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Notes to Accounts of Radico Khaitan Ltd.
Mar 31, 2025
a. The Company''s exposure to credit and currency risks, and impairment allowances related to trade receivables is disclosed in note 53.
b. Also refer note 61 for additional disclosure related to trade receivables.
c. There is no Debts due by directors or other officers of the Company or any of them either severally or jointly with any other person or debts due by firms or private companies respectively in which any director is a partner or a director or a member.
d. The Company in the normal course of business sells certain trade receivables to banks. Under the terms of arrangements, the Company transfers substantially all the risks and rewards of ownership over these assets and transfer is on a non-recourse basis. During the year ended 31 March 2025, the Company has sold certain trade receivables on non-recourse basis. Accordingly the Company has de-recognized such trade receivables.
a. Rights, Preferences & Restrictions attached to equity shares of the Company
The Company has one class of shares, referred to as equity shares having a par value of '' 2/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
d. Aggregate number of shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the year end:
i) Shares allotted as fully paid pursuant to eontraet(s) without payment being received in cash during the financial year 2020-21 to 2024-25:
Nil (during FY 2019-20 to 2023-24: Nil ) equity shares allotted without payment being received in cash during the period of five years immediately preceding March 31, 2025.
ii) Shares issued in aggregate number and class of shares allotted by way of bonus shares:
The Company has issued total Nil equity shares (during FY 2019-20 to 2023-24: Nil equity shares) during the period of five years immediately preceding March 31, 2025 as fully paid up bonus shares including shares issued under ESOP scheme for which entire consideration not received in cash.
iii) Shares bought back during the financial year 2020-21 to 2024-25:
Nil (during FY 2019-20 to 2023-24: Nil) equity shares bought back pursuant to section 68, 69 and 70 of the Companies Act, 2013.
iv) Shares issued under employee stock option plan (ESOP) during the financial year 2020-21 to 2024-25:
The Company has issued total 2,73,235 equity shares of '' 2.00 each (during FY 2019-20 to 2023-24: 3,06,060 equity shares) during the period of five years immediately preceding March 31, 2025 on exercise of options granted under the employee stock option plan (ESOP).
v) Disclosures required pursuant to Ind AS 102 - Share Based Payment:
The Company established Employee Stock Options Plan, duly approved by the shareholders in the meeting held on May 25, 2006 which was effective from July 25, 2006. Accordingly, the Company has granted 4,715,000 equity options up to March 31, 2025 with vesting period over 4 years from the date of the grant. The employees have the options to exercise their right within a period of 3 years from the date of vesting. The compensation cost of stock options granted to employees is accounted by the Company using the fair value method.
I n respect of Options granted under the Employee Stock Options Plan, in accordance with the guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortized on a straight line basis over the period between the date of grant of options and eligible dates for conversion into equity shares.
Measurement of fair values
The fair values are measured based on the Black-Scholes-Merton model. The fair value of the options and inputs used in the measurement of the grant date fair values of the equity-settled share based payments are as follows:
Description of nature and purpose of each reserve
Securities premium: Securities premium is used to record the premium on issue of shares, which will be utilized in accordance with provisions of the Act.
Share option outstanding account: The reserve is used to recognize the grant date fair value of options issued to employees under employee stock option schemes and is adjusted on exercise/ forfeiture of options.
General reserve: General reserve is created from time to time by way of transfer of profits from retained earnings for appropriation purposes. It is created by a transfer from one component of equity to another and is not an item of other comprehensive income.
Retained earnings: Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.
The Company has been sanctioned working capital limits in excess of '' 5 crores, in aggregate, at points of time during the year, from banks or financial institutions on the basis of security of current assets. The quarterly returns filed by the Company with such banks or financial institutions are in agreement with the Books of Account of the Company of the respective quarters.
Considering the emerging practices on disclosures of trade credits being availed by companies in India and globally, the Company has reassessed certain disclosures to provide users to assess impact on liabilities, cash flows and liquidity risks more clearly. Accordingly, interest bearing short term acceptances in the nature of trade credits availed from banks/financial institutions for payments to suppliers have been disclosed as a separate line under financial liabilities which was hitherto included in other current financial liabilities.
Acceptances have been availed at a weighted average interest rate ranging between 705% and 795% per annum (previous year: 723% per annum). The tenure of these acceptances varies between 30 and 180 days from the date of acceptance. These acceptances are unsecured, with no collateral provided to the banks/ financial institutions.
(8) in addition to above, the Company have following additional ongoing litigations;
(a) Madhya Pradesh State industrial Development Corporation Limited, in February 2007, demanded a sum of ''168.09 lakhs besides unspecified expenses arising out of the alleged non compliance of conditions relating to its holding of shares in Abhishek Cement Limited, prior to its merger with the Holding Company during financial year ended March 31, 2003. The writ petition filed by Company before Madhya Pradesh High Court has been partly allowed by confirming the recovery of '' 16732 lakhs against the Company. Further, '' 52.80 lakhs has been waived off order dated April 03, 2007 However, the division bench of Madhya Pradesh High Court has stayed the recovery proceedings initiated by local collector office. The Court has ordered to maintain '' 100.00 lakhs in the State Bank of india till the final adjudication of the matter. The matter is since sub-judice.
(b) The applicability of Goods and Service Tax Act 2017 on Extra Neutral Alcohol (ENA) was kept on hold by the GST Council vide their minutes of meeting dated August 05, 2017, December 22, 2018, September 20, 2019 and May 28, 2021 wherein ENA which is meant for the potable purpose was
kept under the control of respective State Governments, and accordingly, the Company was paying the state taxes on ENA, as applicable in the respective States.
The Deputy Commissioner (State Tax), Sector I, Rampur had issued notices on November 14, 2019, November 15, 2019 and November 16, 2019 for leviability of GST on ENA w.e.f. July 2017 The Company filed a writ petition before Hon''ble High Court of Allahabad, challenging these notices, with the plea that potable ENA is kept away from GST by the Council. The Company got the stay on the proceedings under GST from Hon''ble Court of of Allahabad on January 10, 2020 and advised the department for filing the counter. Later on, the department withdrew their notices and the petition became infructuous.
The Deputy Commissioner (State Tax), Sector I passed an ex-party assessment order treating ENA under VAT @32.5% for AY 2017-18. The Company filed writ petition before the Hon''ble Allahabad High Court contesting VAT to be 14.5%. Meanwhile, various distilleries and UPSMA filed their writs before the High Court challenging the VAT Notification of @5%, issued by the State Government w.e.f. December 9, 2019, They also challenged the powers of State to levy VAT on ENA.
Hon''ble Allahabad High Court decided the writs on September 28, 2021 and declared that ENA, undisputedly should fall under GST regime and the State lost its Legislative competence to enact laws, to impose tax on sales of ENA and have quashed the notification of VAT @ 5%. Thereafter, the State Government filed the SLP before the Hon''ble Supreme Court, even CIABAC and ISWAI also filed the SLP against the order of High Court. All the SLPs are tagged, which are yet to be listed for hearing in Hon''ble Supreme Court.
I n view of the High Court order dated September 28, 2021, Joint Commissioer- Corporate , State Tax, Moradabad issued notices U/S 73(5) ascertaining the GST on ENA for the period July 2017 to September 2021. We filed the reply but the department did not agree with our reply & issued show cause notices U/S 73(1) of GST Act for the same period. We filed the reply of SCN with the office of Joint Commissioner, Corporate, however, department issued the demand U/S 73 (9) of GST on June 20, 2023 amounting to '' 7,346 lakhs (including interest and penalty) for the period of July 2017 to September 2021, which is challenged by the Company before Additional Commission Appeals at Moradabad. In the meantime on October 7, 2023 GST Council in its 52nd meeting has decided and recommonded that the ENA used for manufacture of alcoholic liquor for human consumption is out side the purview of GST, the notification 17/2024 dated September 27, 2024 also notified with effect from November 1, 2024 with regard to amendment in section 9 of GST act.
(c) The issue of applicable rate of GST on job work activities for alcoholic beverages was open since inception of GST This is due to classification of Food & Food products. The GST Council in its 39th and 40th Council meeting considered the issue, however, due to lack of unanimity, decided that courts should take a view on whether alcoholic beverages are food or otherwise.
Finally, in 45th GST Council meeting decision was taken that alcoholic beverage is not "foodâ and be taxed accordingly. Therefore, w.e.f. October 1, 2021, specific entry was included vide Notification No. 06/2021 whereby services of job work in relation to alcoholic beverage is to be taxed @ 18%.
Subsequently, Circular No. 164/20/2021 dated October 6, 2021 was issued clarifying that alcoholic beverage is not food and therefore, not taxed @ 5% but at recommended rate of 18%. Afterward, Department has started to issue notice to our various bottlers & matter is pending in various Courts. Total approx. demand '' 14.64 crore plus interest & penalty, if any.
d) A fire occurred at our Rampur Plant, U.P. on March 6 ,2021 involving two alcohol storage tanks. The Company''s emergency response team along with the local fire brigades were able to bring the fire under control without further spread to plant''s other areas. There was no loss of life.
This accident resulted in loss of ENA to the tune of 1.81 lakh Alcoholic liters stored In these two tanks resulting into financial loss of '' 152.89 lakhs including the replacement cost of damaged tanks. Since, same are duly covered under insurance policy, the insurance company had been intimated. As an interim measure, claim of '' 142.89 lakhs has already been received.
Beside this, the U.P. State Excise Department has issued a show cause notice (SCN) to us claiming Excise Duty amounting to '' 1,822.77 lakhs on the lost Alcohol (out of which '' 455.69 lakhs has been paid under protest). Based on the opinion of legal counsel, the Company has filed an appeal under Rule 813 of the U.P. Excise Rule before the U.P. Commissioner of Excise seeking the relief from above claim by way of setting aside the above mentioned SCN, considering this loss of alcohol as an unavoidable accident of fire.
e) The Company has arrangement with contract bottling unit (CBU''s) for manufacturing & bottling of alcoholic liquor product under their brand name. During the current year, the Company has received an enquiry and demand notice from DGGI on surplus income & notice of '' 11,795.00 lakhs for the period of 2017-18 to 2022-23. In response to the notice, the Company has taken proactive steps by filing a writ petition before the Karnataka High Court. The Hon''ble High Court has granted a stay on the notice amount, and the matter is currently under judicial for regular hearing.
40 Information on lease transactions pursuant to Ind AS 116 - Leases
Assets taken on lease
The Company has leases for lease land, offices, warehouses, plant and equipment and office equipment. With the exception of short term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and right of use assets.
The Company has lease contracts for plant and equipment that contain variable payments. Variable lease payments that depend on production volumes are recognized in the statement of profit and loss in the period in which the condition that triggers those payments occurs and hence, are not considered in determining the lease liability. Any changes in production under contracts which includes variable lease payments, would have a proportionate impact on the variable lease payments.
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
41 In the opinion of the Management and to the best of their knowledge and belief, the value on realization of current/non current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the financial statements.
i) Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Officer, in deciding how to allocate resources and assessing performance. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company is engaged in the business of manufacture, purchase and sale of beverage alcohol and other allied spirits, including through tie-up manufacturing units. Based on the management approach as defined in Ind AS 108, the Chief Operating Officer evaluates the company''s performance based on only one segment i.e. manufacturing and trading in Liquor & Alcohol.
ii) Geographical information
The geographical segments have been considered for disclosure as the secondary segment, under which the domestic segment includes sales to customers located in India and overseas segment includes sales to customer located outside India.
Terms and conditions of transactions with related parties
All the related party transactions are made on terms equivalent to those that prevail In arm''s length. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no outstanding guarantees provided or received for any related party receivables or payables in the current financial year. For the year ended March 31, 2025, the Company has not recorded any impairment of receivables relating to amounts owed by related parties '' Nil (March 31, 2024: '' 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.
(4) Disclosure requirements pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
There are no loans / advances in nature of loan given by the Company to related parties, accordingly, the disclosure requirements pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable.
Derivatives not designated as hedging instruments
The entity uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. However, such foreign currency denominated borrowings have not been designated as hedge. Such derivatives are recorded at mark to market at each reporting date with a corresponding recognition in the Statement of Profit and Loss.
Foreign currency sensitivity- Impact on profit
The below table demonstrates the sensitivity to a 5% Increase or decrease In the foreign currencies against, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents management''s assessment of reasonably possible change in foreign exchange rate. 5% increase or decrease in foreign exchange rates will have the following impact on profit before tax per rupee:
Foreign currency sensitivity-Impact on equity
The below table demonstrates the sensitivity to a 5% increase or decrease in the foreign currencies against, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents management''s assessment of reasonably possible change in foreign exchange rate. 5% increase or decrease in foreign exchange rates will have the following impact on profit before tax per rupee:
The Company''s principal financial liabilities comprise loans and borrowings, security deposits and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets includes loans, investment in preference shares & equity shares, trade and other receivables, and cash and cash equivalents that are derived directly from its operations.
The Company''s business activities are exposed to a variety of financial risks, namely market risks, credit risk and liquidity risk. The Company''s senior management has the overall responsibility for establishing and governing the Company''s risk management framework. The Company has constituted a Risk Management Committee,
which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.
(a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk and currency risk and equity price risk. Financial instruments affected by market risk include loans and borrowings.
The sensitivity analysis in the following sections relate to the position as at March 31, 2025 and March 31, 2024.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments in foreign currencies to total debts.
The analyses exclude the impact of movements in market variables on the carrying values of gratuity and other post-retirement obligations and provisions.
The following 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, 2025 and March 31, 2024.
(i) 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 entity''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.
I n order to balance the Company''s position with regards to interest income and interest expense and to manage the interest rate risk, treasury performs comprehensive interest rate risk management. As the Company does not have any significant amount of debt, the exposure to interest rate risk from the perspective of Financial Liabilities is negligible. Further, treasury activities, focused on managing investments in debt instruments, are centralized and administered under a set of approved policies and procedures guided by the tenets of safety, liquidity and returns. This ensures that investments are made within acceptable risk parameters after due evaluation.
interest rate sensitivity:
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows;
Fair value sensitivity analysis for fixed rate instruments
The Company does not have any fixed rate financial assets and liabilities at fair value through profit and loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss and neither would it affect the equity.
A change of 100 basis points in interest rates for variable rate instruments at the reporting date would have increased/(decreased) profit or loss for the below years by the amounts shown below. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.
(ii) Foreign currency risk
The Indian National Rupee is the entity''s most significant currency As a consequence, the Company''s results are presented in Indian National Rupee and exposures are managed against Indian National Rupee accordingly. The Company has limited foreign currency exposure which are mainly on account of imports and exports.The Company has hedged some of its receivable, since they have short recovery cycle and act as natural hedging reducing the foreign currency risk. Refer note 51 above.
(iii) Equity price risk
The company''s equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. Reports on the equity portfolio are submitted to the company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.
At the reporting date, the exposure to:
- unlisted equity securities at fair value is '' NIL.
- unlisted equity in Joint Venture and Subsidiaries at cost of '' 13,539.53 lakhs.
(iv) Price risk
The Company''s exposure to price risk arises from investments held and classified as FVTPL. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.
(b) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The entity is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, financial assets. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.
Trade receivables and loans
Credit risk is managed by company in accordance with the Company''s established policy, procedures and control relating to credit risk management. Credit quality is assessed based on an extensive credit rating and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables and loans are regularly monitored.
An impairment analysis is performed at each reporting date on an individual basis for receivables and loans. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note below. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and has been rated highly based on internal credit assessment parameters.
For trade receivables, as a practical expedient, the Company computes credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. The Company is using provison matrix of 0.20%, 15%, 25% 50% and 75% for ageing bucket of less than 6 months, 6 months to 1 year, 1 year to 2 years, 2 to 3 years and more than 3 years, respectively. Further, Company is using 65% ECL on disputed matters.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the entity''s treasury department in accordance with the entity''s policy. Counterparty credit limits are reviewed by the entity''s Board of Directors on an annual basis. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
The Company''s maximum exposure to credit risk for the components of the Balance Sheet at March 31, 2025 and March 31, 2024 is the carrying amounts as illustrated in note below.
(c) Liquidity risk
The Company monitors its risk of shortage of funds on a regular basis. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the entity''s performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the entity''s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
Collateral
The Company has created a charge in favour of the lenders for loans and borrowings (Refer note-17 and 21 on Borrowings for details).
The Company has a retirement benefit plans for Gratuity, Provident Fund and Leave Encashment, For provident fund, entity makes contribution to provident fund trust, Gratuity plan is funded with LIC and requires contributions to be made to a separate fund administered by LIC, Leave encashment liability of the entity is unfunded, The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit, The level of benefits provided depends on the member''s length of service and salary at retirement age,
Each year, the Board of Trustees reviews the level of funding in the Gratuity plan and Provident fund, Such a review includes the asset-liability matching strategy and investment risk management policy, The Board of Trustees decides its contribution based on the results of this annual review, The Board of Trustees aims to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise,
The following tables summaries the gratuity components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the respective plans,
C. Actuarial Method
i) Projected unit credit (PUC) actuarial method has been used to assess the plan''s liabilities allowing for retirement, death-in-service and withdrawal and also compensated absence while in service.
ii) Under the PUC method, a projected accrued benefit is calculated at the beginning of the period and again at the end of the period for each benefit that will accrue for all the active members of the plan. The projected accrued benefit is based on the plan accrual formula and upon service as at the beginning and end of the period, but using member''s final compensation, projected to the age at which the employee is assumed to leave active service. The plan liability is the actuarial present value of the projected accrued benefits as on the date of valuation for active members.
Sensitivities due to mortality and withdrawals are not material, hence, impact of change due to these not calculated. Sensitivities as rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method ( present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting year) has been applied when calculating the provision for defined benefit plan recognized in the Standalone Balance Sheet.
The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years.
Although, the analysis does not take account of the full distribution of cash flows expected under the plan, it provides an approximation of the sensitivity of the assumptions shown.
Risk exposure:
The defined benefit plan is exposed to a number of risks, the most significant of which are detailed below:
a) Salary increases - Actual salary increases will increase the plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
b) Investment risk - If plan is funded then assets/liabilities mismatch and actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
c) Discount rate - Reduction in discount rate in subsequent valuations can increase the plan''s liability.
d) Mortality and disability - Actual deaths and disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
e) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact plan''s liability.
D. Code of social security
The Code on Social Security, 2020 ("the Codeâ) relating to employee benefits during employment and post-employment received Presidential assent in September 2020. Subsequently, the Ministry of Labour and Employment had released the draft rules on the aforementioned Code. However, the same is yet to be notified. The Company will evaluate the impact and make necessary adjustments to the financial statements in the period when the Code will be notified and will come into effect.
For the purpose of the company''s capital management, capital includes issued equity share capital and other equity attributable to the equity holders of the company. The primary objective of the company''s capital management is to maximize the shareholder''s wealth.
