FINANCIAL REPORTING AND ANALYSIS

FINAL REPORT
COMPANY – GRINDWELL NORTON LTD

Aarthi S F20001
 CONTENTS

I. OVERVIEW OF THE COMPANY

II. ACCOUNTING PRINCIPLES

A. CONCEPTS

B. CONVENTIONS

III. FINANCIAL STATEMENT ANALYSIS

A. COMPARATIVE STATEMENT ANALYSIS

1. BALANCE SHEET

2. INCOME STATEMENT

B. CASH FLOW STATEMENT ANALYSIS

C. TREND ANALYSIS

D. RATIO ANALYSIS

1. FINANCIAL RATIOS

2. PROFITABILITY RATIOS

3. TURNOVER RATIOS

IV. ASSETS AND LIABILITIES

V. EQUITY AND OTHER INVESTMENTS

VI. OVERALL PERFORMANCE OF THE COMPANY – A CONCLUSION

 I. OVERVIEW OF THE COMPANY
Grindwell Norton (GNO) which pioneered the manufacturing of grinding wheels in India in 1941 is the first
majority-owned subsidiary of Saint Gobain which first acquired the Norton Company, USA, and then
increased its Equity stake, currently holding 51.66% equity capital of GNO.GNO is a publicly traded
company GNO’s businesses today include: Abrasives, Ceramic Materials Businesses (Silicon Carbide
and Performance Ceramics & Refractories), Performance Plastics and ADFORS.
Saint-Gobin on January 2019 adopted a new organisational structure consisting of 5 reporting units – 4
regional businesses and one global High-Performance Solutions Unit (GNO is a part of this). GNO’s
subsidiaries include
• INDEC - an IT development centre,
• Saint-Gobain Ceramic Materials Bhutan Pvt. Ltd, where GNO holds 70% equity and
• Saint-Gobin’s The CertainTeed business
The company currently holds a market capitalisation of 6944.91 with market price of share at 627.25 (as of
November 4, 2020).
II. ACCOUNTING PRINCIPLES

A. CONCEPTS

• Separate Legal Entity

This concept treats the business as a different entity from its owners. The implication of this is
that the owners’ funds are treated as a liability in the books of accounts of the business.
Grindwell Norton is a subsidiary of Saint-Gobin and Saint-Gobin’s equity share in recorded in
the liability side of the balance sheet as the shareholders are different from the business itself and
the business owes the shareholders the amount specified in the balance sheet. This applies to
individual shareholders’ also.
• Going concern: Accounting assumes that business will continue to exist in the foreseeable
future. This is one of the fundamental assumptions and the values stated in the balance sheet are
mostly based on this assumption.
Grindwell Norton’s Directors in the Directors’ Responsibility Report state that “that the annual
financial statements have been prepared on a ‘going concern’ basis”. This is true as, for example,
the assets are valued at cost less depreciation and not at liquidation value.
Deferred tax is another component in the income statement which shows that the company will
continue to exist in the near future.
• Money Measurement: In the definition of accounting by AICPA ,it states that the transactions
should be at least part of ‘financial character’. This is the reason why assets like machinery,
equipment is not recorded in terms of quantity but in terms of their money value. Grindwell, like
all businesses records all assets and liabilities in Money value.
• Dual aspect:It states that every transaction has a debit and a credit effect on the books of
accounts. The effect of this is
Assets = Liabilities+ Equity
In the Financial Statements of Grindwell Norton 2019-20
 • Accounting period: This concept facilitates periodic evaluation of an organisation’s position and its
performance. Grindwell Norton is a Indian Company and prepares its financial statements for the
financial year April 1 to March 31st.

