Corporate Overview Management Reports Financial Statements. Consolidated Financial Statements

Transcription

1 Consolidated Financial Statements 165

2 INDEPENDENT AUDITOR S REPORT To The Members of Coromandel International Limited Report on the Consolidated Ind AS Financial Statements We have audited the accompanying consolidated Ind AS financial statements of Coromandel International Limited (hereinafter referred to as "the Parent") and its subsidiaries (the Parent and its subsidiaries together referred to as "the Group"), which includes Group s share of profit/(loss) in its associate and its joint ventures, comprising the Consolidated Balance Sheet as at, the Consolidated Statement of Profit and Loss including other comprehensive income, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity, for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the consolidated Ind AS financial statements"). Management's Responsibility for the Consolidated Ind AS Financial Statements The Parent's Board of Directors is responsible for the preparation of these consolidated Ind AS financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as "the Act") that give a true and fair view of the consolidated financial position, consolidated financial performance including other comprehensive income, consolidated cash flows and consolidated statement of changes in equity of the Group including its Associate and Joint ventures in accordance with the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India. The respective Board of Directors of the companies included in the Group and of its associate and joint ventures are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group, its associate and its joint ventures and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated Ind AS financial statements by the Directors of the Parent, as aforesaid. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated Ind AS financial statements based on our audit. In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated Ind AS financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated Ind AS financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Parent's preparation of the consolidated Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Parent's Board of Directors, as well as evaluating the overall presentation of the consolidated Ind AS financial statements. We believe t hat the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraphs (a) of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated Ind AS financial statements. Opinion In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of reports of the other auditors on separate financial statements of the subsidiaries, associate and joint ventures referred to below in the Other Matters paragraph, the aforesaid consolidated Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the Ind AS and other accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at, and their consolidated profit, consolidated total comprehensive income, their consolidated cash flows and consolidated statement of changes in equity for the year ended on that date. Other Matters (a) We did not audit the financial statements/ financial information of nine subsidiaries, whose financial statements/ financial information reflect total assets of ` 8,652 lakhs as at, total revenues of ` 872 lakhs and net cash (outflows) amounting to ` 138 lakhs for the year ended on that date, as considered in the consolidated Ind AS financial statements. The consolidated Ind AS financial statements also include the Group's share of net profit of ` 218 lakhs for the year ended, as considered in the consolidated Ind AS financial statements, in respect of one joint venture, whose financial statements / financial information have not been audited by us. These financial statements / financial information have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the consolidated Ind AS financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and one joint venture, and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries and joint venture is based solely on the reports of the other auditors. 167

