1.C.13 PROVISIONS, CONTINGENT LIABILITIES AND
CONTINGENT ASSETS
Provisions are recognized in the Balance Sheet when the
Company has a present obligation (legal or constructive)
as a result of a past event, which is expected to result in
an outflow of resources embodying economic benefits
which can be reliably estimated. Each provision is based
on the best estimate of the expenditure required to settle
the present obligation at the Balance Sheet date. When
appropriate, provisions are measured on a discounted
basis.
Constructive obligation is an obligation that derives from
an entity's actions whereby an established pattern of
past practice, published policies or a sufficiently specific
current statement, the entity has indicated to other
parties that it will accept certain responsibilities; and as
a result, the entity has created a valid expectation on
the part of those other parties that it will discharge those
responsibilities.
Contingent liabilities are disclosed by way of notes.
These are reviewed at each Balance Sheet date and are
adjusted to reflect the current estimate of management.
Contingent assets are not recognised but disclosed
in financial statements when an inflow of economic
benefits is probable.
1.C.14 SEGMENT REPORTING
Ind AS 108 establishes standards for the way that
public business enterprises report information about
operating segments and related disclosures. The
Company undertakes trading activities and also
acts as e-commerce service provider. Based on the
'management approach' as defined in Ind AS 108, the
Chief Operating Decision Maker (CODM) evaluates
Company's performance and allocates resources
on an analysis of various performance indicators by
operating segments. In terms of above the Company
has identified Marketing and e-Commerce as its two
Primary Reportable Business Segments. Revenue and
identifiable operating expenses in relation to segments
are categorized based on items that are individually
identifiable to that segment. Rest of the items of revenue
and expenses, which cannot be specifically allocated
under specific segments, are separately disclosed as
unallocated.
The Board of Directors, in its 335th meeting held on
12.11.2025 has decided to discontinue the procurement
business under BG backed model of Marketing Division.
Accordingly, the marketing business ceases to exist w.e.f.
FY 2026-27.
1.C.15 CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS
AND JUDGEMENTS
The preparation of the financial statements in conformity
with Ind AS requires management to make judgements,
estimates and assumptions that affect the application
of accounting policies and the reported amounts of
assets, liabilities, income, expenses, and disclosures
of contingent assets and liabilities at the date of the
financial statements and the results of operations during
the reporting period end. Although these estimates are
based upon management's best knowledge of current
events and actions, actual results could differ from these
estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are
revised and in any future periods affected.
The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial
year are discussed in the paragraphs that follow.
(i) Useful economic lives and impairment of other assets
The estimated useful life of property, plant and equipment
(PPE) and intangible assets is based on a number of
factors including the effects of obsolescence, usage of
the asset and other economic factors (such as known
technological advances).
The Company reviews the useful life of PPE and intangibles
at the end of each reporting date, and any changes
could affect the depreciation rates prospectively.
The Company also reviews its property, plant and
equipment for possible impairment if there are events or
changes in circumstances that indicate that the carrying
value of the assets may not be recoverable. In assessing
the property, plant and equipment for impairment,
factors leading to significant reduction in profits, such as
the Company's business plans and changes in regulatory
environment are taken into consideration.
(ii) Contingencies and commitments
In the normal course of business, contingent liabilities may
arise from litigation, taxation and other claims against
the Company. Where an outflow of funds is believed
to be probable and a reliable estimate of the outcome
of the dispute can be made based on management's
assessment of specific circumstances of each dispute
and relevant external advice, management provides
for its best estimate of the liability. Such liabilities are
disclosed in the notes but are not provided for in the
financial statements.
Although there can be no assurance regarding the final
outcome of the legal proceedings, the Company does
not expect them to have a materially adverse impact on
the Company's financial position or profitability.
(iii) Actuarial Valuation
The determination of Company's liability towards
defined benefit obligation to employees is made through
independent actuarial valuation including determination
of amounts to be recognized in the Statement of Profit
and Loss and in other comprehensive income. Such
valuation depends on assumptions determined after
taking into account inflation, seniority, promotion and
other relevant factors such as supply and demand
factors in the employment market.
(iv) Fair Value measurements and valuation processes
Some of the Company's assets and liabilities are
measured at fair value for financial reporting purposes.
