Click it and Unblock the Notifications
Notes to Accounts of MRF Ltd.
Mar 31, 2025
1. The Company has incurred '' 26.70 Crores (Previous year - '' 27.34 Crores) for the year ended 31st March, 2025 towards expenses relating to short-term leases and leases of low-value assets (Refer Note 23). The total cash outflow for leases is '' 207.32 Crores (Previous year - '' 179.80 Crores) for the year ended 31st March, 2025, including cash outflow of short-term leases and leases of low-value assets. Interest on lease liabilities is ''77.67 Crores (Previous year - '' 65.84 Crores) for the year ended 31st March, 2025 (Refer Note 22).
2. The Company''s leases mainly comprise of land,buildings and Vehicles. The Company mainly leases land and buildings for its manufacturing, warehouse facilities and sales offices. The Company has leased vehicles for its Goods Transporation.
For the purpose of Company''s Capital Management, capital includes Issued Equity Capital, Securities Premium and all other Equity Reserves attributable to the Equity Holders of the Company. The primary objective of the Company''s Capital Management is to maximise the Share Holder Value.
The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and requirements of the financial covenants and to continue as a going concern. The Company monitors using a gearing ratio which is net debts divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and short term deposit.
The Company''s principal financial liabilities comprise loans and borrowings, lease liability, trade and other payables. The main purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include trade and other receivables, investments in mutual funds, bonds, cash and short term deposits.
The Company has assessed market risk, credit risk and liquidity risk to its financial instruments.
Is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks. Financial instruments affected by market risks, primarily include loans & borrowings, investments and foreign currency receivables, payables and borrowings.
The Company borrows funds in Indian Rupees to meet both the long term and short term funding requirements. The Company due to its AAA rated status commands one of the cheapest source of funding. Interest rate is fixed for the tenor of the Long term loans availed by the Company. Interest on Short term borrowings is subject to floating interest rate and are repriced regularly. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the average outstanding amounts due to bankers over a year.
The Company had issued floating interest rate Non convertible debenture linked to 6 month T-Bill rate, to meet the long term funding requirements.
If the interest rates had been 1% higher / lower and all other variables held constant, the Company''s profit for the year ended 31st March, 2025 would have been decreased/increased by '' 2.96 crores. (Previous year - '' 8.14 crores).
The Company is mainly exposed to changes in US Dollar. The sensitivity to a 1.25% (Previous year - 0.74%) increase or decrease in US Dollar against INR with all other variables held constant will be /(-) ''0.20 Crores (previous year - ''0.95 Crores)
The Sensitivity analysis is prepared on the net unhedged exposure of the Company at the reporting date.
Hedged Foreign Currency exposures :
Foreign Exchange forward Contracts on certain highly probable forecast transactions, are measured at fair value through OCI on being designated as Cash Flow Hedges.
The Company also enters into foreign exchange forward contracts with the intention to minimise the foreign exchange risk of expected purchases, these contracts are not designated in hedge relationships and are measured at fair value through profit or loss.
Figures in brackets are in respect of Previous year.
The terms of the foreign currency forward contracts match the terms of the transactions. As a result, no hedge ineffectiveness arises requiring recognition through profit or loss.
The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities like Natural Rubber, Synthetic Rubber, Compound Rubber and other Chemicals, the Company enters into purchase contracts on a short to medium Term and forward foreign exchange contracts are entered into to bring in stability of price fluctuations.
The Company''s investments in Quoted and Unquoted Securities are susceptible to market price risk arising from uncertainties about future values of investment securities. The Company manages the securities price risk through investments in debt and arbitrage funds and diversification by placing limits on individual and total investments. Reports on Investment Portfolio are reviewed on regular basis and all approvals of investment decisions are done in concurrence with the senior management.
As at 31st March 2025 the investments in debt, arbitrage mutual funds and bonds amounts to ''4517.88 Crores (Previous year - ''3366.16 Crores). A 1% point increase or decrease in the NAV with all other variables held constant would have lead to approximately an additional ''45 Crores (Previous year - '' 34 Crores) on either side in the statement of profit and loss.
Is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Bonds, Debt and Arbitrage Funds, Fixed Deposits Others and Balances with Banks.
The Company''s marketing policies are well structured and all replacement sales are predominantly through dealers and the outstanding are secured by dealer deposits. As regards sales to O.E., and other institutional sales, the Company carries out periodic credit checks and also limits the exposure by establishing maximum payment period for customers and by offering prompt payment discounts. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31st March,2025 is 0.10%(31st March, 2024 0.02%) of the total trade receivables.
There are no transactions with single customer which amounts to 10% or more of the Company''s revenue.
The Company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain. The allowance for lifetime ECL on customer balances for the year ended 31st March 2025 is ''1.02 Crores and for the previous year 31st March 2024 was '' 1.63 Crores.
The Company holds cash and deposits with banks which are having highest safety rankings and hence has a low credit risk.
Investments in mutual funds are primarily debt and arbitrage funds, which have high safety ratings and are monitored on a monthly basis. The Company is of the opinion that its mutual fund investments have low credit risk.
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowing facilities by continuously monitoring forecasts and actual cash flows.
The Company has a system of forecasting rolling three months cash inflow and outflow and all liquidity requirements are planned.
All Long term borrowings are for a fixed tenor and generally these cannot be foreclosed.
The Company has access to various source of Short term funding and debt maturing within 12 months can be rolled over with existing lenders/new lenders, or repaid based on short term requirements.
Trade and other payables are plugged into the three months rolling cash flow forecast to ensure timely funding, if required.
All payments are made along due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The Fair Value of financial assets and liabilities included is the amount at which the instrument could be exchanged in a current transaction between willing parties. The following methods and assumptions were used to estimate the fair value.
1. The Fair values of Debt and Arbitrage Mutual Funds and Quoted Equities are based on NAV / Quoted Price at the reporting date. Further, the Company had invested in Co-operative Societies and in certain other companies towards the corpus. These are non participative shares and normally no dividend is accrued. The Company has carried these investments at it transaction value considering it to be its fair value.
2. The Company enters into Derivative financial instruments with counterparties principally with Banks with investment grade credit ratings. The foreign exchange forward contracts are valued using valuation techniques which employs the use of market observable inputs namely, Marked-to-Market.
NOTE 27 ADDITIONAL/EXPLANATORY INFORMATION :a) Disclosure required by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015; and section 186(4) of the Companies Act, 2013 :
1. Details of Investments made are given in Note 3
2. Amount of Loans and advances in the nature of loans outstanding from /to subsidiaries - '' Nil (Previous year - '' Nil)
3. Loans to employees have been considered to be outside the purview of disclosure requirements.
4. Investment by Loanee in the shares of the Parent company- Nil ( Previous year - Nil)
(d) Terms and conditions of transactions with related parties;
The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31st March 2025, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (Previous Year: '' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
d. Disclosures under Ind AS 108 - "Operating Segment" :
The Company is engaged interalia in the manufacture of Rubber Products such as Tyres, Tubes, Flaps, Tread Rubber. These in the context of IND AS - 108 - ''Operating Segment'' are considered to constitute one single primary segment. The Company''s operations outside India do not exceed the quantitative threshold for disclosure envisaged in the IND AS. Non-reportable segments has not been disclosed as unallocated reconciling item in view of its materiality. In view of the above, operating segment disclosures for business/geographical segment are not applicable to the Company.
h. Terms of Repayment and Security Description of Borrowings:(refer note 11)
a) Current Borrowings
i) Loans repayable on demand from banks are secured by hypothecation of Inventories and book debts, equivalent to the outstanding amount and carries interest rates at the rate of 7% to 9% (Previous year 6.88% to 7.90%).
b) Non Current Borrowings
i) Indian Rupee Term Loan (Unsecured) from the HSBC Bank.
Indian Rupee Term Loan of '' 150 crores availed in July,2021 is for capital expenditure. Interest is payable at a rate equal to the three months T-Bill rate plus a margin of 1.33% payable monthly. The said Loan is repayable in three equal annual installment in July, 2025/July, 2026/July, 2027.
ii) Indian Rupee Term Loan (Unsecured) from the HDFC Bank.
a) Indian Rupee Term Loan of '' 300 crores availed in June, 2020 is for capital expenditure. Interest is payable at a rate equal to repo rate plus a margin of 1.70% payable monthly. The said Loan is repayable in three equal annual installment in June, 2024/June, 2025/June, 2026.
b) Indian Rupee Term Loan of '' 150 crores availed in June, 2021 is for capital expenditure. Interest is payable at a rate equal to repo rate plus a margin of 0.75% payable monthly. The said Loan is repayable in three equal annual installment in June, 2025/June, 2026/June, 2027.
iii) 15,000 [Floating Interest rate linked to 6 month T-Bill rate] Listed Unsecured rated redeemable Taxable Non Convertible Debentures of '' 1,00,000/- each aggregating to '' 150 crore issued on 24th February 2023, are to be redeemed on 24th February, 2026.
iv) Secured Loan of ''80.92 Crores was availed under SIPCOT soft loan in March 2020, further, additional SIPCOT Loan (secured) of '' 7.75 Crores was availed in March 2023. Interest is payable quartely at a rate of 0.10% (Previous year - 0.10%). These loans are secured by way of second charge on the Fixed Assets created at the company''s plants at Perambalur, near Trichy,Tamil Nadu. These loans will be repaid in full in April 2033 and April 2036 respectively.
v) Deferred payment credit is repayable along with interest (at varying rates) in 240 consecutive monthly instalments ending in March 2026.
I nventories written down for obsolescence and Non-moving stocks for the year amounts to ''14.33 crores (Previous Year-''4.47 crores) net of reversal. The amount of write down of inventories to net realizable value recognised as an expenses was '' 8.99 crores (Previous Year-''9.83 crores). The reversal of write-down is on account of offtake/usage and better price realization.The cost of inventories recognised as an expense during the year in respect of continuing operations was ''18293.03 crores (Previous Year- ''15352.46 crores).
j. Extended Producer Responsibility (EPR)
Vide Notification dated 21st July 2022, The Ministry of Environment, Forest and Climate Change notified Regulations on Extended Producer Responsibilities (EPR) for waste tyres applicable to tyre manufacturers.The Company has a present legal obligation as at the year end to recognize a liability with respect to the levy. The Company has recognized a provision for 2024-25, amounting to ''120.89 crores (net of reversal of ''37.46 crores relating to earlier years). The obligations are to be fulfilled by purchasing certificates from recyclers who are registered with the Central Pollution Control Board. The calculation of the levy is based on the domestic revenue, generated in 2022-23 ( used for computing obligation in 2024-25).
k. The amount due and paid during the year to "Investor Education and Protection Fund" is ''0.46 crores (Previous year - ''0.80 crores).
l. Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceeding three financial years on corporate social responsibility (CSR) Activities, which for the financial year ended 31st March 2025 amounts to '' 29.82 crores (Previous year - '' 25.08 crores). A CSR Committee has been formed by the Company as per the Act. During the financial year ended 31st March 2025, the Company has incurred an amount of ''14.47 crores.
n. Events Occuring after the Balance Sheet date
The proposed final dividend for Financial Year 2024-25 amounting to ''97.12 Crores will be recognised as distribution to owners during the financial year 2025-26 on its approval by Shareholders. The proposed final dividend amounts to ''229/- per share.
o. Capital and Other Commitments
(i) Estimated amount of contracts remaining to be executed on Capital Account, net of advances and not provided for - ''714.11 Crores (Previous Year '' 1334.36 Crores)
(ii) Guarantees given by the Banks - ''65.03 Crores (Previous Year - '' 56.10 Crores)
(iii) Letters of Credit issued by the Banks - '' 168.23 Crores (Previous Year - '' 373.82 Crores)
(iv) Commitments relating to Lease arrangements - Refer Note 2(c)( 3)
(v) Commitment to Rubber Board towards Promotion of Rubber Plantations in North East and Other Parts of India- '' 208.04 Crores(net of payments) (Previous Year-''294.01 crores)
(vi) Derivative contract related commitments -Refer Note 24B(i)(b)
q. (i) Contingent Liabilities not provided for:
Claims not acknowledged as debts:
(a) Competition Commission of India (CCI) matter - Refer Note 1 below
(b) Disputed Sales Tax demands pending before the Appellate Authorities /High Court - '' 241.39 Crores ( Previous Year- '' 254.46 Crores).Against the said demand the Company has deposited an amount of ''3.63 Crores (Previous Year - '' 3.50 Crores)
(c) Contractual claims not acknowledged-'' 7.76 Crores (Previous Year - ''7.76 Crores)
(d) Disputed Excise/Customs Duty demands pending before the Appellate Authorities/High Court - '' 594.43 Crores (Previous Year - '' 594.47 Crores). Against the said demand the Company has deposited an amount of '' 18.21 Crores (Previous Year - ''18.15 Crores)
(e) Disputed Income Tax Demands - '' 103.44 Crores (Previous Year - '' 417.27 Crores). Against the said demand the Company has deposited an amount of ''117.12 Crores (Previous Year - '' 162.18 Crores). Reduction in Tax demands is on account of favourable orders received during the year.
(f) Disputed Goods and Service Tax demands pending before the Appellate Authorities - '' 69.66 Crores ( Previous Year- '' 37.12 Crores ). Against the said demand the Company has deposited an amount of '' 3.59 Crores (Previous Year - '' 2.69 Crores)
Note 1: The Competition Commission of India (CCI) had on 2nd February,2022 released its order dated 31st August,2018,imposing penalty on certain Tyre Manufacturers including the Company and also the Automotive Tyre Manufacturers'' Association, concerning the breach of the provisions of the Competition Act 2002, during the year 2011-12. A penalty of ''622.09 Crores was imposed on the Company. The appeal filed by the Company before National Company Law Appellate Tribunal (NCLAT) has been disposed off by remanding the matter to CCI for review after hearing the parties. CCI has in February 2023 filed an appeal against the Order of NCLAT before the Hon''ble Supreme Court. Pending disposal, the Company has filed an appeal before the Hon''ble Supreme Court against the order of NCLAT, which has been tagged with the appeal filed by CCI in the Supreme Court. The Company is of the view that no provision is considered necessary in respect of this matter in the Standalone Financial Statements.
r. Other Statutory Information
(i) The Company does not have any Benami property nor any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall :
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vii) The Company has not recorded any transaction 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.
(viii) The Company has not been declared a wilful defaulter by any bank or financial institution or any of the lenders.
(ix) 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.
Mar 31, 2024
1. Freehold land includes agricultural land - '' 0.12 Crores (31st March, 2023 - '' 0.12 Crores).
2. Other assets represents Electrical Fittings, Fire Fighting/Other Equipments and Canteen Utensils.
3. The amount of Borrowing Cost capitalised during the year ended 31st March, 2024 - '' 9.90 Crores (31st March, 2023 - '' 6.38 Crores).
4. Capital expenditure on Research and Development during the year - '' 55.73 Crores (31st March, 2023 - '' 25.15 Crores) (Refer Note 28 g (ii)).
5. Title deeds of Freehold Land are held in the name of the Company. Title deeds in respect of Buildings which are constructed on company''s Freehold Land is based
on documents constituting evidence of legal ownership of the Buildings.
1. The Company has incurred '' 27.34 Crores (Previous year - '' 27.89 Crores) for the year ended 31st March, 2024 towards expenses relating to short-term leases and leases of low-value assets (Refer Note 23). The total cash outflow for leases is '' 179.80 Crores (Previous year - '' 149.19 Crores) for the year ended 31st March, 2024, including cash outflow of short-term leases and leases of low-value assets. Interest on lease liabilities is '' 65.84 Crores (Previous year - '' 48.70 Crores) for the year ended 31st March, 2024 (Refer Note 22).
2. The Company''s leases mainly comprise of land,buildings and Vehicles. The Company mainly leases land and buildings for its manufacturing, warehouse facilities and sales offices. The Company has leased vehicles for its Goods Transporation.
Consequent to the Bilateral Advance Pricing Agreement (BAPA) signed by the Company with the Central Board of Direct Taxes (CBDT) for the financial years 2015-16 to 2023-24, with respect to Arm''s Length Price (ALP) of the transactions under the Income Tax Act, with MRF SG PTE LTD (MRF SG), the wholly owned subsidiary, the amount determined as payable by MRF SG to the Company is '' 80.33 Crores (net of interest on tax of '' 2.10 Crores), which has since been received by the Company.The income tax impact on account of this refund has been disclosed as relating to earlier years.
NOTE 25
A. Capital Management
For the purpose of Company''s Capital Management, capital includes Issued Equity Capital, Securities Premium and all other Equity Reserves attributable to the Equity Holders of the Company. The primary objective of the Company''s Capital Management is to maximise the Share Holder Value.
The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and requirements of the financial covenants and to continue as a going concern. The Company monitors using a gearing ratio which is net debts divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and short term deposit.
B. Financial Risk Management
The Company''s principal financial liabilities comprise loans and borrowings, lease liability,trade and other payables. The main purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include trade and other receivables, investments in mutual funds,bonds,cash and short term deposits.
The Company has assessed market risk, credit risk and liquidity risk to its financial instruments.
i) Market Risk
Is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks. Financial instruments affected by market risks, primarily include loans & borrowings, investments and foreign currency receivables, payables and borrowings.
a) Interest Rate Risk :
The Company borrows funds in Indian Rupees to meet both the long term and short term funding requirements. The Company due to its AAA rated status commands one of the cheapest source of funding. Interest rate is fixed for the tenor of the Long term loans availed by the Company. Interest on Short term borrowings is subject to floating interest rate and are repriced regularly. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the average outstanding amounts due to bankers over a year. The Company had issued floating interest rate Non convertible debenture linked to 6 month T-Bill rate, to meet the long term funding requirements.
If the interest rates had been 1% higher / lower and all other variables held constant, the Company''s profit for the year ended 31st March, 2024 would have been decreased/increased by '' 8.14 Crores (Previous year - '' 10.66 Crores).
b) Currency Risk :
Foreign currency risks from financial instruments at the end of the reporting period expressed in INR :
The company is mainly exposed to changes in US Dollar. The sensitivity to a 0.74% (Previous year - 4.27%) increase or decrease in US Dollar against INR with all other variables held constant will be /( - ) '' 0.95 Crores (Previous year - '' 1.03 Crores).
The Sensitivity analysis is prepared on the net unhedged exposure of the company at the reporting date.
Hedged Foreign Currency exposures :
Foreign Exchange forward Contracts on certain highly probable forecast transactions, are measured at fair value through OCI on being designated as Cash Flow Hedges.
The Company also enters into foreign exchange forward contracts with the intention to minimise the foreign exchange risk of expected purchases, these contracts are not designated in hedge relationships and are measured at fair value through profit or loss.
c) Price Risk :
The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities like Natural Rubber, Synthetic Rubber, Compound Rubber and other Chemicals, the Company enters into purchase contracts on a short to medium Term and forward foreign exchange contracts are entered into to bring in stability of price fluctuations.
The Company''s investments in Quoted and Unquoted Securities are susceptible to market price risk arising from uncertainties about future values of investment securities. The Company manages the securities price risk through investments in debt funds and diversification by placing limits on individual and total investments. Reports on Investment Portfolio are reviewed on regular basis and all approvals of investment decisions are done in concurrence with the senior management.
As at 31st March, 2024, the investments in debt mutual funds and bonds amounts to '' 3366.16 Crores (Previous year - '' 3071.00 Crores). A 1% point increase or decrease in the NAV with all other variables held constant would have lead to approximately an additional '' 34 Crores (Previous year - '' 31 Crores) on either side in the statement of profit and loss.
ii) Credit Risk
Is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Investments in Equity Shares, Bonds, Debt Funds, Fixed Deposits Others and Balances with Banks.
The Company''s marketing policies are well structured and all replacement sales are predominantly through dealers and the outstanding are secured by dealer deposits. As regards sales to O.E., and other institutional sales, the Company carries out periodic credit checks and also limits the exposure by establishing maximum payment period for customers and by offering prompt payment discounts. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31st March, 2024 is 0.02% (31st March, 2023 0.02%) of the total trade receivables.
There are no transactions with single customer which amounts to 10% or more of the Company''s revenue.
The company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain. The allowance for lifetime ECL on customer balances for the year ended 31st March, 2024 was '' 1.63 Crores and for the previous year 31st March, 2023 was '' 2.08 Crores.
The Company holds cash and deposits with banks which are having highest safety rankings and hence has a low credit risk.
Investments in mutual funds are primarily debt funds, which have high safety ratings and are monitored on a monthly basis.The Company is of the opinion that its mutual fund investments have low credit risk.
iii) Liquidity Risk
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has a system of forecasting rolling three months cash inflow and outflow and all liquidity requirements are planned.
All Long term borrowings are for a fixed tenor and generally these cannot be foreclosed.
The Company has access to various source of Short term funding and debt maturing within 12 months can be rolled over with existing lenders/new lenders, or repaid based on short term requirements.
Trade and other payables are plugged into the three months rolling cash flow forecast to ensure timely funding, if required.
All payments are made along due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The Fair Value of financial assets and liabilities included is the amount at which the instrument could be exchanged in a current transaction between willing parties. The following methods and assumptions were used to estimate the fair value.
1. The Fair values of Debt Mutual Funds and Quoted Equities are based on NAV / Quoted Price at the reporting date. Further, the Company had invested in Co-operative Societies and in certain other companies towards the corpus. These are non participative shares and normally no dividend is accrued. The Company has carried these investments at its transaction value considering it to be its fair value.
