Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliableestimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed,
the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expenserelating to a provision is presented in the Statement of Profit and Loss net of any reimbursement.
Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders by theweighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholdersand the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potentialequity shares, if any.
Cash and cash equivalents in the Balance Sheet comprise cash at banks and in hand and short-term deposits with an originalmaturity of three months or less, which are subject to an insignificant risk of charges in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as definedabove, net of outstanding bank overdrafts as they are considered an integral part of the Company's cash management.
The Company recognises a liability to make cash or non-cash distributions to equity holders of the Company when thedistribution is authorised and the distribution is no longer at the discretion of the Company. As per the Companies Act, 2013,a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrenceor non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that isnot recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingentliability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measuredreliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.
The preparation of the Company's financial statements requires management to make judgements, estimates customer will beentitled. The Company determined that the expected value method is the appropriate method to use in estimating the variableconsideration for revenue from contract with customer. The selected method that better predicts the amount of variableconsideration was primarily driven by the number of volume thresholds contained in the contract with the customer. Beforeadjusting any amount of variable consideration in the transaction price, the Company considers whether the amount of variableconsideration is constrained. The Company determined that the estimates of variable consideration are not constrained basedon its historical experience, business forecast and the current economic conditions.
In the process of applying the Company's material accounting policies, management has made the following judgement, whichhave the most significant effect on the amounts recognised in the financial statements.
The Company determines the lease term as the noncancellable term of the lease, together with any periods covered by anoption to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate thelease, if it is reasonably certain not to be exercised. The Company has several lease contracts that include extension andtermination options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercisethe option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it toexercise either the renewal or termination. After the commencement date, the Company reassesses the lease term if thereis a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercisethe option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customisation tothe leased asset).
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that havea significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financialyear, are described below. The Company based its assumptions and estimates on parameters available when the financialstatements were prepared. Existing circumstances and assumptions about future developments, however, may change dueto market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in theassumptions when they occur.
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarialvaluation. 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 and mortality rates. Due to the complexitiesinvolved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in theseassumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated inIndia, the management considers the interest rates of government bonds in currencies consistent with the currencies of thepost-employment benefit obligation.
The mortality rate is based on publicly available mortality tables for India. Those mortality tables tend to change only atinterval in response to demographic changes. Future salary increases and gratuity increases are based on expected futureinflation rates for India.
Further details about gratuity obligations are given in Note 33.
Property, Plant and Equipment and Intangible Assets are depreciated/amortised over their estimated useful life, after takinginto account estimated residual value. Management reviews the estimated useful life and residual values of the assets annuallyin order to determine the amount of depreciation/amortisation to be recorded during any reporting period. The useful lifeand residual values are based on the Company's historical experience with similar assets and take into account anticipatedtechnological changes. The depreciation/amortisation for future periods is revised if there are significant changes fromprevious estimates.
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (IndianAccounting Standards) Rules as issued from time to time. During the year ended March 31, 2025, MCA has notified Ind AS 117-Insurance Contracts and amendments to Ind As 116 - Leases, relating to sale and lease back transactions, applicable from April 1,2024. The Company has assessed that there is no significant impact on its financial statements.
(c) The settlement of advances to subsidiaries and related parties are not planned.
(d) The Company holds investment in equity shares of Hans Ispat Limited (Wholly Owned Subsidiary Company). Bank of Barodahad filed Original Application against Hans Ispat Limited (Wholly Owned Subsidiary Company) & its guarantors (i.e. Mr. ShaileshBhandari and Mr. Mukesh Bhandari) before Debts Recovery Tribunal-1, Ahmedabad ("DRT") under section 19 of the Recoveryof Debts due to Banks and Financial Institutions Act 1993. As per judgement of the Hon'ble DRT, Ahmedabad, the recoveryproceedings had been initiated for e-auction of properties and the properties has been auctioned for the amount of Rs. 33.03Crores in November, 2021. Based on the application of the auction purchaser, the Hon'ble Recovery Officer by order dated July18, 2024 authorized the bank officer for execution of sale deed in favour of auction purchaser, subject to there being no stay fromany higher forum and accordingly the sale deed was presented / executed before SRO Anjar for registration on July 24, 2024.
As on March 31, 2025 the company had Advances of Rs.64.00 Crores (March 31, 2024 Rs 63.91 Crores) and investment of Rs36.46 Crore (March 31, 2024 Rs.36.46 Crores) and considering all the facts as stated above, the company has provided expectedcredit loss / Provision for doubtful amount of Rs.63.24 Crores (March 31, 2024 Rs 63.24 Crores) on advances and impariment oninvestment in subsidiary of Rs 36.46 Crores (March 31, 2024 Rs.36.46 Crores)
viii) There was proceedings of Inspection & Search by the State Goods and Service tax authorities, at the various places of thecompany and its subsidiary Company Hans Ispat Limited, during January 18, 2021 to February 3, 2021 and during thecourse of said proceedings, as determined by the authorities on various points, the company has voluntarily paid totalamount of Rs 9.57 Crore towards tax, Interest and Penalty, on February 3, 2021. The Company has accounted Rs 6.69 Croreas expenses and Rs 2.88 Crore has been shown as recovery from suppliers. In the opinion of the Company, there will notbe any further additional liability with regard to said proceedings. Thereafter, certain other documents as informed by GSTauthorities, related to the company has been seized and verification of the same is in process by the said authorities.
ix) Claims against the Company not acknowledged as debts amounting to Rs.1.05 Crore (As at March 31, 2024: Rs.1.11 Crore),are pending before various courts, authorities, arbitration, Consumer Dispute Redressal Forum etc.
x) During the year ended as at March 31, 2024, the Company has received the assessment order for the Assessment Year2016-17 from the income tax department where in addition of Rs 662.01 Crore has been made. Against the said addition,set off of the Carried Forward unabsorbed Business Loss and Depreciation has been given. The company has filed an appealbefore the higher authority and the management is hopeful that the matter will be decided in the favour of the company.
i. Future cash flows in respect of above, if any, is determinable only on receipt of judgement/ decisions pending with relevantauthorities.
ii. The above amounts are without the amount involved in the appeal preferred by the Department, if any, and furtherapplicable interest on the demand. The above amounts are after payment of tax under protest and adjustment of refundand has been shown as advances / Balance with Revenue Authority.
iii. During the financial year ended on March 31, 2019, Goods and Service Tax Department of Maharashtra has re-determinedValue Added Tax liability (including interest and penalty) of Rs. 6.28 Crore for the financial year 2009-10 and Rs. 23.93 Crorefor the financial year 2010-11 after adjustment of Rs. 4.00 Crore paid by the Company under protest. The Company haspaid Rs 1.07 Crore during the year ended as at March 31, 2020 and have filed an appeal before the Deputy Commissionerof State Tax, Mumbai. On account of the said order presently the liability of the Company is of Rs. 29.15 Crore (March 31,2024: Rs. 29.15 Crore). The provision for impugned disputed tax liability has not been made for as the Company is hopefulof matter being decided in its favor by appellate authority.
i. The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptionsoccurring at the end of the reporting period, while holding all other assumptions constant.
ii. The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligationas it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may becorrelated.
iii. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has beencalculated using the projected unit credit method at the end of the reporting period, which is the same method as appliedin calculating the defined benefit obligation as recognised in the balance sheet.
iv. There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior year.