In estimating the fair value of an asset or a liability, the
Company uses market-observable data to the extent it
is available. Where Level 1 inputs are not available, the
Company engages third party valuers, where required,
to perform the valuation. Information about the valuation
techniques and inputs used in determining the fair value
of various assets and liabilities are disclosed in the notes
to the financial statements.
(v) Recognition of deferred tax assets for carried
forward tax losses and unused tax credit
The extent to which deferred tax assets can be recognized
is based on an assessment of the probability of the
Company's future taxable income against which the
deferred tax assets can be utilized. In addition, significant
judgement is required in assessing the impact of any
legal or economic limits.
1.C.16 PROVISION OF TRADE RECEIVABLES
i. The Company has a provisioning policy in place which
provides for quarterly review and provision as per the
policy, which is as follows:
ii. The Company has done trading under "Back-to-
Back Arrangement with Associate Suppliers". As per the
arrangement, the payment to suppliers will be released
only on realization of Trade Receivables. Hence the
Company treats these Trade Receivables as Secured.
1.C.17 Restatement of material error / omissions:
Errors/omissions discovered in the current year relating
to prior periods are treated as immaterial and adjusted
during the current year, if all such errors and omissions
in each case do not exceed the overall material limit
specified in MSTC policy for determination of materiality
of events or information in terms of SEBI LODR Regulations
i.e. lower of the following:
(a) Two percent of turnover, as per the last audited
consolidated financial statements of the Company;
(b) Two percent of net worth, as per the last audited
consolidated financial statements of the Company,
except in case the arithmetic value of the net worth
is negative;
(c) Five percent of the average of absolute value of
profit or loss after tax, as per the last three audited
consolidated financial statements of the Company;
In respect to the above, the average of absolute
value of profit or loss is required to be considered
by disregarding the 'sign' (positive or negative)
that denotes such value as the said value/figure
is required only for determining the threshold for
'materiality' of the event and not for any commercial
consideration.
1.C.18 Policy on write back of old unclaimed amounts
♦ At every Balance sheet date, the unclaimed
amounts ageing more than five (5) years will be
written back.
♦ The exercise to be carried out annually with effect
from 31.03.2026.
♦ There may be cases where any amount is
needed to be settled/paid in subsequent years,
out of written back amount. The amount shall be
adjusted from the write back amount available on
that particular financial year (year of payment). If
the write back amount is insufficient, then it will
be charged to Profit and Loss Account of that
particular year (year of payment).
♦ The old balances of erstwhile trading business
and sub-judice matters will not fall under this
policy.
a) Disposal of Leasehold Land represents amortisation of Prepaid Lease Payment.
b) The Title Deed of the immovable property are held in the name of the Company.
c) All assets, wherever applicable have been duly registered with the Registrar of Companies for the charges.
d) At the time of implementation and adoption of IndAS w.e.f 1st April, 2015 in terms of IndAS 101, the Net Block of Assets
was considered as Gross Block treating Accumulated Depreciation on that date as "NIL". Depreciation has been
charged since in terms of Companies Act 2013. Hence, the Accumulated Depreciation represents cumulative
figures since 1st April, 2015 only. Due to this, there are differences in the figure of Gross Block and Accumulated
Depreciation between the Fixed Assets schedule as above and Fixed Assets Register. However the Net Block figures
are in complete agreement with Fixed Assets Register.
e) Freehold Building other than RCC Structure represents Steel Structure.
f) During the financial year 2025-26, the interior fit-out works at the Company's Corporate Office at World Trade
Centre, New Delhi were completed and handed over on 2nd February, 2026. In accordance with Ind AS 16, the
asset has been capitalised from that date. The total cost capitalised, based on bills submitted and approved by
the implementing agency, amounts to ' 1,003.15 Lakhs. Out of this, an amount of ' 855.27 Lakhs was paid prior
to capitalisation. The balance of ' 147.88 Lakhs, representing pending payments subject to verification and final
settlement, has been booked as a provision as at 31st March, 2026. The formal closure of the project and the final
settlement of these bills will take place in the financial year 2026-27. The final liability upon settlement will not
exceed the provisioned amount and may be lower. Any reduction in the final liability will be adjusted against the
gross block of the respective asset classes in the financial year 2026-27. Consequential adjustment to depreciation
will be accounted for as a change in accounting estimate in accordance with Ind AS 8, applied prospectively from
the date of handover.
