of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Information on contingent liability is disclosed in the Notes to the Financial Statements. Contingent assets are not recognized. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognized as an asset.
Decommissioning Liability
The Company records a provision for decommissioning costs towards site restoration activity related to leasehold land. The decommissioning costs are provided at the present value of future expenditure using a current pre tax rate expected to be incurred to fulfill decommissioning obligations and are recognized as part of the cost of the underlying assets. Any change in the present value of the expenditure, other than unwinding of discount on the provision, is reflected as adjustment to the provision and the corresponding assets. The change in the provision due to the unwinding of discount is recognized in the statement of Profit and Loss.
(X) FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION:
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in Statement of Profit and Loss except to the extent of exchange differences which are regarded as an adjustment to interest costs on foreign currency borrowings that are directly attributable to the acquisition or construction of qualifying assets, are capitalized as cost of assets.
In case of an asset, expense or income where a nonmonetary advance is paid/received, the date of transaction is the date on which the advance was initially recognized. If there were multiple payments or receipts in advance, multiple dates of transactions are determined for each payment or receipt of advance consideration.
(IX) PROVISION, CONTINGENT LIABILITIES AND CONTIGENT ASSETS AND COMMITMENTS
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using equivalent period government securities interest rate. Unwinding of the discount is recognized in the statement of profit and loss as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.
Contingent liabilities are disclosed 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
(XI) REVENUE RECOGNITION:
Sale of Goods and Services:
The Company derives revenues primarily from sale of products comprising of pig iron, sponge iron, pellet, steel and Iron & steel casting.
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration entitled in exchange for those goods or services. Generally, control is transferred upon shipment of goods to the customer or when the goods is made available to the customer, provided transfer of title to the customer occurs and the Company has not retained any significant risks of ownership or future obligations with respect to the goods shipped.
Revenue is measured at the amount of consideration which the company expects to be entitled to in exchange for transferring distinct goods or services to a customer as specified in the contract, excluding amounts collected on behalf of third parties (for example taxes and duties collected on behalf of the government). Consideration is generally due upon satisfaction of performance obligations and a receivable is recognized when it becomes unconditional.
The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, it does not adjust any of the transaction prices for the time value of money.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of volume discounts and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
Revenue from rendering of services is recognized over time by measuring the progress towards complete satisfaction of performance obligations at the reporting period.
Contract balances
Trade receivables
A receivable represents the Company's right to an amount of consideration that is unconditional.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognized when the payment is made by the customer. Contract liabilities are recognized as revenue when the Company performs under the contract.
Other Income:
I ncentives on exports and other Government incentives related to operations are recognized in the statement of profit and loss after due consideration of certainty of utilization/receipt of such incentives.
Interest Income:
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 estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.
Dividend
Dividend income is recognized when the right to receive dividend is established
(XII) EMPLOYEE BENEFITS EXPENSE:
Short Term Employee Benefits:
Short-term employee benefits are recognized as an expense in the Statement of Profit and Loss of the year in which the related service is rendered.
Leave encashment being a short-term benefit is accounted for using the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each Balance Sheet date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the year in which they arise.
Post-Employment Benefits
Defined Contribution Plans
Contribution to Provident Fund, a defined contribution plan, is made in accordance with the statute, and is recognized as an expense in the year in which employees have rendered services.
Defined Benefit Plans
The cost of providing gratuity, a defined benefit plan, is determined using the Projected Unit Credit Method, on the basis of actuarial valuations carried out by third party actuaries at each Balance Sheet date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. Other costs are accounted in statement of profit and loss.
Re-measurements of defined benefit plan in respect of post-employment and other long-term benefits are charged to the other comprehensive income in the year in which they occur. Re-measurements are not reclassified to statement of profit and loss in subsequent periods.
(XIII) BORROWING COSTS:
Borrowing costs specifically relating to the acquisition or construction of qualifying assets that necessarily takes a substantial period of time to get ready for its intended use are capitalized (net of income on temporary deployment of funds) as part of the cost of such assets. Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds. For general borrowing used for the purpose of obtaining a qualifying asset, the amount of borrowing costs
eligible for capitalization is determined by applying a capitalization rate to the expenditures on that asset. The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalized during a period does not exceed the amount of borrowing cost incurred during that period. All other borrowing costs are expensed in the period in which they occur.
