1.C.13 PROVISIONS, CONTINGENT LIABILITIES AND
CONTINGENT ASSETS
Provisions are recognised in the Balance Sheet when the
Company has a present obligation (legal or
constructive) as a result of a past event, which is
expected to result in an outflow of resources embodying
economic benefits which can be reliably estimated. Each
provision is based on the best estimate of the
expenditure required to settle the present obligation at
the Balance Sheet date. When appropriate, provisions
are measured on a discounted basis.
Constructive obligation is an obligation that derives from
an entity's actions whereby an established pattern of
past practice, published policies or a sufficiently specific
current statement, the entity has indicated to other
parties that it will accept certain responsibilities; and as a
result, the entity has created a valid expectation on the
part of those other parties that it will discharge those
responsibilities.
Contingent liabilities are disclosed by way of notes. These
are reviewed at each Balance Sheet date and are
adjusted to reflect the current estimate of management.
Contingent assets are not recognised but disclosed in
the financial statements when an inflow of economic
benefits is probable.
1.C.14 SEGMENT REPORTING
Ind AS 108 establishes standards for the way that public
business enterprises report information about operating
segments and related disclosures. The Company
undertakes trading activities, and also acts as e-
commerce service provider. Based on the 'management
approach' as defined in Ind AS 108, the Chief Operating
Decision Maker (CODM) evaluates Company's
performance and allocates resources on an analysis of
various performance indicators by operating segments.
In terms of above the Company has identified Marketing
and e-Commerce as its two Primary Reportable Business
Segments. Revenue and identifiable operating expenses
in relation to segments are categorised based on items
that are individually identifiable to that segment. Rest of
the items of revenue and expenses, which cannot be
specifically allocated under specific segments are
separately disclosed as unallocated.
1.C.15 CRITICAL ACCOUNTING ESTIMATES,
ASSUMPTIONS AND JUDGEMENTS
The preparation of the financial statements in conformity
with Ind AS requires management to make judgements,
estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets,
liabilities, income, expenses, and disclosures of
contingent assets and liabilities at the date of the
financial statements and the results of operations during
the reporting period end. Although these estimates are
based upon management's best knowledge of current
events and actions, actual results could differ from these
estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are
revised and in any future periods affected.
The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial
year are discussed in the paragraphs that follow.
(i) Useful economic lives and impairment of other
assets
The estimated useful life of property, plant and
equipment (PPE) and intangible asset is based on a
number of factors including the effects of obsolescence,
usage of the asset and other economic factors (such as
known technological advances).
The Company reviews the useful life of PPE and
intangibles at the end of each reporting date and any
changes could affect the depreciation rates
prospectively.
The Company also reviews its property, plant and
equipment for possible impairment if there are events or
changes in circumstances that indicate that the carrying
value of the assets may not be recoverable. In assessing
the property, plant and equipment for impairment,
factors leading to significant reduction in profits, such as
the Company's business plans and changes in
regulatory environment are taken into consideration.
(ii) Contingencies and commitments
In the normal course of business, contingent liabilities
may arise from litigation, taxation and other claims
against the Company. Where an outflow of funds is
believed to be probable and a reliable estimate of the
outcome of the dispute can be made based on
management's assessment of specific circumstances of
each dispute and relevant external advice,
management provides for its best estimate of the
liability. Such liabilities are disclosed in the notes but are
not provided for in the financial statements.
Although there can be no assurance regarding the final
outcome of the legal proceedings, the Company does
not expect them to have a materially adverse impact on
the Company's financial position or profitability.
(iii) Actuarial Valuation
The determination of Company's liability towards
defined benefit obligation to employees is made through
independent actuarial valuation including
determination of amounts to be recognised in the
Statement of Profit and Loss and in other comprehensive
income. Such valuation depend on assumptions
determined after taking into account inflation, seniority,
promotion and other relevant factors such as supply and
demand factors in the employment market.
(iv) Fair Value measurements and valuation processes
Some of the Company's assets and liabilities are
measured at fair value for financial reporting purposes. In
estimating the fair value of an asset or a liability, the
Company uses market-observable data to the extent it is
available. Where Level 1 inputs are not available, the
Company engages third party valuers, where required, to
perform the valuation. Information about the valuation
techniques and inputs used in determining the fair value
of various assets and liabilities are disclosed in the notes
to the financial statements.
