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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 532144ISIN: INE191B01025INDUSTRY: Steel - Tubes/Pipes

BSE   ` 515.95   Open: 517.55   Today's Range 513.00
522.45
+2.75 (+ 0.53 %) Prev Close: 513.20 52 Week Range 186.80
625.00
Year End :2023-03 

i Pursuant to the meeting of board of directors held on October 28, 2021, the Company on November 26, 2021, has acquired 100% of equity shares of Mahatva Plastic Products and Building Materials Private Limited (Mahatva) for purchase consideration of Rs. 0.001. Accordingly, Mahatva Plastic Products and Building Materials Private Limited is now a wholly owned subsidiary of the Company. Mahatva Plastic Products and Building Materials Private Limited is incorporated in the financial year 2021-22 for the manufacturing of plastic products. Further as at March 30, 2022, the Company has also invested 0.01% optionally convertible debentures of Mahatva Plastic Products and Building Materials Private Limited of Rs. 401.00.

During the current year, the company had invested 0.01% optionally convertible debentures of Mahatva Plastic Products and Building Materials Private Limited of Rs. 54.83. Also, there was redemption of 0.01% optionally convertible debentures of Mahatva Plastic Products and Building Materials Private Limited of Rs. 452.00 at par.

March 31, 2023 and March 31, 20221-

Terms and rights of 0.01% Optionally Convertible Debentures (OCDs):

0.01% Optionally Convertible Debentures (OCDs) having face value of Rs 100 each shall be convertible at the option of WCL, the holder at any time during the tenure of the debentures into 10 equity shares of Rs 10 each. If the OCD are not redeemed within 5 years from the date of issue, the OCD will be mandatorily converted into equity shares. The OCD shall be redeemable at the option of Mahatva, the issuer, any-time from the date of issue but not later than 5 years.”

ii Anjar TMT Steel Private Limited (Anjar ATMT) became a subsidiary (100%) of the Company pursuant to Merger order dated March 16, 2022 (refer note 51).

The Company holds 2,00,10,000 equity shares of Anjar TMT of par value Rs.10 amounting to Rs. 20.01.

The Company invested in 2,48,15,000, 7.75% Convertible Non-cumulative Optionally Redeemable Preference Shares (7.75% CORPS) of par value Rs 10. amounting to Rs. 24.82 in the previous year.

During the current year, the Company invested in 2,01,75,000, 7.75% Convertible Non-cumulative Optionally Redeemable Preference Shares (7.75% CORPS) of par value Rs 10. amounting to Rs. 20.17.

March 31, 2022 and March 31, 2023:-

Terms and rights of 7.75% Convertible Non-cumulative Optionally Redeemable Preference Shares (7.75% CORPS):

7.75% CORPS have par value Rs. 10 each.

The 7.75% CORPS shall be convertible into equity shares of Anjar ATMT, the issuer any time before March 31, 2036. Conversion ratio is 1:1. One 7.75% CORPS will be converted into one equity share of Rs. 10/- each fully paid-up. If not converted, the 7.75% CORPS shall be redeemable at par at the option of Anjar ATMT, the issuer after March 31, 2030, but before 31st March, 2036.

iii During the previous year, pursuant to the meeting of board of directors held on January 28, 2021, the Company on February 03, 2021, had acquired 100% of equity shares of Welspun DI Pipes Limited (WDI) and Welspun Metallics Limited (WML) for purchase consideration of Rs. 0.011 each. Accordingly WDI and WML became wholly owned subsidiaries of the Company. WDI and WML were incorporated for the manufacturing of ductile iron pipes and pig iron, respectively.

As at February 03, 2021, the Company held 0% Compulsorily Convertible debentures of WDI and WML for Rs. 9.56 and Rs. 86.19, respectively which were converted in the previous year into 9,500,000 equity shares of WDI of par value Rs.10 amounting to Rs. 9.56 and 85,000,000 equity shares of WML of Rs.10 amounting to Rs. 86.19, respectively, in the previous year.

Additionally, the Company had also invested 2,00,00,000 equity shares of WDI of Rs. 10 amounting to Rs. 20 during the previous year.

