4.6 Contractual obligations - Refer Note 35(a) for disclosure of contractual commitments for the acquisition of property, plant and equipment.
4.7 Aggregate amount of depreciation has been included under ‘Depreciation and Amortisation Expense’ in the Statement of Profit and Loss (Refer Note 27).
4.8 Title deeds of immovable properties set out in Note 4.1 and 5.3, where applicable, are in the name of the Company except as set out below which are in the name of Graphite Vicarb India Limited (GVIL)/Powmex Steels Limited (PSL). The immovable properties of GVIL/PSL, inter alia, got transferred to and vested in the Company pursuant to the respective Schemes of Arrangement in earlier years.
7.2 Refer Note 42 for receivables secured against borrowings and Note 40 for information about credit risk and market risk on receivables. For terms and conditions relating to related party receivables, refer Note 38.
7.3 No trade or other receivables are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade or other receivables are due from firms or private companies respectively in which any director is a partner, a director or a member.
@ Above represent payments made to various Government Authorities under protest relating to certain indirect tax matters.
A Balances with Government Authorities primarily include amounts realisable from the value added tax and customs authorities of India and the unutilised goods and service tax input credits on purchases. These are generally realised within one year or regularly utilised to offset the goods and service tax liability on goods sold by the Company. Accordingly, these balances have been classified as current assets.
@ There were no changes in number of shares during the years ended 31st March, 2024 and 31st March, 2023.
(a) Terms/Rights attached to Equity Shares : The Company has only one class of Equity Shares having a par value of Rs. 2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts in proportion to their shareholding.
Nature and Purpose of Each Reserve Capital Reserve
Capital reserve has been primarily created on amalgamation in earlier years. The same can be utilised in accordance with the provisions of the Companies Act, 2013.
Capital Redemption Reserve
The Act requires that where a company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to a capital redemption reserve. The capital redemption reserve may be applied by the company, in paying up unissued shares of the company to be issued to shareholders of the company as fully paid bonus shares. The Company had established this reserve pursuant to the redemption of preference shares issued in earlier years.
Securities Premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
General Reserve
Under the erstwhile Companies Act, 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act, 20 13, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.
Retained Earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends paid to shareholders. Retained earnings includes re-measurement loss/(gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earning is a free reserve available to the Company.
@ In compliance with the provisions laid under Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 and Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, the Company has provided for expenditure towards unspent Corporate Social Responsibility (CSR) towards on-going projects. Subsequent to the year-end, the said amount which is remaining unspent under Section 135(5) of the Act, on account of on-going projects, has been transferred to a special account opened by the Company within prescribed time limit in a scheduled bank.
In respect of other than on-going projects, there are no unspent amounts that are required to be transferred to a fund specified in Schedule VII of the Companies Act, in compliance with Second Proviso to Sub-section 5 of Section 135 of the Act.
33 The Company has lease contracts for various lands which has lease terms between 60 and 999 years. The Company’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. There are several lease contracts that include extension and termination options and Company had initially made one-time lump-sum lease payments and there is no further cash outflow. For carrying amounts of right-of-use assets recognised and the movements during the period, refer Note 5.3.
The Company also has cancellable lease arrangements for certain accommodation. Terms of such lease include one month’s notice by either party for cancellation, option for renewal on mutually agreed terms and there are no restrictions imposed by such lease arrangements. The Company has applied the ‘short-term lease’ exemptions for these leases. Rental expense recorded for short-term leases or cancellable in nature amounts to Rs. 2.30 Crores (Previous Year - Rs. 2.00 Crores).
@ The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required. In respect of above, it is not practicable for the Company to estimate the timing of cash outflows, if any, pending resolution of the respective proceedings. The Company does not expect any reimbursements in respect of the above.
36 Employee Benefits
(I) Post-employment Defined Benefit Plans (A) Gratuity (Funded)
The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. The gratuity plan is governed by the Payment of Gratuity Act, 1972 without ceiling limit, except Rs. 0.20 Crores for Powmex Division. As per the plan, the Gratuity Fund Trusts, administered and managed by the Trustees and funded primarily with Life Insurance Corporation of India (LICI), make payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment. Vesting occurs upon completion of five years of service. The Trustees are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. Each year an Asset-Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as set out in Note 2(p)(ii) above, based upon which, the Company makes contributions to the Employees’ Gratuity Funds.
Assumptions regarding future mortality experience are based on mortality tables of ‘Indian Assured Lives Mortality (2012-2014) published by the Institute of Actuaries of India.’
