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Notes to Accounts of Elgi Rubber Company Ltd.
Mar 31, 2025
p) Provisions, Contingent Liabilities and Contingent Asset
Provisions
Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result
of past events and it is probable that there will be an outflow of resources embodying economic benefits in respect of which a
reliable estimate can be made.
Provisions are discounted, if the effect of the time value of money is material, using pre-tax rates that reflects the risks specific to
the liability. When discounting is used, an increase in the provisions due to the passage of time is recognised as finance cost. These
provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
Necessary provision for doubtful debts, claims, etc., are made if realisation of money is doubtful in the judgement of the management.
Contingent liability
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not
recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability
also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.
Contingent liabilities are disclosed separately.
Show cause notices issued by various Government authorities are considered for evaluation of contingent liabilities only when
converted into demand.
Contingent assets
Where an inflow of economic benefits is probable, the Company discloses a brief description of the nature of the contingent assets
at the end of the reporting period, and, where practicable, an estimate of their financial effect. Contingent assets are disclosed but
not recognised in the financial statements.
q) Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances with original maturity of
less than 3 months, highly liquid investments that are readily convertible into cash, which are subject to insignificant risk of changes
in value.
r) Cash Flow Statement
Cash flows are presented using indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non¬
cash nature and any deferrals or accruals of past or future cash receipts or payments.
Bank borrowings are generally considered to be financing activities. However, where bank overdrafts which are repayable on
demand form an integral part of an entityâs cash management, bank overdrafts are included as a component of cash and cash
equivalents for the purpose of Cash flow statement.
s) Earnings per share
The basic earnings per share are computed by dividing the net profit for the period attributable to equity shareholders by the
weighted average number of equity shares outstanding during the period.
Diluted EPS is computed by dividing the net profit after tax by the weighted average number of equity shares considered for deriving
basic EPS and also weighted average number of equity shares that could have been issued upon conversion of all dilutive potential
equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later
date. Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and
potentially dilutive equity shares are adjusted for bonus shares, as appropriate.
4 RECENT ACCOUNTING PRONOUNCEMENTS
A New Standards/Amendments notified but not yet effective:
Ministry of Corporate Affairs (âMCAâ) notifies new standards or amendments to the existing standards under Companies (Indian
Accounting Standards) Rules as issued from time to time. During the year ended March 31, 2025, MCA has not notified any new
standards or amendments to the existing standards applicable to the Company.
B Changes in material accounting policies
Material accounting policy information
The Company adopted Disclosure of Accounting Policies (Amendments to Ind AS 1) from 1 April 2023. Although the amendments
did not result in any changes in the accounting policies themselves, they impacted the accounting policy information disclosed in the
financial statements.
The amendments require the disclosure of âmaterialâ rather than âsignificantâ accounting policies. The amendments also provide guidance
on the application of materiality to disclosure of accounting policies, assisting entities to provide useful, entity-specific accounting policy
information that users need to understand other information in the financial statements.
Recent IND-AS pronouncements:
Ministry of Corporate Affairs (âMCAâ) 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 Company w.e.f. April 1,2024.
The Company has reviewed the new pronouncements and based on its evaluation has determined that it does not have any significant
impact in its financial statements.
50 Financial Instruments
Capital management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising
the return to stakeholders through the optimisation of the debt and equity balance. The Company determines the amount of capital
required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements
are met through equity, long-term borrowings and other short-term borrowings.
For the purposes of the Companyâs capital management, capital includes issued capital, share premium and all other equity reserves
attributable to the equity holders.
The treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and
manages the financial risks relating to the operations through internal risk reports which analyse exposures by degree and magnitude of risks.
These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The Company seeks to minimise the effects of these risks by using natural hedging financial instruments and forward contracts to hedge risk
exposures. The use of financial derivatives is governed by the Companyâs policies approved by the board of directors, which provide written
principles on foreign exchange risk, the use of financial derivatives, and the investment of excess liquidity. The Company does not enter into
or trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price
of a financial instrument. The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates
and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative
instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of
derivative instruments is subject to limits and regular monitoring by appropriate levels of management.
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The
Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate
the risks from such exposures. The use of derivative instruments, if any, is subject to limits and regular monitoring by appropriate levels of
management.
Foreign currency sensitivity analysis
Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Companyâs
revenues from its operations. Any weakening of the functional currency may impact the Companyâs cost of imports and cost of borrowings
and consequently may increase the cost of financing the Companyâs capital expenditures. The foreign exchange rate sensitivity is calculated
for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates
shift in the foreign exchange rates of each currency by 2%, which represents managementâs assessment of the reasonably possible change
in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their
translation at the period end for a 2% change in foreign currency rates.
In managementâs opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end
of the reporting period does not reflect the exposure during the year.
Interest rate risk management
The Company is exposed to interest rate risk because it borrow funds at both fixed and floating interest rates. The risk is managed by the
Company by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate swap contracts.
Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging
strategies are applied. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating
interest rates to fixed interest rates.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative
instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability
outstanding at the end of the reporting period was outstanding for the whole year, a 25 basis point increase or decrease is used when
reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible
change in interest rates.
The 25 basis point interest rate changes will impact the profitability by INR 3.99 million for the year (Previous INR 3.84 million)
Credit risk management
Credit risk arises when a customer or counterparty does not meet its obligations under a customer contract or financial instrument, leading to
a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables and from its financing/ investing
activities, including deposits with banks and foreign exchange transactions. The Company has no significant concentration of credit risk with
any counterparty.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure is the total of the carrying
amount of balances with banks, short term deposits with banks, trade receivables, margin money and other financial assets excluding equity
investments.
(a) Trade Receivables
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and,
based on the evaluation, credit limit of each customer is defined. Wherever the Company assesses the credit risk as high, the exposure
is backed by either bank, guarantee/letter of credit or security deposits.
The Company does not have higher concentration of credit risks to a single customer. As per simplified approach, the Company makes
provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes
appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
(b) Investments, Derivative Instruments, Cash and Cash Equivalents and Bank deposits
Credit Risk on cash and cash equivalents, deposits with the banks/financial institutions is generally low as the said deposits have been
made with the banks/financial institutions, who have been assigned high credit rating by international and domestic rating agencies.
Credit Risk on Derivative Instruments is generally low as the Company enters into the derivative contracts with the reputed Banks.
There is no major Investments made by the Company and accordingly is not prone to any major investment risk.
Offsetting related disclosures
Offsetting of cash and cash equivalents to borrowings as per the consortium agreement is available only to the bank in the event of a default.
Company does not have the right to offset in case of the counter party''s bankruptcy, therefore, these disclosures are not required.
Liquidity risk management
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain
sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed
deposit and mutual funds, which carry minimal mark to market risks. The Company also constantly monitors funding options available in the
debt and capital markets with a view to maintaining financial flexibility.
Liquidity tables
The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment
periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
Company can be required to pay.
52 Details of Borrowings and Assets pledged as Security: Non-current financial liabilities - Borrowings
Terms and conditions of loans taken from banks and Non-Banking financial institutions
(I) Rupee term loan availed from Axis Bank Ltd: (Total Outstanding: '' 61.83 million)
a) Working Capital Term Loan, I carries interest @ 9.25% pa., The loan is repayable in 31 months. The loan matures in February,
2026. The Rupee term loan is secured by Hypothecation on entire movable fixed assets of the borrower pertaining to the
specific reclaim project (acquired out of EXIM Bank finance and taken over by Axis Bank) on exclusive basis. Further this loan
is secured by way of exclusive charge basis on the Companyâs specific immovable properties and Hypothecation of entire
current assets of the borrower, both present and future on first Pari passu basis other working capital lenders
b) Working Capital Term Loan, II carries interest @ 9.25% pa., The loan is repayable in 62 months. The loan matures in October,
2028. The Rupee term loan is secured by Hypothecation on entire movable fixed assets of the borrower pertaining to the
specific reclaim project (acquired out of EXIM Bank finance and taken over by Axis Bank), on exclusive basis. Further this loan
is secured by way of exclusive charge basis on the Companyâs specific immovable properties and Hypothecation of entire
current assets of the borrower, both present and future on first Pari passu basis with other working capital lenders
c) Term loan carries interest @ 9.25% pa., The loan is repayable in 23 monthly instalments. The loan matures in July, 2025. The
Rupee term loan is secured by Hypothecation on entire movable fixed assets of the borrower pertaining to the specific reclaim
project (acquired out of EXIM Bank finance and taken over by Axis Bank), on exclusive basis. Further this loan is secured by
way of exclusive charge basis on the Companyâs specific immovable properties.
(II) Foreign Currency term loan availed from Axis Bank Ltd: (Total Outstanding: '' 3.57 million)
a) Foreign Currency Term loan carries interest @ 5.18% pa., The loan is repayable on 20 monthly instalments. The loan matures
in April, 2025. This term loan is secured by Hypothecation on entire movable fixed assets of the borrower pertaining to the
specific reclaim project (acquired out of EXIM Bank finance and taken over by Axis Bank), on exclusive basis. Further this loan
is secured by way of exclusive charge basis on the Companyâs specific immovable properties.
