Terms of / Rights attached to equity shares

The Company has a single class of equity shares having par value of '10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Terms of / Rights attached to CCPS

The holders of CCPS shall be entitled to payment of 0.01% per annum as dividend on each CCPS, as and when the Company declares any dividend. Each CCPS shall be convertible into 1 (one) equity share at any date prior to the expiry of the term of 20 (Twenty) years from the date of issuance of the CCPS ("CCPS Term") at the option of the holder of the CCPS. Unless already converted each CCPS outstanding at the expiry of the CCPS Term shall be compulsorily converted into 1 (one) equity share of the Company. The CCPS will have priority with respect of dividend, if declared, or repayment of capital vis-a- vis equity shares. The CCPS holders shall not be entitled to participate in the surplus fund of the Company or participate in the surplus assets and profits, on winding up which may remain after the entire capital has been repaid. The payment of dividend shall be on a non cumulative basis.

Equity shares allotted as fully paid up (during 5 years preceding March 31, 2022) without payment being received in cash

34,90,00,000 equity shares and 52,59,80,000 compulsorily convertible preference shares issued on August 16, 2018, to the shareholders of Milloret Steel Limited in terms of the scheme of amalgamation ('the Scheme') sanctioned by Mumbai bench of National Company Law Tribunal vide its order dated July 24, 2018.

a) Capital reserve

The reserve created pursuant to the acquisition of business represents the difference of liabilities and assets acquired.

b) Securities premium

The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

c) Capital redemption reserve

Reserve is created for redemption of preference shares as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

d) Capital Reconstruction Reserve

Reserve acquired at the time of amalgamation accounted for using the pooling of interest method.

e) Amalgamation Reserve

Reserve is created on account of gain arising at the time of amalgamation accounted for using the pooling of Interest method.

f) General reserve

Under the erstwhile Companies Act, 1956, a general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations.

Consequent to introduction of Companies Act, 2013, the requirement of mandatory transfer of a specified percentage of the net profit to general reserve has been withdrawn and the Company may transfer any amount from the surplus of profit or loss to the General reserves, if it wants to voluntarily. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

g) Equity instruments through OCI

The Company has elected to recognise changes in the fair value of certain investments in equity instruments in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of the equity instruments.

h) Equity contribution resulted on merger

The equity contribution resulted on merger is a surplus after extinguishment of optionally convertible preference shares (OCPS) issued to Milloret Steel Limited.

i) Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company.

Based on legal advice from an independent expert, the management is of the view that vide NCLT order dated July 24, 2018 in response to the resolution plan submitted by the consortium of JSW Steel Limited and AION Investment Private II Limited for acquisition of the Company under the Insolvency Bankruptcy Code, 2016 ("NCLT Order"), the Company will be entitled to carry forward the aforementioned accumulated losses pertaining to the period prior to acquisition and off-set the same against the future taxable income of the Company.

i. Acceptances include credit availed by the Company from banks for payment to suppliers for raw materials purchased by the Company. The arrangements are interest-bearing and are payable within one year.

ii. Trade payables are non-interest bearing and are normally settled within 90 days except for SME's which are settled within 45 days.

iii. Trade payables from related parties details has been disclosed in note 41.

iv. For the Company's credit risk management processes, refer note 44.

The Company does not have any significant adjustments between the contracted price and revenue recognised in the Statement of profit and loss.

The performance obligation is satisfied based on the terms of sale, normally, upon delivery of the goods and payment is generally due within 30 to 120 days from delivery.

Amount of revenue recognized from amounts included in the contract liabilities at the beginning of the year is '68.27 crores (previous year '16.97 crores).

Equity shares to be issued upon conversion of compulsorily convertible preference share have not been considered for the purpose of calculation of diluted earning per share purpose during the previous year as they were anti-dilutive.