2. The Company enters into Derivative financial instruments with counterparties principally with Banks with investment grade credit ratings. The foreign exchange forward contracts are valued using valuation techniques which employs the use of market observable inputs namely, Marked-to-Market.
(d) Terms and conditions of transactions with related parties;
The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31st March 2024, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (Previous Year: '' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
d. Disclosures under Ind AS 108 - "Operating Segment" :
The Company is engaged interalia in the manufacture of Rubber Products such as Tyres, Tubes, Flaps, Tread Rubber. These in the context of IND AS - 108 - ''Operating Segment'' are considered to constitute one single primary segment. The Company''s operations outside India do not exceed the quantitative threshold for disclosure envisaged in the IND AS. Non-reportable segments has not been disclosed as unallocated reconciling item in view of its materiality. In view of the above, operating segment disclosures for business/geographical segment are not applicable to the Company.
Please note that the sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
There is no change in the method of valuation from the prior period. For change in assumptions please refer to section 6 above, where assumptions for prior period, if applicable, are given.
b. Asset Liability Matching Strategies
The scheme is managed on funded basis.
(ii) Capital Expenditure on Research and Development during the year, as certified by the management is '' 55.73 Crores (Previous year -'' 25.15 Crores).
This information complies with the terms of the Research and Development recognition granted upto 31st March 2024 for the Company''s in-house Research and Development activities by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India, vide their Letter No.TU/IV-RD/118/2021 dated 20th October, 2021.
h. Terms of Repayment and Security Description of Borrowings:(refer note 11)
a) Current Borrowings
Loans repayable on demand from banks are secured by hypothecation of Inventories and book debts, equivalent to the outstanding amount and carries interest rates at the rate of 6.88% to 7.90% (Previous year - 4.00% to 7.90%).
b) Non Current Borrowings
i) Indian Rupee Term Loan (Unsecured) from the HSBC Bank
a) Indian Rupee Term Loan of '' 150 Crores availed in February, 2019 is for capital expenditure. Interest is payable at a rate equal to the three months T-Bill rate plus a margin of 1.49% (Previous year - 1.49%) payable monthly. The said Loan was repaid fully in February, 2024.
b) Indian Rupee Term Loan of '' 150 Crores availed in July, 2021 is for capital expenditure. Interest is payable at a rate equal to the three months T-Bill rate plus a margin of 1.33% payable monthly. The said Loan is repayable in three equal annual installment in July, 2025/July, 2026/July, 2027.
ii) Indian Rupee Term Loan (Unsecured) from the HDFC Bank
a) I ndian Rupee Term Loan of '' 300 Crores availed in June,2020 is for capital expenditure. Interest is payable at a rate equal to repo rate plus a margin of 1.70% payable monthly. The said Loan is repayable in three equal annual installment in June/2024, June/2025, June/2026.
b) Indian Rupee Term Loan of '' 150 Crores availed in June,2021 is for capital expenditure. Interest is payable at a rate equal to repo rate plus a margin of 0.75% payable monthly. The said Loan is repayable in three equal annual installment in June, 2025/June 2026/June 2027.
iii) 15,000 [ Floating Interest rate linked to 6 month T-Bill rate] Listed Unsecured rated redeemable Taxable Non Convertible Debentures of '' 1,00,000/- each aggregating to '' 150 Crores issued on 24th February 2023 ,are to be redeemed on 24th February, 2026.
iv) Secured Loan of '' 80.92 Crores was availed under SIPCOT soft loan in March 2020. Further, additional SIPCOT Loan (secured) of '' 7.75 Crores was availed in March 2023. Interest is payable quartely at a rate of 0.10% (Previous year - 0.10%). These loans are secured by way of second charge on the Fixed Assets created at the company''s plants at Perambalur, near Trichy,Tamil Nadu.These loans will be repaid in full in April 2033 and April 2036 respectively.
v) Deferred payment credit is repayable along with interest( at varying rates) in 240 consecutive monthly instalments ending in March 2026.
i. Inventories
Inventories written down for obsolescence and Non-moving stocks for the year amounts to ''4.47 Crores (Previous year - '' 0.01 Crores) net of reversal. The amount of write down of inventories to net realizable value recognised as on expenses was '' 9.83 Crores (Previous year - '' 4.31 Crores). The reversal of write-down is on account of offtake/usage and better price realization.The cost of inventories recognised as an expense during the year in respect of continuing operations was '' 15352.46 Crores (Previous year - ''15637.04 Crores).
j. Extended Producer Responsibility (EPR)
Vide Notification dated 21st July 2022, The Ministry of Environment, Forest and Climate Change notified Regulations on Extended Producer Responsibilities (EPR) for waste tyres applicable to tyre manufacturers.The Company has a present legal obligation as at the year end to recognize a liability with respect to the levy. Due to insufficient information available on the measurability of the EPR obligation in the earlier year, the Company has recognized the provision for 2022-23, amounting to '' 46.36 Crores at the year ended March 2024. The provision taken for 2023-24 is '' 98.14 Crores. The obligations are to be fulfilled by purchasing certificates from recyclers who are registered with the Central Pollution Control Board. The calculation of the levy is based on the domestic revenue, generated in 2020-21 (used for computing obligation in 2022-23) and in 2021-22 (used for computing obligation in 2023-24).
k. The amount due and paid during the year to "Investor Education and Protection Fund" is '' 0.80 Crores (Previous year - '' 0.05 Crores).
l. Corporate Social Responsibility
As per Section 135 of the Companies Act,2013, a Company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceeding three financial years on corporate social responsibility (CSR) Activities,which for the financial year ended 31st March 2024 amounts to '' 25.08 Crores (Previous year - '' 29.13 Crores). A CSR Committee has been formed by the Company as per the Act. During the financial year ended 31st March 2024, the Company has incurred an amount of '' 19.26 Crores.
*The shortfall in CSR expenditure was on account of delay in implementation of projects and project duration extending beyond one financial year as per their original schedule of implementation.The shorfall is transferred to unspent CSR Bank account on 25th April,2024 (Previous year 25th April,2023). The amount spent, during the year, out of the shortfall at the end of the previous years is ''16.36 Crores.
**Disaster Management including Relief, Promotion of Education, Environmental Sustainability, Livelihood enhancement, Vocational Skill development, Promoting Health care, Safe drinking water, Training for Sports, Sanitation and Hygiene, Rural Development projects.
n. Events Occuring after the Balance Sheet date
The proposed final dividend for Financial Year 2023-24 amounting to '' 82.28 Crores will be recognised as distribution to owners during the financial year 2024-25 on its approval by Shareholders. The proposed final dividend amounts to '' 194/- per share.
o. Capital and Other Commitments
(i) Estimated amount of contracts remaining to be executed on Capital Account, net of advances and not provided for - '' 1334.36 Crores (Previous Year '' 2185.02 Crores)
(ii) Guarantees given by the Banks - '' 56.10 Crores (Previous Year - '' 130.78 Crores)
(iii) Letters of Credit issued by the Banks - '' 373.82 Crores (Previous Year - '' 265.58 Crores)
(iv) Commitments relating to Lease arrangements - Refer Note 2(c)( 3)
(v) Commitment to Rubber Board towards Promotion of Rubber Plantations in North East and Other Parts of India - '' 294.01 Crores (net of payments) (Previous year - '' 365.86 Crores)
q. (i) Contingent Liabilities not provided for:
Claims not acknowledged as debts:
(a) Competition Commission of India (CCI) matter - Refer Note 1 below
(b) Disputed Sales Tax demands pending before the Appellate Authorities /High Court - '' 254.46 Crores (Previous Year - '' 198.44 Crores). Against the said demand the company has deposited an amount of '' 3.50 Crores (Previous Year - '' 3.48 Crores)
(c) Contractual claims not acknowledged - '' 7.76 Crores (Previous Year - '' - Nil)
(d) Disputed Excise/Customs Duty demands pending before the Appellate Authorities/High Court - '' 594.47 Crores (Previous Year - '' 377.84 Crores). Against the said demand the company has deposited an amount of '' 16.13 Crores (Previous Year - '' 16.13 Crores)
(e) Disputed Income Tax Demands - '' 417.27 Crores (Previous Year - '' 275.64 Crores).Against the said demand the company has deposited an amount of '' 162.18 Crores (Previous Year - '' 131.61 Crores)
(f) Disputed Goods and Service Tax demands pending before the Appellate Authorities - '' 37.12 Crores (Previous Year- '' 0.56 Crores). Against the said demand the company has deposited an amount of '' 2.69 Crores (Previous Year - '' 0.05 Crores)
Note 1: The Competition Commission of India (CCI) had on 2nd February,2022 released its order dated 31st August,2018,imposing penalty on certain Tyre Manufacturers including the Company and also the Automotive Tyre Manufacturers'' Association, concerning the breach of the provisions of the Competition Act 2002, during the year 2011-12. A penalty of '' 622.09 Crores was imposed on the Company. The appeal filed by the Company before National Company Law Appellate Tribunal (NCLAT) has been disposed off by remanding the matter to CCI for review after hearing the parties. CCI has in February 2023 filed an appeal against the Order of NCLAT before the Hon''ble Supreme Court. Pending disposal, the Company has filed an appeal before the Hon''ble Supreme Court against the Order of NCLAT, which has been tagged with the appeal filed by CCI in the Supreme Court. The Company is of the view that no provision is considered necessary in respect of this matter in the Standalone Financial Statements.
r. Other Statutory Information
(i) The Company does not have any Benami property nor any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall :
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vii) The Company has not recorded any transaction 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.
(viii) The Company has not been declared a wilful defaulter by any bank or financial institution or any of the lenders.
(ix) 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.
Mar 31, 2023
1. Freehold land includes agricultural land - ''0.12 Crores (31st March, 2022 - ''0.12 Crores).
2. Other assets represents Electrical Fittings, Fire Fighting/Other Equipments and Canteen Utensils.
3. The amount of Borrowing Cost capitalised during the year ended 31st March, 2023 - ''6.38 Crores (31st March, 2022 - '' 1.85 Crores.)
4. Capital expenditure on Research and Development during the year - ''25.15 Crores (31st March, 2022, - ''6.71 Crores) Refer Note 28 h (ii).
5. Title deeds of Freehold Land are held in the name of the Company. Title deeds in respect of Buildings which are constructed on company''s Freehold Land is based on documents constituting evidence of legal ownership of the Buildings.
1. The Company has incurred ''27.89 Crores (Previous year ''21.94 Crores) for the year ended 31st March, 2023 towards expenses relating to short-term leases and leases of low-value assets (Refer Note 23). The total cash outflow for leases is ''149.19 Crores (Previous year ''118.72 Crores) for the year ended 31st March, 2023, including cash outflow of short-term leases and leases of low-value assets. Interest on lease liabilities is '' 48.70 Crores (Previous year ''36.29 Crores) for the year ended 31st March, 2023 (Refer Note 22).
2. The Company''s leases mainly comprise of land, buildings and vehicles. The Company mainly leases land and buildings for its manufacturing, warehouse facilities and sales offices. The Company has leased vehicles for its Goods Transporation.
Consequent to the Bilateral Advance Pricing Agreement (BAPA) signed by the Company with the Central Board of Direct Taxes (CBDT) for the financial years 2015-16 to 2023-24, with respect to Arm''s Length Price (ALP) of the transactions under the Income Tax Act, with MRF SG PTE LTD (MRF SG), the wholly owned subsidiary, the amount determined as payable by MRF SG to the Company is ''80.33 Crores (net of interest on tax of ''2.10 Crores), which has since been received by the company. The income tax impact on account of this refund has been disclosed as relating to earlier years.
A. Capital Management
For the purpose of Company''s Capital Management, capital includes Issued Equity Capital, Securities Premium and all other Equity Reserves attributable to the Equity Holders of the Company. The primary objective of the Company''s Capital Management is to maximise the Share Holder Value.
The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and requirements of the financial covenants and to continue as a going concern. The Company monitors using a gearing ratio which is net debts divided by total capital plus net debt. The company includes within net debt, interest bearing loans and borrowings, less cash and short term deposit.
The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include trade and other receivables, investments in mutual funds, bonds, cash and short term deposits.
The Company has assessed market risk, credit risk and liquidity risk to its financial instruments.
Is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks. Financial instruments affected by market risks, primarily include loans & borrowings, investments and foreign currency receivables, payables and borrowings.
a) Interest Rate Risk :
The Company borrows funds in Indian Rupees and Foreign currency, to meet both the long term and short term funding requirements.The Interest rate risk in terms of Foreign currency is managed through financial instruments available to convert floating rate liability into fixed rate liability. The Company due to its AAA rated status commands one of the cheapest source of funding. Interest rate is fixed for the tenor of the Long term loans availed by the Company. Interest on Short term borrowings is subject to floating interest rate and are repriced regularly. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the average outstanding amounts due to bankers over a year.
The Company had issued floating interest rate Non convertible debenture linked to 6 month T-Bill rate, to meet the long term funding requirements.
If the interest rates had been 0.50% to 1% higher / lower and all other variables held constant, the company''s profit for the year ended 31st March, 2023 would have been decreased / increased by ''10.66 Crores (Previous year ''4.54 Crores).
b) Currency Risk :
Foreign currency risks from financial instruments at the end of the reporting period expressed in INR:
The company is mainly exposed to changes in US Dollar. The sensitivity to a 4% (Previous year 2%) increase or decrease in US Dollar against INR with all other variables held constant wifi be /( - ) ''1.37 Crores (previous year ''0.87 Crores).
The Sensitivity analysis is prepared on the net unhedged exposure of the company at the reporting date.
Hedged Foreign Currency Exposures:
Foreign Exchange forward Contracts on External Commercial borrowings and certain highly probable forecast transactions, are measured at fair value through OCI on being designated as Cash Flow Hedges.â
The Company also enters into foreign exchange forward contracts with the intention to minimise the foreign exchange risk of expected purchases, these contracts are not designated in hedge relationships and are measured at fair value through profit or loss.
The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities like Natural Rubber, Synthetic Rubber and other Chemicals, the Company enters into purchase contracts on a short to medium Term and forward foreign exchange contracts are entered into to bring in stability of price fluctuations.
The Company''s investments in Quoted and Unquoted Securities are susceptible to market price risk arising from uncertainties about future values of investment securities. The company manages the securities price risk through investments in debt funds and diversification by placing limits on individual and total investments. Reports on Investment Portfolio are reviewed on regular basis and all approvals of investment decisions are done in concurrence with the senior management.
As at 31st March 2023 the investments in debt mutual funds and bonds amounts to ''3071 Crores (Previous year ''3632.50 Crores). A 1% point increase or decrease in the NAV with all other variables held constant would have lead to approximately an additional ''31 Crores (Previous year ''36 Crores) on either side in the statement of profit and loss.
Is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Investments in Equity Shares, Bonds, Debt Funds, Fixed Deposits, Others and Balances with Banks.
The Company''s marketing policies are well structured and all replacement sales are predominantly through dealers and the outstanding are secured by dealer deposits. As regards sales to O.E., and other institutional sales, the Company carries out periodic credit checks and also limits the exposure by establishing maximum payment period for customers and by offering prompt payment discounts. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31st March, 2023 is 0.02%(31st March, 2022 0.25%) of the total trade receivables.
The Company holds cash and deposits with banks which are having highest safety rankings and hence has a low credit risk.
Investments in mutual funds are primarily debt funds, which have high safety ratings and are monitored on a monthly basis and the Company is of the opinion that its mutual fund investments have low credit risk.
iii) Liquidity Risk
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has a system of forecasting rolling three months cash inflow and outflow and all liquidity requirements are planned.
All Long term borrowings are for a fixed tenor and generally these cannot be foreclosed.
The Company has access to various source of Short term funding and debt maturing within 12 months can be rolled over with existing lenders/new lenders, or repaid based on short term requirements.
Trade and other payables are plugged into the three months rolling cash flow forecast to ensure timely funding, if required.
All payments are made along due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The Fair Value of financial assets and liabilities included is the amount at which the instrument could be exchanged in a current transaction between willing parties. The following methods and assumptions were used to estimate the fair value.
1. The Fair values of Debt Mutual Funds and Quoted Equities are based on NAV / Quoted Price at the reporting date. Further, the Company had invested in Co-operative Societies and in certain other companies towards the corpus. These are non participative shares and normally no dividend is accrued. The Company has carried these investments at it transaction value considering it to be its fair value.
2. The Company enters into Derivative financial instruments with counterparties principally with Banks with investment grade credit ratings. The Interest Rate swaps, foreign exchange forward contracts are valued using valuation techniques which employs the use of market observable inputs namely, Marked-to-Market.
(d) Terms and conditions of transactions with related parties:
The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31st March 2023, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (Previous Year: '' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
e. Disclosures under IND AS 108 - "Operating Segmentâ:
The Company is engaged interalia in the manufacture of Rubber Products such as Tyres, Tubes, Flaps, Tread Rubber. These in the context of IND AS - 108 - ''Operating Segment'' are considered to constitute one single primary segment. The Company''s operations outside India do not exceed the quantitative threshold for disclosure envisaged in the IND AS. Non-reportable segments has not been disclosed as unallocated reconciling item in view of its materiality. In view of the above, operating segment disclosures for business/geographical segment are not applicable to the Company.
(ii) Capital Expenditure on Research and Development during the year, as certified by the management is '' 25.15 Crores (Previous year - '' 6.71 Crores).
This information complies with the terms of the Research and Development recognition granted upto 31st March, 2024 for the Company''s in-house
Research and Development activities by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of
India, vide their Letter No.TU/IV-RD/118/2021 dated 20th October, 2021.
i. Terms of Repayment and Security Description of Borrowings: (refer note 11)
a) Current Borrowings
i) Loans repayable on demand from banks are secured by hypothecation of Inventories and book debts, equivalent to the outstanding amount and carries interest rates at the rate of 4.00% to 7.90% (Previous year 3.8% to 6.85%).
Quarterly returns or statements of current assets filed by the Company with the banks in connection with the working capital limit sanctioned are in agreement with the books of accounts.
b) Non Current Borrowings
i) Indian Rupee Term Loan (Unsecured) from the HSBC Bank
a) Indian Rupee Term Loan of '' 150 Crores availed in February, 2019 is for capital expenditure. Interest is payable at a rate equal to the three months T-Bill rate plus a margin of 1.49% (Previous year- 1.49%) payable monthly. The said Loan is repayable in one full installment in Febuary, 2024.
b) Indian Rupee Term Loan of '' 150 Crores availed in July, 2021 is for capital expenditure. Interest is payable at a rate equal to the three months T-Bill rate plus a margin of 1.33% payable monthly. The said Loan is repayable in three equal annual installment in July, 2025/ July 2026/July 2027.
ii) Indian Rupee Term Loan (Unsecured) from the HDFC Bank.
a) Indian Rupee Term Loan of '' 300 Crores availed in June, 2020 is for capital expenditure. Interest is payable at a rate equal to repo rate plus a margin of 1.70% payable monthly. The said Loan is repayable in three equal annual installment in June, 2024/June 2025/June 2026.
b) Indian Rupee Term Loan of '' 150 Crores availed in June, 2021 is for capital expenditure. Interest is payable at a rate equal to repo rate plus a margin of 0.75% payable monthly. The said Loan is repayable in three equal annual installment in June, 2025/June 2026/June 2027.
iii) 15,000 [Floating Interest rate linked to 6 months T-Bill rate] Listed Unsecured rated redeemable Taxable Non-Convertible Debentures of '' 1,00,000/- each aggregating to ''150 Crore issued on 24th February 2023, are to be redeemed on 24th February, 2026.
iv) Secured Loan of ''80.92 Crores was availed under SIPCOT soft loan in March 2020, further, additional SIPCOT Loan (secured) of ''7.75 Crores was availed in March 2023. Interest is payable quarterly at a rate of 0.10% (Previous year - 0.10%). These loans are secured by way of second charge on the Fixed Assets created at the company''s plants at Perambalur, near Trichy,Tamil Nadu.These loans will be repaid in full in April 2033 and April 2036 respectively.
v) Deferred payment credit is repayable along with interest (at varying rates) in 240 consecutive monthly instalments ending in March 2026.
j. Inventories
Provision for obsolescence and Non-moving stocks for the year amounts to ''0.01 Crores (Previous year - ''16.70 Crores) net of reversal.The amount of write down of inventories to net realizable value recognised as an expenses was ''4.31 crores( Previous year - ''15.44 crores). The reversal of write-down is on account of offtake/usage and better price realization.The cost of inventories recognised as an expense during the year in respect of continuing operations was ''15637.04 Crores (Previous year - ''12812.74 Crores).
k. Managerial Remuneration
During the current financial year ended 31st March 2023, the company has complied with the provisions of Sections 197 & 198 of the Companies Act, 2013 in respect of payment of remuneration to managerial personnel. Further, necessary approval is being sought from the shareholders of the Company in compliance with the provision of Regulation 17(6)(e)(ii) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of remuneration of Promoter Executive Directors of the Company.
l. The amount due and paid during the year to "Investor Education and Protection Fundâ is '' 0.05 Crores (Previous year - '' 0.38 Crores).
m. Corporate Social Responsibility
As per Section 135 of the Companies Act,2013, a Company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceeding three financial years on corporate social responsibility (CSR) Activities, which for the financial year ended 31st March 2023 amounts to ''29.13 crores (Previous year ''33.92 crores). A CSR Committee has been formed by the Company as per the Act. During the financial year ended 31st March 2023, the Company has incurred an amount of ''17.49 Crores.
