivables, investments, cash and cash equivalents, derivatives provided by the Company. None of the financial instruments of the Company result in material concentration of credit risk. The carrying value of financial assets represents the maximum credit risk.
Trade receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates,
also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information. The Company observes: actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the customer's ability to meet its obligations.
The Company also establishes an allowance for impairment that represents its estimate of expected credit losses in respect of trade receivables.
Cash and bank balances:
Credit risk on cash and bank balances is limited as the company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.
Impairment of financial assets
The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
(ii) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company's reputation. The Company's corporate treasury department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company's net liquidity position through rolling forecasts on the basis of expected cash flows.
Market risk is the risk of loss of future earnings, fair value or future cash flows that may result from a change in the price of a financial instrument . The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that effect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including deposits, foreign currency receivables, payables and borrowings.
a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long-term debt obligations with floating interest rates. As the Company has debt obligations with floating interest rates, exposure to the risk of changes in market interest rates are substantially dependent of changes in market interest rates.
c) Foreign currency exchange rate risk
The company operates in a business that exposes it to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD . Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the company's functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the company is to minimize the volatility of the INR cash flows of highly probable forecast transactions.
The Company's quoted equity instruments are susceptible to market price risk arising from uncertainties about future values of the investment securities. The reports on the equity portfolio are submitted to the Company's senior management on a regular basis. The senior management reviews and approves all equity investment decisions
(iv) Commodity Price Risk
The Company is exposed to commodity price risk arising out of fluctuation in prices of raw materials (coating material, metals, acids and chemicals) and fuel (coal and diesel). Such price movements, mostly linked to external factors, can affect the production cost of the Company. To manage this risk, the Company take steps such as monitoring of prices, optimising fuel mix and pursue longer and fixed price contracts, where considered necessary. Additionally, processes and policies related to such risks are controlled by central procurement team and reviewed by the senior management.
2. Capital management
The Company's policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investors, creditors and market confidence and to sustain future development and growth of its business. In order to maintain the capital structure the Company monitors the return on capital, as well as the level of dividends to equity shareholders. The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to all its shareholders. For the purpose of the Company's capital management, capital includes issued capital and all other equity reserves and debt includes borrowings. Refer note 41 for ratio's analysis.
Note 36 Employee benefit plans
a. Defined contribution plan:
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Employees' State Insurance contribution (ESI) and Provident fund , which are defined contribution plans. The contribution are charged to the Statement of profit and loss . During the year, the Company has recognised Rs 2.84 (March 31,2023: Rs 3.31 ) and Rs 86.35 (March 31,2023: Rs 80.86) towards Employees' State Insurance contribution (ESI) contribution and Provident fund contribution.
b. Compensated absences
The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the period.The company has recognised expense of Rs 29.87 ( March 31, 2023 : Rs 13.65) to the statement of profit and loss.
c. Defined benefit plan
The Company provides for gratuity for employees as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement / termination is the employee's last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan. The Company makes contributions to Life Insurance Corporation of India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as and when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
These defined benefit plans typically expose the Company to actuarial risks as under:
a. Investment risk
The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
b. Interest rate risk
Decrease in bond interest rate will increase the plan liability. However, this shall be partially off-set by increase in return as per debt investments.
c. Longevity risk
The present value f the defined benefit plan liability s calculated by reference to the best estimate of the mortality of plan participants.
An increase in the life expectancy will increase the plan's liability.
d. Salary risk
Higher than expected increase in salary will increase the defined benefit obligation.
1) In the month of March 2020, the Company has provided corporate guarantee (SBLC) of USD 150 Million and In September 2021 of USD 50 Million to its wholly owned subsidiary HGHL Holdings Limited (HGHL) for obtaining bank loan of equivalent amount from Union Bank of India, Hong Kong and Dubai branch respectively. The loan is secured by shortfall undertaking from Gulf Oil International Limited, Cayman Islands and collaterally secured by mortgage and exclusive charge on the land admeasuring 115.10 acres at Kukatpally, Hyderabad. HGHL has further given Inter corporate loan of USD 200 Million to 57 Whitehall Investments S.A.R.L, Luxembourg,(an operating company) which in-turn has invested in the downstream joint venture project which is engaged in the development of a residential and hospitality project outside India. The loan is repayable over a period of 7 years and outstanding as at March 31,2024 USD 137.50 Million.HGHL has acquired 10% equity stake in 57 Whitehall Investment S.A.R.L, Luxembourg
2) In the month of March 2020, the Company had given Corporate Guarantee and collateral security to State Bank of India (SBI) for loan of Rs. 109600 availed by Hinduja National Power Corporation Limited (HNPCL) towards working capital requirements. The loan is primarily secured by pari-passu charge on the current assets of the HNPCL along with other working capital lenders and first charge by way of mortgage of land admeasuring 87.125 acres at Kukatpally, Hyderabad belonging to the Company. The Company has received a counter guarantee for an equal amount from Hinduja Energy (India) Limited (HEIL), the parent entity of HNPCL. The loan has to be repaid by HNPCL to SBI in 8 quarterly instalments commencing from June 2023 and ending on March 31,2025. The Loan outstanding as at March 31,2024 is Rs.60000.