B. Conventions

• Historical cost concept: It states that cost should be recorded at the value it was acquired by the
company. Grindwell Norton Ltd. records its freehold land at historical cost, and other property plant
and equipment at historical cost less accumulated depreciation and impairment losses if any. Thus it
follows historical cost and not at current market value.
• Realisation concept: It is application of accrual concept to revenue recognition, i.e., revenues should
be recognised when they are goods and services for which the revenue is earned is delivered or
rendered.
Grindwell Norton records revenue generated from sales when the goods are delivered to the
consumer.
• Conservatism: This concept estimates all the possible losses the company can incur but will not
estimate possible gains. For example in its income statement, Grindwell Norton has allotted
provisions and contingencies. These values are calculated based on past events. In the notes to
accounts it is specified that
• Full disclosure: This convention requires an organisation to disclose all the details that are required
by the users of accounting information. This instils trust and faith in the organisation. Being a listed
company, Grindwell Norton has made mandatory disclosures under SEBI regulations 2015 (Listing
Obligations and Disclosure Requirements).
• Consistency: A business organisation should be consistent in the sense that the accounting policies
followed by it to prepare the financials should not change frequently thus enabling easy comparison.
For the past 3 years assessed, Grindwell Norton follows Straight line method for depreciation which
enables effective comparison.
• Materiality: All amounts disclosed in the financial statements and notes have been rounded off to
the nearest lakhs, with up to two decimals as per the requirement of Schedule III, unless otherwise
stated.

III. ANALYSIS OF FINANCIAL STATEMENTS OF GRINDWELL NORTON LTD.

I. COMPARATIVE STATEMENT ANALYSIS

COMPARATIVE BALANCE SHEET OF GRINDWELL NORTON LTD.

AS ON 31 MARCH 2019 AND 31 MARCH 2020.
PARTICULARS NOTE MARCH 31, MARCH 31, ABSOLUTE PERCENTA
S 2020 2019 DIFFEREN GE
CE (IN RS. DIFFERENC
LAKHS) E (IN %)
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 3 36099.25 34408.07 1,691 5%
Right-of-use asset 3A 2265.69 0 2,266 100%
Capital work-in-progress 3 2912.27 4297 (1,385) (32%)
Goodwill 4 48.8 48.8
Other intangible assets 4 43.57 49.98 (6) (13%)
Financial assets
i. Investments 5 16880.51 17051.1 (171) (1%)
ii. Loans 6 1175.63 1309.85 (134) (10%)
iii. Other financial assets 7 12.61 0 13 100%
 Deferred tax assets (Net) 8 337.66 398.88 (61) (15%)
Other non-current assets 9 847.49 1450.95 (603) (42%)
Total non-current assets 60623.48 59014.64 1,609 3%
CURRENT ASSETS
Inventories 10 30334.38 32858.06 (2,524) (8%)
Financial assets
i. Investments 11 41389.37 1213.72 40,176 3,310%
ii. Trade receivables 12 20503.46 20561.52 (58) (0%)
iii. Cash and cash equivalents 13 1263.17 23216.93 (21,954) (95%)
iv. Bank balances other than (iii) above 14 205.56 195.01 11 5%
v. Loans 15 310.22 191.05 119 62%
vi. Other financial assets 16 848.4 2076.04 (1,228) (59%)
Other current assets 17 4033.95 5600.29 (1,566) (28%)
Total current assets 98888.51 85912.62 12,976 15%
TOTAL ASSETS 159511.99 44927.26 14,585 10%
EQUITY AND LIABILITIES
EQUITY
Equity share capital 18 5536 5536 0 0%
Other Equity 19 113196.56 104255.8 8,941 9%
Equity attributable to owners of the Company 118732.56 109791.8 8,941 8%
Non-controlling interest 1357.47 1385.56 (28) (2%)
Total equity 120090.03 111177.36 8,913 8%
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities
i. Lease liabilities 20 1263.87 0 1,264 100%
Provisions 21 2297.33 2031.52 266 13%
Deferred tax liabilities (Net) 22 1534.15 2720.42 (1,186) (44%)
Other non-current liabilities 23 97.21 125.55 (28) (23%)
Total non-current liabilities 5192.56 4877.49 315 6%
CURRENT LIABILITIES
Financial liabilities
i. Lease liabilities 24 972.26 0 972 100%
ii. Trade payables 25
(a) Total outstanding dues of micro and small 222.21 214.82 7 3%
enterprises
(b) Total outstanding dues of creditors other than 22407.11 17857.04 4,550 25%
(ii)(a) above
iii. Other financial liabilities 26 4878.42 5014.33 (136) (3%)
Provisions 27 2372.25 1622.98 749 46%
Current tax liabilities (Net) 28 597.53 935.98 (338) (36%)
Other current liabilities 29 2779.62 3227.26 (448) (14%)
Total current liabilities 34229.4 28872.41 5,357 19%
TOTAL LIABILITIES 39421.96 33749.91 5,672 17%
TOTAL EQUITY AND LIABILITIES 159511.99 144927.26 14,585 10%

