1.16 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
i) Provisions are made when (a) the Company has a present legal or constructive obligation as a result of past events; (b) it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and (c) a
reliable estimate is made of the amount of the obligation.
ii) Contingent liabilities are not provided for but are disclosed by way of Notes on Accounts. Contingent liabilities are disclosed
in case of a present obligation from past events (a) when it is not probable that an outflow of resources will be required to
settle the obligation;(b) when no reliable estimate is possible;(c) unless the probability of outflow of resources is remote.
iii) Contingent assets are not accounted but disclosed by way of Notes on Accounts where the inflow of economic benefits is probable.
1.17 CURRENT AND NON-CURRENT CLASSIFICATION:
i) The Normal Operating Cycle for the Company has been assumed to be of twelve months for classification of its various assets and liabilities into "Current" and "Non-Current".
ii) The Company presents assets and liabilities in the balance sheet based on current and non-current classification.
iii) An asset is current when it is (a) expected to be realized or intended to be sold or consumed in normal operating cycle; (b) held primarily for the purpose of trading; (c) expected to be realized within twelve months after the reporting period; (d) Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.
iv) An liability is current when (a) it is expected to be settled in normal operating cycle; (b) it is held primarily for the purpose of trading; (c) it is due to be discharged within twelve months after the reporting period; (d) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.
1.18 RELATED PARTY TRANSACTIONS:
i) A related party is a person or entity that is related to the reporting entity preparing its financial statements
(a) A person or a close member of that person's family is related to reporting entity if that person;
(i) Has control or joint control of the reporting entity;
(ii) Has significant influence over the reporting entity; or
(iii) Is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
(b) An entity is related to a reporting entity if any of the following conditions applies;
(i) the entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);
(iii) Both entities are joint ventures of the same third party;
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity;
(vi) The entity is controlled or jointly controlled by a person identified in (a);
(vii) A person identified in (a)
(i) Has significant influence over the entity or is a member of the key management personnel of the entity(or of a parent of the entity);
(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting
entity or to the parent of the reporting entity.
ii) A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.
Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
Compensation includes all employee benefits i.e. all forms of consideration paid, payable or provided by the entity, or on behalf of the entity, in exchange for services rendered to the entity. It also includes such consideration paid on behalf of a parent of the entity in respect of the entity.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.
iii) Disclosure ofrelated party transactions as required by the accounting standard is furnished in the Notes on Financial Statements.
1.19 EARNINGS PER SHARE:
i) Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
ii) For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
1.20LEASE
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.
1.21 CRITICAL ACCOUNTING JUDGMENTS, ASSUMPTIONS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the Standalone Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Judgments
In the process of applying the Company's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the standalone financial statements:
(i) Determination of Functional Currency
Currency of the primary economic environment in which the Company operates ("the functional currency") is Indian Rupee in lakhs (?) in which the company primarily generates and expends cash. Accordingly, the Management has assessed its functional currency to be Indian Rupee in lakhs (').
(ii) Evaluation of Indicators for Impairment of Property, Plant and Equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline asset's value, significant changes in the technological, market, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the asset etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment.
b) Assumptions and Estimation Uncertainties
Information about estimates and assumptions that have the significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may differ from these estimates.
(i) Taxes
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
The Company has carried forward loss on which deferred tax asset is created, based on probability that future profits will be available against which the deductible temporary difference can be realized.
(ii) Useful lives of Property, Plant and Equipment/Intangible Assets
Property, Plant and Equipment/ Intangible Assets are depreciated/amortised over their estimated useful lives, after taking into account estimated residual value. The useful lives and residual values are based on the Company's historical experience with similar assets and taking into account anticipated technological changes or commercial obsolescence. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/amortisation to be recorded during any reporting period. The depreciation/amortisation for future periods is revised, if there are significant changes from previous estimates and accordingly, the unamortised/ depreciable amount is charged over the remaining useful life of the assets.
(iii) Contingent Liabilities
In the normal course of business, Contingent Liabilities may arise from litigation and other claims against the company. Potential liabilities that are possible but not probable of crystallising or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the Notes but are not recognised. Potential liabilities that are remote are neither recognised nor disclosed as contingent liability. The management decides whether the matters need to be classified as 'remote', 'possible' or 'probable' based on expert advice, past judgements, experiences etc.
(iv) Evaluation of Indicators for Impairment of Property, Plant and Equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline in asset's value, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the idle assets etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment and such assessment is based on estimates, future plans as envisaged by the Group.
(v) Provisions
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
1.22 INVESTMENTS
Investment in quoted equity shares are stated at its fair value through Profit and loss account.
