b. Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of H5/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
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 all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
a. Capital Reserve
During amalgamation, the excess of net assets acquired, over the cost of consideration paid is treated as capital reserve.
b. Securities Premium
Securities Premium is used to record the premium received on issue of shares. It is to be utilised in accordance with the provisions of Companies Act, 2013.
c. General Reserve
Under the erstwhile Companies Act, 1956, a General Reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn. General Reserve is available for payment of dividend to the shareholders as per the provisions of Companies Act, 2013.
d. Items of other comprehensive income
The cumulative gains and losses arising from fair value changes of equity investments measured at fair value through other comprehensive income are recognised in fair value of financial assets. The balance of the reserve represents such changes recognised net of amounts reclassified to retained earnings on disposal of such investments.
Terms & Conditions of Secured Loans
i. The working capital facilities from Banks are secured by 1st Pari passu charge by the way of hypothecation with consortium member bank on the entire existing as well as on future current assets of the company. The facilities further secured by 1st Pari passu charge by the way of EM of land & building along with hypothecation of plant and machineries and other movable fixed assets including entire existing as well as future fixed assets of the company including intangibles/goodwill and EM of land and building at phase-I industrial area, Siltara, Raipur, Chhattisgarh.
ii. The above credit facilities are also secured by personal guarantee of promoter directors of the Company.
iii. The working capital facilities (including cash credit) are also secured in line with rupee term loans by Pledge of 1,18,00,000 share of Godawari Energy Ltd. held by the Company (1st pari passu charge among working capital lenders) and Corporate guarantee.
iv. The Buyer's credit facilities from bank in respect of Solar Project - Rajnandgaon - 70 MW is secured by First and exclusive charge on the entire fixed assets both movable (excluding current assets) and immovable pertaining the solar project including land admeasuring 193.36 acres located at Rajnandgaon district in Chhattisgarh of borrower. present and future.
v. The Buyer's credit facilities from bank in respect of Solar Project - Bemetara - 25 MW is secured by Primary charge by the way of hypothecation of movable assets including goods under LC, plant, and machinery etc. at the proposed solar power plant of 25 MW. It is further secured by Exclusive charge by way of equitable mortgage of land over which the proposed 25 MW solar power plant is being set up (Proposed at Dist. Bemetara, Chhattisgarh).
vi. All the monthly returns submitted to banks are in agreement with books of account and there is no any material differences between the books and returns submitted with bank.
Trade receivables are non-interest bearing and are generally on terms of advance or credit period ranges of 1 to 90 days. In March 2023, there was a reversal of H18.24 lacs (March 2022: H140.12 lacs) out of the provision for expected credit losses on trade receivables.
Contract liabilities include short-term advances received from customers to deliver manufacturing goods.
Amount of revenue recognised from amounts included in the contract liabilities at the beginning of the year H1830.70 lacs (previous year H949.02 lacs) and performance obligations satisfied in previous years H NIL (previous year H NIL).
32. Contingent Liabilities and capital commitments
Claims against the companies not acknowledged as debts:
i) Disputed liability of H181.06 lacs (Previous Year H181.06 lacs) on account of Service Tax against which the company has preferred an appeal.
ii) Disputed liability of H243.07 lacs (Previous Year H248.66 lacs) on account of CENVAT against which the company has preferred an appeal.
iii) Disputed liability of H286.55 lacs (Previous year H286.55 lacs) on account of Sales Tax against which the company has preferred an appeal.
iv) Disputed liability of H10 lacs (Previous Year H10 lacs) on account of Custom Duty against which the company has preferred an appeal.
v) Disputed energy development cess demanded by the Chief Electrical Inspector, Govt. of Chhattisgarh H6341.95 lacs (Previous Year H5974.80 lacs). The Hon'ble High Court of Chhattisgarh has held the levy of cess as unconstitutional vide its order dated 20th June,2008. The State Govt. has filed a Special Leave Petition before Hon'ble Supreme Court, which is pending for final disposal.
vi) Disputed demand of H192.66 lacs (Previous Year H192.66 lacs) from Chhattisgarh State Power Distribution Company Limited relating to cross subsidy on power sold under open access during the financial year 2009-10. The company has contested the demand and obtained stay from CSERC and expect a favourable decision in favour of company.
vii) Disputed demand of H68.77 lacs (Previous Year H68.77 lacs) from Mining Department of Chhattisgarh against which the company has preferred an appeal.
