i) Addition to capital work in progress include ? 689 Lakhs finance cost capitalised during the year. (Previous Year ^ 1075 Lakhs).
ii) Cost of Leasehold land is amortised over the period i.e. 95 years.
iii) a) The Company had adopted the revaluation model as per IND AS-16 for plant & machinery and building, as at 31st March, 2020, and accordingly the carrying cost and useful
life of these assets have been revalued through an independent valuer. Due to revaluation, the Company has charged incremental depreciaton for the year ended 31st March, 2023 amounting to^ 1,818 Lakhs (Previous Year ? 1,770 Lakhs).
b) The Company has revalued its plant and machinery and building at the end of the year 31st March, 2023. As a result, the revaluation gain of ^6681 Lakhs (Plant & Machinery ^2,947 Lakhs and Buildings^ 3,734 Lakhs) has been accounted for in the current financial year ended 31st March, 2023 through other comprehensive income. (Previous revaluation was carried out as on 31st March, 2020).
Additional information Assets under construction
Capital work in progress incurred as at 31st March, 2023 amounted '17004 Lakhs (Previous Year '35027 lakhs) in view of implementation of new projects.
Impairment review
Assets are tested for impairment whenever there are any internal or external indicators of impairment. Impairment test is performed at the level of each Cash Generating Unit (‘CGU’) or groups of CGUs within the Company at which the assets are monitored for internal management purposes, within an operating segment. The impairment assessment is based on higher of value in use and value from sale calculations. During the year, the testing did not result in any impairment in the carrying amount of other assets. The measurement of the cash generating units’ value in use is determined based on financial plans that have been used by management for internal purposes. The planning horizon reflects the assumptions for short to- mid-term market conditions.
Note 1) Delay in execution of projects are mainly due to suspension of activities during COVID-19 period. However, there are no cost over run.
2) The projects temporarily suspended are related to Bande Iron Ore, Kodolibad Iron Ore, Warpani Manganese and Navegoan mines developments. Bande Iron Ore, Warpani Manganese and Navegoan mines development is subjudice, due to change in central government ruling Bande iron ore mines, Warpani Mine and Navegoan Mines got cancelled for which the company has filed legal case in Nagpur Bench of Bombay High Court.
Note 1) Delay in execution of projects are mainly due to suspension of activities during COVID-19 period. However, there are no cost over run.
2) The projects temporarily suspended are related to Bande Iron Ore, Kodolibad Iron Ore, Warpani Manganese and Navegoan mines developments. Bande Iron Ore, Warpani Manganese and Navegoan mines development is subjudice, due to change in central government ruling Bande iron ore mines, Warpani Mine and Navegoan Mines got cancelled for which the company has filed legal case in Nagpur Bench of Bombay High Court.
a) Terms/ Voting Rights attached to the Equity Shares ('in Lakh)
(i) The Company has one class of equity shares having a face value of '10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors, if any is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.
(ii) In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion of the number of the Equity shares held by the Shareholders.
i. a) Term Loans from Banks/NBFCs are Secured by a first mortgage of the Company's Immovable properties situated at Village Warthi, District Bhandara, both present and future ranking pari passu interse and a first charge by way of hypothecation of all the company's movables subject to prior charges created in favour of Company's bankers on Inventories, book debts and other movables for securing the borrowings for working capital requirement.
b) Term Loans Rs.5500 Lakhs sanctioned by Bajaj Finance Ltd. is secured by a first mortgage of the Company's Immovable properties situated at KG Marg, New Delhi.
c) The funds availed from the Bank have been utilized only for the purpose(s) as stated in the Sanction Letter and are not used for any investments and other purposes.
i. Working capital borrowings are secured by way of hypothecation of Inventories and book debts and further secured by way of second charge ranking pari passu over the fixed assets situated at Village Warthi, District Bhandara both present and future, subject to prior charges created by the Company in favour of banks for securing term loan.
ii. Interest on working capital loan from Banks are charged between 7.35% to 9.60% by respective bank.
iii. Outstanding under Customer bills discounted are supported by Letter of credit issued by the respective customers. Further the bills are discounted after receipt of acceptance from applicant's Bank.
iv. The quarterly returns or statements filed by the Company for working capital limits with such banks and financial institutions are generally in agreement with the books of account of the Company, however whenever the differences were noted between the amount as per books of accounts for respective quarters and amount as reported in the quarterly statements are given below. Reasons for the deviations are on account of INDAS adjustements, non-tradecreditors, goods intransit, methodology used by banks for consideration of drawing power or stock statements submitted with the banks on provisional basis etc. However, limit utilized was much lower than the limit sanctioned, hence the differences are not material.
