Notes to Standalone Financial Statements for the year ended March 31, 2019
41. Financial risk management objectives and policies
The movement in the pre-tax effect is a result of a change in the fair value 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.
Equity price risk
The Company's listed and non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The investment in listed and unlisted equity securities are not significant.
Credit risk
Credit risk is the risk that counterparty will not meet 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) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company's treasury department. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise 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 March 31, 2019, 31 March 2018 is the carrying amounts as illustrated in Note 10 except for financial guarantees and derivative financial instruments.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company manages liquidity risk by maintaining adequate reserves, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of the financial assets and liabilities.
The table below summarises the maturity profile of the Company's financial liabilities based on contractual undiscounted payments.
March 31, 2019
Less than 1 year
1 to 5 years
> 5 years
Total
Borrowings (other than convertible preference shares) (refer note 14)
507
209
249
965
Convertible preference shares (refer note 15)
-
Other financial liabilities (refer note 15)
429
4
433
Trade and other payables (refer note 17 and 18)
2,817
Derivative contracts (refer note 15)
3,753
213
4,215
In Crores
Borrowings (other than convertible preference shares)
313
413
269
995
(refer note 14)
341
345
2,353
36
135
171
3,043
552
3,864
Rs In Crores
42. Capital management
Capital includes equity attributable to the equity holders to ensure that it maintains an efficient capital structure and healthy capital ratios in order to support its business and maximise shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year ended March 31, 2019 and March 31, 2018.
The Company monitors capital using a 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 equivalents.
March 31, 2018
Borrowings other than convertible preference shares (Note 14 and 15)
1,238
1,122
Less: cash and cash equivalents (Note 11)
(77)
(93)
Net debt
1,161
1,029
Optionally Convertible preference shares (Note 14)
Equity (Note 12 and 13)
7,972
7,969
Total capital
Capital and net debt
9,133
8,998
Gearing ratio
13%
11%
In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowings in the current period.
43. Exceptional items
Amount payable as per final order of The Competition Commission of India
7
Amount payable for proceeding before Patent Trial & Appeal Board
44. Foreign Exchange Management Act
In January 2013, the Company had received a show cause notice from the Directorate of Enforcement, alleging that the Company had contravened certain provisions of Foreign Exchange Management Act, 1999 with regard to foreign direct investment made and utilisation of proceeds of FCCB / ECB. The Company had replied to the show cause notice and had personal hearings to represent their matter and filed written submissions on the basis of which Directorate of Enforcement vide order dated 28th February, 2018 has dropped all the charges levied against the Company.
45. Amalgamation with Advanta Limited
The Hon'ble High Court of Gujarat vide its order dated June 23, 2016 had sanctioned the Scheme of Amalgamation of Advanta Limited with the Company with an appointed date of April 01, 2015. In accordance with the provisions of the scheme and as approved by the High Court, the amalgamation was accounted for under the purchase method specified in Accounting Standard 14 - Accounting for Amalgamations' which is different from Ind AS 103 'Business Combinations'. As per the Court approval the goodwill arising on amalgamation is being amortised over a period of ten years from the appointed date, which is not amortised under Ind AS 103 but only tested for impairment.
If the Company had accounted for amalgamation as per Ind AS 103, profit for the for the years ended March 31, 2019 and March 31, 2018 would have been higher by Rs 370 crs each.
46. CSR expenditure:
Details of CSR expenditure:
Gross amount required to be spent by the company during the year
5
6
In cash
Yet to be paid in Cash
Amount spent during the year
Construction/acquisition of any asset
On purposes other than above
17
1
18
19
20
47.Segment information
1. Information about operating business segments
Agro Activity
Non Agro Activity
Unallocated
Revenue
External-revenue from contracts with customers
7,898
600
8,498 6,618
570
7,188
External-revenue from contracts with others
146
9
162
169
13
186
Inter segment
(285)
285
(183)
183
Total revenue
7,759
892
8,660
6,604
757
7,374
Segment Results
Contribution
512
81
593
741
29
770
Add: Inter segment profit
(53)
53
(37)
37
Total segment results
459
134
704
66
Unallocated income net of unallocated expenses
(82)
52
Finance costs
185
Exceptional items (refer note 43)
Profit before taxation
486
576
Provision for:
Current tax
83
180
Adjustments of tax relating to earlier years
(3)
(83)
Deferred tax
(69)
Net profit after tax
405
548
Other information
Segment assets
10,752
1,018
2,133
13,903
9,148
738
2,164
12,050
Segment liabilities
3,819
273
1,839
5,931 2,458
176
1,447
4,081
Capital expenditure
806
144
48
998
665
65
743
Depreciation
236
11
284
187
27
12
226
Amortisation
420
0
440
Non cash expenses other than depreciation
30
24
2. Information about Geoaranhical Business Seaments
March 31, 2015
India
Outside India
Revenue by geographical market
External
3,714
4,946
3,392
3,982
Carrying amount of non current operating assets
5,771 280
6,051
5,453
336
5,789
3. Notes
(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) Agro activity - This is the main area of the Company's operation and includes the manufacture and marketing of conventional agrochemical products, seeds and other agricultural related products.
b) Non-agro activity - Non agro activities includes manufacture and marketing of industrial chemical and other non agricultural related products.
(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 includes sales to customers located outside India
(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 Company does not have any customer (other than related parties), with whom revenue from transactions is more than 10% of Company's total revenue.
(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.
48. Acquisition of Arysta Lifesciences Inc. and it's subsidiaries from Element Solutions Inc. (formerly Platform Specialty Products Corporation)
On January 31, 2019, UPL Corporation Limited, Mauritius, a subsidiary of the Company completed the acquisition of Arysta Lifesciences Inc. and it's subsidiaries from Element Solutions Inc. (formerly Platform Specialty Products Corporation). The consideration for the acquisition aggregates US $ 4,426 Million(approximately Rs 31,458 crores) and is subject to certain further adjustments as per the terms of the stock purchase agreement signed between parties on July 20,2018.
49. Details of dues to micro and small enterprises as defined under the MSMED Artf 2006
The principal amount and interest due thereon remaining unpaid to any supplier as at the end of each accounting year: Principal amount due to micro and small enterprises
26
Interest due on above, current year Rs. 0 (March 31 , 2018: Rs 0)
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 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 the MSMED Act, 2006. The amount of interest accrued and remaining unpaid at the end of each accounting year, current year Rs. 0 (March 31, 2018: Rs. 0) 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 u/s 23 of MSMED Act, 2006.
Note: The information has been given in respect of such vendors to the extent they could be identified as Micro, and Small enterprises on the basis of information available with the Company.
As per our report of even date attached.
For B S R & Co. LLP
For and on behalf of the Board of Directors of UPL Limited
Chartered Accountants
CIN N0.-L24219GJ1985PLC025132
Firm registration number: 101248W/W-100022
Bhavesh Dhupelia
R.D. Shroff
A.C. Ashar
Partner
Chairman & Managing Director
Whole-time Director
Membership no.: 042070
Din NO.-00180810
Din No.- 00192088
Place: Mumbai
Date: May 17, 2019
Anand Vora
M.B. Trivedi
Chief Financial Officer
Company Secretary
Membership no.: ACS4250
Place: San Francisco