(xxii)Provisions and contingencies

A Provision is recognized for a present obligation as a result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of notes to the accounts. Contingent assets are also disclosed by way of notes to the accounts.

(xxiii) Mines restoration provisions

An obligation for restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing extraction from mines. Costs arising from restoration at closure of the mines and other site preparation work are provided for based on their discounted net present value, with a corresponding amount being capitalised at the start of each project. The amount provided for is recognised, as soon as the obligation to incur such costs arises. These costs are charged to the Statement of Profit and Loss over the life of the operation through the depreciation of the asset and the unwinding of the discount on the provision. The costs are reviewed periodically and are adjusted to reflect known developments which may have an impact on the cost or life of operations. The cost of the related asset is adjusted for changes in the provision due to factors such as updated cost estimates, new disturbance and revisions to discount rates. The adjusted cost of the asset is depreciated prospectively over the lives of the assets to which they relate. The unwinding of the discount is shown as a finance cost in the statement of profit and loss.

(xxiv) Segment reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the company's Chief Operating Decision Maker ("CODM") to make decisions for which discrete financial information is available. Based on the management approach as defined in Ind AS 108, the CODM evaluates the Company's performance and allocates resources based on an analysis of various performance indicators by business segments and geographic segments.

(v) Risk exposure

Through its defined benefit plans the Company is exposed to a number of risks, the most significant of which are detailed below:

Investment risk:

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.

Interest risk:

A decrease in the interest rate on plan assets will increase the plan liability.

Life expectancy:

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.

Salary growth risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the life expectancy of the plan participants will increase the plan liability.

(vi) Defined benefit liability and employer contributions

Expected contributions to post-employment benefits plans for the year ending March 31, 2025 are H164.40 lakhs ( March 31, 2024 - H126.12 lakhs)

The weighted average duration of the defined benefit obligation is 4.61 years (March 31, 2023: 5.56-5.77 years). The expected maturity analysis of undiscounted gratuity is as follows:

The primary objective of capital management is to ensure the maintenance of healthy capital ratio in order to support its business and maximise shareholders value. The Company manages its capital structure according to changing economic conditions. No changes were made in the objectives, policies or processes during the year ended March 31, 2024 as compared to previous year. There have been no breaches of financial covenants of any interest bearing loans and borrowings for the reported year. The Company monitors capital structure on the basis of debt to equity ratio. For the purpose of Company's capital management, equity includes paid up equity share capital and other equity, and debt comprises long-term and short-term borrowings including current maturities of long term borrowings. The following table summarizes debt and equity of the Company.

(i) Fair value hierarchy

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:

Level 1: This level includes those financial instruments which are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities.

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. If all significant inputs required to fair value an instrument are observable, the instrument is included in 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.

(ii) Valuation technique used to determine fair value

The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The following methods and assumptions were used to estimate the fair values:

(a) The fair value of cash and cash equivalents, trade receivables and payables, short-term loans, current financial liabilities and assets and borrowings approximate their carrying amount largely due to the short-term nature of these instruments. The management considers that the carrying amounts of financial assets and financial liabilities recognised at nominal cost/amortised cost in the financial statements approximate their fair values. In respect of non current trade receivables and loans, fair value is determined by using discount rates that reflect the present borrowing rate of the company .

(b) Investments (other than Investments in Subsidiaries) traded in the active market are determined by reference to the quotes from the Stock exchanges as at the reporting date. Quoted Investments for which quotations are not available have been included in the market value at the face value/paid up value, whichever is lower except in case of bonds where the net present value at current yield to maturity have been considered. Unquoted investments in shares have been valued based on historical net asset value as per the latest audited financial statements after considering the impact of fair valuation of immovable properties which is based on valuation report from an independent valuer.

(v) Significant estimates

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting year. For details of the key assumptions used see 43(ii).

Note : 44 - Financial risk management

The Company's activities are exposed to a varieties of financial risks viz credit risk, liquidity risk and market risk (i.e. foreign currency risk, interest rate risk and price risk).This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit risk

Credit risk is the risk that counterparty will not meet its obligations 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 deposits placed with banks and financial institutions and other financial instruments.

i) Trade receivables

Customer credit risk is managed as per the Company's established policies, procedures and defined controls relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying 30 days credit terms. Outstanding customer receivables are regularly monitored and the Company receives security deposits from its customers which mitigates the credit risk. No single customer accounted for 10% or more of the Company's net sales. Therefore, the Company does not expect any material risk on account of non-performance by any of its counterparties.