During the current year, 1,74,79,000 preference shares have been converted to same number of equity shares having face value of Rs 10 per equity share amounting to Rs 17.48 in Welspun DI Pipes Limited.

Additionally, the Company had also invested 50,10,000 equity shares of WDI of Rs.10 amounting to Rs. 5.01 during the current year.

During the current year, the Company has invested in 3,29,89,000 equity shares of Welspun Metallics Limited of Rs 10 each amounting to Rs 32.99 by converting loan into equity shares.

Also, during the current year, the Company has invested in 14,10,00,000 8% Convertible Non-Cumulative Optionally Redeemable Preference Share (CORPS) having par value of Rs. 10 each of Welspun Metallics Limited amounting to Rs 141 by converting loan. The CORPS shall be convertible in to equity share of the Company any time before March 31, 2036. Conversion ratio is 1:1 One CORPS will be converted in to one equity share at par. The CORPS shall be redeemable at the option of the Company in one or more tranches at any time on or after September 30, 2034 but before March 31, 2036 and CORPS shall be redeemed at par.

During the previous year, the Company has also invested in the 8% CORPS of Rs. 10 each of WDI and WML for Rs.180 and Rs. 212, respectively.

March 31, 2023 and March 31, 20221-

Terms and rights of 8% Convertible Non-Cumulative Optionally Redeemable Preference Share (8% CORPS): The 8% CORPS shall be convertible into equity shares of WML/ WDI, the issuer any time before March 31, 2036. Conversion ratio is 1:1 One 8% CORPS will be converted into one equity share at par. The 8% CORPS shall be Redeemable at the option of WML/ WDI, the issuer in one or more tranches at any time on or after 30th September, 2034 but before March 31, 2036 and 8% CORPS shall be redeemed at par.

iv. During the current year, the Company invested in 30,07,000, 0.01% Optionally Convertible Debentures of par value Rs 100 each amounting to Rs. 30.07 of Sintex Prefab and Infra Limited

Terms and Rights:

Each OCD having face value of Rs. 100 each shall be convertible at the option of the holder thereof at any time during the tenure of the OCDs into 10 equity shares of Rs. 10 each.

If the OCDs are not redeemed within 5 years from the date of the issue, the OCDs shall be mandatorily converted into equity shares.

The OCDs shall be redeemable at the option of the issuer, any-time from the date of the issue but not later than 5 years.

Before redeeming the OCDs, the issuer shall give option to holder to convert the OCDs in to equity by issuing 15 days' notice thereto

If the holder does not opt for converting, the issuer shall redeem within 7 days of the expiry of the notice period.

The OCDs shall carry coupon of 0.01% p.a., discretionary.

v. During the current year, the Company invested in 3,30,70,100 0.01% Optionally Convertible Debentures of par value Rs 100 each amounting to Rs. 330.70 of Sintex BAPL Limited

Terms and Rights:

Each OCD having face value of Rs. 100 each shall be convertible at the option of the holder thereof at any time during the tenure of the OCDs into 10 equity shares of Rs. 10 each.

If the OCDs are not redeemed within 5 years from the date of the issue, the OCDs shall be mandatorily converted into equity shares.

The OCDs shall be redeemable at the option of the issuer, any-time from the date of the issue but not later than 5 years.

Before redeeming the OCDs, the issuer shall give option to holder to convert the OCDs in to equity by issuing 15 days' notice thereto

If the holder does not opt for converting, the issuer shall redeem within 7 days of the expiry of the notice period.

The OCDs shall carry coupon of 0.01% p.a., discretionary.

vi. During the current year, the Company has acquired 10,000 equity shares of Rs 10 each amounting to Rs. 0.01 of Nauyaan Shipyard Private Limited. Consequently, it has become a wholly owned subsidiary of the Company.

Further, the Company invested in 87,00,000 0.01% Optionally Convertible Debentures of par value Rs 100 each amounting to Rs. 87.00 of Nauyaan Shipyard Private Limited.

Terms and Rights:

Each OCD having face value of Rs. 100 each shall be convertible at the option of the holder thereof at any time during the tenure of the OCDs into 10 equity shares of Rs. 10 each.

