2.11 Provisions
Provisions are recognized when the Company has a
present obligation (legal or constructive) as a result of a
past event and it is probable that an outflow of economic
benefits will be required to settle the obligation, and
a reliable estimate can be made of the amount of the
obligation taking into account the risks and uncertainties
surrounding the obligation.
A provision for onerous contracts is recognized when the
expected benefits to be derived by the Company from a
contract are lower than the unavoidable cost of meeting
its obligations under the contract. The provision for an
onerous contract 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
such provision is made, the Company recognizes any
impairment loss on the assets associated with that contract.
Provisions are reviewed at the end of each reporting period
and adjusted to reflect the current best estimates. If it is no
longer probable that an outflow of resources embodying
economic benefits will be required to settle the obligation,
the provision is reversed.
2.12 Financial instruments
i. Financial assets
The Company initially recognizes loans and
receivables and deposits on the date that they are
originated. All other financial assets are recognized
initially on the trade date at which the Company
becomes a party to the contractual provisions of
the instrument.
The Company de-recognizes a financial asset
when the contractual rights to the cash flows from
the asset expire, or it transfers the rights to receive
the contractual cash flows on the financial asset
in a transaction in which substantially all the risks
and rewards of ownership of the financial asset
are transferred. Any interest in transferred financial
assets that is created or retained by the Company is
recognized as a separate asset or liability. Financial
assets and liabilities are offset and the net amount
is presented in the balance sheet when, and only
when, the Company has a legally enforceable right
to offset the amounts and intends either to settle on a
net basis or to realize the asset and settle the liability
simultaneously.
A financial asset shall be measured at amortized cost
if both of the following conditions are met:
the financial asset is held within a business
model whose objective is to hold financial assets
in order to collect contractual cash flows and
the contractual terms of the financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.
They are presented as current assets, except
for those maturing later than 12 months after the
reporting date which are presented as non-current
assets. Except Trade Receivable, financial assets are
measured initially at fair value plus transaction costs
and subsequently carried at amortized cost using the
effective interest method, less any impairment loss.
The Company’s financial assets include security
deposits, cash and cash equivalents, trade receivables
and eligible current and non-current assets.
Cash and cash equivalents comprise cash balances
and term deposits with original maturities of one
year or less. Bank overdrafts that are repayable on
demand and form an integral part of the Company’s
cash management are included as a component of
cash and cash equivalents for the purpose of the
statement of cash flows.
ii. Financial liabilities
The Company initially recognizes debt securities
issued and subordinated liabilities on the date that
they are originated. All other financial liabilities
are recognized initially on the trade date at which
the Company becomes a party to the contractual
provisions of the instrument.
The Company de-recognizes a financial liability
when its contractual obligations are discharged or
cancelled or expired.
The Company has the following financial liabilities:
loans and borrowings and trade and other payables.
Such financial liabilities are recognized initially at
fair value through profit or loss and stated net off
transaction cost that are directly attributable to them.
Subsequent to initial recognition these financial
liabilities are measured at amortized cost using the
effective interest method.
2.13 Impairment
i. Financial assets
A financial asset not carried at fair value through
profit or loss is assessed at each reporting date to
determine whether there is objective evidence that it
is impaired. A financial asset is impaired if objective
evidence indicates that a loss event has occurred after
the initial recognition of the asset, and that the loss
event had a negative effect on the estimated future
cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets are impaired
can include default or delinquency by a debtor,
restructuring of an amount due to the Company
on terms that the Company would not consider
otherwise, indications that a debtor or issuer will enter
bankruptcy, or the disappearance of an active market
for a security.
ii. Non-financial assets
At the end of each reporting period, the Company
reviews the carrying amount of its tangible and
intangible assets to determine whether there is
any indication that those assets have suffered
an impairment loss. If such indication exists, the
recoverable amount of the asset is estimated in
order to determine the extent of the impairment
loss (if any). When it is not possible to estimate
the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they
are allocated to the smallest group of cash-generating
units for which a reasonable and consistent allocation
basis can be identified.
Intangible assets with indefinite useful lives and
intangible assets not yet available for use are tested
for impairment at least annually, and whenever there
is an indication that the asset may be impaired.
Recoverable amount is the higher of the fair value less
costs of disposal and value in use. In assessing value
in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the time
value of money and the risks specific to the asset
for which the estimates of future cash flows have
not been adjusted.
2.14 Borrowing costs
Borrowing costs incurred for obtaining assets which takes
substantial period to get ready for their intended use are
capitalized to the respective assets wherever the costs
are directly attributable to such assets and in other cases
by applying weighted average cost of borrowings to the
expenditure on such assets. Other borrowing costs are
treated as expense for the year.
Transaction costs in respect of long-term borrowings
are amortized over the tenure of respective loans using
effective interest method.
