3.16 Contingent liabilities
Provisions are recognised only when there is a present
obligation as a result of past events, it is probable that
an outflow of resources embodying economic benefits
will be required to settle the obligation and when a
reasonable estimate of the amount of obligation can
be made. 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). Contingent liabilities
are disclosed for (i) possible obligation which will be
confirmed only by future events not wholly within
the control of the Company or (ii) present obligations
arising from past events where it is not probable that
an outflow of resources will be required to settle the
obligation or a reliable estimate of the amount of the
obligation cannot be made.
Contingent assets
Contingent asset is not recognised in standalone financial
statements since this may result in the recognition of income
that may never be realised. However, when the realisation
of income is virtually certain, then the related asset is not a
contingent asset and is recognized.
Provisions, contingent liabilities and contingent assets are
reviewed at each Balance Sheet date.
3.17 Financial Instruments
(i) Initial recognition and Measurement
Trade receivables and debt securities issued are
initially recognised when they are originated. All
other financial assets and financial liabilities are
initially recognised when the Company becomes
a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are
recognised when a Company becomes a party
to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue
of financial assets and financial liabilities (other
than financial assets and financial liabilities at
fair value through profit or loss) are added to
or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly
attributable to the acquisition of financial
assets or financial liabilities at fair value through
profit or loss are recognised immediately in the
standalone statement of profit and loss. However,
trade receivables that do not contain a significant
financing component are measured at transaction
price.
(ii) Subsequent Measurement
Non-derivative financial instruments:
a. Financial assets carried at amortised
cost
A financial asset is subsequently measured
at amortised cost using the effective interest
method if it is held with in a business model
whose objective is to hold the asset in order
to collect contractual cash flows and the
contractual terms of the financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest
on the principal amount outstanding. The
amortised cost is reduced by impairment
losses. Interest income, foreign exchange
gains and losses and impairment are
recognised in profit or loss. Any gain or loss
on derecognition is recognised in profit or
loss.
b. Financial assets at fair value through
other comprehensive income
A financial asset is subsequently measured
at fair value through other comprehensive
income if it is held within a business
model whose objective is achieved by both
collecting contractual cash flows and selling
financial assets and the contractual terms
of the financial asset give rise on specified
dates to cash flows that are solely payments
of principal and interest on the principal
amount outstanding. The Company has made
an irrevocable election for its investments
which are classified as equity instruments
to present the subsequent changes in fair
value in other comprehensive income based
on its business model. Impairment losses
(and reversal of impairment losses) on
equity investments measured at FVOCI are
not reported separately from other changes
in fair value. Dividends are recognised as
income in profit or loss unless the dividend
clearly represents a recovery of part of the
cost of the investment. Other net gains and
losses are recognised in OCI and are not
reclassified to profit or loss.
c. Financial assets at fair value through
profit or loss
Financial assets are measured at fair value
through profit or loss unless it is measured
at amortised cost or at fair value through
other comprehensive income.
d. Financial liabilities
Financial liabilities are subsequently carried
at amortized cost using the effective interest
method, except for contingent consideration
recognized in a business combination which
is subsequently measured at fair value
through standalone statement of profit and
loss. For trade and other payables maturing
within one year from the Balance Sheet
date, the carrying amounts approximate
fair value due to the short maturity of these
instruments.
Offsetting
Financial assets and financial liabilities are
offset and the net amount presented in the
balance sheet when, and only when, the
Company currently has a legally enforceable
right to set off the amounts and it intends
either to settle them on a net basis or to
realise the asset and settle the liability
simultaneously.
Financial guarantee contracts
A financial guarantee contract is a contract
that requires the issuer to make specified
payments to reimburse the holder for a loss
it incurs because a specified debtor fails to
make payments when due in accordance
with the terms of a debt instrument.
Financial guarantee contracts issued by the
Company are initially measured at their fair
values and, if not designated as at FVTPL, are
subsequently measured at the higher of:
• the amount of loss allowance
determined in accordance with
impairment requirements of Ind AS
109; and
• the amount initially recognised less,
when appropriate, the cumulative
amount of income recognised in
accordance with the principles of Ind
AS 115.
