l) Provisions (other than for employee benefits)
Provisions are recognised 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.
Where the Company expects some or all of the
expenditure required to settle a provision will be
reimbursed by another party, the reimbursement is
recognised when, and only when, it is virtually certain
that reimbursement will be received if the entity
settles the obligation. The reimbursement is treated
as a separate asset.
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 recognised
as a finance cost. Expected future losses are not
provided for.
Onerous contracts
A provision for onerous contract is recognised when
the expected benefits to be derived by the company
from a contract are lower than the unavoidable
cost of meeting its obligation under the contract.
The provision is measured at the present value of
the lower of the expected cost of terminating the
contract and the expected net cost of continuing
with the contract. Before a provision is established,
the company recognises any impairment loss on
assets associated.
m) Contingent liabilities and contingent assets
Contingent liability is a possible obligation arising 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 entity or a present obligation that arises
from past events but is not recognized because it is
not probable that an outflow of resources embodying
economic benefits will be required to settle the
obligation or the amount of the obligation cannot
be measured with sufficient reliability. The Company
does not recognize a contingent liability but discloses
its existence in the standalone financial statements.
Contingent asset is not recognised in consolidated
standalone financial statements since this may result
in the recognition of income that may never be
realised. However, when the realisation of income
is virtually certain, then the related asset is not a
contingent asset and is recognized.
Provisions, contingent liabilities and contingent assets
are reviewed at each Balance Sheet date
n) Commitments
Commitments include the amount of purchase order
(net of advances) issued to parties for completion of
assets. Provisions, contingent liabilities, contingent
assets and commitments are reviewed at each
reporting date.
o) (i) Revenue from contract with customers
Under Ind AS 115, the Company recognized revenue
when (or as) a performance obligation was satisfied,
i.e. when 'control' of the goods underlying the
particular performance obligation were transferred to
the customer.
Further, revenue from sale of goods is recognized
based on a 5-Step Methodology which is as follows:
Step 1: Identify the contract(s) with a customer
Step 2: I dentify the performance obligation in
contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the
performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity
satisfies a performance obligation
Contract assets are recognized when there is excess
of revenue earned over billings on contracts. Contract
assets are classified as unbilled receivables (only act
of invoicing is pending) when there is unconditional
right to receive cash, and only passage of time is
required, as per contractual terms.
Contract liability is recognized when billings are in
excess of revenues.
Contracts are subject to modification to account for
changes in contract specification and requirements.
The Company reviews modification to contract in
conjunction with the original contract, basis which
the transaction price could be allocated to a new
performance obligation, or transaction price of
an existing obligation could undergo a change. In
the event transaction price is revised for existing
obligation, a cumulative adjustment is accounted for.
Use of significant judgements in revenue recognition
- The Company's contracts with customers could
include promises to transfer multiple products
and services to a customer. The Company
assesses the products / services promised in
a contract and identifies distinct performance
obligations in the contract. Identification
of distinct performance obligation involves
judgement to determine the deliverables and the
ability of the customer to benefit independently
from such deliverables.
- Judgement is also required to determine the
transaction price for the contract. The transaction
price could be either a fixed amount of customer
consideration or variable consideration with
elements such as cash discount, trade discount,
and rebate. The transaction price is also adjusted
for the effects of the time value of money if
the contract includes a significant financing
component. Any consideration payable to the
customer is adjusted to the transaction price,
unless it is a payment for a distinct product
or service from the customer. The estimated
amount of variable consideration is adjusted in
the transaction price only to the extent that it
is highly probable that a significant reversal in
the amount of cumulative revenue recognised
will not occur and is reassessed at the end of
each reporting period. The Company allocates
the elements of variable considerations to all the
performance obligations of the contract unless
there is observable evidence that they pertain to
one or more distinct performance obligations.
