The Company has estimated the useful life for its copyrights and trademark pertaining to consumer & bazaar CGU 1,314.39 crores ( 1,314.39 crores as at 31st March 2023) as indefinite on the basis of renewal of legal rights and the management's intention to keep it perpetually.
Goodwill, Copyrights and Trademark
Goodwill, copyrights and trademark in the books of the Company pertain to Consumer and Bazaar & Business to Business of the Company.
At the end of each reporting period, the Company reviews carrying amount of goodwill, copyrights and trademark to determine whether there is any indication that goodwill, copyrights and trademark has suffered any impairment loss. Accordingly, recoverable amount of goodwill, copyrights and trademark is arrived basis projected cashflows from Consumer and Bazaar business & Business to Business.
Recoverable amount of goodwill, copyrights and trademark exceeds the carrying amount of goodwill, copyrights and trademark in the books as on 31st March 2024 and as on 31st March 2023. Further there are no external indications of impairment of goodwill, copyrights and trademark. As a result, no impairment loss on goodwill, copyrights and trademark is required to be recognised.
Projected cashflows from Consumer and Bazaar business and Business to Business
The recoverable amount of this cash-generating unit is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by the management for next year, estimates prepared for the next 4 years thereafter and a discount rate of 13.5% per annum (12.7% per annum as at 31st March 2023).
Cash flow projections during the budget period are based on the same expected gross margins and raw materials price inflation throughout the budget period. The cash flows beyond that five-year period have been extrapolated using a steady 7% per annum (7% per annum as at 31st March 2023) growth rate. The management believes that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.
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The key assumptions used in the value in use calculations for Consumer and Bazaar and Business to Business cashgenerating unit are as follows:
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Budgeted sales growth
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Sales growth is assumed at 12.4% (CAGR) (12.8% as at 31st March 2023) for Consumer and Bazaar business and at 12.1% (CAGr) (10.9% as at 31st March 2023) for Business to Business which is in line with current year projections. The values assigned to the assumption reflect past experience and current market scenario and are consistent with the managements' plans for focusing operations in these markets. The management believes that the planned sales growth per year for the next five years is reasonably achievable.
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Raw materials price inflation
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Forecast for Material cost growth CAGR higher by 0.2% (0.2% as at 31st March 2023) vs. sales growth, considering impact of commodity cost inflation.
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Other budgeted costs
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Commercial spends (schemes and A&SP) are kept consistent to sales growth. Other fixed costs are in line with the current year's growth.
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b. Terms/ Rights attached to equity shares
The Company has a single class of equity shares having a par value of 1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in the proportion of their shareholding.
The Board of Directors at its meeting held on 7th May 2024 declared a final dividend of 16.00 per equity share of 1 each amounting to 813.77 crores subject to approval of the shareholders at the ensuing Annual General Meeting.
During the year ended 31st March 2024, the Company has paid final dividend of 11.00 per equity share of 1 each for the financial year 2022-23 declared on 8th May 2023.
|22.1 Capital Reserve on Business Combination
Capital Reserve represents excess/short of net assets acquired in business combination. It is not available for the distribution to shareholders as dividend.
|22.2 Securities Premium
Security Premium is created when shares are issued at premium. The Company may issue fully paid-up bonus shares to its members out of the Securities Premium, and Company can use this reserve for buy-back of shares. This reserve is utilised in accordance with the provisions of the Companies Act, 2013.
|22.3 Capital Redemption Reserve
The Company has recognised Capital Redemption Reserve on buy-back of equity shares from its General Reserve. The amount in Capital Redemption Reserve is equal to the nominal amount of equity shares bought back. The reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
|21.4 Cash Subsidy Reserve
Cash Subsidy Reserve represents subsidies received from state government. It is not available for distribution as dividend to shareholders. |21.5 Share Options Outstanding Account
The above reserve relates to share options granted by the Company to its employees under its employee share option plan. Further information about share-based payments to employees is set out in Note 47.
|21.6 General Reserve
General Reserve is created by a transfer from one component of equity to another and is not an item of Other Comprehensive Income.
