(u) Provisions, contingent liabilities and contingent
assets
Provisions are recognised at present value when the
Company has a present obligation (legal or
constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic
benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the
obligation. The expense relating to a provision is
presented in the Statement of Profit and Loss net off
reimbursement, if any.
Decommissioning costs are provided at the present
value of expected costs to settle the obligation using
estimated cash flows and are recognised as part of the
cost of PPE. The cash flows are discounted at a current
pre-tax rate that reflects the risk specific to the
decommissioning liability. The unwinding of discount is
expensed as incurred and recognised in the Statement
of Profit and Loss as a finance cost. The estimated
future costs of decommissioning are reviewed annually
and adjusted as may be appropriate. Changes in the
estimated future costs or in the discount rate applied
are added to or deducted from the cost of the asset.
Progressive mine closure expenses are accounted for as
and when incurred.
In respect of lignite mines the annual mine closure cost
per hectare is provided as per the mine closure
guidelines issued by the Ministry of Coal from time to
time. As per these guidelines, such annual cost is
modified with reference to Wholesale Price Index (WPI)
as mentioned and considered in the mine closure plan
submitted / approved for the respective mines. The
mine closure provisions are provided in line with the
approved / submitted / prepared / draft mine closure
plans. In case the mine closure plan has not been
submitted / approved / prepared the annual cost is
estimated based on the above referred guidelines.
In respect of mines other than lignite mines, mine
closure activities are carried out as per the approved /
submitted / prepared / draft mine closure plans.
However, in the absence of specific guidelines by Indian
Bureau of Mines (IBM) for making provision for the
annual mine closure cost per hectare, financial
assurance in the form of Bank Guarantee of requisite
amount is submitted to IBM. A certificate/confirmation
is obtained from our technical division for mine closure
activities carried out by the Company either
departmentally or through outside agencies. Expenses
incurred departmentally on mine closure activities are
debited to the respective head of expenses and
provision is made for material shortfall therein, if
advised by the technical division.
Contingent liabilities are not provided for, if material,
are disclosed by way of notes to accounts. Contingent
assets are not recognised in the Standalone Financial
Statements. However, the same is disclosed, where an
inflow of economic benefit is probable.
(v) Cash and Cash Equivalents
Cash and cash equivalents comprise cash and short-term
deposits. The Company considers all highly liquid
investments with an original maturity of three months
or less and that are readily convertible to known
amounts of cash to be cash equivalents.
For the purpose of presentation in the Statement of
Cash Flows, cash and cash equivalents includes cash on
hand, other short term, highly liquid investments with
original maturities of three months or less that are
readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value,
and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the Balance Sheet.
(w) Statement of Cash Flow
Cash flows are reported using the indirect method,
whereby profit before tax is adjusted for the effects of
transactions of a non-cash nature, any deferrals or
accruals of past or future operating cash receipts or
payments and item of income or expenses associated
with investing or financing cash flows. The cash flows
from operating, investing and financing activities of the
Company are segregated.
(x) Dividends
The Company recognises a liability for dividends to
equity holders of the Company when the dividend is
authorised, and the dividend is no longer at the
discretion of the Company. As per the corporate laws in
India, dividend is authorised when it is approved by the
shareholders. A corresponding amount is recognised
directly in equity.
(y) Segment Reporting
The Chief Operational Decision Maker (CODM) monitors
the operating results of its business segments
separately for the purpose of making decisions about
resource allocation and performance assessment.
Segment performance is evaluated based on profit or
loss and is measured consistently with profit or loss in
the Standalone Financial Statements. Operating
segments are reported in a manner consistent with the
internal reporting provided to the CODM.
Accordingly, the Board of Directors of the Company is
CODM for the purpose of segment reporting.
(z) Rounding off
All amounts disclosed in the Standalone Financial
Statements and notes have been rounded off to the
nearest Crore up to two decimal points as per the
requirements of Schedule III, unless otherwise stated.
