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Company Information

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Hindalco Industries Ltd.

Sep 27, 04:00
482.10 +3.70 (+ 0.77 %)
 
VOLUME : 266483
Prev. Close 478.40
Open Price 475.20
TODAY'S LOW / HIGH
474.50
 
 
 
489.80
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
162.25
 
 
 
489.80
Sep 27, 03:59
481.40 +2.65 (+ 0.55 %)
 
VOLUME : 6825039
Prev. Close 478.75
Open Price 474.90
TODAY'S LOW / HIGH
472.30
 
 
 
489.95
Bid PRICE (QTY.) 481.40 (2630)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
162.10
 
 
 
489.95
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Market Cap. ( ₹ ) 108176.10 Cr. P/BV 1.63 Book Value ( ₹ ) 296.09
52 Week High/Low ( ₹ ) 490/162 FV/ML 1/1 P/E(X) 31.06
Bookclosure 23/08/2021 TTM EPS ( ₹ ) 31.06 Div Yield (%) 0.62
NOTES TO ACCOUNTS
You can view the entire text of Notes to accounts of the company for the latest year
Year End :2021-03 

(c) Assets pledged and Hypothecated against borrowings:

i ALL the moveable and immoveable items of Property, Plant and Equipment of Mahan Aluminium, both present and future, carrying value ' 11,609 Crore (as at 31/03/2020'11,976 Crore) are given as security towards first ranking charge against the rupee term loans from banks of ' 2942 Crore (gross) (as at 31/03/2020'2,948 Crore). ALL the moveable items of Property, Plant and Equipment of Mahan Aluminium, both present and future are given as first pari passu charge against the foreign currency term loan from bank of ' 460 Crore (gross) (as at 31/03/2020'473 Crore), refer note - 18A (b).

ii All the moveable and immovable items of Property, Plant and Equipment of Aditya Aluminium both present and future, carrying value of ' 12,029 Crore (as at 31/03/2020 ' 12,397 Crore) are given as security towards charge against the rupee term loan from bank of ' 6299 Crore (gross) (as at 31/03/2020 ' 6,299 Crore), refer note - 18A (b).

iii All moveable items of Property, Plant and Equipment both present and future (except moveable items of Mahan Aluminium, Aditya Aluminium, Kalwa Plant, current assets of the Company) and certain immoveable properties of the Company are given as security towards Non-Convertible Debentures of ' 6,000 Crore (as at 31/03/2020 ' 6,000 Crore), refer note - 18A (a).

(d) For capital expenditures contracted but not incurred, refer note 44B.

(e) Capital Work-in-Progress comprise of various projects and expansions spread over all units. Many of these projects will be capitalized during the year ending March 31, 2022. The Company has tested the carrying value of Capital Work-in-Progress for impairment as at reporting date.

(h) Residual values and useful live of Property, Plant and Equipment are reviewed, and adjusted if appropriate, at the end of each reporting period.

(j) During the year, the Company has impaired the certain mining related Property, Plant and Equipment, refer note 35 for further details.

(k) During the year, the Company has reclassified certain assets which were kept as Assets of Disposal Group held for Sale to Property, Plant and equipment presented in "Disposal/ adjustment" column, refer note 15 for further details.

B Right of Use Assets

The Company leases many assets including Land, Buildings, Plant and Machinery, Vehicles, Railway Wagons, Railway Sidings, Furniture etc. These right of use assets are presented as part of 'Property, Plant and Equipment' under Non-Current assets on the face of the Balance Sheet.

(b) The Company has no contractual obligations to purchase, construct or develop Investment Properties or for repairs, maintenance and enhancements. There is no restrictions on the realisability of investment properties or the remittance of income and proceeds of disposal on the Company.

(c) The fair value of the Company's Investment properties as at March 31, 2021 and as at March 31, 2020, have been arrived at on the basis of valuation carried out at the respective dates by an external, independent valuer registered with the authority which governs the valuer in India. The fair value measurement for all the investments properties has been categorised as Level 2 based on the inputs to the valuation technique used. Considering the type of the assets, market approach (sales comparable method) to estimate the fair value of the subject properties is adopted.

(a) Addition in Mining Rights includes ' 44 crore and amortization expense includes ' 20 Crore (as at 31/03/2020, addition included ' 47 Crore, and amortization expense included ' 38 Crore) towards stripping activity assets.

(b) The Carrying amount of Intangible Asset under Development as at 31/03/2021 is ' 122 Crore ( as at 31/03/2020 was ' 73 Crore). This includes ' 116 Crore pertaining to Enterprise Resource Planning System implementation (as at 31/03/2020 was ' 70 Crore). The Company has tested the carrying value of Intangible Asset under Development for impairment as at

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(a) Aggregate carrying value of Investments in subsidiaries is ' 16,794 Crore (as at 31/03/2020'16,793). None of the subsidiaries are listed on any stock exchange in India or outside India and these investments are carried at cost. There is no accumulated impairment as at current or previous year end.

(b) During the current year, "Kosala Livelihood and Social Foundation" a wholly owned subsidiary has been incorporated under Section 8 of the Companies Act, 2013 to promote the art of Kosa silk weaving and provide sustainable livelihood to the local community of reelers and weavers in the State of Chhattisgarh and Jharkhand.

(c) Financial guarantees given to subsidiaries were initially recognised at fair value will continue to be accounted as Other Equity Investment until the investment in subsidiaries are derecognised or impaired.

(d) Refer Note - 43 Related Party Disclosure for information on principal place of business of the above Subsidiaries.

(d) Remaining amortisation period of mining rights ranges between 5 -35 years.

(e) The useful live of Intangible assets are reviewed, and adjusted if appropriate, at the end of each reporting period.

(f) All Computer Software items in Intangible Assets (except of Mahan Aluminium, Aditya Aluminium, Kalwa Plant of the Company) are also given as security towards Non-convertible debentures of ' 6,000 Crore (as at 31/03/2020 ' 6,000 Crore), refer note - 18A (a).

(g) During the year, the Company has impaired the Mining rights assets, refer note 35 for further details.

(b) During the current year, the Company has subscribed to the Rights issue of Aditya BirLa Fashion & Retail Limited at ' 110 per share (Face value of ' 10 and Premium of ' 100). The Company has invested ' 43 Crore (52,57,652 shares at ' 82.50 per share) and Final call of ' 27.50 per share is yet to be made.

(c) Hindalco Industries Limited entered in Power Purchase agreement with Sai Wardha Power Generation Limited (SWPGL) in 2017 under Group captive Power purchase scheme (GCPP scheme) under the Electricity Act 2003. To meet the requirement of GCPP Scheme the Company participated in equity of SWPGL to extent of 0.70%. In the current year this investment has been impaired subsequent to National Company Law Tribunal (NCLT) judgment declaring SWPGL as insolvent.

(d) Investments in Government Securities include ' 242 Crore (as at 31/03/2020 ' Nil) being deposit as margin money with counter parties for derivative transactions.

(a) Refer note - 43 for balances with related parties.

(b) Prepaid Expenses include ' 12 Crore (as at 31/03/2020 Nil) excess CSR spent carried forward to subsequent years. Refer note 53A for further details.

(c) Mainly includes unutilised tax credits and claims receivables from Indirect Tax Authorities.

