1. Terms and rights attached to equity shares:
(a) The Company has only one class of Equity Shares having a par value of ' 10/- each. The Equity Shares of the Company ranks pari passu in all aspects including rights and entitlement to dividend. The Equity shareholders are entitled to one vote per share. Repayment of Capital will be in proportion to the number of equity shares held by the shareholders.
(b) Dividend proposed by Board of Directors (' 16/- per Equity Share) for the Financial Year 2022-2023 for Face Value ' 10/- is subject to approval of Shareholders in ensuing Annual General Meeting.
10 (v) Shares issued for consideration other than cash:
(a) On 18.06.2018, the Company has issued a Bonus issue in the ratio of 1:1. (Out of the total shares, 156,96,208 shares have been issued for consideration other than cash.)
14 (i) Details of Security for Borrowings:
(a) Working Capital loans from Banks are primarily secured by hypothecation of Inventories and Book Debts of the Company
(b) Interest rate relating to Short Term Loans from Banks is in the range of 7.20% to 10.35%
(c) Break-up of Loan repayable on demand and financial institutions.
(i) Fair value hierarchy
This Section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the Financial Statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1:
Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.
Level 2:
The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3:
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.
There are no transfers between levels 1, 2 and 3 during the year.
The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
(ii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices or dealer quotes for similar instruments
- the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date.
- the fair value of certain financial instruments have been determined based on the buy back offer made by the originatory of the instrument.
- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
Details of the investment property and its fair value:
Investment property disclosed is net of depreciation.
The fair values of investment properties have been determined based on the valuation report of a certified engineer.
28 FINANCIAL INSTRUMENTS Capital Management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity and other short-term borrowings.
Financial risk Management objectives
The treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations through internal risk reports which
Foreign currency sensitivity analysis
analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The Company seeks to minimise the effects of these risks by using natural hedging financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the board of Directors, which provide written principles on foreign exchange risk, the use of financial derivatives, and the investment of excess liquidity. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of Management.
Foreign currency risk Management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate the risks from such exposures. The use of derivative instruments, if any, is subject to limits and regular monitoring by appropriate levels of Management.
Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company’s revenues from its operations. Any weakening of the functional currency may impact the Company’s cost of imports and cost of borrowings and consequently may increase the cost of financing the Company’s capital expenditures. The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents Management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 2% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Company where the denomination of the loan is in a currency other than the functional currency of the lender or the borrower.
In Management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.
Interest rate risk Management
The Company is exposed to interest rate risk because it borrow funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings
Interest rate sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key Management personnel and represents Management’s assessment of the reasonably possible change in interest rates.
Credit risk Management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is not subject to credit risk as the internally generated funds are used to meet their financial requirements
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure is the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables, margin money and other financial assets excluding equity investments.
Offsetting related disclosures
Offsetting of cash and cash equivalents to borrowings as per multiple banking arrangement is available only to the respective bank in the event of a default. Company does not have the right to offset in case of the counter party’s bankruptcy, therefore, these disclosures are not required.
Liquidity risk Management
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk Management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit . The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
Liquidity tables
The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
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Particulars
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As at 31.03.2023 ' in Lakhs
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As at 31.03.2022 ' in Lakhs
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29 Contingent liabilities and commitments (to the extent not provided for
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|
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(i) Contingent liabilities:
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|
|
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(a) Claims against the Company, not acknowledged as debts - disputed tax liabilities
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|
|
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(i) Central Excise
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162.72
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162.72
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(ii) Entry Tax
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408.36
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408.36
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(iii) VAT/CST
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374.86
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374.86
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(iv) GST
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9.68
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-
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(v) Income Tax
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3,765.20
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1,304.34
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TOTAL
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4,720.82
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2,250.28
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(b) Guarantee given by Bankers and outstanding
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381.04
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276.63
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(c) Corporate guarantee given for others
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-
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-
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(d) Estimated customs duty obligation on Imports, if corresponfing export obligation is not satisfied
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4,591.32
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512.99
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Note: Future cash outflows in respect of the above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.