Gratuity is a defined benefit plan and company is exposed to the Following Risks:
Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liabilityrequiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on theduration of assets.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. Assuch, an increase in the salary of the members more than assumed level will increase the plan's liability.
Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined byreference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate,it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities,and other debt instruments.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101of Income Tax Rules, 1962, this generally reduces ALM risk.
Mortality Risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not haveany longevity risk.
Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company and a default willwipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory guidelines.
The details related to gratuity is on the basis of the certificate issued by the acturial valuer.
The segment report is given in consolidated financial statements.
The information / details as provided in the Financial Statements are for the disclosure purpose only as per the applicable Ind
Accounting Standards ("Ind AS") without prejudice to the rights of the Company and without any acknowledgement of the debts /
liabilities of the Company under the applicable laws.
The Company has defaulted in repayment of the loan and interest thereon taken from Central Bank of India in March 2012 ofRs. 436.13 Crore. The company on June 29, 2022 has accepted the compromise / One Time Settlement (OTS) letter of CentralBank of India dated June 28, 2022 for their outstanding loan/credit facility. As per the settlement terms and agreement, thecompany has paid the entire settlement amount along with interest there on. On compliance with the terms and conditions ofthe settlement with Central Bank of India and upon issuance of the 'No Due Letter' dated February 7, 2025, the Company hasrecognized a total reduction in debt amounting to Rs 211.13 Crore. Of this amount, Rs 158.83 Crore has been credited to theCapital Reserve and Rs 52.30 Crore has been recognized under Exceptional Items in the Statement of Profit and Loss.
(a) The Company has defaulted in repayment of loan of Rs 183.96 Crore (after adjustment of repayment of Rs 10.05 Crorepaid during the year ended as at March 31, 2020 and Rs.6 Core paid during year ended as at March 31, 2024 as upfrontpayment towards commitment to settlement) (Principal of Rs. 183.95 Crore and Interest of Rs. 0.01 Crore) in August 2011.Indian Overseas Bank has assigned its debts to Rare Asset Reconstruction Limited on September 28, 2017. The Companyis in the process of entering into a settlement agreement with Rare Asset Reconstruction Limited.
(b) The Company was informed vide letter dated October 12, 2017 of Indian Overseas Bank, that the bank has assigned debtsto Rare Asset Reconstruction Limited. However considering pending settlement, the outstanding loan amount is treatedas current maturities of long term borrowings.
(a) The Company has defaulted in repayment of loan of Rs 51.44 Crore (Principal of Rs 51.44 Crore) in September 2011. Thebank has assigned this loan to Rare Asset Reconstruction Limited. The Company has entered into a settlement agreementwith Rare Asset Reconstruction Limited for the repayment of loan on June 28, 2018. As per the settlement agreement, theCompany has agreed to repay the loan by March 15, 2022. The Company has again defaulted in repayment of loan of theinstalment falling due from September 2021 till March 15, 2022 and interest.During the financial year ended March 31,2025 the Company has paid the entire settled Principal amounts due to Rare Asset Reconstruction Limited. The Companyhad been in negotiations with the said lender regarding the outstanding interest amounting to Rs 5.69 crore. During theyear ended March 31, 2025, the Company made a partial payment of Rs 2.50 crore towards this interest. Consequently,there is a default in payment of the remaining interest of Rs 3.19 crore, pertaining to the period from June 2022 to June2024 and which had been subsequently fully paid by the Company.
(b) The repayment of debt to Rare Asset Reconstruction Limited, up to the balance sheet date of Rs. 28.00 Crore (March 31,2024 is Rs. 23.00 Crore) has been adjusted against the total outstanding loan liability.
(c) If all the terms and conditions of the settlement are fully complied there will be reduction of debt by Rs. 23.44 Crore.
Canara Bank and State Bank of Travancore)
(a) The Company has defaulted in repayment of the loan from Bank of India in December 2012 of Rs. 628.04 Crore (Principalof Rs. 628.04 Crore), Bank of Baroda in September 2012 of Rs. 31.23 Crore (Principal of Rs. 31.23 Crore), Canara Bankin September 2012 of Rs. 232.97 Crore (Principal of Rs. 190.18 Crore and Interest of Rs. 42.79 Crore), State Bank ofIndia in December 2011 of Rs. 323.27 Crore (Principal of Rs. 323.27 Crore) and State Bank of Travancore in September2011 of Rs. 91.98 Crore (Principal of Rs. 85.04 Crore and Interest of Rs. 6.94 Crore). All these loans were assigned toEdelweiss Asset Reconstruction Company Limited. The Company entered into a settlement agreement with EdelweissAsset Reconstruction Company Limited on March 10, 2015. As per the settlement agreement, the Company had agreedto repay the loan by March 2023. However, the Company has again defaulted in repayment of the instalment of theloan falling due from December 2020 till March 2023 and interest thereupon. Based on the proposal of the Company,Edelweiss Asset Reconstruction Company Limited has approved the restructuring of the outstanding due on November3, 2023, wherein the Company is required to pay total amount of Rs 391 Crore, through 28 installments (from August 31,2023 to March 15, 2026) along with Interest @ 11% p.a. and default Interest @ 7% p.a and to comply with other termsand conditions.
(b) The Management is of the opinion that Fixed Deposit of Rs. 12.45 Crore appropriated by Bank of Baroda will beadjusted against the outstanding liability payable to Edelweiss Asset Reconstruction Company Limited, at the time oflast installment.
The Company has filed a Special Civil Application ("SCA") before the Hon'ble Gujarat High Court to return back Rs. 12.45crore to the Company's bank account which was adjusted against the outstanding loan. The said petition is admitted andis pending for further hearing.