(d) Includes ' 192 Crore (Garepalma ' 74 Crore and Kathautia ' 118 Crore) [as at 31/03/2020'192 Crore (Garepalma ' 74 Crore and Kathautia ' 118 Crore)] towards appropriation of Performance Bank Guarantee by Nominated Authority (NA). Refer note - 52 for further details.

(a) For trade receivables hypothecated against borrowings, refer note - 18B (a)

(b) No trade or other receivable are due from directors or other officers of the Company either severally or joi ntly with any other person. Further no trade or other receivable are due from firms or private companies respectively in which any director is a partner, or director or member.

(c) Loss allowances includes provision of ' 2 crore (31/03/2020: ' 9 crore) made on account of expected credit loss on Trade Receivables, refer note - 48 (C)

(d) Refer note - 43 for balances with related parties.

(a) The Company has extended fair value hedge accounting on its inventory which forms part of Work-in-Progress and Finished Goods, Fair value hedges are mainly used to hedge the exposure to change in fair value of commodity price risks. The fair value adjustment remains part of the carrying value of inventory and is taken to profit and loss when the inventory is either sold or consumed, refer note - 49A and 49H.

(b) For Inventories hypothecated against secure short-term borrowings, refer note - 18B (a).

(c) Write downs of inventories (net of reversal) to net realizable value related to raw materials, work-in-progress and finished goods amounted to ' 349 Crore (as at 31/03/2020'266 Crore). These were recognized as expense during the year and included in 'cost of raw material consumed' and 'change in value of inventories of work-in-progress and finished goods' in statement of Profit and Loss.

(d) Inventories in hand include bulk materials of Coal, Bauxite and Copper Concentrate lying at yards, mines, plants and precious metals of Gold and Silver lying at Copper smelter and refinery aggregating to ' 3,179 Crore (as at 31/03/2020 ' 3,255 Crore).

(b) During the year, the Company based on future utilisation plan has reclassified certain assets to Property, Plant and equipment which were kept as Assets of Disposal Group held for Sale, refer note 2A.

(c) During the year, the Company has recognised impairment loss of ' 25 Crore on Assets which are held for disposal, refer note 35.

(d) The fair value of the assets held for sale approximates the carrying value.

(e) The Company is in the process of disposing the remaining assets.

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(e) Rights, preferences and restrictions attached to Equity Shares:

The Company has one class of equity shares having a par value of ' 1/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(a) Issued Equity Capital as at 31/03/2021 includes 7,397 Equity Shares (as at 31/03/2020 7,397 Equity Shares) of ' 1/- each issued on Rights basis kept in abeyance due to legal case pending.

(b) Treasury shares include shares held by Trident Trust which represents 16,316,130 (as at 31/03/2020: 16,316,130) equity shares of ' 1/- each fully paid-up of the Company issued, pursuant to a Scheme of Arrangement approved by the Hon'ble High Courts of Mumbai and of Allahabad, vide their Orders dated 31st October, 2002, and 18th November, 2002, respectively, to the Trident Trust, created wholly for the benefit of the Company and is being managed by trustees appointed by it. The tenure of the Trust is up to January 23, 2024.

(c) Treasury shares include shares held by Hindalco Employee Welfare Trust which represents 5,824,965 equity shares (as at 31/03/2020 5,885,672 Equity Shares) of ' 1/- each fully paid-up of the Company. The Trust buys shares of the Company from the market, for giving shares to employees pursuant to the Employees Stock Option Scheme, 2018. Refer note 17 (A)

(viii) for further details.

(g) Shares reserved for issue under options:

The Company has reserved equity shares for issue under the Employee Stock Option Schemes, refer note 42 - Employee Share-based Payments for details of Employee Stock Option Schemes.

(h) The Company during the preceding 5 years:

i. Has not allotted shares pursuant to contracts without payment received in cash.

ii. Has not issued shares by way of bonus shares.

iii. Has not bought back any shares.

(i) The Board of Directors of the Company has recommended final dividend of ' 3.00 per share aggregating to ' 674 Crore for the year ended 31st March 2021 which has not been recognised in the financial statement.

(i) Share Application Money pending Allotment:

Share application money pending allotment represents amount received from employees who has exercised employee stock options for which shares are pending allotment as on balance sheet date.

(ii) Capital Reserve:

The Company has created capital reserve pursuant to past mergers and acquisitions.

(iii) Capital Redemption Reserve:

The Company has created capital redemption reserve as per the requirement of the Companies Act.

(iv) Business Reconstruction Reserve:

The Company had formulated a scheme of financial restructuring under sections 391 to 394 of the Companies Act 1956 ("the Scheme") between the Company and its equity shareholders approved by the High Court of judicature of Bombay to deal with various costs associated with its organic and inorganic growth plan. Pursuant to this, a separate reserve account titled as Business Reconstruction Reserve ("BRR") was created during the year 2008-09 by transferring balance standing to the credit of Securities Premium Account of the Company for adjustment of certain expenses as prescribed in the Scheme.

(v) Securities Premium:

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilized in accordance with the provision of the Act.

(vi) Debenture Redemption Reserve:

The Company is required to create a debenture redemption reserve out of the profits which is available for payment of dividend, for the purpose of redemption of debentures.

(vii) Employee Stock Options:

The employee stock option account is used to recognize the grant date fair value of options /RSUs issued to employees under stock option schemes.

(viii) Treasury Shares held by ESOP Trust

The Company has created a trust. "Hindalco Employee Welfare Trust"(Trust) for providing share-based payments to its employees (including its Subsidiaries' employees). The Company uses this Trust as a vehicle for distributing shares to employees covered under Scheme. The Trust buys shares of the Company from the market, for giving shares to employees under the Employees Stock Option Scheme, 2018.

Shares held by Trust are treated as Treasury shares. Equity instruments that are reacquired (Treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in Statement of profit and loss on purchase, sale, issue or cancellation of Equity instruments. Share options whenever exercised, would be utilised from such treasury shares, refer note 42.

(ix) General Reserve:

The Company has created this reserve by transferring certain amount out of the profit at the time of distribution of dividend in the past.

(x) Retained Earning

Amount of retained earnings represents accumulated profit and losses of the Company as on reporting date. Such profits and losses are after adjustment of payment of dividend, transfer to any reserves as statutorily required and adjustment for realised gain/loss on derecognition of equity instruments measured at FVTOCI. Actuarial Gain/ Loss arising out of Actuarial valuation is immediately transferred to Retained Earning.

(xi) Other Reserves

a) Gain/ (Loss) on equity and debt instruments accounted as FVTOCI

The Company has elected to recognize changes in the fair value of certain investments in other comprehensive income. These changes are accumulated within the FVTOCI equity investments reserve and FVTOCI debt investment reserve within equity.

b) Effective portion of Cash Flow Hedge:

The Company uses hedging instruments as part of its risk management policy for commodity and foreign currency risk as described in note 49. The Cash Flow hedging reserve is used to recognise the effective portion of gain or loss on designated hedging relationship, refer note 49E and 49F.

c) Cost of Hedging Reserve:

The Company designates the spot component of some of its derivative instruments in cash flow hedge relationship. The Company defers changes in the forward element of such instruments in the cost of hedging reserve. The deferred cost of hedging are included in the initial cost of the related hedged items when it is recognized or reclassified to the statement of profit or loss when the hedged item effects the statement of profit or loss. The Company designates intrinsic value of option contracts and the time value of option contracts is included in the cost of hedging reserve, refer note 49E and 49F.

