1. COMPANY INFORMATION

Rathi Steel And Power Limited (the Company) is a public limited company incorporated in 1971 and engaged in the business of Steel and Steel related products.

In particular, following are the significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in standalone financial statements:

Assessment of useful life of property, plant and equipment and intangible asset-refer note no j below.

Significant judgment is required in determination of taxability of certain income and deductibility of certain expenses during the estimation of the provision for income taxes.

Claims are accounted for on determination of certainty of realization thereof.

Impairment allowances for on trade receivables: The Company evaluates whether there is any objective evidence that trade receivables are impaired and determines the amount of impairment allowance as a result of the inability of the customers to make required payments. The Company bases the estimates on the ageing of the trade receivables balance, credit-worthiness of the trade receivables and historical write-off experience.

Provisions and Contingencies

Provisions and liabilities are recognized 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. Management judgment is required for estimating the possible outflow of resources, if any, in respect of contmgencies/claim/htigations/ against the Company as it is not possible to predict the outcome of pending matters with accuracy. The carrying amounts of provisions and liabilities and estimation for contingencies are reviewed regularly and revised to take account of changing facts and circumstances.

d) Current v/s non-current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is treated as current when it is:

• Expected to be realized or intended to be sold or consumed in the normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realized within twelve months after the reporting period; or

• Cash or 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.

A liability is current when:

• It is expected to be settled in the normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the reporting period; or

• 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.

The Company has deemed its operating cycle as twelve months for the purpose of current / noncurrent classification.

e) Revenue Recognition

Revenue is measured at the fair value of consideration received or receivable.

The Company recognizes revenue from sale of goods when it satisfies a performance obligation in accordance with the provisions of contract with the customer. This is achieved when it no longer retains control over the goods sold, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Sale of goods and services is recognized net of taxes.

The performance obligation in case of sale of goods is satisfied at a point in time i.e., when the material is shipped to the customer or on delivery to the customer, as may be specified in the contract.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate ( TIE) applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets to that asset’s net carrying amount on initial recognition.

Dividend income is accounted for on receipt of payment.

Job Charges / Conversion charges received are recognized at net of taxes and reported under revenue from services.

Insurance Claim, if any, is accrued in the year when the right to receive is established and is recognized to the extent there is no uncertainty about its ultimate collection.

f) Impairment of non-financial assets

At each Balance Sheet date, the Company assesses whether there is an indication that an asset may be impaired and also whether there is an indication of reversal of impairment loss recognized in the previous periods. If any indication exists or when annual impairment testing for an asset is required, the Company determines the recoverable amount and impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount.

An asset’s recoverable amount is the higher of an asset or Cash-Generating Unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used

g) Impairment of Financial Assets

In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss.

The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance hased on lifetime ECLs at each reporting date, right from its initial recognition.

h) Inventories:

Inventories are valued at lower of cost and net realizable value. Cost of inventories is determined on weighted average basis and comprises of expenditure incurred in the normal course of business in bringing such inventories to their location and includes, where applicable appropriate overheads.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

i) Cash and cash Equivalents

Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand and short-term deposits, which are subject to insignificant risk of changes in value.

For the purpose of statement of cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above as they are considered as an integral part of the Company’s cash management.

Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit for the period 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.

j) PROPERTY, PLANT AND EQUIPMENT

Leasehold land has been revalued as on 31st March, 1992. All other property, plant and equipment are stated at cost, net of recoverable taxes, trade discounts and rebates less accumulated depreciation and impairment loss, if any.

The cost of tangible assets comprises its purchase price, borrowing cost, Trial run Costs, any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management, initial estimation of any decommissioning obligations and finance cost.

When significant parts of the property, plant and equipment are required to be replaced at intervals, the Company derecognizes the replaced part and recognizes the new part with its own associated useful life and depreciated accordingly.

Stores and spares which meet the definition of property, plant and equipment and satisfy recognition criteria of Ind AS 16 are capitalized as property, plant and equipment.

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset is included in the Statement of Profit and Loss when the asset is derecognized.

Capital work-in-progress ,if any, includes cost of property, plant and equipment which are not ready for their intended use.

The residual values and useful lives of property, plant and equipment are reviewed at each financial year-end and changes, if any, are accounted prospectively.