3 Coromandel International Limited Annual Report (b) Six of these subsidiaries are located outside India whose financial statements and other financial information have been prepared in accordance with accounting principles generally accepted in their respective countries and which have been audited by other auditors under generally accepted auditing standards applicable in their respective countries. The Company s management has converted the financial statements of such subsidiaries located outside India from accounting principles generally accepted in their respective countries to accounting principles generally accepted in India. We have audited these conversion adjustments made by the Company s management. Our opinion in so far as it relates to the balances and affairs of such subsidiaries located outside India is based on the report of other auditors and the conversion adjustments prepared by the management of the Company and audited by us. We did not audit the financial statements / financial information of one subsidiary, whose financial statements/ financial information reflect total assets of ` Nil as at, total revenues of ` Nil and net cash (outflows) amounting to ` 0.22 lakhs for the year ended on that date, as considered in the consolidated Ind AS financial statements. The consolidated Ind AS financial statements also include the Group's share of net loss of ` 1.28 lakhs for the year ended, as considered in the consolidated Ind AS financial statements, in respect of an associate, whose financial statements / financial information have not been audited by us. These financial statements / financial information are unaudited and have been furnished to us by the Management and our opinion on the consolidated Ind AS financial statements, in so far as it relates to the amounts and disclosures included in respect of the subsidiary and joint venture, is based solely on such unaudited financial statements / financial information. In our opinion and according to the information and explanations given to us by the Management, these financial statements/ financial information are not material to the Group. Our opinion on the consolidated Ind AS financial statements above and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements / financial information certified by the Management. Report on Other Legal and Regulatory Requirements As required by Section 143(3) of the Act, based on our audit and other auditors on separate financial statements and the other financial information of subsidiaries, associate and joint venture companies incorporated in India, referred in the Other Matters paragraph above we report, to the extent applicable, that: (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated Ind AS financial statements. (b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated Ind AS financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors. (c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss including Other Comprehensive Income, the Consolidated Cash Flow Statement and Consolidated Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated Ind AS financial statements. (d) In our opinion, the aforesaid consolidated Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act. (e) (f) On the basis of the written representations received from the directors of the Parent as on 31 March, 2018 taken on record by the Board of Directors of the Parent and the reports of the statutory auditors of its subsidiary companies and joint venture companies incorporated in India, none of the directors of the Group companies and joint venture companies incorporated in India is disqualified as on from being appointed as a director in terms of Section 164 (2) of the Act. With respect to the adequacy of the internal financial controls over financial reporting and the operating effectiveness of such controls, refer to our separate Report in Annexure A, which is based on the auditors reports of the Parent, subsidiary companies and Joint venture companies incorporated in India, to whom internal financial controls over financial reporting is applicable. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of internal financial controls over financial reporting of those companies, for the reasons stated therein. (g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditor's) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us: i. The consolidated Ind AS financial statements disclose the impact of pending litigations on the consolidated financial position of the Group, its associate and joint ventures. ii. iii. The Group, its associate and joint ventures did not have any material foreseeable losses on long-term contracts including derivative contracts. There has been no delay in transferring amounts required to be transferred, to the Investor Education and Protection Fund by the Parent and its subsidiary companies and joint venture companies incorporated in India. Secunderabad, 24 April 2018 For DELOITTE HASKINS & SELLS Chartered Accountants (Firm s Registration No S) Ganesh Balakrishnan (Partner) (Membership No ) 168

4 ANNEXURE A TO THE INDEPENDENT AUDITOR S REPORT (Referred to in paragraph 1(f)under Report on Other Legal and Regulatory Requirements section of our report of even date) Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ( the Act ) In conjunction with our audit of the consolidated Ind AS financial statements of the Company as of and for the year ended 31 March, 2018, we have audited the internal financial controls over financial reporting of COROMANDEL INTERNATIONAL LIMITED (hereinafter referred to as the Parent ) and its subsidiary companies and joint venture, which are companies incorporated in India, as of that date. Management s Responsibility for Internal Financial Controls The respective Board of Directors of the Parent, its subsidiary companies and joint ventures, which are companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the respective Companies considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, Auditor s Responsibility Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Parent, its subsidiary companies and its joint venture, which are companies incorporated in India, based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note ) issued by the Institute of Chartered Accountants of India and the Standards on Auditing, prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors of the subsidiary companies and joint venture, which are companies incorporated in India, in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting of the Parent, its subsidiary companies and its joint venture, which are companies incorporated in India. Meaning of Internal Financial Controls Over Financial Reporting A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls Over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion In our opinion to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditors referred to in the Other Matters paragraph below, the Parent, its subsidiary companies and joint venture, which are companies incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March, 2018, based on the criteria for internal financial control over financial reporting established by the respective companies considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. Other Matters Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting insofar as it relates to three subsidiary companies and one joint venture, which are companies incorporated in India, is based solely on the corresponding reports of the auditors of such companies incorporated in India. Our opinion is not modified in respect of the above matters. Secunderabad, 24 April 2018 For DELOITTE HASKINS & SELLS Chartered Accountants (Firm Registration No: S) Ganesh Balakrishnan (Partner) (Membership No: ) 169