(B) Movement of each item of other equity is presented in Statement of Changes in Equity (SOCIE)

A Definition of abbreviation used

(i) 100 basis points (bps) is equal to 1%

(ii) Repo rate is the rate at which RBI lends funds to commercial banks.

(iii) Marginal Cost of funds based Lending Rate (MCLR) is a tenor-linked internal benchmark rate of respective bank

(iv) Treasury Bill (T-bill) means the rate of interest published by the Financial Benchmarks India Pvt. Ltd. ("FBIL”).

* Benchmark changed w.e.f. Oct 2020. Previous benchmark was MCLR 1 Month

# Benchmark changed w.e.f. Dec 2020. Previous benchmark was MCLR 3 Month

(I) The term Loans from banks of ' 2,942 Crore (gross) (31/03/2020: ' 2,948) are secured by a first ranking charge/ mortgage/ security interest in respect of all the moveable and immoveable items of Property, Plant and Equipment of Mahan Aluminium, both present and future. ' 2,858 Crore (gross) is to be repaid in 16 quarterly instalments commencing from June 2026. ' 84 Crore (gross) (31/03/2020: ' 90) is to be repaid in 36 quarterly instalments, refer note - 2A(c) (i).

(II) The term loan of ' 6,299 Crore (gross) is secured by a first ranking charge/ mortgage/security interest in respect of all the moveable and immovable items of Property, Plant and Equipment of Aditya Aluminium both present and future. ' 6,299 Crore (gross) is to be repaid in 26 quarterly instalments commencing from May 2024, refer note - 2A(c) (ii).

Foreign currency term loan pertains to loan from Bank of Tokyo Mitsubishi (BTMU) of USD 40 Millions and USD 22.79 Millions. BTMU loan is secured by a pari-passu first charge on all movable Property, Plant and Equipment of Mahan Aluminium, both present and future, refer note - 2A (c) (i). The loans were to be repaid in a single instalment at the end of the tenure. However, before the year end the Company has served a notice to prepay USD 62.79 Millions in April 2021. Accordingly, this loan has been classified as Current as on 31/03/2021.

(a) Working Capital Loan for Aluminium business, granted under the Consortium Lending Arrangement, are secured by a first pari-passu charge on entire stocks of raw materials, work-in-process, finished goods, consumable stores and spares and also book debts pertaining to the Company's Aluminium business, both present and future. Working Capital Loan for the Copper business is secured by a first pari passu charge on stocks of raw materials, work-in-process, finished goods and consumable stores and spares and also book debts and other moveable assets of Copper business, both present and future, refer note 11 (b).

(b) Foreign currency loans from Indian Banks and Offshore branch of Foreign banks are mainly in nature of Buyers credit which has been availed for Copper business to meet its working capital requirement mostly to settle import payments of copper concentrate and certain other raw materials. Refer note 49C on non-derivative financial instruments used as hedging instruments.

(c) Secured Rupee Loan includes amount received from Banks under Special Banking Arrangement where banks pay on behalf of Government of India, amount related to Fertiliser Subsidy Receivables and Government of India pay directly to Banks.

(d) Rupee Loans from Banks represents loan taken to meet the Company's working capital requirements.

(a) Supplier's credit represents the extended interest bearing credit offered by the supplier which is secured against Usance Letter of Credit (LC). Under this arrangement, the supplier is eligible to receive payment from negotiating bank prior to the expiry of the extended credit period. The interest for the extended credit period payable to the bank on maturity of the LC has been presented under Finance Cost.

(c) Brief Description of Provisions

i) Assets Retirement Obligations

Asset Retirement Obligation (ARO) is a Legal or constructive obligation associated with the ash ponds, ash pipeline and coal transportation system at Renusagar, red mud ponds at Muri and mining lands at Chattisgarh and Jharkhand where these lands need to be restored back to usable condition after closing of activities. This is a statutory requirement in which the timing or method of settlement may be conditional on one or multiple future events, the occurrence of which may not be within the control of the entity. The outflow of economic resources is expected during FY 22 to FY 47. The same has been appropriately discounted.

ii) Environmental Liability

Environmental Liability associated with disposal of hazardous material generated during the course of manufacturing or mining operation e.g. disposal of spent pot lining, Gypsum, Slag etc. This disposal generally takes place as per the guidelines set by various regulatory authorities of States and Central Government. The outflow of economic resources is generally expected in following financial year.

iii) Enterprise Social Commitment

Enterprise Social Commitment is the amount to be spent on social and economic development of the surrounding area where new project is being setup. This is generally defined as a certain percentage of the total cost of the project. The outflow of economic resources is expected during FY 22 to FY 56. This has been appropriately discounted wherever necessary

iv) Legal Cases

There are few Legal cases against which provision has been made since these events are probable to happen i.e. more likely than not but timing of occurrence of such events is uncertain as it depends on when the matter will be settled at the highest Court of Law.

v) Renewable Power Obligation (RPO)

Some of our units situated in various states like Odisha, Madhya Pradesh , Maharashtra ,Gujarat, Jharkhand etc. who gets power from Captive power plants or procure power from open source, are obligated to purchase certain portion of their power consumption from Renewable Energy sources both solar and non-solar. This gives rise to Renewable Power Obligation (RPO). In case the obligated units fail to procure power from such renewable sources, they may satisfy the obligation by purchasing Renewable Energy Certificates from authorised exchanges as an alternative.

vi) Other Provision

Includes Statutory provisions related to Indirect Taxes, Coal Cess etc.

(d) Reversal of RPO ProvisionPursuant to the issuance of notification by Madhya Pradesh Electricity Regulatory Commission (MPERC) dated April 05,2021,the Company has reversed the excess rPo provision of ' 21 Crore related to FY20. Additionally ' 36 Crore has been reversed on account of reduction in Solar certificate rate from ' 2,400/ REC to ' 1,000/ REC.

(e) Reversal of Legal cases ProvisionReversal of ' 39 Crore includes reversal of ' 37 Crore on account of UP Transit Fees and ' 2 Crore on account of Energy Compensation Charges.

23. Income Taxes

Refer Note 1B (W) for accounting policy on Income Taxes

A Current Tax and Deferred Tax Expense

(b) Deferred tax assets and deferred tax Liabilities have been offset wherever the Company has a Legally enforceable right to set-off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relates to income tax Levied by the same taxation authorities.

(d) The Company has not recognised deferred tax asset in respect of deductible temporary differences related to its equity investments measured at FVOCI, subsidiaries and associates as presently it is not probable that future taxable Long term capital gain will be available in the foreseeable future to recover such deferred tax assets.

