Havells India Ltd. இன் கணக்கு குறிப்புகள்
Mar 31, 2023
(C) Nature and Purpose of Reserves
(a) Capital reserve
During amalgamation/ merger approved by honourable court, the excess of net assets taken over the consideration paid, if any, is treated as capital reserve. This capital reserve has arisen as a result of scheme of amalgamation in the past periods.
Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations adjusted by utilisation of reserve in accordance with scheme of Amalgamation in earlier years. The requirement to mandatorily transfer a specified percentage of the net profit to general reserve before declaration of dividend has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.
(d) Share options outstanding account
The share option outstanding account is used to recognise the grant date fair value of options issued to employees under Employee stock purchase plan.
Net of shares 41,960 (March 31,2022: 41,960) held by employee welfare trust included in the financial statements
Retained Earnings are profits that the Company has earned till date less transfer to General Reserve, dividend or other distribution or transaction with shareholders.
(a) The Company has availed secured loan of '' Nil (March 31, 2022: '' 250 crores), carrying interest rate of (3 months TBill rate plus (288 - 488 base points)) against the sanctioned term loan amount of '' Nil (March 31, 2022: '' 250 crores) from CITI Bank N.A. The Company has repaid its loan during the year. The current outstanding amount against the loan is '' Nil (March 31, 2022: '' 203.13 crores).The loan was obtained for the purpose of fresh capital expenditure and reimbursement of prior capital expenditure incurred by the company during the previous year.The term loan was repayable in 16 equated quarterly instalments commencing from 15th month from first drawdown date of April 21, 2020. This term loan was secured by way of first exclusive charge by way of a hypothecation over the Companyâs all movable fixed assets both present and future situated at (i) SP 181 to 189 and 191 (A), Industrial Area, Phase II, Neemrana, Alwar, Rajasthan, India (ii) Unit-1 Village Dharampur,Sai Road,Baddi,Dist Solan,Himachal Pradesh,(iii) Unit-II Village Gulerwala,Dist Solan, Baddi,Himachal Pradesh,(iv) Unit-I,Sector -10,Plot No 2A,BHEL Complex,Haridwar (v) Unit-II, Plot No 2A and 2D/1 Sector-10,Sidcul Industrial Area,Haridwar, Uttarakhand
(b) The Company has availed secured loan of '' Nil (March 31, 2022: '' 250 Crores) carrying interest rate of 4 - 6 % against the sanctioned amount of '' Nil (March 31, 2022: '' 350 crores) from HDFC Bank Limited. The Company has repaid its loan during the year. The current outstanding amount against the loan is '' Nil (March 31, 2022: '' 190.52 crores).The loan was obtained for the purpose of fresh capital expenditure and reimbursement of prior capital expenditure incurred by the company during 12 months of first drawdown date of May 29, 2020. The term loan was repayable in quarterly instalments over the period of 5 years as per terms of agreement starting from [1st Loan of '' 120 Crores (June 2020- May 2025) and 2nd Loan of '' 130 Crores (April 2021- May-2025)]. This loan was secured by way of first exclusive charge by way of a hypothecation over the Companyâs all movable fixed assets, plant and machinery and all movable properties both present and future situated at (i) A-461/462,SP-215 and 204 & 204A, Matsya Industrial Area, Alwar, Rajasthan and (ii) SP-1-133,General Zone, RIICO Industrial Area, Ghiloth.
(c) The Company was required to maintain the Debt Covenants i.e., Fixed assets coverage ratio, Debt service coverage ratio, gearing ratio, leverage ratio and interest coverage ratio and Company had complied with all such covenants in the previous year i.e. March 31, 2022.
(d) During the previous year, The Company had borrowings from banks and financial institutions on the basis of security of current assets. The Company had complied with the requirement of filing of monthly/ quarterly returns/statements of current assets with the banks or financial institutions, as applicable, and these returns were in agreement with the books of accounts for the year ended March 31, 2022. During the year, the Company has not been sanctioned working capital limits in excess of '' 5 crores, in aggregate from banks and financial institutions on the basis of security of current assets and accordingly, the quarterly returns or statements are not required to be filed with banks or financial institutions.
(e) As on the balance sheet date there is no default in repayment of loans and interest.
(f) The borrowings obtained by the company from banks and financial institutions had been applied for the purposes for which such loans were taken. In respect of the term loans which were taken in the previous years, those were applied in the respective years for the purpose for which the loans were obtained.
(g) There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.
(i) The Company has unabsorbed capital loss of '' 390.84 crores as on March 31, 2023 (March 31, 2022: '' 369.61 crores) out of which capital loss of '' 219.75 crores will expire in financial year 2023-24, capital loss of '' 122.30 crores will expire in financial year 2025-26, capital loss of '' 27.51 crores will expire in financial year 2029-30 and capital loss of '' 21.27 crores will expire in financial year 2030-31, on which no deferred tax asset has been created by the management due to lack of probability of future capital gain against which such deferred tax assets can be realised. If the Company were able to recognise all unrecognised deferred tax assets, the profit after tax would have increased by '' 89.28 crores (March 31, 2022: '' 84.56 Crore).
(ii) Effective tax rate has been calculated on profit before tax.
(i) Warranties
A provision is recognized for expected warranty claims and after sales services on products sold during the last one to seven years, based on past experience of the level of repairs and defective returns. It is expected that significant portion of these costs will be incurred in the next financial year and all will be incurred within seven years after the reporting date. Assumptions used to calculate the provisions for warranties are based on current sales levels and current information available about defective returns based on one to seven years warranty period for all products sold and are consistent with those in the prior years. The assumptions made in relation to the current year are consistent with those in the prior year.
Provision for litigation amounting to '' 6.70 Crores (March 31,2022: ''7.28 Crores) is created against demands raised in various ongoing litigations in ordinary course of business. Based on the facts of the case and legal precedents, the management believes there would be a probable outflow of resources and accordingly, has created a provision in books of account.
Sale of products: Performance obligation in respect of sale of goods is satisfied when control of the goods is transferred to the customer, generally on delivery of the goods and payment is generally due as per the terms of contract with customers.
Sales of services: The performance obligation in respect of maintenance services is satisfied over a period of time and acceptance of the customer. In respect of these services, payment is generally due upon completion of maintenance period based on time elapsed and acceptance of the customer. In certain non-standard contracts, where the Company provides warranties in service of consumer durable goods, the same is accounted for as a separate performance obligation and a portion of the transaction price is allocated based on its relative standalone prices. The performance obligation for the warranty service is satisfied over a period of time based on time elapsed.
Note: The remaining performance obligation expected to be recognised in more than one year relates to amounts received from customer against which performance obligation is to be satisfied over the period of one to seven years. All other remaining performance obligation are expected to be recognised within one year. During the year ended March 31, 2023, revenue recognised from amount included in contract liability at the beginning of year is '' 54.30 crores (March 31, 2022: '' 34.94 crores).
(vi) Disclosure pursuant to Appendix C of Ind AS 115
The Company was awarded a contract for replacement of existing conventional street/ park lights with LED street/ park lights by a Municipal Corporation in April 2017. As per the agreement, the Company shall also be responsible for the operation and maintenance of LED street/ park lights for a period of 7 years after installation. The consideration received by the Company under the contract is based on the energy savings resulting from the LED street/ park lights. The revenue recognised during the year and the contract assets balance as at year-end from such contract amounts to '' 45.89 Crores (March 31,2022: '' 45.43 crores) and '' 43.57Crores (March 31,2022: '' 56.83 crores) respectively.
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31. Commitments and Contingencies |
As At March 31,2023 |
('' in crores) As At March 31,2022 |
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A Contingent liabilities (to the extent not provided for) |
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a Claims / Suits filed against the Company not acknowledged as debts (Refer point (i)) |
6.83 |
7.07 |
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b Disputed tax liabilities in respect of pending litigations before appellate authorities {Amount deposited under protest '' 13.04 crores (March 31, 2022: '' 29.13 crores}, included in "Deposit with Statutory and Government authorities" in note no. 8) {refer point (ii)} |
54.74 |
74.88 |
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Notes: i) Claims / suits filed against the Company not acknowledged as debts which represents various legal cases filed against the company. The Company has disclaimed the liability and defending the action. The Company has been advised by its legal counsel that its position is likely to be upheld in the litigation process and accordingly no provision for any liability has been made in the financial statement. ii) The various disputed tax litigations are as under: ('' in crores) |
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Sl. Description {refer note below} Period to which relates |
Disputed amount As At March 31,2023 |
Period to which relates |
Disputed amount As At March 31,2022 |
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a) Excise / Customs / Service Tax |
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Demands raised by Excise and 2007-08 to 2009-Custom department. 10, 2015-16 to 2017-18 and 2019-20 |
16.32 |
2007-08 to 2009-10, 2015-16 to 2017-18 and 2019-20 |
16.34 |
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b) Income Tax1 |
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Disallowances / additions made by 2005-06, 2008-09 the income tax department. to 2014-15, 2016-17 to 2017-18 and 2019-20 |
35.17 |
2005-06, 2009-10 to 2014-15, 201617,2018-19 and 2019-20 |
38.78 |
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c) Goods and Service Tax |
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Demands raised by GST 2017-18 Department and 2019-20 |
1.23 |
2017-18 and 2019-20 |
1.26 |
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d) Sales Tax / VAT |
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Demands raised by Sales tax / VAT 2003-04 department. to 2016-17 |
1.87 |
2005-06 to 2016-17 |
18.35 |
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e) Others |
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Demand of local area development 2001-02 tax by the concerned authorities. |
0.12 |
2001-02 |
0.12 |
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Demand of octroi along with 2010-11 penalty in the state of Maharashtra by the concerned authorities. |
0.03 |
2010-11 |
0.03 |
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RA 7A |
7/1 «« |
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The above figures are net off provisions made by the Company. The Company is contesting these demands and the management, believe that its position will likely to be upheld in the appellate process. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Companyâs financial position and results of operations.
Notes:
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B. Commitments |
('' in crores) |
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As at |
As at |
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March 31,2023 |
March 31,2022 |
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Estimated amount of capital contracts remaining to be executed and not provided for (Net of Advances amounting to '' 52.52 crores (March 31,2022: '' 7.45 crores)) |
476.73 |
59.27 |
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476.73 |
59.27 |
C Undrawn committed borrowing facility
(a) During the Year, the company has availed fund and non fund based unsecured working capital limit amounting to '' 1382.50 Crores under multiple banking arrangements from IDBI Bank Limited, Yes Bank Limited, Standard Chartered Bank Limited, HSBC Bank, ICICI Bank Limited, IndusInd Bank Limited, HDFC Bank Limited, DBS Bank Limited and CITI Bank N.A. An amount of '' 1102.86 crores remain undrawn as at Mach 31,2023.
The Company has some sales tax and other tax related litigation of '' 6.70 crores (March 31,2022: '' 7.28 crores) against which liability has been assessed as probable and adequate provisions have been made with respect to the same.
E The Company has outstanding obligation amounting to '' 0.51 crores (March 31,2022: '' 0.52 crores) in respect of bonds given to central tax department against import of goods at concessional rate of basic custom duty. The Company expects to fulfil the obligation in due course of time.
F The Company has export obligation of '' 158.68 crores (March 31,2022: '' 34.95 crores) on account of import duty exemption of '' 8.72 crores (March 31, 2022: ''1.50 crore) on capital goods under the Export Promotion Capital Goods (EPCG) and '' 0.15 crores Advance Authorisation scheme laid down by the Government of India. The Company expects to fulfil the obligation in due course of time.
i The Company''s lease asset primarily consist of leases for land and buildings for branch offices and warehouses having the various lease terms. The Company also has certain leases of with lease terms of 12 months or less. The Company applies the âshort-term lease'' recognition exemptions for these leases. Payment made towards short term leases of low value assets (lease of assets worth less than '' 2 Lacs) other than building and warehouse are recognized in the statement of Profit and Loss as rental expenses over the tenure of such leases.
vii The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
viii The Company has received the Covid-19-related rent concessions for lessees amounting to '' 0.12 crores (March 31,2022: '' 0.49 crores) and on the basis of practical expedient as per Ind AS 116 âLeasesâ, the same is not considered to be lease modification, hence the income towards rent concession is recognised in âOther Incomeâ in the statement of profit and loss account.
ix The Company has applied a single discount rate to a portfolio of leases of a similar assets in similar economic environment with similar end date.
The employees'' Gratuity Fund Scheme, which is a defined benefit plan, is managed by the trust which maintains its investments with Bajaj Allianz Life Insurance Co. Ltd. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure at 15 days of last drawn basic salary for each completed year of service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
j) The average duration of the defined benefit plan obligation at the end of the reporting period is 21.87 years (March 31,2022: 21.66 years).
k) The Company expects to contribute '' 29.08 crores (March 31,2022 : '' 8.65 crores) to the plan during the next financial year.
l) The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.
m) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.
n) The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in an assumptions occurring at the end of the reporting period while holding all other assumption constraint. In practice it is unlikely to occur and change in some of the assumption may be correlated. When 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.
o) The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period
The segment reporting of the Company has been prepared in accordance with Ind AS-108, âOperating Segmentâ (specified under the section 133 of the Companies Act 2013 (the Act) read with Companies (Indian Accounting Standards) Rule 2015 (as amended from time to time) and other relevant provision of the Act). For management purposes, the Company is organized into business units based on its products and services and has six reportable segments as follows:
a) Operating Segments
Switchgears : Domestic and Industrial switchgears, electrical wiring accessories and capacitors.
Cables : Domestic cables and Industrial underground cables.
Lighting and Fixtures : Energy Saving Lamps (LED, Fixtures) and luminaries.
Electrical Consumer Durables : Fans, Water Heaters, Coolers, and Domestic Appliances Lloyd Consumer : Air Conditioner, Television, Refrigerator and Washing Machine
Others : Industrial motors, Pump, Water purifier, Solar, Personal Grooming
b) Identification of Segments:
The Board of Directors monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segments have been identified on the basis of the nature of product / services and have been identified as per the quantitative criteria specified in the Ind AS.
c) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as âunallocableâ.
d) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets, borrowings and other assets and liabilities that can not be allocated to a segment on reasonable basis have been disclosed as âunallocableâ.
e) There is no transfer of products between operating segments.
f) There are no customers having revenue exceeding 10% of total revenues
a) The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free. The settlement for these balances occurs through payment. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31,2023, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31,2022: '' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
b) As at March 31,2023, the Company has not granted any loans to the promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person (March 31,2022: Nil),
c) Transactions with related parties are reported gross of Goods and Service Tax.
The Company has in place following employee stock purchase plan approved by shareholders of the Company in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) regulations, 2021 :
(a) Havells Employee Long Term Incentive Plan 2014 : In accordance with this scheme, 41,817 (March 31,2022 : 68,356) share options of Re. 1 each were granted, out of which 41,415 (March 31,2022: 68,356) share options of Re. 1 each were vested and allotted on June 03, 2022 (March 31,2022 : June 05, 2021) to eligible employees at '' 1,289.85 (March 31,2022: '' 1,074.10) per share as contributed by these employees. As per the scheme, 50% of the shares are under lock in period of 13 months and balance 50% for 2 years. Also as per the scheme, the Company is obliged to pay 50% of the contribution made by eligible employees as retention bonus over a period of two years in equal instalments. Accordingly, a sum of '' 2.23 crores (March 31,2022 : '' 2.94 crores) has been recognised as employee stock purchase plan expense (refer note 27).
(b) Havells Employee Stock Purchase Plan 2015 : In accordance with this scheme, 150,000 (March 31,2022: 210,000) share options of Re. 1 each were granted, vested and allotted on June 03,2022 (March 31,2022: June 05, 2021) at '' 1,289.85 (March 31,2022: '' 1,074.10) per share to eligible employees as contributed by the Company. As per the scheme, 78% of the shares are under lock in period of 13 months and remaining 22% are under lock in period for 2 years. Accordingly, a sum of '' 19.35 crores (March 2022 :'' 22.56 crores) has been recognised as employee stock purchase plan expenses (refer note 27).
(c) Havells Employee Stock Purchase Plan 2016 : In accordance with the said scheme, 24,942 (March 31,2022: 8,454) share options of Re. 1 each were granted to eligible employees with graded vesting in three years starting from 2022. During the year, 13534 equity shares of Re. 1 each (March 31,2022 : 11705 equity shares) were allotted at '' 1,289.85 (March 31,2022 : ''1,074.10) per share on June 03, 2022. Accordingly, a sum of ''2.69 crores (March 31,2021: 1.26 crores) has been recognised as employee stock purchase plan expense refer note 29 and balance outstanding of '' 1.48 crores (March 31,2022 : 0.53 crores) (refer note 14).''
(d) Havells Employee Stock Purchase Plan 2022 : In accordance with the said scheme, 17,733 (March 31,2022: NIL) share options of Re. 1 each were granted to eligible employees with graded vesting in three years starting from 2022. During the year, 1722 equity shares of Re. 1 each (March 31,2022 : NIL equity shares) were allotted at '' 1,348.55 (March 31, 2022 : NIL) per share on Nov 03, 2022. Accordingly, a sum of ''1.06 crores (March 31,2021: NIL) has been recognised as employee stock purchase plan expense refer note 27 and balance outstanding of '' 0.82 crores (March 31,2022 : NIL) (refer note 14).''
The fair value at grant date of options granted during the year ended March 31,2023 was within range of '' 1271.53 to '' 1348.16 per share (March 31,2022 was within range of '' 1059.27 to '' 1073.90 per share). The fair value at the grant date is determined using Black Scholes valuation model which takes into account the exercise price, the terms of the options, the share price at grant date and expected price volatility of the underlying shares, the expected dividend yield and the risk free interest rate for the term of the option.
The management assessed that cash and cash equivalents, trade receivables, trade payables, other current financial assets and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the other financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
1) The fair value of unquoted instruments, other non-current financial assets and non-current financial liabilities is estimated by discounting future cash flows (DCF model) using rates currently available for debt on similar terms, credit risk and remaining maturities. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.
2) The fair values of the Company''s interest-bearing borrowings are determined by using DCF method using discount rate that reflects the issuer''s borrowing rate as at the end of the reporting period. The own non-performance risk as at March 31,2023 was assessed to be insignificant.
3) Long-term receivables/payables are evaluated by the Company based on parameters such as interest rates, risk factors, individual creditworthiness of the counterparty and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
4) Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: The fair value of financial instruments traded in active markets is based on quoted (unadjusted) market prices at the end of the reporting period for identical assets or liabilities
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. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.
There are no transfers among levels 1,2 and 3 during the year.
This section explains the judgement and estimates made in determining the fair value of financial assets that are:
a) Recognised and measured at Fair value
b) Measured at amortised cost and for which fair value is disclosed in financial statements
10 Financial risk management objectives and policies
The Company''s principal financial liabilities comprise loans and borrowings, 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, and cash and cash equivalents that are derived directly from its operations.
The Companyâs financial risk management is an integral part of how to plan and execute its business strategies. The Company is exposed to market risk, credit risk and liquidity risk.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors and Audit Committee. This process provides assurance to Company''s senior management that the Company''s financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective. In the event of crisis caused due to external factors such as caused by recent pandemic âCOVID-19â, the management assesses the recoverability of its assets, maturity of its liabilities to factor it in cash flow forecast to ensure there is enough liquidity in these situations through internal and external source of funds. These forecast and assumptions are reviewed by board of directors.
The Board of Directors reviews and agrees policies for managing each of these risks which are summarized as below:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises three types of risk: currency rate risk, interest rate risk and other price
risks, such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits, investments, and foreign currency receivables and payables. The sensitivity analysis in the following sections relate to the position as at reporting date. The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets and liabilities. The sensitivity of the relevant Profit and Loss item and equity is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31,2023 and March 31,2022
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. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense is denominated in foreign currency). Foreign currency exchange rate exposure is partly balanced by purchasing of goods from the respective countries. The Company basis their assessment believes that the probability of the occurrence of their forecasted transactions is not impacted by COVID-19 pandemic. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
Foreign currency risk sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD,EUR, JPY, CNY and other currencies including KES,NPR, CHF, LKR, MWK,AED,SLL and GBP exchange rates, with all other variables held constant. The impact on the Company profit before tax and equity is due to changes in the fair value of monetary assets and liabilities. Foreign currency exposures recognised by the Company that have not been hedged by a derivative instrument or otherwise are as under:
I nterest rate is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long term debt obligation at floating interest rates. The Company''s borrowings outstanding as at March 31,2023 and March 31,2022 comprise of long term loans.
The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of industrial and domestic cable and other electronic items and therefore require a continuous supply of copper and aluminium being the major input used in the manufacturing. To mitigate the risk of supply and price fluctuations, Domestic and overseas sources are bench-marked to Optimize the allocation of business share among various sources. The Company''s Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. The Company mitigated the risk of price volatility by entering Long Term & Short term contracts for the Purchase of these commodities basis estimated annual requirements.
Credit Risk is the risk that the counter party will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
(i) Trade Receivables and Contract Assets
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by Trade Receivable buyout facility without recourse, letters of credit and other forms of security.
An impairment analysis is performed at each reporting date on trade receivables by lifetime expected credit loss method based on provision matrix. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables and contract assets as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
(ii) Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made in bank deposits and other risk free securities. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments. The Companyâs maximum exposure to credit risk for the components of the balance sheet at March 31,2023 is the carrying amounts. The Company''s maximum exposure relating to financial instrument is noted in liquidity table below.
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company''s objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate source of financing through the use of short term bank deposits, short term loans, short term commercial papers and cash credit facility. Processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.
For the purposes of Company''s capital management, Capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Company''s capital management is to safeguard its ability to continue as going concern and to ensure that it maintains an efficient capital structure and maximize shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31,2023 and March 31,2022.
15 Fire Incident in Neemrana Plant
There was a fire at Neemrana plant of the Company in July 2022 resulting in destruction/ damage of property, plant and equipment and inventories with book value of '' 47.53 crores and '' 64.99 crores respectively. The loss aggregating to '' 112.52 crores has been accounted for in the books and disclosed as âExceptional Itemsâ in the standalone statement of profit and loss. The process relating to filing of claim with the insurance company has been completed for property, plant and equipment and subsequent to the year-end, the Company has received interim payment amounting to '' 23.98 crores. The process of filing the surveyor report in respect of claim for inventories is in progress. The Company has adequate insurance coverage for the aforesaid loss and based on its assessment of the loss and the terms and conditions of the insurance policies, the claim is fully admissible. Accordingly, '' 112.52 crores has been disclosed as part of âExceptional Itemsâ in the standalone statement of profit and loss. Also refer to Note 11 (E).â
16 The Company has not been declared as a Wilful Defaulter by any bank or financial institution or government or any government authority.
19 Additional regulatory information required by Schedule III of Companies Act, 2013
(i) Details of Benami property: No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
(ii) Utilisation of borrowed funds and share premium:
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
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
(iii) Compliance with number of layers of companies: The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(iv) Compliance with approved scheme(s) of arrangements: The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(v) Undisclosed income: There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
(vi) 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.
(vii) Valuation of PP&E, 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.
(viii) The company has not granted any loans or advances in the nature of loans either repayable on demand.
20 The figures have been rounded off to the nearest crore of rupees upto two decimal places. The figure 0.00 wherever stated represents value less than '' 50,000/-.
21 Note No.1 to 32 form integral part of the Standalone Balance Sheet and Standalone Statement of Profit and Loss.
Based on favourable decisions in similar cases, the Company does not expect any liability against these matters in accordance with principles of Ind AS -12 âIncome taxesâ read with Ind AS -37 provisions, Contingent Liabilities and Contingent Assetsâ and hence no provision has been considered in the books of accounts except for provision created in respect of few years {refer note 19(ii)}.
The above amounts contain interest and penalty where included in the order issued by the department to the Company
Mar 31, 2022
(b) Securities premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilized only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
(c) General reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations adjusted by utilisation of reserve in accordance with scheme of Amalgamation in earlier years. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilized only in accordance with the specific requirements of Companies Act, 2013.
(d) Share options outstanding account
The share option outstanding account is used to recognise the grant date fair value of options issued to employees under Employee stock purchase plan.
Net of shares 41,960 (March 31, 2021: 41,960) held by employee welfare trust included in the financial statements
(e) Retained earnings
Retained Earnings are profits that the Company has earned till date less transfer to General Reserve, dividend or other distribution or transaction with shareholders.
(e) As on the Balance sheet date there is no default in repayment of loans and interest.
(f) The borrowings obtained by the company from banks and financial institutions have been applied for the purposes for which such loans were taken. In respect of the term loans which were taken in the previous year, those were applied in the respective year for the purpose for which the loans were obtained.
(g) There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period. .
(a) The company has availed secured loan of '' 250 crores, carrying interest rate of (3 months TBill rate plus (288-488 base points)) (March 31, 2021: '' 250 crores) against the sanctioned term loan amount of '' 250 crores (March 31, 2021:? 250 crores) from CITI Bank N.A.The current outstanding amount against the loan is '' 203.13 Crores (March 31,2021: '' 250 crores).The loan was obtained for the purpose of fresh capital expenditure and reimbursement of prior capital expenditure incurred by the company during the previous year. The term loan is repayable in 16 equated quarterly instalments commencing from 15th month from first drawdown date of April 21,2020. This term loan is secured by way of first exclusive charge by way of a hypothecation over the Companyâs all movable fixed assets both present and future situated at (i) SP 181 to 189 and 191 (A), Industrial Area, Phase II, Neemrana, Alwar, Rajasthan, India (ii) Unit-1 Village Dharampur,Sai Road,Baddi,Dist Solan,Himachal Pradesh,(iii) Unit-II Village Gulerwala,Dist Solan ,Baddi,Himachal Pradesh,(iv) Unit-I,Sector -10,Plot No 2A,BHEL Complex,Haridwar (v) Unit-II, Plot No 2A and 2D/1 Sector-10,Sidcul Industrial Area,Haridwar, Uttarakhand.
(b) The company has availed secured loan of '' 250 Crores carrying interest rate of 4-6 %, (March 31,2021 : '' 250 crores) against the sanctioned amount of '' 350 crores (March 31,2021: '' 350 crores) from HDFC Bank Limited. The current outstanding amount against the loan is '' 190.52 Crores (March 31 ,2021: '' 241 crores).The loan was obtained for the purpose of fresh capital expenditure and reimbursement of prior capital expenditure incurred by the company during 12 months of first drawdown date of May 29, 2020. The term loan is repayable in quarterly instalments over the period of 5 years as per terms of agreement starting from [1st Loan of '' 120 Crores (June 2020- May 2025) and 2nd Loan of '' 130 Crores (April 2021 - May 2025)]. This loan is secured by way of first exclusive charge by way of a hypothecation over the Companyâs all movable fixed assets, plant and machinery and all movable properties both present and future situated at (i) A-461/462,SP-215 and 204 & 204A ,Matsya Industrial Area, Alwar, Rajasthan and (ii) SP-1-133,General Zone ,RIICO Industrial Area, Ghiloth.
(c) The Company is required to maintain the Debt Covenants i.e., Fixed assets coverage ratio, Debt service coverage ratio, Gearing Ratio, Leverage Ratio & Interest coverage ratio and Company has complied with all the debt covenants in both the year i.e., March 31, 2022 and March 31,2021.
(d) The Company has borrowings from banks and financial institutions on the basis of security of current assets. The Company has complied with the requirement of filing of monthly/ quarterly returns/statements of current assets with the banks or financial institutions, as applicable, and these returns were in agreement with the books of accounts for the year ended March 31, 2022 and March 31, 2021.
Sale of products: Performance obligation in respect of sale of goods is satisfied when control of the goods is transferred to the customer, generally on delivery of the goods and payment is generally due as per the terms of contract with customers.
Sales of services: The performance obligation in respect of maintenance services is satisfied over a period of time and acceptance of the customer. In respect of these services, payment is generally due upon completion of maintenance period based on time elapsed and acceptance of the customer. In certain non-standard contracts, where the Company provides warranties in service of consumer durable goods, the same is accounted for as a separate performance obligation and a portion of the transaction price is allocated based on its relative standalone prices. The performance obligation for the warranty service is satisfied over a period of time based on time elapsed.
(vi) Disclosure pursuant to Appendix D of Ind AS 115
The Company was awarded a contract for replacement of existing conventional street/ park lights with LED street/ park lights by a Municipal Corporation in April 2017. As per the agreement, the Company shall also be responsible for the operation and maintenance of LED street/ park lights for a period of 7 years after installation. The consideration received by the Company under the contract is based on the energy savings resulting from the LED street/ park lights. The revenue recognized during the year and the contract assets balance as at year-end from such contract amounts to '' 45.43 Crores (March 31, 2021: '' 44.52 crores) and '' 56.83 Crores (March 31, 2021: '' 67.09 crores) respectively.
C Undrawn committed borrowing facility
(a) During the year, the Company has availed fund and non fund based unsecured working capital limit amounting to '' 902 Crores under multiple banking arrangements from IDBI Bank Limited, Yes Bank Limited, Standard Chartered Bank Limited, HSBC Bank, ICICI Bank Limited, IndusInd Bank Limited, HDFC Bank Limited, DBS Bank Limited and CITI Bank N.A. An amount of '' 598.44 crores remain undrawn as at Mach 31, 2022.
(b) The Company has availed fund based and non fund based working capital limits amounting to '' 235 crores (March 31, 2021 : '' 235.00 crores) from banks under consortium of Canara Bank, IDBI Bank Limited, Standard Chartered Bank, Axis Bank, ICICI Bank Limited, Yes Bank Limited and The Hong Kong and Shanghai Banking Corporation Limited. An amount of '' Nil crores remain undrawn as at March 31,2022 (March 31,2021 : '' 217.12 crores). Further, the limit availed is secured by way of:
i) Pari-passu first charge with consortium banks by way of hypothecation on entire paid stocks consisting of raw material, work in progress, finished goods kept at Companyâs godown, factories and book debts along with receivables of the Company, both present and future.
ii) Pari-passu first charge with consortium banks by way of equitable mortgage of land and building at 14/3, Mathura Road, Faridabad.
iii) Pari-passu second charge with consortium banks by way of hypothecation of plant and machinery, generators, furniture and fixtures, electric fans and installations on which 1st charge is held with term lenders.
The Company has some sales tax and other tax related litigation of '' 7.28 crores (March 31,2021: '' 12.93 crores) against which liability has been assessed as probable and adequate provisions have been made with respect to the same.
E The Company has outstanding obligation amounting to '' 0.52 crores (March 31,2021: '' 0.80 crores) in respect of bonds given to central tax department against import of goods at concessional rate of basic custom duty. The Company expects to fulfil the obligation in due course of time.
F The Company has export obligation of '' 34.95 crores (March 31, 2021: '' 10.18 crores) on account of import duty exemption of '' 1.50 crores (March 31, 2021: '' 0.50 crore) on capital goods under the Export Promotion Capital Goods (EPCG) and '' 0.24 crores Advance Authorisation scheme laid down by the Government of India. The Company expects to fulfil the obligation in due course of time.