The estimate of future salary increases takes into account inflation, seniority, promotion and other relevant factors, such as demand and supply in the employment market.
* Net off Rs. 0.14 Crore shown under Advance towards Gratuity (Previous Year - Rs. 0.85 Crore) (Refer Note 13)
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit obligation recognised in the Balance Sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
(j) The Company expects to contribute Rs. 7.01 Crores (Previous Year - Rs. 3.55 Crores) to the funded gratuity plans during the next financial year.
(k) The weighted average duration of the defined benefit obligation as at 31st March, 2024 is 8.82 years. (Previous Year - 8.96 years).
(B) Provident Fund
Contributions towards provident funds are recognised as expense for the year. The Company has set up Provident Fund Trusts in respect of certain categories of employees which are administered by Trustees. Both the employees and the Company make monthly contributions to the Funds at specified percentage of the employee’s salary and aggregate contributions along with interest thereon are paid to the employees/nominees at retirement, death or cessation of employment. The Trusts invest funds following a pattern of investments prescribed by the Government. The interest rate payable to the members of the Trusts is not lower than the rate of interest declared annually by the Government under The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, on account of interest is to be made good by the Company.
In view of the Company’s obligation to meet shortfall, if any, on account of interest, Provident Fund Trusts set up by the Company are treated as defined benefit plans.
The Actuary has carried out actuarial valuation of plan’s liabilities and interest rate guarantee obligations as at the balance sheet date using Projected Unit Credit Method and Deterministic Approach as outlined in the Guidance Note 29 issued by the Institute of Actuaries of India. Based on such valuation, an amount of Rs. 0.10 Crores (Previous Year - Rs. 0.13 Crores) has been provided towards future anticipated shortfall with regard to interest rate obligation of the Company as at the balance sheet date. Further during the year, the Company’s contribution of Rs. 0.26 Crores (Previous Year - Rs. 0.29 Crores) to the Provident Fund Trusts has been expensed under the ‘Contribution to Provident and Other Funds’ in Note 25. Disclosures given hereunder are restricted to the information available as per the Actuary’s Report -
(II) Post-employment Defined Contribution Plans
During the year, an amount of Rs. 11.85 Crores (Previous Year - Rs. 11.36 Crores) has been recognised as expenditure towards above defined contribution plans of the Company.
(A) Superannuation Fund
Certain categories of employees of the Company participate in superannuation, a defined contribution plan administered by the Trustees. The Company makes quarterly contributions based on a specified percentage of each covered employee’s salary. The Company has no further obligations under the plan beyond its annual contributions.
(B) Provident Fund
Certain categories of employees of the Company receive benefits from a provident fund, a defined contribution plan. Both the employee and employer make monthly contributions to a government administered fund at specified percentage of the covered employee’s qualifying salary. The Company has no further obligations under the plan beyond its monthly contributions.
(III) Leave Obligations
The Company provides for accumulation of leave by certain categories of its employees. These employees can carry forward a portion of the unutilised leave balances and utilise it in future periods or receive cash (only in case of earned leave) in lieu thereof as per the Company’s policy. The Company records a provision for leave obligations in the period in which the employee renders the services that increases this entitlement.
The total provision recorded by the Company towards this obligation was Rs. 25.93 Crores and Rs. 24.64 Crores as at 31st March, 2024 and 31st March, 2023 respectively. The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.
(IV) Risk Exposure
Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below:
Discount Rate Risk
The Company is exposed to the risk of fall in discount rate. A fall in discount rate will eventually increase the ultimate cost of providing the above benefit thereby increasing the value of the liability.
Salary Growth Risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
Demographic Risk
In the valuation of the liability, certain demographic (mortality and attrition rates) assumptions are made. The Company is exposed to this risk to the extent of actual experience eventually being worse compared to the assumptions thereby causing an increase in the benefit cost.
37 Segment Information
A. Description of Segments and Principal Activities
The Company’s Executive Director examines the Company’s performance on the basis of its business and has identified two reportable segments:
a) Graphite and Carbon Segment, engaged in the production of Graphite Electrodes, Other Miscellaneous Graphite and Carbon Products and related Processing/Service Charges.
b) Others Segment, engaged in manufacturing/laying of GRP Pipes, and in manufacturing of High Speed Steel and Alloy Steel and Power Generating Unit exclusively for outside sale.
Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the standalone financial statements. Also, the Company’s borrowings (including finance costs), income taxes, investments and derivative instruments are managed at head office and are not allocated to operating segments.