The same can be utilised by the Company in accordance with the provisions of the Companies Act, 2013.
|21.7 Retained Earnings
This Reserve represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
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( in crores)
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4o| Contingent Liabilities and Commitments
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As at 31st March 2024
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As at 31st March 2023
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A) Contingent liabilities not provided for:
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1. Claims against the Company not acknowledged as debts comprise:
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a)
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Income Tax demand against the Company not provided for and relating to issues of deduction and allowances in respect of which the Company is in appeal
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147.89
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89.97
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b)
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Excise Duty and Service Tax claims disputed by the Company relating to issues of classifications
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22.41
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23.10
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c)
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Sales Tax (VAT, CST, Entry Tax, LBT and GST) claims disputed by the Company relating to issues of declaration forms and classifications
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129.24
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162.12
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d)
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Other Matters (relating to Open Access Charges, Electricity charges, etc.)
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4.42
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1.50
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2. a)
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Guarantees issued by Banks in favour of Government and others*
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55.25
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38.79
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b)
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Guarantees given by Company on behalf of the Subsidiaries to Banks*
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Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda
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-
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17.26
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Pidilite Bamco Ltd
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3.59
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3.53
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Pidilite MEA Chemicals LLC (Previously known as Jupiter Chemicals LLC)
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45.41
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44.74
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Pidilite Lanka Private Limited
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36.65
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36.12
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Bamco Supply and Services Ltd
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1.21
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1.19
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Pidilite East Africa Limited
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12.51
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12.33
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Nina Percept Limited
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90.00
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90.00
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* Guarantees given are for business purpose.
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c)
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Indemnity given towards disposal of subsidiary (Refer note 54)
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20.91
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-
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Note:
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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 standalone financials statements
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B) Commitments:
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a)
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Estimated amount of contracts, net of advances, remaining to be executed for the acquisition of Property, Plant and Equipment, investments and not provided for
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157.24
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209.92
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b)
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For other commitments, refer Note 48(E)(ii) for financial instruments and Note 52 for leases.
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c)
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The Company, being the holding/ultimate holding company, will extend financial support to its subsidiaries as and when required.
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4l| Details of provisions
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. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
Provision for warranties represents management's best estimate of the liability for warranties based on past experience of claims.
The provisions for tax related matters comprises of numerous separate cases that arise in the ordinary course of business. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilisation and cash outflows, if any, pending resolution.
43 Segment information
Operating Segment:
The Company operates in two segments namely Consumer & Bazaar (C&B) and Business to Business (B2B). Consumer & Bazaar segment covers sale of products mainly to end consumers which are retail users such as carpenters, painters, plumbers, mechanics, households, students, offices, etc. Sale consists of mainly adhesives, sealants, art and craft materials and construction and paint chemicals. B2B covers sale of products to end customers which are mainly large business users. This includes Industrial Products (IP) such as adhesives, synthetic resins, organic pigments, pigment preparations, construction chemicals (projects), surfactants, etc. and caters to various industries like packaging, textiles, paints, joineries, printing inks, paper, leather, etc. Others includes sale of raw materials.
(vi) The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment/ strategy, market scenario, etc. In order to protect the capital and optimise returns within acceptable risk parameters, the plan assets are well diversified.
(vii) The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.
(viii) The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.
Gratuity fund asset is managed by Life Insurance Corporation of India, there is no material risk that the Company would be unable to meet its gratuity liability. Also as the fund is set up as a trust, the money as a part of the trust will not flow back into the Company until the last employee of the trust is paid.
Note on other risks:
1 Investment Risk - The funds are invested by LIC / Kotak and they provide returns basis the prevalent bond yields, LIC on an annual basis requests for contributions to the fund, while the contribution requested may not be on the same interest rate as the bond yields provided, basis the past experience it is low risk.
2 Interest Risk - LIC does not provide market value of assets, rather maintains a running statement with interest rates declared annually - The fall in interest rate is not therefore offset by increase in value of Bonds, hence may pose a risk.
3 Longevity Risk - Since the gratuity payment happens at the retirement age of 60, longevity impact is very low at this age, hence this is a non-risk.