Defined Benefit Plan
The employeesâ Gratuity Fund Scheme, which is a defined benefit plan, is managed by the trust which maintains its investments with Bajaj Allianz Life Insurance Co. Ltd. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure at 15 days of last drawn basic salary for each completed year of service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The following tables summaries the components of net benefit expense recognized in the statement of profit or loss, the funded status and amounts recognized in the balance sheet for the respective plans:
j) The average duration of the defined benefit plan obligation at the end of the reporting period is 21.66 years (March 31, 2021: 21.98 years)
k) The Company expects to contribute '' 8.65 crores (March 31,2021 : '' 18.25 crores) to the plan during the next financial year.
l) The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.
m) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.
n) The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in an assumptions occurring at the end of the reporting period while holding all other assumption constraint. In practice it is unlikely to occur and change in some of the assumption may be correlated. When 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 recognized in the balance sheet.
o) The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
b) Identification of Segments:
The Board of Directors monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segments have been identified on the basis of the nature of product / services and have been identified as per the quantitative criteria specified in the Ind AS.
c) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as âunallocableâ.
d) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets, borrowings and other assets and liabilities that can not be allocated to a segment on reasonable basis have been disclosed as âunallocableâ.
e) There is no transfer of products between operating segments.
f) There are no customers having revenue exceeding 10% of total revenues.
g) No operating segments have been aggregated to form the above reportable operating segments.
a) The transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free. The settlement for these balances occurs through payment. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31,2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31,2021: '' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
b) As at March 31,2022 , the Company has not granted any loans to the promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person (March 31, 2021: Nil),
c) Transactions with related parties are reported gross of Goods and Service Tax.
The Company has in place following employee stock purchase plan approved by shareholders of the Company in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) regulations, 2021 :
(a) Havells Employee Long Term Incentive Plan 2014 : In accordance with this scheme, 68,356 (March 31, 2021 : 110,949) share options of Re. 1 each were granted, out of which 68,356 (March 31, 2021: 109,259) share options of Re. 1 each were vested and allotted on June 05, 2021 (March 31, 2021 : April 14, 2020) to eligible employees at '' 1,074.10 (March 31, 2021: '' 467.35) per share as contributed by these employees. As per the scheme, 50% of the shares are under lock in period of 13 months and balance 50% for 2 years. Also as per the scheme, the Company is obliged to pay 50% of the contribution made by eligible employees as retention bonus over a period of two years in equal instalments. Accordingly, a sum of '' 2.94 crores (March 31, 2021 : '' 2.88 crores) has been recognized as employee stock purchase plan expense in note 27.
(b) Havells Employee Stock Purchase Plan 2015 : In accordance with this scheme, 210,000 (March 31, 2021: 90,000) share options of Re. 1 each were granted, vested and allotted on June 05,2021 ( March 31, 2021: April 14, 2020) at '' 1,074.10 ( March 31, 2021: '' 467.35) per share to eligible employees as contributed by the Company. As per the scheme, 78% of the shares are under lock in period of 13 months and remaining 22% are under lock in period for 2 years. Accordingly, a sum of '' 22.56 crores (March 2021 :'' 4.21 crores) has been recognized as employee stock purchase plan expenses in note 27.
(c) Havells Employee Stock Purchase Plan 2016 : In accordance with the said scheme, 8,454 (March 31,2021: 13,157) share options of '' 1 each were granted to eligible employees with graded vesting in three years starting from 2021. During the year, 11705 equity shares of '' 1 each (March 31, 2021 : 10913 equity shares) were allotted at '' 1,074.10 (March 31, 2021 : '' 467.35) per share on June 05, 2021. Accordingly, a sum of '' 1.26 crores (March 31,2021: 0.50 crores) has been recognized as employee stock purchase plan expense in note 27 and balance outstanding of '' 0.53 crores (March 31, 2021 : 0.64 crores) in note 14.
The management assessed that cash and cash equivalents, trade receivables, trade payables, other current financial assets and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the other financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
1) The fair value of unquoted instruments, other non-current financial assets and non-current financial liabilities is estimated by discounting future cash flows (DCF model) using rates currently available for debt on similar terms, credit risk and remaining maturities. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.
2) The fair values of the Companyâs interest-bearing borrowings are determined by using DCF method using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at March 31, 2022 was assessed to be insignificant.
3) Long-term receivables/payables are evaluated by the Company based on parameters such as interest rates, risk factors, individual creditworthiness of the counterparty and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: The fair value of financial instruments traded in active markets is based on quoted (unadjusted) market prices at the end of the reporting period for identical assets or liabilities
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. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.
There are no transfers among levels 1, 2 and 3 during the year.
This section explains the judgement and estimates made in determining the fair value of financial assets that are:
a) Recognized and measured at Fair value
b) Measured at amortized cost and for which fair value is disclosed in financial statements
assets and liabilities. The sensitivity of the relevant Profit and Loss item and equity is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31,2022 and March 31, 2021.
(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. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense is denominated in foreign currency). Foreign currency exchange rate exposure is partly balanced by purchasing of goods from the respective countries. The Company basis their assessment believes that the probability of the occurrence of their forecasted transactions is not impacted by COVID-19 pandemic. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
Foreign currency risk sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD,EUR, JPY, CNY and other currencies including KES,NPR, CHF, LKR ,MWK,AED,SLL and GBP exchange rates, with all other variables held constant. The impact on the Company profit before tax and equity is due to changes in the fair value of monetary assets and liabilities. Foreign currency exposures recognized by the Company that have not been hedged by a derivative instrument or otherwise are as under:
10 Financial risk management objectives and policies
The Companyâs principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include trade and other receivables, and cash and cash equivalents that are derived directly from its operations.
The Companyâs financial risk management is an integral part of how to plan and execute its business strategies. The Company is exposed to market risk, credit risk and liquidity risk.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors and Audit Committee. This process provides assurance to Companyâs senior management that the Companyâs financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective. In the event of crisis caused due to external factors such as caused by recent pandemic âCOVID-19â, the management assesses the recoverability of its assets, maturity of its liabilities to factor it in cash flow forecast to ensure there is enough liquidity in these situations through internal and external source of funds. These forecast and assumptions are reviewed by board of directors.
The Board of Directors reviews and agrees policies for managing each of these risks which are summarized as below: (a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits, investments , and foreign currency receivables and payables. The sensitivity analysis in the following sections relate to the position as at reporting date. The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial
(ii) Interest Rate Risk
Interest rate is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long term debt obligation at floating interest rates. The Companyâs borrowings outstanding as at March 31, 2022 and March 31,2021 comprise of long term loans.
Interest rate Sensitivity of Borrowings
With all other variables held constant, the following table demonstrates the sensitivity to a reasonably possible change in interest rates on floating rate portion of loans and borrowings as on date.
(iii) Commodity Price Risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of industrial and domestic cable and other electronic items and therefore require a continuous supply of copper and aluminium being the major input used in the manufacturing. To mitigate the risk of supply and price fluctuations, Domestic and overseas sources are bench-marked to Optimize the allocation of business share among various sources. The Companyâs Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. The Company mitigated the risk of price volatility by entering Long Term & Short term contracts for the Purchase of these commodities basis estimated annual requirements.
(b) Credit Risk
Credit Risk is the risk that the counter party will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
(i) Trade Receivables and Contract Assets
Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by Trade Receivable buyout facility without recourse, letters of credit and other forms of security.
(c) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Companyâs objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate source of financing through the use of short term bank deposits, short term loans, short term commercial papers and cash credit facility. Processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.
An impairment analysis is performed at each reporting date on trade receivables by lifetime expected credit loss method based on provision matrix. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables and contract assets as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
(ii) Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made in bank deposits and other risk free securities. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments. The Companyâs maximum exposure to credit risk for the components of the balance sheet at March 31, 2022 is the carrying amounts. The Companyâs maximum exposure relating to financial instrument is noted in liquidity table below.
Trade Receivables and other financial assets are written off when there is no reasonable expectation of recovery, such as debtor failing to engage in the repayment plan with the Company.
For the purposes of Companyâs capital management, Capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Companyâs capital management is to safeguard its ability to continue as going concern and to ensure that it maintains an efficient capital structure and maximize shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2022 and March 31, 2021 except for budgeting for cash flow projections considering the impact of ongoing pandemic COVID - 19. The Company monitors capital using gearing ratio, which is net debt divided by total capital plus net debt. Net debt is calculated as loans and borrowings less cash and cash equivalent.
19 Additional regulatory information required by Schedule III of Companies Act, 2013
(i) Details of Benami property: No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
(ii) Utilisation of borrowed funds and share premium: 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
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
(iii) Compliance with number of layers of companies: The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(iv) Compliance with approved scheme(s) of arrangements: The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(v) Undisclosed income: There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
(vi) 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.
(vii) Valuation of PP&E, 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.
(viii) The company has not granted any loans or advances in the nature of loans either repayable on demand.
20 The figures have been rounded off to the nearest crore of rupees upto two decimal places. The figure 0.00 wherever stated represents value less than '' 50,000/-.
21 Note No.1 to 32 form integral part of the Standalone Balance Sheet and Standalone Statement of Profit and Loss.
Mar 31, 2021
impairment testing of goodwill and intangible assets with indefinite lives
Goodwill of '' 310.47 crores and Trademark of '' 1029.00 crores acquired on acquisition of Lloyd business having indefinite useful lives as assessed by the Management have been allocated to a separate single cash generating unit (CGU) i.e. LLOYD consumer which is also an operating and reportable segment, for impairment testing. The Company has performed an annual impairment test to ascertain the recoverable amount of CGU. The recoverable amount is determined based on value in use calculation. These calculations uses management assumptions and pre tax cash flow projections based on financed budgets approved by management covering generally over a period of 5 years. Cash flow projection beyond 5 years time period are extrapolated using the estimated growth rates which is consistent with forecasts included in industry reports specific to industry in which CGU operates. Further the management have factored the impact of COVID-19 on the cash flow projections used in assessment of recoverable amount of CGU. Management has determined following assumptions for impairment testing of CGU as stated below.
Management determined budgeted gross margin based on past performance and its expectations of market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The calculations performed indicate that there is no impairment of CGU of the company. Management has performed a sensitivity analysis with respect to changes in assumptions for assessment of value-in-use of CGU. Based on this analysis, management believes that change in any of above assumption would not cause any material possible change in carrying value of unitâs CGU over and above its recoverable amount.
(a) Trade Receivable represents the amount of consideration in exchange for goods or services transferred to the customers that is unconditional.
(b) During the earlier years, the Company had entered in to an agreement with customer wherein the Company had identified multiple performance obligations in contract as per Ind AS 115 âRevenue from contract with customersâ. The Companyâs right to receive consideration is conditional upon satisfaction of all performance obligations. Accordingly, the Company has recognised contract asset in respect of performance obligation satisfied during the year. Contract assets are in the nature of unbilled receivables, which arises when Company satisfies a performance obligation but does not have an unconditional rights to consideration. Contract assets have decreased in the current year on account of change in the time frame for aâ right to considerationâ become unconditional.
(c) The Company has entered into the agreements with customers for sales of goods and services. The Company has identified these performance obligations and recognised the same as contract liabilities in respect of contracts, where the Company has obligation to deliver the goods and perform specified services to a customer for which the Company has received consideration. There has been no significant change in the contract liabilities.
(a) Trade receivables are usually on trade terms based on credit worthiness of customers as per the terms of contract with customers.
(b) Neither trade nor other receivables are due from directors or other officers of the company either severally or jointly with any other person, Nor any trade or other receivables are due from firms or private companies respectively in which any director is a partner, a director or a member.
(c) The Company has availed Receivable Buyout facility from banks against which a sum of '' 167.99 crores (March 31, 2020 : '' 404.31 crores) has been utilised as on the date of Balance Sheet. The Company has assigned all its rights and privileges to the bank and there is no recourse on the Company. Accordingly the amount of utilization has been reduced from trade receivables.
(d) The Company has arranged channel finance facility for its customers from banks against which a sum of '' 681.35 crores (March 31, 2020: '' 605.99 crores) has been utilised as on the date of Balance Sheet and correspondingly, the trade receivables stand reduced by the said amount as there is no recourse on the Company.
(a) The Company classified certain items of Property Plant and Equipment retired from active use and are held for sale recognised and measured in accordance with Ind-AS 105 âNon Current Assets Held For Sale and Discontinued Operationsâ at lower of its carrying amount and fair value less cost to sell. The Company expects to complete the sale by September 2020 (previous year :-September 2019) by selling it in the open market.
(b) In the earlier year, the Company and its joint venture partner in respect of their joint venture namely âJiangsu Havells Sylvania Lighting Co. Limitedâ, have applied for liquidation and formed a liquidation committee. Accordingly, the investment in joint venture was classified as asset held for sale, recognised and measured in accordance with Ind-AS 105 âNon-Current Assets Held for Sale and Discontinued Operationsâ at lower of its carrying amount and fair value less cost to sell. During the current year, final consideration amounting to USD 2.35 million has been agreed between the co-venturers, accordingly the same has been classified to other financial assets {refer note 11(E)(b)}
d) Terms/rights attached to equity shares
The Company has only one class of issued share capital i.e. equity shares having a par value of '' 1/- per share (March 31, 2020 : '' 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 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 of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.
(C) Nature and Purpose of Reserves
(a) Capital reserve
During amalgamation/ merger approved by honourable court, the excess of net assets taken over the consideration paid, if any, is treated as capital reserve. This capital reserve has arisen as a result of scheme of amalgamation in the past periods.
(b) Securities premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
(c) General reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations adjusted by utilisation of reserve in accordance with scheme of Amalgamation in earlier years. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.
(a) The Company has availed a secured loan of '' 108 Crores against sanctioned amount of '' 300 crores from CITI bank N.A. during financial year 2017-18.The current outstanding and sanctioned amount against the loan is '' Nil (March 31, 2020; '' 40.50 Crores). The loan was
obtained for the purpose of reimbursement of prior capital expenditure incurred by the company during 12 months previous to sanction date. The loan was having 15 months moratorium period and repayable in 8 quarterly instalments thereafter. This loan was secured by way of first exclusive charge by way of a hypothecation over the Companyâs all movable fixed assets both present and future situated at SP 181 to 189 and 191 (A), Industrial Area, Phase II, Neemrana, Alwar, Rajasthan, India. The Company has complied with all covenants throughout the reporting period. The said loan has been repaid on due date during the year including interest thereon.
(b) The company has availed secured loan of '' 250 crores (March 31, 2020: '' Nil) against the sanctioned term loan amount of '' 250 crores (March 31,2020: '' Nil) from CITI Bank N.A.The current outstanding amount against the loan is '' 250 Crores (March 31,2020: '' Nil).The
loan was obtained for the purpose of fresh capital expenditure and reimbursement of prior capital expenditure incurred by the company during the previous year. The term loan is repayable in 16 equated quarterly instalments commencing from 15th month from first drawdown. This term loan is secured by way of first exclusive charge by way of a hypothecation over the Companyâs all movable fixed assets both present and future situated at (i) SP 181 to 189 and 191 (A), Industrial Area, Phase II, Neemrana, Alwar, Rajasthan, India
(ii) Unit-1 Village Dharampur, Sai Road, Baddi, Dist Solan,Himachal Pradesh,(iii) Unit-II Village Gulerwala, Dist Solan, Baddi, Himachal Pradesh, (iv) Unit-I, Sector -10, Plot No 2A,BHEL Complex,Haridwar (v) Unit-II, Plot No 2A and 2D/1 Sector-10, Sidcul Industrial Area, Haridwar, Uttarakhand.
(c) The company has availed secured loan of '' 250 Crores (March 31, 2020 : '' Nil) against the sanctioned amount of '' 350 crores (March 31, 2020: '' Nil) from HDFC Bank Limited. The current outstanding amount against the loan is '' 241 Crores (March 31, 2020: '' Nil). The loan was obtained for the purpose of fresh capital expenditure and reimbursement of prior capital expenditure incurred by the company during 12 months of first drawdown.. The term loan is repayable in 16 quarterly instalments over the period of 5 years as per terms of agreement. This loan is secured by way of first exclusive charge by way of a hypothecation over the Companyâs all movable fixed assets, plant and machinery and all movable properties both present and future situated at (i) A-461/462,SP-215 and 204 & 204A, Matsya Industrial Area, Alwar, Rajasthan and (ii) SP-1-133,General Zone, RIICO Industrial Area, Ghiloth.
(d) The Company has satisfied all debt covenants prescribed in terms of term loan agreements.
(i) The Company has unabsorbed capital loss of '' 342.05 crores as on March 31, 2021 (previous year 368.55 crores) out of which capital loss of '' 219.75 crores will expire in financial year 2023-24 and capital loss of '' 122.30 crores will expire in financial year 2025-26, on which no deferred tax asset has been created by the management due to lack of probability of future capital gain against which such deferred tax assets can be realised. If the Company were able to recognise all unrecognised deferred tax assets, the profit after tax would have increased by '' 78.26 crores (Previous year '' 85.86 crore).
(ii) The union budget presented on February 1, 2021 which got enacted on March 28, 2021, made an important change by disallowing depreciation on goodwill for tax deduction retrospectively from April 01, 2020. Accordingly, the tax base of goodwill as on April 01, 2020 has become Nil. As a result of above amendment, there is difference between book base and tax base of goodwill resulting in recognition of deferred tax liability by '' 32.96 crores with consequential impact on deferred tax expense.
(iii) During the previous year, the Company had opted for reduced tax rate as per section 115BAA of the Income Tax Act, 1961 (introduced by the Taxation Laws (Amendment) Ordinance, 2019). Accordingly, the Company had recognised Provision for Income Tax for that year and re-measured its Deferred tax liability basis the rate prescribed in the said section and unutilised MAT credit entitlement was written off.
(iv) During the previous year, the Company had paid Final dividend to its shareholders for the year ended March 31, 2019 and Interim Dividend for the year ended March 31, 2020. This had resulted in payment of dividend distribution tax (DDT) amounting to '' 109.34 crores to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence DDT paid is charged to equity in previous year.
(v) Effective tax rate has been calculated on profit before tax.
(i) Trade Payables include due to related parties '' 15.85 crores (March 31, 2020 : '' 4.95 crores) {refer note 33(6)(D)}
(ii) The amounts are unsecured and non interest-bearing and are usually on varying trade term.
(iii) For terms and conditions with related parties. {refer to note 33(6)}
(iv) Trade payables includes acceptances of '' 64.11 crores (March 31,2020: '' 389.71 crores)
a) Information as required to be furnished as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) for the year ended March 31, 2021 is given below. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.
i) Principal amount and interest due thereon remaining unpaid to any supplier covered under MSMED Act, 2006 as at the end of each accounting year
ii) The amount of interest paid by the buyer in terms of section 16, of the MSMED Act,
2006 along with the amounts of the payment made to the supplier beyond the appointed day -
during each accounting year.
iii) The amount of interest due and payable for the period of delay in making payment -
(which have been paid but beyond the appointed day during the year) but without
adding the interest specified under MSMED Act, 2006
iv) The amount of interest accrued and remaining unpaid at the end of each accounting year. -
v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose
of disallowance as a deductible expenditure under section 23 of the MSMED Act, 2006 -
The total dues of Micro and Small Enterprises which were outstanding for more than stipulated period are '' Nil (March 31,2020 : '' Nil)
a) Provision for warranties and E-waste
(i) Warranties
A provision is recognized for expected warranty claims and after sales services on products sold during the last one to seven years, based on past experience of the level of repairs and defective returns. It is expected that significant portion of these costs will be incurred in the next financial year and all will be incurred within seven years after the reporting date. Assumptions used to calculate the provisions for warranties are based on current sales levels and current information available about defective returns based on one to seven years warranty period for all products sold and are consistent with those in the prior years. The assumptions made in relation to the current year are consistent with those in the prior year.
(ii) E-waste
A provision is recognised for probable e-waste liability based on "Extended Producer Responsibilityâ as furnished by the Company to Central Pollution Control Board in accordance with E-Waste Management Rules, 2016 notified by Government of India during the year. A provision for the expected costs of management of historical waste is recognised when the costs can be reliably measured. These costs are recognised as âOther expensesâ in the statement of profit and loss. As a part of acquisition of Lloyd business in earlier year, the seller company had agreed to ensure compliance with " extended producer responsibilityâ (EPR) in accordance with E- waste management rules, 2016 in
respect of sales made by the seller company in respect of Lloyd consumer durable business prior to date of business acquisition i.e. May 08, 2017. Further management has assessed liability under E-Waste management rules on year to year basis and same has been accounted for accordingly. Towards this, the seller company has paid an amount of '' 8.09 crore (March 31, 2020: '' 9.46 crore).
(v) Performance obligation
Sale of products: Performance obligation in respect of sale of goods is satisfied when control of the goods is transferred to the customer, generally on delivery of the goods and payment is generally due as per the terms of contract with customers.
Sales of services: The performance obligation in respect of maintenance services is satisfied over a period of time and acceptance of the customer. In respect of these services, payment is generally due upon completion of maintenance period based on time elapsed and acceptance of the customer. In certain non-standard contracts, where the Company provides warranties in service of consumer durable goods, the same is accounted for as a separate performance obligation and a portion of the transaction price is allocated based on its relative standalone prices. The performance obligation for the warranty service is satisfied over a period of time based on time elapsed.
C Undrawn committed borrowing facility
(a) The Company has availed fund based and non fund based working capital limits amounting to '' 235.00 crores (March 31, 2020 : '' 235.00 crores) from banks under consortium of Canara Bank, IDBI Bank Limited, Standard Chartered Bank, Axis Bank, ICICI Bank Limited, Yes Bank Limited and The Hong Kong and Shanghai Banking Corporation Limited. An amount of '' 217.12 crores remain undrawn as at March 31, 2021 (March 31, 2020 : '' 212.28 crores). Further The limit availed is secured by way of:
i) Pari-passu first charge with consortium banks by way of hypothecation on entire paid stocks consisting of raw material, work in progress, finished goods kept at Companyâs godown, factories and book debts along with receivables of the Company, both present and future.
ii) Pari-passu first charge with consortium banks by way of equitable mortgage of land and building at 14/3, Mathura Road, Faridabad.
iii) Pari-passu second charge with consortium banks by way of hypothecation of plant and machinery, generators, furniture and fixtures, electric fans and installations on which 1st charge is held with term lenders.
(b) The Company has availed a secured loan of '' 108 Crores against sanctioned amount of '' 300 crores from CITI bank N.A. during financial year 2017-18.The current outstanding and sanctioned amount against the loan is '' Nil (March 31, 2020; '' 40.50 Crores). The said loan has been repaid on due date during the year including interest thereon. The loan is closed during the year and an amount of '' Nil is undrawn as at March 31, 2021 (March 31, 2020: '' 192 crores).{refer note 15 (A) (a)}
(c) The company has availed secured loan of '' 250 Crores (March 31, 2020 : '' Nil) against the sanctioned amount of '' 350 crores (March 31, 2020: '' Nil) from HDFC Bank Limited. The current outstanding amount against the loan is '' 241 Crores (March 31, 2020: '' Nil).An amount of '' 100 crores is undrawn as at March 31, 2021. {refer note 15(A)(c)}
The Company has some sales tax and other tax related litigation of '' 12.93 crores (March 31, 2020: '' 13.99 crores) against which liability has been assessed as probable and adequate provisions have been made with respect to the same.
E Land situated at Ghiloth District, General Zone Industrial Area RIICO in the state of Rajasthan was allotted to the
Company for a consideration of '' 71.21 crores which was to be adjusted by rebate of '' 17.71 crores subject of fulfilment
of certain condition attached to grant. As at March 31, 2021, the Company is reasonably certain that it will fulfil the condition attached to the grant, accordingly grant related to assets has been recognised by the Company by deducting the same from carrying amount of related asset as per Ind AS 20 - "Government Grantâ
F The Company has outstanding obligation amounting to '' 0.80 crores (March 31, 2020: '' 1.65 crores) in respect of bonds given to central tax department against import of goods at concessional rate of basic custom duty. The Company expects to fulfil the obligation in due course of time.
G The Company has export obligation of '' 10.18 crore (March 31, 2020: '' Nil) on account of import duty exemption of
'' 0.50 crores (March 31, 2020: '' Nil) on capital goods under the Export Promotion Capital Goods (EPCG) scheme laid
down by the Government of India. The Company expects to fulfil the obligation in due course of time.
The average duration of the defined benefit plan obligation at the end of the reporting period is 21.98 years (March 31, 2020: 22.77 years)
i The plan assets are maintained with Bajaj Allianz Life Insurance Co.Ltd.
The Company expects to contribute '' 18.25 crores (March 31,2020 : '' 19.08 crores) to the plan during the next financial year.
''} The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.
I Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.
The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in an assumptions occurring at the end of the reporting period while holding all other assumption constraint. In practice it is unlikely to occur and change in some of the assumption may be correlated. When 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.
I The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
The segment reporting of the Company has been prepared in accordance with Ind AS-108, "Operating Segmentâ (specified under the section 133 of the Companies Act 2013 (the Act) read with Companies (Indian Accounting Standards) Rule 2015 (as amended from time to time) and other relevant provision of the Act). For management purposes, the Company is organized into business units based on its products and services and has six reportable segments as follows:
Operating Segments
Switchgears : Domestic and Industrial switchgears, electrical wiring accessories and capacitors.
Cables : Domestic cables and Industrial underground cables.
Lighting and Fixtures : Energy Saving Lamps (LED, Fixtures) and luminaries.
Electrical Consumer Durables : Fans, Water Heaters, Coolers, and Domestic Appliances Lloyd Consumer : Air Conditioner, Television, Refrigerator and Washing Machine
Others : Industrial motors, Pump, Water purifier, Solar, Personal Grooming
identification of Segments:
The Board of Directors monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segments have been identified on the basis of the nature of product / services and have been identified as per the quantitative criteria specified in the Ind AS.
Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "unallocableâ.
Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets, borrowings and other assets and liabilities that can not be allocated to a segment on reasonable basis have been disclosed as "unallocableâ.
There is no transfer of products between operating segments.
There are no customers having revenue exceeding 10% of total revenues
No operating segments have been aggregated to form the above reportable operating segments.
Finance income and costs on financial assets are not allocated to individual segments as the underlying instruments are managed on a group basis.
Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a group basis.
Capital expenditure consists of additions of property, plant and equipment, Capital work in progress and intangible assets.
The Company has reviewed its reportable segments effective April 01,2020. The product categories which are not strictly subscribing to a specific product segment has been carved out into a new product segment âOthersâ consisting of Motor, Pump, Solar, Personal Grooming and Water Purifier businesses. The comparative figures for earlier periods have been accordingly reclassified.
The related parties as per the terms of Ind AS-24,âRelated Party Disclosuresâ, (under the section 133 of the Companies Act 2013 (the Act) read with Companies (Indian Accounting Standards) Rules 2015 (as amended from time to time), as disclosed below:-
a) The transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free. The settlement for these balances occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2021, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2020: '' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
b) All the liabilities for post retirement benefits being âGratuityâ are provided on actuarial basis for the Company as a whole, accordingly the amount pertaining to Key management personnel are not included above.
c) Transactions with related parties are reported gross of Goods and Service Tax.
The Company has in place following employee stock purchase plan approved by shareholders of the Company in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) regulators, 2014 :
i) Havells Employee Long Term incentive Plan 2014 : In accordance with this scheme, 110,949 (March 31, 2020 : 169,597) share options of '' 1 each were granted, out of which 109,259 (March 31, 2020: 169,195) share options of '' 1 each were vested and allotted on April 14,2020 (March 31, 2020 : May 28, 2019) to eligible employees at '' 467.35 (March 31, 2020: '' 733.90) per share as contributed by these employees. As per the scheme, 50% of the shares are under lock in period of 13 months and balance 50% for 2 years. Also as per the scheme, the Company is obliged to pay 50% of the contribution made by eligible employees as retention bonus over a period of two years in equal instalments. Accordingly, a sum of '' 2.88 crores (March 31,2020 : '' 4.89 crores) has been recognised as employee stock purchase plan expense in note 28.
i) Havells Employee Stock Purchase Plan 2015 : In accordance with this scheme, 90,000 (March 31, 2020: 150,000) share options of '' 1 each were granted, vested and allotted on April 14,2020 (March 31, 2020: May 28, 2019) at '' 467.35 (March 31, 2020: '' 733.90) per share to eligible employees as contributed by the Company. As per the scheme, 78% of the shares are under lock in period of 13 months and remaining 22% are under lock in period for 2 years. Accordingly, a sum of '' 4.21 crores (March 2020 : '' 11.01 crores) has been recognised as employee stock purchase plan expenses in note 28.
) Havells Employee Stock Purchase Plan 2016 : In accordance with the said scheme, 13,157 (March 31,2020: 16,273) share options of '' 1 each were granted to eligible employees with graded vesting in three years starting from 2020. During the year, 10913 equity shares of '' 1 each (March 31,2020 : 10729 equity shares) were allotted at '' 467.35 (March 31, 2020 : '' 733.90) per share on April 14,2020. Accordingly, a sum of '' 0.50 crores (March 31, 2020: 1.16 crores) has been recognised as employee stock purchase plan expense in note 28 and balance outstanding of '' 0.64 crores (March 31,2020 : 0.64 crores) in note 14(B).
The management assessed that cash and cash equivalents, trade receivables, trade payables, other current financial assets and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the other financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
1) The fair value of unquoted instruments, other non-current financial assets and non-current financial liabilities is estimated by discounting future cash flows (DCF model) using rates currently available for debt on similar terms, credit risk and remaining maturities. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.
2) The fair values of the Companyâs interest-bearing borrowings are determined by using DCF method using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2021 was assessed to be insignificant.
3) Long-term receivables/payables are evaluated by the Company based on parameters such as interest rates, risk factors, individual creditworthiness of the counterparty and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: The fair value of financial instruments traded in active markets is based on quoted (unadjusted) market prices at the end of the reporting period for identical assets or liabilities.
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. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.
There are no transfers among levels 1, 2 and 3 during the year.
This section explains the judgement and estimates made in determining the fair value of financial assets that are:
a) Recognised and measured at Fair value
b) Measured at amortised cost and for which fair value is disclosed in financial statements
10 Financial risk management objectives and policies
The Companyâs principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include trade and other receivables, and cash and cash equivalents that are derived directly from its operations.
The Companyâs financial risk management is an integral part of how to plan and execute its business strategies. The Company is exposed to market risk, credit risk and liquidity risk.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors and Audit Committee. This process provides assurance to Companyâs senior management that the Companyâs financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective. In the event of crisis caused due to external factors such as caused by recent pandemic "COVID-19â, the management assesses the recoverability of its assets, maturity of its liabilities to factor it in cash flow forecast to ensure there is enough liquidity in these situations through internal and external source of funds. These forecast and assumptions are reviewed by board of directors.
The Board of Directors reviews and agrees policies for managing each of these risks which are summarized as below:
(a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits, investments, and foreign currency receivables and payables. The sensitivity analysis in the following sections relate to the position as at reporting date. The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets and liabilities. The sensitivity of the relevant Profit and Loss item and equity is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31, 2021 and March 31, 2020
(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. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense is denominated in foreign currency). Foreign currency exchange rate exposure is partly balanced by purchasing of goods from the respective countries. The Company basis their assessment believes that the probability of the occurrence of their forecasted transactions is not impacted by COVID-19 pandemic. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
Foreign currency risk sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD, EUR, AED, JPY, CNY and other currencies including KES, NPR, CHF, LKR, MWK, SLL and GBP exchange rates, with all other variables held constant. The impact on the Company profit before tax and equity is due to changes in the fair value of monetary assets and liabilities. Foreign currency exposures recognised by the Company that have not been hedged by a derivative instrument or otherwise are as under:
(ii) interest Rate Risk
I nterest rate is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long term debt obligation at floating interest rates. The Companyâs borrowings outstanding as at March 31, 2021 and March 31, 2020 comprise of long term loans.
(iii) Commodity Price Risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of industrial and domestic cable and other electronic items and therefore require a continuous supply of copper and aluminium being the major input used in the manufacturing. To mitigate the risk of supply and price fluctuations, Domestic and overseas sources are bench-marked to Optimize the allocation of business share among various sources. The Companyâs Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. The Company mitigated the risk of price volatility by entering Long Term & Short term contracts for the Purchase of these commodities basis estimated annual requirements.