1. ANALYSIS OF COMPARATIVE BALANCE SHEET:

The Comparative balance sheet compares the asset and liability position of Grindwell Norton Ltd. For the
years FY19 and FY20.

• The Non-current Assets have increased by 2.73% in FY20 because of rise in Property, plant and
equipment which constitutes major portion of Non-current assets. Non-current assets including
Other fixed assets, financial assets and tax assets have declined in FY20, with Other Non -Current
assets declining by 41.59%
 • The cash position of the company is not impressive as there has been a 94% decline in the cash and
cash equivalents but only 5.41% increase in Bank Balances. Inventories also see a fall in FY20, so
does Trade receivables. There is huge increase in Investments by 3310.13%, made in Mutual funds
during the year. Further Loans have also increased by 62% most of which attributes to ‘Loans to
director’.
• Though most components have decreased, rise in short-term loans and Investments have led to
increase in current assets by 15.1%
• With both Non-current and Current Assets increasing in FY20, the Assets have increased by 10.06%
• Total Equity increased by 8% in FY20.Though equity share capital saw no change in FY20, with the
number of shares issued remained same for both the years, other Equity consisting of General
Reserve, Securities Premium and Retained Earnings increased by 8.58% as Retained Earnings saw
an Increase in FY20 due to rise in Net profit.
• There is a rise in total of Non-current Liabilities during the year by 6.46%. This is due to rise In
Provisions made during the year and introduction in Lease Liabilities in the balance sheet. Deferred
tax liabilities and other non-current liabilities, which constitute a minor part see a decline.
• Grindwell Norton has acquired short-term as well as long-term lease during the year with short term
lease being Rs. 972.26 lakhs. Current assets on the whole saw an increase of 18.55% during the
year due to rise in Short-term provisions, Trade payables – which constitute major portion of current
liabilities.
• With rise in all 3 components of Equity and Liabilities, Equity and Liabilities also increased by
10.06%

COMPARATIVE INCOME STATEMENT OF GRINDWELL NORTON LTD.

AS ON 31 MARCH 2019 AND 31 MARCH 2020.