(III) Rupee term loan availed from HDFC Bank Ltd: (Total Outstanding: '' 48.94 million)
a) Working Capital Term Loan under Guaranteed Emergency Credit Line (GECL) carries interest @ 9.25% pa., The loan is
repayable in 60 months. The loan matures in November, 2026. This loan under GECL is secured by extension of second
ranking charge over existing primary and collateral securities including mortgages created in favor of the bank.
b) Working Capital Term Loan under Guaranteed Emergency Credit Line (GECL) carries interest @ 9.25% pa., The loan
is repayable in 48 months. The loan matures in July, 2028. This loan under GECL is secured by extension of second
ranking charge over existing primary and collateral securities including mortgages created in favor of the bank.
c) Commercial vehicle loan carries interest @ 9.00% pa., The loan is repayable in 60 months. The loan matures in March,
2029. This loan is secured by hypothecation of vehicle.
(IV) Rupee term loan availed from CSB Bank Ltd: (Total Outstanding: '' 300.00 million)
a) Carries interest @ 10.35% pa., The loan is repayable on 60 monthly instalments. The loan matures in March,2028. The
term loan availed is secured by way of exclusive hypothecation charge on fixed assets (both present and future) of the
Company acquired out of bankâs finance for the specific project (reclaim). Further it is also secured by exclusive charge
over specific immovable properties of the Company
(V) Rupee term loan availed from Federal Bank Ltd: (Total Outstanding: '' 286.94 million)
a) Working capital term loan carries interest @ 9.00% pa., The loan is repayable on 48 months instalments. The loan
matures in July, 2028. The loan is secured by exclusive charge on pledge of specific investments (equity shares) of the
Company. Further, it is secured by Pari passu charge on the companyâs specific immovable property along with RBL
Bank Ltd. Also, secured by second charge on the primary securities on all movable and immovable assets created out of
the WCTL.
b) Working capital term loans carries interest @ 8.75% pa. The loan is repayable on 31 months instalments. The loan
matures in February, 2027. The loan is secured by exclusive charge on pledge of specific investments (equity shares) of
the Company. Further, it is secured by Pari passu charge on the companyâs specific immovable property along with RBL
Bank Ltd. Also, secured by second charge on the primary securities on all movable and immovable assets created out of
the WCTL.
c) Working capital term loans carries interest @ 8.75% pa. The loan is repayable on 16 months instalments. The loan
matures in December, 2025. The loan is secured by exclusive charge on pledge of specific investments (equity shares)
of the Company. Further, it is secured by Pari passu charge on the companyâs specific immovable property along with
RBL Bank Ltd. Also, secured by second charge on the primary securities on all movable and immovable assets created
out of the WCTL
d) Working capital term loans carries interest @ 8.75% pa. The loan is repayable on 40 months instalments. The loan
matures in March, 2027. The loan is secured by exclusive charge on pledge of specific investments (equity shares) of
the Company. Further, it is secured by Pari passu charge on the companyâs specific immovable property along with RBL
Bank Ltd. Also, secured by second charge on the primary securities on all movable and immovable assets created out of
the WCTL
e) Working capital term loans carries interest @ 8.75% pa. The loan is repayable on 38 months instalments. The loan
matures in May, 2027. The loan is secured by exclusive charge on pledge of specific investments (equity shares) of the
Company. Further, it is secured by Pari passu charge on the companyâs specific immovable property along with RBL
Bank Ltd. Also, secured by second charge on the primary securities on all movable and immovable assets created out of
the WCTL
f) Working capital term loans carries interest @ 8.75% pa. The loan is repayable on 21 months instalments. The loan
matures in June, 2026. The loan is secured by exclusive charge on pledge of specific investments (equity shares) of the
Company. Further, it is secured by Pari passu charge on the companyâs specific immovable property along with RBL
Bank Ltd. Also, secured by second charge on the primary securities on all movable and immovable assets created out of
the WCTL
g) Working capital term loans carries interest @ 8.75% pa. The loan is repayable on 28 months instalments. The loan
matures in November, 2026. The loan is secured by exclusive charge on pledge of specific investments (equity shares)
of the Company. Further, it is secured by Pari passu charge on the companyâs specific immovable property along with
RBL Bank Ltd. Also, secured by second charge on the primary securities on all movable and immovable assets created
out of the WCTL
(VI) Rupee term loan availed from Tata Capital Ltd: (Total Outstanding: '' 139.97 million)
a) Term loan facility under Guaranteed Emergency Credit (GECL) carries interest @ 10.30% pa. The loan is repayable in
60 months. This loan is secured by way of second charge on specific immovable properties of the Company. The loan
originally matures in February, 2026 but foreclosed during April 25.
b) Term loan facility under Guaranteed Emergency Credit (GECL) carries interest @ 10.30% pa. The loan is repayable in
72 months. This loan is secured by way of second charge on specific immovable properties of the Company. The loan
originally matures in February, 2028 but foreclosed during April 25.
c) Term loan carries interest @ 10.30% pa., The loan is repayable on 60 monthly instalments. This loan is secured by way
of exclusive charge by way of equitable mortgage on specific immovable properties of the Company. The loan originally
matures in April, 2027 but foreclosed during May 25.
d) Term loan carries interest @ 10.30% pa., The loan is repayable on 36 monthly instalments. This loan is secured by
extension of mortgage over existing specific immovable properties of the Company. The loan originally matures in June,
2026 but foreclosed during April 25.
e) Term loan carries interest @ 10.30% pa., The loan is repayable on 36 monthly instalments. This loan is secured by
extension of mortgage over existing specific immovable properties of the Company. The loan originally matures in
February, 2027 but foreclosed during April 25.
f) Term loan carries interest @ 10.30% pa., The loan is repayable on 60 monthly instalments. The loan matures in
September, 2029. This loan is secured by extension of mortgage over existing specific immovable properties of the
Company.
Details of Borrowings and Assets pledged as Security: Current liabilities - Financial Liabilities: Borrowings
Terms and conditions of loans taken from banks and Non-Banking financial institutions
(I) HDFC Bank Ltd: (Total Outstanding: '' 344.85 million)
a) Cash Credit loan from HDFC Bank Ltd carries an interest rate @ 8.75 % p.a and is repayable on demand.
b) The packing credit loans from HDFC Bank Ltd are repayable within 180 days from the date of borrowing. The borrowings
carry an interest rate linked to Repo rate/T-bills plus agreed spread after reduction of eligible interest subsidy under
Interest Equalization Scheme of Reserve Bank of India.
c) Demand loan from HDFC Bank Ltd carries an interest rate @ 8.75% p.a. and is repayable on demand.
d) Buyers Credit Foreign Currency loan from HDFC Bank Ltd carries an interest rate linked to TERM SOFR/EURIBOR plus
agreed spread. These loans are repayable within 180 days from the date of borrowing.
e) The above credit facilities are secured by exclusive charge over specific immovable properties of the Company and
also charge by way of hypothecation of all stock in trade and book debts on Pari passu basis with other working capital
lenders. It has also secured by first charge over plant and machinery other than those exclusively charged for other term
loan lenders.
(II) Federal Bank Ltd: (Total Outstanding: '' 98.18 million)
a) Working capital demand loan from Federal Bank Ltd carries an interest rate @ 9.25% p.a. and is repayable on demand
and secured by way of Pari passu charge on the entire current assets of the Company with other working capital lenders.
The loan is secured by exclusive charge on pledge of specific investments (equity shares) of the Company. Further, it is
secured by Pari passu charge on the companyâs specific immovable property along with RBL Bank Ltd.
b) The overdraft facility is secured with cash margin placed by way of fixed deposit.
(III) Axis Bank Ltd: (Total Outstanding: '' 96.77 million)
a) The cash credit facility from Axis Bank Ltd carries an interest rate @ 9.25 % p.a. The facility is repayable on demand and
is secured by Hypothecation of entire current assets of the borrower, both present and future on first Pari passu basis
with other working capital lenders. Further it is also secured by exclusive charge over specific immovable properties of
the Company.
(IV) CSB Bank Ltd: (Total Outstanding: '' 46.61 million)
a) The cash credit facility from CSB Bank Ltd carries an interest rate @ 10.05 % p.a. The facility is repayable on demand
and is secured by Pari passu first charge on the entire current assets of the Company, both present and future along with
the other existing lenders under MBA. Further it is also secured by exclusive charge over specific immovable properties
of the Company.
54. Retirement benefit plans
Defined contribution plans
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined
contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered
employees'' salary. The contributions, as specified under the law, are made to the Provident Fund.
The total (income) / expense recognised in profit or loss of Rs.5.77 million (for the year ended March 31, 2024: Rs.11.24 million)
represents contribution paid to these plans by the Company at rates specified in the rules of the plan.
Defined benefit plans
(a) Leave obligations
The leave obligations cover the company''s liability for earned leave.
(b) Gratuity
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary
(basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months
and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity
payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in
cases where an enterprise has more favourable terms in this regard the same has been adopted.
56. OTHER STATUTORY INFORMATION
1. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for
holding any Benami property.
2. The Company has not traded or invested in Crypto currency or virtual currency during the financial year
3. The Company has not advanced or loaned or invested funds to any persons or entities, 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 on behalf of the Ultimate Beneficiaries
4. The Company has not received any fund from any persons or entities, 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.
5. 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).
6. The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond
statutory period.
7. The Company does not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section
560 of Companies Act, 1956 during the financial year.
8. The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.
57. Figures for the previous year have been regrouped/reclassified wherever necessary to conform to current periodâs classification.
The accompanying notes form an integral part of the standalone financial statements.
For and on behalf of the Board of Directors As per my report of even date
Sudarsan Varadaraj Parvathi Srinivasasn SR Venkatachalam For M/s ARUN & CO
Chairman & Managing Director Director Chief Financial Officer Chartered Accountants
Din: 00133533 DIN: 10646746 Firm Registration No.0014464S
Faizur Rehman Allaudeen A ARUN
Coimbatore Company Secretary Proprietor
May 29, 2025 Membership No. A70055 Memberehip No. 227831
Mar 31, 2024
2) There are no bonus shares and shares bought back during the period of five years immediately preceding the reporting date.
