b. Terms/rights attached to equity shares:
The Company has only one class of equity shares having par value of Rs. 5/- per share (2015 : Rs. 5/- per share). Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approvals of the shareholders in the ensuing Annual General Meeting. The Company declares and pays dividend in Indian Rupees.
During the year ended December 31, 2016, the Board declared an amount of Rs. 4.50 (2015 : Rs. 4.00) per share as interim dividend which was distributed to equity shareholders. The amount of interim dividend distributed to equity shareholders was Rs. 222.55 crores (2015 : Rs. 197.82 crores). In addition, the Board has also declared a Special Dividend of Rs. 2.00 per share (2015 : Nil). The amount of Special Dividend to be distributed to equity shareholders is Rs. 98.91 crores (2015 : Rs. Nil). The Board has also proposed a final dividend of Rs. 4.50 (2015 : Rs. 5.00) for distribution to equity shareholders. The amount of final proposed dividend to be distributed to equity shareholders shall be Rs. 222.55 crores (2015 : Rs. 247.28 crores). All dividends aggregating to Rs. 11.00 per share (2015 : Rs. 9.00 per share).
I n the event of the Company being liquidated, since the equity shares of the Company are fully paid-up, there would be no additional liability on the shareholders of the Company. However, post settlement of the liabilities of the Company, the surplus, if any, would be distributed amongst the shareholders in proportion to the number of shares held by each one of them.
As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.
1. Employee benefits
Defined contribution plan Amounts recognised as an expense
Contribution to Provident and Other Funds'''' in Note 18 includes Rs. 2.92 crores (2015 : Rs. 3.23 crores) for Pension Fund, ESIC and Labour Welfare Fund. Note 19 includes ‘Insurance'''' Rs. 1.51 crores (2015 : Rs. 1.83 crores) for Medical Insurance benefits and post retrial medical benefit scheme. Salaries, wages and bonus in Note 18 includes Rs. 2.01 crores (2015 : Rs. 2.11 crores) for Share match.
The company has incurred redundancy cost of Rs. 3.24 crores (2015 : Rs. 4.82 crores) due to the re-organisation activity, this is included in ‘Employee benefits expense'''' - Note 18.
General description of defined benefit plan Gratuity
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days/one month salary last drawn for each completed year of service depending on the date of joining. The same is payable on termination of service, retirement or death, whichever is earlier. The benefit vests after five years of continuous service.
The Provident Fund (administered by a trust) is a defined benefit scheme whereby the Company deposits amounts determined as a fixed percentage of basic pay to the fund every month. The actuary has provided a valuation and determined the fund assets and obligations as at December 31, 2016. Further, it has been determined that the yield on the investments of the trust is adequate to meet the obligation towards the payment of the interest rate notified by the Government.
2. Employee benefits (contd.)
Pension benefit to past employees
Under the Company''''s pension scheme, certain categories of employees, on retirement, are eligible for monthly differential pension which is accounted for on an actuarial basis as on the Balance Sheet date.
Amounts recognised as an expense
Defined benefit plan
Gratuity in note 18 includes gratuity cost of Rs. 3.37 crores (2015 : Rs. 6.44 crores). Contribution to Provident and other funds in note 18 includes Rs. 2.92 crores (2015 : Rs. 6.06 crores) for Provident fund. Salaries, wages and bonus in note 18 includes pension benefit to past employees, Rs. 0.20 crore (2015 : Rs. 0.20 crore).
Basis used to determine expected rate of return on assets:
Expected rate of return on investments for all defined benefit plans is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio since these are generally held to maturity, along with the estimated incremental investments to be made during the year. Expected rate of return on plan assets is 6.80% (2015 : 8.05%).
Operating Lease: Company as lessee
Office premises, residential flats, motor cars and equipments are obtained on operating lease. The lease terms range from one year to four years and are renewable at the option of the Company.
4. Segment information
The business segment has been considered as the primary segment.