(b) Credit Risk
Credit Risk is the risk that the counter party will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
(i) Trade Receivables and Contract Assets
Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by Trade Receivable buyout facility without recourse, letters of credit and other forms of security.
An impairment analysis is performed at each reporting date on trade receivables by lifetime expected credit loss method based on provision matrix. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables and contract assets as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
(ii) Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made in bank deposits and other risk free securities. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
The Companyâs maximum exposure to credit risk for the components of the balance sheet at 31 March 2021 is the carrying amounts. The Companyâs maximum exposure relating to financial instrument is noted in liquidity table below.
Trade Receivables and other financial assets are written off when there is no reasonable expectation of recovery, such as debtor failing to engage in the repayment plan with the Company.
(c) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Companyâs objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate source of financing through the use of short term bank deposits, short term loans, short term commercial papers and cash credit facility. Processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.
Maturity profile of financial liabilities
The table below provides the details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
For the purposes of Companyâs capital management, Capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Companyâs capital management is to safeguard its ability to continue as going concern and to ensure that it maintains an efficient capital structure and maximize shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2021 and March 31,2020 except for budgeting for cash flow projections considering the impact of ongoing pandemic COVID - 19. The Company monitors capital using gearing ratio, which is net debt divided by total capital plus net debt. Net debt is calculated as loans and borrowings less cash and cash equivalent.
15 The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the Company towards Provident Fund and Gratuity. The effective date from which the changes are applicable is yet to be notified and the final rules are yet to be framed. The Company will carry out an evaluation of the impact and record the same in the financial statements in the period in which the Code becomes effective and the related rules are published.
16 Consequent to the disruption caused due to COVID-19, the Company has made an assessment as at March 31, 2021 of recoverability of the carrying values of its assets such as property, plant and equipment, intangible assets having indefinite useful life, goodwill, inventory, trade receivables, and other current assets giving due consideration to the internal and external factors. Further, on account of continued spread of COVID-19 disease in the country, the Company has made timely and requisite changes in business model which has resulted in consistent growth across the product segments during the year. The Company is continuously monitoring the situation arising on account of COVID-19 and will make appropriate action required, if any.
17 The figures have been rounded off to the nearest crore of rupees upto two decimal places. The figure 0.00 wherever stated represents value less than '' 50,000/-.
18 Note No.1 to 33 form integral part of the balance sheet and statement of profit and loss.
Mar 31, 2019
1. Corporate Information
Havells India Limited (âthe Companyâ) is a public limited Company domiciled in India and incorporated on August 08, 1983 under the provisions of the Companies Act, 1956 having its registered office at 904, 9th Floor, Surya Kiran Building, K.G. Marg, Connaught Place, New Delhi-110001. The Company is listed on BSE Limited and National Stock Exchange of India Limited. The Company is consumer electrical/electronics and power distribution equipment manufacturer with products ranging from Industrial and Domestic Circuit Protection Switchgears, Cables, Motors, Pumps, Fans, Power Capacitors, LED Lamps and Luminaries for Domestic, Commercial and Industrial applications, Modular Switches, Water Heaters, Domestic Appliances, Water Purifier, Air conditioner, Television and washing machine covering the entire range of household, commercial and industrial electrical/ electronics needs. The Companyâs manufacturing facilities are located at Faridabad in Haryana, Alwar, Ghiloth and Neemrana in Rajasthan, Haridwar in Uttarakhand, Sahibabad in Uttar Pradesh, Baddi in Himachal Pradesh and Guwahati in Assam. The research and development facilities are located at Head office, Noida (Uttar Pradesh) and also at some of the plant units. These facilities have been approved by Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India, New Delhi.
The Financial statements were authorised by the Board of Directors for issue in accordance with resolution passed on May 29, 2019.
Notes:
1. Investment property represented, land and building being a premise at Greater Noida, Uttar Pradesh given on lease w.e.f May 12, 2016 on a long term basis. During the year Investment property was transferred to property, plant and equipment on premature termination of lease on November 29, 2018. The Company has decided to use the said property for normal business purpose and accordingly the same is transferred to property, plant and equipment.
2. At the end of the previous financial year the Company had obtained independent valuation from certified valuer for its investment property and had reviewed the fair valuation based on best evidence of fair value determined using replacement cost of an asset of equivalent utility, depreciation and obsolescence. Fair market value is the amount expressed in terms of money that may be reasonably be expected to exchange between a willing buyer and willing seller, with equity or both.
Management has performed a sensitivity analysis with respect to changes in assumptions for assessment of value-in-use of Goodwill and Trademark. Based on this analysis, management believes that change in any of above assumption would not cause any material change in carrying value of unitâs Goodwill/Trademark.
Notes:-
(a) The Company has entered in to an agreement with a customer wherein the Company has identified two performance obligations in contract as per Ind AS 115 âRevenue from contract with customersâ . The Companyâs right to receive consideration is conditional upon satisfaction of both performance obligation. Accordingly, Company has recognised contract asset in respect of performance obligation satisfied during the year. Contract assets are in the nature of unbilled receivables which arises when Company satisfies a performance obligation but does not have an unconditional rights to consideration.
(b) The Company has entered into the agreements with customers for supply of products with extended warranty and annual maintenance contract. Accordingly, the Company has identified additional performance and recognised the same as contract liabilities in respect of contracts where the Company has obligation to perform specified services to a customer for which the Company has received consideration.
Notes:
(a) Trade receivables are usually non-interest bearing and are on trade terms of 30 to 60 days.
(b) No trade or other receivables are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade or other receivables are due from firms or private companies respectively in which any director is a partner, a director or a member,
(c) The Company has availed Receivable Buyout facility from banks against which a sum of Rs. 649.15 crores (March 31, 2018: Rs. 648.99 crores) has been utilised as on the date of Balance Sheet. The Company has assigned all its rights and privileges to the bank and there is no recourse on the company. Accordingly the amount of utilisation has been reduced from trade receivables. A sum of Rs. 35.21 crores (March 31, 2018: Rs. 28.91 crores) have been charged on account of this facility.
(d) The Company has arranged channel finance facility for its customers from banks against which a sum of Rs. 627.98 crores (March 31, 2018: Rs. 593.37 crores) has been utilised as on the date of Balance Sheet and correspondingly, the trade receivables stand reduced by the said amount as there is no recourse on the Company
Notes:
(a) There are no restrictions with regard to cash and cash equivalents as at the end of the reporting period and prior period.
(b) Short-term deposits are made of varying periods between one date to three months depending on the immediate cash requirements of the Company and earn interest at the respective short-term deposits rates.
(c) Changes in liabilities arising from financing activities
Notes:
(a) Escrow account represents amount held in a fixed deposit with bank under escrow arrangement with âLEEL Electricals Limitedâ on account of final settlement of Lloyd business acquisition which is closed in current year.
(b) The deposits maintained by the Company with banks comprise of the time deposits which may be withdrawn by the Company at any point of time without prior notice and are made of varying periods between one day to twelve months depending on the immediate cash requirements of the Company and earn interest at the respective short-term deposit rates.
(c) Fixed deposit with original maturity of more than twelve months but remaining maturity of less than twelve months have been disclosed under other bank balances.
(d) The Company can utilise the balance towards settlement of unclaimed dividend.
c) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.1/- per share (March 31,2018 : Rs.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 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 of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Notes:
(a) Shareholding of Smt Vinod Gupta as at March 31,2019 is below 5%, however figures have been disclosed for comparative purpose.
(b) Shareholding of ARG Family Trust as at March 31, 2018 is below 5%, however figures have been disclosed for comparative purpose.
e) Shares reserved for issue under Employee Stock purchase plan
I nformation relating to employee stock purchase plan, including details of option issued, exercised and lapsed during the financial year and options outstanding as at end of the reporting period are set out in note 33 (9).
(C) Nature and Purpose of Reserves
(a) Capital reserve
During amalgamation/ merger approved by honourable court, the excess of net assets taken over the consideration paid, if any, is treated as capital reserve.
(b) Securities premium
The amount received in excess of face value of the equity shares is recognised in securities premium reserve. In case equity - settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium reserve. This reserve is utilised in accordance with the provisions of the Companies Act, 2013.
(c) General reserve
The reserve arises on transfer portion of the net profit pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
(d) Share options outstanding account
The fair value of the equity settled âshare base payment transactionsâ is recognised to share options outstanding account.
Notes:
(a) The Company has availed a secured loan of Rs. 94.50 Crores (March 31, 2019: Rs. 108 Crores) against sanctioned amount of Rs. 285.00 crores from CITI bank N.A. as of March 31, 2019. The loan was obtained for the purpose of reimbursement of prior capital expenditure incurred by the company during 12 months previous to sanction date. The loan was having 15 months moratorium period and repayable in 8 quarterly instalments thereafter. This loan is secured by way of first exclusive charge by way of a hypothecation over the Companyâs all movable fixed assets both present and future situated at SP 181 to 189 and 191 (A), Industrial Area, Phase II, Neemrana, Alwar, Rajasthan, India with an minimum fixed assets coverage ratio of 1.1x. The Company has complied with these covenants throughout the reporting period.
(b) The Company has not defaulted on any loans payable during the year and has satisfied all debt covenants prescribed in terms of term loan.
Notes:
a) There was unabsorbed capital loss of Rs. 368.85 crores as on March 31, 2019 (previous year 369.28 crores) with expiry in financial year 2023-24 on which no deferred tax asset has been created by the management due to lack of probability of future capital gain against which such deferred tax assets can be realised. If the Company were able to recognise all unrecognised deferred tax assets, the profit after tax would have increased by Rs. 85.92 crores (Previous year 86.02 Crore).
b) During the year the Company has paid dividend to its shareholders for the year ended March 31, 2018, This has resulted in payment of corporate dividend tax (CDT) amounting to Rs. 51.43 crores to the taxation authorities. The Company believes that CDT represents additional payment to taxation authority on behalf of the shareholders. Hence CDT paid is charged to equity
c) Effective tax rate has been calculated on profit before tax.
* Trade Payables include due to related parties Rs. 5.11 crores (March 31, 2018 : Rs. 7.10 crores) {refer note 33(8)(D)}
* The amounts are unsecured and non interest-bearing and are usually paid within 30 to 90 days of recognition.
* For terms and conditions with related parties. {refer to note 33(8)}
* Trade payables includes acceptances of Rs. 281.76 Crores (March 31, 2018: Rs. 289.50)
a) Information as required to be furnished as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) for the year ended March 31, 2019 is given below. This information has been determined to the extent such parties have been identified on the basis of information available with the Company
a) Investor Education and Protection Fund is being credited by the amount of unclaimed dividend after seven years from the due date. The Company has transferred Rs. 0.07 crores (March 31,2018: Rs. 0.03 crore) out of unclaimed dividend to Investor Education and Protection Fund of Central Government in accordance with the provisions of section 124 of the Companies Act,2013.
b) Monies collected on behalf of banks and remitted after the balance sheet date.
c) Purchase consideration payable is related to amount payable in respect of acquisition of Lloyd business which was closed in current year.
a) Provision for warranties and E-waste
(i) Warranties
A provision is recognised for expected warranty claims and after sales services on products sold during the last one to five years, based on past experience of the level of repairs and defective returns. It is expected that significant portion of these costs will be incurred in the next financial year and all will be incurred within five years after the reporting date. Assumptions used to calculate the provisions for warranties are based on current sales levels and current information available about defective returns based on one to five years warranty period for all products sold.
(ii) E-waste
A provision is recognised for probable e-waste liability based on âExtended Producer Responsibilityâ as furnished by the Company to Central Pollution Control Board in accordance with E-Waste Management Rules, 2016 notified by Government of India during the earlier year. A provision for the expected costs of management of historical waste is recognised when the costs can be reliably measured. These costs are recognised as âOther expensesâ in the statement of profit and loss. As a part of acquisition of Lloyd business in previous year, The seller company had agreed to ensure compliance with â extended producer responsibilityâ (EPR) in accordance with E- waste management rules, 2016 in respect of sales made by the seller company in respect of lloyd consumer durable business prior to date of business acquisition i.e. May 08, 2017. Towards this, the seller company has paid an amount of Rs. 12.02 crore .
b) Provision for litigations
Provision for litigation amounting to Rs. 7.60 Crores (March 31, 2018: â7.70 Crores) is created against demands raised in various ongoing litigations under Value Added Tax and Entry Tax in various states. Based on the facts of the case and legal precedents ,the management believes there would be a probable outflow of resources and accordingly, has created a provision in books of account.
The table below gives information about movement in litigation provisions:
Notes:
(a) Sale of products and scrap sales as reported above includes excise duty collected from customers of Rs. Nil (March 2018: Rs. 121.01 crores) and Rs. Nil (March 31, 2018 : Rs. 0.69 crores) respectively. Sale of Products and scrap sales net of excise duty are Rs. 9,959.72 crores (March 31, 2018: Rs. 8,057.30 crores) and Rs. 51.28 crores (March 31, 2018 : Rs. 39.06 crores) respectively. Effective July 01, 2017, the Government of India has implemented Goods and Service Tax (âGSTâ) replacing Excise Duty, Service Tax and various other indirect taxes. The Company collects GST on behalf of the Government. Hence, GST is not included in Revenue from contract with customers. In view of the aforesaid change in indirect taxes, Revenue from operations for the year ended March 31, 2019 is not comparable with March 31, 2018.
(b) Government assistance for refund of Goods and Service Tax represents benefits provided by the Government to the Company in respect of its manufacturing units in the state of Assam, Himachal Pradesh and Uttarakhand in accordance with the âScheme of budgetary support under Goods and Service Tax Regimeâ as notified on October 05, 2017 which were earlier eligible for excise duty exemption. {refer accounting policy 2.16}
(v) Performance obligation
Sale of products: Performance obligation in respect of sale of goods is satisfied when control of the goods is transferred to the customer, generally on delivery of the goods. {refer accounting policy 2.13}.
Sales of services: The performance obligation in respect of installation services is satisfied upon completion of installation and acceptance of customer. In respect of maintenance services, performance obligation is satisfied over a period of time and acceptance of the customer. {refer accounting policy 2.13}.
The transaction price allocated to remaining performance obligation (unsatisfied performance obligation) pertaining to sales of services as at March 31, 2019 is as follows:-
(a) The Company is contesting these demands and the management, including its tax advisors, believe that its favourable position will likely to be upheld in the appellate process and accordingly no provision has been accrued in the financial statements for these tax demand raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Companyâs financial position and results of operations.
Based on favourable decisions in similar cases and discussions with the advisor, the Company does not expect any liability against these matters and hence no provision has been considered in the books of accounts. Besides the above, show cause notices from various departments received by the Company have not been treated as contingent liabilities, since the Company has adequately represented to the concerned departments and does not expect any liability on this account.
C Undrawn committed borrowing facility
(a) The Company has availed working capital limits amounting to Rs. 195.00 crores (March 31, 2018 : Rs. 200 crores) from banks under consortium of Canara Bank, IDBI Bank Limited, Standard Chartered Bank, ICICI Bank Limited, Yes Bank Limited and The Hong Kong and Shanghai Banking Corporation Limited. An amount of Rs. 195.00 crores remain undrawn as at March 31, 2019 (March 31, 2018 : Rs. 199.87 crores). Further The limit availed is secured by way of:
i) Pari-passu first charge with consortium banks by way of hypothecation on entire stocks of raw materials, semifinished goods, finished goods, stores and spares, bill receivables, book debts and all movable and other current assets of the Company.
ii) Pari-passu first charge with consortium banks by way of equitable mortgage of land and building at 14/3, Mathura Road, Faridabad.
iii) Pari-passu first charge with other consortium lenders by way of hypothecation of plant and machinery generators, furniture and fixtures, electric fans and installations.
(b) The Company has availed a secured loan of Rs. 94.50 Crores (March 31, 2019: Rs. 108 Crores) against sanctioned amount of Rs. 285.00 crores from CITI bank N.A. as of March 31, 2019. The loan was obtained for the purpose of reimbursement of prior capital expenditure incurred by the company during 12 months previous to sanction date. The loan was having 15 months moratorium period and repayable in 8 quarterly instalments thereafter. This loan is secured by way of first exclusive charge by way of a hypothecation over the Companyâs all movable fixed assets both present and future situated at SP 181 to 189 and 191 (A), Industrial Area, Phase II, Neemrana, Alwar, Rajasthan, India with an minimum fixed assets coverage Ratio of 1.1x. The Company has not defaulted on any loans payable during the year and has satisfied all debt covenants prescribed in terms of term loan.
D Other Litigations
The Company has some sales tax and other tax related litigation of Rs. 7.60 crores (March 31, 2018: Rs. 7.70 crores) against which liability has been assessed as probable and adequate provisions have been made with respect to the same.
E Leases
Operating lease commitments - Company as lessee
a) The Company has taken various residential/commercial premises under cancellable operating leases. These lease agreements are normally renewed on expiry. There are no restrictions placed upon the Company by entering into these leases and there are no subleases. The annual increments are expected to be in line with the expected general inflation to compensate the lessor for the expected inflationary cost increase.
b) The Company has also taken few commercial premises under non-cancellable operating leases. There are no restrictions placed upon the Company by entering into these leases and there are no subleases. Normally there are renewal and escalation clauses in these contracts. The total of future minimum lease payments in respect of such leases are as follows:
Operating lease commitments - Company as lessor
a) The Company had entered into a sub-lease agreement to sublet a property situated at Kasna, Noida, which was considered as âInvestment Propertyâ. The lease agreement was executed on May 12, 2016. The Company has decided to use the said property for normal business purpose and accordingly, the same was transferred to property, plant and equipment.
b) The total rent recognised as income during the year is Rs. 7.62 crores (March 31, 2018 : Rs. 6.92 crores). Present value of minimum rentals receivable under non-cancellable operating leases as at March 31,2019 are, as follows:
F During the previous year, land measuring 50 acres situated at Ghiloth District , General Zone Industrial Area RIICO in the state of Rajasthan has been allotted to the Company for a consideration of Rs. 71.21 crores. This consideration will be adjusted by way of rebate of Rs. 17.71 crores only after, the Company will incur total investment of Rs. 260.00 crores by November 2019 and an additional amount of Rs. 192.00 crores by March 2022, till March 31,2019 the Company has capitalised Rs. 177.95 crores in property, plant and equipment and Rs. 165.38 crores in Capital work in progress. Till then the Company has considered the rebate as a separate liability
G The Company has given bonds amounting to Rs. 1.09 crores (March 31, 2018: 0.08 crores) to central tax department against import of goods without payment of basic custom duty
2. OTHER NOTES ON ACCOUNTS
1 Change in interest in subsidiaries and joint venture
(a) During the current year wholly owned subsidiary of the Company âHavells Exim Limitedâ has been placed in to voluntary liquidation on December 04, 2018. Accordingly the Company has recognised impairment of investments in subsidiary Company of Rs. 0.10 Crores as disclosed in note 6 to the financial statements in accordance with Ind AS-27 âSeparate Financial Statementsâ.
(b) During the previous year, the Company and its joint venture partner in respect of Jiangsu Havells Sylvania Lighting Co. Limited, have applied for liquidation and formed a liquidation committee. The Company will receive agreed consideration of USD 2.5 million. Accordingly, the investment in joint venture has been classified as asset held for sale, recognised and measured in accordance with Ind-AS 105 âNon-Current Assets Held for Sale and Discontinued Operationsâ at lower of its carrying amount and fair value less cost to sell. The Company is not liable for losses incurred by the joint venture as the Company will received agreed consideration upon completion of liquidation and accordingly the investment has been measured at lower of its caring amount and fare value less cost to sell.
(c) During the year, the Company has acquired an additional 31.08% equity interest in âPromptec Renewable Energy Solutions Private Limitedâ, increasing its ownership interest to 100% for a consideration of Rs. 16.66 crore.
(d) During the previous year, Havells Holdings Limited, a wholly owned subsidiary of the Company completed sales of remaining 20% stake in Feilo Malta Limited and 100% stake in Havells Sylvania (Thailand) Limited to Shanghai Feilo Acoustics Company Limited, China based listed Company. Consequent to this, the Company reversed impairment loss recognised on investment in earlier years amounting to Rs. 11.91 Crores on such investments and reported as exceptional item in statement of profit and loss account.
2 Scheme of Amalgamation
During the year, the board of director vide their approval dated September 21, 2018 has approved the Scheme of Amalgamation, accordingly the Company has filed (âthe Schemeâ) under section 230 to 232 of Companies Act 2013 with National Company law tribunal(âNCLTâ), among the Company and its wholly owned subsidiary companies, namely Promptec Renewable Energy Solutions Private Limited. (âPromptecâ), Standard Electrical Limited (âStandard Electricalâ), Lloyd Consumer Private Limited (âLloyd Consumerâ) and Havells Global Limited (âHavells Globalâ) which is subject to the approval of NCLT. The Company has received approvals from its shareholders and creditors at their meeting held on January 28, 2019 .The appointed date of the scheme is April 01, 2018. Further the NCLT order is awaited and the effect of the scheme would be recognised on receipt of the statutory approvals and scheme becoming effective in accordance with Appendix âCâ of Ind AS 103 âBusiness combinationâ. Management has evaluated that synergies created out of such merger shall generate operating benefit to the Company which are estimated to be significantly higher than the carrying value of investments in its books.
3 Investment in subsidiaries and joint ventures
(a) These financial statement are separate financial statements prepared in accordance with Ind AS-27 âSeparate Financial Statementsâ.
(b) The Company âs investments in subsidiaries are as under:
(c) The Companyâs investment in Joint venture is as under:
4 During the year, the Company has capitalised the following directly relatable cost to the cost of tangible fixed assets, being expenses related to projects and development of Dies and Fixtures. Consequently, expenses disclosed under the respective notes are net of amounts capitalised by the Company.
The Research and Development facilities are located at the Head office, Noida and at some plants of the Company which are approved by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Govt. of India. The Company is entitled to a weighted deduction of 150% of the eligible expenditure incurred at these units under section 35 (2AB) of the Income Tax Act, 1961.
5 Gratuity and other post-employment benefit plans
Disclosures pursuant to Ind AS - 19 âEmployee Benefitsâ(notified under the section 133 of the Companies Act 2013 (the Act) read with Companies (Indian Accounting Standards) Rule 2015 (as amended from time to time) and other relevant provision of the Act) are given below :
There are numerous interpretative issues relating to Supreme Court (SC) judgement dated February 28, 2019 on Provident Fund on the inclusion of allowances for the purpose of PF contribution as well as its applicability of effective date. The company is evaluating and seeking legal inputs regarding various interpretative issues.
Defined Benefit Plan
The employeesâ Gratuity Fund Scheme, which is a defined benefit plan, is managed by the trust which maintains its investments with Life Insurance Corporation of India (LIC) . Under the gratuity plan, every employee who has completed at least five years of service usually gets a gratuity on departure @ 15 days of last drawn basic salary for each completed year of service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The following tables summaries the components of net benefit expense recognised in the statement of profit or loss and the funded status and amounts recognised in the balance sheet for the respective plans:
j) The average duration of the defined benefit plan obligation at the end of the reporting period is 23.36 years (March 31, 2018: 23.64 years) k) The plan assets are maintained with Life Insurance Corporation of India (LIC).
l) The Company expects to contribute Rs. 19.38 crores (March 31,2018 : Rs. 12.19 crores) to the plan during the next financial year.
m) The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary n) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.
o) The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
6 Segment Reporting
The segment reporting of the Company has been prepared in accordance with Ind AS-108, âOperating Segmentâ (specified under the section 133 of the Companies Act 2013 (the Act) read with Companies (Indian Accounting Standards) Rule 2015 (as amended from time to time) and other relevant provision of the Act). For management purposes, the Company is organised into business units based on its products and services and has five reportable segments as follows:
a) Operating Segments
Switchgears : Domestic and Industrial switchgears, electrical wiring accessories, industrial motors, pumps and capacitors.
Cables : Domestic cables and Industrial underground cables.
Lighting and Fixtures : Energy Saving Lamps (LED, Fixtures), Solar and luminaries.
Electrical Consumer Durables : Fans, Water Heaters, Coolers, Personal Grooming, Water Purifier, and
Domestic Appliances Lloyd Consumer : Air Conditioner, Television and Washing Machine
b) Identification of Segments:
The Board of Directors monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segments have been identified on the basis of the nature of product / services and have been identified as per the quantitative criteria specified in the Ind AS.
c) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as âOthersâ.
d) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets, borrowings and other assets and liabilities that can not be allocated to a segment on reasonable basis have been disclosed as âOthersâ.
e) There is no transfer of products between operating segments.
f) There are no customers having revenue exceeding 10% of total revenues
7 Related party transactions
The related parties as per the terms of Ind AS-24,âRelated Party Disclosuresâ, (under the section 133 of the Companies Act 2013 (the Act) read with Companies (Indian Accounting Standards) Rule 2015 (as amended from time to time), as disclosed below:-
# Havells International Limited (WOS of Havells Holdings Limited) hold 49% equity interest in Thai Lighting Assets Co. Ltd. However the said Company has majority representation on Board of Directors of the entity and approval of the said Company is required for all major operational decision and the operations are solely carried out for the benefit of the Company. Based on facts and circumstances, management determine that in substance the Company control this entity and therefore reported the same as controlled entities. The company is currently in liquidation.
(ii) Joint Venture
Jiangsu Havells Sylvania Lighting Co. Limited
50% ownership interest held by Company.(Under Liquidation)
(B) Names of other related parties with whom transactions have taken place during the year :
(i) Enterprises in which directors are interested
QRG Enterprises Limited QRG Foundation Guptajee & Company
QRG Central Hospital and Research Centre Ltd QRG Medicare limited
(ii) Post employee benefit plan for the benefitted employees
Havells India Limited Employees Gratuity Trust
(iii) Key Management Personnel
Shri Anil Rai Gupta, Chairman and Managing Director Shri Rajesh Kumar Gupta, Director (Finance) and Group CFO Shri Ameet Kumar Gupta, Director Shri Sanjay Kumar Gupta, Company Secretary
(iv) Non executive Directors
Shri Vijay Kumar Chopra Dr. Adarsh Kishore
Shri Sunil Behari Mathur (Retired on May 24, 2017)
Shri Surender Kumar Tuteja
Smt. Pratima Ram
Shri Vellayan Subbiah
Shri Puneet Bhatia
Shri T V Mohandas Pai
Shri Surjit Kumar Gupta
Shri Jalaj Ashwin Dani (w.e.f August 16, 2017)
Shri U K Sinha (w.e.f March 01, 2018)
a) The transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free except a loan given to wholly owned subsidiary âPromptec Renewable Energy Solutions Private Limitedâ. The settlement for these balances occur in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2019, the Company has not recorded any impairment of receivables relating to amounts owed by related parties .This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
b) All the liabilities for post retirement benefits being âGratuityâ are provided on actuarial basis for the Company as a whole, accordingly the amount pertaining to Key management personnel are not included above.
c) Purchase of goods and sale of goods has been reported gross off Goods and Service Tax.
8 Share based payments
The Company has in place following employee stock purchase plan approved by shareholder of the Company in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) regulators, 2014 :
a) Havells Employee Long Term Incentive Plan 2014 : In accordance with this scheme, 167,135 (March 31, 2018 : 139, 673) shares of Rs. 1 each were granted, vested and allotted on May 10, 2018 (March 31, 2018 : May 11, 2017) to eligible employees at Rs. 553.90 (March 31, 2018 : Rs. 502.15) per share as contributed by these employees. As per the scheme, 50% of the shares are under lock in period of 13 months and balance 50% for 2 years. Also as per the scheme, the Company is obliged to pay 50% of the contribution made by eligible employees as retention bonus over a period of two years in equal installments. Accordingly, a sum of Rs. 3.85 crores (March 31, 2018 : Rs. 3.04 crores) has been recognised as employee stock purchase plan expense in note 28.
b) Havells Employee Stock Purchase Plan 2015 : In accordance with this scheme, 150,000 (March 31, 2018: 150,000) shares of Rs. 1 each were granted, vested and allotted on May 10, 2018 (March 31, 2018 : May 11, 2017) at Rs. 553.90 (March 31, 2018 : Rs. 502.15) per share to eligible employees as contributed by the Company. As per the scheme, 78% of the shares are under lock in period of 13 months and remaining 22% are under lock in period for 2 years. Accordingly, a sum of Rs. 8.31 crores (March 2018 :Rs. 7.53 crores) has been recognised as employee stock purchase plan in note 28.
c) Havells Employee Stock Purchase Plan 2016 : In accordance with the said scheme, 11,533 (March 31, 2018: 10,377) shares of Rs. 1 each were granted to eligible employees with graded vesting in three years starting from 2018. During the year, 7302 equity shares of Rs. 1 each (March 31, 2018 : 3458 equity shares) were allotted at Rs. 553.90 (March 31, 2018 : Rs. 502.15) per share on May 10, 2018. Accordingly, a sum of Rs. 0.67 crores has been recognised as employee stock purchase plan expense in note 28 and balance outstanding of Rs. 0.27 crores in note 14.
The weighted average share price at the date of exercise of options exercised during the year ended March 31, 2019 was Rs. 495.83 per share (March 31, 2018 : Rs. 471.20)
No options expired during the period covered in the above table
The fair value at grant date of options granted during the year ended March 31, 2019 was Rs. 549.12 per share (March 31, 2018 was Rs. 496.74 per share). The fair value at the grant date is determined using Black Scholes valuation model which takes into account the exercise price , the terms of the options , the share price at grant date and expected price volatility of the underlying shares , the expected dividend yield and the risk free interest rate for the term of the option.
(iv) The expected price volatility is based on the historical volatility (based on remaining life of the options), adjusted for any expected change to future volatility due to publically available information.
9 Corporate Social Responsibility
As per provisions of section 135 of the Companies Act, 2013, the Company has to incur at least 2% of average net profits of the preceding three financial years towards Corporate Social Responsibility (âCSRâ). Accordingly, a CSR committee has been formed for carrying out CSR activities as per the Schedule VII of the Companies Act, 2013. The Company has contributed a sum of Rs. 17.44 crores (March 31, 2018: Rs. 14.95 crores) towards this cause and charged the same to the Statement of Profit And Loss. The funds are primary allocated to QRG foundation, a society exempted under section 12A of the Income Tax Act, 1961 for undertaking Mid-Day meal scheme and Aga Khan Foundation India, a private non-profit foundation registered u/s 592 of Companies Act, 1956 engaged in restoration and conservation of various heritage monuments, Kerala relief fund and construction of bio toilets.
10 Fair value measurements
Set out below, is a comparison by class of the carrying amounts and fair value of the Companyâs financial instruments and investment property:
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
1) The fair value of unquoted instruments, loans from banks and other financial liabilities, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. In addition to being sensitive to a reasonably possible change in the forecast cash flows or the discount rate, the fair value of the equity instruments is also sensitive to a reasonably possible change in the growth rates. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.
2) The fair values of the Companyâs interest-bearing borrowings and loans are determined by using effective interest rate (EIR) method using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2019 was assessed to be insignificant.
3) Long-term receivables/payables are evaluated by the Company based on parameters such as interest rates, risk factors, individual creditworthiness of the counterparty and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
4) The Company had an investment property in current year which was transferred to property, plant and equipment upon termination of lease. In last year, the Company had obtained independent valuation for its investment property as at March 31, 2018 and has reviewed the fair valuation based on best evidence of fair value determined using replacement cost of an asset of equivalent utility, depreciation and obsolescence. Fair market value is the amount expressed in terms of money that may be reasonably be expected to be exchanged between a willing buyer and a willing seller, with equity or both. The valuation by the valuer assumes that Company shall continue to operate and run the assets to have economic utility. The fair value is on âas is whereâ basis. All resulting fair value estimates for investment property are included in Level 3.
5) Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data
11 Financial risk management objectives and policies
The Companyâs principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include loans, trade and other receivables, and cash and cash equivalents that are derived directly from its operations.