g) Intangible assets under development ageing schedule:
a) During F.Y. 2025-26 MSTC Limited have invested ' 500 Lakhs (Previous Year ' 500 Lakhs) towards unquoted equity
contribution in Mahindra MSTC Recycling Private Limited.
b) In terms of impairment testing under Ind AS 36, the recoverable amount of the investment in MMRPLwas determined
based on the fair value derived using the Discounted Cash Flow (DCF) method. The fair value of MSTC
Limited's investment in MMRPL as on 31st March 2026, was assessed at ' 2,850.00 Lakhs (Previous FY ' 2,494.00
Lakhs), compared to the carrying amount of ' 4,000.00 Lakhs (Previous FY ' 3,500.00 Lakhs).
Accordingly, a differential impairment loss of ' 144.00 Lakhs (Previous FY ' 1,006.00 Lakhs) has been recognized
in the Standalone Financial Statements. With this the cumulative impairment loss till date stands at ' 1,150.00
Lakhs (Previous FY ' 1,006.00 Lakhs).
b) During the previous financial year 2024-25, the Company completed the sale of its wholly owned subsidiary,
Ferro Scrap Nigam Limited (FSNL), to Konoike Transport Co., Ltd. The total sale consideration received was
' 32,000.00 lakhs. The cost of acquisition of FSNL, as recorded in the books, amounted to ' 1,581.00 Lakhs. In
connection with the sale of the 100% equity investment in FSNL, the Company incurred costs amounting to
' 249.81 Lakhs, which were directly attributable to the transaction. After accounting for these deductions, the net
proceeds from Disposal of Investment in wholly owned subsidiary amounted to ' 30,169.19 Lakhs.
(#) During the previous financial year 2024-25, the Company completed the sale of its wholly owned subsidiary, Ferro
Scrap Nigam Limited (FSNL), to Konoike Transport Co., Ltd. The total sale consideration was ' 32,000.00 lakhs.
The cost of acquisition of FSNL, as recorded in the books, amounted to ' 1,581.00 lakhs. In connection with the
sale of the 100% equity investment in FSNL, the Company incurred costs amounting to ' 249.81 lakhs, which were
directly attributable to the transaction. Taking into account for these deductions, the net proceeds from disposal
of Investment in wholly owned subsidiary amounted to ' 30,169.19 lakhs.
(@) Litigation settlement in the previous FY 2024-25, includes expenditure of ' 3,850.33 lakhs (USD 38.93 Lakhs and
' 481.98 Lakhs) towards payment and provision on account of very old arbitration awards.
(#) During the previous financial year 2024-25, the Company completed the sale of its wholly owned subsidiary,
Ferro Scrap Nigam Limited (FSNL), to Konoike Transport Co., Ltd. The total sale consideration received was
' 32,000.00 lakhs. The cost of acquisition of FSNL, as recorded in the books, amounted to ' 1,581.00 lakhs. In
connection with the sale of the 100% equity investment in FSNL, the Company incurred costs amounting to ' 249.81
lakhs, which were directly attributable to the transaction. After accounting for these deductions, the net long-term
capital gain arising from the sale amounted to ' 30,169.19 Lakhs.
The tax rate used for the year 2025-26 in the reconciliations above is the corporate tax rate of 25.168% payable by
corporate entities in India on taxable profits under the new regime of Indian tax law. The tax rate used for the previous
financial year 2024-25 in the reconciliations above is the corporate tax rate of 25.168% for business income and 14.625
% for Long Term Capital Gain arising from Sale of Wholly owned Subsidiary payable by corporate entities in India on
taxable profits under the new regime of Indian tax law. For Deferred Tax calculation of financial year 2025-26 and
2024-25, income tax rate considered is 25.168%.
The company has booked Impairment Loss related to Investment in JV company "Mahindra MSTC Recycling Private
Limited" amounting to ' 1,006.00 lakhs in FY 2024-25 and ' 144.00 lakhs in FY 2025-26. However, as a conservative
approach, it has not created any deferred tax assets amounting to ' 253.19 lakhs in FY 2024-25 and ' 36.24 lakhs in
FY 2025-26 on Impairment losses.
