The Company had invested an amount of Rs.7,122.00 Lakhs in equity shares of Bhavnagar Energy Company Limited (BECL). The Gujarat Government vide notification dated 27th August, 2018 in terms of Gujarat Electricity Industry (Reorganisation and Regulation) Act, 2003, formulated the Gujarat Electricity Reform (Transfer of Generation Undertakings) Scheme, 2018 (the scheme), whereby BECL merged with effect from 1st April, 2018 into Gujarat State Electricity Corporation Ltd. (GSECL). In terms of the said notification, the Company received one equity share of Rs. 10/- of Gujarat State Electricity Corporation Ltd. for its investment in BECL. Accordingly, during 2018-19, the Company has impaired its investment in BECL by debit to Other Comprehensive Income.

During the year, the company has transferred 1 share of Gujarat State Electricity Corporation limited to Gujarat Urja Vikas Nigam Limited and received consideration of Rs. 37/-. Consequently on transfer of shares, the company has reclassified impairment loss on Investment from Other Comprehensive Income to Retained earnings.

Capital Advances includes advance payment made for leasehold lands allotted pending execution of lease deeds :

(i) Rs. 923.08 lakhs (FY 2021-22 Rs. 923.08 lakhs) towards plot No. B-37 to B-44 at village Atali admeasuring 50,714.48 sq. mtrs.

In the Financial Year 2012-13, the Company received a demand of Rs. 1,719.66 lakhs from the revenue authorities for excise duty, interest and penalty thereon. The same has been shown as provision for other liabilities under Non-Current Provisions (Note no. 19). The Company has contested the demand and has paid under protest Rs.924.23 lakhs and Rs.333.32 lakhs (Total Rs.1,257.55 lakhs) during 2012-13 and 2013-14 respectively. As the matter is pending with Honourable High Court, the amount paid has been shown under Balance with Govt. Department under Other Non-Current Assets.

Other than mentioned in Note No. 10.2 above, Balance with Govt. Departement includes amount paid under protest relatining to matters pending with respect to Sales Tax & Service Tax.

12.1 Refer Note No. 38 for related party receivable.

12.2 Trade Receivables include overdue outstanding from various parties aggregating to Rs. 1,610.42 lakhs, (Previous Year Rs.1,322.42 lakhs), for which the Company has taken legal steps for recovery of the outstanding dues and the management is hopeful of the recovery. However, cumulative provision of Rs. 1,610.42 lakhs (Previous Year Rs.1,322.42 lakhs) exists for such doubtful debts as on 31.03.2023.

The average credit period on sale of goods is 23 days. However, no interest is charged on Trade Receivables for delay in payment beyond 31 days from the date of the Invoice.

The credit limits for customers are set based on security deposits and bank guarantees. Limits attributed to customers are reviewed periodically.

The Company has used a practical expedient by computing the expected credit loss allowance for Trade Receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates are given in the provision matrix. The provision matrix at the end of the Reporting Period is as follows. :

(ii) Rights, preferences and restrictions attached to equity shares :

The Company has one class of equity shares having a par value of Rs.10/- each. Each Shareholder is eligible for one vote per one share held. 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. 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 proportion to their shareholding.

(v) Dividend :

For current financial year 2022-23, The Company has proposed dividend of Rs. 23.55 per equity share (Previous year Rs. 10.00 per share declared). Proposed dividends on equity share are subject to approval at the Annual General Meeting and are not recognised as a liability as at Balance Sheet date.

a. General Reserve

The General Reserve is used from time to time to transfer profits from Retained Earnings for appropriation purpose. As General Reserve is created by a transfer from one component of Equity to another and is not an item of other comprehensive income, items included in the General Reserve will not be reclassified subsequently to profit or loss.

b. Securities Premium

Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013.

c. Reserve for equity instruments through other comprehensive income

The reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income.

17.3 The Company has working capital facilities with various Banks carrying interest rate ranging from 8.25% p.a. to 8.85% p.a. These facilities are secured by first charge by hypothecation of stocks and book debts and second charge over the immovable assets of the Company.