For expected credit loss as at each reporting date, the Company assesses the risk profile of trade receivables and categorises risk profile viz. trade receivables for which credit risk has not been significantly increased from initial recognition, trade receivables for which credit risk has increased significantly but are not credit impaired and for trade receivables for which credit risk has increased significantly and are credit impaired.

The Company has adopted simplified approach model to compute credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. At each reporting date, the historically observed default rates and changes in the forward-looking estimates are updated. Accordingly, loss allowances on trade receivables are measured using provision matrix at an amount equal to life time expected losses i.e. expected cash shortfall.

The following table summarises the change in the loss allowances measured using simplified approach model expected credit loss assessment.

ii) Financial instruments and deposits

Credit risk pertaining to balances with banks and financial institutions is managed by the Company's Treasury department in accordance with Company's policy. Surplus funds are parked only within approved investment categories with well defined limits. Investment category is periodically reviewed by the Company's Board of Directors.

Credit risk arising from short term liquid funds, other balances with banks and other cash equivalents is limited because the counterparties are banks and recognised financial institutions with high credit ratings assigned by the credit rating agencies. None of the financial instruments of the Company result in material concentration of credit risks.

Other financial assets mainly include incentives receivable from the government, fixed deposits, loans & interest thereon and security deposits given. There are no indications that defaults in payment obligations would occur in respect of these financial assets."

The Company's maximum exposure to credit risk for the components of the Balance Sheet as at March 31, 2024 and March 31, 2023 is the carrying amounts as given in Note 43.

(B) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

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. Due to the nature of the underlying business, the Company maintains sufficient cash and liquid investments available to meet its obligation.

(C) Market risk

(i) Foreign currency risk

The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company deals with international vendors with respect to stores, coal and capital goods procurement, which rises exposure of the company to foreign exchange risk. In view of low proportion of import, as compared to the overall operations, the exposure of the Company to foreign exchange risk is also not considered to be material. The risk is measured through a forecast of highly probable foreign currency cash flows.

(iii) Price risk

The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

The Company's exposure to equity securities price risk arises from investments held by the company in equity securities and classified in the Balance Sheet as at fair value through profit and loss. The Company has investment in quoted and unquoted equity securities as per details in note no 43. Investment is done in accordance with the limits set by the Company. The Company's Board of Directors reviews and approves all investment decisions.

Note : 45 - Lease

a) The Company has entered into lease agreements with different parties for taking offices and land on lease and license basis for business operation. The lease term of different contracts varies in a range of 2 to 9 years and price is on fixed rental basis with escalation clauses in the lease agreements.

b) The Company also has certain leases of buildings with lease terms of 12 months or less. The Company applies the 'short-term lease' recognition exemptions for these leases.

c) The weighted average incremental borrowing rate for lease liabilities are between 8.48% to 8.68% (March 31, 2023: 4.76% to 7.80% ). Set out below are the carrying amounts of lease liabilities included under financial liabilities and its movement during the year.

Note : 46 - Contingent liability and Capital commitments (Contd.)

The Company did not purchase any illegal coal and had complied with all disclosure requirements of the various Government Departments. The Report of NGT Committee was based on the assumptions & views of the Committee and not on hard facts. Moreover neither the Company has been issued a show-cause nor any opportunity of being heard was given to the Company before submitting the Interim reports by the Independent Committee to NGT. Further NGT did not serve any notice on the Company before passing the impugned order which is a clear violation of principles of natural justice.

In the previous year on an appeal by the Company, the Apex Court vide it's order dated May 2, 2023 restored the proceeding back to NGT, at the stage, as it stood prior to the passing of the judgement dated January 17, 2020. Subsequently the matter has been transferred to the NGT, Eastern Zone Bench, and the Company has filed necessary affidavits and the matter is subjudice. No provision has been considered necessary at this stage ."