(XIV) CUSTOMS:
Liability on account of Customs Duty on Imported materials in transit or in bonded warehouse is accounted in the year in which the goods are cleared from customs.
(XV) TAXES ON INCOME:
Tax expense represents the sum of current tax (including income tax for earlier years) and deferred tax. Tax is recognized in the statement ofprofit and loss, except to the extent that it relates to items recognized directly in equity or other comprehensive income, in such cases the tax is also recognized directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognized in equity or other comprehensive income is also recognized in equity or other comprehensive income.
Current tax provision is computed for income calculated after considering allowances and exemptions under the provisions of the applicable Income Tax Laws. Current tax assets and current tax liabilities are off set, and presented as net.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the Balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are generally recognized for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised. Deferred tax
assets and liabilities are measured at the applicable tax rates. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
D MATERIAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
i. Depreciation / Amortization and useful lives of Property Plant and Equipment (PPE) / Intangible Assets:
PPE / intangible assets are depreciated / amortized over their estimated useful lives, after taking into account estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Company's historical experience with similar assets and take into account anticipated technological changes. The depreciation / amortization for future periods are revised if there are significant changes from previous estimates.
ii. Decommissioning Liabilities:
The Liability for decommissioning costs is recognized when the Company has obligation to perform site restoration activity. In determining the fair value of such provision, assumptions and estimates are made in relation to discount rates, the expected cost to dismantle and remove the plant from the site and the expected timing of those costs. The expected cost to be incurred at the end of the lease term is based on the estimates provided by the internal technical experts.
iii. Tax:
The Company reviews at each balance sheet date the carrying amount of deferred tax assets. The factors used in estimates may differ from actual outcome which could lead to an adjustment to the amounts reported in the financial statements.
iv. Contingencies:
Management has estimated the possible outflow of resources at the end of each annual financial year, 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.
v. Impairment of non-Financial Assets:
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or Cash Generating Unit's (CGU) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent to those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
I n assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.
vi. Defined Benefits Plans:
The Cost of the defined benefit plan and other postemployment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and attrition rate. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
vii. Provisions:
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. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
2.07 In the earlier years, the Directorate of Enforcement by way of two attachments had provisionally attached the Plant and Machinery under installation at Dagori Integrated Steel Plant situated at Bilha, Bilaspur (Chhattisgarh) and certain property, plant and equipment at Steel Plant Division, Siltara, Raipur to the extent of Rs. 30758.39 lakhs for alleged misuse of coal raised from Gare Palma IV/4 coal block in Chhattisgarh.
The Adjudicating Authority had confirmed the above provisional attachments. Subsequently, the Appellate Authority stayed both the attachments on an appeal filed by the Company where the matter has been put up for hearing on 15th May, 2024.The Court of Special Judge (PC Act) (CBI), (Coal Block Cases-01), New Delhi, in the matter of ED vs M/s Jayaswal Neco industries Limited Case no 23/19 of 2019, vide its order dated 19th March, 2024 has discharged the Company, Mr Arvind Jayaswal and Mr Ramesh Jayaswal U/S 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA), holding that there was no offence of money laundering in the absence of any charge of cheating in securing the allocation of coal block.
In view of the above order, the Company is confident that under Section 8(6) & (7) of the PMLA, it would succeed in removal of the said attachments and does not expect any material liability on the Company on this account.
2.08 In the earlier years, after completion of investigation the CBI had filed Charge-Sheet against the Company and Mr. Ramesh Jayaswal, the Managing Director (MD) alleging misrepresentation and violation of the terms and conditions of the Gare IV/4 Coal Block Allotment Letter and the executed Mining Lease.
The aforesaid action was in connection with FIR of Central Bureau of Investigation (CBI), Economic Offence Wing, New Delhi, registered on 22nd May, 2014, against the Company and unknown Public Servants in connection with the allotment of Gare IV/4 Coal Block situated in the State of Chhattisgarh.
