d. Rights and preferences attached to Equity Shares:
i. The Company has only one class of Equity Shares having face value of '2 each and each shareholder is entitled to one vote per share.
ii. 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.
iii. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting, except in case of interim dividend.
(i) Rupee Term Loan of '2.40 crores from a Bank and Foreign Currency Loan of '17.62 crores (including '6.63 crores due to forex reinstatement) from a Financial Institution aggregating to '20.02 crores, secured by a first pari passu charge on movable and immovable assets at a Company's Plant in Tamil Nadu, both present and future are repayable in 1 and 2 equal quarterly instalments respectively.
(ii) Rupee Term Loan of '275.19 crores and '34.97 crores from Banks and Foreign Currency Loan of '130.10 crores (including '29.35 crores due to forex reinstatement) from a Financial Institution aggregating to '440.26 crores, secured by a first pari passu charge created on movable and immovable assets at a Company's Plant in Tamil Nadu, both present and future and also secured by way of hypothecation on the specified movable assets at Company's Plants in Madhya Pradesh and Karnataka are repayable in 42 quarterly instalments, 18 and 20 equal quarterly instalments respectively.
(iii) Rupee Term Loan of '212.50 crores from a Bank, secured by a first pari passu charge on movable and immovable assets at a Company's Plant in Tamil Nadu, both present and future is repayable in 42 quarterly instalments.
(iv) Foreign Currency Loan of '26.43 crores (including '6.08 crores due to forex reinstatement) from a Bank, secured by charge by way of hypothecation of specified assets at Company's Plants in Rajasthan, Karnataka and Tamil Nadu, is repayable in 5 equal quarterly instalments.
(v) Foreign Currency Loan of '101.01 crores (including '20.76 crores due to forex reinstatement) from a Bank, secured by first pari passu charge on movable fixed assets at Company's Plants at Rajasthan and Karnataka (excluding those specifically charged to other banks), both present and future. Loan of Tranche - I, '33.83 crores and Tranche - II, '67.18 crores are repayable in 5 and 8 quarterly instalments respectively.
(vi) Rupee Term Loan of '87.09 crores from a Bank, secured by a first pari passu charge created on movable fixed assets at a Company's Plant in Madhya Pradesh (excluding those specifically charged to other banks), both present and future is repayable in 22 equal quarterly instalments.
(vii) Rupee Term Loan of '50 crores from a Bank, secured by a first pari passu charge to be created on movable fixed assets at a Company's Plant in Karnataka (excluding those specifically charged to other banks), both present and future is repayable in 28 equal quarterly instalments commencing from April'2023.
(viii) Term Loans carrying first pari passu charge on the movable and immovable assets, are subject to prior charge of banks on stocks and book debts for working capital borrowings.
(ix) Rupee Term Loan of '18.04 crores from a Bank, secured by a first pari passu charge on movable fixed assets at a Company's Plant in Madhya Pradesh (excluding those specifically charged to other banks), both present and future is repayable in 8 equal quarterly instalments commencing from March'2025.
(x) Rupee Term Loan of '10.37 crores from a Bank, secured by a first pari passu charge on stocks and book debts, of the Company, both present and future with second pari passu charge on movable and immovable assets of the Company's Plants in Rajasthan, Madhya Pradesh, Karnataka and Tamil Nadu (excluding those specifically charged to other banks) is repayable in 5 equal monthly instalments.
(xi) Fixed Deposits of '41.81 crores, '27.65 crores and '27.94 crores (aggregating '97.40 crores) are due for repayment in 2023-24, 2024-25 and 2025-26 respectively.
(xii) The Company has issued and allotted 24,000 Compulsorily Convertible Debentures ("CCDs") during the year. On issuance of the CCDs, the fair value of the liability portion is determined using a market interest rate for an equivalent non-convertible debt, which is recorded as liability on amortised cost basis until its conversion into equity within 18 months from the date of allotment.
Estimated amounts of contracts remaining to be executed on capital account '412.78 crores (Previous year: '175.50 crores).
Note - 33
The Company imported certain equipment under Export Promotion Capital Goods (EPCG) Scheme at a concessional custom duty resulting in cumulative savings of '32.89 crores (Previous year: '23.59 crores), against which export obligation fulfilled till 31st March, 2023 '5.63 crores (Previous year: Nil). Balance obligation yet to be fulfilled is '27.26 crores (Previous year: '23.59 crores).
Note - 34
Contingent liabilities in respect of claims not accepted and not provided for '247.36 crores (Previous year: '159.16 crores) pertaining to matters in appeal for Excise, Customs duty & GST '176.92 crores, Service tax '1.61 crores, Sales Tax matters '3.35 crores, Income tax matters '13.74 crores & others matters '51.74 crores (Previous year: '93.45 crores, '1.13 crores, '2.61 crores, '13.74 crores & '48.23 crores respectively).