(b) As reported in the previous year, the Company had received a demand notice dated March 20, 2023 from the Divisional Mining Officer (DMO), Directorate of Mineral Resources, Meghalaya, Jowai towards outstanding dues of royalty & Cess on Coal, Sandstone, Clay and Shale procured/consumed by the Company in certain specific periods between F.Y. 2009-10 to F.Y. 2022-23 amounting to H2650.31 lakhs (including H1552.61 lakhs towards penal interest) against which a provision amounting to H487.88 lakhs was made in earlier years on account of abundant precaution. As per the provisions of the Mines and Minerals (Development and Regulation) Act, 1957, the liability for payment of royalty in respect of any mineral removed/ consumed from the mining lease arises on the holder of the mining lease and not on the purchaser of such mined minerals. Hence, there is no obligation of the Company to pay royalty/cess in case the minerals are procured from third party vendors. During the year the office of DMO has withdrawn and issued no dues certificates towards its demand for payment of Royalty & Cess on Shale and accordingly provision lying in the books amounting to H47.96 lakhs have been written back. Since the liability to pay royalty & cess itself is not applicable to the company, no provision of differential demand of H1561.30 lakhs (including penal interest H1292.54 lakhs & net of provision kept in the books) has not been provided and shown as contingent liability. Based on the legal opinion received in this regard, the Company has disputed the demand and believe that the said demand is not tenable and the matter shall be disposed off in the favour of the Company.

(c) The Company had received a demand notice from the Director General of Goods & Service Tax Intelligence (DGGI), Shillong towards non-payment of GST under reverse charge mechanism (RCM) amounting to H861.23 lakhs on payment of Royalty, DMF, NMET & Mineral cess and H239.23 lakhs towards ineligible input tax credit (ITC) availed by the company under RCM during certain specific periods between July 2017 to December 2018 (along with penalty amounting to H861.23 & H239.23 lakhs and interest thereon).

The Company has made the adequate payment of GST under RCM amounting to H239.23 lakhs @ 5% applicable rate, before the issuance of demand notice, which has not been taken in cognizance by DGGI and imposed a demand of H861.23 lakhs based on a higher rate of 18% based on CBIC circular no 164/20/2021-GST dated October 6, 2021 with retrospective effect. By giving a reference of a Tribunal decision on a similar case in the favour of assessee, the company has submitted its reply to DGGI and sought for disposal of the matter in its favour and no communication has been received from DGGI since then and the matter is pending. The company considers the above demand non tenable and deserves to be set aside. Based on the legal opinion received, the Company believes that it has a good case in this matter and no provision is required at this stage.

Note: 52 - Other statutory information

i) The Company has not advanced or loaned or invested funds to any other person or entity, including foreign entities (Intermediaries) with the understanding 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 Company (Ultimate Beneficiaries); or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

ii) The company has not been declared as wilful defaulter by any bank of financial institution or other lender.

iii) The Company have not traded or invested in Crypto currency or Virtual currency during the current financial year and previous financial year.

iv) The Company has not received any fund from any person or entity, 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.

v) The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017

vi) The Company has not entered into any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

vii) Struck off Company: Transactions with the struck off companies under section 248 of the Companies Act,2013 is as under -:

Note: 54- Audit trail

The Company has been using accounting software ERP SAP S4HANA for maintaining its books of account which has a feature of recording audit trail (change log) facility and the same has operated throughout the year for all relevant transactions except Audit trail feature is not enabled for certain data changes to the data for users with certain access rights to a third party software.

Note: 55

These financial statements have been approved by the Board of Directors of the Company on May 22, 2024 for issue to the shareholders of the Company for the adoption.

As per our report of even date For and on behalf of Board of Directors of Star Cement Limited

For Singhi & Co. Vinit Kumar Tiwari Sajjan Bhajanka

Chartered Accountants Chief Executive Officer Chairman & Managing Director

Firm Registration No.302049E DIN:00246043

(Gopal Jain) Manoj Agarwal Rajendra Chamaria

Partner Chief Financial Officer Vice-Chairman & Managing Director

Membership No. 059147 DIN:00246171

Place : Kolkata/Lumshnong Debabrata Thakurta

Date : May 22, 2024 Company Secretary