Gujarat Narmada Valley Fertilizers & Chemicals Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2021

1 The above standalone and consolidated financial results of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS”) as prescribed under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, (as amended), including Companies (Indian Accounting Standards) Amendments Rules, 2020.

2 The above standalone and consolidated financial results have been reviewed by the Audit Committee at its meeting held on May 13, 2021 and approved by the Board of Directors at its meeting held on May 17, 2021.

3 The Company makes income tax provision as per the Income Tax Act, 1961. During the current year, the Company has provided income tax provision as per normal provisions of Income Tax Act.

On account of utilization of MAT credit of Rs. 46.46 crores, cash outflow for tax expenses for the year would be lower to that extent.
During the previous year, income tax provision was made as per the Minimum Alternate Tax (MAT) in terms of the provisions of section 115JB of the Income Tax Act.

4 During the corresponding quarter and year ended March 31, 2020, the Company, based on its assessment, decided to continue with existing taxation structure to avail tax incentives and deductions available to the Company and did not exercise the option permitted under section 115BBA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019 (“New tax rate”) for financial year 2019-20. However, the Company had remeasured the outstanding net deferred tax liabilities, by applying the new tax rate on the deferred tax liabilities on account of temporary differences to the extent these are expected to be realized or settled in the future period when the Company will opt for new tax rate and reversed the amount of Rs. 127.23 crores in statement of profit and loss for the year ended March 31, 2020.

5 During the previous year ended March 31, 2020, in view of Department of Fertilizers (DoF) notification dated March 30, 2020 removing ambiguities in respect of it's modified NPS III relating to additional fixed cost, the Company had recognized subsidy income of Rs. 159.23 crores pertaining to the period April 01, 2014 to March 31, 2019 and also recognised subsidy income of Rs. 31.84 crores for FY 2019-20. During the current quarter and year ended March 31, 2021, the Company has recognized Rs. 8.73 crores & Rs. 31.85 crores respectively in this regard. This is part of Fertilizer segment in segment results.

6 During the previous year, the Company had received Demand Notice of Rs. 16,359.21 crores from the Department of Telecommunications (DoT), Ministry of Communications, Government of India, Gujarat Telecom Circle, Ahmedabad, vide its letters dated February 17, 2020 and March 05, 2020, (including of interest and penalty computed till March 31, 2020) towards the license fee in respect of “Very Small Aperture Terminal” (V-SAT) License and ’’Category A - Internet Service Provider” (ISP) License for the financial years from FY 2005-06 to FY 2018-19. Earlier, the Company had also received an initial Demand Notice from DOT dated December 23, 2019 for amounting to Rs. 15,019.97 crores (incl. interest and penalty). The Company has made representations to the DoT against the said demand notices.

Company has evaluated the assessment made by DoT for raising the above demand notices based on the Adjusted Gross Revenue (AGR) judgement of Hon’ble Supreme Court of India on October 24, 2019. Based on legal assessment made, the Company has good grounds on merit to defend itself in this matter, hence no provision is considered necessary in the previous year and in this financial results. Hon’ble Supreme Court vide its Order dated June 11, 2020 directed DoT to reconsider the demand raised on Public Sector Undertakings (“PSUs’), which are not in business of mobile services to the general public. As at reporting date, the Company has not received any update from DoT regarding these demand notices.

7 During the year ended March 31, 2021, other income includes Rs. 43.88 crores recognised towards gain on sale of various investments in Government securities, Debentures, mutual funds and state development loans transferred from Employees’ Provident Fund Trust of the Company (GNFC-EPFT) which are measured at FVTPL

8 The Board of Directors has recommended a dividend of Rs. Per equity share of Rs. 10 each (i.e 80 %) for the year ended March 31, 2021, subject to the approval of shareholders in ensuing Annual General Meeting.

9 During the previous year, the Company had surrendered its exemption to hold contribution in Employees’ Provident Fund Trust of the Company (GNFC-EPFT) to Employees' Provident Fund Organization (EPFO) based on the Company’s obligation as at March 31, 2020 by availing the option of depositing entire corpus of GNFC-EPFT in liquid cash to EPFO. On surrendering the exemption to hold the trust, GNFC-EPFT had deposited Rs 820.59 crores, being the amount equivalent to the statutory liabilities as at March 31, 2020 with the EPFO after obtaining advance from the Company. The Company had recognized the shortfall/deficit of Rs. 61 67 crores between the value of investment portfolio and other assets held by GNFC-EPFT and Company’s obligations to EPFO as at March 31, 2020 which was made good by the Company. Accordingly net amount of Rs. 758.92 crores was shown as advance to GNFC-EPFT as at March 31, 2020. which was equivalent to the fair value of investments, as evaluated by an independent valuers, and other assets held by GNFC-EPFT.