If the OCDs are not redeemed within 5 years from the date of the issue, the OCDs shall be mandatorily converted into equity shares.

The OCDs shall be redeemable at the option of the issuer, any-time from the date of the issue but not later than 5 years.

Before redeeming the OCDs, the issuer shall give option to holder to convert the OCDs in to equity by issuing 15 days' notice thereto

If the holder does not opt for converting, the issuer shall redeem within 7 days of the expiry of the notice period.

The OCDs shall carry coupon of 0.01% p.a., discretionary.

ii) Terms and rights attached to shares Equity shares

The Company has only one class of equity shares having a par value of Rs. 5 per share. Each holder of equity shares is entitled to one vote per share. The dividend when 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 of the company the holders of the equity shares will be entitled to receive remaining assets of the Company after distribution of preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Preference shares

Preference shares do not carry any voting rights in the Company, except as provided in the Companies Act, 2013. Preference share will have priority over equity shares in the payment of dividend and repayment of capital.

Increase in authorized preference share capital pursuant to the Scheme (refer note 51)

Nature and purpose of other equity

(i) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(ii) Debenture redemption reserve

The amounts credited to the debenture redemption reserve may not be utilised except to redeem debentures.

(iii) General reserve

General Reserve represents appropriation of profit by the Company. General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

(iv) Equity settled share based payments (refer note 49)

This account is used to recognise the grant date fair value of options issued to employees under “WELSOP” Employee stock option plan.

(v) Capital redemption reserve

Capital Redemption Reserve is created equal to the nominal value of the shares purchased pursuant to Buy Back of its own fully paid up equity shares.

(vi) Capital reserve

The Company has created capital reserve pursuant to merger and acquisitions.

(vii) Cash flow hedging reserve

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The Cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flows reserve will be reclassified to statement of profit and loss only when the hedged transaction affects the profit or loss or included as a basis adjustment to the non-financial hedged item.

(viii) Retained Earnings

Retained earnings comprises of prior years as well as current year's undistributed earnings after taxes.

ii) 6% Cumulative redeemable preference share repayable on September 17, 2023 of Rs 351.51.

iii) Term loan carrying interest link to 3 months Treasury Bill i.e. 7.97% from bank repayable each from Quarter June 2023 to March 2024 for Rs. 100 each of which Rs. 50 is prepaid during the year. Exclusive charge on specific assets purchased from ABG Shipyard Limited (refer note 52). The above amount is excluding effective interest rate resulting in decrease in borrowing by Rs. 1.52 (March 31, 2022: Nil).

(i) Nature of security for current borrowings

Secured by first charge ranking pari passu on hypothecation of raw materials, finished goods, work-inprogress, goods-in-transit, stores and spares and trade receivables of the Company and second charge on all movable and immovable property, plant and equipment of the Company both present and future. Carrying interest which is linked to 1 month - Treasury Bill carrying rate of 7.53% to 7.60% from banks repayable in the month of May 2023 and June 2023 for Rs. 37.00 and Rs. 120.00 respectively (March 31, 2022: repayable on demand)”

(ii) Terms of repayment and interest

(a) Commercial papers carry an interest of Nil (March 31, 2022: 4.45%-4.75%) and are repaid during the year (March 31, 2022: April 18, 2022 - Rs. 20, May 31, 2022 - Rs. 100 and June 10, 2022 - Rs. 50).

(b) Working capital loan from banks carrying interest at 7.55% and repayable in 120 days ending on May 2023 for loans outstanding as on March 31, 2023 and for previous year it was carrying interest rate of 4.5% to 4.65% and were repayable on demand.

(c) Buyers credit carry an interest linked to SOFR at 7.75% p.a. and repayable in April 2023.

36 EMPLOYEE BENEFIT OBLIGATIONS

(i) Leave obligations

The leave obligations cover the Company's liability for earned leave.

