1.28 Provisions and Contingent Liabilities:
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
I f the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
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. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
Claims against the Company, where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
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.
Warranty Provisions
Provisions for warranty-related costs are recognised as an expense in the Standalone Statement of Profit and Loss when the product is sold or service provided to the customer. Initial recognition is based on historical experience. The initial estimate of warranty-related costs is revised annually.
1.29 Earnings Per Share (EPS):
Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders 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 issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted-average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
1.30 Significant Accounting Judgments, Estimates and Assumptions:
The preparation of financial statements, in conformity with the Ind AS requires judgments, estimates and assumptions to be made, that affect the reported amounts of assets and liabilities on the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures relating to contingent liabilities as of the date of the financial statements. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in outcomes different from the estimates. Difference between actual results and estimates are recognized in the period in which the results are known or materialise. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in the current and future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of asset and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are
beyond the control of the Company. Such changes are
reflected in the assumptions when they occur.
• Classification of Lease Ind AS 116:
Ind AS 116 Leases requires a lessee to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on lease by lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of lease and the importance of the underlying lease to the Company’s operations taking into account the location of the underlying asset and the availability of the suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
• Litigation and Contingencies:
The Company has ongoing litigations with various regulatory authorities. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management’s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in notes to the financial statements.
• Assessment of Impairment of Investments in Subsidiaries, Associates and Joint Ventures:
The Company reviews its carrying value of investments in subsidiaries, associates and joint ventures annually, or more frequently when there is indication for impairment. If the recoverable amount
is less than its carrying amount, the impairment loss is accounted for. Determining whether the investments in subsidiaries, associates and joint ventures are impaired requires an estimate in the value in use of investments. The Management carries out impairment assessment for each investment by comparing the carrying value of each investment with the net worth of each Company based on audited financials, comparable market price and comparing the performance of the investee companies with projections used for valuations, in particular those relating to the cash flows, sales growth rate, pre-tax discount rate and growth rates used and approved business plans.
• Useful Lives of Property, Plant and Equipment and Intangible Assets:
The Company uses its technical expertise along with historical and industry trends for determining the economic life of an asset/component of an asset. The useful lives are reviewed by the management periodically and revised, if appropriate. In case of a revision, the unamortised depreciable amount is charged over the remaining useful life of the assets.
• Measurement of Defined Benefit Obligation:
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases 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.
• Recognition and Measurement of Provisions and Contingencies:
Key assumptions about the likelihood and magnitude of an outflow of resources.
The Company reviews and recognises provisions on periodic basis. Provisions are recognized, when the Company has a present obligation as
a result of a past event and 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.
• Fair Value Measurement of Financial Instruments:
When the fair value of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable market where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgement include consideration of input such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
• Share-Based Payments:
The Company measures the cost of equity-settled transactions with employees using Black-Scholes Model to determine the fair value of the liability incurred on the grant date. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant.
This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them.
The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 4.8
1.31 Cash Dividend to Equity Holders of the Company:
The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in other equity.
1.32 Recent Accounting Pronouncements:
i) New and amended standards adopted by the Company:
On 31st March 2023, the Ministry of Corporate Affairs notified Companies (Indian Accounting Standards) Amendment Rules, 2023 amending the Companies (Indian Accounting Standards) Rules, 2015. The amendments come into force with effect from 1st April 2023. One of the major changes is in Ind AS 1 ‘Preparation of Financial Statements’, which requires companies to disclose in their financial statements ‘material accounting policies’ as against the erstwhile requirement to disclose ‘significant accounting policies’.
The Company has adopted the amendment from 1st April 2023. Although the amendments did not result in any changes in the accounting policies themselves, they impacted the accounting policy information disclosed in the financial statements.
ii) Amendments applicable from next Financial Year:
There are no other new updates or standards issued through the date of issuance of these financial statements that have not yet been adopted by the Company.
C. Sale and Leaseback
During the year, the Company entered into sale and leaseback arrangements for cash proceeds. Certain equipment worth I 68.92 crore (I 81.33 crore including taxes) are sold under the arrangement for a tenure of 5 to 7 years. Interest rate on these arrangements ranges between 6% to 8.56% p.a. Profit on sale and leaseback transactions during the year is I Nil. Out of the sale proceeds, the Company has collected I 5.34 crore (I 6.30 crore including taxes) during the year.