On 30th May, 2019, the Special CBI Court, New Delhi, took cognisance of the matter and issued summons against the Company and Mr. Ramesh Jayaswal - (MD). The summons was received by the Company in June, 2019. The Company and Mr. Ramesh Jayaswal had been charged for the offence under Section 120-B/420/406 of the Indian Penal Code.
The Company strongly refutes all the allegations. The Company believes it has a good case on merits and is confident that the Company and Mr Ramesh Jayaswal -(MD) would be able to defend themselves before the authorities during the course of trial.
2.09 During the year, active development of project of DRI and Captive Power Plant at Bilaspur, Chhattisgarh remained suspended and accordingly the Company has not capitalised Borrowing Costs as per Ind AS - 23.
2.10 CWIP includes Bilha Bilaspur project amounting to Rs. 47969.11 lakhs (Previous Year Rs. 47969.11 lakhs) had been put under abeyance on account of cancellation of the captive coal mines of the Company by the Honourable Supreme Court of India. The Company had recognised an impairment provision of Rs. 43670.11 lakhs (Previous Year Rs. 43670.11 lakhs) for the same in accordance with the Indian Accounting Standards (Ind AS) 36 - 'Impairment of Assets' and the Project remained suspended during the year.
2.11 In accordance with the Indian Accounting Standard (Ind AS 36) on " Impairment of Assets", during the year, the management carried out an exercise of identifying the assets that may have been impaired in accordance with the said Ind AS. On the basis of a review carried out by the management, there was no further impairment loss on property, plant and equipment and Capital Work-in-Progress during the year ended 31st March, 2024.
2.12 There are no projects under capital work-in-progress (CWIP) whose completion is overdue except as stated above in Note No. 2.09 and 2.10.
3.03 The Intangible Assets under Development include Rs. 1520.75 lakhs towards Metabodeli Mines (50 Hectares) and Rs. 46.88 lakhs towards the Ramdongri Mines and Rs. 27.40 lakhs towards Sonadehi Mines; in the case of Metabodeli Mines, the Company had challenged the validity of Section 10 A (2) (c) of the MMDR Amendment Act, 2015 and Rule 8 (4) of the MCR 2016 before the Hon'ble Chhattisgarh High Court which was pleased to pass an interim order dated 12th January, 2017, keeping the application of the Company alive for consideration. A Transfer Petition was filed in the Hon'ble Supreme Court by the Union of India, however, the same was dismissed as withdrawn on 17th July, 2023.
I n the case of Ramdongri Mines, the State Government of Maharashtra had granted Mining Lease in favour of the Company on 17th August, 2004. The said order was challenged by an aggrieved party before the Mines Tribunal first and then before the Hon'ble Bombay High Court, Nagpur Bench, Nagpur. On 17th November, 2022, the Petitioner has withdrawn the petition filed before the Hon'ble High Court. Now the Company is perusing the matter with the Government authorities for completion of procedural formalities for execution of the Mining Lease.
The Company has challenged the 2021 Amendment to the MMDR Act, 1957, before the Hon'ble Chhattisgarh High Court, vide Writ Petition No. 3696 of 2021, wherein, after hearing the parties, the Hon'ble High Court was pleased to grant interim stay on 6th October, 2021. Vide the above referred Writ Petition, the Company has included Sonadehi, Devpura and Metabodeli Mines while challenging the provisions of Amendment of MMDR Act, 2021.
In view of the Central Government's clarification to the State Government as regards the eligibility of the Prospecting license holder for the grant of Mining Lease, the Company opines that its case with respect to the Metabodeli Mines falls Under Section 10 A (2) (b) and not under clause (C) thereof, as advised by the State Government in the past.
That in view of above, the Company filed Writ Petition No. 2757 of 2020, before the Hon'ble Chhattisgarh High Court,
to ensure that the Mining Lease over the subject area is granted in favour of the Company in terms of Section 10 A (2) (b) of the MMDR Act, 1957, upon completion of all the conditions contained therein. Presently the matter is pending for consideration before the Hon'ble High Court.