(ii) Post-employment obligations - gratuity

The Company has a defined benefit gratuity plan in India, governed by the Payment of Gratuity Act, 1972. The plan entitles an employee, who has rendered at least five years of continuous service, to gratuity at the rate of fifteen day wages for every completed year of service or part thereof in excess of six months, based on the rate of wages last drawn by the employee concerned upon retirement/termination. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India. This defined benefit plans expose the Company to actuarial risks, such as interest rate risk and market (investment) risk.

(vi) Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which is asset volatility. The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. The plan assets are invested by the Company in Kotak Group Gratuity Fund and India First Employee Benefits Plan. The plan assets have been providing consistent and competitive returns over the years. The Company intends to maintain these investments in the continuing years.

38 Pursuant to the Supreme Court Judgment in the case of “Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal” in relation to non-exclusion of certain allowances from the definition of “basic wages” of the relevant employees for the purposes of determining contribution to provident fund under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952, and subsequent dismissal of the review petition filed against the Judgement, the Company has assessed the impact and on conservative basis made provision (presented under Current) of Rs. 21.68 (March 31, 2022: Rs. 21.68). The Company has also determined and discharged the provident fund liability from September 1, 2019 considering the impact of the judgement. The Company has changed its salary structure in the month of June 2020 w.e.f. April 01, 2020 to comply with above judgement.

(i) 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 the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below.

Level 1: This hierarchy includes financial instruments measured using quoted prices. The mutual funds are valued using the closing NAV The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. The Company has derivatives which are not designated as hedges, bonds and government securities for which all significant inputs required to fair value an instrument falls under level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted securities.

(ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the fair value of forward contracts is determined using forward exchange rates prevailing with Authorised Dealers dealing in foreign exchange.

- the use of Net Assets Value ('NAV') for valuation of mutual fund investment. NAV represents the price at which the issuer will issue further units and will redeem such units of mutual fund to and from the investors.

- the fair value of bonds and government securities are derived based on the indicative quotes of price and yields prevailing in the market or latest available prices.

The Company's risk management is carried out by treasury department under policies approved by the board of directors. Treasury department identifies, evaluates and hedges financial risks. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments and investment of excess liquidity. There is no change in objectives, policies and process for managing the risk and methods used to measure the risk as compared to previous year.

Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item. This will effectively result in recognising interest expense at a fixed interest rate for the hedged floating rate loans and inventory at the fixed foreign currency rate for the hedged purchases.

(I) Credit risk

Credit risk is the risk that counterparty will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including bonds, deposits with bank, foreign exchange transactions and other financial instruments.

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.”

a) Trade receivables

Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

Receivables are deemed to be past due or impaired with reference to the Company's normal terms and conditions of business. These terms and conditions are determined on a case to case basis with reference to the customer's credit quality and prevailing market conditions. The Company based on past experiences, current conditions and forecasts of future economic conditions does not expect any material loss on its receivables and hence no provision is deemed necessary on account of expected credit loss ('ECL').

The credit quality of the Company's customers is monitored on an ongoing basis and assessed for impairment where indicators of such impairment exist. The Company uses simplified approach (i.e. lifetime expected credit loss model) for impairment of trade receivables/ contract assets. The solvency of the debtor and their ability to repay the receivable is considered in assessing receivables for impairment. Where receivables have been impaired, the Company actively seeks to recover the amounts in question and enforce compliance with credit terms.

Past experience, current conditions and forecasts of future economic conditions suggest a low/ minimum credit risk or allowances of debtors. Exposures of trade receivable broken into ageing bucket as per note 12. The Company's trade receivable do not carry a significant financing element. Hence, trade receivables are measured at transaction price. The Company makes a loss allowance using simplified approach for expected credit loss and on a case to case basis.]

b) Other financial assets

The Company maintains exposure in cash and cash equivalents, term deposits with banks, loans, derivative financial instruments, investments in government securities, bonds and investments in mutual funds. The Company has diversified portfolio of investment with various number of counterparties which have good credit ratings, good reputation and hence the risk is reduced. Individual risk limits are set for each counterparty based on financial position, credit rating and past experience. Credit limits and concentration of exposures are actively monitored by the Company.

Expected credit loss for other than trade receivables has been assessed and based on life-time expected credit loss, loss allowance provision has been made.

