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Notes to Accounts of NAVA Ltd.

Mar 31, 2023

Equity Share Capital (continued)

(b) Terms / rights attached to equity shares

The Company has only one class of equity shares having a face value of 32/- per share with one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(d) Buy-back of equity shares:

The Board of Directors of the Company had approved the buy-back of fully paid-up equity shares of the Company at its meeting held during February 2021 for an amount not exceeding 315,000.00 lakhs, excluding taxes and transaction costs. The buy-back completed during the quarter ended 30 September 2021 and in accordance with the said plan, the Company bought back 18,369,362 equity shares as at 31 March 2022 for an aggregate price of 315,900.87 lakhs, including taxes and transaction costs.

These amounts have been adjusted against the balance of securities premium. Further, the number of equity shares considered for computation of Basic and Diluted EPES for the year ended 31 March 2022 has been adjusted for the effects of the equity shares bought back. Further, as required under the relevant provisions of the Act, required amounts were transferred to capital redemption reserve with a corresponding debit to balance in general reserves. Further, the Company had also bought back 2,358,462 equity shares during the year ended 31 March 2020. Accordingly, the Company has bought back in aggregate 20,727,824 shares in the preceeding 5 years.

Nature and purpose of reserves:

(a) Capital redemption reserve

Capital redemption reserve was created in earlier years for the purpose of redemption of preference shares and for buy-back of equity shares. The Company uses capital redemption reserve for transactions in accordance with the provisions of the Act.

(b) Securities premium

The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the provisions of the Act.

(c) General reserve

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. This reserve is freely available for use by the Company.

(d) Surplus in Statement of Profit and Loss

Surplus in Statement of Profit and Loss represents the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distribution to shareholders.

(e) Actuarial gain/(loss) on employment benefits

The reserve represents the remeasurement gains/(losses) arising from the actuarial valuation of the defined benefit obligations of the Company. The remeasurement gains/(losses) are recognized in other comprehensive income and accumulated under this reserve within equity. The amounts recognized under this reserve are not reclassified to Statement of Profit and Loss.

* Represents amounts distributed towards final dividend at the rate of 36.00 per equity share for the financial year 31 March 2022 (31 March 2022: 32.50 per equity share for the financial year ended 31 March 2021).

Details of security and other terms of borrowings:

(a) Term loan outstanding to the tune of 37,672.48 (31 March 2022: 310,229.98) is secured by the pari-passu first charge on fixed assets of the Company, both present and future excluding 38 acres of land at Paloncha and a second pari-passu charge on the present and future current assets of the Company. The loan is further secured by way of exclusive charge on the Debt Service Reserve Account of the Company. The loan is repayable in 32 unequal quarterly instalments from the date of first disbursement with final maturity date being 31 March 2026 and carries an interest rate of 8.10 to 8.85% per annum (31 March 2022: 8.10%).

(b) Term loan outstanding to the tune of 32,187.50 (31 March 2022: 32,937.50) is secured by the pari-passu second charge on fixed assets of the Company, both present and future excluding 38 acres of land at Paloncha and a second pari-passu charge on the present and future current assets of the Company. The loan is repayable in 48 structured monthly repayments of 362.50 each, commencing from March 2022 and carries an interest rate of 7.10 to 7.30% per annum (31 March 2022: 7.25%).

(c) Working capital loans outstanding represents cash credit facility availed from banks and carry an interest linked to the respective Bank''s prime/base lending rates, ranging from 7.90% to 8.90% per annum (31 March 2022: 8.00% to 10.75% per annum). The said facility is secured by hypothecation of all chargeable current assets of the Company, including raw materials, work-in-progress, finished goods, stores and spares and receivables both present and future and rank pari-passu with the other lenders. The facility is further secured by a pari-passu second charge on all fixed assets of the Company both present and future.

(d) Suppliers credit outstanding as at 31 March 2023 was availed from banks and carried an interest rate linked to the USD libor ranging from 2.00% to 4.50% per annum (31 March 2022: 0.50% to 2.00% per annum). The said facility was secured by hypothecation of all chargeable current assets of the Company and ranked pari-passu with the other lenders. The facility was further secured by a pari-passu second charge on all fixed assets of the Company both present and future.

(e) Refer note 37(iii) for details of disclosure of maturity profile of the borrowings.

(a) Gratuity

The Company provides for gratuity for its employees as per the Payment of the Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is equivalent to employee''s 15 days of last drawn basic salary for each completed years of service. The gratuity plan is partly funded as at 31 March 2023 and 31 March 2022.

