l) Provisions and contingent liabilities
i) General
Provisions are recognised 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. When the Company expects
some or all of a provision to be reimbursed.
The expense relating to a provision is presented
in the Statement of profit and loss net of any
reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre¬
tax rate that reflects, when appropriate, the
risks specific to the liability. When discounting
is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
ii) Contingent liabilities
A disclosure for contingent liabilities is made
where there is a possible obligation or a present
obligation that may probably not require an
outflow of resources. When there is a possible
or a present obligation where the likelihood of
outflow of resources is remote, no provision or
disclosure is made.
iii) Onerous contracts
Provision for onerous contracts. i.e. contracts
where the expected unavoidable cost of meeting
the obligations under the contract exceed the
economic benefits expected to be received
under it, are recognised when it is probable that
an outflow of resources embodying economic
benefits will be required to settle a present
obligation as a result of an obligating event based
on a reliable estimate of such obligation.
m) Leases
As a lessee
The Company recognises a right-of-use asset and a
lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability
adjusted for any lease payments made at or before
the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less
any lease incentives received.
The right-of-use asset is subsequently depreciated
using the straight-line method from the commencement
date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term.
The estimated useful lives of right-of-use assets are
determined on the same basis as those of property,
plant and equipment. In addition, the right-of-use
asset is periodically reduced by impairment losses, if
any, in Statement of profit and loss and adjusted for
certain re-measurements of the lease liability.
The lease liability is initially measured at the present
value of the lease payments that are not paid at
the commencement date, discounted using the its
incremental borrowing rate as the discount rate.
The lease liability is measured at amortised cost using
the effective interest method. It is remeasured when
there is a change in future lease payments arising from
a change in an index or rate, if there is a change in
the Company’s estimate of the amount expected to
be payable under a residual value guarantee, or if
Company changes its assessment of whether it will
exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way,
a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in
statement of profit or loss if the carrying amount of
the right-of-use asset has been reduced to zero.
The Company determines its incremental borrowing
rate by obtaining interest rates from various external
financing sources and makes certain adjustments to
reflect the terms of the lease and type of the asset
leased.
The Company presents right-of-use assets that do not
meet the definition of investment property separately
in the balance sheet and lease liabilities separately
within ‘Financial Liabilities’.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right-of-
use assets and lease liabilities for short-term leases
that have a lease term of 12 months. The Company
recognises the lease payments associated with these
leases as an expense on a straight-line basis over the
lease term.
n) Segment reporting
Operating segments
Operating segments are reported in a manner
consistent with the internal reporting provided to
the Chief Operating Decision Maker (CODM). The
Director of the Company is responsible for allocating
resources and assessing performance of the operating
segments and accordingly is identified as the CODM.
Refer note 31 for segment information presented.
o) Cash and cash equivalents
The Company considers all highly liquid investments,
which are readily convertible into known amounts of
cash that are subject to an insignificant risk of change
in value to be cash equivalents. Cash and cash
equivalents consist of balances with banks which are
unrestricted for withdrawal and usage.
p) Earnings per share
Basic Earnings Per Share (‘EPS’) is computed by dividing
the net profit attributable to the equity shareholders
by the weighted average number of equity shares
outstanding during the year.
For the purpose of calculating diluted earnings per
share, the net profit/ loss for the period attributable
to the equity shareholders and the weighted average
number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity
shares. The Comapny does not have any dilutive
equity shares.
q) Cash flow statement
Cash flows are reported using indirect method,
whereby net profits before tax is adjusted for the
effects of transactions of a non-cash nature and any
deferrals or accruals of past or future cash receipts
or payments. The cash flows from regular revenue
generating (operating activities), investing and
financing activities of the Company are segregated.
r) Government grants
The Company recognises unconditional government
grant related to Package Scheme of Incentive (PSI)
scheme in statement of profit and loss under other
income when the grant becomes receivable.
s) Recent Indian Accounting Standards :
Ministry of Corporate Affairs (“MCA”) notifies new
standards or amendments to the existing standards
under companies (Indian Accounting Standards) Rules
as issued from time to time. For the year ended March
31, 2025, MCA has notified Ind AS - 117 Insurance
Contracts and amendments to Ind AS 116 - Leases,
relating to sale and leaseback transactions, applicable
to the Company w.e.f April 01, 2024. The Company
has reviewed the new pronouncements and based on
its evaluation has determined that it does not have any
significant impact in its financial statements.