(II) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities (comprising the undrawn borrowing facilities below), by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

b) Maturities of financial liabilities

The tables below analyse the Company's financial liabilities into relevant maturity groupings based on their contractual maturities for:

All non-derivative financial liabilities, and derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not material.

(III) Market risk - foreign currency risk

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments, highly probable forecast transactions and foreign currency required at the settlement date of certain receivables/payables. The use of foreign currency forward contracts is governed by the Company's strategy approved by the board of directors, which provide principles on the use of such forward contracts consistent with the Company's risk management policy and procedures.

a) Foreign currency risk exposure

The Company's exposure to foreign currency risk at the end of the reporting period expressed in equivalent in Rs is as follows:

The Company uses forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments, highly probable forecast transactions and foreign currency required at the settlement date of certain receivables/payables. The use of forward contracts is governed by the Company's strategy approved by the board of directors, which provide principles on the use of such forward contracts consistent with the Company's risk management policy.

The Company's hedging policy only allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company enters into hedge relationships where the critical terms of the hedging instrument match exactly with the terms of the hedged item, and so a qualitative assessment of effectiveness is performed. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the Company uses the hypothetical derivative method to assess effectiveness. Ineffectiveness is recognised on a cash flow hedge and net investment hedge where the cumulative change in the designated component value of the hedging instrument exceeds on an absolute basis the change in value of the hedged item attributable to the hedged risk. In hedges of foreign currency forecast sale and purchase transactions, hedges of interest rate risk and hedges of net investment, as applicable, this may arise if:

(i) The critical terms of the hedging instrument and the hedged item differ (i.e. nominal amounts, timing of the forecast transaction, interest resets changes from what was originally estimated), or

(ii) Differences arise between the credit risk inherent within the hedged item and the hedging instrument. There were no ineffectiveness recognised in the statement of profit and loss during March 31, 2023 and March 31, 2022.

(i) During the previous year, the Company announced the successful listing of its Joint Venture company in Kingdom of Saudi Arabia (“KSA”), East Pipes Integrated Company for Industry (EPIC) on the Saudi Exchanges Main Market (“Tadawul”) at the final offer price of SAR 80 per share. Post the IPO the Company owns 35.01% (from earlier 50.01%) through its step-down subsidiary in Mauritius and will continue to be the largest shareholder in EPIC. Consequently, EPIC is now classified as an associate for the Company.

45 CONTINGENT LIABILITIES

The Company has contingent liabilities as at the year end in respect of:

As at

March 31, 2023

As at

March 31, 2022

Claims against the Company not acknowledged as debts

23.51

23.63

Disputed direct taxes

18.01

20.51

Disputed indirect taxes:

Central Sales Tax

0.53

0.53

Service Tax

18.61

18.61

Sales tax/ Value Added Tax

143.67

143.67

Duty of Excise

57.06

48.97

Duty of Customs

0.69

0.69

Goods and Service tax

0.12

0.26

In respect of matters decided against the Company, for which the Company is in appeal with higher authorities, wherein the company believe there would be no future cash outflows.

The Company does not expect any re-imbursements in respect of the above contingent liabilities.

46 CAPITAL AND OTHER COMMITMENTS i) Capital commitments

Capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:

48 SEGMENT INFORMATION

Since the segment information as per Ind AS 108 - Operating Segments is provided on the basis of consolidated financial statement, the same is not provided separately in standalone financial statement.

49 EQUITY SETTLED SHARE BASED PAYMENTS (ESOP) (REFER NOTE 16(B)(IV))

Senior level management employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions). In respect of options granted during the current year under the Welspun Employee Stock Options Scheme (WELSOP), the cost of equity-settled transactions is determined by the fair value at the date when the grant is made using Black Scholes Merton formula which is in accordance with Indian Accounting Standard 102 (Ind AS 102).

The cost of equity settled transaction is recognised, together with a corresponding increase in Equity settled share based payments reserves in other equity, over the period in which the service conditions are fulfilled. This expense is included under the head “Employee benefits expense” as employee share-based expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest.