The following table sets out the reconciliation of opening and closing balances of the present value and defined benefit obligation:

Reasons for Short fall: Not applicable

Nature of CSR Activities: Activities as mentioned under Schedule VII of Companies Act 2013 majorly on promoting health care including preventive health care and promoting education, including special education and employment enhancing vocation skills.

Details of Related Party Transactions in CSR activities: Nil

Where a provision is made with respect to a liability incurred by entering into a contractual obligation:

Not applicable

33. Fair Value measurements (continued)

include loans, trade and other receivables, cash and cash equivalents and other bank balances that derive directly from its operations. The Company also holds FVTPL (Fair value through profit and loss) investments FVTOCI (Fair value through other comprehensive income) investments, investments carried at amortised costs and investment in its subsidiaries.

(ii) The carrying amounts of trade receivables, trade payables and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature. Difference between carrying amounts and fair values of bank deposits, earmarked balances with banks, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant in each of the years presented. For all other amortised cost instruments, carrying value represents the best estimate of fair value.

(iii) Valuation technique used to determine fair value:

The fair value of the financials assets and liabilities is reported at 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:

a. The fair values of the quoted shares are based on price quotations at the reporting dates.

b. The fair value of unquoted equity shares are based on the Net Assets Value, available for Equity Shareholders of the underlying Companies which was ascertained based on data available from the financial statements of the respective Companies.

c. The fair value of unquoted mutual funds, non-convertible debentures are based on the mutual fund statements received from the underlying funds or the depository agent.

d. Management has assessed the fair value of the borrowings, which approximate their current value largely since they are carried at floating rate of interest.

(iv) Fair Value hierarchy:

Financial assets and financial liabilities measured at fair value in the balance sheet are grouped into three Levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

The following table shows the Levels within the hierarchy, of financial assets and liabilities measured at fair value on a recurring basis as at 31 March 2023 and 31 March 2022:

35.

Contingent liabilities, commitments and pending litigations

As at

31 March 2023

As at

31 March 2022

Contingent Liabilities

(a) Guarantees excluding financial guarantees

55,418.31

44,078.48

(b) Claims against the Company not acknowledged as debts:

(i) As of 31 March 2023, the Company is a party to an ongoing dispute in respect of cross-subsidy charges levied by the power utility authority of the State of Telangana, which is presently pending with the Honourable High Court of the State of Telangana. In respect of the claim of R1,486.00 (31 March 2022: R1,486.00) management has re-assessed, and it continues to believe a favourable outcome of the proceedings. Accordingly, no further adjustments were considered in the accompanying standalone financial statements. Further, as of 31 March 2022, the Company was a party to ongoing dispute in respect of cross-subsidy charges levied by the power utility authority of the State of Odisha for a sum of R2,532.78 which was settled during the current year.

(ii) During the previous year, the Northern Power Distribution Company of Telangana Limited (NPDCL) levied a Grid Support Charge (GSC) on the Company, the underlying grounds of which is duly and rightfully contested by way of an appeal with the Honourable High Court of Telangana. Having challenged the demand, management based on its internal assessment in consultation with in-house legal counsel, is of the opinion that the aforesaid litigation could result in a potential economic outflow towards the GSC, and out of abundant precaution provided a sum of R3,120.00 during the year ended 31 March 2022. Further, on consideration of stay order granted by the honourable High Court of Telangana, management is confident that the outcome of the proceedings is unlikely to result in payment of interest on GSC amounting to R8,689.60 as claimed by NPDCL, accordingly no further adjustments were considered necessary in the accompanying standalone financial statements. A similar claim was lodged by Eastern Power Distribution Company of Andhra Pradesh Limited for a sum of R163.09 which is also contested by the Company.

(iii) Pursuant to the income tax assessment for the years mentioned below, the Company had received

various demands from the income tax authorities in relation to the inadmissibility of certain expenditure in accordance with the provisions of the income tax law and compliances with the arm''s length guidelines in relation to international transactions with associated enterprises. The management, on the basis of its internal assessment of the facts of the case, the underlying nature of transactions, the history of judgements made by the various appellate authorities and the necessary advise received from the independent expert engaged in this regard, is of the view that the probability of the case being settled against the Company is remote and accordingly do not foresee any adjustment to the financial statements in this regard. The details of the relevant financial year which is subject to the dispute and the amount of demand along with the interest and penalties demanded is as follows:

Financial year ended

As at

31 March 2023

As at

31 March 2022

2004-05

311.60

311.60

2007-08

325.24

325.24

2008-09

114.94

114.94

2009-10

66.18

66.18

2010-11

264.77

264.77

2011-12

352.81

290.01

2012-13

85.19

85.19

2015-16

-

45.88

(iv)

