Note -
The Company is subject to tax assessments and ongoing proceedings, which are pending before various Tax Appellate Authorities. Management periodically evaluates the positions taken in tax returns with respect to above matters, including unresolved tax disputes, which involves interpretation of applicable tax regulations and judicial precedents. Current tax liability and tax asset balances are presented, after recognising as appropriate, provision for taxes payable and contingencies basis management's assessment of outcome of such ongoing proceedings and amounts that may become payable to the tax authorities. Considering the nature of such estimates and uncertainties involved, the amount of such provisions may change upon final resolution of the matters with tax authorities.
9.6 No element of financing is deemed present as the sales are generally made with a credit term which is consistent with market practice.
9.7 There are no "unbilled" and "disputed" trade receivables, hence the same are not disclosed in the ageing schedule.
9.8 In determining allowance for credit losses of trade receivables, the Company has used the practical expedient by computing the expected credit loss allowance based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on ageing of the receivables and rates used in the provision matrix.
13.2 Rights, Preferences and restrictions attached to equity shares
The company has only one class of equity shares having a par value of H 10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of shareholders. In the event of liquidation of the company, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.
13.5 Additional Disclosure in the respect of Equity Share
(a) The Company does not have any Holding Company or Ultimate Holding Company.
(b) No ordinary shares have been reserved for issue under options and contracts/commitments for the sale of shares/ disinvestment as at the Balance Sheet date.
(c) The Company has not bought back any shares during the period of five years preceding the date at which the Balance Sheet is prepared.
Description of nature and purpose of each reserve
Securities Premium
This reserve is used to record the premium received on issue of shares. The reserve is utilised in accordance with the provisions of Companies Act, 2013.
Retained Earnings
It comprises of accumulated profit/(losses) of the company.
6% Redeemable Preference Shares
The CCPS was converted to 6% Redeemable Preference Shares under section 48 of the Companies Act, 2013 and the Article 10 of the Articles of Association of the Company which is ratified in writing by holders of atleast 3/4th of nominal value of issued Preference Shares. The company will convert the same into CCPS and subsequently into equity in future.
Equity Component of Optionally Convertible Debenture
This contains the equity portion of the Optionally convertible debentures issued in lieu of long term borrowings as per the terms of the restructuring scheme.
Equity Instruments through Other Comprehensive Income
The Company has elected to recognise changes in the fair value of quoted investments in equity securities in OCI. These changes are accumulated within the FVOCI equity investment reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
15.1 Terms of Repayments
a) Term Loan facilities from banks are secured by first pari-passu charge on the entire fixed assets (both present & future) and Second pari-passu charge on the entire current assets (both present & future) of the company's manufacturing facilities situated at Jamgaon, Raigarh in the state of Chhattisgarh. Personal guarantee of Puranmal Agrawal, Suresh Kumar Agrawal, Manish Agrawal and Saket Agrawal is given alongwith corporate guarantee of M/s Ilex Pvt Ltd. Corporate Guarantee is restricted to the extent of shares pledged of the promoter group companies. The interest rate on the domestic long term borrowings are of 2.90% above 6 months MCLR. The Term Loan facilitated from the bank is repayable in 30 Quarterly Instalments from December 2017. Last instalment due in September 2025.
b) The Company has issued 451,970,554 nos. of OCDs amounting to H 451,97.05 lakhs during the year 201718. The OCDs shall have moratorium period of 7 years and shall be repayable in 36 structured quarterly instalments starting from December, 2024 and maturing on September 2033. The OCDs shall carry a coupon rate of 0.01% pa. payable quarterly till maturity. The OCDs will be converted to Equity at the option of the Debenture holders. OCDs may be redeemed alongwith a redemption premium. The redemption premium will be calculated with YTM @ 2.00% p.a. compounded quarterly. As per valuation report and relevant IND AS, PV of OCD as on the OCD issuing date i.e. March 21, 2018 is H 166.90 crore which has been treated as financial liability and balance of H 285.07 crore has been treated as other equity. Subsequently interest expenses (the unwinding of the discount) have been booked at market rate (11.5%) to unwind the liability component to the extent of value of OCD.
c) Pursuant to the scheme for restructuring of loan as approved by the Overseeing Committee (OC) of Reserve Bank of India and agreement dated 24.01.2018 , the Promoter / Promoters' group has transferred 12,85,78,044 equity shares, at H 10/- per equity share of H 12857.80 lakhs, to JLF lenders, as a part payment of unsustainable debt and the same is treated as unsecured loan and shall always be subordinated to the existing senior debt of the borrower.
d) Rate of Interest for the loan from the related parties is maximum being 10%.