(e) The Taxation Law (Amendments) Ordinance 2019 ('the Ordinance'), provides an option to domestic companies to pay income-tax at a Lower rate of 22% (plus applicable surcharge and cess) instead of the normal rate of 30% (plus applicable surcharge and cess) depending on the conditions specified in this behalf under section 115BAA of the Income Tax Act, 1961. A domestic company can avail of the lower tax rate only if it opts for not availing of certain exemptions or incentives specified in this behalf in the Ordinance. There is no time limit prescribed under the above to choose the option of lower tax rate under section 115BAA, however, once chosen it is irreversible.The Company is having carried forward unabsorbed depreciation, accumulated MAT credit and tax incentives to be availed/adjusted against future taxable profits. Based on the projections prepared by the management, including its plan for future capital expenditure for capacity enhancement, the Company has determined that exercising the option of lower rate will be beneficial only from April 01, 2037. Company has assessed that the net deferred tax liability as at March 31, 2021 would get reversed within the period for which Company is expected to continue to be in the existing tax regime. Accordingly, the Company has not made any adjustments to reverse its deferred tax liability balances as at March 31, 2021.

The Company is subject to tax assessments and ongoing proceedings, which are pending before various Tax Appellate Authorities. Management periodically evaluates the positions taken in tax returns with respect to such matters, including unresolved tax disputes, which involves interpretation of applicable tax regulations and judicial precedents. Current tax liability and tax asset balances are presented, after recognising as appropriate, provision for taxes payable and contingencies basis management's assessment of outcome of such ongoing proceedings and amounts that may become payable to the tax authorities. Considering the nature of such estimates and uncertainties involved, the amount of such provisions may change upon final resolution of the matters with tax authorities, refer note 1D

(a) Sales of Copper products and precious metals are accounted for provisionally, pending finalization of price and quantity. Variations are accounted for in the period of settlement. Final price receivable on sale of above products for which provisional price was not finalized are realigned at year end forward LME/LMBA rate and is being presented as part of other operating revenue. Revenue from subsequent variation in price movement is loss of ' 31 Crore (year ended 31/03/2020, loss of ' 1 Crore).

(b) Includes nutrient based subsidy of Phosphorus (P) & Potassium (K) arising from sale of Di ammonium phosphate (DAP) ' 402 Crore (year ended 31/03/2020'234 Crore).

(c) Sale of services predominantly include freight and insurance on exports which are identified as separate performance obligation under Ind AS 115.

(c) Includes gain on modification of borrowings of ' 56 Crore (year ended 31/03/2020'19 Crore) resulting from change in benchmark interest rate and timing of expected cash flows on term loans.

(d) Refer note - 43, for related party transactions.

(a) Purchase of copper concentrate is accounted for provisionally pending finalization of contents in the concentrate and price. Variations are accounted for in the period of settlement. Final price payable on purchase of copper concentrate for which provisional price and quantity were not finalized during the year are realigned based on forward LME and LBMA rate. Impact on cost from subsequent variation in price movement for year ended 31/03/2021 was loss of ' 160 Crore (year ended 31/03/2020 gain of ' 217 Crore).

(a) During the current year, the Fertilizer plant was shut for regular maintenance. Thus to cater to the domestic demand the Company has imported the fertilizer products i.e. Di Ammonium Phosphate (DAP) and Nitrogen, Phosphorus and Potassium (NPK).

(b) Includes gain on realignment Nil (year ended 31/03/2020 gain ' 6 Crore) based on forward LBMA/LME rates for provisionally priced trade purchases.

(a) Interest Income on others includes Nil (year ended 31/03/2020'46 Crore) of interest received from Income Tax Department.

(b) Dividend Income on long-term investments includes Nil (year ended 31/03/2020'29 Crore) dividend received from subsidiary companies. All dividends from equity investments designated at FVTOCI relate to investments held at the end of the reporting period. There was no dividend income relating to investments derecognised during the reporting period.

(i) The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020. 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. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

(ii) The Hon'ble Supreme Court of India ("SC") by their order dated February 28, 2019, in the case of Surya Roshani Limited v/s EPFO, set out the principles based on which allowances paid to the employees should be identifi ed for inclusion in basic wages for the purposes of computation of Provident Fund contribution.

The Company has given effect of the above judgement effective March 1, 2019. This does not have any material impact on the Financial Statements.

B Post-Employment Benefits

The Company provides various benefit plan to its employees. Some of them are defined benefit in nature while some are contributory.

I Defined Benefit Plans:

Major Post retiral defined benefit plans of the Company include Gratuity, Post retirement medical benefit and Provident Fund (to the extent of Company's obligation to fund any shortfall on the yield of the trust's investments over the administered interest rates on an annual basis by Central Provident Fund Organisation of Govt of India). The Company does Actuarial valuation for its identified long term and short term defined benefit plans.

Methodology for actuarial valuation of Defined Benefit Obligations:

The Projected Unit Credit (PUC) actuarial method has been used to assess the plan's liabilities, including those related to death-in-service and incapacity benefits.

Under PUC method a projected accrued benefit is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the plan. The projected accrued benefit is based on the plan's accrual formula and upon service as of the beginning or end of the year, but using a member's final compensation, projected to the age at which the employee is assumed to leave active service. The plan liability is the actuarial present value of the projected accrued benefits for active members.

Defined benefit plans expose the Company to actuarial risks such as: Interest Rate Risk, Salary Risk and Demographic Risk.

i. Interest Rate Risk: While calculating the defined benefit obligation a discount rate based on government bonds yields of matching tenure is used to arrive at the present value of future obligations. If the bond yield falls, the defined benefit obligation will tend to increase and plan assets will decrease.

ii. Salary risk: Higher than expected increases in salary will increase the defined benefit obligation.

iii. Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligations is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

A Gratuity Plans

The Company has various schemes (funded/unfunded) for payment of gratuity to all eligible employees calculated at specified number of days (ranging from 15 days to 1 month) of last drawn salary depending upon the tenure of service for each year of completed service subject to minimum service of five years payable at the time of separation upon superannuation or on exit otherwise. These defined benefit gratuity plans are governed by Payment of Gratuity Act, 1972.

(j) Sensitivity analysis

Sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be co-related. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

B Provident Fund

The Company's contribution towards Provident Fund managed either by approved trusts or by the Central Government is debited to the Statement of Profit and Loss. In respect of provident fund management by the approved trust, the Company has an obligation to fund any shortfall on the yield of the trust's investments over the administered interest rates on an annual basis. The Company also contributes to Coal Mines Provident Fund (CMPF) in respect of employees working in coal mines. The amount debited to Statement of Profit and Loss during the year was ' 100 Crore (year ended 31/03/2020'97 Crore). Based on actuarial valuation, the Company has recognised obligation of ' 2 Crore as at 31/03/2021 (year ended 31/03/2020 ' 8 Crore) towards shortfall on the yield of the trust's investments over the administered interest rates. Amount of actuarial (gain)/ loss recognised in Other Comprehensive Income during the year is ' (8) Crore (year ended 31/03/2020 ' (2) Crore).

Certain investments made by Company's Provident Fund Trust ('AAA' rated when the investment was done) became impaired previous year. The Trust has recorded the loss in its books for the year ended March 31, 2020. The Company is obligated to make good such losses to the trust and as such has compensated the trust by ' 73 crore. The amount has been accounted for in Other Comprehensive Income.