Other matters

As of 31 March,

Remarks

2023

2022

Levy of Electricity Duty, Dharmavaram

547.77

546.32

Pending with Honourable High Court of Andhra Pradesh

Claims for damages against the lease of land for sugar manufacturing facility

327.51

316.98

Sub-judice with the local court in Kakinada, Andhra Pradesh

Custom Duty, for import of Coal for Plant at Odisha

206.06

214.09

Pending with relevant appellate authorities

Electricity Wheeling Charges, and interest thereon

186.93

186.93

Pending with Honourable High Court of Telangana

Multiple demand notices towards levy Service Tax

7.61

7.61

Pending with various appellate authorities

Levy of Royalty on purchase of coal

26.91

26.91

Pending with Honourable High Court of Telangana

Applicability of APERC, Renewable Power 2,042.57 1,824.36 Pending with Honourable High Purchase Obligation (Compliance by Purchase Court of Telangana of Renewable Energy / Renewable Energy Certificates), Regulations 2012

Other miscellaneous

242.41

263.50

Pending with relevant statutory authorities

The matters referred above are pending with various authorities and courts in India and are various stages of discussions. However, there were no significant developments during the current year in respect of the pending matters/litigations.

In addition to the above, the Company is a petitioner to various litigation other matters relating to dues from statutory bodies, land encroachments and other matters, pending with civil courts or other appropriate authorities.

Other pending litigations - contingent assets:

(v) The Company, along with certain other petitioners, have filed a Special Leave Petition with the Honourable Supreme Court of India in relation to applicability of provisions of the Andhra Pradesh Electricity Duty Act, 1939 to the captive power generation facility of the Company situated at Samalkot, Andhra Pradesh for the period beginning 1 April 2003 until the 31 March 2013. The Company has already recognised liabilities aggregating to R345.38 (31 March 2022: R345.38) towards electricity duty on

the number of units of energy captively consumed. Pursuant to an interim order from the Honourable Supreme Court, the Company has also paid a sum of R137.28 (31 March 2022: R137.28) towards the said levy. However, based on its assessment of the facts, status of the case and the underlying regulations on applicability of the electricity duty, the management does not foresee any further adjustments to these financial statements in this regard.

(vi) The Company is a party to a dispute with the Grid Corporation of Odisha (GRIDCO) in relation to amounts involving R2,582.00 (31 March 2022: R2,582.00) relating to sale of power during the earlier periods.

While the Company has received substantial part of the payment against the original dues, however,

a sum of R189.93 is due as of 31 March 2023 (31 March 2022: R189.93). The matter is currently pending with the Honourable Supreme Court of India, the Company wrote off this amount in the earlier years. Basis management assessment, no further adjustment are considered necessary in the accompanying standalone financial statements.

(vii) The Company had filed an appeal against the demand aggregating to R668.00 (31 March 2022: R668.00) from the electricity regulatory authorities of the state of Telangana towards the payment of Voltage Surcharge and additional charges for the period 1 March 1983 to 30 June 1987. The matter was awarded in favour of the Company, however, bank guarantees furnished by the Company to the tune of R409.00 (31 March 2022: R409.00) against the said demands were encashed by the authorities, against which management has filed necessary appeals with the Honourable High Court of the State of Telangana. Pending final outcome of the said petitions, the management has recognised adequate provision in relation to the said dues.

As at

31 March 2023

As at

31 March 2022

(c)

Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for

255.95

554.74

(f) In accordance with the applicable provisions of the Income Tax Act, 1961, the Company is required to use certain specified methods in assessing that the transactions with certain designated related parties, are carried at an arm''s length price and is also required to maintain prescribed information and documents to support such assessment. The appropriate method to be adopted will depend on the nature of transactions / class of transactions, class of associated persons, functions performed and other factors as prescribed. Based on certain internal analysis carried out, management believes that transactions entered into with the related parties were carried out at arms length prices. The Company is in the process of updating the transfer pricing documentation for the financial year ended 31 March 2023. In opinion of the management, the same would not have an impact on these financial statements. Accordingly, these financial statements do not include the effect of the transfer pricing implications, if any.

37. Financial Risk Management objectives and policies:

The Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include market risk, credit risk and liquidity risk. The Company''s risk management policies are established to identify and analyse the risks faced by the Company and seek to, where appropriate, minimize potential impact of the risk and to control and monitor such risks. There has been no change to the Company''s exposure to these financial risks or the manner in which it manages and measures the risks.

The following sections provide details regarding the Company''s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives, policies and processes for management of these risks.

(i) Market risk

Market risk is the risk of loss of future earnings, fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates and prices. The Company is exposed to market risk primarily related to interest rate risk, currency rate risk and other price risks, such as equity risk. Thus, the Company''s exposure to market risk is a function of investing and borrowing activities and revenues generated and operating activities in foreign currencies.

