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Company Information

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17 September 2021 | 12:00

Industry >> Agro Chemicals/Pesticides

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ISIN No INE295D01020 52Week High 89 Book Value (Rs.) 18.72 Face Value 1.00
Bookclosure 24/09/2021 52Week Low 30 EPS 2.58 P/E 29.12
Market Cap. 1484.58 Cr. P/BV 4.01 Div Yield (%) 0.53 Market Lot 1.00
Security Type Other


You can view the entire text of Notes to accounts of the company for the latest year
Year End :2018-03 


Exceptional items pertain to the net effect of insurance claim received against a fire accident that took place in prior year. The Company has contested the claim amount paid by the Insurer and initiated arbitration proceedings seeking additional claim for damages incurred.

1. Transition to Indian Accounting Standards (Ind AS)

These standalone financial statements of NACL Industries Limited (formerly Nagarjuna Agrichem Limited) year ended March 31, 2018 have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015. The adoption of Ind AS was carried out in accordance with Ind AS 101, using April 1, 2016 as the transition date. Ind AS 101 requires that all Ind AS standards and interpretations that are effective for the year ended March 31, 2018, be applied consistently and retrospectively for all fiscal years presented. All applicable Ind AS have been applied consistently and retrospectively wherever required. The resulting difference between the carrying amounts of the assets and liabilities in the financial statements under both Ind AS and Previous GAAP as at the transition date have been recognized directly in equity at the transition date:

The effect of the Company’s transition to Ind AS is summarized as follows:

(i) Transition election

(ii) Reconciliation of equity as previously reported under Indian GAAP to Ind AS

(iii) Reconciliation of profit or loss as previously reported under Indian GAAP to Ind AS

(iv) Adjustments to the statement of cash flows

(i) Transition elections

The Company has prepared the opening Balance Sheet as per Ind AS as of April 1, 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to certain mandatory exceptions and optional exemptions availed by the Company as detailed below:

a. Share based payments:

In accordance with Ind AS transitional provisions, Ind AS 102 Share-based payment has not been applied to employee stock options that have vested before the transition date.

b. investments in subsidiaries and associate:

In accordance with Ind AS transitional provisions, the Company opted to consider previous GAAP carrying value of investments as deemed cost on transition date for investments in subsidiaries and associate in separate financial statement.

c. Designation of equity / preference investments at FVTOCI

The Company has designated investment in equity / preference share capital of the following entities at FVTOCI basis of facts and circumstances that existed at the transition date:

- New India Co-operative bank limited

- SVC co-operative bank limited

- Nagaarjuna Shubho Green Technologies Private Limited”

d. Derecognition of financial assets and financial liabilities:

The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after the transition date.

e. Business combinations

The Company has elected not to apply Ind AS 103 Business Combinations retrospectively to business combinations that occurred before the date of the transition.


a. Ind AS 101 allows an entity to measure property, plant and equipment on the transition date at its fair value or previous GAAP carrying value (book value) as deemed cost. The Company has elected to measure land at fair value and use these fair values as deemed cost on the date of transition. As a result of revaluation of land, the increase in value of property, plant and equipment, has been adjusted to opening reserves (' 2,066 lakhs).

b. Under the previous GAAP, long term investments were measured at cost less diminution in value which is other than temporary. Under Ind AS, the Company has designated such investments at FVTOCI. Ind AS requires such investments to be measured at fair value and the gains/(losses) are recognized through Other Comprehensive Income (FVTOCI) as a separate component of equity. Accordingly, investment in Nagaarjuna Shubho Green Technologies Private Ltd has been fair valued and the impact of the same taken to opening reserves as a separate component of equity.

c. Under Previous GAAP, loss provision for trade receivables was created on incurred loss based on credit risk assessment of each customer. Under Ind AS, these provisions are based on Expected Loss model which factor the credit risk as well as payment delay risk. As a practical expedient, the Company has evaluated a matrix based approach based on past trends to arrive at the provision matrix for receivables outstanding as at each period end. Accordingly, the provision resulting from such evaluation has been adjusted to opening reserves (for receivables outstanding as at April 01, 2016) and the statement of profit and loss (receivables as at March 31, 2017).

d. Under previous GAAP, transaction costs incurred in connection with borrowings are charged upfront to statement of profit and loss. Under Ind AS, transaction costs are included in initial recognition amount of financial liability and charged to statement of profit and loss based on effective interest method.

e. Under previous GAAP, a liability is recognized in the period to which the dividend was recommended by the Board of Directors, even though the dividend may be approved by the shareholders subsequent to the reporting date. Under Ind AS, liability for dividend is recognized in the period in which the obligation to pay is established i.e. when declared by the members in a general meeting. The effect of this change has been adjusted to opening reserves, there is no impact on statement of profit and loss.