37. Commitments and contingencies

(a) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) of '42.19 crores (March 31, 2021 - '47.59 crores)

Pursuant to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 initiated on 18 July 2017, the National Company Law Tribunal on 24 July 2018 (Order date) approved (with modifications), the Resolution Plan submitted by the consortium of JSW Steel Limited and AION Investments Private II Limited read with the independent legal opinion obtained by the Company and the recent judgment of Supreme Court of India, all contingent liabilities, commitments, other claims and obligations including all taxes and other government dues standing as on the effective date (i.e. 31 August 2018) and not part of the Resolution Plan, shall stand extinguished.

I. The Company had entered into an MOU with Ecomaister Company Limited, South Korea for transfer of its holding in JV company Monnet Ecomaister Enviro Private Limited having gross carrying value of '14.21 crores (provision of '14.21 crores, hence net book value is zero) for a total consideration of '10,000 (Rupees Ten Thousand). Accordingly, the Company has measured the said investment at lower of its carrying amount and fair value less costs to sell and classified it as held-for-sale.

II. The Company upon approval of plan to sell off properties in their present condition by the Board of directors, had re-classed advance to properties as held for sale at their fair value less cost to sell and had recognised an impairment loss of '1.80 crore. Since the Company to whom the advance was given is under Insolvency proceedings, the Company has filed its claim and awaits the court order.

III. In the Board Meeting held on 19 January 2021, the Board had approved to sell the aircraft. Accordingly, the Company had entered into a letter of intent with Nav Durga Aviation Private Limited on 6^th October, 2020 and had measured the aircraft at lower of its carrying amount or fair value less costs to sell and had classified it as held-for-sale.

The Company has received the consideration in current year and has accordingly recognised sale.

39. Employee benefit plans

a) Defined contribution plans

The Company operates defined contribution retirement benefit plans for all qualifying employees. Under these plans, the Company is required to contribute a specified percentage of payroll costs.

Company's contribution to provident fund & family pension scheme recognised in statement of profit and loss aggregates to '6.54 crores (31 March 2021: '6.55 crores) (included in note 32).

Contribution towards Company owned trust is detailed in Defined benefit plans.

b) Defined benefit plans

The Company sponsors funded defined benefit plans for all qualifying employees. The level of benefits provided depends on the member's length of service and salary at retirement age.

The gratuity plan is covered by The Payment of Gratuity Act, 1972. Under the gratuity plan, the eligible employees are entitled to post-retirement benefit at the rate of 15 days' salary for each year of service until the retirement age of 58, 60 and 63. The vesting period for gratuity as payable under The Payment of Gratuity Act, 1972 is 5 years.

The fund is managed by Monnet Ispat & Energy Employees Group Gratuity Trust and it is governed by the Board of trustees. The Board of trustees are responsible for the administration of the plan assets and for defining the investment strategy.

The plans in India typically expose the Company to actuarial risks such as: investment risk, interest rate risk and salary risk.

Investment risk The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Interest risk A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision.

Salary risk The present value of the defined benefit plan liability is calculated by reference to the future

salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan's liability.

No other post-retirement benefits are provided to the employees.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31 March 2022 by Independent, Qualified Actuary. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

Sensitivity analysis:-

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

Each year an asset liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles.

The Company is expected to contribute '2.01 crore to its gratuity plan for the next year. The weighted average duration of the plan is 12 years.

44. Financial Instruments

44.1 Capital risk management

The Company, being in a capital intensive industry, its objective is to maintain a strong credit rating and establish a capital structure that would maximise the return to stakeholders through optimum mix of debt and equity.

The Company monitors its capital using gearing ratio which is net debt to total equity. Net debt includes borrowings less cash and cash equivalents and other bank balances.

The objective of the Company's capital management structure is to ensure that there remains sufficient liquidity within the Company to carry out committed work programme requirements. The Company monitors the long term cash flow requirements of the business in order to assess the requirement for changes to the capital structure to meet that objective and to maintain flexibility. The Company manages its capital structure and makes adjustments to it, based on underlying macro economic factors affecting business environment, financial market conditions and interest rates environment.

44.3 Financial risk management objectives and policies

The Company's Corporate Treasury function provides services to the business, coordinates 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 (including currency risk and interest rate risk), credit risk and liquidity risk.

