A. CORPORATE INFORMATION
Ahmedabad Steel Craft Limited ('The Company') was incorporated on 14-07-1972 vide Certificate of Incorporation No.
L27109GJ1972PLC011500 under the Companies Act, 1956. Its shares are listed on the Bombay Stock Exchange ('BSE'). The company
is engaged in the business of Trading of Steel and Electrical items and providing EPC services.
B. SUMMARY OF BASIS OF COMPLIANCE, BASIS OF PREPARATION AND PRESENTATION, CRITICAL ACCOUNTING
ESTIMATES, ASSUMPTIONS AND JUDGMENTS AND SIGNIFICANT ACCOUNTING POLICIES
(i) Basis of compliance
The financial statements comply in all material aspects with Indian Accounting Standards ('Ind AS') notified under Section
133 of the Companies Act, 2013 ('the 2013 Act') read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015
and other relevant provisions of the Act.
(ii) Basis of Preparation of Financial Statement
The financial statements have been prepared under the historical cost convention using the accrual method of accounting
basis, except for certain financial instruments that are measured at fair values at the end of each reporting period as explained
in the significant accounting polices below.
All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other
criteria set out in the Schedule III to the 2013 Act.
(iii) Critical accounting estimates, assumptions and judgements
The preparation of the financial statements requires management to make estimates, assumptions and judgments that affect
the reported balances of assets and liabilities and disclosures as at the date of the financial statements and the reported
amounts of income and expense for the periods presented.
The estimates and associated assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates considering different assumptions and conditions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Impact on account of revisions to accounting
estimates are recognised in the period in which the estimates are revised and future periods are affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying values of assets
and liabilities within the next financial year are discussed below :
(a) Useful life of Property, Plant and Equipment
The cost of property, plant and equipment is depreciated over the useful life, which is based on expected usage of the
assets, expected physical wear and tear, the repair and maintenance program and technoligical obsolescence arising
from changes and residual value
(b) Income taxes
Management judgment is required for the calculation of provision for income taxes and deferred tax assets and
liabilities. 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 significant adjustment to the amounts reported
in the financial statements.
(c) Contingencies
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/
claim/ litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
(d) Allowance for uncollectable accounts receivable and advances
Trade receivables do not carry any interest and are stated at their normal value as reduced by appropriate allowances
for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not
to be collectible. Impairment is made on the expected credit losses, which are the present value of the cash shortfall
over the expected life of the financial assets.
(iv) Use of estimates
The preparation of Financial Statements requires estimates and assumptions to be made that affect the reported amount of
assets and liabilities as at the date of the Financial Statements and the reported amount of revenues and expenses during the
reporting period/year.
The difference between the actual results and estimates are recognised in the year in which the results are known/materialise.
All Assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and
other criteria set out in the schedule III to the Companies Act, 2013. Based on the nature of products and the time between
the acquisition of assets for processing and their realisation in cash and cash equivalent, the Company has ascertained its
operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities.
(v) Fair Value Measurement
Fair value is the price that would be received to sell an asset or settle a liability in an ordinary transaction between market
participants at the measurement date. The fair value of an asset or a liability is measured using the assumption that market
participants would use when pricing an asset or liability acting in their best economic interest. The Company used valuation
techniques, which were appropriate in circumstances and for which sufficient data were available considering the expected
loss/ profit in case of financial assets or liabilities.
(vi) Property, Plant & Equipment (PPE)
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation and any
accumulated impairment losses. The cost of fixed assets comprises of its purchase price, non-refundable taxes & levies,
freight and other incidental expenses related to the acquisition and installation of the respective assets. Borrowing cost
attributable to financing of acquisition or construction of the qualifying fixed assets is capitalized to respective assets when
the time taken to put the assets to use is substantial.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be
measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged
to the income statement during the financial period in which they are incurred.
Depreciation methods, estimated useful lives and residual value
Depreciation on PPE is calculated using the straight-line method to allocate their cost, net of their residual values, over their
estimated useful lives. However, vehicles, being part of PPE are depreciated on a straight-line method over the shorter of
their respective useful lives as prescribed in Schedule -II to the Companies Act, 2013 . Freehold land is not depreciated.
Schedule II to the Companies Act 2013 ('Schedule') prescribes the useful lives for various class of assets. For certain class
of assets, based on technical evaluation and assessment, Management believes that, the useful lives adopted by it reflects
the periods over which these assets are expected to be used. Accordingly for those assets, the useful lives estimated by the
management are different from those prescribed in the Schedule. Management's estimates of the useful lives for various
class of fixed assets are as given below:
Useful lives and residual values of assets are reviewed at the end of each reporting period.
