a. Statement of Compliance
These financial statements have been prepared in accordance with Indian
Accounting Standards (Ind AS) notified under section 133 of the Companies
Act, 2013. The financial statements have also been prepared in accordance with
the relevant presentation requirements of the Companies Act, 2013. The Company
adopted Ind AS from 1st April 2017.
b. Basis of Accounting
The financial statements are prepared under the historical cost convention on an
accrual basis of accounting in accordance with the Generally Accepted
Accounting Principles in India, Accounting Standards notified under Section 133
of the Companies Act, 2013 and other relevant provisions thereof. The
preparation of the financial statements in conformity with Indian GAAP requires
the management to make estimates and assumptions considered in the reported
amounts of assets and liabilities (including contingent liabilities) and the reported
income and expenses during the year. The Management believes that the
estimates used in preparation of the financial statements are prudent and
reasonable. Future results could differ due to these estimates and the differences
between the actual results and the estimates are recognized in the periods in which
the results are known / materialized. 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 Revised Schedule VI to the Companies Act, 2013. Based on
the nature of activityrendered by the Company and the time between the cost
incurred and their realization in cash and cash equivalents, the Company has
ascertained its operating cycle as 12 months for the purpose of current and non¬
current classification of assets and liabilities. The financial statements are
presented in Indian rupees rounded off to the nearest rupees.
c. Use of Estimates
The presentation of financial statements in conformity with Indian GAAP requires
judgments, estimates and assumption to be made that affect the reported amount
of assets and liabilities, disclosure of contingent liabilities on the date of the
financial statement and the reported amount of revenues and expenses during the
reporting period. Difference between the actual results and estimates are
recognized in the period in which the results are known / materialized.
d. Property, Plant & Equipment (PPE)
Tangible assets are stated at cost of acquisition (inclusive of freight) or
construction net of CENVAT /Tax credit, less accumulated depreciation and
impairment loss, if any. All costs, including financial costs till commencement of
commercial production and adjustment arising from exchange rate variations
attributable to the fixed assets are capitalized.
e. Capital Work- in- progress
Project under commissioning and other capital work-in- progress are carried at
cost, comprising direct cost, related incidental expenses and attributable interest
f. Depreciation
a) Depreciation on fixed assets has been provided on Straight Line Method
Depreciation is provided based on useful life of the assets as prescribed in
Schedule II to the Companies Act, 2013.
b) Depreciation on addition to / deduction from fixed assets is being provided on
pro-rata basis from/ to the date of acquisition/ disposal.
g. Inventories
Inventories i.e. stores consumables are valued at cost (exclusive of duties &
taxes). By Products are valued at estimated realizable value. Raw Materials are
valued at cost plus freight using Weighted Average Cost (WAC) method.
Finished Goods are valued at cost or net realizable value (NRV) whichever is
lower. Finished goods include cost of conversion and other cost for bringing it in
the present location and condition including depreciation.
h. Impairment of Assets
(i) Financial assets (other than a fair value)
The Company assesses at each date of balance sheet whether a financial asset or a
group of financial assets is impaired. Ind AS 109 requires expected credit losses
to be measured through a loss allowance. The company recognizes lifetime
expected losses for all contract assets and / or all trade receivables that do not
constitute a financing transaction. For all other financial assets, expected credit
losses are measured at an amount equal to the 12 month expected credit losses or
at an amount equal to the life time expected credit losses if the credit risk on the
financial asset has increased significantly since initial recognition.
Property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated
for recoverability whenever there is any indication that their carrying amounts
may not be recoverable. If the recoverable amount of an asset is estimated to be
less than its carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is recognized in the statement of profit
and loss.
i. Financial Instruments
Financial assets and liabilities are recognized when the Company becomes a party
to the contractual provisions of the instrument. Financial assets and liabilities are
initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value measured on initial recognition of
financial asset or financial liability.
Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents
are short-term balances (with an original maturity of three months or less from the
date of acquisition), highly liquid investments that are readily convertible into
known amounts of cash and which are subject to insignificant risk of changes in
value.
Financial assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial
assets are held within a business whose objective is to hold these assets in order to
collect contractual cash flows and the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if
these financial assets are held within a business whose objective is achieved by
both collecting contractual cash flows and selling financial assets and the
contractual terms of the financial asset gives rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount
outstanding.
Financial assets are measured at fair value through profit or loss unless it is
measured at amortized cost or at fair value through other comprehensive income
on initial recognition. The transaction costs directly attributable to the acquisition
of financial assets and liabilities at fair value through profit or loss are
immediately recognized in profit or loss.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as measured at amortised cost or FVTPL. A
financial liability is classified as at FVTPL if it is classified as held for trading, or
it is a derivative or it is designated as such on initial recognition. Financial
liabilities at FVTPL are measured at fair value and net gains and losses, including
any interest expense, are recognised in profit or loss. Other financial liabilities are
subsequently measured at amortised cost using the effective interest method.