27 INTER COMPANY AGREEMENTS AND ARRANGEMENTS
a) Intellectual property agreement (Royalty expense)- The Company has entered into Intellectual Property
agreement with 3M Innovative Properties Company and 3M Company, USA effective July 01, 2006 for the
payment of license fees in the form of royalties. Payments were waived off for a period of 3 years effective from
July 01, 2006 to June 30, 2009. The Intellectual Property Agreement with 3M Innovative Properties Company
and 3M Company, USA has been revised effective April 01, 2023. Accordingly, the Company has incurred an
expenditure of ' 7,548.06 lakhs for the year ended March 31, 2025 (March 31, 2024: ' 8,142.88 lakhs) and
disclosed as Royalty under other expenses (refer note 25).
b) Corporate management fees - In order to avail economies of scale, the Company has entered into inter-company
services support services agreement with 3M Global Service Center Management Company, USA (having
expertise in establishing, operating and managing international business and incurring costs in developing,
manufacturing, marketing and selling a diverse portfolio of products) with effect from April 01, 2019. The
Company is charged with comprehensive support services charges by 3M Global Service Center Management
Company for the services received from all the 3M group companies in the areas of Laboratory, Technical
assistance and Manufacturing, Selling and Marketing, Strategic and Managerial, Information Technology,
Routine Administration and Foreign Services Employees Expenses and Outsourced Services of Transaction
Processing on competitive conditions. Accordingly, the Company has incurred an expenditure of ' 12,417.63
lakhs for the year ended March 31, 2025 (March 31, 2024: ' 12,757.50 lakhs) and disclosed as corporate
management fee under other expenses (refer note 25).
c) Contract research agreement - The Company has entered into contract research agreement with 3M Innovative
Properties Company and 3M Company, USA effective July 01, 2006 for carrying out contract research activities.
During the year, Company has recognized an income of ' 2,239.65 lakhs (March 31, 2024 : ' 1,332.95 lakhs).
28 EMPLOYEE STOCK OPTION PLAN
a) Description of share based payment arrangements
Stock appreciation rights and Restricted stock units (cash-settled)
3M Company, USA has established 3M Company Long Term Incentive Plan (LTIP). As a part of the plan, eligible
employees of the Company are entitled to acquire shares of 3M Company, USA via stock options i.e., stock
appreciation rights (SARs) and restricted stock units (RSUs). The eligible employees are granted stock options
i.e., stock appreciation rights (SARs) and restricted stock units (RSUs) which will vest with the employees over
a period of 3 years from the date of the grant and they can exercise the stock option within a stipulated period
mentioned in the plan. In case of SARs, the employee (on the date of exercise) gets the compensation as a
difference between market price on the date of exercise and grant date fair value. In case of RSUs, the employee
(on the date of exercise) gets the compensation which is equal to market price on the date of exercise. As of the
year end a sum of ' 5,096.57 lakhs (March 31, 2024: ' 1,425.84 lakhs) is liability and the same is included as
'Employee benefit obligation' under Other financial liabilities (refer note 16).
d) Expense recognised in Statement of profit and loss
An amount of ' 2,658.91 lakhs has been debited (March 31, 2024: ' 257.70 lakhs has been debited) to the
statement of profit and loss for the year and included under Employee benefit expenses.
e) The weighted average share price at the date of exercise with regards to SARs and RSUs exercised during the
year is USD 151.45 and USD 149.87 respectively (March 31, 2024: USD Nil and USD 94.87 respectively)
29 EMPLOYEE BENEFITS
a) Defined contribution plan
The Company offers its employees defined contribution plans in the form of Provident Fund (PF) and Superannuation
Fund (SF). Contribution to SF is made to 3M India Limited Employees Superannuation Fund Trust and 3M E & C
India Employees Superannuation Fund Trust. Other contributions are made to the Government’s funds. While
both the employees and the Company pay predetermined contributions into the Provident Fund, contributions
into superannuation fund are made only by the Company. The contributions are normally based on a certain
proportion of the employee’s salary.
During the year, the Company has recognised the following amounts in the statement of profit and loss, which
are included in contribution to provident and other funds:
31 SEGMENT REPORTING
A) Basis for segmentation
Ind AS 108 establishes standards for the way that public business enterprises report information about operating
segments and related disclosures about products and services, geographic areas, and major customers. Based
on the "management approach" as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates
the Company's performance and allocates resources based on an analysis of various performance indicators by
segments. The accounting principles used in the preparation of the financial statements are consistently applied
to record revenue and expenditure in individual segments, and are as set out in the significant accounting policies.
The Company operates mainly to the needs of domestic market and export turnover is not significant in context of
total turnover. Accordingly, there are no reportable geographical segments. The Company has four reportable
segments, as described below.
For each of the segments, the Company's Managing Director, who is the CODM, reviews internal management
reports on at least a quarterly basis.