2.15 Finance income and costs
Finance income comprises interest income on funds
invested. Interest income is recognized as it accrues
in the statement of profit and loss, using the effective
interest method.
Finance costs comprise interest expense on borrowings,
unwinding of the discount on provisions, impairment losses
recognized on financial assets. Borrowing costs that are
not directly attributable to the acquisition, construction
or production of a qualifying asset are recognized in
the statement of profit and loss using the effective
interest method.
2.16 Earnings per share
The Company presents basic and diluted earnings per
share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to
ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during
the period, adjusted for own shares held. Diluted EPS is
determined by adjusting the profit or loss attributable to
ordinary shareholders and the weighted average number
of ordinary shares outstanding, adjusted for own shares
held, for the effects of all dilutive potential ordinary shares.
2.17 Segment reporting
Operating segments are identified in a manner consistent
with the internal reporting provided to the chief operating
decision maker.
The Company is in the business of manufacturing of super
alloys and other special metals. Considering the core
activities of the Company, management is of the view
that the Company operates a single business segment.
Therefore, there is no other reportable segment.
2.18 Claims by / against the Company:
Claims on underwriters/carriers towards loss / damage are
accounted when monetary claims are preferred.
Claims for refund of customs duty including project
imports/port trust charge/excise duty are accounted on
acceptance/receipt.
Liquidated Damages on suppliers are accounted on recovery.
Liquidated damages levied by the customers are netted-
off from revenue on recovery/advice by the customers.
A provision is created for the likely claims of Liquidated
Damages for shipments made where a reliable
estimation can be made.
Disputed/Time barred debts from Govt. Depts. & PSUs
are not treated as Doubtful Debts. However, on a review
appropriate provisions/write offs are made in the books of
accounts on a case to case basis.
Provision for Doubtful Debts is made on the amounts due
from other than Govt. Depts. & PSUs using expected credit
loss provisional matrix.
Provision for Contingencies & Warranty to take care of
rejected / returned material by customers is provided at an
average of percentages of rejections over turnover related
to manufactured products for the previous 5 years.
2.19 Research and development expenses:
Research expenditure is charged to the Statement of Profit
and Loss. Development costs of products are also charged
to the Statement of Profit and Loss unless a product’s
technical feasibility has been established, in which case
such expenditure is capitalized. Tangible assets used in
research and development are capitalized.
Expenditure incurred towards other development activity
where the research results or other knowledge is applied
for developing new or improved products or processes, are
recognised as an Intangible Asset if the recognition criteria
specified in Ind AS 38 are met and when the product or
process developed is expected to be technically and
commercially usable, the company has sufficient resources
to complete development and subsequently use or sell the
intangible asset, and the product or process is likely to
generate future economic benefits.
2.20 Physical verification of Fixed Assets and Inventory:
Fixed Assets under the heads Land & Development, Roads
& Bridges, Drainage, Sewerage and water system and
Buildings & Internal Services are verified once in 3 years. All
other Fixed Assets are verified once in the Financial Year.
Inventories of work-in-process, finished goods, raw
materials and consumables in the Company premises are
verified at the end of the financial year.
Inventories of raw materials, stores and spares in the Central
Stores are verified on perpetual basis as per norms fixed
from time to time and reconciled. Provisional adjustments
are made to revenue, in respect of discrepancies pending
reconciliation.
2.21 Cash Flow Statement:
Cash flow statement has been prepared in accordance
with the indirect method prescribed in Ind AS 7-
Statement of Cash Flows.
2.22 New standards and interpretations not yet effective:
i. A number of new standards, amendments to
standards and interpretations are not yet effective as
on the reporting date, and have not been applied in
preparing these financial statements. The effect of the
same is being evaluated by the Company.
2.23 Government Grants:
i. Grants from the Government are recognized at their
fair value where there is reasonable assurance that
grant will be received and the Company will comply
with all attached conditions.
ii. Government grants relating to income are deferred
and recognized in the profit and loss over the period
necessary to match them with the costs that they are
intended to compensate and presented within other
income. Alternatively, they are deducted in reporting
the related expense.
iii. Grants related to non-depreciable assets may also
require the fulfilment of certain obligations and would
then be recognized in profit or loss over the periods
that bear the cost of meeting the obligations.
iv. Government Grants received either as subsidy or
otherwise for acquisition of depreciable assets are
accounted as deferred income. If the grant/subsidy is
absolute, amount corresponding to the depreciation
is treated as income over the life of the asset. If the
grant/subsidy is attached with any conditions, such as
repayment, income is accounted as per the terms of
the grant/subsidy.
2.24 LEASES
Company as a lessee:
Contracts with third party, which give the company the right
of use in respect of an Asset, are accounted in line with
the provisions of Ind AS 116 - “Leases” if the recognition
criteria as specified in the Accounting standard are met.
