3.13 Provisions, Contingent Liabilities and Contingent Assets
(a) Provisions
Provisions for legal claims are recognized when the Company has a present legal or constructive obligation
as a result of past events, it is probable that an outflow of resources will be required to settle the obligation
and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an
outflow with respect to any one item included in the same class of obligations may be small. 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 isrecognized as interest expense.
(b) Contingent liabilities
Contingent liabilities are disclosed when there is a possible obligation arising from past events the existence of which
will be confirmed only by the occurrence or non- occurrence of one or more uncertain future events not wholly
within the control of the Company or a present obligation that arises from past events where it is either not probable
that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
(c) Contingent Assets
Contingent Assets are disclosed, where an inflow of economic benefits is probable.
4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the Company's Financial Statements requires management to make judgement, estimates and assumptions
that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. 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 next financial years. This note provides an overview of the areas that involved a higher degree
of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions
turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is
included in relevant notes together with information about the basis of calculation for each affected line item in the standalone
financial statements.
(i) Estimation of useful life of Property, Plant and Equipment
Estimates are involved in determining the cost attributable to bringing the assets to the location and condition necessary
for it to be capable of operating in the manner intended by the management. Property, Plant and Equipment/Intangible
Assets are depreciated/amortised over their estimated useful life, after taking into account estimated residual value.
Management reviews the estimated useful life and residual values of the assets annually in order to determine the amount
of depreciation/ amortisation to be recorded during any reporting period. The useful life and residual values are based on
the Company's historical experience with similar assets and take into account anticipated technological and future risks.
The depreciation/ amortisation for future periods is revised if there are significant changes from previous estimates.
(ii) Estimation of Provision
The timing of recognition and quantification of the liability (including litigations) 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.
The Company writes down inventories to net realizable value based on an estimate of the realizability of inventories. The
identification of write-downs requires the use of estimates of net selling prices of the down-graded inventories. Where
the expectation is different from the original estimate, such difference will impact the carrying value of inventories and
write-downs of inventories in the periods in which such estimate has been changed.
(iii) Estimated fair value of Financial Instruments
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.
The Management uses its judgment to select a variety of methods and make assumptions that are mainly based on market
conditions existing at the end of each reporting period.
(iv) Estimation of Contingent Liabilities
The Company exercises judgment in measuring and recognizing provisions and the exposures to contingent liabilities
which is related to pending litigation or other outstanding claims. Judgement is necessary in assessing the likelihood that
a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because
of the inherent uncertainty in this evaluation process, actual liability may be different from the originally estimated as
provision.
Nature and purpose of other equity
(i) Securities Premium
Securities premium is used to record the premium on issue of shares. The reserve is utilized in accordance with the
provisions of the Companies Act, 2013
(ii) 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.
(iii) Retained Earnings
Retained earnings comprises of prior years as well as current year's undistributed earnings after taxes.
(iv) Foreign currency transalation reserves
Foreign currency transalation reserves represents the cumulative effect of exchange rate fluctuations when translating
the financial statements of foreign branch into Indian reporting currency and it is an item of other comprehensive income.
(v) Money received against share warrants
Money received against Share Warrants represents amounts received towards warrants which entitles the warrant holders
the option to apply for and be allotted equivalent number of equity shares of the face value of ^5/ each.
During the financial year 2023-24, the Company had issued to its Promoters Group 25,00,000 warrants at a price of ^
183.50 each entitling them for subscription of equivalent number of Equity Shares of ^ 5/- each (including premium of ^
178.50/- each Share) under Regulation 28(1) of the SEBI (LODR) Regulations, 2015. The holder of the warrants would need
to exercise the option to subscribe to equity shares before the expiry of 18 months from the date of allotment made on
01st December,2024 upon payment of the balance 75% of the consideration of warrants.
During the financial year 2024-25, the promoter Group has not excercised the option to convert the warrants into equity
shares. Balance warrants pending as on March 31 2025 to be exercised are 25,00,000 (Previous year: 25,00,000).