5 Coromandel International Limited Annual Report Consolidated Balance Sheet as at Note I ASSETS 1 Non-current assets (a) Property, plant and equipment 4 1,29,350 1,31,588 (b) Capital work-in-progress 4 3,585 1,367 (c) Goodwill (d) Other intangible assets 5 1,108 1,134 (e) Intangible assets under development 5 1, (f) Financial assets i) Investments a) Investments in joint ventures 6 1,620 1,680 b) Other investments 6 20,505 37,155 (g) Income tax assets (net) (h) Other non-current assets 8 8,911 7,025 1,66,224 1,80,831 2 Current assets (a) Inventories 9 2,22,713 1,72,461 (b) Financial assets i) Investments ii) Trade receivables 11 1,52,343 1,62,167 iii) Government subsidies receivable 2,62,686 2,55,703 iv) Cash and cash equivalents 12 44,190 14,671 v) Bank balances other than cash and cash equivalents 13 10,890 2,112 vi) Loans 14 40,777 52,225 vii) Other financial assets 7 2,159 3,788 (c) Other current assets 15 70,729 20,529 8,06,501 6,83,669 Total assets 9,72,725 8,64,500 II EQUITY AND LIABILITIES 1 Equity (a) Equity share capital 16 2,924 2,917 (b) Other equity 17 3,09,662 2,86,160 Equity attributable to owners of the Company 3,12,586 2,89,077 2 Non-current liabilities (a) Financial liabilities i) Other financial liabilities (b) Provisions 20 1,439 1,417 (c) Deferred tax liabilities (net) 21 12,897 14,947 (d) Other non-current liabilities ,023 15,439 17,510 3 Current liabilities (a) Financial liabilities i) Borrowings 18 2,72,844 2,22,838 ii) Trade payables 23 3,35,895 2,93,454 iii) Other financial liabilities 19 24,331 31,223 (b) Provisions ,474 (c) Current tax liabilities (net) ,195 1,640 (d) Other current liabilities 22 8,529 7,284 6,44,700 5,57,913 Total liabilities 6,60,139 5,75,423 Total equity and liabilities 9,72,725 8,64,500 See accompanying notes forming part of the consolidated financial statements In terms of our report attached For and on behalf of the Board of Directors For Deloitte Haskins & Sells Chartered Accountants Firm Registration Number:008072S Ganesh Balakrishnan Partner Membership Number: Place: Secunderabad Date: 24 April 2018 Sameer Goel Managing Director Jayashree Satagopan Chief Financial Officer M M Murugappan Chairman P Varadarajan Company Secretary 170

6 Consolidated Statement of Profit and Loss for the year ended Note I Income Revenue from operations 24 10,99,014 10,19,509 Other income 25 5,837 5,482 Total income 11,04,851 10,24,991 II Expenses Cost of materials consumed 6,49,639 5,58,523 Purchases of stock-in-trade 1,24,317 1,23,013 Changes in inventories of finished goods, work-in-process and stock-intrade 26 (18,023) 30,560 Excise duty 4,343 16,434 Employee benefits expense 27 35,104 31,084 Finance costs 28 17,829 22,378 Depreciation and amortisation expense 29 9,759 10,071 Other expenses 30 1,80,944 1,61,627 Total expenses 10,03,912 9,53,690 III Exceptional item (net) - - IV Share of profit/ (loss) of joint ventures and associate 43 (60) (71) V Profit before tax (I-II+III+IV) 1,00,879 71,230 VI Tax expense: (1) Current tax 35,229 24,317 (2) Deferred tax (712) (783) 34,517 23,534 VII Profit for the year (V-VI) 66,362 47,696 VIII A Other Comprehensive Income (i) Items that will not be reclassified to profit or loss (a)remeasurement of defined benefit plan 34(a) (382) (303) (b)net fair value (loss)/gain on investments in equity shares at FVTOCI (18,151) (8,683) (18,533) (8,986) (ii) Income tax relating to items that will not be reclassified to profit or loss 21.3 (1,337) (1,063) B (i) Items that will be reclassified to profit or loss (a)exchange differences on translating foreign operations (60) (419) (60) (419) (ii) Income tax relating to items that will be reclassified to profit or loss - - Total other comprehensive income (17,256) (8,342) IX Total Comprehensive Income for the year (VII+VIII) 49,106 39,354 X Earnings per equity share of ` 1 each: 35 Basic ` Diluted ` See accompanying notes forming part of the consolidated financial statements In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants Firm Registration Number:008072S Ganesh Balakrishnan Partner Membership Number: Place: Secunderabad Date: 24 April 2018 For and on behalf of the Board of Directors Sameer Goel Managing Director Jayashree Satagopan Chief Financial Officer M M Murugappan Chairman P Varadarajan Company Secretary 171