The company''s policy is to maintain a strong capital base so as to maintain investor, creditors and market confidence and to sustain future development of the business. The Board of Directors monitor the return on capital employed as well as the level of dividend to shareholders.
The company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The company monitors capital using a debt equity ratio, which is net debt divided by total capital.
I n order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interestbearing loans and borrowing in the current financial year. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2025.
Contract asset is the right to consideration in exchange for goods or services transferred to the customer. Contract liability is the Group''s obligation to transfer goods or services to a customer for which the Group has received consideration from the customer in advance,
In Accordance of Ind As 115, the timing of recognition of revenue for the company is at a point in time,
The amounts receivable from customers become due after expiry of credit period which on an average ranges between 30-90 days,
In respect to advance from customers, the Company expect revenue to be recognised over the period of next 1 year from the reporting date,
66 Other Statutory Information
a. The Company has not undertaken any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
b. The Company do not have any transactions with companies struck off.
c. The Company does not hold any Investment property hence not applicable.
d. In Current year, no revaluation has been done for Property, plant and equipment and Intangible assets.
e. The Company has not been declared a ''Willful Defaulter'' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India.
f The Company does not have any Benami property and no proceedings have been initiated or pending against the Company for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
g. The Company has not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.
h. The Company have not advanced or loaned or invested funds to any other persons or entities, including foreign entities (intermediaries) with the understanding that the intermediary shall:
i. directly and indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company(ultimate beneficiaries) or:
ii. provide any guarantee, security or the like to or on behalf of ultimate beneficiaries.
i. 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:
i. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or,
ii. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
j. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
k. The Company has ensured compliance with Section 2(87) of the Companies Act, 2013 read with Companies (Restriction on Number of Layers) Rules, 2017 (''Layering Rules'') is not applicable.
l. 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.
m. The borrowings obtained by the Company from banks have been applied for the purposes for which such loans were was taken.
n. The Company has been sanctioned a working capital limit in excess of '' 5 crore by banks based on the security of current assets during the year. The quarterly returns/statements, in respect of the working capital limits have been filed by the Company with such banks and such returns/statements are in agreement with the books of account of the Company for the respective periods.
The Ministry of Corporate Affairs (MCA) has prescribed a requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules, 2021 requiring companies, which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Company has used accounting software for maintaining its books of account which has a feature of audit trail (edit log) facility and the same was enabled at the application level. During the year ended March 31, 2025, the Company has not enabled the feature of recording audit trail (edit log) at the database level for the said accounting software to log any direct data changes on account of recommendation in the accounting software administration guide which states that enabling the same all the time consume storage space on the disk and can impact database performance significantly
69 Fig ures of Previous year figures have been regrouped, wherever necessary. The impact of the same is not material to the user of the standalone financial statements.
Mar 31, 2024
Rights, Preferences & Restrictions attached to equity shares of the Company
The Company has one class of shares, referred to as equity shares having a par value of '' 2/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
d. Aggregate number of shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the year end:
i) Shares allotted as fully paid pursuant to contract(s) without payment being received in cash during the financial year 2019-20 to 2023-24:
Nil (during FY 2018-19 to 2022-23: Nil) equity shares allotted without payment being received in cash during the period of five years immediately preceding March 31, 2024 .
ii) Shares issued in aggregate number and class of shares allotted by way of bonus shares:
The Company has issued total Nil equity shares (during FY 2018-19 to 2022-23: Nil equity shares) during the period of five years immediately preceding March 31, 2024 as fully paid up bonus shares including shares issued under ESOP scheme for which entire consideration not received in cash.
iii) Shares bought back during the financial year 2019-20 to 2023-24:
Nil (during FY 2018-19 to 2022-23: Nil) equity shares bought back pursuant to section 68, 69 and 70 of the Companies Act, 2013.
iv) Shares issued under employee stock option plan (ESOP) during the financial year 2019-20 to 2023-24:
The Company has issued total 3,06,060 equity shares of '' 2.00 each (during FY 2018-19 to 2022-23: 3,66,500 equity shares) during the period of five years immediately preceding March 31, 2024 on exercise of options granted under the employee stock option plan (ESOP).
v) Disclosures required pursuant to Ind AS 102 - Share Based Payment
The Company established Employee Stock Options Plan, duly approved by the shareholders in the meeting held on May 25, 2006 which was effective from July 25, 2006. Accordingly, the Company has granted 47,15,000 equity options up to March 31, 2024 with vesting period over 4 years from the date of the grant. The employees have the options to exercise their right within a period of 3 years from the date of vesting. The compensation cost of stock options granted to employees is accounted by the Company using the fair value method.
In respect of Options granted under the Employee Stock Options Plan, in accordance with the guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortized on a straight line basis over the period between the date of grant of options and eligible dates for conversion into equity shares.
Further, during the current year, the Company has granted 2,15,000 stock options to the eligible employees of the Company as per ESOP Scheme 2006. Each option granted during the year shall entitle the holder to one equity share having face value of '' 2 each at an exercise price of '' 1,015.37.
Measurement of fair values
The fair values are measured based on the Black-Scholes-Merton model. The fair value of the options and inputs used in the measurement of the grant date fair values of the equity -settled share based payments are as follows: *41,560, (March 31, 2023: NIL) share options were exercised on a regular basis throughout the year. The weighted average share price during the year was '' 878.74 respectively (March 31, 2023 : NIL).
#The options outstanding as at March 31, 2024 are with the exercise price of '' 928.05 & ''1015.37 respectively (March 31, 2023 :'' 928.05 & '' 723.14 ). The weighted average of the remaining contractual life is 1.03 years respectively (March 31, 2023 : 1.03 years).
The measure of volatility used is the annualized standard deviation of the continuously compounded rates of return of stock over the expected lives of different vests, prior to grant date. Volatility has been calculated based on the daily closing market price of the Company''s stock on NSE over these years.
Description of nature and purpose of each reserve
Securities premium: Securities premium is used to record the premium on issue of shares, which will be utilized in accordance with provisions of the Act.
Share option outstanding account: The reserve is used to recognize the grant date fair value of options issued to employees under employee stock option schemes and is adjusted on exercise/ forfeiture of options.
General reserve: General reserve is created from time to time by way of transfer of profits from retained earnings for appropriation purposes. It is created by a transfer from one component of equity to another and is not an item of other comprehensive income.
Retained earnings: Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.
a. The loan is secured by i. A first pari passu mortgage and charge on all borrower''s immovable properties (owned/leased), pertaining to the project. ii. A first charge by way of hypothecation on all tangible assets and iii. A first charge by way of hypothecation on all rights, title, interest, benefits, claims, etc.
b. The Rupee Term loan from bank bearing floating & fixed rate interest ranging from 6.30% to 8.02%
The Company has been sanctioned working capital limits in excess of 5 crores, in aggregate, at points of time during the year, from banks or financial institutions on the basis of security of current assets. The monthly/ quarterly/half-yearly returns filed by the Company with such banks or financial institutions are in agreement with the Books of Account of the Company of the respective quarters.
|
37 Contingent Liabilities, Commitments and Other Claims a Capital commitments |
||
|
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) |
9,748.28 |
19,487.37 |
|
9,748.28 |
19,487.37 |
|
|
b Contingent liabilities and other claims i) Claims against the Company, not acknowledged as debts |
||
|
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
|
(a) Disputed liability relating to Employees'' State Insurance (ESI ) contribution |
0.89 |
0.89 |
|
(b) Disputed liability relating to payment of late recalibration fees on verification and stamping of manufacturing vats/tanks installed at distillery. |
155.00 |
155.00 |
|
(c) Disputed VAT/Sales/GST/Entry/Service tax matters under appeal |
174.10 |
176.27 |
|
(d) Disputed excise matters |
1,160.93 |
910.51 |
|
(e) Disputed Stamp duty claim arising out of amalgamation, being contested |
80.00 |
80.00 |
|
(f) Disputed service tax demand on GTA |
19.12 |
- |
|
(g) Disputed custom duty |
10.73 |
- |
|
(h) Disputed income tax matter |
119.36 |
- |
|
1,720.13 |
1,322.67 |
|
ii) Madhya Pradesh State Industrial Development Corporation Ltd., in February 2007, demanded a sum of ''168.09 lakhs besides unspecified expenses arising out of the alleged non compliance of conditions relating to its holding of shares in Abhishek Cement Ltd, prior to its merger with Radico Khaitan Ltd. in the financial year 2002-03. The writ petition filed by Company before Madhya Pradesh high court has been partly allowed by confirming the recovery of '' 167.32 lakhs against the Company. Further, '' 52.80 Lacs has been waived off order dated April 03, 2007. However, the division bench of Madhya Pradesh High Court has stayed the recovery proceedings initiated by local collector office. The court has ordered to maintain '' 100.00 lakhs in State Bank of India till the final adjudication of the matter. The matter is since sub-judice.
iii) (a) The applicability of Goods and Service Tax Act 2017 on Extra Neutral Alcohol (ENA) was kept on
hold by the GST council vide their minutes of meeting dated August 05, 2017, December 22, 2018, September 20, 2019 and May 28, 2021 wherein the ENA which is meant for the potable purpose was kept under the control of respective State Governments, and accordingly the Company was paying the state taxes on ENA, as applicable in the respective States.
(b) The Deputy Commissioner (State Tax), Sector I, Rampur had issued notices on November 14, 2019, November 15, 2019 and November 16, 2019 for leviability of GST on ENA w.e.f. July 2017. The Company filed a writ petition before Hon''ble High Court of Allahabad, challenging these notices, with the plea that potable ENA is kept away from GST by the Council. The Company got the stay on the proceedings under GST from Hon''ble Court on January 10, 2020 and advised the department for filing the counter. Later on the department withdrew their notices and the petition became infructuous.
(c) The Deputy Commissioner (State Tax) , Sector I passed an ex-party assessment order treating ENA under VAT @32.5% for AY 2017-18. The Company filed writ petition before the Hon''able Allahabad High Court contesting VAT to be 14.5%. Meanwhile various distilleries and UPSMA filed their writs before the High Court challenging the VAT Notification of @5%, issued by the State Government w.e.f. December 9, 2019, They also challenged the powers of State to levy VAT on Extra Nuetral Alcohol.
(d) Hon''ble Allahabad High Court decided the writs on September 28, 2021 and declared that ENA, undisputedly should fall under GST regime and the State lost its Legislative competence to enact laws, to impose tax on sales of ENA and have quashed the notification of VAT @ 5%. Thereafter the State Government filed the SLP before the Hon''ble Supreme Court, even CIABAC and ISWAI also filed the SLP against the order of High Court. All the SLPs are tagged, which are yet to be listed for hearing in Hon''ble Supreme Court.
In view of the High Court order dated September 28, 2021, Joint Commissioner-Corporate, State tax, Moradabad issued notices U/S 73(5) ascertaining the GST on ENA for the period July 2017 to September 2021. We filed the reply but the department did not agree with our reply & issued show cause notices U/S 73(1) of GST act for the same period. We filed the reply of SCN with the office of Joint Commissioner, Corporate, however department issued the demand U/S 73 (9) of GST on June 20, 2023 amounting to '' 10,857 Lakh (including interest and penalty) for the period ended July 2017 to September 2021, which is challenged by the Company before Additional Commission Appeals at Moradabad. In the mean time on October 7, 2023 GST council in its 52nd meeting has decided and recommonded that the ENA used for manufecture of alcoholic liquor for human consumption is out side the purview of GST, howecver no formal notification has been issued till date.
(e) The issue of applicable rate of GST on job work activities for alcoholic beverages was open since inception of GST. This is due to classification of Food & Food products. The GST Council in its 39th and 40th Council meeting considered the issue, however, due to lack of unanimity, decided that courts should take a view on whether alcoholic beverages are food or otherwise.
Finally, in 45th GST Council meeting decision was taken that alcoholic beverage is not âfoodâ and be taxed accordingly. Therefore, w.e.f. October 01, 2021, specific entry was included vide notification no. 06/2021 whereby services of job work in relation to alcoholic beverage is to be taxed @ 18% .
Subsequently, circular no. 164/20/2021 dated October 06, 2021 was issued clarifying that alcoholic beverage is not food and therefore not taxed @ 5% but at recommended rate of 18%. Afterward Department has started to issue notice to our various bottlers & matter is pending in various court. Total approx. demand '' 33.02 crore plus interest & penalty if any.
iv) A fire occurred at our Rampur Plant, U.P. on March 6, 2021 involving two alcohol storage tanks. The Company''s emergency response team along with the local fire brigades were able to bring the fire under control without further spread to plant''s other areas. There was no loss of life.
This accident resulted in loss of Extra Neutral Alcohol to the tune of 1.81 lakh Alcoholic liters stored in these two tanks resulting into financial loss of ''152.89 lakhs including the replacement cost of damaged tanks. Since, the same are duly covered under insurance policy, the insurance company had been intimated. As an interim measure claim of '' 142.89 lakhs has already been received.
Beside this, the U.P. State Excise Department has issued a show cause notice (SCN) to us claiming Excise Duty amounting to '' 1,822.77 lakhs on the lost Alcohol (out of which '' 455.69 lakhs has been paid under protest). Based on the opinion of legal counsel, the Company has filed an appeal under Rule 813 of the U.P. Excise Rule before the U.P. Commissioner of Excise seeking the relief from above claim by way of setting aside the above mentioned SCN, considering this loss of alcohol as an unavoidable accident of fire.
c During FY2023-24, the Company has received an erroneous demand amounting to '' 2,403.51 lakhs via demand order dated 21 March 2024. However, subsequently on perusal of the records it was observed by the assessing officer that the tax credit of advance tax / regular tax paid was not given to the Company and TDS credit was less given to the Company. It being a mistake apparent from records, the same has been rectified by the income tax department via order dated April 1, 2024. Accordingly, the Company has not disclosed same as contingent liability.
38 Information on Lease Transactions pursuant to Ind AS 116 - Leases
Assets taken on lease
The Company has leases for lease land, offices, warehouses, plant and equipment and office equipment. With the exception of short term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and right of use assets.
The Company has lease contracts for plant and equipment that contain variable payments. Variable lease payments that depend on production volumes are recognized in the statement of profit and loss in the period in which the condition that triggers those payments occurs and hence are not consider in determining the lease liability. Any changes in production under contracts which includes variable lease payments, would have a proportionate impact on the variable lease payments.
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
39 In the opinion of the Management and to the best of their knowledge and belief, the value on realization of current/non current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the standalone financial statements.
i) Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Officer, in deciding how to allocate resources and assessing performance. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company is engaged in the business of manufacture, purchase and sale of beverage alcohol and other allied spirits, including through tie-up manufacturing units. Based on the management approach as defined in Ind AS 108, the Chief Operating Officer evaluates the company''s performance based on only one segment i.e. manufacturing and trading in Liquor & Alcohol.
ii) Geographical information
The geographical segments have been considered for disclosure as the secondary segment, under which the domestic segment includes sales to customers located in India and overseas segment includes sales to customer located outside India.
Terms and conditions of transactions with related parties
The sales to and purchases from 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 outstanding guarantees provided or received for any related party receivables or payables in the current financial year. For the year ended March 31, 2024, the Company has not recorded any impairment of receivables relating to amounts owed by related parties rs, Nil (March 31, 2023: '' 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.
4 Disclosure requirements pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
There are no loans / advances in nature of loan given by the Company to related parties, accordingly the disclosure requirements pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable.
Derivatives not designated as hedging instruments
The entity uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. However such foreign currency denominated borrowings have not been designated as hedge. Such derivatives are recorded at mark to market at each reporting date with a corresponding recognition in the Statement of Profit and Loss.
Foreign currency sensitivity-Impact on equity
The below table demonstrates the sensitivity to a 1% increase or decrease in the foreign currencies against, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 1% represents management''s assessment of reasonably possible change in foreign exchange rate. 1% increase or decrease in foreign exchange rates will have the following impact on profit before tax per rupee:
The Company''s principal financial liabilities comprise loans and borrowings, security deposits and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets includes loans, investment in preference shares & equity shares, trade and other receivables, and cash and cash equivalents that are derived directly from its operations.
The Company''s business activities are exposed to a variety of financial risks, namely market risks, credit risk and liquidity risk. The Company''s senior management has the overall responsibility for establishing and governing the Company''s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.
(a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk and currency risk and equity price risk. Financial instruments affected by market risk include loans and borrowings.
The sensitivity analysis in the following sections relate to the position as at March 31, 2024 and March 31, 2023.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments in foreign currencies to total debts.
The analyses exclude the impact of movements in market variables on the carrying values of gratuity and other post-retirement obligations and provisions.
The following 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, 2024 and March 31, 2023.
(i) 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 entity''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.
In order to balance the Company''s position with regards to interest income and interest expense and to manage the interest rate risk, treasury performs comprehensive interest rate risk management. As the Company does not have any significant amount of debt, the exposure to interest rate risk from the perspective of Financial Liabilities is negligible. Further, treasury activities, focused on managing investments in debt instruments, are centralized and administered under a set of approved policies and procedures guided by the tenets of safety, liquidity and returns. This ensures that investments are made within acceptable risk parameters after due evaluation.
Interest rate sensitivity:
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as followsâ
Fair value sensitivity analysis for fixed rate instruments
The Company does not have any fixed rate financial assets and liabilities at fair value through profit and loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss and neither would it affect the equity.
A change of 100 basis points in interest rates for variable rate instruments at the reporting date wouldhave increased/(decreased) profit or loss for the below years by the amounts shown below. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:
(ii) Foreign currency risk
The Indian National Rupee is the entity''s most significant currency. As a consequence, the company''s results are presented in Indian National Rupee and exposures are managed against Indian National Rupee accordingly. The company has limited foreign currency exposure which are mainly on account of imports and exports.Refer note 49 above.
(iii) Equity price risk
The company''s equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. Reports on the equity portfolio are submitted to the company''s senior management on a regular basis. The company''s Board of Directors reviews and approves all equity investment decisions.
At the reporting date, the exposure to:
- unlisted equity securities at fair value is '' NIL.
- unlisted equity in Joint Venture and Subsidiaries at cost of '' 13,539.53 Lakhs.
(iv) Price risk
The Company''s exposure to price risk arises from investments held and classified as FVTPL . To manage the price risk arising from investments, the Company diversifies its portfolio of assets.
(b) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The entity is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, financial assets. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.
Trade receivables and loans
Credit risk is managed by company in accordance with the company''s established policy, procedures and control relating to credit risk management. Credit quality is assessed based on an extensive credit rating and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables and loans are regularly monitored.
An impairment analysis is performed at each reporting date on an individual basis for receivables and loans. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note below. The company does not hold collateral as security. The company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and has been rated highly based on internal credit assessment parameters.