Expense for the period from grant date to reporting date recognised is Rs. 5.58 (March 31, 2022: Rs. 0.56).

As at

March 31, 2023

As at

March 31, 2022

Estimated amount of contracts remaining to be executed on capital account (net of advances):

Property, plant and equipment (net of capital advances)

7.80

0.48

ii) Other commitments

As at

March 31, 2023

As at

March 31, 2022

Corporate guarantees given by the company for loans of subsidiaries and joint ventures. Loan/ liabilities outstanding against these guarantees aggregate to Rs.2,645.95 (March 31, 2022: Rs. 741.10) (refer note 42)

3,577.57

1,696.03

Outstanding letters of credit

224.50

534.40

47 OPERATING LEASE As a lessor

The Company has entered into operating leases for land and premises. These lease arrangements are both cancellable and non-cancellable in nature and range for a period between three years to ten years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

Rental income with respect to all operating leases

Year ended March 31, 2023

Year ended March 31, 2022

Rental income recognised in the statement of profit and loss during the year

2.58

1.68

of amalgamation as per “pooling of interest method”, at carrying value adjusted for alignment for accounting policies of the Company has been considered in the books retrospectively and the previous period/year numbers have been accordingly restated.

In terms of the Scheme, the Company has issued 81 Cumulative Redeemable Preference shares (CRPS) of face value of Rs 10/- each of the Company for every 100 Equity Shares of face value of INR 10/- each held in Welspun Steel Limited by shareholders as on the record date stated therein, which were pending for allotment as at March 31, 2022 which will be redeemed at the expiry of 18 months from date of issue

i.e. March 16, 2022.

Further, consequent to the above arrangement, Welspun Speciality Solution Limited and Anjar TMT Steel Private Limited have become subsidiaries of the Company.

50 Assessment of impairment of carrying value of investments and recoverability of loans given to subsidiary: Welspun Specialty Solutions Limited (“WSSL” or “subsidiary”) is engaged in manufacturing of pipes in India. The Company has outstanding investment in equity shares of Rs. 283.65 in subsidiary which is carried at cost, as at March 31, 2023. The Company has outstanding loans granted to its subsidiary of Rs. 182.63 which is carried at cost as at March 31, 2023. Considering the financial position and losses of the subsidiary, the Company has assessed the impairment of the carrying value of the investment in the subsidiary based on the market approach model (the “model”). The Company has also assessed the impairment of the carrying value of the loans based on the expected credit loss model (“ECL”) resulting in no impairment for the year.

Note 1- As defined in the Scheme, “Demerged Undertaking” means undertaking, business, activities and operations pertaining to steel, specialty steel and thermo mechanical treatment bars manufacturing business carried on by WSL directly or indirectly through its subsidiaries (which includes Welspun Specialty Solutions Limited, Anjar TMT Steel Private Limited). The above figures are as per Management signed unaudited accounts.

Note 2- As at March 31, 2022, the amount to the extent CRPS issued (pending allotment) i.e. Rs. 351.51 is disclosed under “Borrowings”. Subsequent to the year end March 31, 2022, CRPS of Rs. 351.51 have been allotted.

Note 3 - It has been disclosed under the head “other financial liabilities” in March 31, 2022. Subsequent to the year end March 31,2022, the liability of Rs.11.22 has been paid in cash.

ii. Before merger, the Company and demerged undertaking held 19.70% (58,33,500 shares) and 3% (8,72,193 shares) in Welspun Captive Power Generation Limited (WCPGL), respectively. Pursuant to merger, the shareholding of the Company in WCPGL became 22.7% (67,05,693 shares).

Due to this change, Company obtained significant influence over WCPGL in March 2022 and is treated as associate of WCL as at March 31, 2022.