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. Moreover the Company is in the process of updating its suppliers data, as to the status as a Micro, Small & Medium Enterprise with a copy of the Memorandum filed as per the provisions of Section 8 of the Micro, Small & Medium Enterprises Development Act, 2006.
37. Capital management
For the purpose of the Company's capital management, equity includes issued equity capital, securities premium and all other equity reserves attributable to the equity shareholders and net debt includes interest bearing loans and borrowings less current investments and cash and cash equivalents. The primary objective of the Company's capital management is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, long term borrowings and short term borrowings. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.
In order to achieve this overall objective, the Company's capital management amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
To maintain or adjust the capital structure, the Company review the fund management at regular intervals and take necessary actions to maintain the requisite capital structure.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31st March, 2023 and 31st March, 2022.
38. The Company has received an Arbitration award vide order dated 22nd April, 2022 read with additional / supplementary award dated 28th April, 2022 pertaining to Company's past period claims on Lloyds Metal & Energy Ltd (LMEL), which has been settled through Arbitral tribunal vide award dated 22nd April, 2022 read with additional / supplementary award dated 28nd April, 2022. Consequently, LMEL issued Optionally Fully Convertible Debentures (OFCD) with an option to convert into equity shares. The company exercised its option and converted the OFCD into 600 Lakhs equity shares.(refer note No.4).
a) The investment details of Gratuity funds are as per the Scheme of Life Insurance Corporation of India (LIC).
b) The investment details of Superannuation funds are as per the Scheme of Life Insurance Corporation of India (LIC) under two plans. Even though these plans are still continuing, Company has stopped making contribution towards One plan i.e. Superannuation Scheme of Workers w.e.f 01.04.1995 on payment of bonus in the year 1995 as per the terms and conditions of Rules framed at the time of subscribing to the designated policy of LIC. Company was liable as per terms and conditions of the Trust deed to pay contributions only till applicability of provisions of Payment of Bonus Act.
The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties in an orderly market transaction, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values.
The fair values of derivatives are on MTM as per Bank
Company has opted to fair value its Long term and Current investments through profit & loss
Company has adopted effective rate of interest for calculating Interest. This has been calculated as the weighted average of effective interest rates calculated for each loan. In addition processing fees and transaction cost relating to each loan has also been considered for calculating effective interest rate.
Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level-1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
43. Financial Risk Management Financial risk factors
The Company’s principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables, and financial guarantee contracts.The main purpose of these financial liabilities is to manage finances for the Company’s operations. The Company has loan, Investment, trade receivables, other receivables, cash and short-term deposits that arise directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks and also ensure that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. It is the Company’s policy that no trading in derivatives for speculative purposes will be undertaken.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below :
i) Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity risk. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.This is based on the financial assets and financial liabilities held as at 31st March, 2023 and 31st March, 2022.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. In order to optimize the Company's position with regards to interest expenses to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total loan portfolio. The company's borrowings have been contracted at floating rates of interest. Accordingly, carrying value of such borrowings (including interest accrued but not due) which approximates fair value.
Interest rate sensitivity
ii) Credit risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and advances to suppliers) and from its financing activities, including deposits and other financial instruments.
Trade receivables
Customer credit risk is managed by the Company’s established policy, procedures and control relating to customer credit risk management. The Company continuously monitors the economic environment in which it operates. The Company manages its Credit risk through credit approvals, establishing credit limits and continuously monitoring credit worthiness of customers to which the Company grants credit terms in the normal course of business. An impairment analysis is performed at each reporting date on an individual basis for major clients.An impairment analysis is performed at each quarter end on an individual basis for major customers.
iii) Liquidity Risk
The Company monitors its risk of a shortage of funds using a liquidity planning tool. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and cash credit facilities.
46. Subsequent events
No adjusting or significant non- adjusting events have occurred between the reporting date and date of authorization of these financial statements, except the event referred to in note No.38
47. The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on 13th November, 2020, and has invited suggestions from stakeholders, which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
49. Other Statutory information
i) The Company does not have any benami property, and no proceeding has been initiated against the Company for holding any benami property.
ii) The Company does not have any transactions with companies struck off.
iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
iv) The Company has not traded or invested in crypto currency or virtual currency during the financial year.
v) The Company does not have 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 provision of the Income Tax Act, 1961)
vi) The Company has not been declared willful defaulter by any banks or any other financial institution at any time during the financial year.
vii) All immovable properties are held in the name of the Company.
50. Previous year's figures have been regrouped / re-classified wherever necessary to make them more comparable.
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