2.14 Provisions, contingent liabilities and contingent assets
Provisions are recognised when the company has a present obligation (legal or constructive), as a result of past events, and it is probable that an
outflow of resources, that can be reliably estimated, will be required to settle such an obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date,
taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as
an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent Liabilities and Contingent Assets are not recognised but are disclosed in the notes.
2.15 Earnings per share
Basic earnings per share is computed by dividing the profit after tax / (loss) attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year.
The weighted average number of equity shares outstanding during the year is adjusted for events including bonus issue, bonus element in a rights issue
to existing shareholders, share split and reverse share split (consolidation of shares). Diluted earnings per share is computed by dividing the profit /
(loss) after tax attributable to equity shareholders as adjusted for dividend, interest and other charges to expense or income (net of any attributable
taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share
and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
2.16 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is
necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred
under finance costs. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to interest costs.
2.17 Non-current assets held for sale / distribution to owners and discontinued operations
The company classifies non-current assets and disposal groups as held for sale/distribution to owners if their carrying amounts will be recovered
principally through a sale / distribution rather than through continuing use. Actions required to complete the sale/ distribution should indicate that it
is unlikely that significant changes to the sale/ distribution will be made or that the decision to sell/ distribute will be withdrawn. Management must
be committed to the sale/distribution and it is expected to be completed within one year from the date of classification.
The criteria for held for sale/ distribution classification is regarded as met only when the assets or disposal group is available for immediate sale/
distribution in its present condition, subject only to terms that are usual and customary for sales/ distribution of such assets (or disposal groups), its
sale/ distribution is highly probable; and it will genuinely be sold, not abandoned. The company treats sale/ distribution of the asset or disposal group
to be highly probable when:
- The appropriate level of management is committed to a plan to sell the asset (or disposal group); An active programme to locate a buyer and complete
the plan has been initiated;
-The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value;
-The sale is expected to qualify for recognition as a completed sale within one year from the date of classification; and
-Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Non-current assets held for sale/for distribution to owners and disposal groups are measured at the lower of their carrying amount and the fair value
less costs to sell/ distribute. Assets and liabilities classified as held for sale/ distribution are presented separately in the balance sheet. Property, Plant
and Equipment and intangible assets once classified as held for sale/ distribution to owners are not depreciated or amortised.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale,
and:
-represents a separate major line of business or geographical area of operations,
-is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations
-is a subsidiary acquired exclusively for resale.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from
discontinued operations in the statement of profit and loss.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets and financial liabilities are initially measured at fair value or transaction value wherever appropriate. 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 Statement of Profit and Loss ('FVTPL')) are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised
immediately in Statement of Profit and Loss.
Trade receivables are recognised when they are originated.
Trade payables are in respect of the amount due on account of goods purchased or services availed in the normal course of business. They are
recognised at the transaction price i.e., the amount payable for the goods or services, if the transaction does not contain a significant financing
component.
a) Financial Assets
(i) Recognition and initial measurement
All financial assets are recognised initially at fair value. Transaction costs that are directly attributable to the acquisition of financial assets (other
than financial assets at fair value through Statement of Profit or Loss ('FVTPL']) are added to the fair value of the financial assets, on initial
recognition. Transaction costs directly attributable to the acquisition of financial assets at FVTPL are recognised immediately in Statement of Profit
and Loss.
(ii) Subsequent measurement
For the purposes of subsequent measurement, financial assets are classified in four categories:
- Debt instruments at amortised cost
- Debt instruments at fair value through other comprehensive income (FVTOCI);
- Debt instruments and equity instruments at fair value through profit or loss (FVTPL);
- Equity instruments measured at fair value through other comprehensive income (FVTOCI).
Debt instruments at amortised cost
A 'debt instrument' is measured at the amortised cost if both the following conditions are met:
-The asset is held within a business model whose objective is to hold assets for collecting 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 (SPPI) on the
principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The
EIR amortisation is included under the head finance income in the profit or loss. The losses arising from impairment are recognised in the profit or
loss. This category generally applies to trade and other receivables.
Debt instrument at FVTOCI
A 'debt instrument' is classified as FVTOCI if both of the following criteria are met:
-the objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
- The asset's contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are
recognised in the other comprehensive income (OCI).
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as amortised cost or as
FVTOCI, is classified as FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognised in the
statement of profit and loss.