(m) Expected Contributions to post employment benefit plan of Gratuity for the year ending 31st March, 2022 are ' 63 Crore. B Post Retirement Medical Benefit

This is a defined benefit plan where the Company provides post retirement medical benefit to its certain retired employees. The scheme involves reimbursement of expenses towards medical treatment of self and dependents. The amount charged to the statement Profit and Loss during the year is ' 0.34 Crore (year ended 31/03/2020'0.36 Crore) and amount of actuarial (gain)/ loss recognised in Other Comprehensive Income during the year is ' (1) Crore (year ended 31/03/2020'4 Crore). The obligation with respect to said scheme as at 31/03/2021'5 Crore ( year ended 31/03/2020'5 Crore) .

II Defined Contribution Plans A Pension

It is a contributory benefit plan where the Company contributes a certain percentage of salary for all eligible employees in the managerial cadre towards Superannuation Funds with option to put certain portion in National Pension Scheme (NPS) and/or in funds managed by Birla Sunlife Insurance Company to be converted to annuity of Life Insurance Corporation of India at retirement. Junior Pension Plan provided to certain employees is in the nature of defined benefit plan which provides an annuity in the form of pension amount at retirement. Refer note 43 for details of pension benefit provided to erstwhile Managing Director. The amount charged to statement of Profit and Loss during the year is ' 18 Crore (year ended 31/03/2020'60 Crore). Amount of actuarial (gain)/ loss recognised in Other Comprehensive Income during the year is ' 1 Crore (year ended 31/03/2020'6 Crore). The obligation with respect to these schemes as at 31/03/2021'47 Crore (year ended 31/03/2020'47 Crore).

III Other Employee Benefit plans A Leave Obligation

The leave obligation cover the Company's liability for earned and sick leave. The entire amount of the provision of ' 257 Crore (year ended 31/03/2020'254 Crore) is presented as current, since the company does not have an unconditional right to defer settlement for these obligations. Expected amount towards settlement of Leave for the next 12 months are ' 36 Crore (31/03/2020'37 Crore).

(a) Interest expenses include ' 6.48 Crore (year ended 31/03/2020'0.16 Crore) paid to Income Tax Department.

(b) Includes difference between effective interest rate and contracted interest rate of ' 49 Crore (year ended 31/03/2020 ' 41 Crore) mainly from amortisation of debt issuance cost.

(c) Mainly includes unwinding of discount on Enterprise Social Commitment and Asset Retirement Obligation.

(d) The Capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to general borrowings. Capitalisation rate for year ended 31/03/2021 is 6.58% p.a.

34. Depreciation and Amortisation Expenses

Refer Note 1B (D) for accounting policy on Property, Plant and Equipment Refer Note 1B (E) for accounting policy on Investment properties Refer Note 1B (F) for accounting policy on Intangible Assets Refer Note 1B (G) for accounting policy on Stripping cost Refer Note 1B (L) for accounting policy on Leases

(a) Operation of certain mining assets of the Company have become unviable due to high cost of production and other operational issues. As a result the Company has recognized impairment in respect of these mining assets amounting to ' 115 Crores (Property, Plant and Equipement ' 71 Crore and Intangible assets ' 44 Crore).

(b) The Company has recognized impairment of ' 25 Crores on certain other assets classified as "Non Current Asset Held for Sale" based on their future utilisation plan.

(d) Freight expenses amounting to ' 152 Crore (year ended 31/03/2020 of ' 156 Crore) is included in Cost material consumed and ' 25 Crore (year ended 31/03/2020 of ' 79 Crore) is included in Power and Fuel expense. (refer note 28 and 32).

(e) Donation includes Nil (year ended 31/03/2020 of ' 29 Crore) paid towards political donation, out of which Nil (year ended 31/03/2020 of ' 10 Crore) paid to AB General Electoral Trust (erstwhile General Electoral Trust) and ' Nil (year ended 31/03/2020'19 Crore) through Electoral Bond previous year.

(f) Miscellaneous expenses include ' 0.04 Crore (year ended 31/03/2020'0.01 Crore) paid to a firm of solicitors in which one of the Director of the Company is a partner.

4,295,432 shares (year ended 31/03/2020 4,448,494 Shares) options granted under Employee Stock option scheme but were not included in the calculation of diluted earnings per share because they are antidilutive for the period. Options can potentially dilute basic earnings per share in the future depending on future share price of the Company.

Stock options granted to the employees under various ESOP schemes are considered to be potential equity shares. They have been included in the determination of diluted earnings per share to the extent they are dilutive. The stock options have not been included in the determination of basic earnings per share. For details relating to stock options, refer note 42.

41. Segment Reporting

The Company has presented segment information in its Consolidated Financial Statements, which are part of the same annual report. Accordingly, in terms of provisions of Accounting Standard on Segment Reporting (Ind AS 108), no disclosure related to the segment are presented in the Standalone Financial Statements.


42. Employee Share-based Payments

Refer Note 1B (V) for accounting policy on Employee Share-based Payments

The Company has formulated employee share-based payment schemes with objective to attract and retain talent and align the interest of employees with the Company as well as to motivate them to contribute to its growth and profitability. The Company views employee stock options as instruments that would enable the employees to share the value they create for the Company in the years to come. At present, following employee share-based payment schemes are in operation, details of which are given below:

(I) Employee Stock Option Scheme 2006 (“ESOS 2006"):

The shareholders of the Company has approved on 23/01/2007 an Employee Stock Option Scheme 2006 ("ESOS 2006"), under which the Company may grant up to 3,475,000 stock options to its permanent employees in the management cadre, whether working in India or out of India, including Managing and the Whole Time Directors of the Company, in one or more tranches. The ESOS 2006 is administrated by the Nomination and Remuneration Committee of the Board of Directors of the Company ("the Committee"). Each stock option, when exercised, would be converted into one fully paid-up equity share of ' 1/- each of the Company. The stock options will vest in 4 equal annual instalments after completion of one year of service from the date of grant. The exercise price shall be average price of the equity shares of the Company in the immediate preceding seven day period on the date prior to the date on which the ESOS compensation committee finalises the specific numbers of Options to be granted to the employees discounted by such percentage not exceeding 30 % (thirty percent) to be determined by ESOS Compensation Committee in the best interest of the various stake holders in the prevailing market conditions. The maximum period of exercise is 5 years from the date of vesting and these stock options do not carry rights to dividends or voting rights till the date of exercise. Further, forfeited/ expired stock options are also available for grant. Further, on 23/09/2011 the ESOS 2006 has been partially modified and by which the Company may grant 6,475,000 stock options to its eligible employees.

Under the ESOS 2006, till 31/03/2021 the Committee has granted 4,328,159 stock options (31/03/2020: 4,328,159 stock options) to its eligible employees out of which 1,819,941 stock options (31/03/2020: 1,819,941 stock options) has been forfeited/ expired and are available for grant as per term of the Scheme.

of the Company as at the date of grant of RSUs. Each stock option and each RSU entitles the holders to apply for and be allotted one fully paid-up equity share of ' 1/- each of the Company upon payment of exercise price during exercise period. The stock options will vest in 4 equal annual instalments after completion of one year of the services from the date of grant, whereas RSU will vest upon completion of three years of services from the date of grant. The maximum period of exercise is 5 years from the date of vesting and these stock option/ RSU do not carry rights to dividends or voting rights till the date of exercise. Further, forfeited/ expired stock options and RSUs are also available for grant.