(a) Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company''s financial instruments will fluctuate because of changes in market interest rates. The Company''s exposure to interest rate risk relates primarily to the floating interest rate borrowings.

The Company''s investment in deposits with banks, deposits with others, investments in bonds and non convertible debentures with fixed interest rates and therefore do not expose the Company to significant interest rate risk. Further, the loans extended by the Company carries a fixed interest rate and therefore not subject to interest rate risk since neither the carrying value nor the future cash flows will fluctuate because of the change in market interest rates.

The Company''s exposure to changes in interest rates relates primarily to the Company''s outstanding floating rate debt. A major portion of foreign currency debt is linked to international interest rate benchmarks like LIBOR. The Company also hedges a portion of these risks by entering into derivative instruments like interest rate swaps and currency swaps.

* The Company has entered into interest rate swap arrangement against the variable rate borrowing amounting to R639.38 (31 March 2022: R3,196.88) and accordingly the impact of interest rate sensitivity as mentioned above is expected to be offset proportionately.

(b) Foreign Currency Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company''s exposure to the risk of change in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in foreign currency) and financing activities (when borrowings are denominated in foreign currency).

The Company has transactional currency exposures arising from services provided or availed that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company''s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The Company does use financial derivatives such as foreign currency forward contracts and swaps.

(c) Other price risk

Other price risk is the risk that the fair value or future cash flows of the Company''s financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

The Company based on working capital requirement keeps its liquid funds in current accounts. Excess funds are invested in long term instruments/current investments. The Company has listed and non-listed equity securities that are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and reports on the equity portfolio are submitted to the management on a regular basis.

The following table demonstrates the sensitivity to the impact of increase/(decrease) of the index on the Company''s equity and profit for the period. The analysis is based on the assumption that index has increased or decreased by 10%, with all other variables held constant and that the Company''s equity instruments moved in line with the index.

(ii) Credit risk:

Credit risk is the risk of loss that may arise on outstanding financial instruments when a counterparty defaults on its obligations. The Company''s exposure to credit risk arises primarily from loans extended, security deposits, balances with bankers, investments in bonds, non-convertible debentures and fixed deposits other than banks and trade and other receivables. The Company minimises credit risk by dealing exclusively with high credit rating counterparties. The Company''s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Company trades only with recognised and creditworthy third parties. It is the Company''s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In addition, receivable balances are monitored on an ongoing basis with the result that the Company''s exposure to bad debts is not significant.

(a) Exposure to credit risk:

At the end of the reporting period, the Company''s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position. No other financial assets carry a significant exposure to credit risk.

(b) Credit risk concentration profile:

At the end of the reporting period, there were no significant concentrations of credit risk. The maximum exposures to credit risk in relation to each class of recognised financial assets is represented by the carrying amount of each financial assets as indicated in the balance sheet.

(c) Financial assets that are neither past due nor impaired:

None of the Company''s cash equivalents, other bank balances, loans, security deposits and other receivables were past due or impaired as at 31 March 2023. Trade and other receivables including loans that are neither past due nor impaired are from creditworthy debtors with good payment record with the Company. Cash and short-term deposits investment securities that are neither past due nor impaired, are placed with or entered with reputable banks financial institutions or companies with high credit ratings and no history of default.

(d) Financial assets that are either past due or impaired:

The Company doesn''t have any significant trade receivables or other financial assets which are impaired. The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. The Company''s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company has used a practical expedient 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 Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

(iii) Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation.

Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows.

The table below summarises the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments as of 31 March 2023:

38. Segment Information

In accordance with Indian Accounting Standard (Ind AS) 108 on "Operating Segments", segment information has been disclosed in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these standalone financial statements.

39. Capital management

Capital includes equity capital and all other reserves attributable to the equity holders of the parent. The primary objective of the capital management is to ensure that it maintain an efficient capital structure and healthy capital ratios in order to support its business and maximise shareholder''s value. The Company manages its capital structure and make adjustments to it, in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

# Total Borrowings include long-term borrowing, current maturities of long-term borrowings and working capital loans like cash credit and buyer''s credit.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets the financial covenants attached to interest bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call back loans and borrowings.

There have been no breaches in the financial covenants of any interest bearing loans and borrowings in the current period.

No changes were made in the objectives, policies or processes for managing the capital during the year ended 31 March 2023 and 31 March 2022.

i. Debt equity Ratio: Improvement in ratio was led by increased repayments of existing loan installments followed by increase in reserves and surplus owing to the profits generated for the year.

ii. Inventory turnover ratio: Decline in ratio is largely owing to the significant increase in inventory carrying levels at year end owing to inventories being procured for Odisha Ferro alloys unit wherein the management from December 2022 had shifted to manufacturing of silico manganese for self and had discontinued the ferro chrome conversion agreement with Tata Steel Mining Limited and thus impacting the ratio.