Derivative financial instruments:
The Company enters into a variety of derivative
financial instruments to manage its exposure
to interest rate and foreign exchange rate risks,
including foreign exchange forward contracts.
Derivatives are initially recognised at fair value
at the date the derivative contracts are entered
into and are subsequently remeasured to their
fair value at the end of each reporting period. The
resulting gain or loss is recognised in statement of
profit and loss immediately unless the derivative is
designated and effective as a hedging instrument,
in which event the timing of the recognition in
statement of profit and loss depends on the
nature of the hedging relationship and the nature
of the hedged item.
Effective interest method:
The effective interest method is a method
of calculating the amortized cost of a debt
instrument and of allocating interest income
over the relevant period. The effective interest
rate is the rate that exactly discounts estimated
future cash receipts (including all fees and points
paid or received that form an integral part of the
effective interest rate, transaction costs and other
premiums or discounts) through the expected life
of the debt instrument, or, where appropriate,
a shorter period, to the net carrying amount on
initial recognition.
Income is recognised on an effective interest basis
for debt instruments other than those financial
assets classified as at Fair Value Through Profit
or Loss (FVTPL). Interest income is recognised
in standalone statement of profit and loss and is
included in the "other income" line item.
Hedge accounting:
The Company designates derivative contracts
in a cash flow hedging relationship by applying
the hedge accounting principles designated in
a hedging relationship, used to hedge its risks
associated with change in interest rates on the
recognised liability.
At the inception of the hedge relationship, the
Company documents the relationship between
the hedging instrument and the hedged item,
along with its risk management objectives
and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the Company
documents whether the hedging instrument is
highly effective in offsetting changes in fair values
or cash flows of the hedged item attributable to
the hedged risk. These derivative contracts are
stated at the fair value at each reporting date.
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognised in other comprehensive
income. The gain or loss relating to the ineffective
portion is recognised immediately in statement of
profit and loss.
Amounts previously recognised in other
comprehensive income and accumulated in
equity relating to (effective portion as described
above) are reclassified to statement of profit and
loss in the periods when the hedged item affects
profit or loss.
Hedge accounting is discontinued when the
hedging instrument expires or is sold, terminated,
or exercised, or when it no longer qualifies for
hedge accounting. Any gain or loss recognised in
other comprehensive income and accumulated
in equity at that time remains in equity and is
recognised when the forecast transaction is
ultimately recognised in statement of profit and
loss. When a forecast transaction is no longer
expected to occur, the gain or loss accumulated
in equity is recognised immediately in statement
of profit and loss.
Investment in subsidiaries and
associates:
On initial recognition, these investments
are recognized at fair value plus any directly
attributable transaction cost. Subsequently, they
are measured at cost.
Derecognition of financial assets and
financial liabilities
Financial asset:
The Company de-recognises a financial asset
when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial
asset and substantially all the risks and rewards of
ownership of the
asset to another party. If the Company retains
substantially all the rewards of ownership of
a transferred financial asset, the Company
continues to recognize the financial asset and
also recognizes a collateralised borrowing for the
proceeds received.
On de-recognition of a financial asset in its
entirety, the difference between the asset's
carrying amount and the sum of the consideration
received and receivable and the cumulative
gain or loss that had been recognised in other
comprehensive income and accumulated in equity
is recognised in standalone statement of profit
and loss if such gain or loss would have otherwise
been recognised in standalone statement of profit
and loss on disposal of that financial asset.
Financial liabilities:
The Company derecognises financial liabilities
when, and only when, the Company's obligations
are discharged, cancelled or have expired. The
Company also derecognises a financial liability
when its terms are modified and the cash flows
of the modified liability are substantially different,
in which case a new financial liability based on
the modified terms is recognised at fair value.
The difference between the carrying amount
of the financial liability derecognised and the
consideration paid and payable is recognised in
the standalone statement of profit and loss.
Impairment of Financial assets:
The Company recognizes loss allowances using the
expected credit loss (ECL) model for the financial
assets which are not fair valued through profit
and loss. Loss allowance for trade receivables
with no significant financing component is
measured at an amount equal to lifetime ECL.