33. Disclosures on financial instruments
This section gives an overview of the significance of financial instruments for the Company and provides additional
information on balance sheet items that contain financial instruments.
The details of significant accounting policies, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in notes to the standalone financial statements.
(l) Categories of Financial Instruments
The following table presents carrying amount and fair value of each category of financial assets and liabilities
as at the year end. The Carrying value is equivalent to the Fair value.
(2) Capital Management
The Company manages its capital to ensure that the Company is able to continue as going concern
while maximising the return to shareholders through the optimisation of the debt and equity balance.The
Company is not subject to any externally imposed capital requirements.
(3) Financial risk management objectives
The Company's Corporate Treasury function provides services to the business, co-ordinates access to domestic
and international financial markets , monitors and manages the financial risks relating to the operations of
the company . These risks include market risk (like- currency risk, interest rate risk and other price risk), credit
risk and liquidity risk. Compliance with policies and exposure limits is reviewed by the internal auditors on a
continuous basis. The Company does not enter into or trade of financial instruments, including derivative
financial instruments, for speculative purposes.
(a) Market Risk
The Company's activities exposes it, primarily to the financial risks of changes in foreign currency exchange
rates. On a case to case basis, the Company enters into Forward foreign exchange contracts to hedge the
exchange rate risk, as and when necessary.
(i) Interest rate risk management
The company endeavours to convert its loans to MCLR based, hence the rate is firm for a contract period
usually for a year, as and when necessary.
(ii) Foreign Currency risk management
Wherever foreign exchange fluctuations are to be borne by the customers as per agreement with them,
foreign exchange gain/(loss) are not recognized in the books of the Company.
(b) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in fianacial
loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties,
where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only
transact with entities that are rated by agencies where available and if not available, the company uses
other publicly available financial information and its own past records to rate its major customers. The
Company's exposure and the credit ratings of its counterparties are monitored and the aggregated value
of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by
counterparty limits that are reviewed and approved by the Senior management committee. Furthermore,
in case of Marketing Segment, the Business is done with backup of Bank Guarantee.
(c) Liquidity risk management
The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the
maturity profiles of financial assets and liablities.
The table below provides details regarding the contractual undiscounted cash obligations of financial
liabilities including estimated interest payments for the period 31st March, 2026 and as at 31st March, 2025 .
35. Employee Benefits
Defined Contribution Plans
1. Pension
In terms of Ministry of Steel Directives Pension scheme for the employees of MSTC has been formulated, under
Defined Contribution Plan. The company contributes annually to LIC of India / NPS through a Trust. LIC /
NPS will provide the pension to the employees from the corpus created on account of employees, by way of
contribution from MSTC (The Employer).
Defined Benefits Plans
1. Gratuity:
The Gratuity is payable on service severance in respect of eligible employees. The Gratuity is funded with LIC
of India. The Company contributes in the fund every year as premium on the basis of demand raised by LIC of
India.
a. Executives:
The Gratuity is calculated and paid as per the Payment of Gratuity Act, 1972. However, in terms of DPE guidelines,
the maximum ceiling of Gratuity is ' 25,00,000/- wef 01.10.2025.
b. Non- Executives:
(i) The Gratuity payable to those who joined the company on or after 01.07.2014 is calculated and paid as per
the Payment of Gratuity Act, 1972. However, in terms of DPE guidelines, the maximum ceiling of Gratuity
is ' 25,00,000/- wef 01.10.2025.
(ii) The Gratuity payable to those who joined the company prior to 01.07.2014 is calculated and paid considering
15/26 days' wages drawn by the employee on 31.10.2023 for every completed year of service till 30 years
and one month's wages drawn by the employee on 31.10.2023 for every completed years of service in
excess of 30 years and the calculated amount is without any ceiling.
2. Post Retirement Medical Benefit:
The Post Retirement Medical Benefit is a medical benefit to the superannuated employees and their spouse.
The members will be covered through Mediclaim Insurance of the Insurance Company. This is available to
superannuated employees at any hospital under the Mediclaim Insurance Policy. In addition to this expenses
incurred in domicilliary treatment is also reimbursed as per prescribed ceiling. The benefits are funded through
a separate trust formed for this purpose. The Company provides the corpus for this as per actuarial valuation.