The Company is also of the view that the Company's above cases are already pending under Section 10A (2) (c) of the Mining Act and the matters are subjudice, therefore the amendments done in Section 10A (2) (b) will not have any impact on the status of the Mines. Further the amendment under the Mining Act in the second Proviso of Section 10A (2) (b) provides that "the holder of a reconnaissance permit or prospecting license whose rights lapsed under the first proviso, shall be reimbursed the expenditure incurred towards reconnaissance or prospecting operations in such a manner as may be prescribed by the Central Government"; accordingly, the Company does not envisage any losses on account of the above amendment.
3.04 The Company had filed Mining Lease applications for Rowghat Iron Ore Deposit, Bastar, Chhattisgarh. The Chhattisgarh State Government (SG) had rejected the same by a common order which was challenged by the Company. The SG had filed a complaint before the Ministry of Mines which had referred the matter to the Chief Vigilance Officer (CVO), which couldn't make out any case against the Company. The revision petition of the Company was allowed and subsequently the Hon'ble Delhi High Court also confirmed the order. The Hon'ble Delhi High Court had specifically observed that the Company had successfully undertaken prospecting operations in the area.
Subsequently in 2012, SG filed a fresh complaint containing the same allegations before the Chief Vigilance Commission (CVC). The Central Bureau of Investigation (CBI) on the directions of the CVC had registered an FIR against the Company alleging certain irregularities. Post completion of the investigations by CBI, the Chargesheet was filed by the CBI before Special CBI Court Nagpur where the trial is under progress. The Company doesn't expect any financial effect of the above matter under litigation.
NATURE AND PURPOSE OF RESERVES Capital Reserve
The Capital Reserve was created pursuant to the Scheme of Merger of the Steel Division of Corporate Ispat Alloys Limited, Amalgamation of Nagpur Alloy Casting Limited and Capital incentive received from Government of Maharashtra. It shall be utilised in accordance with the provisions of the Companies Act, 2013.
Securities Premium
Securities Premium was created when shares were issued at premium. It shall be utilised in accordance with the provisions of the Companies Act, 2013.
General Reserve
The General Reserve was created pursuant to the Scheme of, Amalgamation of Inertia Iron and Steel Industries Private Limited, Merger of Sponge Iron Plant and Power Plant of Corporate Ispat Alloys Limited and Abhijeet Infrastructure Limited. It shall be utilised in accordance with the provisions of the Companies Act, 2013.
Capital Redemption Reserve
Capital Redemption Reserve was created for redemption of Preference Shares. It shall be utilised in accordance with the provisions of the Companies Act, 2013.
Retained Earnings
Retained Earnings represent the accumulated profits/losses made by the Company over the years.
Revaluation Reserve
Revaluation Reserve was created for revaluation of Factory Building and Shed. It shall be utilised in accordance with the provisions of the Companies Act, 2013.
Other Comprehensive Income
Other Comprehensive Income (OCI) represents the amount recognised in Other Equity consequent to remeasurement of Defined Benefit Plan.
Equity Component of Compound Financial Instruments
The Company had received the Interest free Inter Corporate Deposits from the Promoters and under Ind AS the difference between the Fair Value and Transaction Value is recognised as Equity Component of Compound Financial Instruments under Other Equity.
18.01 As per the terms of the Restructuring Support Agreement (RSA) dated 23rd August, 2021, the Company had to refinance its outstanding amount of Principal Term Loans and Interest Accrued but not due on Borrowings from ACRE Trusts on or before 15th December, 2023. The Company has duly repaid its entire Secured Obligations to the ACRE Trusts on 14th December, 2023 through Debt Refinancing by way of issuance of Secured Non-Convertible Debentures.
On 14th December, 2023, the Company has made allotment of 3,20,000 Unlisted, Secured, Redeemable, Non-Convertible Debentures with 14.50% per annum as Scheduled Coupon Rate and 3.00% per annum as Additional Coupon Rate, having face value of Rs. 100,000/- each aggregating to Rs. 320000.00 lakhs on private placement basis to the various Debenture holders with a tenor of sixty months from the Date of Allotment, commencement of Principal Repayment from 31st July, 2024 with Vistra ITCL (India) Limited as the Debenture Trustee.
