B. The Company has not revalued its Intangible Assets during the financial years ended 31st March, 2024 and 31st March, 2023
C. There are no Intangible Assets under Development ("IAUD") as at 31st March, 2024 and 31st March, 2023. Accordingly the ageing schedule and the completion schedule for IAUD has not been presented.
5 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES Company as a lessee
The Company has lease contracts for various items of building, land and plant & machinery (IT equipment) used in its operations. Leases of building generally have lease terms between 4 and 10 years and certain plant & machinery (IT equipment) have lease term of 5 years. Leasehold land pertains to upfront payments made to Maharashtra Industrial Development Corporation and hence have longer lease terms upto 99 years with no corresponding leasehold liabilities. The Company's obligations under its leases are secured by the lessor's title to the leased assets. There are several lease contracts that include extension and termination options and variable lease payments. The Company also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with low value. The Company applies the 'short-term lease' and 'lease of low-value assets' recognition exemptions for such leases.
*The Board of Directors at its meeting held on Wednesday, 6th March, 2024, accorded its in-principle approval for sale of its holding in Sudarshan Japan Limited subject to necessary due diligence, approvals, consents, permission from the concerned authrority to Sudarshan Europe B.V. Pursuant to the requirement of IND AS 105 - "Non current Assets Held for Sale and Discontinued Operations”, this has been classified as "investment in subsidiary (held for sale)” as at 31st March, 2024.
**As a part of restructuring / consolidation and with the purpose to have a single entity as Global Holding Company for all overseas subsidaries,the Company through Share Purchase Agreement dated 22nd March 2024, divested its holding in Sudarshan (Shanghai) Trading Company Limited to Sudarshan Europe B.V. for a total consideration of C 134.7 Lakhs resulting into a loss of C344.1 Lakhs (including transaction cost and other incidental cost) which has been disclosed as an exceptional item. Refer note 53.
The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
As an Ind AS transition adjustment, as at 31st March, 2017, the fair value of financial guarantee fees receivable for security given by the Company for loans taken by subsidiaries has been included in the value of investments. The details of such fair values included in the value of investments above is as shown below:
(b) Terms / Rights attached to equity shares
The Company has only one class of equity shares having a par value of C2.0 per share (Previous Year : C2.0 per share). Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend, which is ratified subsequently.
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.
The Board of Directors at its meeting held on 17th May, 2024, recommended Final Dividend of C1.0/- (Rupee One only) (i.e. 50%) per Equity Share of face value of C2.0/- each fully paid up, for the Financial Year ended 31st March, 2024, subject to approval of the members at ensuing Annual General Meeting. This is in addition to the Interim Dividend of C3.6/- (Rupees Three and Sixty Paise only) (i.e. 180%) per Equity Share of face value of C2.0/- each fully paid up, paid during the Financial Year 2023-24, taking total Dividend for the Financial Year 2023-24 at C4.6/- (Rupees Four and Sixty Paise only).
In the previous year, the Board of Directors had recommended a final dividend of C1.5/- per share on face value of C2.0/-per share (i.e. 75%) for the FY 2022-23, which was approved by the shareholders at the 72nd Annual General Meeting of the Company.
As per records of the Company, including its register of members and other declarations received from shareholders regarding beneficial interest, the above shareholding pattern represents both legal and beneficial ownership of shares.
(d) For a period of five years immediately preceding 31st March, 2024
- aggregate number of shares allotted as fully paid up pursuant to contract without payment being received in cash - Nil
- aggregate number and class of shares allotted as fully paid up by way of bonus shares - Nil
- aggregate number of shares bought back - Nil
(f) Other disclosures
The Company being ultimate holding company, there are no shares held by any other holding, ultimate holding company and their subsidiaries.
There are no shares reserved for issue under options and contracts / commitments for the sale of shares / disinvestment, including the terms and amounts; except as disclosed in note 51
There are no securities convertible into equity / preference shares issued along with the earliest date of conversion in descending order starting from the farthest such date.
Description of nature and purpose of each reserve
(a) Capital reserve
Capital reserve includes surplus on re-issue of shares made in the financial year 1996-97 amounting to C0.4 Lakhs.
(b) Securities premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
(c) 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 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 Companies Act, 2013.