Interest expense and foreign exchange gains and losses are recognised in profit or
loss. Any gain or loss on derecognition is also recognised in profit or loss.
j. Revenue
The Company manufactures and sells a range of steel and other products.
Effective April 1, 2018, the Company has applied Ind AS 115 which establishes a
comprehensive framework for determining whether, how much and when revenue
is to be recognised. Ind AS 115 replaces Ind AS 18 Revenue and Ind AS 11
Construction Contracts. The Company has adopted Ind AS 115 using the
retrospective effect method. The adoption of the new standard did not have a
material impact on the Company.
Sale of products
Revenue from sale of products is recognised when control of the products has
transferred, being when the products are delivered to the customer. Delivery
occurs when the products have been shipped or delivered to the specific location
as the case may be, the risks of loss has been transferred, and either the customer
has accepted the products in accordance with the sales contract, or the Company
has objective evidence that all criteria for acceptance have been satisfied. Sale of
products include related ancillary services, if any.
Goods are often sold with volume discounts based on aggregate sales over a 12
months period. Revenue from these sales is recognised based on the price
specified in the contract, net of the estimated volume discounts. Accumulated
experience is used to estimate and provide for the discounts, using the most likely
method, and revenue is only recognised to the extent that it is highly probable that
a significant reversal will not occur. A liability is recognised for expected volume
discounts payable to customers in relation to sales made until the end of the
reporting period. No element of financing is deemed present as the sales are
generally made with a credit term of 30-90 days, which is consistent with market
practice. Any obligation to provide a refund is recognised as a provision. A
receivable is recognised when the goods are delivered as this is the point in time
that the consideration is unconditional because only the passage of time is
required before the payment is due.
The Company does not have any contracts where the period between the transfer
of the promised goods or services to the customer and payment by the customer
exceeds one year.
As a consequence, the Company does not adjust any of the transaction prices for
the time value of money.
Sale of power
Revenue from sale of power is recognised when the services are provided to the
customer based on approved tariff rates established by the respective regulatory
authorities. The Company doesn’t recognise revenue and an asset for cost
incurred in the past that will be recovered.
k. Other income
Interest income is accounted on an accrual basis. Dividend income is accounted
for when the right to receive income is established.
l. Borrowing Cost
The Borrowing costs that are attributable to the acquisition or construction or
production of the qualifying assets are capitalized as per the cost of such assets up
to the date when such assets are ready for its intended use. All other borrowing
costs are charged to the Profit & Loss A/c.
m. Accounting for Taxes on Income
(a) Current tax is determined as the tax payable in respect of taxable income for
the year and is computed in accordance with relevant tax regulations.
(b) Deferred tax assets and liabilities are recognized for future tax consequences
attributable to the timing differences that result between taxable profit and the
profit as per the financial statement. Deferred tax assets & liabilities are
measured using the tax rates and the tax laws enacted or substantially
enacted as on the Balance Sheet date. Deferred tax assets are recognized only
to the extent there is reasonable certainty for its realization.
(c) The taxable income of the company being lower than the book profits under
the provision of the income tax act 1961. The company is liable to pay
Minimum Alternate tax (MAT) on its income.
(d) Considering the future profitability & taxable position in the subsequent
years the company has recognized MAT Credit as an assets by crediting the
provision for income tax & including the same under Loans & advances in
accordance with the Guidance note on “Accounting for Credit available in
respect of MAT under Income Tax Act 1961” issued by the Institute of
Chartered Accountant of India.
n. Cash Flow Statement
Cash flows are reported using the indirect method prescribed in the relevant
Accounting Standard , whereby profit before tax 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.
o. Foreign Currency Transaction
The financial statements of the Company are presented in Indian Rupees (‘'’),
which is the functional currency of the Company and the presentation currency
for the financial statements.
In preparing the financial statements, transactions in currencies other than the
Company’s functional currency are recorded at the rates of exchange prevailing
on the date of the transaction. At the end of each reporting period, monetary items
denominated in foreign currencies are re-translated at the rates prevailing at the
end of the reporting period. Non-monetary items carried at fair value that are
denominated in foreign currencies are re-translated at the rates prevailing on the
date when the fair value was determined. Non-monetary items that are measured
in terms of historical cost in a foreign currency are not translated.
Exchange differences arising on translation of long-term foreign currency
monetary items recognised in the financial statements before the beginning of the
first Ind AS financial reporting period in respect of which the Company has
elected to recognise such exchange differences in equity or as part of cost of
assets as allowed under Ind AS 101-“First-time adoption of Indian Accounting
Standards” are added/deducted to/ from the cost of assets as the case may be.
Such exchange differences recognised in equity or as part of cost of assets is
recognised in the statement of profit and loss on a systematic basis.
Exchange differences arising on the re-translation or settlement of other monetary
items are included in the statement of profit and loss for the period.
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