(ii) The company did not have any material transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of
the Companies Act, 1956 during the financial year.
(i) Contingent Liabilities not provided for:
Claims not acknowledged as debts:
(a) Competition Commission of India (CCI) matter - Refer Note 1 below
(b) Disputed Sales Tax demands pending before the Appellate Authorities /High Court - ''198.44 Crores (Previous Year- '' 196.00 Crores)
(c) Disputed Excise/Customs Duty demands pending before the Appellate Authorities/High Court - ''377.84 Crores (Previous Year - ''378.66 Crores)
(d) Disputed Income Tax Demands - ''275.64 Crores (Previous Year - ''159.87 Crores). Against the said demand the company has deposited an amount of ''131.61 Crores (Previous Year ''97.52 Crores)
(e) Disputed Goods and Service Tax demands pending before the Appellate Authorities - ''0.56 Crores (Previous Year- ''1.70 Crores)
(f) Contested EPF Demands pending before Appellate Tribunal- ''1.10 Crores (Previous year ''1.10 Crores)
Note 1 : The Competition Commission of India (CCI) had on 2nd February, 2022 released its order dated 31st August, 2018,imposing penalty on certain Tyre Manufacturers including the Company and also the Automotive Tyre Manufacturers'' Association, concerning the breach of the provisions of the Competition Act, 2002, during the year 2011-12. A penalty of ''622.09 Crores was imposed on the Company. The appeal filed by the Company has been disposed off by National Company Law Appellate Tribunal (NCLAT) in December 2022 by remanding the matter to CCI for review after hearing the parties. CCI has in February 2023 filed an appeal against the Order of NCLAT before the Hon''ble Supreme Court. Pending disposal of the same, the Company is of the view that no provision is considered necessary in respect of this matter in the Standalone Financial Statements.
Mar 31, 2022
1. Freehold land includes agricultural land - '' 0.12 Crores (31st March, 2021 - '' 0.12 Crores).
2. Other assets represents Electrical Fittings, Fire Fighting/Other Equipments and Canteen Utensils.
3. The amount of Borrowing Cost capitalised during the year ended 31st March, 2022 - '' 1.85 Crores (31st March, 2021 - '' 2.11 Crores).
4. Capital expenditure on Research and Development during the year - '' 6.71 Crores (31st March, 2021, including Building - '' 31.88 Crores) Refer Note 27 h (ii).
5. Title deeds of Freehold Land are held in the name of the Company. Title deeds in respect of Buildings on immovable properties which are constructed on company''s Freehold Land is based on documents constituting evidence of legal ownership of the Buildings.
1. The Company has incurred '' 21.94 Crores (Previous year - '' 9.67 Crores) for the year ended 31st March, 2022 towards expenses relating to short-term leases and leases of low-value assets (Refer Note 23). The total cash outflow for leases is ''118.72 Crores (Previous year - '' 107.44 Crores) for the year ended 31st March, 2022, including cash outflow of short-term leases and leases of low-value assets. Interest on lease liabilities is '' 36.29 Crores (Previous year - '' 37.27 Crores) for the year ended 31st March, 2022 (Refer Note 22).
2. The Company''s leases mainly comprise of Land, Buildings and Vehicles. The Company mainly leases land and buildings for its manufacturing, warehouse facilities and sales offices. The Company has leased vehicles for its Goods Transporation.
For the purpose of Company''s Capital Management, capital includes Issued Equity Capital, Securities Premium and all other Equity Reserves attributable to the Equity Holders of the Company. The primary objective of the Company''s Capital Management is to maximise the Shareholder Value.
The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and requirements of the financial covenants and to continue as a going concern. The Company monitors using a gearing ratio which is net debts divided by total capital plus net debt. The company includes within net debt, interest bearing loans and borrowings, less cash and short term deposit.
The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include trade and other receivables, investments in mutual funds,bonds,cash and short term deposits.
The Company has assessed market risk, credit risk and liquidity risk to its financial instruments.
i) Market Risk
Is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks. Financial instruments affected by market risks, primarily include loans & borrowings, investments and foreign currency receivables, payables and borrowings. a) Interest Rate Risk :
The Company borrows funds in Indian Rupees and Foreign currency, to meet both the long term and short term funding requirements. The Interest rate risk in terms of Foreign currency is managed through financial instruments available to convert floating rate liability into fixed rate liability. The Company due to its AAA rated status commands one of the cheapest source of funding. Interest rate is fixed for the tenor of the Long term loans availed by the Company. Interest on Short term borrowings is subject to floating interest rate and are repriced regularly. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the average outstanding amounts due to bankers over a year.
The company is mainly exposed to changes in US Dollar. The sensitivity to a 2% (Previous year 2%) increase or decrease in US Dollar against INR with all other variables held constant will be /( - ) '' 0.87 Crores (Previous year - '' 0.82 Crores).
The Sensitivity analysis is prepared on the net unhedged exposure of the company at the reporting date.
Hedged Foreign Currency Exposures:
Foreign Exchange forward Contracts on External Commercial borrowings and certain highly probable forecast transactions, are measured at fair value through OCI on being designated as Cash Flow Hedges.
The Company also enters into foreign exchange forward contracts with the intention to minimise the foreign exchange risk of expected purchases, these contracts are not designated in hedge relationships and are measured at fair value through profit or loss.
The outstanding position and exposures are as under :
The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities like Natural Rubber, Synthetic Rubber and other Chemicals, the Company enters into purchase contracts on a short to medium Term and forward foreign exchange contracts are entered into to bring in stability of price fluctuations.
The Company''s investments in Quoted and Unquoted Securities are susceptible to market price risk arising from uncertainties about future values of investment securities. The company manages the securities price risk through investments in debt funds and diversification by placing limits on individual and total investments. Reports on Investment Portfolio are reviewed on regular basis and all approvals of investment decisions are done in concurrence with the senior management.
As at 31st March, 2022 the investments in debt mutual funds and bonds amounts to '' 3632.50 Crores (Previous year - '' 5846.02 Crores). A 1% point increase or decrease in the NAV with all other variables held constant would have lead to approximately an additional '' 36 Crores (Previous year '' 58 Crores) on either side in the statement of profit and loss.
Is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Investments in Equity Shares, Bonds, Debt Funds, Fixed Deposits Others and Balances with Banks.
The Company''s marketing policies are well structured and all replacement sales are predominantly through dealers and the outstanding are secured by dealer deposits. As regards sales to O.E., and other institutional sales, the Company carries out periodic credit checks and also limits the exposure by establishing maximum payment period for customers and by offering prompt payment discounts. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31st March, 2022 is 0.25% (31st March, 2021 0.64%) of the total trade receivables.
There are no transactions with single customer which amounts to 10% or more of the Company''s revenue.
The company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain. The allowance for lifetime ECL on customer balances for the year ended 31 March, 2022 was '' 2.08 Crores and for the year ended 31 March, 2021 was '' 2.45 Crores.
The Company holds cash and deposits with banks which are having highest safety rankings and hence has a low credit risk.
Investments in mutual funds are primarily debt funds, which have high safety ratings and are monitored on a monthly basis and the Company is of the opinion that its mutual fund investments have low credit risk.
iii) Liquidity Risk
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has a system of forecasting rolling three months cash inflow and outflow and all liquidity requirements are planned.
All Long term borrowings are for a fixed tenor and generally these cannot be foreclosed.
The Company has access to various source of Short term funding and debt maturing within 12 months can be rolled over with existing lenders/new lenders, or repaid based on short term requirements.
Trade and other payables are plugged into the three months rolling cash flow forecast to ensure timely funding, if required.
All payments are made along due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The Fair Value of financial assets and liabilities included is the amount at which the instrument could be exchanged in a current transaction between willing parties. The following methods and assumptions were used to estimate the fair value.
1. The Fair values of Debt Mutual Funds and Quoted Equities are based on NAV / Quoted Price at the reporting date. Further, the Company had invested in Co-operative Societies and in certain other companies towards the corpus. These are non participative shares and normally no dividend is accrued. The Company has carried these investments at it transaction value considering it to be its fair value.
2. The Company enters into Derivative financial instruments with counterparties principally with Banks with investment grade credit ratings. The Interest Rate swaps, foreign exchange forward contracts are valued using valuation techniques which employs the use of market observable inputs namely, Marked-to-Market.
(d) Terms and conditions of transactions with related parties:
The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31st March, 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (Previous Year - '' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
e. Disclosures under IND AS 108 - "Operating Segmentâ:
The Company is engaged interalia in the manufacture of Rubber Products such as Tyres, Tubes, Flaps, Tread Rubber. These in the context of IND AS - 108 - ''Operating Segment'' are considered to constitute one single primary segment. The Company''s operations outside India do not exceed the quantitative threshold for disclosure envisaged in the IND AS. Non-reportable segments has not been disclosed as unallocated reconciling item in view of its materiality. In view of the above, operating segment disclosures for business/geographical segment are not applicable to the Company.
g. Disclosures as per IND AS - 19 - Employee Benefits
1) The contributions to MRF Limited Executives Provident Fund Trust is a defined benefit plan in terms of the definition mentioned in para 7 of IND AS -19 the accounting for which is to be done on an actuarial basis. The actuary has provided a valuation of provident fund liability based on the assumptions listed below and determined that there is no shortfall as at 31st March, 2022 and for the year ended 31st March 2021.
The plan assets have been primarily invested in Government securities, Corporate bonds and Exchange Traded Funds.
The principal assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are: Projection is restricted to five years or earlier, if retirement occurs.
Expected guaranteed interest rate - 8.10% (Previous year - 8.50%)
Discount rate - 7.30% (Previous year - 6.80%)
Please note that the sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
(ii) Capital Expenditure on Research and Development during the year, as certified by the management is '' 6.71 Crores (Previous year excluding Building - '' 31.75 Crores).
This information complies with the terms of the Research and Development recognition granted upto 31st March, 2024 for the Company''s in-house Research and Development activities by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India, vide their Letter No.TU/IV-RD/118/2021 dated 20th October, 2021.
i. Terms of Repayment and Security Description of Borrowings: (Refer Note 11)
a) Current Borrowings
i) ECB (Unsecured) from the HSBC Bank
USD 45 Million availed in December, 2017 is for capital expenditure. Interest is payable at a rate equal to the six months BBA LIBOR plus margin of 0.80% payable half yearly (Previous year- six months BBA LIBOR plus margin of 0.80%). The said Loan is fully hedged and is repayable in one full installment in December, 2022.
ii) Loans repayable on demand from banks are secured by hypothecation of Inventories and book debts, equivalent to the outstanding amount and carries interest rates at the rate of 3.80% to 6.85% (Previous year - 6.60% to 8.85%).
The quartely returns filed by the Company with banks, against borrowings on the basis of security of current asset, are in agreement with the books of accounts and there are no material discrepancies.
b) Non Current Borrowings
i) Indian Rupee Term Loan (Unsecured) from the HSBC Bank
a) Indian Rupee Term Loan of '' 150 Crores availed in February, 2019 is for capital expenditure. Interest is payable at a rate equal to the three months T-Bill rate plus a margin of 1.49% (Previous year - 1.49%) payable monthly. The said Loan is repayable in one full installment in February, 2024.
b) Indian Rupee Term Loan of '' 150 Crores availed in July, 2021 is for capital expenditure. Interest is payable at a rate equal to the three months T-Bill rate plus a margin of 1.33% payable monthly. The said Loan is repayable in three equal annual installment in July, 2025/ July, 2026/ July, 2027.
ii) Indian Rupee Term Loan (Unsecured) from the HDFC Bank
a) Indian Rupee Term Loan of '' 300 Crores availed in June, 2020 is for capital expenditure. Interest is payable at a rate equal to repo rate plus a margin of 1.7% payable monthly. The said Loan is repayable in three equal annual installment in June, 2024/June, 2025/June, 2026.
b) Indian Rupee Term Loan of '' 150 Crores availed in June, 2021 is for capital expenditure. Interest is payable at a rate equal to repo rate plus a margin of 0.75% payable monthly. The said Loan is repayable in three equal annual installment in June, 2025/June, 2026/June, 2027.
iii) Secured Loan availed under SIPCOT soft loan in March 2020,Interest is payable at a rate of 0.10% (Previous year - 0.10%) payable quarterly are secured by way of second charge on the Fixed Assets created at the company''s plants at Perambalur, near Trichy, Tamil Nadu. This loan will be repaid in full in April 2033.
iv) Deferred payment credit is repayable along with interest (at varying rates) in 240 consecutive monthly instalments ending in March 2026.
j. The amount due and paid during the year to "Investor Education and Protection Fundâ is '' 0.38 Crores (Previous year - '' 0.38 Crores)
k. Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceeding three financial years on corporate social responsibility (CSR) Activities, which for the financial year ended 31st March 2022 amounts to '' 33.92 Crores (Previous year - '' 30.44 Crores). A CSR Committee has been formed by the Company as per the Act. During the financial year ended 31st March, 2022, the Company has incurred an amount of '' 17.62 Crores.
*The shortfall in CSR expenditure was on account of delay in implementation of projects and project duration extending beyond one financial year as per their original schedule of implementation. The shorfall will be transfereed to unspent CSR Bank account and spent as per CSR Rules.
"Disaster Management including Relief ,Promotion of Education, Environmental Sustainability, Livelihood enhancement, Vocational Skill development, Promoting Health care, Safe drinking water, Training for Sports, Sanitation and Hygiene, Rural Development projects.
***Above includes a contribution of '' 59.77 Crores paid to MRF Foundation for setting up a new Driver Development Institute for MRF Institute of Driver Development (MIDD).
l. Events Occuring after the Balance Sheet date
The proposed final dividend for financial year 2021-22 amounting to '' 61.07 Crores will be recognised as distribution to owners during the financial year 2022-23 on its approval by Shareholders. The proposed final dividend amounts to '' 144/- per share.
p. (i) Contingent Liabilities not provided for:
Claims not acknowledged as debts:
(a) Competition Commission of India (CCI) matter - Refer Note 1 below
(b) Disputed Sales Tax demands pending before the Appellate Authorities /High Court - '' 196.03 Crores (Previous year - '' 195.97 Crores)
(c) Disputed Excise/Customs Duty demands pending before the Appellate Authorities/High Court - '' 339.96 Crores (Previous year - '' 323.94 Crores)
(d) Disputed Income Tax Demands - '' 159.87 Crores (Previous year - '' 96.58 Crores). Against the said demand the company has deposited an amount of '' 97.52 Crores (Previous Year - '' 49.55 Crores)
(e) Disputed Goods and Service Tax demands pending before the Appellate Authorities - '' 1.57 Crores (Previous year- '' 0.29 Crores )
(f) Contested EPF Demands pending before Appellate Tribunal- '' 1.10 Crores (Previous year - '' 1.10 Crores)
Note 1: In terms of the Order dated 31st August, 2018 the Competition Commission of India (CCI) has on 2nd February, 2022 released its Order imposing penalty on the Company concerning the breach of provisions of the Competition Act, 2002 during the year 2011-2012 and imposed a penalty of '' 622.09 Crores on the Company. The Company has filed an appeal against the CCI Order before the National Company Law Appellate Tribunal (NCLAT). Based on the Company''s assessment on the outcome of the appeal, the Company is of the view that no provision is necessary in respect of this matter in the Standalone Financial Statements.
Mar 31, 2021
(a) Bharat Forge Global Holding GmbH (BFGH)
Contributions to the capital reserves of BFGH as per the German Commercial Code (code), forms a part of the equity share capital and accordingly, has been considered as an investment and is redeemable subject to provisions of the code.
During the current year, a loan of Euro 7.00 million was granted by the Company which was subsequently converted into capital contribution to BFGH of '' 601.93 million (March 31, 2020 : Nil).
(b) Bharat Forge America Inc.
During the current year, a loan of USD 5.00 million was granted by the Company which was subsequently converted into capital contribution to BFA of '' 368.30 million (March 31, 2020 : '' Nil).
(c) BF Infrastructure Limited (BFIL, India)
During the current year pursuant to Rights issue, the Company had made further investment in BFIL, India of '' 44.43 million (March 31, 2020 : '' 727.26 million) by converting and acquiring 4,443,010 (March 31, 2020 : 72,726,400) equity shares of '' 10/- each.
(d) Kalyani Centre For Precision Technology Limited (KCPTL)
During the current year, the Company has made investment in KCPTL of '' 490.78 million by acquiring 49,078,330 equity shares of ''10/- each (March 31, 2020''200.10 million by acquiring 20,010,000 equity shares of '' 10/- each).
(e) Kalyani Powertrain Limited (KPL)
During the current year, the Company has made investment in KPL of '' 0.01 million by acquiring 1,000 equity shares of ''10/- each (March 31, 2020 '' Nil ). KPL to undertake various electric vehicle related activities by using advanced technology solutions.
(f) Kalyani Strategic Systems Limited (KSSL)
During the previous year, the Company has made an investment of '' 30.70 million by acquiring 6,139,324 equity shares of '' 10/- each on right basis by partly paying '' 5/- per Share.
(g) Eternus Performance Materials Private Limited (EPMPL)
During the previous year, the Company entered into a Share Subscription Agreement with Eternus Performance Materials Private Limited, India (Eternus). Pursuant to the said Agreement, the Company has made investment in EPMPL of '' 3.75 million by acquiring 83,226 equity shares of '' 10/- each at premium of '' 35/- per share.
(h) BF NTPC Energy Systems Limited (BFNTPCESL)
During the earlier year, the shareholders of BFNTPCESL at their EGM held on October 9, 2018 decided to voluntarily liquidate the Company and engaged liquidator to liquidate the Company under the provisions of Section 59 of Insolvency and Bankruptcy Code, 2016.
(i) REFu Drive GmbH [REFu]
During the previous year, the Company entered into a Joint Venture Agreement with Refu Elektronik GmbH, Germany and its affiliates / Promoters (REFU) for incorporating a Joint Venture Company i.e. Refu Drive GmbH (JV), under the laws of Germany. During the previous year, the Company has made an investment of '' 892.34 million by acquiring 12,500 equity shares of '' 10/- each and balance portion pertains transactions costs that are directly attributable to the investment.
(j) Tork Motors Private Limited (TMPL)
During the previous year, the Company has made an additional investment of '' 39.99 million by acquiring 1,895 equity shares of '' 10/- each.
(k) Tevva Motors (Jersey) Limited (TMJL)
During the earlier year, the Company had made investment in TMJL '' 892.93 million by acquiring 777,840 ordinary shares of £ 0.00001 each. During the year the Company has further extended the tenure of the convertible loan note amounting to GBP 3.50 million to December 31, 2021. The management intends to convert the said loan into equity at GBP 13.38 per share. On the revised due date, the outstanding loan amount including interest accrued thereon till the date of conversion will be converted into equivalent equity shares of Tevva Motors (Jersey) Limited as per the terms of agreement. Accordingly, such loan and interest accrued thereon till March 31, 2021 have been disclosed as investment in associates.
In the previous year the company had impaired '' 890.00 million against the same.
(l) Aeron Systems Private Limited [ASPL]
During the previous year, the Company entered into a Share Subscription Agreement with Aeron Systems Private Limited (Aeron). Pursuant to the said Agreement, the Company has made additional investment in ASPL of '' 60.00 million by acquiring 58,500 equity Shares of '' 10/- each at a premium of '' 1,015.64 per share (March 31, 2020''80.00 million by acquiring 78,000 equity shares of '' 10/- each.)
(a) Gupta Energy Private Limited (GEPL)
Shares of GEPL pledged against the facility obtained by Gupta Global Resources Private Limited. This investment is carried at fair value of '' Nil.
(b) Birlasoft Limited and KPIT Technologies Limited
The Company had invested into 613,000 equity shares of '' 2/- each of KPIT Technologies Limited. The Hon''ble National Company Law Tribunal, Mumbai Bench, had by its order approved the composite scheme of arrangement (Scheme), amongst Birlasoft (India) Limited, KPIT Technologies Limited, KPIT Engineering Limited and their respective shareholders. Pursuant to the Scheme, the engineering business of KPIT Technologies Limited had been transferred to KPIT Engineering Limited.
Pursuant to the order during the previous year, Birlasoft (India) Limited had merged with KPIT Technologies Limited and KPIT Technologies had been renamed as "Birlasoft Limited. KPIT Engineering Limited had been renamed as "KPIT Technologies Limited".
Pursuant to the Scheme, the Company had received 1 equity share of KPIT Technologies Limited of '' 10/- each for 1 equity share of Birlasoft Limited of '' 2/- each. The ratio of cost of acquisition per share of Birlasoft Limited and KPIT Technologies Limited was 56.64% to 43.36%.
(c) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities and quoted debt securities. Refer note 47 for determination of their fair values.
(d) Investments at fair value through profit or loss (fully paid) reflect investment in quoted / unquoted equity and debt securities. Refer note 47 for determination of their fair values.
i) Terms / rights attached to equity shares
The Company has only one class of issued equity shares having a par value of '' 2/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
I Global depository receipts
The Company had issued 3,636,500 equity shares of '' 10/- each (later sub-divided into 18,182,500 equity shares of '' 2/- each) in April 2005 represented by 3,636,500 Global Depository Receipts (GDR) (on sub division 18,182,500 GDRs) evidencing "Master GDR Certificates" at a price of USD 27.50 per GDR (including premium). GDRs outstanding as at year end are 18,400 (March 31, 2020 : 18,400). The funds raised had been utilized towards the object of the issue.