3. Provident Fund:
The Company operates a Provident Fund scheme for its employees which is managed by an in-house Trust
named 'Metal Scrap Trade Corporation Limited Contrbutory Provident Fund Trust'. Both employees and the
Company contribute 12% of the qualifying basic salary and dearness allowance. Employees also have the
option to contribute a higher percentage. The Trust is obligated to pay interest to the members at a rate
not lower than the statutory rate notified by the Government of India (EPFO). Any shortfall between the
actual investment income generated by the Trust and the interest distributed at the EPFO declared rate
is to be met by the Company. Accordingly, the plan is classified as a Defined Benefit Plan under Ind AS 19,
and an actuarial valuation has been carried out using the Projected Unit Credit Method (PUCM).
(e) Details of the Provident Fund Plan are as follows :
The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests
the funds in permitted securities. The Company has an obligation to ensure minimum rate of return to the members
as specified by Government of India. Accordingly, the Company has obtained report of the actuary, based on which
overall interest earnings and cumulative surplus is more than the statutory interest payment requirement for all the
periods presented. Further, contribution to employees' pension scheme is paid to the appropriate authorities.
Notes :
1. Current Ratio has improved due to continuous cash profit earned by the company.
2. Refer Note no. 18, Current Borrowings. The amounts appearing there in are sub judice and contingent in nature at
this juncture, hence, not considered in the calculation of Debt-Equity ratio.
3. Refer Note 2 above, as per the reasons mentioned there in, the Debt Service Coverage ratio is not applicable.
4. The Return on Equity (ROE) ratio for previous FY 2024-25 saw a one-time increase due to a sharp increase in Net
Profit After Tax, primarily driven by a non-recurring exceptional gain from the sale of a wholly owned subsidiary
5. MSTC do not have any inventory, hence, not applicable.
6. Trade Receivable Turnover Ratio increased due to reduction in Trade Receivables on account of better realisation.
7. The Trade Payables Turnover Ratio increased due to efficient working capital management and strong liquidity.
8. Net Capital Turnover Ratio decreased due to reduction in sale of goods and services and increase in working capital.
9. Net Profit Ratio for previous FY 2024-25 saw a one-time increase due to a sharp increase in Net Profit After Tax,
primarily driven by a non-recurring exceptional gain from the sale of a wholly owned subsidiary.
10. The Return on Capital Employed (ROCE) ratio for previous FY 2024-25 saw a one-time increase due to a sharp
increase in Profit, primarily driven by a non-recurring exceptional gain from the sale of a wholly owned subsidiary.
11. The Return on Investment (ROI) ratio for previous FY 2024-25 saw a one-time increase due to a sharp increase in
Net Profit After Tax, primarily driven by a non-recurring exceptional gain from the sale of a wholly owned subsidiary.
37 . Expenditure Incurred on Corporate Social Responsibility Activities
(a) The minimum Gross amount required to be spent by the company during the year is ? 696.00 Lakhs (Previous Year -
? 479.00 Lakhs).
(b) In accordance to section 135 of Companies Act 2013, the company has incurred ? 734.64 Lakhs (Previous Year - ? 480.81
Lakhs),as CSR expenditure.
(c) There is no related party transaction involved in CSR expenditure.
(d) Above figures are disclosed separately in note no.27(aa).
38. Balances of Trade Receivables, Trade Payables and Advances includes balances subject to confirmation/
reconciliation and consequential adjustment, if any. Reconciliations are carried out on on-going basis. Provisions,
wherever considered necessary, have been made.
39. The company did not have any unrecorded transactions in the Books of Accounts which have been surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
40. The company has not traded or involved in Crypto or Virtual currency during the year.
41. The Board of Directors of the Company adopted the Financial Statements in 338th Board Meeting held on 29th May
2026.
42. The Board of Directors of the Company in its 338th Board Meeting held on 29th May 2026. has proposed a final
dividend of ? 8.10 per share in respect of year ending 31st March 2026, @ 81% on equity share capital which is
? 7,040.00 Lakhs as on date. The payment of Dividend is subject to approval of shareholders at Annual General
Meeting. If approved it will result in a cash outflow of ? 5,702.40 Lakhs.
43. The figures for the corresponding previous years have been regrouped/reclassified wherever necessary to make
them comparable.
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