3) 49,550,000 equity shares of '' 1/- each were allotted in accordance with the scheme of amalgamation and arrangement during the
year 2010-11.
4) The Company has no holding Company.
5) Rights, preferences and restrictions in respect of equity shares issued by the Company.
a. The company has only one class of equity shares having a par value of '' 1/- each. The equity shares of the company having par value of '' 1/- rank pari-passu in all respects including voting rights and entitlement to dividend.
b. The Company has one class of equity shares having a par value of '' 1/- per share. Each shareholder is eligible for one vote per share held. During the year the company has not declared any dividend. (Previous year dividend : Nil)
c. In the event of liquidation, shareholders will be entitled to receive the remaining assets of the company after distribution of all preferential amounts. The distribution will be proportionate to the number of equity shares held by the shareholder.
Details of Borrowings and Assets pledged as Security, and terms and conditions of loans taken from banks and Non Banking
financial institutions - Refer note 53.
a) The Company has not been declared as a wilful defaulter by any bank or financial institutions or government or any government authority.
b) The Companyâs borrowings from banks or financial instituitions on the basis of security of current assets and the quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.
c) There are no defaults in the repayments of above borrowings during the year.
d) The borrowings obtained by the company from banks and financial institutions have been applied for the purposes for which such loans were taken
A. Standby letter of credit (guarantee) and Corporate Guarantee
SBLC facilities were extended by banks in India to their foreign counterparts based on the counter guarantee given by the company. These counterpart banks who in turn had granted credit facilities to the following subsidiary companies including step down-subsidiaries. During the year, the Company has also extended the Corporate Guarantees against the credit facilities granted to its subsidiary companies including step down-subsidiaries.
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity, long-term borrowings and other short-term borrowings.
The treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The Company seeks to minimise the effects of these risks by using natural hedging financial instruments and forward contracts to hedge risk exposures. The use of financial derivatives is governed by the Companyâs policies approved by the board of directors, which provide written principles on foreign exchange risk, the use of financial derivatives, and the investment of excess liquidity. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management.
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate the risks from such exposures. The use of derivative instruments, if any, is subject to limits and regular monitoring by appropriate levels of management.
Foreign currency sensitivity analysis
Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Companyâs revenues from its operations. Any weakening of the functional currency may impact the Companyâs cost of imports and cost of borrowings and consequently may increase the cost of financing the Companyâs capital expenditures. The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates
shift in the foreign exchange rates of each currency by 2%, which represents managementâs assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 2% change in foreign currency rates.
In managementâs opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.
The Company is exposed to interest rate risk because it borrow funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year, a 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents managementâs assessment of the reasonably possible change in interest rates.
The 25 basis point interest rate changes will impact the profitability by '' 3.84 million for the year (Previous '' 3.28 million)
Credit risk arises when a customer or counterparty does not meet its obligations under a customer contract or financial instrument, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables and from its financing/ investing activities, including deposits with banks and foreign exchange transactions. The Company has no significant concentration of credit risk with any counterparty.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure is the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables, margin money and other financial assets excluding equity investments.
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and, based on the evaluation, credit limit of each customer is defined. Wherever the Company assesses the credit risk as high, the exposure is backed by either bank, guarantee/letter of credit or security deposits.
The Company does not have higher concentration of credit risks to a single customer. As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
(b) Investments, Derivative Instruments, Cash and Cash Equivalents and Bank deposits
Credit Risk on cash and cash equivalents, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions, who have been assigned high credit rating by international and domestic rating agencies.
Credit Risk on Derivative Instruments is generally low as the Company enters into the derivative contracts with the reputed Banks.
There is no major Investments made by the Company and accordingly is not prone to any major investment risk.
Offsetting related disclosures
Offsetting of cash and cash equivalents to borrowings as per the consortium agreement is available only to the bank in the event of a default. Company does not have the right to offset in case of the counter partyâs bankruptcy, therefore, these disclosures are not required.
Liquidity risk management
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
52 Details of Borrowings and Assets pledged as Security : Non current financial liabilities - Borrowings
Terms and conditions of loans taken from banks and Non Banking financial institutions
(I) Rupee Term loan availed from Axis Bank Ltd (Total outstanding : '' 111.25 million)
a) Working Capital Term Loan - I carries interest @ 9.25% pa., The loan is repayable in 31 months. The loan matures in March, 2026. The Rupee term loan is secured by Hypothecation on entire movable fixed assets of the borrower pertaining to the specific reclaim project (acquired out of EXIM Bank finance and taken over by Axis Bank), on exclusive basis. Further this loan is secured by way of exclusive charge basis on the Companyâs specific immovable properties and Hypothecation of entire current assets of the borrower, both present and future on first pari passu basis with HDFC Bank.
b) Working Capital Term Loan - II carries interest @ 9.25% pa., The loan is repayable in 62 months. The loan matures in October, 2028. The Rupee term loan is secured by Hypothecation on entire movable fixed assets of the borrower pertaining to the specific reclaim project (acquired out of EXIM Bank finance and taken over by Axis Bank), on exclusive basis. Further this loan is secured by way of exclusive charge basis on the Companyâs specific immovable properties and Hypothecation of entire current assets of the borrower, both present and future on first pari passu basis with HDFC Bank.
c) Term loan carries interest @ 9.25% pa., The loan is repayable in 23 monthly instalments. The loan matures in July, 2025. The Rupee term loan is secured by Hypothecation on entire movable fixed assets of the borrower pertaining to the specific reclaim project (acquired out of EXIM Bank finance and taken over by Axis Bank), on exclusive basis. Further this loan is secured by way of exclusive charge basis on the Companyâs specific immovable properties.
(II) Foreign Currency Term loan availed from Axis Bank Ltd (Total outstanding : '' 45.91 million)
a) Carries interest @ 6.35% pa., The loan is repayable on 20 monthly instalments. The loan matures in April, 2025. The Rupee term loan is secured by Hypothecation on entire movable fixed assets of the borrower pertaining to the specific reclaim project (acquired out of EXIM Bank finance and taken over by Axis Bank), on exclusive basis. Further this loan is secured by way of exclusive charge basis on the Companyâs specific immovable properties.
(III) Rupee Term loan availed from HDFC Bank Ltd: (Total outstanding : '' 75.98 million)
equitable mortgage over specific immovable properties (including plant and machinery) and second charge over plant and machinery acquired out of the term loan funded by HDFC Bank and on escrow of receivables arising out of lease rentals from Companyâs specific commercial / industrial property.
repayable in 48 months. The loan matures in July, 2028. This loan under GECL is secured by extension of second ranking
charge over existing primary and collateral securities including mortgages created in favour of the bank.
c) Commercial vehicle loan carries interest @ 9.00% pa., The loan is repayable in 60 months. The loan matures in March, 2029. This loan is secured by hypothecation of vehicle..
(IV) Rupee Term loan availed from CSB Bank Ltd: (Total outstanding : '' 349.05 million)
a) Carries interest @ 9.95% pa., The loan is repayable on 60 monthly instalments. The loan matures in March, 2028. The term loan availed is secured by way of exclusive hypothecation charge on fixed assets (both present and future) of the Company acquired out of bankâs finance for the specific project (reclaim).
(V) Rupee Term loan availed from RBL Bank Ltd: (Total outstanding : '' 190.39 million)
a) Carries interest @ 10.00% pa., The loan is repayable on 60 months instalments. The loan matures in December, 2028. The loan is secured by exclusive charge on pledge of specific investments (equity shares) of the Company. Further, it is secured by exclusive charge on the companyâs specific immovable property.
(VI) Rupee Term loan availed from Tata Capital Financial Services Ltd: (Total outstanding : '' 204.53 million)
a) Term loan facility under Guaranteed Emergency Credit Line-2 (GECL) carries interest @ 10.10% pa., The loan is repayable on 60 monthly instalments. The loan matures in February, 2026. This loan is secured by way of second charge on specific immovable properties of the Company.
b) Term loan facility under Guaranteed Emergency Credit Line-2 extension (GECL) carries interest @ 10.10% pa. The loan is repayable in 72 months. The loan matures in February, 2028. This loan under GECL is secured by way of second charge on specific immovable properties of the Company.
c) Term loan Carries interest @ 10.10% pa., The loan is repayable on 60 monthly instalments. The loan matures in December, 2027. This loan is secured by way of exclusive charge by way of equitable mortgage (including negative lien) on specific immovable properties of the Company.
d) Term loan carries interest @ 10.10% pa., The loan is repayable on 60 monthly instalments. The loan matures in April, 2027. This loan is secured by way of exclusive charge by way of equitable mortgage (including negative lien) on specific immovable properties of the Company.
e) Term loan carries interest @ 10.10% pa., The loan is repayable on 36 monthly instalments. The loan matures in June, 2026. This loan is secured by extension of mortgage over existing specific immovable properties of the Company.
f) Term loan carries interest @ 10.10% pa., The loan is repayable on 36 monthly instalments. The loan matures in February, 2027. This loan is secured by extension of mortgage over existing specific immovable properties of the Company.
53. Details of Borrowings and Assets pledged as Security : Current liabilities - Financial Liabilities: Borrowings
Terms and conditions of loans taken from banks and Non Banking financial institutions
(I) HDFC Bank Ltd (Total outstanding : '' 286.60 million)
a) Cash Credit loan from HDFC Bank Ltd carries an interest rate @ 9.08% p.a and is repayable on demand.
b) The packing credit loans from HDFC Bank Ltd are repayable within 180 days from the date of borrowing. The borrowings carry an interest rate linked to Repo rate/T-bills plus agreed spread after reduction of eligible interest subsidy under Interest Equalization Scheme of Reserve Bank of India.
c) Demand loan from HDFC Bank Ltd carries an interest rate @ 9% p.a. and is repayable on demand.
d) Buyers Credit Foreign Currency loan from HDFC Bank Ltd carries an interest rate linked to TERM SOFR/EURIBOR plus agreed spread. These loans are repayable within 180 days from the date of borrowing.