Segment revenue, results, assets and liabilities figures include the respective amounts identifiable to each of
the segments. Other unallocable income net off unallocable expenditure are towards common services to the
segments which are not directly identifiable to the individual segments as well as those at a corporate level which
relate to the Company as a whole.
B) Information about reportable segments
Information regarding the results of each reportable segment is included below. Performance is measured based
on segment profit (before tax), as included in the internal management reports that are reviewed by the CODM.
Segment profit is used to measure performance as management believes that such information is the most relevant
in evaluating the results of certain segments relative to other entities that operate within these industries.
No customers have individually accounted for more than 10% of the revenues during the years ended March 31,
2025 and March 31, 2024.
Notes:
i) Income tax matters mainly relate to transfer pricing adjustments made by the Income tax authorities with respect
to disallowance of intercompany charges related to corporate management fees. Further, the Company has
opted VSV Scheme for certain years and accordingly have created a provision and hence excluded from the
contingent liability disclosure as at March 31, 2025 (refer note 34).
ii) The Company during the year 2012-13 had received an order from The Commissioner of Customs demanding
differential duty, interest and penalty of '1,961.50 lakhs, contending the availment of concessional import
duty in respect of some of its products for which a demand notice was served on the Company for payment of
the above amount. The Company has filed an appeal against the order including for obtaining a stay against any
recovery proceedings that may be initiated and accordingly no liability has been recognised in the books.
iii) The Company was issued a Show Cause Notice dated December 08, 2016 by the Directorate of Revenue
Intelligence (DRI) in relation to levy of customs duty on inter-company transactions for import of goods and
services and hence proposing to demand differential duty of customs covering the transactions during the period
December 08, 2011 to February 7, 2014. The Company has received an order in original on October 1, 2017
from Additional Director General - DRI (Adjudication), Mumbai confirming the demand raised for custom duty in
show cause notice amounting to '7,693.52 lakhs, penalty equivalent to the custom duty amount and additional
penalty and interest of '1,000 lakhs. The Company has executed bank guarantee of ' 1,000 lakhs. The Company
has filed an appeal against this order with CESTAT, Mumbai after making payment of deposit of ' 577.00 lakhs.
iv) Sales tax cases primarily pertains to Maharashtra Value Added Tax Act, 2002 and Karnataka Value Added Tax
Act, 2003. These are pertaining to the years from 2006-07 to 2017-18. These cases are with respect to the
applicable rate of tax for various products and matters pertaining to declaration forms.
v) Service tax matters relates to cases with respect to manner of apportionment of credit availed by the Company
without registering as an Input service distributor.
vi) Excise matters relates to penalty for allegedly dealing in goods liable to confiscation under Rule 26 of the Central
Excise Act and Valuation/ allowability of CENVAT credit under the Central Excise Act.
vii) The Goods and service tax matter relates to classification, disallowances of input tax credit for the year 2017 to
2024, notices received upon GST Audits for year 2017-18 to 2019-20, and transition of credit through TRAN-1
for year 2016-17 and 2017-18.
The fair value of financial assets and financial liabilities approximates to their carrying amount largely due to the
short-term nature of these instruments.
B) Financial Risk Management
The Company has exposure to the following risk arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
i) Risk management framework
The Company’s principal financial liabilities comprise finance lease obligations, 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, cash and cash equivalents that are derived
directly from its operations.
ii) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Company’s receivables from
customers.
a) Financial assets that are not credit impaired
The Company has financial assets which are in the nature of cash and cash equivalents, loans to
employees, unbilled revenue from related party, interest accrued on fixed deposits and receivables
from related parties which are not credit impaired. These are contractually agreed with either banks,
related parties or employees where the probability of default is negligible.
b) Financial assets that are credit impaired
Trade receivables
The Credit services team has established a credit policy under which each new customer is analysed
individually for creditworthiness before the Company’s standard payment and delivery terms and
conditions are offered. The Company’s review includes external ratings, if they are available. Sale
limits are established for each customer and reviewed yearly.
The Company establishes an allowance for impairment that represents its estimate of expected losses
in respect of trade receivables.
Expected credit loss assessment for the Company as at March 31, 2025 and 2024:
The Company has divided all the debtors outstanding for the last twelve quarters into age brackets
of not due, 0-90 days, 91-180 days, 181-270 days, 271-365 days and amounts outstanding for more
than one year.
The Company has calculated the impairment loss arising on account of past trends in the default rate
for time bucket.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating expected credit losses, the Company considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Company’s historical experience
and informed credit assessment and including forward looking information.
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured
as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company
in accordance with the contract and the cash flows that the Company expects to receive).
Out of the total trade receivables of ' 83,025.86 lakhs (March 31, 2024 : 74,371.35 lakhs), the
exposure considered for expected credit loss is ' 77,712.89 lakhs (March 31, 2024 : ' 70,365.75).