The Companyâs financial risk management is an integral part of how to plan and execute its business strategies. The Company is exposed to market risk, credit risk and liquidity risk.
The Companyâs senior management oversees the management of these risks. The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors and Audit Committee. This process provides assurance to Companyâs senior management that the Companyâs financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective.
The Board of Directors reviews and agrees policies for managing each of these risks which are summarised as below:
(a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits, investments , and foreign currency receivables and payables. The sensitivity analysis in the following sections relate to the position as at reporting date. The analysis exclude the impact of movements in market variables on the carrying values of gratuity and other post-retirement obligations, provisions and the non-financial assets and liabilities. The sensitivity of the relevant Profit and Loss item and equity is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31, 2019.
(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. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense is denominated in foreign currency). Foreign currency exchange rate exposure is partly balanced by purchasing of goods from the respective countries. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
Foreign currency risk sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD, LKR ,EUR. AED, NPR, JPY,CNY, KES, CHF and GBP exchange rates, with all other variables held constant. The impact on the Company profit before tax and equity is due to changes in the fair value of monetary assets and liabilities. Foreign currency exposures recognised by the Company that have not been hedged by a derivative instrument or otherwise are as under:
(Ii) Interest Rate Risk
I nterest rate is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long term debt obligation at floating interest rates. The Companyâs borrowings outstanding as at March 31, 2019 comprise of term loan and working capital demand loan.
Interest rate Sensitivity of Borrowings
With all other variables held constant, the following table demonstrates the sensitivity to a reasonably possible change in interest rates on floating rate portion of loans and borrowings.
(iii) Commodity Price Risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of industrial and domestic cable and other electronic items and therefore require a continuous supply of copper and aluminum, being the major input used in the manufacturing. Due to the significantly increased volatility of the price of the copper and aluminum, the Company has entered into various purchase contracts for these material for which there is an active market The Companyâs Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. The Company mitigated the risk of price volatility by entering into the contract for the purchases of these material considering quantity discounts based on annual achievement of quantity targets.
(b) Credit Risk
Credit Risk is the risk that the counter party will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
(i) Trade Receivables
Customer credit risk is managed by each business unit subject to the Companyâs established policy procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by Trade Receivable buyout facility without recourse, letters of credit and other forms of security. As at March 31, 2019, the Company had 59.17% (March 31,2018: 65.48%) of its trade receivable discounted from banks under Trade Receivable buyout facility. Out of the remaining debtors, the Company has 10 customers that owed the Company approx. Rs. 198.23 crores(March 31,2018 : 213.02 crores) and accounted for 44.26% (March 31,2018 : 63.38%) of remaining trade receivables.
An impairment analysis is performed at each reporting date on trade receivables by lifetime expected credit loss method based on provision matrix. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
(ii) Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made in bank deposits and other risk free securities. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
The Companyâs maximum exposure to credit risk for the components of the balance sheet at 31 March 2019 is the carrying amounts . The Companyâs maximum exposure relating to financial instrument is listed in liquidity table below.
Trade Receivables and other financial assets are written off when there is no reasonable expectation of recovery, such as debtor failing to engage in the repayment plan with the Company
(c) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Companyâs objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate source of financing through the use of short term bank deposits and cash credit facility. Processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.
Maturity profile of financial liabilities
The table below provides the details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
12 Capital Management
For the purposes of Companyâs capital management, capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Companyâs capital management is to safeguard its ability to continue as going concern and to ensure that it maintains an efficient capital structure and maximize shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2019 and March 31, 2018. The Company monitors capital using gearing ratio, which is net debt divided by total capital plus net debt. Net debt is calculated as loans and borrowings less cash and cash equivalent.
13 Events occurring after balance sheet date
Refer to note 33(15) for the final dividend recommended by the Directors which is subject to approval of the shareholders in the ensuing annual general meeting.
14 The figures have been rounded off to the nearest crore of rupees upto two decimal places. The figure 0.00 wherever stated represents value less than Rs. 50,000/-.
15 Note No.1 to 33 form integral part of the balance sheet and statement of profit and loss.
Mar 31, 2018
1 Investment property represent, land and building being a warehouse in Greater Noida, Uttar Pradesh given on lease w.e.f May 12, 2016 on a long term basis. Refer note 31(E) for lease disclosure.
2 The Company has obtained independent valuation from certified valuer for its investment property as at March 31, 2018 and has reviewed the fair valuation based on best evidence of fair value determined using replacement cost of an asset of equivalent utility, depreciation and obsolescence. Fair market value is the amount expressed in terms of money that may be reasonably be expected to be exchanged between a willing buyer and a willing seller, with equity or both. The valuation by the valuer assumes that Company shall continue to operate and run the assets to have economic utility. The fair value is on "as is where" basis. All resulting fair value estimates for investment property are included in Level 3 and disclosed in note 32 (10).
3 There are no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance and enhancements thereof and there are no restriction on remittance of income and proceeds of disposal.
4 The investment Property is a leasehold property and reliability of Investment property is subject to terms and conditions as mentioned under the lease deed entered on November 20, 2009 with Greater Noida Industrial Development Authority, District-Gautam Budha Nagar.
Impairment testing of goodwill and intangible assets with indefinite lives
Goodwill and Trademarks acquired on acquisition of Lloyd business having indefinite useful lives have been allocated to a separate single cash generating unit i.e. LLOYD consumer which is also an operating and reportable segment for impairment testing. The Company has performed an annual impairment test to ascertain the recoverable amount of goodwill and Trademarks. The recoverable amount is determined based on value in use calculation. These calculations uses management assumptions and pre tax cash flow projections based on financed budgets approved by management covering a 5 years period. Cash flow projection beyond 5 years time period are extrapolated using the estimated growth rates which is consistent with forecasts included in industry reports specific to industry in which CGU operates. Management has determined following assumptions for impairment testing of Goodwill and Trademarks as stated below.
Management has performed a sensitivity analysis with respect to changes in assumptions for assessment of value-in-use of Goodwill and Trademark. Based on this analysis, management believes that change in any of above assumption would not cause any material possible change in carrying value of unit''s Goodwill/Trademark over and above its recoverable amount.
(b) The stock of scrap materials have been taken at net realizable value.
(c) Inventories are hypothecated with the bankers against working capital limits. {Refer note 31(C)}
(d) During the year Rs, 15.43 Crores {previous year: Rs, (2.46 Crores)} was recognized as an expense/ (Income) for inventories carried at the net realizable value.
(b) No trade or other receivables are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade or other receivables are due from firms or private companies respectively in which any director is a partner, a director or a member.
(c) The Company has availed Receivable Buyout facility from banks against which a sum of Rs, 648.99 crores (March 31, 2017: Rs, 445.38 crores) has been utilized as on the date of Balance Sheet. The Company has assigned all its rights and privileges to the bank and there is no recourse on the company. Accordingly the amount of utilization has been reduced from trade receivables. A sum of Rs, 28.91 crores (March 31, 2017: Rs, 28.59 crores) on account of charges paid for this facility has been debited to the trade receivables factoring charges account.
(d) The Company has arranged Channel Finance facility for its customers from banks against which a sum of Rs, 593.37 crores (March 31, 2017: Rs, 424.13 crores) has been utilised as on the date of Balance Sheet and correspondingly, the trade receivables stand reduced by the said amount as there is no recourse on the Company.
Notes:
(a) Escrow account represents amount held in a fixed deposit with bank under escrow arrangement with "LEEL Electricals Limited" on account of final settelment of Lloyd business acquisiton which is due for closure subsequent to the year end. Refer note 32(1B) for details of business combination.
(b) The deposits maintained by the Company with banks comprise of the time deposits which may be withdrawn by the Company at any point of time without prior notice and are made of varying periods between one day to twelve months depending on the immediate cash requirements of the Company and earn interest at the respective short-term deposit rates.
(c) Fixed deposit with original maturity of more than twelve months but remaining maturity of less than twelve months have been disclosed under other bank balances.
(d) The Company can utilise the balance towards settlement of unclaimed dividend.
(a) The Company classified certain assets retired from active use and held for sale recognized and measured in accordance with Ind-AS 105 "Non Current Assets Held For Sale and Discontinued Operations" at lower of its carrying amount and fair value less cost to sell. The Company expects to complete the sale by 30th September, 2018 by selling it in the open market.
(b) During the previous year, both the joint venture partners of Jiangsu Havells Sylvania Lighting Co. Limited, have agreed to liquidate the operations of the joint venture, in respect of which the Company will receive agreed liquidation proceeds of USD 2.5 million. Accordingly, the investment in joint venture has been classified as asset held for sale, recognized and measured in accordance with Ind-AS 105 "Non-Current Assets Held for Sale and Discontinued Operations" at lower of its carrying amount and fair value less cost to sell. Subsequent to the year end, the management of the joint venture have applied for liquidation with relevant authorities.
c) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs, 1/- per share (March 31, 2017 : Rs, 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 dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Notes:
a) Shareholding of Smt.Vinod Gupta includes 13,584,000 (March 31, 2017: 13,584,000) equity shares of Rs, 1/- each as a legal heir which are under process of transmission.
b) Share holding of Shri Surjit Kumar Gupta as at March 31 2018 is below 5%, however figures have been disclosed for comparative purposes.
Note : Security premium account balances depicts premium on issue of shares. The reserve is utilised in accordance with provision of Company Act 2013
(a) The Company has availed a secured loan of Rs, 108.00 Crores against sanctioned amount of Rs, 285.00 crores from CITI bank N.A. as of March 31, 2018. The loan was obtained for the purpose of reimbursement of prior capital expenditure incurred by the company during last 12 months. The loan is having 1 year moratorium period and repayable in 8 quarterly installments thereafter. This loan is secured by way of first exclusive charge by way of a hypothecation over the Company''s all movable fixed assets both present and future and immovable properties situated at SP 181 to 189 and 191 (A), Industrial Area, Phase II, Neemrana, Alwar, Rajasthan, India with an minimum Fixed Assets Coverage Ratio of 1.1x. The registration of charge on immaterial property is under process..
(b) The Company has not defaulted on any loans payable during the year and has satisfied all debt covenants prescribed in terms of term loan.
Limited", which is set off with capital gain of Rs, 24.98 crores on sale of Land and NHAI bonds, resulting in net unabsorbed capital loss of Rs, 122.74 crores. No deferred tax asset has been created on total capital losses of Rs, 369.28 crores by the management due to lack of probability of future capital gain against which such deferred tax assets can be realized. If the Company were able to recognize all unrecognized deferred tax assets, the profit would have increased by Rs, 86.02 crores.
b) During the year the Company has paid dividend to its shareholders for the year ended March 31, 2017, This has resulted in payment of corporate dividend tax (CDT) to the taxation authorities. The Company believes that CDT represents additional payment to taxation authority on behalf of the shareholders. Hence CDT paid is charged to equity
c) Effective tax rate has been calculated on profit before tax.
(a) Working capital limits of Rs, Nil (March 31, 2017: Rs, 50.02 Crores) from consortium banks are secured by way of:
i) Pari-passu first charge with consortium banks by way of hypothecation on entire stocks of raw materials, semi finished goods, finished goods, stores and spares, bill receivables, book debts and all movable and other current assets of the Company.
ii) Pari-passu first charge with consortium banks by way of equitable mortgage of land and building at 14/3, Mathura Road, Faridabad.
iii) Pari-passu second charge with other consortium lenders by way of hypothecation of plant and machinery, generators, furniture and fixtures, electric fans and installations on which first charge was held by HSBC Bank (Mauritius) Limited against External Commercial Borrowings.
(b) The Company had issued commercial papers of Rs,150 crores in favour of Yes Bank Limited, which has been re-paid during the year.
* Trade Payables include due to related parties Rs, 7.10 crores (March 31, 2017 : Rs, 12.85 crores) {refer note 32(7)}(d)}
* The amounts are unsecured and are usually paid within 120 days of recognition.
* Trade payables are usually non- interest bearing. In few cases, where the trade payables are interest bearing, the interest is settled on quarterly basis.
a) In the previous year the company had made a provision of excise duty payable amounting to Rs, 17.91 crores on stocks of finished goods and scrap material at the end of the year except units which are exempt from excise duty. In the Current year, the Government of India has implemented Goods and Service Tax (GST) w.e.f July 01, 2017 which has replaced excise duty, service tax and other indirect taxes and accordingly GST payable as at March 31, 2018 is Rs, 46.26 crores.
a) Provision for warranties and E-waste
(i) Warranties
A provision is recognized for expected warranty claims and after sales services on products sold during the last one to five years, based on past experience of the level of repairs and returns. It is expected that significant portion of these costs will be incurred in the next financial year and all will have been incurred within five years after the reporting date. Assumptions used to calculate the provisions for warranties were based on current sales levels and current information available about returns based on one to five years warranty period for all products sold.
(ii) E-waste
A provision is recognized for probable e-waste liability based on "Extended Producer Responsibility" as furnished by the Company to Central Pollution Control Board in accordance with E-Waste Management Rules, 2016 notified by Government of India during the year. A provision for the expected costs of management of historical waste is recognized when the costs can be reliably measured. These costs are recognized as ''Other expenses'' in the statement of profit and loss.
b) Provision for litigations
Provision for litigation amounting to Rs, 7.70 Crores (March 31, 2017: Rs, 24.99 Crores) is created against demands raised in various ongoing litigations under Value Added Tax in various states and Income Tax Act. Management based on existing legal precedents and as advised by its legal counsel expects a probable outflow of resources and accordingly, has created a provision in books of account.
The table below gives information about movement in litigation provisions:
Note:
a) According to the requirements of Ind AS 18 - "Revenue", Sale of products for the current year (period April 01, 2017 to June 30, 2017) and year ended 31st March 2017, are reported inclusive of Excise Duty of Rs, 121.01 crores and Rs, 448.31 crores respectively. Similarly, excise duty included in scrap sales amounts to Rs, 0.69 crores (March 31, 2017: Rs, 2.39 crores). Effective July 01, 2017, the Government of India has implemented Goods and Service Tax ("GST") replacing Excise Duty, Service Tax and various other indirect taxes. Accordingly, as per Ind AS 18, the revenue for the current year (July 2017 to March 2018) are reported net of GST and hence is not comparable with previous year.
b) Government assistance for refund of Goods and Service Tax represents benefits provided by the Government to the Company in respect of its manufacturing units in the state of Assam, Himachal Pradesh and Uttarakhand in accordance with the Rs,Scheme of budgetary support under Goods and Service Tax Regime'' as notified on October 05, 2017 which were earlier eligible for drawing benefits under the excise duty exemption/refund schemes.
C Undrawn committed borrowing facility
(a) The Company has availed working capital limits amounting to Rs, 200.00 crores from banks under consortium of Canara Bank, IDBI Bank Limited, State Bank of India, Standard Chartered Bank, ICICI Bank Limited, Yes Bank Limited and The Hong Kong and Shanghai Banking Corporation Limited. An amount of Rs, 199.87 crores remain undrawn as at March 31, 2018( Previous year : Rs, 150.00 crores). Further The Company has a debit balance in cash credit accounts as on the date of Balance Sheet except in case of Canara Bank where the Company has availed a working capital Demand loan of Rs, Nil (Previous Year Rs, 50.02 crores). The limit availed is secured by way of:
i) Pari-passu first charge with consortium banks by way of hypothecation on entire stocks of raw materials, semifinished goods, finished goods, stores and spares, bill receivables, book debts and all movable and other current assets of the Company.
ii) Pari-passu first charge with consortium banks by way of equitable mortgage of land and building at 14/3, Mathura Road, Faridabad.
iii) Pari-passu second charge with other consortium lenders by way of hypothecation of plant and machinery, generators, furniture and fixtures, electric fans and installations on which first charge was held by HSBC Bank (Mauritius) Limited against External Commercial Borrowings.
(b) The Company has availed a secured loan of Rs, 108.00 Crores against sanctioned amount of Rs, 285.00 crores from CITI bank N.A. as of March 31, 2018. The loan was obtained for the purpose of reimbursement of prior capital expenditure incurred by the company during last 12 months. The loan is having 1 year moratorium period and repayable in 8 quarterly instalments thereafter. This loan is secured by way of first exclusive charge by way of a hypothecation over the Company''s all movable fixed assets both present and future and immovable properties situated at SP 181 to 189 and 191 (A), Industrial Area, Phase II, Neemrana, Alwar, Rajasthan, India with an minimum Fixed Assets Coverage Ratio of 1.1x. The registration of charge on immaterial property is under process.
D Other Litigations
(a) The Company has some sales tax and other tax related litigation of Rs, 7.70 crores (March 31, 2017: Rs, 24.99 crores) against which liability has been assessed as probable and adequate provisions have been made with respect to the same.
E Leases
Operating lease commitments - Company as lessee
a) The Company has taken various residential/commercial premises under cancellable operating leases. These lease agreements are normally renewed on expiry. There are no restrictions placed upon the Company by entering into these leases and there are no subleases. The annual increments are expected to be in line with the expected general inflation to compensate the lessor for the expected inflationary cost increase.
b) The Company has also taken few commercial premises under non-cancellable operating leases. There are no restrictions placed upon the Company by entering into these leases and there are no subleases. Normally there are renewal and
Operating lease commitments - Company as lessor
a) The Company had entered into a sub-lease agreement to sublet a property situated at Kasna, Noida, which is considered as "Investment Property". The lease agreement is executed on May 12, 2016.
b) The said lease is for a term of four years nine months and 18 days w.e.f May 12, 2016 upto February 28, 2021 for the purpose of setting up its manufacturing unit and the annual increments are expected to be in line with the expected general inflation to compensate the lessor for the expected inflationary cost increase.. The lease include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. The total rent recognized as income during the year is Rs, 6.92 crores (March 31, 2017 : Rs, 5.85 crores).
F During the year, Land measuring 50 acres situated at Ghiloth District , General Zone Industrial Area RIICO in the state of Rajasthan has been allotted to the Company for a consideration of Rs, 71.21 crores. This consideration will be adjusted by way of rebate of Rs, 17.71 crores if the Company will be able to fulfil the conditions of total investment of Rs, 260 crores by November 2019 and an additional amount of Rs, 192.00 crores by March 2022. The Company has considered a rebate as a separate liability till all conditions are fulfilled as disclosed in note no. 17 as "creditor for capital goods".
G Contingent Assets
The Government of India vide its office memorandum dated April 01, 2007 has announced fiscal incentives and concessions for North East Region viz. the NEIIP 2007. Incentives were available to all industrial units commencing their operations in this area by specified date. The Company has set up a plant in Guwahati and started production during the year. A subsidy of 30% of total investment in Plant and Equipment was available as capital investment subsidy. Subsidy will be disbursed after fulfilment of specified conditions and submission of application to the Government. Subsidy will be granted once the agency appointed by Government completes its verification and issues order in this regard. The Company has invested total sum of Rs, 7.85 crores in Plant and Equipment and is accordingly eligible for subsidy. The Company has filed claim for subsidy and expects that an amount of Rs, 2.35 crores will be released after completion of procedural formalities by the Government.
32 OTHER NOTES ON ACCOUNTS
1A Divestment of interest in subsidiaries, Joint Ventures and Associates
(a) During the year, Havells Holdings Limited, a wholly owned subsidiary of the Company completed sales of remaining 20% stake in Feilo Malta Limited and 100% stake in Havells Sylvania ( Thailand) Limited to Shanghai Feilo Acoustics Company Limited, China based listed Company for a agreed consideration of Euro 34.50 Million ( INR 263.89 Crores) and Euro 1.60 Million ( INR 12.20 Crores) respectively. Consequent to this, the Company has done partial redemption of 30,023,710 ordinary shares of GBP 1 each, resulting redemption proceeds of Rs, 198.25 Crores. Exceptional items of Rs, 11.91 Crores represents reversal of impairment on investment provided in the previous year.
(c) During the previous year, both the joint venture partners of Jiangsu Havells Sylvania Lighting Co. Limited, have agreed to liquidate the operations of the joint venture, in respect of which the Company will receive agreed liquidation proceeds of USD 2.5 million. Accordingly, the investment in joint venture has been classified as asset held for sale, recognized and measured in accordance with Ind-AS 105 "Non-Current Assets Held for Sale and Discontinued Operations" at lower of its carrying amount and fair value less cost to sell. Subsequent to the year end, the management of the joint venture have applied for liquidation with relevant authorities.
1B Acquisition of Consumer durable business of Lloyd Electric and Engineering Limited and brand of Fedders Lloyd Corporation Limited
On May 08, 2017, the Company has completed acquisition of Consumer durable business of Lloyd Electric and Engineering Limited (LEEL) and trade mark "Lloyd" from Fedders Lloyd Corporation Limited, companies incorporated under the Companies Act 1956. The Consumer durable business of Lloyd consist of business of importing, trading, marketing, exporting, distribution, sale of air conditioners, televisions, WASHing machines, and other household appliances, which has been acquired by the Company on slump sale basis at an enterprise value of Rs, 1547.38 crores on cash free and debt free basis. The acquisition has enabled the Company to enter into Electronic Consumer durable market. Details of purchase price allocation done on composite basis by the Company in accordance with agreement upto closing date is as given below:
a) The fair value and gross amount of acquired trade receivables at acquisition date is Rs, 142.08 crores. None of the trade receivables is credit impaired and it is expected that full contractual amount can be collected.
b) Goodwill of Rs, 310.47 crores comprises the value of expected synergies arising from the acquisition which is not separately recognized. Goodwill is allocated entirely to Lloyd consumer segment.
2 Investment in subsidiaries and joint ventures
(a) These financial statement are separate financial statements prepared in accordance with Ind AS-27 "Separate Financial Statements".
(i) During the year, the Company has invested a sum of Rs, 0.45 Crores in Havells Guangzhou International Limited which was formed on dated October 17, 2016. The said Company is engaged in wholesale business of electrical goods.
(ii) During the year the Company has invested a sum of Rs, 0.05 crores in Lloyd Consumer Private Limited which was formed on dated December 06, 2017. The said Company is engaged in business of electrical goods.
(iii) During the year the Company has invested a sum of Rs, 0.13 crores in Havells Exim Limited which was formed on dated September 01, 2017. The said Company is engaged in business of electrical goods.
The Company had entered into a Joint Venture agreement with ''Shanghai Yaming Lighting Co. Ltd., Shanghai, China'' on December 26, 2011 for forming a Joint Venture Company for production of lighting lamps and lighting accessories and sales / services of related products. Accordingly, the Company ''Jiangsu Havells Sylvania Lighting Co. Ltd.'' a Jointly Controlled Entity was formed vide certificate of approval dated February 13, 2012 issued by the People''s Government of Jiangsu Province, China. The Company along with its JV partner decided to close down the business and liquidate the JV, accordingly the Board of Directors has been replaced by the Liquidation Committee formed on 30th June, 2017 and the regular operations have been fully closed in October 2017. The JV reported a turnover of Rs, 49.81 crores and a loss of Rs, 26.32 crores during the financial year on account of write down of certain assets as part of Liquidation process. Accordingly investment has been valued at fair value less cost to sell at Rs, 16.21 based on agreed closure proceed to be received by the company from other joint venture partner and shown as ''Asset classified as held for sale'' in note 12.
3 During the year, the Company has capitalized the following pre operative expenses to the cost of tangible fixed assets, being expenses related to projects and development of Dies and Fixtures. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the Company.
The Research and Development facilities are located at the Head office, Noida and some other units of the Company which are approved by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Govt. of India. The Company is entitled to a weighted deduction of 150% of the expenditure incurred at these units under section 35 (2AB) of the Income Tax Act, 1961.
Defined Benefit Plan
The employees'' Gratuity Fund Scheme, which is a defined benefit plan, is managed by the trust maintained with Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Limited. Under the gratuity plan, every employee who has completed at least five years of service usually gets a gratuity on departure @ 15 days of last drawn salary for each completed year of service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The following tables summaries the components of net benefit expense recognized in the statement of profit or loss and the funded status and amounts recognized in the balance sheet for the respective plans:
j) The average duration of the defined benefit plan obligation at the end of the reporting period is 23.64 years (March 31, 2017: 24.09 years)
k) The plan assets are maintained with Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Limited.
l) The Company expects to contribute Rs, 12.19 crores (March 31,2017 : Rs, 13.06 crores) to the plan during the next financial year.
m) The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.
n) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.
o) The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
6 Segment Reporting
The segment reporting of the Company has been prepared in accordance with Ind AS-108, "Operating Segment" (specified under the section 133 of the Companies Act 2013 (the Act) read with Companies (Indian Accounting Standards) Rule 2015 (as amended from time to time) and other relevant provision of the Act). For management purposes, the Company is organised into business units based on its products and services and has five reportable segments as follows:
a) Operating Segments
Switchgears : Domestic and Industrial switchgears, electrical wiring accessories, industrial
motors, pumps and capacitors.
Cables : Domestic cables and Industrial underground cables.
Lighting and Fixtures : Energy Saving Lamps (CFL, LED), Solar and luminaries.
Electrical Consumer Durables : Fans, Water Heaters, Coolers, Personal Grooming,Water Purifier and Domestic
Appliances
Lloyd Consumer : Air Conditioner, Television, WASHing Machine and Domestic Appliances
No operating segments have been aggregated to form above reportable operating segments.
b) Identification of Segments:
The Board of Directors monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segments have been identified on the basis of the nature of product / services and have been identified as per the quantitative criteria specified in the Ind AS.
c) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Others".
d) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets, borrowings and other assets and liabilities that can not be allocated to a segment on reasonable basis have been disclosed as "Others".
e) There is no transfer of products between operating segments.
f There are no customers having revenue exceeding 10% of total revenues
g) During the year, the Company has re-organised its internal reporting and accordingly, lighting and fixtures project business which was earlier identiifed as separate reporting segment and disclosed under "Others" has been clubbed under "Lighting & Fixtures" segment. The comparative figures for earlier periods have been accordingly restated.
5 Havells Guangzhou International Limited WOS
6 Lloyd Consumer Private Limited WOS
7 Havells Exim Limited WOS Step Down Subsidiary Companies
1 Havells International Limited WOS of Havells Holdings Limited
2 Havells Sylvania (Thailand) Limited Ceased to be subsidiary w.e.f
29th Nov''17
3 Havells Sylvania Brazil Illuminacao Ltd. WOS of Havells International
Limited(Ceased to be susidiary w.e.f. 30th Mar''18)
4 Havells Sylvania Iluminacion (Chile) Ltd. WOS of Havells Holdings Limited
(under liquidation)
5 Havells USA Inc. WOS of Havells Holdings Limited
(Dissolved with effect from 31st Oct 2017)
6 Thai Lighting Asset Co. Ltd.# 49% held by Havells International
Limited(Under Liquidation)
# Havells International Limited (WOS of Havells Holdings Limited) hold 49% equity interest in Thai Lighting Assets Co. Ltd. However the said Company has majority representation on Board of Directors of the entity and approval of the said Company is requited for all major operational decision and the operations are soley carried out for the benefit of the Group. Based on facts and circumstances, management determine that in substance the Group control this entity and therefore reported the same as controlled entities. The company is currently in liquidation.
_(ii) Associate__
Feilo Exim Limited (erstwhile Havells Ceased to be associate Company w.e.f. _Exim Limited)__November 30, 2016_
(iii) Joint Venture
Jiangsu Havells Sylvania Lighting Co. Limited 50% ownership interest held by Company. __(Under Liquidation)_
(B) Names of other related parties with whom transactions have taken place during the year :
(i) Enterprises in which directors are interested
QRG Enterprises Limited
QRG Foundation
Guptajee & Company
The Vivekananda Ashrama
QRG Central Hospital and Research Centre Ltd
QRG MediCARE limited
(ii) Post employee benefit plan for the benefitted employees Havells India Limited Employees Gratuity Trust
(iii) Key Management Personnel
Shri Anil Rai Gupta, Chairman and Managing Director Shri Rajesh Kumar Gupta, Director (Finance) and Group CFO Shri Ameet Kumar Gupta, Director Shri Sanjay Kumar Gupta, Company Secretary
v) Non Executive Directors Shri Vijay Kumar Chopra
Shri Avinash Parkash Gandhi (Retired on 18th Oct, 2016)
Dr. Adarsh Kishore
Shri Sunil Behari Mathur (Retired on 24th May, 2017)
Shri Surender Kumar Tuteja Smt. Pratima Ram
a) The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
b) All the liabilities for post retirement benefits being ''Gratuity'' are provided on actuarial basis for the Company as a whole, the amount pertaining to Key management personnel are not included above.
c) Purchase of goods and sale of goods has been reported gross off Value Added tax/Goods and Service Tax
8 Share based payments
(a) The Company had, vide special resolution passed by way of postal ballot on June 9, 2014 and by way of amendment to the "Havells Employees Stock Option Plan 2013" (ESOP 2013 or Plan) included Part B - "Havells Employees Stock Purchase Plan 2014 and renamed the plan as "Havells Employees Long Term Incentive Plan 2014" for granting Employees Stock Options in the form of Equity Shares to eligible employees. The purchase price of the options was approved on May 11, 2016 under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company. The options were Granted and vested as on May 16, 2016. In accordance with the terms and conditions of the plan, the said options were exercisable within a period of 30 days from the date of vesting were settled by way of issue of equity shares. During the year 1,39,673 (March 31, 2017: 1,17,562 Equity Shares) of Rs, 1/- each were allotted to eligible employees under the said scheme at price of Rs, 502.15 (March 31, 2017: Rs, 345.65) per share (being market price of shares at close of business day immediately preceding the date of Nomination and Remuneration Committee meeting). As per the scheme, 50% of shares are under lock-in-period of 13 months and remaining 50% are under a lock-in-period of two years.
Further, as per the scheme, the Company shall pay 50% of issue price for differential bonus shares on issue of shares and 50% of employee contribution to eligible employees over a period of two years. Accordingly a sum of Rs, 3.04 crores has been recognized as employee stock option expense during the Financial Year. (Previous Year Rs, 1.78 cores)
(b) The Company had, vide special resolution passed by way of postal ballot on December 4, 2015 "Havells Employees Stock Purchase Plan 2015 for granting Employees Stock Options in the form of Equity Shares to eligible employees. The purchase price of the options was approved on May 11, 2017 under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company. The options were Granted and vested as on May 16, 2017. In accordance with the terms and conditions of the plan, the said options were exercisable within a period of 30 days from the date of vesting and settled by way of issue of equity shares. During the year 1,50,000 (March 31, 2017: 1,50,000 Equity Shares) of Rs, 1/- each were allotted to eligible employees under the said scheme at Rs, 502.15 (March 31, 2017: Rs, 345.65) per share (being market price of shares at close of business day immediately preceding the date of Nomination and Remuneration Committee meeting). As per the scheme, 78% of shares are under lock-in-period of 13 months and remaining 22% are under a lock-in-period of two years.
Further, as per the scheme, the Company shall pay 100% of issue price to the eligible employees on issue of shares. Accordingly a sum of Rs, 7.53 crores has been recognized as employee stock purchase plan expense during the Financial year.(Previous Year Rs, 5.18 crores)
(c) The Company had, vide special resolution passed by way of postal ballot on July 13, 2016 "Havells Employees Stock Purchase Plan 2016 for granting Employees Stock Options in the form of Equity Shares to eligible employees. The purchase price of the options was approved on May 11, 2017 under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company. The options were Granted and vested in three equal tranche. First tranche was vested on May 17, 2017. In accordance with the terms and conditions of the plan, the said options were exercisable within a period of 30 days from the date of vesting and settled by way of issue of equity shares. During the year First tranche 3,458 Equity Shares of Rs, 1/- each (March 31, 2017: NIL) were allotted to eligible employees under the said scheme at Rs, 502.15 per
share (March 31, 2017: Rs, NIL) (being market price of shares at close of business day immediately preceding the date of Nomination and Remuneration Committee meeting). As per the scheme, these shares are under lock-in-period of 13 months
Further, as per the scheme, the Company shall pay 100% of issue price to the eligible employees on issue of shares. Accordingly a sum of Rs, 0.17 crores has been recognized as employee stock purchase plan expense during the financial year. (Previous Year NIL)
The fair value at grant date of options granted during the year ended March 31, 2018 was Rs, 146.14 per share. The fair value at the grant date is determined using Black Scholes valuation model which takes into account the exercise price , the terms of the options , the share price at grant date and expected price volatility of the underlying shares , the expected dividend yield and the risk free interest rate for the term of the option.