Depreciation on the property, plant and equipment is provided over the useful life of assets as specified in Schedule II to the Companies Act, 2013 using straight line method. Property, plant and equipment which are added/disposed of during the year, depreciation is provided on pro rata basis with reference to the month of addition/deletion.

k) Investments

Trade Investments are the investments meant to enhance the company’s interest. Investments are classified as current or non-current based on the management’s intention at the time of investment. Long-term investments are stated at cost. Provision for diminution in the value of long-term investment is made only if such a decline is permanent in nature.

l) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged revenue.

m) Current Tax and Deferred Tax:

Current Tax is the amount of tax payable on the taxable income for the year, determined in accordance with the provisions ofthe Income Tax Act,1961.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the balance sheet and their corresponding tax bases. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused tax losses being carried forward, to the extent that it is probable that taxable profits will be available in future against which those deductible temporary differences and tax losses can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill. In view of losses incurred in preceding previous years, company has not calculated deffered tax.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

n) Retirement benefits

Actual liability for gratuity is provided in respect of eligible employees. Other employees’ benefits are accounted for as per Company’s policy.

o) Foreign exchange transactions

Foreign currency transactions are accounted for at the exchange rate prevailing on the date of the transaction. All monetary foreign currency assets and liabilities are converted at the exchange rates prevailing at the reporting date. All exchange differences arising on translation of monetary items are dealt with in the Statement of Profit and Loss.

p) Accounting for Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognized 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 or loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

A contingent liability is disclosed when:

(a) a possible obligation that arises from past events and whose existence 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

(b) a present obligation that arises from past events but is not recognized because:

(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) the amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is disclosed, when there is a possible asset that arises from past events and whose existence 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.

Contingent liabilities and assets are not recognized but are disclosed m notes.

NOTES ON ACCOUNTS:

1. COMMITMENTS:

Estimated amount of Contracts remaining to be executed on capital account-Rs. NIL (Rs. NIL)

2. CONTINGENT LIABILITIES:

A. No provision has been made for:

a. Outstanding effective Bank Guarantees and Counter Guarantees given by the Company Rs.40,17,112/-.

b. Outstanding Letter of Credit Rs. -NIL- (Rs. NIL)

c. VAT / Sales Tax liability for various years in respect of which the Company has filed appeals with higher authority amounts to Rs.21,17,77,388/-. Most of the demands have been stayed by concerned authorities and the Company is confident to get relief. Further, Cases which have been awarded in favor of the Company against which department has filed appeals /revision petition amounts to Rs.10,64,73.573/.

d. Excise/Service tax cases pending with various statutory authorities being disputed principal amount Rs.7,67,29,699/-. The Company is Confident to get relief and chances of any liability is very remote.

e. Civil/Recovery suits and Labour cases pending against the Company not acknowledged as debt -Rs.12,48,10,916/-.

f As per Sales Agreement between GAIL and Company for Gas, GAIL has been raising demand in relation to annual take or pay deficiency which the Company has disputed on numerous occasions. After representation by the company, a Settlement Advisory Committee (“SAC”) has been appointed under the GAIL Conciliation Rules 2010 with mutual consent of both parties to settle the dispute. The company is quite confident to get the dispute settled, and liability, if any, arises may not have material effect on the financial position of the Company.

B. Income Tax and Sales Tax Assessments:

a. Assessing officer (TDS has imposed penalty and late fees towards delay in TDS deposited and late fees for issuance of relevant forms during FY 2013-14 and raised demand of Rs.l 184600/-.

b. Assessing officer passed order u/s 147 r.w.s. 144B of Income Tax Act with addition of Rs.10,20,31,713/ was made in relation to AY 2013-14. further the same has been adjusted with carry forwarded losses by the Authority.

Company has disputed these orders and filed Appeals before the appellate authorities. The company is quite confident to get the additions dismissed.

c. Additional liability, if any, in respect of pending assessments / appeals of Income Tax, compounding application, would be provided for on completion of assessments / disposal of appeals.

d. Additional demand, if any, in respect of pending assessment of Sales Tax / VAT / Entry Tax would be known only on completion of the assessments.

3. SEGMENTAL REPORTING:

The business activity of the company falls within one broad segment viz Steel. Hence the disclosure requirement of Accounting Standard (Ind-AS 108) of “Segment Reporting” issued by the Institute of Chartered Accounts of India is not given.

4. FOREIGN CURRENCY TRANSACTIONS:

Expenditure in Foreign Currency:

a. Raw material purchase (CIF) Rs.58,54,21,625/ (Rs. 26,45,82,873/-)

b. Capital Goods (CIF) - Rs. NIL (Rs. NIL)

c. Stores Purchased (CIF)- Rs.l, 10,60,294/- (Rs.4,05,14,999/-)

Earning in Foreign Currency (FOB):

Finished goods sale Rs. Nil (Rs. Nil).

Details of Consumption of Imported and Indigenous items_Rs. in lacs_

Imported Indigenous

Particulars --------

2023-24 % 2022-23 % 2023-24 % 2022-23 %

Materials 5854.22 16.00% 2645.83 4.34% 30723.67 84.00% 58307.95 95.66%

Stores and Spares 110.60 4.59% 405.15 12.50% 2299.17 95.41% 2837.45 87.50%

5. PAYMENT TO AUDI TORS:

a. Audit Fee - Rs.4,00,000/- (Rs.4,00,000).

b. Certification Fees - Rs.92000/- (Rs. 11000).