In addition, the company may elect to designate a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as FVTPL. However,
such election is chosen only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as 'accounting mismatch').
A financial asset is de-recognised only when;
a. The entity has transferred the rights to receive cash flows from the financial asset
or
b. The entity retains the contractual rights to receive the cash flows of the financial asset, but expects a contractual obligation to pay the cash flows to
one or more recipients.
Where entity has transferred an asset, the entity examines and assesses whether it has transferred substantially all risks and rewards of ownership of
financial asset. In such cases, financial asset is de-recognised. Where entity has not transferred substantially all risks and rewards of ownership of
financial asset, such financial asset is not de-recognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the
financial asset is de-recognised, if the entity has not retained control of the financial asset. Where the entity retains control of the financial asset is
continued to be recognised to the extent of continuing involvement in the financial asset.
(iv) Investment in subsidiaries
The company's investment in equity instruments of subsidiaries is accounted for at cost as per Ind AS 27, including adjustment for fair value of
obligations, if any, in relation to such subsidiaries.
b) Financial liabilities and equity instruments
(i) Initial recognition and measurement
All financial liabilities are recognised initially at fair value giving effect to transaction cost (if any) that is attributable to the acquisition of the financial
liabilities which is also adjusted.
(ii) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate (EIR)
method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised through the EIR amortisation process. Amortised cost is
calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is
included under finance costs in the statement of profit and loss.
Trade and other payables
These amounts represent liabilities for goods or services provided to the company which are unpaid at the end of the reporting period. Trade and other
payables are presented as current liabilities when the payment is due within a period of 12 months from the end of the reporting period.
For all trade and other payables classified as current, the carrying amounts approximate fair value due to the short maturity of these instruments.
Other payables falling due after 12 months from the end of the reporting period are presented as non-current liabilities and are measured at amortised
cost unless designated at fair value through profit and loss at the inception.
The company enters into deferred payment arrangements (acceptances) whereby lenders such as banks and other financial institutions make
payments to supplier's banks for purchase of raw materials. The banks and financial institutions are subsequently repaid by the company at a later
date. These are normally settled up to 90 days. These arrangements for raw materials are recognised as Acceptances i.e. trade payables and are
included in total outstanding dues of creditors other than micro enterprises and small enterprises.
Financial guarantee
Financial guarantee contracts issued by the company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs
because, the principal debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are
recognised initially as a liability at fair value, including transaction costs that are directly attributable to the issuance of the guarantee. Subsequently,
the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind- AS 109 and the amount
recognised less cumulative amortisation.
All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in statement of profit or loss are included within
finance costs or finance income.
Other financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through statement of profit or loss. Gains or losses on liabilities held for trading or designated as at FVTPL are recognised in
the profit or loss.
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the statement of profit or loss.
c) Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to
offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
d) Impairment of Financial assets
The Board assesses at balance sheet date 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 recognises 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 expected credit
losses for the next 12 months or at an amount equal to the lifetime expected credit losses, if the credit risk on the financial asset has increased
significantly since initial recognition.
e) Fair value measurement
The Board measures financial instruments at fair value at each balance sheet date. Fair value is the price 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. The fair value measurement is based on the
presumption that the transaction to sell the asset or transfer the liability takes place either:
-In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability which are accessible to the company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in
its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
Valuation techniques that are appropriate in the circumstances are used and for which sufficient data are available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
-Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
-Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable, or
- Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the company determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based on the lowest level Input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
f) Derivative financial instruments
Derivative financial instruments are accounted for at FVTPL except for derivatives designated as hedging instruments in cash flow hedge relationships,
which require a specific accounting treatment. To qualify for hedge accounting, the hedging relationship must meet several strict conditions with
respect to documentation, probability of occurrence of the hedged transaction and hedge effectiveness.
These arrangements have been entered into to mitigate currency exchange risk arising on account of repayment of foreign currency term loan and
interest thereon. For the reporting period under audit, the company has not designated any forward currency contracts as hedging instruments.
2.19 Cash and cash equivalents and cash flow statement
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with 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.
Cash flows are reported using the Indirect method, whereby profit/ (loss) before extraordinary items and tax is appropriately classified for the effects
of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. In cash flow statement, cash and cash
equivalents include cash in hand, balances with banks in current accounts and other short- term highly liquid investments with original maturities of
three months or less.