(d) Effective portion of cash flow hedge
The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. Such gains or losses will be reclassified to Statement of Profit and Loss in the period in which the underlying hedged transaction occurs (refer note 49 and 52).
(e) Share options outstanding reserve
The share options-based payment reserve is used to recognise the grant date fair value of options issued to employees under employee stock option plan. (refer note 51).
(f) Retained earnings
Retained earnings are the profits/(losses) that the Company has earned / incurred till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings include re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss.
In the previous year, the Company was unable to fulfil the debt obligations associated with its non-current borrowings. The management had obtained condonation letters for the same from all lenders involved in the form of waiver, provision of 'cure-period' for fulfilling such obligations, deferral of applicability of financial covenants and modification in financial covenants. The Company has continued to disclose these borrowings as per the repayment schedule.
Proposed dividends on equity shares are subject to approval at the Annual General Meeting of the Company and are not recognised as a liability as at year end. Dividend for the year ended 31st March, 2023 was subsequently approved by the shareholders at the 72nd Annual General Meeting of the Company.
The Company has complied with the provisions of Section 123 of the Companies Act, 2013 related to dividend declared and dividend paid.
Non-current borrowings are disclosed net of unamortised finance cost of C 138.8 Lakhs (Previous Year: C229.0 Lakhs)
The above balance also includes interest accrued but not due amounting to C723.0 lakhs as at 31st March, 2024 and C796.0 lakhs as at 31st March, 2023.
OTHER REGULATORY INFORMATION
The Company files monthly / quarterly statement for its current assets with banks. Further, pursuant to subsequent adjustment if any post closures of yearly books and statutory audit, the Company files the revised return with the updated amounts at the year end.
The charges or satisfaction on the assets of the Company are registered with Registrar of Companies within the statutory period. The Company does not have any charges or satisfaction which are yet to be registered with Registrar of Companies (ROC) beyond statutory period.
The Company has used the borrowings obtained from banks and financial institutions for the specific purpose for which they were taken during the year ended 31st March, 2024 and 31st March, 2023.
The Company has not been declared as a wilful defaulter by any bank or financial institution or government or any government authority.
* The Company has availed import duty exemption under Export Promotion Capital Goods ("EPCG”) scheme, EPCG scheme is a scheme which allows an exporter to import of capital goods including spares for pre-production, production and post-production at zero Customs duty, for exports. As per the scheme, the Company has undertaken export obligation amounting to 6 times of the amount saved on duty on the capital goods.
# Includes payable with respect to Goods & Services Tax, Local Body Tax, Grampanchayat Tax, Withholding Taxes, Provident Fund etc.
**The Company has received C296.5 lakhs as at 31st March, 2024, (C442.8 lakhs as at 31st March, 2023) as contract liabilities (advance from customers), these liabilities are derecognised once the supply of goods are made.
The Code on Social Security, 2020
The Code on Social Security, 2020 ('Code') relating to employees benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules / interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
Compliance to Section 197 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
During the year under review, the managerial remuneration amounting to C 1,570.1 Lakhs was paid to the Managing Director and the Wholetime Director in terms of the provisions of Section 197 of the Companies Act, 2013 read with Schedule V thereto, and Rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This includes remuneration amounting to C129.03 Lakhs in excess of the limits prescribed under the Companies Act, 2013, and Rules made thereunder and C875.60 Lakhs in excess of the limits prescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Approval for the same has been accorded by the Shareholders by way of Special Resolution at its 72nd Annual General Meeting held on 11th August, 2023.
37 AMOUNT SPENT TOWARDS CORPORATE SOCIAL RESPONSIBILITY
The Company is covered under Section 135 of the Companies Act 2013, and is required to contribute towards activities eligible under Section 135 of The Companies Act, 2013 read with Schedule VII thereto. Company's CSR activities for ongoing projects are (a) promotion of education and enhancing vocational skills, (b) eradication of hunger and promoting hygiene, (c) promotion of sports, (d) protection of national heritage and promotion and development of traditional arts, (e) promotion of gender equality, and (f) other infrastructure that would help meet the objectives of environmental sustainability such as waste management, vermi-culture, organic farming, etc.
