5 Right-of-Use AssetTransition to Ind AS 116

Ministry of Corporate Affairs (MCA) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 Leases, and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessee and lessors.

The Company has adopted Ind AS 116, effective annual reporting period beginning 1st April, 2019

On application of Ind AS 116, the nature of expenses has changed from lease rent in previous periods to depreciation cost for the right-of-use asset, and finance cost for interest accrued on lease liability.

5.1 The Company as lessee

(i) Company had taken vehicle on lease with lease term of 60 months w.e.f 01-04-2019, during the financial year 2023-24, lessor has terminated lease i.e. before expirations of lease term.

5.2 Company as a lessor

The Company is not required to make any adjustments on transition to Ind As 116 for leases in which it acts as a lessor. The details of the right-of-use asset held by the Company is as follows:

13.2 An advance of Rs. 950 lakh was paid to FAL Power Ventures Pvt Ltd, (a wholly owned domestic subsidiary), which was impaired at the time of Ind As adoption in FY 17-18. Now this amount is returned by the subsidiary company and considered as Miscellaneous Income.

13.3 Loans and Advance to subsidiaries includes Rs. 852.32 lakh receivable from Cati Madencilik Ithalat Ve Ihracat (Cati), a stepdown tier II overseas subsidiary. This amount refers to loan taken by Cati from BOI, London (The lender) and company provided corporate guarantee as collateral for such loan. Cati defaulted in repayment of loan, Consequently, company received demand notice dated 20.02.2017 from the lender of Cati against the corporate guarantee given by Facor Alloys Limited towards its borrowing amount of USD 1.5 million. The lender had offered one time settlement (OTS) vide its letter dated 17.01.2019 for payment of USD 1.188 million. Company remitted OTS amount to BOI (London) in FY 2019-20 and shown amount recoverable from Cati. Company has provided lifetime expected credit loss for the same during the Financial Year 2023-24 and no deferred tax asset has been recognised on the same.

The company has identified certain assets like Land which are available for sale in its present condition. The company is committed to plan the sale of asset. The company expects to dispose off these assets within twelve months from its classification. The company has received an amount of ' 79.10 lakhs (previous year ' 18.10 lakhs) which pertains to the advance received from the parties in relation to this sale. The same is shown as a liability under other current liabilities.

a. Terms and rights attached to equity shares

The company has only one class of equity shares each having a par value of ‘ 1/- per share. The Equity Shares have rights, preferences and restrictions which are in accordance with the provisions of law, in particular the Companies Act, 2013.

Nature and purpose of other reserves Securities premium

Securities premium is used to record the premium on issue of shares. The reserve will be utilised in accordance with the provisions of the Act.

General reserve

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purpose.

33 Contingent Liabilities, Contingent Assets and Commitments A. Contingent Liabilities

a. Claims against the Company not acknowledged as debts, since disputed ' 1,336.85 lakhs (Previous Year ' 1,336.85 lakhs). Amounts paid under protest ' 110.85 lakhs (Previous Year ' 110.85 lakhs) have been debited to Advance Account.

b. In view of the decision of NCLT, Mumbai bench in the application under section 30(1) and (6) and order under section 31 of Insolvency and Bankruptcy Code, 2016 in the matter of Vidarbha Iron & Steel Corporation Limited, the liability of the Company on account of Corporate Guarantee issued in favour of Consortium Banks of Facor Steels Limited is NIL.

c. Bank guarantee amounting to NIL (previous year ' 300.00 lakhs) secured by way of fixed deposit as disclosed in note 12.

d. Claims against the Company not acknowledged as debts and not provided for: Company had entered into long term conversion agreement with M/s Tata Steel Mining Ltd (TSML), a wholly owned subsidiary of M/s Tata Steel Ltd (TSL) on 22-03-2021. Consequent to the merger of TSML into TSL on 08-08-2023, agreement was modified in the name of M/s TSL w.e.f. 01-09-2023, As per conversion agreement raw materials required for conversion work will be supplied by TSL free of cost at the manufacturing site of the company and company will raise conversion bills on manufacturing of HCFC. During the year, TSL informed the company that 9885 MT of raw material was found short on physical verification of inventory laying at company’s premises on 27-02-2024 and shortage of material was valued at prevailing market price at ' 31.15 Crores. During the financial year 2024-25, the Company, has recognise the loss amounting to ' 23.27 Crores in its books. Accordingly, the total claim of ' 23.27 crores has been set off against the following :

• ' 3.00 crores through encashment of the bank guarantee; (refer note no. 33(c))

• ' 2.00 crores paid directly via banking channels; and

• ' 18.27 crores adjusted against outstanding receivables (refer note no.10).

The remaining balance of the claim continues to be disputed by the Company in terms of both quantity and valuation. Discussions with TSL are ongoing with a view to jointly reconciling the raw material position since the inception of the agreement. The recognised loss has been disclosed separately under Exceptional Items in the Statement of Profit and Loss for the year ended 31st March 2025.

34 Segment Information:

Segment information is presented in respect of the company’s key operating segments. The operating segments are based on the company’s management and internal reporting structure.