For trade receivables, as a practical expedient, the Company computes credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. . The Company is using provison matrix of 0.20%, 15%, 25%, 50% and 75% for ageing bucket of less than 6 months, 06 months to 01 year, 1 Year to 2 year, 2 to 3 year and More than 3 Year respectively. Further Company is using 65% ECL on disputed matters.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the entity''s treasury department in accordance with the entity''s policy. Counterparty credit limits are reviewed by the entity''s Board of Directors on an annual basis. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
(c) Liquidity risk
The Company monitors its risk of shortage of funds on a regular basis. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.
The table below summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments:
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the entity''s performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the entity''s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
Collateral
The Company has created a charge in favor of the lenders for loans and borrowings (Refer note-17 and 21 on Borrowings for details)
The Company has a retirement benefit plans for Gratuity, Provident Fund and Leave Encashment. For provident fund, entity makes contribution to provident fund trust. Gratuity plan is funded with LIC and requires contributions to be made to a separate fund administered by LIC. Leave encashment liability of the entity is unfunded. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age.
Each year, the Board of Trustees reviews the level of funding in the Gratuity plan and Provident fund. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees decides its contribution based on the results of this annual review. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The following tables summaries the gratuity components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the respective plans.
C. Actuarial Method
i) Projected unit credit (PUC) actuarial method has been used to assess the plan''s liabilities allowing for retirement, death-in-service and withdrawal and also compensated absence while in service.
ii) Under the PUC method a projected accrued benefit is calculated at the beginning of the period and again at the end of the period for each benefit that will accrue for all active members of the plan. The projected accrued benefit is based on the plan accrual formula and upon service as at the beginning and end of the period, but using member''s final compensation, projected to the age at which the employee is assumed to leave active service. The plan liability is the actuarial present value of the projected accrued benefits as on the date of valuation for active members.
Sensitivities due to mortality & withdrawals are not material & hence impact of change due to these not calculated. Sensitivities as rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method ( present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting year) has been applied when calculating the provision for defined benefit plan recognized in the Standalone Balance Sheet.
The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it provides an approximation of the sensitivity of the assumptions shown.
Risk exposure:
The defined benefit plan is exposed to a number of risks, the most significant of which are detailed below:
a) Salary increases - Actual salary increases will increase the plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability
b) Investment risk - If plan is funded then assets/liabilities mismatch and actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
c) Discount rate - Reduction in discount rate in subsequent valuations can increase the plan''s liability.
d) Mortality and disability - Actual deaths and disability cases proving lower or higher than assumed in the valuation can impact the liabilities
e) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact plan''s liability
D. Code of social security
The Code on Social Security, 2020 (âthe Codeâ) relating to employee benefits during employment and post-employment received Presidential assent in September 2020. Subsequently, the Ministry of Labour and Employment had released the draft rules on the aforementioned Code. However, the same is yet to be notified. The Company will evaluate the impact and make necessary adjustments to the financial statements in the period when the Code will be notified and will come into effect.
For the purpose of the Company''s capital management, capital includes issued equity share capital and other equity attributable to the equity holders of the Company. The primary objective of the company''s capital management is to maximize the shareholder''s wealth.
The Company''s policy is to maintain a strong capital base so as to maintain investor, creditors and market confidence and to sustain future development of the business. The Board of Directors monitor the return on capital employed as well as the level of dividend to shareholders.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a debt equity ratio, which is net debt divided by total capital.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current financial year. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2024.
Contract asset is the right to consideration in exchange for goods or services transferred to the customer. Contract liability is the Group''s obligation to transfer goods or services to a customer for which the Group has received consideration from the customer in advance.
In Accordance of Ind As 115, the timming of recognition of revenue for the company is at a point in time.
The amounts receivable from customers become due after expiry of credit period which on an average ranges between 30-90 days.
64 Other Statutory Information
a. The Company has not undertaken any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
b. The Company do not have any transactions with companies struck off.
c. The Company does not hold any Investment property hence not applicable.
d. In current year, no revaluation has been done for Property, plant and equipment and Intangible assets.
e. The Company has not been declared a ''Willful Defaulter'' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India.
f. The Company does not have any Benami property and no proceedings have been initiated or pending against the Company for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
g. The Company has not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.
h. The Company have not advanced or loaned or invested funds to any other persons or entities, including foreign entities (intermediaries) with the understanding that the intermediary shall:
(a) directly and 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 ultimate beneficiaries.
i. 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:
i. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or ,
ii. provide any guarantee, security or the like on behalf of the ultimate beneficiaries
j. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
k. The Company has ensured compliance with Section 2(87) of the Companies Act, 2013 read with Companies (Restriction on Number of Layers) Rules, 2017 (''Layering Rules'') is not applicable.
l. 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.
m. The borrowings obtained by the Company from banks have been applied for the purposes for which such loans were was taken.
n. The Company has been sanctioned a working capital limit in excess of '' 5 crore by banks based on the security of current assets during the year. The monthly/quarterly/half yearly returns/statements, in respect of the working capital limits have been filed by the Company with such banks and such returns/ statements are in agreement with the books of account of the Company for the respective periods.
The ministry of corporte affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the companies (Accounts) Rules, 2014, inserted by the Companies (Accounts) amendment rules 2021 requiring companies, which uses accounting software for maintaining its books of accounts, shall only use such accounting software which was a feature of recording audit trail of each & every transactions, creating an edit log of each change made in the books of account anong with the date when such changes were made and ensuring that the audit trail cannot be disabled. The new requirement is applicable with effect from the financial year beginning on April 1, 2023.
The Company uses SAP as the primary accounting software. During the current financial year, the audit trail (edit log) feature for any direct changes made at the database level was not enabled for the accounting software used for maintenance of all the accounting records by the company. However, the audit trail (edit log) at the application level (entered from the frontend by users) for the accounting software were operating for all relevant transactions recorded in the software .
67 Figures of Previous year figures have been regrouped, wherever necessary. The impact of the same is not material to the user of the standalone financial statements .
Mar 31, 2023
a. Rights, Preferences & Restrictions attached to equity shares of the Company
The Company has one class of shares, referred to as equity shares having a par value of '' 2/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
d) Aggregate number of shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the year end:
i) Shares allotted as fully paid pursuant to contract(s) without payment being received in cash during the financial year 2017-18 to 2021-22:
Nil (during FY 2017-18 to 2021-22: Nil ) equity shares allotted without payment being received in cash.
ii) Shares issued in aggregate number and class of shares allotted by way of bonus shares:
The Company has issued total Nil equity shares (during FY 2017-18 to 2021-22: Nil equity shares) during the period of five years immediately preceding March 31, 2023 as fully paid up bonus shares including shares issued under ESOP scheme for which entire consideration not received in cash.
iii) Shares bought back during the financial year 2017-18 to 2021-22:
Nil (during FY 2016-17 to 2020-21: Nil) equity shares bought back pursuant to section 68, 69 and 70 of the Companies Act, 2013.
iv) Shares issued under employee stock option plan (ESOP) during the financial year 2017-18 to 2021-22:
The Company has issued total 6,35,000 equity shares of '' 2.00 each (during FY 2016-17 to 2020-21: 5,29,500 equity shares) during the period of five years immediately preceding March 31, 2023 on exercise of options granted under the employee stock option plan (ESOP).
v) Disclosures required pursuant to Ind AS 102 - Share Based Payment:
The Company established Employee Stock Options Plan, duly approved by the shareholders in the meeting held on May 25, 2006 which was effective from July 25, 2006. Accordingly, the Company has granted 4,500,000 equity options up to March 31, 2023 with vesting period over 4 years from the date of the grant. The employees have the options to exercise their right within a period of 3 years from the date of vesting. The compensation cost of stock options granted to employees is accounted by the Company using the fair value method.
I n respect of Options granted under the Employee Stock Options plan, in accordance with the guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortized on a straight line basis over the period between the date of grant of options and eligible dates for conversion into equity shares.
During the current year, the Company has not granted any stock options to the eligible employees of the Company as per ESOP Scheme 2006.
Measurement of fair values
The fair values are measured based on the Black-Scholes-Merton model. The fair value of the options and inputs used in the measurement of the grant date fair values of the equity-settled share based payments are as follows:
The measure of volatility used is the annualized standard deviation of the continuously compounded rates of return of stock over the expected lives of different vests, prior to grant date. Volatility has been calculated based on the daily closing market price of the Company''s stock on NSE over these years.
Description of nature and purpose of each reserve
Securities premium: Securities premium is used to record the premium on issue of shares, which will be utilized in accordance with provisions of the Act.
Share option outstanding account: The reserve is used to recognize the grant date fair value of options issued to employees under employee stock option schemes and is adjusted on exercise/ forfeiture of options.
General reserve: General reserve is created from time to time by way of transfer of profits from retained earnings for appropriation purposes. It is created by a transfer from one component of equity to another and is not an item of other comprehensive income.
Retained earnings: Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.
|
38 Contingent liabilities, commitments and other claims a Capital commitments |
||
|
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) |
19,48737 |
36,851.47 |
|
19,487.37 |
36,851.47 |
|
|
b Contingent liabilities and other claims i) Claims against the Company, not acknowledged as debts |
||
|
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
|
(a) Disputed liability relating to Employees'' State Insurance (ESI ) contribution |
0.89 |
0.89 |
|
(b) Disputed liability relating to Provident fund contribution of contractor labour |
- |
24.35 |
|
(c) Disputed liability relating to payment of late recalibration fees on verification and stamping of manufacturing vats/tanks installed at distillery |
155.00 |
155.00 |
|
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
|
(d) Disputed VAT/Sales/GST/Entry/Service tax matters under appeal |
176.27 |
176.27 |
|
(e) Disputed excise matters |
910.51 |
967.62 |
|
(f) Disputed Stamp duty claim arising out of amalgamation, being contested |
80.00 |
80.00 |
|
(g) Disputed customs duty |
- |
10.73 |
|
1,322.67 |
1,414.86 |
|
ii) Madhya Pradesh State Industrial Development Corporation Ltd., in February 2007, demanded a sum of ''168.09 lakhs besides unspecified expenses arising out of the alleged non compliance of conditions relating to its holding of shares in Abhishek Cement Ltd, prior to its merger with Radico Khaitan Ltd. in the financial year 2002-03. The writ petition filed by the Company before the Madhya Pradesh High Court has been partly allowed by confirming the recovery of '' 16732 lakhs against the Company Further, '' 52.80 lakhs has been waived off vide order dated April 03, 2007 However, the division bench of Madhya Pradesh High Court has stayed the recovery proceedings initiated by local collector office. The court has ordered to maintain '' 100.00 lakhs in State Bank of India till the final adjudication of the matter. The matter is since sub-judice.
iii) (a) The applicability of Goods and Service Tax Act 2017 on Extra Neutral Alcohol (ENA) was kept on
hold by the GST council vide their minutes of meeting dated August 05, 2017, December 22, 2018, September 20, 2019 and May 28, 2021 wherein the ENA which is meant for the potable purpose kept under the control of respective State Government, and accordingly, the Company was paying the state taxes on ENA as applicable in the respective states.
(b) The Deputy Commissioner (Commercial Tax), Sector I, Rampur had issued notices on November 14, 2019, November 15, 2019 and November 16, 2019 for leviability of GST on ENA w.e.f July 2017 The Company filed a writ petition before Hon''ble High Court of Allahabad, challenging these notices, with the plea that potable ENA is kept away from GST by the Council. The Company got the stay on the proceedings under GST from Hon''ble Court on January 10, 2020 and advised the department for filing the counter. Later on, the department withdrew their notices and the petition became infructuous.
(c) The Deputy Commissioner proceed with Ex-Party Assessment order treating the VAT @32.5% on ENA for AY 2017-18. The Company filed writ petition before the High Court contesting VAT to be 14.5%. Meanwhile various distilleries and UPSMA filed their writs before the High Court challenging the notification of VAT @5% issued by the State Government w.e.f. December 09, 2019, they also challenged the power of state to issue notification on ENA.
(d) Hon''ble Allahabad High Court decided the writs on September 28, 2021 and declare that ENA, undisputedly should fall under GST regime and the State lost its Legislative competence to enact laws, to impose tax on sales of ENA and have quashed the notification of VAT @ 5%. Thereafter, the State Government filed the SLP before the Hon''ble Supreme Court, even CIABAC and ISWAI also filed the SLP against the order of High Court. All the SLPs are tagged, which are likely to be listed/ heard by the Hon''ble Supreme Court on July 12, 2023.
In view of the High Court order dt.Sept 28 2021, Joint Commissioner-Corporate , State Tax , Moradabad issued the notices U/S 73(5) ascertaining the GST on ENA for the period July 17 to Sept 21 . We filed the reply but department has not agreed with our reply & issued show cause notices U/S 73(1) of GST Act for the same period . We filed the reply of SCl with the office of Joint Commissioner , Corporate, Moradabad but till date no order has been passed .
(e) The issue of applicable rate of GST on job work activities for alcoholic beverages was open since inception of GST This is due to classification of Food & Food products. The GST Council in its 39th and 40th Council meeting considered the issue, however, due to lack of unanimity, decided that courts should take a view on whether alcoholic beverages are food or otherwise.
Finally, in 45th GST Council meeting decision was taken that alcoholic beverage is not "foodâ and be taxed accordingly. Therefore, w.e.f. 01.10.2021, specific entry was included vide Notification No. 06/2021 whereby services of job work in relation to alcoholic beverage is to be taxed @ 18% .
Subsequently, Circular No. 164/20/2021 dated 06.10.2021 was issued clarifying that alcoholic beverage is not food and therefore not taxed @ 5% but at recommended rate of 18%. Afterward Department has started to issue notice to our various bottlers & matter is pending in various court. Total approx. demand approx. 32 crore plus interest & penalty if any.
iv) A fire occurred at our Rampur Plant, U.P. on March 06 ,2021 involving two alcohol storage tanks. The Company''s emergency response team along with the local fire brigades were able to bring the fire under control without further spread to plant''s other areas. There was no loss of life.
This accident resulted in loss of Extra Neutral Alcohol to the tune of 1.81 Lakh Alcoholic liters stored in these two tanks resulting into financial loss of ''152.89 lakhs including the replacement cost of damaged tanks. Since same are duly covered under insurance policy, the insurance company had been intimated. As an interim measure claim of '' 142.89 lakhs has already been received.
Beside this, the U. P. State Excise Department has issued a show cause notice (SCN) to us claiming Excise Duty amounting to '' 1,822.77 lakhs on the lost Alcohol (out of which '' 455.69 lakhs has been paid under protest). Based on the opinion of legal counsel, the Company has filed an appeal under Rule 813 of the U.P Excise Rule before the U.P Commissioner of Excise seeking the relief from above claim by way of setting aside the above mentioned SCN, considering this loss of alcohol as an unavoidable accident of fire.
59 Information on lease transactions pursuant to Ind AS 116 - Leases
Assets taken on lease
The Company has leases for lease land, offices, warehouses, plant and equipment and office equipment. With the exception of short term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and right of use assets.
The Company has lease contracts for plant and equipment that contain variable payments. Variable lease payments that depend on production volumes are recognized in the statement of profit and loss in the period in which the condition that triggers those payments occurs and hence are not consider in determining the lease liability. Any changes in production under contracts which includes variable lease payments, would have a proportionate impact on the variable lease payments.
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
40 In the opinion of the Management and to the best of their knowledge and belief, the value on realization of current/non-current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the financial statements.
45 Segment reporting
i) Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Officer, in deciding how to allocate resources and assessing performance. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company is engaged in the business of manufacture, purchase and sale of beverage alcohol and other allied spirits, including through tie-up manufacturing units. Based on the management approach as defined in Ind AS 108, the Chief Operating Officer evaluates the company''s performance based on only one segment i.e. manufacturing and trading in Liquor & Alcohol.
ii) Geographical information
The geographical segments have been considered for disclosure as the secondary segment, under which the domestic segment includes sales to customers located in India and overseas segment includes sales to customer located outside India.
Terms and conditions of transactions with related parties
The sales to and purchases from 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 outstanding guarantees provided or received for any related party receivables or payables in the current financial year. For the year ended March 31, 2023, the Company has not recorded any impairment of receivables relating to amounts owed by related parties '' Nil (March 31, 2022: '' 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.
4 Disclosure requirements pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
There are no loans / advances in nature of loan given by the Company to related parties, accordingly the disclosure requirements pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable.
The Company''s principal financial liabilities comprise loans and borrowings, security deposits and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets includes loans, investment in preference shares & equity shares, trade and other receivables, and cash & cash equivalents that are derived directly from its operations.
The Company''s business activities are exposed to a variety of financial risks, namely market risks, credit risk and liquidity risk. The Company''s senior management has the overall responsibility for establishing and governing the Company''s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.
(a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk and currency risk and equity price risk. Financial instruments affected by market risk include loans and borrowings.
The sensitivity analysis in the following sections relate to the position as at March 31, 2023 and March 31, 2022.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments in foreign currencies to total debts.
The analyses exclude the impact of movements in market variables on the carrying values of gratuity and other post-retirement obligations and provisions.
The following 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, 2023 and March 31, 2022.
(i) 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 entity''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. In order to balance the Company''s position with regards to interest income and interest expense and to manage the interest rate risk, treasury performs comprehensive interest rate risk management. As the Company does not have any significant amount of debt, the exposure to interest rate risk from the perspective of Financial Liabilities is negligible. Further, treasury activities, focused on managing investments in debt instruments, are centralized and administered under a set of approved policies and procedures guided by the tenets of safety, liquidity and returns. This ensures that investments are made within acceptable risk parameters after due evaluation.â
Interest rate sensitivity:
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows
Fair value sensitivity analysis for fixed rate instruments
The Company does not have any fixed rate financial assets and liabilities at fair value through profit and loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss and neither would it affect the equity.
A change of 100 basis points in interest rates for variable rate instruments at the reporting date would have increased/(decreased) profit or loss for the below years by the amounts shown below. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.
(ii) Foreign currency risk
The Indian National Rupee is the entity''s most significant currency As a consequence, the Company''s results are presented in Indian National Rupee and exposures are managed against Indian National Rupee accordingly. The Company has limited foreign currency exposure which are mainly on account of imports and exports.The Company has hedged some of its receivable, since they have short recovery cycle and act as natural hedging reducing the foreign currency risk. Refer note 51 above.
(iii) Equity price risk
The Company''s equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.
At the reporting date, the exposure to:
- unlisted equity securities at fair value is '' NIL.
- unlisted equity in Joint Venture and Subsidiaries at cost of '' 13,539.53 lakhs.
(iv) Price risk
The Company''s exposure to price risk arises from investments held and classified as FVTPL. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.
(b) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The entity is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, financial assets. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.
Trade receivables and loans
Credit risk is managed by company in accordance with the company''s established policy, procedures and control relating to credit risk management. Credit quality is assessed based on an extensive credit rating and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables and loans are regularly monitored.
An impairment analysis is performed at each reporting date on an individual basis for receivables and loans. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note below. The company does not hold collateral as security. The company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and has been rated highly based on internal credit assessment parameters.