40 GRATUITY AND OTHER POST EMPLOYMENT BENEFITS PLANS A Defined Contribution Plans
In accordance with the law, all employees of the Company are entitled to receive the benefits under the Provident Fund Act. Company's contribution paid / payable during the year to provident fund and labour welfare fund are recognised in the Statement of Profit and Loss. The Company makes contributions to the Superannuation Scheme for employee who have opted, a defined contribution scheme administered by Life Insurance Corporation of India, which are charged to the Statement of Profit and Loss. The Company has no obligation to the scheme beyond its annual contributions.
B Defined Benefit Plans I Gratuity
Funded Scheme :
The Company has a defined benefit gratuity plan for its employees. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, every employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the employee's length of service and salary at retirement age. An employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service as per the provisions of the Payment of Gratuity Act, 1972. The scheme is funded with insurance companies in the form of qualifying insurance policies. The Company accounts for liability of such future benefits based on an independent actuarial valuation on projected accrued credit method carried out for assessing the liability as on the reporting date.
Risk exposure and asset-liability matching
Provision of a defined benefit scheme poses certain risks, as the Company take on uncertain long-term obligations to make future benefit payments.
The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss, the funded status and amounts recognised in Balance Sheet for the plan.
Sensitivity analysis indicates the influence of a reasonable change in certain significant assumptions on the outcome of the present value of obligation and aids in understanding the uncertainty of reported amounts. Sensitivity analysis is done by varying one parameter at a time and studying its impact.
Sensitivity analysis for each significant actuarial assumptions namely Discount rate and Salary assumptions have been shown in the table above at the end of the reporting period, showing how the defined benefit obligation would have been affected by the changes.
The method used to calculate the liability in these scenarios is by keeping all the other parameters and the data same as in the base liability calculation except the parameters to be stressed.
There is no change in the method from the previous period and the points / percentage by which the assumptions are stressed are same to that in the previous year.
The assumptions for mortality and attrition do not have a significant impact on the liability, hence are not considered a significant actuarial assumption for the purpose of sensitivity analysis.
Expected contribution by the Company for the next year: C366.9 lakhs
Weighted average duration of the plan (based on discounted cash flows using mortality, withdrawal and interest rate) is 12.8 years (Previous Year : 12.9 years).
II Pension
The Company provides for Pension, a defined benefit retirement plan covering eligible employees. Eligible employee are Company's employees beyond certain grade subject to the approval of Nomination and Remuneration Commitee. The plan provides for monthly pension payments to such eligible employees or their family members till such period as stipulated in the Board approved policy. The Company accounts for liability of such future benefits based on an independent actuarial valuation on projected accrued credit method carried out for assessing the liability as on the reporting date.
The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss, the funded status and amounts recognised in Balance Sheet for the plan.
Sensitivity analysis indicates the influence of a reasonable change in certain significant assumptions on the outcome of the Present value of obligation and aids in understanding the uncertainty of reported amounts. Sensitivity analysis is done by varying one parameter at a time and studying its impact.
Sensitivity analysis for each significant actuarial assumptions namely Discount rate and Salary assumptions have been shown in the table above at the end of the reporting period, showing how the defined benefit obligation would have been affected by changes.
The method used to calculate the liability in these scenarios is by keeping all the other parameters and the data same as in the base liability calculation except for the parameters to be stressed.
There is no change in the method from the previous period and the points / percentage by which the assumptions are stressed are same to that in the previous year
The assumption for mortality and attrition do not have a significant impact on the liability, hence are not considered a significant actuarial assumption for the purpose of sensitivity analysis.
III Leave Encashment / Compensated Absences / Sick Leave
The leave obligations cover the Company's liability for sick leave, privilege leave and casual leave.
The amount of the provision to be settled within next 12 months is presented as current, since the Company does not have an unconditional right to defer the settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following table shows bifurcation of current and non-current provision for leave encashment.
The Company provides for accumulation of compensated absences by certain categories of its employees. These employees can carry forward a portion of unutilised compensated absences and utilise it in the future periods or receive cash in lieu thereof as per Company policy. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The measurement of such obligation is based on actuarial valuation as at the Balance Sheet date carried out by qualified actuary on projected accrued credit method carried out for assessing the liability as on the reporting date.
44 The disclosures under Ind AS 108 - Operating Segments have been included in the Consolidated Financial Statements and accordingly, not included in these financial statements. Refer note 50 of the Consolidated Financial Statements.