- The Company uses judgement to determine
an appropriate standalone selling price for a
performance obligation. The Company allocates
the transaction price to each performance
obligation on the basis of the relative standalone
selling price of each distinct product or service
promised in the contract.
Revenue Recognition
The Company recognises revenue generally at the
point in time when the products are delivered or
dispatch to customer or when it is delivered to a
carrier for export sale, which is when the control over
product is transferred to the customer.
Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction
price (net of variable consideration) allocated to that
performance obligation. A receivable is recognised
when the goods are delivered as this is the point in
time that the consideration is unconditional because
only passage of time is required before payment is
due.
i) Export Incentives
Export incentives under various schemes notified
by the government are recognised on accrual basis
when no significant uncertainties as to the amount
of consideration that would be derived and as to its
ultimate collection exist.
(iii) Insurance and Other Claims
Revenue in respect of claims is recognized when
no significant uncertainty exists with regard to the
amount to be realized and the ultimate collection
thereof.
p) Government grant
Government grants in the form of transfers of
resources to the Company in return for past
compliance with certain conditions relating to the
operating activities of the Company are recognized
as other income in profit or loss.
Government grants related to capital assets are
recognized initially as deferred income at fair value
or deducted from the carrying value of the asset
when there is reasonable assurance that they will
be received and the Company will comply with the
conditions associated with the grant; they are then
recognised in profit or loss as other income on a
systematic basis or depreciated over the remaining
useful life of the asset, respectively.
Further, Grants that compensate the Company for
expenses incurred are recognised in profit or loss
on a systematic basis in the periods in which such
expenses are recognised.
q) Recognition of interest income or expense
Interest income or expense is recognised using the
effective interest method.
The 'effective interest rate' is the rate that exactly
discounts the estimated future cash payments or
receipts through the expected life of the financial
instrument to:
a) the gross carrying amount of the financial asset;
or
b) the amortised cost of the financial liability.
In calculating interest income and expense, the
effective interest rate is applied to the gross carrying
amount of the asset (when the asset is not credit-
impaired) or to the amortised cost of the liability.
However, for financial assets that have become
credit impaired subsequent to initial recognition,
interest income is calculated by applying the effective
interest rate to the amortised cost of the financial
asset. If the asset is no longer credit-impaired, then
the calculation of interest income reverts to the gross
basis.
r) Income taxes
Income tax comprises current and deferred tax. It is
recognised in Statement of Profit and Loss except to
the extent that it relates to a business combination
or an item recognised directly in equity or in other
comprehensive income.
The Company has determined that interest and
penalties related to income taxes, including uncertain
tax treatments, do not meet the definition of income
taxes, and therefore accounted for them under Ind AS
37 Provisions, Contingent Liabilities and Contingent
Assets.
Current tax
Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable
in respect of previous years. The amount of current
tax reflects the best estimate of the tax amount
expected to be paid or received after considering
the uncertainty, if any, related to income taxes. It is
measured using tax rates (and tax laws) enacted or
substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset
only if there is a legally enforceable right to set off
the recognised amounts, and it is intended to realise
the asset and settle the liability on a net basis or
simultaneously.
Deferred tax
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of the
assets and liabilities for financial reporting purposes
and the corresponding amounts used for taxation
purposes. Deferred tax is also recognised in respect
of carried forward tax losses (if any) and tax credits.
Deferred tax assets are recognised to the extent that it
is probable that future profits will be available against
which they can be used. Deferred tax assets are
reviewed at each reporting date and are recognised
to the extent that it is probable that the related tax
benefits will be realized. Deferred tax is measured
at the tax rates that are expected to apply to the
period when the asset is realized or the liability is
settled, based on the laws that have been enacted or
substantively enacted by the reporting date. Deferred
tax assets - unrecognised or recognised, are
reviewed at each reporting date and are recognised
/ reduced to the extent that it is probable / no longer
probable respectively that the related tax benefits will
be realized.