During the current year, against the aforesaid advance outstanding as at March 31, 2020 amounting to Rs. 758.92 Crores, the entire investment portfolio and other assets held by GNFC EPFT have been transferred to the Company except balance of Rs 21.04 crores, which is held by State Bank of India in the name of GNFC EPFT. Such balance of Rs 21 04 Crores shall be received by the Company after receiving final order of approval for cancellation of exemption of GNFC-EPFT from EPFO.

10 The Indian Parliament has approved & the President has accorded the assent the Code on Social Security, 2020 (‘Code’) in September, 2020. The Code might impact the contributions by the Company towards Provident Fund, Gratuity and other employment and post-employment employee benefits. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record the impact, if any, in the period in which the Code becomes effective.

11 The current “second wave" of COVID-19 pandemic has significantly increased in India. The Government of India has ruled out a nationwide lockdown for now, but regional lockdowns are implemented in areas with a significant number of COVID-19 cases. We are closely monitoring the situation and will continue to take all necessary actions to ensure the health, safety and wellbeing of our employees in this given scenario.

Further, the Company has also assessed the impact of this pandemic on recoverability of the carrying amounts of inventories, tangible assets, intangible assets, trade receivables, investments and other financial asset as at balance sheet date using various internal and external information. The management has also performed sensitivity analysis on the assumptions used and based on present estimates it believes that the carrying amount is considered to be recoverable and accordingly no further adjustments are required in the financial statements. However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration and the Company continues to monitor the changes in future economic conditions. Further the Company has zero long term debt outstanding as at March 31, 2021 and has substantial working capital lines which are available, should the need arise.

The management does not see any risk in the ability to continue as a going concern and meeting its liabilities as and when they fall due. However, the actual impact of COVID-19 on the Company's financial statements may differ from that estimated.

12 Pursuant to Ministry of Corporate Affairs (MCA) clarification dated 23.03.2020 on spending of Corporate Social Responsibility (CSR) funds for COVID-19 and appeal of Government of Gujarat for contributing to fight against worldwide pandemic "Coronavirus". on 01 04.2020, the Company contributed Rs.10 Crores to the “Chief Minister’s Relief Fund”(CMRF), Government of Gujarat after obtaining due approval of Company’s CSR Committee and of the Board of Directors. The Company has considered the CMRF contribution as a part of CSR spend in terms of section 135 of Companies Act, 2013 (as amended) ("the Act"). Subsequently, on 10.04.2020, MCA had issued Frequently Asked Questions (FAQs) related to COVID-19 on Corporate Social Responsibility (CSR) wherein it was inter alia clarified that “Chief Minister’s Relief Fund" or “State Relief Fund" for COVID19 is not included in Schedule VII of the Act and therefore, any contribution to such funds shall not qualify as admissible CSR expenditure

The CSR Committee and the Board vide circular resolution dated 31.03.2021 took a note of the matter and concluded that since the MCA issued FAQ’s were issued subsequent to the Companies transaction, the said contributions of Rs.10 Crore earlier made by the Company to CMRF on 01.04.2020 to fight against pandemic "Coronavirus" COVID 19 was in compliance with the provisions of the Act & rules made thereunder read with Schedule VII of the Act and therefore is admissible as CSR expenditure Accordingly, for the contribution of Rs.10 Crore to the CMRF under Disaster Management of Covid-19 Pandemic, the management of the Company is of the view that it has complied with the provisions of section 135 of the Act, as regards the total required spent of Rs. 16.01 Crore towards CSR activities for the year ended March 31, 2021, with actual CSR expenditure spent of Rs.20.26 Crore made by the Company during the year.

13 The Consolidated Financial Results includes results of Subsidiary - “Gujarat Ncode Solutions Limited" which is under process of strike off in the records of Registrar of Companies and results of Associate company - “M/s Gujarat Green Revolution Company Limited" in accordance with Ind AS - 110 “ Consolidated Financial Statements” and Ind AS -28 “Investments in Associates and Joint Ventures.

14 The figures of the current quarter ended March 31, 2021 and corresponding previous quarter ended March 31, 2020 are the balancing figures between audited figures in respect of the full financial year ended March 31, 2021 and March 31, 2020 and the unaudited published year to date figures upto December 31, 2020 and December 31, 2019 respectively being the date of the end of the third quarter of the respective financial year which were subjected to limited review.

15 Previous periods figures have been regrouped wherever necessary.

Shri Panraj Joshi, IAS
Managing Director