Inventories which comprise raw materials, packing materials, work-in-progress and finished goods are carried at the lower of cost and net realisable value. (See detailed accounting policy in Note 3.6)
The write-down of inventories at year end amounted to '178.06 million (31 March 2023: '158.06 million). The write down of inventories are included in cost of materials consumed or changes in inventories of finished goods and work-in-progress in the statement of profit and loss.
The loss allowance on trade receivables has been computed on the basis of Ind AS 109, Financial Instruments, which requires such allowance to be made even for trade receivables considered good on the basis that credit risk exists even though it may be very low.
Above amount does not include any amount receivable from directors or other officers of the company either severally or jointly with any other person or from firms or private companies respectively in which any director is a partner, a director or a member.
The Company’s exposure to credit and currency risks, and loss allowances related to trade receivables are disclosed in Note 46.
The carrying amounts of the trade receivables include receivables which are subject to a factoring arrangement. Under this arrangement, the company has transferred the relevant receivables to the factor in exchange for cash. However, the company has retained credit risk. The company therefore continues to recognise the transferred assets in their entirety in its balance sheet. The amount subject to factoring agreement is presented as borrowing.
Deposits given as security
1) Margin money deposits with a carrying amount of '85.05 million (31 March 2023 - '122.21 million) are earmarked towards non fund based facilities availed from banks.
2) Bank deposits with a carrying amount of 'Nil (31 March 2023 '203.54 million) are earmarked towards the Company’s rupee term loans and external commercial borrowing term loan availed from banks.
a. The Board of Directors of the Company at its meeting held on 9 May 2018, approved a proposal to issue bonus shares in the ratio of one equity share of '2 each for every two equity share of '2 each held by the shareholders of the Company as on the record date i.e 25 June 2018 , which was approved by the shareholders by means of an ordinary resolution in the extra ordinary general meeting held on 11 June 2018. The Company allotted 41,100,250 equity shares as fully paid up bonus shares by capitalisation of securities premium amounting to '82.20 million.
c. Terms/rights attached to equity shares
The Company has only single class of equity shares having a par value of '2 (31 March 2023, '2) per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares 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.
As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
In the previous year, one of the shareholder of the Company filed a suit in the Bombay High Court, the suit seeks certain actions on part of the Company, Pending any order / direction from the Bombay High Court, there is no impact on the financial statements.
vii. Equity instruments through other comprehensive income
The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the Equity instruments through Other Comprehensive Income. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
B Nature and purpose of reserves
i. Capital reserve
Capital reserve is created on merger/amalgamation.
ii. Capital redemption reserve
Capital redemption reserve represents redemption of redeemable cumulative preference shares in earlier years. The same can be used to issue fully paid bonus shares.
iii. Securities premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares inaccordance with provisions of Companies Act, 2013.
iv. State subsidy
State subsidy is created on receipt of government grants for setting up the factories in backward areas. The same will be utilised for expansion of business.
v. Contingency reserve
Contingency reserve is created by transferring funds from retained earnings to meet future contingencies.
vi. General reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.
a. Nature of security :
i Redeemable, non-convetible debentures (NCD) is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli, Bangalore, R & D centre at Pune and second pari passu charge on entire current assets both present and future.
ii Rupee term loan from banks is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli, Bangalore, R & D centre at Pune and second pari passu charge on entire current assets both present and future.
iii Rupee term loan from financial institutions is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli and Bangalore, R & D centre at Pune and second pari passu charge on entire current assets both present and future.
a. Nature of security and terms of repayment for secured borrowings :
i Working capital loans from all banks are secured by first pari passu charge on all current assets of the Company and second pari passu charge on fixed assets both present and future situated at Company’s plants at Bangalore, Taloja and Panoli.
ii Loans availed under bill discounting facility are against specific receivables, having tenure of 30 to 90 days and carrying interest ranging between 1.50% to 1.80% p.a.
b. Working capital loans are repayable on demand and carry interest ranging from 790% to 10.05% p.a.
Contract liability include long term advances which are received to deliver product on long term period and short term advances are adjusted against product delivered in current year. Increase due to additional advance received during the year.
Contract Assets represents unbilled revenue from ongoing development contracts. Decreased due to billing during the year.
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off income tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered.
43 Earnings per share (EPS)
Basic EPS is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year, after considering adjustment for the effects of all dilutive potential equity shares.
44 Employee benefits
(i) Defined Contribution Plans
The Company makes contributions towards superannuation fund and other retirement benefits to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits.
(ii) Defined Benefit Plans Gratuity:
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. The Company has obtained insurance policies with the Life Insurance Corporation of India (LIC) for eligible employees at Panoli plant and makes an annual contribution to LIC for amounts notified by LIC. The Company accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year using the projected unit credit method. Actuarial gains and losses are recognised as Other Comprehensive Income or Loss.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company’s standalone financial statements as at balance sheet date:
The above sensitivity analyses have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the reporting date. In practice, generally it does not occur. When we change one variable, it affects to others. In calculating the sensitivity, project unit credit method at the end of the reporting period has been applied.