f. Under the previous GAAP, deferred sales tax liability is recorded at transaction value. Under Ind AS, the deferred sales tax liability is an incentive received by the Company from the government under a sales tax deferral scheme. Since the loan is interest-free in nature, its face value or the transaction price is not considered to represent fair value. The Company considered that the use of a present value technique based on the cash flows payable under the scheme is an appropriate method of determining fair value. The difference between the fair value of the loan and the amount payable represents the ‘other component’ which is considered to be in the nature of a government grant since it represents an incentive received by the Company from the government. This is accounted for in accordance with Ind AS 20.

g The Company recognizes costs related to the post-employment defined benefit plan on an actuarial basis both under Indian GAAP and Ind AS. Under Indian GAAP, the entire cost including actuarial gains and losses are charged to statement of profit and loss. Under Ind AS, remeasurements are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI.

h Consequential deferred tax on all the above adjustments.

(iv) Effect of adoption of Ind AS on the statement of cash flows for the year ended March 31, 2017:

Following is the impact on cash flows on transition from Previous GAAP to Ind-AS.


(a) The Company has disputed various demands raised by excise duty authorities for the assessment years 2005-06 to 2009-10, which are pending at various stages of appeals. The Company is confident that these appeals will be decided in its favour.

(b) The Company has disputed various demands raised by service tax authorities for the assessment years 2012-13 to 2017-18, which are pending at various stages of appeals. The Company is confident that these appeals will be decided in its favour.

(c) The Company has disputed various demands raised by income tax authorities for the assessment years 2004-05 to 2009-10, which are pending at various stages of appeals. The Company is confident that these appeals will be decided in its favour.

(d) The Company has disputed various demands raised by sales tax authorities for the assessment years 2009-10 to 2016-17, which are pending at various stages of appeals. The Company is confident that these appeals will be decided in its favour.

(e) Guarantees given to bank for guarantees given by bank to third party in ordinary course of business.

(f) 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 is confident that the case will be decided in its favour.

2. Financial Instruments

36.1 Capital management

The Company’s capital management objective is to maximize the total shareholder return by optimizing cost of capital through flexible capital structure that supports growth. Further, the Company ensures optimal credit risk profile to maintain/ enhance credit rating. The Company determines the amount of capital required on the basis of annual operating plan and long-term strategic plans. The funding requirements are met through internal accruals and long-term/short-term borrowings. The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

3 Fair Value by hierarchy

Valuation technique and key inputs Level 1

Quoted prices (unadjusted) in an active markets for identical assets or liabilities.

Level 2

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3

Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

Quantitative disclosures of fair value measurement hierarchy-Level 3 for financial instruments:

The fair values of the unquoted equity shares have been estimated using a Discounted Cash Flow model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, earnings growth, discount rate, and probabilities of the various estimates within the range used in management’s estimate of fair value for these unquoted equity investments.

Valuation inputs and relationships to fair value:

The following table summarizes the quantitative information about the significant unobservable inputs used in level 3 fair value measurements.

4.Financial risk management 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

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.

Sensitivity analysis:

For the year ended March 31, 2018 and March 31, 2017, every increase / decrease of ' 1 in the respective foreign currencies compared to functional currency of the Company would impact profit before tax by (' 74 lakhs)/ ' 74 lakhs and (' 16 lakhs)/ ' 16 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 fixed and 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, insurance of trade receivables within the aging of 90 days to 180 days, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. 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.

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 unutilized credit limits from the banks of Rs, 5,929 lakhs, Rs, 3,739 lakhs and Rs, 1,470 lakhs as of March 31, 2018, March 31, 2017 and April 1, 2016 respectively.

The working capital position of the Company:

5. Leases:

The Company has entered into certain operating lease agreements and an amount of Rs, 315 lakhs (2017: Rs, 302 lakhs) paid under such agreements is charged to the statement of profit and loss. These leases are generally cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed by such agreements.

6. Segment Reporting:

As the Company’s business activities fall within a single primary segment viz-a-viz “manufacture of products -pesticides, insecticides etc.), therefore the disclosure requirements of Indian Accounting Standard 108 - Operating Segments are not applicable. The Company sells its products mainly within India where the conditions prevailing are uniform. Since the sales outside India are below the threshold limit, no separate geographical segment disclosure is considered necessary.

7. Change in the name of Company :

During the year, the Company changed its name from Nagarjuna Agrichem Limited to NACL Industries Limited with effect from September 4, 2017.

8. Approval of financial statements :

The financial statements are approved for issue by the Board of Directors on May 19, 2018.