2.4.2 Impairment Testing of Investments:
The Company values its investments in certain joint venture entities using discounted cash flow (DCF) method and are tested for impairment annually or more frequently if indicators of impairment exist. DCF method uses cash flow projections based on financial budgets covering three to five years period approved by these entities management.
The Key assumptions used in the estimation of these investments recoverable amount are set out below. The values assigned to the key assumptions represent their management’s assessment of future trends in the relevant industries and economic environment and have been based on historical data from both external and internal sources.
The Company has performed sensitivity analysis around the key assumptions and has concluded that no reasonable change in the key assumption would result in the recoverable amount of investments in joint ventures to be less than the carrying value of investment and accordingly, no impairment charges were recognised during the year for these investments.
Shares kept in Abeyance
Pursuant to provisions of section 126 of the Companies Act 2013, the issue of 61,985 Fully Paid Equity Shares (Previous Year 61,985 Equity Shares) are kept in abeyance.
2,077 Right Equity Shares were issued and kept in abeyance against 61,985 fully paid equity shares of Face Value I 2 each and 948 Right Equity Shares were issued and kept in abeyance against 28,295 fully paid equity shares of Face Value I 2 each which aggregates to 3,025 Right Equity Shares kept in abeyance.
2.17.4 Rights, Preferences and Restrictions attached to Equity Shares
The Company has only one class of Equity Shares having a par value of I 2 per share. The holder of the equity share is entitled to dividend right and voting right in the same proportion as the capital paid-up on such equity share bears to the total paid-up equity share capital of the Company. The Company declares 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.
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 the same proportion as the capital paid-up on the equity shares held by them bears to the total paid-up equity share capital of the Company.
2.17.5 Rights Issue
(a) On 4th January 2024, the Board of Directors of the Company approved issue of 2,20,73,935 equity shares of face value of I 2 each (the “Rights Equity Shares”) at a price of I 1,812 per Rights Equity Share (including premium of I 1,810 per Rights Equity Share), in the ratio of 6 Rights Equity Shares for every 179 existing fully-paid equity shares held by the eligible equity shareholders as on 10th January 2024, the record date.
On 2nd February 2024, the Rights Issue Committee 2023 of the Company approved allotment of 2,20,67,231 partly paid-up Equity Shares at an issue price of I 1,812 per Equity Share [(including a premium of I 1,810 per Equity Share) of which I 453 per Equity Share has been received on application (I 0.50 has been paid-up on application as share capital and I 452.50 as a premium per equity share)], to eligible equity shareholders. Further, allotment of 6,704 Rights Equity Shares was kept in abeyance pending regulatory/other clearances, out of which the Committee approved allotment of 3,679 partly paid-up equity shares to eligible equity shareholders on 7th March 2024 and balance 3,025 shares have been kept in abeyance.
The object of the Rights issue is to enlarge the capital base of the Company. The net proceeds to be utilised for Repayment or prepayment, in full or in part, of certain borrowings availed by the Company and for other General corporate purposes.
The Company has raised I 999.81 crore on application. The total expense on Rights Issue aggregates to I 16.08 crore (excluding taxes of I 2.32 crore) has been adjusted against securities premium. During the year ended 31st March 2024, the Company has utilised I 975 crore for repayment of borrowings as mentioned above. Further I 10.15 crore pending utlisation have been kept in a separate bank account, which includes issue related expenses of I 1.65 crore paid by the Company from its own account (other than monitoring account) and also includes interest of I 2.09 crore received on FDs placed from the unutilised proceeds during the year (Note 2.13).
(b) There has been no deviation in the use of proceeds of the Rights Issue, from the objects stated in the Offer document.
2.17.6 The Company does not have any Holding Company.
The Description of the nature and purpose of each reserve within equity is as follows:
a. Securities Premium: Securities Premium is credited when shares are issued at premium. It can be used to issue bonus shares, write-off equity related expenses like underwriting costs, etc.
b. General Reserve: Under the erstwhile Companies Act, 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of the Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of the Companies Act, 2013.
c. Capital Reserve: Capital Reserve is mainly the reserve created during business combination of erstwhile Aditya Birla
Chemicals (India) Limited and Aditya Birla Nuvo Limited with the Company.
d. Treasury Shares: The reserve for shares of the Company held by the Grasim Employees Welfare Trust (ESOP Trust).