31. FINANCIAL AND DERIVATIVE INSTRUMENTS Capital Management
The company's objective when managing capital is to:
- Safeguard its ability to continue as a going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders.
- Maintain an optimal capital structure to reduce the cost of capital.
The company's Board of director's reviews the capital structure on regular basis. As part of this review the board considers the cost of capital risk associated with each class of capital requirements and maintenance of adequate liquidity.
Disclosures
This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.
The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized in respect of each class of financial asset, financial liability and equity instrument are disclosed in accounting policies as stated above
(ii) Fair Value Measurement
This note provides information about how the Company determines fair values of various financial assets.
Fair Value of financial assets and liabilities that are not measured at fair value (but fair value disclosures are required).
Management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.
(iii) Financial Risk Management Objectives
While ensuring liquidity is sufficient to meet Company's operational requirements, the Company's financial management committee also monitors and manages key financial risks relating to the operations of the Company by analyzing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and price risk), credit risk and liquidity risk.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate, currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include FVTPL investments, trade payables, trade receivables, etc.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities. The Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on the Company.
Interest Rate Risk
The Company's interest rate risk arises from the Long-Term Borrowings with fixed rates. The Company's fixed rates borrowings are carried at amortized cost.
Liquidity Risk
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due.
Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios.
The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The information included in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The contractual maturity is based on the earliest date on which the Company may be required to pay.
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).
Trade Receivables
An impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 8 as the Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries.
(ii) Defined Benefit Plan: Retirement benefits in the form of Gratuity are considered as defined benefit obligation and are provided for on the basis of third-party actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.
Every Employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of The Payment of Gratuity Act, 1972.
As the Company has not funded its liability, it has nothing to disclose regarding plan assets and its reconciliation.
(iii) Major risk to the plan
I have outlined the following risks associated with the plan:
A. Actuarial Risk:
It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.
Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.
Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
B. Investment Risk:
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
C. Liquidity Risk:
Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cash flows.
D. Market Risk:
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
E. Legislative Risk:
Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/ regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.
33 For the year ending on 31st March, 2024, the company has discontinued to make the provision of interest on loans from banks amounting to ' 146.61 lakhs.
34 The Company has long term investment in the shares of SAL Steel Limited amounting to ' 3,994.96 Lakhs. There is major movement in the prices of stock in share market such circumstances indicate that there is increase, other than temporary, in the value of a long-term investment. And as a re-sult, we have accounted for investment in shares of SAL Steel Ltd at market rate of shares @ ' 20.71 per share increase the value of investment to ' 6266.22 Lakhs and provided for ' 2139.17 Lakhs as notional gain in the value of investment in books of accounts.
b) Capital Commitments:
Estimated amount of contracts remaining to be executed on capital account [net of advances] and not provided for ' NIL (P.Y ' NIL)
Note:
(a) It is not practicable for the company to estimate the timings of cash outflows, if any, in respect of the above, pending resolution of the respective proceedings as it is determinable only on receipt of judgments/decisions pending with various forums/ authorities.
(b) The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.
37 Certain Balance of Debtors, Creditors, are non- moving / sticky since last 3 years. However, in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.
38 In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.
42 The Company has not evaluated the provisioning requirement of a loss allowance on its financial assets so as to give impact of impairment if any as per the expected credit loss method as per the requirement of lnd AS 109 'Financial Instruments' and hence, the effect of the same if any on the Financial Results is not identifiable.
43 As stated by the Management, the Company has not recognized any Impairment of entire Capital Work in Progress (CWIP) of ' 900.50 lakhs for the year ended on 31/03/2024. The management has assessed the carrying amount of CWIP based on expected future economic benefits. The management believes that the carrying value of CWIP is recoverable and does not warrant any impairment as of the year ended on 31/03/2024.
44 During the Year under review, the company has written back creditors amounting to ' 1675.65 lakhs, in case of one of the creditors, the legal suit is decided in favour of the company and in view of the management the same is not payable, and also in case of other creditors management is of the view that the said creditors are not payable accordingly they have been written back and credited to statement of Profit and loss account as Other Income.
45 The Company has entered into a Settlement Agreement dated 13.12.2023 with Giant Stride Capital MU Limited (formerly known as AMIF Limited), who had initiated legal proceedings against the Company claiming to be the alleged Bondholder of Foreign Currency Convertible Bonds. While the matter was sub judice, without admitting any liability as due and payable under the said Bonds, in order to buy peace mind and to put an end to the litigation, the Company has entered into a Settlement Agreement dated 13.12.2023 with the said claimant and agreed to pay an amount of ' 1560 lakhs as the settlement amount. The said amount is shown as "Exceptional Item" in the profit and loss account.