Accordingly, investments in WCPGL has been disclosed under “Investments in equity instruments of subsidiaries, associate and joint venture” (refer note 6) as at March 31, 2022.

iii. The Board of Directors at their meeting dated May 27, 2022 have recommended to pay dividend of Rs 8.67 at the stipulated rate of 6% on the CRPS for the financial year ended March 31, 2022, the payment of which made during the current year.

iv. With respect to the accounting treatment of such CRPS, presentation and measurement has been made in accordance with Ind AS 32 'Financial Instruments: Presentation' and Ind AS 109 'Financial Instruments' which requires the presentation of these CRPS as a financial liability in its entirety, given that as per the terms of the instrument, they are redeemable, at face value, at the option of the holder. The relevant disclosures required under Ind AS 107 'Financial Instruments: Disclosures' and under Ind AS 1 'Presentation of financial statements' for these CRPS have been made in the standalone financial statements. Accordingly, in view of the reasons set out in the aforesaid note, CRPS have not been presented as preference share capital in the standalone financial statements, in accordance with the Companies Act, 2013.

b. Bigshot Infra Facilities Private Limited (“Bigshot”), a wholly owned subsidiary of the Company from April 18, 2022, has acquired control over Sintex Prefab India Limited (“SPIL”) on February 24, 2023. SPIL was admitted under Corporate Insolvency Resolution process (CIRP) in terms of Insolvency and Bankruptcy code, 2016 (''IBC'') of India. The National Company Law Tribunal (NCLT) vide its order dated December 21, 2022, approved the resolution plan for acquiring controlling stake in SPIL and merge Bigshot with SPIL by way of scheme of arrangement (''Scheme'') approved by NCLT. Consequently, SPIL became wholly owned subsidiary of the Company.

c. Propel Plastic Products Private Limited (“Propel”), a wholly owned subsidiary of the Company from September 27, 2022, has acquired control over Sintex BAPL Limited (“SBAPL”) on March 29, 2023. SBAPL was admitted under Corporate Insolvency Resolution process (CIRP) in terms of Insolvency and Bankruptcy code, 2016 (''IBC'') of India. The National Company Law Tribunal (NCLT) vide its order dated March 17, 2023, approved the resolution plan for acquiring controlling stake in SBAPL and merge Propel with SBAPL by way of scheme of arrangement (''Scheme'') approved by NCLT. Consequently, SBAPL became wholly owned subsidiary of the Company.

52 During the year, the Company has paid Rs. 589.45 towards the purchase consideration of the private sale of specified assets of ABG Shipyard Limited (in liquidation) under the provisions of the Insolvency & Bankruptcy Code, 2016 (“IBC”). Post payment was made to ABG's Liquidator and receipt of sale certificates by the Company, the Liquidator received a Provisional Attachment Order from ED, Ahmedabad. The Company, the Liquidator of ABG Shipyard Limited (“Liquidator”) and the Lenders (SBI & IDBI) have all filed separate writ petitions before Hon'ble Gujarat High Court (“Court”) against ED's Provisional Attachment Order wherein during the quarter ended December 31, 2022, the Court has granted interim relief and stayed the Provisional order on the specified assets. The Company has received the possession of moveable properties (partially built obsolete ships, metal, and scrap) from the Liquidator.

(vi) Compliance with approved scheme(s) of arrangements

The Company has compliance with an accounting impact on approved scheme of arrangements on current or previous financial year (refer note 51).

(vii) Utilisation of borrowed funds and share premium

The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) other than note 1 below, with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Ultimate Beneficiaries or

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries

The Company has not received any funds from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries Note 1

During the current year:

(i) The Company has invested in Optionally Convertible Debentures ("OCD”) aggregating to Rs. 30.07 of Big Shot Infra Facilities Private Limited ("Big Shot”), a wholly-owned subsidiary company. Big Shot has paid the lenders of Sintex Prefab and Infra Limited ("SPIL”), for acquiring the debt of SPIL as part of the NCLT-approved resolution plan, after which Bigshot merged with SPIL and SPIL became a wholly owned subsidiary of WCL under the approved NCLT scheme.

(ii) The Company has invested in OCD of Rs. 370.70 of Propel Plastics Products Private Limited ("Propel”), a wholly-owned subsidiary company. Propel has paid the lenders of Sintex BAPL Limited ("SBAPL”), for acquiring the debt of SBAPL as part of the NCLT-approved resolution plan, after which Propel merged with SBAPL and SBAPL became a wholly owned subsidiary of WCL under the approved NCLT scheme.