42. Discontinued operations

Pursuant to a resolution passed at their meeting held on 2 March 2020, the Board of Directors have resolved to cease the sugar operations of the Company at its sugar manufacturing facility located at Samalkot,

Andhra Pradesh, (''Sugar division'') after completion of the crushing season during March 2020, owing to nonavailability of sugar cane and unviable sugar operations. The Board of Directors have also resolved to dispose the non-current assets of the said sugar division comprising of the underlying land available in Samalkot and the assets pertaining to the sugar manufacturing facility. Accordingly, these non-current assets have been classified as assets held for sale in these financial statements as at and for the years ended 31 March 2023 and 31 March 2022. Further, owing to the aforesaid resolution, the financial performance of the sugar division have been presented as discontinued operations in the Statement of Profit and Loss for the years ended 31 March 2023 and 31 March 2022 in accordance with the provisions of Ind AS 105 - Non-Current Assets Held for Sale and Discontinued Operations.

(d) Pursuant to the overall plan of disposal of the non-current assets of the sugar division at Samalkot,

management has already commenced necessary actions in this regard by assessing the realisable values of the underlying plant and equipment and certain buildings located in the said sugar manufacturing facility by engaging an independent valuer and by seeking necessary quotations from independent prospects. On the basis of the aforesaid exercise, management has recorded an impairment charge of R570.30 towards a diminution in the carrying values of these assets held for sale and is confident of being able to sell these assets by the financial year ending 31 March 2024. Further, in accordance with the aforesaid plan, management has also re-classified the carrying values of land and certain other buildings as Property, plant and equipment in these standalone financial statements in accordance with the accounting principles.

Note: Consortium of bankers led by State Bank of India have been considered as lenders for the purpose of this disclosure.

This is the summary of significant accounting policies and other explanatory information referred to in our report of even date.


Mar 31, 2022

(b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a face value of R 2/- per share with one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(d) Scheme of capital reduction:

In August 2019, the Board of Directors (''Board'') had approved a Scheme of Capital Reduction (Scheme) in compliance with the relevant provisions of the Act. Pursuant to the said scheme equity shares aggregating to 9,947,020 and 2,800,000 then held by Nav Energy Private Limited and Nava Bharat

Ventures Employees Welfare Trust, respectively were proposed to be cancelled upon obtaining requisite regulatory approvals. As the Company has obtained all the requisite regulatory approvals, including an order of the Honourable NCLT, Hyderabad Bench vide their order dated 19 January 2021, the scheme was given effect to in the accompanying standalone financial statements during the year ended 31 March 2021 by way of adjustments to the balance in equity share capital, treasury shares and general reserves to the tune of R 254.94, R 2,745.67 and R 2,490.73, respectively.

(e) Buy-back of equity shares:

The Board of Directors of the Company had approved the buy-back of fully paid-up equity shares of the Company at its meeting held during February 2021 for an amount not exceeding R 15,000.00 Lakhs, excluding taxes and transaction costs. The buy-back got completed during the quarter ended 30 September 2021 and in accordance with the said plan, the Company bought back 18,369,362 equity shares as at 31 March 2022 for an aggregate price of R 15,900.87 Lakhs, including taxes and transaction costs. These amounts have been adjusted against the balance of securities premium. Further, the number of equity shares considered for computation of Basic and Diluted EPES for the year ended 31 March 2022 has been adjusted for the effects of the equity shares bought back. Further, as required under the relevant provisions of the Act, required amounts were transferred to capital redemption reserve with a corresponding debit to balance in general reserves. Further, the Company had also bought back 2,358,462 equity shares during the year ended 31 March 2020. Accordingly, the Company has bought back in aggregate 20,727,824 shares in the preceeding 5 years.

Nature and purpose of reserves:(a) Capital redemption reserve

Capital redemption reserve was created in earlier years for the purpose of redemption of preference shares and in the current year on account of buy-back of equity shares. The Company uses capital redemption reserve for transactions in accordance with the provisions of the Act.

(b) Securities premium

The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the provisions of the Act.

(c) General reserve

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. This reserve is freely available for use by the Company.

(d) Surplus in Statement of Profit and Loss

Surplus in Statement of Profit and Loss represents the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distribution to shareholders.