Particulars Notes March 31, March 31, Absolute Percentage

2020 2019 Difference Difference(%)
(Rs. In
Lakhs)
INCOME
Revenue from Operations 30 157956.94 159806.36 (1,849) (1.16%)
Other Income 31 4037.52 3535.67 502 0.14
Total Income 161994.46 163342.03 (1,348) (0.82%)
EXPENSES
Cost of materials consumed 32 59303.94 62892.39 (3,588) (5.71%)
Purchases of stock-in-trade 33 12237.2 10911.71 1,325 0.12
Changes in Inventories of work-in-progress, 34
stock-in-trade and
finished goods -244.52 -2850.72 2,606 (91.42%)
Employee benefits expense 35 20484.2 19258.04 1,226 0.06
Finance costs 36 446.87 149.96 297 1.98
Depreciation and amortisation expense 37 5778.33 4523.1 1,255 0.28
Other expenses 38 39725.51 42413.24 (2,688) (6.34%)
Total expenses 137731.53 137297.72 434 0.00
Profit before share of profit/(loss) of joint 24262.93 26044.31 (1,781) (6.84%)
venture and tax
Share of profit of joint venture accounted for 0.74 0 1
using the equity method
Profit before tax 24263.67 26044.31 (1,781) (6.84%)
Income tax expenses 39
- Current tax 6755.56 9027.53 (2,272) (25.17%)
- Deferred tax -881.22 144.59 (1,026) (709.46%)
Total tax expenses 5874.34 9172.12 (3,298) (35.95%)
Profit for the year 18389.33 16872.19 1,517 0.09
Other Comprehensive Income
Items that will not be reclassified to profit or
loss
Remeasurement of post-employment benefit -344.85 130.72 (476) (363.81%)
obligations - gain/(loss)
Change in fair value of equity instruments at
Fair Value through
Other Comprehensive Income (FVOCI) -1450 488 (1,938) (397.13%)
Income tax relating to these items
- Current tax 86.79 -45.67 132 (290.04%)
- Deferred tax 243.82 -44.76 289 (644.73%)
Other Comprehensive Income for the Year -1464.24 528.29 (1,993) (377.17%)
Total Comprehensive Income for the Year 16925.09 17400.48 (475) (2.73%)
Net Profit attributable to:
- Owners 18252.16 16724.48 1,528 0.09
- Non-controlling interests 137.17 147.71 (11) (7.14%)
Total comprehensive income attributable to:
- Owners 16787.92 17252.77 (465) (2.69%)
- Non-controlling interests 137.17 147.71 (11) (7.14%)
Earnings per share (Face value of ` 5 each)
Basic earnings per equity share (in `) 39 16.48 15.11 1 0.09
Diluted earnings per equity share (in `) 39 16.48 15.11 1 0.09

2. ANALYSIS OF COMPARATIVE INCOME STATEMENT

The Comparative Income Statement shows the Changes in the FY20 keeping FY19 as the base.

• The Revenue from operations fell by 1.16% in the FY20 which means there has been a decline in
the sales of Grindwell Norton. Though other Income has increased, it con stitutes a minor portion of
Total Income and thus Total Income for the year sees a fall due to fall in Revenue from Operations.
• While there has been a fall in Cost of materials consumed, the Purchases of stock -in-trade had
increased by 12.15%, which means more finished goods have been purchased. A negative change in
inventories shows the inefficiency of the business to sell, as ending inventory has exceeded the
opening inventory.
• However there has been 91.42% decline in ‘Negative change in inventory’ which means there is a
recovery in sales. Expenses other than cost of goods sold have increased in FY20 except for other
expense. The decline in Changes in inventory has almost offset the increase in non-operating
expenses. Thus, the total expenses rose by 0.32% only.
• Since expenses have increased and income has declined, the Profit before tax declined by 6.84% in
FY20.
• Both current and deferred tax see a fall in FY20 which in turn leads to fall in total tax expenses by
35.95%. Since tax expense falls by a greater proportion that Profit Before tax, the Profit After Tax
rises by 8.99% in year FY20. Overall the Income Statement shows fall in revenue and rise in
expenses but fall in taxes have led to rise in Profit after tax
II. ANALYSIS OF CASH FLOW STATEMENT
CASH FLOW STATEMENT SUMMARY FOR 2017-18, 2018-19 and 2019-20
Years Cash from operating Cash from investing activities Cash from financing activities
activities
2018 133,70.76 (45,80.73) (60,10.60)
2019 84,54.41 (53,78.57) (68,23.90)
2020 317,58.26 (442,05.71) (219,53.76)

The cash flow statement of the company shows the cash inflow and outflow from operating, financing, and
investing activities.
In operating activities, the statement shows a net cash inflow in all 3 years, which is beneficial for the
company, as there is an inflow from the core operating of the business. There is an increase in cash
generated from operations as well as a decrease in income tax paid. In FY20, there has been a tremendous
increase in cash inflow from operations which is a good sign
Under Investing activities, in FY20 there is an increase in outflow of cash as compared to previous year, as
there is an increased investment in Mutual funds leading to outflow of cash, and purchase of property and
plant. Since these two components constitute major part there is a net outflow of cash from investing
activities. Net Cash outflow from investing activities means Grindwell Norton Ltd is investing in its
business in order to improve its operations and hence might prove beneficial.
There is a net outflow of cash from financing activities. All components in financing activities led to outflow
of cash for the company except for interest received. Further there has been an increase in outflow with
payment of Dividend to non-controlling interest, and Principal amount paid for lease in FY20
The net effect for this shows cash outflow from the company, primarily because of outflow from investing
activities. Though the cash at the beginning is relatively higher, net outflow led to fall in cash and cash
equivalents at end of the year as compared to previous year which is reflected in Balance sheet .