The above credit facilities are secured by exclusive charge over specific immovable properties of the Company and exclusive charge by way of hypothecation of all stock in trade and book debts on pari passu basis with other cash credit lenders and first charge over plant and machinery other than those exclusively charged for other term loan lenders.
(II) Federal Bank Ltd (Total outstanding : '' 79.42 million)
a) Working capital demand loan from Federal Bank Ltd carries an interest rate @ 9.25% p.a. and repayable at the end of 90th day and secured by way of pari passu charge on the entire current assets of the Company with other working capital lenders.
b) The overdraft facility is secured with cash margin placed by way of fixed deposit.
(III) TATA Capital Financial Services Ltd (Total outstanding : '' 30.00 million)
a) Working capital demand loan from TATA Capital Financial Services Ltd carries an interest rate @ 10.10% p.a. and repayable at the end of 120th day and secured by way of first charge on specific immovable properties of the Company.
(IV) Axis Bank Ltd (Total outstanding : '' 96.60 million)
a) The cash credit facility from Axis Bank Ltd carries an interest rate @ 9.25 % p.a. The facility is repayable on demand and is
secured by Hypothecation of entire current assets of the Company, both present and future on first paripassu basis with HDFC bank. Further it is also secured by exclusive charge over specific immovable properties of the Company.
(V) CSB Bank Ltd (Total outstanding : '' 49.72 million)
a) The cash credit facility from CSB Bank Ltd carries an interest rate @ 9.75 % p.a. The facility is repayable on demand and is secured by Hypothecation of entire current assets of the Company, both present and future along with the other existing lenders on pari passu basis under MBA. Further it is also secured by exclusive charge over specific immovable properties of the Company.
Defined contribution plans
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined
contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employeesâ salary. The contributions, as specified under the law, are made to the Provident Fund.
The total (income) / expense recognised in profit or loss of '' 11.24 million (for the year ended March 31,2023: '' 13.00 million) represents contribution paid to these plans by the Company at rates specified in the rules of the plan.
Defined benefit plans
(a) Leave obligations
The leave obligations cover the companyâs liability for earned leave.
(b) Gratuity
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.
The discount rate indicated above reflects the estimated timing and currency of benefit payments. It is based on the yield / rates available on applicable bonds as on the current valuation date.
The salary growth rate indicated above is the Companyâs best estimate of an increase in salary of the employees in future years, determined considering the general trend in inflation, seniority, promotions, past experience and other relevant factors such as demand and supply in employment market, etc.
56. OTHER STATUTORY INFORMATION
1. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
2. The Company has not traded or invested in Crypto currency or virtual currency during the financial year
3. The Company has not advanced or loaned or invested funds to any persons or entities, 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 on behalf of the Ultimate Beneficiaries
4. The Company has not received any fund from any persons or entities, 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.
5. 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).
6. The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond statutory period.
7. The Company does not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
8. The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.
57. Figures for the previous year have been regrouped/reclassified wherever necessary to conform to current periodâs classification.
Mar 31, 2023
3) 49,550,000 equity shares of '' 1/- each were allotted in accordance with the scheme of amalgamation and arrangement during the
year 2010-11.
4) The Company has no holding Company.
5) Rights, preferences and restrictions in respect of equity shares issued by the Company.
a. The company has only one class of equity shares having a par value of '' 1/- each. The equity shares of the company having par value of '' 1/- rank pari-passu in all respects including voting rights and entitlement to dividend.
b. The Company has one class of equity shares having a par value of '' 1/- per share. Each shareholder is eligible for one vote per share held. During the year the company has not declared any dividend. (Previous year dividend : Nil)
c. In the event of liquidation, shareholders will be entitled to receive the remaining assets of the company after distribution of all preferential amounts. The distribution will be proportionate to the number of equity shares held by the shareholder.
Details of Borrowings and Assets pledged as Security, and terms and conditions of loans taken from banks and Non Banking financial institutions - Refer note 52
a) The Company has not been declared as a wilful defaulter by any bank or financial institution or government or any government authority.
b) There are no defaults in the repayments of above borrowings during the year.
c) The borrowings obtained by the company from banks and financial institutions have been applied for the purposes for which such loans were taken.
Details of Borrowings and Assets pledged as Security, and terms and conditions of loans taken from banks and Non Banking
financial institutions - Refer note 53
a) The Company has not been declared as a wilful defaulter by any bank or financial institutions or government or any government authority.
b) The Companyâs borrowings from banks or financial instituitions on the basis of security of current assets and the quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts except exchange fluctuation gain or loss considered in books
c) There are no defaults in the repayments of above borrowings during the year.
d) The borrowings obtained by the company from banks and financial institutions have been applied for the purposes for which such loans were taken
|
46 Contingent liability Contingent Liability Claims against the Company not acknowledged as debts a. Income tax matters |
91.17 |
91.17 |
|
|
b. Excise and service tax matters |
13.33 |
13.33 |
|
|
c. Sales tax |
78.12 |
89.59 |
|
|
d. Legal metrology |
0.15 |
0.15 |
|
|
Capital Commitments Estimated amount of contracts remaining to be executed on capital account and not |
60.00 |
178.00 |
|
|
provided for |
Other commitments
A. Standby letter of credit (guarantee) and Corporate Guarantee
SBLC facilities were extended by banks in India to their foreign counterparts based on the counter guarantee given by the company. These counterpart banks who in turn had granted credit facilities to the following subsidiary companies. During the year, the Company has also extended the Corporate Guarantees against the credit facilities granted to its subsidiary companies including step-subsidiaries.
The SBLC facilities granted by Banks are secured by way of:
a. Charge on specific immovable properties including land and buildings (all present and future buildings constructed thereon) including plant and machinery of the Company other than those exclusively charged to other term lenders.
b. Hypothecation of all the stocks in trade (both present and future) and book debts of the Company.
c. Cash margin - Lien on fixed deposits
d. Additionally, the SBLC facility is secured by the Corporate Guarantee provided by LRG Technologies Limited.
50 Financial Instruments Capital management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity, long-term borrowings and other short-term borrowings.
For the purposes of the Companyâs capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders.
The treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The Company seeks to minimise the effects of these risks by using natural hedging financial instruments and forward contracts to hedge risk exposures. The use of financial derivatives is governed by the Companyâs policies approved by the board of directors, which provide written principles on foreign exchange risk, the use of financial derivatives, and the investment of excess liquidity. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management.
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate the risks from such exposures. The use of derivative instruments, if any, is subject to limits and regular monitoring by appropriate levels of management.
Foreign currency sensitivity analysis
Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Companyâs revenues from its operations. Any weakening of the functional currency may impact the Companyâs cost of imports and cost of borrowings and consequently may increase the cost of financing the Companyâs capital expenditures. The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents managementâs assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 2% change in foreign currency rates.
In managementâs opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.
The Company is exposed to interest rate risk because it borrow funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents managementâs assessment of the reasonably possible change in interest rates.
The 25 basis point interest rate changes will impact the profitability by '' 3.28 million for the year (Previous '' 2.71 million)
Credit risk arises when a customer or counterparty does not meet its obligations under a customer contract or financial instrument, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables and from its financing/ investing activities, including deposits with banks and foreign exchange transactions. The Company has no significant concentration of credit risk with any counterparty.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure is the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables, margin money and other financial assets excluding equity investments.
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and, based on the evaluation, credit limit of each customer is defined. Wherever the Company assesses the credit risk as high, the exposure is backed by either bank, guarantee/letter of credit or security deposits.
The Company does not have higher concentration of credit risks to a single customer. As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
(b) Investments, Derivative Instruments, Cash and Cash Equivalents and Bank deposits
Credit Risk on cash and cash equivalents, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions, who have been assigned high credit rating by international and domestic rating agencies.
Credit Risk on Derivative Instruments is generally low as the Company enters into the derivative contracts with the reputed Banks.
There is no major Investments made by the Company and accordingly is not prone to any major investment risk.
Offsetting related disclosures
Offsetting of cash and cash equivalents to borrowings as per the consortium agreement is available only to the bank in the event of a default. Company does not have the right to offset in case of the counter partyâs bankruptcy, therefore, these disclosures are not required.
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
52 Details of Borrowings and Assets pledged as Security : Non current financial liabilities - Borrowings Terms and conditions of loans taken from banks and Non Banking financial institutions
(I) Rupee term loan availed from Export-Import Bank of India:
a) Term loan carries interest @ 9.20% pa., The loan is repayable in 20 quarterly instalments. The loan matures in July, 2025. The Rupee term loan is secured by way of exclusive first charge and first pari passu charge with Kotak Mahindra Bank (acting as an agent of EXIM) on the Companyâs specific immovable properties and hypothecation over the whole of Companyâs movable fixed assets (both present and future) funded out of EXIM Bankâs term loan pertaining to the specific reclaim project.
b) Term Loan I availed under ECGLS Scheme carries interest @ 9.25% pa., The loan is repayable in 60 months. The loan matures in April, 2026. This loan under ECGLS is secured by way of second charge over the Companyâs specific immovable properties and second charge over the whole of Companyâs specific movable fixed assets (both present and future) funded out of EXIM Bankâs term loan.
c) Term Loan II availed under ECGLS Scheme carries interest @ 9.25% pa., The loan is repayable on 72 months. The loan matures in November, 2028. This loan under ECGLS is secured by way of second charge over the whole of Companyâs specific movable fixed assets pertaining to the specific reclaim project funded out of EXIM Bankâs term loan.
