XIV. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized if, as a result of a past event, the company has a present legal or constructive obligationthat
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obli¬
gation and there is reliable estimate of the amount of obligation.
A disclosure for contingent liabilities is made where there is a possible obligation arising from past events, the exist¬
ence of which will be confirmed only on the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the company or a present obligation that arise from past events where it is not prob¬
able that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
XV. Leases
As a Lessee
A lease is classified at the inception date as finance lease or an operating lease. Leases under which the company as¬
sumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets
are capitalized at fair value or present value of the minimum lease payments at the inception of lease, whichever is
lower. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in
the statement of profit and loss.
Other leases are treated as operating leases, with payments are recognized as expense in the statement of profit and
loss on a straight line basis over the lease term.
XVI. Impairment of Non-Financial Assets
The company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a
group of non-financial assets are impaired. If any such indication exists, the company estimates the amount of im¬
pairment loss. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows from other assets or group of assets is
considered as cash generating unit. If any such indication exists, an estimate of the recoverable amount of the indi¬
vidual asset/cash generating unit is made.
An impairment loss is calculated as the difference between an asset's carrying amount and recoverable amount.
Losses are recognized in profit or loss and reflected in an allowance account. When the company considers that there
are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment
loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment
was recognized, then the previously recognized impairment loss is reversed through profit or loss.
XVII. Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provi¬
sions 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 and loss) are added to or deducted from the fair value measured
on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the acquisi¬
tion of financial assets and financial liabilities at fair value through profit and loss are immediately recognized in the
statement of profit and loss.
Financial instruments also include derivative contracts such as foreign currency foreign exchange forward contracts,
interest rate swaps and currency options; and embedded derivatives in the host contract.
XVIII. Effective interest method
The effective interest method is a method of calculating the amortized cost of a financial instrument and of allocating
interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts fu¬
ture cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter
period.
(A) Financial assets
Classification
The Company shall classify financial assets and subsequently measured at amortized cost, fair value through other
comprehensive income or fair value through profit or loss on the basis of its business model for managing the finan-
cial assets and the contractual cash flow characteristics of the financial asset.
Initial recognition and measurement
All financial assets are recognized initially at fair value plus transaction costs that are attributable to the acquisition of
the financial asset, in the case of financial assets not recorded at fair value through profit or loss. Purchases or sales
of financial assets that require delivery of assets within a time frame established by regulation or convention in the
market place (regular way trades) are recognized on the trade date, i.e., the date that the company commits to pur¬
chase or sell the asset.
Measured at Amortized cost
A financial asset is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash
flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal
and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective in¬
terest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the state¬
ment of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss. This
category generally applies to trade and other receivables.
Measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial
assets, and
b) The asset's contractual cash flows represent SPPI.
Financial assets included within the FVTOCI category are measured initially as well as at each reporting date at fair
value. Fair value movements are recognized in the other comprehensive income (OCI). However, the company recog¬
nizes interest income, impairment losses & reversals and foreign exchange gain or loss in the profit and loss. On de¬
recognition of the asset, cumulative gain or loss previously recognized in OCI is reclassifiedfrom the equity to profit
and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Financial Asset at fair value through profit and loss (FVTPL)
FVTPL is a residual category for financial asset. Any financial asset, which does not meet the criteria for categorization
as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the company may elect to classify a financial asset, which otherwise meets amortized cost or FVTOCI cri¬
teria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recog¬
nition inconsistency (referred to as 'accounting mismatch').
Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the prof¬
it and loss.
De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a company of similar financial assets) is
primarily de-recognized (i.e. removed from the company's balance sheet) when:
i) The rights to receive cash flows from the asset have expired, or
ii) The company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a 'pass- through' arrangement; and either (a)
the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither trans¬
ferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
iii) When the company has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has nei-
ther transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the as¬
set, the company continues to recognise the transferred asset to the extent of the company's continuing involve¬
ment. In that case, the company also recognises an associated liability. The transferred asset and the associated lia¬
bility are measured on a basis that reflects the rights and obligations that the company has retained.
iv) Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that the company could be required
to repay.
Impairment of financial assets
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and
recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, debt securities, depos¬
its, and bank balance.
b) Trade receivables
The Company follows 'simplified approach' for recognition of impairment loss allowance on:
i) Trade receivables which do not contain a significant financing component.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recog¬
nizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
ii) For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether
there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased signifi¬
cantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, life¬
time ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a
significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allow¬
ance based on 12-month ECL.