Other long term employee benefit plans Compensated absences:
The obligation for leave encashment is recognised in the same manner as gratuity. The Company’s liability on account of compensated absences is not funded and hence the disclosures relating to the planned assets are not applicable. Amount of '64.48 million (31 March 2023 '40.62 million) towards compensated absences is recognised as an expense and included in "Employee benefits expense” in the Statement of profit and loss during the year.
46 Financial instruments - Fair values and risk management A. Accounting classification and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. There are no financial assets or financial liabilities not measured at fair value, whose carrying amount is not a reasonable approximation of fair value.
45 Leases:
The Company has a lease contract for building used in its operations. The Lease term is 9 years. The company has leasehold land for a period of up to 99 years The Company’s obligations under its lease is secured by the lessor’s title to the leased asset.
The Company also has certain leases of machinery/premises with lease terms of 12 months or less and leases of office equipment with low value. The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
i. Risk management framework
The Company’s Board of Directors has 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 the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The 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.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers.
The carrying amount of following financial assets represents the maximum credit exposure:
Trade and other receivables
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables.
Cash and cash equivalents
The Company held cash and cash equivalents (including bank deposits) of '213.13 million at 31 March 2024 (31 March 2023: '633.68 million). The cash and cash equivalents (including bank deposits) are held with banks with good credit ratings and financial institution counterparties with good market standing.
Other than trade and other receivables, the Company has no other significant financial assets that are past due but not impaired.
iii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
The gross outflows disclosed in the above table represent the contractual undiscounted cash flows relating to financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity.
iv Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments.Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. We are exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of our investments. Thus, our exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.
v. Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.
Currency risk
The Company is exposed to currency risk on account of its operating and financing activities. The functional currency of the Company is Indian Rupee.
Fair value sensitivity analysis for fixed-rate instruments
The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through statement of profit and loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
47 Capital Management
As at 31 March 2024, the Company has only one class of equity shares. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or re-investment into business based on its long term financial plans.
For the purpose of the Company’s capital management, capital includes issued capital and other equity reserves. The primary objective of the Company’s capital management is to safeguard its ability to continue as going concern and to maintain and optimal capital structure so as to maximise shareholders 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 and adjusted net debt to equity ratio. For this purpose, adjusted net debt is defined as total debt less cash and bank balances.
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48 Contingent liabilities and commitments (to the extent not provided for) A. Contingent liabilities
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As at 31 March 2024
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As at 31 March 2023
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(i) Direct and Indirect taxes
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Income Taxes*
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361.69
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292.23
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Excise Duty**
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39.93
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39.93
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Cental Sales Tax (CST)***
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2.97
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2.97
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Value Added Tax (VAT)****
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11.27
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11.27
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Goods and Service Tax (GST) *****
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73.31
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-
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* Above does not includes interest and penalty, if any
** In addition to above interest and penalty of '40.13 million was levied.
*** In addition to above for certain matters, penalty and interest of '6.14 million was levied during the assessment. **** In addition to above penalty and interest of '11.27 million was levied during the assessment.
***** In addition to above penalty of '7.33 million was levied.
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(ii) I n connection with the alleged improper disposal of by-products by the Company in January 2022, statutory authorities have conducted investigations in relation to alleged non-compliance with certain environmental laws and regulations, and the matter is pending before the Courts and relevant statutory authorities.
I n the previous year, consequent to directions of Maharashtra Pollution Control Board (MPCB) the Company had temporarily stopped manufacturing activities at its Taloja plant on grounds of not adhering to conditions stipulated in the relevant Consent to Operate. Subsequently, pursuant to an order of the Honourable Bombay High Court, MPCB granted permission on 29 June 2022 to re-start manufacturing activities at the plant.
In March 2023, the National Green Tribunal, Principal Bench, New Delhi had passed an order accepting the joint committee’s reports, which includes recovery of compensation of '174.50 millions from the Company for non-compliance with environmental laws and regulations. Gujarat Pollution Control Board subsequently issued a direction to the Company for payment thereof.
The Company approached the Hon’ble Supreme court, which has on, 8 April 2024 stayed recovery of the aforesaid amount, subject to the Company depositing, within a period of five weeks, '50 millions with the Court. Of this amount, '9.80 millions is to be released to legal representatives of the deceased individuals, for which the Company has recognized a provision as a matter of prudence, and without prejudice to its rights and contentions.
Based on the advice of external legal counsel, the Company believes it has a good case on merits in these matters, and the Company is taking necessary steps, including legal measures, to defend itself. Accordingly, no further provision is required in the financial statements in this respect.
(iii) On 12 July 2023, Karnataka Pollution Control Board served a demand notice for '83.10 millions as Environmental Compensation however notice does not give details of instance of grounds / noncompliances. Aggrieved by this, Company has approached Hon’ble Karnataka High Court. which ruled that the said notice be deemed as show cause notice. Based on the advice of external legal counsel, the Company believes it has a good case on merits in this matter and accordingly, no provision is required in the financial statement in this regard.