Guarantees excluding financial guarantees:
i) Counter Guarantees given to banks against Bank guarantees issued by the Company Banker aggregate to H10105.42 lacs (Previous Year H10463.76 lacs.).
ii) Corporate Guarantees given to lenders of subsidiary company aggregating to H26560 lacs (Previous Year H27116 lacs).
Capital Commitments:
i) Estimated amount of contracts remaining to be executed on capital accounts H9344.94 (Previous Year H 8263.49 lacs).
33. DISCLOSURES AS REQUIRED BY INDIAN ACCOUNTING STANDARD (Ind AS) 19 EMPLOYEE BENEFITS:
a. Defined Contribution Plan:
The Company has certain defined contribution plans viz. provident fund . Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation.
An amount of H1418.06 lacs (P.Y. H938.60 lacs) is recognised as an expenses and included in employee benefit expense as under the following defined contribution plans (Refer Note no 27).
b. Defined benefit plan:
Leave Obligations:
The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number days of unutilised leave at each balance sheet date on the basis of year-end actuarial valuation using projected unit credit method. The scheme is unfunded.
Based on past experience and in keeping with Company's practice, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months and accordingly the total year end provision determined on actuarial valuation, as aforesaid is classified between current and non current.
An amount of H119.76 lacs (P.Y. H102.70 lacs) is recognised as an expenses and included in employee benefit expense as under the following defined contribution plans (Refer Note no 27).
Gratuity:
The Gratuity scheme is a final salary defined benefit plan that provides for a lump sum payment made on exit either by way of retirement, death, disability or voluntary withdrawal. The benefits are defined on the basis of final salary and the period of service and paid as lump sum at exit. Benefits provided under this plan is as per the requirement of the Payment of Gratuity Act, 1972. The scheme is unfunded.
(ii) Risk Exposure
Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below: Interest rate risk:
The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.
Salary inflation risk:
Higher than expected increases in salary will increase the defined benefit obligation.
Demographic risk:
This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.
35. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES
The Company's principal financial liabilities comprise of loans and borrowings, trade payables and other financial liabilities. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include investments, loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company also enters into derivative contracts.
The Company is exposed to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk
- Interest rate risk
- Currency risk
- Price risk
The Company's board of directors has overall responsibility for the establishment and oversight of the company's risk management framework. This note presents information about the risks associated with its financial instruments, the Company's objectives, policies and processes for measuring and managing risk, and the Company's management of capital.
Credit Risk
The Company is exposed to credit risk as a result of the risk of counterparties non performance or default on their obligations. The Company's exposure to credit risk primarily relates to investments, accounts receivable and cash and cash equivalents. The Company monitors and limits its exposure to credit risk on a continuous basis. The Company's credit risk associated with accounts receivable is primarily related to party not able to settle their obligation as agreed. To manage this the Company periodically reviews the financial reliability of its customers, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of accounts receivables.
Trade receivables
Trade receivables represent the most significant exposure to credit risk and are stated after an allowance for impairment and expected credit loss.
Loans
Financial assets in the form of loans are written off when there is no reasonable expectations of recovery. Where recoveries are made, these are recognise as income in the statement of profit and loss. The company measures the expected credit loss of dues based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and passed trends. Based on historical data, loss on collection of dues is not material hence no additional provisions considered.
Bank, Cash and cash equivalents
Bank, Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to cash. These are subject to insignificant risk of change in value or credit risk.
Liquidity risk
The Company is exposed to liquidity risk related to its ability to fund its obligations as they become due. The Company monitors and manages its liquidity risk to ensure access to sufficient funds to meet operational and financial requirements. The Company has access to credit facilities and debt capital markets and monitors cash balances daily. In relation to the Company's liquidity risk, the Company's policy is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions as they fall due while minimizing finance costs, without incurring unacceptable losses or risking damage to the Company's reputation.
Interest rate risk
Interest rate risk is the risk that an upward movement in the interest rate would adversely effect the borrowing cost of the company. The Company is exposed to long term and short-term borrowings, Commercial Paper Program. The Company manages interest rate risk by monitoring its mix of fixed and floating rate instruments, and taking action as necessary to maintain an appropriate balance.
FOREX EXPOSURE RISK
The Company operates Internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through purchases from overseas suppliers in various foreign currencies.
Foreign currency exchange rate exposure is partly balanced by hedging of exposure by forward contract of purchasing of goods in the respective currencies.