The Company has integrated its organisation structure with respect to its automotive and non-automotive business considering that the synergies, risks and returns associated with business operations are not predominantly distinct. The Company has aligned its internal financial reporting system in line with the new organisation structure. As a result the Company''''s business segment consists of a single segment of “Lubricants” w.e.f. January 1, 2016 in terms of Accounting Standard -17.
During the previous year the Company was organised into two business segments, Automotive and Non-Automotive.
The above business segments have been identified considering:
- The customers
- The differing risks and returns
- The organisation structure
- The internal financial reporting system
Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.
* The Company has initiated the process of identification of suppliers registered under Micro and Small Enterprise Development Act, 2006, by obtaining confirmations from all suppliers. Information has been collated only to the extent of information received.
5. Capitalisation of expenditure
During the year, the Company has capitalised the following expenses which is attributable to the construction activity in general and included in the cost of fixed asset/capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amount capitalised by the Company.
6. Related party disclosures as required under AS-18, “Related Party Disclosures”, are given below:
A. Name of the related party and nature of relationship where control exists:
(a) Holding Companies Castrol Limited, U.K. (Holding Company of Castrol India Limited)
Burmah Castrol PLC (Holding Company of Castrol Limited, U.K.)
BP PLC (Holding Company of Burmah Castrol PLC), Ultimate Holding Company
B. Name of the related party and nature of relationship where transaction have taken place during the year:
(a) Fellow Subsidiaries AsPac Lubricants (Malaysia) Sdn. Bhd. BP Korea Limited (where transaction exists)
BP (China) Industrial Lubricants Limited BP Lubricants USA Inc.
BP Australia Pty Limited BP Marine Limited
BP Business Service Centre Asia BP Mauritius Limited
BP Castrol Lubricants (Malaysia) Sdn. Bhd. BP Middle East (Auto and Marine Lubes)
BP - Castrol (Thailand) Limited BP Petrolleri Anonim Sirketi
BP Corporation North America Inc. BP S.A. Pty Oil Hq
BP Europa SE BP Shipping Limited
BP Europa SE BP Belgium BP Singapore Pte. Limited
BP Europa SE Zweigniederlassung - BP BP Southern Africa Proprietary Limited Austria
BP Exploration (Alpha) Limited Castrol (Shenzhen) Company Limited
BP France Castrol Australia Pty Limited
BP India Services Private Limited Castrol Industrial North America Inc.
BP International Limited Lubricants UK Limited
BP Italia SPA PT Castrol Indonesia
BP Japan K.K.
(b) Key management personnel Omer Dormen Managing Director (w.e.f. 12.10.2015)
(where transaction exists)
Rashmi Joshi Director Finance Jayanta Chatterjee Director Supply Chain
Ravi Kirpalani Managing Director (up to 11.10.2015) & thereafter Executive Director (up to 31.12.2015)
7. The Company has received an order from Maharashtra Sales Tax Department for the financial year 2009-10, 2007-08 and 2010-11 demanding Rs. 255.00 crores, Rs. 306.00 crores and Rs. 264.00 crores respectively towards sales tax (including interest). The demand pertains to sale of goods made by the Company in the states other than Maharashtra, where applicable taxes have been paid as per the provisions of law. Also the movement of goods from Maharashtra was not pursuant to any contract/order from customers in other states hence the understanding of operations/systems recorded in the assessment orders are not factually correct. The Company''''s tax payment methodology in respect of the goods sold is adequately supported by robust legal grounds/ precedents and in Company''''s opinion the said demand is unjustified. The Company has filed the appeal against these orders. The management believes that the findings in the orders are not sustainable and that the Company has a strong case based on the facts of the matter. The Company does not expect any liability on account of the order received from Maharashtra Sales Tax Department. Hence, the Company has not made any provision for any liability in this regard in the current financial statements.
8. Previous year figures
The Company has reclassified previous year figures to conform to this year''''s classification.