45 CAPITAL COMMITMENT AND CONTINGENT LIABILITIES (a) CAPITAL COMMITMENT
The unexecuted value of capital purchase orders issued to vendors as at 31st March, 2024 are C615.7 lakhs (31st March, 2023 : C325.3 lakhs)
(b) CONTINGENT LIABILITIES
Claims against the Company not acknowledged as debts
|
Particulars
|
As At
31st March, 2024
|
As At
31st March, 2023
|
Excise duty / Service tax demands - matters under dispute
|
507.1
|
475.0
|
GST / VAT / CST demands - matters under dispute
|
2,275.5
|
-
|
Custom duty demands - matters under dispute
|
330.4
|
318.2
|
Direct Tax demands - matters under dispute
|
331.9
|
-
|
Electricity duty on Power Generation (refer note iv)
|
2,810.4
|
2,371.1
|
i It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgments / decisions pending with various forums / authorities. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required in this regard.
ii The Company does not expect any reimbursements in respect of the above contingent liabilities.
iii The Company's pending litigations comprise of claims against the Company pertaining to proceedings pending with Income Tax, Excise, Custom, Sales / VAT tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as 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 statements.
iv The Government of Maharashtra revised electricity duty payable on captive power generation (""CPP"") vide notification dated 13th April, 2015 and accordingly MSEDCL issued a Circular no 214 dated 23rd April, 2015, the revised rates for CPP was revised to 120 paise per unit from 30 paise per unit. The rates for CPP increased by 4 times, which was very high, therefore the Captive Power Producers Association filed writ petition with Bombay High Court which has been admitted by H.C. vide case No. WP/4963/2015 and WP/906/2017. The High Court passed interim stay order, subsequently during the last hearing held on 24th January, 2020, the bench passed the order to continue the interim stay granted previously.
The Company has obtained an opinion from a subject-matter expert ('SME') on the Electricity Duty contingency. The matter is sub-judice with the Bombay High Court and the SME has opined that the Company has a good case of success in the proceedings.
(c) OTHER LITIGATIONS
There are several other cases which has been determined as remote or has been provided in the books by the Company and hence not been disclosed above.
(d) GUARANTEES EXCLUDING FINANCIAL GUARANTEES
The Company has given guarantees on behalf of Sudarshan Europe B.V., Sudarshan North America, Sudarshan (Shanghai) Trading Company Limited, and RIECO Industries Limited for working capital requirement of the subsidiary companies. The management has considered the probability for outflow of the same to be remote. The Company has reviewed the financial position along with consideration of other factors, of the entity to whom the guarantees are issued and has determined that the exposure of revocation of liability is remote. Hence these financial guarantees are not measured at fair value as per Ind AS 109 - Financial Instruments (Refer note 43). Other than this the Company has issued guarantees to Maharashtra Pollution Control Board, Maharashtra State Electricity Distribution Company Limited, Custom Authorities and other authoritites amounting to C729.8 lakhs.
46 OTHER STATUTORY INFORMATION AS REQUIRED BY NOTIFICATION ISSUED BY MINISTRY OF CORPORATE AFFAIRS DATED 24TH MARCH, 2021 ON AMENDMENTS ON SCHEDULE III
(a) There are no loans or advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013) either severally or jointly with any other person.
(b) The Company does not hold any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
(d) The Company has not traded or invested in crypto currency or virtual currency during the financial year ended 31st March, 2024 and 31st March, 2023.
(e) (A) The Company has not advanced or loaned or invested funds to any persons or entities, including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:
i) 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
ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(B) The Company has not received any fund from any persons or entities, 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.
49 RISK MANAGEMENT AND CAPITAL MANAGEMENT A Financial instruments risk management objectives and policies
The Company's principal financial liabilities other than derivatives, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations and to support its operations. The Company's principal financial assets include investments, trade and other receivables, deposits, loans and cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. The Company's senior management is supported by an Enterprise Risk Management (ERM) team that advises on financial risks and the appropriate financial risk governance framework for the Company. The ERM team provides assurance to the Company's senior management that the Company's financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. The ERM team process seeks to provide greater confidence to the decision maker and thus enhance achievement of objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
(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 three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings, deposits, investments, other receivable, payables and derivative financial instruments. The sensitivity analysis in the following sections relate to the position as at 31st March, 2024 and 31st March, 2023.