For trade receivables, as a practical expedient, the Company computes credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. . The Company is using provison matrix of 0.20%, 15%, 25% 50% and 75% for ageing bucket of less than 6 months, 6 months to 1 year, 1 year to 2 year, 2 to 3 year and more than 3 year, respectively. Further, the Company is using 70% ECL on disputed matters.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the entity''s treasury department in accordance with the entity''s policy. Counterparty credit limits are reviewed by the entity''s Board of Directors on an annual basis. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
(c) Liquidity risk
The Company monitors its risk of shortage of funds on a regular basis. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the entity''s performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the entity''s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
Collateral
The Company has created a charge in favor of the lenders for loans and borrowings (Refer note-17 and 23 on Borrowings for details).
The Company has a defined benefit plans for Gratuity, Provident Fund and Leave Encashment. For provident fund, entity makes contribution to provident fund trust. Gratuity plan is funded with LIC and requires contributions to be made to a separate fund administered by LIC. Leave encashment liability of the entity is unfunded. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age.
Each year, the Board of Trustees reviews the level of funding in the Gratuity plan and Provident fund. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees decides its contribution based on the results of this annual review. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The following tables summaries the gratuity components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the respective plans.
Assumption regarding future mortality have been based on published statistics and mortality tables C. Actuarial Method
i) Projected unit credit (PUC) actuarial method has been used to assess the plan''s liabilities allowing for retirement, death-in-service and withdrawal and also compensated absence while in service.
ii) Under the PUC method, a projected accrued benefit is calculated at the beginning of the period and again at the end of the period for each benefit that will accrue for all active members of the plan. The projected accrued benefit is based on the plan accrual formula and upon service as at the beginning and end of the period, but using member''s final compensation, projected to the age at which the employee is assumed to leave active service. The plan liability is the actuarial present value of the projected accrued benefits as on the date of valuation for active members.
Sensitivities due to mortality & withdrawals are not material & hence impact of change due to these not calculated. Sensitivities as rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method ( present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting year) has been applied when calculating the provision for defined benefit plan recognized in the Standalone Balance Sheet.
The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it provides an approximation of the sensitivity of the assumptions shown.
Risk exposure:
The defined benefit plan is exposed to a number of risks, the most significant of which are detailed below:
a) Salary increases - Actual salary increases will increase the plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability
b) Investment risk - If plan is funded then assets/liabilities mismatch and actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
c) Discount rate - Reduction in discount rate in subsequent valuations can increase the plan''s liability.
d) Mortality and disability - Actual deaths and disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
e) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact plan''s liability.
C. Code of social security
The Code on Social Security, 2020 ("the Codeâ) relating to employee benefits during employment and post-employment received Presidential assent in September 2020. Subsequently, the Ministry of Labour and Employment had released the draft rules on the aforementioned Code. However, the same is yet to be notified. The Company will evaluate the impact and make necessary adjustments to the financial statements in the period when the Code will be notified and will come into effect.
55 Capital management
For the purpose of the company''s capital management, capital includes issued equity share capital and other equity attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximize the shareholder''s wealth.
The Company''s policy is to maintain a strong capital base so as to maintain investor, creditors and market confidence and to sustain future development of the business. The Board of Directors monitor the return on capital employed as well as the level of dividend to shareholders.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a debt equity ratio, which is net debt divided by total capital.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interestbearing loans and borrowing in the current financial year. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2023.
Contract asset is the right to consideration in exchange for goods or services transferred to the customer. Contract liability is the Group''s obligation to transfer goods or services to a customer for which the Group has received consideration from the customer in advance.
In Accordance of Ind AS 115, the timming of recognition of revenue for the company is at a point in time.
The amounts receivable from customers become due after expiry of credit period which on an average ranges between 30-90 days.
65 Other Statutory Information
a. The Company has not undertaken any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
b. The Company do not have any transactions with companies struck off.
c. The Company does not hold any Investment property, hence not applicable.
d. In current year, no revaluation has been done for Property, plant and equipment and Intangible assets.
e. The Company has not been declared a ''Willful Defaulter'' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India.
f. The Company does not have any Benami property and no proceedings have been initiated or pending against the Company for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
g. The Company has not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.
h. The company have not advanced or loaned or invested funds to any other persons or entities, including foreign entities (intermediaries) with the understanding that the intermediary shall:
i. directly and indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company(ultimate beneficiaries) or:
ii. provide any guarantee, security or the like to or on behalf of ultimate beneficiaries.
i. 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:
i. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or,
ii. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
j. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
k. The Company has ensured compliance with Section 2(87) of the Companies Act, 2013 read with Companies (Restriction on Number of Layers) Rules, 2017 (''Layering Rules'') is not applicable.
l. 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.
m. The borrowings obtained by the Company from banks have been applied for the purposes for which such loans were was taken.
n. The Company has been sanctioned a working capital limit in excess of '' 5 crore by banks based on the security of current assets during the year. The quarterly returns/statements, in respect of the working capital limits have been filed by the Company with such banks and such returns/statements are in agreement with the books of account of the Company for the respective periods.
o. Fig ures of Previous year figures have been regrouped, wherever necessary. The impact of the same is not material to the user of the standalone financial statements.
Mar 31, 2022
a. Allowance for obsolete and non-moving inventories amounting to '' 49.21 Lakhs (previous year: '' 155.26 Lakhs) has been recognised as an expense in the Statement of Profit and Loss.
b. Includes provision for excise duty and Custom duty '' 8,569.86 Lakhs (previous year '' 9,356.87 Lakhs)
c. Stock of raw material includes Goods-in-transit amounting to '' Nil (Previous Year '' 2.75 Lakhs)
d. Inventories include inventory held by tie up manufacturing units amounting to '' 5,295.36 Lakhs (previous year '' 3,937.46 Lakhs).
a. Rights, Preferences & Restrictions attached to equity shares of the Company
The Company has one class of shares, referred to as equity shares having a par value of '' 2/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
d) Aggregate number of shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the year end:
i) Shares allotted as fully paid pursuant to contract(s) without payment being received in cash during the financial year 2017-18 to 2021-22:
Nil (during FY 2016-17 to 2020-21: Nil) equity shares allotted without payment being received in cash.
ii) Shares issued in aggregate number and class of shares allotted by way of bonus shares:
The Company has issued total Nil equity shares (during FY 2016-17 to 2020-21: Nil equity shares) during the period of five years immediately preceding March 31, 2022 as fully paid up bonus shares including shares issued under ESOP scheme for which entire consideration not received in cash.
iii) Shares bought back during the financial year 2017-18 to 2021-22:
Nil (during FY 2016-17 to 2020-21: Nil) equity shares bought back pursuant to section 68, 69 and 70 of the Companies Act, 2013.
iv) Shares issued under employee stock option plan (ESOP) during the financial year 2017-18 to 2021-22:
The Company has issued total 6,35,000 equity shares of '' 2.00 each (during FY 2016-17 to 2020-21: 5,29,500 equity shares) during the period of five years immediately preceding March 31, 2022 on exercise of options granted under the employee stock option plan (ESOP).
v) Disclosures required pursuant to Ind AS 102 - Share Based Payment
The Company established Employee Stock Options Plan, duly approved by the shareholders in the meeting held on May 25, 2006 which was effective from July 25, 2006. Accordingly, the Company has granted 4,500,000 equity options up to March 31, 2022 with vesting period over 4 years from the date of the grant. The employees have the options to exercise their right within a period of 3 years from the date of vesting. The compensation cost of stock options granted to employees is accounted by the Company using the fair value method.
In respect of Options granted under the Employee Stock Options plan, in accordance with the guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortised on a straight line basis over the period between the date of grant of options and eligible dates for conversion into equity shares.
During the current year, on November 2, 2021 and March 8, 2022, the Company has granted 180,000 and 40,000 stock options to the eligible employees of the Company as per ESOP Scheme 2006. Each option shall entitle the holder to one equity shares of '' 2/- at an exercise price of '' 928.05 and '' 723.14 respectively.
The measure of volatility used is the annualised standard deviation of the continuously compounded rates of return of stock over the expected lives of different vests, prior to grant date. Volatility has been calculated based on the daily closing market price of the Company''s stock on NSE over these years.
Description of nature and purpose of each reserve
Securities premium: Securities premium is used to record the premium on issue of shares, which will be utilised in accordance with provisions of the Act.
Share option outstanding account: The reserve is used to recognise the grant date fair value of options issued to employees under employee stock option schemes and is adjusted on exercise/ forfeiture of options.
General reserve: General reserve is created from time to time by way of transfer of profits from retained earnings for appropriation purposes. It is created by a transfer from one component of equity to another and is not an item of other comprehensive income.
Retained earnings: Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.
⢠Secured by hypothecation of inventories and trade receivables. Further secured by a second charge on fixed assets of the Company
⢠Non-fund based facilities provided by banks are also secured by second charge on the fixed assets (Property, Plant and Equipment excluding Intangible Assets) of the Company
⢠The Company has been sanctioned working capital limits in excess of 5 crores, in aggregate, at points of time during the year, from banks or financial institutions on the basis of security of current assets. The quarterly returns filed by the Company with such banks or financial institutions are in agreement with the Books of Account of the Company of the respective quarters
|
b Contingent liabilities and other claims i) Claims against the Company, not acknowledged as debts |
||
|
Particulars |
As at March 31, 2022 |
As at March 31, 2021 |
|
(a) Disputed liability relating to Employees'' State Insurance (ESI) contribution |
0.89 |
0.89 |
|
(b) Disputed liability relating to Provident fund contribution of contractor labour |
24.35 |
24.35 |
|
(c) Disputed liability relating to payment of late re-calibration fees on verification and stamping of manufacturing vats/tanks installed at distillery. |
155.00 |
155.00 |
|
(d) Disputed VAT/Sales/GST/Entry/Service tax matters under appeal |
176.27 |
186.15 |
|
(e) Disputed excise matters |
96762 |
551.75 |
|
(f) Disputed Stamp duty claim arising out of amalgamation, being contested |
80.00 |
80.00 |
|
(g) Disputed customs duty |
10.73 |
10.73 |
|
1,414.86 |
1,008.87 |
|
ii) Madhya Pradesh State Industrial Development Corporation Ltd. in February 2007 demanded a sum of '' 168.09 Lakhs besides unspecified expenses arising out of the alleged non compliance of conditions relating to its holding of shares in Abhishek Cement Ltd, prior to its merger with Radico Khaitan Ltd. in the financial
year 2002-03. The writ petition filed by Company before Madhya Pradesh high court has been partly allowed by confirming the recovery of '' 16732 Lakhs against the Company. Further, '' 52.8 Lakhs has been waived off order dated April 03, 2007 However, the division bench of Madhya Pradesh High Court has stayed the recovery proceedings initiated by local collector office. The court has ordered to maintain '' 100 Lakhs in State Bank of India till the final adjudication of the matter. The matter is since sub-judice.
iii) (a) The applicability of Goods and Service Tax Act 2017 on Extra Neutral Alcohol (ENA) was kept on hold
by the GST council vide their minutes of meeting dated August 05, 2017, December 22, 2018, September 20, 2019 and May 28, 2021 wherein the ENA which is meant for the potable purpose kept under the control of respective State Government, and accordingly the Company was paying the state taxes on ENA supplies.
(b) The Deputy Commissioner (Commercial Tax), Sector I, Rampur had issued notices on November 14, 2019, November 15, 2019 and November 16, 2019 for leviability of GST on ENA w.e.f. July 2017 The Company filed a writ petition before Hon''ble High Court of Allahabad, challenging these notices, with the plea that potable ENA is kept away from GST by the Council. The Company got the stay on the proceedings under GST from Hon''ble Court on January 10, 2020 and advised the department for filing the counter. Later on the department withdrew their notices and the petition became infructuous.
(c) The Deputy Commissioner proceed with Ex-Party Assessment order treating the VAT @32.5% on ENA for AY 2017-18. The Company filed writ petition before the High Court contesting VAT to be 14.5%. Meanwhile various distilleries and UPSMA filed their writs before the High Court challenging the notification of VAT @5% issued by the State Government w.e.f. December 9, 2019, they also challenged the power of state to issue notification on ENA.
(d) Hon''ble Allahabad High Court decided the writs on September 28, 2021 and declare that ENA, undisputedly should fall under GST regime and the State lost its Legislative competence to enact laws, to impose tax on sales of ENA and have quashed the notification of VAT @ 5%. Thereafter the State Government filed the SLP before the Hon''ble Supreme Court, even CIABAC and ISWAI also filed the SLP against the order of High Court. All the SLPs are tagged, which are likely to be heard by the Hon''ble Supreme Court on July 25, 2022.
iv) A fire occurred at our Rampur Plant, U.P. on March 6,2021 involving two alcohol storage tanks. The Company''s emergency response team along with the local fire brigades were able to bring the fire under control without further spread to plant''s other areas. There was no loss of life.
This accident resulted in loss of Extra Neutral Alcohol to the tune of 1.81 Lakh Alcoholic liters stored in these two tanks resulting into financial loss of '' 270 Lakhs including the replacement cost of damaged tanks. Since same are duly covered under insurance policy the insurance company had been intimated. As an interim measure claim of '' 100 Lakhs has already been received.
Beside this, the U. P. State Excise Department has issued a show cause notice(SCN) to us claiming Excise Duty amounting to '' 1,822.77 Lakhs on the lost Alcohol (out of which '' 455.69 Lakhs has been paid under protest). Based on the opinion of legal counsel, the Company has filed an appeal under Rule 813 of the U.P. Excise Rule before the U.P. Commissioner of Excise seeking the relief from above claim by way of setting aside the above mentioned SCN, considering this loss of alcohol as an unavoidable accident of fire.
40 INFORMATION ON LEASE TRANSACTIONS PURSUANT TO IND AS 116 - LEASES Assets taken on lease
The Company has leases for lease land, offices, warehouses, plant and equipment and office equipment. With the exception of short term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and right of use assets. Further the lease contracts have been reassesed in case of reduction of lease payment due to impact of Covid 19.
The Company has lease contracts for plant and equipment that contain variable payments. Variable lease payments that depend on production volumes are recognised in the statement of profit and loss in the period in which the condition that triggers those payments occurs and hence are not consider in determining the lease liability. Any changes in production under contracts which includes variable lease payments, would have a proportionate impact on the variable lease payments.
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
41 In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of current/non current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the financial statements.
#The Board of Directors at its meeting held on May 30, 2022 have recommended a payment of final dividend of '' 3.00 per equity share with value of '' 2.00 each for the financial year ended March 31, 2022. The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognised as a liability.
* Paid to shareholders during the financial year 2021-22.
The entity offsets tax assets and 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.
46 SEGMENT REPORTING
i) Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Officer, in deciding how to allocate resources and assessing performance. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company is engaged in the business of manufacture, purchase and sale of beverage alcohol and other allied spirits, including through tieup manufacturing units. Based on the management approach as defined in Ind AS 108, the Chief Operating Officer evaluates the company''s performance based on only one segment i.e. manufacturing and trading in Liquor & Alcohol.
ii) Geographical information
The geographical segments have been considered for disclosure as the secondary segment, under which the domestic segment includes sales to customers located in India and overseas segment includes sales to customer located outside India.
Terms and conditions of transactions with related parties
The sales to and purchases from 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 outstanding guarantees provided or received for any related party receivables or payables in the current financial year. For the year ended March 31, 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2021: '' 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.
4 Disclosure requirements pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
There are no loans / advances in nature of loan given by the Company to related parties, accordingly the disclosure requirements pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable.
51 FOREIGN CURRENCY EXPOSURE
Derivatives not designated as hedging instruments
The entity uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. However such foreign currency denominated borrowings have not been designated as hedge. Such derivatives are recorded at mark to market at each reporting date with a corresponding recognition in the Statement of Profit and Loss.
The Company''s principal financial liabilities comprise loans and borrowings, security deposits and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets includes loans, investment in preference shares & equity shares, trade and other receivables, and cash and cash equivalents that are derived directly from its operations.
The Company''s business activities are exposed to a variety of financial risks, namely market risks, credit risk and liquidity risk. The Company''s senior management has the overall responsibility for establishing and governing the Company''s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyse the risks faced by the Company to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk and currency risk and equity price risk. Financial instruments affected by market risk include loans and borrowings.
The sensitivity analysis in the following sections relate to the position as at March 31, 2022 and March 31, 2021.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments in foreign currencies to total debts.
The analyses exclude the impact of movements in market variables on the carrying values of gratuity and other post-retirement obligations and provisions.
The following 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, 2022 and March 31, 2021.
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 entity''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.
I n order to balance the Company''s position with regards to interest income and interest expense and to manage the interest rate risk, treasury performs comprehensive interest rate risk management. As the Company does not have any significant amount of debt, the exposure to interest rate risk from the perspective of Financial Liabilities is negligible. Further, treasury activities, focused on managing investments in debt instruments, are centralised and administered under a set of approved policies and procedures guided by the tenets of safety, liquidity and returns. This ensures that investments are made within acceptable risk parameters after due evaluation.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows
Fair value sensitivity analysis for fixed rate instruments
The Company does not have any fixed rate financial assets and liabilities at fair value through profit and loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss and neither would it affect the equity.
The Indian National Rupee is the entity''s most significant currency. As a consequence, the company''s results are presented in Indian National Rupee and exposures are managed against Indian National Rupee accordingly. The company has limited foreign currency exposure which are mainly on account of imports and exports.The company has hedged some of its receivable, since they have short recovery cycle and act as natural hedging reducing the foreign currency risk. Refer note 51 above.
The company''s equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. Reports on the equity portfolio are submitted to the company''s senior management on a regular basis. The company''s Board of Directors reviews and approves all equity investment decisions.
At the reporting date, the exposure to:
⢠unlisted equity securities at fair value is '' 0.60 Lakhs.
⢠unlisted equity in Joint Venture and Subsidiaries at cost of '' 13,539.53 Lakhs
The Company''s exposure to price risk arises from investments held and classified as FVTPL. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The entity is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, financial assets. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.
Credit risk is managed by company in accordance with the company''s established policy, procedures and control relating to credit risk management. Credit quality is assessed based on an extensive credit rating and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables and loans are regularly monitored.
An impairment analysis is performed at each reporting date on an individual basis for receivables and loans. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note below. The company does not hold collateral as security. The company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and has been rated highly based on internal credit assessment parameters.
Presently In the current COVID-19 scenario, there are no indication of any material risk. However going forward this could be possible risk which will be addressed as & when they arise.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the entity''s treasury department in accordance with the entity''s policy. Counterparty credit limits are reviewed by the entity''s Board of Directors on an annual basis. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
The Company monitors its risk of shortage of funds on a regular basis. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the entity''s performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the entity''s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
The Company has a defined benefit plans for Gratuity Provident Fund and Leave Encashment. For provident fund, entity makes contribution to provident fund trust. Gratuity plan is funded with LIC and requires contributions to be made to a separate fund administered by LIC. Leave encashment liability of the entity is unfunded. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age.