For all other financial assets, expected credit
losses are measured at an amount equal to the
12-month ECL, unless there has been a significant
increase in credit risk from initial recognition in
which case those are measured at lifetime ECL.
The amount of expected credit losses (or reversal)
that is required to adjust the loss allowance at the
reporting date to the amount that is required to
be recognised as an impairment gain or loss in the
standalone statement of profit and loss.
For trade receivables only, the Company applies
the simplified approach permitted by Ind AS 109
Financial Instruments, which requires expected
lifetime losses to be recognised from initial
recognition of the receivables. As a practical
expedient, the Company uses a provision matrix
to determine impairment loss of its trade
receivables. The provision matrix is based on
its historically observed default rates over the
expected life of the trade receivable and is
adjusted for forward looking estimates.
In addition to the provision matrix, the Company
also performs individual assessment of credit risk
for specific customers where there is objective
evidence of increased credit risk. Where such
individual assessment indicates that a trade
receivable meets the criteria for being classified
as credit impaired under Ind AS 109, the Company
recognises a loss allowance based on lifetime
ECL and discloses such credit impaired trade
receivables separately in the standalone balance
sheet.
A financial asset is credit-impaired when one or
more events that have a detrimental impact on
the estimated future cash flows of the financial
asset have occurred. Evidence that a financial
asset is credit-impaired includes the following
observable data:
a. significant financial difficulty of the debtor;
b. a breach of contract, such as a default or 2
years past due;
c. it is probable that the debtor will enter
bankruptcy or other financial reorganization;
d. the disappearance of an active market for a
security because of financial difficulties.
The ECL loss allowance (or reversal) during
the year is recognised in the standalone
statement of profit and loss.
Write-off:
The gross carrying amount of a financial asset is
written off when the Company has no reasonable
expectations of recovering a financial asset in
its entirely or a portion thereof. For individual
customers, the Company has policy of writing
off the gross carrying amount when the financial
asset is 2 years past due based on historical
experience of recoveries of similar assets.
3.18 Fair value measurement
In determining the fair value of its financial
instruments, the Company uses a variety of methods
and assumptions that are based on market conditions
and risks existing at each reporting date. The methods
used to determine fair value include discounted cash
flow analysis, available quoted market prices and dealer
quotes. All methods of assessing fair value result in
general approximation of value, and such value may
never actually be realised.
3.19 Recent Pronouncements
Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. For the year ended March
31, 2025, MCA has notified Ind AS - 117 Insurance
Contracts and amendments to Ind AS 116 - Leases,
relating to sale and leaseback transactions, applicable
to the Group w.e.f. April 1, 2024. The Group has
reviewed the new pronouncements and based on its
evaluation has determined that it does not have any
significant impact in its financial statements.
Notes:
(i) Unclaimed dividend accounts
(a) If the dividend has not been claimed within 30 days from the date of declaration, the Company is required to transfer the total
amount of dividend which remains unpaid or unclaimed to a special account to be opened by the Company with a scheduled
bank to be called ""Unpaid Dividend Account"". The unclaimed dividend lying in such account is required to be transferred to
the Investor Education and Protection Fund (IEPF), administered by the Central Government after a period of seven years from
the date of declaration.
(b) During the year, there has been a delay in transfer of unpaid dividend in respect of final dividend of FY 2016-17 amounting to
? 4 lakhs to the IEPF for the year ended 31 March 2025, which was due in July 2024. The Company is in the process of transferring
the said amount to IEPF.
(ii) Margin money / deposit
Margin money represents amounts deposited with banks as security against bank guarantees issued to various authorities.
14.7.1 Nagarjuna Agrichem Limited-Employee Stock Option Scheme-2020:
i) The Company set up the "NACL Industries Limited-Employee Stock Option Scheme-2020" (hereinafter referred to as "ESOS-2020")
and earmarked 25,00,000 number of equity shares of ? 1 each for issue to employees. The plan was approved in financial year
2020-21 and is administered by the Nomination and Remuneration Committee of the Board of Directors.
ii) Under the ESOS-2020 scheme, options are granted to eligible employees at an exercise price, which shall not be less than the
face value of the equity shares of the Parent Company. These options vest over a period of one to five years subject to continuous
employment and exercisable by the employees within two years of vesting. There is no performance condition attached to these
options.