III. TREND ANALYSIS OF GRINDWELL NORTON FOR 2017-18, 2018-19 and 2019-20
March 31, March 31, March 31,
PARTICULARS Notes 2020 2019 2018 2018 2019 2020
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 3 36099.25 34408.07 34,071.28 100% 101% 106%
Right-of-use asset 3A 2265.69 0 100%
Capital work-in-progress 3 2912.27 4297 2,452.15 100% 175% 119%
Goodwill 4 48.8 48.8 48.80 100% 100% 100%
Other intangible assets 4 43.57 49.98 99.61 100% 50% 44%
Financial assets
i. Investments 5 16880.51 17051.1 17,079.75 100% 100% 99%
ii. Loans 6 1175.63 1309.85 1,185.72 100% 110% 99%
iii. Other financial assets 7 12.61 0 11.46 100% 0% 110%
Deferred tax assets (Net) 8 337.66 398.88 462.78 100% 86% 73%
Other non-current assets 9 847.49 1450.95 1327.48 100% 109% 64%
Total non-current assets 60623.48 59014.64 56739.03 100% 104% 107%
CURRENT ASSETS
Inventories 10 30334.38 32858.06 27189.33 100% 121% 112%
Financial assets
i. Investments 11 41389.37 1213.72 0.00 0 100% 100%
ii. Trade receivables 12 20503.46 20561.52 17709.04 100% 116% 116%
iii. Cash and cash equivalents 13 1263.17 23216.93 27057.34 100% 86% 5%
 iv. Bank balances other than (iii) above 14 205.56 195.01 165.25 100% 118% 124%
v. Loans 15 310.22 191.05 94.67 100% 202% 328%
vi. Other financial assets 16 848.4 2076.04 826.97 100% 251% 103%
Other current assets 17 4033.95 5600.29 4596.91 100% 251% 88%
Total current assets 98888.51 85912.62 77639.51 100% 111% 127%
TOTAL ASSETS 159511.99 144927.26 134378.54 100% 108% 119%
EQUITY AND LIABILITIES
EQUITY
Equity share capital 18 5536 5536 5,536.00 100% 100% 100%
Other Equity 19 113196.56 104255.8 93516.32 100% 111% 121%
Equity attributable to owners of the 99,052.32 111%
Company 118732.56 109791.8 100% 120%
Non-controlling interest 1357.47 1385.56 1237.85 100% 112% 110%
Total equity 120090.03 111177.36 100290.17 100% 111% 120%
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities
i. Lease liabilities 20 1263.87 0 0 0 100% 100%
Provisions 21 2297.33 2031.52 2,035.22 100% 100% 113%
Deferred tax liabilities (Net) 22 1534.15 2720.42 2,594.96 100% 105% 59%
Other non-current liabilities 23 97.21 125.55 155.93 100% 81% 62%
Total non-current liabilities 5192.56 4877.49 4786.11 100% 102% 108%
CURRENT LIABILITIES
Financial liabilities
i. Borrowings 0 0 3.63 100% 0% 0%
ii. Lease Liabilities 24 972.26 0 0 0 100% 100%
iii.Trade Payables 25
(a) Total outstanding dues of micro and
small enterprises 222.21 214.82 180.74 100% 119% 123%
(b) Total outstanding dues of creditors 93%
other than (ii)(a) above 22407.11 17857.04 19299.44 100% 116%
iii. Other financial liabilities 26 4878.42 5014.33 4075.07 100% 123% 120%
Provisions 27 2372.25 1622.98 2,073.41 100% 78% 114%
Current tax liabilities (Net) 28 597.53 935.98 1,198.03 100% 78% 50%
Other current liabilities 29 2779.62 3227.26 2471.94 100% 131% 112%
Total current liabilities 34229.4 28872.41 29302.26 100% 99% 117%
TOTAL LIABILITIES 39421.96 33749.91 34088.37 100% 99% 116%
TOTAL EQUITY AND LIABILITIES 159511.99 144927.26 134378.54 100% 108% 119%