46 As Stated, by the Management, the company does not currently have insurance coverage for its Property, Plant & Equipment. The Company may face the financial losses without any claim or compensation from an insurance provider.
47 As stated & Confirmed by the Management, the company does not have details w.r.t MSME Vendors as prescribed under MSME Act, 2006 which states as specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order 2019 and hence the company has not provided the same.
48 The balance confirmations from the suppliers and customers have been called for, but the same are awaited till the date of audit. Thus, the balances of receivables, advance from customers and trade payables have been taken as per the books of accounts submitted by the management of the company and are subject to confirmation from the respective parties.
49 During the year under review, the company has sold its Captive Power Plant for a consideration of ' 852.33 lakhs. The Profit on sale the said Captive Power Plant of ' 609.21 lakhs has been shown as income in the Statement of Profit and loss and has been reflected as an "Exceptional Item" in the Statement of Profit and loss for the year ended on 31st March, 2024.
50 The financial statements were authorized for issue by the directors on 30th May, 2024.
51 CORPORATE SOCIAL RESPONSIBILITY CONTRIBUTION-
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are Promoting education, including special education and employment enhancing vocation skill and other activities as mentioned in Schedule VII of the Companies Act, 2013. A CSR committee has been formed by the company as per the Act. The funds were primarily utilized throughout the year on these activities which are specified in Schedule VII of the Companies Act, 2013:
52 UNDISCLOSED TRANSACTIONS
As stated, & confirmed by the Board of Directors, The Company does not have 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
53 BENAMI TRANSACTIONS
As stated, & confirmed by the Board of Directors, The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
54 LOAN OR INVESTMENT TO ULTIMATE BENEFICIARIES
As stated, & Confirmed by the Board of Directors, The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
i. directly or indirectly lend or invest in other persons or enties identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
ii. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
55 LOAN OR INVESTMENT FROM ULTIMATE BENEFICIARIES
As stated, & Confirmed by the Board of Directors, The Company has not received any fund 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
56 WILLFUL DEFAULTER
As stated, & Confirmed by the Board of Directors, the company has not been declared willful defaulter by the bank during the year under review.
57 TRANSACTIONS WITH STRUCK OFF COMPANIES
As stated, & Confirmed by the Board of Directors, the company has not under taken any transactions nor has outstanding balance with the company Struck Off either under section 248 of the Act or under Section 560 of Companies act 1956.
58 SATISFACTION OF CHARGE
As informed by the Management there are no charges which are yet to be registered or yet to be satisfied with Registrar of Companies beyond statutory period. However, while caring out search on MCA portal, following charges are yet to be satisfied beyond the statutory period, details of which are as under:
59 CRYPTO CURRENCY
As stated, & Confirmed by the Board of Directors. The Company has not traded or invested in Crypto Currency or Virtual Currency.
60 COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES:
As informed and confirmed by the Board of Directors, the Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
61 COMPLIANCE WITH SCHEME OF ARRANGEMENT
The Company has not applied for any scheme of Arrangements under sections 230 to 237 of the Companies Act 2013.
62 As stated & Confirmed by the Board of Directors, The company has not been sanctioned any term loan during the year not there is outstanding term loans as at 31st March 2024.
63 As stated & Confirmed by the Board of Directors, the Property, plant and equipment is in the name of the company.
64 As stated & confirmed by the board of Directors, the company has not revalued its Property, Plant and Equipment during the year under review.
65 As stated & Confirmed by the board of Directors, the Company has not been sanctioned working capital limits from a bank on the basis of security of the current assets.
66 As stated and Confirmed by, the management, the Company Secretary (CS) has resigned w.e.f 11-05-2024 and the company is in process of appointing new CS
Signatures to Notes - 1 to 66
Notes referred to herein above form an integral part of the Financial Statements.
As per our report of even date attached.
For Parikh & Majmudar For and on behalf of the Board of Directors,
Chartered Accountants Shah Alloys Limited
(Firm Regn.No.107525W)
UDIN: 24107628BJZWRZ6265
CA Satwik Durkal [Rajendra V Shah] [Ashok Sharma] [Mrinal Sinha]
Partner Chairman Whole Time Director & CFO Whole Time Director
Membership No. : 107628 DIN- 0020904 DIN-0038360 DIN- 09482143
Place : Ahmedabad Date : 30th May, 2024
|