Secured Foreign currency term loans from banks:
1 State Bank of India - Nature of security and terms of repayment and interest
A Nature of security
Foreign Currency Term Loan is secured by way of registered mortgage of
i) First pari passu charge by leasehold land & building on Plot No. 258A (16500 Sq Mtr), 258C (15400 Sq Mtr), 257 B,
258 B (45277.67 Sq. Mtr), 269B (6908.50 Sq Mtr) and 258D (4821 Sq. Mtr), Industrial Area. Sector No.I, Pithampur
District Dhar (MP) - 454775, total admeasuring land area 88907.17 Sq. Mtr.
ii) First pari passu charge by Industrial Land & Building on Survey No. 485/2, 485/3, 485/4,485/5,495, 496, 497, 498,
499, 500, 502/1,502/2, Village Moti Khedop, Taluka - Anjar, Dist Kutch, Gujarat - 370130 total admeasuring land
of area of 56 acres approx. 249076.40 Sq. mtrs.
iii) First hypothecation charge on entire movable assets including Plant & Machinery of the Company, both present
and future.
iv) Secong charge on of the entire current assets of the Company, both present and future except the stock and
receivables pertaining to the project specific limits sanction by other lenders.
v) Pledge of 65,00,000 shares of the Company by the promoters and 18,789 equity shares held in Merino Shelters
Pvt. Ltd.
vi) Personal Guarantees of Promoters - Mr. Rameshchandra Mansukhani and Mr. Nikhil Mansukhani.
1 Working capital demand loan from banks - Nature of security and terms of repayment and interest
Working capital loan from banks includes Cash credit
(i) Nature of security
Working Capital facilities by banker's are secured by
i ) First ranking pari passu hypotheation/ charge amongst the said Banks over the entire current assets of the
Borrower, including but not limited to the current assets stored and / or lying inside the Borrower's factories,
godowns, warehouses, offices, premises and such other places as approved by the said Banks from time to time,
including the stocks of raw materials, semi-finished and finished goods, stores and spares not relating to plant
and machinery (consumbale stores & spares), bill receivable and book debts, both present and future excluding
such movables as may be permitted by the said Banks from time to time (except the stock and receivables
pertaining to the project specific limits sanction by other lenders).
ii) Second pari passu charge mortgage/hypothecation/charge, as the case may be, on all the movable and
immovable fixed assets of the Borrower including the windmills located at Taluka Abdasa, Kutch in the State of
Gujarat and the movable and immovable fixed assets and properties located at:
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
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(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.
Risk Management is an integral part of the business practices of the Company. The framework of Risk Management concentrates
on formalising a system to deal with the most relevant risks, building on existing Management practices, knowledge and
structures. The Company has developed and implemented a comprehensive Risk Management System to ensure that risks
to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely
basis. While defining and developing the formalised Risk Management System, leading standards and practices have been
considered. The Risk Management System is relevant to business reality, pragmatic and simple and involves the following:
i. Risk identification and definition - Focused on identifying relevant risks, creating, updating clear definitions to ensure
undisputed understanding along with details of the underlying root causes contributing factors.
ii. Risk classification - Focused on understanding the various impacts of risks and the level of influence on its root causes.
This involves identifying various processes generating the root causes and clear understanding of risk interrelationships.
iii. Risk assessment and prioritisation - Focused on determining risk priority and risk ownership for critical risks. This involves
assessment of the various impacts taking into consideration risk appetite and existing mitigation controls.
iv. Risk mitigation - Focused on addressing critical risks to restrict their impact(s) to an acceptable level (within the defined
risk appetite). This involves a clear definition of actions, responsibilities and milestones.
v. Risk reporting and monitoring - Focused on providing to the Board and the Audit Committee periodic information on risk
profile evolution and mitigation plans.
a) Management of liquidity risk
The Company's principal sources of liquidity are cash and cash equivalents, borrowings and the cash flow that is generated
from operations. The Company believes that current cash and cash equivalents, tied up borrowing lines and cash flow that
is generated from operations is sufficient to meet requirements. Accordingly, liquidity risk is perceived to be low.
The following table shows the maturity analysis of the Company's financial liabilities based on contractually agreed
undiscounted cash flows as at the Balance sheet date:
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.