Sales between segments are carried out on cost plus appropriate margin and are eliminated on consolidation. The segment revenue is measured in the same way as in the Statement of Profit and Loss.
Segment assets and liabilities are allocated based on the operations of the segment and the physical location of the assets.
(iv) Terms and Conditions of Transactions with Related Parties -
Transactions relating to dividend were on the same terms and conditions that applied to other shareholders. The sales to and purchases from related parties are made in the ordinary course of business and at arm’s length prices. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. No provisions are held against receivables from related parties. There are no loans outstanding with related parties other than disclosed above.
# As the future liability for gratuity is provided on actuarial basis for the Company as a whole, the amount pertaining to an individual is not ascertainable and therefore, not included above.
* Amount is below the rounding off norm adopted by the Company.
(ii) Fair Values
The fair values of financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended 31st March, 2023. The following methods and assumptions were used to estimate the fair values:
(a) The fair values of the quoted shares and exchange traded funds are based on price quotations at the reporting date. The fair value of unquoted equity shares and compulsorily convertible preference share have been estimated using a discounted cash flow analysis, option pricing method, net asset value, comparable companies multiple method and comparable transaction method as determined appropriate. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk, volatility, earnings per share and price earnings ratio of comparable companies in the sector. The probabilities of the various estimates within the range can be reasonably assessed and are used in management’s estimate of fair value for these unquoted equity investments, as applicable.
(b) In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements as at the year end. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors. Accordingly, such net asset values are analogous to fair market value with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the issuers of these units of mutual funds.
(c) The management has assessed that the fair values of Trade Receivables, Cash and Cash Equivalents, Other Bank Balances, Other Financial Assets, Investments in Debentures, Bonds, Corporate Deposits, Trade Payables, Borrowings (including Interest Accrued) and Other Financial Liabilities approximate to their respective carrying amounts largely due to the short-term maturity of these instruments. Further, management has also assessed the carrying amount of certain loans bearing floating interest rates which are a reasonable approximation of their respective fair values and any difference between their carrying amounts and fair values is not expected to be significant.
(d) Investments in venture capital funds are valued using valuation techniques, which employs the use of market observables inputs and the assessment of Net Asset Value (NAV) given by funds.
(e) Perpetual Bonds and Market Linked Debentures are valued based on the trends observed in primary and secondary markets mainly Volume Weighted Average Yield (VWAY) of primary reissuances of the same ISIN through book building and secondary trades in the same ISIN of the same issuer of similar maturity.
(f) The fair value of remaining financial instruments is determined on the basis of discounted cash flow model using current lending/discount rates, as considered appropriate.
For financial assets carried at fair value, the carrying amounts are equal to their respective fair values.
(iii) Fair Value Hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the standalone financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows below.
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 (for example, over-the-counter derivatives) is determined using valuation techniques which maximise 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 in level 3. This is the case for unlisted equity securities included in level 3.
The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There are no transfers between level 1 and level 2 fair value measurements during the year ended 31st March, 2024 and 31st March, 2023.
Fair Value Measurements using Significant Unobservable Inputs (Level 3)
Fair valuation of unquoted equity investments is based on valuation report using given weighted average of net asset value, comparable companies multiple method, option pricing method and comparable transaction method. A change in significant unobservable inputs used in such valuation (mainly earnings per share and price earnings ratio of comparable companies in the sector) is not expected to have a material impact on the fair values of such assets as disclosed above.
In determining fair value measurement, the impact of potential climate-related matters, including legislation, which may affect the fair value measurement of assets and liabilities in the financial statements has been considered. These risks in respect of climate-related matters are included as key assumptions where they materially impact the measure of recoverable amount. These assumptions have been included in the cash-flow forecasts in assessing value-in-use amounts. At present, the impact of climate-related matters is not material to the Company’s financial statements.
40. Financial Risk Management
The Company’s activities expose it to credit risk, liquidity risk and market risk. In order to safeguard against any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered as per Company’s policy to hedge certain foreign currency risk exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
The Company’s senior management oversees the management of above risks. The senior executives working to manage the financial risks are accountable to the Audit Committee and the Board of Directors. This process provides assurance to the Company’s senior management that the Company’s financial risks-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and the Company’s risk appetite.
This Note explains the sources of risk which the entity is exposed to and how the entity manages the risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
(A) Credit Risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company is exposed to credit risk from its operating activities (primarily Trade Receivables) and from its investing activities comprising Deposits with Banks, Investments in Mutual Funds, Commercial Papers and Debentures.