In terms of ESOS 2013, till 31/03/2021 the Committee has granted 2,250,754 stock options and 2,252,254 RSUs (31/03/2020: 2,250,754 stock options and 2,252,254 RSUs) to the eligible employees of the Company and some of its subsidiary companies. Further, 296,996 stock options and 202,063 RSUs (31/03/2020: 216,409 stock options and 193,287 RSUs) has been forfeited/ expired and are available for grant as per term of the Scheme.

Under ESOS 2006, as at 31/03/2021 exercise prices for stock options outstanding was ' 118.73 (31/03/2020: ' 118.73) whereas the weighted average remaining contractual life of the stock options outstanding was 1.02 years (31/03/2020: 1.81 years).

The weighted average share price at the date of exercise of ESOS 2006 was ' 173.25 per share (31/03/2020'179.07 per share).

(II) Employee Stock Option Scheme 2013 (“ESOS 2013"):

The shareholders of the Company has approved on 10/09/2013 an Employee Stock Option Scheme 2013 ("ESOS 2013"), under which the Company may grant up to 5,462,000 Options (comprising of Stock Options and/ or Restricted Stock Units (RSU)) to the permanent employees in the management cadre and Managing and Whole time Directors of the Company and its subsidiary companies in India and abroad, in one or more tranches. The ESOS 2013 is administered by the Nomination and Remuneration Committee of the Board of Directors of the Company ("the Committee"). The stock options exercise price would be determined by the Committee, whereas the RSUs exercise price shall be the face value of the equity shares

(IN) Employee Stock Option Scheme 2018 (“ESOS 2018"):

The shareholders of the Company has approved on 21/09/2018 an Employee Stock Option Scheme 2018 ("ESOS 2018"), formulated by the company, under which the Company may grant not more than 13,957,302 [Stock Options and Restricted Stock Units('RSU')] to its permanent employees of the Company in management cadre including Managing and the Wholetime Director of the Company and its subsidiary companies in India and abroad, in one or more tranches. The ESOS 2018 is administered by the Nomination and Remuneration Committee of the Board of Directors of the Company ("the Committee") and the Hindalco Employees Welfare Trust ("Trust"). The Stock options exercise price would be determined by the Committee whereas the RSU exercise price shall be the face value of the equity shares of the company as at the date of grant of RSUs. Each stock option and each RSU entitles the holders to apply for and be allotted one fully paid-up equity share of Re. 1/- each of the Company upon payment of exercise price during the exercise period. The stock options will vest in 4 equal annual instalments after completion of one year of the services from the date of grant, whereas RSU will vest upon completion of three years of services from the date of grant. The maximum period of exercise is 5 years from the date of vesting and these stock options/RSUs do not carry rights to dividends or voting rights till the date of exercise. Further, forfeited/expired stock options and RSUs are also available for grant.

In terms of ESOS 2018, till 31/03/2021 the Committee has granted 5,189,519 stock options and 1,368,979 RSUs (31/03/2020: 4,607,279 stock options and 1,348,492 RSUs) to the eligible employees of the Company and some of its subsidiary companies. A summary of movement of stock options and RSUs and weighted average exercise price (WAEP) is given below:

(IV) Stock Appreciation Rights ('SAR 2013'):

The Company had granted 956,522 Share Appreciation Rights ("SAR 2013 ") to its eligible employee to be vested in 4 equal annual instalments after completion of one year of the service from the date of grant (i.e. 09/10/2013). The SAR 2013 is administered by the Nomination and Remuneration Committee of the Board of Directors of the Company ("the Committee"). The SAR 2013 have performance linked vesting conditions which are decided by the committee and are cash settled. The options shall lapse in case of performance linked vesting conditions are not met. The Exercise price of the SAR is ' 118.73. The SAR can be exercised within 3 years from the date of vesting or within 6 years from the date of grant, whichever is earlier.

Under ESOS 2018, the range of exercise prices for stock options outstanding as at 31/03/2021 was ' 159.30 to ' 278.05 (31/03/2020 was ' 159.30 to ' 218.80) whereas exercise price in case of RSUs was ' 1 (31/03/2020: ' 1.00). The weighted average remaining contractual Life for the stock options and RSUs outstanding as at 31/03/2021 was 5.43 years and 5.84 years, respectively (31/03/2020 was 6.26 years and 6.81 years respectively).

The weighted average share price at the date of exercise of ESOS 2018 was ' 332.87 per share.

The fair values at grant date of stock options granted duri ng the year ended 31/03/2021 was ' 144.57 to ' 181.09 (31/03/2020 was ' 53.05 to ' 97.09) and fair values in case of RSUs was ' 269.56 (31/03/2020 was ' 150.68 to ' 205.48, respectively. The fair valuation has been carried out by an independent valuer by applying Black and Scholes Model. The inputs to the model include the exercise price, the term of option, the share price at grant date and the expected volatility, expected dividends and the risk free rate of interest for terms of options.

(V) Stock Appreciation Rights ('SAR 2018'):

The Company till 31/03/2021, has granted 95,815 Option SAR and 20,514 RSU SAR (31/03/2020: 44,668 Option SAR and 11,333 RSU SAR)under the Share Appreciation Rights Scheme 2018 ("SAR 2018") to its eligible employees. Option SAR to be vested in 4 equal annual instalments after completion of one year of the service from the date of grant and RSU SAR will vest upon completion of three years of services from the date of grant. The SAR 2018 is administered by the Nomination and Remuneration Committee of the Board of Directors of the Company ("the Committee"). The SAR 2018 have performance linked vesting conditions which are decided by the committee and are cash settled. The options shall lapse in case of performance linked vesting conditions are not met. The range of exercise price of the Option SAR is ' 159.30 to ' 278.05 and RSU SAR is ' 1 (31/03/2020: Option SAR is ' 218.80 and RSU SAR is ' 1).

The fair values per Option SAR as at 31/03/2021 was ' 144.97 to ' 232.47 (31/03/2020'6.62 to ' 19.87) and for RSU SAR as at 31/03/2021 was ' 321.21 to ' 322.35 (31/03/2020'89.14 to ' 89.46). The fair value has been carried out by an independent valuer by applying Black and Scholes Model. The inputs to the model include the exercise price, the term of option, the share price at grant date and the expected volatility, expected dividends and the risk free rate of interest. The assumptions used for fair valuation for Option SAR and RSU SAR are given below:

Effect of Employee Share-Based Payment transactions on Profit or Loss for the period and on financial position:

For the year ended 31/03/2021, the Company recognised total expenses of ' 16 Crore (31/03/2020'28 Crore) related to equity-settled and cash-settled share based transactions. During the year ended 31/03/2021, the Company has allotted 461,560 fully paid-up equity share of ' 1/- each of the Company (31/03/2020 692,442) on exercise of equity settled options for which the Company has realised ' 3 Crore (31/03/2020'6 Crore) as exercise prices.

The Company has received ' 0.29 Crore (31/03/2020'1 Crore) from Utkal Alumina International Limited and Hindalco -Almex Aerospace Limited (Subsidiaries) towards the grant of 88,676 Stock Options and 43,261 RSUs under ESOS 2018 which is netted off from Employee Share-Based Payments Expenses.

(i) Excludes amortisation of fair value of employee share-based payments under Ind AS 102.