Note - 35
c) There were no capital-work-in progress and intangible assets under development, whose completion was overdue or has exceeded its cost compared to its original plan.
Note - 37
The title deeds of all immovable properties are held in the name of the Company. Accordingly, there are no Immovable Properties which were not held in name of the Company as on 31.03.2023 and 31.03.2022.
The Competition Commission of India ("CCI") on 2nd February 2022 had released an Order dated 31st August 2018 for alleged contravention of provisions of the Competition Act, 2002 against the Company, certain other Tyre manufacturers and Automotive Tyre Manufacturers Association. CCI had imposed a penalty of '309.95 crores on the Company. The Company had filed an Appeal before the Hon'ble National Company Law Appellate Tribunal against the said CCI Order. The NCLAT, through an order dated 1st December 2022, has disposed of the aforementioned appeal, after taking note of the multiple errors in the said CCI Order dated 31st August 2018, and remanded the matter back to the CCI, to re-examine the matter on merits and also to consider reviewing the penalty (if violation is established) in accordance with the provisions of the Competition Act. The Company understands that the CCI has filed an appeal against the NCLAT order dated 1st December 2022, however, no notice has been received by the Company till date. Based on legal advice, the Company continues to believe that it has a strong case, and accordingly, no provision has been made in the accounts. The Company strongly reiterates that there has been no wrongdoing on the part of the Company and reassures all the stakeholders that the Company has never indulged in or was part of any cartel or undertook any anti-competitive practices.
The Company has lease contracts for land, buildings and plant & equipment. These are recognised as Right of use assets with related lease liabilities in accordance with accounting policy of the Company as given in Note No. 1.3(iv).
a) The movements in Right of use assets is shown in Note No. 2, Property, Plant & Equipment.
f) The company has given certain equipment on sub-lease, from which rental income recognised during the year is '0.77 crore (Previous year: '0.77 crore).
Note - 39
Debts / Advances include '72.54 crores (Previous year '65.55 crores) for which legal and other necessary action has been taken.
Note - 40
In respect of certain disallowances and additions made by the Income Tax Authorities, appeals are pending before the Appellate Authorities and adjustment, if any, will be made after the same are finally determined.
Note - 41
The details of amounts outstanding under the Micro, Small and Medium Enterprises Development Act, 2006 to the extent of information available with the Company are as under:
(i) Principal & Interest amount due and remaining unpaid as at 31.03.2023: Nil (Previous year: Nil), (ii) Payment made beyond the appointed day during the year: Nil (Previous year: Nil) and (iii) Interest Accrued and unpaid as at 31.03.2023: Nil (Previous year: Nil).
Note - 42
The Company has borrowings from Banks and Financial Institutions on the basis of securities of Current Assets. It has also filed the quarterly statements of current assets with all consortium banks and Financial Institutions during the year and these statements agree with the salient relevant items of books of account of the Company.
Note - 43
a) The Company has utilised the borrowings received from banks and financial institutions for the purpose for which it was taken during the year.
b) During the year, out of '240 crores raised from issuance and allotment of 24,000 CCDs at Face Value of '1,00,000 each on preferential allotment basis is parked in Cash Credit accounts maintained with consortium Bank of the Company.
(iv) The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of assets management, historical results of return on plan assets and the policy for plan assets management.
(v) The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
(vi) Employer's Contribution to PF (trust) during the 12 months ended 31st March, 2023 of '12.13 crores (Previous year: '8.95 crores) has been included under the head Employee Benefits Expense. (Refer Note No. 29)
Note - 52 Other statutory Information
a. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
b. The Company has not been declared wilful defaulter by any Banks or any other Financial Institution at any time during the financial year.
c. The Company has not revalued its Property, Plant and Equipment (including Right of use assets) or intangible assets during the year.
d. The Company did not have any material transactions with companies struck-off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956 during the financial year and previous year.
e. The Company has not traded or invested in Crypto Currency or Virtual Currency during the year.
f. The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond the statutory period.
g. During the year, 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:
i. 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
ii. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
h. 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:
i. 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
ii. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
i. The Company has no such transactions which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in tax assessments under Income Tax Act, 1961.
j. The Company has not made any Loans or Advances to any promoters, directors, KMPs and the related parties (as defined under the Companies Act, 2013), either severally or jointly with any other person, that are:
i. repayable on demand; or
ii. without specifying any terms or period of repayment.
The following methods and assumptions were used to estimate the fair values:
1. Cash and short-term deposits, trade receivables, loans, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
2. Other non-current receivables are evaluated by the Company, based on parameters such as interest rates, individual creditworthiness of the counterparty etc. Based on this evaluation, allowances are considered to account for the expected losses of these receivables. As at end of each reporting year, the carrying amounts of such receivables, net of allowances (if any), are not materially different from their calculated fair values.
