No trade receivables or other receivables are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner or a director. The amount due from firms / private companies are to the tune of current Year INR Nill, Prev Year INR 1478.42 Lakhs
Trade receivables are non-interest bearing and are generally on terms of 15 to 20 days.
* The Company has allotted in earlier years 12,849,605 Number of 1% Non - Convertible & Non-Cumulative Redeemable Preference Shares(NCRPS) , at face value of Rs. 10 each fully paid up with a premium of Rs. 30 each. The preference shareholders have preferential right over payment of dividend and settlement of principal amount upon liquidation, over common shareholders. The dividend shall be paid out upon availability of profits. The preference shares shall be redeemed out of profits or out of the proceeds of fresh issue of shares after the end of the Fifth year but within a period of 20 years either in one or on more trenches as may be determined by the board of directors of the company in its absolute discretion at such price as may be decided but in any case not less than price of Rs.44 per share.
However as per management perception, the above liabilities will not devolve upon the company in future.
The company had given Corportate Guarantees to M/s Scan Energy & Power Limited to the tune of INR Nil (outstanding balance as on 31.03.2023) towards fund based limit extended by Indian Bank (formerly Allahabad bank) subsequently taken over by Assets Reconstruction Company (ARC).(Previous Year INR 1580 Lakhs). For which the company has received Certificate of No Dues from Assets Reconstruction Company (ARC).
Note-27 : Right of Recompense (ROR)
The company had received a letter from State Bank of India mentioning Right of Recompense amount for the year 2018 to 2021 on account of restructuring of loan in the year 2018. During the year under audit, the company has paid out full Right of Recomense (ROR) of INR 1041.51 Lakhs (pervious year-Nil) as demand raised by State Bank of India.
Note -28 : Recognition of Corporate Gurantee as Financial Liability
Financial gurantee is a contractual right of the lender to receive cash from the guarantor, and a corresponding contractual obligation of the guarantor to pay the lender, if the borrower defaults. The contractual right and obligation exist because of a past transaction or event (assumption of the guarantee), even though the lender's ability to exercise its right and the requirement for the guarantor to perform under its obligation are both contingent on a future act of default by the borrower. A contingent right and obligation meet the definition of a financial asset and a financial liability, even though such assets and liabilities are not always recognised in the financial statements. Based on the measurement principles laid down under Ind AS 109 "Financial Instrument Recognition and Measurement", the fair value of all those financial gurantee contracts are resonably below to the materiality threshhold limit set by the company. Accordingly the entity has made appropriate disclosure in Note -26 without additionally recognising any financial assets or liability.
Note -29 : Registration of Charges or Satisfication
The Company has filed, respective forms before Registar of Companies related to creation of charges and satisfication of charges in relation to loan availed from banks and financial institutions, timely manner within a statutory period prescribed under Companies Act' 2013.
(ii) Fair value Hierarchy:
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
(a) recognised and measured at fair value, and
(b) measured at amortised cost and for which fair values are disclosed in the financial statements.
To provide an indication about the reliability of the inputs used in determining fair value, the company has classified its financial instruments into three levels prescribed under the Ind AS 113 "Fair Value Measurements An explanation of each level follows underneath the table.
Level 1 : This hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have quoted price. The fair value of all equity instruments(including bonds) which are traded in the stock exchange is valued using the closing price as at the reporting period.
Level 2 : Fair value of financial instruments that are not traded in an active market (for example, traded bonds, over the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument is observable, the instrument is included in level 2.
Level 3 : If one or more of the significant inputs is not based on observable data, the instrument is included in level
3. This is the case for unlisted equity securities, contigent consideration and indemnification assets.
(iii) As per Ind AS 107 "Financial Instrument:Disclosure", fair value disclosures are not required when the carrying amounts are reasonably approximate to the fair value. Accordingly fair value disclosures have not been made for the following financial instruments:-
1. Trade receivables
2. Cash and cash Equivalent
3. Loans and advances
4. Borrowings
5. Trade Payables
6. Capital Creditors
7. Other payables
Note -36 : Financial risk management
The company's few portion of activities are exposed to variety of financial risks i.e. market risk, credit risk and liquidity risk. The company's primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The company's financial instruments (excluding receivables from related parties) are influenced mainly by the individual characteristics of each customer. The company's exposure to credit risk is the concentration of risk from the top few customers and the demographics of the customers.
