a) Total cash outflow for leases for the year ended March 31, 2024 was ' 200.00 Lakhs (March 31,2023 Nil) which includes payment of rental dues amounting to ' 100.00 Lakhs pertaining to previous year.
b) There are no variable lease payments included in the measurement of lease liability.
c) Extension and termination options: Extension and termination options are included in the lease contracts of the Company. These are used to maximise operational flexibility in terms of managing the assets of the Company. All the extension and termination options held are exercisable both by the Company and the respective lessor.
d) Pursuant to the composite scheme of arrangement approved by NCLT, as per para 4.4 of the scheme, on the same becoming effective and w.e.f appointed date i.e. April 01, 2022 as per scheme, Naperol Investments Limited (NIL) shall effect the lease of land as specified in schedule IB and schedule II to the scheme in the name of the Company. Accordingly, the Company has considered commencement date for the lease from April 01, 2022 for 15 Years or extended as agreed between NIL and the Company.
#During the year, obsolete inventory amounting to ' 174.86 Lakhs has been written off and the existing provision for such obsolescence inventory amounting to ' 175.18 Lakhs created in earlier years has been reversed. The reversal of excess provision amounting to ' 0.32 Lakhs has been accounted under Cost of Raw Material and Packing Material Consumed in the Statement of Profit and Loss. In the previous year, write-down of inventories to net realizable value amounted to ' 109.93 Lakhs. These were recognized as an expense and included in 'Other expenses - Consumption of stores and spares’ and 'Cost of Raw Material and Packing Material Consumed’ in Statement of Profit and Loss.
#Erstwhile known as IDFC Overnight Fund
A The above investment in Mutual Funds have been acquired under the Composite Scheme of Arrangement (Refer note 4) from Naperol Investments Limited (formerly known as National Peroxide Limited) ("Demerged Company") but are held in the name of Demerged Company. Necessary steps are being taken by the Company to get the legal formalities completed for transfer of investments.
AThe Composite Scheme of Arrangement has become effective on September 11,2023 and as per the terms of the Scheme, one equity share of ' 10 each is to be allotted to the existing shareholders of Naperol Investments Limited (formerly known as National Peroxide Limited) ("NIL") ("Demerged Company") whose name appear in register of members of NIL as on the record date. Till the shares are allotted the same would appear in equity share capital suspense account. The Company has allotted 57,47,000 equity shares on September 27, 2023 to the existing shareholders of NIL as on record date. Hence, the equity shares have been transferred from Equity Share Capital Suspense to Issued, subscribed and fully paid-up Equity Share Capital.
As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares. Since shares were allotted on September 27, 2023, the disclosure pertaining to previous year is not applicable. iv) Rights, preferences and restrictions attached to equity shares:
The Company has one class of equity share having a par value of ' 10 per share. Every holder of equity shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. 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.
I n the event of liquidation of the Company, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholdings.
vi) Details of shares allotted without payment being received in cash in last five years:
The Company has not made any buy-back, nor there has been an issue of shares by way of bonus share nor issue of share pursuant to contract without payment being received / paid in cash for the period of five years immediately preceding the balance sheet date. However, 57,47,000 equity shares of ' 10 each has been allotted on September 27, 2023 to the existing shareholders of Naperol Investments Limited (formerly known as National Peroxide Limited) as on record date (Refer note 4C) without payment received in cash in accordance with Composite Scheme of Arrangement.
I) Term of repayment
The sanctioned amount of Rupee term loan from bank is ' 1,500 Lakhs (March 31,2023: ' 1,500 Lakhs). This facility carries floating interest rate of 8.55% to 9.70%. The loan is repayable in 17 equal quarterly instalments commencing from the end of 12th month from date of first drawdown (i.e. January 07, 2022).
II) Nature of security
The above loan are secured by a pari passu charge on entire movable fixed assets including plant and machinery of the Company located in Kalyan, Maharashtra. As this loan was transferred to the Company pursuant to the composite scheme of arrangement, the process of transfer of charges from the Demerged Entity to the Company is in progress.