3. Fair value of Investments in quoted mutual funds and equity shares are based on quoted market price at the reporting date. The fair value of unquoted Investments in preference shares are estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. The fair value of unquoted Investments in equity shares are estimated on net assets basis.
4. Fair value of borrowings from banks and other non-current financial liabilities, are estimated by discounting future cash flows using rates currently available for debt on similar terms and remaining maturities.
5. The fair values of derivatives are calculated using the RBI reference rate as on the reporting date as well as other variable parameters. Fair Value Hierarchy:
All financial assets and liabilities for which fair value is measured in the financial statements are categorised within the fair value hierarchy, described as follows: -
Level 1 - Quoted prices in active markets.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.
Level 3 - Inputs that are not based on observable market data.
Forward Contracts for hedging Receivables: ?338.00 crores - US $ 41.11 Million (Previous year: ?394.20 crores - US $ 52 Million) and for hedging Payables: ?559.98 crores - US $ 68.11 Million (Previous year: ?252.74 crores - US $ 33.34 Million) are outstanding as at 31.03.2023. Currency Swap for Long-term rupee loans: ?90.12 crores -US $ 10.96 Million & ?50.57 crores -EUR 5.64 Million (Previous year: Nil).
Foreign currency exposure unhedged net payable is ?602.43 crores - US $73.27 Million (Previous year: ?841.11 crores - US $ 110.97 Million) as at 31.03.2023.
o Interest Rate Risk: Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Any changes in the interest rates environment may impact future rates of borrowing. The Company mitigates this risk by regularly assessing the market scenario, finding appropriate financial instruments, interest rate negotiations with the lenders for ensuring the cost-effective method of financing.
Note - 56
The fair value of Investment property as per registered valuer report as at 31st March, 2023 is '13.75 crores (Previous year: '13.07 crores) after considering the rental income from current leases and other assumptions that market participants would use while pricing investment property under current market conditions.
Note - 57 Financial Risk Management Objectives and Policies
The Company's activities are exposed to a variety of financial risks from its operations. The key financial risks include market risk (including foreign currency risk, interest rate risk and commodity price risk), credit risk and liquidity risk.
• 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 risk comprises mainly three types of risk: interest rate risk, currency risk and other price risk such as commodity price risk.
o Foreign Currency Risk: Foreign Currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because
of changes in foreign exchange rates. The Company has obtained foreign currency borrowings and has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk.
After taking cognizance of the natural hedge, the Company takes appropriate hedges to mitigate its risk resulting from fluctuations in foreign currency exchange rate(s).
Foreign Currency Sensitivity: The following table demonstrates the sensitivity to a reasonably possible change in USD with all other variables held constant. The impact on company's profit before tax is due to changes in the foreign exchange rate is as follows:
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.
o Commodity Price Risk: The Company is affected by the price volatility of certain commodities. Its operating activities require the
purchase of raw material and manufacturing of tyres, and therefore, requires a continuous supply of certain raw materials such as natural rubber, synthetic rubber, carbon black, fabric, bead wire rubber chemicals etc. To mitigate the commodity price risk, the Company has an approved supplier base to get best competitive prices for the commodities and to assess the market to manage the cost without any compromise on quality.
• Credit Risk: Credit risk is the risk that counterparty might not honor its obligations 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).
o Trade Receivables: Customer credit risk is managed based on company's established policy, procedures and controls. The company
assesses the credit quality of the counterparties taking into account their financial position, past experience and other factors.
Credit risk is reduced by receiving pre-payments and export letter of credit to the extent possible. The Company has a well-defined sales policy to minimize its risk of credit defaults. Outstanding customer receivables are regularly monitored and assessed. Impairment analysis is performed based on historical data at each reporting date on an individual basis. However, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively.
Note - 58 Capital Management
The Company's policy is to maintain an adequate capital base so as to maintain creditor and market confidence and to sustain future development. Capital includes issued capital, share premium and all other equity reserves attributable to equity holders. In order to strengthen the capital base, the company may use appropriate means to enhance or reduce capital, as the case may be.
The company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Net Debt is calculated as borrowings less cash and cash equivalents.
Note - 59
The amount required to be spent as Corporate Social Responsibility (CSR) under Section 135 of the Companies Act, 2013 for the year ended 31st March 2023 is '5.09 crores (Previous Year: '5.04 crores) i.e. 2% of average net profits for last three financial years, calculated as per Section 198 of the Companies Act, 2013.
Note - 60
Figures less than '50000 have been shown at actual in brackets.
Note - 61
Previous year figures have been reclassified/ regrouped wherever necessary.
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