IV. RATIO ANALYSIS

1. FINANCIAL RATIOS (amounts in Rs. Lakhs)

i. CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES

YEAR CURRENT RATIO

2018 2.65
2019 2.98
2020 2.89
 ii. LIQUID RATIO = LIQUID ASSETS / CURRENT LIABILITIES

YEAR LIQUID RATIO

2018 1.72
2019 1.84
2020 2

iii. DEBT TO EQUITY RATIO = TOTAL LONG-TERM DEBT / SHAREHOLDERS’ FUNDS

YEAR DEBT SHARE RESERVES AND TOTAL DEBT-
CAPITAL SURPLUS (in Rs. EQUITY
(in Rs. Lakhs) (in Rs. Lakhs) Lakhs) RATIO
2018 4 5536 93516 99052 0.0007
2019 0 5536 104256 109792 0
2020 0 5536 113031 118567 0

iv. PAYOUT RATIO = DIVIDEND PER EQUITY SHARE/ EARNING PER SHARE
YEAR DIVIDEND PER SHARE EPS PAYOUT RATIO
2018 5 13.52 0.37
2019 6 15.11 0.40
2020 7.5 16.48 0.46

2. PROFITABILITY RATIOS (RATIOS IN %) (amounts in Rs. Lakhs)

i. RETURN ON INVESTMENT = (NET OPERATING PROFIT / CAPITAL EMPLOYED)

(Capital employed = Net fixed assets + Working Capital)
CAPITAL EMPLOYED
YEAR NET OPERATING PROFIT NET FIXED ASSET WORKING CAPITAL TOTAL ROI
2018 22900 36672 48336 85008 27%
2019 26194 38804 57040 95844 27%
2020 24710 41274 64678 105952 23%

ii. NET PROFIT RATIO = (NET PROFIT / REVENUE FROM OPERATIONS) *100

NET PROFIT REVENUE NET PROFIT

FROM RATIO
OPERATIONS
2018 15089 143097 11%
2019 16872 159806 11%
2020 18389 157957 12%

iii. OPERATING PROFIT RATIO = NET OPERATING PROFIT / REVENUE FROM OPERATIONS) *100

OPERATING
MARGIN
2018 45%
 2019 48%
2020 45%

iv. EARNING PER SHARE = NET PROFIT AFTER TAX/ TOTAL NO. OF OUTSTANDING SHARES

EPS
2018 13.52
2019 15.11
2020 16.48

v. RETURN ON ASSETS = (NET PROFIT AFTER TAX / TOTAL ASSETS)

NET PROFIT AFTER NET TOTAL ASSETS RETURN ON ASSETS

TAX
2018 15089 134379 0.11
2019 16872 144927 0.12
2020 18389 159512 0.12

3. ACTIVITY RATIOS (IN TIMES) (amounts in Rs. Lakhs)

i. FIXED ASSETS TURNOVER RATIO = NET REVENUE FROM OPERATIONS/ NET FIXED ASSETS
NET FIXED REVENUE FIXED
ASSETS FROM ASSETS
OPERATIONS TURNOVER
RATIO
2018 36672 143097 3.9
2019 38804 159806 4.1
2020 41274 157957 3.8

ii. WORKING CAPITAL TURNOVER = NET REVENUE FROM OPERATIONS/ WORKING CAPITAL
NET REVENUE FROM WORKING
WORKING OPERATIONS CAPITAL
CAPITAL TURNOVER
2018 48336 143097 2.96