17.4 Represents repayment falling due in next twelve months :

(i) Rs. 2,191.20 lakhs to ICICI Bank towards ECB loan secured against Hypothecation charge on plant and machinery of 14.70 MW Windmills phase-X located at Porbandar district, Gujarat, 915 nos. Cell Elements at Ranoli, Dist. Vadodara, Gujarat and 440 nos. Cell Elements at Dahej, Dist. Bharuch, Gujarat carrying interest rate of LIBOR plus 1.64% p.a.

(ii) Rs. 11,503.80 lakhs to State Bank of India towards ECB loan secured against Hypothecation charge on plant and machinery of Chloromethanes plant at Plot no D-II/9 P.O. Dahej Taluka Vagra Dist Bharuch, Gujarat carrying interest rate of LIBOR plus 1.28% p.a.

36 EMPLOYEE BENEFIT PLANS

Defined Contribution Plan

An amount of Rs.1,081.41 Lakhs (FY 2021-22 Rs.1,087.90 Lakhs) contributed to Provident Fund and amount of Rs.833.13 lakhs (FY 2021-22 Rs.692.52 lakhs) contributed to Employees Superannuation Trust is recognised as an expense and included in “Employee Benefits Expenses” (Note 28) of Statement of Profit & Loss.

Defined Benefit Plans

The Company offers the following employee benefit schemes to its employees :

i. Gratuity (included as part of b (iii) in Note 28 Employees benefit expense)

ii. Leave encashment (included as part of a in Note 28 Employee benefit expense)

The following table sets out the funded status of the defined benefits scheme and the amount recognised in financial statement :

As per Actuarial Valuation as on March 31, 2023

37 FINANCIAL INSTRUMENTS

37.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as a Going Concern while maximising the return to stakeholders through optimisation of the Debt and Equity Balance.

The Company is subject to externally imposed capital requirements as part of its debt covenants such as maintaining a Total Debt to EBDITA ratio of 3 times (consolidated) for one bank and Interest Coverage ratio of 2.75 times for another bank, a Debt Service Coverage ratio of 1.3 times for one bank and 1.5 times for another bank, Total Debt to Tangible Net Worth ratio of 1 : 1 for one bank.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital by computing the above ratios on an annual basis and ensuring that the same is in Compliance with the requirements of the Financial Covenants.

37.3 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 (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

Compliance with policies and exposure limits is reviewed internally on a continuous basis. The Corporate Treasury does not enter into any trade financial instruments, including derivative financial instruments and relies on natural hedge. The Corporate Treasury Function monitors risks and policies implemented to mitigate risk exposures on a periodical basis.

37.4 Market Risk

The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company currently has not hedged any External Commercial Borrowings (ECBs). The Company performs an analysis of the impact of not hedging its ECBs. This has been done by comparing the actual cash outflows related to ECBs under current unhedged conditions in the past vis-a-vis the scenario of complete hedging of individual ECB on the disbursement day through quotes provided by the banks. Further, the Company parks its earnings in foreign currency in Exchange Earners Foreign Currency (EEFC) account and discharges its obligations in case of foreign currency loans out of the said account. The Company’s investments in listed and non-listed equity securities are susceptible to price risk arising from uncertainties about future value of the investment securities. The Company’s non-current investment in equity shares are strategic investments and hence are considered as Fair Value through Other Comprehensive Income. The Company’s Board of Directors reviews and approves all equity investment decisions.

37.5 Foreign Currency Risk Management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters. Further, the Company parks its earnings in foreign currency in Exchange Earners Foreign Currency (EEFC) account and discharges its obligations in case of foreign currency loans and towards import obligations out of the said account.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities are restated at the end of each quarter. The same at the end of the reporting period are as follows :

Foreign Currency Sensitivity Analysis

The Company is mainly exposed to US Dollar.

The following table details the Company’s sensitivity to a 5% increase and decrease in the Rupee against the relevant foreign currencies. 5% is a sensitivity rate used when reporting foreign currency internally to the key management personnel and represents management’s assessment of the reasonably possible changes in the foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in the foreign currency rates. A positive number below indicates an increase in profit or equity where the Rupee strengthens by 5% against the relevant currency. For a 5% weakening of the Rupee against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be negative.