Trade receivables
Concentrations of credit risk with respect to trade receivables are limited, due to the Company's customer base being large,
diverse and across sectors and countries. All trade receivables are reviewed and assessed for default on a quarterly basis.
Our historical experience of collecting receivables is supported by low level of past default and hence the credit risk is perceived
to be low.
Other financial assets
The Company maintains exposure in cash and cash equivalents, term deposits with banks, and loans to subsidiary companies.
Individual risk limits are set for each counter-party based on financial position, credit rating and past experience. Credit limits
and concentration of exposures are actively monitored by the Treasury department of the Company.
Notes:
1 Total debt = Non-current borrowings and Current borrowings
2 Earning for debt service = Profit for the year Non-cash operating expenses like depreciation and other amortizations
Interest expenses
3 Debt service = Interest and principal repayments including lease payments
4 Cost of Goods Sold = Cost of material consumed Purchases of stock-in-trade Changes in inventories of finished goods,
stock-in-trade and work-in progress Manufacturing Expenses under Other Expenses
5 Working capital = Current assets (-) Current liabilities
6 Capital employed = Tangible net worth Total debt
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41 Other Statutory Information
i The Company does not have any Benami property, where any proceeding has been initiated or pending against the
Company for holding any Benami property.
ii The Company has no transactions with struck off companies .
iii The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.
iv The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
v 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:
(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
vi 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 Group 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,
vii The Company has not 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
viii The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets
during the year ended March 31,2025.
ix Particulars of loan to Promoters,Directors,Key Managerial Personnel & Related Parties Which are repayable on demand are
given below :-
As required by section 186(4) of the Companies Act, 2013, the Company has disclosed the loan given, guarantee given or
security given under the respective head in the financial statements. Further, the loan given are for busniess purpose.
x The Company has not defaulted in repayment of loans, or other borrowings or payment of interest thereon to any
lender.
xi The Company has not been declared willful defaulter by any bank, financial institution, government or government
authority.
xii The quarterly returns/statements filed by the Company with the banks are in agreement with the books of accounts of the
company.
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42 During the FY 2021-22, Securities and Exchange Board of India (SEBI) had initiated a forensic audit and based on the report
issued show cause notice to the Company. The Company filed the settlement application with SEBI and the same is sub-judice
before Hon'ble Bombay High Court due to non-consideration of Settlement Application by SEBI.
43 The SEBI matter in relation to the non-consolidation of accounts of Subsidiary Company and other issues was referred by SEBI
to the Ministry of Corporate Affairs (MCA). On the basis of the same, Ministry of Corporate Affairs, Registrar of Companies,
Mumbai issued a notice to the Company and its Directors under Section 206(5) of the Companies Act, 2013. In view of the
above, the Company and its Directors have suo-moto filed the Compounding / Regularisation Applications with the Ministry
of Corporate Affairs, Office of the Regional Director, Western Region, Mumbai to settle the matter and the same is pending for
settlement.
44 The Company is having single segment i.e. "Steel Pipes".
45 Events after the reporting period
There were no events that occurred after the reporting period i.e. March 31,2025 up to the date of approval of the financial
statements that require any adjustment to the carrying value of assets and liabilities.
46 Expected credit loss represents an allowance for life time expected loss on the carrying value of trade receivables, which has
been recognised in accordance with simplified approach as permitted by IND-As 109 - "Financial instruments"
47 Previous year's figures have been regrouped or reclassified to confirm to current year's presentation , wherever considered
necessary.
As per our report of the even date
For A Sachdev & Co. For and on behalf of Board of Directors
Chartered Accountants R C Mansukhani Nikhil Mansukhani Renu P Jalan Rabi Bastia
Firm registration number : 001307C Chairman Managing Director Director Director
DIN - 00012033 DIN - 02257522 DIN - 08076758 DIN - 05233577
Manish Agarwal Narendra S. Mairpady Sandeep Kumar Rahul Rawat
Partner Director Chief Financial Officer Company Secretary
Membership No.: 078628 DIN - 00536905
Place : Mumbai
Date : May 12, 2025
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