i) The company in its efforts to augment capacity of Linear Alkyl Benzene plant from its existing 120 KTA to 145 KTA and modernised existing CS Lye facility has incurred a sum of ' 3,504.36 lakhs as of March 2023 (31st March 2022: ' 2,211.41 lakhs) and capital advance of ' 439.89 lakhs (31st March 2022: Nil)
ii) CPP is convertered from FO engine to Gas based engine and amount of ' 6468.98 lakhs (31st March 2022: ' 4.73 lakhs) has already been incurred towards this.
iii) During the year, the Honourable HC of Madras, while disposing the common writ petitions by various land owners including TPL ( in respect of its land of 18 acres in Manali), in its order dated 19.9.2022 quashed the decision to take over such lands from the owners under the Urban Land Ceiling Act, 1972, on grounds that the Act itself having being repealed in 1999. Accordingly, the Company’s unencumbered title to the land is established”.
13.01 In December 1993, the company came out with Rights cum Public Issue of Equity Shares. The difference between issued and subscribed capital of 5,425 shares (previous year 5,425 shares) is due to said shares kept in abeyance under Section 126 of the Companies Act, 2013.
13.02 There has been no movement in the Share Capital during the period. The Company has only one class of equity shares having a par value of f10 per share. Each holder of the equity shares is entitled to one vote per share. In the event of repayment of Share Capital, the same will be in proportion to the number of equity shares held.
(B) Nature and purpose of reserves
a. General Reserve: This Reserve is created by an appropriation from one component of equity generally surplus in statement of Profit and Loss (Retained Earnings) to another, not being an item of Other Comprehensive Income. The same can be utilized in accordance with the provisions of the Companies Act, 2013.
b. Securities Premium: This Reserve represents the premium on issue of shares in earlier years and can be utilized in accordance with the provisions of the Companies Act, 2013.
c. Surplus in Statement of Profit and Loss: Surplus in Statement of Profit and Loss are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholder
d. Items of Other Comprehensive Income - Remeasurements of Net Defined Benefit Plans
It represent different between actuarial assumption on interest income on Plan asset and actuals, besides movement in plan liabilities due to changes in actuarial assumptions including experience adjustments.
a) The above includes f 850.32 lakhs of future lease commitment in respect of lease hold land from Government of Tamilnadu estimated on the basis of increase in guideline value (as indicated in the earlier lease agreement which expired as at 12th June 2020) accounted in compliance with Ind AS 116 - Leases, pending approval of application for renewal of lease submitted by the Company.
i) Working capital loans are secured by hypothecation of inventories both at factory and in transit, book debts and other receivables, both present and future. This are further secured by way of mortgage by deposit of title deeds of immovable properties, both present and future, on second charge basis ranking pari passu amongst them.
ii) The above loans carry varying rates of interests with the maximum rate of interest being 10.55% (As at 31st March 2022: 10.65%) per annum. The weighted average rate of interest of these loans is 9.22% (2021-22: 9.66%) per annum.
iii) Other short tem advances against deposits are obtained for workings capital purpose which carry rate of interests being 6.30%.
a) The above includes f 13.51 lakhs of future lease commitment in respect of lease hold land from Government of Tamilnadu estimated on the basis of increase in guideline value (as indicated in the earlier lease agreement which expired as at 12th June 2020) accounted in compliance with Ind AS 116 - Leases, pending approval of application for renewal of lease submitted by the Company.
34. Employee benefit plans a) Defined contribution plans
The Company makes Provident fund contributions to defined contribution plans for qualifying employees. Under this scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable by the Company to these plans are at the rates specified in the rules of the schemes.
b) Defined benefit plans
The Company has a funded Gratuity Scheme for its employees and gratuity liability has been provided based on the actuarial valuation carried out at the year end. The Gratuity scheme of the Company is funded with the Life Insurance Corporation of India.
Demands disputed by the Company and appeals filed against these disputed demands are pending before respective appellate authorities. Outflows, if any, arising out of these claims would depend on the outcome of the decision of the appellate authorities and the Company’s rights for future appeals. v) Cross Subsidy Charge under Group Captive Scheme 444.95 6,130.48
The demand from TANGEDCO for f 61.30 crores towards cross subsidy surcharge for alleged non-compliance under Rule 3 of the Electricity Rules, 2005 during the period 2014-15 to 2016-17 in respect of the Company’s participation in Group Captive Scheme for procurement of power from private power producers is unlikely to fructify in the wake of one such private power producer having established compliance under the above said Rules as communicated by TANGEDCO vide their letter dated 13.05.2022 and thereby qualifying to be categorized as captive generating plant. TANGEDCO’s response to the Company’s representation for withdrawal of the above said demand for reasons stated above is awaited
C. Lease arrangements with the Government of Tamilnadu
The agreement entered with the Government of Tamilnadu in respect of leasehold land on which Propylene Oxide plant is operating expired on 12th June 2020. Application for renewal of the lease for further period has been filed with the relevant authorities. In the meanwhile, the Company received a demand for payment of arrears of lease rent for the period 1st July 1990- 30th June 2020 to the tune of f 9,224.33 lakhs from the Vattachiyer, Tiruvottiyur, Despite representation made by the company in this regard, in the absence of any response from the authorities as to the basis on which the above demand was
raised, the management is of the view that the demand is arbitrary and devoid of any merit. The Company continues to make payment of the lease rent at contracted rates as per the earlier agreement with Government of Tamilnadu, in terms of the extant Government guidelines for lease of land for industrial purposes. Pending execution of the renewed lease agreement from 13th June 2020, the company has recognised Right of use of Assets (ROUA) on the indicative increase in lease rentals for a period of 30 years.