(v) Recognition of deferred tax assets for carried
forward tax losses and unused tax credit
The extent to which deferred tax assets can be
recognised is based on an assessment of the probability
of the Company's future taxable income against which
the deferred tax assets can be utilised. In addition
significant judgement is required in assessing the impact
of any legal or economic limits.
1.C.16 Restatement of material error / omissions:
Errors/omissions discovered in the current year relating
to prior periods are treated as immaterial and adjusted
during the current year, if all such errors and omissions in
each case does not exceed the overall material limit
specified in MSTC policy for determination of materiality
of events or information in terms of SEBI LODR Regulations
i.e. lower of the following:
(a) Two percent of turnover, as per the last audited
consolidated financial statements of the Company;
(b) Two percent of net worth, as per the last audited
consolidated financial statements of the Company,
except in case the arithmetic value of the net worth is
negative;
(c) Five percent of the average of absolute value of
profit or loss after tax, as per the last three audited
consolidated financial statements of the Company;
In respect to the above, the average of absolute value of
profit or loss is required to be considered by disregarding
the 'sign' (positive or negative) that denotes such value
as the said value/figure is required only for determining
the threshold for 'materiality' of the event and not for any
commercial consideration.
NOTE :
a) During the financial year 2024-25, the Company completed the sale of its wholly owned subsidiary, Ferro Scrap
Nigam Limited (FSNL), to Konoike Transport Co. Ltd. The total sale consideration received was '32,000.00 lakhs. The
cost of acquisition of FSNL, as recorded in the books, amounted to '1,581.00 lakhs. In connection with the sale of the
100% equity investment in FSNL, the Company incurred costs amounting to '249.81 lakhs, which were directly
attributable to the transaction. After accounting for these deductions, the net proceeds from Disposal of
Investment in wholly owned subsidiary amounted to '30,169.19 lakhs.
b) During F.Y. 2024-25 MSTC Limited have invested '500 lakhs (Previous Year 'NIL ) towards unquoted equity
contribution in Mahindra MSTC Recycling Private Limited.
c) In terms of impairment testing under Ind AS 36, the recoverable amount of the investment in MMRPL was
determined based on the fair value derived using the Discounted Cash Flow (DCF) method. The fair value of MSTC
Limited's investment in MMRPL as on 31st March, 2025, was assessed at '2,494.00 Lakhs, compared to the carrying
amount of '3,500.00 Lakhs. Accordingly, an impairment loss of '1,006.00 Lakhs has been recognized in the
Statement of Profit and Loss.
8.2: The Current Borrowings includes 14,361.97 Lakhs (Previous period '14,361.97 Lakhs) towards payment made by
Standard Chartered Bank (SCB), after purchase of export bills of MSTC raised on foreign buyers against export of
Gold Jewelleries to the buyers during 2008-09, under a Receivable Purchase Agreement. On non-receipt of the
proceeds from the foreign buyers against the bills, SCB submitted claims with the Insurance Company, who,
however, wrongfully repudiated the claim of SCB. Thereafter, SCB converted the receivables purchased from MSTC
under the Receivables Purchase Agreement into loans/ debts as if owing by MSTC, claimed the amount from MSTC
with interest and filed a case, being the Original Application (oa) in the Debt Recovery Tribunal (DRT), Mumbai in the
year 2012, which MSTC has denied and disputed. Against this petition, an Interim order claiming '22,251.00 lakhs was
passed by the DRT, Mumbai on 16th July, 2017, which has been set aside by the Debt Recovery Appellate Tribunal
(DRAT), Mumbai by its order dated 7th August, 2023. Consequently, the recovery proceedings have since been
dropped. As a result of which MSTC has got refund of '9,000.00 Lakhs (pre-deposit amount towards hearing of
appeal) along with interest of '534.03 lakhs. The attached properties have also been released. Other proceedings
challenging the claim of SCB are also pending before various forums including Hon'ble High Court of Bombay, the
Civil Court at Alipore, Kolkata initiated by MSTC both against SCB and the Insurance Company. SCB had also filed a
Summary Suit in late 2012 in the Hon'ble Bombay High Court against ICICI Lombard claiming the same amount
under the Policy from ICICI Lombard on account of the repudiation of the claim of SCB by ICICI Lombard. SCB has
since withdrawn the suit against ICICI Lombard and Hon'ble Bombay High Court has also passed an order dated 17th
January, 2024 to this effect. Aggrieved by the unilateral withdrawal of suit by SCB against ICICI Lombard, MSTC has
filed a counterclaim against SCB in the pending OA at DRT Mumbai. The claim of SCB is contingent upon the
outcome of legal cases. Pending final disposal of all such Court cases where the matters are currently pending,
MSTC has disclosed the amount simultaneously as Borrowings (vide Note No- 18(b)) and as Trade Receivables. The
matter is sub-judice and is contingent in nature, at this juncture.
