p. Provisions, Contingent Liabilities and
Contingent Assets:
Provisions are recognized when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the
amount of the obligation.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects current market assessment of time value of
money and, where appropriate, the risks specific to the
liability. Unwinding of the discount is recognized in the
Statement of Profit and Loss as a finance cost. Provisions
are reviewed at each reporting date and are adjusted to
reflect the current best estimate.
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 recognized in financial
statements since this may result in the recognition of
income that may never be realized. However, when the
realization of income is virtually certain, then the related
asset is not a contingent asset and is recognized.
q. Earnings Per Share:
The basic Earnings Per Share (“EPS”) is computed
by dividing the net profit/(loss) after tax for the year
attributable to the equity shareholders by the weighted
average number of equity shares outstanding during
the year. The weighted average number of equity shares
outstanding during the period is adjusted for events of
bonus issue and share split, if any that have changed
the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted EPS, net profit/
(loss) after tax for the year attributable to the equity
shareholders and the weighted average number of equity
shares outstanding during the year are adjusted for the
effects of all dilutive potential equity shares.
r. Cash and Cash Equivalent:
Cash and cash equivalents in the Balance Sheet comprise
cash at bank and in hand, including fixed deposit with
originalmaturity period of three months or less and short¬
term highly liquid investments with an original maturity of
three months or less, that are readily convertible into cash
which are subject to insignificant risk of changes in value
and are held for the purpose of meeting short-term cash
commitments.
s. Cash Flow Statement:
Cash flows are reported using the indirect method,
whereby the net profit before tax is adjusted for the
effects of transactions of a non-cash nature, any deferrals
or accruals of past or future operating cash receipts or
payments and item of income or expenses associated
with investing or financing cash flows. The cash flows
from operating, investing and financing activities of the
Company are segregated.
t. Derivative Financial Instruments and
Hedge Accounting:
The Company enters into derivative financial instruments
viz. foreign exchange forward contracts to manage its
exposure to foreign exchange rate risks. The Company
formally establishes a hedge relationship between such
forward currency contracts ('hedging instrument’) and
recognized financial liabilities ('hedged item’) through
a formal documentation at the inception of the hedge
relationship in line with the Company’s Risk Management
objective and strategy. The Company does not hold
derivative financial instruments for speculative purposes.
Derivatives are initially recognized at fair value at the
date the derivative contracts are entered into and are
subsequently remeasured to their fair value at the end
of each reporting period. The resulting gain or loss is
recognized in statement of profit or loss immediately
excluding derivatives designated as cash flow hedge.
Recognition and measurement of fair value
hedge:
Hedging instrument is initially recognized at fair value on
the date on which a derivative contract is entered into and
is subsequently measured at fair value at each reporting
date. Gain or loss arising from changes in the fair value
of hedging instrument is recognized in the Statement of
Profit and Loss. Hedging instrument is recognized as a
financial asset in the Balance Sheet if its fair value as at
reporting date is positive as compared to carrying value
and as a financial liability if its fair value as at reporting
date is negative as compared to carrying value.
Hedged item (recognized financial liability) is initially
recognized at fair value on the date of entering into
contractual obligation and is subsequently measured at
amortized cost. The hedging gain or loss on the hedged
item is adjusted to the carrying value of the hedged item as
per the effective interest method and the corresponding
effect is recognized in the Statement of Profit and Loss.
On Derecognition of the hedged item, the unamortized
fair value of the hedging instrument is recognized in the
Statement of Profit and Loss.
u. Segment Reporting:
Identification of Segments:
An operating segment is a component of the Company
that engages in business activities from which it may earn
revenues and incur expenses, whose operating results
are regularly reviewed by the company’s management to
make decisions for which discrete financial information
is available. Operating Segments are identified based on
monitoring of operating results by the chief operating
decision maker (CODM) separately for the purpose
of making decision about resource allocation and
performance assessment.
Operating Segment is identified based on the nature of
products and services, the different risks and returns, and
the Internal Business Reporting System.
Based on the management approach as defined in Ind
AS 108, the management evaluates the Company’s
performance and allocates resources based on an analysis
of various performance indicators by business segments
and geographic segments.
v. 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.