Operating Segments

The Management Information System of the Company identifies and monitors Ferro Alloys as the business segment. The Company is managed organisationally as a single unit. In the opinion of the management, the Company is primarily engaged in the business of Ferro Alloys. As the basic nature of these activities are governed by the same set of risk and return, these constitute and are grouped as a single segment. Accordingly, there is only one Reportable Segment for the Company which is “Ferro Alloys”, hence no specific disclosures have been made.

Entity wise disclosures

A. Information about products and services

During the year, the Group primarily operates in one product line, therefore product wise revenue disclosure is not applicable.

All the non-current assets of the Group other than financial instruments, deferred tax assets, post-employment benefit assets are located in India.

C. Information about Major Customers (from External Customers)

The Company derives revenues from the following customers where each contributes to 10 per cent or more of an entity’s revenues:

‘During the current financial year 2024-25, the Company has disclosed the net outstanding amount, i.e., the gross advance given net of Life time expected credit loss recognised in accordance with the requirements of the applicable accounting standards. In the previous year 2023-24, the amount disclosed represented the gross amount of advance given. Accordingly, the comparative figure for the year ended 31st March 2024 has been reclassified from ' 900 lakhs to ' 47.71 lakhs to ensure consistency and better comparability with the current year’s disclosure.This reclassification does not impact the total assets, liabilities, or profit reported in the previous year’s financial statements.

Details of Loans given, Investments made and Guarantee given covered U/s 186(4) of the Companies Act, 2013.

Loans given, Investments made and Guarantees given by the Company in respect of loans are given under the respective heads.

Employee Benefits

The Company Contributes to the following post-employment Defined Plans.

Defined Contribution Plans:

Amount of ' 46.66 lakhs (Previous Year ' 77.91 lakhs) is recognised as expenses and included in “Employee Benefits Expense” in Note 28 of the Statement of Profit and Loss.

Defined Benefit Plan :

The company has a defined benefit 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 scheme is funded with SBI Life Insurance in form of qualifying insurance policy.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2025. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company’s financial statements as at balance sheet date:

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

The Expected Rate of Return on Plan Assets is determined considering several applicable factors, mainly the composition of Plan Assets held, assessed risks, historical results of return on Plan Assets and the Company’s policy for Plan Assets Management.

The expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2024-25

During the year, trade receivables include a reduction amounting to ' 18.27 crores on account of adjustment made against a claim raised by M/s Tata Steel Ltd. (TSL) relating to a shortage of raw materials supplied under a long-term conversion agreement. The said adjustment has been accounted for as part of the loss recognised under Exceptional Items in the Statement of Profit and Loss for the year ended 31st March 2025. This set-off represents the settlement of outstanding dues from TSL (formerly Tata Steel Mining Ltd.) in line with the resolution of the matter disclosed under Contingent Liabilities and Claims Not Acknowledged as Debt.

42 During the year, the Company has recognized a liability towards Fuel & Power Purchase Cost Adjustment (FPPCA) in respect of the financial years 2022-23 and 2023-24, pursuant to the order issued by the Andhra Pradesh Electricity Regulatory Commission. The liability has been provided in the financial year 2024-25.In addition, FPPCA charges relating to the financial year 2021-22 was recognized in the previous financial year (FY 2023-24), pursuant to a regulatory order issued during that period.

43 During the financial year 2024-25, the management identified an excess quantity of 329.40 MT of anthracite coal at the production floor. This surplus arose due to lower-than-anticipated consumption of raw materials in the manufacturing process when compared with the standard norms for production efficiency. Out of the identified excess, 257.40 MT was sold during the year. Given the non-recurring and exceptional nature of this event, the proceeds from the sale have been disclosed separately under Exceptional Items in the Statement of Profit and Loss for the year ended 31st March 2025.

44 Plant operation is temporarily shut down w.e.f. 31-10-2023, which has caused lowest revenue during the quarter/year. Top management had recently undergone reshuffle and new management has taken charge w.e.f. 9th April, 2024. New management is rigorously exploring all options including dialogues with corporate houses and lenders to get assistance to resume operations and moreover, promotor entity is also infusing funds to meet running fund requirement.

B. 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.

There are no transfers between level 1 and level 2 during the year

II. Financial Risk Management

The Company has exposure to the following risks arising from financial instruments:

• credit risk;

• liquidity risk; and

• market risk

Risk Management Framework

A company is exposed to uncertainties owning to the sector in which it is operating. The Company is conscious of the fact that any risk that could have a material impact on its business should be included in its risk profile. Accordingly, in order to contain / mitigate the risk, the Board of Directors have approved a Risk management policy which shall be reviewed by Board and the management from time to time.

The Company’s Risk Management framework is designed to identify, assess and monitor various risks related to key business and strategic objectives and lead to the formulation of a mitigation plan. Major risks in particular are monitored regularly at Executive meetings and the Board of Directors of the Company is kept abreast of such issues and the policy was reviewed by the Board and Committee at its meeting.