(c) The amount of repayment of debt to Edelweiss Asset Reconstruction Company Limited, up to the balance sheet date ofRs. 672.35 Crore (March 31, 2024 is Rs. 528.34 Crore) has been adjusted against the total outstanding loan liability.
(d) If all the terms and conditions of settlement are fully complied upto March 2026, there will be reduction in debt byRs. 403.55 Crore.
Punjab National Bank and Allahabad Bank)
(a) The Company has defaulted in repayment of the loan from Oriental Bank of Commerce in June 2012 of Rs. 55.19 Crore,Punjab National Bank in October 2011 of Rs. 184.69 Crore (Principal amount of Rs. 184.69 Crore) and Allahabad Bank inJuly 2012 of Rs. 283.62 Crore (Principal of Rs. 278.22 Crore and interest of Rs. 5.40 Crore). All these loans were assigned toInvent Assets Securitization and Reconstruction Private Limited ("Invent ARC"). The Company entered into a settlementterms with Invent ARC in August 2015 for debts of Oriental Bank of Commerce and in July 2016 for debts of AllahabadBank and Punjab National Bank. On June 18, 2019, the settlement terms were revised where in the last date of repaymentfurther extended up to June 2023 / December 2023. However, the Company has again defaulted in repayment of theinstalment. Based on the request of the Company, Invent ARC has approved further revised repayment schedule on May31, 2024 for the payment of outstanding settlement dues with interest @11% p.a.
(b) As per the terms of settlement, the Company had paid the entire settlement amount of Rs. 18.50 Crores along withinterest of Rs. 0.49 Crores for the debt originally owed to Oriental Bank of Commerce (now merged with Punjab NationalBank) assigned to Invent ARC by March 31, 2025 and Invent ARC has issued No Due Certificate dated April 7, 2025.Upon compliance with all the terms and conditions of the settlement, a total reduction in debt amounting to Rs.36.69Crores has been recognized. Of this, Rs 24.14 Crores has been credited to Capital Reserve, and Rs 12.55 Crores has beenrecognized under Exceptional Items in the Statement of Profit and Loss.
(c) The amount of repayment of debt to Invent Assets Securitization and Reconstruction Private Limited (being assigneeof debts of Punjab National Bank and Allahabad Bank), up to the balance sheet date of Rs. 77.06 Crore (March 31, 2024is Rs. 59.06 Crore) has been adjusted against the total outstanding loan liability. If all the terms and conditions of thesettlements are fully complied, there would be a reduction in debt by Rs. 288.32 Crore.
(a) Cases before Debts Recovery Tribunal (DRT):
(i) Central Bank of India has filed Original Application against the Company & its guarantors (Mr. Mukesh Bhandari,Mr. Shailesh Bhandari and Mr. Avinash Bhandari) before the Debts Recovery Tribunal-1, Ahmedabad ("DRT") undersection 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. The Hon'ble DRT vide judgementdated October 9, 2018 allowed the original application filed by the Bank and issued recovery certificate against theCompany and guarantors to the tune of Rs. 577.89 Crores and future interest on the amount due @10% p.a. with monthlyrests from the date of filing of Original Application till the recovery of amount. The Hon'ble Recovery Officer of theDRT has initiated recovery proceedings and passed order / issued warrant for attachment of hypothecated / mortgagedproperties and for valuation of the said attached properties. Further as per the terms of settlement with Central Bank ofIndia dated June 28, 2022, on payment of the settlement amount along with interest, Central Bank of India has issued NoDue Letter dated February 7, 2025 and as no claims of Central Bank of India remains to be satisfied, the Hon'ble RecoveryOfficer has disposed / closed the recovery proceedings by order dated February 28, 2025.
(ii) Rare Asset Reconstruction Limited (being assignee of debts of Indian Overseas Bank) ("Rare ARC") had filed OriginalApplication against the Company & its guarantors Mr. Mukesh Bhandari, Mr. Shailesh Bhandari and Mr. Avinash Bhandaribefore the Debts Recovery Tribunal-1, Ahmedabad ("DRT") under section 19 of the Recovery of Debts due to Banksand Financial Institutions Act, 1993. The Hon'ble DRT vide judgment dated September 20, 2018 allowed the originalapplication filed by the Bank / Financial Institution and issued recovery certificate against the Company and Guarantorsto the tune of Rs. 315.64 Crore and future interest on the amount due @12.75% p.a. with monthly rests from the date offiling of Original Application till the recovery of amount. The Hon'ble Recovery Officer of the DRT has initiated recoveryproceedings and passed order / issued warrant for attachment of hypothecated / mortgaged properties. The Hon'bleRecovery Officer has passed order for release of Rs. 10 Crores from the account of company with Standard CharteredBank to Rare ARC, sale of shares of the guarantors and payment of Rs. 0.05 Crores by Mr. Avinash Bhandari for non¬disclosure of assets to be adjusted towards the dues. Further action / hearing is pending before Hon'ble Recovery Officer.
(iii) In view of settlement / consent terms filed with DRT, the Original Application filed by Rare Asset Reconstruction Limited(being assignee of debts of Dena Bank) has been disposed on October 15, 2018 and the recovery proceedings by theRecovery Officer of the Hon'ble DRT were being adjourned. Thereafter, the Demand Notice dated August 3, 2021 is issuedby Recovery Officer and further action / hearing is pending before Hon'ble Recovery Officer.
(iv) In view of settlement / consent terms filed with DRT or otherwise after completion of pleadings and hearing, the OriginalApplication filed by Invent Assets Securitization and Reconstruction Private Limited (being assignee of debts of AllahabadBank) has been disposed on March 21, 2018 and the recovery proceedings by the Recovery Officer of the Hon'ble DRT isbeing adjourned.
(i) Central Bank of India has declared the Company as a willful defaulter on May 29, 2014 for outstanding default amount ofRs. 436.13 Crores and reported the name of Company and its directors to the Reserve Bank of India and Credit InformationBureau (India) Limited (CIBIL) as willful defaulter.
(ii) Dena Bank has declared the Company as a wilful defaulter on March 31, 2016 for outstanding amount of Rs. 51.44 Croresand reported the name of the Company and its directors to the Reserve Bank of India and Credit Information Bureau (India)Limited (CIBIL) as Wilful Defaulter. Rare Asset Reconstruction Limited (being assignee of debts of Dena Bank) has agreedto withdraw the name of the Company and its directors from the defaulter's list on receipt of entire settlement amount.