37. The Chief Operating Decision Maker (CODM) has considered manufacturing of industrial intermediate chemicals as the single operating segment as defined in Ind AS 108- Operating Segments.,
38. Financial instruments
(i) Capital management
For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholder value.
The Company’s objective when managing capital are to:
- Safeguard their ability to continue as a going concern, so that they can continue to provide return for shareholders and benefits for other stakeholders and
- Maintain an optimal capital structure to reduce the weighted average cost of capital
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to shareholders, return capital to shareholders, issue new shares, or sell non-core assets to reduce the debt.
The Company’s risk management is governed by policies monitored by Risk Management Committee, a sub-committee of the Board and as well approved by the Board of Directors Company’s treasury identifies, evaluates and hedges financial risks in close co-ordination with the Company’s operating units. The board provides written principles for overall risk management, as well as policies covering areas such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity in short term Fixed Deposits / Mutual debt funds.
a. Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
a(i) Trade receivables
Customer credit risk is managed by each business unit under the guidance of the credit policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on financial position, past performance, business/economic conditions, market reputation, expected business etc. Based on this evaluation, credit limit and credit terms are decided. Exposure on customer receivables are regularly monitored and managed through credit lock and release. Further where required the company obtains bank guarantee as security for goods sold.
a(ii) Financial Instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made in deposits with reputed banks and short-term liquid funds
The Company has no exposure to credit risk relating to these cash deposits as at: 31st March 2023.
b. Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risks: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings and deposits.
Market risk exposures are measured using sensitivity analysis. There has been no change in the measurement and management of the Company’s exposure to market risks .
b(i) Foreign currency risk management
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Foreign exchange rate exposures are managed within policy parameters approved by Board of Directors The Company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum of 12 month period of forecasted receipts and payments. Exposures relating to capital expenditure beyond a threshold are hedged as per Company policy at the time of commitment.
b(ii) Interest rate risk management
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has been availing the borrowings on a fixed and variable rate of interest. These borrowings are carried at amortised cost. The borrowings on a fixed rate of interest basis are not subject to the interest rate risk as defined in Ind AS 107, since neither the carrying amount not future cash flows will fluctuate because of change in market interest rates. The borrowings on a variable rate of interest are subject to interest rate risk as defined in Ind AS 107. The Company at the end of March 2023, does not carry any loans with variable interest.
c. Liquidity risk management
Liquidity Risk refers to the risk that the company cannot meets its financial obligation, the objective of the liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The company consistently generated sufficient cash flows from operations to meet its financial obligation including lease liabilities as and when they fall due.
42. Additional Regulatory Information required under Schedule III of Companies Act 2013
There are no transactions during the year in respect of following disclosure requirements under amended Schedule III:
(a) Crypto Currency or Virtual Currency
(b) Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder
(c) Registration of charges or satisfaction with Registrar of Companies
(d) Relating to borrowed funds:
i. Wilful defaulter
ii. Utilisation of borrowed funds & share premium
iii. Borrowings obtained on the basis of security of current assets
iv. Discrepancy in utilisation of borrowings
v. Current maturity of long-term borrowings
43. Additional Regulatory Information required under Schedule III of Companies Act 2013
During the year, the Company’s wholly owned subsidiary, Certus Investment and Trading Ltd Mauritius, out of the Funds invested by Company in earlier years, extended loans aggregating to USD 2,500,000 to its subsidiary Certus Investment and Trading Pte Ltd Singapore, who in turn had extended unsecured loans to the extent of USD 17,500,000( including the amount received earlier from its parent) to third parties. These loans were extended at arm’s length interest rates.
45. Events after the reporting period
The Board of Directors have recommended a dividend of f 1.50/- per share 15 (%) on 8,99,71,474 equity shares of f10/- each for the Financial Year 2022-23 subject to approval of Members at the Annual General Meeting.
46. Approval of financial statements
The financial statements were reviewed and recommended by the Audit Committee and approved by the Board of Directors at the meeting held on 23rd May, 2023.
47. Previous Year’s figures
Previous year’s figures have regrouped wherever necessary to correspond with the current year’s disclosure.
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