(ii) As the Liabilities for defined benefit plans are provided on actuarial basis for the Company as a whole, the amounts pertaining to Key Management Personnel are not included.

(iii) The Board approved pension of Mr. D. Bhattacharya of ' 0.335 Crore per month and other post-employment benefits for his past service when he was the Managing Director of the Company. The present value of the above pension liability determined based on the actuarial valuation is accounted by the Company in the financial statements. Amount charged as expenses in the statement of profit and loss during the year towards such post-employment benefit amounting to ' 3 Crore (as at 31/03/2020'3 Crore) has been disclosed as a part of managerial remuneration above, and does not include the impact of actuarial (gains)/losses recognised in other comprehensive income.

45. Capital Management

The Company's objective to manage its capital is to ensure continuity of business while at the same time provide reasonable returns to its various stakeholders, but keep associated costs under control. In order to achieve this, requirement of capital is reviewed periodically with reference to operating and business plans that take into account capital expenditure and strategic investments. Apart from internal accrual, sourcing of capital is done through judicious combination of equity and borrowing, both short term and long term. Net debt (total borrowings less current investments and cash & cash equivalents) to equity ratio is used to monitor capital. No changes were made to the objectives, policies or processes for managing capital during the years ended March 31, 2021 and March 31, 2020.

Level 1 Hierarchy includes financial instruments valued using quoted market prices. Listed equity instruments and traded debt instruments which are traded in the stock exchanges are valued using the closing price at the reporting date. Mutual funds are valued using the closing NAV.

Level 2 Hierarchy includes financial instruments that are not traded in active market. This includes over the counter (OTC) derivatives, close ended mutual funds and debt instruments valued using observable market data such as yield etc. of similar instruments traded in active market. All derivatives are reported at discounted values hence are included in level 2. Borrowings have been fair valued using credit adjusted interest rate prevailing on the reporting date. Trade Receivables and Payables that are realigned based on forward LME/LBMA price movements have been included in Level 2 hierarchy.

Level 3 If one or more significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity instruments and certain debt instruments which are valued using assumptions from market participants.

(v) Valuation Process

Some of the Company's assets and Liabilities are measured at fair value for financial reporting purposes. The Management of the Company has set up a team in the finance department which performs the valuation of financial assets and liabilities.

In estimating the fair value of an asset or a Liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The team works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. The team reports findings to the Management of the Company to explain the cause of fluctuations in the fair value of the assets and liabilities.

(vi) Valuation techniques used for valuation of instruments categorised as Level 3

For valuation of investments in equity shares and associates which are unquoted, peer comparison has been performed wherever available. Valuation has been primarily done by considering the net worth of the Company and price to book multiple to arrive at the fair value. In cases where income approach was feasible valuation has been arrived using the earnings capitalisation method. For inputs that are not observable for these instruments, certain assumptions are made based on available information. The most significant of these assumptions are the discount rate and credit spreads used in the valuation process.

For valuation of investments in debt securities categorised as level 3, market polls which represent indicative yields are used as assumptions by market participants when pricing the asset.

There were no significant inter-relationships between unobservable inputs that materially affect fair values.

(ii) Market Risk : Foreign Currency Risk

Exchange rate movements, particularly the United States Dollar (USD) and Euro (EUR) against Indian Rupee (INR), have an impact on our operating results. In addition to the foreign exchange inflow from exports, the commodity prices in the domestic market are derived based on the landed cost of imports in India where LME prices and USD/INR exchange rate are the main factors. In case of conversion business, the objective is to match the exchange rate of outflows and related inflows through derivative financial instruments. With respect to Aluminium business where costs are predominantly in INR, the strengthening of INR against USD adversely affects the profitability of the business and benefits when INR depreciates against USD. The company enters into various foreign exchange contracts to protect profitability. The Company also enters into various foreign exchange contracts to mitigate the risk arising out of foreign currency exchange rate movement in foreign currency contracts executed with foreign suppliers to procure capital items for its project activities.

During the year ended, the Company's foreign currency exposure arising from exports and import transactions resulted in the FOB value of exports amounting to ' 13,860 Crore (31/03/2020'11,009 Crore) and the CIF value of imports amounting to ' 21,274 Crore (31/03/2020'17,089 Crore).


48. Financial Risk Management

Refer Note 1B (P) for accounting policy on Financial Instruments

The Company's activities exposes it to various risks such as market risk, liquidity risk and credit risk. This section explains the risks, which the Company is exposed to and how it manages those risks.

A Market Risk

(i) Market Risk : Commodity Price Risk

Hindalco's India Operations consist of two businesses - Copper Business and Aluminium Business. The Copper Business works under a "Custom Smelting" model wherein the focus is to improve the processing margin. The timing mis-match risk between the input and output price, which is linked to the same international pricing benchmark, is eliminated through use of derivatives. This off-set hedge model (through use of derivatives) is used to manage the timing mis-match risk for both Commodity (Copper and Precious Metals) and Currency Risk (primarily, USD/INR). The Copper Business also has a portion of View Based exposure for both Commodity and Currency, beyond the above timing mis-match risk. Lower Copper Prices, Stronger USD/INR exchange rate and Higher "Other Input" Prices (eg Coal, furnace oil, natural gas etc) are the major price risks that adversely impact the business. Here, the Company may use derivative instruments, wherever available, to manage these pricing risks. A variety of factors, including the risk appetite of the business and price view, are considered while taking Hedging Decisions. Such View based hedges are usually done for the next 1-15 quarters.

The Aluminium Business is a vertically integrated business model wherein the input and output pricing risks are independent of each other, i.e. are on different pricing benchmarks, if any. Here, the Company may use derivative instruments, wherever available, to manage its pricing risks for both input and output products. Lower Aluminium Prices, Stronger USD/INR exchange rate and Higher Input Prices (e.g. Alumina, furnace oil, coal tar pitch) are the major price risks that adversely impact the Business. Hedging decisions are based on a variety of factors, including risk appetite of the business and price View. Such Hedge decisions are usually done for the next 1-12 quarters.

Embedded Derivatives

Copper concentrate is purchased on future pricing model based on month's average LME (in case of copper) / LBMA (in case of gold and silver). Since, the value of the concentrate changes with response to change in commodity pricing indices, embedded derivatives (ED) is identified and segregated in the contract. The ED so segregated, is treated like commodity derivative and qualify for hedge accounting. These derivatives are put into a Fair Value hedge relationship with respect to inventory.

(iv) Market Risk: Interest Rate Risk

The Company is exposed to interest rate risk on financial Liabilities such as borrowings, both short-term and Long-term. It maintains a balance of fixed and floating interest rate borrowings and the proportion is determined by current market interest rates, projected debt servicing capability and view on future interest rates. Such interest rate risk is actively evaluated and interest rate swap is taken whenever considered necessary.

The Company is also exposed to interest rate risk on its financial assets that include fixed deposits, bonds, debentures, commercial papers, other mutual funds and liquid investments comprising mainly mutual funds (which are part of cash and cash equivalents). Since, majority of these are generally for short durations, the Company believes it has limited interest rate risk.

Derivatives

The Company does have any interest rate hedges oustanding as on the reporting date, accordingly IBOR related impact on hedge accounting including discounting of other derivatives is not expected to be material.