(i) The Central Bureau of Investigation (CBI) has conducted certain proceedings, on the basis of the complaint filed byCentral Bank of India with regard to the utilization of the loan disbursed by Central Bank of India. Central Bureau ofInvestigation has filed a charge sheet and a CBI Special Case was registered against the Company and its directors i.e.Mr. Mukesh Bhandari, Mr. Shailesh Bhandari, Mr. Avinash Bhandari and few officers of Central Bank of India beforethe Hon'ble CBI Court, Ahmedabad on October 6, 2015 and the matter was pending before the Hon'ble CBI Court forfurther proceedings. The Directorate of Enforcement, Ahmedabad has filed an application before the Hon'ble CBI Court,Ahmedabad for transfer of CBI Case to the designated court of Prevention of Money Laundering (PMLA). The Hon'ble CBICourt, Ahmedabad by order dated January 24, 2022 allowed the application and by further order dated March 29, 2022disposed of the case for transfer to PMLA Court. The Principal District Court (PMLA Court) has registered the transferredcase as ACB - Special Case No. 15/2022 and the case is now pending for opening by prosecution.
(ii) Bank of India has filed a complaint dated December 29, 2021 under section 154(1) of the Criminal Procedure Code (Cr.P.C)pertaining to fraud perpetrated by the Company, its directors, unknown public servants and other unknown persons withintent to defraud Bank of India to the tune of Rs. 81.97 Crores, being the amount of difference between the outstandingamount of Rs. 631.97 Crores and assignment amount of Rs. 550 Crores. The Central Bureau of Investigation, BankingSecurities Fraud Branch, Mumbai has registered a FIR on December 31, 2021. Central Bureau of Investigation (CBI) carriedout the search on January 4, 2022 and seized various documents and now the matter is under investigation. The Companyhas filed a petition for quashing of FIR before Hon'ble Gujarat High Court in April 2024 and the Hon'ble Gujarat High Courtby order dated April 26, 2024 issued notice and notice as to interim relief. The said petition is pending for further hearing.
(i) In view of the registration of the FIR by the Central Bureau of Investigation related to loan of Central Bank of India forscheduled offences, the Ahmedabad Zonal Office of the Directorate of Enforcement ("ED") has recorded a case underthe provisions of the Prevention of Money Laundering Act, 2002 ("PMLA") and during the course of investigation, EDhas passed an order dated March 28, 2018 under sub-section (1) of section 5 of the PMLA for provisional attachmentof certain properties to the extent of Rs. 179.80 Crores comprising Land having total area of 4,90,621 square meterat Chhadavada and Samakhiyali of Steel Plant, Building and Plant & Machinery for a period of 180 days. Thereafter, acomplaint under sub-section (5) of section 5 of the PMLA was filed by ED before the Adjudicating Authority, New Delhiand the Adjudicating Authority, New Delhi vide order dated September 5, 2018 confirmed the attachment of abovesaidproperties. The Company has filed an appeal before the Hon'ble Appellate Tribunal, PMLA, New Delhi and the Hon'bleAppellate Tribunal, PMLA, New Delhi vide order dated December 10, 2018 passed an order for maintaining status quo andno coercive action by ED. The ED has filed its reply and the matter is adjourned for filing of rejoinder. The ED has filed anapplication for vacation of interim order. Edelweiss Asset Reconstruction Company Limited ("Edelweiss ARC"), a securedfinancial creditor has filed impleadment application in July 2023 to participate in the proceedings, which was allowed onJuly 9, 2024. Thereafter, the matter was adjourned from time to time for further hearing.
(ii) The Assistant Director, Directorate of Enforcement, Ahmedabad has filed a Complaint Under Section 45 of the Preventionof Money Laundering Act,2002 on December 1, 2018 before Principal District Judge, Ahmedabad against the company,Mr. Mukesh Bhandari, Mr. Shailesh Bhandari and Mr. Avinash Bhandari under section 3 and 4 of the PMLA related to loanof Central Bank of India. The charge has been framed by the Hon'ble Court and now it is pending at the stage of evidenceof prosecution.
(iii) On January 10, 2025, Directorate of Enforcement (ED), Zonal Office, Ahmedabad has conducted search at the corporateoffice & factory of the Company situated at Palodia and the residence of Mr. Shailesh Bhandari, Executive Vice Chairman& Promoter of the Company under the provisions of Prevention of Money Laundering Act, 2002 ("PMLA"). During thesearch, it was informed that the search is being carried out in relation to the registration of the FIR by the Central Bureauof Investigation related to loan of Bank of India for schedule offences and a Enforcement Case Information Report ("ECIR")has been registered by ED on March 31, 2022. ED has passed order under Section 17(1A) of the PMLA for (a) freezingof the balances lying in 39 bank accounts of the Company alongwith interest accrued thereon as on January 10, 2025and interest accrued subsequently from January 10, 2025 onwards (b) freezing of balances lying in two personal bankaccounts of Mr. Shailesh Bhandari, Executive Vice Chairman, alongwith interest accrued thereon as on January 11, 2025and (iii) seized two cars found at the residence premises of Mr. Shailesh Bhandari, Executive Vice Chairman.
The Company and Mr. Shailesh Bhandari, Executive Vice Chairman challenged the action of ED dated 10th / 11th January,2025 before the Hon'ble Gujarat High Court and the Hon'ble Gujarat High Court by interim order dated January 29, 2025,till the pendency of the said petitions, inter alia, permitted the Company and Mr. Shailesh Bhandari to operate the bankaccounts in respect of the amount which is in excess of the amount freezed on January 10 / 11, 2025. Accordingly, anamount of Rs. 34.29 Crores in two bank accounts of the Company and an amount of Rs. 0.83 Crores in one bank accountof Mr. Shailesh Bhandari has been lien marked in favour of ED and the said three accounts are being operated for theamount in excess of the lien marked amount and all other bank accounts have been unfreezed by ED. The said petitionsare pending before Hon'ble Gujarat High Court for further hearing. ED has further removed the seizure of one car, beingowned by third party and the application for use / release of second car is pending before Hon'ble Gujarat High Court.
(iv) Based on the original application filed by Directorate of Enforcement (ED), Zonal Office, Ahmedabad before Ld.Adjudicating Authority, PMLA, New Delhi related to search conducted on January 10, 2025 and January 11, 2025 for loanof Bank of India, a show cause notice dated February 21, 2025 has been issued to the Company and Mr. Shailesh Bhandarifor allowing the retention of frozen accounts and seized vehicle. The Company and Mr. Shailesh Bhandari filed theirreply of the said original application and now it is pending for rejoinder and further hearing before the Ld. AdjudicatingAuthority, PMLA, New Delhi.