7 Coromandel International Limited Annual Report Consolidated Cash Flow Statement for the year ended Cash flow from operating activities Profit before tax 1,00,879 71,230 Adjustments for: Depreciation and amortisation expense 9,759 10,071 (Profit)/ loss on sale/ scrap of property, plant and equipments (net) 445 (14) Profit on sale of investment (79) (242) Exchange differences (net) 8,623 (2,579) Share of loss of joint ventures accounted using equity method Loss/ (gain) on measuring investments at FVTPL (net) 8 (25) Provision for doubtful trade receivables and other liabilities no longer required, written back (95) (164) Provision for doubtful trade and other receivables, loans and advances (net) 1,849 2,248 Trade and other receivables written off Provision for employee benefits (1,049) 21 Share-based payments Finance costs 17,829 22,378 Interest income (5,403) (4,752) Dividend income (245) (25) Others 7 (37) Operating profit before working capital changes 1,33,451 99,327 Changes in working capital: Trade payables 33,189 (21,887) Other liabilities (8,038) (576) Trade receivables 7,975 (1,207) Government subsidies receivable (6,983) (18,997) Inventories (50,252) 62,115 Other assets (49,087) (752) Balances in margin money/ deposit accounts - 8 Cash generated from operations 60, ,031 Direct taxes paid (net of refunds) (34,700) (26,507) Net cash flow from operating activities (A) 25,555 91,524 Cash flows from investing activities Purchase of property, plant and equipments, including capital work-in-progress and capital (11,425) (8,980) advances Purchase of leasehold land (981) (135) Proceeds from sale of property, plant and equipments 311 1,033 Investment in joint ventures - (400) Amount transferred from Escrow accounts Purchase of non-current investments (1,625) - Proceeds from sale of non-current investments Inter-corporate deposits/ loans given (40,052) (52,225) Inter-corporate deposits matured/ loans received 51,500 48,000 Purchase of current investments (41,000) (12,000) Proceeds from sale of current investments 41,000 12,000 Interest received 5,950 4,313 Dividend received from current and non-current investments Net cash from/ (used in) investing activities (B) 4,063 (7,860) 172

8 Consolidated Cash Flow Statement for the year ended Cash flow from financing activities Proceeds from issue of equity shares on exercise of employee stock options 1, Repayment of long-term borrowings - (9,407) Increase/ (decrease) in short-term borrowings 44,371 (40,442) Dividend paid including tax thereon (28,133) (14,030) Interest and other borrowing costs paid (18,009) (22,750) Net cash from/ (used in) financing activities (C) (98) (86,440) Net increase/(decrease) in cash and cash equivalents (A + B + C) 29,520 (2,776) Cash and cash equivalents at the beginning of the year 14,671 17,448 Exchange (loss)/ gain on cash and cash equivalents (1) (1) Cash and cash equivalents at the end of the year 44,190 14,671 Note: 1. Cash Flow Statement has been prepared under the Indirect method as set out in the Indian Accounting Standard 7 on Cash Flow Statements. Cash and cash equivalents in the Cash Flow Statement comprise cash at bank and in hand, demand deposits and cash equivalents which are short-term and held for the purpose of meeting short-term cash commitments. 2. Reconciliation of liabilities from financing activities (short-term borrowings): Opening balance 2,22,838 Proceeds 10,21,417 Repayments* (9,71,411) Fair value changes - Closing balance 2,72,844 *excludes effect of changes in foreign exchange rates of `5,635 lakhs See accompanying notes forming part of the consolidated financial statements In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants Firm Registration Number:008072S Ganesh Balakrishnan Partner Membership Number: Place: Secunderabad Date: 24 April 2018 For and on behalf of the Board of Directors Sameer Goel Managing Director Jayashree Satagopan Chief Financial Officer M M Murugappan Chairman P Varadarajan Company Secretary 173