(#) During the financial year 2024-25, the Company completed the sale of its wholly owned subsidiary, Ferro Scrap
Nigam Limited (FSNL), to Konoike Transport Co. Ltd. The total sale consideration received was '32,000.00 lakhs. The cost
of acquisition of FSNL, as recorded in the books, amounted to '1,581.00 lakhs. In connection with the sale of the 100%
equity investment in FSNL, the Company incurred costs amounting to '249.81 lakhs, which were directly attributable to
the transaction. After accounting for these deductions, the net long-term capital gain arising from the sale amounted
to '30,169.19 Lakhs.
Pursuant to the introduction of Section 115BAA under the Income Tax Act, 1961, the Company has, during the FY 2023-24,
opted for lower tax regime under the said Section for the financial year ended 31 March, 2024 and onwards resulting in
reduction of Current Tax by '253.54 Lakhs and additional charge of '123.06 Lakhs to Other Comprehensive Income for
the FY 2023-24. Consequently, the Company has charged off the Deferred Tax Assets arising due to MAT credit and
restated the Deferred Tax Assets, based on the revised effective tax rate 25.168%, resulting in one time charge of
'3,706.72 Lakhs in the Statement of Profit and Loss, for the year ended 31st March, 2024.
The tax rate used for the year 2024-25 in the reconciliations above is the corporate tax rate of 25.168% for business
income and 14.625% for Long Term Capital Gain arising from Sale of Wholly owned Subsidiary payable by corporate
entities in India on taxable profits under the new regime of Indian tax law. The tax rate used for the year 2023-24 in the
reconciliations above is the corporate tax rate of 25.168% payable by corporate entities in India on taxable profits under
the new regime of Indian tax law. For Deferred Tax calculation of financial year 2024-25 and 2023-24, income tax rate
considered is 25.168%.
(2) Capital Management
The Company manages its capital to ensure that the Company is able to continue as going concern while
maximising the return to shareholders through the optimisation of the debt and equity balance.The Company
is not subject to any externally imposed capital requirements.
(3) Financial risk management objectives
The Company's Corporate Treasury function provides services to the business, co-ordinates access to
domestic and international financial markets, monitors and manages the financial risks relating to the
operations of the company . These risks include market risk (like-currency risk, interest rate risk and other price
risk), credit risk and liquidity risk. Compliance with policies and exposure limits is reviewed by the internal
auditors on a continuous basis. The Company does not enter into or trade of financial instruments, including
derivative financial instruments, for speculative purposes.
(a) Market Risk
The Company's activities exposes it ,primarily to the financial risks of changes in foreign currency exchange
rates. On a case to case basis, the Company enters into Forward foreign exchange contracts to hedge the
exchange rate risk, as and when necessary.
(i) Interest rate risk management:
The company endeavours to convert its loans to MCLR based, hence the rate is firm for a contract period
usually for a year, as and when necessary.
(ii) Foreign Currency risk management
Wherever foreign exchange fluctuations are to be borne by the customers as per agreement with them,
foreign exchange gain/ loss are not recognized in the books of the Company.
(b) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in fianacial
loss to the Company . The Company has adopted a policy of only dealing with creditworthy counterparties ,
where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only
transact with entities that are rated by agencies where available and if not available , the company uses
other publicly available financial information and its own past records to rate its major customers. The
Company's exposure and the credit ratings of its counterparties are monitored and the aggregated value
of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by
counterparty limits that are reviewed and approved by the Senior management committee. Furthermore, in
case of Marketing Segment, the Business is done with backup of Bank Guarantee.
(c) Liquidity risk management
The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the
maturity profiles of financial assets and liablities.