(B) Financial liabilities Classification
The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial
liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be sub¬
sequently measured at fair value.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss or
amortized costs.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs.
The company's financial liabilities include trade and other payables, loans and borrowings, financial guarantee con¬
tracts and derivative financial instruments.
Financial liabilities at fair value through profit or loss.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative fi¬
nancial instruments entered into by the group that are not designated as hedging instruments in hedge relationships
as defined by Ind-AS 109. Separated embedded derivatives are also classified as held for trading unless they are des¬
ignated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial
date of recognition, and only if the criteria in Ind-AS 109 are satisfied. For liabilities designated as FVTPL, fair value
gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/loss are not subsequently
transferred to P&L. However, the company may transfer the cumulative gain or loss within equity. All other changes
in fair value of such liability are recognized in the statement of profit or loss.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using
the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as
through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
This category generally applies to interest-bearing loans and borrowings.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as the DE recog¬
nition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts
is recognized in the statement of profit or loss.
Measurement of fair values:
The Company's accounting policies and disclosures require the measurement of fair values, for financial instruments.
The Company has an established control framework with respect to the measurement of fair values. The manage¬
ment regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as
broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence ob¬
tained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, includ¬
ing the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible.
Fair values are categorized into different levels in a fair value hierarchy based on the inputs used inthe valuation tech¬
niques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either direct¬
ly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
Inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy,
then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the low¬
est level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting periodduring
which the change has occurred.
Note 20 Contingent Liabilities -
(As per Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets)
1. The company has issued corporate guarantees on behalf of related parties (RSAL Pvt Ltd.), and the following mat¬
ters are currently under litigation before the Debt Recovery Tribunal (DRT), Jabalpur. These guarantees may result
in outflow of economic resources depending on the outcome of legal proceedings. Based on management as¬
sessment and legal opinion, these are disclosed as contingent liabilities.
Total Contingent Liability (Corporate Guarantees): ^ 175.89 Crore
Management is monitoring the ongoing litigation and believes that the outcome of these matters will be deter¬
mined based on judicial proceedings. No provision has been made in the accounts as the obligations are contingent
in nature and will arise only upon unfavorable outcomes.
2. The following contingent liability has been disclosed in the financial statements based on ongoing legal proceedings.
The matter is currently unresolved, and no provision has been made, as the liability is not yet determined and is de¬
pendent on the outcome of the adjudication process.
The National Company Law Appellate Tribunal (NCLAT), vide its order dated 28.02.2025, observed that the matter re¬
garding the determination of customs duty liability is to be adjudicated by the Customs Authority. As such, the liability
has not yet been finalized, and the matter remains under judicial consideration before the Customs Act. The company
continues to pursue the appropriate remedy under the applicable legal framework. Accordingly, the above amount has
been disclosed as a contingent liability, with no accounting provision recognized in the books.
3. The Company is involved in the following legal proceedings wherein it has been made a respondent, although it is
not a principal party to the underlying disputes. These matters primarily pertain to property and title declarations,
and are currently pending before the District Court, Dhar. While IMEC Services Ltd. has not initiated nor is directly
involved in the substantive claims, it has been arrayed as a respondent in the following suits, and therefore dis¬
closes these as contingent liabilities:
The Company has not recognized any provision in respect of these matters, as the outcome of the proceedings is
uncertain and IMEC Services Ltd. is not directly liable for the claims under dispute. These amounts have therefore
been disclosed as contingent liabilities, based on the fact that the Company has been named as a respondent and
may be affected depending on the final outcome of the cases.
Note 22
a) Trade Payables includes Rs. Nil (Previous Year Nil) amount due to micro and small enterprises registered under
the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) Act.
a) Financial Year 2015-16 to 2022-23, Company's subsidiary RSAL Steel Pvt. Ltd. has suffered huge losses and conse¬
quent upon its net worth has been fully eroded further subsidiary's accounts declared Non-Performing Assets by
its banks, the Company has provided for diminution in the value of its investment in subsidiary for full value i.e.