40 Segment information
The CEO & Executive Director reviews the Company’s performance. Presently, the Company is engaged in only one segment viz 'Manufacturing of peroxygens’ and as such there is no separate reportable segment as per Ind AS 108 'Operating Segments’. Presently, the Company’s operations are predominantly confined in India.
#Note: Receivable from Demerged Company pursuant to Composite Scheme of Arrangement
As per the composite scheme of arrangement Naperol Investments Limited (formerly known as National Peroxide Limited) ("Demerged Company") has continued to manage the operations of demerged business undertaking, hence the inter-se transactions between the demerged & resulting company pertaining to the operations of resulting company including interest, transfer of inventories, sales of goods, assets, employee funds etc. have not been reported here on above. A sum of ' 301.37 Lakhs is receivable as at March 31,2024 (March 31,2023 - ' 37.95 Lakhs) from Naperol Investments Limited (formerly known as National Peroxide Limited) on account of money held in trust by them for managing the operations of demerged undertaking.
Above related party transactions were made on normal commercial terms and conditions and at market rates.
(c) Post employment obligations Gratuity
The Company has a defined benefit plan, governed by the Payment of Gratuity Act, 1972. The plan entitles an employee, who has rendered at least five years of continuous service, to gratuity. Where the period of service is more than 5 years but less than 10 years, gratuity will be calculated at the rate of fifteen days basic salary for every completed years of services or part thereof in excess of six months, based on the rate of basic salary last drawn by the employee concerned. Where the period of service is more than 10 years but less than or equal to 15 years, gratuity will be calculated at the rate of two third of the one month’s salary for each completed year of service, being calculated over and above the provisions of the Gratuity Act, 1972. Where the period of service is more than 15 but less than or equal to 20 years, gratuity will be calculated at the rate of one month’s salary for each completed year of service over 15 years, being calculated over and above the provisions of the Gratuity Act, 1972. Where the period od service is more than 20 years, gratuity will be calculated at the rate of one month’s salary for each completed year of service over 20 years, being calculated over and above the provisions of the Gratuity Act, 1972. This is subject to maximum of 20 months’ salary in case of resignation and termination of service. In case of Pre-mature retirement, the maximum Ex-gratia gratuity is 30 months’ salary.
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. While calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
(iv) The above defined benefit gratuity plan was administrated 100% by a trust as at March 31,2024.
(v) Defined benefit liability and employer contributions
The Company will pay demand raised by the trust towards gratuity liability on time to time basis to eliminate the deficit in defined benefit plan.
The weighted average duration of the defined benefit obligation is 4.77 years (Previous Year: 4.78 years)
Pension
The Company operates a defined benefit pension plan. The pension benefits payable to the employees are based on the employee's service and last drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company. The Company does not contribute annually to any trust or a fund towards the liability under the plan, this plan is unfunded.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. While calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
Provident Fund
In respect of certain employees, provident fund contributions are made to a trust administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The liability in respect of the shortfall of interest earnings of the Fund is determined on the basis of an actuarial valuation.
Company measures its liability towards provident fund through actuarial valuation using 'projected credit unit method’. In case of net assets, assets are recognised to the extent of liability only.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. While calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
(iv) The above defined benefit plan was administrated 100% by a trust as at March 31,2024.
(v) Defined benefit liability and employer contributions
The Company will pay demand raised by the trust towards provident fund liability on time to time basis to eliminate the deficit in defined benefit plan.
The weighted average duration to payment is 9.41 years (Previous Year: 9.17 years)
(vi) The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets under perform this yield, this will create a deficit.
(b) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Financial Instrument not measured using Fair Value i.e. measured using amortised cost
The carrying value of Other financial assets / liabilities represent reasonable estimate of its fair value.
Note:
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
There are no transfers between any levels during the year.
The Company does not have financial instrument at level 3 with unobservable input and hence no sensitivity analysis performed.