(aa) Events occurring after the Balance sheet Date.
Adjusting events (that provides evidence of condition
that existed at the Balance Sheet date) occurring after
the Balance Sheet date are recognized in the
Standalone Financial Statements. Material non
adjusting events (that are inductive of conditions that
arose subsequent to the Balance Sheet date) occurring
after the Balance Sheet date that represent material
change and commitments affecting the financial
position are disclosed in the Board's Report.
(bb) Exceptional Items
Certain occasions, the size, type or incidence of an item
of income or expense, pertaining to the ordinary
activities of the Company is such that its disclosure
improves the understanding of the performance of the
Company, such income or expense is classified as an
exceptional item and accordingly, disclosed in the notes
accompanying to the Standalone Financial Statements.
2.01C.01 Gujarat State Electricity Corporation Limited (GSECL) and the Company had agreed to create common amenities (school,
hospital, drinking water supply, communication, transport facilities, etc.) for the employees of both entities and also for general
public in Panandhro in terms of minutes dated 8.10.1991, 3.8.1992, 1.10.1993. These were to be managed by a Trust to be
registered in this regard. Pending formation of the Trust, the capital and revenue expenditure incurred by the Company as well as
GSECL are shared on 50:50 basis and accounted in the books of the respective entity. Share of 50% given by each against the
expenditure incurred by respective entity is subject to confirmation and adjustments, if any. Pending transfer of such assets to the
Trust, capital expenditure incurred in the creation of items of property, plant and equipment towards 50% share of the Company to
the tune of ? 0.59 Crore (31st March, 2024: 0.59 Crore) is accounted in the books of the Company and included in the respective
items of property, plant and equipment.
2.01C.02 The Company does not have any assets under capital work in progress whose completion is overdue or whose costs have
exceeded in original plan.
2.01C.03 The Company has capitalised the borrowing costs amounting to 1.88 Crore (31st March, 2024: Nil Crore). These costs
have been capitalised at weighted average rate of borrowing i.e. 7.25%.
2.11.01 Other bank balances include restricted bank balances on account of Unpaid dividend, Fixed deposits for Security against
borrowings (overdraft facility)/ Bank Guarantees, Security against guarantees and Security against other commitments as stated
above.
Pending clearance of the title of the land, sale deed in respect of the land of the cement plant at Hadad sold earlier, was not
executed and an amount of 0.25 Crore (31st March 2024: 0.25 Crore ) was recoverable from the buyer on execution of sale deed.
The said amount has been deposited by the party before the Danta Court and in turn the Court has directed to the Company to
deposit the said amount with a nationalised bank in the form of FDR with a lien marked in favour of Danta Count. Accordingly, the
Company has placed the same with Union Bank of India, Vastrapur Branch, Ahmedabad.
2.34.01 During the year, royalty on account of sale of Bauxite has been accounted for ? 37.28 crore ( 2023-24: 24.08 crore) on ad
hoc basis as intimated by the Commissioner of Geology and Mining. Necessary adjustment shall be made in the accounts after final
outcome of the matter.
2.34.02 In the view of the Supreme Court's decision in respect of mining activities, applications made by the Company for renewal of
leases covering 2,040 ( 2023 -24 : 2,040) hectares of land at Panandhro lignite mine for extracting lignite are pending since 1993-94.
Necessary adjustment in respect of liability for any charges, taxes, duties etc. will be provided in accounts on finalisation of renewal
applications.
2.34.03 During the year, the Company has written off ? 0 Crore (2023- 24: 0.15 crore) and written back 0 Crore ( 2023 -24: 2.82
Crore) in the books of account. In the opinion of the management, such amounts are no longer receivable / payable. Net effect
thereof is written off / (back) to the Statement of Profit and Loss amounting to 0 Crore (2023-24: 2.67) Crore).