Holders of GDRs will have no voting rights or other direct rights of a shareholder with respect to the shares underlying the GDRs.
Warrants subscription money:
The Company had issued and allotted to Qualified Institutional Buyers, 10,000,000 equity shares of '' 2/- each at a price of '' 272/- per share aggregating to '' 2,720 million on April 28, 2010, simultaneous with the issue of 1,760, 10.75% Non Convertible Debentures (NCD) of a face value of '' 1,000,000/- at par, together with 6,500,000 warrants at a price of '' 2/- each entitling the holder of each warrant to subscribe for 1 equity share of '' 2/- each at a price of '' 272/- a'' any time within 3 years from the date of allotment. Following completion of three years term, the subscription money received on issue of warrants was credited to capital reserve as the same is not refundable / adjustable. Further the warrants had lapsed and ceased to be valid from April 28, 2013.
Unsecured Non-convertible debentures (NCDs) Repayable in yearly instalments along with interest of 5.97% p.a.
On August 6, 2020, the Company issued 5,000 5.97% BFL 2025 listed, rated, unsecured, redeemable, non-convertible debentures having face value of '' 1,000,000/- each on private placement basis.
) GITA R&D project loan (Secured)
The loan is secured by bank guarantee executed by the Company in favour of Global Innovation & Technology Alliance (GITA) which is repayable in 5 yearly instalments, along with interest @ 12.00% p.a. only on 67% of the principal amount and balance amount is interest free.
GITA has partially released funds (in instalments) for the R&D project. Repayment dates for the loan will be decided by GITA, on completion of review for closure of the project.
Preshipment packing credit
The loan is secured against hypothecation of inventories (refer note 11) and trade receivables (refer note 12).
Preshipment packing credit - Rupee (secured and unsecured) is repayable within 30 days to 180 days and carries interest @ 7.50% p.a. to 8.50% p.a.
Preshipment packing credit - foreign currency (secured and unsecured) is repayable within 30 days to 180 days and carries interest @ LIBOR 60 bps to LIBOR 125 bps p.a. and EURIBOR 45 bps to EURIBOR 70 bps p.a., respectively.
Bill discounting with banks
The loan is secured against hypothecation of inventories (refer note 11) and trade receivables (refer note 12).
Bill discounting (secured and unsecured) with banks is repayable within 30 to 210 days.
Rupee and Foreign bill discounting (secured and unsecured) with banks carries interest @ 7.50% p.a. to 8.50% p.a. and LIBOR 60 bps to LIBOR 125 bps p.a. & EURIBOR 45 bps to EURIBOR 95 bps p.a., respectively.
The Company offsets tax assets and tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
During the year ended March 31, 2020, the Company has paid dividend to its shareholders. This has resulted in payment of Dividend Distribution Tax (DDT) to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence, DDT paid is charged to equity.
The Government of India introduced Taxation Laws (Amendment) Ordinance, 2019 (The "Ordinance") on September 20, 2019. Tax expenses for the year ended March 31, 2020 reflect changes made vide the Ordinance, as applicable to the Company.
The contract liabilities primarily relate to the advance consideration received on contracts entered with customers for which performance obligations are yet to be performed, therefore, revenue will be recognized when the goods are passed on to the customers.
Includes payable with respect to Good and Services Tax, Local Body Tax, Gram Panchayat Tax, Withholding taxes, provident fund etc.
Others includes rent received in advance, rent equalisation reserve and miscellaneous liabilities.
Voluntary retirement scheme compensation
The Company announced a Voluntary Retirement Scheme (VRS) on March 12, 2020, July 4, 2020 and November 11, 2020 for its eligible employees who have completed 10 years of service with the Company. The amount of expenditure under said scheme is showed as exceptional item.
Provision for impairment in the value of the investment in Tevva Motors (Jersey) Ltd.
In view of the business situation and considering the prospects going forward, provision of an amount of '' 890.00 million was made during the previous year towards the impairment in the value of the investment in Tevva Motors (Jersey ) Ltd.
Company as lessee
The Company has lease contracts for solar plant &, various items of building and leasehold land, etc. used in its operations. These leases generally have lease terms between 2 and 16 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. There are several lease contracts that include extension and termination options and variable lease payments, which are further mentioned below:
The Company also has certain leases of various assets with lease terms of 12 months or less and leases of office equipment with low value. The Company applies the ''short-term lease'' and ''lease of low-value assets'' recognition exemptions for these leases.
The Company had total cash outflows for leases of '' 105.83 million (March 31, 2020: '' 31.87 million). The Company also had non-cash additions to right-of-use assets and lease liabilities of '' 1,656.95 million (March 31, 2020: Nil) and '' 1,656.00 million (March 31, 2020: Nil), respectively.
The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Company''s business needs. Management exercises significant judgment in determining whether these extension and termination options are reasonably certain to be exercised. (Refer note 49)
Company as lessor
The Company has entered into agreements / arrangement in the nature of lease / sub-lease agreement with different lessees for the purpose of land and building. These are generally in the nature of operating lease. Period of agreements/ arrangement are generally for three years to twenty five years and cancellable with a notice of thirty days to six months and renewal at the options of the lessee / lessor.
Gratuity plan Funded scheme
The Company has a defined benefit gratuity plan for its employees. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, every employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the employee''s length of service and salary at retirement age. An employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service as per the provisions of the Payment of Gratuity Act, 1972. In case of certain category of employees who have completed 10 years of service, gratuity is calculated based on 30 days salary (last drawn) for each completed year of service and cap for gratuity is 20 years. The scheme is funded with insurance companies in the form of a qualifying insurance policies.
Risk exposure and asset-liability matching
Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as company take on uncertain long term obligations to make future benefit payments.
Liability risks
a) Asset-liability mismatch risk
Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements.
b) Discount rate risk
Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.
c) Future salary escalation and inflation risk
Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this increasing risk.
Asset risks
All plan assets are maintained in a trust fund managed by a public sector insurer viz. LIC of India and other insurance companies. LIC and other insurance companies have a sovereign guarantee and have been providing consistent and competitive returns over the years. The Company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The Company has no control over the management of funds but this option provides a high level of safety for the total corpus. The same account is maintained for both the investment and claim settlement and hence, 100% liquidity is ensured and also interest rate and inflation risk are taken care of.
The following table summarises the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the gratuity plans.
Special gratuity
The Company has a defined benefit special gratuity plan. Under the gratuity plan, every eligible employee who has completed ten years of service gets an additional gratuity on departure which will be salary of specified months based on last drawn basic salary. The scheme is unfunded.
1) Liability risks
a) Asset-liability mismatch risk
Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralise valuation swings caused by interest rate movements.
b) Discount rate risk
Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.
c) Future salary escalation and inflation risk
Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this increasing risk.
2) unfunded plan risk
This represents unmanaged risk and a growing liability. There is an inherent risk here that the Company may default on paying the benefits in adverse circumstances. Funding the plan removes volatility in the Company''s financial statements and also benefit risk through return on the funds made available for the plan.
Provident fund
In accordance with the law, all employees of the Company are entitled to receive benefits under the provident fund. The Company operates two plans for its employees to provide employee benefits in the nature of provident fund, viz. defined contribution plan and defined benefit plan.
Under the defined contribution plan, provident fund is contributed to the government administered provident fund. The Company has no obligation, other than the contribution payable to the provident fund.
Under the defined benefit plan, the Company contributes to the "Bharat Forge Company Limited Staff Provident Fund Trust". The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.
The details of the defined benefit plan based on actuarial valuation report are as follows:
1) Liability risks:
a) Asset-liability mismatch risk
Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements. Hence, companies are encouraged to adopt asset-liability management.
b) Discount rate risk
Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.
c) Future salary escalation and inflation risk
Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments, resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion, may lead to uncertainties in estimating this increasing risk.
CONTINGENT LIABILITIES CContd.):
(a) The Company has issued various financial guarantees/support letter for working capital requirement of the subsidiary companies. The management has considered the probability for outflow of the same to be remote.
(b) The Company is contesting the demands raised pertaining to property tax. It also includes claim against the Company comprising of dues in respect to personnel claims (amount unascertainable), local taxes etc.
(c) Includes amount pertaining to incentive received under Government schemes, etc.
(d) Includes amount pertaining to classification differences of products, etc.
(e) Includes amount pertaining to duty demand for non-receipt of various statutory forms, etc.
(f) Includes amount pertaining to matter relating to applicability of TDS.
The Company is contesting the demands and the management, including its tax/legal advisors, believe that its position will likely be upheld in the appellate process. No provision has been recognised in the financial statements for the tax demand raised. The management based on its internal assessment and advice by its legal counsel believes that it is only possible/remote, but not probable, that the action will succeed.
Note: In cases where the amounts have been accrued, it has not been included above.
Deferred payment liabilities
Sales tax deferral incentives attached to the erstwhile windmill division, which was demerged to BF Utilities Limited (BFUL) under section 392 and 394 of the erstwhile Companies Act, 1956 sanctioned by the High Court of the Judicature at Mumbai, have been passed on thereafter from year to year by the Company to the latter, under an arrangement, with all liabilities and obligations attached thereto taken over completely by BFUL. The net liability outstanding of BFUL after
ciir''h nncc on n mo i into to ? /if! 1 9 mill ioo f M n rota Q 1 ? Q ~7 /i 1 mil I ionl
* Does not include gratuity and leave encashment since the same is considered for all employees of the Company as a whole.
(1) Transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year end are unsecured with a short term duration unless otherwise stated and interest free except for loans and interest-bearing advance given to supplier, Saarloha Advance Materials Private Limited. settlement occurs in cash. For the year ended March 31, 2021, the Company has not recorded any impairment of receivables relating to amount owed by related parties other than those disclosed separately above (March 31, 2020 : '' Nil). This assessment is undertaken in each financial year through examining the financial position of the related party and the market in which the related party operates.
(2) All transactions were made on normal commercial terms and conditions and are at market rates.
(3) For details of guarantees given to related parties refer note 38 and 46.
(4) The Company has various other welfare trusts to administer the long term benefits for its employees for which no contribution is made in the current or previous year.
The Company, for its newly set up plant located at Mambattu, Nellore, Andhra Pradesh for Manufacture of Aluminium Casting, has imported capital Goods under the Export Promotion Capital goods Scheme of the Government of India, at concessional rates of Duty, on an undertaking to fulfill quantified exports against which remaining future obligation as on March 31, 2021 aggregates USD 9.82 million (Rs. 734.93 million), over a period of 6 years (Block year 1st to 4th year - 50% and 5th to 6th year - 50%) from December 14, 2018, while maintaining average export of USD Nil per annum, as specified. Non fulfillment of such future obligations, in the manner required, if any, entails options / rights to the Government to levy penalties under the above referred scheme.
41. DEFERRAL/CAPITALISATION OF EXCHANGE DIFFERENCES
On the date of transition to Ind AS, the Company had availed the option under Ind AS 101 para D13AA for borrowings availed before April 1, 2016, continuing the policy adopted for accounting for exchange differences arising from translation of foreign currency monetary items recognised in financial statements.
EFFECT OF GLOBAL HEALTH PANDEMIC RELATING TO COVID-19
The spread of COVID-19 has severely impacted business in many countries including India and there have been severe disruption to regular business operations due to lockdown and other emergency measures. This may impact the Company''s operations in certain geographies. The Company has made assessment of liquidity, recoverable values of its financial and non-financial assets, financial and non-financial liabilities, carrying value of its subsidiaries including possible obligations arising from any ongoing negotiations with customers, vendors and regulatory exposures across businesses and geographies and has concluded that there are no material adjustments required in the annual financial statements. The management believes that it has assessed and taken all the possible impacts known from these events wherever possible outcome is known. However, given the effect of these on the overall economic activity and in particular in the industry in which Company operates, the impact assessment of COVID-19 is a continuous process, given the estimation and uncertainties associated with its nature, duration and outcome of any negotiations. The impact of global health pandemic might be different from that estimated as at the date of approval of these financial results. The Company will continue to closely monitor any material changes to future economic conditions and its consequential impact on its financial results.
# For the loan given in FY 2010-11 for which no terms has changed thereafter.
* Receivable on demand.
! Receivable after 2 years from the date of disbursement of loan. It can be repaid earlier than the maturity, based on mutual understanding.
@ Receivable in 6 months from the date of disbursement of loan. (renewed for further period of 10 months).
$ Refer Note 6 and 8
## Short term advance converted into a long term advance for a period of 4 years.
A Loan Tenure is 3 years from the date of disbursement of loan. Quarterly repayment is '' 2 million, '' 3 million, '' 5 million for year 1, 2 and 3, respectively.
- All loans are unsecured
- Details of investments made are given in note 6 and note 7
- Guarantee given on behalf of:
- Bharat Forge Kilsta AB, step down subsidiary company, of '' 1,544.04 million (March 31, 2020: '' 1,481.86 million) for working capital requirement which was renewed during the current year.
- Bharat Forge America Inc., wholly owned subsidiary company, of '' 3,387.42 million (March 31, 2020: '' 303.04 million) for term loan or loans towards investment in stepdown subsidiaries.
Gupta Energy Private Limited (GEPL)
The Company has an investment in equity instrument of GEPL. The same is classified as at fair value through profit and loss. Over the years GEPL has been making consistent losses. The management of the Company has made attempts to obtain latest information for the purpose of valuation. However, such information is not available as GEPL has not filed the financial statements with Ministry Of Corporate Affaires (MCA) since FY 2014-15. In view of the above, the management believes that the fair value of the investment is Nil as at April 1, 2015 and thereafter.
KPIT Technologies Limited
The Company had invested into 613,000 equity shares of '' 2/- each of KPIT Technologies Limited. The Hon''ble National Company Law Tribunal, Mumbai Bench, has by its order approved the composite scheme of arrangement (Scheme), amongst Birlasoft (India) Limited, KPIT Technologies Limited, KPIT Engineering Limited and their respective shareholders. Pursuant to the Scheme, the engineering business of KPIT Technologies Limited has been transferred to KPIT Engineering Limited.
Pursuant to the Scheme, the Company had received 1 equity share of KPIT Technologies Ltd. of '' 10/- each for 1 equity share of Birlasoft Ltd. of '' 2/- each. The ratio of cost of acquisition per share of Birlasoft Ltd. and KPIT Technologies Ltd. was 56.64% to 43.36%.
The investment in shares has been classified under level 1 of the fair value hierarchy as on March 31,2021.
Avaada SataraMH Private Limited
The investment in equity shares of Avaada SataraMH Private Limited which was made in October 2020, is governed by the terms of the share purchase agreement and the shares held by the Company are subject to certain restrictions in terms of ability of the Company to sell the shares and the value at which this can be done. Considering the nature of restrictions and overall intension of the management in relation to the equity shares, the fair value of such shares for the Company is same as it cost i.e. the face value.
* Investments do not include investments in subsidiaries, joint ventures and associates which are carried at cost and hence, are not required to be disclosed as per Ind AS 107 "Financial Instruments Disclosures".
The management assessed that the fair value of cash and cash equivalent, trade receivables, derivative instruments, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.
Further, the management assessed that the fair value of security deposits, trade receivables and other non-current receivables approximate their carrying amounts largely due to discounting/expected credit loss at rates which are an approximation of current lending rates.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
(i) Long-term fixed-rate and variable-rate receivables are evaluated by the Company based on parameters such as individual creditworthiness of the customer. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
(ii) The fair values of quoted instruments are based on price quotations at the reporting date. The fair value of unquoted instruments, loans from banks as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. In addition to being sensitive to a reasonably possible change in the forecast cash flows or the discount rate, the fair value of the equity instruments is also sensitive to a reasonably possible change in the growth rates. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in note 47. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.
48. FINANCIAL INSTRUMENTS BY CATEGORY [Contd.):
(iii) The fair values of the unquoted equity shares have been estimated using a DCF model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments.
(iv) The Company enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies and forward rate curves of the underlying. All derivative contracts are fully cash collateralised, thereby eliminating both counterparty and the Company''s own non-performance risk. As at March 31, 2021, the marked-to-market value of derivative asset positions is net of a credit valuation adjustment attributable to derivative counterparty default risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognised at fair value.
(v) The Company''s borrowings and loans are appearing in the books at fair value since the same are interest bearing hence, discounting of the same is not required. The own non-performance risk as at March 31, 2021 and March 31, 2020 was assessed to be insignificant.
. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures, including the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgements
In the process of applying the Company''s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:
1) Leases
Determining the lease term of contracts with renewal and termination options - Company as lessee
The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Company reassesses the lease term, if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customisation to the leased asset).
Refer to Note 35 for information on potential future rental payments relating to periods following the exercise date of extension and termination options that are not included in the lease term.
Property lease classification - Company as lessor
The Company has entered into commercial property leases on its investment property portfolio. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the commercial property and the present value of the minimum lease payments not amounting to substantially all of the fair value of the commercial property, that it retains substantially all the risks and rewards incidental to ownership of these properties and accounts for the contracts as operating leases.
2) Embedded derivative
The Company has entered into certain hybrid contracts i.e. where an embedded derivative is a component of a nonderivative host contract, in the nature of financial liability. The Company has exercised judgement to evaluate if the economic characteristics and risks of the embedded derivative are closely related to the economic characteristics and risks of the host. Based on the evaluation, the Company has concluded that, these economic characteristics and risks of the embedded derivatives are closely related to the economic characteristics and risks of the host and thus, not separated from the host contract and not accounted for separately.
3) Revenue from contracts with customers
The Company applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers:
I. Identifying contracts with customers
The Company enters into Master service agreement (''MSA'') with its customers which define the key terms of the contract with customers. However, the rates and quantities to be supplied is separately agreed through
purchase orders. Management has exercised judgement to determine that contract with customers for the purpose of Ind AS 115 is MSA and customer purchase orders for purpose of identification of performance obligations and other associated terms.
II. Identifying performance obligation
The Company enters into contract with customers for goods and tooling income. The Company determined that both the goods and tooling income are capable of being distinct. The fact that the Company regularly sells these goods on a standalone basis indicates that the customer can benefit from it on an individual basis. The Company also determined that the promises to transfer these goods are distinct within the context of the contract. These goods are not input to a combined item in the contract. Hence, the tooling income and the sale of goods are separate performance obligations.
III. Determination of timing of satisfaction of performance obligation for sale of products
The Company concluded that goods and tooling income is to be recognised at a point in time because it does not meet the criteria for recognising revenue over a period of time. The Company has applied judgement in determining the point in time when the control of the goods and tooling income are transferred based on the criteria mentioned in the standard read along with the contract with customers, applicable laws and considering the industry practices which are as follows:
1. Sale of goods
The goods manufactured are "Build to print" as per design specified by the customer for which the tools / dies are approved before commercial production commences. Further, the dispatch of goods is made on the basis of the purchase orders obtained from the customer taking into account the just in time production model with customer. Further, some orders have variable considerations (including LME adjustments) for the review of prices under negotiation which are estimated based on the expected probability method and, where appropriate, they would be limited to the amount that is highly unlikely to be reversed in the future.
2. Tooling income
Tools are manufactured as per the design specified by the customer which is approved on the basis of the customer acceptance. Management has used judgement in identification of the point in time where the tools are deemed to have been accepted by the customers.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
A. Estimating the incremental borrowing rate
The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore, reflects what the Company ''would have to pay'', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Company estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates.
B. Impairment of non-financial assets (tangible and intangible)
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or Cash Generating Unit''s (CGU''s) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. In determining the fair value less costs to disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.
C. Defined benefit plans
The cost of the defined benefit gratuity plan, other defined benefit plan and other post-employment plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, expected returns on plan assets and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The mortality rate is based on publicly available mortality tables for India. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases, discount rate and return on planned assets are based on expected future inflation rates for India.
Further details about defined benefit plans are given in note 37.
D. Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using different valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements and estimates include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer note 48 for further disclosures.
E. Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Further, the Company also evaluates risk with respect to expected loss on account of loss in time value of money which is calculated using average cost of capital for relevant financial assets.
F. Income tax and deferred tax
Deferred tax assets are not recognised for unused tax losses as it is not probable that taxable profit will be available against which the losses can be utilised. Significant management judgement/estimate is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Further details on taxes are disclosed in note 21.
G. Provision for Inventories
Management reviews the inventory age listing on a periodic basis. This review involves comparison of the carrying value of the aged inventory items with the respective net realizable value. The purpose is to ascertain whether an allowance is required to be made in the financial statements for any obsolete slow-moving items and net realisable value. Management is satisfied that adequate allowance for obsolete and slow-moving inventories has been made in the financial statements.
H. Current / Non-Current Classification
The Company evaluates funds requirement on the basis of internal budgets and forecasts and believes that on the basis of current scale of operations and cash realisation cycle, it would be able to generate sufficient funds from operations in order to meet such requirement in the foreseeable future of upto one year. Accordingly, the Company has classified major portion of its investment in mutual funds as non-current.