The balance which is not considered for impairment primarily pertains to intercompany receivables
and secured debtors.
iv) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates will affect the Company’s
income or the value of its holdings of financial instruments. Market risk is attributable to all market risk
sensitive financial instruments including foreign currency receivables and payables. The Company is
exposed to market risk primarily related to foreign exchange rate risk. Thus, the exposure to market risk is
a function of revenue generating and operating activities in foreign currency. The objective of market risk
management is to avoid excessive exposure in our foreign currency revenues and costs.
Exposure to currency risk
The summary quantitative data about the Company's unhedged exposure to currency risk as reported to
the management is as follows.
38 LEASES
The Company has taken vehicles, leasehold improvements, data processing equipment, office premises and
warehouse. These leases typically run for a period of eleven months to ninety six months, with an option to renew
the lease after that date. For certain leases, the Company is restricted from entering into any sub-lease arrangements.
Information about leases for which the Company is a lessee is presented below.
39 AMALGAMATION
a) The Boards of Directors of the Company and of 3M E&C, wholly owned subsidiary of the Company at their
Meetings held on September 17, 2021 had approved the Scheme of Amalgamation of 3M E&C with the Company
under Sections 230 to 232 of the Companies Act 2013 read with the Companies (Compromises, Arrangements
and Amalgamations) Rules, 2016. The Scheme of Amalgamation of 3M E&C with the Company was filed with
National Company Law Tribunal (NCLT) to amalgamate the wholly owned subsidiary.
b) 3M E&C was a private limited company domiciled in India with its registered office at Plot Nos. 95-97,
Sanniyasikuppam, Udhaya Nagar, Thirubhuvanai main road, Thirubhuvanai Post, Pondicherry - 605107. 3M
E&C offers a complete range of products that include the Cable jointing kits ranging from 1.1Kv to 132 KV,
Heatshrinks, Coldshrinks, Kastex, Electrical Insulation Tapes, Busbar tubes, DIY Electrical kits, various kinds
of water filters, water softners, Hi flo filters, Wholehouse filters, Zeta . In India, 3M E&C has manufacturing
facility at Pune.
c) Pursuant to the order from NCLT Chennai dated August 25, 2023 and order from NCLT Bengaluru dated August
08, 2024, 3M E&C (the “transferor company”) were merged with the Company with an appointed date as April
01, 2023. The order has been made effective on September 04, 2024 upon complying with all the relevant
requirements under the Companies Act, 2013.
d) The amalgamation has been accounted for under the ‘pooling of interest’ method as prescribed by Appendix C
of Ind AS 103 “Business Combination”. Given that the merger is a common control transaction, the prior year
figures have been restated as if the merger had occurred from the beginning of the preceding period. i.e., April
01, 2023. Prior year numbers have been recasted to include the result of the subsidiary as if the merger had
occurred from the beginning of the preceding period April 01, 2023.
e) Consequent to the scheme of amalgamation, the authorized share capital of the transferor companies stands
cancelled. Further, there was no consideration or exchange of shares on account of this amalgamation as the
subsidiary got subsumed into the Company.
f) The impact of the above merger on the reported balance sheet as at March 31, 2024 on the Company and
the subsidiary while preparing the merged financials are as follows. There is no impact of the merger on the
consolidated financial statements of the Company.
41 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources
or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”)
with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party
identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from
any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or
invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any
guarantee, security or the like on behalf of the Ultimate Beneficiaries.
42 OTHER STATUTORY INFORMATION:
i) The Company does not have any Benami property or any proceeding is pending against the Company for holding
any Benami property.
ii) The Company do not have any charges or satisfaction which is yet to be registered with Registrar of Companies
beyond the statutory period.
iii) The Company has not traded or invested in crypto currency or virtual currency during the financial year.
iv) The Company is not classified as wilful defaulter.
v) The Company doesn’t have any transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 such
as search or survey.
vi) The Company has no transactions with the struck off companies.
vii) The Company has not entered into any scheme of arrangement which has an accounting impact on current or
previous financial year.
for B S R & Co. LLP for and on behalf of 3M India Limited
Chartered Accountants
Firm Registration No: 101248W/W-100022
Umang Banka Ramesh Ramadurai Jayanand Kaginalkar
Partner Managing Director Whole-time Director
Membership No: 223018 DIN: 07109252 DIN: 07904558
Nikhil Arora Pratap Rudra Bhuvanagiri
Chief Financial Officer Company Secretary
Membership No: A22297
Place: Bengaluru Place: Bengaluru
Date: May 28, 2025 Date: May 28, 2025
| 