2.34.04 In compliance with Section 135(5) of the amended Companies Act, 2013, the Company has spent ? 78.44 crore ( 2023-24:
? 18.30 crore) against the minimum statutory requirement of spending ? 21.38 crore ( 2023-24 : ? 16.27 crore) (based on average
net profit of last 3 years) during the year towards Corporate Social Responsibility (CSR) Expense.
NOTE 2.41 EVENTS OCCURRING AFTER THE REPORTING PERIOD
The Standalone Financial Statements were approved and authorized for issue in accordance with a resolution passed in Board of
Directors meeting held on 15 th May, 2025.
The Board of Directors, in its meeting on 15 th May, 2025, have proposed a final dividend of ? 10.10 per equity share (Face Value of
? 2 each) for the financial year ended on 31st March 2025. The proposal is subject to the approval of shareholders at the Annual
General Meeting and if approved would result in a cash outflow of approximately ? 321.18 Crore.
The Board of Directors, in its meeting on 27th May, 2024, had proposed a final dividend of 9.55 per equity share (Face Value of
? 2 each) for the financial year ended on 31st March, 2024. The proposal was approved by the shareholders at the annual general
Meeting and this resulted in cash outflow of approximately of ? 303.69 Crore.
NOTE 2.42 In the opinion of Management, any of the assets other than items of property, plant and equipment, investment
properties, intangible assets and Non-Current Investments have a value on realisation in the ordinary course of business at least
equal to the amount at which they are stated, unless otherwise stated.
NOTE 2.43 Balances of trade payables, trade receivables, loans & advances, advances from customers, other non-current/current
liabilities, etc. are subject to confirmation and adjustments, if any, in the accounts.
NOTE 2.44 On periodical basis and as and when required, the company reviews the carrying amounts of its assets.
During the year 2020-21, the Company had booked an impairment loss of ? 396.59 Crore for Akrimota Thermal Power Station
(ATPS). Considering very low Plant Load Factor (PLF) during the years 2021-22 to 2023-24, review for possible reversal of
impairment in ATPS up to the year 2023-24 has not been considered.
During the current year, although Power Purchase Agreement (PPA) between the Company and GUVNL has been approved by
Gujarat Electricity Regulatory Commission (GERC), the financial implications thereof could not be ascertained as the Company is in
the process of major overhauling of ATPS for most of the period and during the year 2024-25 and the same is still in progress, the
generation was not possible. The same will be considered after it is completed and based thereon the PLF would increase
substantially as planned.
NOTE 2.46 SEGMENT INFORMATION
(a) Description of segment and principal activities
The Chief Operational Decision Maker (CODM) monitors the operating results of its business segments separately for the
purpose of making decisions about resource allocation and performance assessment, and accordingly, the Company has
identified two reportable operating segments viz. Mining and Power. Operating segments have been identified and reported
in a manner consistent with the internal reporting provided to the CODM.
(b) Segment revenue and expenses
Revenue and expenses have been identified to a segment on the basis of relationship to operating of the segment. Revenue
and expenses which relate to enterprise as a whole and are not allocable to a segment on a reasonable basis have been
disclosed as "Unallocated".
(c) Segment assets and liabilities
Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets
and other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as
"Unallocated".
(d) Secondary segment reporting
The Company does not have geographical distribution of revenue as the operations of the Company are carried out within India
and hence secondary segmental reporting based on geographical locations of its customers is not applicable to the Company.
(e) Information about major customers
Revenue from power segment (which exceeds 10% of total segment revenue) amounting to ? 160.27 Crore (2023-24 :
? 248.33 Crore) is derived from a single customer and revenue from mining segment (which exceeds 10% of total segment
revenue) amounting to ? 155.40 Crore (2023-24: ? 151.25 Crore) is derived from a single customer.
(f) Information about product and services
The Company's revenue from external customers for each product is the same as disclosed below under "Segment Revenue":
Input Level-I (Directly Observable) which includes quoted price in active markets for identical assets such as quoted price for an
equity Security on Security Exchanges.
