Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of
estimation in measurement are recognized

when there is a legal or constructive obligation
as a result of past events and it is probable
that there will be an outflow of resources and
a reliable estimate can be made of the amount
of obligation. Provisions are not recognised for
future operating losses. The amount recognized
as a provision is the best estimate of the
consideration required to settle the present
obligation at the end of the reporting period,
taking into account the risks and uncertainties
surrounding the obligation.

Contingent liabilities are not recognized and
are disclosed by way of notes to the Standalone
financial statements when there is a possible
obligation arising from past events, the existence
of which will be confirmed only by the occurrence
or non-occurrence of one or more uncertain
future events not wholly within the control of the
Company or when there is a present obligation
that arises from past events where it is either
not probable that an outflow of resources will be
required to settle the same or a reliable estimate
of the amount in this respect cannot be made.

Contingent assets are disclosed in the
Standalone Financial Statements by way of notes
to accounts when an inflow of economic benefits
is probable.

o. Employee Benefits

Employee benefits are accrued in the year in
which services are rendered by the employees.
Short term employee benefits are recognized as
an expense in the statement of profit and loss for
the year in which the related service is rendered.

Contribution to defined contribution plans such
as Provident Fund, Employee Pension Scheme
etc, is being made in accordance with statute
and are recognised as and when incurred.

Employees benefits using defined benefit plans are
recognised using actuarial valuation techniques
at the close of each year. Remeasurements
comprising of actuarial gains and losses, are
recognised immediately in the Balance Sheet
with a corresponding debit or credit to retained
earnings through Other Comprehensive
Income (“OCI”) in the period in which they occur.
Remeasurements are not reclassified to Profit
or Loss in subsequent periods. The Liability
recognised in the Balance Sheet in respect of
gratuity is the present value of the defined benefit
obligation as at the balance sheet date. The
defined benefit obligation is calculated by external
actuaries using the projected Unit credit method.

p. Revenue Recognition

1. Revenue from Operations

Revenue from contracts with customers is
accounted for only when it has commercial
substance, and all the following criteria are met:

(i) parties to the contract have approved
the contract and are committed to
performing their respective obligations;

(ii) each party's rights regarding the goods
or services to be transferred and
payment terms there against can be
identified;

(iii) consideration in exchange for the goods
or service to be transferred is collectible
and determinable.

The revenue is recognized on satisfaction of
performance obligation, when control over
the goods or services has been transferred
and/ or goods/ services are delivered/
provided to the customers. Delivery occurs
when the goods have been shipped or
delivered to a specific location, and the
customer has either accepted the goods
under the contract or the Company has
sutficient evidence that all the criteria for
acceptance have been satisfied.

Revenue is measured at the amount of
transaction price (consideration specified in
the contract with the customers) allocated to
that performance obligation. The transaction
price of goods sold is net of variable
consideration on account of discounts
offered by the company and excludes
amounts collected on behalf of third parties.

2. Other Income

Interest, Dividend and Claims:

Dividend income is recognized when the
right to receive payment is established.

Interest income from a financial asset is
recognized when it is probable that the
economic benefits will flow to the Company
and the amount of income can be measured
reliably. Interest income is accrued on a
time basis, by reference to the principal
outstanding and at the effective interest rate
applicable, which is the rate that exactly
discounts the estimated future cash receipts
through the expected life of the financial

asset to that asset's net carrying amount on
initial recognition.