2019 57040 159806 2.80

2020 64678 157957 2.44

iii. INVENTORY TURNOVER RATIO = NET REVENUE FROM OPERATIONS/ AVERAGE INVENTORY

COST OF OPENING CLOSING AVERAGE INVENTORY INVENTORY

GOODS SOLD INVENTORY INVENTORY INVENTORY TURNOVER HOLDING
RATIO PERIOD
2018 62354.58 24558.41 27189.33 25873.87 2.41 151.46
2019 70953.38 27189.33 32858.06 30023.70 2.36 154.45
2020 71296.62 32858.06 30334.38 31596.22 2.26 161.76
 iv. DEBTORS TURNOVER RATIO = NET REVENUE FROM OPERATIONS/ AVERAGE TRADE RECEIVABLES

OPENING CLOSING TRADE AVERAGE TRADE REVENUE DEBTORS DEBT

TRADE RECEIVABLES RECEIVABLES FROM TURNOVER COLLECTION
PAYABLES OPERATIONS RATIO PAYMENT
2018 12739.42 17709.04 15224.23 143097 9.40 38.83
2019 17709.04 20561.52 19135.28 159806 8.35 43.71
2020 20561.52 20503.46 20532.49 157957 7.69 47.45

v. CREDITORS TURNOVER RATIO = NET PURCHASES / AVERAGE TRADE PAYABLES

OPENING CLOSING TRADE AVERAGE TRADE NET CREDITORS CREDIT
TRADE PAYABLES RECEIVABLES PURCHASES TURNOVER PAYMENT
PAYABLES RATIO PERIOD
2018 16558.51 19480.18 18019.35 61686.37 3.42 106.62
2019 19480.18 18071.86 18776.02 73804.10 3.93 92.86
2020 18071.86 22629.32 20350.59 71541.14 3.52 103.83

vi. OPERATING CYCLE = DEBT COLLECTION PAYMENT+ INVENTORY HOLDING PERIOD

DEBT COLLECTION INVENTORY HOLDING OPERATING

PAYMENT PERIOD CYCLE
2018 38.83 151.46 190.29
2018 43.71 154.45 198.15
2018 47.45 161.76 209.20

IV. ASSETS AND LIABILITIES:

ASSETS
Current versus non-current classification: The assets are classified as Current and Non-Current as per the
Operating Cycle, that is the time between the acquisition of assets for processing and their realization in cash
and cash equivalents (12 months for this company), and other criteria set out in the Schedule III to the Act.
TANGIBLE ASSETS
Recognition of Property, plant, and equipment:

• Freehold land is valued at historical cost

• All other items of property, plant and equipment are stated at historical cost less accumulated
depreciation and any accumulated impairment losses.
• If the items of Property, plant and equipment have different useful life, their depreciation is
accounted separately

ASSETS USEFUL LIFE

(in years)
Building 3 to 60
Plant and Equipment 7.5 to 25
Electrical Installations and Equipment 10
Laboratory Equipment 10
Computers 3
Furniture and Fixtures 10
 Office Equipment 5
Vehicles 8 to 10
Specific Kilns 5 to 10
Server & Networks 4

INTANGIBLE ASSETS:
Recognition and Measurement:
• An Intangible asset is recognised when it is probable that the future economic benefits that are
attributable to the asset will flow to the Group and the cost of the asset can be measured reliably.
• Intangible asset other than Goodwill and Trademark is carried at its cost less any accumulated
amortisation and any accumulated impairment losses.
• Goodwill and Trademark are recorded at cost less impairment losses if any.
• The useful life is either finite or indefinite. For finite useful life, the amortisation period and the
amortisation method for an intangible asset are reviewed at the end of each reporting period.
Amortisation:
• Grindwell Norton uses Straight-line method of Amortisation for intangible assets excepts for
Goodwill and Trademark.
ASSETS USEFUL
LIFE (in
years)
Computer Software 3 to 5
Other Intangibles 10
FINANCIAL ASSETS

• The company uses Expected Credit Loss Model for measurement and recognition of impairment
losses
• Debt instruments like loans, bank deposits are measured at cost less amortisation
• For trade receivables, the credit risk is assessed on specific basis and recognises impairment loss
allowance based on lifetime ECLs at each reporting date.
INVENTORIES

• Inventories are valued at lower of cost and net realisable value.

