There are no Micro, Small and Medium Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March 2024 and no interest payment made during the year to any Micro, Small and Medium Enterprises (MSME). (Previous Year MSME Interest: NIL), This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extend such parties has been identified on the basis of information available with the Company.
Terms/Rights attached to Preference Sharesa) Preference Shares - 4% Redeemable Non-Convertible Non-Cumulative of '100/- each fully paid
The Company has issued 16,00,000 4% Non-Cumulative Non-Convertible Redeemable Preference Shares of '100/- each for cash, at an issue price of '500/- per share including premium of '400/- per share aggregating to '80/- Crore on 24th December 2021 redeemable on 23rd December 2025 at '639/- per share.
b) Shares held by Holding Company
Shares held by Holding Company Aditya Birla Capital Limited :
31st March 2024 16,00,000 (Previous Year : 16,00,000) 4% Redeemable Non-Convertible Non-Cumulative Preference Shares of '100/- each fully paid-up.
2) Term/Right Attached to Equity Shares
The Company has only one class of equity shares having a par value of '1/- per share. Each holder of Equity Shares is entitled to one vote per share. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting.
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 to all preferential holders. The distribution will be in proportion to the number of the Equity Shares held by the shareholders.
3) Shares held by Holding Company
4,15,50,000 (Previous Year: 4,15,50,000) Equity Shares of '1/- each fully paid-up are held by Aditya Birla Capital Limited, the Holding Company.
NOTE: 33 A. FINANCIAL INSTRUMENTS-ACCOUNTING CLASSIFICATIONS AND FAIR VALUE MEASUREMENTS
The management assessed that the fair value of cash and cash equivalents, Security deposits, Staff Advances, Subordinate Liabilities, Debt securities, trade receivables, margin with exchanges, trade payables, bank balances and other current liabilities approximate their carrying amount.
With respect to Investments Refer Note 5 are fair valued based on quoted price available in the active market (Level 1).
NOTE: 34 STAMP DUTY
Hitherto, the Company had been collecting and remitting stamp duties with respect to states wherein the manner of payment of the same has been prescribed by the respective state governments. From July 2011, the Company had started collecting stamp duty on contract notes for all states, including the states wherein the manner of payment has not yet been notified. The Company is evaluating various options of remitting the same, including remitting those amounts in the State of Tamil Nadu, as all the contract notes are executed at Tamil Nadu. Pending, the final determination of the manner of remittance, amount of ' 164.90 Lakh (PY: ' 164.90 Lakh) collected till 30th June 2020 has been disclosed under statutory dues in other Non-Financial liabilities.
NOTE: 35 MANAGERIAL REMUNERATION
During the earlier years the Company had made an application to the Central Government under Section 309 (5B) of the Companies Act, 1956 for seeking waiver of excess managerial remuneration amounting to '30.95 Lakh (Previous Year: '30.95 Lakh) (excluding statutory contribution to provident fund, gratuity and leave encashment which are exempted under Schedule VI) paid to Mr. P.B. Subramaniyan, the erstwhile whole time director ('Erstwhile Director') of the Company for the period from 1st April 2008 to 6th March 2009.
During the earlier years, the Company has received an order from the Central Government (CG) whereby the CG has rejected excess remuneration of '16.27 Lakh (Previous Year: '16.27 Lakh) and directed the Company to collect the same from the Erstwhile Director. Further the Company has filed a Civil Suit in the High Court of Judicature at Madras vide C.S. No. 53/2016 seeking recovery of the excess remuneration paid to Mr. P.B. Subramaniyan. Pending the recovery of the same, it has been shown as advances recoverable by the Company in the Balance Sheet.
NOTE: 36 FOREIGN CURRENCY TRANSACTIONS
The Company did not enter into any foreign currency transactions in the current year and previous year.
NOTE: 37 CAPITAL MANAGEMENT
For the purpose of the Company's Capital management, Capital includes issued equity capital, subordinated liabilities and other equity reserves attributable to the equity holders. The primary objective of the Company's capital management is to maximise the shareholder value, comply to the regulatory requirements and maintain an optimal capital structure to reduce the cost of capital to the Company. The Company makes adjustments in light of changes in economic conditions and the requirements of the applicable 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 gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents net of amount payable to customer.
In order to achieve the 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 borrowings in the current period.
NOTE: 38 CREDIT RISK
Credit Risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract leading to a financial loss. The Company's exposure to credit risk is very minimal as the trade receivables are covered by collateral.
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and based on the evaluation, credit limit of each customer is defined. Wherever the Company assesses the credit risk as high, the exposure is backed by either stocks comfort or margin money
As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
NOTE: 39 CONTINGENT LIABILITIES
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation.