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(ii) Commitments:
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Estimated amount of contracts remaining to be executed on capital account and not provided for - Tangible assets
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11,471.76
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6,106.33
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33 EMPLOYEE BENEFIT PLANS Defined Contribution plans:
The Company makes Providend Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized ' 1,129.66 Lakhs (Year ended 31 March, 2022 ' 1,073.45 Lakhs) for Providend Fund contributions and ' 18.02 Lakhs (Year ended 31 March, 2022'21.89 Lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes.
State plans:
The Company makes ESI contributions to Employees State Insurance Scheme. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised ' 213.61 Lakhs (Year ended 31 March, 2022'217.71 Lakhs) in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Scheme.
Defined Benefit Plan - Gratuity:
The Company provides gratuity benefit (included as part of employees contribution to funds in Note 22 Employee benefits expense) to all eligible employees, which is funded with Life Insurance Corporation of India.
The following table sets out the funded status of the defined benefit schemes and the amount recognised in the Financial Statements
Note: Figures in brackets relate to the previous year.
39 The title deeds of immovable properties which are freehold, based on the registered sale deeds/transfer deed/conveyance deed/scheme of arrangements approved by Hon’ble high Courts & appropriate authorities and property tax receipts, are held in the name of the Company as at Balance sheet date.
In respect of immovable properties of Land that have been taken on lease and disclosed as fixed assets in the Financial Statements and the buildings constructed on such leasehold land, whose lease deeds have been pledged as security for credit facilities taken from the banks, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement
40 The Company has no proceedings initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
44 The Company’s borrowings from banks or financial institutions on the basis of security of current assets and the quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.
45 The Company is not declared as a wilful defaulter by any Bank or Financial Institution.
46 The Company has no relationship with Struck-Off companies.
47 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 The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) 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 whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
49 The Company has not been received any funds from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
50 The Company has no income which has been surrendered or disclosed as income during the year in any of the tax assessments under the Income Tax Act 1961.
51 The Company has not traded/invested in crypto currency/ virtual currency during the Financial Year.
52 Loans and Advances in the nature of loan granted to Promoter, KMP and related parties: Nil
53 There are no charges or satisfaction of charges that are yet to be registered with Registrar of Companies beyond the the statutory period.
54 The Company has not issued any Securities for a specific purpose.
55 The Company has utilised the borrowings from banks and financial institutions for the purpose for which it was availed
56 There were no significant events that occurred after the Balance Sheet date apart from the ones mentioned in “Material Changes and commitments affecting the financial position between the end of the fiscal and date of the report’ in the Board’s report
57 Since the Company prepares Consolidated Financial Statements, Segment Information as revised by IND AS 108 “Operating Segments” has been disclosed in consolidated Financial Statements.
58 Exceptional item represents subsidy received.
59 Recent Accounting 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
On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023. Certain amendments are discussed below:
Ind AS 1 - Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a difinition of ‘accounting estimates’ and included amendments to Ind AS 8 to help entitites distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023.
Ind AS 12 - Income-taxes - This amendment has narrowed the scope of the initital recognition exemption sp that it does not apply tp transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023.
60 Previous year figures have been regrouped and reclassified, wherever necessary, to correspond with the current year’s classification/disclosure.
61 The Code on Social Security 2020 has been notified in the Official Gazette on 29th September 2020. The effective date from which the changes are applicable is yet to be notified and the rules are yet to be framed. Impact, if any of the change will be assessed and accounted in the period in which the said Code becomes effetive and the rules framed thereunder are published.
62 In assessing the recoverability of Company’s Assets such as Property Plant and Equipment, Investments, Trade Receivables, Inventories etc in view of Covid 19 outbreak ,the Company has considered available information upto the date of approval of these financial results to arrive at its estimates. The Company has evaluated its liquidity position, recoverability of such assets and based on the current estimates expects that the carrying amount of these assets would be recovered.
63 The Committee of Creditors of RSAL Steel P Ltd Ltd (RSAL), through a Letter of Intent (LOI) have declared LG Balakrishnan & Bros Ltd as the successful bidder for RSAL, under the Insolvency & Bankruptcy code 2016.The implementation of the resolution plan is subject to the terms of the LOI and requiste approval from regulatory authorities.
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