Each year, the Board of Trustees reviews the level of funding in the Gratuity plan and Provident fund. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees decides its contribution based on the results of this annual review. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
i) Projected unit credit (PUC) actuarial method has been used to assess the plan''s liabilities allowing for retirement, death-in-service and withdrawal and also compensated absence while in service.
ii) Under the PUC method a projected accrued benefit is calculated at the beginning of the period and again at the end of the period for each benefit that will accrue for all active members of the plan. The projected accrued benefit is based on the plan accrual formula and upon service as at the beginning and end of the period, but using member''s final compensation, projected to the age at which the employee is assumed to leave active service. The plan liability is the actuarial present value of the projected accrued benefits as on the date of valuation for active members.
Sensitivities due to mortality & withdrawals are not material & hence impact of change due to these not calculated. Sensitivities as rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting year) has been applied when calculating the provision for defined benefit plan recognised in the Standalone Balance Sheet.
The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it provides an approximation of the sensitivity of the assumptions shown.
The defined benefit plan is exposed to a number of risks, the most significant of which are detailed below:
a) Salary increases - Actual salary increases will increase the plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability
b) I nvestment risk - If plan is funded then assets/liabilities mismatch and actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
c) Discount rate - Reduction in discount rate in subsequent valuations can increase the plan''s liability.
d) Mortality and disability - Actual deaths and disability cases proving lower or higher than assumed in the valuation can impact the liabilities
e) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact plan''s liability
The Code on Social Security, 2020 ("the Codeâ) relating to employee benefits during employment and post-employment received Presidential assent in September 2020. Subsequently, the Ministry of Labour and Employment had released the draft rules on the aforementioned Code. However, the same is yet to be notified. The Company will evaluate the impact and make necessary adjustments to the financial statements in the period when the Code will be notified and will come into effect.
56 CAPITAL MANAGEMENT
For the purpose of the company''s capital management, capital includes issued equity share capital and other equity attributable to the equity holders of the company. The primary objective of the company''s capital management is to maximise the shareholder''s wealth.
The company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitor the return on capital employed as well as the level of dividend to shareholders.
The company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The company monitors capital using a debt equity ratio, which is net debt divided by total capital.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current financial year. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2022.
57 The Second and third wave of the pandemic impacted the economy during the nine months ended December 31, 2021. However, the Company''s business and operations continued with certain restrictions in line with the guidelines laid down by the Government.
Radico Khaitan has evaluated the impact of the pandemic on its business operations and financial position. Based on such review, there is no significant impact on the Company''s assets, capital and financial resources, profitability parameters or liquidity position as of March 31, 2022.
The Management does not envisage any impact on the going concern assumption in the foreseeable future. However, the impact assessment of COVID-19 will be a continuing process given the uncertainties associated with its nature and duration.
67 OTHER STATUTORY INFORMATION
a. The Company has not undertaken any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
b. The Company do not have any transactions with companies struck off.
c. The Company does not hold any Investment property hence not applicable.
d. In Current year, no revaluation has been done for Property, plant and equipment and Intangible assets.
e. The Company has not been declared a ''Wilful Defaulter'' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
f. The Company does not have any Benami property and no proceedings have been initiated or pending against the Company for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
g. The Company has not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.
h. The company have not advanced or loaned or invested funds to any other persons or entities, including foreign entities (intermediaries) with the understanding that the intermediary shall:
(a) Directly and 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 ultimate beneficiaries.
i. 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:
i. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or,
ii. provide any guarantee, security or the like on behalf of the ultimate beneficiaries
j. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
k. The Company has ensured compliance with Section 2(87) of the Companies Act, 2013 read with Companies (Restriction on Number of Layers) Rules, 2017 (''Layering Rules'') is not applicable.
l. 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.
m. The borrowings obtained by the Company from banks have been applied for the purposes for which such loans were was taken.
Mar 31, 2021
ii) In February 2007, the Madhya Pradesh State Industrial Development Corporation Ltd. demanded a sum of '' 168.09 lakhs besides unspecified expenses arising out of the alleged non-compliance of conditions relating to its holding of shares in Abhishek Cement Ltd., prior to its merger with Radico Khaitan Ltd. in the financial year 2002-03. The writ petition filed by the Company before the Madhya Pradesh High Court has been partly allowed by confirming the recovery of '' 167.32 lakhs against the Company. However, the division bench of the Madhya Pradesh High Court has stayed the recovery proceedings initiated by local collector office. The court has ordered to maintain '' 100 lakhs in State Bank of India till the final adjudication of the matter. The matter is since sub-judice.
iii) (a) The applicability of Goods & Service Tax Act, 2017 on Extra Neutral Alcohol (ENA) was kept on hold by
the GST council vide their minutes of meeting dated 05.08.2017, 22.12.2018 and 20.09.2019 wherein the ENA meant for the potable purpose was kept under the control of respective State Governments, and accordingly the Company is paying the state taxes on ENA as applicable in the respective states.
(b) The Deputy Commissioner (Commercial Tax), Sector I, Rampur had issued notices on 14.11.2019, 15.11.2019 and 16.11.2019 for the leviability of GST on ENA w.e.f. July 2017. Radico Khaitan has filed writ petition before Honâble High Court of Allahabad, challenging these notices, with the plea that potable ENA is kept out of the purview of GST by the GST Council. The Honâble Court on 10th January 2020, granted stay to the Company against any proceedings under GST and also advised the department to file a response.
iv) A minor fire occurred at the Company (UP) Rampur plant on 6th March, 2021 involving two of the alcohol storage tanks. The Companyâs emergency response team along with the local fire brigades were able to bring the fire under control without further spread to the plantâs other areas. There was no loss of life.
This accident resulted in loss of Extra Neutral Alcohol to the tune of 1.81 Lakh alcoholic liters stored in these two tanks translating into a financial loss of '' 270 Lakhs including the replacement cost of damaged tanks. The Company immediately filed the insurance claim which is being assessed by the Insurer. Meanwhile, an interim measure claim of '' 50 lakhs has already been received.
Beside this, the U.P. State Excise Department has issued a show cause notice (SCN) to us claiming an excise duty amounting to '' 1,822.77 Lakhs on the alcohol lost in the accident. Based on the opinion of the legal counsel, the Company has filed an appeal under Rule 813 of the U.P. Excise Rule before the U.P. Commissioner of Excise seeking relief from the above claim by way of setting aside the above mentioned SCN, considering this loss of alcohol as an unavoidable accident of fire.
Disclosure as per Ind AS 116
On transition, the adoption of the new standard resulted in recognition of âRight of Useâ asset of '' 1029.17 lakhs, and a lease liability of '' 1203.67 lakhs. The cumulative effect of applying the standard, amounting to ''130.58 lakhs was debited to retained earnings, net of taxes of '' 43.92 lakhs. Ind AS 116 will result in an increase in cash inflows from operating activities and an increase in cash outflows from financing activities on account of lease payments.
The following is the summary of practical expedients elected on initial application:
1. Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
2. Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application.
3. Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
4. Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind AS 116 is applied only to contracts that were previously identified as leases under Ind AS 17.
5. The weighted average incremental borrowing rate applied to lease liabilities as applicable.
i) Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Officer, in deciding how to allocate resources and assessing performance. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Based on the management approach as defined in Ind AS 108, the Chief Operating Officer evaluates the companyâs performance based on only one segment i.e. manufacturing and trading in Liquor & Alcohol.
Terms and conditions of transactions with related parties
The sales to and purchases from 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 outstanding guarantees provided or received for any related party receivables or payables in the current financial year. For the year ended March 31, 2021, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (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.
Derivatives not designated as hedging instruments
The entity uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. However such foreign currency denominated borrowings have not been designated as hedge. Such derivatives are recorded at mark to market at each reporting date with a corresponding recognition in the Statement of Profit and Loss.
51 financial instruments
A- Fair values
The carrying amount of financial assets and liabilities except for certain financial assets i.e. "instrument carried at fair valueâ appearing in the financial statement are reasonable approximation of fair value. Such investments of those financial instruments carried at fair value are disclosed below:-
52 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Companyâs principal financial liabilities comprise loans and borrowings, security deposits and trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support its operations. The Companyâs principal financial assets include loans, investment in preference shares & equity shares, trade and other receivables, and cash and cash equivalents that are derived directly from its operations.
The Companyâs business activities are exposed to a variety of financial risks, namely market risks, credit risk and liquidity risk. The Companyâs senior management has the overall responsibility for establishing and governing the Companyâs risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Companyâs risk management policies. The Companyâs risk management policies are established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.
(a) 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 prices comprise three types of risk: interest rate risk, foreign currency risk and price risk. Financial instruments affected by market risk include interest bearing loans and borrowings, fixed deposits and FVTPL investments.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments are all constant as at 31 March 2017 and 31 March 2016.
The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets and liabilities.
The following assumptions have been made in calculating the sensitivity analyses:
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 31 March 2017 and 31 March 2016.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk and currency risk and equity price risk. Financial instruments affected by market risk include loans and borrowings.
The sensitivity analysis in the following sections relate to the position as at March 31, 2021 and March 31, 2020.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments in foreign currencies to total debts.
The analyses exclude the impact of movements in market variables on the carrying values of gratuity and other post-retirement obligations and provisions.
The following 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.
(i) Interest Rate Risk
I nterest 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 entityâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long-term debt obligations with floating interest rates.
Interest rate sensitivity:
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Companyâs profit before tax is affected through the impact on floating rate borrowings, as follows
Fair value sensitivity analysis for fixed rate instruments
The Company does not have any fixed rate financial assets and liabilities at fair value through profit and loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss and neither would it affect the equity.
(ii) Foreign currency risk
The Indian National Rupee is the entityâs most significant currency. As a consequence, the companyâs results are presented in Indian National Rupee and exposures are managed against Indian National Rupee accordingly. The company has limited foreign currency exposure which are mainly on account of imports and exports.The company has not hedged its imports and exports, since they have short recovery cycle and act as natural hedging reducing the foreign currency risk.
Foreign currency sensitivity:
The following tables demonstrate the sensitivity to a reasonably possible change in foreign currency exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax due to changes in the fair value of foreign currency exposure.
(iii) Equity price risk
The companyâs equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. Reports on the equity portfolio are submitted to the companyâs senior management on a regular basis. The companyâs Board of Directors reviews and approves all equity investment decisions.
At the reporting date, the exposure to:
-unlisted equity securities at fair value is '' 0.60 Lakhs.
-unlisted equity in Joint Venture at cost of '' 13,538.53 Lakhs
(b) Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The entity is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, financial assets. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.
Trade receivables and loans
Credit risk is managed by company in accordance with the companyâs established policy, procedures and control relating to credit risk management. Credit quality is assessed based on an extensive credit rating and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables and loans are regularly monitored.
An impairment analysis is performed at each reporting date on an individual basis for receivables and loans. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note below. The company does not hold collateral as security. The company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and has been rated highly based on internal credit assessment parameters.
Presently, In the current COVID-19 scenario, there are no indication of any material risk. However going forward this could be possible risk which will be addressed as & when they arise.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the entityâs treasury department in accordance with the entityâs policy. Counterparty credit limits are reviewed by the entityâs Board of Directors on an annual basis. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the entityâs performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the entityâs policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
Collateral
The Company has created a charge in favour of the lenders for loans and borrowings (Refer note-18 and 23 on Borrowings for details).
The entity has a defined benefit plans for Gratuity, Provident Fund and Leave Encashment. For provident fund, entity makes contribution to provident fund trust. Gratuity plan is funded with LIC and requires contributions to be made to a separate fund administered by LIC. Leave encashment liability of the entity is unfunded. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age.
Each year, the Board of Trustees reviews the level of funding in the Gratuity plan and Provident fund. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees decides its contribution based on the results of this annual review. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The following tables summaries 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 respective plans.
For the purpose of the companyâs capital management, capital includes issued equity share capital and other equity attributable to the equity holders of the company. The primary objective of the companyâs capital management is to maximise the shareholderâs wealth.
The companyâs policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitor the return on capital employed as well as the level of dividend to shareholders.
The company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The company monitors capital using a debt equity ratio, which is net debt divided by total capital. The companyâs policy is to keep the debt equity ratio between 70% and 100%. The company includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents, excluding discontinued operations.
In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current financial year. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2021.
56 The nationwide lockdown imposed by the Government of India, due to the COVID -19 pandemic, was lifted in a phased manner. Accordingly, the Companyâs operations including bottling facilities have become operational with necessary safety measures, even though temporary disruptions occurred from time to time, including recent surge.
The Company has evaluated the impact of this pandemic on its business operations and financial position. Based on such review, there is no significant impact on the Companyâs assets, capital and financial resources, profitability parameters or liquidity positions as at March 31, 2021.
The Management does not envisage any impact on the going concern assumption in the foreseeable future. However, the impact assessment of COVID-19 will be a continuing process given the uncertainties associated with its nature and duration.
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management and relied upon by the auditors. Interest, if any, on these have been provided since identified.
58 NOTE ON REDUCTION OF SHARE CAPITAL OF JOINT VENTURE ENTITY (GIVEN IN THE FINANCIAL STATEMENT ADOpTED ON JuNE 25, 2019)
Based on NCLT order dated 16th December 2019, the joint venture entity (Radico NV Distilleries Maharashtra Ltd.) has reduced its equity capital from '' 7387.72 lakhs to '' 3773.58 lakhs w.e.f. March 31,2019. As a result, the reserve of the joint venture increased to '' 39610.95 lakhs from '' 35996.81 lakhs. The impact of the said change has reflected in the annualised accounts as at March 31, 2020 by the JV company. Proportionately impact on the nos. of equity shares held in the joint venture has been taken.
59 EXCEpTIONAL ITEMS (Refer NOTE NO. 37)
(a) The Central Pollution Control Board (CPCB) vide its letter dated August 06, 2019 pursuant to Companyâs representation and their subsequent inspection has allowed the Company to restore capacity of its molasses plant from 77 KLD to 200 KLD. Environmental Compensation of '' 702.00 lakhs as levied by CPCB, has been paid and accounted for during the year.
(b) In accordance with Sabka Vishwas Scheme 2019, '' 858.59 Lakhs was paid towards Central excise duty as onetime settlement, for the period April 2007 to June 2017 in line with legal advice and accounted for during the reporting year.
(c) The Government of Bihar in exercise of the powers conferred under Section 19(4) of the Bihar Excise Act, 1915 through its notification dated April 5, 2016, imposed a ban on trade and consumption of Liquor in the State of Bihar. As on March 31, 2019, the Company had an outstanding of '' 1259.12 lakhs with the Bihar State Beverages Corporation Limited (ââBSBCLââ). An amount of '' 403.09 lakhs pertaining to VAT refund from the Government of Bihar under the applicable law at that time, in respect of billed stocks returned by BSBCL or stocks destroyed pursuant relevant notifications, has been received in June''2019. The balance of '' 856.03 lakhs, has been written off, as a matter of prudence and it is disclosed as an exceptional item.
The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
61 Previous year figures have been re-grouped, wherever necessary, to correspond to current year figures.
Mar 31, 2018
Background
Radico Khaitan Limited (the Company) is a company limited by shares, incorporated and domiciled in India. The Company is engaged in the manufacturing and trading of Alcoholic products such as Indian Made Foreign Liquor (IMFL), Alcohol, Country Liquor etc. The Company has its presence in India as well as various other global markets.
Significant Accounting Policies
1.01. Basis of preparation
The standalone financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.
Effective March 31, 2016, the entity has prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). These financial statements for the year ended March 31, 2018 has been prepared in accordance with Ind AS.
The standalone financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
-Derivative financial instruments,
-Defined benefit plans -Share Based Payments
-Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments).
1.02. Current versus non-current classification
The company presents assets and liabilities in the Balance Sheet based on current/non-current classification. An asset is treated as current when it is:
-expected to be realized or intended to be sold or consumed in normal operating cycle,
-held primarily for the purpose of trading,
-expected to be realized within twelve months after the reporting period, or -cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
-it is expected to be settled in normal operating
cycle,
-it is held primarily for the purpose of trading,
-it is due to be settled within twelve months after the reporting period, or -there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The entity has assumed twelve months as its operating cycle.
1.03. Fair value measurement
The entity measures financial instruments, such as, derivatives at fair value at each reporting date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
-in the principal market for the asset or liability, or -in the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
-Level 1-Quoted (unadjusted) market prices in active markets for identical assets or liabilities,
-Level 2-Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable, -Level 3-Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.04. Foreign Currency Transactions
The standalone financial statements are presented in INR, which is also its functional currency.
Transactions in foreign currencies are accounted for at the exchange rate prevailing on the day of transaction. The outstanding liabilities/ receivables are translated at the year end rates.
Exchange differences arising on settlement or translation of monetary items are recognized in the Statement of Profit and Loss .
Non-monetary items denominated in foreign currency, are valued at the exchange rate prevailing on the date of transaction. Any gain or losses arising on translation or settlement are recognized in the Statement of Profit and Loss as per the requirements of Ind AS 21.
1.05. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government with an exception to excise duty. The company has concluded that it is the principal
in all of its revenue arrangements with tie up units since the company is the primary obligor in all the revenue arrangements, has pricing latitude and is also exposed to inventory and credit risks. In arrangements with tie up units, revenue is recognized at gross value with corresponding cost being recognized under cost of production.
However, in case of revenue arrangements with royalty units, the company has concluded that it is acting as an agent in all such revenue arrangements since the company is not the primary obligor in all such revenue arrangements, has no pricing latitude and is not exposed to inventory and credit risks. Company earns fixed royalty for sales made of its products which is recognized as revenue.
The company has assumed that recovery of excise duty flows to the entity on its own and liability for excise duty forms part of the cost of production, irrespective of whether the goods are sold or not. Revenue therefore includes excise duty.
Sale of goods: Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
Interest income: For all debt instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the Statement of Profit and Loss.
Royalty: Royalties are recognized on an accrual basis in accordance with the substance of the relevant agreement.
Export Incentives: Income from export incentives such as duty drawback etc. are recognized on accrual basis.
Dividend: Dividend is recognized when the right to receive the payment is established, which is generally when shareholders approve the dividend.
1.06. Excise Duty
In respect of stocks covered by Central Excise, excise duty is provided on closing stocks and also considered for valuation. In respect of country liquor and IMFL stocks, applicable State excise duty/ export duty is provided on the basis of state-wise dispatches identified. In the case of Rectified Spirit/ ENA, it is not ascertainable as to how much would be converted finally into country liquor or IMFL or sold as such and also to which particular state or exported outside India. Duty payable in such cases is not determinable (as it varies depending on the places and the form in which these are dispatched). Hence, the excise duty on such stocks lying in factory is accounted for on clearances of such goods. The method of accounting followed by the company has no impact on the financial statements of the year.
1.07. Government grants
Government grants are recognized at fair value where there is reasonable assurance that the grant will be received and all attached conditions are complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset.
