b. Terms / rights attached to Equity Shares
i) The company has only one class of equity shares having a par value of ' 10 per share. Each holder of equity shares is entitled to one vote per share. Equity Shareholders are eligible to dividend proposed by the Board of Directors as approved by Shareholders in the ensuing Annual General Meeting.
ii) In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Note for Purposes of Reserves:
Retained Earnings: Retaining Earnings represents the amount that can be distributed by the company as dividend considering the requirements of the companies Act, 2013.
Security Premium: The Amount received in excess of face value of the equity shares is recognised is Security Premium. Note on Dividend
The Board of directors of the Company at their meeting held on 9th May, 2024, has recommended the final dividend of ' 0.5 per equity share, i.e., 5% on the face value of ' 10/- per equity share respectively for FY 2023-24 subject to the approval of shareholders in the ensuing Annual General Meeting.
Earlier, the Board at their meeting held on 26th October, 2023, had declared an Interim Dividend of ' 0.5/- per equity shares ,i.e., 5% on face value of ' 10/- each. The said Interim Dividend was paid to all eligible shareholders.
With this, the total dividend for the FY 2023-24, including the proposed final dividend, amounts to ' 1/- per equity share of the face value of ' 10/- each.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
31 FINANCIAL INSTRUMENTS
(a) Financial risk management objective and policies
This section gives an overview of the significance of financial instruments for the company and provides additional information on the balance sheet. 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.
Financial Instruments - Accounting Classification and Fair Value Measurements
The fair value of the financial assets and liabilities are included at the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short terms deposits, trade and other short receivables, trade payables , other current liabilities , short term loans from banks and other financial institutions approximate their carrying amounts largely due to the short term maturities of these instruments
2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameter such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.
Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level: 1 Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 Other techniques for which all inputs which have a significant effect on the recorded fair value are observables, either directly or indirectly
Level 3 Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data
Financial assets and liabilities:
The accounting classification of each category of financial instruments, and their carrying amounts, are set out below:
(b) Financial Risk Management Objective and Policies:
The Company's principal financial liabilities, other than derivatives, borrowings, comprise trade and other payables and advances from Customers. The Company's principal financial assets include Investment, loans and advances, trade and other receivables and cash and bank balances that derive directly from its operations. The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial assets will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Company monitors the risks arising out of long term debt on a regular basis with the help of the treasury team. Further Company may enter into derivatives if the exposure arising out of these risks exceeds significantly.
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. Company has interest rate risk exposure mainly from changes in rate of interest on borrowing & on deposits with bank/financial institutions.
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 (when revenue or expense is denominated in a foreign currency). The Company monitors the risks arising out of same on a regular basis with the help of the treasury team. Further the company may enter into derivatives if the exposure arising out of these risks exceeds significantly.
The Company's exposure to foreign currency arises where the Company holds monetary assets and liabilities denominated in a currency different to the functional currency, with US dollar & Euro being the non-functional currency. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rate, liquidity and other market changes.
The results of Company's operations may be affected largely by fluctuations in the exchange rates between the Indian Rupee against the US dollar & Euro. The foreign exchange rate sensitivity is calculated by the aggregation of the net foreign exchange rate exposure with a simultaneous parallel foreign exchange rates shift in the currencies by 10% against the functional currency of the Company.
Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion in to functional currency, due to exchange rate fluctuations between the previous reporting period and the current reporting period.
Credit Risk
Credit risk is the risk that a counter party 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). Company deals with reputed manufactures hence chances of credit risk is minimised to that extent. Further part portion of the order is taken in advance, hence credit risk is already mitigated to that extent.
Trade Receivables
Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date for outstanding customers.
Financial Instruments and Cash Deposits
Credit risk from balances with banks and financial institutions is managed by the Company's treasury department in accordance with the Company's policy. Investments of surplus funds are made only with approved authorities. Credit limits of all authorities are reviewed by the Management on regular basis.
Liquidity Risk
The Company monitors its risk of a shortage of funds using a liquidity planning tool. The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, Letter of Credit and working capital limits.