6. Sundry debtors, advances, creditors & other liabilities include inter parties transfers and are subject to confirmation and consequent adjustments. In the opinion of the Board of Directors, the current assets and loans & advances except doubtful in nature would realize at least the amount at which these are stated in the Balance Sheet. For doubtful debts, the Board of Directors is very much hopeful for their recovery. Therefore, no provision during the year has been made.

7. Interest / Penalty, if any on delayed payments of statutory dues (Excise, GST, PF/ESI etc.) will be provided for as and when ascertained / determined by the concerned authority.

8. The MSME status of creditors is not in knowledge of the Company as per available records even after adequate efforts, hence information is not given.

9. During the previous years in order to optimize the Ghaziabad unit operation, Company did job work for other parties.

10. CONCLUSION FOR RESTRUCTURING OF SECURED DEBTS: During the period under report Company has concluded debt restructuring agreement with M/s Assets Care and Restructuring Enterprises Ltd (ACRE) and OTS (onetime settlement) with Canara Bank, by adhering and paying the settled amount in full concluding / implementing the same as per mutually agreed terms with the Lenders / banks.

The effect of conclusion and reduction of such liabilities are represented in the respective financial statements under the head Reserves and Surplus, extra-ordinary item in the Profit and loss account. To that extent, financial statements for the current / previous year has been recasted, regrouped and rearranged wherever necessary.

Thus as a result of the conclusion of debt restructuring agreements / OTS and adherence to the terms thereof, Company has become Zero debt company as at the end of the financial year under report.

11. EARNINGS PER SHARE (EPS):

Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders of the Group by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share are computed by dividing the profit after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on conversion of all dilutive potential equity shares.

The company has not incurred loss during the year ended on March 31^st, 2024, however as on that date the company’s current liabilities exceed its current assets by Rs. 1,97,61,567.00 and company’s net worth has turned into positive at the end of the year after long period. Company has fully concluded its debt restructuring agreements / OTS entered in earlier years and adherence to the terms thereof, Company has become Zero debt company as at the end of the financial year under report. Company is making further efforts to maximize the operating levels / minimize the costs, and there has been steady improvement in reference to last couple of years. Further the Company is exploring various refinancing options with prospective Lenders / Investors to meet the working capital and long term financial requirements.

Considering the measures and efforts made by the management to make the Company zero debt company as at the end of the year and further being made for long term revival of Company, these financial statements have been prepared on a going concern basis on the strength of continued support of the promoters, bankers / other lenders and signs of recovery in general economic scenario.

12. RELATED PARTY DISCLOSURE:

In accordance with Accounting Standard (Ind-AS 24) on related party disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, along with description of relationship identified, are given below:

a) Individuals

b) Key Managerial Personnel

Shri P.N. Varshney Smt. Shobhita Singh Shri Rakesh Kumar

c) The following transactions were carried out with related parties in the ordinary course of business:

19. Surety given for others, amount not ascertained as company has not maintained any such records.

20. " I lie Company has increased its authorized share capital of the Company to Rs. 1,31,64,81,470/- (Rupees One Hundred Thirty-One Crores Sixty-Four Lakhs Eighty-One Thousand Four Hundred and Seventy only) divided into 8,64,5l,399(Eight Crores Sixty-Four Lakhs Fifty-One Thousand Three Hundred and Ninety-Nine only) Equity Shares of Rs. 10/- (Rupees Ten only) each aggregating to Rs. 86,45,13,990 (Rupees Eighty-Six Crores Forty-Five Lakhs Thirteen Thousand Nine Hundred and Ninety only) and 4,51,96,748 (Four Crores Fifty-One Lakhs Ninety- Six Thousand Seven Hundred and Forty- Eight only) Preference Shares of Rs. 10/- (Rupees Ten only) each aggregating to Rs. 45,19,67,480/-(Rupees Forty-Five Crores Nineteen Lakhs Sixty- Seven Thousand Four Hundred and Eighty only).

21. Company has converted Redeemable preference shares into OCRPS and consequently in Equity Shares (pursuant to section 102 of the Companies Act,2013 read with rules made thereunder ("the Act”) and SEBI (ICDR) Regulations) and in compliance to the "Special Resolution” under section 42,48 and 62(1) (C) of the Companies Act,2013, read with rules made thereunder, and Regulation 160 of the SEBI- ICDR Regulations, approved in EGM of shareholders held during the year, out of which 1505265 of OCRPS converted from RPS-Type- 2 are yet to be converted.

22. Redemption period of Redeemable Preference Shares (RPS Type -1) issued to M/s Char Investment and Trading Ltd and M/s Lenzing Poly Packs Limited is extended to March 31,2034 and have become non- cumulative.

23. Company have not paid any dividend on Preference Shares during the year. Its waived off being converted into OCRPS or extended. Even for future years, shares are non-cumulative.

24. Company has revised its Income Tax Returns for preceding previous year to comply with law and avoid any unforeseen litigation.

25. The amount of Stores consumed during the financial year includes the value of stores issued for repair and maintenance.

26. Previous year figures have been regrouped or recast wherever necessary.