The Company’s Audit Committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

i. Credit Risk

Credit risk is the risk of financial loss to company if a customer or counterparty to the financial instrument fails to meet its financial obligations, and arises principally from the loans & advances to related parties and company’s receivables from customers.

Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, cash and cash equivalents, other balances with banks and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk other than trade receivable.

The company maintains its Cash and cash equivalents and Bank Deposits with banks having good reputation, good past track record and high quality credit rating and also reviews their credit rating on a timely basis.

The gross carrying amount of trade receivables is ' 6,178.96 lakhs (31 March 2024'4,413.34 lakhs).

During the period, the Company has made no write-offs of trade receivables. The Company management also pursue all options for recovery of dues wherever necessary based on its internal assessment. A default on a financial asset is when counterparty fails to make payments within 365 days when they fall due.

Other current financial assets basically include loans and advances recoverable from related parties. Provision is created in books of accounts on case to case basis depending upon the possibility/probability of recovery of the amount due to financial position of related parties. The carrying amount of loan and advances to related parties as on 31 March 2025 amounted to ‘ 47.71 lakhs out of which no provision of expected life time credit loss has been provided during the FY 24-25 ( As at 31 March 2024 was ‘ 900.03 lakhs out of which provision of expected life time credit loss amounting to ‘ 852.32 lakhs has been provided during the same year ).

ii. Liquidity risk

Liquidity risk refers to risk of financial distress or extra ordinary high financing cost arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require financing. The Company’s objective is to maintain at all times optimum levels of liquidity to meet its cash and collateral requirements. Processes and policies related to such risk are overseen by senior management and management monitors the Company’s net liquidity position through rolling forecast on the basis of expected cash flows.

(a) Financing arrangements

The company do not have undrawn bank overdraft facilities as on 31 March 2025 and as on 31 March 2024.

(b) Maturities of financial liabilities

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and excluding contractual interest payments and exclude the impact of netting agreements.

iii. Market risk

Market risk is the risk that changes in market prices, foreign exchange rates and interest rates - will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

a) Equity Price risk

Commodity Price Risk is the risk that future cash flow of the Company will fluctuate on account of changes in market price of the material produced and sold by the company. The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company has in place policies to manage exposure to fluctuations in the prices of the materials. The Company enters into contracts for procurement of materials and most of the transactions are short term fixed price contracts.

b) Currency risk

Foreign currency risk is the risk that fair value of future cash flow 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. The Company has foreign currency trade payables and receivables and is therefore, exposed to a foreign exchange risk. Foreign currency risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR). The risk is managed through a forecast of highly probable foreign currency cash flows.

c) 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 exposure to the risk of changes in market interest rates related primarily to the Company’s short term borrowing 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.

47 Capital management

For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity share holders of the Company. The primary objective of the Company’s capital management is to safeguard continuity, maintain healthy capital ratios in order to support its business and maximise shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through equity, internal accruals, long term borrowings and short term borrowings. In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.

48 The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record related impact, if any, in the period the Code becomes effective.

49 The Company has terminated the conversion agreements dated 01-08-2021 (‘Agreement”) with Rajadhiraj Vinayak Natraj Pvt. Ltd (“RTVNPL”) vide termination notice dated 27-10-2022 as RTVNPL has violated the terms of the said Agreement. RTVNPL against the said termination had filed a petition bearing no.O.M.P. (I) (Comm.) 310/2022 under section 9 of arbitration and conciliation Act (“Act”) before Hon’ble High Court of Delhi and sought interim reliefs against the termination of the said Agreement. The Hon’ble High Court of Delhi vide order dated 03-11-2022 referred the parties to Mediation under the aegis of Samadhan, at Delhi High Court Mediation and Conciliation Centre, however same was unsuccessful.Thereafter, the Hon’ble High Court of Delhi vide order dated 10-11-2022 treated present petition as an application under section 17 of the Act on mutual consent of both counsels and referred the matter to the arbitration to be held under the aegis of the Delhi International Arbitration Centre, Delhi High Court. Hon’ble Ms. Justice Indira Banerjee, former judge of Supreme Court of India was appointed as Sole Arbitrator. Claim and counter claim are filed and arbitration is in process. As no Arbitration award has been passed and impact cannot be quantified at this stage, therefore, no accounting adjustment have been made in books of Accounts. Debtors include Rs. 2,444.85 lakh receivable from RTVNPL on account of conversion bills as on 31-03-2024.

50 Other Statutory Information

a) The title deeds of all the immovable properties (other than properties where the company is the lessee and the lease agreements are duly executed in favour of the lessee) are in the name of erstwhile pre-demerged company. The immovable properties were transferred by virtue of BIFR Order No.314/98, dated 13th April, 2004. The immovable properties acquired subsequent to demerger are held in the name of the company

b) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

c) The company has not been declared wilful defaulter by any bank or financial institution or other lender.

d) The Company do not have any transactions with companies struck off.

e) 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.

f) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

g) During the year company has not availed working capital borrowings from banks or financial institutions.

51 The figures for the corresponding previous year has been regrouped/ reclassified wherever necessary, to make them comparable.