(c) Valuation techniques used to determine fair value
The Mutual Funds are valued using closing NAV.
The carrying amounts of cash and cash equivalents, other bank balances, trade receivables, investment in mutual funds, inter corporate deposits, other financial assets, current financial liabilities- borrowings including accrued interest, lease liabilities, trade payables and other current financial liabilities are considered to be the same as their fair values due to their short term nature.
44 Financial risk management
The Company’s business activities expose it to a variety of financial risks, namely liquidity risk, market risks and credit risk. In order to minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as cross currency interest rate swap are entered to hedge certain foreign currency risk exposures and interest rate exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
The Company has adopted a Risk Management Policy wherein all material risks faced by the Company are identified and assessed. The Risk Management framework defines the risk management approach of the Company and includes collective identification of risks impacting the Company’s business and documents their process of identification, mitigation and optimisation of such risks.
Hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item. The effective portion of the change in the fair value of the hedging instrument is deferred into the cash flow hedge reserve through OCI and will be recognised in profit or loss when the hedged item affects profit or loss. This will effectively result in recognising interest expense at a fixed interest rate for the hedged loans and foreign currency borrowing at the fixed foreign currency rate.
(a) Credit risk
The Company is exposed to credit risk, which is the risk that counterparty will default on its contractual obligation resulting in a financial loss to the Company. Credit risk arises from cash and cash equivalents, financial assets carried at amortised cost as well as credit exposures to trade customers including outstanding receivables.
The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
Credit risk management
The Company’s credit risk arises from accounts receivable balances. The Company has a credit risk policy in place to ensure that sales are made to customers only after an appropriate credit risk assessment and credit line allocation process. Procedures are standardised within a customer credit risk policy and supported by the information technology system by limiting the credit exposure to each customer and allowing an average credit period of 30-90 days. The Company has adopted a policy of only dealing with creditworthy counterparties.
The Company provides for life time allowance on trade receivable using simplified approach and on a case to case basis on specified customers. Specific debtors represents debtors facing bankruptcy cases, operation shutdown and other scenario as determined by the management. Such debtors are categorised as specific debtors upon intimation/ news. Such specific debtors has no nexus with the macro economy factor. The Company recognises expected credit loss on specified receivables as determined by the management.
Liquidity risk is the risk that the Company will fail in meeting its obligations to pay its financial liabilities. The Company’s approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. In respect of its operations, the Company funds its activities primarily through cash generated in operations and working capital borrowings.
Management monitors the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. Cash which is not needed in the operating activities of the Company is invested in marketable liquid funds. Based on recent trends observed, profitability, cash generation, cash surpluses held by the Company and the borrowing lines available, the Company does not envisage any material liquidity risks.
(i) Maturities of financial liabilities
The amounts disclosed below are the non derivative contractual undiscounted cash flows of financial liabilities. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
Market risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of volatility of prices in the financial markets. Market risk can be further segregated as: a) Foreign currency risk, b) Interest rates risk and c) Other price risk.
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Foreign exchange risks arise from recognised assets and liabilities, when they are denominated in a currency other than functional currency of the Company. The Company imports certain raw materials and spare parts used in manufacturing and exports finished goods. Therefore it is exposed to foreign exchange risks arising from various currency exposures, primarily with respect to the US-dollar ("USD"). Company’s exposure to foreign currency risk due to operation is very limited and it always ensures that the such exposure is within the approved limit for which the Company does not require to hedge through derivatives. However, for foreign currency variable interest rate denominated borrowings the Company’s risk management policy is to hedge 100% of the exposure using cross currency interest rate swaps. Under the Company’s policy, the critical term of the cross currency interest rate swaps must align the hedged item.
Sensitivity
If mutual fund prices had been 10% higher / lower, profit before tax for the year ended March 31, 2024 would increase / (decrease) by ' 351.02 Lakhs and (351.02) Lakhs (March 31,2023: ' 399.59 Lakhs and (399.59) Lakhs) as a result of the changes in fair value of mutual funds measured at FVTPL.