Input Level-II (Indirectly Observable) which includes prices in active markets for similar assets such as quoted price for similar
assets in active markets, valuation multiple derived from prices in observed transaction involving similar businesses
etc.
Input Level-III (Unobservable) which includes management's own assumptions for arriving at a fair value such as projected cash
flows used to value a business etc.
B. Measurement of Fair values
i) Valuation techniques and significant unobservable inputs
The following are the valuation techniques used in measuring Level 3 fair values as well as the significant unobservable inputs used.
Financial instruments measured at Fair value
FVTOCI in unquoted equity shares:
Gujarat State Petroleum Corporation Limited
1. Market approach : This approach uses information generated by market transactions of the Company being valued or the
transactions of comparable companies. The following market-linked information may be used for determining valuation under this
approach:
- Quoted price of the Company being valued;
- Past transaction value of the Company being valued;
- Listed comparable companies' trading multiples like price to earning ratio, enterprise value to earning before interest, tax,
depreciation and amortisation, enterprise value to sales etc;
- Transactions multiples for investment / M & A transaction of comparable companies.
The valuation arrived at based on the market approach reflects the current value of the Company perceived in the active market.
However, as the valuation arrived at using market multiples is based on the past/current transaction or traded values of comparable
companies/businesses, it may not reflect the possible changes in future trend of cash flows being generated by a business.
2. Income Approach : The income approach reflects present value of future cash flows. For valuing a business, the discounted cash
flow (DCF) methodology is used under this approach. This methodology works on the premise that the value of a business is
measured in terms of future cash flow streams, discounted to the present time at an appropriate discount rate. This method is used
to determine the present value of business on a going concern assumption. The DCF technique recognizes the time value of money.
The value of the firm is arrived at by estimating the Free Cash Flow to Firm (FCFF) and discounting the same at the Weighted Average
Cost of Capital (WACC). FCFF is estimated by forecasting free cash flows available to the firm (which are derived on the basis of the
likely future earnings of the Company).
3. Cost Approach : The cost approach essentially estimates the cost of replacing the tangible assets of the business. The
replacement cost takes into account the market value of various assets or the expenditure required to create the infrastructure
exactly similar to that of a company being valued.
Significant unobservable inputs
Highest priority is given to unadjusted quoted price of listed entities and lowest priority to non-market linked inputs such as future
cash flows used in income approach.
Inter-relationship between significant unobservable inputs and fair value measurement
The estimated fair value would increase (decrease) if there is a change in significant unobservable inputs used in determination of
fair value.
Considering the diverse asset and investment base of the Company with differing risk/return profiles, a sum of the parts approach
has been adopted for the valuation. Under this method, the value of each distinct business/asset/investment has been arrived at
separately and total value estimate for the Company presented as the sum of all its business/assets/investments.
Gujarat Guardian Limited
Fair value is determined using the ratio of enterprise value to EBITDA adjusted for the industry average. The industry average has
been computed using peer companies. Further, in the absence of latest valuation report of Gujarat Guardian Limited, the fair value
is determined based on valuation report as on 31st December, 2024. Once the latest valuation report is available, appropriate
changes would be made in the subsequent periods.
Gujarat Industrial And Technical Consultancy Organisation Limited (GITCO) and Gujarat Informatics Limited
In the absence of sufficient information for determination of fair value, the Company has determined the same using net worth as
reflected in the financial statements as at the each reporting date. Management is of the view that the value so determined are
reflective of the fair values. Further, in the absence of the audited financial statements of GITCO and Gujarat Informatics Limited,
the fair value is determined based on unaudited financial statements for the year ended 31st March, 2025 and 31st March, 2022
respectively. Once the audited financials are available, appropriate changes would be made in the subsequent periods.
Sensitivity analysis - Investments in unquoted equity instruments
On account of lack of sufficient information as at the end of reporting period and nature of investments, the management is of the
view that it is impracticable to determine the sensitivity of the fair values to changes in the underlying assumptions.
C. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
• Credit risk ;
• Liquidity risk ; and
• Market risk.