2.20 Dividend on ordinary shares
The entity recognises a liability to make cash or non-cash distributions to equity holders of the company when the distribution is authorised and the
distribution is no longer at the discretion of the company. The amount so authorised is recognised directly in equity.
2.21 Segment reporting
An operating segment is defined as a component of the entity that represents business activities from which it earns revenue and incurs expenses and
for which discrete financial information is available. The operating segments are based on the entity's internal reporting structure and the manner in
which operating results are reviewed by the Chief Operating Decision Maker (CODM).
2.22 Recent Pronouncements
The Ministry of Corporate Affairs (“MCA”] notifies new standards or amendment to the existing standards under Companies (Indian Accounting
Standards) Rules as issued from time to time.
For the year ended March 31, 2025, MCA has notified Ind AS - 117 Insurance contracts and amendments to Ind AS 116 - Leases, relating to sale and
leaseback transactions applicable from April 01,2024. The company has reviewed the new pronouncements and based on its evaluation opines that it
does not have any impact in its financial statements.
3. KEY SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGEMENTS
In the course of applying the policies outlined in all notes under section 2 above, the company is required to make judgements, estimates and
assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period, or in the period of the revision and future period, if the revision affects current and future
period.
(i) Useful lives of Property, Plant and Equipment
The Board reviews the useful lives of Property, Plant and Equipment once a year. Such lives are dependent upon an assessment of both the technical
lives of the assets and also their likely economic lives based on various internal and external factors including relative efficiency and operating costs.
Accordingly depreciable lives are reviewed annually using the best information available to the Management.
(ii) Impairment of investments in subsidiaries
Determining whether the investments in subsidiaries are impaired, requires an estimate in the value in use of investments. In considering the value in
use, the Board has anticipated the future commodity prices, capacity utilisation of plants, operating margins, discount rates and other factors of the
underlying businesses / operations of the investee companies.
Any subsequent changes to the cash flows due to changes in the above mentioned factors could impact the carrying value of investments, necessitating
the recognition of a provision for diminution in value.
(iii) Provisions and liabilities
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past
operations or events that can reasonably be estimated. The timing of recognition requires application of judgement to existing facts and circumstances
which may be subject to change. The amounts are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability.
(iv) Contingencies
In the normal course of business, contingent liabilities may arise from litigation and other claims against the company. Potential liabilities that are
possible but not probable of crystalising or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the
notes but are not recognised.
(v) Fair value measurements
When the fair values of financial assets or financial liabilities recorded or disclosed in the financial statements cannot be measured based on quoted
prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models
are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values.
Judgements include consideration of inputs such as liquidity risk, credit risk and volatility.
The credit period on goods sold ranges from 0 to 60 days without security. Trade receivable with credit impairment is identified on case to case
basis.
In determining the allowances for doubtful trade receivables, the Company has used a practical expediency by computing the expected credit loss
allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is
adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used
in the provision matrix.
Before accepting any new customer, the company evaluates the financial soundness, business opportunities, credit references etc of the new
customer and defines credit limit and credit period. The credit limit and the credit period are reviewed at periodical intervals.
The Company does not generally hold any collateral or other credit enhancements over these balances .
Trade receivables have been offered as collateral towards borrowings (refer note no 22, 27 and 44).
In determining the recoverability of a trade receivable, the Company considers any change in the credit quality of the trade receivable from the
date when credit was initially granted up to the end of the reporting period. The concentration of credit risk is limited due to the fact that the
customer base is large and unrelated.
e) In the period of five years immediately preceding 31-03-2025
i) The Company has not allotted any equity shares as fully paid-up without payment being received in cash.
ii) The Company has not allotted any equity shares by way of bonus issue.
iii) The Company has not bought back any equity shares.
f) Money Received against Share Warrants
Pursuant to the approval of the Board of Directors in their meeting held on 24th March, 2022 and approval of shareholders through special
resolution dated 20th April, 2022 passed in Extra-Ordinary General Meeting, the Board has allotted 14,00,000 Warrants on 7th May 2022,
each carrying a right to subscribe to one Equity Share per Warrant, at a price of Rs. 750/- per Warrant ("Warrant Price”), aggregating to
Rs.105 crores. The Warrants were issued to APL Apollo Mart Limited, Delhi ("Acquirer”), a wholly owned subsidiary of APL Apollo Tubes
Limited, Delhi an entity which does not qualify as a promoter or member of the promoter group of the Company. The Warrants were issued
to APL Apollo Mart Limited by way of a preferential allotment.