4 Salary Risk - The liability is calculated taking into account the salary increase, basis past experience of the Company's actual salary increases with the assumptions used, they are in line, hence this risk is low risk.
Note on Sensitivity Analysis
1 Sensitivity analysis for each significant actuarial assumptions of the Company which are discount rate and salary assumptions as of the end of the reporting period, showing how the defined benefit obligation would have been affected by changes is called out in the table above.
2 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.
3 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.
47| Employee Stock Option Scheme
a) Details of Employee Share Options
In the Annual General Meeting of the Company held on 24th July 2012, the shareholders approved the issue of 50,76,486 equity shares under the Scheme titled “Employee Stock Option Scheme 2012" (ESOS 2012). The Board approved Employees Stock Option Scheme covering 3,00,000 Stock options, in terms of the regulations of the Securities and Exchange Board of India.
The ESOS 2012 allows the issue of options to Eligible employees of the Company. Each option comprises one underlying equity share. The exercise price of each option shall be 1/- per equity share. The options vest in the manner as specified in ESOS 2012. Options may be exercised within 5 years from the date of vesting.
ESOP 2016 covering grant of 45,00,000 options (including 2,50,000 Options to be granted to Eligible Employees/ Directors of the subsidiary Companies) was approved by the shareholders through Postal Ballot on 2nd April 2016. Each option comprises one underlying equity share. The exercise price shall be 1/- per option or such other higher price as may be fixed by the Board or Committee. Options to be granted under the Plan shall vest not earlier than one year but not later than a maximum of six years from the date of grant of such options. In the case of Eligible Employee who has not completed 3 years of employment as on date of the grant of Options then the Options which are due for vesting before completion of 3 years as above, shall vest as on the completion of 3 years of employment in the Company by the Employee concerned or as may be approved by the Nomination and Remuneration Committee. Vested Options will have to be exercised within 3 years from the date of respective vesting.
48| Financial Instruments
(A) Capital Management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximising the return to stakeholders through the optimum utilisation of the equity balance. The capital structure of the Company consists of only equity of the Company. The Company is not subject to any externally imposed capital requirements.
(C) Financial risk management objectives
The Company's Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk, credit risk and liquidity risk. The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising foreign exchange forward contracts. Compliance with policies and exposure limits is a part of Internal Financial Controls. The Company does not enter into or trade in financial instruments, including derivative financial instruments, for speculative purposes. The Corporate Treasury function reports quarterly to the Company's risk management committee, an independent body that monitors risks and policies implemented to mitigate risk exposures.
(D) Market risk
The Company's activities expose it primarily to the financial risk of changes in foreign currency exchange rates (see note E below).
The Company enters into foreign exchange forward contracts to manage its exposure to foreign currency risk of net imports.
Interest risk: The Company is mainly exposed to the interest rate risk due to its investment in mutual funds. The interest rate risk arises due to uncertainties about the future market interest rate on these investments. The Company has laid policies and guidelines including tenure of investment made to minimise impact of interest rate risk.
Price risk: The Company is mainly exposed to the price risk due to its investment in mutual funds, bonds and alternate investment funds. The changes in the prices will not have material impact on financial statements
(ii) Foreign exchange forward contracts
It is the policy of the Company to enter into foreign exchange forward contracts to cover foreign currency payments (net of receipts) in USD and EUR. The Company enters into contracts with terms upto 90 days. The Company's philosophy does not permit any speculative calls on the currency. It is driven by conservatism which guides that we follow conventional wisdom by use of Forward contracts in respect of Trade transactions.
Regulatory Requirements: The Company does alter its hedge strategy in relation to the prevailing regulatory framework and guidelines that may be issued by RBI, FEDAI or ISDA or other regulatory bodies from time to time.
Mode of taking Cover: Based on the outstanding details of import payable and export receivable (in weekly baskets) the net trade import exposure is arrived at (i.e. Imports - Exports = Net trade exposures). The net trade import exposure arrived at is netted off with the outstanding forward cover as on date and with the surplus foreign currency balance available in EEFC A/Cs.