Nature and purpose of reserves:
a) General Reserves: General reserve was created through an annual transfer of profits from retained earnings in accordance with
applicable regulations. General reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.
b) Capital reserve: This represents capital subsidy received from government in earlier years for promotion of investment in backward
areas.
c) Security premium: Security premium represents the amount received in excess of the face value of the equity shares. The utilisation
of the security premium reserve is governed by the relevant provisions of the Companies Act, 2013 ("Act").
d) Reserve for equity instruments through other comprehensive income: This reserve represents the cumulative gains and losses
arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amounts
reclassified to retained earnings when those assets have been disposed off.
e) Share Options Outstanding Account: This reserve relates to share options granted by the Company to its employees under its
employee share option plans.
f) Effective portion of cash flow hedge reserve: When a derivative is designated as a cash flow hedging instrument, the effective
portion of changes in the fair value of the derivative is recognised in other comprehensive income and accumulated in the cash flow
hedging reserve. The cumulative gain or loss previously recognised in the cash flow hedging reserve is transferred to the Statement
of Profit and Loss upon the occurrence of the related forecasted transaction.
g) Retained earnings: Retained earnings represents the Company's undistributed earnings after taxes.
Notes:
1. In respect of the year ended March 31, 2023, shareholders approved at the Annual General Meeting held on September 22, 2023
a final dividend of ? 0.25 per equity share. The total amount paid with respect to final dividend is ? 497 lakhs.
Secured by: first ranking pari-passu charge on present and future property, plant and equipments of the Company, second ranking
pari-passu charge on present and future stock and book debts of the company.
Repayable in 12 quarterly instalments starting from June 2023 and the last installment is being payable in February 2026.
Rate of interest is Repo plus 3.10% p.a.
(b) Loans repayable on demand:
Loans repayable on demand from banks (includes Cash Credit Facilities, Working capital demand loan and packing credit foreign
currency facilities, buyers credit availed under non fund based limits) from various banks and financial institutions are secured by
way of hypothecation of current assets comprising stock in trade, book debts and stores and spares both present and future. The
aforesaid facilities are further secured by second charge on immovable and movable properties, both present and future, ranking
pari-passu with other working capital lenders.
Rate of interest on Rupee loans repayable on demand is in the range of 5.80% to 18.00% p.a. (March 31, 2024: 5.25% to 10.80% p.a.).
(c) Unsecured loans:
During the previous year, the Company participated in a supply chain financing arrangement (SCF) with banks, which is disclosed
under borrowings. The principal purpose of this arrangement was to provide funding to the Company, and accordingly the Company
derecognized original liabilities upon banks paying the Company's suppliers. Payments to the suppliers by the banks were presented
as part of operating activities and payments to the banks by the Company were presented as part of financing activities.
* The Company has availed an unsecured loan of ? 1,000 lakhs from Mrs. K. Lakshmi Raju (Promoter) on 16th November 2024 at an
interest rate of 10% p.a., approved by the Board on 12th November 2024, with repayment of ? 1,010 lakhs due on or before 15th
November 2025.
**An unsecured loan of ?2,500 lakhs has been obtained from Options Exim Pvt. Ltd. for one year at 10% p.a., backed by the personal
guarantee of Mrs. K. Lakshmi Raju, with a total repayment of ? 2,750 lakhs due on maturity.
The purpose of the loan is to meet the Company's financial and operational business requirements.
(e) For the year ended 31 March 2025 and 31 March 2024, there has been a deviation with respect to certain ratios such as Debt
Service Coverage ratio and EBIDTA of the Company in comparison to the prescribed limits as per the respective loan agreements
disclosed under non current borrowings. The management has however obtained a confirmation prior to the approval of the
financial statements from such lenders on the satisfactory discharge of its debt servicing obligations and that the existing repayment
schedules as per the sanction terms would continue. Accordingly, borrowings continue to be classified in accordance with the terms
of the repayment schedule agreed with the lenders.