When the company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to the Statement of Profit and Loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual installments. When loans or similar assistance are provided by Governments or related institutions, with an interest rate lower than the current applicable market rate, the effect of this favorable interest is regarded as a government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial instruments.
1.08. Taxes
Current Income Tax: Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the entity operates and generates taxable income.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred Tax: Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting nor taxable profit or loss.
In respect of taxable temporary differences associated with interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:
-When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss -In respect of deductible temporary differences associated with interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
1.09. Property, plant and equipment
Property, plant and equipment have been measured at fair value at the date of transition to Ind AS. The entity recognized the fair value as deemed cost at the transition date, viz., 1 April 2015.
Assets are carried at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the items.
Capital work in progress is stated at cost, less accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. When significant parts of plant and equipment are required to be replaced at intervals, the entity depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred. (Refer to note 1.23 regarding significant accounting judgments, estimates and assumptions).
Depreciation: Cost of leasehold land and leasehold improvements are amortized over the period of lease.
Depreciation is provided as per Schedule II to the Companies Act, 2013, on straight line method with reference to the useful life of the assets specified therein. On additions costing less than Rs.5000, depreciation is provided at 100% in the year of addition.
The determination of the useful economic life and residual values of property, plant and equipment is subject to management estimation. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
1.10. Intangible assets
On transition to Ind AS, the entity has elected to continue with the carrying value of all of intangible assets (except goodwill which was impaired) and use that carrying value as the deemed cost of intangible assets.
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Amortization: Based on the anticipated future economic benefits, the life of Brands & Trade Marks are amortized over twenty years on straight line method. Software are amortized over a period of three years on straight line method.
1.11. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
1.12. Segment reporting
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
1.13. Inventories
Finished goods and work-in-progress are valued at lower of cost or net realizable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition. Raw materials, packing materials, stores and spares are valued at lower of cost or net realizable value. Cost is ascertained on -moving weighted average- basis for all inventories.
1.14. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to April 01, 2015, the company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
Entity as a lessee: A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the company is classified as a finance lease.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the entity''s general policy on the borrowing costs (See note 1.11). Contingent rentals are recognized as expenses in the periods in which they are incurred.
Leased assets are depreciated over the useful life of the asset.
However, if there is no reasonable certainty that the company will obtain ownership by the end of the lease term, the asset is depreciated over the lower of the estimated useful life of the asset and the lease term.
As on transition date, the entity has newly classified a land lease as a finance lease and has recognized such asset and liability at fair value with differential being recognized in retained earnings.
Operating lease rentals are charged off to the Statement of Profit and Loss.
1.15. Impairment of non-financial assets
At each reporting date, the company reviews the carrying amount of it assets to determine whether there are any indication that those assets have suffered an impairment loss. If any such indication exists, recoverable amount of the assets is estimated in order to determine the extent of impairment loss.
An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or entity''s of assets. When 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, quoted share prices for publicly traded companies or other available fair value indicators.
1.16. Provisions, Contingent Liabilities and Contingent
Assets
Provisions: Provisions are recognized when the company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Statement of Profit and Loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liability and Contingent Assets:
Contingent liabilities are not recognized but are disclosed where possibility of any outflow in settlement is remote. Contingent assets are not recognized but disclosed where an inflow of economic benefits is probable.
1.17. Employee benefits
Short-term obligations: Liabilities for salaries and wages, including non-monetary benefits, that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized up to the end of the reporting period and are measured at the amounts expected to be paid on settlement of such liabilities. The liabilities are presented as current employee benefit obligations in the Balance Sheet.
Other long-term employee benefit obligations: The liabilities for earned and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in the Statement of Profit and Loss.
The obligations are presented as current liabilities in the Balance Sheet since the company does not have an unconditional right to defer the settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Post-employment obligations:
The Company operates the following postemployment schemes:
-Defined benefit plans in the form of gratuity, and -Defined contribution plans such as provident fund and superannuation fund
Gratuity obligations: The Company operates a defined benefit gratuity plan for employees. The Company has obtained group gratuity scheme policies from Life Insurance Corporation of India to cover the gratuity liability of these employees. The difference in the present value of the defined benefit obligation and the fair value of plan assets at the end of the reporting period is recognized as a liability or asset, as the case may be, in the Balance Sheet. The defined benefit obligation is calculated annually on the basis of actuarial valuation using the projected unit credit method.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in the employee benefit expense in the Statement of Profit and Loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in OCI.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in statement of profit or loss as past service cost.
Defined contribution plans: The Company makes contribution to statutory provident fund and pension funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
1.18. Share-based payments
Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions). The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The fair value of the options granted is recognized as an employee benefits expense with a corresponding increase in equity. Total amount to be expensed is determined by reference to the fair value of the option granted:
-including any market performance conditions (e.g., the Company''s share price),
-excluding the impact of any service and non-market performance vesting conditions (e.g., profitability, sales growth targets and remaining and employee of the entity over a specified time period), and
-including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holding shares for a specific period of time).
The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in statement of profit or loss, with a corresponding adjustment to equity.
1.19. Earnings Per Share
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
Diluted earnings per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of shares outstanding during the period adjusted for the effects of all dilutive potential equity shares.
1.20. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement: Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, other than those designated as fair value through profit or loss (FVTPL), are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities recognized at FVTPL are recognized immediately in Statement of Profit and Loss.
A. Financial Assets
Subsequent measurement: Financial assets are subsequently classified as measured at:
-amortized cost
-fair value through other comprehensive income (FVTOCI)
-fair value through profit or loss (FVTPL)
Trade Receivables and Loans: Trade receivables are initially recognized at fair value. Subsequently these assets are held at amortized cost, using the effective interest rate (EIR) method net of any expected credit losses (ECL). The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument
Financial assets measured at amortized cost: Afinancial asset is measured at amortized cost if both the following conditions are met:
A. The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
B. Contractual terms of the instruments give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the Effective Interest Rate (EIR) method. EIR is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the EIR, transaction costs and other premiums or discounts) through the expected life of the debt instrument or where appropriate, a shorter period, to the net carrying amount on initial recognition.
The EIR amortization is included in other income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss. This category generally applies to trade and other receivables, loans, etc.
Measured at fair value through other comprehensive income: Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognized in OCI is reclassified from the equity to ''other income'' in the Statement of Profit and Loss.
Measured at fair value through Profit or Loss: A financial asset not classified as either amortized cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognized as ''other income'' in the Statement of Profit and Loss.
Equity investments: All equity investments in scope of Ind AS 109 are measured at fair value.
Equity instruments which are held for trading and contingent consideration recognized by an acquirer in a business combination to which Ind AS 103 applies are classified as FVTPL. For all other equity instruments, the company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The entity makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
Derecognition: The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or the same are transferred.
Impairment of financial assets: Expected credit losses (ECL) are recognized for all financial assets subsequent to initial recognition other than financial assets in FVTPL category. For financial assets, as per Ind AS 109, the Company recognizes 12-month expected credit losses for all originated or acquired financial assets if at the reporting date. The credit risk of the financial asset has not increased significantly since its initial recognition. Expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition.
The impairment losses and reversals are recognized in Statement of Profit and Loss.
B. Financial liabilities
Subsequent measurement
-Financial liabilities are subsequently measured at amortized cost using the EIR method.
-Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.
Derecognition: A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
Reclassification of financial assets: No reclassification is made for financial assets which are equity instruments and financial liabilities.
For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The company''s senior management determines change in the business model as a result of external or internal changes which are significant to the entity''s operations. Such changes are evident to external parties. A change in the business model occurs when the company either begins or ceases to perform an activity that is significant to its operations. If the company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The entity does not restate any previously recognized gains, losses (including impairment gains or losses).
C. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the standalone Balance Sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
1.21. Derivative financial instruments
The entity uses derivative financial instruments, such as forward currency contracts, interest rate swaps to hedge its foreign currency risks and interest rate risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
1.22. Cash and cash equivalents
Cash and cash equivalent in the Balance Sheet comprise balance at banks and cash on hand and short-term deposits with an original maturity of three months or less, highly liquid investments that are readily convertible which are subject to an insignificant risk of changes in value.
1.23. Significant accounting judgments, estimates and assumptions
The preparation of the standalone financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, contingent liabilities, and the accompanying disclosures. 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.
Judgmentsâ:
In the process of applying the accounting policies, management has made the following judgments, which have most significant effect on the amounts recognized in the separate financial statements:
A. Arrangement containing lease: The entity applies Appendix C of Ind AS 17, -Determining Whether an Arrangement Contains a Lease-, to contracts entered with contract bottling units. Appendix C deals with the method of identifying and recognizing service, purchase and sale contracts that do not take the legal form of a lease but convey a right to use an asset in return for a payment or series of payments. The entity has determined that where the capacity utilization by the entity is less the 100% and others take more than an insignificant amount of output, the arrangement does not contain leases. Where the entity utilise 100% capacity and others take less than an insignificant output the agreement contains lease. However, based on an evaluation of the terms and conditions of the arrangements, the company has concluded that these contracts are in the nature of operating leases.
B. Revenue recognition: The entity assesses its revenue arrangements against specific criteria,
i.e. whether it has exposure to the significant risks and rewards associated with the sale of goods or the rendering of services, in order to determine if it is acting as a principal or as an agent. The entity has generally concluded that it is acting as a principal in all its revenue arrangements.
When deciding the most appropriate basis for presenting revenue or costs of revenue, both the legal form and substance of the agreement between the entity and its business partners are reviewed to determine each party''s respective role in the transaction.
Where the entity''s role in a transaction is that of a principal, revenue is recognized on a gross basis. This requires revenue to comprise the gross value of the transaction billed to the customer, net off sales tax/VAT/GST, trade discounts and rebates but inclusive of excise duty with any related expenditure charged as an operating cost.
Estimates and assumptions:
The key assumptions concerning the future and other key sources of estimation and 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 entity based its assumptions and estimates on parameters available when the separate 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 entity. Such changes are reflected in the assumptions when they occur.
A. Impairment reviews: At each reporting date, the entity reviews the carrying amount of its non-financial assets to determine whether there are any indication that those assets have suffered an impairment loss. If any such indication exists, recoverable amount of the assets is estimated in order to determine the extent of impairment loss.
Impairment reviews in respect of the relevant CGUs are performed at least annually or more regularly if events indicate that this is necessary.
Impairment reviews are based on discounted future cash flows. The future cash flows which are based on business forecasts, the long-term growth rates and the pre-tax discount rates, that reflects the current market assessment of the time value of money and the risk specific to the asset or CGU, used are dependent on management estimates and judgments. Future events could cause the assumptions used in these impairment reviews to change.
B. Allowance for uncollectible account receivables and advances: Trade receivables and certain financial assets do not carry any interest unlike other interest bearing financial assets viz interoperate deposits. Such financial assets are stated at their carrying value as reduced by impairment losses determined in accordance with expected credit loss. Allowance as per expected credit loss model is based on simplified approach which is based on historically observed default rates and changed as per forward-looking estimates. In case of trade receivables entity uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables which is also based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. The actual loss could differ from the estimate made by the management.
C. Taxes: The entity is subject to income tax laws as applicable in India. Significant judgment is required in determining the provision for taxes as the tax treatment is often by its nature complex, and cannot be finally determined until a formal resolution has been reached with the relevant tax authority which may take several years to conclude. Amounts provided are accrued based on management s interpretation of country specific tax laws and the likelihood of settlement. The entity recognizes liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Actual liabilities could differ from the amount provided which could have a consequent adverse impact on the results and net position of the entity.
D. Pension and post-retirement benefits: The cost of defined benefit plans viz. gratuity, provident fund, leave encashment, etc. are determined using actuarial assumptions. 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 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 parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about defined benefit plans are given in note no. 54.
E. Depreciation / amortization and useful lives of property plant and equipment / intangible
assets: Property, plant and equipment / intangible assets are depreciated / amortized over their estimated useful lives, after taking into account estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortization to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes. The depreciation / amortization for future periods is revised if there are significant changes from previous estimates.
1.24. RECENT ACCOUNTING DEVELOPMENTS
Standards issued but not yet effective: In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying amendments to Appendix B to Ind AS 21, -Foreign currency transactions and advance consideration-- and Ind AS 115- -Revenue from Contract with Customers--. The amendments are applicable to the Company from April 01, 2018.
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On
March 28, 2018, Ministry of Corporate Affairs (-MCA-) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which 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, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 01, 2018.
The Company has evaluated the effect of this on the financial statements and the impact is not material.
Mar 31, 2017
Background
Radico Khaitan Limited (the Company) is a company limited by shares, incorporated and domiciled in India. The Company is engaged in the manufacturing and trading of Alcoholic product such as IMFL, Alcohol, Country Liquor etc. The Company sells its products in India as well as various other global markets.
1 i) The Company entered into an agreement dated November 11, 2011 for purchase of land & building for a lump sum consideration of Rs. 8000.00 Lakhs. The purchase consideration was paid subject to vacation of mortgage with payment of interest by the party on the consideration till the transfer of the property in the name of the Company. Since the party had not fulfilled the obligation, the matter was referred to an arbitrator in December 2015. Subsequently, the arbitration order was awarded on May 11, 2016 for payment of Rs. 10410 lakhs, by the party to Company, over next five year in equally yearly installments of Rs. 2082 Lakhs. Subsequently in March 2017, the party also expressed its intent to repay the entire amount to the Company by March 31, 2018.
ii) In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.
2 Segment reporting
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Based on the management approach as defined in Ind AS 108, the Chief Operating Decision Maker evaluates the companyâs performance based on only one segment i.e. manufacturing and trading in Liquor & Alcohol.
3 Related party transactions and disclosures
(1) Related parties and their relationship :
I Enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the reporting enterprise :
(1) Sapphire Intrex Ltd.(it is amalgamated with Shailja Finance Ltd.)
(2) The Rampur Distillery & Chemical Company Ltd. Employees P. F. Trust
(3) The Rampur Distillery & Chemical Company Ltd. Employees Group Gratuity Trust
(4) The Rampur Distillery & Chemical Company Ltd. Employees Superannuation Scheme
II Joint Ventures:
(1) Radico NV Distilleries Maharashtra Limited
III Key Management personnel :
(1) Dr. Lalit Khaitan , Chairman & Managing Director
(2) Mr. Abhishek Khaitan , Managing Director
(3) Mr. K.P.Singh , Whole Time Director
(4) Ms. Shailja Devi , Director Relatives :
(1) Mrs. Deepshikha Khaitan (Wife of Mr Abhishek Khaitan)
4 Financial Instruments
A- Fair values
The carrying amount of all financial assets and liabilities except for certain other financial assets i.e. âinstrument carried at fair valueâ appearing in the financial statement is reasonable approximation of fair value. Such investments of those financial instrument carried at fair value are disclosed below:-
B- Fair value hierarchy
The following table provides fair value management hierarchy of the company assets:
C- Valuation techniques and processes used to determine fair value
Fair value of unquoted investments, fair value is determined based on the present values, calculated using generally accepted valuation principles.
D- Valuation inputs and relationships to fair value
Significant unobservable inputs used in Level 3 fair value measurement.
E- Reconciliation of financial instruments categorised under level 3
5 Financial risk management objectives and policies
The Companyâs principal financial liabilities comprise loans and borrowings, security deposits and trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support its operations. The Companyâs principal financial assets include loans, preference shares, equity, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The Companyâs business activities are exposed to a variety of financial risks, namely market risks, credit risk and liquidity risk,. The Companyâs senior management has the overall responsibility for establishing and governing the Companyâs risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Companyâs risk management policies. The Companyâs risk management policies are established to identify and analysis the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.
(a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk and currency risk and equity price risk. Financial instruments affected by market risk include loans and borrowings.
The sensitivity analysis in the following sections relate to the position as at March 31, 2017 and March 31, 2016:
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments in foreign currencies are all constant as at March 31, 2017.
The analyses exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations and provisions.
The following assumptions have been made in calculating the sensitivity analyses:
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, 2017 and March 31, 2016.
(i) 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 entityâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long-term debt obligations with floating interest rates.
Interest rate sensitivity:
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Companyâs profit before tax is affected through the impact on floating rate borrowings, as follows
A change of 100 basis points in interest rates for variable rate instruments at the reporting date would have increased/(decreased) profit or loss for the below years by the amounts shown below. With all other variables held constant, the Companyâs profit before tax is affected through the impact on floating rate borrowings, as follows:
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.
(ii) Foreign currency risk
The Indian Rupee is the entityâs most significant currency. As a consequence, the entityâs results are presented in Indian Rupee and exposures are managed against Indian Rupee accordingly. The entity has limited foreign currency exposure which are mainly on account ECB loan, purchases and exports.
The company has hedged 0.00% as at 31-Mar-2017 (1.75% as at 31-Mar-2016, 1.56% as at 01- Apr-2015) of its ECB loan to minimize the risk. Purchase and export has short recovery cycle and counter each other reducing the foreign currency risk.
Foreign currency sensitivity:
The following tables demonstrate the sensitivity to a reasonably possible change in foreign currency exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of liabilities
(iii) Equity price risk
The entityâs equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. Reports on the equity portfolio are submitted to the entityâs senior management on a regular basis. The entityâs Board of Directors reviews and approves all equity investment decisions.
At the reporting date, the exposure to unlisted equity securities at fair value was Rs. 0.60 lakhs.
(b) Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The entity is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, financial assets. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.
Trade receivables and loans
Credit risk is managed by entity subject to the entityâs established policy, procedures and control relating to credit risk management. Credit quality is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables and loans are regularly monitored.
An impairment analysis is performed at each reporting date on an individual basis for receivables and loans. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note below. The entity does not hold collateral as security. The entity evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and has been rated highly based on internal credit assessment parameters.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the entityâs treasury department in accordance with the entityâs policy. Counterparty credit limits are reviewed by the entityâs Board of Directors on an annual basis. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
The Companyâs maximum exposure to credit risk for the components of the Balance Sheet at March 31, 2017 and March 31, 2016 is the carrying amounts as illustrated in note below.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
(c) Liquidity Risk
The Company monitors its risk of a shortage of funds on a regular basis. The Companyâs objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.
The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments:
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the entityâs performance to developments affecting a particular industry. In order to avoid excessive concentrations of risk, the entityâs policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
The entity has a defined benefit plans for Gratuity, Provident Fund and Leave Encashment. For provident fund, entity makes contribution to provident fund trust. Gratuity plan is funded with LIC and requires contributions to be made to a separate fund administered by LIC. Leave encashment liability of the entity is unfunded. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. Each year, the Board of Trustees reviews the level of funding in the Gratuity plan and Provident fund. Such a review includes the asset-liability matching strategy and investment risk management policy. The Board of Trustees decides its contribution based on the results of this annual review. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
The following tables summaries 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 respective plans.
6 Capital management
For the purpose of the entityâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the entityâs capital management is to maximise the shareholder value.
