1 General Information:
Mangalam Alloys Limited is a public Limited company domiciled in India with its
registered office situated at Plot No. 3123-3126, GIDC Phase III, Chhatral, Dist.
Gandhinagar, Gujarat, India, 382729. It was incorporated on 1st August, 1988 under
the provisions of the Companies Act, 1956 and Governed by Companies Act, 2013 vide
. Corporate Identification Number (CIN-L27109GJ1988PLC011051). The company is
engaged in the business of manufacturing and distribution of high quality Stainless
Steel Products. :
The Company's Shares of Company are listed and traded on the National Stock
Exchange of India Limited (Emerge)
2 Basis of preparation and presentation :
a) Statement of Compliance :
These Financial Statements have been prepared in accordance with the applicable
Accounting Standards prescribed under section 133 of Companies Act, 2015 ('Act')
read together with Rule 7 of the Companies (Accounts) Rules, 2014, accounting
standard issued by the Institute of Chartered Accountants of India (ICAI) and the other
relevant provisions of the Act and Rules thereunder, as amended from time to time.
b) Basis of Measurement
The Financial Statements have been prepared on the historical cost convention on
accrual basis except for certain financial assets and liabilities that are measured at Fair
value, amortised cost or present value, as disclosed in accounting policies and Defined
Benefit plans where Plan Assets are measured at Fair value at the end of each reporting
period.
Historical cost is generally based on the fair value of the consideration given in
exchange for goods and services.
The Financial Statements have been presented in Indian Rupees (INR), which is also
the Company's functional currency. All values are rounded off to the nearest two
decimal lakhs, unless otherwise indicated.
c) Operating Cycle
As the operating cycle cannot be identified in the normal course due to the special
nature of industry, the same has been assumed to have duration of 12 months.
Accordingly, all assets and liabilities have been classified as current or non-current as
per company's operating cycle and other criteria set out in Accounting Standards and
Schedule III to the companies Act, 2013.
3 Significant Accounting Policies:
3.1 Revenue Recognition:
Revenue from sale of goods and services are recognized when the significant risks and
rewards of ownership have been transferred to a customer, recovery of the
consideration is probable, the associated cost can be estimated reliably, there is no
continuing effective control or managerial involvement with the goods, and .the amount
of revenue can be measured reliably.
Revenue from sale of goods is measured at the fair value of the consideration received
or receivable, taking into account contractually defined terms of payment and excluding
taxes or duties collected on behalf of the government.
Interest income is recognized on time proportion method.
Export incentives are accrued in the year when the right to receive the same is
established in respect of exports made and are accounted to the extent there is no
significant uncertainty about the measurability and ultimate realisation / utilisation of
Dividend Income is recognized when the unconditional right to receive the income is
' established.
3.2 Borrowing Cost:
Borrowing costs that are directly attributable to the acquisition or construction of
qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is
one that necessarily takes substantial period of time to get ready for its intended use.
-Borrowing costs includes exchange differences arising from foreign currency borrowings
to the extent they are regarded as an adjustment to the interest cost.
All other borrowing costs are recognized in profit and loss in the period in'which they
are incurred.
3.3 Income Taxes :
Income Tax Expense represents the sum of current tax and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs
from 'profit before tax' as reported in the Statement of Profit and Loss because of items
of income or expense that are taxable or deductible in other years and items that are
never taxable or deductible. The Company's current tax is calculated using tax rates
and laws that have been enacted or substantively enacted by the end of the reporting
period.
Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used
in the computation of taxable profit. Deferred tax liabilities and assets are measured at
the tax rates that are expected to apply in the period in which the liability is settled or
the asset realized, based on tax rates (and tax laws) that have been .enacted or
substantively enacted by the end of the reporting period. The carrying amount of
deferred tax liabilities and assets are reviewed at the end of each reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences
that would follow from the manner in which the Company expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
a) Short Term Employee Benefits
The undiscounted amount of short-term employee benefits expected to be paid in
exchange for the services rendered by employees are recognized as an expense during
the period when the employees render the services. These benefits include salaries,
wages, bonus, performance incentives etc.
b) ' Long Term Employee Benefits . Ý .
Liabilities recognized in respect of other long- term employee benefits such as Gratuity,
is measured at the present value of the estimated future cash outflows expected to be
made by the company in respect of services provided by employees at the balance
sheet date.