(A) Credit risk
Credit risk refers to the risk of default on its obligation by the counter party resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily trade receivables from customers other than government entities .These Trade receivables are typically unsecured and are derived from revenue earned from domestic and foreign customers. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the company uses expected credit loss model to assess impairment loss or gain. the company uses a matrix to compute the expected credit loss allowance for trade receivable.
Credit risk management
Credit risk is managed on instrument basis. For Banks and financial institutions ,only high rated banks /institutions are accepted. For other financial instruments, the company assesses and maintains an internal credit rating system. The finance function consists of a separate team who assesses and maintain internal credit rating system. Internal credit rating is performed on a company level basis for each class of financial instrument with different characterstics.
VL1 : High-quality assets, negligible credit risk
VL2 : Quality assets, low credit risk
VL3 : Standard assets, moderate credit risk
VL4 : Sub-standard assets, relatively high credit risk
VL5 : Low-quality assets, very high credit risk
VL6 : Doubt full assets, credit-impaired
The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forward- looking information. Especially the following indicators are incorporated:
1. Internal credit rating
2. External credit rating (as far as available)
3. Actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the borrower's ability to meet the obligation.
4. Actual or expected significant changes in the operating results of the borrower.
5. Significant increase in credit risk on other financial instruments of the same borrower
6. Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party guarantees or credit enhancements.
7. Significant changes in the expected performance and behaviour of the borrower, including changes in the payment status of borrowers in the group and changes in the operating results of the borrower.
8. Macro economic information (such as regulatory changes, market interest rate or growth rate) is incorporated as part of the internal rating model.
In general , it is presumed that credit risk has significantly increased since intial recognition if the payments are more than 30 days past due.
A default on a financial asset is when the counterparty fails to make contractual payment within 180 days of when they fall due. This definition of default is determined by considering the business environment in which entity operates and other-economic factors.
(B) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the company treasury maintains flexibility in funding by maintaining available under committed credit lines.
Management monitors rolling forecasts of the company's liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at local level in accordance with practice and limits set by the company. These limits vary by locations to take into account the liquidity of the market in which the entity operates. In addition, the company's liquidity management policy involves, projecting cash flows in major currencies,considering the level of liquid assets necessary , monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
(ii) Maturities of financial liabilities
The tables below analyse the group's financial liabilities into relevant maturity groupings based on their contractual maturities for :
1. All non-derivative financial liabilities and
2. Net and gross settled derivative financial intruments for which the contractual maturities are essential for an understanding of the timing of cash flows.
(C) Market Risk
The company is not an active investor in equity market. It continues to hold certain investments in equity for long term value accretion which are accordingly measured at fair value through other comprehensive income. Accordingly,fair value fluctations arising form market volatitlity is recognised in other comprehensive income.
(i) Foreign Currency Risk
The company's exposure to foreign currency risk & Derivative financial Instruments as on 31st March, 2023
The Company don't have foreign currency exposure hence no foreign exchange forward contracts are required to hold and to mitigate the risk of foreign exchange fluctuation.
(ii) Cash flow and fair value interest rate risk
The company's main interest rate risk arises from long term borrowings with variable rates, which exposes the company to cash flow interest rate risk. Group policy is to maintain most of its borrowings at fixed and variable rate using interest rate swaps to achieve this when necessary.
The company's fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
(iii) Price risk
The company's exposure to equity securities price risk arises from investments held by the company and classified in the balance sheet either as fair value through OCI or at fair value through profit or loss .
Profit for the period would increase/ decrease as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would increase/decrease as a result of gains/losses on equity securities classified as fair value through other comprehensive income.