A present obligation that arises from past events, where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Claims against the Company, where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
The Company does not recognise a contingent liability in the financial statements except when the management decides to recognise basis the probability of the contingent liability devolving on the Company.
Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
NOTE: 40 INCOME TAX
The Company offsets tax assets and liabilities if it has legally enforceable right to set off current taxes assets and current taxed liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Deferred Tax:
Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base.
In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.
NOTE 41: LEASE DISCLOSURESDisclosure Pursuant to Indian Accounting Standard 116 - Leases is as under:Transition:
Effective Aprill, 2019, the Company adopted Ind AS 116 "Leases" and applied the standard to all lease contracts existing on Aprill, 2019 using the modified retrospective method and has taken the cumulative adjustment to retained earnings, on the date of initial application. Consequently, the Company recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rate and the right of use asset at its carrying amount as if the standard had been applied since the commencement date of the lease, but discounted at the lessee's incremental borrowing rate at the date of initial application.
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 recognise 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 for all contracts as on 1st April 2019, Ind AS 116 is applied only to contracts that were previously identified as leases under Ind AS 17.
The weighted average incremental borrowing rate applied to lease liabilities as at 31st March 2024 is between the ranges of 6.29% to 8.39% for a period varying from 1 to 10 years.
Critical accounting judgments and key sources of estimation uncertainty
Critical judgments required in the application of Ind AS 116 may include, among others, the following:
• Identifying whether a contract (or part of a contract) includes a lease;
• Determining whether it is reasonably certain that an extension or termination option will be exercised;
• Classification of lease agreements (when the entity is a lessor);
• Determination of whether variable payments are in-substance fixed;
• Establishing whether there are multiple leases in an arrangement;
• Determining the stand-alone selling prices of lease and non-lease components.
Key sources of estimation uncertainty in the application of Ind AS 116 may include, among others, the following:
• Estimation of the lease term;
• Determination of the appropriate rate to discount the lease payments;
• Assessment of whether a right-of-use asset is impaired.
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.
NOTE: 42 EMPLOYMENT BENEFIT DISCLOSURES Defined Contribution Plan
The amounts charged to the Statement of Profit and Loss during the year for Provident fund contribution aggregates to '313.65 Lakh (Previous Year: '272.40 Lakh), NPS contribution fund contribution aggregates to '23.35 Lakh, (Previous Year: '15.25 Lakh) and employees' state insurance contribution aggregates to '0.84 Lakh (Previous Year: '1.90 Lakh).
Defined Benefit Plan General Description of the Plan:
The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement, whichever is earlier. The benefit vests after five years of continuous service. In case of some employees, the Company's scheme is more favourable as compared to the obligation under Payment of Gratuity Act, 1972.
Nature of Benefits
The Company operates a defined benefit final salary gratuity plan which is open to new entrants. The gratuity benefits payable to the employees are based on the employee's service and last drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company.
Regulatory Framework:
There are no minimum funding requirements for a gratuity plan in India. The trustees of the gratuity fund have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Since the fund is income tax approved, the Company and the trustees have to ensure that they are at all times fully compliant with the relevant provisions of the income tax and rules. Besides this if the Company is covered by the Payment of Gratuity Act, 1972 then the Company is bound to pay the statutory minimum gratuity as prescribed under this Act.
Governance of The Plan:
The Group has setup an income tax approved irrevocable trust fund to finance the plan liability. The trustees of the trust fund are responsible for the overall governance of the plan.
Inherent Risks:
The plan is of a final salary defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, there is a risk for the Company that any adverse salary growth or demographic experience or inadequate returns on underlying plan assets can result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature the plan is not subject to any longevity risks.
The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the gratuity plan.
Funding Arrangement and Policy
The money contributed by the Company to the fund to finance the liabilities of the plan has to be invested.
The trustees of the plan are required to invest the funds as per the prescribed pattern of investments laid out in the income tax rules for such approved schemes. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset-liability matching strategy to manage risk actively.
There is no compulsion on the part of the Company to fully pre fund the liability of the Plan. The Company's philosophy is to fund the benefits based on its own liquidity and tax position as well as level of underfunding of the plan.
Sensitivity Analysis Method
These sensitivities have been calculated to show the movement in defined benefit obligation in isolation, and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analysis.
Details of plan assets
The plan assets represent Company's proportionate share in the Grasim Industries Limited Employees Gratuity Trust managed by the Ultimate Parent Company for the employees of the Company. The details of plan assets are as under:
The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
The Company does not expect to contribute additional amount to the fund in the next year.
The estimate of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market
Note: Salaries and Wages includes share of ABFSSL allocation of Salaries, PF, Gratuity of '107.98 Lakh of FY24 and '88.64 Lakh of FY23.
