'The Company's objective for capital management is to maximize shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated. The Company is not subject to any externally imposed capital requirements.
The Board of Directors at its meeting held on August 08, 2022, approved a proposal to buy-back upto 9,00,000 equity shares of the Company for an aggregate amount not exceeding ' 693 lakh, being 4.67% of the total paid up equity share capital at ' 77 per equity share. The Company bought back 9,00,000 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares on October 14, 2022. Capital redemption reserve was created to the extent of share capital extinguished (' 90 lakh). The excess cost of buy-back of ' 712 lakh (including 19.10 lakh towards transaction cost of buy-back) over par value of shares and corresponding tax on buy-back of ' 140.48 lakh were offset from retained earnings.
Terms / Rights attached to equity shares
The Company has only one class of equity shares having par value of ' 10 per share. Each shareholder of equity share is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the realized value of the assets of the Company, remaining after payment of all preferential dues. The distribution will be in proportion to the number of equity shares held by the shareholders.
Notes: Securities Premium Account - the reserve has been accumulated by the excess of issue price of shares over their face value, Securities premium reserve can be utilised for the specific purposes as per the provisions of Companies Act, 2013.
General Reserves- the reserve has been accumulated by transferring profit of the company to reserve account, General Reserves can be used for the purposes and as per guidelines prescribed in the Companies Act, 2013.
Statutory Reserves - the reserve has been accumulated by transferring profit of the company to statutory reserve account, this reserve would be utilize to pay statutory liabilities of the company.
Capital Reserves - the reserve has been accumulated by transferring profit of the company to reserve account, the reserve would be utilised as per guidelines prescribed in the Companies Act, 2013.
Note No. 1 : The working capital loan from HDFC Bank Limited at 9.50% p.a. of ' 3,366.06 Lakhs (2023: HDFC Bank Limited @ 8.00% p.a. of ' 2,008.66 Lakhs), is secured by the first charge on paripasu basis over the current assets of the company and second charge over the fixed assets of the company and guaranted by the directors of the company 1. Mr. Ashok Shah, 2. Mr. Kunal Shah, 3. Mr. Gunvant Shah along with corporate guarantee of Suraj Impex LLP.
All the quarterly returns and current assets statements filed by the company with the banks are in agreement with the books of account.
Note No. 2 : For Related Party Transaction, Refer Note No. 28.
Note (a) : The remuneration to the key managerial personnel does not include the provisions made for gratuity, as it is determined on an actuarial basis for the company as a whole.
Terms and conditions of transactions with related parties
Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided for any related receivables or payables. However the company has received Corporate gurantee from Suraj Impex LLP against the Bank Borrowings. For the year ended 31st March, 2024 and 31st March, 2023, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken at each financial year through examining the financial position of the related party and the market in which the related party operates.
Note (i) Excise/Custom duty demand comprise various demands from the Excise Authorities for payment of ' 1,680.97 Lakhs (31st March, 2023 ' 1,680.97 Lakhs). The Company has filed appeals against these demands. The Company is confident that the demands are likely to be deleted and accordingly no provision for liability has been recognized in the financial statements.
Defined benefit plans:
The Company has gratuity as post employment benefits which are in the nature of defined benefit plans:
(a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan administered by Trust and the Company makes contributions to recognised Trust.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to change in the market scenario.
32. FINANCIAL INSTRUMENTS, RISK MANAGEMENT, OBJECTIVES AND POLICIES32.1 Category-wise Classification of Financial Instruments
The company's Financial Assets and Financial Liabilities are measured at Amortised Cost as on 31st March, 2024. The management assessed that cash and cash equivalents, other bank balances, trade receivables, other financial assets, trade payables, bank overdrafts, investments and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
32.2 Financial Risk Management
The company's Board of Directors has overall responsibility for the establishment and oversight of the company's risk management framework. The company's risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls and to monitor risks. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the company's activities.
32.3 Credit Risk Management
Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends and ageing of accounts receivable. Individual risk limits are set accordingly.