The Proceeds of the issue to the extent of Rs. 317362.00 lakhs has been used for repayment of Secured Obligations of the ACRE Trusts, the remaining amount has been partly used and the balance is lying with the State Bank of India, Nagpur for part financing the Debt Refinancing related costs, fees etc.
18.02 The Secured Non-Convertible Debentures referred to above aggregating to Rs. 320000.00 lakhs are guaranteed by an unconditional and irrevocable personal guarantee provided by Mr. Arvind Jayaswal (Chairman of Company)
and Mr. Ramesh Jayaswal (Managing Director of Company). Further the entire Secured Non-Convertible Debentures are secured by way of first and exclusive pledge of the entire Equity Shares of the Company held by the Promoters and Promoter Group Companies.
18.03 The Secured Non-Convertible Debentures referred to above aggregating to Rs. 320000.00 lakhs are further secured by way of:
(a) a first and exclusive equitable mortgage on all the immovable properties of the Company, both present and future (excluding the Enforcement Directorate (ED) Attached Assets and the Corporate Ispat Alloys Limited (CIAL) Steel Division Land acquired under merger).
(b) a first and exclusive equitable mortgage on the Land of Neco Ceramics Limited.
(c) a first and exclusive charge by way of hypothecation on all the movable assets including Current Assets of the Company , both present and future (excluding the ED Attached Assets).
18.04 The Secured Non-Convertible Debentures are issued by the Company subject to Early Repayment Option of 24 months from Date of Allotment (i.e. from14th December, 2023) and Mandatory Redemption Option of 36 months from Date of Allotment (i.e. from14th December, 2023). The Secured Non-Convertible Debentures referred to above aggregating to Rs. 320000.00 lakhs are to be repaid as per the documented terms as under:
B. Segment Identification, Reportable Segments and definition of each segment:
i. Reportable Segments:
The Company's operating segments are established on the basis of those components that are evaluated regularly by the Chief Operating Decision Maker, in deciding how to allocate resources and in assessing performance. These have been identified and reported taking into account the differing risks and returns, nature of products, the organisational structure and the internal reporting system of the Company.
ii. Primary / Secondary Segment Reporting Format:
a) The risk-return profile of the Company's business is determined predominantly by the nature of its products. Accordingly, the business segments constitute the Primary Segments for disclosure of segment information.
b) Since all the operations of the Company are predominantly conducted within India, there are no separate reportable geographical segments.
c) No Non-Current Assets of the Company is located outside India as on 31st March, 2024 and 31st March 2023.
d) No single customer has accounted for more than 10% of the Company revenue for the year ended 31st March, 2024 and 31st March 2023.
iii. Segment Composition:
a) Steel Segment is engaged in manufacture and sale of Pig Iron, Billets, Rolled Products including Alloy Steel, Sponge Iron and includes its captive Power Plants at its unit located at Siltara, Raipur and Mining activities in the state of Chhattisgarh and Maharashtra.
b) Iron and Steel Castings Segment comprises of manufacture and sale of Engineering and Automotive Castings with production facilities at Nagpur in Maharashtra and Anjora in Chhattisgarh.
c) Other Segment comprises of trading of PVC pipes.
d) Unallocated comprises of income, expenses, assets and liabilities which can not be directly identified to any of the above segments.