Revenue in respect of claims of insurance,
etc. are recognized only when there is
reasonable certainty as to the ultimate
collection.

q. Borrowing Costs

Borrowing cost comprises of interest and other
costs incurred in connection with the borrowing
of the funds. All borrowing costs are recognized
in the Statement of Profit and Loss using the
effective interest method except to the extent
attributable to qualifying Property Plant and
Equipment (PPE) which are capitalized to the
cost of the related assets. A qualifying PPE is
an asset, that necessarily takes a substantial
period of time to get ready for its intended use
or sale. Borrowing cost also includes exchange
differences to the extent considered as an
adjustment to the borrowing costs.

r. Government Grants

Government grants are recognized on systematic
basis when there is reasonable certainty of
realization of the same. Revenue grants including
subsidy/rebates are credited to Statement of
Profit and Loss Account under "Other Income”
or deducted from the related expenses for
the period to which these are related. Grants
which are meant for purchase, construction or
otherwise to acquire non current assets are
recognized as Deferred Income and disclosed
under Non Current Liabilities and transferred
to Statement of Profit and Loss on a systematic
basis over the useful life of the respective asset.
Grants relating to non-depreciable assets is
transferred to Statement of Profit and Loss over
the periods that bear the cost of meeting the
obligations related to such grants.

s. Taxes on Income

Income tax expense representing the sum of
current tax expenses and the net charge of the
deferred taxes is recognized in the statement of
profit and loss except to the extent that it relates
to items recognized directly in equity or other
comprehensive income.

Current Tax

Current income tax is provided on the taxable
income and recognized at the amount expected to
be paid to or recovered from the tax authorities,

using the tax rates and tax laws that have been
enacted or substantively enacted by the end of
the reporting period. Advance tax and provisions
are presented in the balance sheet after setting
off advance tax paid and income tax provision for
the current year.

Deferred Tax

Deferred tax is accounted by using the balance
sheet liability method in respect of temporary
differences between the carrying amounts of
assets and liabilities in the Standalone Financial
Statements and the corresponding tax bases
used in the computation of taxable profit as well
as for unused tax losses or credits. In principle
deferred tax liabilities are generally recognized
for all taxable temporary differences. Deferred
tax assets are generally recognized for all
deductible temporary differences to the extent
that it is probable that taxable profits will
be available against which those deductible
temporary differences can be utilized.

Deferred Tax Asset & Liabilities have been offset
wherever the company has a legally enforceable
right to set off current tax assets against current
tax liabilities & where deferred tax assets &
liabilities relate to income tax levied by the same
taxation authority.

Deferred taxes are calculated at the enacted
or substantially enacted tax rates that are
expected to apply when the asset or liability is
settled. Deferred tax is charged or credited to
the income statement, except when it relates
to items credited or charged directly to other
comprehensive income in equity, in which
case the corresponding deferred tax is also
recognized directly in equity.

The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all
or part of the deferred tax asset to be utilized.

t. Earnings Per Share

Basic earnings per share are computed by
dividing the net profit/loss attributable to the
equity holders of the company by the weighted
average number of equity shares outstanding
during the period.

Diluted earnings per share is computed by
dividing the net profit/loss attributable to the
equity holders of the company by the weighted

average number of equity shares considered for
deriving basic earnings per share and also the
weighted average number of equity shares that
could have been issued upon conversion of all
dilutive potential equity shares.

u. Segment Reporting

The Company has one operating business
segment viz, manufacturing, processing and
selling of steel and steel products comprising
of engineering and other products and services
and all other activities are incidental to the same.

D. Critical accounting judgments, assumptions
and key sources of estimation and uncertainty

The preparation of the Standalone financial statements
in conformity with the measurement principle of
Ind AS requires management to make estimates,
judgments and assumptions. These estimates,
judgments and assumptions affect the application
of accounting policies and the reported amounts of
assets and liabilities, the disclosures of contingent
assets and liabilities at the date of the Standalone
financial statements and reported amounts of
revenues and expenses during the period. Accounting
estimates could change from period to period. Actual
results could differ from those estimates. Appropriate
changes in estimates are made as management
becomes aware of changes in circumstances
surrounding the estimates. Differences between the
actual results and estimates are recognized in the
year in which the results are known / materialized
and, if material, their effects are disclosed in the notes
to the Standalone financial statements.