B Liquidity Risk

The Company determines its liquidity requirements in the short, medium and long term. This is done by drawing up cash forecast for short and medium term requirements and strategic financing plans for long term needs.

The Company manages its liquidity risk in a manner so as to meet its normal financial obligations without any significant delay or stress. Such risk is managed through ensuring operational cash flow while at the same time maintaining adequate cash and cash equivalents position. The management has arranged for diversified funding sources and adopted a policy of managing assets with liquidity in mind and monitoring future cash flows and liquidity on a regular basis. Surplus funds not immediately required are invested in certain financial assets (including mutual funds) which provide flexibility to liquidate at short notice and are included in current investments and cash equivalents. Besides, it generally has certain undrawn credit facilities which can be accessed as and when required, which are reviewed periodically.

The Company has developed appropriate internal control systems and contingency plans for managing liquidity risk. This incorporates an assessment of expected cash flows and availability of alternative sources for additional funding, if required.

(a) Includes Principal and interest payments, short term borrowings, current portion of debt and excludes unamortised fees.

(b) Total cash outflow for leases for the year ended 31/03/2021 is ' 181 Crore (31/03/2020: ' 169 Crore).

C Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation.

Credit risk arises from cash and cash equivalents, contractual cash flows of debt investments, favourable derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

Credit risk is managed on an entity level basis. The Company has adopted a policy of dealing only with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating risk of financial loss from defaults. The Company invests only in those instruments issued by high rated banks/ institutions and government agencies. The Company assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. The Company's investments in debt instruments and certain loans are considered to have low credit risk. The credit ratings of the investments are monitored for credit deterioration.

For some trade receivables the Company obtains security in the form of guarantees, deed of undertaking or letters of credit which can be called upon if the counterparty is in default under the terms of the agreement.

The Company periodically monitors the recoverability and credit risks of its other financials assets including security deposits and other receivables. The Company evaluates 12 month expected credit losses for all the financial assets for which credit risk has not increased. In case credit risk has increased significantly, the Company considers life time expected credit losses for the purpose of impairment provisioning.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forwardlooking information. The expected credit loss allowance is based on the ageing of the days for which the receivables are due and the expected loss rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows:

49. Derivative Financial Instruments:

Refer Note 1B (P) for accounting policy on Financial Instruments

Refer Note 1B (Q) for accounting policy on Derivatives and hedge accounting

The Company uses derivative financial instruments such as forwards, futures, swaps, options etc. to hedge its risks associated with foreign exchange fluctuation and price risk movements. Risks associated with fluctuation in the price of the products (copper, aluminium, coal, furnace oil, natural gas, coal tar pitch and precious metals) are minimized by undertaking appropriate derivative instruments. Derivatives embedded in other contracts are treated as separate derivatives when their risks and characteristics are not closely related to their host contracts. In some cases, the embedded derivatives may be designated in a hedge relationship. The fair values of all such derivative financial instruments are recognized as assets or liabilities at the balance sheet date.

The Company also applies hedge accounting using certain foreign currency non-derivative monetary items which are used as hedging instruments for hedging foreign exchange risk.

The Company has furnished its replies to both the notices vide letters dated December 17, 2019 contesting that the NA has no right under the aforesaid clauses to recover any amount from the Performance Security.

The NA has neither issued any further letter to the Company nor raised any demand against the Company in this regard.

53. Additional Information

A. As per Section135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on Corporate social Responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief, COVID-19 relief and rural development projects. A CSR committee has been formed by the Company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:

50. COVID 19 Impact on the Financial Statement.

The outbreak of coronavirus (COVID19) pandemic impacted businesses around the globe during the current financial year. The Company's operations, revenues, and profitability during the current year has improved and has reached almost the pre-COVID19 Level. The Company has made a detailed assessment of its Liquidity position for a period of at Least one year from the balance sheet date, of the recoverability and carrying values of its assets comprising property, plant and equipment, Intangible assets, Trade Receivables, Inventory, investments, other current and non-current assets and ability to pay its liabilities as they become due and effectiveness of internal financial controls at the balance sheet date, and has concluded that there are no material impact or adjustments required in the standalone financial statements.

Management is of the view that considering the nature of its business operations, existing customer and supplier relationships and its market position, impact on its business operations, if any, arising from COVID -19 pandemic is not expected to be significant. The impact of COVID 19 pandemic may be different from that estimated as at the date of approval of these standalone financial statements. The Company will continue to monitor any material changes to future economic conditions.

51. Note on acquisition of Aleris Corporation (Aleris)

iv) In the previous year as per the provisions of Companies Act 2013, amount not less than ' 38 Crore should have been incurred during the year under CSR. The Company has incurred expenses amounting to ' 39 Crore in line with the CSR policy which is in conformity with the activities specified in Schedule VII of the Companies Act 2013.

B. Details of loans given, investment made and guarantee given covered under section 186(4) of the Companies Act, 2013:

i. Details of investments made have been given as part of Note '5' Investments in Subsidiary, Note '6' Investments in Associates and Joint Ventures and Note '7A and 7B' Other Investments.

On April 14, 2020, the Company completed its acquisition of 100% of the issued and outstanding shares of Aleris Corporation (Aleris), a global supplier of rolled aluminium products. As a result, the acquisition increases the Company's footprint as an aluminium rolled products manufacturer by expanding the portfolio of services provided to its customers.

52. Gare Palma IV/4 (GP-4) and Gare Palma IV/5 (GP-5) coal mines were acquired by the Company through auction conducted by the Nominated Authority (NA) constituted under the Ministry of Coal, Government of India. The Company was required to achieve certain Efficiency Parameters and reach their Peak Rated Capacity (PRC) during 2015-16. Performance Security in the form of Performance Bank Guarantees (PBG) of ' 318 Crore and ' 369 Crore for gP-4 and GP-5 respectively were provided by the Company to NA in this regard.

Due to the various delays on the part of NA, PRC was achieved by the Company for both the mines during FY 2016-17. Having satisfied itself about achievement of Efficiency Parameters/PRC, NA returned the PBG in respect of GP-4 on June 19, 2017. However, in a volte face action, vide a letter dated 25th April, 2018, NA imposed a penalty equal to 20% of PBG amounting to ' 64 Crore for GP-4 and ' 74 Crore (refer note 10) for Gp-5. As the PbG for GP-5 was still with NA, it also appropriated an amount equal to the penalty from the PBG.

The above actions were contested by the Company and the Hon'ble Chhattisgarh High Court at Bilaspur has already given its judgment in favour of the Company in the matter related to GP-5. As per the judgment, Hon'ble High Court has asked NA to refund the amount apportioned by them and return the PBG to the Company. The NA has filed an appeal before the Hon'ble Supreme Court which has not been taken up hearing yet. The Company's appeal to quash the demand raised by NA in case of GP-4 is yet to be decided and is pending before the Mines Tribunal.

The Company further received two Show-Cause Notices dated December 03, 2019 from NA for shortfall in production of coal at the above mi nes for FY 2017-18 and FY 2018-19 compared to their respective mining plans. Through these notices, the NA has asked the Company to show cause why action should not be taken against the Company for recovery of an amount equal to the appropriation amount for the said defaults provided in Clause 6.3 and 10.3 of the Coal Mine Development and Production Agreement.