Note 1(B) Significant Accounting
Judgements and Estimates
The preparation of the financial statements in conformity
with Ind AS requires management to make judgments,
estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets,
liabilities, income and expenses. Uncertainty about these
assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of
assets or liabilities affected in future periods.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are
revised and in any future periods affected.
In particular, information about significant areas of
estimation, uncertainty and critical judgments in applying
accounting policies that have the most significant effect
on the amounts recognized in the financial statements
are included in the following notes.
(i) Useful Lives of Property, Plant &
Equipment:
Property, Plant and Equipment represent a significant
proportion of the asset base of the Company. The
charge in respect of periodic depreciation is derived after
determining an estimate of an asset’s expected useful life.
The useful lives of the Company’s assets are determined
by the management at the time the asset is acquired
and reviewed periodically, including at each financial year
end. The lives are based on historical experience with
similar assets as well as anticipation of future events,
which may impact their life, such as changes in technical
or commercial obsolescence arising from changes or
improvements in production or from a change in market
demand of the product or service output of the asset.
(ii) Defined Benefit Plans and Compensated
Absences:
The cost of the defined benefit plans, compensated
absences and the present value of the defined benefit
obligation are based on actuarial valuation using the
projected unit credit method. 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.
(iii) Expected Credit Losses on Financial
Assets:
The impairment provisions of financial assets are based on
assumptions about risk of default and expected timing of
collection. The Company uses judgment in making these
assumptions and selecting the inputs to the impairment
calculation, based on the Company’s past history,
customer’s creditworthiness, existing market conditions
as well as forward looking estimates at the end of each
reporting period.
(iv) Fair Value measurement of Financial
Instruments:
When the fair values of financials assets and financial
liabilities recorded in the Balance Sheet cannot be
measured based on quoted prices in active markets,
their fair value is measured using valuation techniques,
including the discounted cash flow model, which involve
various judgements and assumptions.
Maturity profile:
The sensitivity analyses above have been determined based on reasonably possible changes of the respective
assumptions occurring at the end of the reporting period and may not be representative of the actual change. It is based
on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to
the assumption, the method (Projected Unit Credit Method) used to calculate the liability recognized in the balance
sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change
compared with the previous period.
100% of the plan assets held by gratuity trust comprises of employees group gratuity scheme with TANFAC Employees
Gratuity Trust Fund. The estimates of future salary increases, considered in actuarial valuation, take account of inflation,
seniority, promotion and other relevant factors such as supply and demand factors in the employment market. The
expected rate of return on plan assets given by Actuary. The Plan Assets are fully invested in Insurance Schemes.
The Company contributed ? Nil (PY ? Nil) to gratuity trust for contribution to Aditya Birla Sun Life Insurance during the
financial year 2024-25.
b) Disclosure in respect of leave entitlement liability:
Leave entitlement is short term benefit which is recognized as an expense at the un-discounted amount in the year in
which the related service is rendered and disclosed under other current liabilities.
c) Death in service benefit:
The Company has taken group term policy from an insurance Company to cover its obligation for death in service benefit
given to eligible employees. The insurance premium of ? 25.82 lakhs (P.Y. ? 18.78 lakhs) is recognized in Statement of Profit
and Loss.
d) The Company contributes towards Employees Provident Fund, Employees State Insurance Scheme and Labour
Welfare Fund. The aggregate amount contributed and charged to Statement of Profit and Loss is ? 126.77 lakhs (PY ?
103.65 lakhs).
b) Unredeemed Letters of Credit/Bank Guarantees - ?
5314.34 Lakhs (Previous Year- ? 2775.64 Lakhs).
c) Capital Commitments:
Estimated amount of contracts remaining to be executed
on capital account and not provided for (Net of advances)
- ? 3,871.67 lakhs (Previous Year ? 4,126.22 lakhs).
c) SIPCOT has raised a demand of ? 12.00 lakhs for
payment of additional cost for the land at Cuddalore taken
on long-term lease together with interest @ 16.5%p.a.
The Company has paid an initial amount of ? 6.00 lakhs in
1995 and additional amount of ? 6.00 lakhs in 2001, as per
the directions of the Honourable High Court of Madras.
However, SIPCOT has preferred an appeal against the
order of the High Court challenging the waiver of interest.
