(b) Terms/rights attached to equity shares
The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regards to dividends and share in the Company's residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.
Failure to pay any amount called up on shares may lead to forfeiture of the shares.
In the event of liquidation, the equity shareholders will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
Capital Reserve -
The Company recognises profit or loss on purchase, sale, issue or cancellation of the Company's own equity instruments to capital reserve.
Securities Premium -
Where the Company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to "Securities Premium". The Company may issue fully paid-up bonus shares to its members out of the securities premium and the Company can use this for buy-back of shares.
General Reserve -
General Reserve is created out of the profits earned by the Company by way of transfer from surplus in the statement of profit and loss. The Company can use this reserve for payment of dividend and issue of fully paid-up bonus shares.
|29.| EMPLOYEE BENEFITS - EMPLOYMENT BENEFIT PLANS
a) Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund, and ESI which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to statement of profit and loss as they accrue.
i) In respect to the income tax liability mentioned above, the demands have arisen on account of disallowance of a claim by the Company (common for all years) which has been settled and allowed in favour of the Company by the Hon'ble ITAT, Mumbai for the earlier years, and therefore the management is of the opinion that the contingent liabilities would not have an adverse impact on the Company in view of the favourable decisions given by the higher authorities in the Company's own case as mentioned above. Further, for FY 2014-15 (AY 2015-16), the Company has considered ' 90.61 Lakhs as contingent liability as in view of the management the Company has a refund of ' 1,340.48 Lakhs as per the return of income filed and once the issue is decided in favour of the Company for the respective year, the Company will be entitled to a refund of ' 1,340.48 Lakhs along with the applicable interest.
ii) Future cash flows, if any, in respect of Service tax matter is determinable only on receipt of the judgement/decision pending with relevant authorities. The Company does not expect the outcome of the matter stated above to have a material adverse effect on the Company's financial condition, result of operations or cash flows.
iii) In February 2019, the Supreme Court of India in its judgement clarified the applicability of allowances that should be considered to measure obligations under Employees Provident Fund Act, 1952. The Company is opined that there are interpretative challenges on the application of judgement retrospectively and as such does not consider there is any probable obligations for past periods. The Company has complied with the Employees Provident Fund Act, 1952 from the date of the Supreme Court order.
iv) During March 2022, the Company has voluntarily paid/ reversed GST ITC Credit ‘Under Protest' aggregating to ' 3,678.72 Lakhs and disclosed the same as recoverable. The Company believes that the amount is refundable based on legal advice obtained from an eminent expert.
|32.| SEGMENT iNFORMATiON
Ind AS 108 establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas, and major customers. Based on the "management approach" as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates the Company's performance and allocates resources based on an analysis of various performance indicators by business segments and geographic segments. Accordingly, information has been presented both along business segments and geographic segments.
Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of associated revenue of the segment. All other expenses or income which are not attributable or allocable to segments have been disclosed as unallocable expenses.
Business segment of the Company primarily identified and reported taking into account, the different risks and returns, the organisation structure and the internal reporting systems are as follows:
Agrochemicals : Insecticides, Herbicides, Fungicides and Biocides
Belts : Conveyor Belts, V Belts and Timing Belts
(i) The business of the Company is divided into two business segments. These segments are the basis for management control and hence form the basis for reporting. The business of each segment comprises of:
a) Agrochemicals - This is the main area of the Company's operation and includes the trading of agrochemical products.
b) Belts - Trading of products such as conveyor belts and rubber belts/sheets
(ii) Segment Revenue in the above segments includes sales of products net of taxes.
(iii) Inter Segment Revenue is taken as comparable third party average selling price for the year
(iv) Segment Revenue in the geographical segments considered for disclosure are as follows:
a) Revenue within India includes sales to customers located within India.
b) Revenue outside India is further bifurcated into Europe, North American Free Trade Agreement (NAFTA), Latin America (LATAM) and Rest of the World (ROW).
(v) Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.
(vi) The Group does not have any customer (including related parties), with whom revenue from transactions is more than 10% of Group's total revenue during the year.
(vii) Based on the "management approach" defined in Ind AS 108 - Operating Segments, the Chief Operating Decision Maker evaluates the Company's performance and allocate resources based on an analysis of various performance indicators by business segments. Accordingly information has been presented along these segments.
Geographical information
The geographical information analyses the Company's revenues and non-current assets by the Company's country of domicile (i.e. India) and other geographic locations. In presenting the geographical information, segment revenue are based on the geographic location of customers and segment assets are based on the geographical locations of the assets. It is bifurcated between within India and Outside India.
|33.| REVENUE FROM CONTRACTS WITH CUSTOMER (IND AS 115)
The Company is primarily in the business of export of agrochemicals (technical grade and formulations) and non-agro products such as conveyor belts, rubber belts/sheets, dyes and dye intermediates to various countries across the world. The product shelf life being short, revenue is recognised upon satisfaction of the performance obligations which is typically upon dispatch / delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established, the Company does not give significant credit period resulting in no significant financing component. The Company, however, has a policy for replacement of the damaged goods.
a. During the year ended 31 March, 2018 the Company entered into a Memorandum of Understanding (‘MOU') with other shareholders of Sharda Private (Thailand) Limited (an Associate Company). In terms of the said MOU dated November 10, 2017 the Company has gained 100% control over Sharda Private (Thailand) Limited as the other shareholders shall not be entitled to participate in the profits/losses of the said company and do not have any decision making powers as well. Thus, the said company has been treated as a subsidiary company w.e.f. November 10, 2017 in the consolidated financial results of the Company for and from the year ended 31 March, 2019 and has been consolidated in the Financial Statements applying Indian Accounting Standard - 110.
b. During the year ended 31 March, 2021, the Company entered into a Memorandum of Understanding (‘MOU') with other shareholders of Sharda Impex Trading LLC (an Associate Company). In terms of the said MOU dated 17 March, 2021 the Company has gained 100% control over Sharda Impex Trading LLC as the other shareholders shall not be entitled to participate in the profits / losses of the said company and do not have any decision making powers as well. Thus, the said company has been treated as a subsidiary company w.e.f. 17 March, 2021 in the consolidated financial results of the Company for the year ended 31 March, 2021 and has been consolidated in the Financial Statements applying Indian Accounting Standard - 110.
c) Persuant to order of Court Sharda Polska SP. Z..O.O was merged with Sharda Poland SP. Z.O.O. w.e.f 01 March, 2022.