9 Coromandel International Limited Annual Report Consolidated Statement of Changes in Equity for the year ended a. Equity share capital Number of shares Amount Balance as at 1 April ,13,20,465 2,913 Add: Equity shares allotted pursuant to exercise of stock options 3,48,662 4 Balance as at 29,16,69,127 2,917 Add: Equity shares allotted pursuant to exercise of stock options 7,14,282 7 Balance as at 29,23,83,409 2,

10 b. Other equity Capital reserve Capital redemption reserve Securities premium reserve Reserves and Surplus (refer Note 17) Central subsidy General reserve Share options outstanding account Retained earnings Foreign currency translation reserve Items of other comprehensive income (refer Note 17) Equity instruments through other comprehensive income Remeasurement of the net defined benefit plans Balance at 1 April , , ,400 5,542 6,319 (120) 260,483 Profit for the year , ,696 Other comprehensive income for the year, net of income tax (419) (7,726) (198) (8,343) Total comprehensive income for the year ,696 (419) (7,726) (198) 39,353 Total Recognition of share-based payments Amount received on exercise of employee stock options Dividend on equity shares (14,030) (14,030) Amounts transferred within the reserves ,000 - (30,000) Balance at , , ,066 5,123 (1,407) (318) 286,160 Balance at 1 April , , ,066 5,123 (1,407) (318) 286,160 Profit for the year , ,362 Other comprehensive income for the year, net of income tax (60) (16,947) (249) (17,256) Total comprehensive income for the year ,362 (60) (16,947) (249) 49,106 Recognition of share-based payments Dividend on equity shares (28,133) (28,133) Amount received on exercise of employee stock options - - 1, ,666 Transfer to retained earnings Amounts transferred within the reserves ,020 (191) (30,000) Balance at , , ,295 5,063 (18,354) (567) 309,662 See accompanying notes forming part of the consolidated financial statements In terms of our report attached For and on behalf of the Board of Directors For Deloitte Haskins & Sells Chartered Accountants Firm Registration Number:008072S Sameer Goel M M Murugappan Managing Director Chairman Ganesh Balakrishnan Partner Membership Number: Place: Secunderabad Date: 24 April 2018 Jayashree Satagopan Chief Financial Officer P Varadarajan Company Secretary 175

11 Coromandel International Limited Annual Report Notes forming part of the Consolidated financial statements 1 General information Coromandel International Limited ( the Company ) is a limited company incorporated in India, equity shares of which are listed on the Bombay Stock Exchange and the National Stock Exchange in India. Its parent company is E.I.D Parry (India) Limited. The address of its registered office and principal place of business are disclosed in the annual report. The Company is engaged in the business of farm inputs comprising of fertiliser, crop protection, specialty nutrients and organic compost. Our Executive Leadership Team comprises the following officers at the date of release of these financial statements: Sameer Goel Managing Director G Veerabhadram President Crop Protection S Sankarasubramanian- President & Head (Fertilisers) Amir Alvi Executive Vice President & Head Manufacturing (Fertilisers) Arun Leslie George Executive Vice President & Head (SSP) B Prasannatha Rao Executive Vice President & Head HR Jayashree Satagopan- Executive Vice President & Chief Financial Officer Kalidas Pramanik Executive Vice President - Marketing (Fertilisers & Organic) P Varadarajan Senior Vice President Legal and Company Secretary Ripu Daman Singh - Executive Vice President & Head (Retail) S Govindarajan Executive Vice President & Head Commercial Srikanthan S Executive Vice President & COO Crop Protection The executive leadership team reviews the results of our operations and our financial position on consolidated, operating segment and business unit levels. Our operating segments are defined by the organisation and reporting structure through which we operate our business. We categorise our operating segments into Nutrient and other allied business and Crop Protection. 2 Application of new and revised Ind AS Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On 28 March 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from 1 April The Company is currently evaluating the requirements of the amendment and is in the process of determining the impact on the financial statements. Ind AS 115- Revenue from Contract with Customers: On 28 March 2018, MCA has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity s contracts with customers. The standard permits two possible methods of transition: Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach) The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1 April The Company will adopt the standard on 1 April 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended will not be retrospectively adjusted. The Company is currently evaluating the requirements of the revised standard and is in the process of determining the impact on the financial statements. 3 Significant accounting policies 3.1 Statement of compliance The consolidated financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the Companies Act, 2013 ( the Act ), Companies (Indian Accounting Standards) Rules, 2015, along with relevant amendment rules issued thereafter and other relevant provisions of the Act, as applicable. 3.2 Basis of preparation and presentation The consolidated financial statements include accounts of Coromandel International Limited ( the Company ) and its subsidiaries Liberty Pesticides and Fertilisers Limited, Sabero Organics America S.A., Sabero Australia Pty Ltd, Sabero Europe B.V., Sabero Argentina S.A., Coromandel Agronegocios de Mexico S.A de C.V (formerly Sabero Organics Mexico S.A de C.V), Parry Chemicals Limited, Dare Investments Limited, CFL Mauritius Limited, Coromandel Brasil Limitada, (a Limited Liability Partnership), its joint ventures Yanmar Coromandel Agrisolutions Private Limited, Coromandel Getax Phosphates Pte Limited (Upto 8 September 2016) and Coromandel SQM (India) Private Limited; all together referred to as the Group. 176