45 Capital Management (a) Risk Management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. Gearing ratio is determined as net debt (total borrowings and lease liabilities net of cash and cash equivalents) divided by total 'equity’.
46 Micro, small and medium enterprise
Disclosure in respect to Micro and Small Enterprises as per Micro, Small and Medium Enterprises Development Act, 2006 ('MSMED’) Act, 2006 is as follows:
The information as required under Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the auditors. The principal amounts / interest payable amounts for delayed payments to such vendors as at Balance Sheet date during the current year and previous year mentioned below.
47 Contingent liability
(i) Contingent liability relating to determination of provident fund liability, based on judgement of the Hon’ble Supreme Court, is not determinable at present for the period prior to March 2019, due to uncertainty on the impact of the judgement in the absence of further clarification relating to applicability. The Company has paid provident fund to employees as applicable with effect from March 2019. The Company will continue to assess any further developments in this matter for their implications on Ind AS financial statements, if any.
(ii) The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as Contingent liability, where applicable, in its financial statements. The Company’s management does not reasonably expect that these legal notices, when ultimately concluded and determined, will have material and adverse effect on Company’s result of operations or financial conditions.
48 Capital and other commitmentsCapital commitments
(i) Estimated amount of contracts remaining to be executed on capital account and not provided (net of advances) for ' 18.58 Lakhs (March 31,2023: ' 462.30 Lakhs).
(ii) Other commitment:
The Company has entered into a long term agreement with GAIL (India) Limited ("GAIL") for purchase of Natural Gas. The agreement is valid till December 31, 2025. As per the said agreement, the Company under 'Take or Pay obligation’ clause has to make payment for a fixed quantity of gas on an annual basis, whether used or not. GAIL has the discretion to waive off the Take or Pay charges. A request for supply of Make Up gas can be made by the Company corresponding to Take or Pay deficiencies which are outstanding and for which the Company would pay to GAIL at the time of annual program.
49 Additional regulatory information required by Schedule III to the Companies Act, 2013
(i) Details of benami property held
No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
(ii) Borrowing secured against current assets
The Company has borrowings from financial institutions on the basis of security of current assets. The quarterly statements of current assets filed by the Company with financial institutions is in agreement with the books of accounts.
(iii) Wilful defaulter
The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
(iv) Relationship with struck off companies
The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.
(v) Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(vi) Compliance with approved scheme(s) of arrangements
In the previous year, the effect of the Composite Scheme of Arrangement as explained in Note 4 has been accounted for in the books of accounts of the Company is 'in accordance with the Scheme’ and 'in accordance with the applicable accounting standards’. For the current year, the Company has not entered into any approved Scheme of arrangement.
(vii) Utilisation of borrowed funds and share premium
I 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
II 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
(viii) Undisclosed income
(ix) Details of crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
(x) Valuation of Property, plant and equipment, intangible asset and investment property
The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
The Company does not have investment property.
50 Other regulatory information
(i) Title deeds of immovable properties not held in name of the Company
The Company is in process of transferring the title deeds of buildings in its own name. This has been disclosed in note 5 to the Ind AS financial statements.
(ii) Registration of charges or satisfaction with Registrar of Companies
There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period. The Company is in the process of transferring the charges in its name from the Demerged Company.
(iii) Utilisation of borrowings availed from banks and financial institutions
The borrowings obtained by the Company from banks and financial institutions have been applied for the purposes for which such loans were taken.
52 Pursuant to the Scheme as referred to in Note 4, the Registrar of Companies, Maharashtra, Mumbai has approved the change of name of the Company from "NPL Chemicals Limited" to "National Peroxide Limited" with effect from January 31, 2024.
53 Events Occurring after the Balance Sheet Date
No material events have occurred after the Balance Sheet date and upto the approval of the Ind AS financial statements.
55 The Ind AS financial statements are authorised by the Board of Directors of the Company at their meeting held on May 09, 2024.
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