1.13 Provisions and contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
The financial obligation towards mine closure plans under relevant Acts and Rules are technically estimated, based on total available ore reserves of all the mining leases. The amount so determined is provided in the books of account on the basis of run of mine ore production of the mines of all the mining leases.
1.14 Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
1.15. Earnings per share
The basic earnings/ (loss) per share is computed by dividing the net profit/ (loss) attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.
1.16. Segment reporting
Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision Maker (CODM). The Company has identified business segments as its primary segments.
The Company’s primary segments consist of Mining, Ferroalloys, Coke and energy.
Unallocable represents other income and expenses which relate to the Company as a whole and are not allocated to segments.
1.17 Operating cycle
As mentioned in para 1.1(ii) above under ‘Basis of preparation of the standalone financial statements’, the Company based on the normal time between acquisition of assets and their realisation in cash or cash equivalents, has determined its operating cycle as one year. The above basis is used for classifying the assets and liabilities into current and non-current as the case may be.
1.18. Cash flow statement
Cash flows are reported using the indirect method, whereby profit/ (loss) before extraordinary items and tax is adjusted for the effects of transactions of noncash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
1.19. Financial instruments
Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired.
Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling financial assets.
Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless they are measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in Standalone Statement of Profit and Loss.
Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest method.
Equity instruments
An equity instrument is a contract that evidences residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received net of direct issue cost.
1.20 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in the Standalone Statement of Profit and Loss in the year in which they are incurred.
The Company determines the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the year less any interest income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets, to the extent that an entity borrows funds specifically for the purpose of obtaining a qualifying asset. In case if the Company borrows generally and uses the funds for obtaining a qualifying asset, borrowing costs eligible for capitalisation are determined by applying a capitalisation rate to the expenditures on that asset.
Borrowing Cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the finance cost.
1.21 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. For the year ended 31 March 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Companies.
(iv) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having par value of TI0 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting. In the event of the liquidation, the equity shareholders are eligible to receive the remaining assets of the Company in proportion to their shareholdings after distribution of all preferential amounts.
(v) Aggregate number and class of equity shares allotted as fully paid without payment being received in cash for the period of 5 years immediately preceding the balance sheet date:
(a) The scheme of amalgamation of Star Metallics and Power Private Limited (‘Transferor’) a subsidiary, with the Company was approved by the Bengaluru bench of National Company Law Tribunal (NCLT), vide its order dated 4 March 2020, and on completion of the required formalities the Scheme became effective from 1 April 2019. Pursuant to the approval of the scheme, 251,941 equity shares of ^10 each were issued to the minority shareholders.
(b) The Board of Directors of the Company in its meeting held on 18 December 2023 recommended and approved the issuance of 5 (five) fully paid-up bonus shares of T10/ - each for every 1 (one) fully paid-up equity share held as on the record date. The said bonus issue was approved by the shareholders of the Company on 20 January 2024 through Postal Ballot/ e-Voting. Subsequently, on 5 February 2024, the Company allotted 13,50,29,115 equity shares of T10/ - each to shareholders who held equity shares as on the record date of 2 February 2024 by utilising the free reserves as per the Act.
Notes:
i. Terms of repayment: Borrowing from ICICI Bank Limited and IndusInd Bank Limited is payable over 84 equal instalments starting from 31 March 2021 and from Axis Bank Limited is payable over 73 equal instalment starting from 31 March 2021.
The entire outstanding loan from IndusInd Bank Limited has been repaid during the year.
ii. Security:
(a) First pari-passu charge on all the immovable assets (limited to properties pledged against the facility), movable assets, project receivables, debt service reserve accounts assets and escrow account.
(b) Second pari-passu charge on all the current assets and receivables.
iii. Rate of interest: In the range of 8.25% to 9.00% as at 31 March 2024 (As at 31 March 2023: 6.50% to 9.00%).
iv. Working capital facilities (fund based and non-fund based) aggregating to "429,500 lakh (31 March 2023: 449,600 lakh) are secured by first pari-passu charge on all the current assets, cash and receivables and second pari-passu charge on all the immovable assets (limited to properties pledged against the facility), movable assets, debt service reserve accounts assets and escrow account assets.
v. The Company has filed quarterly returns or statements with the banks in lieu of the sanctioned working capital facilities, which are in agreement with the books of account.
vi. The Company has not defaulted on any loan payable and has complied with the covenants as per the terms of the loan agreement.
Note No. 35 - Segment information
The Chief Operating Decision maker of the Company examines the performance of the Company from a product perspective and has identified three reportable segments (a) Mining, (b) Ferroalloys and (c) Coke and Energy. Unallocable represents the income, expenses, assets and liabilities which are related to the Company as a whole and cannot be allocated to a particular segment.
Prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.
The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional policies for segment reporting.
(a) Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and Expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable”.
(b) Segment Assets and Segment Liabilities represent Assets and Liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable”.
Note No. 37 - Financial instruments
The material 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 are disclosed in material accounting policies to the standalone financial statements.
Financial instruments by category and 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 standalone 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 is as follows:
Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
There are no transfers between levels during the year.
The management considers that the carrying amount of financial assets and financial liabilities recognised in these standalone financial statements at amortised cost approximate their fair values.
Notes:
i. The Company has not disclosed the fair value for trade receivables, cash and cash equivalents, other bank balances, other financial assets, loans, borrowings, lease liabilities, trade payables and other financial liabilities because their carrying value of financial instruments measured at amortised cost equals to the fair value.
ii. During the reporting year ended 31 March 2024 and 31 March 2023, there was no transfer between level 1 and level 2 fair value measurement.