The Company uses derivatives (forward contract, interest rate swap) or non-derivative or a combination of both to hedge its exposure of forex / interest rate related risk. These instruments are either used to lock in a lower purchase price or / and a higher sales prices / fixed interest rate The gain or loss on hedging instrument are aligned and effectively an offset compared with hedged item.
The economic relationship between hedged item and hedged instrument is established to ensure that both are moving in the opposite direction because of the same hedged risk.
The credit risk associated with the hedge relationship is negligible due to the highly rated counterparties.
The Company's hedging policy only allows for effective hedge relationships. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between hedged item and hedging instrument. The Company enters into hedge relationships where the critical terms of the hedging instrument match exactly with the terms of the hedged item, and so a qualitative assessment of effectiveness is performed. If the critical terms of the hedged item do not match exactly with the critical terms of the hedging instrument, the company uses the quantitative analysis to assess effectiveness.
Ineffectiveness is recognised on a cash flow hedge where the cumulative change in the designated component value of the hedging instrument exceeds, on an absolute basis, the change in value of the hedged item that attributes to the hedged risk. This may arise if there is any change in the timing of the underlying hedged item or if the critical terms of the hedging instrument and the hedged item do not match exactly.
The Company basis their assessment believes that the probability of the occurrence of their highly probable forecasted transactions is not significantly impacted by the current geopolitical scenario. The Company has also considered the effect of changes, if any, in both counterparty credit risk and own credit risk while assessing hedge effectiveness and measuring hedge ineffectiveness. The Company continues to believe that there is no impact on effectiveness of its hedges.
In addition to the historical pattern of credit loss, the Company has also considered the likelihood of increased credit risk considering emerging situations due to the current geopolitical scenarios. This assessment is based on the likelihood of the recoveries from the customers in the present situation. The Company closely monitors its customers who are going through financial stress and assesses actions such as change in payment terms, recognition of revenue on collection basis etc., depending on severity of each case. Basis this assessment, the allowance for doubtful trade receivables is considered adequate.
In addition, financial instruments that are subject to concentration of credit risk include loans, cash and cash equivalents, other balances with banks and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk. Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.
B Capital management
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 Company. The primary objective of capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.
The Company manages its capital structure and makes adjustments to it 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
50 ASSETS HELD FOR SALE :
Description
Sale of Freehold Land
The Board of Directors at its meeting held on Thursday, 9th February, 2023, accorded its in-principle approval for sale of freehold, clear and marketable titled land admeasuring approximately 5.76 acres along with the structures standing thereon located at 162 Wellesley Road, Pune - 411 001, Maharashtra, India, subject to necessary due diligence, approvals, consents, permissions from the concerned authorities to one or more parties in part, piecemeal or in full. Subsequently, the Company entered into an agreement dated 6th April, 2023 for transfer of aforesaid land along with the structures standing thereon. The transaction was completed on 6th April, 2023. Pursuant to the requirements of Ind AS 105 - "Non current Assets Held for Sale and Discontinued Operations", this has been classified as "assets held for sale" as at 31st March, 2023. Also refer note 53(a).
These instruments are measured at fair values at each reporting period resulting in derivative financial assets and derivative financial liabilities. The gain / loss on maturity / termination of such derivative instruments is recorded in the Statement of Profit and Loss along with the relevant hedged item.
The weighted average fair value of the share option granted is C 169.2/-. Options were priced using the Black-Scholes Merton Formula pricing model. Where relevant, the expected life used in this model has been adjusted based on management's best estimate for the effects of non-transferability, exercise restrictions and behavior considerations. Expected volatility is based on historical sale price volatility of comparable companies in the industry over the expected life of 6 - 10 years.
The cash flow hedges of the expected future sales during the year ended 31st March, 2024 were assessed to be highly effective and a net unrealised (loss) / gain of C20.0 Lakhs (31st March, 2023: C(2,184.4) Lakhs) is included in OCI.
The amounts retained in OCI at 31st March, 2024 are expected to be realised in the Statement of Profit and Loss till the year ended 31st March, 2028.
The following are the details of outstanding derivative and non derivative instruments (foreign currency loans) entered into by the Company which have been designated as cash flow hedges:
There are no options vested during the year ended 31st March 2024 and 31st March 2023.