Trade Receivables
Trade receivables are typically unsecured and are derived from revenue earned from customers. Customer credit risk is managed by each business unit subject to the Company’s established policy and procedures which involve credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit assurance.
The Company’s exposure to customers is diversified and is monitored by the Company’s senior management periodically. Other Financial Assets
Credit risk from balances with banks, term deposits, loans, investments, corporate deposits and derivative instruments is managed by Company’s finance department. Investments of surplus funds are made only with approved counterparties who meet the minimum threshold requirements. The Company monitors ratings, credit spreads and financial strength of its counterparties.
The Company’s maximum exposure to credit risk for the components of the Balance Sheet as of 31st March, 2024 and 31st March, 2023 is the carrying amounts as disclosed below.
Financial Assets that are neither Past Due nor Impaired
None of the Company’s cash equivalents with banks, loans and investments were past due or impaired as at 31st March, 2024 and 31st March, 2023. Of the total trade receivables, Rs. 275.08 Crores as at 31st March, 2024, and Rs. 238.61 Crores as at 31st March, 2023 consisted of customer balances that were neither due nor impaired as at such respective dates.
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company’s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and maintains adequate sources of financing.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, debt and equity investments and derivative financial instruments.
(i) Foreign Currency Risk
Foreign currency risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currencies (primarily US Dollars and Euro). The Company has foreign currency trade receivables, trade payables and other financial assets/ liabilities and is therefore, exposed to foreign currency risk.
The Company strives to achieve asset-liability offset of foreign currency exposures and only the net position is hedged where considered necessary. The Company manages its foreign currency risk by hedging appropriate percentage of its foreign currency exposure per established risk management policy.
The Company uses forward exchange contracts to hedge the effects of movements in foreign exchange rates on foreign currency denominated assets and liabilities.
(ii) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to risk of changes in market interest rates relates primarily to the Company’s debt interest obligation. Further, the Company engages in financing activities at market linked rates, any changes in the interest rate environment may impact future rates of borrowings. To manage this, the Company may enter into interest rate swaps. The management also maintains a portfolio mix of floating and fixed rate debt.
The Company’s fixed rate borrowings and investments comprising Deposits with Banks, Commercial Papers, Corporate Deposits and Bonds/Debentures are carried at amortised cost. They are, therefore, not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of changes in market interest rates.
(iii) Equity Price Risk
The Company invests in listed and non-listed equity securities, exchange traded fund which are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior on a regular basis.
(iv) Securities Price Risk
Securities price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded prices.
The Company invests its surplus funds in various debt instruments. These comprise of mainly liquid schemes of mutual funds, perpetual bonds and market linked debentures. To manage its price risk arising from investments in mutual funds, perpetual bonds and market linked debentures, the Company diversifies its portfolio.
These investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments.
(a) Securities Price Risk Exposure
The Company’s exposure to securities price risk arises primarily from investments in mutual funds, perpetual bonds and market linked debentures held by the Company and classified in the Balance Sheet as fair value through profit or loss (Refer Note 39).
(b) Sensitivity
The sensitivity of profit or loss to changes in Net Assets Values (NAVs) and interest rate as at year end for investments in mutual funds, perpetual bonds and market linked debentures and venture capital fund.
(v) Commodity Price Risk
Exposure to market risk with respect to commodity prices primarily arises from the Company’s sales of graphite electrodes, including the raw material components for such products. Cost of raw materials forms the largest portion of the Company’s cost of sales. Market forces generally determine prices for the graphite electrodes sold by the Company. These prices may be influenced by factors such as supply and demand, production costs (including the costs of raw material inputs) and global and regional economic conditions and growth. Adverse changes in any of these factors may reduce the revenue that the Company earns from the sales of graphite electrodes. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. The Company has not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.
41 Capital Management (a) Risk Management
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 and benefits for other stakeholders and
• maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
43 In the current year, pursuant to the publication of Tariff Order by Hon’ble West Bengal Electricity Regulatory Commission for the years 2020-21 to 2022-23 and finalisation of tariff thereof, the Company has reversed the excess rate revision provision towards electricity charges in respect of its Durgapur Plant amounting to Rs. 42.84 Crores and have netted it off against ‘Power and Fuel’ expenses for the year ended 31st March, 2024.
In previous year, pursuant to the publication of Tariff Orders by Hon’ble West Bengal Electricity Regulatory Commission for the years 2017-18 to 2019-20, Damodar Valley Corporation (DVC) had revised tariff rates towards arrear electricity charges in respect of Company’s Durgapur Plant and the net charge of Rs. 75.23 Crores (after netting off corresponding provision created in earlier years) was charged under ‘Power and Fuel’ expenses for the year ended 31st March, 2023.