(iii) The Company has invested in OCD aggregating to Rs. 54.83 of Mahatva Plastic Products and Building Materials Private Limited (Mahatva) and Mahatva has further invested the Rs. 26.02, along with unutilised funds as on April 1, 2022 of Rs. 14.06, aggregating Rs.40.08 in purchasing the NCDs of Sintex BAPL Limited during the year ended March 31, 2023

The above payments made by the Company are for the purpose of acquisitions of unrelated parties through its wholly-owned subsidiaries. There are no non-compliances with the applicable laws and regulations.

(viii) Undisclosed income

There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(ix) Details of crypto currency or virtual currency

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(x) Valuation of PP&E, intangible asset and investment property

The Company has not revalued its property, plant and equipment (including Right-of-Use assets) or intangible assets or both during the current or previous year.

(xii) Registration of Charges or satisfaction with Registrar of Companies (ROC)

The Company does not have any charge or satisfaction not registered with the ROC beyond the statutory period.

(xiii) Utilisation of borrowings availed from banks and financial institutions

The borrowings obtained by the Company from banks and financial institutions have been applied for the purposes for which such loans were was taken.

(xiv) Loans or advances to specified person

The Company has not granted any loans or advances in the nature of loans to promoters, directors, KMPs and related parties (as defined under Companies Act, 2013) either severally or jointly with any other person, that are (a) repayable on demand; or (b) without specifying any terms or period of repayment.

57 The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the Company towards Provident Fund and Gratuity. The draft rules for the Code on Social Security, 2020 have been released by the Ministry of Labour and Employment on November 13, 2020. The Company is in the process of assessing the additional impact on Provident Fund contributions and on Gratuity liability contributions and will complete their evaluation and give appropriate impact in the standalone financial statements in the period in which the rules that are notified become effective.

able

59 DIVIDEND INCOME FROM WMHL

During the previous year ended March 31, 2022, Welspun Mauritius holdings Limited (WMHL) has given a dividend to WCL amounting to $ 40.49 Million (Rs. 307.66)

60 CORE INVESTMENT COMPANIES (CIC)

Management has assessed that there are three CIC in the Group ('Companies in the Group' is as defined in Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016, as amended).

61 SUBSEQUENT EVENTS

The Board of Directors at their meeting dated May 30, 2023 have recommended to pay dividend at the stipulated 6% Cumulative Redeemable Preference shares of the face value of Rs 10/- each fully paid up and to pay dividend at the rate of 100% per equity share (i.e. INR 5 per equity share) having nominal value of INR 5 for the financial year ended March 31, 2023. The payment is subject to approval of the shareholders in the upcoming Annual General Meeting.

62 The Company in the current year that ended March 2023, has changed its rounding off denomination to crores from millions in order to make it more useful to users of financial statements. This change is also aligned with the results published pursuant to Regulation 33 and Regulation 52 of SEBI (LODR) Regulations, 2015, as amended. Accordingly, the figures of the comparative year has also been changed to give this effect. Further, the said change is in line with Schedule III of the Companies Act, 2013.

63 During the year, the Company has sold land and civil structures (collectively known as “assets sold”) situated at the Dahej unit of the Company in the state of Gujarat and included resulting profit of Rs 103.92 under “Other Income”.

64 At its meeting held on March 14, 2023, the Board of Directors of the Company have, inter alia, considered and decided to propose a Scheme under Sections 230-232 of the Companies Act, 2013 to National Company Law Tribunal (“NCLT”) for its approval. The Scheme, inter alia, provides for transfer and vesting of the entire assets and liabilities of Welspun Metallics Limited, wholly owned subsidiary of the Company (the “Transferor Company”), in the Company with effect from the Appointed Date of April 1, 2022. As the entire share capital of the Transferor Company is held by the Company, upon the Scheme becoming effective, no shares of the Company shall be issued and allotted and the investment by the Company in the Transferor Company shall stand cancelled on the Effective Date (as defined in the Scheme) without any further act, instrument or deed.

65 The figures for the previous year have been regrouped wherever necessary.