I. Litigations
The Company has various ongoing litigations, the outcome of which may have a material effect on the financial position, results of operations or cashflows. Legal team regularly analyses current information about these matters and assesses the requirement for provision for probable losses including estimates of legal expense to resolve such matters. In making the decision regarding the need for loss provision, management considers the degree of probability of an unfavourable outcome and the ability to make sufficiently reliable estimate of the amount of loss. The filing of a law suit or formal assertion of a claim against the Company or the disclosure of any such suit or assertions, does not automatically indicate that a provision of a loss may be appropriate.
Considering the facts on hand and the current stage of certain ongoing litigations where it stands, the Company foresee remote risk of any material claim arising from claims against the Company. Management has exercised significant judgement in assessing the impact, if any, on the disclosures in respect of litigations in relation to the Company.
50. hedging activities and derivatives
Cash flow hedges
Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash flow hedges of forecast sales in US Dollar and Euro. These forecast transactions are highly probable.
The foreign exchange forward contract balances vary with the level of expected foreign currency sales and changes in foreign exchange forward rates.
The cash flow hedges of the expected future sales during the year ended March 31, 2021 were assessed to be highly effective and a net unrealised (loss) / gain of '' 2,784.32 million (March 31, 2020: '' (688.49) million), with a deferred tax liability of '' 700.76 million (March 31, 2020 '' 173.28 million) relating to the hedging instruments, is included in OCI.
The amount removed from OCI during the year and included in the carrying amount of the hedged item as an adjustment for the year ended March 31, 2021 as detailed in note 33, totaling '' 523.40 million (gross of deferred tax) (March 31, 2020: '' (644.90) million). The amounts retained in OCI at March 31, 2021 are expected to mature and affect the statement of profit and loss till the year ended March 31, 2025.
Fair value hedges
At March 31, 2021 and March 31, 2020, the Company has a cross currency swap agreement in place. The same contract was also outstanding as on March 31, 2020. Through this arrangement, the Company has converted one of its USD loans into a Euro loan to avail the benefit of the negative EURIBOR. Under the original agreement the interest rate was fixed at LIBOR 67 basis points, but due to the cross currency swap arrangement the revised interest rate has been fixed at EURIBOR 87 basis points, decreasing the corresponding interest cost on the term loan.
Also as at March 31, 2020 the Company had certain forward contracts outstanding, which are being used to hedge the exposure to changes in fair value of its underlying borrowings and trade receivables.
The Company''s principal financial liabilities other than derivatives comprise loans and borrowings, trade payables and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI and FVTPL investments and enters into derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by a Finance and Risk Management Committee (FRMC) that advises on financial risks and the appropriate financial risk governance framework for the Company. The FRMC provides assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. Further, all the derivative activities for risk management purposes are carried out by experienced members from the senior management who have the relevant expertise, appropriate skills and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised as below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments in mutual funds, FVTOCI investments and derivative financial instruments.
The sensitivity analysis in the following sections relate to the position as at March 31, 2021 and March 31, 2020.
The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant and on the basis of hedge designations in place at March 31, 2021 and comparatively as at March 31, 2020.
The analysis excludes the impact of movements in market variables on the carrying values of gratuity and other post-retirement obligations and provisions.
The below assumptions have been made in calculating the sensitivity analysis:
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2021 and March 31, 2020 including the effect of hedge accounting.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates, other than 5.97% rated unsecured non-convertible debentures which have a fixed interest rate.
The Company generally borrows in foreign currency, considering natural hedge it has against its export. Long-term and short-term foreign currency debt obligations carry floating interest rates.
The Company avails short term debt in foreign currency up to tenor of 9 months, in the nature of export financing for its working capital requirements. LIBOR or EURIBOR for the said debt obligations is fixed for the entire tenor of the debt, at the time of availment.
. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CContd.):
The Company has an option to reset LIBOR o
Mar 31, 2019
A) General Information
MRF Limited (the âCompanyâ) is a limited Company, incorporated on 5th November, 1960 in India, whose shares are publicly traded.
The Company is Indiaâs largest tyre manufacturer and ranked amongst the Top 20 Global Manufacturers, with 9 state-of-the-art factories across India. It is also Indiaâs largest Original Equipment Manufacturer (OEM) tyre supplier with an expansive tyre range from two-wheelers to fighter aircrafts.
The Registered Office is located at No.114, Creams Road, Chennai-600 006.
The Company is the ultimate parent of MRF Limited Group.
B) Basis of preparation of financial statements
The principal accounting policies applied in the preparation of these financial statements are set out in Para C below. These policies have been consistently applied to all the years presented.
i. Statement of Compliance
These Separate financial statements (also known as Standalone Financial Statements) have been prepared in accordance with IND AS as prescribed under Section 1 33 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 201 5 and subsequent amendments thereto.
ii. Basis of preparation and presentation
The financial statements have been prepared on historical cost basis considering the applicable provisions of Companies Act 2013, except for the following material item that has been measured at fair value as required by relevant Ind AS. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
a) Certain financial assets/liabilities measured at fair value (refer Note C(19).) and
b) Any other item as specifically stated in the accounting policy.(refer Note 27(h))
The Financial Statement are presented in INR and all values are rounded off to Rupees Crores unless otherwise stated.
The Company reclassifies comparative amounts, unless impracticable and whenever the Company changes the presentation or classification of items in its financial statements materially. No such material reclassification has been made during the year.
The financial statements of the Company for the year ended 31st March, 2019 were authorised for issue in accordance with a resolution of the directors on 2nd May, 2019.
iii. Major Sources of Estimation Uncertainty
In the application of accounting policy which are described in note (C) below, the management is required to make judgment, estimates and assumptions about the carrying amount of assets and liabilities, income and expenses, contingent liabilities and the accompanying disclosures that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant and are prudent and reasonable. Actual results may differ from those estimates. The estimates and underlying assumptions are reviewed on ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future period.
The few critical estimations and judgments made in applying accounting policies are:
Property. Plant and Equipment:
Useful life of Property Plant and Equipment and Intangible Assets are as specified in Schedule II to the Companies Act, 2013 and on certain assets based on technical advice which considered the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support. The Company reviews the useful life of Property, Plant and Equipment at the end of each reporting period. This reassessment may result in change in depreciation charge in future periods.
Impairment of Non-financial Assets:
For calculating the recoverable amount of non-financial assets, the Company is required to estimate the value-in-use of the asset or the Cash Generating Unit and the fair value less costs to disposal. For calculating value in use the Company is required to estimate the cash flows to be generated from using the asset. The fair value of an asset is estimated using a valuation technique where observable prices are not available. Further, the discount rate used in value in use calculations includes an estimate of risk assessment specific to the asset.
Impairment of Financial Assets:
The Company impairs financial assets other than those measured at fair value through profit or loss or designated at fair value through other comprehensive income on expected credit losses. The estimation of expected credit loss includes the estimation of probability of default (PD), loss given default (LCD) and the exposure at default (EAD). Estimation of probability of default apart from involving trend analysis of past delinquency rates include an estimation on forward-looking information relating to not only the counterparty but also relating to the industry and the economy as a whole. The probability of default is estimated for the entire life of the contract by estimating the cash flows that are likely to be received in default scenario. The lifetime PD is reduced to 12 month PD based on an assessment of past history of default cases in 12 months. Further, the loss given default is calculated based on an estimate of the value of the security recoverable as on the reporting date. The exposure at default is the amount outstanding at the balance sheet date.
Defined Benefit Plans:
The cost of the defined benefit plan and other postemployment benefits and the present value of such obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and attrition rate. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.(refer Note27(h))
Fair Value Measurement of Financial Instruments:
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Note: 1. Freehold land includes agricultural land - Rs.0.12 Crores (31st March, 2018 - Rs.0.12 Crores).
2. Other assets represents Electrical Fittings, Fire Fighting/Other Equipments and Canteen Utensils.
3. The amount of Borrowing Cost capitalised during the year ended 31st March, 2019 - Rs.11.16 Crores (Year ended 31st March, 2018 - Rs.3.02 Crores.)
4. The Company has classified the leasehold land as a finance lease, after exercise of judgement based on evaluation of facts and circumstances and considering the indicators envisaged in Para 10 and 11 of Ind AS 17 âLeasesâ.
5. Capital expenditure on Research and Development (including Building) during the year - Rs.55.50 Crores (previous year - Rs.110.86 Crores) refer Note 27 i (ii).
The management determines that the segment information reported is sufficient to meet the disclosure objective with respect to disaggregation of revenue under IND AS 115 âRevenue from contracts with customersâ. Hence no separate disclosure of disaggregate revenues are reported.(refer note 27(f))
NOTE 1 : A. Capital Management
For the purpose of Companyâs Capital Management, capital includes Issued Equity Capital, Securities Premium and all other Equity Reserves attributable to the Equity Holders of the Company. The primary objective of the Companyâs Capital Management is to maximise the Share Holder Value.
The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and requirements of the financial covenants and to continue as a going concern. The Company monitors using a gearing ratio which is net debts divided by total capital plus net debt. The company includes within net debt, interest bearing loans and borrowings, less cash and short term deposit.
B. Financial Risk Management
The Companyâs principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include trade and other receivables, investments in mutual funds and cash and short term deposits.
The Company has assessed market risk, credit risk and liquidity risk to its financial instruments.
i) Market Risk
Is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks. Financial instruments affected by market risks, primarily include loans & borrowings, investments and foreign currency receivables, payables and borrowings.
a) Interest Rate Risk:
The Company borrows funds in Indian Rupees and Foreign currency, to meet both the long term and short term funding requirements. The Interest rate risk in terms of Foreign currency is managed through financial instruments available to convert floating rate liability into fixed rate liability. The Company due to its AAA rated status commands one of the cheapest source of funding. Interest rate is fixed for the tenor of the Long term loans availed by the Company. Interest on Short term borrowings is subject to floating interest rate and are repriced regularly. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the average outstanding amounts due to bankers over a year.
If the interest rates had been 1% higher / lower and all other variables held constant, the companyâs profit for the year ended 31st March, 2019 would have been decreased/increased by Rs. 2.48 crores.( Previous year - Rs. 2.24 crores)
b) Currency Risk:
Foreign currency risks from financial instruments at the end of the reporting period expressed in INR:
The company is mainly exposed to changes in US Dollar. The sensitivity to a 3% (Previous year - 0.25%) increase or decrease in US Dollar against INR with all other variables held constant will be /( - ) Rs. 0.75 Crores (previous year - Rs. 0.22 Crores).
The Sensitivity analysis is prepared on the net unhedged exposure of the company at the reporting date.
Hedged Foreign Currency exposures:
Foreign Exchange forward Contracts on External Commercial borrowings and certain highly probable forecast transactions, are measured at fair value through OCI on being designated as Cash Flow Hedges.
The Company also enters into foreign exchange forward contracts with the intention to minimise the foreign exchange risk of expected purchases, these contracts are not designated in hedge relationships and are measured at fair value through profit or loss.
The outstanding position and exposures are as under:
c) Price Risk
The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities like Natural Rubber, Synthetic Rubber and other Chemicals, the Company enters into purchase contracts on a short to medium Term and forward foreign exchange contracts are entered into to bring in stability of price fluctuations.
The Companyâs investments in Quoted and Unquoted Securities are susceptible to market price risk arising from uncertainties about future values of investment securities. The company manages the securities price risk through investments in debt funds and diversification by placing limits on individual and total investments. Reports on Investment Portfolio are reviewed on regular basis and all approvals of investment decisions are done in concurrence with the senior management.
As at 31st March, 2019 the investments in debt mutual funds amounts to Rs. 3820.67 Crores. A 1% point increase or decrease in the NAV with all other variables held constant would have lead to approximately an additional Rs. 38 Crores on either side in the statement of profit and loss.
ii) Credit Risk
Is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Investments in Equity Shares, Debt Funds and Balances with Banks.
The Companyâs marketing policies are well structured and all replacement sales are predominantly through dealers and the outstanding are secured by dealer deposits. As regards sales to Original Equipment and other institutional sales, the Company carries out periodic credit checks and also limits the exposure by establishing maximum payment period for customers and by offering prompt payment discounts. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31st March, 2019 is 0.28% (31st March, 2018-0.27%) of the total trade receivables.
There are no transactions with single customer which amounts to 10% or more of the Companyâs revenue.
The company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain. The allowance for lifetime ECL on customer balances for the year ended 31st March, 2019 was Rs. 2.17 crores and for the year ended 31st March, 2018 was Rs. 2.27 crores.
The Company holds cash and deposits with banks which are having highest safety rankings and hence has a low credit risk.
Investments in mutual funds are primarily debt funds, which have high safety ratings and are monitored on a monthly basis and the Company is of the opinion that its mutual fund investments have low credit risk.
iii) Liquidity Risk
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has a system of forecasting rolling three months cash inflow and outflow and all liquidity requirements are planned.
All Long term borrowings are for a fixed tenor and generally these cannot be foreclosed.
The Company has access to various source of Short term funding and debt maturing within 12 months can be rolled over with existing lenders/new lenders, or repaid based on short term requirements.
Trade and other payables are plugged into the three months rolling cash flow forecast to ensure timely funding, if required.
All payments are made along due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The Fair Value of financial assets and liabilities included is the amount at which the instrument could be exchanged in a current transaction between willing parties. The following methods and assumptions were used to estimate the fair value.
1. The Fair values of Mutual Funds and Quoted Equities are based on NAV / Quoted Price at the reporting date. Further, the Company had invested in Co-operative Societies and in certain other companies towards the corpus. These are non-participative shares and normally no dividend is accrued. The Company has carried these investments at it transaction value considering it to be its fair value.
2. The Company enters into Derivative financial instruments with counterparties principally with Banks with investment grade credit ratings. The Interest Rate swaps, foreign exchange forward contracts are valued using valuation techniques which employs the use of market observable inputs namely, Marked-to-Market.
b. Disclosure required by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015; and section 186(4) of the Companies Act, 2013:
1. Amount of Loans and advances in the nature of loans outstanding from subsidiaries - â Nil (Previous year - â Nil)
2. Loans to employees have been considered to be outside the purview of disclosure requirements.
3. Investment by Loanee in the shares of the Parent Company - Nil (Previous year - Nil):
c. The Companyâs leasing arrangements are in respect of operating leases for premises (residential, office and godowns). The leasing arrangements, which are not non-cancellable, range between eleven months and ten years generally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals payable are charged as rent.
Notes:
(i) Cash outflow towards warranty provision would generally occur during the next two years.
(ii) Litigation and related disputes represents estimates mainly for probable claims arising out of litigation/disputes pending with authorities under various statutes (i.e. Service Tax, Excise and Customs Duty, Electricity/Fuel Surcharge, Cess). The probability and the timing of the outflow with regard to these matters will depend on the final outcome of the litigations/disputes.
(iii) Figures in brackets are in respect of Previous year.
(d) Terms and conditions of transactions with related parties:
The transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31st March, 2019, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (Previous Year: â Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
f. Disclosures under IND AS 108 - âOperating Segmentâ:
The Company is engaged interalia in the manufacture of Rubber Products such as Tyres, Tubes, Flaps, Tread Rubber and Conveyor Belt. These in the context of IND AS - 108 - âOperating Segmentâ are considered to constitute one single primary segment. The Companyâs operations outside India do not exceed the quantitative threshold for disclosure envisaged in the IND AS. Non-reportable segments has not been disclosed as unallocated reconciling item in view of its materiality. In view of the above, operating segment disclosures for business/geographical segment are not applicable to the Company.
h. Disclosures as per IND AS - 19 - Employee Benefits
1) The contributions to MRF Limited Executives Provident Fund Trust is a defined benefit plan in terms of the definition mentioned in para 7 of IND AS -19 the accounting for which is to be done on an actuarial basis. The actuary has provided a valuation of provident fund liability based on the assumptions listed below and determined that there is no shortfall as at 31st March 2019 and for the year ended 31st March 2018.
The plan assets have been primarily invested in Government securities, Corporate bonds and Exchange Traded Funds
The principal assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are: Projection is restricted to five years or earlier, if retirement occurs.
Expected guaranteed interest rate - 8.55% (Previous Year - 8.55%)
Discount rate - 7.62% (Previous Year - 8.58%)
- In the absence of detailed information regarding Plan assets which is funded with Insurance Company, the composition of each major category of Plan assets, the percentage or amount for each category to the fair value of Plan assets has not been disclosed.
- The group gratuity Policy with LIC includes employees of MRF Corp Ltd, a Subsidiary Company
vii) Amount, Timing and Uncertainty of Future Cash Flows
a. Sensitivity Analysis
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:
(ii) Capital Expenditure on research and development (excluding Building) during the year, as certified by the management is Rs. 50.05 Crores (Previous year - Rs. 98.86 Crores).
This information complies with the terms of the Research and Development recognition granted upto 31st March 2019 for the Companyâs in-house Research and Development activities by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India, vide their Letter No.TU/IV-RD/118/2018 dated 13th July, 2018.
j. Terms of Repayment and Security Description of Borrowings: (refer note 11)
a) Current Borrowings
Loans repayable on demand from banks are secured by hypothecation of Inventories and book debts, equivalent to the outstanding amount and carries interest rates at the rate of 7.85% to 8.45% (Previous year 7.85% to 9.75%)
Rupee Export Packing Credit is repayable within a year and carries interest rates at the rate of 7.95% to 8.40% (Previous year 5.77% to 7.95%). Buyerâs Line of Credit from banks are secured by hypothecation of Inventories and book debts, equivalent to the outstanding amount and are repayable within a year and carries interest at the rate of LIBOR plus 35bps (Previous year - LIBOR plus 4bps to LIBOR plus 60bps)
b) Non-Current Borrowings
i) The principal amount of Debentures, interest, remuneration to Debenture Trustees and all other costs, charges and expenses payable by the Company in respect of Debentures are secured by way of a legal mortgage of Companyâs land at Taluka Kadi, District Mehsana, Gujarat and hypothecation by way of a first charge on Plant and Machinery at the Companyâs plants at Perambalur, near Trichy, Tamil Nadu, equivalent to the outstanding amount.
5000, 10.09% Non-convertible Debentures of Rs.10,00,000 each are to be redeemed at par in three instalments as stated below:
ii) ECB(Unsecured) from the MUFG Bank, Ltd. (Old name- Bank of Tokyo- Mitsubishi UFJ, Ltd.)
a) USD 15 Million availed in October, 2013 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.50% (Previous year- six months USD LIBOR plus margin of 1.50%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning October, 2017.
b) USD 20 Million availed in May, 2015 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.00% (Previous year-six months USD LIBOR plus margin of 1.00%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning May, 2019.
iii) ECB(Unsecured) from the Mizuho Bank, Ltd.
a) USD 15 Million availed in January, 2014 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.50% (Previous year- six months USD LIBOR plus margin of 1.50%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning January, 2018.
b) USD 25 Million availed in February, 2015 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.00% (Previous year- six months USD LIBOR plus margin of 1.00%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning February, 2019.
iv) ECB (Unsecured) from the CITI Bank availed in January, 2015 amounting to USD 20 Million is for capital expenditure. Interest is payable at a rate equal to the six months BBA LIBOR plus margin of 1.30% (Previous year- six months BBA LIBOR plus margin of 1.30%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning January, 2019.
v) âECB(Unsecured) from the HSBC Bank
a) USD 20 Million availed in October, 2015 is for capital expenditure. Interest is payable at a rate equal to the six months BBA LIBOR plus margin of 1.25% (Previous year- six months BBA LIBOR plus margin of 1.25%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning October, 2019.
b) USD 45 Million availed in December, 2017 is for capital expenditure. Interest is payable at a rate equal to the six months BBA LIBOR plus margin of 0.80% payable half yearly (Previous year- six months BBA LIBOR plus margin of 0.80%). The said Loan is fully hedged and is repayable in one full instalment in December, 2022.
vi) Indian Rupee Term Loan of Rs. 150 Crores availed in February, 2019 is for capital expenditure. Interest is payable at a rate equal to the three months T-Bill rate plus a margin of 1.49% (Previous year- Not applicable) payable monthly. The said Loan is repayable in one full installment in February, 2024.
vii) Interest free Unsecured Loan availed under Sales tax Deferral Scheme got repayed during the financial year ended 31st March, 2019.
viii) Deferred payment credit is repayable along with interest (at varying rates) in 240 consecutive monthly instalments ending in March 2026.
ix) Fixed Deposits are Unsecured and got repayed during the financial year ended 31st March, 2019 with interest of 9.5%. (Previous year - 9.50%) k. Events Occurring after the Balance Sheet date
The proposed final dividend for Financial Year 2018-19 amounting to Rs. 22.91 Crores will be recognised as distribution to owners during the financial year 2019-20 on its approval by Shareholders. The proposed final dividend per share amounts to Rs. 54/-
l. (i) Estimated amount of contracts remaining to be executed on Capital Account, net of advances and not provided for - Rs. 3989.78 Crores (Previous Year Rs. 942.70 Crores) m. Corporate Social Responsibility
As per Section 135 of the Companies Act,2013, a Company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceeding three financial years on corporate social responsibility( CSR) Activities. A CSR Committee has been formed by the Company as per the Act. The funds were primarily allocated to the activities which are specified in Schedule VII of the Companies Act, 2013.
a) Gross amount required to be spent by the Company during the year is Rs. 42.73 Crores (Previous Year - Rs. 43.04 Crores).
n. Contingent Liabilities not provided for:
(i) Guarantees given by the Banks - Rs. 51.14 Crores (Previous Year - Rs. 37.56 Crores)
(ii) Letters of Credit issued by the Banks - Rs. 450.41 Crores (Previous Year - Rs. 97.69 Crores)
(iii) Claims not acknowledged as debts:
(a) Disputed Sales Tax demands pending before the Appellate Authorities - Rs. 46.20 Crores (Previous Year - Rs. 48.39 Crores)
(b) Disputed Excise/Customs Duty demands pending before the Appellate Authorities/High Court - Rs. 335.51 Crores (Previous Year - Rs. 98.23 Crores)
(c) Disputed Income Tax Demands - Rs. 85.58 Crores (Previous Year - Rs. 127.60 Crores). Against the said demand the Company has deposited an amount of Rs. 37.51 Crores (Previous Year - Rs. 31.96 Crores)
(d) Contested EPF Demands pending before Appellate Tribunal- Rs. 1.10 Crores (Previous year - Rs. 1.10 Crores)
o. The amount due and paid during the year to âInvestor Education and Protection Fundâ is Rs. 0.21 Crores (Previous year - Rs. 0.54 Crores)
Mar 31, 2018
Appendix B to IND AS 21, Foreign currency transactions and advance consideration:
It clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, as when an entity has received or paid advance consideration in a foreign currency.