The measurement of deferred tax reflects the tax
consequences that would follow from the manner in
which the Company expects, at the reporting date,
to recover or settle the carrying amount of its assets
and liabilities.
Section 115 BAA of the Income Tax Act 1961,
introduced by Taxation Laws (Amendment)
Ordinance, 2019 gives a one-time irreversible option
to Domestic Companies for payment of corporate
tax at reduced rates. The Company has opted the
new tax regime from 1 April 2022.
Deferred tax assets and liabilities are offset only if there
is a legally enforceable right to set off the current tax
liabilities and assets, and they relate to income taxes
levied by the same tax authorities
;) Operating segments
An operating segment is a component of the Company
that engages in business activities from which it
may earn revenues and incur expenses, including
revenues and expenses that relate to transactions
with any of the Company's other components, and
for which discrete financial information is available. All
operating segments' operating results are reviewed
regularly by the Company's Chief Operating Decision
Maker (CODM) to make decisions about resources
to be allocated to the segments and assess their
performance.
) Royalty
Payment of technical know-how in the form of royalty
for providing technical assistance is being accounted
for on accrual basis as per the agreement between
the parties.
j) Corporate Social Responsibility ("CSR") expenditure
CSR expenditure incurred by the Company is charged
to the Statement of the Profit and Loss.
v) Cash and cash equivalents
For the purpose of presentation in the statement of
cash flows, cash and cash equivalents include cash in
hand, demand deposits held with banks, other short¬
term highly liquid investments with original maturities
of three months or less that are readily convertible to
known amounts of cash and which are subject to an
insignificant risk of changes in value.
w) 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.
x) Earnings per share
Basic earnings/ (loss) per share is calculated by
dividing the net profit/(loss) for the year attributable
to equity shareholders by the weighted average
number of equity shares outstanding during the
year. The weighted average number of equity shares
outstanding during the period is adjusted for events
of bonus issue and share split. For the purpose of
calculating diluted earnings/ (loss) per share, the
net profit or loss for the period attributable to equity
shareholders and the weighted average number of
shares outstanding during the year are adjusted for
the effects of all dilutive potential equity shares.
y) Asset held for sale
The Company classifies assets as held for sale if
their carrying amounts will be recovered principally
through a sale transaction rather than through
continuing use. This condition is regarded as met
only when the asset is available for immediate sale
in its present condition subject only to terms that are
usual and customary for sales of such asset and its
sale is highly probable. Such assets or group of assets
/ liabilities are presented separately in the Balance
Sheet, in the line "Assets held for sale" and "Liabilities
held for sale" respectively. Once classified as held
for sale, intangible assets and PPE are no longer
amortised or depreciated.
Such assets or disposal groups held for sale are stated
at the lower of carrying amount and fair value less
costs to sell."
z) Recent Indian Accounting Standards (Ind AS)
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 March 31, 2025, MCA has notified Ind AS - 117
Insurance Contracts and amendments to Ind AS 116
- Leases, relating to sale and leaseback transactions,
applicable to the Company w.e.f. April 1, 2024. The
Company has reviewed the new pronouncements
and based on its evaluation has determined that it
does not have any significant impact in its standalone
financial statements
40.3 Pursuant to judgement by the Hon'ble Supreme Court dated 28 February 2019, it was held that basic wages, for
the purpose of provident fund, to include special allowances which are common for all employees. However,
there is uncertainty with respect to the applicability of the judgement and period from which the same applies.
Owing to the aforesaid uncertainty and pending clarification from the authorities in this regard, the Company
had not recognised any provision for the years prior to 28 February 2019. Further, management also believes
that the impact of the same on the Company though not quantifiable will not be material.
