(ii) Terms / Rights attached to Equity Shares
The Company has only one class of equity shares having a par value of ' 10/-. Each shareholder 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 any of the 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. The Company declares and pays dividend in Indian rupees.
Final Dividend of ' 10/- per equity share for the Financial year ended 31st March 2024 proposed by board of directors in its meeting held on 29th May 2024 (' 10/- per equity share for FY 2022-23) is in compliance with Section 123 of the Companies Act 2013 and is subject to approval of shareholders in the ensuing Annual General Meeting and if approved, would result in Cash outflow of ' 2,323.24 Lakhs.
Nature and Purpose of Other Reserves:1 Capital Redemption Reserve
Capital redemption reserve is towards the redemption of preference shares allotted to Industrial Development Bank of India (IDBI) in FY 2014 - 15.
2 Securities Premium
Securities premium reserve is towards the premium on issue of equity shares. This reserve is utilised in accordance with the provisions of The Companies Act, 2013.
3 Capital Reserve
Capital reserve of ' 4,439.48 lakhs was created on demerger of manufacturing business of erstwhile Garware Chemicals Limited (GCL) as per the scheme of arrangement between the Company and GCL under provisions of section 391 - 394 of the Companies Act, 1956 and ' 61,842.43 lakhs (net of deferred tax) on account of fair valuation of property, plant and equipment done as at the transition date of Ind AS. Capital reserve also includes revaluation reserve amounting to ' 4,584.49 lakhs pertains to revaluation of land at Mumbai at Vile Parle in 2007 and ' 18,755.94 lakhs revaluation of land situated at Aurangabad and Nashik in FY 2012 - 13
and ' (13,235.03) lakhs pertains to impairment of assets taken over from GCL in FY 2012 - 13 and ' 2.07 Lakhs amount paid up on cancellation of 82,756 shares.
4 Fair Value Through Other Comprehensive Income (FVTOCI) Equity Instruments
The Company has elected to recognise changes in fair value of certain investments in equity instruments through other comprehensive income. These changes are accumulated within the FVTOCI equity instruments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity instruments are derecognised.
5 General Reserve
General reserve is created from time to time by way of transfer of profits from retained earnings for appropriation purposes. General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.
6 Retained Earnings
This reserve represents undistributed accumulated earnings of the Company as on the balance sheet date.
i) The term loans have been applied for the purposes of capacity expansion and various other capex plans.
ii) During the year outstanding term loans have been prepaid.
iii) Registration of charges or satisfaction with Registrar of Companies have been complied with in the statutory period.
iv) Quarterly return / statements of current assets filed by the company with banks are in agreement with the books of accounts.
v) The company has not been declared as Wilful Defaulter by any bank or financial institution.
vi) No funds have been received by the company from any person or entity including foreign entity (Funding Parties), with the understanding whether recorded in writing or otherwise that the company shall whether 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vii) Funds raised on short term basis are not used for long term purpose.
a) The company has recognised revenue incuding Taxes of ' 6,758.76 Lakhs ( Previous year ' 7,899.33 Lakhs) as per Ind AS 115 from the amounts included under advance received from customer against the opening balance of advance of ' 3,327.78 Lakhs during the year.
b) Contract liability primarily relates to advance consideration received from customers for sale of products based on terms agreed. The contract liability is expected to be recognised within 12 months.
c) Unsatisfied Performance Obligations the Company applies the practical expedient in Paragraph 121 of Ind AS 115 and does not disclose information about remaining performance obligations.
b) The Company has given counter-guarantees for ' 5,600.85 lakhs (March 31,2023: ' 6,557.91 lakhs) to banks in respect of guarantees given by the banks to third parties for purchase of equipments, supply of goods, clearance of goods from customs, excise bonds, etc.
c) Letters of Credit opened on behalf of the Company by Banks for purchase of materials and equipment amount to ' 2,130.39 lakhs (March 31,2023: ' 2,397.59 lakhs).
d) Capital commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for ' 1,215.30 lakhs (March 31, 2023: ' 805.75 lakhs) against which an advance of ' 420.39 lakhs (March 31, 2023: ' 226.06 lakhs) has been paid.
e) Company has procured certain plant and machinery under Export Promotion Capital Goods scheme. Export obligation outstanding against the same is ' 6,585.88 lakhs (March 31, 2023: ' 12,828.49 lakhs).