25% of the total consideration (25% of Rs. 105 Crores i.e., Rs. 26.25 crores) was received on 6th May, 2022 and balance 75% of the total
consideration (75% of Rs.105 Crores i.e., Rs.78.75 crores) was received on 2nd November, 2023.
General Reserve
General Reserve is an accumulation of retained earnings of the Company, apart from the balance in the statement of profit and loss
which can be utilised for meeting future obligations.
Capital Reserve
Reserve is primarily created on amalgamation as per statutory requirement.
Securities Premium
This consists of premium realised on issue of shares and will be applied/ utilised in accordance with the provisions of the Companies
Act, 2013.
Retained earnings
Surplus in Statement of Profit and Loss is part of retained earnings.This is available for distribution to shareholders as dividend and
capitalisation
b. As lessee:
Various Buildings have been taken on operating lease with lease term between 11 and 144 months for office premises, storage space and retail
shop, which are renewable on a periodic basis by mutual consent of both parties. There is no restriction imposed by lease arrangements, such
as those concerning dividends, additional debts.
Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or
terminate the lease, if the use of such option is reasonably certain. The reporting entity makes an assessment on the expected lease term on a
lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be
exercised.
For the short-term ¥*d low value leases, the reporting entity recognizes the lease payments as an operating expense on a straight-line basis
42. Segment Reporting
The company is primarily engaged in the business of Trading and retailing of Steel Tubes & Pipes, Steel- Flat Products, roofing, TMT, Steel-long
Products, Sanitaryware, Tiles, PVC Pipes & Fittings and other building material products. In accordance with IND AS 108 "Operating Segments", the
company has presented the segment information on the basis of its consolidated financial statements. Hence, the segment information for the
separate (i.e. standalone) financial statements are not presented.
b) Defined benefit plan
(i) Gratuity
The Company has funded the gratuity liability ascertained on actuarial basis, wherein every employee who has completed five years or more of
service is entitled to gratuity on retirement or resignation or death calculated at 15 days salary for each completed year of service, subject to a
maximum of Rs. 20 lacs per employee. The vesting period for Gratuity as payable under The Payment of Gratuity Act,1972 is 5 years.
The plans in India typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to government
bond yields; if the return on plan asset is below this rate, it will create a plan deficit.
Interest risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on
the plan's debt investments.
Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan
participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability.
Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an
increase in the salary of the plan participants will increase the plan's liability.
There are no other post-retirement benefits provided to employees.
The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31-03-2025. The
present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit
credit method.
The Company expects to contribute Rs.0.65 crores (previous year Rs.0.36 crores) to its gratuity plan for the next year.
In assessing the Company's post retirement liabilities, the Company monitors mortality assumptions and uses up-to date mortality tables, the base
being the Indian assured lives mortality (2012-14) ultimate.
Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the
estimated term of the obligations after considering several applicable factors such as the composition of plan assets, investment strategy, market
scenario, etc.
The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors,
such as supply and demand in the employment market.
The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of
the obligations.
Effective March 29, 2018, the Government of India has notified the Payment of Gratuity (Amendment) Act, 2018 to raise the statutory ceiling on
gratuity benefit payable to each employee to Rs 20 lakhs from Rs 10 lakhs. Accordingly the amended and improved benefits, if any, are recognised
as current year's expense as required under paragraph 103 of Ind AS 19.
Sensitivity Analysis:
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality.
The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of
the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the
change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
The average expected remaining lifetime of the plan members is 6 years (31-03-2024 - 6 years) as at the valuation date which represents the
weighted average of the expected remaining lifetime of all plan participants.
The Company had deployed its investment assets in an insurance plan which is invested in market linked bonds. The investment returns of the
market-linked plan are sensitive to the changes in interest rates as compared with the investment returns from the smooth return investment
plan. The liabilities' duration is not matched with the assets' duration.
The liabilities of the fund are funded by assets. The company aims to maintain a close to full-funding position at each Balance Sheet date. Future
expected contributions are disclosed based on this principle.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
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48. Financial Instruments
A. Capital Management
(1) Capital risk management
The Company's capital requirements are mainly to fund its expansion, working capital and strategic acquisitions. The principal source of funding of
the Company has been, and is expected to continue to be, cash generated from its operations supplemented by borrowings from bank and funds from
capital markets. The Company is not subject to any externally imposed capital requirements.