Lease payments associated with short term lease (term of
twelve months or less) and lease in respect of low value
assets are charged off as expenses on straight line basis
over lease term or other systematic basis, as applicable.
At commencement date, the value of “right of use” is
capitalised at the present value of outstanding lease
payments plus any initial direct cost and estimated cost, if
any, of dismantling and removing the underlying asset.
Liability for lease is created for an amount equivalent to the
present value of outstanding lease payments. Subsequent
measurement, if any, is made using cost model.
Each lease payment is allocated between the liability
created and finance cost. The finance cost is charged to
the statement of profit and loss over the lease period so
as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
The right of use asset is depreciated over the shorter of the
asset’s useful life and the lease term on a straight line basis.
The lease payments are discounted using the interest rate
implicit in the lease, if that rate can be determined, or the
company’s incremental borrowing rate.
Lease modifications, if any, are accounted as a
separate lease if the recognition criteria specified in the
standard are met.
Company as a Lessor:
Lease are classified as finance or operating lease based
on the recognition criteria specified in Ind AS 116 - Leases.
a) Finance Lease:
At commencement date, amount equivalent to the “net
investment in the lease” is presented as a receivable.
The implicit interest rate is used to measure the value
of the “net investment in Lease”.
Each lease payment is allocated between the
Receivable created and finance income. The finance
income is recognised in the statement of profit and
loss over the lease period so as to reflect a constant
periodic rate of return on the net investment in lease.
The asset is tested for de-recognition and impairment
requirements as per Ind AS 109- Financial Instruments.
Lease modifications, if any, are accounted as a
separate lease if the recognition criteria specified in
the standard are met.
b) Operating lease:
The company recognises lease payments from
operating leases as income on either a straight line
basis or another systematic basis, if required. Lease
modifications, if any, are accounted as a separate
lease if the recognition criteria specified in the
standard are met.
A lease is classified at the inception date as a finance
lease or operating lease.
1. Conveyance deeds for 275 acres and 35 guntas of Land acquired which are through various Allotment/Award Letters/GO's are
yet bo executed in the name of the Company. Most of them are allotted/granted by the undivided Govt. of AP earilier.
Further, above land includes:
(a) Land leased to DRDO - 35 acres and 39 guntas (Operating Lease), (b)Land in the physical possession of Telanagana State
Govt. - 1 acre, (c) Land in the physical possession of BDL - 1 acre and (d) 1.5 Acres land is under dispute on account of
unauthorized ocupancy by third party.
2. Claims for reimbursement of cost for 70 acres and 23 guntas of Land transferred by DRDO not acknowledged, as no final
settlement has been reached.
3. Pending registration/receipt of claims, no Provision has been made towards stamp Duty on conveyance deeds/conversion of
Land use/property taxes/service charges (amount not ascertainable).
4 Plant and Machinery includes H5058.04 lakhs (31-Mar-2024 H5058.04 lakhs) for R&D capital cost.
5 Company considered the salvage value as 5% of the Cost of Assets.
6 Principal Asset costing ?100 lakhs and above only are identified for the purpose of componentization of assets.
7 During the year, the Company has not revalued Property, Plant and Equipment.
8 The Estimated useful life of various categories of assets are considered based on the Schedule II of the Companies Act, 2013,
where NESD rates are available. For the other assets, management has estimated the useful life after taking into consideration,
factors like expected usage of assets, risk of technical and commercial obsolescence etc. The estimated useful lives of various
categories of Tangible Assets is as follows.
Note : For the purpose of above abbreviations, FVPL - Fair value through profit and loss; FVOCI - Fair value through other
comprehensive income; Amortized cost - Fair value through amortized cost.
(1) Assets that are not financial assets (such as receivables from statutory authorities, export benefit receivables,
prepaid expenses, advances paid and certain other receivables) as of March 31,2025, March 31,2024 respectively,
are not included.
(2) Other liabilities that are not financial liabilities (such as statutory dues payable, deferred revenue, advances from
customers and certain other accruals) as of March 31,2025, March 31,2024 are not included.
(i) Fair value of financial asset and financial liabilities measured at amortized cost
The carrying amounts of trade receivables, trade payables, borrowings, cash and cash equivalents and other current
financial liabilities are considered to be the same as their fair values, due do their short-term nature.
The Company has a Board approved Risk Management Policy and the Risks involved at the various processes in the Company
are also being discussed in the internal Production Review Meetings and Corporate Management Committee Meetings. The
identification of the risk elements faced by the company is listed out in Management Discussion and Analysis and also listed out
in the form of SWOT analysis.
The Company’s risk management policies are established to identify and analyze 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 Company has put in place all
required internal controls and systems to meet all the canons of financial propriety. External Audit firms who were engaged
to carry out internal audit, continue their efforts to ensure adequacy of such systems, controls and report thereon which were
subject to periodical review by Audit Committee appointed by the Board.