Post-Employment Benefits-
i) Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which the
company pays specified contributions to a separate entity. When the company makes
specified monthly contributions towards Provident Fund and Pension Scheme, the
company's contribution is recognized as an expense in the Statement of Profit and Loss
during the period in which the employee renders the related service.
ii) Defined Benefit Plans
For defined benefit plans, the cost of providing benefits is determined,' using the
projected unit credit method, with actuarial valuation being carried out at the end of
each annual reporting period. Re-measurement, comprising actuarial gains and losses
and the return on plan assets (excluding net interest), is reflected immediately in the
balance sheet with a charge or credit recognized in the statement of profit and loss in
the period in which they occur. Net interest is calculated by applying the discount rate
at the beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorized as follows:
i) Service cost
ii) Net interest expense or income
iii) Re-measurement
3.5 Property, Plant and Equipment (Fixed Asset, Depreciation & Amortization):
a) Property, plant, and equipment (Fixed Assets) are stated at cost, net of recoverable
taxes, trade discounts, and rebates, less accumulated depreciation and impairment
losses, if any. Such cost includes the purchase price, borrowing costs, and any costs
directly attributable to bringing the assets to their working condition for their intended
use, net changes on foreign exchange contracts, and adjustments arising from
exchange rate variations attributable to the assets.
Subsequent costs are included in the asset's carrying amount or recognized as a
separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the entity and the cost can be measured reliably.
Depreciation is charged on a pro-rata basis at the straight-line method over estimated
economic useful lives of its property, plant/ and equipment generally in accordance: with
that provided in Schedule II to the Act.
Leasehold lands which were acquired from GIDC for 99 years lease are accounted at
Cost and no depreciation has been provided on these lease hold lands. Freehold Land is
not depreciated.
Useful life of each class of PPE as prescribed under Part C of Schedule II to the
companies Act, 2013 and adopted by the company as under.
Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata
basis with reference to the date of additions/deletions.
b) Intangible Assets
Intangible assets with finite useful life acquired separately, are recognized only if it is
probable that future economic benefits that are attributable to the assets will flow to
the enterprise and the cost of assets can be measured reliably. The intangible assets
are recorded at cost and are carried at cost less accumulated amortization and
accumulated impairment losses, if any.
Intangible assets are amortised on Straight Line Method from the date they are
available for use, over the useful lives of the assets as estimated by the Management
as under:
Inventories are valued at lower of cost or net realisable value after providing for
obsolescence, and other losses, where considered necessary. The basis of determining
the value of each class of inventory is as follows :
3.6 impairment of non-financial Assets-Property, Plant and Equipment (Fixed
.Assets):'
The company assesses at each reporting date whether there is any indication that any
property, plant, and equipment or group of assets, called cash-generating units (CGU),
may be impaired. If it is not possible to estimate the recoverable amount of an
individual asset, the Company estimates the recoverable amount of the CGU to which
the asset belongs.
An impairment loss is recognized in the Statement of Profit and Loss to the extent the
asset's carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less cost of disposal and its value in use. Value in use is
based on the estimated future cash flows, discounted to their present value using a pre¬
tax discount rate that reflects current market assessments of the time value of money
and risk specific to the assets. .
The impairment loss recognized in a prior accounting period is reversed if there has
been a change in the estimate of recoverable amount.
3.7 Foreign currencies transaction 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 of 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 borrowing.
That are directly attributable to the acquisition or construction of qualifying assets, are
capitalized as cost of assets. ,
3.8 Cash flow statement:
Cash flows are reported using the indirect method, whereby profit before tax is
adjusted for effects of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipt or payments. The cash flows are segregated into operating,
investing and financing activities.
3,9 Earnings per share;
Basic earnings per share is computed by dividing the profit after tax by weighted
average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit after tax as adjusted for
interest and other charges to expense or income relating to dilutive potential equity
Ý shares, by the weighted average number of equity shares considered for deriving
' earning per share. -
' 3.10 Investment: . V. T
Non-Current Investments are stated at cost price. Provision for diminution in the value
of non- current investment is made only If such a decline is other than temporary in
the opinion of the management.
3.11 Leases
As,Lessee ..
The Company applies the short-term lease recognition exemption to its short-term
leases of Property, Plant and Equipment (i.e., those leases that have a lease term of 12
months or less from the commencement date and do not contain a purchase option). It
also applies the lease of low-value assets recognition exemption to leases that are
considered of low value. Lease payments on short-term leases and leases of low-value;
assets are recognised as expense on a straight-line basis over the lease term or
another systematic basis if that basis is more representative of the pattern of the
lessee's benefit.
3.12 Preliminary and Share Issue Expenses :
Expenses incurred during the Initial Public Offer, follow on offer are charged to the
securities premium account. \
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