R. Provisions
A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost. Provisions are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
S. Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by
the occurrence or non-occurrence of one or more uncertain future events beyond control of the Company or a
present obligation that is not recognized because it is not probable that an outflow of resources will be required to
settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot
be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but
discloses its existence in the financial statements.
19 Other Equity (contd.)
Securities Premium - Where the Company issues shares at a premium, whether for cash or otherwise, a sum equal to the
aggregate amount of the premium received on those shares shall be transferred to "Securities Premium Reserve". The
Company may issue fully paid-up bonus shares to its members out of the securities premium reserve and the Company can
use this reserve for buy-back of shares.
Capital Reserve - It represents gain of capital nature which mainly includes gain on reissue of forfeited shares.
General Reserve - General Reserve is created out of the profits earned by the Company by way of transfer from surplus in
the statement of profit and loss. The Company can use this reserve for payment of dividend and issue of fully paid-up and
not paid-up bonus shares.
Retained Earnings - Retained Earnings are the profits that the Company has earned till date, less any transfers to General
reserve and payment of dividend.
36 Significant Accounting Judgements, Estimates and Assumptions
The preparation of the Company's financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods
Other disclosures relating to the Group's exposure to risks and uncertainties includes:
- Financial Risk Management Objectives and Policies - Note 44
- Capital Management - Note 45
- Sensitivity analyses disclosures - Note 37 and 44
Judgements
In the process of applying the Company's accounting policies, management has made the following judgements, which
have the most significant effect on the amounts recognised in the financial statements:
Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are described below. The Company based its assumptions and estimates on parameters available when
the standalone financial statements were prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such
changes are reflected in the assumptions when they occur.
Employee Benefit Plans
The cost of defined benefit gratuity plan and other long-term employment benefit plans are determined using actuarial
valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in
the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the
complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes
in these assumptions. All assumptions are reviewed at each reporting date. The mortality rate is based on publicly available
mortality tables for India. Those mortality tables tend to change only at interval in response to demographic changes.
Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity
obligations are given in Note 37.
Taxes
Significant management judgement is required to determine the amount of deferred tax assets that can be recognised,
based upon the likely timing and the level of future taxable profits together with future tax planning strategies. Details on
deferred taxes are disclosed in Note 21.
Useful Lives of Property, Plant & Equipment
The Company reviews the useful life of property, plant & equipment at the end of each reporting period. This reassessment
may result in change in depreciation expense in future periods.
Impairment of Financial Assets
The impairment provision for financial assets are based on assumptions about risk of default and expected loss rates. The
Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the
Company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Estimated impairment allowance on trade receivables is based on the ageing of the receivable balances and historical
experiences. Individual trade receivables are written off when management deems them not to be collectible.
Provisions and contingent liabilities
The Company estimates the provisions that have present obligations as a result of past events and it is probable that
outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting
period and are adjusted to reflect the current best estimates.
The Company uses significant judgements to assess contingent liabilities. Contingent liabilities are recognised when there
is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation
that arises from past events where it is either not probable that an outflow of resources will be required to settle the
obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in
the standalone financial statements.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based
on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The
inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of
judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit
risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
37 Employee Benefit
Defined Benefit Plans
The Company has defined benefits gratuity plan. Every employee who has completed five years or more of service gets
gratuity on death or resignation or retirement at 15 days salary (last drawn salary) for each completed years of service. The
Company's Gratuity Fund is managed by Life Insurance Corporation of India.
The following tables summaries the components of net benefit expense recognised in the statement of profit and loss and
the funded status and amounts recognised in the balance sheet.
38 Commitments and Contingencies
a. Leases
Company as Lessee
(i) The Company has lease contracts for various lands taken from Bhavnagar Municipal Corporation (Lessor). These lease
contracts have lease terms between 25 to 99 years. Upon expiry, the Company (Lessee) also has an option to renew
the said lease for another term of lease. The consideration for the right to use these lands over the lease term is paid
upfront and these leases do not require payment of any material lease rent amount on recurring basis. Right-of-use
asset with respect to these leashold lands has been presented as part of Note 3 on Property, Plant and Equipment.
Regarding plot no. F69AB1 & F69AB3 the term of lease is expired and the company has before expiry of lease term
has applied with the lessor for the renewal of lease (carrying value Rs.11.36 Lakhs). The said renewals are under
process with the lessor. The company expects it to be approved shortly during FY 2025-26.
(ii) One plot no. 148 situated in Gujarat Industrial Development Corporation (GIDC) - Vartej was alloted to the company
by the GIDC. The possession was also given to the company. However, the lease deed is pending to be executed as
the allotment challenged in Hon'ble Gujarat High Court and matter is on stay since then.
Notes:
(i) In the year of 2010 the company purchased a plot of land having city survey no. 302, admeasuring 22,325.59 sq.
mtrs, identified in company's record as Plot no. F-26, from a private party and acquired the lease rights thereon.