(II) Foreign Currency term loan availed from Export-Import Bank of India:
a) Carries interest @ 8.46% pa., The loan is repayable on 20 quarterly instalments. The loan matures in May, 2023. The Foreign currency term loan is secured by way of first pari passu charge with Kotak Mahindra Bank (acting as an agent of EXIM) on the Companyâs specific immovable properties.
b) Carries interest @ 9.18% pa., The loan is repayable on 20 quarterly instalments. The loan matures in April, 2025. The loan is secured by way of exclusive first charge and first pari passu charge with Kotak Mahindra Bank (acting as an agent of EXIM) on the Companyâs specific immovable properties and hypothecation over the whole of Companyâs movable fixed assets (both present and future) funded out of EXIM Bankâs term loan pertaining to the specific reclaim project.
(III) Rupee term loan availed from HDFC Bank Ltd:
a) Carries interest @ 9.04 % pa., The loan is repayable on 60 monthly instalments. The loan matures in July, 2023. The term loan is secured by way of exclusive first charge by way of equitable mortgage on specific immovable properties and plant & machinery acquired out of the term loan funded by HDFC Bank and exclusive charge on escrow of receivables arising out of lease rentals from Companyâs specific commercial / industrial property.
b) Working Capital Term Loan under Guaranteed Emergency Credit Line (GECL) carries interest @ 9.25% pa., The loan is repayable in 60 months. The loan matures in March, 2026. This loan under GECL is secured by second charge by way of equitable mortgage over specific immovable properties (including plant and machinery) and second charge over plant and machinery acquired out of the term loan funded by HDFC Bank and on escrow of receivables arising out of lease rentals from Companyâs specific commercial / industrial property.
(IV) Rupee term loan availed from CSB Bank Ltd:
a) Carries interest @ 9.75% pa., The loan is repayable on 60 monthly instalments. The loan matures in March, 2028. The term loan availed is secured by way of exclusive hypothecation charge on fixed assets (both present and future) of the Company acquired out of bankâs finance.
(V) Rupee loan against securities availed from Bajaj Finance Limited:
a) Carries interest @ 8.75% pa., The loan is repayable at the end of the tenor of 36 months on bullet repayment. The loan matures in May, 2025. The loan is secured by exclusive charge by way of pledge on specific investments (equity shares) of the Company.
(VI) Rupee term loan availed from Tata Capital Financial Services Ltd:
a) Term loan facility under Guaranteed Emergency Credit Line-2 (GECL) carries interest @ 11.80% pa. The loan is repayable in 72 months. The loan matures in February, 2028. This loan under GECL is secured by way of second charge on specific immovable properties of the Company.
b) Term loan Carries interest @ 11.50% pa., The loan is repayable on 60 monthly instalments. The loan matures in December, 2027. This loan is secured by way of exclusive charge by way of equitable mortgage (including negative lien) on specific immovable properties of the Company.
c) Term loan carries interest @ 11.80% pa., The loan is repayable on 60 monthly instalments. The loan matures in February, 2026. This loan is secured by way of first charge on specific immovable properties of the Company.
d) Term loan carries interest @ 11.80% pa., The loan is repayable on 60 monthly instalments. The loan matures in April, 2027. This loan is secured by way of exclusive charge by way of equitable mortgage (including negative lien) on specific immovable properties of the Company.
53. Details of Borrowings and Assets pledged as Security : Current liabilities - Financial Liabilities: Borrowings
Terms and conditions of loans taken from banks and Non Banking financial institutions
(I) HDFC Bank Ltd
a) Cash Credit loan from HDFC Bank Ltd carries an interest rate @ 9.67% p.a and is repayable on demand.
b) The packing credit loans from HDFC Bank Ltd are repayable within 180 days from the date of borrowing. The borrowings carry an interest rate linked to Repo rate/T-bills plus agreed spread after reduction of eligible interest subsidy under Interest Equalisation Scheme of Reserve Bank of India.
c) Demand loan from HDFC Bank Ltd carries an interest rate @ 9% p.a. and is repayable on demand.
d) Buyers Credit Foreign Currency loan from HDFC Bank Ltd carries an interest rate linked to TERM SOFR/EURIBOR plus agreed spread. These loans are repayable within 180 days from the date of borrowing.
The above credit facilities are secured by exclusive charge over specific immovable properties of the Company and exclusive charge by way of hypothecation of all stock in trade and book debts and first charge over plant and machinery other than those exclusively charged for other term loan lenders.
(II) TATA Capital Financial Services Ltd
a) Working capital demand loan from TATA Capital Financial Services Ltd carries an interest rate @ 11.80% p.a. and repayable at the end of 120th day and secured by way of first charge on specific immovable properties of the Company.
(III) Kotak Mahindra Bank Ltd
a) Overdraft loan from Kotak Mahindra Bank Ltd carries an interest rate @ 11.00 % p.a. The facility is repayable on demand and is secured by exclusive charge by marking a lien on specific cash deposit / term deposit of the Company.
(IV) Arth Padarth Factors and Finance Private Limited
a) Bill Discounting facilities from Arth Padarth Factors and Finance Private Limited carries an interest rate @ 12.00 % p.a. and repayable on maturity.
54. Retirement benefit plans Defined contribution plans
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employeesâ salary. The contributions, as specified under the law, are made to the Provident Fund.
The total (income) / expense recognised in profit or loss of Rs.13.00 million (for the year ended March 31, 2022: Rs.7.92 million) represents contribution paid to these plans by the Company at rates specified in the rules of the plan.
Defined benefit plans
(a) Leave obligations
The leave obligations cover the companyâs liability for earned leave.
(b) Gratuity
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.
56. OTHER STATUTORY INFORMATION
1. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
2. The Company has not traded or invested in Crypto currency or virtual currency during the financial year
3. The Company has not advanced or loaned or invested funds to any persons or entities, 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 on behalf of the Ultimate Beneficiaries
4. The Company has not received any fund from any persons or entities, 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.
5. 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).
6. The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond statutory period.
7. The Company does not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
8. The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.
57. Figures for the previous year have been regrouped/reclassified wherever necessary to conform to current periodâs classification.
Mar 31, 2018
1 Company Overview
Elgi Rubber Company Limited (âCompanyâ or âERCLâ) was incorporated on 16th October 2006. ERCL is leading Company providing solutions to Rubber Industry and engaged in the business of manufacture of Reclaimed rubber, Retreading machinery, and Retread rubber.
2 Basis of preparation of financial statements Statement of compliance
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (âthe Actâ) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
Basis of preparation and presentation
For all periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
The financial statements for the year ended March 31, 2018 are the first financial statements the Company has prepared in accordance with Ind AS with the date of transition as April 1, 2016. Refer to note 50 for information on how the Company adopted Ind AS.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:
a) Derivative financial instruments
b) Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)
Use of estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods.
Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is the Companyâs functional currency. All financial information presented in INR has been rounded to the nearest millions (up to two decimals). The financial statements are approved for issue by the Companyâs Board of Directors on May 24, 2018.
2a Critical accounting estimates and management judgments
In application of the accounting policies, which are described in note 2, the management of the Company is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
Information about significant areas of estimation, uncertainty and critical judgements used in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
Property, Plant and Equipment (PPE)
The residual values and estimated useful life of PPEs, Intangible Assets and Investment Properties are assessed by the technical team at each reporting date by taking into account the nature of asset, the estimated usage of the asset, the operating condition of the asset, past history of replacement and maintenance support. Upon review, the management accepts the assigned useful life and residual value for computation of depreciation/amortisation. Also, management judgement is exercised for classifying the asset as investment properties or vice versa.
Current tax
Calculations of income taxes for the current period are done based on applicable tax laws and managementâs judgement by evaluating positions taken in tax returns and interpretations of relevant provisions of law.
Deferred tax assets
Significant management judgement is exercised by reviewing the deferred tax assets at each reporting date to determine the amount of deferred tax assets that can be retained / recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Fair value
Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. In applying the valuation techniques, management makes maximum use of market inputs and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date.
Impairment of trade receivables
The impairment for trade receivables are done based on assumptions about risk of default and expected loss rates. The assumptions, selection of inputs for calculation of impairment are based on management judgement considering the past history, market conditions and forward looking estimates at the end of each reporting date.
Impairment of Non-financial assets (PPE/Intangible assets/Investment properties)
The impairment of non-financial assets is determined based on estimation of recoverable amount of such assets. The assumptions used in computing the recoverable amount are based on management judgement considering the timing of future cash flows, discount rates and the risks specific to the asset.
Defined benefit plans and other long term benefits
The cost of the defined benefit plan and other long term benefits, and the present value of such obligation are determined by the independent actuarial valuer. An actuarial valuation involves making various assumptions that may differ from actual developments in future. Management believes that the assumptions used by the actuary in determination of the discount rate, future salary increases, mortality rates and attrition rates are reasonable. Due to the complexities involved in the valuation and its long term nature, this obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities could not be measured based on quoted prices in active markets, management uses valuation techniques including the Discounted Cash Flow (DCF) model, to determine its fair value The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is exercised in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Provisions and contingencies
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the reporting date. The actual outflow of resources at a future date may therefore vary from the figure estimated at end of each reporting period.
2b Recent accounting pronouncements
Standards issued but not yet effective
The following standards have been notified by Ministry of Corporate Affairs
a. Ind AS 115 - Revenue from Contracts with Customers (effective from April 1, 2018)
b. Ind AS 116 - Leases (effective from April 1, 2019)
The Company is evaluating the requirements of the above standards and the effect on the financial statements is also being evaluated.