The table below provides details regarding the contractual undiscounted cash obligations of financial
liabilities including estimated interest payments for the period 31st March, 2025 and as at 31st March, 2024 .
provide the pension to the employees from the corpus created on account of employees, by way of contribution
from MSTC (The Employer).
Defined Benefits Plans
1. Gratuity :
The Gratuity is payable on service severance in respect of eligible employees. The Gratuity is funded with LIC of
India.The Company contributes in the fund every year as premium on the basis of demand raised by LIC of India.
(a) Executives :
The Gratuity is calculated and paid as per the Payment of Gratuity Act, 1972.
(b) Non- Executives :
The Gratuity is payable as per the Payment of Gratuity Act, 1972 except for:
(i) The Gratuity is calculated at the rate of one month's wages last drawn by the employee for every
completed years of service in excess of 30 years.
(ii) In case employees who joined before 1st July, 2014, the Gratuity is payable without any ceiling.
2. Post Retirement Medical Benefit :
The Post Retirement Medical Benefit is a medical benefit to the superannuated employees and their spouse. The
members will be covered through Mediclaim Insurance admitted of the Insurance Company. This is available to
superannuated employees at any hospital under the Mediclaim Insurance Policy. In addition to this expenses
incurred in domicilliary treatment is also reimbusrsed as per prescribed ceiling. The benefits are funded through a
separate trust formed for this purpose.The company provides the corpus for this. Deficit if any is being
compensated by the company.
Notes :
1. Current Ratio has improved due to continuous cash profit earned by the company.
2. MSTC do not have any long- term debt, hence, not applicable.
3. MSTC do not have any long- term debt, hence, not applicable.
4. Return on Equity ratio has increased on account of increase in Net Profit After Tax mainly due to Profit arising out of
sale of wholly owned subsidiary.
5. MSTC do not have any inventory, hence, not applicable.
6. Trade Receivable Turnover Ratio increased due to reduction in Trade Receivables on account of better realisation.
7. There is no change in Trade Payables Turnover Ratio, hence not applicable.
8. Net Capital Turnover Ratio decreased due to reduction in sale of goods and services and increase in working capital.
9. Net Profit Ratio has increased on account of increase in Net Profit After Tax due to sale of wholly owned subsidiary.
10. The Return on Capital Employed Ratio has increased on account of increase in Profit mainly due to Profit arising out
of sale of wholly owned subsidiary.
11. Return on Investment ratio has increased on account of increase in Net Profit After Tax mainly due to Profit arising out
of sale of wholly owned subsidiary.
37 . Expenditure incurred on Corporate Social Responsibility Activities
a) The minimum Gross amount required to be spent by the company during the year is '479.00 Lakhs (Previous
Year - '376.00 Lakhs) .
b) In accordance to section 135 of Companies Act 2013, the company has incurred '480.81 Lakhs (Previous Year -
'377.60 Lakhs), as CSR expenditure.
(c) There is no related party transaction involved in CSR expenditure.
(d) Above figures are disclosed separately in note no. 27(aa).
38. Balances of Trade Receivables, Trade Payables and Advances includes balances subject to confirmation/
reconciliation and consequential adjustment, if any. Reconciliations are carried out on on-going basis. Provisions,
wherever considered necessary, have been made.
39. The company did not have any unrecorded transactions in the Books of Accounts which have been surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
40. The company has not traded or involved in Crypto or Virtual currency during the year.
41. The Board of Directors of the Company adopted the Financial Statements in 332nd Board Meeting held on 29th May
2025.
42. The figures for the corresponding previous years have been regrouped/reclassified wherever necessary to make
them comparable.
In terms of our report of even date.
For S. Guha & Associates For and on behalf of Board of Directors
Chartered Accountants
FRN : 322493E Sd/- Sd/-
(Manobendra Ghoshal) (Subrata Sarkar)
Sd/- Chairman and Managing Director Director (Finance) & CFO
(CA Sourabh Mitra ) DIN : 09762368 DIN : 08290021
Partner
M.No:308743 Sd/- Sd/-
(Suchit Kumar Barnwal) (Ajay Kumar Rai)
Place : New Delhi General Manager Company Secretary
Dated : May 29, 2025 Finance & Accounts M. No. : F5627
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