Terms and conditions of transactions with related parties
The sales to and purchases of goods and services from related parties are made on terms equivalent to those that prevail in arm's length transactions and are in compliance with the provisions of Companies Act and SEBI Regulations. 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. 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.
The management assessed that cash and cash equivalents, trade receivables, trade payables, buyers credit and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the- counter derivatives) 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.The mutual funds are valued using the closing NAV.
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.
|37.| FiNANOiAL RiSK MANAGEMENT OBJEOTiVES AND POLiCiES Financial risk factors
The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company's exposure to credit risk is influenced mainly by the individual characteristic of each customer.
market risk
The Company operates internationally and a major portion of its business is transacted in United States Dollars and Euros and purchases from overseas suppliers mainly in US Dollars. The Company holds derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the Indian Rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company's operations are adversely affected as the rupee appreciates / depreciates against these currencies.
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's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in a foreign currency) and the Company's net investments in foreign subsidiaries.
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts (Refer note 35).
The movement in the pre-tax effect is a result of a change in the fair value of of monetary assets and liabilities denominated in US dollars, where the functional currency of the entity is a currency other than US dollars. Although the derivatives have not been designated in a hedge relationship, they act as an economic hedge and will offset the underlying transactions when they occur.
Foreign currency sensitivity
With all other variables held constant , for the year ended 31 March, 2022 and 31 March, 2021, every percentage point depreciation/appreciation in the exchange rate between the Indian rupee and respective major currencies (viz.US$, EUR & CAD) pertaining to trade payables , trade receivables & capital creditors has affected the Company's incremental profit before tax margins by approximately 0.30 % each.
Credit Risk
Credit risk refers to the risk of default on its obligation by the counter party resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ' 1,31,860.64 Lakhs and ' 1,09,376.42 Lakhs as of 31 March, 2022 and 31 March, 2021, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
Trade Receivables
The Company has established credit policy under which each new customer is analysed individually for credit worthiness before Company's standard payment terms (credit period ranges from 30 to 180 days) and delivery terms and conditions are offered. The Company review external ratings, if they are available, financial statements, credit agency information, industry information and in some cases bank references.
Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks. with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units. Loans represent loan given to related parties & employees for which the Company does not foresee any impairment loss.
Liquidity Risk
The liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach of managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damages to the Company's reputation. The Company monitors the level of expected cash inflows on trade receivables and loans together with expected cash outflows on trade payables & other financial liabilities.
The Company's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
As of 31 March, 2022, the Company had a working capital of ' 98,877.74 Lakhs including cash and cash equivalents of ' 4,292.03 Lakhs and current investments of ' 13,439.50 Lakhs. As of 31 March, 2021, the Company had a working capital of ' 85,289.15 Lakhs including cash and cash equivalents of ' 3,876.70 Lakhs and current investments of ' 8,301.31 Lakhs.
The table below provides details regarding the contractual maturities of significant financial liabilities as of 31 March, 2022:
|38.| CAPiTAL MANAGEMENT
The Company's objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-tem and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated.
The capital structure of the Company consists of net asset and total equity of the Company.
The Company is not subject to any externally imposed capital requirements.
|44.| ESTIMATION OF UNCERTAINTIES RELATING TO THE GLOBAL HEALTH PANDEMIC FROM COVID-19:
The Governments of various countries notified lockdown to contain the outbreak of COVID-19. Due to this, there have been several restrictions imposed by the Governments across the globe. However, the operations of the Company did not face any disruption. There is no significant impact of COVID-19 pandemic on the financial position and performance of the Company for the financial year ended 31 March, 2022.
In light of these circumstances, the Company has considered the possible effects that may result from COVID-19 on the carrying amounts of financial assets, inventories, trade receivables, property plant and equipment, Intangibles assets and Intangible assets under development, etc., as well as liabilities accrued. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of this pandemic, the Company has used internal and external information such as our current contract terms, financial strength of partners, investment profile, future volume estimates from the business etc.
Having reviewed the data and based on current estimates, the Company expects the carrying amount of these assets will be recovered and there is no significant impact on liabilities accrued.
|45.| sTANDARDs Issued BuT NOT YET EFFEcTIVE
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time
On 23 March, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from 01 April, 2022, key amendments are as below:
a) IND As 16 - property plant and Equipment-
The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant and equipment.
b) Ind As 37 - provisions, contingent liabilities and contingent Assets-
The amendment specifies that the ‘cost of fulfilling' a contract comprises the ‘costs that relate directly to the contract'. Costs that related directly to a contract can either be incremental cost of fulfillling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an exampe would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).
None of these amendment is expected to have material impact on the financial statements of the Company.
|46.| DiSCLOSURE FOR ULTiMATE BENEFiOiARiES
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
|47.| OTHER MATTERS
Information with regard to other matters specified in Schedule III to the Act is either nil or not applicable to the Company for the year.
|48.| PREViOUS YEAR COMPARATiVE
The figures for the previous year have been regrouped / reclassified to correspond with the current year's classification / disclosures puruant to amendment of the revised Schedule III to the Companies Act 2013.
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