NOTE: 40 RELATED PARTY DISCLOSURES:
In accordance with the requirements of Ind AS 24, on Related Party Disclosures, name of the related party, related party relationship, transactions and outstanding balances including commitments where control exists and with whom transactions have taken place during reported year, are as detailed below:
A. List of Related Parties:
I. Associate Company
Maa Usha Urja Limited
II. Key Management Personnel and their Relatives
Key Management Personnel Relatives of Key Management Personnel
Shri B. L. Shaw (up to 24.11.2023) Shri Avneesh Jayaswal
Shri Arvind Jayaswal Shri Anshul Bhardwaj (up to 24.02.2023)
Shri Ramesh Jayaswal
Shri P.K.Bhardwaj (up to 24.02.2023)
Shri Sangram Keshari Swain (from 13.11.2023)
Shri Ashish Srivastava (from 15.04.2023)
Shri Vikash Kumar Agarwal (up to 13.01.2023)
Shri M. P. Singh (up to 12.11.2023)
Shri Kapil Shroff (from 25.02.2023)
III. Enterprises in which key managerial personnel and their relatives are able to exercise significant influence with whom transactions have taken place during the year:
Other Related Parties
The Jayaswal Basant Lall Shaw Family Trust Jayaswal Neco Urja Private Limited
Shashi Enterprises (up to 12.11.2023) Neco Defence Systems Private Limited
Neco Mining Company Private Limited Neco Heavy Engineering and Castings Private Limited
NSSL Private Limited Synergy CapCorp India Private Limited *
Neco Deserttech Defence Private Limited
* Nominee Director is able to exercise significant influence.
44.03 Fair Value Hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:-
i) Level 1:- Quoted prices / published Net Assets Value (unadjusted) in active markets for identical assets or liabilities. It includes fair value of financial instruments traded in active markets and are based on quoted market prices at the Balance Sheet date and financial instruments like mutual funds for which Net Assets Value is published by mutual fund operators at the Balance Sheet date.
ii) Level 2:- Inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). It includes fair value of the financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on the Company specific estimates. If all significant inputs required to fair value an instrument are observable then instrument is included in level 2.
iii) Level 3:- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
The following table provides hierarchy of the fair value measurement of Company's asset and liabilities, grouped into Level 1 (Quoted prices in active markets), Level 2 (Significant observable inputs) and Level 3 (Significant unobservable inputs) as described below:
NOTE: 45 Financial Risk Management - Objective and Policies
The Company is exposed to Market Risk, Credit Risk and Liquidity Risk. Risk management is carried out by the Company under the policy and plan as approved by the Board of Directors. The Risk management plan defines how risks associated with the Company will be identified, analysed, and managed. It outlines how risk management activities will be performed, recorded, and monitored by the Company. The basic objective of risk management plan is to implement an integrated risk management approach to ensure that all significant areas of risks are identified, understood and effectively managed, to promote a shared vision of risk management and encourage discussions on risks at all levels of the organisation to provide a clear understanding of risk / benefit trade-offs, to deploy appropriate risk management methodologies and tools for use in identifying, assessing, managing and reporting on risks, and to determine the appropriate balance between cost and control of risk and deploy appropriate resources to manage / optimise key risks. The activities are developed to provide feedback to management and other interested parties (e.g. Audit committee, Board etc.) by way of Action taken report. The results of these activities ensure that risk management plan is effective in the long-term.
45.01 Market Risk and Sensitivity:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprise three types of risks: Foreign Currency Rate risk, Interest Rate risk and other Price risks, such as Commodity price risk. Financial instruments affected by market risk include Loans and Borrowings, Deposits and Investments.
The sensitivity analysis relates to the position as at 31st March, 2024 and 31st March, 2023.
45.02 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 from its financing activities, including deposits with banks and other financial instruments.
a) Trade Receivables:
The Company measures the expected credit loss of trade receivables, which are subject to credit risk, based on historical trend, industry practices and the business environment in which the entity operates and adjusted for forward-looking information. Loss rates are based on actual credit loss experience and past trends.
The Company has used practical expediency by computing the expected credit loss allowance for trade receivables based on provision matrix. The provision matrix has taken into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on ageing of the days the receivables are due.
b) Financial Instruments and Cash Deposits:
The Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks with which its balances are maintained. The Credit risk from balances with bank is managed by the Company's finance and treasury department. Utilisation of surplus funds, as and when required are also managed by finance and treasury department.
The Company does not maintain significant cash in hand. Excess balance of cash other than those required for its day-to-day operations is deposited into the bank.
For other financial instruments, the finance and treasury department assesses and manages credit risk based on internal assessment. Internal assessment is performed for each class of financial instrument with different characteristics.
45.03 Liquidity Risk:
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. It will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. The Company's objective is to, at all times, maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company relies on short-term borrowings and operating cash flows to meet its need for fund.