The entityâs policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitor the return on capital employed as well as the level of dividend to shareholders.
The entity manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the entity may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The entity monitors capital using a debt equity ratio, which is net debt divided by total capital plus net debt. The entityâs policy is to keep the debt equity ratio between 70% and 100%. The entity includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents, excluding discontinued operations.
In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current quarter. No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2017 and March 31, 2016.
7 DISCLOSURE ON SPECIFIED BANK NOTES (SBNs)
During the year, the Company had specified bank notes (SBNs) and other denomination notes as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017, on the details of Specified Bank Notes (SBNs) held and transacted during the period from November 08, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per the notification is given below.
Mar 31, 2016
a. The Company has issued only one class of shares, referred to as equity shares having a par value of Rs. 21-. Each holder of equity shares is entitled to one vote per share.
b. 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.
c. During the year ended March 31, 2016, the amount of dividend per share recognized for distribution to equity shareholders is Rs. 0.80 (previous year Rs. 0.80) per share.
f. Shares reserved for issue under options: ESOPs
The Company established Employee Stock Options Plan, duly approved by the shareholders in the meeting held on 25.05.2006 which is effective from 25.07.2006. Accordingly, the Company has granted 41,80,000 equity options up to 31.03.2016 which will get vested over a period of 4 years from the date of the grant. The employees have the options to exercise the right within a period of 3 years from the date of vesting. The compensation cost of stock options granted to employees are accounted by the Company using the intrinsic value method.
# Notes
i). The above loans are secured by a parl-passu first charge on gross block of fixed assets of the Company, both present and future.
II). Non-fund based facilities provided by banks are also secured by a second charge on the fixed assets of the Company
# Loans from banks - secured by hypothecation of inventories and book debts. Further secured by a second charge on fixed assets of the Company.
# The Company has not received information from suppliers or service providers, whether they are covered under Micro, Small and Medium Enterprises (Development) Act, 2006 and hence it has not been possible to ascertain the required information relating to amounts unpaid, if any, as at year end together with interest paid or payable to them.
# This does not include any amount due and outstanding, to be credited to the Investor Education and Protection Fund
For the purpose of considering the limit of the Committee Memberships and Chairmanships of a Director, the Audit Committee and the Stakeholders Relationship Committee of Public Limited Companies have been considered.
The Board has framed the Remuneration and Nomination Committee Charter which ensures effective compliance of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement and Regulation 19 and part D of ceased to be member on 05.02.2016. Terms of reference
Mar 31, 2015
1.a. The Company has issued only one class of shares, referred to as
equity shares having a par value of Rs. 2J-. Each holder of equity
shares is entitled to one vote per share.
b. 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,
Rupees in lace
2014-15 2013-14
2. Contingent Liabilities not provided for:
i) Claims against the Company,
not acknowledged as debts
(a) Disputed liability relating
to ESI Contribution 0 89 0.89
(b) Disputed liability relating to
PF conlribulion of conlraclor labour 33.04 33 04
(c) Disputed liability relating to
payment of late re-Calibration fees on
verification and stamping of manufacturing
vats/lanks installed at distillery. 86.00 88.00
(d) Disputed claim relating to refund
of export duty On rectified spirit 10.62 10.62
(e) Disputed VAT/Sales/Entry Tax
matters under appeal 2,078,08 9.88
(f) Disputed Excise matters- 349,52 392.64
(g) Disputed Stamp duty claim arising
out of amalgamation, being contested 80.00 80.00
(h) Disputed demands on account of service
tax including interest and penalty thereon
for the period July 2003 to March 2012,
being contested and under appeal 15,371.50 10,865,61
18, 011.65 11,480,69
In respect of the items above, future cash outflows are determinable
only on receipt of judgements / decisions pending at various forums /
authorities
ii) Madhya Pradesh State Industrial Development Corporation Ltd, in
February 2007 demanded a sum of Rs.166.09 lacs besides unspecified
expenses arising out of the alleged non compliance of conditions
relating to its holding of shares in Abhishek Cement Ltd prior to the
merger of Radico Khailan Ltd, in the year 2002-03. The writ petition
filed by Company before Madhya Pradesh high court has been partly
allowed by confirming the recovery of Rs 167.32 Sacs against the
Company. However, the division bench of Madhya Pradesh high court has
stayed the recovery proceedings initiated by local collector office. The
court has ordered to maintain Rs 100 lacs in Slate Bank of India till
the final adjudication of the matter. The matter is since sub -judioe.
iii) The Company has filed legal suits against recovery of its dues
from trade receivable, contract bottlers and other parties aggregating
to Rs.1376.39 Lakhs, which are in the opinion of Management recoverable
and no material losses are foreseen,
vi)The Commissioner Service Tax New Delhi had issued further show cause
notice on 12 05 2014 on the Company demanding Service Tax of Rs 2647.22
Lacs plus interest and penally under business auxiliary service for the
period April 2012 toMarch 2013, The Company is in the process of
replying to the show cause notice
3. In the opinion of the Management and to the best of their knowledge
and belief, the value on realisation of current assets, loans and
advances in the ordinary course of business would not be less than the
amount at which they are stated in the Balance Sheet.
4. Pursuant to the amendment by way of addition of paras 46 and 46A to
AS-11 on effect of changes in foreign exchange rates. the Company had
excercised the option of deferring the foreign exchange fluctuation
gain / loss in respect of the accounting periods commencing from
0104,2007 Further, such foreign exchange differences relating to
acquisition of depreciable capital assets have been adjusted to the
cost of such assets and depreciated over the balance life of the
assets.
As a result, foreign exchange loss (including arising on account of
loan repayment) of Rs 479,45 lacs (previous year Rs 1131.59 lacs) long
term foreign currency items pertaining to capital assets has been
adjusted to fixed assets. Out of the foreign currency monetary items
translation difference account of Rs.4229,45 lacs (debit) (previous
year Rs,5524.02 lacs), as on 31.03.2015, a sum of Rs 1033.09 lacs
(previous year Rs,1469.39 lacs) has been debited to loss on foreign
exchange fluctuation account during the year,
5. The Company has taken premises on operating lease. The lease
payments charged during the year to the Statement of profit and loss
account amounts to Rs 489.57 lacs. (Previous Year; Ra.473.03 lacs),
Amount due within one year Rs 366.61 lacs.
6. Income Tax -
Provision for Income Tax for the year has been made as per section 115
JB of the Income Tax Act, 1962 (MAT). The Company can avail the benefit
of unutilized MAT credit of Rs 952.50 lacs within the period provided
in law.
7. Employee Benefits : AS-15
(I) The Company has taken a policy with Life Insurance Corporation of
India (LIC) for meeting the acornting liability on account of gratuity.
The premium, ascertained by UC, is charged to the Statement of profit
and loss. The amount debited to profit & loss account is Rs. 376-34
lacs
8. Related Party disclosure as per Accounting Standard -18 :
A Related parties arid their relationship:
I Enterprises that directly, or
Indirectly through one or more
intermediaries control, or are
controlled by, or are under common
control with, the reporting enterprise : (1)Sapphire Intrex Ltd,
II Associates and Joint Ventures (1) Radico MV Distilleries
Limited Maharashtra
(2) Radico Global Limited
(Associate)
III Key Manangemant personnel: (1) Dr Lai it Khaitan , Chairman 4
Managing Director (2) Mr, Khaitan . Managing Director
(3) Mr, K.P. Singh , Whole Time Director
(4) Mrs. Shailaja Seraf, Director
Relatives: (1) Mrs, Deepshikha Khaitan (Wife of
Mr Abhishek Khaitan)
9.The Company is required to spend a further sum of Rs.71.86 lakhs
lowards Corporate Social Responsibility relating to the financial year
2014-15, as required under section 135 of the Companies Act, 2013. This
is expected to be spent Jo the succeeding financial year.
10. The Company has entered into arrangements with certain distilleries
and bottling units in other states for manufacture and marketing of its
own IMFL brands. The manufacture under the said arrangement, wherein
each party's obligations are stipulated, is carried out under It's dose
supervision. The marketing is entirely the responsibility of the
Company and consequently the Company is required to bear bad debts
arising on sales The Company is also required to ensure adequate
finance to the distilleries, where required. Accordingly, it is
considered appropriate to disclose the following Information
(unaudited), as applicable to such activities
i) The balance due from distilleries under the arrangement, Rs
17424,63 lacs (Previous year Rs 21031.53 lacs) is included under
advances recoverable, This is on account of the financing by the
company of inventories. deblora and other current assets net of current
liabilities on behalf of the Units. Such advances include Rs.1992,96
lacs (previous year Rs.1927,64 lacs) in respect of units Which are
closed and considered good and recoverable. The management is taking
steps to recover the amount,
11. Previous year figures have been re-grouped, wherever necessary, to
correspond to current year figures.
Mar 31, 2014
Rupees in lacs
2013-14 2012-13
1 Contingent Liabilities not provided for:
i) Claims against the Company , not
acknowledged as debts
(a) Disputed liability relating to ESI
Contribution 0.89 0.89
(b) Disputed liability relating to PF
contribution of contractor labour 33.04 32.44
(c) Disputed liability relating to payment
of late re-calibration fees on verification
and stamping of manufaturing vats/tanks
installed at distillery. 88.00 88.00
(d) Disputed claim relating to refund of
export duty on rectified spirit 10.62 10.62
(e) Disputed Sales/Entry/Purchase Tax
matters under appeal 9.88 9.88
(f) Disputed Excise matters 392.64 401.23
(g) Disputed Stamp duty claim arising out of amalgamation, being
contested 80.00 80.00 (h) Disputed demands on account of service tax
including interest and penalty thereon for the period July 2003 to
March 2012, being contested and under
appeal 10,865.61 10,865.61
11,480.68 11,488.67
2 Related party disclosure as per Accounting Standard -18 :
A Related parties and their relationship :
I Enterprises that directly, or indirectly through one or more
intermediaries,control, or are controlled by, or are under common
control with, the reporting enterprise :
(1) Sapphire Intrex Ltd.
II Associates and Joint Ventures
(1) Radico NV Distilleries Maharashtra Limited
(2) Radico Global Limited ( Associate)
III Key Manangement personnel :
(1) Dr. Lalit Khaitan , Chairman & Managing Director
(2) Mr. Abhishek Khaitan , Managing Director
(3) Mr. K.P.Singh , Whole Time Director
(1) Mrs. Deepshikha Khaitan (Wife of Mr Abhishek Khaitan)
(2) Mrs. Shailaja Saraf ( Daughter of Dr Lalit Khaitan )
(3) Mr. Padmanabh Mandelia ( Grand son of Dr Lalit Khaitan )
Mar 31, 2013
1. In the opinion of the Management and to the best of their
knowledge and belief, the value on realisation of current assets, loans
and advances in the ordinary course of business would not be less than
the amount at which they are stated in the Balance Sheet.
2. Pursuant to the amendment by way of addition of paras 46 and 46A
to AS-11 on effect of changes in foreign exchange rates, the Company
had excercised the option of deferring the foreign exchange fluctuation
gain / loss in respect of the accounting periods commencing from
01.04.2007. Further, such foreign exchange differences relating to
acquisition of depreciable capital assets have been adjusted to the
cost of such assets and depreciated over the balance life of the
assets.
As a result, foreign exchange loss of Rs 646.64 lacs (previous year Rs
1281.30 lacs) long term foreign currency items pertaining to capital
assets has been adjusted to fixed assets. Out of the foreign currency
monetary items translation difference account of Rs.4114.11 lacs
(debit) (previous year Rs.2981.51 lacs), as on 31.03.2013, a sum of Rs
771.81 lacs (previous year Rs.296.86 lacs) has been debited to loss on
foreign exchange fluctuation account during the year.
35. The Company has taken premises on operating lease. The lease
payments charged during the year to the Statement of profit and loss
account amounts to Rs 454.72 lacs. (Previous Year: Rs.322.69 lacs).
Amount due within one year Rs 328.96 lacs.
3. INCOME TAX -
i) Provision for Income Tax for the year has been made as per normal
provisions of the Income Tax Act, 1961. The MAT credit to the extent of
Rs. 703.28 lacs will be adjusted thereagainst. The Company can avail
the benefit of unutilized MAT credit within the period provided in law.
ii) The Company''s factory premises and offices were searched by the
Income Tax Department on 1 5th February, 2011. There were no seizure of
cash or stocks etc. from the Company''s premises. The Company received
notices under section 1 53A of the Income Tax Act, 1961 in respect of
A.Y''s 2005-06 to 2010-11 and u/s 143(2) for scrutiny assessment for
assessment year 2011 -12. The assessment proceedings are currently in
progress. In view of the ongoing assessment proceedings, the Company is
not in a position to ascertain the possible liability on account of
this action.
4. EMPLOYEE BENEFITS : AS-1 5
(i) The Company has taken a policy with Life Insurance Corporation of
India (LIC) for meeting the accruing liability on account of gratuity.
The premium, actuarially ascertained by LIC, is charged to the
Statement of profit and loss. The amount debited to profit & loss
account is Rs. 100.82 lacs.
(ii) In respect of leave encashment, provision is made based on the
actuarial valuation by an independent Actuary. The following
information as required under AS-1 5 are based on the report of the
Actuary / L.I.C.
5. SEGMENT REPORTING :
Based on the guideline in Accounting Standard on segment reporting (AS-
17), the Company''s primary business segment is manufacture and trading
in liquor. The liquor business incorporates the product groups, namely,
rectified spirit, country liquor and IMFL which mainly have similar
risks and returns. Therefore, segment reporting is not applicable.
6. RELATED PARTY DISCLOSURE AS PER ACCOUNTING STANDARD-18 :
A Related parties and their relationship :
I Enterprises that directly, or indirectly through one or more
intermediaries,control, or are controlled by, or are under common
control with, the reporting enterprise :
(1) Sapphire Intrex Ltd.
II Associates and Joint Ventures (1) Radico NV Distilleries Maharashtra
Limited
(2) Radico Global Limited ( Associate)
III Key Management personnel : (1) Dr. Lalit Khaitan , Chairman &
Managing Director
(2) Mr. Abhishek Khaitan , Managing Director
(3) Mr. K.P.Singh , Whole Time Director
Relatives: (1) Mrs. Deepshikha Khaitan (Wife of Mr Abhishek Khaitan)
(2) Mrs. Shailaja Saraf ( Daughter of Dr Lalit Khaitan)
(3) Mr. Padmanabh Mandelia ( Grand son of Dr Lalit Khaitan)
7. In the opinion of the management, there is no impairment of assets
requiring provision in accordance with AS-28.
8. The Company has entered into arrangements with certain
distilleries and bottling units in other states for manufacture and
marketing of its own IMFL brands. The manufacture under the said
arrangement, wherein each party''s obligations are stipulated, is
carried out under it''s close supervision. The marketing is entirely the
responsibility of the Company and consequently the Company is required
to bear bad debts arising on sales. The Company is also required to
ensure adequate finance to the distilleries, where required.
Accordingly, it is considered appropriate to disclose the following
information (unaudited), as applicable to such activities.
(i) Income from operations through other distilleries / bottling units
reflects the net contribution from the sales made by these Units and is
detailed as under:
ii) The balance due from distilleries under the arrangement, Rs
19595.94 lacs (Previous year Rs 18954.51 lacs) is included under
advances recoverable. This is on account of the financing by the
company of inventories,debtors and other current assets net of current
liabilities on behalf of the Units. Such advances include Rs. 1 889.38
lacs (net of Rs.75 lacs provided) in respect of units which are closed
and considered good and recoverable. The management is taking steps to
recover the amount.
9. The Board of Directors in their meeting held on 8th February, 2013
have re-appointed to Dr L.K. Khaitan,Mr Abhishek Khaitan and Mr K. P.
Singh as Chairman & Managing Director, Managing Director and Whole Time
Director respectively for a period of 5 years w.e.f. 20th February,
2013 subject to the approval of shareholders and any other regulatory
approvals that may be necessary. Necessary resolutions will be placed
before the shareholders in the ensuing Annual General Meeting.
10. Previous year figures have been re-grouped, wherever necessary, to
correspond to current year figures.
Mar 31, 2012
2011-2012 2010-2011
1. Estimated amount of Capital
commitments (Net of advances) 2,169.19 1740.70
2. Contingent Liabilities not
provided for:
i) Claims against the Company,
not acknowledged as debts
(a) Disputed liability relating
to ESI Contribution 0,89 0.89
(b) Disputed liability relating to
PF contribution of contractor labour 32.44 32.44
(c) Disputed liability relating to
payment of late re-calibration fees on
verification and stamping of
manufacturing vats/tanks
installed at distillery. 88.00 88.00
(d) Disputed claim relating to
refund of export duty on rectified
spirit 10.62 10.62
(e) Disputed Entry Tax demand-
matter under appeal 6.86 33.17
(f) Disputed penalty U/s 10 for purchase
of HSD (Diesel) matter under appeal 3.02 3.02
(g) Disputed Excise matters 442.68 236.65
(h) Disputed Stamp duty claim arising
out of amalgamation, being contested 80.00 80.00
(i) Disputed demands on account of
service tax including interest
and penalty thereon
for the period July 2003 to March
2010, being contested and under appeal 8,259.47 6,359.66
8,923.98 6,844.45 In respect of the items above, future cash outflows
are determinable only on receipt of judgements / decisions pending at
various forums / authorities.
3.Employee Benefits : AS-15
(I) The Company has taken a policy with Life Insurance Corporation of
India (LIC) for meeting the accruing liability on account of gratuity.
The premium, actuarially ascertained by LIC, is charged to the Profit
and Loss account. The amount debited to profit & loss account is Rs.
89.77 lacs.
(ii) In respect of leave encashment, provision is made based on the
actuarial valuation by an independent Actuary. The following
information as required under AS-15 are based on the report of the
Actuary / L.I.C.
4. Segment reporting :
Based on the guideline in Accounting Standard on segment reporting (AS-
17), the Company's primary business segment is manufacture and trading
in liquor. The liquor business incorporates the product groups, namely,
rectified spirit, country liquor and IMFL which mainly have similar
risks and returns. Therefore, segment reporting is not applicable.
5.Related party disclosure as per Accounting Standard -18 :
A Related parties and their relationship :
I Enterprises that directly, or indirectly through one or more
intermediaries, control, or are controlled by, or are under common
control with, the reporting enterprise :
6. The Company has entered into arrangements with certain distilleries
and bottling units in other states for manufacture and marketing of its
own IMFL brands. The manufacture under the said arrangement, wherein
each party's obligations are stipulated, is carried out under it's
close supervision. The marketing is entirely the responsibility of the
Company and consequently the Company is required to bear bad debts
arising on sales The Company is also required to ensure adequate
finance to the distilleries, where required. Accordingly, it is
considered appropriate to disclose the following information
(unaudited), as applicable to such activities.
7. Previous year figures have been re-grouped, wherever necessary, to
correspond to current year figures.