3 Operating Segments
The Companyâs business operation comprises of single operating segment viz., "Rubber Industry". Operating segment has been identified on the basis of nature of products and reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker.
4 Financial instruments Capital management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity, long-term borrowings and other short-term borrowings.
Financial risk management objectives
The treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The Company seeks to minimise the effects of these risks by using natural hedging financial instruments and forward contracts to hedge risk exposures. The use of financial derivatives is governed by the Company''s policies approved by the board of directors, which provide written principles on foreign exchange risk, the use of financial derivatives, and the investment of excess liquidity. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management.
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate the risks from such exposures. The use of derivative instruments, if any, is subject to limits and regular monitoring by appropriate levels of management.
Foreign currency sensitivity analysis
Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company''s revenues from its operations. Any weakening of the functional currency may impact the Company''s cost of imports and cost of borrowings and consequently may increase the cost of financing the Company''s capital expenditures. The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 2% change in foreign currency rates.
In management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.
Interest rate risk management
The Company is exposed to interest rate risk because it borrow funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.
The 25 basis point interest rate changes will impact the profitability by INR 2.95 Million for the year (Previous INR 2.20 Million)
Credit risk management
Credit risk arises when a customer or counterparty does not meet its obligations under a customer contract or financial instrument, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables and from its financing/ investing activities, including deposits with banks and foreign exchange transactions. The Company has no significant concentration of credit risk with any counterparty.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure.The maximum exposure is the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables, margin money and other financial assets excluding equity investments.
(a) Trade receivables
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and, based on the evaluation, credit limit of each customer is defined. Wherever the Company assesses the credit risk as high, the exposure is backed by either bank, guarantee/letter of credit or security deposits.
The Company does not have higher concentration of credit risks to a single customer. As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
(b) Investments, Derivative instruments, Cash and cash equivalents and Bank deposits
Credit risk on cash and cash equivalents, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions, who have been assigned high credit rating by international and domestic rating agencies.
Credit risk on Derivative instruments is generally low as the Company enters into the derivative contracts with the reputed Banks.
There is no major Investments made by the Company and accordingly is not prone to any major investment risk.
Offsetting related disclosures
Offsetting of cash and cash equivalents to borrowings as per the consortium agreement is available only to the bank in the event of a default. Company does not have the right to offset in case of the counter party''s bankruptcy, therefore, these disclosures are not required.
Liquidity risk management
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
5 Retirement benefit plans Defined contribution plans
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary. The contributions, as specified under the law, are made to the Provident Fund.
The total expense recognised in profit or loss of '' 6.16 Million (for the year ended March 31, 2017: Rs. 0.92 Million) represents contribution paid to these plans by the Company at rates specified in the rules of the plan.
Defined benefit plans
(a) Leave obligations
The Leave obligations cover the Company''s liability for earned leave.
(b) Gratuity
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk and salary risk.
Sensitivity analysis
In view of the fact that the Company for preparing the sensitivity analysis considers the present value of the defined benefit obligation which has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
6 First-time adoption of Ind AS
Transition to Ind AS
These are the Company''s first financial statements prepared in accordance with Ind AS.
The accounting policies set out in Note 3 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet at April 1, 2016 (The company''s date of transition). âIn preparing its opening Ind AS balance sheet, the company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards generally applicable to the Company (as amended from time to time) and other relevant provisions of the Act (previous GAAP or Indian GAAP)."
An explanation of how the transition from previous GAAP to Ind AS has affected The company''s financial position, financial performance and cash flows is set out in the following tables and notes.
A. Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A.1 Ind AS optional exemptions
A.1.1 Deemed cost for PPE
Ind AS 101 permits a first-time adopter to elect to fair value a class of property, plant and equipment or to continue with the carrying value for all of its PPE as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities.
Accordingly, the company has elected to continue the property, plant and equipment at their previous GAAP values.
A.1.2. Deemed cost investment in subsidiaries, joint ventures and associates
A first-time adopter that subsequently measures an investment in a subsidiary, joint ventures or associate at cost, may measure such investment at cost (determined in accordance with Ind AS 27) or deemed cost (fair value or previous GAAP carrying amount) in its separate opening Ind AS balance sheet.
Accordingly, the company has elected to continue the investments in subsidiaries at their cost.
A.1.3. Designation of previously recognised financial instruments
Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI or FVTPL on the basis of the facts and circumstances at the date of transition to Ind AS. The company has elected to apply this exemption for its investment in equity investments.
A.1.4. Leases
Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The company has elected to apply this exemption for such contracts/ arrangements.
A.2 Ind AS mandatory exceptions
A.2.1 Estimates
An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The company made estimates for impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
B. Notes to first-time adoption
B.1 Proposed dividends
Under Ind AS, liability to pay dividends arises only when the share holders approves the dividends recommended by the board of directors. Till such approval the proposed dividends does not meet the recognition criteria of a liability. The Company has accordingly, reversed the provisions for proposed dividends and the related taxes. Only a disclosure as required by Ind AS has been made.
B.2 Fair valuation of investments
Under Ind AS, investments in equity instruments are to be valued at fair valued through profit and loss (FVTPL) or fair valued through other comprehensive income (FVTOCI) based on the Company''s business objectives and the cash flow characteristics of the underlying financial investments. The Company has remeasured the investments at FVTPL as on the date of transition/ comparative period and the consequential impact has been given in the opening retained earnings/ profit and loss account of the comparative period.
B.3 Transaction costs in respect of financial instruments
Under the previous GAAP, transaction costs in relation to financial liabilities are charged to the profit and loss in the year in which they are incurred. As per Ind AS 109, transaction costs in relation to financial liabilities are to be reduced from the related financial liabilities and amortised over the repayment period of the said liability. The same has been considered in the opening and comparative period financial statements.
B.4 Trade receivables
As per Ind AS 109, The company is required to apply expected credit loss model for recognising the allowance for doubtful debts. Accordingly, the Company has developed an assessment for allowance for expected credit loss. The same has been considered in the opening and comparative period financial statements.
B.5 Property, Plant and Equipment
As per Ind AS 16, the company is required to remeasure the property, plant and equipment and any carry forward capital work in progress. Accordingly, the Company has remeasured the PPE with consequential adjustment in the retained earnings.
B.6 Intangibles with indefinite economic useful life
Under Ind AS, Intangible assets with indefinite economic useful life are not to be amortised and should be tested for impairment. The has remeasured such intangible assets/ related amortisation as aforesaid and accounted in the Ind AS financial statements.
B.7 Deferred tax
Under Ind AS, the deferred tax asset and liabilities are required to be accounted based on balance sheet approach. The Company has remeasured its deferred tax assets and liabilities as aforesaid and accounted in the Ind AS financial statements.
Mar 31, 2016
1. Notes on accounts for the year ended 31st March 2016
The previous year figures have been regrouped / reclassified, wherever necessary to conform to the current year presentation.
Previous year figures are not comparable due to the fact that the current year figures are inclusive of the numbers relating to erstwhile Treadsdirect Limited and Parani Steels Private Limited, whereas, the previous year numbers are exclusively that of Elgi Rubber Company Limited prior to the scheme of amalgamation.
The Company has only one class of shares referred to as equity shares, having a par value of Rs, 1/-. Each holder of equity shares is entitled to one vote per share held.
The Company declares and pays dividend in Indian Rupees. The dividend recommended by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting.
The board of directors, in their meeting held on 30th May 2016, recommended a final dividend of Rs, 0.37 per share. The recommendation is subject to the approval of the shareholders at the annual general meeting to be held. The total dividend appropriation for the year ended March 31, 2016 amounted to Rs, 18,518,500/- and corporate dividend tax of Rs, 3,769,931/-. Dividend, if approved, is payable to the shareholders in proportion to their shareholding.
No shares have been allotted as fully paid up, by way of bonus shares during 5 years immediately preceding March 31,2016
49,550,000 equity shares of Rs, 1/- each were alloted in accordance with the scheme of amalgamation and arrangement during the year 2010-11.
Securities offered
a. Loan from ICICI Bank Limited is secured against exclusive charge by equitable mortgage on the commercial property situated at Chamiers Road, Chennai
b. Loan from Export Import Bank of India is secured by exclusive charge over the land and building located at Kovilpalayam (Mettupalayam Village), Coimbatore.
c. The facility granted by Export Import Bank of India as above is further secured by first pari passu charge over industrial/commercial land located at Trichy Road, Coimbatore and Kurichi Village Coimbatore along with Kotak Mahindra Bank Ltd.
Provision in respect of disputes represents claims against the Company on account of differential treatment given by statutory authorities/ rejection of certain claims by the Company.
Securities offered in connection with the credit facilities availed by the Company
a. Cash credit / export packing credit facility availed from State Bank of India is secured by exclusive first charge over current assets viz. raw materials, work in process, stores and spares, finished goods and receivables. Bill discounting/letter of credit and bank guarantee facilities are secured by documents to title to goods and first charge over the current assets as stipulated above.
Banking facilities referred to above are further secured by first charge over the entire fixed assets of the company exclusively (including Plant and Machinery) by way of equitable mortgage of land and building located at Kanjikode, Chengalpattu, Neelambur, Aralvaimozhi,Tirunvelveli, Palakkad and Pondicherry. The facilities are further secured by a second charge of equitable mortgage over companyâs land property and factory building located at Annur, Kurichi and Hyderabad.
b. Loan against fixed deposits with State Bank of India amounting to '' 27,702,671/- ('' 23,000,000/-), is secured by a lien and pledge of fixed deposit receipts with State Bank of India and is repayable on demand.
c. Working capital short term loan facility from ICICI Bank Ltd is secured by residuary charge by way of hypothecation of the companyâs entire stocks of raw material, semi finished goods, finished goods, consumable stores, spares and such other movables including book debts, bills, outstanding monies, receivables both present and future.