(iv) The expected price volatility is based on the historical volatility (based on remaining life of the options), adjusted for any expected change to future volatility due to publically available information.
9 Corporate Social Responsibility
As per provisions of section 135 of the Companies Act, 2013, the Company has to incur at least 2% of average net profits of the preceding three financial years towards Corporate Social Responsibility ("CSR"). Accordingly, a CSR committee has been formed for carrying out CSR activities as per the Schedule VII of the Companies Act, 2013. The Company has contributed a sum of Rs, 14.95 crores (March 31, 2017: Rs, 13.37 crores) towards this cause and charged the same to the Statement of Profit And Loss. The funds are primary allocated to QRG foundation, a society registered under section 12A of the Income Tax Act, 1961 for undertaking Mid-Day meal scheme and Aga Khan Foundation India, a private non-profit foundation registered u/s 592 of Companies Act, 2013. it is engaged in restoration and conservation of various heritage monuments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
1) The Company had determined classification of quoted bonds invested with National Highway Authority of India as subsequently measured at amortized cost in previous year since the Company expected to hold the investment upto maturity and receive the principal and interest amount as per defined term of investment. However, during the year the Company has prematurely sold the said bonds in open market to fund the acquisition of business. Accordingly, the gain of Rs, 18.49 crores has been recorded in "other income".
2) The fair value of unquoted instruments, loans from banks and other financial liabilities, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. In addition to being sensitive to a reasonably possible change in the forecast cash flows or the discount rate, the fair value of the equity instruments is also sensitive to a reasonably possible change in the growth rates. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.
3) The fair values of the Company''s interest-bearing borrowings and loans are determined by using effective interest rate (EIR) method using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2018 was assessed to be insignificant.
4) Long-term receivables/payables are evaluated by the Company based on parameters such as interest rates, risk factors, individual creditworthiness of the counterparty and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
5) The Company has obtained independent valuation for its investment property as at March 31, 2018 and has reviewed the fair valuation based on best evidence of fair value determined using replacement cost of an asset of equivalent utility, depreciation and obsolescence. Fair market value is the amount expressed in terms of money that may be reasonably be expected to be exchanged between a willing buyer and a willing seller, with equity or both. The valuation by the valuer assumes that Company shall continue to operate and run the assets to have economic utility. The fair value is on "as is where" basis. All resulting fair value estimates for investment property are included in Level 3.
6) The significant unobservable inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at March 31, 2018, are as shown below:
Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data
11 Financial risk management objectives and policies
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Companyâs principal financial assets include loans, trade and other receivables, and cash and cash equivalents that are derived directly from its operations.
The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company is exposed to market risk, credit risk and liquidity risk.
The Company''s senior management oversees the management of these risks. The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors and Audit Committee. This process provides assurance to Company''s senior management that the Company''s financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective.
The Board of Directors reviews and agrees policies for managing each of these risks which are summarized as below:
(a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises three types of risk: currency rate risk, interest rate risk and other price risks , such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits, investments , and foreign currency receivables and payables. The sensitivity analysis in the following sections relate to the position as at reporting date. The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets and liabilities. The sensitivity of the relevant Profit and Loss item and equity is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31, 2018.
(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. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense is denominated in foreign currency). Foreign currency exchange rate exposure is partly balanced by purchasing of goods from the respective countries. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
Note: Figures in bracket represents payables
(ii) Interest Rate Risk
Interest rate is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long term debt obligation at floating interest rates. The Company''s borrowings outstanding as at March 31, 2018 comprise of term loan and working capital demand loan.
Interest rate Sensitivity of Borrowings
With all other variables held constant, the following table demonstrates the sensitivity to a reasonably possible change in interest rates on floating rate portion of loans and borrowings.
(iii) Commodity Price Risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of industrial and domestic cable and other electronic items and therefore require a continuous supply of copper and Aluminum being the major input used in the manufacturing. Due to the significantly increased volatility of the price of the Copper and aluminum, the Company has entered into various purchase contracts for these material for which there is an active market The Company''s Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. The Company partly mitigated the risk of price volatility by entering into the contract for the purchase of these material based on average price of for each month.
(b) Credit Risk
Credit Risk is the risk that the counter party will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
(i) Trade Receivables
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major
customers are generally covered by Trade Receivable buyout facility without recourse, letters of credit and other forms of security. As at March 31, 2018, the Company had 65.48% (March 31,2017: 66.37% )of its trade receivable discounted from banks under Trade Receivable buyout facility. Out of the remaining debtors, the Company has 10 customers that owed the Company approx. Rs 213.02 crores( March 31,2017 : 166.90 crores) and accounted for 63.38% (March 31,2017 : 73.00%) of remaining trade receivables.
An impairment analysis is performed at each reporting date on trade receivables by lifetime expected credit loss method based on provision matrix. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
(ii) Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Company''s policy. Investments of surplus funds are made in bank deposits and other risk free securities. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
The Company''s maximum exposure to credit risk for the components of the balance sheet at 31 March 2018 is the carrying amounts . The Company''s maximum exposure relating to financial instrument is noted in liquidity table below.
Trade Receivables and other financial assets are written off when there is no reasonable expectation of recovery, such as debtor failing to engage in the repayment plan with the Company.
Balances with banks is subject to low credit risks due to good credit ratings assigned to these banks The ageing analysis of trade receivables has been considered from the date the invoice falls due
(c) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company''s objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate source of financing through the use of short term bank deposits and cash credit facility. Processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.
Maturity profile of financial liabilities
The table below provides the details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
12 Capital Management
For the purposes of Company''s capital management, Capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Company''s capital management is to safeguard its ability to continue as going concern and to ensure that it maintains an efficient capital structure and maximize shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2018 and March 31, 2017. The Company monitors capital using gearing ratio, which is net debt divided by total capital plus net debt. Net debt is calculated as loans and borrowings less cash and cash equivalent.
16 The figures have been rounded off to the nearest crore of rupees upto two decimal places. The figure 0.00 wherever stated represents value less than Rs, 50,000/-.
17 The comparative figures have been regrouped/ rearranged wherever considered necessary to make them comparable with current year numbers.
18 Note No.1 to 32 form integral part of the balance sheet and statement of profit and loss.
Mar 31, 2017
Notes:
(a) The deposits maintained by the Company with banks comprise of the time deposits which may be withdrawn by the Company at any point of time without prior notice and are made of varying periods between one day to twelve months depending on the immediate cash requirements of the Company and earn interest at the respective short-term deposit rates.
(b) Fixed deposit with original maturity of more than twelve months but remaining maturity of less than twelve months have been disclosed under other bank balances.
(c) The Company can utilize the balance towards settlement of unclaimed dividend.
(a) On March 31, 2017, the Company classified certain plant and machinery retired from active use and held for sale recognized and measured in accordance with Ind-AS 105 âNon Current Assets Held For Sale and Discontinued Operationsâ at lower of its carrying amount and fair value less cost to sell. The Company expects to complete the sale by 30th September 2017 by selling it in the open market.
(b) Refer to note 32(1) for information of investment in associate and joint venture held for sale.
(c) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of '' 1/- per share (March 31, 2016 : '' 1/- per share) (April 1, 2015: '' 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 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 of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
* Shareholding of Smt. Vinod Gupta includes Nil equity shares ofRs,1/- each (March 31, 2016 :1,33, 20,000) (April 1, 2015 :1,33, 20,000) for and behalf of M/s Uptake & Company, a firm in which she is a partner and 1,35,84,000 (March 31, 2016 :1,35,84,000) (April 1, 2015 :1,35,84,000) equity shares ofRs,1/- each as a legal heir, which are under process of transmission.
a) There was unabsorbed capital loss ofRs,265.54 crores as on April 1, 2016 with expiry in financial year 2023-24. During the year there was a capital gain ofRs,19.06 crores on sale of shares of Feilo Exim Limited (erstwhile Havells Exim Limited) and acquisition of part of land at Faridabad. No deferred tax asset has been created on net capital loss ofRs,246.48 crores by the management due to lack of probability of future capital gain against which such deferred tax assets can be realized. If the Company were able to recognize all unrecognized deferred tax assets, the profit would have increased byRs,56.87 crores.
b) During the year the Company has paid dividend to its shareholders for the year ended March 31, 2016, This has resulted in payment of corporate dividend tax (CDT) to the taxation authorities. The Company believes that CDT represents additional payment to taxation authority on behalf of the shareholders. Hence CDT paid is charged to equity.
c) Effective tax rate has been calculated on profit before tax and exceptional items.
(a) Working capital demand loan has been availed from Canara bank for a minimum period of 7 days and maximum period upto 1 year and the same is secured by way of:
i) Pari-passu first charge with consortium banks by way of hypothecation on entire stocks of raw materials, semi-finished goods, finished goods, stores and spares, bill receivables, book debts and all movable and other current assets of the Company.
ii) Pari-passu first charge with consortium banks by way of equitable mortgage of land and building at 14/3, Mathura Road, Faridabad.
iii) Pari-passu second charge with other consortium lenders by way of hypothecation of plant and machinery, generators, furniture and fixtures, electric fans and installations on which first charge was held by HSBC Bank (Mauritius) Limited against External Commercial Borrowings.
(b) The Company has issued commercial papers ofRs,150 crores in favour of Yes Bank Ltd, which are due for repayment on 16th June 2017. The same have been shown at mortised cost.
* Trade Payables include due to related partiesRs,12.85 crores (March 31, 2016 :Rs,8.67 crores) (April 1, 2015 :Rs,19.46 crores)
* The amounts are unsecured and are usually paid within 120 days of recognition.
* Trade payables are usually non- interest bearing. In few cases, where the trade payables are interest bearing, the interest is settled on quarterly basis.
* For terms and conditions with related parties, refer to Note 32(7)
a) Information as required to be furnished as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) for the year ended March 31, 2017 is given below. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.
The total dues of Micro and Small Enterprises which were outstanding for more than stipulated period are Nil (March 31, 2016 :Rs,Nil) (April 1, 2015 :Rs,Nil)
a) Investor Education and Protection Fund is being credited by the amount of unclaimed dividend after seven years from the due date. The Company has transferredRs,0.06 crore (March 31, 2016Rs,0.04 crore) (April 01, 2015:Rs,0.03 crore) out of unclaimed dividend pertaining to the financial year 2008-09 and 2009-10 to Investor Education and Protection Fund of Central Government in accordance with the provisions of section 205C of the Companies Act,1956.
b) Monies collected on behalf of banks and remitted after the balance sheet date.
a) The Company has made a provision of excise duty payable amounting toRs,17.91 crores (March 31, 2016 :Rs,15.65 crores) (April 1, 2015 :Rs,12.12 crores) on stocks of finished goods and scrap material at the end of the year except units which are exempt from excise duty. Excise duty is considered as an element of cost at the time of manufacture of goods.
a) Provision for warranties
A provision is recognized for expected warranty claims and after sales services on products sold during the last one to two years, based on past experience of the level of repairs and returns. It is expected that significant portion of these costs will be incurred in the next financial year and all will have been incurred within two years after the reporting date. Assumptions used to calculate the provisions for warranties were based on current sales levels and current information available about returns based on one to two years warranty period for all products sold. The table below gives information about movement in warranty provisions.
b) Provision for litigations
i) During the financial year 2010-11, the Central Excise Department, Jalandhar raised a penalty demand forRs,0.10 crore (March 31, 2016 :Rs,0.10 crore) (April 1, 2015 :Rs,0.10 crore) towards differential excise duty on finished goods sold by the branches at higher selling price. The Company is contesting the same before the Central Excise and Service Tax Appellate Tribunal (CESTAT). A provision ofRs,0.10 crore (March 31, 2016:Rs,0.10 crore) (April 1, 2015 :Rs,0.10 crore) has been made towards the liability on this account.
ii) During the year the Company has made a provision ofRs,3.97 crores including interest ofRs,0.98 crore on account of disallowance of input tax credit on consumables and packing material in respect of financial years 2008-09 to 2016-17 for ongoing litigation in the state of Uttarakhand.
iii) During the year the Company has made a provision ofRs,3.48 crores towards disputed credit taken in respect of entry tax for the period from 2008-09 to 2015-16 for ongoing litigation in the state of Bihar.
iv) The Company has challenged the constitutional validity of levy of entry tax in few states which are pending before the respective high courts. During the year a provision ofRs,5.84 crore (March 31, 2016:Rs,6.66 Crores) (April 1, 2015Rs,6.32 Crores) has been made on this account and the liability as on March 31, 2017 isRs,17.42 Crores (March 31, 2016:Rs,20.17 Crores) (April 1, 2015:Rs,13.51 Crores)
v) A demand ofRs,0.06 crore (March 31, 2016 :Rs,0.06 crore) (April 1, 2015 :Rs,0.06 crore) was raised by the Income Tax Department for the financial year 2003-04. The same is being contested before the ITAT, New Delhi. However, the Company expects the liability ofRs,0.02 crore (March 31, 2016 :Rs,0.02 crore) (April 1, 2015 :Rs,0.02 crore) and the provision has been made accordingly.
Note: Excise duty collected from customers included in sale of products amounted toRs,448.31 crores (March 31, 2016:Rs,394.83 crores) and scrap sales amounts toRs,2.39 crores (March 31, 2016:Rs,2.27 crores). Sales of product net of excise duty isRs,6,083.03 crores (March 31, 2016:Rs,5,338.73 crores) and scrap sale net of excise duty isRs,37.36 crores (March 31, 2016:Rs,31.85 crores)
i) a) The Company has availed Receivable Buyout facility from banks against which a sum ofRs,445.38 crores (March 31, 2016:Rs,438.35 crores) (April 1, 2015 :Rs,418.77 crores) has been utilised as on the date of Balance Sheet. The Company has assigned all its rights and privileges to the bank and there is no recourse on the Company. Accordingly the amount of utilization has been reduced from trade receivables. A sum ofRs,28.59 crores (March 31, 2016: 29.42 crores) on account of charges paid for this facility has been debited to the trade receivables factoring charges account.
b) The Company has arranged Channel Finance facility for its customers from banks against which a sum ofRs,424.13 crores (March 31, 2016:Rs,370.64 crores) (April 1, 2015 :Rs,371.94 crores) has been utilised as on the date of Balance Sheet and correspondingly, the trade receivables stand reduced by the said amount as there is no recourse on the Company.
The Company is contesting the demands and the management, including its tax advisors, believe that its position will likely to be upheld in the appellate process and accordingly no provision has been accrued in the financial statements for the tax demand raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Companyâs financial position and results of operations.
iii) a) The Company has fulfilled its obligation to export goods within a period of eight years from the date of issue of EPCG licenses issued in terms of para 5.2 of Foreign Trade Policy 2009-2014. As on the date of balance sheet, the Company is yet to file Export Obligation Discharge Certificates (EODC) worthRs,64.05 crores (March 31, 2016:Rs,64.05 crores) (April 1, 2015:Rs,68.39 crores) with the Director General Foreign Trade (DGFT) within the stipulated time. Custom duty payable against said obligation isRs,8.00 crores (March 31, 2016:Rs,8.00 crores) (April 1, 2015:Rs,8.55 crores).
b) The Company has fulfilled its obligation to export goods in respect of duty free imports made by the Company against Advance Licenses. As on the date of balance sheet, the Company is yet to file Export Obligation Discharge Certificates (EODC) worthRs,9.76 crores (March 31, 2016:Rs,13.23 Crores) (April 1, 2015:Rs,55.48 crores) with the Director General Foreign Trade (DGFT) within the stipulated time. Custom duty payable against said obligation is ''
0.57 crore (March 31, 2016:Rs,0.88 crore) (April 1, 2015:Rs,3.59 crores).
C Undrawn committed borrowing facility
(a) The Company has availed working capital limits amounting toRs,200 crores from banks under consortium of Canara Bank, IDBI Bank Limited, State Bank of India, Standard Chartered Bank, ICICI Bank Limited, Yes Bank Limited and The Hong Kong and Shanghai Banking Corporation Limited. An amount ofRs,150 crores remain undrawn as at March 31, 2017.
(b) Working capital limits from consortium banks are secured by way of:
i) pari-passu first charge with consortium banks by way of hypothecation on entire stocks of raw materials, semifinished goods, finished goods, stores and spares, bill receivables, book debts and all movable and other current assets of the Company.
ii) pari-passu first charge with consortium banks by way of equitable mortgage of land and building at 14/3, Mathura Road, Faridabad.
iii) pari-passu second charge with other consortium lenders by way of hypothecation of plant and machinery, generators, furniture and fixtures, electric fans and installations on which first charge was held by HSBC bank (Mauritius) Limited against external commercial borrowings.
(c) The Company has a debit balance in cash credit accounts as on the date of Balance Sheet except in case of Canara bank where the company has availed working capital demand loan ofRs,50 crores represented under borrowings {refer note no. 18(A)}.
D Other Litigations
The Company has some entry tax and other tax related litigation ofRs,24.99 crores (March 31, 2016:Rs,20.29 crores) (April 1, 2015 :Rs,13.69 crores) against which liability has been assessed as probable and adequate provisions have been made with respect to the same. {refer note no. 20(b)}
E Leases
Operating lease commitments-Company as lessee
a) The Company has taken various residential/commercial premises under cancellable operating leases. These lease agreements are normally renewed on expiry. There are no restrictions placed upon the Company by entering into these leases and there are no subleases. The annual increments are expected to be in line with the expected general inflation to compensate the less or for the expected inflationary cost increase.
Operating lease commitments-Company as less or
a) During the year, the Company has entered into a sub lease agreement to sublet a property situated at Kasna, Noida which is considered as âInvestment Propertyâ. The lease agreement was executed on May 12, 2016.
b) The said lease is for a term of four years nine months and 18 days w.e.f 12.05.2016 upto 28.02.2021 for the purpose of setting up its manufacturing unit and the annual increments are expected to be in line with the expected general inflation to compensate the less or for the expected inflationary cost increase.. The lease include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. The total rent recognized as income during the year isRs,5.85 crores (March 31, 2016 :Rs,Nil).
d) As per the terms of the agreement, the lessee shall restore the leased premise to its original custodian on termination of the agreement.
F Contingent Assets
The Government of India vide its office memorandum dated April 01, 2007 has announced fiscal incentives and concessions for North East Region viz. the NEIIP 2007. Incentives were available to all industrial units commencing their operations in this area by specified date. The Company has set up a plant in Guwahati and started production during the year. A subsidy of 30% of total investment in Plant and equipment was available as capital investment subsidy. Subsidy will be disbursed after fulfillment of specified conditions and submission of application to the Government. Subsidy will be granted once the agency appointed by Government completes its verification and issues order in this regard. The Company has invested total sum ofRs,5.85 crores (Excluding Pre-Operative expenses) in Plant and equipment and is accordingly eligible for subsidy. The Company is in process of making an application for claim of subsidy and expects that an amount ofRs,1.76 crores will be sanctioned by Government in this regard on submission of application and approval accorded by the competent authority.
1. OTHER NOTES ON ACCOUNTS
Divestment of interest in Subsidiaries, Joint Ventures and Associate
1. (a) Pursuant to the shareholders agreement entered on January 18, 2016 between INESA UK Limited and Havells Holding Limited (a Companyâs subsidiary) for divestment of stake in Feilo Malta Limited (earlier known as Havells Malta Limited); both the parties have reached to a consensus to divest remaining stake of 20% in Feilo Malta Limited (FML) and accordingly the Board of Directors of the Company have approved the following transaction:
(i) Divest the remainder 20% stake of FML for a consideration of Euro 34.5 million ('' 238.90 crores)
(ii) Divest 100% stake in Havells Sylvania Thailand Limited for a consideration aggregating to Euro 1.6 Million ('' 11.08 crores)
(iii) Terminate joint venture agreement with Jiangsu Havells Sylvania Lighting Company (JV) Limited, a 50:50 joint venture of the Company and Shanghai Yaming Lighting Company Limited, an affiliate of FEILO and liquidation of its business as agreed between both partners, it is expected that liquidation of JV would realise Euro 2.3 Million ('' 16.21 crores) for 50% of Company share.
(iv) An orderly closure of its remaining international operations of Sylvania business.
Consequently, the recoverable amount of Companyâs investment in wholly owned subsidiary; Havells Holdings Limited (HHL) stands reduced toRs,187.52 crores as against the book value ofRs,249.62 crores representing closure cost of international operations, estimated by the management on best effort basis taking into account observable fair value of the residual investments held through HHL in worlwide Sylvania business in respect of which both parties have reached a consensus to conclude the sale of the remaining 20% equity stake. Accordingly, the Company has recognized impairment loss ofRs,62.10 crores on its investments in Havells Holdings Limited and disclosed in âExceptional Itemsâ in Statement of profit and loss . Further, consequent to above, the Company has also recognized loss ofRs,14.66 crores being difference between carrying value and fair value less cost to sell (being agreed sale price between both the parties) on account of termination of JV agreement in Jiangsu Havells Sylvania Lighting Company.
(b) During the current year, the Company completed the sale of 100% stake in its wholly owned subsidiary Feilo Exim Limited (erstwhile Havells Exim Limited), Hong Kong for a total sale consideration ofRs,94.84 crores to Shanghai Feilo Acoustics Co. Ltd. (FEILO), of which 80% was completed during the year ended March 31, 2016. Pursuant to aforesaid sale of shares, the Company has recorded a profit on sale of Long term Investment as aforesaid, amounting toRs,18.95 crores during current year (March 31, 2016:Rs,75.81 crores) being the difference
between consideration received (net of expenses) and historical cost of investments which has been disclosed as an exceptional item in accordance with the requirement of Ind AS-1 - âPresentation of Financial Statementsâ (specified under section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2015).
2. Investment in subsidiaries, associates and joint ventures -
(i) During the year, the Company has further acquired 4,67,737 number of shares in Promptec Renewable Energy Solutions Private Limited, having its registered office at Bengaluru, Karnataka for a consideration ofRs,10.67 crores (March 31, 2016 :Rs,29.12 crores) as per the share subscription cum purchase agreement dated June 08, 2016 . The said Company is engaged in marketing and manufacturing of LED products including street lighting, office lighting and solar lighting.
(ii) During the year, Havells Guangzhou International Limited was incorporated on October 17, 2016. The said Company is engaged in wholesale business of electrical goods. The Company is yet to make investment in share capital as per laws prevailing in The Republic of China.
(iii) During the year, Standard Electrical Limited was incorporated on September 12, 2016. The said Company is engaged in business of electrical goods.
(iv) During the year, Havells Global Limited was incorporated on July 04, 2016. The said Company is engaged in business of export of electrical goods.
The Company had entered into a Joint Venture agreement with âShanghai Yaming Lighting Co., Ltd., Shanghai, Chinaâ on December 26, 2011 for forming a Joint Venture Company for production of lighting lamps and lighting accessories and sales / services of related products. Accordingly, the Company âJiangsu Havells Sylvania Lighting Co., Ltd.â a Jointly Controlled Entity was formed vide certificate of approval dated February 13, 2012 issued by the Peopleâs Government of Jiangsu Province, China. The Company has an investment ofRs,30.87 crores (RMB 33.00 millions) {April 1, 2015:Rs,30.87 crores (RMB 33.00 millions)} towards 50% of capital contribution in the said Joint Venture Company as on the date of balance sheet. During the current year, both the parties have agreed to liquidate operations of the JV and accordingly, the same has been valued at fair value less cost to sell atRs,16.21 crores and shown as âAsset classified as held for saleâ in note 12.
3. During the year, the Company has capitalized the following pre operative expenses to the cost of tangible fixed assets, being expenses related to projects and development of Dies and Fixtures. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the Company.
The Research and Development facilities are located at the Head office, Noida and some other units of the Company and are approved by Department of Scientific and Industrial Research, Ministry of Science and Technology, Govt. of India. The Company is entitled to a weighted deduction of 200% of the expenditure incurred at these units under section 35 (2AB) of the Income Tax Act, 1961.
5. Disclosures pursuant to Ind AS-19 âEmployee Benefitsâ(specified under section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2015) are given below :
Defined Benefit Plan
The employeesâ Gratuity Fund Scheme, which is a defined benefit plan, is managed by the trust maintained with Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Limited. Under the gratuity plan, every employee who has completed at least five years of service usually gets a gratuity on departure @ 15 days of last drawn salary for each completed year of service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The following tables summaries the components of net benefit expense recognized in the statement of profit or loss and the funded status and amounts recognized in the balance sheet for the respective plans:
j) The average duration of the defined benefit plan obligation at the end of the reporting period is 24.09 years (March 31, 2016: 24.27 years)
k) The plan assets are maintained with Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Limited.
l) The Company expects to contributeRs,13 crores (March 31, 2016 :Rs,12 crores) to the plan during the next financial year.
m) The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.
n) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.
o) The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
6. Segment Reporting
The segment reporting of the Company has been prepared in accordance with Ind AS-108, âOperating Segmentâ (specified under section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2015). For management purposes, the company is organized into business units based on its products and services and has four reportable segments as follows:
a) Operating Segments
Switchgears : Domestic and Industrial switchgears, electrical wiring accessories, industrial motors, pumps and capacitors.
Cables : Domestic cables and Industrial underground cables.
Lighting and Fixtures : Energy Saving Lamps (CFL, LED), Solar and luminaries.
Electrical Consumer Durables : Fans, water heaters, coolers, personal grooming and domestic appliances
No operating segments have been aggregated to form above reportable operating segments.
b) Identification of Segments:
The Board of Directors monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segments have been identified on the basis of the nature of product / services and have been identified as per the quantitative criteria specified in the Ind AS.
c) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as âOthersâ.
d) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets, borrowings and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as âOthersâ.
e) There is no transfer of products between operating segments.
f) There are no customers having revenue exceeding 10% of total revenues.
7. Related party transactions
The related parties as per the terms of Ind AS-24,âRelated Party Disclosuresâ, (specified under section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2015) are disclosed below:-
(A) Names of related parties and description of relationship:
(i) Related party where control exists
Subsidiary Companies Relationship
1. Havells Holdings Limited Wholly Owned Subsidiary (WOS)
2. Promptec Renewable Energy Solutions Subsidiary Private Limited
3. Standard Electrical Limited WOS
4. Havells Global Limited WOS
_5. Havells Guanzhou International Limited_WOS_
Step Down Subsidiary Companies
1. Havells International Limited WOS of Havells Holdings Limited
2. Havells Sylvania (Thailand) Limited 49% held by Havells International Limited and 51%
held by Thai Lighting Asset Co. Ltd.
3. Havells Sylvania Brazil Illuminacao Ltd. WOS of Havells International Limited
4. Havells Sylvania Iluminacion (Chile) Ltd. WOS of Havells Holdings Limited
5. Havells USA Inc. WOS of Havells Holdings Limited
6. Thai Lighting Asset Co. Ltd.# 49% held by Havells International Limited #
(ii) Related party where control exists upto December 31, 2015 (ceased to be Subsidiary Company w.e.f. January 1, 2016) (Refer Note 32(1))
1. Feilo Exim Limited (erstwhile Havells Exim WOS Limited)
2. FEILO Malta Limited (earlier known as WOS Havells Malta Limited)
# Havells International Limited (WOS of Havells Holding Limited) hold 49% equity interest in Thai Lighting Assets Co. Ltd. However they said Company has majority representation on Board of Directors of the entity and approval of the said Company is required for all major operational decision and the operations are solely carried out for the benefit of the Group. Based on facts and circumstances, management determine that in substance the Group control this entity and therefore reported the same as controlled entities.
(iii) Joint Venture
Jiangsu Havells Sylvania Lighting Co., Ltd 50% ownership interest held by Company.
(B) Names of other related parties with whom transactions have taken place during the year :
(i) Enterprises in which directors are interested
QRG Enterprises Limited QRG Foundation Guptajee & Company
QRG Investments and Holdings Limited (formerly known as Ajanta Mercantile Limited)
The Vivekananda Ashrama
(ii) Associates (w.e.f. 01-01-2016)
Feilo Exim Limited (erstwhile Havells Exim Limited)
FEILO Malta Limited (earlier known as Havells Malta Limited)
(iii) Post employee benefit plan for the benefitted employees
Havells India Limited Employees Gratuity Trust
(iv) Key Management Personnel
Shri Anil Rai Gupta, Chairman and Managing Director Shri Rajesh Kumar Gupta, Director (Finance) and Group CFO Shri Ameet Kumar Gupta, Director Shri Sanjay Kumar Gupta, Company Secretary
(v) Non Executive Directors
Shri Vijay Kumar Chopra Shri Avinash Parkash Gandhi Dr. Adarsh Kishore Shri Sunil Behari Mathur Shri Surender Kumar Tuteja Smt. Pratima Ram Shri Vellayan Subbiah Shri Puneet Bhatia Shri T V Mohandas Pai Shri Surjit Kumar Gupta
a) The transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties .This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
b) All the liabilities for post retirement benefits being âGratuityâ are provided on actuarial basis for the Company as a whole, the amount pertaining to Key management personnel are not included above.
8. Share based payments
(a) The Company, vide special resolution passed by way of postal ballot on January 23, 2013, had approved âHavells Employees Stock Option Plan 2013â (ESOP 2013 or Plan) for granting Employees Stock Options in the form of Equity Shares to eligible employees. The plan is administered by Havells Employees Welfare Trust (âEW Trustâ) under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company (âCommitteeâ) in compliance with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 and other applicable provisions for the time being in force. The first grant date of the options under the approved ESOP 2013 Plan was 8th April, 2013. The options are vested equally over a period of 2 years after the date of grant, and the said options can be exercised any time within a period of 30 days from the date of vesting and will be settled by way of equity shares in accordance with the aforesaid plan. Under the said scheme, the Company had granted 45,939 options atRs,677/- per share and exercise price wasRs,338.50 per share ofRs,5 each ('' 67.70 per share ofRs,1 each) which was sub-divided into equity shares fromRs,5 toRs,1 per share. As of March 31, 2016 and as at March 31, 2017, there are no outstanding options in respect of this scheme.
The weighted average remaining contractual life for the stock option outstanding as at March 31, 2017 is Nil (March 31 2016 is Nil) (April 1, 2015: 0.05 year).
There were no options granted during year ended March 31, 2017 and March 31, 2016 and accordingly disclosures as required under Ind AS 102 w.r.t weighted average fair value of stock option granted during the year is not applicable.
(b) The Company had, vide special resolution passed by way of postal ballot on June 9, 2014 and by way of amendment to the âHavells Employees Stock Option Plan 2013â (ESOP 2013 or Plan) included Part B-âHavells Employees Stock Purchase Plan 2014 and renamed the plan as âHavells Employees Long Term Incentive Plan 2014â for granting Employees Stock Options in the form of Equity Shares to eligible employees. The purchase price of the options was approved on May 11, 2016 under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company. The options were Granted and vested as on May 16, 2016. In accordance with the terms and conditions of the plan, the said options were exercisable within a period of 30 days from the date of vesting were settled by way of issue of equity shares. During the year 1,17,562 (March 31, 2016: 99,745 Equity Shares) of Re. 1/- each were allotted to eligible employees under the said scheme at price ofRs,345.65 (March 31, 2016:Rs,293.90) per share (being market price of shares at close of business day immediately preceding the date of Nomination and Remuneration Committee meeting). As per the scheme, 50% of shares are under lock-in-period of one year and remaining 50% are under a lock-in-period of two years.