(a) The Company has disputed various demands raised by excise duty authorities for the Financial years 2004-05 to 2006-07 and 2008-
OS which are pending at various stages of appeals. While the Company does not expect these proceedings to have a materially
adverse effect on its financial position, any potential outflow related to interest costs, has been duly considered.
(b) The Company has disputed various demands raised by service tax authorities for the Financial years 2006-07 to 2010-11, which are
pending at various stages of appeals. While the Company does not expect these proceedings to have a materially adverse effect on
its financial position, any potential outflow related to interest costs, has been duly considered.
(c) The Group has disputed various demands raised by income tax authorities for the assessment years 2004-05 to 2007-08; 2009¬
10; 2016-17 to 2018-19; and 2022-23 which are pending at various stages of appeals. While the Company does not expect these
proceedings to have a materially adverse effect on its financial position, any potential outflow related to interest costs, has been duly
considered.
(d) The Company has disputed various demands raised by sales tax authorities for the financial years 2012-13 to 2016-17, which are
pending at various stages of appeals. While the Company does not expect these proceedings to have a materially adverse effect on
its financial position, any potential outflow related to interest costs, has been duly considered.
(e) The Company has disputed various demands raised by Goods and Service Tax authorities for the financial year 2017-2018 to 2019-20,
which are pending at various stages of appeals. While the Company does not expect these proceedings to have a materially adverse
effect on its financial position, any potential outflow related to interest costs, has been duly considered.
(f) The disputed amount of ? 1,032 lakhs pertaining to the demand raised by Director general of foreign trade (DGFT) office for the
excess exports benefits availed by the company for earlier years. During the previous year, vide final order dated Decmeber 31, 2023,
the Company has received a favourable order from Additional Director general of foreign trade. The Company also disputed the
penalty levied by the Office of the Commissioner of Customs (Adjudication) in respect of the same matter and the appeal is pending
before Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The Company does not expect the outcome of these proceedings
to have a materially adverse effect on its financial position.
(g) Other contingent liability majorly pertains to demand for payment of alleged deficit of stamp duty, registration fees and penalty in
respect of a sales deed. The Company does not expect the outcome of these proceedings to have a material adverse effect on its
financial position.
B. Guarantee
The Company has given guarantee for the term loan and working capital facilities availed by the NACL Spec-chem Limited (wholly owned
subsidiary) to HDFC Bank Limited and Axis Bank Limited of ? 10,864 lakhs (March 31, 2024: ? 18,500 lakhs).
a. The Company entered into contract to purchase certain items of property, plant and equipment.
32. Defined benefit plans
a) Contribution to provident fund and other funds
- Provident fund:
The Company makes provident fund contributions which are defined contribution plans for qualifying employees. Under the scheme, the
Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the
fund administered and managed by the Government of India. The Company's monthly contributions are charged to the Statement of Profit
and Loss in the period they are incurred. Total expense recognised during the year aggregated ? 816 lakhs (March 31, 2024: ? 738 lakhs).
- Gratuity (funded):
Amount recognised in statement of profit and loss in respect of gratuity ? 265 lakhs (March 31, 2024: ? 209 lakhs).
b) Gratuity
In accordance with the 'Payment of Gratuity Act, 1972' of India, the Company, provides for Gratuity, a defined retirement benefit plan
(the 'Gratuity Plan') covering eligible employees. Liabilities with regard to such Gratuity plan are determined by an independent actuarial
valuation and are charged to the Statement of Profit and Loss for the year determined. The Gratuity fund is administered through a scheme
of Life Insurance Corporation of India (LIC).
The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the
projected unit credit method. These defined benefit plans expose the Company to actuarial risks, such as longevity risk, currency risk,
interest rate risk and market (investment) risk. The gratuity plan is funded. The funding requirements are based on the gratuity fund's
actuarial measurement framework set out in the funding policies of the plan and the Company contributes to LIC.
34.4 Financial risk management
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management
framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring
the Company's risk management policies. The committee reports regularly to the board of directors on its activities.
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 Company 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 Company 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.
Financial risk factors
The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's primary focus is to
foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Company
has adequate internal processes to assess, monitor and manage financial risks. The Company's exposure to credit risk is influenced mainly
by the individual characteristic of each customer and the concentration of risk from the top few customers. The liquidity risk is measured
by the Company's inability to meet its financial obligations as they become due.