There are no amounts due for payment to the Investor Education and Protection Fund under the relevant provision of the Companies Act, 1956 (1 of 1956) and rules made there under, as at the year end.
Securities offered to
a. Kotak Mahindra Bank Ltd (KMBL), Coimbatore and Export Import Bank of India (EXIM), Mumbai for the facilities granted by the banks to the subsidiary companies with serial Nos.2,3 and 4,5 respectively as stated above.
By deposit of title deeds and equitable mortgage of immovable property located at Trichy Road, Coimbatore and Kurichi,Coimbatore, in favour of KMBL (in respect of the facility offered under item 2(a) above) ranking pari-passu with EXIM (in respect of the facilities offered under item 4 and 5 above). The facilities as referred to in item 2(a), 2(b) and 3 above relating to the standby letter of credit extended by KMBL is further secured by marking of lien by the bank on the fixed deposits (grouped under margin money deposits) held with them amounting to ''154.20 million.
b. State Bank of India, Coimbatore (SBI) for the credit facilities granted by State Bank of India, Antwerp to Rubber Resources B.V., The Netherlands for serial number 6 as stated above.
By exclusive first charge over the entire current assets of the company and equitable mortgage over company''s land property and factory building located at Annur,Kurichi, and Hyderabad. The facilities relating to the standby letter of credit extended by SBI is further secured by marking of lien by the bank on the fixed deposits (grouped under margin money deposits) held with them amounting to '' 83.60 million.
c. SBI for the credit facilities granted by SBI, Antwerp to Elgi Rubber Company Holdings B.V., The Netherlands for serial number 7 as stated above. By extension of securities in respect of the cash credit facilities as referred to in Note 2.05(a). The facilities relating to the standby letter of credit extended by SBI is further secured by marking of lien by the bank on the fixed deposits (grouped under margin money deposits) held with them amounting to '' 37.50 million.
2. During the year the Company has capitalized interest paid on term loans amounting to '' 4,141,287/- ('' 741,734/-) along with the immovable property which is constructed. Consequently interest amount shown in the notes is net off such expenditure capitalized.
3. Corporate Social Responsibility: As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The CSR expenditure for the year ended March 31, 2016 is contributed to a few trusts towards activities which are specified in schedule VII of the Companies Act, 2013.
4 In the opinion of board of directors, current assets, loans and advances, have at least the value as stated in the balance sheet, if realized in the ordinary course of the business.
5. Income tax assessment has been completed up to the accounting year ended 31st March 2013.
6. No intangible / tangible asset has been generated during the year out of the research and development activity.
7. Pursuant to Accounting Standard (AS 28) - impairment of assets, the Company assessed its fixed assets for impairment as at March 31, 2016 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of account.
8. Deferred tax asset includes a sum of Rs, 3,823,000/- (Asset) transferred from M/s Treads direct Limited, on account of the scheme of amalgamation.
Mar 31, 2015
I. Overseas subsidiaries
Securities offered in connection with Standby Letter of Credit extended
by ING Vysya Bank Limited and Export-Import Bank of India, in favour of
the respective banks, which have granted credit facilities to the
following Subsidiary Companies
Facilities offered
1. for the credit facilities granted by ING Bank NV, Filial De Sao
Paulo, Brasil to Borrachas e Equipamentos Elgi Ltda, Brasil.
2. for the credit facilities granted by ING Bank NV, Amsterdam to
Rubber Resources B.V., The Netherlands.
3. for the credit facilities granted by Export-Import Bank of India,
London to Pincott International Pty Limited, Australia.
4. for the credit facilities granted by Export-Import Bank of India,
London to Elgi Rubber Company LLC, USA. Securities offered
By deposit of title deeds and equitable mortgage of immovable property
located at Trichy Road, Coimbatore and Kurichi,Coimbatore, in favour
of ING Vysya Bank Limited, Coimbatore ranking pari-passu with Export
Import Bank of India, Mumbai
The facilities relating to the standby letter of credit extended by ING
Vysya Bank Ltd is further secured by marking of lien by the bank on
the fixed deposits (grouped under margin money deposits) held with them
amounting to Rs.188.54 million, which includes margin money
towards the facilities granted to Elgi Rubber Company B.V., The
Netherlands amounting to EUR 0.50 million, Rubber Resources B.V.,
The Netherlands and Borrachas e Equipamentos Elgi Ltda, Brasil.
Securities offered in connection with standby letter of credit extended
by State Bank of India, based on which credit facilities to
the following subsidiary Company
For the credit facilities granted by State Bank of India, Antwerp to
Rubber Resources B.V., The Netherlands.
Secured by exclusive first charge over the entire current assets of the
company, equitable mortgage over Company's landed property and
factory building located at Annur and Kurichi, Coimbatore
The facilities relating to the standby letter of credit extended by
State Bank of India is further secured by marking of lien by the bank
on the fixed deposits (grouped under margin money deposits) held with
them amounting to Rs.36.90 million, towards the facilities granted to Rubber
Resources B.V., The Netherlands for a sum of EUR 3.00 million.
1. Employee benefits
The details required under AS 15 - Employee Benefits are as follows
The Employees' Gratuity fund scheme managed by the Life Insurance
Corporation of India is a defined benefit plan. The present value of
the obligation is determined based on actuarial valuation using the
projected unit credit method, which recognises each period of service
as giving rise to additional unit of employees benefit entitlement and
measures each unit separately to build up the final obligation. The
obligation for Compensated absence is recognised in the same manner as
gratuity.
The funds in respect of gratuity have been invested in the LIC Group
Gratuity Cash Accumulation Plan and in respect of compensated abseno
have been invested in the LIC Group leave encashment plan, administered
by the Life Insurance Corporation of India.
2. Segment reporting
The Company is engaged primarily in one segment of providing solutions
to the rubber industry and hence the segment reporting is not
applicable
3. During the year the Company has capitalised interest paid on term loans
amounting to Rs.741,734 along with the immovable property which is
being constructed. Consequently interest amount shown in the notes is
net off such expenditure capitalised.
4. Corporate Social Responsibility: As per Section 135 of the
Companies Act, 2013, a CSR committee has been formed by the Company.
The CSR expenditure for the year ended March 31, 2015 is contributed to
a few trusts towards activities which are specified in schedule VII of
the Companies Act, 2013.
5. In the opinion of board of directors, current assets, loans and
advances, have atleast the value as stated in the balance sheet, if
realised in the ordinary course of the business.
6. Income tax assessment has been completed upto the accounting year
ended 31st March 2012.
7. No intangible / tangible asset has been generated during the year
out of the research and development activity.
2.46 Pursuant to Accounting Standard (AS 28) - impairment of assets,
the Company assessed its fixed assets for impairment as at March 31,
2015 and concluded that there has been no significant impaired fixed
asset that needs to be recognised in the books of account.
2.47 Non current investments
a. Number of units of investment in mutual funds are rounded off to
the nearest whole number.
b. All investments are fully paid up, unless otherwise stated.
c. Details of Investments
Mar 31, 2014
The Company has only one class of shares referred to as equity shares
having a par value of Re.1/-. Each holder of equity shares is entitled
to one vote per share held.
The company declares and pays dividend in Indian Rupees. The dividend
recommended by the board of directors is subject to the approval of the
shareholders in the ensuing annual general meeting.
The board of directors, in their meeting held on 19th May 2014,
recommended a final dividend of Re. 0.37 per share. The recommendation
is subject to the approval of the shareholders at the annual general
meeting to be held. The total dividend appropriation for the year ended
March 31, 2014 amounted to Rs.18,518,500/-. Dividend, if approved, is
payable to the shareholders in proportion to their shareholding.
In the event of liquidation of the company, the holders of equity
shares will be entitled to receive the remaining assets of the Company.
The distribution will be in proportion to the number of equity shares,
held by the shareholders.
Note
Neither shares are reserved for issue under options nor securities have
been issued, which are convertible into equity / preference shares in
future as on the date of balance sheet.
Securities offered in connection with the credit facilities availed by
the Company
a. Loan against fixed deposits with State Bank of India amounting to
Rs.Nil(Rs.26,500,000), with Bank of India amounting to Rs.13,500,000
(Rs.13,500,000) and with City Union Bank Limited amounting to
Rs.9,000,000 (Rs.Nil) are secured by a lien and pledge of fixed deposit
receipts with the State Bank of India, Bank of India and City Union
Bank Limited respectively and are repayable on demand.
b. Overdraft facility against fixed deposit with HDFC Bank Ltd., is
secured by a lien and pledge of fixed deposit receipts with HDFC Bank
Ltd., which is repayable on demand.
c. Cash credit/ export packing credit facility availed from State Bank
of India is secured by first charge over raw materials, stock in
process, finished goods, receivables, and other current assets.
d. Bill discounting/letter of credit and bank guarantee facilities are
secured by documents to title goods and first charge over the current
assets as stipulated.
Banking facilities referred to in (c) and (d) above are further secured
by first charge over the entire fixed assets of the company exclusively
including equitable mortgage of land and building located at Kanjikode,
Chengalpattu, Kurichi, Neelambur, Aralvaimozhi and Tirunvelveli.