Losses arising from the retirement of, and gains or losses arising from disposal of PPE are recognised in the Statement of
Profit and Loss.
Leasehold land is amortised on a straight line basis over the period of lease.
Capital work-in-progress includes cost of property, plant and equipment under installation / under development as at the
balance sheet date.
Intangible Asset under development includes cost of development of new intangible assets to complete the assets as at the
balance sheet date.
Capital Expenditure on tangible assets for research and development is classified under property, plant and equipment and
is depreciated on the same basis as other property, plant and equipment.
(vii) Intangible Assets
Intangible assets that are acquired by the Company, which have finite useful lives, are measured at cost less accumulated
amortization and accumulated impairment losses (if any). Costs include expenditure that is directly attributable to the
acquisition of the intangible assets.
Subsequent Expenditure:
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, are recognized in
profit or loss as incurred.
Amortization of intangible assets with finite useful lives:
Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the
date that they are available for use.
Computer Softwares are amortised on stright line basis over the estimated useful lives of 5 years.
(viii) Impairment of Non Financial Assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for
impairment and additionally whenever there is a triggering event for impairment. Assets that are subject to amortisation and
depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount of cash
generating units exceeds its recoverable amount.
(ix) Inventories
(1) Inventories are valued at the lower of cost or net realisable value.
Items of inventories are valued at cost or net realisable value, whichever is lower. Costs of inventories comprises of cost
of purchase and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion
and the estimated costs necessary to make the sale.
(2) Cost of Inventory of services being provided by the company
The company measures its inventory of services at the costs of their production. These costs consist primarily of the
labour and other costs of personnel directly engaged in providing the service, including supervisory personnel, and
attributable overheads. Labour and other costs relating to sales and general administrative personnel are not included
but are recognized as expenses in the period in which they are incurred. The cost of inventories of a service does not
include profit margins or non-attributable overheads that are often factored into prices charged by service providers.
(x) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial Assets
(a) Initial recognition and measurement:
All financial assets are recognised initially at fair value and, in the case of financial assets not recorded at fair value
through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
(b) Subsequent measurement
For purposes of subsequent measurement financial assets are classified in two broad categories:
• Financial assets at fair value
• Financial assets at amortised cost
(c) Classification:
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other
comprehensive income or fair value through profit or loss on the basis of its business model for managing the financial
assets and the contractual cash flows characteristics of the financial asset.
(d) Financial assets measured at amortised cost:
Financial assets are measured at amortised cost when asset is held within a business model, whose objective is to hold
assets for collecting contractual cash flows and contractual terms of the asset give rise on specified dates to cash flows
that are solely for payments of principal and interest. Such financial assets are subsequently measured at amortised cost
using the effective interest rate (EIR) method. The losses arising from impairment are recognised in the Statement of
profit and loss. This category generally applies to trade and other receivables.
(e) Financial assets measured at fair value through other comprehensive income (FVTOCI):
Financial assets under this category are measured initially as well as at each reporting date at fair value. Fair value
movements are recognized in the other comprehensive income.
(f) Financial assets measured at fair value through profit or loss (FVTPL):
Financial assets under this category are measured initially as well as at each reporting date at fair value with all changes
recognised in profit or loss.
(g) Investment in Equity Instruments:
Equity instruments which are held for trading are classified as at FVTPL. All other equity instruments are classified as
FVTOCI. Fair value changes on the instrument, excluding dividends, are recognized in the other comprehensive income.
There is no recycling of the amounts from other comprehensive income to profit or loss.
(h) Derecognition of Financial assets:
A financial asset is primarily derecognised when the rights to receive cash flows from the asset have expired or the
Company has transferred its rights to receive cash flows from the asset, if an entity transfers a financial asset in a transfer
that qualifies for derecognition in its entirety and retains the right to service the financial asset for a fee, it shall recognise
either a servicing asset or a servicing liability for that servicing contract. If the fee to be received is not expected to
compensate the entity adequately for performing the servicing, a servicing liability for the servicing obligation shall
be recognised at its fair value. If the fee to be received is expected to be more than adequate compensation for the
servicing, a servicing asset shall be recognised for the servicing right at an amount determined on the basis of an
allocation of the carrying amount of the larger financial asset.
(i) Impairment of Financial assets:
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition
of impairment loss on the financial assets that are debt instruments and trade receivables. For recognition of impairment
loss on other financial assets and risk exposure, the Company determines that whether there has been a significant
increase in the credit risk since initial recognition.