Note-37 : Capital Management
Risk management
The company's objectives when managing capital are to:
(a) safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
(b) maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return on capital to shareholders or issue new shares.The company monitors capital using gearing ratio, which is net debt divided by total Equity. Net debt comprises of long term and short term borrowings less cash and bank balances. Equity includes equity share capital and reserves that are managed as capital.For relevant ratios please refer Note- 23 financial ratios.
(iii) Use of Funds raised and statements submitted with Banks or Financial Institution
During the year under audit, the Company has raised an amount of INR 30 lakhs (previous year INR 1176 Lakhs for working capital requirement) from one of the Non Banking Financial Corporation(NBFC) for meeting requirement of Vehicle & Heavy Earth Moving Equipment purchase. The disbursed amount is utilised for the purpose for which it is raised.
The Company has borrowing from banks or financial institutions on the basis of security of current assets,it shall confirm that the quarterly returns or statements of current assets filed by the company with banks or financial institutions are in agreement with the books of accounts.
Note -40 :
As per the requirements of Ind AS, the company has implemented / adopted the following policies and procedures for accounting:
i Componentisation.
As per prevailing practice, company compontises fixed assets as detailed in the Invoice. It does not have a separate componetisation policy. Accordingly, components identified ( as mentioned above ) are also depreciated based on the useful lives prescribed under Schedule-II ( of the Companies Act. ) for the main asset.
The company is in the process of identification of the major components significant to the total cost of the asset accordingly necessary requirements to be complied.
ii Stores and Spares
The company on purchases of stores and spares,if it relates to an item of PPE, the same are capitalised on the date of issue, and which are issued for revenue expenditure purpose, are charged to Profit & Loss Account on the date of consumption.
Note -41 : Expected Credit Loss
On the basis of historical information and findings from analysis of the trade receivables recovery pattern, it is expected that the trade receivables within three years are realizable, not doubtful. Hence the expected credit loss is calculated on the trade receivable falling under the age group of more than 3 years. For this purpose, an expected credit loss rate is taken into account considering the historical credit loss experience and is adjusted for forwardlooking information.
Note -43 : Leases
Effective from April 01,2019, the company has applied Ind AS 116 ''Leases''. The standard is applied prospectively and the cumulative effect of applying this standard is recognised. The adoption of Ind AS 116 did not have any significant impact for the company.
Note -44 : Income tax
Pursuant to The Taxation Laws (Amendment) Ordinance , 2019 ('Ordinance') issued by Ministry of Law and Justice (Legislative Department) on 20th September, 2019 which is effective 01 April 2019 , domestic companies have the option to pay corporate income tax rate at 22% plus applicable surcharge and cess ('New tax rate') subject to certain conditions. The company had opted for New Tax Regime from AY 2020-21 onwards.
Note -45 : Leasing Out of a Unit
The company has leased out, one of its undertaking having a sponge iron manufacturing facility situated in Bellary in the state of Karnataka, from the 1st day of December, 2022 On monthly rental. No other consideration is charged or received during the leasing process. Hence, the Income from Operation for the quarter January to March 2023 does not include the turnover figure of Bellary unit. Income from 4 Months Lease Rental For Bellary ,Karnataka Unit INR 108.00 Lakhs (Prev Year Nill) is included in the Sale of Services in the Profit and Loss statement.
Note -46 : Corporate Social Responsibility (CSR) Activity
As per Section 135 of the Companies Act,2013 , a company, meeting the applicability threshold, need to spend at least 2% of its average net profit for the immediately proceeding 3 financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are promoting education, animal welfare and Infrastructure support for rural development projects. A CSR committee has been performed by the company as per Act. The funds were primarily allocated to a corpus and utilised throughout the year on these activities which are specified in Schedule VII of the Companies Act, 2013 :
Previous year figures have been regrouped and/or rearranged wherever necessary, confirming to current year. Figures in bracket represent previous year figure.
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