Financial risk management
The Board of Directors of the Company have the overall responsibility for the establishment and oversight of the their risk management framework. The Company has constituted a Risk Management Committee. The Company has in place a Risk management framework to identify, evaluate business risks and challenges across the Company. The 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 and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The 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 which regularly reviews risk management controls and procedures, the results of which are reported to the Audit Committee. These risks include foreign currency risk, credit risk, liquidity risk and interest rate risk.
Foreign currency risk management
The Company’s functional currency remains the Indian Rupee (INR). While the primary currency of business transactions is INR, the Company engages in foreign currency transactions, thereby exposing itself to exchange rate fluctuations. Such fluctuations impact the cost of imports, particularly in relation to raw materials procurement.
Throughout the fiscal year, the Company has not only continued its focus on imports but has also expanded its activities to include exports. Approximately 90% of our export transactions are secured with advance payments, with the remaining 10% receivable upon shipment delivery. While this approach to exports mitigates a substantial portion of associated risks, it’s essential to acknowledge the residual exposure to foreign exchange fluctuations in these transactions.
Commodity price risk
The Company doesn’t enter into any long term contract with its suppliers for hedging its commodity price risk. Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Company is exposed to credit risk from its operating activities mainly trade receivables. The Company has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. Credit risk is managed by the Company through approved credit norms, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. Ultimate responsibility for managing the liquidity risk rests with the management, which has established an appropriate liquidity risk management framework for managing the Company’s short-
Capital management
The Company’s objective for capital management is to maximize shareholder’s wealth, safeguard business continuity and support the growth of the Company. The Company determines the capital management requirement based on annual operating plans and long term and other strategic investment plans. The funding requirement are met through equity, borrowings and operating cash flows required.
Note No. 40 - Other Statutory information
(i) Relationship with struck off companies
The Company has not entered any transactions with Companies struck off under Section 248 of Companies Act, 2013 or Section 560 of Companies, 1956.
(ii) Details of benami property held
The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.
(iii) Compliance with number of layers of companies
The Company is in compliance with the number of layers prescribed under Clause (87) of Section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017.
(iv) Investment in crypto currency
The Company has not traded or invested in crypto currency or virtual currency during the financial year.
(v) Charge with registrars of the Company
The Company does not have any charge or satisfaction which is yet to be registered with Registrars of Companies beyond the statutory period.
(vi) The Company has not advanced or loaned or invested fund to any other person(s) or entit(ies), including foreign entites
(intermediaries) with the understanding that the intermediary shall:
a) 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
b) Provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(vii) The Company has not received any fund from any person(s) or entit(ies), including foreign entities (funding party) with the understanding (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 the funding party (ultimate beneficiaries) or
b) Provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
Note No. 41:
The Company has used accounting software’s for maintaining its books of account for the financial year ended 31 March 2024 which has a feature of recording audit trail (edit log) facility, however, the same has not operated throughout the year for all relevant transactions recorded in the software. The Company is in process of implementing the changes inline with the regulation.
1 Debt includes current and Non-current portion of lease liabilities.
2 Earnings for debt service includes net profit after taxes and non-cash operating expenses like depreciation, profit/ loss on sale of property, plant and equipment, etc.
3 Debt service includes interest & lease payments.
4 Revenue from operations means gross credit sales after deducting sales return.
5 Total purchases means gross credit purchases after deducting purchase return. Gross credit purchases includes other expenses.
6 Working capital is calculated by deducting current liabilities from current assets.
7 Capital employed is calculated by Net worth total debt deferred tax liability - Intangible asset.
8 Weighted average Investments exclude investment
in subsidiary and associate.
Notes:
(a) Repayment of debt has resulted in an improvement in the ratio.
(b) Increase in profit has resulted in an improvement in the ratio.
(c) Reduce in the revenue has resulted in a detoriation in the ratio.
(d) Increase in income from investments has resulted in an improvement in the ratio.
(e) Decrease in the trade payable has resulted in an improvement in the ratio.
(f) Increase in closing inventory and decrease in COGS has resulted in a detoriation in the ratio.
Note No. 43 - Event occurring after reporting period
Subsequent to the year end, on 25 April 2024, the Company has signed a definitive agreement for strategic business acquisition to acquire an 80% equity stake in Arjas Steel Private Limited (ASPL) at an Enterprise value of A3,00,000 lakh. The said strategic business acquisition will help the Company to accelerate its journey of forward integration into steel, value-added products and unlock potential for numerous synergies. The acquisition of ASPL is expected to be completed within seven months, subject to customary closing conditions and approval of the Competition Commission of India as per the Share Purchase Agreement (SPA).
The Company evaluated all events or transactions that occurred after 31 March 2024 up through 15 May 2024, the date the standalone financial statements were authorized for issue by the Board of Directors. Based on this evaluation, the Company is not aware of any events or transactions that would require recognition or disclosure in the standalone financial statements other than the above.
Note No. 44 - Previous year figures
Previous years figures has been regrouped/ reclassified wherever necessary to correspond with current year classification/ disclosure.
For and on behalf of the Board of Directors
T.R. Raghunandan Bahirji Ajai Ghorpade
Chairman Managing Director
DIN: 03637265 DIN: 08452844
Mohammed Abdul Saleem Uttam Kumar Bhageria
Whole Time Director, Company Chief Financial Officer &
Secretary & Compliance Officer Chief Risk Officer
Place: Bengaluru Date: 15 May 2024
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