17.1 Terms and conditions attached to Short term borrowings from banks
(a) Cash Credit facilities from banks are secured by first pari-passu charge on the entire current assets (both present & future) and Second pari-passu charge on the entire fixed assets (both present & future) of the company's manufacturing facilities situated at Jamgaon, Raigarh in the state of Chhattisgarh. Personal guarantee of Puranmal Agrawal, Suresh Kumar Agrawal, Manish Agrawal and Saket Agrawal is given alongwith corporate guarantee of M/s Ilex Pvt Ltd. Corporate Guarantee is restricted to the extent of shares pledged of the promoter group companies. The rate of interest on cash credit is 2.75% above 6 month MCLR.
(b) The Intercorporate loans carry an interest rate of 9.85% p.a (Previous Year - 9.85%)
17.2 Refer Note No. 45 in the respect of Quarterly Return/Statement filed with the bank in lieu of sanctioned working capital facilities.
18.1 rade Payables include acceptances and arrangements where operational suppliers of goods and services are paid by banks while the company continues to recognise the liability till settlement with the banks which are normally effected within a period of 90 or 180 days amounting to H 7, 602.70 lakhs ( previous year H 8,867.75 lakhs)
On the basis of physical verification of non-current assets and cash generation capacity of those assets, in the management perception, there is no impairment of non current assets as on 31st March 2024. Based on the registered valuers' valuation report, the management has recognised an impairment reversal on the investment in its Joint Venture Madanpur South Coal Company Limited of H 30.75 Lakhs for the FY 2022-23.
C. The Taxation Laws (Amendment) Ordinance 2019 was promulgated on September 20, 2019. The Ordinance amends the income tax Act 1961 and the Finance Act 2019. The Ordinance provides domestic companies with a non-reversible option to opt for lower tax rates, provided they do not claim certain deductions. The company has evaluated the same and decided to continue with the existing tax structure until utilisation of accumulated minimum alternate tax (MAT) , tax incentives and other deductions available to the Company
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 recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 (g) to the financial statements.
ii) Fair values hierarchy
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:
Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in quoted equity shares.
Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level of hierarchy includes Company's over-the-counter (OTC) derivative contracts.
Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
iii) Valuation process and technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
(a) Quoted investments (Equity Shares)- Market Value
(b) Unquoted Investments - As determined by Independent Valuer. The equity shares of H 4,020.66 Lakhs (31.03.2023 - H 4,092.53 lakhs) are not listed. Fair value estimates of equity investments are included in level-3 and are based on information relating to value of investee company's net assets and DCF methods.
(c) The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
35. Financial Risk Management, Objectives and Policies
A) Capital Management
i) Risk Management
The Company's objectives when managing capital are to
- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
- maintain an optimal capital structure to reduce the cost of capital
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Company monitors capital on the basis of net debt to equity ratio and maturity profile of overall debt portfolio of the Company.
Net debt implies total borrowings of the Company comprises all components attributable to the owners of the Company
No changes were made in the objective policies & process for expenditure as on 31st March 2024 & 31st March 2023.
ii) Dividends
The company has not declared/paid any dividend for FY 2022-23 and no dividend has been proposed for FY 2023-24.
The Company's activities expose it to market risk, liquidity risk and credit risk. In order to minimise any adverse effects on the financial performance of the Company, the company has risk management policies as described below :-
i) Credit risk
Credit risk refers to the risk of financial loss arising from default / failure by the counterparty to meet financial obligations as per the terms of contract. The Company is exposed to credit risk for receivables, cash and cash equivalents. None of the financial instruments of the Company result in material concentration of credit risks.
Customer credit risk is managed by the Company's established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored and reconciled. Based on historical trend, industry practice and the business environment in which the company operates, an impairment analysis is performed at each reporting date for trade receivables. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 9.
Credit Risk on cash and cash equivalent, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions who have been assigned high credit rating by international and domestic rating agencies.
ii) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company's treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company's liquidity position through rolling forecasts on the basis of expected cash flows.