The Company has evaluated the effect of these amendments on the financial statement and the impact is not expected to be material.
Note: 1. Freehold land includes agricultural land - Rs, 0.12 Crores (31.03.201 7 - Rs, 0.12 Crores).
2. Other assets represents Electrical Fittings, Fire Fighting/Other Equipments and Canteen Utensils.
3. The amount of Borrowing Cost capitalized during the year ended 31.03.2018 - Rs, 3.02 Crores (Year ended 31.03.201 7 - Rs, 10.01 Crores).
4. The Company has classified the leasehold land as a finance lease, after exercise of judgment based on evaluation of facts and circumstances and considering the indicators envisaged in Para 10 and 11 of IND AS 17 "Leases".
5. Capital expenditure on Research and Development (including Building) during the year - Rs, 110.86 Crores (previous year - Rs, 158.92 Crores) refer Note 27 i (ii).
* Cost of Freehold land sold during the year - Rs, 1831/-.
NOTE 24 : A. Capital Management
For the purpose of Company''s Capital Management, capital includes Issued Equity Capital, Securities Premium, and all other Equity Reserves attributable to the Equity Holders of the Company. The primary objective of the Company''s Capital Management is to maximize the Share Holder Value.
The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and requirements of the financial covenants and to continue as a going concern. The Company monitors using a gearing ratio which is net debts divided by total capital plus net debt. The company includes within net debt, interest bearing loans and borrowings, less cash and short term deposit.
B. Financial Risk Management
The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include trade and other receivables, investments in mutual funds and cash and short term deposits.
The Company has assessed market risk, credit risk and liquidity risk to its financial instruments.
i) Market Risk
Is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks. Financial instruments affected by market risks, primarily include loans & borrowings, investments and foreign currency receivables, payables and borrowings.
a) Interest Rate Risk :
The Company borrows funds in Indian Rupees and Foreign currency, to meet both the long term and short term funding requirements. The Interest rate risk in terms of Foreign currency is managed through financial instruments available to convert floating rate liability into fixed rate liability. The
Company due to its AAA rated status commands one of the cheapest source of funding. Interest rate is fixed for the tenor of the Long term loans availed by the Company. Interest on Short Term borrowings is subject to floating interest rate and are reprised regularly. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the average outstanding amounts due to bankers over a year.
If the interest rates had been 1% higher / lower and all other variables held constant, the company''s profit for the year ended 31st March, 2018 would have been decreased/increased by Rs, 2.24 crores.
b) Currency Risk :
The Company is not exposed to significant risk with regard to foreign currency borrowing and payables.
The foreign currency loans are designated as cash flow hedges and are fully covered for the tenor of the loan.
Foreign currency risks from financial instruments at the end of the reporting period expressed in INR :
The company is mainly exposed to changes in US Dollar. The sensitivity to a 0.25% to 1% increase or decrease in US Dollar against INR with all other variables held constant will be /( - ) Rs, 0.22 Crores (previous year Rs, 0.37 Crores)
The Sensitivity analysis is prepared on the net unhedged exposure of the company at the reporting date.
Hedged Foreign Currency exposures :
Foreign Exchange forward Contracts on External Commercial borrowings / Buyers line of credit are measured at fair value through OCI on being designated as Cash Flow Hedges.
The Company also enters into foreign exchange forward contracts with the intention to minimise the foreign exchange risk of expected purchases, these contracts are not designated in hedge relationships and are measured at fair value through profit or loss.
Figures in brackets are in respect of Previous year
c) Price Risk :
The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities like natural rubber, synthetic rubber and other chemicals, the Company enters into purchase contracts on a short to medium term and forward foreign exchange contracts are entered into to bring in stability of price fluctuations.
The Company''s investments in quoted and unquoted securities are susceptible to market price risk arising from uncertainties about future values of investment securities. The company manages the securities price risk through investments in debt funds and diversification by placing limits on individual and total investments. Reports on Investment Portfolio are reviewed on regular basis and all approvals of investment decisions are done in concurrence with the senior management.
As at 31st March, 2018, the investments in debt mutual funds amounts to Rs, 4120.26 Crores. A 1% point increase or decrease in the NAV with all other variables held constant would have lead to approximately an additional Rs, 41 Crores on either side in the statement of profit and loss.
ii) Credit Risk
Is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Investments in Equity Shares, Debt Funds and Balances with Banks.
The Company''s marketing policies are well structured and all replacement sales are predominantly through dealers and the outstanding are secured by dealer deposits. As regards sales to O.E., and other institutional sales, the Company carries out periodic credit checks and also limits the exposure by establishing maximum payment period for customers and by offering prompt payment discounts. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31st March, 2018 is 0.27 % (31st March, 2017 - 0.35%) of the total trade receivables.
The Company holds cash and deposits with banks which are having highest safety rankings and hence has a low credit risk.
Investments in mutual funds are primarily debt funds, which have high safety ratings and are monitored on a monthly basis and the Company is of the opinion that its mutual fund investments have low credit risk.
iii) Liquidity Risk
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has a system of forecasting rolling three months cash inflow and outflow and all liquidity requirements are planned.
All Long term borrowings are for a fixed tenor and generally these cannot be foreclosed.
The Company has access to various source of Short term funding and debt maturing within 12 months can be rolled over with existing lenders/new lenders, or repaid based on short term requirements.
Trade and other payables are plugged into the three months rolling cash flow forecast to ensure timely funding, if required.
All payments are made along due dates and requests for early payments are entertained after due approval and availing early payment discounts.
The details of the contractual maturities of significant financial liabilities as at 31st March, 2018 are as under:
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The Fair Value of financial assets and liabilities included is the amount at which the instrument could be exchanged in a current transaction between willing parties. The following methods and assumptions were used to estimate the fair value.
1. The Fair values of Mutual Funds and Quoted Equities are based on NAV / Quoted Price at the reporting date. Further, the Company had invested in Co-operative Societies and in certain other companies towards the corpus. These are non participative shares and normally no dividend is accrued. The Company has carried these investments at it transaction value considering it to be its fair value.
2. The Company enters into Derivative financial instruments with counterparties principally with Banks with investment grade credit ratings. The Interest Rate swaps, foreign exchange forward contracts are valued using valuation techniques which employs the use of market observable inputs namely, Marked-to-Market.
Notes :
(i) Cash outflow towards warranty provision would generally occur during the next two years. Such claims are netted off from sales.
(ii) Litigation and related disputes represents estimates mainly for probable claims arising out of litigation/disputes pending with authorities under various statutes (i.e. Service Tax, Excise and Customs Duty, Electricity/Fuel Surcharge, Cess). The probability and the timing of the outflow with regard to these matters will depend on the final outcome of the litigations/disputes.
(iii) Figures in brackets are in respect of Previous year.
e. Related party disclosures:
(a) Names of related parties and nature of relationship where control exists are as under:
Subsidiary Companies: i) MRF Corp Ltd
ii) MRF International Ltd
iii) MRF Lanka (Private) Ltd.
iv) MRF SG Pte Ltd
(b) Names of other related parties and nature of relationship:
Key Management Personnel: i) Mr. K.M. Mammen, Chairman and Managing Director
ii) Mr. Arun Mammen, Vice Chairman and Managing Director (w.e.f. 04th May, 2017)
Managing Director (Upto 03rd May, 2017)
iii) Mr. Rahul Mammen Mappillai, Managing Director (w.e.f. 04th May, 2017)
Whole time Director (Upto 03rd May, 2017)
iv) Mr. Samir Thariyan Mappillai, Whole time Director (w.e.f. 04th August, 2017)
v) Mr. Varun Mammen ,Whole time Director (w.e.f. 04th August, 2017)
vi) Mr.Ravi Mannath, Company Secretary
vii) Mr. Madhu P Nainan, Vice President Finance
Relatives of Key Management i) Mrs. Ambika Mammen,Director (Wife of Chairman and Managing Director)
Personnel: ii) Dr.(Mrs) Cibi Mammen,Director (Wife of Vice Chairman and Managing Director)
iii) Mr. Samir Thariyan Mappillai (Son of Chairman and Managing Director)
iv) Mrs.Meera Mammen (Mother of Mr Varun Mammen)
Companies in which Directors
are interested: Badra Estate & Industries Limited, Devon Machines Pvt Ltd, Coastal Rubber Equipments Pvt Ltd
Comprehensive Investments & Finance Co.Pvt Ltd, Kirloskar Electric co Ltd, Braga Industries LLP,
Funskool (India) Ltd, Pandalur Plantations Pvt Ltd, Gokul Rubber & Tea Plantations Ltd, VPC Freight Forwarders Pvt Ltd., Madras Christian College, MM Rubber Company Ltd, Chennai International Centre.
Other Related Parties: Mr. Jacob Kurian- Director, MRF Ltd Executives Provident Fund Trust, MRF Management Staff Gratuity Scheme,
MRF Employees Gratuity Scheme, MRF Managers'' Superannuation Scheme.
iv) Companies in which Directors are interested:
Purchase of Raw Materials/ Coastal Rubber Equipments Pvt Ltd - '' 62.45 C rores (Previous Year - '' 56.19 Crores), Devon Machines
Components/Machinery Pvt Ltd - '' 16.88 Crores (Previous Year - '' 20.82 Crores), Braga Industries LLP - '' 83.05 Crores
(Previous Year - '' 84.76 Crores), and Others - '' Nil (Previous Year - '' 0.01 Crores)
Selling & Distribution Expenses Funskool (India) Ltd - '' 1.40 Crores. (Previous Year - '' 1.05 Crores)
Payment towards Services VPC Freight Forwarders Pvt Ltd - '' 3.32 Crores (Previous Year - '' 5.94 Crores), Coastal Rubber
Equipments Pvt Ltd - Rs, 1.69 Crores (Previous Year - Rs, 1.39 Crores), Braga Industries LLP - Rs, 0.64 Crores (Previous Year - Rs, 0.60 Crores), Madras Christian College - Rs, 0.08 Crores (Previous Year - Rs, 0.13 Crores), M M Rubber Company Ltd - Rs, 0.05 Crores (Previous Year - Rs, Nil), Chennai International Centre -Rs, 0.03 Crores (Previous Year - Rs, 0.02 Crores), Kirloskar Electric Company Limited - Rs, 0.10 Crores (Previous Year - Rs, 0.02 Crores).
Lease Rent Received Funskool (India) Ltd - Rs, 1.18 Crores (Previous Year- Rs, 1.14 Crores).
Sale of Materials Funskool (India) Ltd - Rs, 0.01 Crores (Previous Year- Rs, 0.03 Crores).
Balance Outstanding:
Payable Devon Machines Pvt Ltd - Rs, 0.22 Crores (Previous Year - Nil), Coastal Rubber Equipment Pvt Ltd -
Rs, 1.07 Crores (Previous Year - Nil), Braga Industries LLP - Rs, 11.04 Crores (Previous Year - Rs, 11.76 Crores).
Receivable Funskool (India) Ltd - Rs, 0.26 Crores (Previous Year-Rs, 0.14 Crores).
v) Other Related Parties:
Professional Charges Mr.Jacob Kurien - Rs, 0.14 Crores (Previous Year - Rs, 0.16 Crores).
Contributions MRF Ltd Executives Provident Fund Trust - Rs, 9.95 Crores(Previous Year-Rs, 8.47 Crores), MRF Management
Staff Gratuity Scheme - Rs, 9.20 Crores (Previous Year - Rs, 5.23 Crores), MRF Employees Gratuity Scheme -Rs, 15.80 Crores (Previous Year - Rs, 0.77 Crores), MRF ManagersRs, Superannuation Scheme - Rs, 13.97 Crores (Previous Year - Rs, 11.89 Crores).
Balance Outstanding:
Contributions Payable MRF Ltd Executives Provident Fund Trust - Rs, 0.87 Crores (Previous Year - Rs, 0.74 Crores), MRF
Management Staff Gratuity Scheme - Rs, 17.64 Crores (Previous Year - Rs, 17.76 Crores), MRF Employees Gratuity Scheme - Rs, 18.73 Crores (Previous Year - Rs, 19.59 Crores).
d) Terms and conditions of transactions with related parties:
The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31st March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (Previous Year - Nil). This assessment is undertaken in each financial year through examining the financial position of the related party and the market in which the related party operates.
h. Disclosures as per IND AS - 19 - Employee Benefits
1) The contributions to MRF Limited Executives Provident Fund Trust is a defined benefit plan in terms of the definition mentioned in para 7 of IND AS -19 the accounting for which is to be done on an actuarial basis. The actuary has provided a valuation of provident fund liability based on the assumptions listed below and determined that there is no shortfall as at 31st March, 2018 and for the year ended 31st March 2017.
The assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are:
Projection is restricted to five years or earlier, if retirement occurs.
Expected guaranteed interest rate - 8.55%( Previous Year -8.65%)
Discount rate - 8.58% (Previous Year - 7.81%)
(ii) Capital Expenditure on research and development ( excluding Building) during the year, as certified by the management is Rs, 98.86 Crores (Previous year - Rs, 97.72 Crores).
This information complies with the terms of the R & D recognition granted upto 31st March, 2018 for the Company''s in-house Research and Development activities by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India, vide their Letter No.TU/IV-RD/118/2014 dated 15th March, 2018. j. Terms of Repayment and Security Description of Borrowings:
a) Current Borrowings
Loans repayable on demand from banks are secured by hypothecation of Inventories and book debts ,equivalent to the outstanding amount and carries interest rates at the rate of 7.85% to 9.75% (Previous year - 8.25% to 9.75 %)
Rupee Export Packing Credit is repayable within a year and carries interest rates at the rate of 5.77% to 7.95% (Previous year - Nil)
Buyer''s Line of Credit from banks are secured by hypothecation of Inventories and book debts, equivalent to the outstanding amount and are repayable within a year and carries interest at the rate of LIBOR plus 4bps to LIBOR plus 60bps (Previous year LIBOR plus 15bps and LIBOR plus
25bps)
b) Non-Current Borrowings
i) ECB from The Bank of Tokyo - Mitsubishi UFJ, Ltd. availed in December, 2011-USD 40 Million is secured by a first charge on Plant and Machinery situated at Puduchery Unit. Equivalent to the outstanding amount and interest is payable at a rate equal to the 6 months BBA LIBOR plus margin of 1.55%( Previous year - 6 months BBA LIBOR plus margin of 1.55%) payable half-yearly. The said loan is fully hedged and is repayable in three equal annual instalments at the end of the fourth, fifth and sixth year beginning October, 2015.This loan got fully repaid in the financial year 2017-18.
ii) The principal amount of Debentures, interest, remuneration to Debenture Trustees and all other costs, charges and expenses payable by the company in respect of Debentures are secured by way of a legal mortgage of Company''s land at Taluka Kadi, District Mehsana, Gujarat and hypothecation by way of a first charge on Plant and Machinery at the Company''s plants at Perambalur, near Trichy, Tamil Nadu, equivalent to the outstanding amount.
iii) ECB(Unsecured) from the Bank of Tokyo- Mitsubishi UFJ, Ltd:
a) USD 15 Million availed in October, 2013 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.50%(Previous year- six months USD LIBOR plus margin of 1.50%) payable half-yearly. The said Loan is fully hedged and is repayable in three equal annual installments at the end of fourth, fifth and sixth year beginning October, 2017.
b) USD 20 Million availed in May, 2015 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.00%(Previous year-six months USD LIBOR plus margin of 1.00%) payable half-yearly. The said Loan is fully hedged and is repayable in three equal annual installments at the end of fourth, fifth and sixth year beginning May,2019.
iv) ECB(Unsecured) from the Mizuho Bank, Ltd:
a) USD 15 Million availed in January, 2014 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.50%(Previous year- six months USD LIBOR plus margin of 1.50%) payable half-yearly. The said Loan is fully hedged and is repayable in three equal annual installments at the end of fourth, fifth and sixth year beginning January, 2018.
b) USD 25 Million availed in February, 2015 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.00%(Previous year- six months USD LIBOR plus margin of 1.00%) payable half-yearly. The said Loan is fully hedged and is repayable in three equal annual installments at the end of fourth, fifth and sixth year beginning February, 2019.
v) ECB(Unsecured) from the CITI Bank availed in January,2015 amounting to USD 20 Million is for capital expenditure. Interest is payable at a rate equal to the six months BBA LIBOR plus margin of 1.30% (Previous year- six months BBA LIBOR plus margin of 1.30%) payable half-yearly. The said Loan is fully hedged and is repayable in three equal annual installments at the end of fourth, fifth and sixth year beginning January, 2019.
vi) ECB(Unsecured) from the HSBC Bank:
a) USD 20 Million availed in October, 2015 is for capital expenditure. Interest is payable at a rate equal to the six months BBA LIBOR plus margin of 1.25% (Previous year- six months BBA LIBOR plus margin of 1.25%) payable half-yearly. The said Loan is fully hedged and is repayable in three equal annual installments at the end of fourth, fifth and sixth year beginning 0ctober,2019.
b) USD 45 Million availed in December, 2017 is for capital expenditure. Interest is payable at a rate equal to the six months BBA LIBOR plus margin of 0.80% payable half-yearly (Previous year- Not applicable). The said Loan is fully hedged and is repayable in one full installment in December, 2022.
vii) Buyers Line of Credit (Unsecured) of USD 24.82 Million availed from CITI Bank for Capital Expenditure is repayable after 2 years and 364 days beginning in March, 2017 at varied interest rates as applicable on different drawdown dates. The said Loan is fully hedged. This loan got fully repaid in the financial year 2017-18.
viii) Interest free Unsecured Loan availed under Sales tax Deferral Scheme is repayable yearly and to end on 1st April, 2019.
ix) Deferred payment credit is repayable along with interest (at varying rates) in 240 consecutive monthly installments ending in March, 2026.
x) Fixed Deposits are Unsecured and are repayable as per the terms with interest rate of 9.50%. (Previous year - 8.50% to 9.50%)
k. Events Occuring after the Balance Sheet date
The proposed final dividend for Financial Year 2017-18 amounting to Rs, 22.90 Crores will be recognized as distribution to owners during the financial year 2018-19 on its approval by Shareholders. The proposed final dividend per share amounts to Rs, 54/-
l. Estimated amount of contracts remaining to be executed on Capital Account, net of advances and not provided for - Rs, 942.70 Crores (Previous Year -Rs, 1086.57 Crores).
n. Corporate Social Responsibility:
As per Section 135 of the Companies Act,2013, a Company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility( CSR) Activities. A CSR Committee has been formed by the Company as per the Act. The funds were primarily allocated to the activities which are specified in Schedule VII of the Companies Act, 2013.
a) Gross amount required to be spent by the company during the year is Rs, 43.04 Crores (Previous Year - Rs, 39.24 Crores).
b) Amount spent during the year on: Rs, Crores
o. Contingent Liabilities not provided for:
(i) Guarantees given by the Banks - Rs, 37.56 Crores (Previous Year - Rs, 35.49 Crores)
(ii) Letters of Credit issued by the Banks - Rs, 97.69 Crores (Previous Year - Rs, 153.92 Crores)
(iii) Claims not acknowledged as debts:
(a) Disputed Sales Tax demands pending before the Appellate Authorities - Rs, 48.39 Crores ( Previous Year- Rs, 38.61 Crores).
(b) Disputed Excise/Customs Duty demands pending before the Appellate Authorities/High Court - Rs, 98.23 Crores (Previous Year - Rs, 86.42 Crores).
(c) Disputed Income Tax Demands - Rs, 127.60 Crores (Previous Year - Rs, 79.01 Crores) Against the said demand the company has deposited an amount of Rs, 31.96 Crores.
(d) Contested EPF Demands pending before Appellate Tribunal- Rs, 1.10 Crores ( Previous year - Rs, 1.10 Crores).
p. The amount due and paid during the year to "Investor Education and Protection Fund" is Rs, 0.54 Crores (Previous year - Rs, 0.05 Crores).
Mar 31, 2017
Note 1 - Standalone Accounting Policies under IND AS
A) General Information
MRF Limited (the âCompanyâ) is a limited company, incorporated on 5th November, 1960 in India, whose shares are publicly traded.