Application of accounting policies that require
significant areas of estimation, uncertainty and
critical judgments and the use of assumptions in the
Standalone financial statements have been disclosed
below. The key assumptions concerning the future
and other key sources of estimation uncertainty at
the Balance Sheet date, that have a significant risk
of causing a material adjustment to the carrying
amount of assets and liabilities within the next
financial year are discussed below:

a. Arrangements containing leases

Ind AS 116 requires lessees to determine the
lease term as the non-cancellable period of
a lease adjusted with any option to extend or
terminate the lease, if the use of such option
is reasonably certain. The Company makes
an assessment on the expected lease term on

a lease-by-lease basis and thereby assesses
whether it is reasonably certain that any
options to extend or terminate the contract
will be exercised. In evaluating the lease term,
the Company considers factors such as any
significant leasehold improvements undertaken
over the lease term, costs relating to the
termination of the lease and the importance of
the underlying asset to the company's operations
taking into account the location of the underlying
asset and the availability of suitable alternatives.
The lease term in future periods is reassessed to
ensure that the lease term reflects the current
economic circumstances.

b. Depreciation / amortization and impairment on
Property, Plant and Equipment / Intangible assets.

Property, plant and equipment, ROU Assets and
intangible assets are depreciated/amortized on
Straight-Line Basis over the estimated useful
lives (or lease term if shorter) in accordance with
Internal assessment and Independent evaluation
carried out by technical expert/ Schedule II of
the Companies Act, 2013, taking into account
the estimated useful life and residual value,
wherever applicable.

The company reviews its carrying value of
its Tangible and Intangible Assets whenever
there is objective evidence that the assets are
impaired. In such situation assets recoverable
amount is estimated which is higher of asset's
or cash generating units (CGU) fair value less
cost of disposal and its value in use. In assessing
value in use the estimated future cash flows
are discounted using pre-tax discount rate
which reflect the current assessment of time
value of money. In determining fair value less
cost of disposal, recent market realisations are
considered or otherwise in absence of such
transactions appropriate valuations are adopted.

c. Impairment loss on trade receivables

The Company evaluates whether there is any
objective evidence that trade receivables
are impaired and determines the amount of
impairment allowance as a result of the inability
of the customers to make required payments. The
Company bases the estimates on the ageing of
the trade receivables balance, credit-worthiness
of the trade receivables and historical write¬
off experience. If the financial conditions of the
trade receivable were to deteriorate, actual
write-offs would be higher than estimated.

d. Current Tax and Deferred Tax

Significant judgment is required in determination
of taxability of certain income and deductibility
of certain expenses during the estimation of the
provision for income taxes.

Significant management judgement is required
to determine the amount of deferred tax assets/
liability that can be recognised, based upon the
likely timing and the level of future taxable profit
together with future tax planning strategies. The
management has reviewed the rationale for
recognition of Deferred Tax Liability and based on
the likely timing and level of profitability in future and
expected utilisation of deferred tax there against.

e. Defined benefit obligation (DBO)

Critical estimate of the DBO involves a number
of critical underlying assumptions such as
standard rates of inflation, mortality, discount
rate, anticipation of future salary increases etc.
as estimated by Independent Actuary appointed
for this purpose by the Management. Variation in
these assumptions may significantly impact the DBO
amount and the annual defined benefit expenses.

f. Provisions and Contingencies

Provisions and liabilities are recognized in the
period when it becomes probable that there will
be a future outflow of funds resulting from past
operations or events and the amount of cash
outflow can be reliably estimated. The timing
of recognition and quantification of the liability
requires the application of judgement to existing
facts and circumstances, which can be subject
to change.

Management judgment is required for estimating
the possible outflow of resources, if any, in respect
of contingencies/claim/litigations against the
Company as it is not possible to predict the
outcome of pending matters with accuracy.

The carrying amounts of provisions and
liabilities and estimation for contingencies are
reviewed regularly and revised to take account
of changing facts and circumstances.