There is no realisation of money by exercise of option during the year ended 31st March 2024 and 31st March 2023.
The options outstanding at 31st March, 2024 have an exercise price of C349.35 (31st March, 2023: C349.35) and a weighted average remaining contractual life of 6.2 years (31st March, 2023: 7.2 years)
Weighted average share price at the date of the exercise of share options exercised in 2023-24 is not disclosed as no shares were exercised during the current year and the previous year.
Expense recognised in Statement of Profit and Loss
The Company has followed the fair value method to account for the grant of stock options. Profit and loss impact for the year ended 31st March, 2024 is C 126.1 Lakhs (previous year: C108.4 Lakhs).
52 HEDGING ACTIVITIES Cash flow hedges
The Company enters into derivative instruments which comprise of interest rate swaps, cross currency swaps and also designates its foreign currency borrowings against highly probable forecasted export sales for hedge accounting to manage its foreign currency exposure.
For qualitative details w.r.t hedging strategy followed by the Company refer note 49A.
Derivatives not designated as hedging instruments:
The Company has used foreign exchange forward contracts to manage its import payments and realisation from export customers. These foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions i.e. the payments against import purchases and realisation from export customers.
a) During the current year, the Company concluded the sale of its freehold land along with the structures thereon located at 162 Wellesley Road, Pune 411 001, for a total consideration of C35,600.0 lakhs resulting into a gain of C31,510.1 lakhs (net of transaction costs and other incidental costs). These assets were disclosed as Assets Held for Sale as on 31st March, 2023. Tax expense on this exceptional item amounting to C6,921.0 lakhs is included in current tax expenses.
b) As a part of restructuring / consolidation and with the purpose to have a single entity as Global Holding Company for all overseas subsidaries,the Company through Share Purchase Agreement dated 22nd March 2024, divested its holding in Sudarshan (Shanghai) Trading Company Limited to Sudarshan Europe B.V. for a total consideration of C134.7 Lakhs resulting into a loss of C344.1 Lakhs (including transaction cost and other incidental cost).
The management assessed that the fair value of cash and cash equivalent, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following method and assumptions were used to estimate the fair value:
(i) Long-term fixed-rate and variable-rate receivables / borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
(ii) The fair value of unquoted instruments, loans from banks, related parties and other financial liabilities as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(iii) The Company enters into derivative financial instruments with financial institutions and banks with investment grade credit ratings. Foreign exchange Forward Contracts and Interest Rate Swap are valued using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation techniques include forward pricing models, using present value calculations. The model incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies, interest rate curves and forward rate curves of the underlying commodity.
(iv) The fair values of the Company's interest-bearing borrowings and loans are determined by using DCF method using discount rate that reflects the issuer's borrowing rate as at the end of the reporting period. The own non-performance risk was assessed to be insignificant.
55 FAIR VALUE HIERARCHY
The following table provides the fair value measurement hierarchy of the Company's assets and liabilities
Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of mutual fund investments.
Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e.; as prices) or indirectly (i.e.; derived from prices). This level of hierarchy include Company's over-the- counter (OTC) derivative contracts.
Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
The following table presents the fair value measurement hierarchy of financial assets and liabilities measured at fair value on a recurring basis as at 31st March, 2024 and 31st March, 2023.
56 Additional regulatory information/disclosures as required by General Instructions to Division II of Schedule III to the Companies Act, 2013 are furnished to the extent applicable to the Company.
57 MCA has amended Rule 3 of the Companies (Accounts) Rules, 2014 (the "Accounts Rules") relating to the mode of keeping books of account and other books and papers in electronic mode through an amendment on 5th August, 2022. In compliance with the requirements of the amendment, the books of accounts and other relevant books and records are accessible in India at all times. Further, backup of books of account maintained in electronic form is kept in servers physically located in India on a daily basis.
58 The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled for changes, if any, made using certain administrative access rights to the SAP Hana software. These administrative rights were restricted to limited users. Further, these administrative access rights at the application level have been revoked and audit trail feature at database is enabled subsequent to the year end. Further, no instance of audit trail feature being tampered with was noted in respect of such accounting software where the audit trail has been enabled.
59 Previous year figures have been regrouped / reclassified as considered necessary to conform with current period presentation wherever applicable.
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