The Company is Indiaâs largest tyre manufacturer and ranked amongst the Top 20 Global Manufacturers, with 9 state-of-the-art factories across India. It is also Indiaâs largest Original Equipment Manufacturer (OEM) tyre supplier with an expansive tyre range from two-wheelers to fighter aircrafts.
The Registered Office is located at No.114, Greams Road, Chennai-600 006.
The Company is the ultimate parent of MRF Limited Group.
B) Basis of preparation of financial statements
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented.
The Company has adopted the Indian Accounting Standards (Ind ASâ) in accordance with Ind AS 101 - First Time Adoption of Indian Accounting Standards. The Company has transited from its previous GAAP as defined in Ind AS 101 with the necessary disclosures relating to reconciliation of Shareholders equity under Previous GAAP and Ind AS and of the net profit as Previous GAAP and Total Comprehensive Income Under Ind AS. Refer Note 24 (a), (b), (c).
i. Statement of Compliance
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (referred to as âIND ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2016. These financial statements have been prepared in accordance with IND AS as prescribed under Section 133 of the Companies Act, 2013 read together with the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto.
The Financial Statement for the year ended 31st March, 2017 is the first Financial Statement, the Company has prepared in accordance with IND AS. (Refer Para D below for the details of first-time adoption exemptions availed by the Company.)
ii. Basis of preparation and presentation
The financial statements have been prepared on historical cost basis considering the applicable provisions of Companies Act 2013, except for the following items that have been measured at fair value as required by relevant IND AS. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services at the time of initial recognition.
a) Certain financial assets/liabilities measured at fair value (refer accounting policy regarding financial instruments) and
b) Any other item as specifically stated in the accounting policy.
The Financial Statement are presented in INR and all values are rounded off to Rupees Crores unless otherwise stated.
The financial statements of the Company for the year ended 31st March, 2017 were authorised for issue in accordance with a resolution of the directors on 4th May, 2017.
iii. Comparative Reporting Period
In view of the requirement of Companies Act, 2013, regarding uniform financial year for all Companies, the Company changed its financial year end from 30th September to 31st March. The company had reported for 18 months from 1st October 2014 to 31st March 2016 under previous GAAP. Therefore, the comparative reporting period for the company is of 18 months from 1st October 2014 to 31st March 2016. In view of the reporting period of current year and comparative period not being same, the financial statements are not entirely comparable.
iv. Use of Estimate and judgment
In the application of accounting policy which are described in Para C below, the management is required to make judgment, estimates and assumptions about the carrying amount of assets and liabilities, income and expenses, contingent liabilities and the accompanying disclosures that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant and are prudent and reasonable. Actual results may differ from those estimates. The estimates and underlying assumptions are reviewed on ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future period.
The few critical estimations and judgments made in applying accounting policies are:
Property, Plant and Equipment:
Useful life of Property, Plant and Equipment and Intangible Assets are as specified in Schedule II to the Companies Act, 201 3 and on certain assets based on technical advice which considered the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support.
Inventories:
Inventory obsolescence is based on assessment of the future uses. In all cases, inventory is carried at the lower of historical cost and net realisable value.
Lease:
Lease accounting after evaluating the right to use the underlying assets, substance of the transactions including legally enforceable arrangements and other significant terms and conditions of the arrangement to conclude whether the arrangements meet the criteria under IND AS 1 7.
Impairment of Non-financial Assets:
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or CGUâs fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.
Impairment of Financial Assets:
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Defined Benefit Plans:
The cost of the defined benefit plan and other postemployment benefits and the present value of such obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and attrition rate. Due to the complexities involved in the valuation and its long-term nature, a defined benefit 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 recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
NOTE 2 (a) - FOOTNOTES TO THE RECONCILIATION OF EQUITY AS AT 1ST OCTOBER, 2014 AND 31ST MARCH, 2016 AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ENDED 31ST MARCH, 2016
i) FVTPL Financial Assets:
Under previous GAAP, the Company accounted for non-current/ current investments in quoted equity shares and unquoted mutual funds units at cost less provision for other than temporary diminution in the value of investments and at lower of cost and share value respectively. Under Ind-AS, the investments are required to be classified and measured subsequently at fair value through profit or loss. At the date of transition to Ind-AS, difference between the fair value and GAAP carrying amount of Rs.195.39 Crores has been recognised in the retained earnings. The impact of Rs.167.71 Crores as at 31st March, 2016 has been recognised in the statement of profit and loss.
ii) Derivatives:
Under previous GAAP, the company recognised derivatives if the fair value of the derivative resulted in loss in the Statement of Profit or Loss. Derivatives resulting in gains in the Statement of Profit and Loss were not recognised. Ind AS requires all derivatives to be recognised whether they result in loss or gain. All derivatives have been recognised at fair value. The effective portion of the changes in fair value of interest rate swaps designated as hedging instrument under cash flow hedge relating to risk being hedged is recognised in Other Comprehensive Income. The changes in fair value of undesignated derivatives are recognised in retained earnings on the date of transition and in finance costs after the date of transition. However, none of the derivatives designated as hedge, were ineffective during the reporting period. The impact on account of recognition of derivatives in the Other Comprehensive Income for the period ended 31 March 2016 is Rs.6.08 Crores (Net of Tax of Rs.3.21 Crores) and Rs.5.18 Crores (Net of Tax of Rs.2.74 Crores) as at the date of transition.
iii) Other Payables:
Under previous GAAP, proposed dividend including Dividend
Distribution Tax are recognised as a liability in the period to which they relate, irrespective of when they are declared. Under Ind-AS, dividend is recognised as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting).
Accordingly, the liability of Rs.22.39 Crores for the year ended on 30th September, 2014 recorded for proposed dividend has been derecognised against retained earnings on 1st October, 2014. The proposed dividend for the period ended on 31st March 2016 of Rs.47.99 Crores recognised under Indian GAAP was reduced from other payables and with a corresponding impact in the retained earnings.
iv) Defined Benefit Obligation:
Both under previous GAAP and Ind-AS, the Group recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to statement of profit and loss. under Ind-AS, re-measurements comprising of actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions, the effect of change in asset ceiling (if applicable) and the return on plan assets (excluding net interest) are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income (OCI). Thus, the employee benefit cost is reduced by Rs.16.36 Crores (Net of Tax of Rs.8.66 Crores) as at 31st March, 2016 and re-measurement losses on defined benefit plans has been recognised in the Other Comprehensive Incomes (net of tax)
v) Other Comprehensive Income:
Under previous GAAP, the Company has not presented Other Comprehensive Income (OCI) separately. Hence, it has reconciled previous GAAP profit to profit as per Ind-AS. Further, Indian GAAP profit is reconciled to total comprehensive income as per Ind-AS.
vi) Deferred Tax
Under previous GAAP, the deferred tax was calculated on income statement approach whereas Ind AS requires deferred tax to be recognised on balance sheet liability method. This change in the concept of recognition and measurement has resulted in an increase of deferred tax liability of Rs.15.30 Crores on transition date with corresponding decrease in retained earnings. Further, the impact during the previous period ended 31 March 2016 was net decrease in the total comprehensive income for the period of Rs.37.63 Crores
vii) Other IND AS Adjustments (Non Current Financial Assets / liabilities and provisions)
Under previous GAAP, the Company accounted for non-current Financial Assets / liabilities and provisions at undiscounted values. In contrast, the IND AS requires that where the effect of time value of money is material, the amount of Non Current Financial Assets / liabilities and provisions should be the present value of expenditure / income expected to be required to settle the obligations / received upon maturity. This impact is recognised as an Interest Income or as other borrowing cost.
viii) Non Current Assets
The Company has elected to measure certain advances at fair value at the date of transition to IND AS. Accordingly, at the date of transition to IND AS on 1st October 2014 a decrease of Rs.1.58 Crores and Rs.0.11 Crores for the period ended 31st March 2016 has been recognised as an expenses on de-recognition of the asset.
NOTE 3 : A. Capital Management
For the purpose of Companyâs Capital Management, capital includes Issued Equity Capital, Securities Premium, and all other Equity Reserves attributable to the Equity Holders of the Company. The primary objective of the Companyâs Capital Management is to maximise the Share Holder Value.
The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and requirements of the financial covenants and to continue as a going concern. The Company monitors using a gearing ratio which is net debts divided by total capital plus net debt. The company includes within net debt, interest bearing loans and borrowings, less cash and short term deposit.
B. Financial Risk Management
The Companyâs principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include trade and other receivables, investments in mutual funds and cash and short term deposits.
The Company has assessed market risk, credit risk and liquidity risk to its financial liabilities.
i) Market Risk
Is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks. Financial instruments affected by market risks, primarily include loans & borrowings, investments and foreign currency receivables, payables and borrowings.
In order to optimise and manage the companyâs interest rate risk, the treasury performs a comprehensive risk management policy by balancing the portion of fixed rate and floating rate financial instruments in its total portfolio. The Company due to its AAA rated status commands one of the cheapest source of funding. Interest rate is fixed for the tenor of the term loans availed by the Company. Interest on borrowings subject to floating interest rate are repriced regularly. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the average outstanding amounts due to bankers over a year.
If the interest rates had been 1% higher / lower and all other variables held constant, the companyâs profit for the year ended 31st March, 2017 would have been decreased/ increased by Rs.2.48 crores.
The Company is not exposed to significant risk with regard to foreign currency borrowing and payables.
The foreign currency loans are designated as cash flow hedges and are fully covered for the tenor of the loan. As regards foreign currency trade transactions, net exposure on a month on month basis, is fully covered.
The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities like Natural Rubber, Synthetic Rubber and other Chemicals, the Company enters into purchase contracts on a short term and forward foreign exchange contracts(matching the purchase contracts) are entered into to minimise price fluctuations.
ii) Credit Risk
Is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from cash and cash equivalents, investments as well as credit exposure to customers.
The Company holds cash and cash equivalents with banks which are having highest safety rankings and hence has a low credit risk.
Investments in mutual funds are primarily debt funds, which have high safety ratings and are monitored on a monthly basis and the Company is of the opinion that its mutual fund investments have low credit risk.
The Companyâs marketing policies are well structured and all replacement sales are predominantly through dealers and the outstanding are secured by dealer deposits. As regards sales to O.E. and other institutional sales, the Company carries out periodic credit checks and also limits the exposure by establishing maximum payment period for customers and by offering prompt payment discounts, etc. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31 March 2017 is 0.35% of the total trade receivables.
iii) Liquidity Risk
The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.
The Company has a system of forecasting rolling three months cash inflow and outflow and all liquidity requirements are planned.
All Long term borrowings are for a fixed tenor and generally these cannot be foreclosed.
The Company has access to various source of Short term funding and debit maturing within 12 months can be rolled over with existing lenders/new lenders, or repaid based on short term requirements.
Trade and other payables are plugged into the three months rolling cash flow forecast to ensure timely funding, if required.
All payments are made along due dates and requests for early payments are entertained after due approval and availing early payment discounts.
NOTE 4 : FAIR VALUES AND HIERARCHY
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The Fair value of financial assets and liabilities included is the amount at which the instrument could be exchanged in a current transaction between willing parties. The following methods and assumptions were used to estimate the fair value.
1. The Fair values of Mutual Funds and Quoted Equities are based on NAv / Quoted Price at the reporting date. Further, the Company had invested in Co-operative Societies and in certain other companies towards the corpus. These are non participative shares and normally no dividend is accrued. The Company has carried these investments at it transaction value considering it to be its fair value.
2. The Company enters into Derivative financial instruments with counterparties principally with Banks with investment grade credit ratings. The Interest Rate swaps, foreign exchange forward contracts are valued using valuation techniques which employs the use of market observable inputs namely, Marked-to-Market.
a. Disclosures required under Section 186(4) of the Companies Act,2013:
(i) The Company has given Corporate guarantees to bankers on behalf of Subsidiary Companies for general business purposes in the earlier year amounting to Rs.854.85 Crores. The said guarantees have been cancelled during the period ended 31st March, 2016.
(ii) Refer Note 3 for Investments
b. Terms of Repayment and Security Description of Borrowings:
a) Current Borrowings
Loans repayable on demand from banks are secured by hypothecation of Inventories and book debts and carries interest rates at the rate of 8.25% to 9.75% (Previous period 9.35% to 10.50 %)
Buyerâs Line of Credit is repayable within a year and carries interest at the rate of LIBOR plus 15bps to LIBOR plus 25bps (Previous period LIBOR plus 25bps and LIBOR plus 40bps)
b) Non Current Borrowings
i) ECB from The Bank of Tokyo - Mitsubishi uFJ, Ltd. availed in December 2011-uSD 40 Million is secured by a first charge on Plant and Machinery situated at Puduchery Unit. Interest is payable at a rate equal to the 6 months BBA LIBOR plus margin of 1.55% (31.03.2016 and 01.10.2014- 6 months BBA LIBOR plus margin of 1.55%) payable half-yearly. The said loan is fully hedged and is repayable in three equal annual instalments at the end of the fourth, fifth and sixth year beginning October, 2015.
ii) The principal amount of Debentures, interest, remuneration to Debenture Trustees and all other costs, charges and expenses payable by the company in respect of Debentures are secured by way of a legal mortgage of Companyâs land at Taluka Kadi, District Mehsana, Gujarat and hypothecation by way of a first charge on Plant and Machinery at the companyâs plants at Perambalur, near Trichy, Tamil Nadu, equivalent to the outstanding amount.
iii) ECB(Unsecured) from the Bank of Tokyo- Mitsubishi UFJ, Ltd
a) USD 15 Million availed in October,2013 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.50%(31.03.2016 and 01.10.2014- six months USD LIBOR plus margin of 1.50%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning October,2017.
b) USD 20 Million availed in May,2015 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.00%(31.03.2016-six months USD LIBOR plus margin of 1.00%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning May,2019.
iv) ECB(Unsecured) from the Mizuho Bank, Ltd
a) USD 15 Million availed in January,2014 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.50%(31.03.2016 and 01.10.2014- six months USD LIBOR plus margin of 1.50%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning January,2018.
b) USD 25 Million availed in February,2015 is for capital expenditure. Interest is payable at a rate equal to the six months USD LIBOR plus margin of 1.00%(31.03.2016- six months USD LIBOR plus margin of 1.00%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning February,2019.
v) ECB(Unsecured) from the CITI Bank availed in January,2015 amounting to USD 20 Million is for capital expenditure. Interest is payable at a rate equal to the six months BBA LIBOR plus margin of 1.30% (31.03.2016- six months BBA LIBOR plus margin of 1.30%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning January, 2019.
vi) ECB(Unsecured) from the HSBC Bank availed in October,2015 amounting to USD 20 Million is for capital expenditure. Interest is payable at a rate equal to the six months BBA LIBOR plus margin of 1.25% (31.03.2016- six months BBA LIBOR plus margin of 1.25%) payable half yearly. The said Loan is fully hedged and is repayable in three equal annual instalments at the end of fourth, fifth and sixth year beginning October,2019.
vii) Buyers Line of Credit (Unsecured) of USD 24.82 Million availed from CITI Bank for Capital Expenditure is repayable after 2 years and 364 days beginning in March 2017 at varied interest rates as applicable on different drawdown dates. The said Loan is fully hedged.
viii) Interest free Unsecured Loan availed under Sales tax Deferral Scheme is repayable yearly and to end on 1st April, 2019.
ix) Deferred payment credit is repayable along with interest( at varying rates) in 240 consecutive monthly instalments ending in March 2026.
x) Fixed Deposits are Unsecured and are repayable as per the terms with interest rates of 8.50% to 9.50%.(Previous year 8.50% to 9.50%)
c. Commitment
(i) Estimated amount of contracts remaining to be executed on Capital Account, net of advances and not provided for - Rs.1086.57 Crores (Previous Period Rs.650.59 Crores).
(ii) Customs Duty on import of equipments and spare parts under EPCG Scheme - Rs.238.48 Crores (31.03.2016 - Rs.162.76 Crores, 01.10.2014Rs.161.36 Crores).
d. Contingent Liabilities not provided for:
(i) Guarantees given by the Banks - Rs.35.49 Crores (Previous Period - Rs.47.33 Crores).
(ii) Letters of Credit issued by the Banks - Rs.153.92 Crores (Previous Period - Rs.85.90 Crores).
(iii) Claims not acknowledged as debts:
a) Disputed Sales Tax demands pending before the Appellate Authorities - Rs.38.61 Crores (Previous Period - Rs.23.05 Crores).
b) Disputed Excise/Customs Duty demands pending before the Appellate Authorities/High Court - Rs.86.42 Crores (Previous Period - Rs.76.07 Crores).
c) Disputed Income Tax Demands - Rs.79.01 Crores (Previous Period - Rs.30.74 Crores). Against the said demand the company has deposited an amount of Rs.15.98 Crores.
d) Contested EPF Demands pending before Appellate Tribunal- Rs.1.10 Crores (Previous Period - Rs.1.10 Crores).
e. Previous period figures have been regrouped/ rearranged, wherever necessary.
Sep 30, 2014
A. The Company''s leasing arrangements are in respect of operating
leases for premises (residential, office, godowns, etc). The leasing
arrangements, which are not non-cancellable, range between eleven
months and three years generally, and are usually renewable by mutual
consent on agreed terms. The aggregate lease rentals payable are
charged as rent.
b. Movement in provisions as required by Accounting Standard 29
"Provisions, Contingent Liabilities and Contingent Asset".
c. Provision for Taxation has been made in respect of the income
presently determined for the period 1st April, 2014 to 30th September,
2014 which is subject to appropriate revision/adjustment on final
determination of income for the year to end on 31st March, 2015,
relevant to assessment year 2015-16. Further, provision for the
assessment year 2014-15 has been determined and adjusted considering
the provision already made in the accounts for the year ended 30th
September, 2013.
d. Related party disclosures:
(a) Names of related parties and nature of relationship where control
exists are as under:
Subsidiary Companies:
i) MRF Corp Ltd.
ii) MRF International Ltd.
iii) MRF Lanka (Private) Ltd.
iv) MRF SG Pte Ltd. ( w.e.f. 23rd July, 2014) - Ref Note q
(b) Names of other related parties and nature of relationship:
Key Management Personnel: i) Mr. K M Mammen, Chairman & Managing
Director
ii) Mr. K M Philip, Whole-time Director
iii) Mr. Arun Mammen, Managing Director
iv) Mr. Rahul Mammen Mappillai, Whole-time Director
v) Mr. Ravi Mannath, Company Secretary (w.e.f. 1st April, 2014)
vi) Mr. Madhu P Nainan, Vice President Finance (w.e.f. 1st April, 2014)
Relatives of Key Management Personnel: Mr. Samir Thariyan Mappillai
(Son of Chairman & Managing Director)
e. The Company is engaged mainly in the manufacture of Rubber Products
such as Tyres, Tubes, Flaps, Tread Rubber and Conveyor Belt. These in
the context of Accounting Standard 17 on Segment Reporting are
considered to constitute one single primary segment. The Company''s
operations outside India do not exceed the quantitative threshold for
disclosure envisaged in the Accounting Standard. Non-reportable
segments has not been disclosed as unallocated reconciling item in view
of its materiality. In view of the above, primary and secondary
reporting disclosures for business/geographical segment are not
applicable to the Company.
f. The Micro, Small and Medium Enterprises Development Act, 2006
(''MSMED''):
The information given below and that given in Note 9 ''Trade Payables''
regarding Micro, Small and Medium Enterprises has been determined to
the extent such parties have been identified on the basis of
information available with the company.
g. The total borrowing cost capitalised during the year is Rs. 18.18
crore (Previous year - Rs. 5.29 crore).
h. a) In terms of the guidance on implementing the revised AS 15 issued
by the Accounting Standard Board of the Institute of Chartered
Accountants of India, the Provident Fund Trust set up by the Company is
treated as Defined Benefit Plan since the Company has to meet the
shortfall in the fund assets,and interest based on the Government
specified minimum rate of return, if any. However, as at the year end,
no shortfall remains unprovided for. Further, having regard to the
assets of the Fund and the Return on the Investments, the Company does
not expect any deficiency in the foreseeable future. In terms of the
guidance note issued by the Institute of Actuaries of India, the
actuary has provided a valuation of provident fund liability based on
the assumptions listed below and determined that there is no shortfall
as at 31st March, 2014.
The assumptions used in determining the present value of obligation of
the interest rate guarantee under deterministic approach are:
Projection is restricted to five years or earlier, if retirement
occurs.
Expected guaranteed interest rate - 8.75%
Discount rate - 8.00%
i) The group gratuity Policy with LIC includes employees of Speciality
Coating division divested effective 1st April, 2011.