The Company seeks to minimise the effects of these risks by using derivative financial instruments to hedge these risk exposures, wherever required. The use of financial derivatives is governed by the Company's policies approved by the board of directors, which provide written principles on foreign exchange risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The sensitivity analysis of the above mentioned risk in the following sections relate to the position as at 31 March 2022 and 31 March 2021.

A. 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. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's debt obligations with floating interest rates.

B. Foreign currency risk management

Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in exchange rates.

The Company's functional currency is Indian Rupee (INR). The Company also undertakes transactions denominated in foreign currencies. Consequently, exposure to exchange rate fluctuations arises. Volatility in exchange rates affects the Company's revenue from export markets and the cost of imports, primarily in relation to raw materials. The Company is exposed to exchange rate risk under its trade portfolio.

A reasonably possible strengthening/weakening of the foreign currencies (USD / Euro) against INR would affect the measurement of financial instruments denominated in foreign currencies and affect equity and profit and loss by the amounts shown below. The analysis assumes that all other variables remain constant.

44.4 Credit risk management:

Credit risk is the risk that counterparty 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 from its financing activities, including deposits with banks.

The maximum credit risk exposure relating to financial assets is represented by the carrying value as at the Balance Sheet date.

A. Trade receivables

Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit review and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored. At the year end the Company does not have any significant concentrations of credit risk other than that disclosed in note 13.

At each reporting date, the Company computes the expected credit loss using simplified approach. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets as at the balance sheet date. The Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low. The outstanding trade receivables are regularly monitored and appropriate action is taken for collection of overdue receivables.

B. Financial instruments and bank deposits

Credit risk from investments with banks is managed by the Treasury functions in accordance with the management policies. Investments of surplus funds are only made with approved counterparties who meet the appropriate rating and/or other criteria, and are only made within approved limits. The management continually re-assesses the Company's policy and updates the same as required. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty failure.

III. Liquidity risk

Liquidity risk refers to the risk of financial distress or extraordinarily high financing costs arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require financing.

The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts.

Maturity pattern of financial assets and liabilities:

The table below summarises the maturity profile of the Company's financial assets and liabilities based on contractual undiscounted payments.

I. During the year due to improvement in demand and better realization, the Company has earned positive net profit resulted into better return on equity.

II. During the year due to increased operations and higher productions, the Company could rotate the inventory better

III. During the year due to better performance on account of improvement in demand and realization, the Company has earned positive net profit resulted into positive net profit ratio.

IV. During the year due to better performance on account of improvement in demand and realization, the Company has earned higher EBIT resulted into higher return on capital employed.

V. During previous year due to post COVID recovery the share price had risen significantly as compared to current year resulted into higher return on investment in PY.

49. Other statutory information

i) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.

ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

iii) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of The Company (ultimate beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

iv) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

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 provisions of the Income Tax Act, 1961.

vi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

vii) The Company is not declared wilful defaulter by and bank or financials institution or lender during the year.

viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

ix) The Company does not have any transactions with companies which are struck off.

50. The Board of Directors of the Company, at their meeting held on February 16, 2022, has inter alia, approved,

a) the acquisition of 100% of the paid up equity share capital of Mivaan Steels Limited ("MSL").

b) the Scheme of Arrangement under applicable provisions of the Companies Act, 2013 and rules and regulation made thereunder, for transfer of specified undertaking of the Company pertaining to manufacturing facilities at Raipur and mining facilities at Kanker and associated coal washery operations at Patherdih along with other assets, properties and liabilities as defined in the Scheme on a going concern basis to MSL by way of a slump sale.

The Company has filed the Scheme with necessary authorities and accordingly the implementation of the Scheme is subject to the necessary approvals, sanctions and consents from the stock exchanges, shareholders, creditors, National Company Law Tribunal and any other authorities as may be required under the applicable laws and regulations.

The Company completed the acquisition of entire paid up equity share capital of MSL on February 24, 2022, and with this acquisition Mivaan Steels Limited has become wholly owned subsidiary of the Company.

51. The figures for the corresponding previous years have been reclassified / regrouped wherever necessary to make them comparable.