32.4 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. The company's treasury department 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 net liquidity position through rolling forecast on the basis of expected cash flows.
Maturity profile of Financial Liabilities
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
32.5 Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loan borrowings. The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, borrowing strategies, and ensuring compliance with market risk limits and policies.
(a) Interest rate risk
Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. In order to optimize the company's position with regards to the interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in it total portfolio.
With all other variables held constant, the following table demonstrates the impact of the borrowing cost on floating rate portion of loans and borrowings and excluding loans on which interest rate swaps are taken.
b) Commodity Price Risk
Principal Raw Material for company's products is scrap and pig iron. Company sources its raw material requirements from domestic markets. Domestic market price generally remains in line with international market prices. Volatility in metal prices, currency fluctuation of rupee vis a vis other prominent currencies coupled with demand-supply scenario in the world market affect the effective price of scrap and pig iron. Company effectively manages availability of material as well as price volatility through well planned procurement and inventory strategy and also through appropriate contracts and commitments.
33. Capital management
For the purposes of the Company's capital management, capital includes issued capital and all other equity reserves. The primary objective of the Company's Capital Management is to maximise shareholder value. The company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirement of the financial covenants.
34. Previous year's figures have been regrouped / re-arranged / re-casted, wherever necessary, so as to make them comparable with current year's figures.
35. In terms of Ind AS 36 - Impairment of Assets issued by ICAI, the management has reviewed its Property plant & equipment assets and arrived at the conclusion that impairment loss which is difference between the carrying amount and recoverable value of assets was not material and hence no provision is required to be made.
36. Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. During the year ended 31st March, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
37. The company uses an accounting software for maintaining its books of account which has a feature of recording audit trail ( edit log ) facility and the same has operated throughout the year for all relevant transactions recorded in the accounting software, except that audit trail feature is not enabled for certain direct changes to the data for users with the certain privileged access right to the ERP application. Further, no instance of audit trail feature being tempered with was noted in respect of the accounting software. Presently, the log has been activated at the application and the privileged access to ERP continues to be restricted to limited set of users who necessarily require this access for maintenance and administration of the database.
38. Segment Reporting
The Company has only one segment of Manufacturing of Stainless Steel Seamless Pipes, Tubes and "U" Tubes, Flanges & Fittings with Electro polishing.
39. Additional Regulatory Information Required By Schedule III
a. Details of benami property held
No proceedings have been initiated on or are pending against the Company for holding benami property under the BenamiTransactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
b. Borrowing secured against current assets
The Company have sanctioned borrowings/facilities from banks on the basis of security of current assets. The quarterly returnsor statements of current assets filed by the Company with banks and financial institutions are in agreement with the books ofaccounts.
c. Wilful defaulter
The Company has not been declared wilful defaulter by any bank or financial institution or any lender.
d. Relationship with struck off companies
The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.
e. Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under the Companies Act, 2013.
f. Compliance with approved scheme(s) of arrangements
The Company has not entered into any scheme of arrangement which has an accounting impact on current or previousfinancial year.
g. Utilisation of borrowed funds and share premium
The Company has not advanced or loaned or invested (either from borrowed funds or sharepremium or any other sources orkind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that theIntermediary shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of theCompany (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with theunderstanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of theFunding Party (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries
h. Undisclosed Income
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under theIncome Tax Act, 1961, that has not been recorded in the books of account.
i. 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.
j. Valuation of PP&E, intangible asset and investment property
The Company has not revalued its property, plant and equipment or intangible assets or bothduring the current or previous year.
k. Registration of charges or satisfaction with Registrar of Companies
There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.
40. EVENTS AFTER THE REPORTING PERIOD:
The company evaluates events and transactions that occur subsequent to the balance sheet date but prior to the approval of the financial statements to determine the necessity for recognition and/or reporting of any of these events and transactions in the financial statements. As of 10th May, 2024, there were no subsequent events to be recognized or reported that are not already previously disclosed.
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