C) Market Risk
i) Foreign currency risk
The company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the company's functional currency.
Nominal value of forward contracts & option contracts that hedge monetary labilities in foreign currencies, and for which no hedge accounting is applied, are recognised in the Statement of profit and loss. The value of such contracts amount to H Nil (previous year - H 2532.00 lakhs)
The Company enters into certain derivative contracts to hedge risks which are not designated as hedges. Such contracts are accounted for fair value through profit and loss and are included in other income / expenses.
ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's short term borrowing and long term borrowings with floating interest rates. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.
D) Other Price Risk
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. Other price risk arises from financial assets such as investments in equity instruments and bonds. The Company is exposed to price risk arising mainly from investments in equity instruments recognised at FVTOCI.
b) The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period when the Code becomes effective.
c) Capital Commitment
The capital commitment for the company amounts to H nil (h nil)
37. The Company did not raise any term loans or no new working capital borrowings have been sanctioned the current year. Accordingly, the Company does not have any charges to be filed or satisfaction which is yet to be registered with ROC beyond the statutory period.
38. The company has not filed any Scheme of Arrangements in terms of sections 230 to 237 of the Companies Act, 2013 with any Competent Authority.
39. Short Term Leases
The Company's leasing arrangements are in respect of short term leases for office premises at Kolkata and Raigarh, depot at Raipur & guest houses at Raigarh, Gairkata, Keonjhar, Vishakapatnam and Kolkata. These leasing arrangements which are cancellable for period of 11 months and the Company has elected not to recognize ROU assets and lease liabilities for short term leases and recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. The Company has paid lease rentals of H 157.00 Lakhs ( Previous year - H 75.84 Lakhs). The company also hires equipments on short term contract basis, and has paid H 1,942.30 Lakhs (Previous year - H 1,854.18 Lakhs) against it during the year which is included in other miscellaneous expenses.
Defined Benefit Plan:
a) Gratuity Plan
Every employee who has completed five years or more of service is entitled to gratuity on terms not less favourable than the provisions of the Payment of Gratuity Act, 1972. The present value of defined obligation and related current cost are measured using the Projected Unit Credit Method with actuarial valuation being carried out at Balance Sheet date.
b) Risk Exposure
Defined benefit plans expose the Company to the following types of actuarial risks:
Interest rate risk: The Plan exposes the company to the risk of fall in interest rates . A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements.)
Liquidity Risk: This is the risk that the company is not able to meet the short term gratuity payouts .This may arise due to non availability of enough cash / cash equivalent to meet the liabilities or holding of liquid assets not being sold in time.
Salary Escalation Risk: The Present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participate in future . Deviation in the rate of increase of salary in future for plan participant from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan's liability.
Demographic risk: The company has used certain mortality and attrition assumption in valuation of the liability . The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.
Regulatory Risk: Gratuity benefit is paid in accordance with the requirement of the Payment of Gratuity Act, 1972 (as amended from time to time). There is risk of change in regulation requiring higher gratuity payout (e.g. Increase in the maximum limit on gratuity of H 20,00,000).
Asset Liability Mismatching or Market Risk: The duration of the liability is longer compared to duration of assets, exposing the Company to market risk for volatilities/fall in interest rate.
Investment Risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular Investment.
The Gratuity Scheme is invested in policies offered by Life Insurance Corporation (LIC) of India . The information on the allocation of the fund into major asset classes and expected return on each major class are not readily available. The expected rate of return on plan assets is based on market expectations, at the beginning of the period, for returns over the entire life of the related obligation.
i) Asset Liability Matching Strategy
The company has purchased insurance policy which is basically a year on year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The Insurance company as a part of policy rules makes payment of all gratuity outgoes happening during the year (subject to sufficiency of fund under the policy). The Policy, thus mitigate the liquidity risk. However, being cash accumulation plan the duration of assets shorter compared to the duration of liabilities. Thus the company is exposed to movement in interest rate (in Particular the significant fall in interest rate which should result in a increase in liability without corresponding increase in assets).
k) The company expect to contribute H 266.46 Lakhs (Previous Year - H 355.34 Lakhs) during the next annual reporting Period to gratuity fund.