The Company has issued employees stock option scheme for its employees. The shares of the Company have been purchased and held by ESOP Trust to issue and allot to employees at the time of exercise of ESOP by Employees.
e. Employee Share Option Outstanding: The Company has stock option schemes under which options to subscribe for the Company’s shares have been granted to certain employees including key management personnel. The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, as part of their remuneration.
f. Retained Earnings: Amount of retained earnings represents accumulated profit and losses of the Company as on reporting date. Such profits and losses are after adjustment of payment of dividend, transfer to any reserves as statutorily required and adjustment for realised gain/loss on derecognition of equity instruments measured at FVTOCI. Actuarial Gain/(Loss) arising out of Actuarial valuation is immediately transferred to Retained Earnings.
g. Debt Instrument through OCI: It represents the cumulative gains/(losses) arising on the fair valuation of debt instruments measured at fair value through OCI, net of amount reclassified to Profit or Loss on disposal of such instruments.
h. Equity Instrument through OCI: It represents the cumulative gains/(losses) arising on the fair valuation of Equity Shares (other than investments in Subsidiaries, Joint Ventures and Associates, which are carried at cost) measured at fair value through OCI, net of amounts reclassified to Retained Earnings on disposal of such instruments.
i. Hedging Reserve: It represents the effective portion of the fair value of forward contracts, designated as cash flow hedge.
(i) Term loan (Subsidised Government Loan) secured by way of first pari passu charge created by hypothecation of the entire movable Property Plant and Equipment of the Company’s Excel Fibre Division Plant at Kharach. Repayment Terms is 9 half yearly instalments from 1st April 2020.
Effective cost for the above loans is at 5% per annum (Previous Year: 5% per annum).
II: Unsecured Borrowings:
Bank loans contain certain debt covenants relating to limitation on indebtedness, debt-equity ratio, net Borrowings to EBITDA ratio and debt service coverage ratio. The limitation on indebtedness covenant gets suspended if the Company meets certain prescribed criteria. The debt covenant related to limitation on indebtedness remained suspended as of the date of the authorisation of the financial statements. The Company has also satisfied all other debt covenants prescribed in the terms of bank loan.
The other bank loans do not carry any financial debt covenant.
4.2 Competition Commission of India (CCI) has passed an order dated 16th March 2020 under section 4 of the Competition Act, 2002, imposing a penalty of I 301.61 crore in respect of the Viscose Staple Fibre turnover of the Company. The Company filed an appeal before the National Company Law Appellate Tribunal (NCLAT) and NCLAT, vide Order dated 4th November 2020, stayed the recovery of the penalty amount during the pendency of the Appeal and directed the Company to deposit 10% of the penalty amount by 19th November 2020, which the Company has complied. The Appeal is pending before the NCLAT.
Without considering that an Appeal is already pending against the aforesaid Order, the CCI passed another Order dated 3rd June 2021, levying a penalty of I 3.49 crore for non-compliance with the Order passed on 16th March 2020. The Company filed Writ Petition before the Hon’ble Delhi High Court against the Order of the CCI. The CCI appeared before the Hon’ble Delhi High Court and assured that no precipitative steps shall be taken against the Company till the disposal of the matter.
The Company believes that it has strong grounds against both these said orders, on merit and accordingly no provision has been made in the accounts.
4.6. RETIREMENT BENEFITS:
4.6.1 Defined Benefit Plans as per Actuarial Valuation:
Gratuity (funded by the Company):
The Company operates a Gratuity plan through a trust for its all employees. The Gratuity plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of service, whichever is earlier, of an amount equivalent to 15 to 30 days’ salary for each completed year of service as per rules framed in this regard. Vesting occurs upon completion of five continuous years of service in accordance with Indian law. In case of majority of employees, the Company’s scheme is more favourable as compared to the obligation under payment of Gratuity Act, 1972.
The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method as prescribed by the Ind AS-19 - ‘Employee Benefits’, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up final obligation.
Inherent Risk:
The plan is defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, this exposes the Company to actuarial risk such as adverse salary growth, changes in demographic experience, inadequate return on underlying plan assets. This may 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 risk.
Pension:
The Company provides pension to few retired employees as approved by the Board of Directors of the Company.