The Company regularly considers other financing and refinancing opportunities to diversify its debt profile, reduce finance cost and closely monitors
its judicious allocation amongst competing expansion projects and strategic acquisitions, to capture market opportunities at minimum risk.
C. Financial risk management
The Company has an Audit & Risk Management Committee established by its Board of Directors for overseeing the Risk Management Framework
and developing and monitoring the Company's risk management policies. The risk management policies are established to ensure timely
identification and evaluation of risks, setting acceptable risk thresholds, identifying and mapping controls against these risks, monitor the risks
and their limits, improve risk awareness and transparency. Risk management policies and systems are reviewed regularly to reflect changes in
the market conditions and the Company's activities to provide reliable information to the Management and the Board to evaluate the adequacy of
the risk management framework in relation to the risk faced by the Company.
The risk management policies aims to mitigate the following risks arising from the financial instruments:
- Market risk
- Credit risk; and
- Liquidity risk
(1) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in the market prices. The
Company is exposed in the ordinary course of its business to risks related to changes in commodity prices and interest rates.
Sensitivity
Currency risks related to the amounts of foreign currency loans are fully hedged using derivatives that mature on the same dates as the loans are
due for repayment.
(ii) Commodity price risk:
The Company's revenue is exposed to the market risk of price fluctuations related to the sale of its steel and other building products. Market
forces generally determine prices for the steel products 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 sale of its steel products.
The Company purchases the steel and other building products in the open market from third parties as well as from subsidiaries at prevailing
market price. The Company is therefore subject to fluctuations in the prices of steel coil, steel pipes,sanitary wares etc.
The Company aims to sell the products at prevailing market prices. Similarly the Company procures the products based on prevailing market
rates as the selling prices of steel products and the prices of inputs move in the same direction.
(iii) 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 is exposed to interest rate risk since funds are borrowed at both fixed and floating interest rates. Interest rate risk is
measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in
rupees. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.
The following table provides a break-up of the Company's fixed and floating rate borrowings:
(2) Credit risk management:
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.
Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks.
Company's credit risk arises principally from the trade receivables, advances and financial guarantees furnished to the lenders of the subsidiaries.
(i) Trade receivables:
Customer credit risk is managed centrally by the company and subject to established policy, procedures and control relating to customer credit risk
management. Credit quality of a customer is assessed based on financial position, past performance, business/economic conditions, market
reputation, expected business etc. Based on that credit limit & credit terms are decided. Outstanding customer receivables are regularly monitored.
Trade receivables consist of a large number of customers spread across diverse industries and geographical areas with no significant concentration
of credit risk. The outstanding trade receivables are regularly monitored and appropriate action is taken for collection of overdue receivables.
The company does not anticipate any downfall in the current level of performance of the subsidiaries in the near future. The networth of the subsidiaries are
sufficient enough to manage in the event of default.
(3) Liquidity risk management
Liquidity risk refers to the risk of financial distress or extraordinary high financing costs arising due to shortage of liquid funds in a situation where
business conditions unexpectedly deteriorate and requiring financing. The Company requires funds both for short term operational needs as well as
for strategic acquisitions. The Company generates sufficient cash flow for operations, which together with the available cash and cash equivalents and
borrowings provide liquidity. 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 liabilities.
The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment
periods and its non-derivative financial assets. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based
on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.
With respect to floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual
maturity is based on the earliest date on which the Company may be required to pay.
52. No proceedings have been initiated or pending against the Company for holding Benami property under the Benami Transactions
(Prohibition) Act, 1988 (45 of 1988) and the Rules made there under
53. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), 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 beneficiary
54. The Company has not received any fund from any person(s) or entity(ies), 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
57. During the year the Company has not disclosed or surrendered, any income other than the income recognised in the books of accounts in the
tax assessments under Income Tax Act, 1961.
58. The Company has complied with the number of layers prescribed under clause (87) of Section 2 of the Companies Act, 2013 read with
Companies (Restriction on number of Layers) Rules, 2017.
59. The Board of Directors of the Company at their meeting held on 18th December, 2023 approved a Scheme of Arrangement under section 230¬
232 and read with other applicable provisions of the Companies Act, 2013 for demerger of the Demerged Undertaking (“Trading Business”) of
Shankara Building Products Limited (“Demerged Company”) into Shankara Buildpro Limited (“Resulting Company”) which is a wholly owned
subsidiary of the Demerged Company and their respective shareholders and creditors (“Scheme”).