NOTE 43.1. STOCK OPTIONS GRANTED
i) ABML - EMPLOYEE STOCK OPTION SCHEME - 2014
The objective of the Employee Stock Option Scheme is to attract and retain talent and align the interest of employees with the Company as well as to motivate them to contribute to its growth and profitability.
The Company adopts Senior Executive Plan in granting Stock options to its Senior Employees. (Employee Stock Option Scheme - 2014)
During 2014 the Company had formulated the ABML Employee Stock Option Scheme - 2014 (ABML ESOP Scheme - 2014) with the approval of the shareholders at the Annual General Meeting dated 09th September 2014. The Scheme provides that the total number of options granted there under will be 27,70,000 Shares and to follow the Market Value Method (Intrinsic Value) for valuation of the Options.
Each option, on exercise, is convertible into one Equity Share of the Company having Face Value of '1/- each. Subsequently, the Nomination and Remuneration Committee of the Board of Directors on 2nd December 2014 has granted 25,09,341 stock options to its eligible employees under the ABML ESOP Scheme - 2014 at an exercise price of '34.25. The Exercise Price was based on the latest available closing price, prior to the 2nd December 2014 (the date of grant by the Nomination & Remuneration Committee) on the recognised stock exchanges on which the shares of the Company are listed with the highest trading volume.
The Company has granted options to the eligible employees at an exercise price of '34.25 per share being the latest market price as per SEBI ESOP Regulations. In view of this, there being no intrinsic value (being the excess of the market price of share under ESOP over the exercise price of the option), on the date of grant, the Company is not required to account the accounting value of option as per SEBI ESOP Regulations.
ii) ABCL - Employee Stock Option Scheme - 2017
Pursuant to ESOP Plan being established by the Holding Company (i.e. Aditya Birla Capital Limited), stock options were granted to the employees of the Company during the financial year. Total cost incurred by the Holding Company till date is being recovered from the Company over the period of vesting. Accordingly, a sum of '12,40,000/- (Previous Year: '1,17,371/-) has been recovered from the Company during the year, which has been charged to the Statement of Profit and Loss.
NOTE: 47 DISPUTED IMMOVABLE PROPERTY HELD IN NAME OF THE COMPANY
The Company has a land of '15 Lakh in the name of Apollo Sindhoori Capital Investments Limited (Currently known as Aditya Birla Money Limited) and the title is under dispute and the matter is in sub judice.
The land could not be registered or transferred onto the Company due to pendency at District Court at Sangareddy. As per the court order, the parties (including Company) were required to maintain status quo with respect to schedule property until further orders.
NOTE: 49 The Company has a process whereby periodically all long term contracts, if any, are assessed for material foreseeable losses. As at the Balance Sheet date, there were no long term contracts (including derivative contracts).
NOTE: 50 The Company's pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Income Tax and other statutory authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results. Refer Note 39 for details on contingent liabilities.
NOTE: 52 No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
NOTE: 53 No funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, 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.
NOTE: 54 CAPITAL COMMITMENT
Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) '60.88 Lakh (Previous Year: '8.81 Lakh).
NOTE: 55 OTHER STATUTORY INFORMATION
(a) The Company has not revalued any of its property, plant and equipment (including Right of Use assets) and intangible assets during the year.
(b) The Company is not holding any benami property under the Benami Transactions (Prohibition) Act, 1988.
(c) The Company has not been declared a willful defaulter by any bank or financial institution or government or any government authority.
(d) The Company has no charges or satisfaction to be registered which is yet to be registered with the Register of Companies beyond the statutory period.
(e) The Company has not entered into any scheme of arrangement under Section 230 to 237 of the Companies Act 2013.
(f) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
(g) There were no transactions relating to previously unrecorded income that were surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 during the year.
(h) The Company has not traded or invested in crypto currency or virtual currency during the financial year.
(i) No loans or advances in the nature of loans are granted to promoters, Directors, Key Managerial Personnel and the related parties (as defined under the Companies Act, 2013) either severally or jointly with any other person.
(j) The Company is required to submit gross debit balance (excluding credit balance) as at period end after making an adjustment for transactions for which settlement is not due. Post these adjustments, the amount reported are in agreement with unaudited books of accounts.
(k) The Company has utilised the funds for the purposes for which the loans were obtained.
NOTE: 56 AUDIT TRAIL
As per the Rule 3(1) of Companies (Accounts) Rules, 2022, as amended, requires the companies for the financial year commencing on or after 01st April 2023, which uses accounting software for maintaining their books of account, to use only such accounting software which has audit trail 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.
For the purpose of this Rule, accounting software Sun Infor and Lidha Didha (LD) have been identified as books of accounts. These accounting software have the feature of recording audit trail (edit log) facility except audit trail feature was not enabled at the database level for the above mentioned accounting software.
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