Market risk
Market is the risk that the fair value of future cash flows of financial instrument will fluctuate because of changes in market prices. Market
risk comprises of foreign currency risk and interest rate risk. The objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimising the returns.
Foreign currency exposure
The Company is exposed to foreign exchange risk through imports from overseas suppliers in various foreign currencies, exports to
customers abroad, bill discounting, buyer's credit, packing credit. The exchange rate between the rupee and foreign currencies has
changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company's operations
are adversely affected as the rupee appreciates/ depreciates against these currencies. The Company monitors and manages its financial
risks by analysing its foreign exchange exposures. The Company, in accordance with its Board approved risk management policies and
procedures, enters into foreign exchange forward contracts to manage its exposure in foreign exchange rates.
Sensitivity analysis:
For the year ended March 31, 2025 and March 31, 2024, every increase / decrease of ? 1 in the respective foreign currencies compared to
functional currency of the Company would impact profit before tax by ? 82 lakhs/ (? 82 lakhs) and ? 57 lakhs/ (? 57 lakhs) respectively and
Impact Equity, net of tax by ? 61 lakhs/ (? 61 lakhs) and ? 43 lakhs/ (? 43 lakhs) respectively.
Interest rate risk:
The Company draws term loans, working capital demand loans, avails cash credit, foreign currency borrowings including buyer's credit,
packing credit etc. for meeting its funding requirements. The Company manages the interest rate risk by maintaining appropriate mix/
portfolio of borrowings having floating rate of interest. The borrowings are serviced on a timely manner and repayments of the principal
and interest amounts are made on a regular basis.
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, deposits with banks, foreign exchange transactions and
other financial instrument. Credit risk is managed through credit approvals, monitoring the creditworthiness and establishing credit limits
of customers to which the Company grants credit terms in the normal course of business. The company collects security deposits from
its dealer customers which act as security against the outstanding trade receivables from such dealer customers. In the event of default,
these security deposits can be adjusted against the uncollectible trade receivables from such dealer customers. The Company establishes
an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect of trade and other receivables
and investments.
Trade receivables:
(i) The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. Credit risk is managed
through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to whom the
Company grants credit terms in the normal course of business. The credit period on sale of goods varies with seasons and markets
and generally ranges between 30 to 120 days. Before accepting any new customer, the Company assesses the potential customer's
credit quality and defines credit limits by customer. Limits attributed to customers are reviewed annually.
As a practical expedient, the Company uses a provision matrix to determine impairment loss of its trade receivables. The provision
matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward
looking estimates. The ECL allowance (or reversal) during the year is recognised in the statement of profit and loss.
Security deposits:
It consists of rent, electricity and other deposits. The Group does not expect any financial loss as the said deposits are given only to credible
vendors/ service providers.
Cash and cash equivalents and deposits with banks:
Cash and cash equivalents and deposits of the Group are held with banks which have high credit rating. The Group considers that its cash
and cash equivalents and deposits with banks have low credit risk based on the external credit ratings of the counterparties.
Other price risks
The Company is exposed to valuation of equity investment risks as the Company's equity investments are held for strategic rather than
trading purposes.
Liquidity risk management
The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously
monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Company's principal
sources of liquidity are cash & bank balances, credit facilities and cash generated from operations.
The Company has unutilised credit limits from the banks of ? 1,910 lakhs and ? 9,262 lakhs as of March 31, 2025 and March 31, 2024
respectively.
40. Operating Segments
The Company publishes the standalone financial statements of the Company along with the consolidated financial statements. In
accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial
statements.