3) In the year 2012-13, the Competition Commission of India had passed an order imposing a penalty of Rs. 2894.76 against Company in a case filed by a customer. The Company had filed an appeal in Competition Appellate Tribunal (“COMPAT”) against the said order which was disposed in the year 2013 of by reducing the penalty amount to Rs. 289.48 Subsequently, in the year 2013 the Company had filed an appeal with the Honorable Supreme Court of India (SC) against the said order of COMPAT which was admitted by the SC and interim stay was granted. No hearings have taken place during the year as the pleading are in progress before the Judicial Registrar. Based on merits of the case and the opinion obtained from an independent legal counsel, the Company has a strong case in its favour and adequate provision has been considered necessary.
4) The Civil appeal filed by the Company against Sri Udasin Mutt was dismissed by the Hon'ble Supreme court.
The application of the Mutt claiming use and occupation charges is pending before the Telangana Endowments Tribunal . Sri
Udasin Mutt in its re-joinder has informed that the deposit amount including interest has been withdrawn by Sri Udasin Mutt. The said withdrawn amount shall be adjusted/ refunded as per the decision of the Tribunal
5) The writ petitions/ appeals filed with Hon'ble Orissa High Court and Orissa sale tax tribunal under the Orissa sale tax claiming
CST for the AY 1984-85 to 1987-88, 1994-95 & 1995-96 and 1998-99 is pending
6) The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its standalone financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial statement.
7) The Company has long-term contracts other than derivative contracts, for which there were no material foreseeable losses.
i) The above disclosures including related parties as per Ind AS 24 " Related Party disclosures and Companies Act' 2013.
ii) The remuneration to key management personnel doesn't include the provisions made for gratuity and compensated absences, as they are obtained on an actuarial basis for the Company as a whole.
iii) All transactions with these related parties are priced on an arm's length basis.
Note 39 Corporate social responsibility (CSR)
As per section 135 of the Companies Act, 2013, a Corporate Social responsibility (CSR) Committee has been formed by the Company. The proposed areas for CSR activities, as per the CSR policy of the Company are promotion of education, rural development activities, medical facilities, employment and ensuring environmental sustainability which are specified in Schedule VII of the Companies Act, 2013. Expenditure incurred under Section 135 of the Companies Act, 2013 on CSR activities are as below:
In accordance with Ind AS 108 - Operating segments, segment information has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.
i. The Company do not have any Benami property and neither any proceedings have been initiated or is pending against the Company for holding any Benami property.
ii. The Company do not have any transactions with companies struck off.
iii. The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
iv. The Company has not been declared a wilful defaulter by any bank or financial institution or any other lender during
the current year
v. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or
kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”) with
the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vi. All quarterly returns or statements of current assets are filed by the company with banks or financial institutions and are in agreement with the books of accounts.
vii. The loan has been utilized for the purpose for which it was obtained and no short term funds have been used for long term purpose.
viii. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year
ix. The Company have no 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).
i) Pursuant to the approval of the shareholders of the Company at the 62nd Annual General Meeting held on September 21,2023, the Company has disbursed during the year, for the financial year 2022-23 a dividend of @ Rs.5 per equity share (250%) and a Special Dividend of Rs.5 per equity share (250%), totalling to a Dividend of Rs.10 per equity share (500%) aggregating to an amount of Rs.4957.25.
ii) The Board has recommended a Dividend of Rs. 4 per share ( 200% ) for the financial year 2023-24 subject to approval of Members at the ensuing Annual General Meeting.
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