The Scheme inter-alia provides for
(i) Demerger, transfer and vesting of Trading Business from the Demerged Company into the Resulting company on a going concern basis.
(ii) Reduction and cancellation of equity share capital of the Resulting company held by the Demerged Company.
(iii) Issuance and allotment of Equity Shares by the Resulting Company to all the shareholders of the Demerged Company as per the Share
Entitlement Ratio i.e., for every 1 (one) fully paid equity share of face value of INR 10/- (Indian Rupees Ten only) each, held in the Demerged
Company as on the Record Date (as defined in the Scheme), the equity shareholders of the Demerged Company shall be issued 1 (One) fully paid
equity share of face value of INR 10/- (Indian Rupees Ten Only) each in the Resulting Company, in consideration of transfer of Demerged
Undertaking. After the sanction of the Scheme by the National Company Law Tribunal, Bengaluru having jurisdiction over the Companies (NCLT)
and upon the fulfilment of conditions as prescribed in clause 18 of the Scheme, the Scheme shall become effective from the Effective Date as
defined in the Scheme.
The Appointed date is 01.04.2024 as per the Scheme which is approved by the Board of Directors in the Board Meeting held on 18th December
2023.
The Scheme of arrangement has been approved by BSE Limited ,National Stock Exchange of India Limited vide their observation letter dated 1st
July 2024 and 6th July 2024 respectively.
The Company filed an online application with the National Company Law Tribunal (NCLT) on August 17, 2024. Additionally, physical documents,
including the Company application (NCLT-1), were submitted to the NCLT Bangalore bench on August 19, 2024.
Pursuant to the application filed with the Hon'ble National Company Law Tribunal, Bengaluru (NCLT) on August 17, 2024 ,the NCLT has passed
an order dated 18th December, 2024 (the “Order”), directing inter alia, that a meeting be convened and held of the equity shareholders of
Shankara Building Products Limited, Bengaluru (herein after mentioned as the “Company” or “Applicant Company No.1/Demerged Company”),
for the purpose of considering the scheme of arrangement proposed to be made amongst Shankara Building Products Limited,Bengaluru
(Applicant Company No.1/Demerged Company) and Shankara Buildpro Limited,Bengaluru (Applicant Company No.2/Resulting Company) and
their respective shareholders & creditors.
In pursuance of the directions of the Hon'ble Tribunal, the meeting of the Equity Shareholders of the Demerged Company was duly convened on
February 12, 2025 at 11:00 A.M. at the registered office of the Demerged Company, and the approval of the shareholders was obtained for the
proposed Scheme of Arrangement. Thereafter, in accordance with the said order, the second motion petition was filed before the Hon'ble
Tribunal. The petition has been admitted and listed for hearing on 26th May 2025.
The Scheme is yet to be approved by the National Company Law Tribunal, Bengaluru (NCLT) and accordingly it has no impact on the financial
statements.
The Board is of the view that provisions of Ind AS 105- “Non-Current Assets Held for Sale and Discontinued Operations” are not applicable as
there is no sale by the Demerged Company. Further there is no inflow of cash as consideration for sale into the Demerged Company.
60. The company has not granted loans or advances in the nature of loans to any Promoters, Directors, KMPs which are repayable on demand or
without specifying any terms or period of repayments but has granted advances in the nature of loans to its related parties i.e. four wholly owned
subsidiaries which are repayable on demand. Refer Note No. 9(a)
61. Events occurring after the Balance Sheet date
The Board has recommended a final dividend of Rs.3/-(Rupees Three only) per equity share (face value of Rs. 10/- each) for the financial year
ended 31-03-2025 aggregating to Rs.7.27 crores subject to the approval of shareholders in the ensuing Annual General Meeting.
62. The financial statements has been approved by the Board of directors at their meeting held on 16th May, 2025.
As per our report attached of even date For and on behalf of the Board of Directors
For SUNDARAM & SRINIVASAN
Sukumar Srinivas C.Ravikumar
Chartered Accountants w TN. TNTmT , ,
ICAI Firm Reg No. 004207S Managmg Director DIN: Whole-time Director DIN:
01668064 01247347
Srinivasan K
Partner Alex Varghese Ereena Vikram
Membership No: 209120 Chief Financial Officer Company Secretary
ACS Membership No: 33459
Place: Bengaluru Place: Bengaluru
Date: May 16, 2025 Date: May 16, 2025
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