12 The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, and on accrual basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36. In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability. Based on the nature of activities of the Company and the average time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current. The principal accounting policies are set out below. 3.3 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company: has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company s voting rights in an investee are sufficient to give it power, including: the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders; potential voting rights held by the Company, other vote holders or other parties; rights arising from other contractual arrangements; and any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit and loss from the date the Company gains control until the date when the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intragroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. 177

13 Coromandel International Limited Annual Report Changes in the Group's ownership interests in existing subsidiaries 3.4 Goodwill Changes in the Group s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable Ind AS). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under Ind AS 109, or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cashgenerating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 3.5 Investments in associates and joint ventures An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method of accounting. An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised directly in equity as capital reserve in the period in which the investment is acquired. After application of the equity method of accounting, the Group determines whether there is any objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the net investment in an associate or a joint venture and that event (or events) has an impact on the estimated future cash flows from the net investment that can be reliably estimated. If there exists such an objective evidence of impairment, then it is necessary to recognise impairment loss with respect to the Group s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with Ind AS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms 178

14 part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with Ind AS 36 to the extent that the recoverable amount of the investment subsequently increases. When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group. The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the investment is classified as held for sale. 3.6 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. a) Sale of goods is recognised net of returns and trade discounts, when the risk and rewards of ownership are transferred to the customers. Sales include amounts recovered towards excise duty and exclude sales tax/ value added tax. Revenue is also recognised on sale of goods in case where the delivery is kept pending at the instance of the customer, the risk and rewards are transferred and customer takes title and accepts billing as per usual payment terms. b) Subsidy is recognised on the basis of the rates notified from time to time by the Government of India in accordance with the Nutrient Based Subsidy (NBS) policy on the quantity of fertilisers sold by the Company for the period for which notification has been issued and for the remaining period, based on estimates. c) Income from services rendered is recognised based on the agreements/arrangements with the concerned parties and when services are rendered. d) Export benefits and other excise benefits are accounted for on accrual basis. 3.7 Other income a) Dividend income from investments is recognised in the year in which the right to receive the payment is established. b) Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition. 3.8 Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Group's significant leasing arrangements are in respect of operating leases for premises that are cancelable in nature. The lease rentals under such agreements are recognised in the Statement of Profit and Loss as per the terms of the lease. Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessor s expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue. 3.9 Insurance claims Insurance claims are accounted for on the basis of claims admitted/ expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection Functional and presentation currency Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which these entities operate (i.e. the functional currency ). The financial statements are presented in Indian Rupee (`), the national currency of India, which is the functional currency of the Group Foreign currencies In preparing the financial statements of each individual group entity, transactions in currencies other than the entity s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain foreign currency risks Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. 179