With implementation of the debt refinancing, the cash flow position of the Company, financial leverage levels, liquidity position have improved significantly and have resulted in elimination of the financial stress. Previous implementation of the Debt Restructuring had already led to realignment of debt to sustainable level, the Company has been doing promptly servicing of debt dues as per the Debt Refinancing from the cut-off date of 14th December, 2023. (Refer Note No.18)
49.01 During the year, based on the direction of Samadhan (Delhi High Court Mediation & Conciliation Centre), a settlement agreement between M/s Goyal MG Gases Pvt. Ltd. (Lessor) and the Company was executed on 29th May, 2023 for a dispute related to 70 TPD Oxygen Plant and the Company purchased the said Oxygen Plant from the Lessor for Rs. 850 lakhs plus applicable Taxes. Exceptional items for Rs. 61.19 lakhs during the year represent payments related to Lease rentals, interest paid in pursuance to the orders of the Honorable Delhi High Court and Samadhan related to the 70 TPD Oxygen Plant.
49.02 In FY 2006-07, Corporate Ispat Alloys Limited (CIAL) had entered into a lease agreement and other agreement for Operation and Maintenance (O&M) with Goyal MG Gases Private Limited (GMG) for 100 TPD Air Separation Plant (ASP). In FY 2013-14, the Steel Division of CIAL merged in the Company. Subsequently disputes arose between the Company and GMG, and the matter was referred to Sole Arbitrator for adjudication of dispute. On 1st June, 2023, the Ld. Arbitrator passed an Arbitral Award, which was subsequently corrected (vide two orders). Both the parties have challenged the Arbitral Award before the Hon'ble Delhi High Court.
On 15th January, 2024, the Hon'ble Delhi High Court granted stay to the effect and operation of the Arbitration Award with conditions that the Company had to deposit Rs. 900 lakhs with the High Court Registry to be kept in Fixed deposit by the Registry and pay Rs. 900 lakhs directly to GMG, without prejudice to the rights and contentions of the Company and GMG. The Company has already complied with the order of Hon'ble Delhi High Court. Presently the appeals filed by the Company & GMG are pending before the Hon'ble Delhi High Court. The next date for hearing in this matter is 7th May, 2024.
During the year, without prejudice to the outcome of litigation, as a matter of prudence, the Company has made provision of Rs. 1824.95 lakhs and disclosed as Exceptional item.
NOTE: 50 Other Statutory Information
50.01 The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
50.02 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 (whether recorded in writing or otherwise)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.
50.03 The Company has not received any fund from any person(s) or entity(s), including 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.
50.04 The Company does not have any such transaction which is not recorded in the books of account surrendered or disclosed as income during the year in the tax assessments under the Income-tax act, 1961.
50.05 No proceeding has been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
50.06 The Company is not declared wilful defaulter by any bank or financial institution or other lender.
50.07 There is no charge or satisfaction which is yet to be registered with the Registrar of Companies (ROC) beyond the statutory period excepting twenty-three old charges totalling to Rs. 15105.00 lakhs appearing on the website of the Ministry of Corporate Affairs due to certain factors beyond the control of the Company.
The principal reasons for non-satisfaction of the ROC Charge are as under:-
1) Lender no longer exists,
2) Lender merged with other lender, current lender is unable to track the transaction,
3) Documents are not traceable since being very old,
4) Legacy documents being in Physical form etc.
These old charges are for the period starting from 1976 to 2005 when the ROC was not digitalised. Further, against these old charges no loan is presently outstanding in the Books of Account of the Company.
NOTE:51 Previous Year's figures have been regrouped / rearranged wherever necessary, to make them comparable with those of current year.
As per our Report of even date For and on behalf of Board of Directors
For CHATURVEDI & SHAH LLP ARVIND JAYASWAL RAMESH JAYASWAL
Chartered Accountants Chairman Managing Director
(Registration No.: 101720W/W100355) DIN: 00249864 DIN: 00249947
RUPESH SHAH ASHISH SRIVASTAVA KAPIL SHROFF
Partner Company Secretary Chief Financial Officer
Membership No.: 117964 Membership No.: A20141
Nagpur 30th April, 2024
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