Forward cover is obtained from bank for each of the aggregated exposures and the Trade deal is booked. The forward cover deals are all backed by actual trade underlines and settlement of these contracts on maturity are by actual delivery of the hedged currency for settling the underline hedged trade transaction.
(i) Liquidity risk tables
The following tables detail the Company's remaining contractual maturity for its non-derivative and derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company will be liable to pay.
The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period.
The maturity of above outstanding USD buy forward contracts is less than 6 months.
The line-items in the financial statements that include the above hedging instruments are “Other Financial Assets" of 0.05 crores ( NIL crores as at 31st March 2023) and “Other Financial Liabilities" of NIL crores ( 0.60 crores as at 31st March 2023) (refer Note: 13 and 25 respectively).
The aggregate amount of gain under foreign exchange forward contracts recognised in the Statement of Profit and Loss is 0.65 crores (loss of 0.44 crores as at 31st March 2023).
(F) Credit risk management
Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables (refer Note 9), investment in mutual funds, derivative financial instruments, other balances with banks, loans and other receivables.
The Company has adopted a policy of only dealing with counterparties that have sufficiently high credit rating. The Company's exposure and credit ratings of its counterparties are continuously monitored and the aggregate value of transactions is reasonably spread amongst the counterparties.
Credit risk arising from investment in mutual funds, derivative financial instruments and other balances with banks is limited and there is no collateral held against these because the counterparties are banks and recognised financial institutions with high credit ratings assigned by the international credit rating agencies.
(G) Liquidity risk management
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.
The Company has an established liquidity risk management framework for managing its short term, medium term and long term funding and liquidity management requirements. The Company's exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Company manages the liquidity risk by maintaining adequate funds in Cash and Cash Equivalents.
The Company also has adequate credit facilities agreed with banks to ensure that there is sufficient cash to meet all its normal operating commitments in a timely and cost-effective manner.
(1) To promote, carry out, support activities relating to: Education and Training including in Science and Technology, Humanities etc; Healthcare; Welfare of Children, Women, Senior Citizens, and Differently Abled Persons; Employment enhancing Vocational skills; Sanitation; Water management; Agriculture; Horticulture; Milk and Animal Health; promotion of Farmer Producer Organisation;
Swachtha Initiative; promotion of Culture; Art & Craft; Conservation of Natural Resources; Promotion and development of traditional Arts & Handicrafts, Khadi and Handloom; Employment Generation and Government Scheme System; Environment Sustainability; Science & Technology; Rural Development; Animal Welfare; welfare and development measures towards reducing inequalities faced by Socially and Economically Backward groups; and such activities may include establishing, supporting and / or granting aid to institutions engaged in any of the activities referred to above.
(2) To conduct and support studies & research; publish and support literature, publications & promotion material; conduct and support discussions, lectures, workshops & seminars in any of the areas covered above.
(3) To promote, carry out, support any activities covered in Schedule VII to the Companies Act, 2013, as amended from time to time.
54 Other Information
a) During the current year, the Company invested an amount of 50.02 crores on 13th July 2023 in Pidilite Ventures Private Limited (PVPL) (formerly known as Madhumala Ventures Pvt Ltd), a wholly owned subsidiary of the Company. PVPL has further invested in the following companies.
(i) invested an amount of Nil in the current year ( 3.65 crores in previous year) in the Abeyaantrix Technology Private Limited. The company operates a software-enabled platform for construction contractors to manage documents, and record financial transactions, known by the name of Onsite.
(ii) invested an amount of 6.00 crores on 27th August 2023 ( 23.89 crores in previous year) in the Buildnext Construction Solutions Private Limited. The company is engaged in providing end to end home construction services.
(iii) invested an amount of 5.00 crores on 18th January 2024 ( 9.00 crores in previous year) in the Finemake Technologies Private Limited by subscription to preference shares. The company is engaged in business of providing interior designing services.
(iv) invested an amount of 0.57 crores on 10th November 2023 & 28th December 2023 ( 0.49 crores in previous year) in the Climacrew Private Limited by subscription to equity shares. The company is engaged in business of supply of seaweed and seaweed products.
