A. Company Information
Sanghi Industries Limited is engaged in the manufacturing and marketing of cement and cement products in domestic and export market. The Company’s manufacturing facilities are at Sanghipuram, Gujarat and Registered Office at Sanghi nagar, R.R. District, Telangana. Equity shares of the Company are listed on The National Stock Exchange and Bombay Stock Exchange. The Financial Statements were approved and adopted by Board of Directors of the Company in their meeting held on 19th May 2018.
Notes :
A) Rights, preferences and restrictions attached to shares Equity Shares
The Company has one class of equity shares having par value of INR 10 per share. Each member is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.
D) During the year, the Company has issued and allotted 3,10,21,000 equity shares of Rs.10 each to the Qualified Institutional Buyers (QIB) on 25/01/2018 at issue price of Rs.129 per equity share(including premium of Rs.119 per equity share) aggregating to Rs.400.17 Cr. Pursuant to the allotment of equity shares in Qualified Institutional Placement, the paid up equity share capital of the Company stands increased at Rs.251 Cr. Issue Expenses amounting to Rs.9.63 Cr incurred in relation to issue to QIB have been charged off against the Securities Premium Account in accordance with the provisions of Section 52 of the Companies Act, 2013. Some of the proceeds of QIB issue has been utilised as per the object of the issue and the unutilised proceeds of the issue have been invested in short term fixed deposit and included in bank balances other than Cash and Cash Equivalent.
“Basic and Diluted EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year.
The following reflects the profit and number of shares used in the basic and diluted EPS computations:
Note - 1 Financial instruments - Fair values and risk management
A. Accounting classification and fair values
The management assessed that fair value of Trade Receivables, Cash and Cash Equivalents, Bank Balances, Short Term Borrowings, Trade Payables, Floating rate Borrowings and Fixed rate Borrowings approximate their carrying amounts.
B. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk ;
- Liquidity risk ; and
- Market risk
i. Risk management framework
The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company manages cash resources, borrowing strategies, and ensures compliance with market risk limits and policies. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The audit committee oversees compliance with the Company’s risk management policies and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investments in debt securities.
Cash and other bank balances
The company maintains its Cash and cash equivalents and Bank deposits with banks with good past track record and high quality credit rating and also reviews their credit-worthiness on an on-going basis.
Trade receivables
Credit risk is managed through credit approvals, ongoing credit evaluations of its customers’ financial condition and monitoring the creditworthiness of its customers.
iii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company maintains sufficient lines of credit to commensurate its business.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.
The gross inflows/(outflows) disclosed in the above table represent the contractual undiscounted cash flows relating to derivative financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity.
iv. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company’s income or the value of its holdings of financial instruments. Exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency.
v. Currency risk
The functional currency of the Company is Indian Rupee. The Company is exposed to currency risk on account of its receivables, borrowings and payables for capital goods in foreign currency. The Company has not used derivative financial instruments either for hedging purpose or for trading or speculative purposes.
Sensitivity analysis
A reasonably possible strengthening (weakening) of the Indian Rupee against US dollars at March 31 would have affected the measurement of financial instruments denominated in US dollars and affected equity by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.
vi. Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. The Company adopts a policy to ensure that it achieves balance between fixed and floating rate.
vii. Exposure to interest rate risk
The company uses a mix of fixed rates and floating rates of borrowings. The changes in the floating interest rates are monitored closely.
Note - 2 Capital Management
The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.
The Company’s adjusted net debt to equity ratio at March 31, 2018 was as follows.
The claims against the Company not acknowledged as debt amount to INR 119.96 Cr. (31 March, 2017 : INR 108.75 Cr.) and interest and penalty thereon as may be decided at the time of disposal of the claim. Against above, the Company has deposited a sum of INR 51.54 Cr. (31 March, 2017 : INR 52.12 Cr.) with respective authorities as deposit.
Capital Commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for is INR 73.99 Cr. ( 31 March, 2017 is INR 24.74 Cr. Net of advances).
Note - 3 Segment reporting
(a) Description of segments and principal activities
The Company is in the business of manufacturing and sale of cement and clinker which is considered to constitute one single primary segment.
Domestic revenue includes INR 0.85 Cr. self consumption (31 March, 2017 : INR 0.91 Cr.)
(c) Information about major customers
None of the entity’s external customers account for I0 per cent or more of an entity’s revenue.
Note - 4 Related party disclosures
a. Subsidiary Company :
The Company has incorporated subsidiary Company in China named, Sange Testing Services (Shanghai) Co., Ltd. on March 20, 2015.
However, no investment is made till March 31, 2018.
b. Key Management Personnel:
Mr. Ravi Sanghi - Chairman and Managing Director
Mr. Aditya Sanghi - Whole Time Director
Mr. Alok Sanghi - Whole Time Director
Mr. Bina Engineer - Whole Time Director and CFO
Mr. N. B. Gohil - Whole Time Director
Mr. D. K. Kambale - Non Executive Director
Mr. Sadashiv Sawrikar - Non Executive Director
Mr. R. K. Pandey - Non Executive Director
Mr. D. B. N. Rao - Non Executive Director
Mr. M. K. Doogar - Non Executive Director
Mr. T. M. Jagan Mohan - Non Executive Director ( Retired w.e.f. 14th Dec 2017)
Mr. S. Balasubramarian - Non Executive Director ( Appointed w.e.f. 9th Nov 2017)
Mr. Anil Agrawal - Company Secretary
The company has taken certain assets on operating lease which are cancellable. During the year company has paid INR 2.73 Cr ( FY 16-17 INR 2.34 Cr ) towards cancellable operating lease. There are no operating leases which are non cancellable.
Note - 5 Gratuity and other post employment benefit plans
The Company operates post employment and other long term employee benefits defined plans as follows:
I. Unfunded
i. Gratuity
ii. Leave encashment benefit
II. Defined Benefit Plan
The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service to build up the final obligation. The obligation for leave encashment is recognised in the same manner as for gratuity.
III. Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
Note 6
Balance of Debtors, Creditors, Advances and Deposits are subject to confirmation and reconciliation, if any.
Note 7
Goods and Service Tax (GST) has been implemented w.e.f. 01.07.2017 . Accordingly , GST is being levied as against Excise duty applicable hitherto. Since, excise duty is included in the revenue and GST is not included in revenue, revenue from operations for current year ended 31st March 2018 is not comparable with the previous year. Excise amounting to INR 25.65 Cr (Previous Year INR 104.49 Cr) is included in Revenue from operations.
Note 8
Corresponding figures of previous year have been regrouped / rearranged wherever necessary.
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