The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies to foreign currency risk.
PRICE RISK:
The entity is exposed to equity price risk, which arised out from FVTPL quoted equity shares and FVTOCI quoted and unquoted equity shares including preference instrument. The management monitors the proportion of equity securities in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the management. The primary goal of the entity's investment strategy is to maximize investments returns.
Sensitivity Analysis for Price Risk:
Equity Investments carried at FVTOCI are not listed on the stock exchange. For preference investments and mutual funds classified as at FVTPL, the impact of a 2% in the index at the reporting date on profit & loss would have been an increase of H232.70 lacs (2021-22: H25.87 lacs); an equal change in the opposite direction would have decreased profit and loss. For equity instruments classified as at FVTOCI, the impact of a 2% in the index at the reporting date on profit & loss would have been an increase of H0.30 lacs (2021-22: H33.88 lacs); an equal change in the opposite direction would have decreased profit and loss.
36. CAPITAL MANAGEMENT
The Company's main objectives when managing capital are to:
- ensure sufficient liquidity is available (either through cash and cash equivalents, investments or committed credit facilities) to meet the needs of the business;
Ý ensure compliance with covenants related to its credit facilities; and
Ý minimize finance costs while taking into consideration current and future industry, market and economic risks and conditions.
Ý safeguard its ability to continue as a going concern
Ý to maintain an efficient mix of debt and equity funding thus achieving an optimal capital structure and cost of capital.
The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management of deployed funds and leveraging opportunities in domestic and international financial markets so as to maintain investor, creditor and market confidence and to sustain future development of the business.
For the purpose of Company's capital management, capital includes issued capital and all other equity reserves. The Company manages its capital structure in light of changes in the economic and regulatory environment and the requirements of the financial covenants.
The Company manages its capital on the basis of net debt to equity ratio which is net debt (total borrowings net of cash and cash equivalents) divided by total equity
Proposed dividend on equity shares are subject to approval at the Annual General Meeting and are not recognized as a liability as at 31March,2023
38. FINANCIAL INSTRUMENTS - ACCOUNTING CLASSIFICATIONS AND FAIR VALUE MEASUREMENTS
The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to the shortterm maturities of these instruments.
2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counter party. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
38. FINANCIAL INSTRUMENTS - ACCOUNTING CLASSIFICATIONS AND FAIR VALUE MEASUREMENTS (Contd.)
Level 1 : The fair values of the Mutual Funds are based on NAV price quotations at the reporting date. The fair value of quoted investments (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 : The fair values of the unquoted shares & securities have been estimated using a DCF model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management's estimate of fair value for these unquoted investments. Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly of indirectly.
iv) Terms and conditions of transactions with related parties
All related party transactions entered during the year were in ordinary course of business and on arm's length basis. Outstanding balances at the year-end are unsecured and will be settled in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2023, the company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2022: HNil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
41 . The company is in the business of manufacturing of Iron & Steel products and hence has only one reportable operating segment i.e. Iron & Steel as per Ind AS 108 - Operating Segment.
42. During the year, the company has divested its entire stake in Associate Company viz. Jagdamba Power & Alloys Limited, accordingly the net gain of H208.40 lacs on buy back has been shown under exceptional item. Similarly, during the previous year, the gain of H9874.46 lacs on disinvestment of equity shares of Godawari Green Energy Limited has been shown as exceptional items.
47. The company has not undertaken any transactions with companies struck off under section 248 of the Companies Act 2013 or section 560 of Companies Act 1956 during the current year or in previous year.
48. All the transactions are recorded in the books of accounts and there was no income that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961. Also there was no previously unrecorded income and related assets which has been recorded in the books of account during the year.
49. No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
50. The company has not advanced or loaned or invested funds to any other persons or entities, including foreign entities (Intermediaries) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries. Further, the company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding , whether recorded in writing or otherwise, that the company shall 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
51 . The company has complied with the number of layers of companies prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
52. The company has neither traded nor invested in Crypto Currency or Virtual Currency during the financial year.
53. No scheme of compromise or arrangement has been proposed between the company & its members or the company & its creditors under section 230 of the Companies Act 2013 (“The Act”) and accordingly the disclosure as to whether the scheme of compromise or arrangement has been approved or not by the competent authority in terms of provisions of sections 230 to 237 of the Act is not applicable.
54. The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant.
55. Previous year figures have been regrouped or rearranged wherever necessary.
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