(v) The Company and Mr. Shailesh Bhandari has filed a petition for quashing of Enforcement Case Information Report ("ECIR")registered by ED on March 31,2022 related to loan of Bank of India before Hon'ble Gujarat High Court in March, 2025 andthe Hon'ble Gujarat High Court by order dated March 28, 2025 issued notice to respondents. The said petition is pendingfor further hearing.
(i) The Company had filed a Special Civil Application ("SCA") against Central Bank of India and Reserve Bank of India forwrongfully declaring the account of the Company as fraud account on November 6, 2013 in breach of principles of naturaljustice. The said petition was dismissed by the Hon'ble Gujarat High Court. The Company has filed a Letters Patent Appeal(LPA) against the said order. The Hon'ble Gujarat High Court has issued Notice and notice as to interim relief. The Hon'bleGujarat High Court by interim order dated June 21, 2023 stayed the fraud classification and order passed by Hon'blesingle judge. In view of interim order passed by Hon'ble Gujarat High Court and request of the Company, Central Bank
of India has removed fraud flagging in the account. The said appeal is pending for further hearing before the Hon'bleGujarat High Court.
(ii) The Company had filed a Special Civil Application ("SCA") against Bank of India in July 2023 for wrongfully declaring theaccount of the Company as fraud account on February 13, 2019 without any intimation and in breach of principles ofnatural justice. The Hon'ble Gujarat High Court by order dated November 30, 2023 quashed and set aside the action ofclassifying the account as fraud account and the matter was remitted to the bank leaving a liberty to take fresh stepsin accordance with the principles laid down by Hon'ble Apex Court. Bank of India has given a show cause notice andcopy of Forensic Audit Report to the Company to make representation / submission. The Company has made a detailedrepresentation / reply. Bank of India has again reclassified the account as fraud by letter dated August 7, 2024. TheCompany has again filed Special Civil Application before Hon'ble Gujarat High Court against such reclassification of fraudaccount and the Hon'ble Gujarat High Court by way of ad-interim relief dated September 24, 2024, passed order for nocoercive action. The said petition is pending for further hearing.
(iii) The Company had filed a Special Civil Application ("SCA") against Canara Bank (erstwhile Syndicate Bank) in December2023 for wrongfully declaring the account of the Company as fraud account on May 4, 2018 without any intimation, inbreach of principles of natural justice and despite that the Company has repaid the settled loan amount and have receivedNo Due Certificate from the bank on May 27, 2019. The Hon'ble Gujarat High Court has issued notice on December 11,2023 and now petition is pending for further hearing.
(iv) The Company had filed a Special Civil Application ("SCA") against ICICI Bank and Reserve Bank of India in April 2024 forwrongfully declaring the account of the Company as fraud account without any intimation, in breach of principles ofnatural justice and despite that the Company has repaid the settled loan amount and have received No Due Certificatefrom the bank on July 4, 2016. The Hon'ble Gujarat High Court has issued notice on April 18, 2024 and ICICI Bank has filedreply and now petition is pending for further hearing.
Indian Overseas Bank had filed two criminal complaints against the Company and its directors / officers under section 138of Negotiable Instruments Act, 1881 for dishonor of cheques of Rs. 103.00 Crore issued by the Company and the Companyis contesting both the said cases and both the matters are pending for further proceedings before the respective Hon'bleMetropolitan Magistrates, Ahmedabad.
The Indian Overseas Bank had classified the loan account of the Company as non-performing assets during August 2011, which wassubsequently assigned to Rare Assets Reconstruction Limited ("Rare ARC"), but with whom the settlement terms have not beenentered into. Further, the Hon'ble Debt Recovery Tribunal (DRT), Ahmedabad has passed judgment against Company for recoveryalong with future interest on the amount due @12.75% p.a. with monthly rests. As per the details available with the Company, theamount of unprovided interest, on approximate basis, on the said loan is as under:-
(a) The cost of material consumed includes freight, loading and unloading expenses, inspection fees, commission on purchase,taxes & duties (to the extent of credit not available), rate difference and interest cost on purchase of raw material and ancillaryexpenses thereof (including reversal of any claim).
(b) Few accounts of "Trade Receivables", "Trade payables", "Advances from Customer", "Advances Recoverable In Cash or Kind","Advance to Suppliers and Other Parties" including very old balances are subject to confirmation/ reconciliation/ supportingdocuments and includes very old non-moving items therefore are subject to necessary adjustments for accounting or re¬grouping / classification.
(c) Account of Receivables / Payables in respect of Goods and Service Tax, Service Tax, CENVAT, and Vat are subject to reconciliation,submission of its return for its claim and/or its Audit/ Assessment/Settlement/ Payment, if any.
(d) The classification / grouping of items of the accounts are made by the management, based on the available data with the Company.
(e) On account of technicalities involved, the claim of Merchandise Exports from India ("MEIS") will be accounted for as and whenthe claim will be admissible with the respective authority.
(f) During the year ended as at March 31, 2022 the business activity of Transmission Line Tower division (TLT) was temporarilysuspended in order to evaluate its further business viability. However, till March 31 2025 the operation of the TLT division hasnot commenced. The management is of the opinion that the carrying value of the Inventory, Property Plant and Equipment andTrade receivables represent net realizable value and therefore no provision for impairment/write off is required to be made.
(g) During the year, the Company has written off bad debts amounting to Rs.92.86 Crore pertaining to trade receivables fromcustomers, primarily due to disputes, inability to pay, or settlements/recoveries that resulted in partial or no payment.Majority of the Trade Receivable balances had been previously provided for under the Expected Credit Loss (ECL) model, andthe corresponding ECL provisions have been reversed during the year.
(h) Audit Log: The Company has used an accounting software for maintaining its books of account which has a feature of recordingaudit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in thesoftware. Further, where audit trail (edit log) facility was enabled, no instance of the audit trail feature being tampered with.
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed usingderivative instruments are foreign currency risk. Following are the Derivative instruments at year end not designated ashedging instrument:*Pursuant to the revised reschedulement agreement dated May 31, 2024, entered into with Invent Assets Securitization andReconstruction Private Limited (assignee of Oriental Bank of Commerce, now merged with Punjab National Bank, AllahabadBank and Punjab National Bank), and based on the balance confirmation received from Invent ARC, an amount of Rs 41.93Crores towards unpaid interest for the period from September 2020 till March 2024 has been recognized as Income underExceptional Items in the Statement of Profit and Loss for the year ended March 31, 2025.