(e) Actuarial gain/(loss) on employment benefits

The reserve represents the remeasurement gains/(losses) arising from the actuarial valuation of the defined benefit obligations of the Company. The remeasurement gains/(losses) are recognized in other comprehensive income and accumulated under this reserve within equity. The amounts recognized under this reserve are not reclassified to Statement of Profit and Loss.

Details of security and other terms of borrowings:

(a) Term loan outstanding to the tune of R 10,229.98 (31 March 2021: R 12,787.48) is secured by the pari

passu first charge on fixed assets of the Company, both present and future excluding 38 acres of land at Paloncha and a second pari-passu charge on the present and future current assets of the Company. The loan is further secured by way of exclusive charge on the Debt Service Reserve Account of the Company. The loan is repayable in 32 unequal quarterly instalments from the date of first disbursement with final maturity date being 31 March 2026.

(b) Term loan outstanding to the tune of Nil (31 March 2021: R 1,115.63) is secured by the pari passu first charge on fixed assets including immovable and movable properties of the Company and a second charge on the current assets of the Company, both present and future along with the existing term lenders. The loan is repayable in 16 structured quarterly repayments of R 96.85 each, commencing from June 2020 and has been fully repaid during the current year.

(c) Term loan outstanding to the tune of R 2,937.50 (31 March 2021: R 3,000.00) is secured by the pari passu second charge on fixed assets of the Company, both present and future excluding 38 acres of land at Paloncha and a second pari-passu charge on the present and future current assets of the Company. The loan is repayable in 48 structured monthly repayments of R 62.50 each, commencing from March 2022.

(d) All the above loans carry interest rates ranging from 4% to 8.10% per annum (31 March 2021: 4% to 10.15%).

(e) Working capital loans outstanding represents cash credit facility availed from banks and carry an interest linked to the respective Bank''s prime/base lending rates, ranging from 8.00% to 10.75% per annum (31 March 2021: 8.00% to 10.75% per annum). The said facility is secured by hypothecation of all chargeable current assets of the Company, including raw materials, work-in-progress, finished goods, stores and spares and receivables both present and future and rank pari passu with the other lenders. The facility is further secured by a pari passu second charge on all fixed assets of the Company both present and future.

(f) Suppliers credit outstanding as at 31 March 2022 was availed from banks and carried an interest rate linked to the US$ libor ranging from 0.50% to 2.00% per annum (31 March 2021: 0.55% per annum). The said facility was secured by hypothecation of all chargeable current assets of the Company and ranked pari passu with the other lenders. The facility was further secured by a pari passu second charge on all fixed assets of the Company both present and future.

(i) Deferred tax assets as at 31 March 2022 includes an amount of Nil (31 March 2021: R 9,078.93),

representing the credit of minimum alternative taxes paid and recognised by the Company in accordance with the provisions of the prevailing income tax regulations. Based on the assessment of the financial projections of the Company, the projected profitability and the history of achieving significant operational profits in the past, the management is confident of earning sufficient taxable profits in the future in order to be able to realise the aforesaid tax credits within the timelines prescribed under the income tax regulations.

(a) Gratuity

The Company provides for gratuity for its employees as per the Payment of the Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is equivalent to employee''s 15 days of last drawn basic salary for each completed years of service. The gratuity plan is partly funded as at 31 March 2022 and 31 March 2021.

The following table sets out the reconciliation of opening and closing balances of the present value and defined benefit obligation.

The Company''s principal financial liabilities, comprise 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, cash and cash equivalents and other bank balances that derive directly from its operations. The Company also holds FVTPL (Fair value through profit and loss) investments FVTOCI (Fair value through other comprehensive income) investments, investments carried at amortised costs and investment in its subsidiaries.

(ii) The carrying amounts of trade receivables, trade payables and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature. Difference between carrying amounts and fair values of bank deposits, earmarked balances with banks, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant in each of the years presented. For all other amortised cost instruments, carrying value represents the best estimate of fair value.

(iii) Valuation technique used to determine fair value:

The fair value of the financials assets and liabilities is reported at 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:

a. The fair values of the quoted shares are based on price quotations at the reporting dates.

b. The fair value of unquoted equity shares are based on the Net Assets Value, available for Equity Shareholders of the underlying Companies which was ascertained based on data available from the financial statements of the respective Companies.

c. The fair value of unquoted mutual funds, non-convertible debentures are based on the mutual fund statements received from the underlying funds or the depository agent.

d. Management has assessed the fair value of the borrowings, which approximate their current value largely since they are carried at floating rate of interest.