Inherent Risk:
The plan is of a 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 increase in salary increases for serving employees/ pension increase for pensioners or adverse demographic experience can result in an increase in cost of providing these benefits to employees in future. In this case the pension is paid directly by the Company (instead of pension being bought out from an insurance Company) during the lifetime of the pensioners/beneficiaries and hence the plan carries the longevity risks.
(xi) There are no amounts included in the Fair Value of Plan Assets for:
a) Company’s own financial instrument
b) Property occupied by or other assets used by the Company
(xii) Basis used to determine Discount Rate:
Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date, applicable to the period over which the obligation is to be settled.
(xiii) Asset Liability matching Strategy:
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 under funding of the plan.
(xiv) Salary Escalation Rate:
The estimates of future salary increases are considered taking into account inflation, seniority, promotion, increments and other relevant factors.
(xv) Sensitivity Analysis:
Sensitivity Analysis have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market condition at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analysis.
(xvi) The best estimate of the expected Contribution for the next year amounts to I 3.51 crore (Previous Year I Nil).
4.6.1.2 Compensated Absences:
The obligation for compensated absences is recognised in the same manner as gratuity, amounting to charge of I 57.58 crore (Previous Year I 51.58 crore).
4.6.1.3 The details of the Company’s Defined Benefit Plans in respect of the Company managed Provident Fund Trust:
Contribution to the recognised provident fund are substantially defined contribution plan. The Company is liable for any shortfall in the fund assets based on the Government specified rate of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in the year of incurring the same. The Company does not expect any shortfall.
Amount recognised as expense and included in the Note 3.6 as ‘Contribution- Company owned Provident Fund’ is I 39.39 crore (Previous Year I 34.36 crore) and Amount recognized as preoperative expense and included in Note 2.1.5 as ‘Contribution - Company owned Provident Fund’ is I 5.46 crore (Previous Year I 1.60 crore).
4.7.2 Government Grant (Ind AS 20)
As at 31st March 2024, the Company has outstanding interest-free loans of I 45 crore (Contractual Value I 57.25 crore) from a State Government, repayable in full in next one to five years. Company has done the initial recognition of loan at fair value Using prevailing market interest rate for an equivalent loan. As at 31st March 2024, the difference of I 12.25 crore between contractual Value and fair value of loan is the government grant which will be recognised in the Statement of Profit and Loss over the remaining period of loan.
4.7.3 Corporate Social Responsibility
The Company has spent I 58.39 crore on Corporate Social Responsibility Projects/initiatives during the year (Previous Year I 54.19 crore) which are included in different heads of expenses in the Statement of Profit and Loss.
The amount required to be spent under Section 135 of the Companies Act, 2013 for the year ended 31st March 2024 is I 34.02 crore (Previous Year I 29.95 crore) i.e. 2% of average net profits for last three financial years, calculated as per Section 198 of the Companies Act, 2013.
4.7.5 Other Matters - Audit Trail
The accounting softwares used by the Company have audit trail (edit log) feature at application level, except for two accounting software used at acquired business units, which contribute ~5% of revenue from operations. The accounting softwares used by the Company do not have Audit Trail feature at Database level.
The management ensures appropriate controls are in place with respect to Internal Financial Controls throughout the year.
4.8 SHARE BASED PAYMENTS
4.8.1 20,34,148 Equity Shares of Face Value of I 2 each (Previous Year 20,36,941 Equity Shares of Face Value of I 2 each)
are reserved for issue under Employee Stock Option Scheme-2006 (ESOS-2006), Employee Stock Option Scheme, 2013 (ESOS-2013), Employee Stock Option Scheme, 2018 (ESOS-2018) and Employee Stock Option Scheme, 2022 (ESOS-2022).
4.10 FINANCIAL RISK MANAGEMENT OBJECTIVES (IND AS 107)
The Company’s principal financial liabilities, other than derivatives, comprise of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets, other than derivatives, include trade and other receivables, investments and cash and cash equivalents that arise directly from its operations.
The Company’s activities expose it to market risk, liquidity risk and credit risk and foreign exchange.
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments, including investments and deposits, foreign currency receivables, payables and borrowings.
The Company’s overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. The Company uses derivative financial instruments, to hedge foreign currency risk exposure. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
The Management updates the Audit Committee/ Risk Management Committee/ Board of Directors on a quarterly basis about the implementation of the above policies. It also updates on periodical basis about various risk to the business and the status of various activities planned to mitigate such risks.