37.6 Interest Rate Risk Management

The Company is exposed to interest rate risk because the Company borrows funds at floating interest rates. The risk is managed by the Company by monitoring the exchange rate on regular basis and also parking the export proceeds in the EEFC account which also provides a natural hedge for the outflows in foreign currency. Further, the Company performs an impact analysis of not hedging its ECBs. This has been done by comparing the actual cash outflows related to ECBs under current unhedged conditions in the past visa-vis the scenario of complete hedging of individual ECB on the disbursement day through quotes provided by the banks.

Interest Rate Sensitivity Analysis

The sensitivity analysis below have been determined based on the exposure to interest rates for instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year.

If the interest rates had been 50 basis points higher / lower and all other variables were held constant, the Company’s profit before tax for the year ended would be impacted to the extent of Rs.156.00 Lakhs (Rs.56.28 lakhs for the year 2021-22).

37.7 Credit Risk Management

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is operating through network of dealers based at different locations. In order to ensure the security of receivables, the Marketing Department computes an exposure ratio for every dealer based on his past turnover, track record, etc. The same is overseen and approved by the Board. Further, the Company also collects bank guarantees / security deposits from the respective dealers. Regular monitoring of the receivables is undertaken by the Marketing Department and in case the limits are exceeded, an auto lock system is in place in the SAP system of the Company to stop further supplies to the concerned dealer till the amount outstanding is recovered. In case of new customers, the goods are supplied only against advance receipts. For the export made by the Company, the sales are backed by letters of credit or advance receipts. The internal risk management committee of the Company meets regularly to discuss the dealers and credit risks, measures taken to address them and the status and level of risk after the measures taken.

Domestic & Export trade receivables are secured to the extent of interest free security deposits and bank guarantees / letter of credit received from the customers amounting to Rs.2,182.90 Lakhs and Rs.5,275.36 Lakhs as at 31st March, 2023 and 31st March, 2022 respectively. (Refer Note No. 12 for Trade Receivables outstanding).

37.8 Liquidity Risk Management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Company’s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages its funds mainly from internal accruals. The liquidity risk is managed by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.

Liquidity and interest risk tables

The following tables detail the Company’s remaining contractual maturity for its non 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 can be required to pay.

The Company’s operations fall under single segment namely “Chemicals” hence no separate disclosure of segment reporting is required to be made as required under Ind AS 108 ‘Operating Segments’.

All non Current assets are located in the company’s country of domicile.

One customer (PY: One Customer) individually contribute more than 10% of entity’s revenues. The total revenue from such entity is Rs. 76,154 Lakhs (P.Y. Rs. 53,415 Lakhs)

47 OTHER STATUTORY INFORMATION

47.1 The Company does not have any Immovable Property whose title deeds are not held in the name of the Company.

47.2 The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

47.3 The Company has utilised funds raised from issue of securities or borrowings from banks and financial institutions for the specific purposes for which they were issued/taken.

47.4 Quarterly return/statement of current assets filed by the company with bank are in agreement with the books of accounts.

47.5 The Company has not been declared as a wilful defaulter by any lender who has powers to declare a company as a wilful defaulter at any time during the financial year or after the end of reporting period but before the date when financial statements are approved.

47.6 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:

47.6(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

47.6(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

47.7 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:

47.7(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

47.7(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

47.8 On the basis of information available, the Company does not have any transactions with struck-off companies.

47.9 The Company does not have any transaction which is not recorded in the books of accounts but 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 or any other relevant provisions of the Income Tax Act, 1961).

47.10 The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

47.11 The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017.

47.12 The Company does not have any charges or satisfaction which is yet to be registered with the Registrar of Companies (ROC) beyond the statutory period.

48 Previous Year’s figures have been regrouped / rearranged wherever necessary to correspond with current year’s presentation.

49 Approval of Financial Statements

The financial statements are approved for issue by the Board of Directors on 22nd May, 2023.