Matter is pending at High court of Madras.
d) During the Financial Year 1991 - 92 the Company
has received a notice from the Tamil Nadu Sales Tax
authorities towards levy of tax etc. on sales effected from
Pondicherry Depot during 1989-90 and 1990-91. Based on
the directions of the Honourable High Court of Madras,
the Appellate Assistant Commissioner, Commercial Taxes,
Chennai passed the order in favour of the company thereby
reducing the demand to ? 52.77 lakhs. The amount has
since been paid under protest. The company has also filed
a writ petition before Honourable High Court of Madras,
for granting refund of tax paid earlier to Pondicherry
Government. As a matter of abundant caution, provision
has been made in these accounts for the disputed amount
of ? 52.77 lakhs.
The Honourable High Court had passed Order vide SR
No.49922 dated 1st September, 2016, disposing the all
writ petitions filed earlier on various occasions and giving
liberty to the Company (Petitioner) to file an appeal before
the Tamil Nadu Sales Tax Appellate Tribunal within Sixty
days from the receipt of the order, who shall entertain the
appeal without reference to the limitation. Accordingly,
the Company has filed an appeal before The Tamil Nadu
Sales Tax Appellate Tribunal on 6th January, 2017, pursuant
to the judgement order dated 01.09.2016 delivered on
22/11/2016 and appeal proceeding is awaited.
e) The company has a process of evaluating financial
impact of pending litigation on Financial Statements
and making necessary provision in terms of prevailing
accounting practices.
f) The Company has a process whereby periodically all
long term contracts are assessed for material foreseeable
losses (Including all derivative contracts). At the year end,
the Company has reviewed and ensured that adequate
provision as required under any law/accounting standards
for material foreseeable losses on such long term
contracts has been made in the books of account.
29.5. Fair Value Measurement:
The management assessed that cash and bank
balances, trade receivables, trade payables, cash
credits and other financial assets and liabilities
approximate their carrying amounts largely due to
the short-term maturities of these instruments.
The fair values of the financial assets and liabilities
are 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 Company has established the following fair value
hierarchy that categorises the values into 3 levels. The
inputs to valuation techniques used to measure fair value
of financial instruments are:
29.6. Financial risk management objectives and policies:
The Company’s principal financial liabilities, other than derivatives, comprise loans and 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 include trade and other receivables, investments, and cash & 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. It is the Company’s policy that no trading in derivatives for speculative purposes
may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are
summarised below.
a) Material Risk:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises of foreign currency risk. Market risk is attributable to all market risk sensitive
financial instruments including foreign currency receivables, payables and borrowings. The sensitivity analyses in the
following sections relate to the position as at 31st March, 2025 and 31st March, 2024.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is
based on the financial assets and financial liabilities held at 31st March, 2025 and 31st March, 2024.
(i) Foreign currency risk
The Company may also have foreign currency exchange risk on procurement of raw materials. The Company manages
this foreign risk using derivatives, wherever required to mitigate or eliminate the risk.
Foreign currency sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in rate of USD, with all other variables
held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and
liabilities
The Company considers the probability of default upon initial recognition of asset and whether there has been a
significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a
significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date
with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking
information such as:
i. Actual or expected significant adverse changes in business,
ii. Actual or expected significant changes in the operating results of the counterparty,
iii. Financial or economic conditions that are expected to cause a significant change to the counterparty’s ability to
meet its obligations,
iv. Significant increase in credit risk on other financial instruments of the same counterparty,
v. Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party
guarantees or credit enhancements.
Financial assets are written off when there are no reasonable expectations of recovery, such as a debtor failing to engage
in a repayment plan with the Company.
Assets in the nature of Investment, security deposits, loans and advances are measured using 12 months expected credit
losses (ECL). Balances with Banks is subject to low credit risk due to good credit rating assigned to these banks. Trade
receivables are measured using life time expected credit losses.
d) Capital Management:
For the purposes of the Company’s capital management, capital includes issued capital, share premium and all other
equity reserves attributable to the equity holders. The Company aims to manage its capital efficiently so as to safeguard
its ability to continue as a going concern and to optimise returns to our shareholders.
The capital structure of the Company is based on management’s judgement of the appropriate balance of key elements
in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage
the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets.
The Company’s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain
investor, creditors and market confidence and to sustain future development and growth of its business. The Company
will take appropriate steps in order to maintain, or if necessary, adjust, its capital structure.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided
by total capital plus net debt.