Mr. Suraj Bhandari was re-appointed as a Whole-time Director for a period of three years w.e.f. November 13, 2022 to November12, 2025 at a remuneration of Rs. 1,50,000/- per month as approved by the shareholders of the Company at 36th Annual GeneralMeeting held on August 31, 2022. Mr. Shailesh Bhandari was re-appointed as a Managing Director for a period of three yearsw.e.f. February 1, 2023 to January 31, 2026 at a remuneration of Rs. 2,00,000/- per month as approved by the shareholders ofthe Company through Postal Ballot on March 28, 2023. Further, Mr. Shailesh Bhandari, Managing Director was re-designated asExecutive Vice Chairman and Mr. Suraj Bhandari was elevated and re-designated as a Managing Director with effect from February9, 2024 with same terms & conditions of remuneration and the shareholders of the Company have also approved the same throughPostal Ballot on March 19, 2024.
This remuneration to both the Directors are subject to approval from banks and financial institutions as the Company has defaultedin repayment of loans. In absence of such approval, no remuneration was paid to Mr. Shailesh Bhandari and Mr. Suraj Bhandariduring the financial year.
(a) Some of the creditors have filed cases of recovery against the company before the various Civil Courts / Commercial Courts forRs 3.76 Crore (As at March 31, 2024 Rs 3.76 Crore). The said amounts are excluding interest.
(b) Some of the suppliers have filed complaints against the Company and its directors / officers under Section 138 of NegotiableInstruments Act, 1881 for dishonor of cheques of Rs. 67.42 Crore (As at March 31, 2024 Rs. 66.17 Crore) issued by the Companyand the Company and its directors / officers are contesting the said cases and the same are pending before respective courts.
(c) The Company has filed recovery case against Victory Rich Trading Limited ("VRTL") & its director for non-payment of amountin the High Court of Hong Kong and the High Court of Hong Kong has passed judgment for payment of recovery amount.Thereafter, VRTL has challenged the said order and the same was pending before the High Court of Hong Kong for furtherproceedings. As per the enquiry from High Court of Hong Kong, the cases have already been concluded with no writtenjudgement given. Further the Company has filed a winding up petition against VRTL before the High Court of Hong Kong andthe High Court of Hong Kong has passed the order for winding up of VRTL. However, in absence of any assets in the name ofVRTL, the liquidator has applied for release as liquidator and the dissolution of VRTL.
(d) Mr. Siddharth Bhandari, one of the Promoter group and erstwhile Whole-time Director and Dr. Rakesh Bhandari, one of thePromoter group of the Company ("Petitioners") has filed two separate petitions (CP No. 93 / 2018 and CP No. 94 / 2018) beforethe Hon'ble National Company Law Tribunal, Ahmedabad ("NCLT") under section 149, 150, 152, 159 and 176 of the CompaniesAct, 2013 inter alia, for declaring the appointment of four independent directors as null and void from their respective datesof appointment being violative of provisions of section 149 and 150 and other related provisions of the Companies Act, 2013and the Companies (Appointment and Qualification of Directors) Rules, 2014. The interim order dated May 4, 2021 passed bythe Hon'ble NCLT, Ahmedabad for joint signature of Mr. Siddharth Bhandari in bank accounts, policy decisions affecting smoothrunning of company as a going concern etc. was challenged by Mr. Shailesh Bhandari & Company before Hon'ble NCLAT andthereafter, before Hon'ble Supreme Court of India. After granting stay on joint signature in bank accounts by the Hon'ble NCLATand Hon'ble Supreme Court of India, the appeals were finally disposed off. Therefore, there was joint signature of Mr. SiddharthBhandari in bank accounts during the interregnum period during the financial year 2022-23. The CP No. 93 / 2018 and CP No.94 / 2018 was finally heard by the Hon'ble NCLT, Ahmedabad and the said petitions were disposed of on January 11, 2023 asnot maintainable and vacated all interim orders. The Petitioners have challenged the order dated January 11, 2023 before theHon'ble NCLAT and on August 23, 2024, the Appellants have withdrawn the appeals from the Hon'ble NCLAT.
(e) Mr. Siddharth Bhandari, Mr. Mukesh Bhandari and Dr. Rakesh Bhandari ("Petitioners") has filed a petition (CP No. 5/2022)before the Hon'ble National Company Law Tribunal, Ahmedabad ("NCLT") under section 241-242 of the Companies Act, 2013against the Company, Mr. Shailesh Bhandari & Others. The Hon'ble NCLT has issued notice to respondents and directed to filereply on interim relief and maintainability. The Company has filed its reply on interim relief and maintainability.
During the pendency of this petition, the Petitioners have filed an Interlocutory Application No. 55 / 2022 in CP No. 5/ 2022to restrain the Company from holding Board Meeting dated August 2, 2022 and stay some of the agenda items. The Hon'bleNCLT, Ahmedabad by order dated August 24, 2022 not granted any stay and rejected the application as misconceived and notmaintainable. The Petitioners have challenged the order dated August 24, 2022 before the Hon'ble NCLAT and the Hon'bleNCLAT by order dated November 29, 2022 dismissed the appeal. The Petitioners have challenged the order dated November29, 2022 before the Hon'ble Supreme Court of India and the civil appeal is pending for hearing before the Hon'ble SupremeCourt of India.
The Petitioners have also filed an Interlocutory Application No. 5 / 2024 in CP No. 5 / 2022 for various reliefs including jointsignature in bank accounts. The Hon'ble NCLT, Ahmedabad by order dated March 19, 2024 dismissed the application. ThePetitioners have also filed an Interlocutory Application No. 82 / 2024 for various relief to access the company premises andbooks of accounts etc. The Petitioners have also filed an Interlocutory Application No. 91 / 2024 for various relief including tomaintain status quo of board of directors etc. The Hon'ble NCLT, Ahmedabad by order dated September 12, 2024 dismissedthe application. The Petitioners have filed appeal before Hon'ble NCLAT against order dated September 12, 2024, howeverthe same was disposed of on October 23, 2024 with direction to Ld. NCLT to dispose of main petition expeditiously, preferablywithin 8 weeks after decision on maintainability.
The Hon'ble NCLT by order dated October 25, 2024 dismissed CP No. 5 / 2022 as not maintainable alongwith pendingInterlocutory Application.