l) As at 31st March 2024, the weighted average duration of the defined benefit obligation was 12 years (previous year- 12 years).The distribution of the timing of benefits payment i.e., the maturity analysis of the benefit payments is as follows :
m) Sensitivity Analysis
Significant actuarial assumption for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possibly changes of the assumption occurring at the end of the reporting period, while holding all other assumption constant.The result of sensitivity assumption is given below:
42. Segment information
The Company is engaged in manufacturing of "Iron and Steel". Consequent to the adoption of IND-AS, the company has identified one operating segment viz, "Iron and Steel", which is consistent with the internal reporting provided to the managing director who is the chief operating decision maker of the company. The information relating to revenue from external customers and location of non-current assets of its single reportable segment has been disclosed as below:
Information about major customers
Total amount of revenues from customers (each exceeding 10% of total revenues of the Company) is H Nil (Previous Year H Nil Lakhs) reported under Iron & Steel segment.
43. Corporate social responsibility
As per Section 135 of the Companies Act, 2013, a company meeting the applicable 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 in accordance to the CSR Policy of the Company which includes Rural Development Project, eradicating hunger, poverty and malnutrition, healthcare and sanitation, animal welfare, etc. A CSR committee has been formed by the Company as per the Act.
Note 1 - Statements are being filed with bankers on the basis of provisional figures since the final figures are made available at a later date. The Company has not claimed Drawing Power(DP) on certain current assets. DP is calculated as per norms of lenders. The terms of the sanction letter limit the amount of advances & Stock of Stores & Spares that can be considered in the Drawing Power calculation for the monthly stock statements.
*This is computed by considering the following :
Inventory Trade Receivables Advances Given to suppliers-Trade Payables-Advances Received from customers
Description of ratios:
(a) Current ratio: Current Assets / Current Liabilities
(b) Debt-equity ratio: Total Debt /Shareholder's Equity
(c) Debt service coverage ratio: Earning for Debt Service = Net Profit after taxes Non-cash operating expenses like depreciation and other amortizations Interest other adjustments like loss on sale of Fixed assets etc./Debt service = Interest & Lease Payments Long term Principal Repayments
(d) Return on equity ratio: Net Profits after taxes/Average Shareholder's Equity
(e) Inventory turnover ratio : Sales of Products/ Average inventory =(Opening Closing balance / 2)
(f) Trade receivables turnover ratio : Revenue from Operations/Average trade debtors = (Opening Closing balance / 2)
(g) Trade payables turnover ratio: Purchase of Raw Materials & Stores/Average Trade Payables
(h) Net capital turnover ratio: Revenue from Operations/Working Capital =Working capital shall be calculated as current assets minus current liabilities.
(i) Net profit ratio :Earning before interest and taxes/Capital Employed = Tangible Net Worth Total Debt Deferred Tax Liability
(j) Return on capital employed : Earning before interest and taxes./Capital Employed = Tangible Net Worth Total Debt Deferred Tax Liability
(k) Return on investment: Net gain/(loss) on sale/fair value changes of Equity Instruments/Average Investments
47 Other Statutory Information
(a) The Company has not revalued its Property, Plant and Equipment (including Right-of-Use Assets) and intangible assets during the year.
(b) The Company has not given any loans or advances in the nature of loans either repayable on demand or without specifying any terms or period of repayment granted to promoters, directors, KMPs and related parties.
(c) The Company has not used borrowings for purpose other than specified purpose of the borrowing.
(d) The Company does not have any Benami property. Further, there are no proceedings initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(e) The Company does not have transactions with any struck off companies during the current year and previous year.
(f) The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year.
(g) 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 entities 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
(h) 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:
(i) 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
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(i) The Company have 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.
(j) The Company has not been declared as a wilful defaulter by any bank or financial institution or government or any government authority.
(k) 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.
48 Miscellaneous Expenses include de-recognition of financial asset (Trade Receivables/Advances/Loan) on account of irrecoverability, the contractual right to receive cash flow from the financial asset of H 31.82 Lakhs (Previous Year -H 17.88 Lakhs).
49 The previous year's figures have been regrouped, rearranged and reclassified to conform to the classification of the current year, wherever necessary.
50 The financial statements have been approved in Audit Committee meeting held on 29.05.2024 and approved by the Board of Directors on the same day.
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