41. Insurance claim
An Appeal has been filed by the Insurance Company (The Oriental Insurance Company Limited) against the Arbitration Award that was
disposed in favour of the Company, before the Hon'ble High Court of Delhi. Pending final disposal of the above appeal, the Company has
filed the Execution Petitions before Hon'ble High Court of Delhi for deposit of awarded amount in Material Damage (MD) Claim of ? 1,649
lakhs (includes interest) and Business Interruption Policy claim of ? 1,277 lakhs (includes interest) with the Court. With respect to the
execution petition filed by the Company in both the cases, the Hon'ble High Court of Delhi has passed an order vide its order dated March
19, 2021 & April 9, 2021 directed the Insurance Company to deposit the awarded amount towards Material Damage claim & Business
Interruption Policy respectively together with the interest upto the date of deposit with Court. During the financial year 2021-22, the
amount deposited by the Insurance Company has been released by the Court in favour of the Company after submission of equivalent
bank guarantee.
During the year, the Hon'ble High Court of Delhi, vide its order dated February 13, 2025, has ruled in favour of the Company by dismissing
the appeal filed by Insurance Company against the Arbitration Award related to the Company's insurance claim. Pursuant to this favourable
ruling, the Company has recognized the award amount of ?2,926 lakhs (the amount was received in earlier years) as an Exceptional income
for the year ended 31 March 2025.
42. Proposed Acquisition of majority Stake by Coromandel International Limited
On March 12, 2025, the Promoter Group and certain other shareholders of the Company entered into Share Purchase Agreements
('Agreements') with Coromandel International Limited (the 'Acquirer'), pursuant to which the Acquirer will acquire 52.98% of the
shareholding in the Company, subject to the terms and conditions outlined in the Agreements. The parties are currently in the process of
obtaining the necessary regulatory approvals to consummate the transaction.
As of the date of approval of these audited standalone financial statements by the Board of Directors, the Promoter Group continues to be
the existing shareholder of the Company
43. The Company carried trade receivables aggregating to ? 7,796 lakhs as at 31 March 2024 (netted off with subsequent collections up
to the date of the auditor's report for the year ended 31 March 2024), for which the auditors of the Company had received unreliable
responses to their independent balance confirmation requests, for audit of the standalone financial statements for the year ended
31 March 2024, from some of these customers.
Subsequently, the management has instituted an independent investigation into the matter and has also undertaken steps including
but not limited to conducting internal investigation, terminating the company's employee allegedly involved in the matter and
carrying out balance confirmation and reconciliation procedures with the customers. The management has assessed the resultant
impact on the standalone financial statements of the Company and has provided for a cumulative amount of ? 1,978 lakhs (including
the ? 1,880 lakhs charged during the previous year), to fully cover the net exposure.
44. Additional regulatory 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 has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(iii) 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.
(iv) 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.
(v) The Company does not have any 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.
(vi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies
(Restriction on number of Layers) Rules, 2017.
(vii) The Company is not declared wilful defaulter by and bank or financials institution or lender during the year.
(viii) The Company does not have any charges which are yet to be registered with ROC beyond the statutory period. The Company does
not have any satisfaction of charges which are yet to be registered with the ROC beyond the statutory period except for:
The satisfaction of above charges is pending for registration due to procedural delays at the ROC Hyderabad and the Company is
currently following up with the ROC to complete the registration of such satisfaction.
(ix) The Company has borrowings from banks and financial institutions on the basis of security of current assets. Quarterly returns or
statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.
(x) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was obtained.
(xi) The title deeds of all the immovable properties, (other than immovable properties where the Company is the lessee and the lease
agreements are duly executed in favour of the Company) disclosed in the financial statements included in property, plant and
equipment and capital work-in progress are held in the name of the Company as at the balance sheet date.
(xii) The Company has not revalued any of its property, plant and equipment (including right-of-use-assets) and intangible assets during
the year.
(xiii) The Company does not have any transactions with companies which are struck off.
(xiv) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
As per our Report of even date attached
For B S R and Co. For and on behalf of the Board of Directors
Chartered Accountants NACL Industries Limited
Firm's Registration No.: 128510W CIN: L24219TG1986PLC016607
Baby Paul K. Lakshmi Raju G. Veera Bhadram Santanu Mukherjee
Partner Chairperson Whole Time Director Director
Membership No.: 218255 (DIN: 00545776) (DIN: 00114611) (DIN: 07716452)
Anish T. Mathew Satish Kumar Subudhi
Chief Financial Officer Company Secretary
Place: Hyderabad Place: Hyderabad
Date: May 28, 2025 Date: May 28, 2025
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