(iv) Fair Value hierarchy:

Financial assets and financial liabilities measured at fair value in the balance sheet are grouped into three Levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

The following table shows the Levels within the hierarchy, of financial assets and liabilities measured at fair value on a recurring basis as at 31 March 2022 and 31 March 2021:

35. Contingent liabilities, commitments and pending litigations

As at 31 March 2022

As at 31 March 2021

Contingent Liabilities i j

(a) Guarantees excluding financial guarantees

44,078.48

42,417.35

(b) Claims against the Company not acknowledged as debts:

(i) As of 31 March 2022, the Company is a party to ongoing disputes in respect of cross-subsidy charges levied by the power utility authorities of the States of Odisha and Telangana, which are presently pending with the Honourable High Courts of the State of Odisha and Telangana, respectively. While the matters are sub-judice at appropriate forums, however, basis certain developments during financial year 2021 and duly supported by in-house legal advice, management had recognised

and expensed off a sum of R 2,532.78 in respect cross subsidy charges payable to power utility authorities in the State of Odisha. In respect of the claim of R 1,486.00 (31 March 2021: R 1,486.00) currently pending with the Honourable High Court of Telangana, management has re-assessed, and it continues to believe a favourable outcome of the proceedings. Accordingly, no further adjustments were considered in the accompanying standalone financial statements.

(ii) During the previous year, the Northern Power Distribution Company of Telangana Limited (NPDCL) levied a Grid Support Charge (GSC) on the Company, the underlying grounds of which is duly and rightfully contested by way of an appeal with the Honourable High Court of Telangana. Having challenged the demand, management based on its internal assessment in consultation with inhouse legal counsel, is of the opinion that the aforesaid litigation could result in a potential economic outflow towards the GSC, and out of abundant precaution provided a sum of R 3,120.00 in the accompanying standalone financial statements. Further, on consideration of stay order granted

by the honourable High Court of Telangana, management is confident that the outcome of the proceedings is unlikely to result in payment of interest on GSC amounting to R 8,689.60 as claimed by NPDCL, accordingly no further adjustments were considered necessary in the accompanying standalone financial statements. A similar claim was lodged by Eastern Power Distribution Company of Andhra Pradesh Limited for a sum of R 163.09 which is also contested by the Company.

(iii) Pursuant to the income tax assessment for the years mentioned below, the Company had received various demands from the income tax authorities in relation to the inadmissibility of certain expenditure in accordance with the provisions of the income tax law and compliances with the arm''s length guidelines in relation to international transactions with associated enterprises. The management, on the basis of its internal assessment of the facts of the case, the underlying nature of transactions, the history of judgements made by the various appellate authorities and the necessary advise received from the independent expert engaged in this regard, is of the view that the probability of the case being settled against the Company is remote and accordingly do not foresee any adjustment to the financial statements in this regard. The details of the relevant financial year which is subject to the dispute and the amount of demand along with the interest and penalties

35. Contingent liabilities, commitments and pending litigations (continued)

(iv) Other matters

As of 31 March,

Remarks

2022

2021

Levy of Electricity Duty, Dharmavaram

546.32

546.32

Pending with Honourable High Court of Andhra Pradesh

Claims for damages against the lease of land for sugar manufacturing facility

316.98

306.45

Sub-judice with the local court in Kakinada, Andhra Pradesh

Custom Duty, for import of Coal for Plant at Odisha

214.09

214.09

Pending with relevant appellate authorities

Electricity Wheeling Charges, and interest thereon

186.93

186.93

Pending with Honourable High Court of Telangana

Multiple demand notices towards levy Service Tax

7.61

71.76

Pending with various appellate authorities

Levy of Royalty on purchase of coal

26.91

26.91

Pending with Honourable High Court of Telangana

Telangana Sales Tax Authorities, levy of sales tax on sale of export entitlement licenses

-

144.23

Pending with concerned appellate authorities

Applicability of APERC, Renewable Power Purchase Obligation (Compliance by Purchase of Renewable Energy / Renewable Energy Certificates), Regulations 2012

1,824.36

1,589.14

Pending with Honourable High Court of Telangana

Other miscellaneous

263.50

229.86

Pending with relevant statutory authorities

The matters referred above are pending with various authorities and courts in India and are various stages of discussions. However, there were no significant developments during the current year in respect of the pending matters/litigations.

In addition to the above, the Company is a petitioner to various litigation other matters relating to dues from statutory bodies, land encroachments and other matters, pending with civil courts or other appropriate authorities.

Other pending litigations - contingent assets:

(v) The Company, along with certain other petitioners, have filed a Special Leave Petition with the Honourable Supreme Court of India in relation to applicability of provisions of the Andhra Pradesh Electricity Duty Act, 1939 to the captive power generation facility of the Company situated at Samalkot, Andhra Pradesh for the period beginning 1 April 2003 until the 31 March 2013. The Company has already recognised liabilities aggregating to R 345.38 (31 March 2021: R 345.38) towards electricity duty on the number of units of energy captively consumed. Pursuant to an interim order from the Honourable Supreme Court, the Company has also paid a sum of R 137.28 (31 March 2021: R 137.28) towards the said levy. However, based on its assessment of the facts, status of the case and the underlying regulations on applicability of the electricity duty, the management does not foresee any further adjustments to these financial statements in this regard.