(f) Ministry of Corporate Affairs, Office of the Regional Director, North-Western Region, Ahmedabad has in October, 2018 initiatedinspection of books of accounts and other records under section 206(5) of the Companies Act, 2013. Thereafter, the RegionalDirector has issued letter for violations / irregularities of the Companies Act, 1956 / 2013 and the Company has replied tothe same. Based on the same, the Registrar of Companies, Gujarat has issued letter for violations of Section 128(1), 129(1),129(5), 133 read with Schedule III of the provisions of the Companies Act, 2013 and initiated prosecution against Mr. MukeshBhandari, Mr. Shailesh Bhandari, Mr. Avinash Bhandari, Mr. Siddharth Bhandari, Managing Directors / Whole-time Director &
Late Mr. Pawan Gaur, Chief Financial Officer of the Company. Mr. Shailesh Bhandari, Mr. Avinash Bhandari & Late Mr. PawanGaur have challenged the said prosecution before the Hon'ble Gujarat High Court under section 463 of the Companies Act,2013 and on October 29, 2024, the Hon'ble Gujarat High Court granted ad-interim relief of stay on the prosecution. The saidpetition is pending for hearing before the Hon'ble Gujarat High Court.
Further the office of Regional Director vide letter / order dated December 24, 2019 informed the Company about investigationinto the affairs of the Company under section 210(1)(c) of the Companies Act, 2013. Thereafter, the Company was directed tofurnish documents / information and the Company has challenged the said investigation before the Hon'ble Gujarat High Court.As the petition was rejected by the Hon'ble Gujarat High Court, the Company has challenged the same before division benchby filing Letters Patent Appeal and the division bench of the Hon'ble Gujarat High Court has passed order for continuation ofinvestigation and that if the report recommends closure of the proceedings, no further orders may be necessary, however, ifthe report recommends some coercive measures to be taken, then the Central Government or the competent authority maynot take any such decision without leave of the Court. The Letters Patent Appeal is pending awaiting the appropriate report ofinvestigation under Section 210 of the Companies Act, 2013.
Further with regard to the two prosecutions filed by Registrar of Companies, Gujarat against Mr. Mukesh Bhandari, Mr. ShaileshBhandari, Mr. Avinash Bhandari, Mr. Siddharth Bhandari, Managing Directors / Whole-time Director & Late Mr. PawanGaur, Chief Financial Officer and Mr. Fageshkumar Soni, Company Secretary of the Company under section 447 - 448 of theCompanies Act, 2013 for failing to furnish material facts related to related party transactions for the financial year 2017 and2018, Mr. Shailesh Bhandari, Mr. Avinash Bhandari & Mr. Fageshkumar Soni challenged the said prosecution before Hon'bleGujarat High Court and the Hon'ble Gujarat High Court by order dated December 12, 2024 and February 17, 2025 grantedinterim relief of stay on the said two prosecutions qua the applicants. The said petitions are pending for further hearing beforethe Hon'ble Gujarat High Court.
(g) Mr. Babu Devraj Badhiya has filed a Writ Petition in the nature of Public Interest Litigation (PIL) on February 4, 2019 beforethe Hon'ble Gujarat High Court with prayer for direction for compliance of various approvals / permissions issued by variousauthorities for the Samakhiyali Plant, Kutch, Gujarat. The Hon'ble Gujarat High Court has passed order for not to carry out anyfurther construction / development and the matter is pending before the Hon'ble Gujarat High Court.
Note: The financial implication of all this case is not ascertainable at this point of time.
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Companyfor holding any Benami property.
(ii) The Company does not have any transactions with the Companies which are struck off.
(iii) The Company does not have any charges or satisfaction which are yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) 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 theCompany (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with theunderstanding (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 theFunding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrenderedor disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or anyother relevant provisions of the Income Tax Act, 1961).
(viii) The Company is in compliance with the number of layers prescribed under clause (87) of Section -2 of the Companies Act 2013with Companies (Restriction of number of Layers) Rules, 2017.
Mr. Mukesh Bhandari, Promoter & his family members and Mr. Shailesh Bhandari, Promoter & Executive Vice Chairman & his familymembers vide letter dated March 29, 2025 ("Bhandari Family Letter") informed the Company about execution of Family SettlementAgreement ("FSA") amongst the Bhandari Family. Pursuant to the realignment under the FSA: (a) the management rights andcontrol over the Electrotherm (India) Limited ("EIL" / 'Company") and all of its respective subsidiaries and joint venture company,will be realignment in the manner contemplated under the FSA and shall continue to be with Mr. Shailesh Bhandari. Mr. MukeshBhandari & his family members will exit from the Company including its respective subsidiaries and joint venture companies bytransferring shares to Mr. Shailesh Bhandari and tendering the resignation in the concerned companies; (b) To realign/transfer/release/forgo certain individual properties, rights thereof and shareholdings in the various companies as prescribed in FSA; (c) Theequity shares of EIL held by Mr. Mukesh Bhandari will be transferred to Mr. Shailesh Bhandari, upon fulfilment of certain obligationsby Mr. Shailesh Bhandari, as contemplated in the FSA; (d) The equity shares of EIL held by Mrs. Jyoti Bhandari will be transferredto Mrs. Reema Bhandari, by way of gift; (f) After completion of actual transfer of shares of Mr. Mukesh Bhandari to Mr. ShaileshBhandari, Mr. Mukesh Bhandari and his family members will make application(s) / request(s) for reclassification of their status from'Promoter / Promoter Group' to 'Public' category; (g) Further, the equity share of subsidiaries or joint venture company of EIL, heldby Mr. Mukesh Bhandari and his family members, whether singly or jointly, for and on behalf of EIL, will be transferred in the nameof such other person(s) or Mr. Shailesh Bhandari (h) Further, shareholding of Mukesh Bhandari Family in such companies controlledby 'Shailesh Bhandari Family' shall be transferred to Mr. Shailesh Bhandari. (i) Mr. Mukesh Bhandari and Mr. Shailesh Bhandari willindemnify each other against any claims, liabilities etc. in respect of personal guarantee given by them for availing the credit facilitiesby their respective companies; (j) Both parties will immediately take appropriate steps to file for consent quashing / withdrawal ofany proceedings / cases with the regard to respective legal proceedings initiated by parties against each other as well as against theCompany. Further the company is not a party to the family settlement agreement.
The Remuneration to the key managerial personnel does not include the Provision made for gratuity and leave encashment, asit is determined on an accrual basis for the Company as a whole.