The relevant transfer of the property and lease rights thereon was accepted by Bhavnagar Municipal Corporation
(BMC) and taken on their record. Subsequently, the Collector of Bhavnagar District intervened and passed an order
holding the transfer of the property to the company to be invalid. The company then went in appeal to the High
Court of Gujarat and the Honourable High Court was pleased to stay the order of the Collector. The company is
confident of ultimately winning the case on merits and does not foresee any adverse consequences and or liability
in this regard. The matter is still pending in High Court.
(ii) The company uses energy generated from conventional sources and as per Electricity Act 2003 and Gujarat
Electricity Regulatory Commission regulations, the company is cast upon obligation to purchase Renewal Energy
Certificate(REC) for meeting renewal power purchase obligation determined in the regulations from Central
Electricity Regulatory Commission. The regulations are effective since 2015-16 and awaiting clarification from
power distribution Companies for its enforcement and applicability period. The matter is sub-judice. The REC
obligation amount of Rs 17.48 Lakhs is arrived at as per rate mentioned at Indian Energy Exchange (IEX) in the
month of March 2025. The REC obligation will be discharged upon disposal of cases from the regulators.
(iii) The Company had sold goods to Steelcast LLC (an erstwhile joint venture between the Company and Makary &
Associates for business development for Steelcast Limited) in 2015 which in turn sold the goods to its customer
i.e. LB Steel in United States of America. The LB Steel initiated bankruptcy proceeding in 2015 in United States
Bankruptcy Court of Illinois and a Committee of Creditors(CoC) was formed. The CoC initiated bankruptcy
proceedings in the said court for recovery of payment made to Steelcast Limited by LB Steel through Steelcast LLC.
The amount determined was USD 252,393 (equivalent INR 207.38 Lakhs).
The company had disclosed regarding the above matter under contingent liabilities head in Note no. 38 of Balance
Sheet of FY 2023-24. The company had during FY 2024-25, deposited an amount of USD 277,379 (equivalent INR
231.68 Lakhs) as per the assessment of the amount & direction of the district court of USA. Now the company has
received the judgment of the United States District Court for the Northern District of Illinois on 04 April 2025 in
favour of the Committee of the Creditors (LB Steel LLC).
During FY 2024-25, the Company has already written off the amount deposited USD 277,379 (equivalent INR
231.68 Lakhs) with the Court of USA. The appropriation of the deposited amount shall be decided and intimated
to us during the FY 2025-26 and the balance amount, if any, shall be refunded back to the company.
This disclosure is only for the information with reference to our previous year disclosure on this case in
contingent liability.
39 Related Party Transactions
A. Name of the related parties and nature of the related party relationship:
i Key Managerial Personnel & their Relative
Shri Chetan M Tamboli -Chairman & Managing Director
Shri RushiL C Tamboli - Son of Managing Director and Non-Executive Non-Independent Director
Mrs. Vidhi S Merchant - Daughter of Managing Director and Non-Executive Non-Independent Director
Shri Ashutosh H Shukla - Executive Director
Shri Subhash R Sharma - Executive Director and Chief Financial Officer
Shri Umesh V Bhatt - Company Secretary
ii Entities controlled by Key Managerial Personnel
Steelcast Education Trust
Shri F. P. Tamboli Charitable Trust
The fair value of the financial assets and liabilities is the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were
used to estimate the fair values:
- The fair values of quoted investments are based on price quotations at the reporting date
- The fair values of unquoted investment in equity shares and compulsory convertible debentures are based on valuation
report obtained from a Registered Valuer. In addition, the Company also made necessary inquiries with the investee
company to evaluate the changes in fair value of these investments since the date of valuation by Registered Valuer
and the reporting date and has assessed that there has been no major variation in their fair value. Hence the fair
value as at 31 March 2025 has been taken on the basis of valuation carried out by a Registered Valuer as at 31 March
2024 and necessary inquiries made with the investee company to evaluate the changes in fair value since the date of
valuation by Registered Valuer and the reporting date.
- The fair values of non-current loans have been estimated using DCF model which consider certain assumptions viz.
forecast cash flows, discount rate, credit risk and volatility.
- Fair value of non-current security deposits is cosidered same as its carrying amount as majority of these are related to
utility services and the same are repayable on demand.
- The fair values of non-current deposits with banks have been estimated using DCF model which consider certain
assumptions viz. forecast cash flows, discount rate, credit risk and volatility.
- The management assessed that the carrying amounts of current financial assets and current financial liabilities such as
trade receivables, cash and bank balances, loans, other financial assets, borrowings, trade payables and other financial
liabilities are reasonable approximations of fair values largely due to the short-term maturities of these instruments.