Further, as per the scheme, the Company shall pay 50% of issue price for differential bonus shares on issue of shares and 50% of employee contribution to eligible employees over a period of two years. Accordingly a sum ofRs,1.78 crores has been recognized as employee stock option expense during the Financial Year. (Previous YearRs,1.70 crores).
(c) The Company had, vide special resolution passed by way of postal ballot on December 4, 2015 âHavells Employees Stock Purchase Plan 2015â for granting Employees Stock Options in the form of Equity Shares to eligible employees. The purchase price of the options was approved on May 11, 2016 under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company. The options were Granted and vested as on May 16, 2016. In accordance with the terms and conditions of the plan, the said options were exercisable within a period of 30 days from the date of vesting and settled by way of issue of equity shares. During
the year 1,50,000 (March 31, 2016: Nil Equity Shares) of Re. 1/- each were allotted to eligible employees under the said scheme atRs,345.65 (March 31, 2016:Rs,Nil) per share (being market price of shares at close of business day immediately preceding the date of Nomination and Remuneration Committee meeting). As per the scheme, 78% of shares are under lock-in-period of 13 months and remaining 22% are under a lock-in-period of two years. Further, as per the scheme, the Company shall pay 100% of issue price to the eligible employees on issue of shares. Accordingly a sum ofRs,5.18 crores has been recognized as employee stock option expense during the Financial year. (Previous YearRs,Nil)
9. Corporate Social Responsibility
As per provisions of section 135 of the Companies Act, 2013, the Company has to incur at least 2% of average net profits of the preceding three financial years towards Corporate Social Responsibility (âCSRâ). Accordingly, a CSR committee has been formed for carrying out CSR activities as per the Schedule VII of the Companies Act, 2013. The Company has contributed a sum ofRs,13.37 crores (March 31, 2016:Rs,11.48 crores) towards this cause and debited the same to the Statement of Profit And Loss. The funds are primary allocated to QRG foundation, a society registered under section 12A of the Income Tax Act, 1961 for undertaking Mid-Day meal scheme, Ashoka University, sponsored by International Foundation for Research and Education (IFRE) which is a âNot for Profitâ Company incorporated under the provisions of section 25 of the erstwhile Companies Act, 1956 for the promotion of education and to the Vivekananda Ashramaa for providing free education to underprivileged students.
10. Fair value measurements
Set out below, is a comparison by class of the carrying amounts and fair value of the Companyâs financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
11. The Company has determined classification of quoted bonds invested with National Highway Authority of India as subsequently measured at mortised cost since the Company expect to hold the investment upto maturity and receive the principal and interest amount as defined under the term of investment. The fair values of the quoted bonds are based on price quotations near to the reporting date.
12. The fair value of unquoted instruments, loans from banks and other financial liabilities, as well as other noncurrent financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. In addition to being sensitive to a reasonably possible change in the forecast cash flows or the discount rate, the fair value of the equity instruments is also sensitive to a reasonably possible change in the growth rates. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.
13. The fair values of the Companyâs interest-bearing borrowings and loans are determined by using Discounted cash flow method using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2017 was assessed to be insignificant.
4. Long-term receivables/payables are evaluated by the Company based on parameters such as interest rates, risk factors, individual creditworthiness of the 1counterparty and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
15. The Company has obtained independent valuation for its investment property as at March 31, 2017 and has reviewed the fair valuation based on best evidence of fair value determined using replacement cost of an asset of equivalent utility, depreciation and obsolescence. Fair market value is the amount expressed in terms of money that may be reasonably be expected to be exchanged between a willing buyer and a willing seller, with equity or both. The valuation by the valuer assumes that Company shall continue to operate and run the assets to have economic utility. The fair value is on as is where basis. All resulting fair value estimates for investment property are included in Level 3.
16. The significant unobservable inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at 31 March 2017, are as shown below
Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data
17. Financial risk management objectives and policies
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include loans, trade and other receivables and cash and cash equivalents that are derived directly from its operations.
The Companyâs financial risk management is an integral part of how to plan and execute its business strategies. The Company is exposed to market risk, credit risk and liquidity risk.
The Companyâs senior management oversees the management of these risks. The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors and Audit Committee. This process provides assurance to Companyâs senior management that the Companyâs financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective.
The Board of Directors reviews and agrees policies for managing each of these risks which are summarized as below:
(a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits, investments and foreign currency receivables and payables. The sensitivity analyses in the following sections relate to the position as at March 31 2017. The analyses exclude the impact of movements in market variables on; the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets and liabilities. The sensitivity of the relevant Profit and Loss item is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31, 2017.
(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. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense is denominated in foreign currency). Foreign currency exchange rate exposure is partly balanced by purchasing of goods from the respective countries. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
Foreign currency risk sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD, EUR, AED, NPR, JPY and GBP exchange rates, with all other variables held constant. The impact on the Company profit before tax is due to changes in the fair value of monetary assets and liabilities. Foreign currency exposures recognized by the Company that have not been hedged by a derivative instrument or otherwise are as under:
Note: Figures in bracket represents payables
(ii) Interest Rate Risk
Interest rate is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long term debt obligation at floating interest rates. The Companyâs borrowings outstanding as at March 31, 2017 comprise of fixed rate loans and accordingly, are not expose to risk of fluctuation in market interest rate.
Interest rate Sensitivity of Borrowings
With all other variables held constant, the following table demonstrates the sensitivity to a reasonably possible change in interest rates on floating rate portion of loans and borrowings.
(iii) Commodity Price Risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of industrial and domestic cable and other electronic items and therefore require a continuous supply of copper and Aluminum being the major input used in the manufacturing. Due to the significantly increased volatility of the price of the Copper and aluminum, the Company has entered into various purchase contracts for these material for which there is an active market The Companyâs Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. The Company partly mitigated the risk of price volatility by entering into the contract for the purchase of these material based on average price of for each month.
(b) Credit Risk
Credit Risk is the risk that the counter party will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
(i) Trade Receivables
Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by Trade Receivable buyout facility without recourse, letters of credit and other forms of security. As at March 31, 2017, the Company had 66.37 % (March 31, 2016: 73.54%) of its trade receivable discounted from banks under Trade Receivable buyout facility. Out of the remaining debtors, the Company has 10 customers that owed the Company approx.Rs,166.90 crores and accounted for 73% (March 31, 2016 : 58.33%) of remaining trade receivables.
An impairment analysis is performed at each reporting date on trade receivables by lifetime expected credit loss method based on provision matrix. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
(ii) Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made in bank deposits and other risk free securities. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counter partyâs potential failure to make payments.
The Companyâs maximum exposure to credit risk for the components of the balance sheet at 31 March 2017 is the carrying amounts . The Companyâs maximum exposure relating to financial is noted in liquidity table below. Trade Receivables and other financial assets are written off when there is no reasonable expectation of recovery, such as debtor failing to engage in the repayment plan with the Company.
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Companyâs objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate source of financing through the use of short term bank deposits and cash credit facility. Processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.
Maturity profile of financial liabilities
The table below provides the details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
18. Capital Management
For the purposes of Companyâs capital management, Capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Companyâs capital management is to ensure that it maintains an efficient capital structure and maximize shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2017, March 31, 2016 and as at April 1, 2015.
19. Events occurring after balance sheet date
Acquisition of Consumer durable business of Lloyd Electric and Engineering Limited and brand of Fedders Lloyd Corporation Limited
Subsequent to the year end, the Company has completed acquisition of Consumer durable business of Lloyd Electric and Engineering Limited, a listed Company and trade mark âLloydâ from Fedders Lloyd Corporation Limited, a Company incorporated under the Companies Act 1956. The Consumer durable business of Lloyd consist of business of importing, trading, marketing, exporting, distribution, sale of air conditioners, televisions, washing machines and other household appliances and assembling of televisions, which has been acquired by the Company on slump sale basis at an enterprise value ofRs,1600 crores on free cash and free debt basis.
20. Disclosures as required by Indian Accounting Standard (Ind AS 101) first time adoption of Indian Accounting Standards
These are Companyâs first financial statements prepared in accordance with Ind AS.
The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS balance sheet as at April 1, 2015 (The Companyâs date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.
A. Exemptions and exceptions availed
A.1 Ind-AS optional exemptions :
I nd AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
A.1.1 Business combinations
Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.
The Company has availed the said exemption and elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Accordingly business combinations occurring prior to the transition date have not been restated.
A.1.2 Deemed cost
Ind AS 101 permits a first time adopter to elect to fair value of its property, plant and equipment as recognized in financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition or apply principles of Ind AS retrospectively. Ind AS 101 also permits the first time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS. This exemption can be also used for intangible assets covered by Ind-AS 38.
The Company has elected to consider fair value of its property, plant and equipment other than land and capital work in progress as its deemed cost on the date of transition to Ind AS. The Company has used depreciated replacement cost technique to compute the fair value on the date of transition. For Land and CWIP and Intangible assets the Company has applied principles of Ind AS 16 and Ind AS 38 retrospectively from the date of acquisition of tangible and intangible assets respectively.
A.1.3 Share based payment transactions
Ind AS 101 permits a first time adopter to elect not to apply principles of Ind AS 102 to liabilities arising from share based payment transactions that were settled before the date of transition.
The Company has elected not to apply Ind AS 102- âShare based paymentâ on stock options that vested before date of transition.
A.1.4 Leases
Appendix C to Ind AS 17-â Leasesâ requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind-AS except where the effect is expected to be not material.
The Company has elected to apply this exemption for such contracts/arrangements.
A.1.5 Investments in subsidiaries, associates and joint ventures
Ind AS 101 permits the first time adopter to measure investment in subsidiaries, joint ventures and associates in accordance with Ind AS 27 at one of the following:
a) cost determined in accordance with Ind AS 27 or
b) Deemed cost:
(i) fair value at date of transition
(ii) previous GAAP carrying amount at that date.
The Company has elected to consider previous GAAP carrying amount of its investments in Subsidiaries, Joint ventures and Associates on the date of transition to Ind AS as its deemed cost for the purpose of determining cost in accordance with principles of IND AS 27- âSeparate financial statementsâ.
A.2 Ind AS mandatory exceptions
A.2.1 Estimates
An entity estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
(i) Investments in debt instruments carried at amortised cost; and
(ii) Impairment of financial assets based on expected credit loss model.
A.2.2 Derecognition of financial assets and financial liabilities
Ind AS 101 requires a first time adopter to apply the derecognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. Accordingly, the Company has applied the derecognition requirement for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after date of transition to Ind AS.
A.2.3 Classification of financial assets and liabilities
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of facts and circumstances that exist on the date of transition to Ind AS. Accordingly, the Company has applied the above requirement prospectively.
A.2.4 Impairment of financial assets
I nd AS 101 requires an entity to assess and determine the impairment allowance on financial assets as per Ind AS 109 using the reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments which were initially recognized and compare that to the credit risk at the date of transition to Ind AS. The Company has applied this exception prospectively.
Note: The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note.
Notes to the reconciliation of Balance Sheet as at April 1, 2015 and March 31, 2016 and the total comprehensive income for the year ended March 31, 2016. A. Property, Plant and Equipment (PPE)
The Company has elected the option of fair value as deemed cost for property, plant & equipment other than Land and Capital work in progress and intangible assets on the date of transition to Ind AS. This has resulted in increase ofRs,137.33 crores as at April 01, 2015 andRs,126.61 crores as at March 31, 2016 in the value of PPE with corresponding in deferred tax liability ofRs,47.53 crores.
This lead to additional depreciation ofRs,12.69 crores during the year ended March 31, 2016. Further, the Company has sold some of the assets which were fair valued as on the transition date. Under Ind AS, such sale has resulted into reduction of loss on sale of assets byRs,1.97 crores. The Company has also separately disclosed the non-current held for sale amounting toRs,0.39 crores as on April 1, 2015 andRs,0.10 crores as on March 31, 2016 which were shown in the schedule of Property, plant & equipment in the previous GAAP.
B Amortized cost of financial assets and financial liabilities
(i) Under the previous GAAP, interest free security deposit (that are refundable in cash on completion of lease term) are recorded at their transaction value. Under Ind AS all financial assets are required to be recognized at fair value. Accordingly the Company has fair valued the security deposit retrospectively. Difference between the transaction value and fair value is recognized as prepaid rent as on the date of transition. Due to this security deposit is decreased byRs,1.42 crores andRs,1.80 crores, prepaid rent is increased byRs,1.32 crores andRs,1.68 crores as at April 1, 2015 and March 31, 2016 respectively with corresponding decrease in total equity byRs,0.08 crores as on transition date. Profit for the year ended March 31, 2016 is decreased byRs,0.04 crores due to amortization of prepaid rent byRs,0.43 crores which is partially set off with the notional interest income ofRs,0.39 crores. {refer note (b), (c), (f), and (g)}
(ii) Under the previous GAAP, interest free retention money (that are refundable in cash on completion of lease term) are recorded at their transaction value. Under Ind AS all financial liabilities are required to be recognized at fair value. Accordingly the Company has fair valued the security deposit received during the year. Difference between the transaction value and fair value is recognized as rent received in advance during the year ended March 31, 2016. Due to this security deposit is decreased byRs,0.26 crores andRs,1.44 crores as on April 1, 2015 and March 31, 2016 respectively and rent received in advance is increased by 1.25 crores as at March 31, 2016 with corresponding increase in equity byRs,0.26 crores on transition date. Profit for the year ended March 31, 2016 is decreased byRs,0.06 due to amortization of rent in advance byRs,0.02 crores which is set off with the notional interest expense ofRs,0.08. crores. (refer note (j), (k) and (l)}
(iii) Under the previous year, interest accrued on investment in NHAI bonds was shown as interest accrued in other current assets. Under Ind AS investment in Bonds are financial assets and are qualified to be recognized at mortised cost at reporting date as per Ind AS 109. Accordingly the Company has measured investment in bonds at amortised cost at reporting date. Due to this investment is increased byRs,2.44 crores with corresponding decrease in interest accrued by same amount as at March 31, 2016. There is no impact on total equity and profit. {refer note (a) and (g)}
(iv) Under the previous GAAP, transaction costs incurred in connection with borrowings are amortized upfront and charged to profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method. Accordingly long term borrowing is increased byRs,0.15 crore and Rs, Nil, current maturities of long term borrowing is increased by 0.12 crores andRs,0.18 crores with the corresponding decrease in interest accrued on borrowing byRs,0.32 crores andRs,0.18 crores as at date of transition and as at March 31, 2016 respectively. The profit the year ended March 31, 2016 is reduced byRs,0.05 crores as a result of additional interest expense. {refer note (i), (k) and (l)}
(v) Under the previous year, interest accrued on Fixed deposit was shown as interest accrued in other current assets. Under Ind AS fixed deposits are financial assets and are qualified to be recognized at amortized cost at reporting date as per Ind AS 109. Accordingly the Company has measured them at amortized cost at reporting date. Accordingly amortised cost of fixed deposit is increased byRs,9.94 crores andRs,21.44 crores as at the date of transition and March 31, 2016 respectively with the corresponding decrease in interest accrued on fixed deposit. There is no impact on total equity and profit. {refer note ((b), (d), (e), and (g)}
C Provision
Under the previous GAAP, the Company has accounted for provisions, including long-term provision, at the undiscounted amount. In contrast, Ind AS 37 requires that where the effect of time value of money is material, the amount of provision should be the present value of the expenditures expected to be required to settle the obligation. The discount rate should not reflect risks for which future cash flow estimates have been adjusted. Ind AS 37 also provides that where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognized as borrowing cost. Discounting of provisions led to decrease in warranty provision byRs,0.55 crores as at the date of transition and byRs,0.76 crores as on March 31, 2016. Profit for the year ended March 31, 2016 has been increased byRs,0.21 crores.
D Deferred Tax
Under the previous GAAP, deferred tax is
Mar 31, 2015
CORPORATE INFORMATION
Havells India Limited (''the Company'') is a public limited Company
domiciled in India and incorporated under the provisions of the
Companies Act, 1956. The Company is listed on BSE Limited and National
Stock Exchange of India Limited. The Company is electrical and power
distribution equipment manufacturer with products ranging from
Industrial and Domestic Circuit Protection Switchgears, Cables, Motors,
Pumps, Fans, Power Capacitors, CFL Lamps and Luminaries for Domestic,
Commercial and Industrial applications, Modular Switches, Water Heaters
and Domestic Appliances covering the entire range of household,
commercial and industrial electrical needs. The Company alongwith its
subsidiary companies owns some of the prestigious global brands like
Crabtree, Sylvania, Concord, Luminance, Linotile and Standard. The
Company''s manufacturing facilities are located at Faridabad in
Haryana, Alwar and Neemrana in Rajasthan, Haridwar in Uttarakhand,
Sahibabad and Noida in Uttar Pradesh and Baddi in Himachal Pradesh. The
research and development facilities are located at Head office, Noida
(Uttar Pradesh) and at some of the units which have been approved by
Department of Scientific & Industrial Research, Ministry of Science &
Technology, Government of India, New Delhi.
a) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs. 1/- per share (previous year Rs. 5/- per share). Each holder of
equity shares is entitled to one vote per share. The Company declares
and pays dividend in Indian rupees. A final dividend of Rs. 3/- per
share of Rs. 1/- each (previous year Rs. 10/- per share of Rs. 5/-each)
has been recommended by the Board subject to approval of shareholders
in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
b) Shares reserved for issue under Stock Option
90,550 Equity shares of Rs. 1/- each ( Previous Year 39,345 equity
shares of Rs. 5/- each) are reserved for the issue under Employees
Stock Option Plan (ESOP) of the Company. {refer note no. 31(10)(a)}
c) External commercial borrowing is from HSBC Bank (Mauritius) Limited.
The said loan is repayable in 12 equal quarterly instalments of Rs.
10.43 crores (USD 1,666,667) starting from 26th April, 2014 carrying an
interest rate of LIBOR 195 bps per annum, and is secured by way of :-
i) first charge on movable fixed assets acquired out of the said loan
and
ii) equitable mortgage over land and building situated at Plot no. 2A,
sector 10, BHEL Industrial Estate, Haridwar, Uttarakhand.
b) Current maturities of long-term borrowings is Rs. 41.73 crores
(Previous Year Rs. 40.07 crores)
c) Deposit from public are in respect of dealers for the amount payable
under QRG Growth incentive Scheme, out of which a sum of Rs. 52.67
crores has been invested in Mutual Fund on behalf of dealers, Rs. 1.06
crores has been paid to dealers and remaining amount of Rs. 9.22 crores
has been transferred to current liabilities under sales incentive
payable.
a) Trade payables include acceptances of Rs. 25.83 crores (previous
year Rs. 22.65 crores).
b) Trade payables include Rs. 18.51 crores due to subsidiary companies
(previous year Rs. 13.27 crores) {refer note no. 31(13)(c)}
c) Information as required to be furnished as per section 22 of the
Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act)
for the period ended 31st March, 2015 is given below. This information
has been determined to the extent such parties have been identified on
the basis of information available with the Company.
a) Investor Education and Protection Fund is being credited by the
amount of unclaimed dividend after seven years from the due date. The
Company has transferred Rs. 0.03 crores (previous year Rs. 0.03 crores)
out of unclaimed dividend pertaining to the financial year 2006-07 to
Investor Education and Protection Fund of Central Government in
accordance with the provisions of section 205C of the Companies
Act,1956.
b) The Company has made a provision of excise duty payable amounting to
Rs. 12.12 crores (previous year Rs. 10.99 crores) on stocks of finished
goods and scrap material at the end of the year except units which are
exempt from excise duty. Excise duty is considered as an element of
cost at the time of manufacture of goods.
c) Other liabilities include expenses payable, bonus payable, retention
money, liabilities towards banks for receivable buyout facilities and
other miscellaneous deposits.
2 SHORT TERM PROVISIONS
a) Provision for warranties
A provision is recognised for expected warranty claims and after sales
services on products sold during the last one to two years, based on
past experience of the level of repairs and returns. It is expected
that significant portion of these costs will be incurred in the next
financial year and all will have been incurred within two years after
the reporting date. Assumptions used to calculate the provisions for
warranties were based on current sales levels and current information
available about returns based on one to two years warranty period for
all products sold. The table below gives information about movement in
warranty provisions.
i) During the financial year 2010-11, the Central Excise Department,
Jalandhar raised a penalty demand for Rs. 0.10 crores (previous year
Rs. 0.10 crores) towards differential excise duty on finished goods
sold by the branches at higher selling price. The Company is contesting
the same before the Central Excise and Service Tax Appellate Tribunal
(CESTAT). A provision of Rs. 0.10 crores (previous year Rs. 0.10
crores) has been made towards the liability on this account.
ii) The Company has challenged the constitutional validity of Entry Tax
in Rajasthan, Himachal Pradesh, Orissa and West Bengal before the
Hon''ble High Courts in respective states. During the year 2014-15, a
provision of Rs. 6.32 crores (previous year Rs. 5.13 crores) has been
made on this account and the liability as on date is Rs.13.51 crores
(previous year Rs. 7.21 crores).
iii) During the financial year 2011-12, a demand of Rs. 0.21 crores
(previous year Rs 0.21 crores) has been raised by the Excise and
Taxation officer, Jalandhar. The Company is contesting the same before
the Deputy Excise & Taxation Commissioner, Jalandhar Division. However,
the Company expects the liability of Rs. 0.06 crores (previous year Rs
0.06 crores) on account of input tax credit on diesel and provision has
been made accordingly.
iv) That a demand of Rs. 0.03 crores (previous year Rs. 0.03 crores)
has been raised by the Income Tax Department for the financial year
2003-04. The same is contested before the Hon''ble Income Tax
Appellate Tribunal. However, the Company expects the liability of Rs.
0.02 crores (previous year Rs. 0.02 crores) and the provision has been
made accordingly.
c) Provision for dividend
The Board of Directors has recommended a final dividend of Rs. 3/- per
share of Rs. 1/- each (previous year of Rs. 10/- per share of Rs. 5/-
each). The payment of final dividend is subject to the approval of the
shareholders in the ensuing Annual General Meeting of the Company.
(Rs. in Crores)
2014-15 2013-14
A Contingent liabilities (to the extent not
provided for)
a Claims / Suits filed against the Company
not acknowledged as debts 5.21 14.09
b Liability towards banks against receivable
buyout facilities {refer point (i)} 106.30 86.80
c Bonds to excise department against export
of excisable goods / purchase of 3.30 18.57
goods without payment of duty (to the extent
utilised)
d Disputed tax liabilities in respect of
pending cases before appellate authorities 100.80 70.54
{Amount deposited under protest Rs. 20.65
crores (previous year Rs. 8.35 crores)}
{refer point (ii)}
e Demand raised by Uttarakhand Power
Corporation Limited contested before 1.00 1.00
electricity Ombudsman, Dehradun
{Amount deposited under protest Rs. 1.00
crore (previous year Rs. 1.00 crore)}
f Corporate Guarantees given on behalf of
subsidiary companies (to the extent - 143.13
of outstanding obligation) {refer point
(iii)}
g Custom duty payable against export
obligation {refer point (iv)} 12.14 19.18
Notes:
i) a) The Company has utilised a receivable buyout facility of Rs.
210.98 crores (previous year Rs. 227.69 crores) from IDBI Bank Limited
against insurance backed trade receivables with a recourse of 10% of
facility amount. Accordingly, the trade receivables stand reduced by
the said amount. A sum of Rs. 14.18 crores (previous year Rs. 13.78
crores) on account of charges paid for this facility has been debited
to trade receivables factoring charges account.
b) The Company has utilised a receivable buyout facility of Rs. 70.38
crores (previous year Rs. 72.82 crores) from Axis Bank Limited against
insurance backed trade receivables with a recourse of 10% of the
facility amount. Accordingly, the trade receivables stand reduced by
the said amount. A sum of Rs. 5.11 crores (previous year Rs. 5.31
crores) on account of charges paid for this facility has been debited
to trade receivables factoring charges account.
c) During the year, the Company has arranged a receivable buyout
facility of Rs. 137.41 crores (previous year Rs. 40.47 crores) from The
Hongkong and Shanghai Banking Corporation Limited against insurance
backed trade receivables with a recourse of 10% of the facility amount.
Accordingly, the trade receivables stand reduced by the said amount. A
sum of Rs. 6.31 crores (previous year Rs. 4.68 crores) on account of
charges paid for this facility has been debited to trade receivables
factoring charges account.
d) The Company has arranged channel finance facility for its customers
of Rs. 371.94 crores (previous year Rs. 356.46 crores) from Yes Bank
Limited and Axis Bank Limited against insurance backed trade
receivables with a recourse of 10% of the facility amount.
Besides the above, show cause notices from various departments received
by the Company have not been treated as contingent liabilities since
the Company has adequately represented to the concerned departments and
does not expect any liability on this account.
iii) a) The Company has given a corporate guarantee of Rs. 31.30 crores
(USD 5 millions) {previous year Rs. 109.98 crores (USD
18.30 millions)} to Standard Chartered Bank (Hong Kong) Limited in
respect of the credit facilities sanctioned to its subsidiary Company
''Havells Exim Limited''. The outstanding amount of the said credit
facility as on the date of the balance sheet is Rs. Nil (previous year
Rs. Nil).
b) The Company had given an irrevocable and unconditional corporate
guarantee to Standard Chartered Bank Limited, London for Rs. 175.53
crores (Euro 26 millions) {previous year Rs. 214.70 crores (Euro 26
millions)} in respect of facility sanctioned to its subsidiary Company
''Havells Holdings Limited'' as per Deed of Guarantee executed
between the Company and Standard Chartered Bank Limited, London on 29th
March 2013. The outstanding amount of the said credit facility as on
the date of the balance sheet is Rs. Nil {previous year Rs. 143.13
crores (Euro 17.33 millions)}. The bankers have released the corporate
guarantee during the year.
iv) a) The Company is under obligation to export goods within a period
of eight years from the date of issue of EPCG licenses issued in terms
of para 5.2 of Foreign Trade Policy 2009-2014. As on the date of
balance sheet, the Company is under obligation to export goods worth
Rs. 68.39 crores (previous year Rs. 95.47 crores) within the stipulated
time as specified in the respective licenses. Out of the said amount,
the Company has fulfilled the export obligation of Rs. 65.63 crores
(previous year Rs. 82.65 crores) in respect of which application for
Export Obligation Discharge Certificates (EODC) will be filed with the
Director General Foreign Trade (DGFT) within the stipulated time.
Custom duty payable against the said obligation is Rs. 8.55 crores
(previous year Rs. 13.89 crores)
b) Further the Company is under obligation to export goods worth Rs.
55.48 crores (previous year Rs. 70.46 crores) in respect of duty free
imports made by the Company against Advance Licenses. Out of the said
amount, export obligation of Rs. 54.32 crores (previous year Rs. 60.65
crores) has been fulfilled by the Company as at the end of the year in
respect of which application for Export Obligation Discharge
Certificates (EODC) will be filed with the Director General Foreign
Trade (DGFT) within the stipulated time. Custom duty payable against
the said obligation is Rs. 3.59 crores (previous year Rs. 5.29 crores)
D Other Litigations
i) One of the customer of the Company had raised claims against the
Company relating to supply of switchgear products. The Company and the
customer, considering their long-term relationship with each other and
without admission of liability on part of either party, have settled
their respective claims. The full and final settlement of the claim
have been arrived at and the Company has agreed to pay an amount of Rs.
69.69 crores to the customer, which have appropriately accounted for in
the financial statements.
ii) Additionally, the Company has some entry tax and other tax related
litigation of Rs. 13.69 crores (previous year Rs. 7.39 crores) against
which liability has been assessed as probable and adequate provisions
have been made with respect to the same. {refer note no. 11(b)}
3 The Company has entered into a Joint Venture agreement with
''Shanghai Yaming Lighting Co., Ltd., Shanghai, China'' on 26th
December, 2011 for forming a Joint Venture Company for production of
lighting lamps and lighting accessories and sales / services of related
products. Accordingly, a Company ''Jiangsu Havells Sylvania Lighting
Co., Ltd.'' a Jointly Controlled Entity has been formed vide
certificate of approval dated 13th February, 2012 issued by the
People''s Government of Jiangsu Province, China. The Company has an
investment of Rs. 30.87 crores (RMB 33.00 millions) {previous year Rs.
30.96 crores (RMB 33.00 millions)} towards 50% of capital contribution
in the said Joint Venture Company as on the date of balance sheet.
The Company''s interest in Joint Venture is reported as a Non-Current
Investment (refer note no. 13) and is stated at cost. The disclosure in
respect of Company''s Joint Venture''s assets and liabilities are
given on the basis of audited financial statements of the joint venture
Company as at 31st December, 2014.
4 Depreciation
(a) Till 31st March, 2014, depreciation was being provided on straight
line method as per the rates prescribed in Schedule XIV of the
Companies Act, 1956. The Schedule XIV has been replaced by Schedule II
of the Companies Act, 2013 and the depreciation has been charged on
straight line method on the basis of useful lives of the assets in the
manner as prescribed in Schedule II of the Companies Act, 2013.
(b) Till 31st March, 2014, the assets for a value not exceeding Rs.
5000/- were written off in the year of purchase as per Schedule XIV of
the Companies Act, 1956. Schedule II of the Companies Act, 2013 does
not recognize such practice. The depreciation on assets for a value
not exceeding Rs. 5000/- has been provided on the basis of their useful
lives in the manner as prescribed in the Schedule II of the Companies
Act, 2013.
5 (a) The Company has availed working capital limits from banks under
consortium of Canara Bank, IDBI Bank Limited, State Bank of India,
Standard Chartered Bank, ICICI Bank Limited, Yes Bank Limited and
Hongkong and Shanghai Banking Corporation Limited.
(b) Working capital limits from consortium banks are secured by way of:
i) pari-passu first charge by way of hypothecation on stocks of raw
materials, semi-finished goods, finished goods, stores and spares, bill
receivables, book debts and all movable and other current assets of the
Company.
ii) pari-passu first charge by way of equitable mortgage of land and
building at 14/3, Mathura Road, Faridabad.
iii) pari-passu second charge by way of hypothecation of plant and
machinery, generators, furniture and fixtures, electric fans and
installations.
(c) The Company has a debit balance in cash credit accounts as on the
date of Balance Sheet.
5 The Company''s manufacturing units at Village Gularwala, Baddi
Distt.-Solan (Unit-II) (Himachal Pradesh) and Haridwar (Uttarakhand)
are exempted from excise duty vide Notification No. 49 and 50/2003
issued by Government of India, Ministry of Finance, Department of
Revenue, Central Board of Excise and Customs, New Delhi and the profits
of the said units are eligible for deduction as per the provisions
under section 80-IC of the Income Tax Act, 1961.
Defined Benefit Plan
The employees'' Gratuity Fund Scheme, which is a defined benefit plan,
is managed by the trust maintained with Life Insurance Corporation of
India (LIC) and Bajaj Allianz Life Insurance Company Limited. The
present value of obligation is determined based on actuarial valuation
using the Projected Unit Credit Method, which recognises each period of
service as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final
obligation.
i) The plan assets are maintained with Life Insurance Corporation of
India (LIC) and Bajaj Allianze Life Insurance Company Limited.
j) The Company expects to contribute Rs. 11.00 crores (previous year
Rs. 5.00 crores) to the plan during the next financial year.
The estimates of rate of escalation in salary considered in actuarial
valuation are after taking into account inflation, seniority, promotion
and other relevant factors including supply and demand in the
employment market. The above information is as certified by the
Actuary.