• Raw materials, packing materials, trading items and stores & spare parts are valued at cost on
weighted average basis. Thus, ending inventories is calculated based on WAC method to arrive at
Cost of Goods Sold.
INVESTMENTS AND OTHER FINANCIAL ASSETS

• Cash and Cash Equivalents: In the books of Grindwell Norton Ltd., Cash and cash equivalents
includes
▪ cash on hand,
▪ deposits held at call with financial institutions
▪ other short-term highly liquid investments with original maturities of three months or less
• Grindwell Norton measures some of its financial assets at fair value and some at amortised cost.
For assets recorded at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income
LIABILITIES:
FINANCIAL LIABILITIES:
Loans, borrowings and payables are recorded at net of directly attributable transaction costs
Other financial Liabilities are recorded at fair value
The Company then uses Effective Interest Method to subsequent measurement of interest-bearing
borrowings.
SHORT TERM EMPLOYEE-BENEFIT EXPENSES:
Salaries, wages and other non-monetary expenses are recorded at amount expected to be paid when the
liabilities are settled
POST-EMPLOYMENT OBLIGATIONS:
The Group operates the following post-employment schemes:
(a) defined benefit plans such as gratuity; and
(b) defined contribution plans such as provident fund.
INCOME TAX:
For FY20 – Income tax = Current tax expense = 67,55.56 + Deferred tax (8,81.22).
The current tax is calculated using tax laws enacted or subsequently enacted at end of period.
LEASE:
As a lessee:

• The Saint-Gobain group has lease agreements for Land and Building
• The Right of use asset Lease is initially measured at cost and depreciated using straight line method
over period of time.
• Estimated useful life calculation is like that of Plant, Property and Equipment.
• Lease Liability is recorded at amortised cost
As a lessor:

• The company earns income from operating leases

• Lease income is recorded in straight line basis over the lease term.

V. EQUITY AND OTHER INVESTMENTS:

EQUITY SHARE CAPITAL:

• The company has one class of equity shares with par value of Rs. 5 each.
• Over the 3 years analysed in this report, there has been no change in equity capital or the number of
shares. The number of shares issued and paid up stands at 11,07,20,000 with the equity share capital
being Rs. 5,536 lakhs.
RESERVES:
• The company maintains
▪ Securities Premium
▪ General Premium
 ▪ Retained Earnings

CAPITAL STRUCTURE:
The capital structure of the company can be assessed using the debt-equity ratio.
DEBT SHARE RESERVES AND TOTAL DEBT-
CAPITAL SURPLUS (in Rs. EQUITY
(in Rs. Lakhs) (in Rs. Lakhs) Lakhs) RATIO
2018 4 5536 93516 99052 0.0007
2019 0 5536 104256 109792 0
2020 0 5536 113031 118567 0

In the year 2019, the company records zero debt. Thus the capital structure of the company is consisting of
equity. But 100% equity might always not be beneficial for the company and it should have a mix of both
debt and equity.
OVERALL PERFORMANCE OF THE COMPANY - CONCLUSION
• This report analysed the financials of Grindwell Norton for the years 2017-18, 2018-19 and 2019-20.
• In the first year of Analysis the company performed better in the second half as compared to the first.
• In the second half of 2018-19 the economy slowed down and considering that , there has been
increase in revenue from operations and operating margin in that year.
• In the year 2019-20 there has been a decline in operating profit due to decline in sales considering
the COVID-19 pandemic situation. However due to lower taxes the profit after tax has improved
• As far as cash flow is concerned the company has major outflow in investing activities which is good
as it will improve the operating efficiency of the business. It has inflow from operating activities
which means the company is able to realise cash from its core operations
• Despite the covid scenario, the company is able to realise cash and improve its bottom line as well
which means that it has been performing well.
• Ratios that show a decline in efficiency also show minor changes. For example, the operating cycle
has increased due to COVID- 19 but there is no significant decline.