(iv) In connection with the closure directions issued in July 2023 by the Gujarat Pollution Control Board (‘GPCB’) for the Company’s Panoli manufacturing Plant, the Company submitted clarifications sought by GPCB, basis which GPCB revoked its July 2023 closure directions until 5 November 2023 and thereafter until 3 June 2024. The Company has submitted its application for permanent revocation of the said closure directions, pending which, the Panoli manufacturing facility continues to operate without any interruption in this regard.
(v) The Company is subject to legal proceedings, claims and GST audit, which have arisen in the ordinary course of business. The Company has reviewed all its pending litigations and other matters and has adequately provided for where provisions are required and disclosed as contingent liability, where applicable in its financial statements. The Company’s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect of the Company’s results of operations or financial condition.
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B. Commitments
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As at
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As at
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31 March 2024
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31 March 2023
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Estimated amount of contracts remaining to be executed on capital account and not provided for tangible assets (net of advances)
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340.64
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947.83
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Other non cancellable material commitment
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2,391.52
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957.24
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50 Dues relating to Investor Education and Protection fund
During the year the Company has transferred Rs 0.56 Million (31 March 2023 : Rs. 0.34 million) to Investor Education and Protection fund. There are no other dues which need to be credited as at the year end to the Investor Education and Protection fund.
51 Corporate social responsibility
As per Section 135 of the Act, a CSR committee has been formed by the Company. The funds are utilised during the year on the activities which are specified in Schedule VII of the Act. The utilisation is done by way of direct and indirect contribution towards various activities.
Gross amount required to be spent by the Company during the year: '35.40 million (31 March 2023: '36.77 million)
56 Segment information
For management purposes, the Company is organised into business units based on its products and services and has two reportable segments, as follows:
Pharmaceuticals: Segment produces in Active Pharmaceutical Ingredients Crop protection: Segment manufactures in pesticides, herbicides.
The Chief Operating Decision Maker (“CODM”) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by operating segments. The CODM reviews revenue and profit as the performance indicator for all of the operating segments and review the total assets and liabilities of an operating segment.
There is a customer which account for revenue of ' 2,604.53 (31 March 2023 ' 2,954.95 Million) in Crop protection segment other than these there are no transactions with single external customer which amounts to 10% or more of the Company’s revenue.
Figures in italics pertain to previous year
57 Related party disclosures
The note provides the information about the Company’s structure including the details of the subsidiaries and the holding company. The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:
For the year ended 31 March 2024 the remuneration paid to one of the managerial person was in excess of limits specified in section 197 of the Companies Act, 2013 ("the Act”) and accordingly in section, such excess remuneration of '6 million is recognized in the financial statements as a recoverable from the director and will be recovered by the Company in accordance with said provisions of the Act. The remuneration to managerial persons for the year ended 31 March 2024 is in accordance with the limits applicable under the regulation 17(6) of SEBI (listing Obligation and Disclosure Requirements) Regulation, 2015
Terms and conditions of transactions with related parties
1. All related party transactions entered during the year were in ordinary course of business and are on arms length basis.
2. Outstanding balances at year end are unsecured and settlement occures in cash.
3. The remuneration of executive directors is determined by the nomination and remuneration committee.
4. *Outstanding balance does not include escrow account balance with the party.
5. Also refer note 51
59 Contribution to Provident Fund as per Supreme Court Judgment
There are numerous interpretative issues relating to the Supreme Court (SC) judgment dated 28th February, 2019 on Provident Fund (PF) on the inclusion of allowances for the purpose of PF contribution as well as its applicability of effective date. The impact is not expected to be material as per the assessment made by the company.
60 The Code on Social Security, 2020
The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment had released draft rules for the Code on Social Security, 2020 on November 13, 2020. The Company will assess the impact and its evaluation once the subject rules are notified. The Company will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
61 The Company does not have any Benami property, where any proceedings have been initiated or pending against the company for holding any Benami property.
62 The Company does not have any transactions with Companies struck off.
63 The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
64 The Company has not traded or invested in Crypto currency or Virtual currency during the financial year.
65 The Company has not advanced or loaned or invested funds to any other person / entities, including foreign entities (intermediaries) with the understanding that the intermediary shall:
(i) 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
(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
66 The Company has not received funds to any other person / entities, including foreign entities (Funding party) with the understanding (whether recorded in writing or otherwise) that the company shall:
(i) 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
(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
67 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)
68 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 during the year company has migrated to new database effective January 20, 2024 and in respect of new database audit trail feature is not enabled for direct changes to data when using certain access rights. With respect to legacy database the Company does not possess required information in relation to maintenance audit trail feature.
69 The quarterly returns or statements of Current assets filed by the Company with the banks or financial institutions are in agreement with the books of accounts.
70 Other information
The figures for the previous year have been regrouped wherever necessary to conform to the current year’s presentation.
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