BASF India Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2020
Auditor and Management Disclosures and Notes for the annual results dated 31 Mar 2020
1. The above results for the quarter and year ended March 31, 2020 have been reviewed by the Audit Committee and thereafter approved by the Board of Directors at its meeting held on May 22, 2020.
2. The Board of Directors at its meeting held on May 22, 2020 recommended payment of Dividend of 30% on equity shares for the financial year ended March 31, 2020.
3. Exceptional items includes following: For Table, kindly refer Corporate Announcements on www.bseindia.com.
4. The Company has adopted modified retrospective approach as per para C8 (c) (ii) of Ind AS 116 - Leases, effective from April 1, 2019. Accordingly, comparatives of the year ended March 31, 2019 (including quarter ended March 31, 2019) have not been retrospectively adjusted. On the initial date of application, the Company has recognised right of use of assets (an amount equal to the lease liability, adjusted by prepaid lease rent) of Rs. 1,761.3 million as at April 1, 2019. In the financial results for the current period, operating lease expenses has changed from rent (included in Other expenses) to depreciation cost for the right of use of assets and finance cost for interest accrued on lease liability. The effect of this adoption on the profit for the period and the earnings per share has been appropriately dealt in these financial results. To this extent, the figures are not comparable.
5. Finance cost includes interest on income tax, interest and other costs incurred on short and long term borrowings, interest accrued on lease liabilities under Ind AS 116, effects from fair valuation of derivatives relating to financing activities, realised (gain)/ loss on rollover of derivatives relating to financing activities, exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
6. The Company had entered into a Business Transfer Agreement with Archroma India Private Limited on July 8, 2019, to divest its Stilbene based Optical Brightening Agents (OBA) business for paper and powder detergent applications. The transaction was concluded on December 6, 2019 and the Company has recognised total loss of Rs. 261.5 million during the year ended March 31, 2020.
7. Tax expense includes provision for current income tax, tax expense for previous periods, minimum alternate tax and deferred tax charge/ (credit) including minimum alternate tax credit (based on estimated average effective annual income tax rate, considering tax allowances).
8. The Company has received demand notices from the Commercial Tax Department, Karnataka aggregating Rs. 6,209.3 million (including interest and penalty) for the period 2006-07 to 2014-15, by treating the stock transfers of its Mangalore Plant as interstate sales to dealers. However, recovery of these demands have been stalled by the Hon'ble Karnataka Appellate Tribunal for the period 2006-07 to 2010-11 & 2014-15. The company is in the process of filing appeal with stay application before KAT for the period 2011-12 to 2013-14.
The Company has also filed a Writ Petition before the Hon'ble Karnataka High Court against the order passed by Hon'ble Central Sales Tax Appellate Authority (CSTAA).
Further, the Company has received proposition notices aggregating Rs. 463.9 million (including interest and penalty) for the period 2015-16 from Commercial Tax Department, Karnataka. The Company has filed necessary reply/ submissions in response to these notice.
Based on the expert legal advice obtained by the Company, it does not consider these stock transfers as interstate sales. Hence no provision is considered necessary in the books.
9. As informed to stock exchanges on September 10, 2018, the Company has replaced the agency business with merchandise business model effective April 1, 2019 and hence revenue from operations for certain business segments for the quarters ended December 31, 2019, March 31, 2020 and year ended March 31, 2020 is strictly not comparable to previous periods.
10. Further to intimation to the stock exchange on December 23, 2019, the Board of Directors of the Company at its Meeting held on February 11, 2020, have approved the proposal to transfer its construction chemicals business to Master Builders Solutions India Pvt. Ltd., a fellow subsidiary Company, at a consideration of Rs. 5,951.6 million, subject to such other approvals, as may be required. The Company’s construction chemicals business, which forms part of the Surface Technologies segment, has generated sales of Rs. 4,728.6 million for the year ended March 31, 2020.
The business transfer was also approved by the shareholders of the Company vide postal ballot results announced on April 22, 2020. The Company has entered into a business transfer agreement with Master Builders Solutions India Pvt. Ltd. on May 14, 2020. The transaction is expected to close by second quarter of the financial year 2020-21.
Accordingly, the non-current assets of this business have been considered as held for sale as on March 31, 2020, as required by Indian Accounting Standard (Ind AS) 105 - ‘Non-current Assets Held for Sale and Discontinued Operations’.
11. Pursuant to SEBI circular dated October 22, 2019, the Company has listed its debt instrument- Commercial Papers on Bombay Stock Exchange effective December 30, 2019. Credit ratings for the Company's commercial papers programme have been reaffirmed by CRISIL with a credit ratings of "CRISIL A1+" and by India Ratings and Research Private Limited with a credit rating of "IND A1+". All commercial papers of the Company are unsecured.
Details of commercial papers issued during the period since initial listing on stock exchange are as per below table and interest and principal have been paid on the due dates. For Table, kindly refer Corporate Announcements on www.bseindia.com.
12. Probable incremental employee benefit liability that may arise on the Company due to likely shortfall in fund balance considering uncertainty in recoverability of certain investments held by the Gratuity Trust - Rs. 56.5 million (Previous year: Nil) and Provident Fund Trust - Rs. 154.5 million (Previous year: Nil), has been included as remeasurement costs in 'Other comprehensive income’.
13. The COVID-19 pandemic has severely disrupted business operations due to lockdown and other emergency measures imposed by the governments. The operations of the Company were impacted, due to shutdown of plants and offices following nationwide lockdown. The Company continues with its operations in a phased manner in line with directives from the authorities.
The Company has evaluated the impact of this pandemic on its business operations, liquidity and financial position and based on management's review of current indicators and economic conditions there is no material impact on its financial results as at March 31, 2020. However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration and accordingly the impact may be different from that estimated as at the date of approval of these financial results. The Company will continue to monitor any material changes to future economic conditions.
14. Figures for the quarter ended March 31, 2020 and the corresponding quarter ended in the previous year as reported in these financial results are the balancing figures between audited figures in respect of the full financial year and the published year to date figures upto the end of the third quarter of the relevant financial year. Also the figures upto the end of the third quarter had only been reviewed and not subjected to audit.
15. The statutory auditors have expressed an unqualified audit opinion on annual financial statements for the year ended March 31, 2020. The audit report has been filed with stock exchange and is available on the Company's website.
16. Previous period figures have been regrouped/ reclassified, wherever necessary to conform to current period classification.
17. a. Debt-equity ratio= Total debt [Long term borrowings + Short term borrowings + Current maturities of long term debts] / Total equity [Equity share capital + Other equity]
b. Debt service coverage ratio= Profit before finance cost, tax and depreciation & amortisation expense (before exceptional items) / Total Debt Service [Finance cost (excluding interest under Ind AS 116) + Repayment of long term debts during the period]
c. Interest service coverage ratio= Profit before finance cost, tax and depreciation & amortisation expense (before exceptional items) / Finance cost (excluding interest under Ind AS 116)