Outstanding balance at the year end are unsecured and settlement occurs in cash. There have been no guarantee provided orreceived for any related party receivables or payables. The cumulative amount of the impairment on investment in subsidiariesand joint venture of as on March 31, 2025 is Rs 38.59 Crore (March 31, 2024 Rs 39.31 Crore) and provision for doubtful debtof receivable/advance relating to related parties is Rs. 67.42 Crore (March 31, 2024 of Rs. 95.32 Crore). The assessment isundertaken at each financial year through examining the financial position of the related party and the market in which therelated party operates.
i) Fair value hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are(a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in thefinancial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Companyhas classified its financial instruments into three levels prescribed under the accounting standard. An explanation of eachlevel follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuationtechniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates.If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included inLevel 3.
Financial instruments are initially recognized and subsequently re-measured at fair value as described below :
- The fair value of investment in quoted Mutual Funds is measured at quoted price or NAV.
The Company obtains valuation results from external/internal valuers for level 2 measurements. Inputs to level 2measurements are verified by the Company's treasury department.
The management assessed that cash and cash equivalents, Bank Balance other than cash and cash equivalents, tradereceivables, trade payables, investments in unquoted equity of joint venture / subsidiary company and governmentsecurities, other financial assets, short term borrowings, non current borrowings and other current financial liabilitiesapproximate their carrying amounts.
The management of the Company has implemented a risk management system that is monitored by the Board of Directors.The general conditions for compliance with the requirements for proper and future-oriented risk management within theCompany are set out in the risk management principles. These principles aim at encouraging all members of staff to responsiblydeal with risks as well as supporting a sustained process to improve risk awareness. The guidelines on risk management specifyrisk management processes, compulsory limitations, and the application of financial instruments. The risk managementsystem aims at identifying, analyzing, managing, controlling and communicating risks promptly throughout the Company. Riskmanagement reporting is a continuous process and part of regular company reporting.
The Company is exposed to credit, liquidity and market risks (interest rate risk, foreign currency risk and other price risk)during the course of ordinary activities. The aim of risk management is to limit the risks arising from operating activities andassociated financing requirements.
The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities,including deposits with banks. The balances with banks and security deposits are subject to low credit risk since the counter¬party has strong capacity to meet the obligations and where the risk of default is negligible or nil.
Credit risk arises from the possibility that customer / borrowers will not be able to settle their obligations as and when agreed.To manage this, the Company periodically assesses the financial reliability of customers and the brorrowers, taking into accountthe financial condition, current economic trends, analysis of historical bad debts, ageing of accounts receivable and forwardlooking information.
The provision on trade receivables for expected credit loss is recognized on the basis of life-time expected credit losses(simplified approach). Trade receivables are evaluated separately for balances towards progress billings and retention moneydue from customers. An expected loss rate is calculated at each year-end, based on combination of rate of default and rate ofdelay. The Company considers the rate of default and delay upon initial recognition of asset, based on the past experience andforward-looking information, wherever available. The provision on loans for expected credit loss is recognized on the basis of12-month expected credit losses and assessed for significant increase in the credit risk.
During the year ended March 31, 2025, Sales to a Customer of Rs 574.76 Crore (or 13.97 % of Net revenue) and during the yearended March 2024 ,sales to such customer 479.13 Crore(or 11.22% of net revenue).Account receivable from such customerRs.Nil (or 0% total receivalbes)at March 31, 2025 and Rs.Nil (or 0% total receivalbes)at March 31,2024.A loss of this customercould significantly affect the operating results or cash flows of the Company
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company'sapproach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurringunacceptable losses. In doing this, management considers both normal and stressed conditions.
Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis. Liquidity crises has ledto default in repayment of principal and interest to lenders however the Company regularly monitors the rolling forecasts to ensureit has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated, over and above theamount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to theextent required) and any excess is used for the repayment of loan, invested in interest bearing term deposits and mutual funds withappropriate maturities to optimize the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.
Market risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in marketprices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk. Financial instrumentsaffected by market risk includes borrowings, deposits, investments, trade and other receivables, trade and other payables andderivative financial instruments.
The potential economic impact, due to these assumptions, is based on the occurrence of adverse / inverse market conditions andreflects estimated changes resulting from the sensitivity analysis. Actual results that are included in the Statement of Profit and Lossmay differ materially from these estimates due to actual developments in the global financial markets. The company is mainly exposedto interest rate risk and foreign currency risk.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changesin the market rates. Since the borrowing of the company are classified as non performing assets or are transferred to assetsreconstruction company or the settlement agreement have been executed and few lenders are charging interest at fix rate ofinterest, therefore the exposure to risk of changes in market interest rates is minimal. However the Company is liable for thepayment of interest to Central Bank of India @ 1 Year MCLR on the Outstanding amount.During the financial year ended March31, 2025 the company has paid the entire settelement amount along with interest there on to Central Bank of India and hasreceived no due Certificate accordingly their will be no interest rate risk as on March 31,2025.
The Company's objectives when managing capital are to:
• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders andbenefits for other stakeholders, and
• maintain an optimal capital structure to reduce the cost of capital.
For the purpose of the Company's capital management, capital includes issued equity capital, securities premium and all otherequity reserves attributable to the equity holders of the Company. The primary objective of the Company's capital management is tomaximize the shareholders value. The Company manages its capital structure and makes adjustments in light of changes in economicconditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders. The Capitalstructure of the Company is as follows:
52 Events occurred after the Balance Sheet Date
The Company evaluates events and transactions that occur subsequent to the Balance Sheet date but prior to the approval of thefinancial statements to determine the necessity for recognition and/or reporting of any of these events and transactions in thefinancial statements. As of May 20, 2025, there were no subsequent events to be recognized or reported that are not already disclosedelsewhere in the financial statements.
53 Previous year amount has been regrouped/re-casted/re-arranged/ re-classified/re-determined, wherever necessary, to make thefigure of the current year comparable with the previous year.
As per our report of even date For and on behalf of the Board of Directors of
For Hitesh Prakash Shah & Co. Electrotherm (India) Limited
Chartered AccountantsFirm Registration No: 127614W
Hitesh Shah Shailesh Bhandari Suraj Bhandari
Partner Executive Vice Chairman Managing Director
Membership No. 124095 DIN:- 00058866 DIN:- 07296523
UDIN: 25124095BMILBJ2902
Amit Kumar Patwarika Harish Mukati Fageshkumar R. Soni
Chief Financial Officer Chief Executive Officer Company Secretary
(Steel Division)
Place: Palodia Place: Palodia
Date: May 20, 2025 Date: May 20, 2025