A Defined Contribution Plan
The Company has certain defined contribution plans. Contributions are made to provident fund / Superannuation fund / National Pension Scheme contribution for employees at the rate as per regulation of basic salary. The contributions are made to registered provident fund administered by the government, however certain employees are covered under the contributory plans with trust “Garware Polyester Limited Office Staff and Officers Provident Fund”.
B Compensated Absences
The leave obligations is towards encashment of balance leave. The provision made during the year is ' 266.32 lakhs (March 31,2023 - reversed ' 38.99 lakhs).
C Gratuity
The Company provides for gratuity for employees as per the Payment of Gratuity Act, 1972. The gratuity plan is a funded plan.
VI Risk Exposure
1 Asset Volatility : All plan assets are maintained in a trust managed by a public sector insurer viz. LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years. The Company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.
2 Discount rate risk : Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practise can have a significant impact on the defined benefit liabilities.
3 Future salary increase and inflation risk : Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management's discretion may lead to uncertainties in estimating this increasing risk.
4 Asset-Liability mismatch risk : Risk arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes quoted equity instruments. The fair value of all the equity instruments which are treated in the stock exchanges is valued using the closing price as at the reporting period.
Level 2: The fair value of derivatives and investment in unquoted equity and unquoted mutual funds instruments is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. The mutual funds are valued using the closing NAV.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
ii) Valuation Technique Used to Determine Fair Value
Specific valuation techniques used to value financial instruments include:
- The use of quoted market prices or dealer quotes for similar instruments
- The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date
- The fair value of mutual funds is calculated by valuing them at closing NAV
iii) Fair Value of Financial Assets and Liabilities Measured at Amortised Cost
The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
32. FINANCIAL RISK MANAGEMENT
The Company's activities exposes it to market risk, liquidity risk and credit risk. In order to minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are taken.
The Company's risk management is carried out by the Company's treasury department under policies approved by the board of directors. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
Credit risk refers to a risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities primarily trade receivables, derivative financial instruments, investment in mutual funds, deposits held with banks, loans and other receivables.
The Company has a policy of only dealing with counterparties that have sufficiently high credit rating. The Company's exposure and credit ratings of its customers are continuously monitored and the aggregate value of transactions is reasonably spread amongst the counterparties.
For investment in mutual funds, derivative financial instruments and balances held with banks, banks and recognised financial institutions with only high credit rating are accepted.
(i) Trade Receivables
Credit risk arises from the possibility that customer will not be able to settle their obligations as and when agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts, ageing of accounts receivable and forward looking information. Individual credit limits are set accordingly.
(B) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying business, the Company's treasury maintains flexibility in funding by maintaining availability under committed credit lines.
(i) Maturities of Financial Liabilities:
Company's financial liabilities into relevant maturity groupings based on their contractual maturities for all non - derivative financial liabilities are as follows:
I) Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The company is engaged in international trade and thereby exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and EUR. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company's functional currency ('). The Company's risk management policy is to hedge sales and purchases. The Company uses foreign exchange forward contracts to hedge its exposure in foreign currency risk.
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on financial liabilities such as borrowings, both non - current and current. The Company has not used any interest rate derivatives. The Company is also exposed to interest rate risk on its financial assets that include fixed deposits and liquid investments such as deposits which are part of cash and cash equivalents. Since all these are generally for short durations, the Company believes it has manageable risk for achieving satisfactory returns.
33. CAPITAL MANAGEMENTa) Risk Management
The Company's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital. For the purpose of the Company's capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company's capital management is to maximise the shareholders value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2024 and March 31, 2023.
36. PREVIOUS YEAR FIGURES HAVE BEEN RECLASSIFIED / REGROUPED TO CONFORM TO THIS YEAR CLASSIFICATION
37. APPROVAL OF FINANCIAL STATEMENTS
The financial statements have been authorised for issue by the Board of Directors at their meeting held on May 29, 2024.
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