1. Contingent liabilities and commitments (to the extent not provided
for)
i. Claims against the company not acknowledged
as debts
a. Income tax matters 667,560 2,597,600
b. Excise and Service Tax Matters 1,696,185 776,362
c. Sales tax 261,000 -
d. Stamp duty 4,368,304 4,368,304
ii. Capital commitments
a. Estimated amount of contracts remaining
to be executed on capital account and not
provided for 16,359,035 27,670,271
b. Uncalled liability on shares and other
investments partly paid - Payable in
respect of purchase of shares of Rubber
Resources B.V., (RR) on achievement of
milestones EUR 210,000 EUR 1,080,000
iii. Other commitments
a. The company has issued an undertaking
to provide need based financial support
to its following wholly owned subsidiary
companies
i. Pincott International Pty Ltd.,
Australia AUD 577,771 AUD 577,771
USD 800,000 -
ii. Borrachas e Equipamentos ELGI Ltda,
Brasil BRL 9,900,000 BRL 3,900,000
iii.Elgi Rubber Company B.V., The
Netherlands EUR 300,000 EUR 300,000
iv. Elgi Rubber Company LLC, USA USD 2,516,579 -
v. Rubber Resources B.V., The
Netherlands EUR 2,500,000 -
b. Guarantee on account of unpaid
liability on account of purchase of
shares of RR as stated in column (ii)
(b) above EUR 720,000 EUR 1,080,000
c. Guarantee on account of security
deposits with various electricity
boards, state road transport
corporations and other statutory
authorities 8,005,484 7,469,208
d. Letter of credit on account of
import of goods USD 498,600 USD 114,580
iv. Overseas subsidiaries
Securities offered in connection with standby letter of credit extended
by ING Vysya Bank Limited and Export-Import Bank of India, in favour of
the respective banks, which have granted credit facilities to the
following subsidiary companies
Facilities offered
1. for the credit facilities granted by ING Bank NV, Filial De Sao
Paulo, Brasil to M/s Borrachas e Equipamentos Elgi Ltda, Brasil.
2. for the credit facilities granted by ING Bank NV, Amsterdam, to M/s
Rubber Resources B.V., Netherlands.
3. for the credit facilities granted by Export-Import Bank of India,
London to M/s Pincott International Pty., Ltd, Australia..
4. for the credit facilities granted by Export-Import Bank of India,
London to M/s Elgi Rubber Company LLC, USA..
Securities offered
By deposit of title deeds and equitable mortgage of immovable property
located at Trichy Road, Coimbatore and Kurichi, Coimbatore, in favour
of ING Vysya Bank Ltd., Coimbatore ranking pari-passu with
Export-Import Bank of India, Mumbai.
The facilities relating to the standby letter of credit extended by M/s
ING Vysya Bank Ltd., is further secured by marking of lien by the bank
on the fixed deposits (grouped under margin money deposits) held with
them amounting to Rs.184.13 Million.
2. Employee benefits
The details required under AS 15 - Employee Benefits are as follows
The Employees'' Gratuity Fund Scheme managed by the Life Insurance
Corporation of India is a defined benefit plan. The present value of
the obligation is determined based on actuarial valuation using the
projected unit credit method, which recognises each period of service
as giving rise to additional unit of employees benefit entitlement and
measures each unit separately to build up the final obligation. The
obligation for Compensated absence is recognised in the same manner as
gratuity.
3. Segment reporting
The Company is engaged primarily in one segment of providing solutions
to the rubber industry and hence the segment reporting is not
applicable.
4. In the opinion of Board of Directors, current assets, loans and
advances, have atleast the value as stated in the balance sheet, if
realised in the ordinary course of the business.
5. (a) Number of units of investment in mutual funds are rounded off
to the nearest whole number.
(b) All investments are fully paid up, unless otherwise stated.
6. Income tax assessment has been completed in respect of erstwhile
Companies viz., Elgi Rubber Company Limited upto the accounting year
ended 31st March 2011.
7. No intangible / tangible asset has been generated during the year
out of the research and development activity.
8. Pursuant to Accounting Standard (AS 28) - Impairment of assets,
the Company assessed its fixed assets for impairment as at March 31,
2014 and concluded that there has been no significant impaired fixed
asset that needs to be recognised in the books of account.
Mar 31, 2013
1.1 Employee benefits
The details required under AS 15 - Employee Benefits are as follows
The Employees'' Gratuity Fund Scheme managed by the Life Insurance
Corporation of India is a defined benefit plan. The present value of
the obligation is determined based on actuarial valuation using the
projected unit credit method, which recognises each period of service
as giving rise to additional unit of employees benefit entitlement and
measures each unit separately to build up the final obligation. The
obligation for Compensated absence is recognised in the same manner as
gratuity.
1.2 Segment reporting
The Company is engaged primarily in one segment of providing solutions
to the rubber industry and hence the segment reporting is not
applicable.
1.3 In the opinion of Board of Directors, current assets, loans and
advances, have atleast the value as stated in the balance sheet, if
realised in the ordinary course of the business.
1.4 (a) Number of units of investment in mutual funds are rounded off
to the nearest whole number. (b) All investments are fully paid up,
unless otherwise stated.
1.5 Income tax assessment has been completed in respect of erstwhile
Companies viz., Elgi Rubber Company Limited and Treadsdirect Limited
upto the accounting year ended 31st March 2010.
1.6 Confirmation from debtors and creditors has not been received in a
few cases.
1.7 No intangible / tangible asset has been generated during the year
out of the research and development activity.
1.8 Pursuant to Accounting Standard (AS 28) - Impairment of assets,
the Company assessed its fixed assets for impairment as at March 31,
2013 and concluded that there has been no significant impaired fixed
asset that needs to be recognised in the books of account.
Mar 31, 2012
The previous year figures have been regrouped / reclassified, wherever
necessary to conform to the current year presentation.
Previous years figures are not comparable as the previous year figures
include nine months operations ending 31.12.2010 of its units located
at Kovillpalayam, Puducherry and Palakkad and its retreading units
located all over India, whereas the current year figures are without
the operations of the said units for the whole accounting period.
The Company has only one class of shares referred to as equity shares
having a par value of Re.1. Each holder of equity shares is entitled to
one vote per share held.
The Company declares and pays dividend in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of the
share holders in the ensuing annual general meeting.
The Board of Directors, in their meeting on 23rd May, 2012, proposed a
final dividend of Re. 0.50 per share. The proposal is subject to the
approval of the shareholders at the Annual General Meeting to be held.
The total dividend appropriation for the year ended March 31,2012
amounted to Rs. 29,084,680 including Corporate dividend tax of Rs.
4,059,680. Dividend, if approved, is payable to the shareholders in
proportion to their shareholding.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive any of the remaining assets of the
Company. The distribution will be in proportion to the number of equity
shares held by the shareholders.
* No shares have been allotted as fully paid up, by way of bonus shares
during 5 years immediately preceding March 31, 2012.
** 49,550,000 Equity shares of Re.1/- each were allotted in accordance
with the Scheme of Arrangement and Amalgamation during the year
2010-11.
a. Loan against fixed deposits with State Bank of India amounting to
Rs.45,353,527( March 31,2011- Rs.Nil) are secured by lien and pledge of
fixed deposit receipts with the State Bank of India and are repayable
on demand.
b. Cash credit/ Export Packing credit facility availed from State Bank
of India is secured by first charge over raw materials, stock in
process, finished goods, receivables and other current assets.
c. Bill discounting/Letter of credit and Bank Guarantee facilities are
secured by documents to title goods and first charge over the current
assets as stipulated.
Banking facilities referred to in (b) and (c) above are further secured
by first charge over the entire fixed assets of the company including
land and building located at Kanjikode, Chenglepattu, Kurichi,
Neelambur, Aralvaimozhi and Tirunvelveli.
1.1 Contingent Liabilities and Commitments (to the extent not provided
for)
Claims against the Company not acknowledged as debts
a. Income tax matters 711,290 2,940,118
b. Excise and Service Tax Matters 776,362 776,362
c. Stamp duty 4,368,304 4,368,304
1.2 Employee Benefits
The details required under AS 15 - Employee Benefits as follow
The Employees' Gratuity Fund Scheme managed by the Life Insurance
Corporation of India is a defined benefit plan. The present value of
the obligation is determined based on actuarial valuation using the
projected unit credit method, which recognises each period of service
as giving rise to additional unit of employees benefit entitlement and
measures each unit separately to build up the final obligation. The
obligation for compensated absence is recognised in the same manner as
gratuity.
The funds have been invested in the LIC Group Gratuity (Cash
Accumulation Policy), administered by the Life Insurance Corporation of
* Surplus in plan value of assets amounting to Rs. 1,078,474 over the
liability has not been recognised in the Statement of Profit and Loss
on a conservative basis.
1.3 Segment Reporting
The Company is engaged primarily in one segment of providing solutions
to the rubber industry and hence the segment reporting is not
applicable.
1.4 In the Opinion of Board of Directors, current assets, loans and
advances, have atleast the value as stated in the balance sheet, if
realised in the ordinary course of the business.
1.5 a. Number of units of investment in mutual funds are rounded off
to the nearest whole number,
b. All investments are fully paid up, unless otherwise stated.
1.6 Income tax assessment has been completed in respect of erstwhile
companies viz., Elgi Rubber Company Limited and Treadsdirect Limited
upto the accounting year ended 31st March 2009.
1.7 Confirmation from debtors and creditors has not been received in a
few cases.
1.8 No intangible / tangible asset has been generated during the year
out of the Research and Development activity.
1.9 Pursuant to Accounting Standard (AS 28) - Impairment of assets,
the Company assessed its fixed assets for impairment as at March 31,
2012 and concluded that there has been no significant impaired fixed
asset that needs to be recognised in the books of account.
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