44 Financial Risk Management Objectives and Policies
The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other
payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal
financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its
operations. The Company also holds FVTOCI investments and enters into derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the
management of these risks. The Company's financial risk activities are governed by appropriate policies and procedures
and financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. The
Company's financial risk management policies are set by the Board of Directors. All derivative activities for risk management
purposes are carried out by teams that have the appropriate skills, experience and supervision. It is the Company's policy
that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees
policies for managing each of these risks, which are summarised below.
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 market prices. Market risk comprises three types of risk: interest rate risk, currency risk, commodity price risk and other
price risk. Financial instruments affected by market risk include borrowings, payables, receibables and equity investments.
The sensitivity analyses in the following sections relate to the position as at 31 March 2025 and 31 March 2024.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest
rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is
based on the financial assets and financial liabilities held at 31 March 2025 and 31 March 2024.
Interest Rate Risk
The Company's exposure to changes in interest rates relates primarily to the Company's outstanding floating rate debt. All
the borrowing of the Company are at floating rate of interest.
Interest Rate Sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans
and borrowings affected. With all other variables held constant, the Company's profit before tax is affected through the
impact on floating rate borrowings, as follows:
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable
market environment.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in
foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the
Company's operating activities (when revenue or expense is denominated in a foreign currency). To mitigate the foreign
currency risk, the Company enters into foreign exchange forward contracts. These foreign exchange forward contracts,
carried at fair value, may have varying maturities varying depending upon the primary host contract requirements and risk
management strategy of the Company.
The most significant foreign currencies the Company is exposed to is the USD and EURO. The following tables sets forth
information relating to foreign currency forward contracts and unhedged foreign currency exposureas at 31 March 2025
and 31 March 2024.
Commodity price risk
The Company is exposed to the price volatility of certain commodities. Its operating activities require the ongoing
manufacture of steel castings and therefore require a continuous supply of Mild Steel, Stainless Steel and Ferro Alloys.
In order to mitigate the risk of volatility in the price of these supplies, the contracts with customers contain a clause for
recovery of the variation in the price of these supplies. Hence, there is no material impact of these price variations for
the Company.
Other Price risk
The Company's exposure to other price risk arises from investments in equity instruments, compulsory convertible
debentures and mutual fund held by the Company and classified in the balance sheet at FVTOCI and at FVTPL. To manage
its price risk arising from investments, the Company diversifies its portfolio. Diversification of the portfolio is done in
accordance with the limits set by the Company.
Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables)
and from its financing activities, including deposits with banks and financial institutions and foreign exchange transactions.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in
several jurisdictions and industries and operate in largely independent markets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The
Company does not hold collateral as security.
I) Trade Receivables
Customer credit risk is managed on the basis of the Company's established policy, procedures and control relating
to customer credit risk management. Trade receivables are non-interest bearing and are generally on 30 days to 145
days credit term. Credit limits are established for all customers based on internal rating criteria. Outstanding customer
receivables are regularly monitored.
FFor trade receivables, Expected Credit Loss (ECL) is provided as per simplified approach. The Company has applied
the practical expedient as per Ind AS 109 'Financial Instruments' to measure the loss allowance at lifetime ECL. The
Company determines the ECL on trade receivables by using a provision matrix, estimated based on historical credit
loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and
estimates of future economic conditions. Below table represents the reconciliation of provision made for expected
credit loss for trade receivables:
II) Financial Instruments and Cash Deposits
Credit risk from balances with banks and financial institutions is managed by the Company's finance department in
accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties who
meets the minimum threshold requirements under the counterparty risk assessment process. Based on its on-going
assessment of counterparty risk, the Company adjusts its exposure to various counterparties.
45 Capital Management
For the purpose of the Company's capital management, capital includes issued equity capital, share premium and all other
equity reserves attributable to the equity holders of the parent. The primary objective of the Company's capital management
is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions or
its business requirements. To maintain or adjust the capital structure, the Company may adjust the dividend payment
to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio,
which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing borrowings
(including current maturities), trade payables, less cash and cash equivalents and other bank balances.
49 Other Statutory Information (management to assess if the Company has entered into any of
the following transactions. If yes, then necessary disclosures will have to be given).
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the
Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any 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 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 Beneficiaries
(vi) 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,
(vii) The Company does not have any such 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).
1
50 Previous year figures have been recast / restated wherever necessary.
As per our report of even date.
For S S M & CO For STEELCAST LIMITED
Chartered Accountants
FRN : 129198W Subhash Sharma Umesh Bhatt
Chief Financial Officer & Director Company Secretary
For and on Behalf of the Board of Directors
M. Rafik Sheikh Rushil C Tamboli Chetan M Tamboli
Partner Director Chairman & Managing Director
M. No. 106176 DIN: 07807971 DIN: 00028421
Place: Bhavnagar Place: Bhavnagar
Date: 28th May 2025 Date: 28th May 2025
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