29.12. Registrar of Charges:
The Register of Charges of the Company as per MCA
records shows some old charges of various Banks
amounting to ? 7,186 Lacs lying open, which the Company
maintains that those charges were satisfied during
earlier years and necessary forms were filed with the MCA
manually when there were no online filing requirements.
Company is taking steps to correct the MCA records.
29.13. Recent Accounting Prnouncements:
To the best of information of management of the
Company, Additional regulatory information required to be
given pursuant to Gazette notification for Amendments
in Schedule III to Companies Act, 2013 dated 24 March
2021 effective from 01 April 2021 is disclosed wherever
applicable. Further, the following disclosures are not
applicable to the Company:
i) Disclosure on Revaluation of property, plant and
equipment and intangible assets from Registered
Valuers is not applicable to company.
ii) No proceeding has been initiated or pending against
the Company for holding any benami property under
the Benami Transactions (Prohibition) Act,1988 (us of
1988) an rules made thereunder.
iii) The Company has not been declared a wilful defaulter
by any bank or financial institution or other lender.
iv) Transactions with Struck off Companies*
During the year, the Company has not entered into
any transaction with companies struck off under
Section 248 of the Companies Act, 2013 or Section
560 of Companies Act, 1956.
* based on information available as on the date of
reporting.
v) As per clause (87) of section 2 and section 186 (1) of
the Companies Act, 2013 and Rules made thereunder,
the company is in complaince with the number of
layers as permitted under the said provisions.
vi) The Company has not carried out any scheme
of arrangement which is approved by regulatory
authorities during the year.
vii) The Company has not traded or invested in Crypto
currency or virtual currency during the financial year.
viii) There are no transactions recorded in books of
account reflecting surrender/disclosure of income in
the assessment under Income Tax Act, 1961.
ix) During the year no loans/advances in the nature of
Loans have been given to Promoters, Directors, KMP
and Related Parties.
x) The company does not have investment in subsidiary
companies and accordingly the disclosure as to
whether the company has complied with the number
of layers of companies prescribed under clause (87)
of section 2 of the Act read with the Companies
(Restriction on number of Layers) Rules, 2017 is not
applicable.
xi) (a) In the opinion of the Management, 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 entity
("Intermediaries"), with the understanding,
whether recorded in writing or otherwise,
that the Intermediary shall, whether, 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 provided any guarantee,
security or the like on behalf of the Ultimate
Beneficiaries.
(b) In the opinion of the Management, 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 entity ("funding parties"), with the
understanding, whether recorded in writing or
otherwise, that the Company shall, whether,
directly or indirectly, lend or invest in other
persons or entities identified in any manner
whatsoever by or on behalf of the funding
parties ("Ultimate Beneficiaries") or provide any
guarantee, security or the like on behalf of the
Ultimate Beneficiaries.
29.14. Ministry of Corporate Affairs (“MCA”) notifies
new standard or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. As on March 31, 2025 there
were no material amendments to the Companies (Indian
Accounting Standards) Rules issued by the MCA which
were not yet effective.
29.15. Dividend: The Board of Directors in their
meeting held on 22nd April 2024 had recommended
final dividend of ? 7.00 per share totaling ? 698.25 lakhs
for the financial year 2023-24 and the said dividend
was transferred to the Dividend Warrant Account in
September 2024 after confirmation by members in
their General Meeting held on 27th September 2024.
The Board of Directors have recommended dividend of
? 9.00 per share totaling ? 897.75 Lakhs for the financial
year 2024-25 subject to the approval of shareholders in
the forthcoming Annual General Meeting.
29.16. The accounting software used by the Company, to maintain its Books of account have a feature of recording audit
trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software,
except at the Database level. The Company are taking necessary steps for upgrading its Software which would have the
facility for recording audit trail (edit log).
29.17 Previous year figures are regrouped or rearranged wherever considered necessary.
As per our report of even date attached
For Singhi & Co., For and on behalf of the Board of Directors of
Chartered Accountants TANFAC Industries Limited
Firm Registration No. 302049E CIN: L24117TN1972PLC006271
Sudesh Choraria Afzal Harunbhai Malkani R. Karthikeyan
Partner Director Director
Membership No. 204936 DIN 07194226 DIN 00824621
Place: Chennai S Vinod Kumar N.R.Ravichandran
Date: 28.04.2025 Company Secretary Chief Financial Officer
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