41 Segment information
Board of Directors of the Company has been identified as the Chief Operating Decision Maker (CODM) as
defined by Ind AS 108, "Operating Segments". Operating Segments have been defined and presented based on
the regular review by the CODM to assess the performance of segment and to make decision about allocation
of resources. The Company has identified only one operating segment i.e."Manufacturing of Steel products"
and operations are mainly within India. Hence, it is the only reportable segment under Ind AS 108 'Operating
Segments'. Entity wide disclosure required by Ind AS 108 are made as follows:
43.2 Defined contribution plan:-
The Company's provident fund scheme and employee's state insurance (ESI) fund scheme are defined contribution
plans. The Company has recorded an expense of C414.71 (Previous year: C360.22) under provident fund scheme
and C51.25 (Previous year: C52.02) under ESI scheme. These have been included in the note 34 Employees
benefits expenses, in Statement of Profit and Loss.
43.3 Defined benefit plan
Gratuity (funded)
The employees' gratuity fund scheme managed by VSSL Gratuity fund trust is a defined benefit plan. The present
value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures
each unit separately to build up the final obligation. The Company made annual contributions to the VSSL Gratuity
fund trust.
The above defined benefit plan exposes the Company to following risks:
Interest rate risk:
The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the
defined benefit obligation will tend to increase.
Salary inflation risk:
Higher than expected increase in salary will increase the defined benefit obligation
Demographic risk:
This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal,
disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward
and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to
overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically
costs less per year as compared to a long service employee.
The Company actively monitors how the duration and the expected yield of the investments are matching the
expected cash outflows arising from the employee benefit obligations. The Company has not changed the
processes used to manage its risks from previous periods. The funds are managed by specialised team of VSSL
Gratuity Fund Trust
i) Funding
Gratuity is a funded benefit plan for qualifying employees. 100% of the plan assets are managed by VSSL Gratuity
fund trust. The assets managed are highly liquid in nature and the Company does not expect any significant
liquidity risks. The following table sets out the status of the defined benefit plan as required under Ind-AS 19 -
Employee Benefits:
43.4 Share based payments to employees (Equity settled)
i) ESOP Plan 2016: Second (2nd) Grant
The Nomination and Remuneration Committee of the Company in its meeting held on 11 November 2020 has
granted 135,000 options to its eligible employees against the plan under the Second grant out of 136,937 options
lying un-granted at a price of C72 per share, other terms and conditions remaining the same.
During the year, the Company has allotted 32,000 (Previous year: 26,250) equity shares to the eligible employees
at a price of C72 per share. Along with this employees had also exercised 32,000 Bonus Shares in the ratio of 1:1
during the year (Previous year: 26,250)
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise
price, the term of the option, the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option.
ii) ESOP Plan 2016: Third (3rd) Grant
The Nomination and Remuneration Committee in its meeting held on 23rd July, 2022 has made a third grant of
9,000 options under ESOP Plan 2016 to its eligible employees out of 9,437 options lying ungranted under the said
Plan at a price of C72 per share.
During the year, the Company has allotted 2,250 (Previous year : Nil) equity shares to the eligible employees at a
price of C72 per share. Along with this employees had also exercised 2,250 Bonus Shares in the ratio of 1:1 during
the year (Previous year: Nil)
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise
price, the term of the option, the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option.
*The fair value of borrowings is based upon a discounted cash flow analysis that used the aggregate cash flows from
principal and finance costs over the life of the debt and current market interest rates.
(iv) Derivatives are carried at fair value at each reporting date. The fair values of the derivative financial instruments has
been determined using valuation techniques with market observable inputs. The company uses mark to market
provided by bank for valuation of this derivative contracts. There are no significant unobservable inputs used for
Derivative financial instruments.
There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2025 and 31 March
2024.
47 Financial risk management
47.1 Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's
risk management framework. The board of directors has established the risk management committee which is
responsible for developing the monitoring the company risk management policies. The Company's risk manage¬
ment policies are established to identify and analyse the risk 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 effect changes in market conditions and Company's activities. The Company, through its training and
management standards and procedures, aims to maintain discipline and constructive control environment in
which all employees understand their roles and obligations.