Mar 31, 2011
Rs. in '000 Rs. in '000
CURRENT YEAR PREVIOUS YEAR
1. Estimated amount of Capital
commitments ( Net of advances ) 174,070 44,506
2 Contingent Liabilities
not provided for:
i) Claims against the Company ,
not acknowledged as debts
(a) Disputed liability
relating to ESI Contribution 89 89
(b) Disputed liability relating
to PF contribution of
contractor labour 3,244 3,244
(c) Disputed liability relating
to payment of late re-calibration
fees on verification and stamping
of manufaturing vats/tanks
installed at distillery. 8,800 8,800
(d) Disputed claim relating to
molasses purchased on credit ( include
interest of Rs.437,868) - 561
(e) Disputed claim by APO
for non - supply of rum - 1,292
(f) Disputed claim relating to
refund of export duty on rectified spirit 1,062 1,062
g) Disputed Entry Tax demand-matter
under appeal 3,317 3,370
(h) Disputed Penalty U/S 10 for
purchase of HSD ( Diesel) -matter under
appeal 302 302
(i) Disputed Excise matters 23,665 23,665
(j) Disputed Stamp duty claim
arising out of amalgamation, being
contested 8,000 8,000
(k) A recovery suit and winding
up petition filed by a UK company for
enforcing an alleged guarantee given
on behalf of Radico SPS UK Ltd.
(Since liquidated) disputed and
being contested at London and Allahabad
(Higher of the claim being taken) - 99,513
(l) Disputed demand on account of
service tax including an equal
penalty thereon for the
period July 2003 to March 2008,
being contested and under appeal 635,966 635,966
(m) Loan prepayment charges
levied by Banks, not accepted - 9,477
684,445 795,341
In respect of the items above,
future cash outflows are determinable
only on receipt of
judgements / decisions pending at
various forums / authorities.
ii) Guarantee given to a
Bank on behalf of :
(a) Radico NV Distilleries
Maharashtra Ltd. 414,000 414,000
iii) The Company has entered into
an agreement dated 23rd February'
2007 with Fortune
Brand Promotion And Management
Trust (the Trust), (of which
the Company is the
Settler) for carrying out brand
management services. In
consideration of the same, the
Company is required to pay brand
management fee to the Trust.
Sales promotion expenses for the
year include Rs. 1890.73 lacs
(Previous year Rs. 1804.96 lacs)
paid to the Trust on the basis of
their invoices. The agreement is
to continue for a period of
seven years, unless terminated earlier.
As per the Trust Deed and
agreement, the Trust
fund is held for the benefit of the
lenders in respect of their
outstanding dues and the
brand owners (the Company) in
respect of residual interest. On
termination of the
agreement at any time, the Company
will be liable to pay to the Trust
of its outstanding borrowing, as
reduced by the funds available to the
Trust and also the other costs and
expenses towards closing of the Trust.
As security, charge by way of
hypothecation has been created on the
trade marks and copy rights of two self
generated brands of the Company in
favour of a Bank and registered in the
office of Registrar of Companies as
per section 125 of the Companies
Act 1956. On the basis of information
from the Trust, the outstanding
loan as on the Balance Sheet date is : 356,363 371,580
iv) Madhya Pradesh State Industrial
Development Corporation Ltd. has
demanded a sum of Rs.168.09 lacs
besides unspecified expenses arising
out of the alleged non compliance
of conditions relating to its holding
of shares in Abhishek Cement Ltd.
prior to the merger of Radico Khaitan
Ltd. in the year 2002-03. Its action
has resulted in a sum of Rs.72.84 lacs
held in State Bank of India being
attached. The recovery proceedings
initiated by local Collector Office
are stayed under the Orders of the
Madhya Pradesh High Court. The Company
is taking suitable steps to contest
the recovery proceedings.
v) The Addl. Director General DGCEI
(Hqrs), R.K. Puram, New Delhi had
issued show cause notice on 21.10.2009
on the Company demanding Service Tax
of Rs. 729.86 Lacs plus interest and
penalty under business auxiliary
service for the period April 2008
to March 2009. The Company has
submitted the reply and hearing on
the same is awaited.
vi) The Addl. Director General DGCEI
(Hqrs), R.K. Puram, New Delhi
had issued further
show cause notice on 24.09.2010 on
the Company demanding Service Tax of
Rs. 1169.95 Lacs plus interest and
penalty under business auxiliary
service for the period April 2009 to
March 2010. The Company is in the
process of submitting the reply.
3 In the opinion of the Management
and to the best of their knowledge
and belief, the value on
realisation of current assets,
loans and advances in the ordinary
course of business would not
be less than the amount at which
they are stated in the Balance Sheet.
4 (i) The Company raised USD 50 million through an issue of FCCBs on
26th July 2006 (USD 40 million) and 25th August 2006 (USD 10 million on
exercise of green shoe
option by the manager to the issue). The FCCBs will be convertible into
equity shares of the Company at any time during the currency of the
bonds at the option of the bondholders at a conversion price of Rs.
159.20 per share (orginal conversion price being Rs 172.50 per share
reset on 6th August 2008 pursuant clause 6.4 of the subscrption
agreement). These are listed on the Singapore Stock Exchange. The FCCBs
carry a coupon rate of 3.50% per annum and have a maturity of five
years and one day from the date of issue.
(ii) The FCCBs unless previously converted, redeemed, or cancelled, are
liable to be redeemed on the maturity date at a premium of 30.3961% of
the principal amount. The premium payable on redemption has been
provided proportionately (over the life of bonds) and accordingly,
Rs.883.50 lacs for the year (out of the total redemption premium of
Rs.4602.22 lacs) on this account has been debited to Share Premium
account.
5 Pursuant to the amendment by way of addition of para 46 to AS-11 on
effect of changes in foreign exchange rates, the Company has excercised
the option of deferring the foreign exchange fluctuation gain / loss in
respect of the accounting periods commencing from 01.04.2007. Further,
such foreign exchange differences relating to acquisition of
depreciable capital assets have been adjusted to the cost of such
assets and depreciated over the balance life of the assets.
As a result, Rs 113.49 lacs foreign exchange gain on long term foreign
currency items pertaining to capital assets (previous year: gain Rs
1292.41 lacs) has been adjusted to fixed assets. Out of the foreign
currency monetary items translation difference account of Rs.177.88
lacs (credit), as on 31.03.2011 (previous year: credit Rs 250.43 lacs)
a sum of Rs 177.88 lacs - credit (previous year: credit Rs 125.22 lacs)
has been credited during the year.
6 The Company has taken premises on opearitng lease. The lease payments
charged during the year to the profit and loss account amounts to
Rs.210.85 Lacs. (Previous Year: Rs.167.37 Lacs). Amount due within one
year Rs.179.06.lacs.
7 Income Tax -
a ) Provision for Income Tax for the year has been made on book profits
(MAT) under section 115 JB of the Income Tax Act, 1961. MAT credit
available for set off aggregating to Rs.1447.50 lacs has been shown
separately under Loans and Advances . The Company can avail the benefit
of MAT within the period provided in law.
b ) The Company's factory premises and offices were searched by the
Income Tax Department on 15th February, 2011. There were no seizures of
cash or stocks etc. from the Company's premises. The Income Tax
department would be preparing an appraisal report in due course of time
and would be submitting the same to the assessing authorities under the
rules governing such searches. The Company has not yet been informed of
the substance of the allegations against it nor evidence upon which
they are based and is therefore not in a position to ascertain the
possible liability on account of this action and the Company is not
aware of any wrong doing.
8 The Company has not received information from suppliers or service
providers, whether they are covered under Micro, Small and Medium
Enterprises (Development) Act, 2006 and hence it has not been possible
to ascertain the required information relating to amounts unpaid,if
any, as at year end together with interest paid or payable to them.
9 The Company established Employee Stock Options Plan, duly approved by
the shareholders in the meeting held on 25th May, 2006, which has
become effective from 25th July, 2006. Accordingly, the Company has
granted 3,327,500 equity options upto 31st March 2010 and also 62,500
equity options during 2010-11, to the eligible employees as per the
recommendations of the Compensation Committee, which will get vested
over a period of 4 years from the date of the grant. The employees have
the options to exercise the right within a period of 3 years from the
date of vesting.
In respect of Options granted under the Employee Stock Options plan, in
accordance with the guidelines issued by SEBI, the accounting value of
the options is accounted as deferred employee compensation, which is
amortized on a straight line basis over the period between the date of
grant of options and eligible dates for conversion into equity shares.
Consequently the schedule of salaries & benefits includes Rs.43.19
lakhs (Previous year Rs.81.38 lakhs) being the amortisation of deferred
employee compensation.
10 Employees Benefits : AS-15
(I) The Company has taken a policy with Life Insurance Corporation of
India (LIC) for meeting the accruing liability on account of gratuity.
The premium, actuarialy ascertained by LIC, is charged to the Profit
and Loss account. The amount debited to profit & loss account is
Rs.63.69 lacs
11 Segment reporting :
Based on the guideline in Accounting Standard on segment reporting (
AS- 17), the Company's primary business segment is manufacture and
trading in liquor. The liquor business incorporates the product groups,
namely, rectified spirit, country liquor and IMFL which mainly have
similar risks and returns. Therefore, segment reporting is not
applicable.
12 Related party disclosure as per Accounting Standard -18 :
A Related parties and their relationship :
I Enterprises that directly, or indirectly through one or more
intermediaries, control, or
(1) Saphire Intrex Ltd.
are controlled by, or are under common control with, the reporting
enterprise:
II Associates and joint ventures
(1) Diageo Radico Distilleries Private Limited
(2) Radico NV Distilleries Maharashtra Limited
(3) Radico Global Limited (an associate)
III Key Manangement personnel :
(1) Dr. Lalit Khaitan, Chairman & Managing Director
(2) Mr. Abhishek Khaitan, Managing Director
(3) Mr. K.P. Singh, Whole Time Director
Relatives :
(1) Mrs. Deepshikha Khaitan (wife of Mr Abhishek Khaitan)
(2) Mrs. Shailja Saraf (Daughter of Dr. Lalit Khaitan)
(3) Mr. Padmanabh Mandelia (Grand son of Dr Lalit Khaitan)
13 The Company has entered into arrangements with certain distilleries
and bottling units in other states for manufacture and marketing of its
own IMFL brands. The manufacture under the said arrangement, wherein
each party's obligations are stipulated, is carried out under it's
close supervision. The marketing is entirely the responsiblity of the
Company and consequently the Company is required to bear bad debts
arising on sales The Company is also required to ensure adequate
finance to the distilleries, where required. Accordingly, it is
considered appropriate to dislcose the following information
(unaudited), as applicable to such activities.
14 Previous year figures have been re-grouped, wherever necessary, to
correspond to current year figures.
Mar 31, 2010
1. In the opinion of the Management and to the best of their knowledge
and belief, the value on realisation of current assets, loans and
advances in the ordinary course of business would not be less than the
amount at which they are stated in the Balance Sheet.
2. The shareholders in the Extra Ordinary General Meeting held on
23.10.2009 approved the raising of long term funds by way of Qualified
Institutional Placements (QIPs)in terms of Chapter VIII of the SEBI
(Issue of Capital & Disclosre Requirements) Regulations 2009. In
pursuant thereof, the Company has raised USD 75 millions equivalent to
Rs.341.79 crores from QIBs and 2,89,19,000 equity shares having face
value of Rs.2/- each at a premium of Rs.116.90 per equity share, were
issued and allotted to the investors on 22.03.2010. The funds thus
raised have been used for repayment of loans as per the terms of the
issue and the amount remaining unutilised are held in mutual funds -
Rs. 22.00 crores and in an escrow bank a/c - Rs. 12.79 crore.
3. (i) The Company has raised USD 50 million through an issue of FCCBs
on 26th July 2006 (USD 40 million) and 25th August 2006 ( USD 10
million on exercise of green shoe option by the manager to the issue).
The FCCBs will be convertible into equity shares of the Company at any
time during the currency of the bonds at the option of the bondholders
at a conversion price of Rs. 159.20 per share (orginal conversion price
being Rs 172.50 per share reset on 6th August 2008 pursuant clause 6.4
of the subscrption agreement). These are listed on the Singapore Stock
Exchange. They carry a coupon rate of 3.50% per annum and have a
maturity of five years and one day from the date of issue.
(ii) The FCCBs unless previously converted, redeemed, or cancelled, are
liable to be redeemed on the maturity date at a premium of 30.3961% of
the principal amount. The premium payable on redemption has been
provided proportionately (over the life of bonds) and accordingly, Rs
451.95 lacs for the year (out of the total redemption premium of Rs
4652.72 lacs) on this account has been debited to Share Premium
account.
(iii) Pursuant to RBI circular dated 8th December 2008, the Company has
repurchased / bought back the FCCBs to the extent of face value of USD
16.09 million till 31st March 2010 and cancelled in the record of the
Trustee to the issue, leaving a balance outstanding of USD 33.91
million. The gain on re-purchase of bond has been credited to profit &
loss account. The Company has been advised that this gain is not
exigible to income tax liability under normal computation.
4. Pursuant to the amendment by way of addition of para 46 to AS-11 on
effect of changes in foreign exchange rates, the Company has excercised
the option of deferring the foreign exchange fluctuation gain / loss in
respect of the accounting periods commencing from 01.04.2007. Further,
such foreign exchange differences relating to acquisition of
depreciable capital assets have been adjusted to the cost of such
assets and to be depreciated over the balance life of the assets.
As a result, Rs 1292.41 lacs foreign exchange gain on long term foreign
currency items pertaining to capital assets (previous year: loss Rs
1940.91 lacs) has been adjusted to fixed assets. Out of the foreign
currency monetary items translation difference account of Rs 250.43
lacs(credit), as on 31.03.2010 (previous year: debit Rs 724.17 lacs) a
sum of Rs 125.22 lacs - credit (previous year: debit Rs 270.76 lacs)
has been credited during the year leaving a balance of Rs 125.21
lacs(credit) to be adjusted in the next financial year.
5. Income Tax -
a ) Provision for Income Tax for the year has been made on book profits
(MAT) under section 115 JB of the Income Tax Act, 1961. Income tax
payments (net of provision) shown under Loans and Advances include Rs
1447.50 lacs on account of MAT credit available for set off, which the
Company can avail within the period provided in law.
b ) In respect of assessment years 1993-94 and 1996-97 - the demands
aggregate to Rs 96.90 lacs. In view of the expected relief in appeals,
no provision is considered necessary for the demand. However, these
have been adjusted in full by the department against TDS / Advance tax
refunds due to the Company.
c ) The Deputy Commissioner of Income Tax, while giving effect to the
order of Income Tax Settlement Commission for the assesment years
2000-01 to 2006-07 has vide order dated 29th April,2008 charged penal
interest under relevant provisions of the Income Tax Act 1961
aggregating to Rs 335.23 lacs. This has been recovered out of the
refunds due to the company. The Company has not accepted the levy of
interest and no provision has been made therefore. The Company has
filed a special leave petition before the HonÃble Supreme Court of
India, which is pending.
In line with the Accounting Standard AS-22, deferred tax in respect of
timing differences, which orginate and likely to be reversed during the
tax holiday period under chapter VI A of the Act have not been
recognised.
6. The Company has not received information from suppliers or service
providers, whether they are covered under Micro, Small and Medium
Enterprises (Development) Act, 2006 and hence it has not been possible
to ascertain the required information relating to amounts unpaid, if
any, as at year end together with interest paid or payable to them.
7. The Company established Employee Stock Options Plan, duly approved
by the shareholders in the meeting held on 25th May, 2006, which has
become effective from 25th July, 2006. Accordingly, the Company has
granted 2,590,000 equity options upto 31st March 2009 and also 737,500
equity options during 2009-10, to the eligible employees as per the
recommendations of the Compensation Committee, which will get vested
over a period of 4 years from the date of the grant. The employees have
the options to exercise the right within a period of 3 years from the
date of vesting.
The compensation cost of stock options granted to employees are
accounted by the Company using the intrinsic value method.
In respect of Options granted under the Employee Stock Options plan, in
accordance with the guidelines issued by SEBI, the accounting value of
the options is accounted as deferred employee compensation, which is
amortized on a straight line basis over the period between the date of
grant of options and eligible dates for conversion into equity shares.
Consequently the schedule of salaries & benefits includes Rs. 81.38
lakhs (Previous year Rs 56.25 lakhs) being the amortisation of deferred
employee compensation.
8. Employees Benefits : AS-15
(i) The Company has taken a policy with Life Insurance Corporation of
India (LIC) for meeting the accruing liability on account of gratuity.
The premium, actuarialy ascertained by LIC, is charged to the Profit
and Loss account. The amount debited to profit & loss account is
Rs.58.00 lacs (includes Rs.3.51 lakhs excess charged during previous
year).
Based on the guideline in Accounting Standard on segment reporting (
AS- 17), the CompanyÃs primary business segment is manufacture and
trading in liquor. The liquor business incorporates the product groups
, namely , rectified spirit , country liquor and IMFL which mainly have
similar risks and returns.Therefore, segment reporting is not
applicable.
9. Related party disclosure as per Accounting Standard -18 : A
Related parties and their relationship :
I Enterprises that directly, or indirectly through one or more
intermediaries, control, or are controlled by, or are under common
control with, the reporting enterprise:
(1) Saphire Intrex Ltd.
II Associates and joint ventures (1) Diageo Radico Distilleries
Private Limited
(2) Radico NV Distilleries
Maharashtra Limited
(3) Radico Global Limited
(an associate)
III Key Manangement personnel : (1) Dr. Lalit Khaitan, Chairman &
Managing Director
(2) Mr. Abhishek Khaitan,
Managing Director
(3) Mr. K.P.Singh,
Whole Time Director
Relatives : (1) Mrs. Deepshikha Khaitan
(wife of Mr Abhishek Khaitan)
(2) Mrs. Shailja Saraf
(Daughter of Dr. Lalit Khaitan)
(3) Mrs. Sheela Singh
(wife of Mr. K.P. Singh)
ii) The balance due from distilleries under the arrangement, Rs 1577715
thousands (Previous year Rs 1335047 thousands) is included under
advances recoverable. This is on account of the financing by the
company of inventories,debtors and other current assets net of current
liabilities on behalf of the Units. Out of this balances aggregating to
Rs. 606623 thousands are pending confirmation / reconciliation. 22.
Previous year figures have been re-grouped, wherever necessary, to
correspond to current year figures.
c There are no derivative contracts outstanding as on the balance sheet
date.
10. The Company has entered into arrangements with certain distilleries
and bottling units in other states for manufacture and marketing of its
own IMFL brands. The manufacture under the said arrangement, wherein
each partyÃs obligations are stipulated, is carried out under itÃs
close supervision. The marketing is entirely the responsiblity of the
Company and consequently the Company is required to bear bad debts
arising on sales The Company is also required to ensure adequate
finance to the distilleries, where required. Accordingly, it is
considered appropriate to dislcose the following information, as
applicable to such activities.
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
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