Financial Liabilities
(a) Initial recognition and measurement:
All financial liabilities are recognised initially at fair value and, in the case of loans, borrowings and payables, net of
directly attributable transaction costs. Financial liabilities include trade and other payables, loans and borrowings
including bank overdrafts.
(b) Classification & Subsequent measurement:
I f a financial instrument that was previously recognised as a financial asset is measured at fair value through profit
or loss and its fair value decreases below zero, it is a financial liability measured in accordance with IND AS. Financial
liabilities are classified as held for trading, if they are incurred for the purpose of repurchasing in the near term.
The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities
at fair value through profit or loss.
(c) Loans and Borrowings:
Interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate
(EIR) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through
EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement
of profit and loss. After initial recognition Gain and Liabilities held for Trading are recognised in statement of profit and
Loss Account.
(d) Derecognition of Financial Liabilities:
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised
in the Statement of Profit and Loss.
(e) Financial guarantee contract
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a
debt instrument.
Financial Guarantee contracts issued by a company are initially measured at their fair values and,if not designated as
FVTPL, are subsequently measured at the higher of:
• the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109' Financial
Instruments'; and
• the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance
with the principles of Ind AS ' Revenue'
Offsetting financial instruments:
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to offset the recognised amounts and there is an intention to settle on a net basis to realise the asset
and settle the liability simultaneously.
Subsequent recoveries of amounts previously written off are credited to Other Income.
(xi) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash on hand and at bank, deposits held at call with banks, other
short-term highly liquid investments with original maturities of three months or less that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value and are held for the purpose of meeting short-term
cash commitments.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined
above, net of outstanding bank overdrafts as they are considered an integral part of the Company's cash management.
(xii) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit for the year is adjusted for the effects of transactions of
a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities
of the Company are segregated. The Company considers all highly liquid investments that are readily convertible to known
amounts of cash to be cash equivalents.
(xiii) Borrowing Costs
Borrowing costs directly attributable to the acquisition, production or construction of qualifying assets is capitalized as part
of the cost of such qualifying assets till the date of being ready for intended use. Other borrowing cost is recognized as
expenditure in the period in which they are accrued.
(xiv) Investments
Investments that are readily realisable and are intended to be held for not more than one year from the Reporting Date, are
classified as Current Investments. All other investments are classified as Non Current Investments. Current Investments are
valued at lower of Cost and Fair value. Non Current Investments are valued at cost, except in the case of other than temporary
decline in value, in which case neccessary provision is made.
Section 129 (3) of the companies Act 2013, requires preparation of consolidated financial statement of the Company and
of all the subsidiaries including associate company and joint venture businesses in the same form and manner as that of
its own. Indian Accounting Standard (Ind AS) 28on accounting for Investments in Associates in consolidated Financial
Statements defines Associate as an entity, including an unincorporated entity such as a partnership, over which the investor
has significant influence and that is neither a subsidiary nor an interest in a joint venture. It mentions that if an investing party
holds, directly or indirectly through intermediaries, 20 per cent or more of the voting power of the enterprise, it is presumed
that the investing party does have significant influence, unless it can be clearly demonstrated that this is not the case.
The Company holds investment in the Light Works LLC which by ownership are deemed to be an associate company.
However, the Company does not exercise significant influence in the above mention entity, as demonstrated below:
i) The Company does not have any representation on the board of directors or corresponding governing body
of the investee.
ii) The Company does not participate in policy making process.
iii) The Company does not have any material transaction with the investee.
iv) The Company does not interchange any managerial personnel.
v) The Company does not provide any essential technical information to the investee.
vi) As these are not investments strategic to the core business of Ahmedabad Steel Craft Limited, these are intended to be
divested/liquidated in the near future.
As the interests in above enterprise originated for investment purposes and are not of sufficient proportions for the
company to be able to control or exercise significant influence on decisions of the investee, these are not being construed
as associate company for the purpose of consolidation and therefore it has not been consolidated in the financial statement
of the company.
(xv) Foreign Currency Transactions
Transactions in foreign exchange are accounted for at exchange rate ruling attransaction date. Monetary assets and liabilities
denominated in foreign currency are translated at the rates of exchange at the balance sheet date and the resultant gain or
loss is recognized in the Statement of Profit and Loss. Exchange difference arising on payment or translation of liabilities and
receivables is recognized as income or expense in the year in which the same arises.
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