The Company's audit committee oversees how management monitors compliance with Company's risk man¬
agement policies and procedures, and reviews the adequacy of the risk management framework in relation to
risk faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit
undertakes both regular and adhoc reviews of risk management controls and procedures, the result of which are
reported to audit committee.
The Company has exposure to the following risks arising from financial instruments:
- credit risk (see (ii))
- liquidity risk (see (iii)): and
- market risk (see (iv))
47.2 Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails
to meet its contractual obligations. The carrying amount of financial assets represents the maximum credit risk
exposure and arises principally from the Company's receivable from customers and loans. The maximum expo¬
sure to credit risks is represented by the total carrying amount of these financial assets in the Balance Sheet:
The loans primarily represents loans given to employees. The management believes these to be high quality
assets with negligible credit risk. The management believes the parties to which these loans have been given
have strong capacity to meet the obligations and where the risk of default is negligible or nil and accordingly no
allowance for expected credit loss has been provided on these financial assets.
Credit risk on cash and cash equivalents and bank deposits is limited as the Company generally invests in deposits
with banks with high credit ratings assigned by domestic credit rating agencies.
47.3 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 assets. The Company's approach to
manage liquidity is to have sufficient liquidity to meet it's liabilities when they are due, under both normal and
stressed circumstances, without incurring losses or risking damage to the Company's reputation.
Management manages the liquidity risk by monitoring cash flow forecasts on a periodic basis and maturity profiles
of financial assets and liabilities. This monitoring takes into account the accessibility of cash and cash equivalents
and additional undrawn financing facilities.
47.4 Market risk
(a) Commodity price risk
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 key raw materials used
in operations. The Company manages fluctuations in raw material price through hedging in the form of advance
procurement when the prices are perceived to be low and also enters into advance buying contracts as strategic
sourcing initiative in order to keep raw material and prices under check to the extent possible.
(b) Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to
the Company's borrowings with floating interest rates.
Exposure to interest rate risk
The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest
rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The risk
is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. The
exposure of the Company's borrowing to interest rate changes as reported to the management at the end of the
reporting period are as follows:
50 Additional regulatory information pursuant to the requirement in Division II of Schedule III to the Companies
Act 2013:
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending
against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible
assets or both during the current or previous year.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including
foreign entities (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 to or on behalf of the Ultimate
Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(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
(vii) The Company has 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
(such as, search or survey or any other relevant provisions of the Income Tax Act, 1961
(viii) None of the entities in the Company have been declared wilful defaulter by any bank or financial institution
or government or any government authority.
(ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(x) The Company has not entered into any scheme of arrangement which has an accounting impact on current
or previous financial year.
(xi) The Company including the "Companies in the Group" (as per the provisions of the Core Investment
Companies (Reserve Bank) Directions, 2016) do not have any Core Investment Company ("CIC")
51 The Company has established a comprehensive system of maintenance of information and documents as required
by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires
existence of such information and documentation to be contemporaneous in nature, the Company continuously
updates its documentation for the international transactions entered into with the associated enterprises during
the financial year and expects such records to be in existence latest by the due date as required under law. The
management is of the opinion that its international transactions are at arm's length so that the aforesaid legislation
will not have any impact on the financial statements, particularly on the amount of income tax expense and that
of provision for taxation.
As per our report of even date attached For and on behalf of Board of Directors of
For B S R & Co. LLP Vardhman Special Steels Limited
Chartered Accountants
ICAI Firm Registration No 101248W/W-100022
Gaurav Mahajan Sachit Jain R. K. Rewari
Partner Vice Chairman & Managing Director Executive Director
Membership number 507857 DIN 00746409 DIN 00619240
Sanjeev Singla Sonam Dhingra
Chief Financial Officer Company Secretary
Place: Ludhiana Place: Ludhiana
Date: 22 April 2025 Date: 22 April 2025
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