Risk management Framework
The Company has a well-defined risk management framework. The Board of Directors of the Company has adopted a Risk
Management Policy. The Company has also set up a Risk Management Committee.
Looking to the profile of the Company, i.e., Mining and Power Operations, the Company has inbuilt risk management practices to
address various operational risks. The Company has standard operating processes for various mining operations in order to mitigate
procedures and prevent risk arising out of various operations. The Company primarily deals with natural resources. Hence, Policy of
Government may impact the Company's operational strategy. The Company's risk management process revolves around following
parameters:
1. Risk Identification and Impact Assessment
2. Risk Evaluation
3. Risk Reporting and Disclosure
4. Risk Mitigation
(i) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Company's receivables from customers.
Other financial assets
The Company maintains its Cash and cash equivalents and Bank deposits with banks having good reputation, good past track record
and high quality credit rating and also reviews their credit-worthiness on an on-going basis.
Trade and other receivables
Trade receivables of the Company are typically unsecured, except to the extent of advance received against sales for sale of lignite.
Credit risk is managed through credit approvals and periodic monitoring of the creditworthiness of customers to which Company
grants credit terms in the normal course of business. The Company performs ongoing credit evaluations of its customers' financial
condition and monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business.
Significant portion of trade receivables at the respective reporting date comprise of State Governments' PSUs. Management does
not expect any credit risk on the same. The allowance for impairment of trade receivables is created to the extent and as and when
required, based upon the expected collectability of accounts receivables.
Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on
historical payment behaviour and extensive analysis of customer credit risk, including underlying customers' credit ratings if they
are available.
Management estimates that there are no instances of past due or impaired trade and other receivables.
(ii) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as
possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Company's reputation.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and
undiscounted, and include estimated interest payments and exclude the impact of netting agreements, if any.
(iii) Market Risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the
Company's income or the value of its holdings of financial instruments.
Currency risk
The functional currency of the Company is Indian Rupees.
The Company does not use derivative financial instruments for trading or speculative purposes. As the Company does not engage in
foreign exchange transaction, it is not exposed to currency risk.
Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of
changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk
is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest
rates. The Company has outstanding borrowing of ? 122.79 Crore as on 31st March, 2025 (? Nil at 31st March 2024). Since the the
borrowing is the fixed rate, the Company is not exposed to changes in interest rate.
Price Risk
The Company's exposure to equity securities price risk arises from investments held by the Company and classified in the balance
sheet as fair value through other comprehensive income (FVTOCI). Some of the equity investments are publicly traded and are
included in the NSE Nifty 50 Index.
Sensitivity
The table below summarises the impact of increases/decreases of the index on the Company's equity and other comprehensive
income for the period. The analysis is based on the assumption that the index had increased by 20% or decreased by 20% with all
other variables held constant and that the Company's quoted equity instruments moved in line with the index. The % have been
determined considering average of the actual movements in quoted prices of equity shares held as investments as at 31st March,
2025.
NOTE 2.53 RECENT PRONOUNCEMENTS
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian
Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2025, MCA has notified Ind AS 117
- Insurance Contracts and amendments to Ind AS 116 - Leases, relating to sale and leaseback transactions, applicable to the
Company w.e.f. April 1, 2024. The Company has reviewed the new pronouncements and based on its evaluation has determined
that it does not have any significant impact in its financial statements.
As per our report of even date attached For and on behalf of the Board of Directors,
For Dhirubhai Shah & Co LLP Anupma Iyer Roopwant Singh, IAS
Chartered Accountants General Manager (Accounts) & Managing Director
FRN: 102511W/W100298 Chief Financial Officer DIN: 06717937
CA Parth S. Dadawala Joel Evans Prof- Shailesh Gandhi
partner Company Secretary Director
M. No. 134475 DIN - 02685385
Place: Ahmedabad Place: Ahmedabad
Date: 15 May, 2025 Date: 15 May, 2025
|