(v) invested an amount of 20.00 crores on 6th October 2023 ( Nil in previous year) in the Imagimake Play Solutions Pvt Ltd by subscription to equity shares. The company is engaged in business of providing toys which cater to art & hobby, educational toys, puzzles and 3D model sets.
(vi) invested an amount of 18.45 crores on 14th July 2023 ( Nil in previous year) in the Pepperfry Private Limited (formerly known as M/s. Trendsutra Platform Services) by subscription to Non cumulative Compulsory Convertible Preference Shares. Pepperfry is an online furniture chain in India.
Statement of compliance:
With regard to the investments made during the year ended 31st March 2024 as well as 31st March 2023 the Company has complied with the relevant regulatory provisions.
b) During previous year, the Company has invested an amount of 8.18 crores in "Pidilite International Pte Ltd” and ? 12.22 crores in "Pidilite Litokol Pvt Ltd" by subscription to equity shares.
c) During the current year, the Company invested an amount of 12.45 crores in "Pidilite Grupo Puma Manufacturing Ltd” (Previous year - 13.04 crores) and 6.79 crores in "Pidilite Middle East Ltd" ( 17.03 crores in the Previous year) by subscription to equity shares.
d) During the current year, the Company has invested an amount of 107.68 crores in "Nina Percept Pvt Ltd" by subscription to Equity shares. A liability towards acquisition (refer Note 24 & Note 25) had been recognised in the financial statement in current year amounting to 7.00 crores.
e) During the current year, the company has recognised profit on buyback of shares from "Pidilite USA Inc” amounting to 27.15 crores for 1,20,00,000 shares recognised under Exceptional Items in the Standalone financial Statements (Refer note 39).
f) During current year, the Company has divested its entire shareholding in its wholly owned subsidiary "Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda".The Company incurred transaction cost amounting to 2.36 crores and recognised total loss on sale of shares amounting to 20.00 crores recognised under Exceptional Items in the Standalone financial Statements (Refer note 38). The company has given indemnity of 20.91 crores against losses resulting from succession claims and other claims (including third party).
g) During current year, the Company decided to sell plant and machinery located at Mahad and accordingly has reclassified identified assets as "Assets held for sale" at fair market value of 3.41 crores. The Company has recognised an impairment loss amounting to 20.36 crores under Depreciation, Amortisation and Impairment Expense in the Standalone financial Statements based on estimated realizable value.
h) During current year, the Company entered into master agreement with M/s Basic Adhesives for purchase of certain intangible assets at an agreed consideration of USD 3,000,000. The transaction has been accounted as asset acquisition in line with Ind AS 38 (Intangible Asset). The Company incurred transaction cost of 0.27 crores for the above asset acquisition which was capitalised along with Basic Adhesive Trademark, IPR and technical knowhow. Total value of 24.91 crores is recognised under Intangible assets in the standalone financial statements.
i) During the current year, the Company had paid Dividend of 11.00 per equity share of 1 each for the financial year 2022-23.
55 Additional Regulatory Information Required By Schedule Ill To The Companies Act, 2013:
a) The Company did not have any material transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the current and previous financial year.
b) The Company does not have any benami property held in its name. 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.
c) The Company has not been declared wilful defaulter by any bank or financial institution or other lender or government or any government authority.
d) The Company has complied with the requirement with respect to number of layers as prescribed under Section 2(87) of the Companies Act, 2013 read with the Companies (Restriction on number of layers) Rules, 2017.
e) There is no income surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961 (such as search or survey), that has not been recorded in the books of account.
f) The Company has not traded or invested in crypto currency or virtual currency.
g) The Company does not have any charges or satisfaction of charges which is yet to be registered with Registrar of Companies beyond the statutory period.
h) The Company has not received any funds from any person(s) or entity(ies), including foreign entities ("Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
I58 Approval of financial statement
The standalone financial statements are approved for issue by the Audit Committee and by the Board of Directors at their respective meetings held on 7th May 2024.
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