The expected rate of return on plan assets is determined considering
several applicable factors, mainly the composition of plan assets held,
assessed risks, historical results of return on plan assets and the
Company''s policy for the plan assets management.
6 Employee Stock Option Scheme
(a) The Company, vide special resolution passed by way of postal ballot
on 23rd January 2013, had approved "Havells Employees Stock Option
Plan 2013" (ESOP 2013 or Plan) for granting Employees Stock Options
in the form of Equity Shares to eligible employees. The plan is
administered by Havells Employees Welfare Trust ("EW Trust") under
the supervision of the Nomination and Remuneration Committee of the
Board of Directors of the Company ("Committee") in compliance with
the provisions of SEBI (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 (SEBI Guidelines) and other
applicable provisions for the time being in force. The first grant date
of the options under the approved ESOP 2013 Plan was 8th April, 2013.
The options are vested equally over a period of 2 years after the date
of grant, and the said options can be exercised any time within a
period of 30 days from the date of vesting and will be settled by way
of equity shares in accordance with the aforesaid plan.
During the financial year 2013-14, the Company had granted 45,939
options at Rs. 677/- per share and the exercise price was Rs. 338.50
per share.
The weighted average remaining contractual life for the stock option
outstanding as at 31st March, 2015 is 0.05 year (previous year 0.60
year). The exercise price for options outstanding at the end of year is
Rs. 67.70 per share. The average market share price of ESOP exercised
during the year is Rs. 254.80 per share.
The weighted average fair value of stock option granted during the year
is Rs. 237.48 per share. The Black Scholes valuation model has been
used for computing the weighted average fair value considering the
following inputs:
(b) The Company had, vide special resolution passed by way of postal
ballot on 9th June, 2014 and by way of amendment to the "Havells
Employees Stock Option Plan 2013" (ESOP 2013 or Plan) included Part B
- "Havells Employees Stock Purchase Plan 2014 and renamed it as
"Havells Employees Long Term Incentive Plan 2014" for granting
Employees Stock Options in the form of Equity Shares to eligible
employees. The purchase price of the options was approved on 26th June,
2014 under the supervision of the Nomination and Remuneration Committee
of the Board of Directors of the Company. The options were vested as on
15th July, 2014 after the grant date and in accordance with the terms
and conditions of the plan, the said options can be exercisable within
a period of 30 days from the date of vesting and settled by way of
equity shares. Accordingly during the year, Equity Shares of Rs. 1/-
each were allotted to eligible employees at Rs. 223.17 per share. As
per the scheme, 50% of shares are under lock-in-period of one year and
remaining 50% are under lock-in-period of two years.
Further, as per the scheme, the Company shall pay 50% of issue price
for differential bonus shares to eligible employees as exgratia / bonus
for the said amount.
In respect of stock options granted pursuant to the Company''s stock
options scheme, the intrinsic value of the options (excess of market
price of the share over the exercise price of the option) is treated as
expense and accounted as employee compensation over the vesting period
and will be paid in two equal instalments annually.
(c) The Company has debited an expense of Rs. 3.73 crores (previous
year Rs. 0.99 crores) to the statement of profit and loss under
Employee Stock Option Scheme during the financial year.
7. Corporate Social Responsibility
As per provisions of section 135 of the Companies Act, 2013, the
Company has to provide at least 2% of average net profits of the
preceding three financial years towards Corporate Social Responsibility
("CSR"). Accordingly, a CSR committee has been formed for carrying
out CSR activities as per the Schedule VII of the Companies Act, 2013.
The Company has contributed a sum of Rs. 9.79 crores towards this cause
and debited the same to the statement of profit and loss. The funds are
primary allocated to QRG foundation, a society registered under section
12A of the Income Tax Act, 1961 for undertaking Mid-Day meal scheme,
Ashoka University, sponsored by International Foundation for Research
and Education (IFRE) which is a "Not for Profit" Company
incorporated under the provisions of section 25 of the erstwhile
Companies Act, 1956 for the promotion of education and to the
Vivekanand Ashram for providing free education to underprivileged
students.
8. Segment Reporting
The segment reporting of the Company has been prepared in accordance
with Accounting Standard-17, "Segment Reporting" ( specified under
section 133 of the Companies Act, 2013, read with Rule 7 of Companies
(Accounts) Rules, 2014 ).
Segment Reporting Policies
a) Identification of Segments:
Primary- Business Segment
The Company has identified four reportable segments viz. Switchgears,
Lighting and fixtures, Cables and Electrical Consumer Durables on the
basis of the nature of products, the risk and return profile of
individual business and the internal business reporting systems. The
products included in each of the reported business segments are as
follows:
(i) The switchgear segment comprises of domestic and the industrial
switchgears, electrical wiring accessories, industrial motors, pumps
and capacitors.
(ii) The cable segment comprises of flexible cables and industrial
underground cables.
(iii) The lighting and fixture segment comprises of energy saving lamps
(CFL) and luminaries.
(iv) The electrical consumer durable segment comprises of fans, water
heaters and domestic appliances.
Secondary- Geographical Segment
The analysis of geographical segment is based on geographical location
of the customers.
b) Revenue and expenses have been identified to a segment on the basis
of relationship to operating activities of the segment. Revenue and
expenses which relate to enterprise as a whole and are not allocable to
a segment on reasonable basis have been disclosed as "Unallocated".
c) Segment assets and segment liabilities represent assets and
liabilities in respective segments. Investments, tax related assets,
borrowings and other assets and liabilities that can not be allocated
to a segment on reasonable basis have been disclosed as
"Unallocated".
9 a) The Company has taken various residential / commercial premises
under cancellable operating leases. These lease agreements are normally
renewed on expiry. There are no restrictions placed upon the Company by
entering into these leases and there are no subleases.
10 Subsequent Event
The Company has acquired 51% stake in Promptec Renewable Energy
Solution Private Limited, having its registered office at Bengaluru,
Karnataka for a consideration of Rs. 29.08 crores as per the share
subscription cum purchase agreement dated April 21, 2015 . The said
Company is engaged in marketing and manufacturing of LED products
including street lighting, office lighting and solar lighting.
11 The figures have been rounded off to the nearest crore of rupees
upto two decimal places. The figure 0.00 wherever stated represents
value less than Rs. 50,000/-.
12 Previous year figures has been regrouped/reclassiffed wherever
necessary to make them comparable with the current year figures.
13 Note No.1 to 31 form integral part of the balance sheet and
statement of profit and loss.
Mar 31, 2014
A) terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.
5/- per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividend in Indian rupees. The
Board of Directors at its meeting held on 14th March, 2014 declared an
interim dividend of Rs. 5/- per equity share of Rs. 5/- each. A Final
dividend of Rs. 10/- per share (previous year Rs. 7.50/- per share) has
been recommended by board subject to the approval of shareholders in
the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
b) Shares reserved for issue under options :
39,345 shares are reserved for the issue under Employee Stock Option
Plan (ESOP) of the Company {refer note no. 31(10)}
c) aggregate number of shares issued as fully paid up pursuant to
contract without payment being received in cash or by way of bonus
shares during the period of five years immediately preceding the date of
Balance Sheet:
d) Provision for litigations
i) During the FY 2010-11, the Central Excise Department, Jalandhar
raised a penalty demand for Rs. 0.10 crore (previous year 0.10 crore)
towards differential excise duty on finished goods sold by the branches
at higher selling price. The Company is contesting the same before the
Central Excise and Service Tax Appellate Tribunal (CESTAT). A provision
of Rs. 0.10 crore (previous year 0.10 crore) has been made towards the
liability on this account.
ii) The Company has challenged the constitutional validity of Entry Tax
in Rajasthan, Himachal pradesh, Orissa and West Bengal before the
Hon''ble High Courts in respective states. During the year 2013-14, a
provision of Rs. 5.13 crores (previous year Rs. 1.57 crores) has been made
on this account and the liability as on date is Rs. 7.21 crores (previous
year Rs. 2.82 crores).
iii) During the FY 2011-12, a demand of Rs. 0.21 crore (previous year
0.21 crore) has been raised by the Excise and Taxation officer,
Jalandhar. The Company is contesting the same before the Deputy Excise
& Taxation Commissioner, Jalandhar Division. However, the Company
expects the liability of Rs. 0.06 crore (previous year 0.06 crore) on
account of input tax credit on diesel and provision has been made
accordingly.
iv) A demand of Rs. 0.03 crore (previous year 0.03 crore) has been raised
by the Income Tax Department for the FY 2003-04. The same is contested
before the Hon''ble Income Tax Appellate Tribunal. However, the Company
expects the liability of Rs. 0.02 crore (previous year 0.02 crore) and
the provision has been made accordingly.
e) Provision for dividend
The Board of Directors has recommended a final dividend of Rs. 10/-
(previous year Rs. 7.50/-) per equity share of Rs. 5/- each in addition to
an interim dividend of Rs. 5/- each (previous year nil) already paid for
the year ended March 31, 2014. The payment of final dividend is subject
to the approval of the shareholders in the ensuing Annual General
Meeting of the Company.
Based on favorable decisions in similar cases, legal opinions taken by
the Company and discussions with the solicitors, the Company does not
expect any liability against these matters and hence no provision has
been considered in the books of accounts.
Besides the above, show cause notices from various departments have
been received by the Company have not been treated as contingent
liabilities since the Company has adequately represented to the
concerned departments and does not expect any liability on this
account.
iv) a) The Company has given a corporate guarantee of Rs. 109.98 crores
(USD 18.30 millions) {previous year Rs. 99.53 crores (USD 18.30
millions)} to Standard Chartered Bank (Hong Kong) Limited in respect of
the credit facilities sanctioned to its subsidiary company ''Havells
Exim Limited''. The outstanding amount of the said credit facility as on
the date of the balance sheet is Rs. Nil {(previous year Rs. 97.24 crores
(USD 17.88 millions)}. Subsequent to the date of balance sheet, the
said guarantee has been reduced to Rs. 30.05 crores (USD 5 millions).
b) The Company has given an irrevocable and unconditional corporate
guarantee to Standard Chartered Bank Limited, London for Rs. 214.70
crores (Euro 26 millions) {previous year Rs. 180.81 crores (Euro 26
millions)} in respect of facility sanctioned to its subsidiary company
''Havells Holdings Limited'' as per Deed of Guarantee executed between
the Company and Standard Chartered Bank Limited, London on 29th March,
2013. The outstanding amount of the said credit facility as on the date
of the balance sheet is Rs. 143.13 crores (Euro 17.33 millions) {previous
year Rs. 180.81 crores (Euro 26 millions)}.
v) a) The Company is under obligation to export goods within a period
of eight years from the date of issue of EPCG licenses issued in terms
of para 5.2 of Foreign Trade Policy 2009-2014. As on the date of
balance sheet, the Company is under obligation to export goods worth Rs.
95.47 crores (previous year Rs. 125.80 crores) within the stipulated time
as specified in the respective licenses. Out of the said amount, the
Company has fulfilled the export obligation of Rs. 82.65 crores (previous
year Rs. 86.44 crores) in respect of which application for Export
Obligation Discharge Certificates (EODC) will be fled with the Director
General Foreign Trade (DGFT) within the stipulated time.
b) Further the Company is under obligation to export goods worth Rs.
70.46 crores (previous year Rs. 60.46 crores) in respect of duty free
imports made by the Company against Advance Licenses. Out of the said
amount, export obligation of Rs. 60.65 crores (previous year Rs. 49.70
crores) has been fulfilled by the Company as at the end of the year in
respect of which application for Export Obligation Discharge
Certificates (EODC) will be fled with the Director General Foreign Trade
(DGFT) within the stipulated time.
1. The Company has entered into a Joint Venture agreement with ''Shanghai
Yaming Lighting Co., Limited, Shanghai, China'' on 26th December, 2011
for forming a Joint Venture Company for production of lighting lamps
and lighting accessories and sales/services of related products.
Accordingly, a Company ''Jiangsu Havells Sylvania Lighting Co., Limited''
a Jointly Controlled Entity has been formed vide certificate of approval
dated 13th February, 2012 issued by the People''s Government of Jiangsu
Province, China. The Company has invested a sum of Rs. 30.96 crores (RMB
33.00 millions) {previous year Rs. 16.85 crores (RMB 19.19 millions)}
towards 50% of capital contribution in said Joint Venture Company as on
the date of balance sheet.
The Company''s interest in Joint Venture is reported as a Non-Current
Investment (refer note 13) and is stated at cost. The disclosure in
respect of Company''s Joint Venture''s assets and liabilities are given
on the basis of audited financial statements of the joint venture
company as at 31st, December, 2013.
(b) Working capital limits from consortium banks are secured by way of:
i) pari-passu first charge by way of hypothecation on stocks of raw
material, semi-finished goods, finished goods, stores and spares, bill
receivables, book debts and all movable and other current assets of the
Company.
ii) pari-passu first charge by way of Equitable Mortgage on land and
building at 14/3, Mathura Road, Faridabad
iii) pari-passu second charge by way of hypothecation on plant and
machinery, generators, furniture and fixtures, electric fans and
installations.
(c) The Company has a debit balance in cash credit accounts as on the
date of Balance Sheet.
2. The Company had created a Business Reconstruction Reserve Account(
"BRR") in the FY 2009-10 by transfer of Rs. 400 crores from securities
premium account for the purpose of adjustment of certain expenses as
per the scheme of arrangement entered into by the Company with its
subsidiary and associate company as approved by the Hon''ble High Court
of Delhi vide their order dated 19.08.2010. As per the scheme of
arrangement, as and when the Board of Directors of the Company
determines that a part or whole of the balance remaining in BRR is no
longer required, then such unutilised amount can be transferred to the
General Reserve. Accordingly, during the year, the Company has
transferred unutilised amount of BRR of Rs. 398.46 crores to General
Reserve pursuant to resolution passed by the Board of Directors.
3. Companies (Accounting Standards) (Second Amendment Rules), 2011
issued by the Ministry of Corporate Affairs vide Notification dated
December 29, 2011, had amended Accounting Standard - 11 "The Effect of
Changes in Foreign Exchange Rates" and given an option to the companies
to adopt the treatment prescribed in the said notification in reference
to exchange differences arising on reporting of long term foreign
currency monetary items. The Company has, consistently following the
provisions of AS-11 as in the past, chosen not to adopt the alternate
treatment prescribed under the above notification. In accordance with
the accounting policy of the Company, a sum of Rs. 11.42 crores has been
recognised as exchange loss in respect of the long term foreign
currency monetary items during the year (previous year exchange loss Rs.
5.86 crores).
Out of the said loss, Rs. 10.73 crores (previous year Rs. 2.25 crores)
has been treated as finance cost being the exchange difference arising
from foreign currency borrowings to the extent they can be regarded as an
adjustment to interest costs as per Accounting Standard -16, "
Borrowing Costs" notified under the Companies (Accounting Standards)
Rules, 2006 (as amended).
Research and development facilities located at Head offce, Noida (Uttar
Pradesh) and other manufacturing units have been approved by Department
of Scientific & Industrial Research, Ministry of Science & Technology
for In-house Research & Development Facility and are eligible for
deduction under section 35(2AB) of the Income Tax Act,1961.
4. The Company''s manufacturing units at Baddi, (Himachal Pradesh) and
Haridwar (Uttarakhand) are exempted from excise duty vide Notification
No. 49 and 50/2003 issued by Government of India, Ministry of Finance,
Department of Revenue, Central Board of Excise and Customs, New Delhi
and the profits of the said units are eligible for deduction as per the
provisions under section 80-IC of the Income Tax Act,1961.
j) The plan assets are maintained with Life Insurance Corporation of
India (LIC) and Bajaj Allianze Life Insurance Company Limited
k) The Company expects to contribute Rs. 5.00 crores (previous year Rs.
3.75 crores) to the plan during the next financial year.
The estimates of rate of escalation in salary considered in actuarial
valuation are after taking into account inflation, seniority, promotion
and other relevant factors including supply and demand in the
employment market. The above information is as certified by the Actuary.
The expected rate of return on plan assets is determined considering
several applicable factors, mainly the composition of plan assets held,
assessed risks, historical results of return on plan assets and the
Company''s policy for the plan assets management.
5. employee Stock Option Scheme
a) The Company had, vide special resolution passed by way of postal
ballot on 23rd January 2013 approved "Havells Employees Stock Option
Plan 2013" (ESOP 2013 or Plan) for granting Employees Stock Options in
the form of Equity Shares to eligible employees. The plan is
administered by Havells Employees Welfare Trust ("EW Trust") under the
supervision of the Nomination and Remuneration Committee of the Board
of Directors of the Company ("Committee") in compliance with the
provisions of SEBI (Employee Stock Option Scheme and Employee Stock
purchase Scheme) Guidelines, 1999 (SEBI Guidelines) and any other
applicable provisions for the time being in force. The first grant date
of the options under the approved ESOP 2013 Plan was 8th April, 2013.
The options are vested equally over a period of 2 years after the date
of grant, and the said options can be exercised any time within a
period of 30 days from the date of vesting and will be settled by way
of equity shares in accordance with the aforesaid plan.
During the year, the Company has granted 45,939 options at Rs. 677/- per
share and the exercise price is Rs. 338.50/- per share.
In respect of stock options granted pursuant to the Company''s stock
options scheme, the intrinsic value of the options (excess of market
price of the share over the exercise price of the option) is treated as
expense and accounted as employee compensation over the vesting period.
Expense on Employee Stock Option Scheme debited to the Statement of
Proft and Loss during the FY 2013-14 is Rs. 0.99 crore.
b) During the year, financial statements of ''Havells Employee Welfare
Trust'' have been consolidated in the Standalone financial statements of
the Company, in accordance with the opinion of Expert Advisory
Committee (EAC) issued by the Institute of Chartered Accountants of
India. Accordingly, investments held by trust in the shares of the
Company and loan received by trust from the Company has been eliminated
with the issued share capital and securities premium and loan given by
the Company. Further, bank balance of Rs. 2.74 crores, advance received
by trust from Company''s employees of Rs. 4.21 crores has been
consolidated in respective account heads in the financial statements of
the Company.
6. Segment Reporting
The segment reporting of the Company has been prepared in accordance
with Accounting Standard-17, "Segment Reporting", notified under the
Companies (Accounting Standards) Rules, 2006 (as amended).
Segment Reporting Policies
a) identification of Segments:
Primary- Business Segment
The Company has identified four reportable segments viz. Switchgears,
Lighting and fixtures, Cables and Electrical Consumer Durables on the
basis of the nature of products, the risk and return profile of
individual business and the internal business reporting systems. The
products included in each of the reported business segments are as
follows:
(i) The switchgear segment comprises of domestic and the industrial
switchgears, electrical wiring accessories, industrial motors, pumps
and capacitors.
(ii) The cable segment comprises of flexible cables and industrial
underground cables.
(iii) The lighting and fixture segment comprises of energy saving lamps
(CFL) and luminaries.
(iv) The electrical consumer durable segment comprises of fans, water
heaters and domestic appliances.
Secondary- Geographical Segment
The analysis of geographical segment is based on geographical location
of the customers.
b) Revenue and expenses have been identified to a segment on the basis
of relationship to operating activities of the segment. Revenue and
expenses which relate to enterprise as a whole and are not allocable to
a segment on reasonable basis have been disclosed as "Unallocated".
c) Segment assets and segment liabilities represent assets and
liabilities in respective segments. Investments, tax related assets,
borrowings and other assets and liabilities that can not be allocated
to a segment on reasonable basis have been disclosed as "Unallocated".
7. a) The Company has taken various residential/commercial premises
under cancellable operating leases. These lease agreements are normally
renewed on expiry. There are no restrictions placed upon the Company by
entering into these leases and there are no subleases.
8. The figures have been rounded off to the nearest crore of rupees up to
two decimal places. The figure 0.00 wherever stated represents value
less than Rs. 50000/-.
9. Previous year figures has been regrouped/reclassified wherever
necessary to make them comparable with the current year figures.
10. Note No.1 to 31 form integral part of the balance sheet and
statement of profit and loss.
Mar 31, 2011
B CONTINGENT LIABILITIES (Rs.in crores)
2010-11 2009-10
a Estimated amount of capital contracts
remaining to be executed and not provided for
(net of advances) 23.13 32.65
b Bank guarantees and letter of credits
opened with bank (net of margin money) 115.82 87.38
c Bonds to excise department against export
of excisable goods/ purchase of goods without
payment of duty (to the extent utilised) 15.86 24.64
d Custom duty payable against export obligation 24.46 19.75
e Suits filed against the Company not acknowledged
as debts 3.46 0.45
f Liability towards banks against debtors buyout
facilities 35.23 27.08
g Disputed tax liabilities in respect of pending
cases before Appellate Authority (amount deposited
under protest Rs. 4.22 crores (previous year
Rs. 4.44 crores) 14.27 13.24
h Corporate Guarantee given on behalf of
subsidiary companies (to the extent of outstanding
obligation) 100.72 113.19
i Export bills discounted with banks 26.04 40.45
2 The Company has issued and allotted 6,23,87,406 fully paid-up equity
shares of Rs. 5/- each as fully paid up bonus shares in the ratio of
1:1 ranking pari passu with the existing equity shares of the Company
as approved in the Annual General Meeting held on 29th September 2010
by capitalisation of Rs. 21.68 crores from securities premium account
and Rs. 9.52 crores from General Reserve account.
3 The Company has been sanctioned a term loan of Rs. 140 Crores by
Canara Bank with an option to avail the same by way of foreign currency
loan for the purpose of expansion of manufacturing facilities at Baddi
(H.P), Haridwar (Uttarakhand) , Alwar (Rajasthan) and
Neemrana(Rajasthan) units. Out of the said loan, the Company has
availed a term loan of Rs. 130.18 crores (USD 28 Million) and utilised
the same for the purpose for which it was sanctioned. The same is due
for repayment in 16 (sixteen) equal quarterly instalments commencing
from 01.04.2011.
4 a) The IDBI Bank Limited has sanctioned a receivable buyout facility
of Rs. 250 crores to the Company. As per the terms with the bankers,
the debtors are insured and the bankers have recourse on the Company to
the extent of 5% of claim amount or Rs.0.02 crore, whichever is higher.
As on the date of Balance Sheet, total debtors assigned to the bankers
are at Rs. 241.04 crores (previous year Rs.199.30 crores). With the
result, the debtors at the end of the year stand reduced by the said
amount. A sum of Rs. 14.92 crores (previous year Rs.11.23 crores) on
account of charges paid for this facility has been debited to debtors
factoring charges account.
b) The Company has arranged channel finance facility for its customers
from Yes Bank Limited and Axis Bank Limited . As per the terms of the
bankers, the debtors are insured and the bankers have recourse on the
Company to the extent of 5% of claim amount or Rs.0.02 crore, whichever
is higher. As on the balance sheet date, the total debtors who have
availed this facility were at Rs. 116.73 crores (Previous year Rs.
42.28 crores).
5 The Company has been sanctioned a Packing Credit Facility of Rs. 50
crores by the Canara Bank. The outstanding bills discounted with the
Bank at the end of the year are at Rs. 26.04 crores (USD 5832855)
{Previous year Rs. 39.50 crores (USD 8750763)}. The sundry debtors
have been reduced by the amount of bills discounted with the bank.
6 The CENVAT credit and VAT credit in respect of Capital Goods has been
adjusted @ 100% to the cost of Fixed Assets. The CENVAT credit has been
availed @ 50% during the year and the balance will be claimed in the
subsequent year subject to the conditions as per Excise Rules. The VAT
credit has been availed as per the VAT rules applicable in the
respective states.
7 In respect of Baddi (other than 100% EOU unit) and Haridwar units,
the cenvat credit against fixed assets has not been availed and
provision for excise duty payable on finished goods and scrap materials
has not been made since the units are exempted from payment of excise
duty.
8 The Companys manufacturing units at Baddi (Himachal Pradesh) and
Haridwar (Uttarakhand) are exempted from excise duty vide Notification
No. 49 and 50/2003 issued by Government of India, Ministry of Finance,
Department of Revenue, Central Board of Excise and Customs, New Delhi
and the profit of the said units are eligible for deduction as provided
under section 80 IC of the Income Tax Act,1961.
9 Interest and other borrowing costs amounting to Rs. 1.00 crore
(previous year Rs.0.62 crore) have been capitalised to the carrying
cost of fixed assets being financing costs directly attributable to the
acquisition, construction or installation of the concerned qualifying
assets till the date of its commercial use.
10 The Company has invested a sum of Rs. 184.02 crores in its wholly
owned subsidiary Company Havells Holdings Limited during the year.
The total investment in the said subsidiary Company as at the end of
the year is Rs. 715.42 crores and there is an accumulated loss of Rs.
710.93 crores in the consolidated financial statements of the said
subsidiary company. The accumulated loss includes one time non
recurring expenses incurred by the subsidiary companies towards
severance and other restructuring costs to the tune of Rs. 495.81
crores which have started to yield tangible benefits.
a) The control over Sylvania group of Companies was acquired in
April,2007 with a long term view and was a strategic decision. A sum of
Rs. 335.42 crores (Euro 53.04 millions) was paid as premium towards the
said acquisition in the light of tangible and intangible benefits
accruing to the Company in the future.
b) The group companies have been provided with funding from a banking
group led by Barclays Capital in the form of a term loan of Rs. 479.99
crores (Euro 75.90 million) and a revolving facility of Rs. 235.25
crores (Euro 37.2 million). The terms of these loan agreements include
covenants related to the group companies performance. The management
constantly monitors the financial performance with respect to
compliance with the associated bank covenants. As on the date of the
Balance Sheet, the Company is in compliance with all financials
covenants.
c) The group companies experienced a positive trend in sales growth and
margin improvement during the year 2010-11 due to successful
implementation of restructuring plans, improvement in operational
efficiencies and better price realisation etc. During the year, the
Sylvania Group of Companies earned a net profit after tax of Rs. 43.73
crores as against a loss of Rs. 463.85 crores during the corresponding
previous year. The EBITDA (Earning Before Interest, Tax, Depreciation
and Amortisation) before exceptional expenses and other income of these
companies is Rs.190.86 crores as against a negative EBIDTA of Rs. 6.32
crores during the corresponding previous year.
d) Management is of the opinion that the Net Enterprise Value (EV) of
the Sylvania group of companies exceeds the amount of investment made
and hence there is no impairment in the value of investment in these
companies.
11 The electrical business of Standard Electricals Limited (SEL) was
transferred to Seven Wonders Holidays Limited, a subsidiary company
(Name changed to Standard Electrical Limited) with effect from
01.04.2009 pursuant to Scheme of Arrangement u/s 391, 392 of the
Companies Act, 1956 and as approved by the Honble High Court of
Judicature at Delhi vide their order dated 19.08.2010. In accordance
with the scheme:
a) 2219000 fully paid up equity shares of Rs. 5/- each were allotted to
the shareholders of the demerged company (SEL) on 27th August 2010.
b) Professional charges incurred during the year for the purpose of
scheme of arrangement to the tune of Rs. 0.18 crore have been adjusted
against the Business Reconstruction Reserve.
12 The Company had entered into a Business Transfer Agreement, on
16th March2010 with HSIL Limited, Kolkata for sale of its Bath Fitting
Business Division situated at Bhiwadi, Rajasthan as a going concern on
as is where is basis for a consideration of Rs. 16.44 crores. The
sale of the division was approved by Shareholders through postal ballot
on 23rd April 2010. The legal and physical possession of the division
was transferred to HSIL Limited on 1st May2010.
The requirements for disclosures of Accounting Standard 24
Discontinuing Operations, issued by the Institute of Chartered
Accountants of India does not apply to the said transaction as the sale
of Bathfitting division does not constitute a separate major line of
business or geographical area of operations of the Company.
13 The Company, as a Settlor, has established irrevocable determinate
contributory trust known as Havells Business Partner Trust vide Deed
of Indenture executed on 07.10.2010 with the object for holding the
distribution commission/sales incentive accrued to the Participating
Dealers, for a period of at least three years from the date of such
contribution to the Trust and to make investment in permitted
securities for the benefit of Participating Dealers. A sum of Rs. 13.25
crores accrued to the Trust on behalf of the Participating Dealers as
on the date of the Balance sheet.
14 The Company has started commercial production of Printed Circuit
Board (PCB) at its unit at Noida (Uttar Pradesh) during the year.
Pre-operative expenses till the date of start of commercial production
amounting to Rs. 0.39 crore has been capitalised to the carrying cost
of fixed assets on a pro-rata basis.
15 The Company has a system of obtaining periodic confirmations from
debtors and creditors. Necessary entries have been passed on
reconciliation of accounts wherever required.
16 a) Information as required to be furnished as per Section 22 of the
Micro, Small and Medium Enterprises
Development Act, 2006 (MSMED Act) for the year ended 31st March, 2011
is given below. This information has been determined to the extent such
parties have been identified on the basis of information available with
the Company.
b) The total dues of Micro and Small Enterprises which were outstanding
for more than stipulated period were at Rs. 1.30 Crores (Previous year
Rs. 2.95 Crores) as on the balance sheet date.
17 The Company has made a provision of excise duty amounting to Rs.
6.45 crores (previous year Rs. 4.17 crores) payable on stocks of
finished goods and scrap material at the end of the year except at
Baddi and Haridwar units which are exempt from excise duty. Excise duty
is considered as an element of cost at the time of manufacture of
goods.
18 a) The Company has given a corporate guarantee of Rs. 215.02 crores
(Euro 34 millions) {Previous Year
Rs. 205.90 crores (Euro 34 millions)} for and on behalf of wholly owned
subsidiary company Havells Netherlands Holding B.V., in respect of
Asian Terms Facility Agreement entered with Barclays Capital and State
Bank of India on 13th March, 2007, against the loan taken by the said
subsidiary. The outstanding loan as on the date of the Balance sheet is
Rs. 63.24 crores (Euro 10 Millions) {Previous Year Rs. 100.95 crores
(Euro 16.67 Million)}. The Company has further provided security by way
of first pari-passu charge on the moveable fixed assets of the Company
(except for those charged against working capital limits and excluded
moveable and immovable assets ), by way of first pari-passu charge by
way of mortgage over the immovable fixed assets situated at A-461/462,
MIA Alwar (Rajasthan), SP - 215, MIA Alwar (Rajasthan), Land at Village
Dharampur, Tehsil Nalagarh, District Solan (Himachal Pradesh) and Plot
no. 2A, Sector - 10, IIE Ranipur, Haridwar and subservient charge on
land and building at 14/3, Mathura Road, Faridabad (first pari passu
charge to working capital bankers).
b) The Company has given an irrevocable and unconditional corporate
guarantee of Rs. 31.62 crores (Euro 5 millions) {previous year Rs.
30.28 crores (Euro 5 millions)} to Deutsche Bank in respect of credit
facilities and other financial accommodation sanctioned to the step
down subsidiary company Havells Sylvania Europe Limited. The
outstanding amount of the said credit facility as on the date of the
Balance sheet is Rs. 11.88 crores (Euro 1.88 Million) {Previous year
Rs.12.23 crores (Euro 2.02 Million)}.
c) The Company has given a corporate guarantee of Rs. 100 crores to Yes
Bank Limited in respect of standby letter of credit facility
sanctioned to its subsidiary company Havells Exim Limited. The
outstanding amount of the said credit facility as on the date of the
Balance sheet is Rs. 25.60 crores.
19 a) The Company is under obligation to export goods within a period
of eight years from the date of issue of EPCG licenses issued in terms
of para 5.2 of Foreign Trade Policy 2009-2014. As on the date of
Balance Sheet, the Company is under obligation to export goods worth
Rs. 127.34 crores (previous year Rs. 95.55 crores) within the
stipulated time as specified in the respective licenses. Out of the
said amount, the Company has fulfilled the export obligation of Rs.