Details relating to the risks are provided here below:
A. Foreign Exchange Rate Risk:
Foreign exchange risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates to import of fuels, raw materials and spare parts, plant and equipment, exports, foreign currency borrowings and net investment in foreign subsidiaries/ joint ventures.
The Company regularly evaluates exchange rate exposure arising from foreign currency transactions. The Company follows the established risk management policies and standard operating procedures. It uses derivative instruments like forward covers to hedge exposure to foreign currency risk.
When a derivative is entered into for the purpose of hedge, the Company negotiates the terms of those derivatives to match the terms of the foreign currency exposure.
(i) Foreign Currency Sensitivity:
The sensitivities are based on financial assets and liabilities held at 31st March 2024 that are not denominated in Indian Rupees. The sensitivities do not take into account the Company’s sales and costs and the results of the sensitivities could change due to other factors such as changes in the value of financial assets and liabilities as a result of non-foreign exchange influenced factors.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in prevailing market interest rates. For all long-term borrowings in foreign currency with floating interest rates, the risk of variation in the interest rates is mitigated through interest rate swaps. The Company constantly monitors the credit markets and revisits its financing strategies to achieve an optimal maturity profile and financing cost.
C. Equity Price Risk:
The Company is exposed to equity price risk arising from Equity Investments (other than Subsidiaries, Joint Ventures and Associates, which are carried at cost).
Equity Price Sensitivity Analysis:
The Sensitivity analysis below has been determined based on the exposure to equity price risk at the end of the reporting period.
If equity prices of the quoted investments increase/decrease by 5%, Other Comprehensive Income for the year ended 31st March 2024 would increase/decrease by I 573.29 crore (for the year ended 31st March 2023 by I 400.29 crore).
D. Credit Risk:
Credit risk arises when a customer or counterparty does not meet its obligations under a customer contract or financial instrument, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables and from its financing/investing activities, including deposits with banks, mutual fund investments, investments in debt securities and foreign exchange transactions. The Company has no significant concentration of credit risk with any counterparty.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company’s treasury team is responsible for managing liquidity, funding as well as settlement. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s liquidity position through rolling forecasts and long range business forecasts on the basis of expected cash flows.
The table below provides details of Financial Liabilities and Financial Assets at the reporting date
F. Capital Management:
The Company’s objectives when managing capital are to (a) maximise shareholder value and provide benefits to other stakeholders and (b) maintain an optimal capital structure to reduce the cost of capital.
For the purposes of the Company’s capital management, capital includes issued capital, securities premium and all other equity reserves attributable to the equity holders.
The Company monitors capital using debt-equity ratio, which is total debt less investments divided by total equity.
(ii) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(iii) As on 31st March 2024 there is no unutilised amounts in respect of any issue of securities and long term borrowings from banks and financial institutions except as mentioned in Note 2.13. The funds have been utilised for the specific purpose for which it were raised.
(iv) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(v) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
(vi) The Company has not any such transaction which is not recorded in the books of account 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)
(vii) The Company is in compliance with the number of layers prescribed under Clause (87) of Section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017.
(viii) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(ix) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries 4.13 AUTHORISATION OF FINANCIAL STATEMENTS
The financial statements for the year ended 31st March 2024 were approved by the Board of Directors on 22nd May 2024. Signatures to Notes ‘1' to ‘4'
The accompanying Notes are an integral part of the Standalone Financial Statements In terms of our report on even date attached
For B S R & Co. LLP For KKC & Associates LLP For and on behalf of the Board of Directors of
Chartered Accountants Chartered Accountants GRASIM INDUSTRIES LIMITED
Firm's Registration No.: 101248W/W- Firm's Registration No.: 105146W/ CIN-L17124MP1947PLC000410
100022 W100621
Vikas R Kasat Gautam Shah Harikrishna Agarwal V. Chandrasekaran
Partner Partner Managing Director Independent Director
Membership No.: 105317 Membership No.: 117348 DIN: 09288720 DIN: 03126243
Mumbai Pavan K. Jain Sailesh Kumar Daga
Dated: 22nd May 2024 Chief Financial Officer Company Secretary
Membership No.: F 4164
Mumbai
Dated: 22nd May 2024
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