(ii) Capital Expenditure on research and development during the year,
as certified by the management is Rs. 5.44 crore (Previous Year - Rs. 4.22
crore). This information complies with the terms of the R&D
recognition granted upto 31st March, 2018 for the Company''s in-house
Research and Development activities by the Department of Scientific and
Industrial Research, Ministry of Science and Technology, Government of
India, vide their Letter No. TU/IV-RD/118/2014 dated 6th June, 2014.
j. Terms of Repayment and Security Description of Long Term Borrowings:
i) ECB from The Bank of Tokyo - Mitsubishi UFJ, Ltd. availed in
December 2011-USD40 Million is secured by a first charge on Plant and
Machinery situated at Puduchery Unit. Interest is payable at a rate
equal to the 6 months BBA LIBOR plus margin of 1.55% payable
half-yearly. The said loan is fully hedged and is repayable in three
equal annual instalments at the end of the fourth, fifth and sixth year
beginning October, 2015.
iii) ECB(Unsecured) from the Bank of Tokyo - Mitsubishi UFJ, Ltd.
availed in October, 2013 amounting to USD 15 Million is for capital
expenditure. Interest is payable at a rate equal to the six months BBA
LIBOR plus margin of 1.50% payable half yearly. The said Loan is fully
hedged and is repayable in three equal annual instalments at the end of
fourth, fifth and sixth year beginning October, 2017.
iv) ECB(Unsecured) from the Mizuho Bank, Ltd. availed in January, 2014,
amounting to USD 15 Million is availed for capital expenditure.
Interest is payable at a rate equal to the six months USD LIBOR plus
margin of 1.50% payable half yearly. The said Loan is fully hedged and
is repayable in three equal annual instalments at the end of fourth,
fifth and sixth year beginning January, 2018.
v) Buyers Line of Credit (Unsecured)of USD 24.09 Million availed from a
Bank for Capital Expenditure is repayable after 2 years and 364 days
beginning in March, 2017 at varied interest rates as applicable on
different drawdown dates. The said Loan is fully hedged.
vi) Interest free Unsecured Loan availed under Sales tax Deferral
Scheme is repayable yearly and to end on 1st April, 2019.
vii) Deferred payment credit is repayable along with interest (at
varying rates) in 240 consecutive monthly instalments ending in March,
2026.
viii) Fixed Deposits are Unsecured and are repayable as per the terms
with interest rates ranging from 8.5% to 9.5%
k. Estimated amount of contracts remaining to be executed on Capital
Account, net of advances and not provided for - Rs. 1,460.46 crore
(Previous year Rs. 1,031.68 crore)
l. The Company has during the year incorporated a wholly owned
subsidiary in Singapore under the name MRF SG Pte Ltd and has
subscribed to 10,000 ordinary shares of Singapore Dollar 1 each for Rs.
0.05 crore. An amount of Rs. 6.06 crore was paid as share application
money for subscribing to 12,63,200 ordinary shares of Singapore Dollar
1 each which has been issued on the 1st of October, 2014.
m. Contingent Liabilities not provided for:
(i) Guarantees given by the Banks - Rs. 35.18 crore (Previous year - Rs.
39.53 crore)
(ii) Corporate Guarantees given to Banks for and on behalf of wholly
owned Subsidiaries - Rs. 310.85 crore (Previous year - Rs. 1.88 crore)
(iii) Letters of Credit issued by the Banks - Rs. 466.05 crore (Previous
year - Rs. 317.38 crore)
(iv) Customs Duty on import of equipments and spare parts under EPCG
Scheme - Rs. 161.36 crore (Previous year - Rs. 97.25 crore)
(v) Bills discounted with a bank - Rs. 22.14 crore (Previous year - Rs.
3.23 crore).
(vi) Claims not acknowledged as debts:
(a) Disputed Sales Tax demands pending before the Appellate Authorities
- Rs. 18.18 crore (Previous year - Rs. 17.38 crore)
(b) Disputed Excise/Customs Duty demands pending before the Appellate
Authorities/High Court - Rs. 80.31 crore (Previous year - Rs. 79.66 crore)
(c) Disputed Income Tax Demands - Rs. 63.34 crore (Previous year - Rs.
58.13 crore). Against the said demand, the Company has deposited an
amount of Rs. 55.02 crore.
(d) Contested EPF Demands pending before Appellate Tribunal - Rs. 1.10
crore (Previous year - Rs. NIL).
n. Figures are rounded off to nearest lakh.
Sep 30, 2013
A. The Company''s leasing arrangements are in respect of operating
leases for premises (residential, office, godowns, etc). The leasing
arrangements, which are not non-cancellable, range between eleven
months and three years generally, and are usually renewable by mutual
consent on agreed terms. The aggregate lease rentals payable are
charged as rent.
Notes :
(i) Cash outflow towards warranty provision would generally occur
during the next two years. Such claims are netted off from sales.
(ii) Litigation and related disputes represents estimates mainly for
probable claims arising out of litigation/disputes pending with
authorities under various statutes (i.e. service tax, excise & customs
duty, electricity/fuel surcharge, cess, etc). The probability and the
timing of the outflow with regard to these matters will depend on the
consequent decision/conclusion by the Management.
B. Provision for Taxation has been made in respect of the income
presently determined for the period 1st April, 2013 to 30th September,
2013 which is subject to appropriate revision/adjustment on final
determination of income for the year to end on 31st March, 2014,
relevant to assessment year 2014- 15. Further, provision for the
assessment year 2013-14 has been determined and adjusted considering
the provision already made in the accounts for the year ended 30th
September, 2012.
C. The unsecured loan of Rs. 4 crore given to MRF Lanka (P) Ltd., a wholly
owned subsidiary of the Company, has been converted into 99,41,238
Equity shares of SLR 10 each during the year, after obtaining necessary
approvals.
D. The Company is engaged mainly in the manufacture of Rubber Products
such as Tyres, Tubes, Flaps, Tread Rubber and Conveyor Belt. These, in
the context of Accounting Standard 17 on Segment Reporting are
considered to constitute one single primary segment. The Company''s
operations outside India do not exceed the quantitative threshold for
disclosure envisaged in the Accounting Standard. Non-reportable
segments have not been disclosed as unallocated reconciling item in
view of its materiality. In view of the above, primary and secondary
reporting disclosures for business/geographical segment are not
applicable to the Company.
E. The total borrowing cost capitalised during the year is Rs. 5.29 crore
(Previous Year - Rs. 49.94 crore).
F. a) In terms of the guidance on implementing the revised AS 15 issued
by the Accounting Standard Board of the Institute of Chartered
Accountants of India, the Provident Fund Trust set up by the Company is
treated as Defined Benefit Plan since the Company has to meet the
shortfall in the fund assets, and interest based on the Government
specified minimum rate of return, if any. However, as at the year end,
no shortfall remains unprovided for. Further, having regard to the
assets of the Fund and the Return on the Investments, the Company does
not expect any deficiency in the foreseeable future. In terms of the
guidance note issued by the Institute of Actuaries of India, the
actuary has provided a valuation of provident fund liability based on
the assumptions listed below and determined that there is no shortfall
as at 31st March, 2013.
The assumptions used in determining the present value of obligation of
the interest rate guarantee under deterministic approach are:
Projection is restricted to five years or earlier, if retirement
occurs.
Expected guaranteed interest rate - 8.50%
Discount rate - 8.00%
(ii) Capital Expenditure on research and development during the year,
as certified by the management is Rs. 4.22 Crore (Previous Year - Rs. 7.50
Crore).
This information complies with the terms of the R & D recognition
granted upto 31st March, 2014 for the Company''s in-house Research and
Development activities by the Department of Scientific and Industrial
Research, Ministry of Science and Technology, Government of India, vide
their Letter No. TU/IV-RD/118/2010 dated 30th April, 2010.
G. Security Description and Terms of repayment of Long-Term Borrowings:
i) ECB from The Bank of Tokyo - Mitsubishi UFJ, Ltd. is secured by a
first charge on plant and machinery situated at its Pondicherry Unit.
Interest is payable at a rate equal to the 6 month BTMU LIBOR plus
margin of 1.55% payable half-yearly. The said loan is fully hedged and
is repayable in 3 equal annual installments at the end of the 4th, 5th
and 6th year beginning October 2015.
ii) The principal amount of debentures, interest, remuneration to
Debenture Trustees and all other costs, charges and expenses payable by
the Company in respect of debentures are secured by way of a legal
mortgage of Company''s land at Gujarat and hypothecation of plant and
machinery at the Company''s plants at Ankenpally, Andhra Pradesh and at
Perambalur, near Trichy, Tamil Nadu, equivalent to the outstanding
amount.
iii) Buyers Line of Credit availed from a bank for capital expenditure
is repayable after a moratorium of 3 years beginning in February 2014
at varied interest rates as applicable on different drawdown dates.
iv) Interest free unsecured loan availed under Sales tax Deferral
Scheme is repayable yearly and to end on 1st April, 2019.
v) Deferred payment credit is repayable along with interest in 240
consecutive monthly installments ending in March, 2026.
H. Estimated amount of contracts remaining to be executed on Capital
Account, net of advances and not provided for - Rs. 1031.68 Crore
(Previous year Rs. 220.28 Crore).
I. Contingent Liabilities not provided for:
(i) Guarantees given by the Banks - Rs. 41.41 Crore (Previous Year - Rs.
28.77 Crore).
(ii) Letters of Credit issued by the Banks - Rs. 317.38 Crore (Previous
Year - Rs. 183.14 Crore).
(iii) Customs Duty on import of equipments and spare parts under EPCG
Scheme - Rs. 97.25 Crore (Previous Year - Rs. 94.62 Crore).
(iv) Bills discounted with a bank - Rs. 3.23 Crore (Previous Year - Rs.
5.89 crore).
(v) Claims not acknowledged as debts:
(a) Disputed Sales Tax demands pending before the Appellate Authorities
- Rs. 17.38 Crore ( Previous Year- Rs. 1.73 Crore).
(b) Disputed Excise/Customs Duty demands pending before the Appellate
Authorities/High Court - Rs. 79.66 Crore (Previous Year - Rs. 78.65 Crore).
(c) Disputed Income Tax Demands - Rs. 58.13 Crore (Previous Year - Rs.
48.87 Crore). Against the said demand the Company has deposited an
amount of Rs. 53.62 Crore.
Sep 30, 2010
1. Sundry Debtors include dues from a subsidiary company Rs.4.97 Crore
(Previous Year - Rs.3.79 Crore).
2. Loans and Advances include:
i) Due from an Officer of the Company - Rs.0.04 Crore. Maximum balance
due at any time during the year - Rs.0.06 Crore.
(Previous Year - Rs.0.06 Crore and maximum balance due at any time
during the year Rs.0.08 Crore) ii) Due from a subsidiary company
Rs.0.20 Crore (Previous Year - Rs.0.31 Crore)
3. The Companys leasing arrangements are in respect of operating
leases for premises (residential, office, godowns, etc). The leasing
arrangements are not non-cancellable, range between eleven months and
three years generally and are usually renewable by mutual consent on
agreed terms. The aggregate lease rentals payable are charged as rent.
4. The Company decided not to exercise the option available under
Notification No.G.S.R. 225(E) dated March 31, 2009 issued by the
Government of India optionally providing for a modification in
accounting certain foreign currency items pursuant to AS-11 prescribed
under Section 211 (3C) of the Companies Act, 1956. Accordingly, the
treatment in that respect continues to be in conformity with AS-11.
5. The total borrowing cost capitalised during the year is Rs.5.90
Crore (Previous Year - Rs.12.60 Crore).
6. a) In terms of the guidance on implementing the revised AS 15
issued by the Accounting Standard Board of the Institute of Chartered
Accountants of India, the Provident Fund Trust set up by the Company is
treated as Defined Benefit Plan since the Company has to meet the
shortfall in the fund assets, if any. Pending the issuance of the
Guidance note from the Actuarial Society of India, the Companys
actuary has expressed his inability to reliably measure the Provident
Fund liability. However, as at the year end, no shortfall remains
unprovided for. Further, having regard to the assets of the Fund and
the Return on the Investments, the Company does not expect any
deficiency in the foreseeable future.
7. Interest paid to Chairman & Managing Director and Managing
Director on Fixed Deposits at the rates prescribed in the Companies
(Acceptance of Deposits) Rules, 1975 - Rs.0.24 Crore (Previous Year -
Rs.0.02 Crore). Fixed Deposits outstanding as at the year end - Rs.
3.23 Crore (Previous year - Rs.0.95 Crore)
8. Related Party disclosures:
(a) Names of related parties and nature of relationship where control
exists are as under: Subsidiary Companies: i) MRF Corp Ltd.
ii) MRF International Ltd. iii) MRF Lanka (P) Ltd.
(b) Names of other related parties with whom transactions have taken
place during the year:
Key Management Personnel (KMP): i) Mr. K.M. Mammen, Chairman & Managing
Director
ii) Mr. K.M. Philip, Whole-time Director
iii) Mr. Arun Mammen, Managing Director Relatives of Key Management
Personnel: i) Mr. Rahul Mammen Mappillai (Son of Chairman & Managing
Director)
9. The amount due and paid during the year to "Investor Education and
Protection Fund" is Rs.0.16 Crore (Previous Year - Rs.0.13 Crore).
10. The Company is engaged mainly in the manufacture of Rubber Products
such as Tyres, Tubes, Flaps, Tread Rubber and Conveyor Belt. These in
the context of Accounting Standard 17 on Segment Reporting are
considered to constitute one single primary segment. The Companys
operations outside India do not exceed the quantitative threshold for
disclosure envisaged in the Accounting Standard. Non-reportable
segments have not been disclosed as unallocated reconciling item in
view of their materiality. In view of the above, primary and secondary
reporting disclosures for business/geographical segment are not
applicable to the Company.
11. Estimated amount of contracts remaining to be executed on Capital
Account, net of advances and not provided for - Rs.778.46 Crore.
(Previous Year - Rs.384.20 Crore).
12. Contingent Liabilities not provided for:
(i) Guarantees given by the banks - Rs.1 7.75 Crore (Previous Year -
Rs.16.87 Crore).
(ii) Letters of Credit issued by the banks - Rs.21 7.65 Crore (Previous
Year - Rs.115.23 Crore).
(iii) Customs duty on import of equipments and spare parts under EPCG
Scheme - Rs.36.92 Crore (Previous Year - Rs.23.94 Crore).
(iv) Bills discounted with a bank - Rs. Nil. (Previous Year - Rs.16.44
Crore).
(v) Claims not acknowledged as debts:
(a) Disputed Sales / Purchase Tax demands - Rs.3.09 Crore (Previous
Year - Rs.3.20 Crore).
(b) Disputed Excise/Customs Duty demands - Rs.83.15 Crore (Previous
Year - Rs.80.49 Crore).
(c) Disputed Income Tax Demands - Rs.1 7.1 7 Crore (Previous Year -
Rs.4.88 Crore).
(d) Contested ESIC Demands - Rs.0.06 Crore (Previous Year - Rs.0.19
Crore).
13. Figures are rounded off to nearest lakh. Figures below Rs.50,000
are denoted by an *.
14. Previous years figures have been regrouped, wherever necessary.
Sep 30, 2009
1. Sundry Debtors include due from a subsidiary Company Rs.3.79 Crore
(Previous Year - Rs.2.23 Crore)
2. Loans and Advances include:
i) Due from an Officer of the Company - Rs.0.06 Crore. Maximum balance
due at any time during the year - Rs.0.08 Crore. (Previous Year -
Rs.0.08 Crore and maximum balance due at any time during the year
Rs.0.10 Crore)
ii) Due from a subsidiary Company Rs.0.31 Crore (Previous Year -
Rs.0.15 Crore)
3. The Companys leasing arrangements are in respect of operating
leases for premises (residential, office, godowns, etc). The leasing
arrangements, which are not non-cancellable, range between eleven
months and three years generally and are usually renewable by mutual
consent on agreed terms. The aggregate lease rentals payable are
charged as rent.
4. The Company enters into Forward Exchange Contracts, Currency Swaps
and Interest Rate Swaps being derivative instruments, which are not
intended for trading or speculative purposes, but for hedging purposes,
to establish the amount of reporting currency required or available at
the date of settlement of certain payables and receivables.
5. The Company decided not to exercise the option available under
Notification No. G.S.R. 225(E) dated March 31, 2009 issued by the
Government of India optionally providing for a modification in
accounting certain foreign currency items pursuant to AS-11 prescribed
under Section 211 (3C) of the Companies Act, 1956. Accordingly, the
treatment in that respect continues to be in conformity with AS-11.
6. The total borrowing cost capitalised during the year is Rs.12.60
Crore (Previous Year - Rs.6.29 Crore).
7. (a) In terms of the guidance on implementing the revised AS 15
issued by the Accounting Standard Board of the Institute of Chartered
Accountants of India, the Provident Fund Trust set up by the Company is
treated as defined benefit plan since the Company has to meet the
shortfall in the fund assets, if any. However, as at the year end, no
shortfall remains unprovided for. Further, having regard to the assets
of the Fund and the Return on the Investments, the Company does not
expect any deficiency in the foreseeable future. Accordingly, other
related disclosures in respect of Provident Fund have not been
disclosed.
8. Interest paid to Chairman & Managing Director and Managing
Director on Fixed Deposits at the rates prescribed in the Companies
(Acceptance of Deposits) Rules, 1975 - Rs.0.02 Crore (Previous Year -
Rs.0.01 Crore).
9. Related Party disclosures:
(a) Names of related parties and nature of relationship where control
exists are as under:
Subsidiary Companies:
i) MRF Corp. Ltd.
ii) MRF International Ltd.
iii) MRF Lanka (P) Ltd.
(b) Names of other related parties with whom transactions have taken
place during the year:
Key Management Personnel:
i) Mr. K.M. Mammen, Chairman & Managing Director
ii) Mr. K.M. Philip, Whole-time Director
iii) Mr. Arun Mammen, Managing Director
Relatives of Key Management
Personnel:
i) Mrs. K.M. Mammen Mappillai
ii) Mr. Rahul Mammen Mappillai
10. The amount due and paid during the year to "Investor Education and
Protection Fund" is Rs.0.13 Crore (Previous Year - Rs.0.13 Crore).
11. The Management is of the view that having regard to the future
business projections and plans and considering the strategic and long
term nature of investments in a subsidiary, the decline in the book
value of investment is temporary in nature requiring no provision.
12. The Company is engaged mainly in the manufacture of Rubber Products
such as Tyres, Tubes, Flaps, Tread Rubber and Conveyor Belt. These in
the context of Accounting Standard 17 on Segment Reporting are
considered to constitute one single primary segment. The Companys
operations outside India do not exceed the quantitative threshold for
disclosure envisaged in the Accounting Standard. Non-reportable
segments have not been disclosed as unallocated reconciling item in
view of their materiality. In view of the above, primary and secondary
reporting disclosures for business/geographical segment are not
applicable to the Company.
13. Estimated amount of contracts remaining to be executed on Capital
Account, net of advances and not provided for - Rs.384.20 Crore.
(Previous Year - Rs.153.13 Crore).
14. Contingent Liabilities not provided for:
(i) Guarantees given by the banks - Rs.16.87 Crore (Previous Year -
Rs.21.24 Crore).
(ii) Letters of Credit issued by the banks - Rs.115.23 Crore (Previous
Year - Rs.144.74 Crore).
(iii) Customs duty on import of equipments and spare parts under EPCG
Scheme - Rs.23.94 Crore (Previous Year - Rs.40.12 Crore).
(iv) Bills discounted with a bank - Rs.16.44 Crore (Previous Year -
Rs.Nil).
(v) Claims not acknowledged as debts:
(a) Disputed Sales / Purchase Tax demands - Rs.3.20 Crore (Previous
Year - Rs.18.06 Crore).
(b) Disputed Excise/Customs Duty demands - Rs.80.49 Crore (Previous
Year - Rs.83.02 Crore).
(c) Disputed Income Tax Demands - Rs.4.88 Crore (Previous Year -
Rs.Nil).
(d) Contested ESI Demands - Rs.0.19 Crore (Previous Year - Rs.0.30
Crore).
15. Figures are rounded off to nearest lakh. Figures below Rs.50,000
are denoted by an.
16. Previous years figures have been regrouped, wherever necessary.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on MRF Ltd.
-
MRF Ltd. Tools
- Bulk Deals
- Block Deals
-
MRF Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- BSE Price History
- NSE Price History
-
MRF Ltd. Key Financial Ratios
- Ratios
-
MRF Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
MRF Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
MRF Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
MRF Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
-
Stocks To Buy Today, Dec 19: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Stocks To Buy Today, Dec 18: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday -
Stocks To Buy Today, Dec 17: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
Stocks To Buy Today, Dec 16: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
India Stock Market Weekly Review: Nifty and Sensex Fall as Caution Spreads -
Stocks To Buy Today, Dec 15: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday
-
Stocks To Buy Today, Dec 12: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Market Outlook 2026: Kotak Securities Sees Nifty 50 at 30,000; THESE 4 Sectors Lead Rally, Gold To Stay Strong -
Stocks To Buy Today, Dec 10: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
D-Street Bleeds For 2nd Day! Sensex Slumps 678 Pts; Nifty Cracks 25,800; Why Stock Market Is Falling Today? -
Stocks To Buy Today, Dec 9: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
Stocks To Buy Today, Dec 8: Top 4 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday -
Stock Market Alert! Major Pre-Open Session Change From Dec 8: Full Timings, Rules & All You Need To Know -
Bank Nifty Surges: RBI’s 25 bps Rate Cut Triggers Strong Upside in Major Banking Stocks -
Closing Bell: Sensex Ends 158 pts Higher, Nifty Climbs Above 26,000; Hero MotoCorp, HAL Up 2% Each -
Stocks To Buy Today, Dec 4: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday
-
Block for 8 hours
-
Block for 12 hours
-
Block for 24 hours
-
Don't block
Sign in with Google- Male
- Female
- Others
- Under 18
- 18 to 25
- 26 to 35
- 36 to 45
- 45 to 55
- 55+