Rs. 5,279.87 Lacs in the Statement of Profit and Loss during the FY 2015-16.
b) Company holds 1,50,000 Equity Shares of Agrotrade Enterprises Limited, in the Financial Year 2017-18, Agrotrade
Enterprises Limited has suffered huge losses and consequent upon its net worth has been fully eroded. Consider¬
ing the negative net worth Company has provided for diminution in the value of its investment in Equity Shares
for full value i.e. Rs. 167.71 Lacs in the Statement of Profit and Loss during the FY 2018-19.
General Information
Factors used to identify the entity's reportable segments, including the basis of organization
Based on the criterion as mentioned in Ind-As-108- "Operating Segment", the Company has identified its re¬
portable segments, as follows:
• Segment 1- Service
• Segment 2- Trading
Unallocable - All the segments other than segments identified above are collectively included in this segment.
The Chief Operating Decision Maker ("CODM") evaluates the Company's performance and allocates re¬
sources based on an analysis of various performance indicators by operating segments. The CODM reviews
revenue and gross profit as the performance indicator for all of the operating segments
In the opinion of Board of Directors, non-current/ current assets and Loans and Advances have value on realiza¬
tion in the ordinary course of business, at least equal to the amount at which they are stated in the Balance
sheet and that the provision for known liabilities is adequate and reasonable. There are no contingent liabilities
other than stated herein above.
Note 30 Leases - Where company is Lessee:
The Company has taken various premises under operating leases with no restrictions and is renewable/ cancel¬
lable at the option of either party. There are no sub leases. There are no restrictions imposed by lease arrange¬
ments. The Company has not recognized any contingent rent as expense in the statement of profit and loss. The
aggregate amount of operating lease payment recognized in the statement of profit and loss is Rs. 20.88
Lacs (Previous year Rs. 38.05 Lacs).
Gratuity:
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees
who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on
retirement/termination is paid as per the provisions of Payment of Gratuity Act, 1972. The gratuity plan is funded
plan and company makes annual contributions to the Group Gratuity cum Life Assurance Scheme administered
by LIC of India, a Funded defined benefit plan for qualifying employees.
The annual premium paid to Life Insurance Corporation of India is charged to statement of Profit & Loss ac¬
count. The Company also carries out actuarial valuation of gratuity using projected Unit Credit Method as re¬
quired by Indian Accounting Standard "Employee Benefits".
Note 33 Financial instruments - Fair values and risk Management Financial
Financial Risk Management
The Company's principal financial liabilities, other than derivatives, comprise borrowings, trade and other paya¬
bles, and financial guarantee contract. The main purpose of these financial liabilities is to manage finances for
the company's operation. The company's financial assets comprise investment, loan and other receivables,
trade and other receivable, cash, and deposits that arise directly from its operations.
The Company's activities are exposed to market risk, credit risk and liquidity risk. In other to minimize adverse
effects on the financial performance of the Company, derivative financial instruments such as forward contracts
are entered into to hedge foreign currency risk exposure. Derivatives are used exclusively for hedging purpose
and not as trading and speculative purpose.
The Company has exposure to the following risks arising from financial instruments:
(i) Market risk
(a) Currency risk;
(ii) Credit risk; and
(iii) Liquidity risk
The Company's activities expose it to a variety of financial risks, including market risk, credit risk and liquidity
risk. The Company's primary risk management focus is to minimize potential adverse effects of risks on its finan¬
cial performance. The Company's risk management assessment and policies and processes are established to
identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor
such risks and compliance with the same. Risk assessment and management policies and processes are reviewed
regularly to reflect changes in market conditions and the Company's activities. The Board of Directors and the
Audit Committee is responsible for overseeing the Company's risk assessment and management policies and
processes
(i) Market risk
Market risk is the risk of changes the market prices on account of foreign exchange rates, interest rates and
Commodity prices, which shall affect the Company's income or the value of its holdings of its financial instru¬
ments. The objective of market risk management is to manage and control market risk exposure within accepta¬
ble parameters, while optimizing the returns.
(a)Currency risk
The fluctuation in foreign currency exchange rates may have potential impact on the profit and loss account and
equity, where any transaction has more than one currency or where assets/liabilities are denominated in a cur¬
rency other than the functional currency of the entity.
As on 31st March, 2025 Company is not exposed to foreign currency risk as there are no receivable/payables
outstanding as on date.
(ii) Credit Risk
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. Credit
risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditwor¬
thiness of customers to which the Company grants credit terms in the normal course of business. The Company
establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in re¬
spect of trade and other receivables and investments.