85.44 crores (Previous Year 30.75 crores) against which export
obligation discharge certificates (EODC) are yet to be obtained from
Director General Foreign Trade (DGFT).
b) Further the Company is under obligation to export goods worth Rs.
109.83 crores (previous year Rs. 88.80 crores) in respect of duty free
imports made by the Company against advance licenses. Out of the said
amount, export obligation of Rs. 91.68 crores (previous year Rs. 86.08
crores) has been fulfilled by the Company as at the end of the year
against which export obligation discharge certificates (EODC) are yet
to be obtained from Director General Foreign Trade (DGFT).
20 The Company has not made any provision for cess payable u/s 441A of
the Companies Act, 1956. The said provision shall be made as and when
the requisite notification is issued by the Central Government in this
regard.
21 The Company has transferred and deposited a sum of Rs. 0.02 crore
(previous year Rs. 0.005 crore) out of unclaimed dividend pertaining to
the financial years 2002-03 and 2003-04 to Investor Education and
Protection Fund of Central Government in accordance with the provisions
of Section 205C of the Companies Act, 1956.
22 The Company is entitled for incentive under status holder incentive
scrip @ 1% of FOB value of exports (except exports made from EOU unit)
in terms of para 3.16 of Foreign Trade Policy 2009-2014. A provision of
Rs. 1.33 crores (previous year Rs. 1.21 crores) has been made on this
account which is to be utilised for duty free import of capital goods.
No provision in respect of the above amount has been made since the
Company expects no liability on these accounts.
Besides the above, show cause notices from various departments have
been received by the Company in respect of which provisions have not
been made since the Company has adequately represented to the concerned
departments.
23 Companies (Accounting Standards) Amendment Rules, 2009 issued by the
Ministry of Corporate Affairs vide Notification no.G.S.R.225 (E) dated
March 31, 2009, had amended the Accounting Standard - 11 on "The Effect
of Changes in Foreign Exchange Rates" and given an option to the
companies to adopt the treatment prescribed in the said notification in
reference to its foreign currency transactions. The Company has,
consistently following the provisions of AS-11 as in the past, chosen
not to adopt the alternate treatment prescribed under the above
notification. In accordance with the accounting policy of the Company,
a sum of Rs. 10.30 crores (previous year Rs. 9.68 crores) has been
recognised as exchange gain (net) and credited to the profit and loss
account.
24 During the year the Company had entered into a forward contract with
Yes Bank Limited in order to hedge its exposure for movements in
foreign exchange rates in case of underlying assets being imports in
case of the Company. As on the Balance sheet date, there are no
outstanding derivative contracts. The Company has recognised a profit
of Rs. 0.11 crore in the profit and loss account (Previous year loss of
Rs. 0.08 crore) on this account.
25 The Company has proposed dividend for the year @ 50% on its equity
capital and a provision for corporate dividend tax including surcharge
and education cess thereon has been made. The said amount is not
subject to deduction of tax at source (TDS).
26 Current Tax and Deferred Tax Current Tax
The Company has made a provision for current tax in accordance with the
provisions of the Income Tax Act 1961
Deferred Tax
Deferred tax resulting from timing differences between book profit and
taxable income is accounted for using the current tax rate. In respect
of the Companys units under tax holiday period u/s 80 IC of the Income
Tax Act, 1961, deferred tax assets/liabilities for timing differences
which are capable of reversal after the tax holiday period have been
recognised during the year in accordance with The Accounting Standard
Interpretation (ASI 3)(Revised) issued by The Institute of Chartered
Accountants of India. The break-up of deferred tax assets and deferred
tax liabilities is as under:
27 Disclosures required by Accounting Standard (AS- 29) relating to
Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised such as sales incentives, bad debts, warranty
and other expenses of commercial nature. The provisions are recognised
on the basis of past events and the probable settlement of the present
obligation during the year as a result of the past events.
Defined Benefit Plan
The Employees Gratuity Fund Scheme, which is defined benefit plan, is
managed by Trust maintained with Life Insurance Corporation of India
(LIC). The present value of obligation is determined based on actuarial
valuation using Projected Unit Credit Method, which recognizes each
period of service as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final
obligation. The obligation for compensated absences is recognized in
same manner as gratuity.
g) The plan assets are maintained with Life Insurance Corporation of
India Gratuity Scheme. The details of investment maintained by Life
Insurance Corporation of India are not available with the Company and
have not been disclosed.
h) The Company expects to contribute Rs. 2.00 crores to the plan during
the next financial year.
The estimates of rate of escalation in salary considered in actuarial
valuation after taking into account inflation, seniority, promotion and
other relevant factors including supply and demand in the employment
market. The above information is as certified by the Actuary.
The expected rate of return on plan assets is determined considering
several applicable factors, mainly the composition of plan assets held,
assessed risks, historical results of return on plan assets and the
Companys policy for the plan assets management. The Company has no
unfunded obligation as on the Balance sheet date.
28 In accordance with accounting standard - AS-28 "Impairment of
Assets" issued by the Institute of Chartered Accountants of India and
made applicable w.e.f 1st April 2004 , the Company has identified its
divisions into cash generating units. The cash generating units have
been identified on the basis of group of assets that includes the asset
that generates cash inflows from continuing use that are largely
independent of other assets or group of assets. As on 31st March 2011,
the Company has identified its principal cash generating units into
Switchgear Divisions (Faridabad, Haryana and Sahibabad, Uttar Pradesh)
, EOU Division and Switchgear Divisions (Baddi, Himachal Pradesh),
Cable Division (Alwar, Rajasthan), Fan Divisions at Haridwar
(Uttarakhand), Electric Motor and CFL Division at Neemrana (Rajasthan),
Printed Circuit Board division (Noida, Uttar Pradesh) and Companys
Head Office and branches at various locations.
Each of the aforesaid cash generating units have been assessed at the
balance sheet date and tested for impairment. The Company has generally
considered external factors influencing impairment of assets such as
significant changes in market value of the assets, changes in
technological, market, economic or legal environment, return on
investment etc. and internal factors such as obsolescence, physical
damage, changes at operation level etc. for assessment of impairment
conditions existing in the cash generating units as on the Balance
Sheet date. Further, where production line itself is not impaired,
impairment conditions are not recognised in individual machine if any.
After due consideration to above factors it is established that no
impairment conditions exist in any of the cash generating units as on
the Balance Sheet date.
29 In the opinion of the Board, the current assets, loans and advances
have a value on realisation in the ordinary course of business at least
equal to the amount at which they are stated and provision for all
known liabilities have been made.
30 Segment Reporting
The segment reporting of the Company has been prepared in accordance
with Accounting Standard (AS-17), "Accounting for Segment Reporting"
issued by the Institute of Chartered Accountants of India.
Segment Reporting Policies
a) Identification of Segments:
Primary- Business Segment
The Company has identified four reportable segments viz. Switchgears,
Cable, Lighting and fixtures and Electrical Consumer Durables on the
basis of the nature of products, the risk return profile of individual
business and the internal business reporting systems.
Secondary- Geographical Segment
The analysis of geographical segment is based on geographical location
of the customers.
b) Revenue and expenses have been identified to a segment on the basis
of relationship to operating activities of the segment. Revenue and
expenses which relate to enterprise as a whole and are not allocable to
a segment on reasonable basis have been disclosed as "Unallocated".
c) Segment assets and segment liabilities represent assets and
liabilities in respective segments. Investment, tax related assets and
other assets and liabilities that can not be allocated to a segment on
reasonable basis have been disclosed as "Others".
62387406 Bonus shares issued during the year have been considered in
the computation of Basic and Diluted earning per share from the
beginning of the reporting period i.e. 1st April 2010. Previous year
figures have been adjusted for the bonus issue and restated
accordingly.
2219000 equity shares allotted on 19.08.2010 had been considered in the
computation of basic and diluted earning per share during the last year
in terms of the scheme of arrangement approved by the Honble High
Court of Delhi vide their order dated 19.08.2010, with effect from 1st
April 2009 being the appointed date as per the scheme of arrangement.
31 a) The Company has taken various residential/ commercial premises
under cancellable operating leases. These lease agreements are normally
renewed on expiry.
b) The Company has also taken few commercial premises under
non-cancellable operating leases. The total of future minimum lease
payments in respect of such leases as on 31.03.2011 is as follows:
à not later than one year Rs. 3.10 crores (previous year Rs. 2.60
crores)
à later than one year and not later than five years Rs. 4.98 crores
(previous year Rs. 3.04 crores)
à later than five years Rs. Nil
Lease payments recognised in the statement of profit and loss as an
expense for the year is Rs. 27.28 crores (Previous year Rs. 23.26
crores)
32 That the figures for the previous year have been
regrouped/rearranged wherever necessary.
33 The figures have been rounded off to the nearest crore of rupees
upto two decimal places. The figure 0.00 wherever stated represents
value less than Rs. 50000/-.
34 Schedule No.1 to 18 form integral part of the balance sheet and
profit and loss account.
Mar 31, 2010
A CONTINGENT LIABILITIES
(Rs.in crores)
2010 2009
a Estimated amount of capital contracts
remaining to be executed and
not provided for (net of advances) 32.65 15.60
b Bank guarantees and letter of credits
opened with bank (net of margin money) 87.38 66.07
c Bonds to excise department against
export of excisable goods/purchase of
goods without payment of duty (to the
extent utilised) 24.64 21.95
d Custom duty payable against export
obligation 17.12 19.46
e Suits fled against the Company not
acknowledged as debts 0.45 2.10
f Liability towards banks against
debtors buyout facilities 27.08 14.33
g Disputed tax liabilities in respect
of pending cases before Appellate
Authority 13.24 7.71
h Corporate Guarantee given on behalf
of subsidiary companies (to the extent
of outstanding obligation) 113.19 251.94
i Export bills discounted with banks 40.45 Nil
C NOTES
2 The Company had, on a preferential basis issued and allotted 2600000
Warrants to Seacrest Investment Limited, a Warburg Pincus group
Company convertible into equity shares on or before 25th day of
May2009. Seacrest Investment Limited exercised their right to convert
2250000 Warrants into equity shares on 4th February, 2009 and had opted
not to convert the remaining 350000 warrants into equity shares.
Consequently, a sum of Rs. 2.42 crores representing 10% of the
subscription amount paid by the said investor has been forfeited by the
Company and transferred to Capital Reserve Account during the year.
3 The Company has been sanctioned a term loan of Rs. 140 Crores by
Canara Bank with an option to avail the same by way of foreign currency
loan for the purpose of expansion/extension of manufacturing facilities
at Baddi (H.P), Haridwar (Uttarakhand), Alwar (Rajasthan) and
Neemrana(Rajasthan) Works. Out of the said loan, the Company has
availed foreign currency term loan of Rs. 112.85 crores (USD 25
Million) and utilised the same for the purpose for which it was
sanctioned. The same is due for repayment in 16 (sixteen) equal
quarterly installments commencing from 01.04.2011.
4 a) The IDBI Bank Limited has sanctioned a receivable buyout facility
of Rs.250 crores to the Company. As per the terms with the bankers, the
debtors are insured and the bankers have recourse on the Company to the
extent of 5% of claim amount or Rs.0.02 crore, whichever is higher. As
on the date of Balance Sheet, total debtors assigned to the bankers are
at Rs. 199.30 crores (previous year Rs.188.45 crores). With the result,
the debtors at the end of the year stand reduced by the said amount. A
sum of Rs. 11.23 crores (previous year Rs.16.64 crores) on account of
charges paid for this facility has been debited to debtors factoring
charges account.
b) The Company has arranged channel finance facility for its customers
from Yes Bank Limited, Axis Bank Limited and Federal Bank Limited. As
per the terms of the banks, the debtors are insured and the bankers
have recourse on the Company to the extent of 5% of claim amount or
Rs.0.02 crore, whichever is higher. As on the balance sheet date the
total debtors who have availed this facility were Rs. 42.28 Crores
(Previous year Rs. 22.05 crores).
5 a) The Company has been sanctioned a Foreign Currency Packing Credit
Facility limit of Rs. 45 crores (USD 10 Million) out of the working
capital limits sanctioned by Canara Bank. The outstanding bills
discounted with the Bank at the end of the year are at Rs. 39.50 Crores
(USD 8750763). The exchange loss of Rs. 0.75 crore on account of bills
discounted with the bank has been debited to the Profit and loss
account.
b) The sundry debtors have been reduced by the amount of bills
discounted with the bank.
6 The Company had imported a plant for its motor unit at Neemrana from
Spain (Europe) in the financial year 2007-08 against which the Company
has obtained a Buyers Credit facility from Canara Bank, London for
Euro 3.70 millions (Rs.22.41crores). The said facility is secured by
way of hypothecation of said plant and machinery, stocks, furniture,
computers and other moveable assets awarded in the public auction and
is due for repayment on 10th August, 2010.
7 The Company has started commercial production of Electrical
Switchgears and Electrical Fans at its new units at Baddi (Himachal
Pradesh) and Haridwar (Uttarakhand) respectively during the year.
Pre-operative expenses till the date of start of commercial production
amounting to Rs. 0.50 crore and Rs. 1.10 crores respectively have been
capitalised to the carrying cost of fixed assets on a pro-rata basis.
8 The CENVAT credit and VAT credit in respect of Capital Goods has been
adjusted @ 100% to the cost of Fixed Assets. The CENVAT credit has been
availed @ 50% during the year and the balance will be claimed in the
subsequent year subject to the conditions as per Excise Rules. The VAT
credit has been availed as per the VAT rules applicable in the
respective states.
9 In respect of Baddi (other than 100%EOU unit) and Haridwar units, the
cenvat credit against fixed assets has not been availed and provision
for excise duty payable on finished goods and scrap materials has not
been made since the units are exempted from payment of excise duty.
10 The Companys manufacturing units at Baddi, (Himachal Pradesh) and
Haridwar ( Uttarakhand) are exempted from excise duty vide Notification
No. 49 and 50/2003 issued by Government of India, Ministry of Finance,
Department of Revenue, Central Board of Excise and Customs, New Delhi
and the profit of the said units are eligible for deduction as provided
under section 80 IC of the Income Tax Act,1961.
11 Interest and other borrowing costs amounting to Rs. 0.62 crore
(previous year Rs.1.57 crores) have been capitalised to the carrying
cost of fixed assets being financing costs directly attributable to the
acquisition, construction or installation of the concerned qualifying
assets till the date of its commercial use.
12 The Company has invested a sum of Rs. 143.70 crores in its wholly
owned subsidiary Company Havells Holdings Limited during the year
which includes a sum of Rs. 83.33 crores (Euro 12 Million) invested in
accordance with the lending Banks revised covenants executed with the
subsidiary Company/Step-down subsidiary Companies. The total investment
in the said subsidiary Company as at the end of the year is Rs. 531.40
crores and there is an accumulated loss of Rs. 751.74 crores in the
consolidated financial statements of subsidiary Company (Sylvania Group
of Companies). The decline in the value of investments, in the opinion
of the management, is temporary due to the following reasons:
a) The control over Sylvania group of Companies was acquired in
April,2007 with a long term view and was a strategic decision. A sum
of Rs. 303.49 crores (Euro 53.04 millions) was paid as premium towards
the said acquisition in the light of tangible and intangible benefits
accruing to the Company in the future.
b) The accumulated loss of Rs. 751.74 Crores includes one time non
recurring expenses incurred by the subsidiary companies towards
severance and other restructuring costs to the tune of Rs. 492.21
crores which will yield tangible benefits in future. The subsidiary
Companies generally experienced good market conditions till June, 2008,
and the period thereafter being more challenging following the
beginning of the World recession in second half of year 2008 more
particularly in European economy. The total market shrunk due to
recession, which adversely affected the operating results of the
Company. As a result, the Group has implemented a variety of fixed cost
reduction measures to manage the costs effectively and offset this
trend. These initiatives include rationalization of fixed overheads,
partial outsourcing of manufacturing to low cost countries and further
cost reduction initiatives on materials costs. The restructuring
measures taken during the year are primarily focused in Europe and
Latin America regions. So far, the Company is able to execute the
restructuring plan in line with the expectation. The expected recurring
annualised savings on account of these restructuring plans is Rs.
221.04 crores.
c) On 28th August 2009, the Group Subsidiary Company re-negotiated the
loan agreement with the banking group led by Barclays bank. As part of
the revised loan agreement clause 4(d) of Schedule - 1 and clause 7(a),
the Company had agreed to increase the share capital of the Group
Subsidiary Company by Rs. 83.32 crores (Euro 12 million) in two parts
i.e. first part of Rs. 41.66 crores (Euro 6 million) at the time of
signing the agreement in August 2009 and second part of Rs. 41.66
crores (Euro 6 million) within 90 days from signing the agreement. The
parent undertaking has already invested a sum of Rs. 83.32 crores (Euro
12 million) as per the agreement. The banks have agreed to re-schedule
the amortization plan of the loans and have reset the covenants in line
with the revised projections made by the Group. The Company continues
to meet the revised covenants and there are no defaults on repayments.
d) That, with the signs of improvement in global economy, there are
signs of business improvement too. The Group has experienced trading in
line with projections and the management has further plans in place to
ensure that the Group continues to trade in line with expectations. The
Directors of the Group Companies are satisfied that, provided the
current facilities remain in place, the Group Companies have sufficient
levels of cash to operate the business on a going concern basis for the
foreseeable future.
In view of all above factors i.e. benefits of restructuring plans,
revised bank agreement and signs of economic recovery, the management
is of the opinion that no provision for impairment in the value of its
investments in subsidiary companies, is required.
13 The Company has invested a sum of Rs. 0.01 Crore in a wholly owned
subsidiary Seven Wonders Holidays Private Limited (SWHPL) during the
year. The Company , its Subsidiary (SWHPL) and Standard Electricals
Limited (SEL), a Company under the same management, have entered in a
Scheme of Arrangement u/s 391, 392 and 394 of The Companies Act, 1956
which has been approved by the Honble High Court of Delhi vide their
order dated 19.08.2010 and fled with the Registrar of Companies on
21.08.2010. In accordance with the aforesaid scheme of arrangement:
a) The electrical business of SEL has been transferred to SWHPL on a
going concern basis.The assets and liabilities have been transferred at
respective book values and surplus of assets over liabilities acquired
has been transferred to the General Reserve in the books of SWHPL.
b) 2219000 fully paid up equity shares of Rs. 5/- each are to be issued
to the shareholders of the demerged company (SEL) as a consideration
for demerger, in the exchange ratio of 7 shares of the Company for
every 10 shares held in SEL. Since allotment of shares stated above has
not been effected before 31.03.2010, a sum of Rs. 1.11 crore has been
transferred from Business Reconstruction Reserve account to Equity
Shares pending allotment account.
c) Business Reconstruction Reserve Account has been created by the
Company by transfer of Rs. 400 crores from Securities Premium Account
for the purpose of adjustment of certain expenses and allotment of
equity shares as per the aforesaid scheme.
d) Professional charges of Rs. 0.25 crore paid in connection with the
scheme of arrangement has been adjusted against the Business
Reconstruction Reserve.
14 The Company has entered into a Business Transfer Agreement, on
16th March2010 with HSIL Limited ,Kolkata for sale of its Bath Fitting
Business Division situated at Bhiwadi, Rajasthan as a going concern on
as is where is basis for a consideration of Rs. 16.87 crores. The
sale of the division was approved by Shareholders through postal
ballot. The legal and physical possession of the division was
transferred to HSIL Limited on 1st May2010.
15 The Company has a system of obtaining periodic confrmations from
debtors and creditors. Necessary entries have been passed on
reconciliation of accounts wherever required.
16 The Company has made a provision of excise duty amounting to Rs.
4.17 crores (previous year Rs. 1.85 crores) payable on stocks of
finished goods and scrap material at the end of year except at Baddi
and Haridwar units which are exempt from excise duty. Excise duty is
considered as an element of cost at the time of manufacture of goods.
17 (a) The Company has given a corporate guarantee of Rs. 205.90 crores
(Euro 34 millions) {Previous Year Rs. 229.43 crores (Euro 34 millions)}
for and on behalf of wholly owned subsidiary company Havells
Netherlands Holding B.V., Netherlands in respect of Asian Terms
Facility Agreement entered with Barclays Capital and State Bank of
India on 13th March, 2007, against an outstanding loan of Rs. 100.95
crores (Euro 16.67 Million) taken by the said subsidiary. The Company
has further provided security by way of pari-passu charge on all the
moveable fixed assets of the company (except for those charged against
working capital limits) and further secured by way of first pari-passu
charge by way of mortgage over the immovable fixed assets situated at
A-461/462, MIA Alwar (Rajasthan), SP - 215, MIA Alwar (Rajasthan), Land
at Village Dharampur, Tehsil Nalagarh, District Solan (Himachal
Pradesh) and Plot no. 2A, Sector - 10, IIE Ranipur, Haridwar.
(b) The Company has also given an irrevocable and unconditional
corporate guarantee to Deutsche Bank in respect of credit facilities
and other financial accommodation availed by step down subsidiary
company Havells Sylvania Europe Limited upto the amount of Rs. 30.28
crores (Euro 5 millions) {previous year Rs. 80.98 crores (Euro 12
millions)}. The outstanding obligation against the said guarantee was
Rs. 12.23 crores (Euro 2.025 Million) as at the end of the year.
22 (a) The Company is under obligation to export goods within a period
of eight years from the date of issue of EPCG licenses issued in terms
of para 5.2 of Foreign Trade Policy 2009-2014. As on the date of
Balance Sheet, the Company is under obligation to export goods worth
Rs. 95.55 crores (previous year Rs.82.21 crores) within the stipulated
time as specified in the respective licenses. Out of the said amount,
the Company has fulfilled the export obligation of Rs. 30.75 crores
(Previous Year 22.18 crores) against which export obligation discharge
certificates (EODC) are yet to be obtained from Director General
Foreign Trade (DGFT).
(b) Further the Company is under obligation to export goods worth Rs.
69.78 crores (previous year Rs. 73.14 crores) in respect of duty free
imports made by the Company against advance licenses. Out of the said
amount , export obligation of Rs.67.07 crores has been fulfilled by the
Company as at the end of the year against which export obligation
discharge certificates (EODC) are yet to be obtained from Director
General Foreign Trade (DGFT).
18 The Company has not made any provision for cess payable u/s 441A of
the Companies Act, 1956. The said provision shall be made as and when
the requisite notification is issued by the Central Government in this
regard.
19 The Company has transferred and deposited a sum of Rs. 0.005 crore
(previous year Rs. 0.006 crore) out of unclaimed dividend pertaining to
the year 2001-02 to Investor Education and Protection Fund of Central
Government in accordance with the provisions of Section 205C of the
Companies Act, 1956.
20 The Company is entitled for incentive under status holder incentive
scrip @ 1% of FOB value of exports (except exports made from EOU unit)
during the year. A provision of Rs. 1.21 crores has been made on this
account which is to be utilised for duty free import of capital goods.
21 Companies (Accounting Standards) Amendment Rules, 2009 issued by the
Ministry of Corporate Affairs vide Notification no.G.S.R.225 (E) dated
March 31, 2009, has amended the Accounting Standard - 11 on "The Effect
of Changes in Foreign Exchange Rates" and given an option to the
companies to adopt the treatment prescribed in the said notification in
reference to its foreign currency transactions. The Company has,
consistently following the provisions of AS-11 as in the past, chosen
not to adopt the alternate treatment prescribed under the above
notification. In accordance with the accounting policy of the Company,
a sum of Rs. 9.68 crores (previous year Rs. 0.51 crore) has been
recognised as exchange gain (net) and credited to the profit and loss
account.
22 a) Foreign Currency Loan from ICICI Bank Limited, Singapore has been
repaid during the year. The Company has recognised a sum of Rs. 1.35
crores as exchange gain and has credited the same to the Profit and
Loss account
b) Buyers Credit Facility from Canara Bank, London has been translated
at the prevailing rate of exchange as on the date of balance sheet.
Consequent to realignment, the value of credit facility is reduced by
Rs. 2.56 crores (previous year increase of Rs. 1.62 crores). The
exchange gain on the said realignment has been credited to the Profit
and loss account.
c) The Company has entered into a forward contract with Yes Bank
Limited in order to hedge its exposure for movements in foreign
exchange rates in case of underlying assets being imports in case of
the Company. As on the Balance sheet date, all outstanding derivative
contracts were fair valued at Mark-to-Market basis and the Company has
recognised a loss of Rs. 0.08 crores in the profit and loss account
(Previous year gain of Rs. 0.17 crore) on this account .
d) The Foreign currency term loan of USD 25 Million from Canara Bank
referred in note no. 3 has been restated at prevailing rate of exchange
as at the end of the year resulting in exchange gain of Rs. 3.42 crores
which has been credited to the Profit and Loss account .
23 Loss on sale/discard of assets charged to Profit and Loss account
include a sum of Rs. 2.75 crores (Previous Year Nil) written off on
account of plant and machinery discarded by the Company with a view to
modernise its existing plants at Neemrana (Rajasthan) and Alwar
(Rajasthan) for the manufacture of Compact Fluorescent Lamps (CFL) and
Cables respectively.
24 The Company has proposed dividend for the year @ 50% on its equity
capital and a provision for corporate dividend tax including surcharge
and education cess thereon has been made. The said amount is not
subject to tax deducted at source (TDS).
25 Current Tax and Deferred Tax
Current Tax
The Company has made a provision for current tax in accordance with the
provisions of the Income Tax Act 1961.
26 Disclosures required by Accounting Standard (AS-29) relating to
Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised such as sales incentives, bad debts, warranty
and other expenses of commercial nature. The provisions are recognised
on the basis of past events and the probable settlement of the present
obligation during the year as a result of the past events.
27 In accordance with accounting standard - AS-28 "Impairment of
Assets" issued by the Institute of Chartered accountant of India and
made applicable w.e.f 1st April 2004 , the Company has identified its
divisions into cash generating units. The cash generating units have
been identified on the basis of group of assets that includes the asset
that generates cash inflows from continuing use that are largely
independent of other assets or group of assets. As on 31st March 2010,
the Company has identified its principal cash generating units into
Switchgear Division and CFL Division (Faridabad, Haryana), Switchgear
Division (Sahibabad, Uttar Pradesh) , EOU Division and Switchgear
Divisions (Baddi, Himachal Pradesh), Cable Division (Alwar,
Rajasthan),Fan Divisions at Haridwar (Uttarakhand), Capacitor Division
at Noida (Uttar Pradesh), Electric Motor and CFL Division at Neemrana
(Rajasthan) and Companys Head Office and branches at various
locations.
Each of the aforesaid cash generating units have been assessed at the
balance sheet date and tested for impairment. The Company has generally
considered external factors influencing impairment of assets such as
significant changes in market value of the assets, changes in
technological, market, economic or legal environment, return on
investment etc. and internal factors such as obsolescence, physical
damage, changes at operation level etc. for assessment of impairment
conditions existing in the cash generating units as on the Balance
Sheet date. Further, where production line itself is not impaired,
impairment conditions are not recognised in individual machine if any.
After due consideration to above factors it is established that no
impairment conditions exist in any of the cash generating units as on
the Balance Sheet date.
28 In the opinion of the Board, the current assets, loans and advances
have a value on realisation in the ordinary course of business at least
equal to the amount at which they are stated and provision for all
known liabilities have been made.
29 Segment Reporting The segment reporting of the Company has been
prepared in accordance with Accounting Standard (AS-17), Ã Accounting
for Segment Reportingà issued by the Institute of Chartered Accountants
of India.
Segment Reporting Policies
a) Identification of Segments: Primary- Business Segment
The Company has identified four reportable segments viz. Switchgears,
Cable , Lighting and fixtures and Electrical Consumer Durables on the
basis of the nature of products, the risk return profile of individual
business and the internal business reporting systems.
Secondary- Geographical Segment
The analysis of geographical segment is based on geographical location
of the customers.
b) Revenue and expenses have been identified to a segment on the basis
of relationship to operating activities of the segment. Revenue and
expenses which relate to enterprise as a whole and are not allocable to
a segment on reasonable basis have been disclosed as " Unallocated".
c) Segment assets and segment liabilities represent assets and
liabilities in respective segments. Investment, tax related assets and
other assets and liabilities that can not be allocated to a segment on
reasonable basis have been disclosed as " Others".
Notes:
a) WOS refers to Wholly Owned Subsidiary
b) *In Havells Sylvania (Thailand) Limited minorities hold 51% of
ordinary shares ( representing 11000 Euro as at 31st March,2010) and in
Havells Sylvania Argentina S.A. minorities hold 1% of ordinary shares (
representing 22000 Euro as at 31st March, 2010) but the majority of
voting rights are held by Sylvania Group. The beneficial ownership of
both the entities lies with the Sylvania Group.
c) During the year Precision Materials SARL (WOS of Havells Sylvania
Lighting France SAS) has amalgamated with its holding Company.
d) Four UK based Dormant Companies namely Linolite Limited, Marlin
Lighting Limited, Concord Lighting Limited and Badalex Limited were
closed during the year.
e) Havells Sylvania Poland S.P.Z.O.O was incorporated during the year
f) Seven Wonders Holidays Private Limited was acquired during the year.
2 Associates
QRG Enterprises Limited
Standard Electricals Limited
Guptajee & Company
QRG Foundation
QRG Central Hospital and Research Centre Limited
3 Key Management Personnel
Shri Qimat Rai Gupta Shri Surjit Gupta Shri Anil Gupta Shri Rajesh
Gupta
30 a) The Company has taken various residential/ commercial premises
under cancellable operating leases. These lease agreements are normally
renewed on expiry.
b) The Company has also taken few commercial premises under
non-cancellable operating leases. The total of future minimum lease
payments in respect of such leases as on 31.03.2010 is as follows:
- not later than one year Rs. 2.60 crores
- later than one year and not later than fve years Rs. 3.04 crores
- later than five years Rs. Nil
Lease payments recognised in the statement of profit and loss as an
expense for the year is Rs. 23.26 crores (Previous year Rs. 19.03
crores).
31 That the figures for the previous year have been regrouped/
rearranged wherever necessary.
32 The figures have been rounded off to the nearest crore of rupees
upto two decimal places.
33 Schedule No.1 to 20 form integral part of the balance sheet and
profit and loss account.
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Havells India Ltd. குறித்த கூடுதல் தகவல்களை
-
Havells India Ltd. டூல்ஸ்
- பல்க் டீல்ஸ்
- பிளாக் டீல்ஸ்
-
Havells India Ltd. நிறுவன தகவல்கள்
- நிறுவன சுயவிவரம்
- நிறுவன வரலாறு
- நிர்வாக குழு
- மூலதன வடிவம்
- புராடெக்ட் மிக்ஸ்
- வங்கியாளர்/தணிக்கையாளர்/பதிவாளர்
-
நிறுவன வரலாறு
- போனஸ்
- மும்பை பங்குச் சந்தையில் விலை வரலாறு
- என்எஸ்இ விலை வரலாறு
-
Havells India Ltd. முக்கிய நிதியில் விகிதங்கள்
- விகிதங்கள்
-
Havells India Ltd. முடிவுகள்
- காலாண்டு முடிவுகள்
- அரையாண்டு முடிவுகள்
- 9 மாத முடிவுகள்
- வருடாந்திர முடிவுகள்
-
Havells India Ltd. நிதியியல் தகவல்கள்
- தணிக்கை முடிவுகள்
- பணப்பாய்வு
- இருப்பு நிலைக்குறிப்பு
-
Havells India Ltd. அறிக்கை
- கணக்கியல் கோட்பாடுகள்
- தணிக்கையாளர்கள் அறிக்கை
- இயக்குநர்கள் அறிக்கை
- கணக்கு குறிப்புகள்
-
Havells India Ltd. கார்ப்பரேட் அறிவிப்புகள்
- புத்தக முடிவு
- ஈவுத்தொகை
- நிர்வாகக் குழுக் கூட்டங்கள்