The Board of Directors monitors the 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.
This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and
processes for measuring and managing risk, and the Company’s management of capital.
Further quantitative disclosures are included throughout these financial statements.
i. Credit risk
a) Credit risk management
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the Company's receivables from customers.
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
However, management also considers the demographics of the Company’s customer base, including the default risk
of the industry and country in which customers operate, as these factors may have an influence on credit risk. Majority
of trade receivables of the Company, originate from Government owned entities, which are not exposed to high risk,
the Company is making specific provisions based on case to case reviews and approved by Board. Whereas, for other
customers risk is measured using the expected credit loss provisional matrix and provision is recognized accordingly.
Impairment
Majority of trade receivables originate from Government owned entities, which are not exposed to high risk, the
Company is making specific provisions based on case to case reviews and approve by Board. Whereas, for private
customers, provision is determined using expected credit loss provisional matrix.
Cash and cash equivalents
The Company held cash and cash equivalents of t 5,088.18 Lakh at March 31,2025 (March 31,2024: t 1,647.66 Lakh).
The Company is investing in Fixed Deposits with various banks empanelled by the Investment Committee which is approved
by the Board. All such deposits are made only with the approval of the Investment Committee. Further, management
believes that cash and cash equivalents are of low risk in nature and hence no impairment has been recognized.
ii. 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.
Company ensures that it has sufficient cash on demand to meet expected operational expenses, including the servicing
of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted,
such as natural disasters. In addition, the Company maintains the following lines of credit.
Maturities of financial liabilities
The amounts disclosed in the table are the contractual undiscounted cash flows. Balance due within 12 months equal their
carrying balances as the impact of discounting is not significant.
iii. Market risk
(a) Foreign currency risk
Market risk is the risk that changes in market prices, such as 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 optimizing the return.
Since majority of the company's operations are being carried out in India and since all the material balances are
denominated in its functional currency, the company does not carry any material exposure to currency fluctuation risk.
(b) Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk
is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates.
Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate
because of fluctuations in the interest rates.
The Company’s external borrowings carries a fixed interest rate of 6.82 % per annum, hence, no interest rate risk has
been determined.
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The Board of Directors monitors the return on capital, which the Company
defines as result from operating activities divided by total shareholders’ equity.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings
and the advantages and security afforded by a sound capital position. In comparison the weighted average interest expense
on interest-bearing borrowings (excluding liabilities with imputed interest) was 6.82 percent (2024: 7.02 percent).
39. Operating segments
The Company is in the business of manufacturing of super alloys and other special metals. As the Company is engaged in
defence production, exemption was granted from applicability of Accounting Standard on Segment reporting under sec 129 of
Companies Act, 2013 vide Notification dated 23rd February, 2018 of Ministry of Corporate Affairs.
40. Related party transactions
The President of India has an ownership interest of 74.00 %. MIDHANI is thus a Government entity under the administrative
control of Ministry of Defence (MoD) and is exempt from detailed disclosures as required under Ind AS 24 with respect to related
party tansactions with Government and Government related entities.
46. As at 31st March, 2025, the company does not have any outstanding Commercial Paper and therefore, the disclosure
requirements as per updated SEBI circular: SEBI/HO/DDHS/P/CIR/2021/613 dated 13th April, 2022 on "Operational Circular for
issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and
Commercial Paper", information as required under regulation 52(4) of SEBI (Listing Obligations and Disclosures Requirements)
Regulations 2015 is not applicable.
47. The Company has leases for various assets referred to in Note 3 of financial statements. With the exception of short-term leases
and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability.
The Company classifies its right-of-use assets in a consistent manner to its Property, plant and equipment (Refer Note 3)
The maturity analysis of Contractual Cash flows of Lease Liabilities is disclosed at Note 37(ii) of the financial statements."
48. Retention Sale
The value of Retention Sale (i.e., Goods retained with the Company at the customers' request and at their risk) included in
Turnover during the year is H 8,629.74 Lakh. Out of the above, the value of Ex-work sale is H 7,839.04 Lakh.
49. The previous period figures have been regrouped/reclassified, wherever necessary to conform to the current presentation.
Subject to our report of even date for and on behalf of the Board of Directors
Sd/-
for ANJANEYULU & CO. Dr. S.V.S. Narayana Murty
Chartered Accountants Chairman & Managing Director
Firm’s registration no. 000180S DIN: 11065319
Sd/- Sd/-
CA K Narayana Murthy Shri. Gowri Sankara Rao Naramsetti
Partner Director (Finance)
Membership No.026012 DIN: 08925899
Sd/-
Shri Paul Antony
Place: Hyderabad Company Secretary
Date: 28-05-2025 Memb. No.A29037
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