33 CAPITAL MANAGEMENT
The Company considers the following components of its Balance Sheet to be managed capital:
1. Total equity - Share Capital, Retained Profit/ (Loss) and Other Equity.
2. Working capital.
The Company manages its capital so as to safeguard its ability to continue as a going concern. The capital structure of the Company is based on management's judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. The Company considers the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets.
The Company's policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditor, and market confidence and to sustain future development and growth of its business. The Company's focus is on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required, without impacting the risk profile of the Company. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.
35.2 i) The Company during FY 2022-23 has completed its Initial Public Offering (IPO) 0f 50,74,100 equity shares of face value of ' 10/- each for cash at an issue price of ' 326/- per equity share aggregating to ' 1654.16 mn, having fresh issue of 50,74,100 equity shares. The equity shares of the Company were listed on BSE Limited and National Stock Exchange of India Limited on 24th May, 2022.
The management monitors the requirement of capital to meet the operational cost of the company from time to time and infuse the capital through sub-ordinate debt, which is classified as other equity.
35.3 The Company has taken portion of factory land under operating lease . Effective 1st April, 2019, the company has adopted Ind AS 116 and applied to its leases, retrospectively, with the cumulative effect of initially applying the standard on the date of initial application (1st April, 2019). Accordingly, the Company has not restated comparative information and recognised right-of-use assets at an amount equal to the lease liability. Refer Note 2 for details of right-of-use assets for details of Lease Liability. Interest on lease liability ' 0.34 mn in FY 2022-23 has been included in Finance Costs and depreciation on right-of-use assets has been included in Depreciation and amortisation expense for the period. Henceforth the company acquired the land on 22nd February, 2023 and therefore the lease liability stands closed.
35.4 Segment information
(a) Description of segment
The board of directors of Company is identified as chief operating decision maker (CODM) monitors the operating result of Company. CODM has identified only one reportable segment as Company involved in manufacturing \ trading of Pipes, tubes & steel. The operations of Company are located in India.
Non-current assets include property, plant and equipment, capital work in progress, intangible assets, Rou Assets. It is allocated based on the geographic location of the respective assets.
35.5 During the Extraordinary General Meeting (EGM) convened on 30th March, 2024, Company obtained approval for the allotment of 420,000 Convertible Warrants, priced at ' 1700 per warrant, aggregating to ' 71,40,00,000. These warrants are offered on a preferential basis to both promoters and non-promoter investors. Each warrant holder is entitled to apply for and receive one equity share having face value of ' 10 per warrant.
35.6 The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the Group towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on 13th November, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
35.7 Balances of Sundry Creditors, Sundry debtors, Loans & advances, etc. are subject to confirmation and reconciliation, if any.
35.8 There have been no events after reporting date that requires disclosure in financial statement.
35.9 The financial statements were approved for issue by Board of Directors, at its meeting held on 9th May,2024.
35.10 Previous Years Figures have been regrouped/reclassified wherever necessary to correspond with current year's classification/disclosures.
35.11 Additional Regulatory Information
A. Title deed of immovable property:
The title deeds of all the immovable properties are held in the name of Company. Except disclosed in note no 2.
B. Valuation of Property Plant & Equipment, intangible asset:
The Company has not revalued its property, plant and equipment or intangible assets or both during the current or previous year.
C. Details of benami property held:
No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
D. Borrowing secured against current assets
The Company has borrowings from banks on the basis of security of current assets. The quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of accounts.
E. Wilful defaulter:
The Company has not been declared wilful defaulter by any bank or financial institution or other lender.”
F. Relationship with struck off companies:
The Company has no transactions with the companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.
G. Registration of charges or satisfaction with Registrar of Companies (ROC):
There are no charges or satisfaction yet to be registered with Registrar of Companies (ROC) beyond the statutory period.
H. Compliance with number of layers of companies:
The Company has complied with the number of layers prescribed under the Section 2(87) of the Companies Act, 2013 read with Companies (Restriction on number of layers) Rules, 2017.
I. Utilisation of borrowed funds and share premium:
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entities ("Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
J. Undisclosed income:
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded previously in the books of account.
K. Details of crypto currency or virtual currency:
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
L. Utilisation of borrowings availed from banks and financial institutions:
The borrowings obtained by Company from banks and financial institutions have been applied for the purposes for which such loans were taken.
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