44 Based on income tax assessment orders received by the Company in respect of Assessment Years 2018-19 and 2019-20, the Company had received refunds amounting to Rs. 417.10 Crores. The Company had preferred appeals against the short allowance of deduction claimed by the Company. Pending disposal of such appeals, no credit/ adjustment has been made on a prudent basis.
45 Pending completion of the relevant formalities of transfer of certain assets and liabilities of Powmex Steels Undertaking of GKW Limited (GKW) acquired pursuant to the Scheme of Arrangement sanctioned by the Hon’ble High Court at Calcutta vide Order dated 22nd May, 2009, such assets and liabilities remains included in the books of the Company under the name of GKW (including another company, erstwhile Powmex Steels Limited, which was amalgamated with GKW in earlier years).
46 The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post-employment benefits, received Presidential assent in September, 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
47 Due to the overall fall in the electrode prices, the Company, in accordance with the applicable Ind AS has recognized the related inventory on Net Realizable Value (NRV) basis to the extent applicable and has accordingly written down the carrying cost of inventory. The value of such write down (Balance Sheet position) as at 31st March, 2024 is Rs. 98.55 Crores in respect of raw materials, Rs. 169.51 Crores in respect of work-in-progress and Rs. 30.13 Crores in respect of finished goods respectively, aggregating to Rs. 298.19 Crores. Corresponding amounts being Nil as at 31st March, 2023. Refer Note 12.2.
48 The Company vide sale deed dated 7 th August, 2023 had sold its land at Bengaluru for an aggregate consideration of Rs. 986.14 Crores to TRIL Bengaluru Real Estate Five Limited and TRIL Bengaluru Real Estate Six Limited (wholly owned subsidiaries of Tata Realty and Infrastructure Limited) against which the entire consideration was received during the year ended 31st March, 2024. Exceptional item of Rs. 953.89 Crores represents net gain on sale of aforesaid freehold land (after netting of related expenses amounting to Rs. 11.39 Crores, excluding tax) during the year ended 31st March, 2024.
49 During the current year ended 31st March, 2024, the Company has invested Rs. 49.99 Crores in 2,49,044 compulsory convertible preference shares and 100 equity shares of Godi India Private Limited (GIPL) constituting 31% of GIPL Share Capital. The investment in GIPL is part of Company’s strategy to diversify into advanced chemistry battery technologies for the development of electric vehicle battery and energy storage battery cells. Considering the terms and conditions of the shareholders agreement (including certain protective clauses), the investment in the shares of the above associate has been accounted for as Fair Value through Profit or Loss (“FVTPL”) instruments in these standalone financial statements in accordance with Ind AS 109 ‘Financial Instruments’ and the resultant gain in respect of the fair value as on 31st March, 2024 amounting to Rs. 0.97 Crore has been recognised as “Net gain on investment carried at Fair Value through Profit or Loss” in the Statement of Profit and Loss. Also refer Note 39.
50 The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled at the database level insofar as it relates to privileged/administrative access rights of SAP accounting software. Further no instance of audit trail feature being tampered with was noted in respect of accounting software.
51 Managerial remuneration to the executive director and other directors for the year ended 31st March, 2024, is in excess of the limits applicable under Section 197 of the Act, read with Schedule V thereto, by Rs. 0.27 Crore and Rs. 0.09 Crore respectively. The Company is in the process of obtaining necessary approval from its shareholders at the forthcoming Annual General Meeting as required under provisions of Section 197, Schedule V and other applicable provisions of the Companies Act, 2013.
Reasons for variances of more than 25% in above ratios are explained below:
* Movement is due to impact of exceptional item considered in the calculation of earnings/profits in the current year.
@ Due to increase in current investments.
A Reduction in overall borrowings of the Company.
# Due to decrease in inventory holding and impact of net realisable value considered in inventory.
## Major decline due to NRV provision.
$ Due to increase in income from underlying investments during the year and increase in investments of the Company. $$ Includes the impact of exceptional items (Refer Note 48).
$$$ Net of NRV provision (Refer Note 47).
53 Other Statutory Information
(i) No proceedings has been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.
(ii) The Company does not have any transactions with companies struck off under Section 248 of Companies Act, 2013 or Section 560 of Companies Act, 1956.
(iii) There are no charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has 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 (either from borrowed funds or share premium or any other sources or kind of funds) to or in any other persons or entities, 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 the Company (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 persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vii) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(viii) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
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