Trade and other receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer.
The demographics of the customer, including the default risk of the industry has an influence on credit risk as¬
sessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring
the creditworthiness of customers to which the Company grants credit terms in the normal course of business
Summary of the Company's exposure to credit risk by age of the outstanding from various customers is as fol¬
lows:
The Company holds cash and cash equivalents with credit worthy banks and financial institutions of Rs 47.41 Lacs
as at March 31, 2025 [Previous Year Rs. 36.97 Lacs]. The credit worthiness of such banks and financial institutions
is evaluated by the management on an ongoing basis and is considered to be good.
(iii) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due.
Liquidity crises have led to default in repayment of principal and interest to lenders. The Company had taken
measures to ensure that the Company's cash flow from business borrowing is sufficient to meet the cash re¬
quirements for the company's operations. The Company managing its liquidity needs by monitoring forecasted
cash inflows and outflows in day to day business. Liquidity needs are monitored on various time bands, on a day
to day and week to week basis, as well as on the basis of a rolling 30 day projections. Presently company's objec¬
tive is to maintain sufficient cash to meet its operational liquidity requirements.
Exposure to liquidity risk
The table below analyses the Company's financial liabilities into relevant maturity groupings based on their
contractual maturities for:
The Company's objective when managing the capital is to safeguard the Company's ability to continue as a go¬
ing concern. In order to provide the return to shareholders and benefits to other stakeholder's and to maintain
an optimal capital structures to reduce the capital.
The Company monitors capital using a ratio of 'adjusted net debt' to 'total equity'. For this purpose, adjusted
net debt is defined as total debt, comprising interest-bearing loans and borrowings and obligations under fi¬
nance leases, less cash and cash equivalents.
Equity comprises of Equity share capital and other equity. However, in view of certain adverse factors and li¬
quidity problems faced by the Company, the net worth of the Company has been eroded in previous years.
Accounting classification and fair values
The following table shows the carrying amounts of financial assets and financial liabilities, including their level in
fair value hierarchy. It does not include fair value information for financial assets and financial liabilities if the
carrying amount is a reasonable approximation of fair value. A substantial portion of the Company's long-term
debt has been contracted at floating rates of interest, which are reset at short intervals. Accordingly, the carry¬
ing value of such long-term debt approximates fair value.
(B) Measurement of fair values
Valuation techniques and significant unobservable inputs
Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, ei¬
ther directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: Inputs for the asset or liabilities that are not based on observable market data (unobservable inputs).
Note 40
Company has made the provisions for Bad & Doubtful Debts in FY 2024-25 Rs 1.13 lakh for its customers
(Previous year Rs. Nil).
Note 41
In some cases, confirmation of loans, advances, deposits, debtors and creditors are not received. Therefore,
same are shown as per books of accounts. Necessary adjustments, if any, will be made on reconciliations,
quantum of impact if any, not ascertainable.
1. Current Ratio
The current ratio has significantly increased during the year, primarily on account of a large portion of
trade receivables remaining outstanding as at the balance sheet date. It indicates improved short-term
liquidity, though the quality and reliability of receivables need to be monitored.
2. Return on Equity
The return on equity has shown a sharp turnaround from negative to highly positive, mainly due to sub¬
stantial increase in profitability during the current year.
3. Inventory Turnover Ratio
Inventory turnover in terms of days has risen significantly as the Company sold almost all its stock in the
early part of the year, resulting in comparatively higher average holding period being reflected at year-
end.
4. Debtors' Turnover Ratio
Debtors' turnover in days has materially increased, as a major portion of the revenue remains outstanding
and uncollected as at the balance sheet date. This indicates a longer collection cycle and higher credit ex¬
tended to customers.
5. Trade Payables Turnover Ratio
The payables turnover in days has increased due to a higher portion of trade payables remaining out¬
standing as compared to the previous year.
6. Net Capital Turnover Ratio
Net capital turnover in days has increased sharply, despite higher revenue, mainly because a substantial
portion of sales is yet to be realized as on the reporting date. This reflects slower efficiency in converting
working capital into sales.
7. Net Profit Ratio
Net profit margin has risen dramatically, owing to a sharp increase in revenue and profitability.
8. Return on Capital Employed
Return on capital employed has improved significantly, driven by higher profits and revenue with only
marginal changes in capital employed.
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