(vi) The Company is a party to a dispute with the Grid Corporation of Odisha (GRIDCO) in relation to amounts involving R 2,582.00 (31 March 2021: R 2,582.00) relating to sale of power during the earlier periods. While the Company has received substantial part of the payment against the original dues, however, a sum of R 189.93 is due as of 31 March 2022 (31 March 2021: R 189.93). The matter is currently pending with the Honourable Supreme Court of India, the Company wrote off this amount in the earlier years. Basis management assessment, no further adjustment are considered necessary in the accompanying standalone financial statements.

(vii) The Company had filed an appeal against the demand aggregating to R 668.00 (31 March 2021:

R 668.00) from the electricity regulatory authorities of the state of Telangana towards the payment of Voltage Surcharge and additional charges for the period 1 March 1983 to 30 June 1987. The matter was awarded in favour of the Company, however, bank guarantees furnished by the Company to the tune of R 409.00 (31 March 2021: R 409.00) against the said demands were encashed by the authorities, against which management has filed necessary appeals with the Honourable High Court of the State of Telangana. Pending final outcome of the said petitions, the management has recognised adequate provision in relation to the said dues.

35. Contingent liabilities, commitments and pending litigations (continued)

As at 31 March 2022

As at 31 March 2021

(c) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for

554.74

34.92

’Represents maximum amount that can be called for under the financial guarantee contract extended on behalf of Nava Bharat Energy India Limited (NBEIL) to its lenders, against the working capital facilities availed by the same.

"Represents performance guarantee extended amounting to US$ 580.19 (31 March 2021: US$ 580.19) on behalf of Nava Energy Pte Limited (NEPL) to Maamba Collieries Limited (MCL), against the operations and maintenance service contract provided by MCL to NEPL in relation to the operations and maintenance services of power plant of MCL situated at Zambia.

(f) In accordance with the applicable provisions of the Income Tax Act, 1961, the Company is required to use certain specified methods in assessing that the transactions with certain designated related parties, are carried at an arm''s length price and is also required to maintain prescribed information and documents to support such assessment. The appropriate method to be adopted will depend on the nature of transactions / class of transactions, class of associated persons, functions performed and other factors as prescribed. Based on certain internal analysis carried out, management believes that transactions entered into with the related parties were carried out at arms length prices. The Company is in the process of updating the transfer pricing documentation for the financial year ended 31 March 2022. In opinion of the management, the same would not have an impact on these financial statements. Accordingly, these financial statements do not include the effect of the transfer pricing implications, if any.

37. Financial Risk Management objectives and policies

The Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include market risk, credit risk and liquidity risk. The Company''s risk management policies are established to identify and analyse the risks faced by the Company and seek to, where appropriate, minimize potential impact of the risk and to control and monitor such risks. There has been no change to the Company''s exposure to these financial risks or the manner in which it manages and measures the risks.

The following sections provide details regarding the Company''s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives, policies and processes for management of these risks.

(i) Market risk

Market risk is the risk of loss of future earnings, fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates and prices. The Company is exposed to market risk primarily related to interest rate risk, currency rate risk and other price risks, such as equity risk. Thus, the Company''s exposure to market risk is a function of investing and borrowing activities and revenues generated and operating activities in foreign currencies.

(a) Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company''s financial instruments will fluctuate because of changes in market interest rates. The Company''s exposure to interest rate risk relates primarily to the floating interest rate borrowings.

The Company''s investment in deposits with banks, deposits with others, investments in bonds and non convertible debentures with fixed interest rates and therefore do not expose the Company to significant interest rate risk. Further, the loans extended by the Company carries a fixed interest rate and therefore not subject to interest rate risk since neither the carrying value nor the future cash flows will fluctuate because of the change in market interest rates.

The Company''s exposure to changes in interest rates relates primarily to the Company''s outstanding floating rate debt. A major portion of foreign currency debt is linked to international interest rate benchmarks like LIBOR. The Company also hedges a portion of these risks by entering into derivative instruments like interest rate swaps and currency swaps.

(b) Foreign Currency Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company''s exposure to the risk of change in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in foreign currency) and financing activities (when borrowings are denominated in foreign currency).

The Company has transactional currency exposures arising from services provided or availed that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company''s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The Company does use financial derivatives such as foreign currency forward contracts and swaps.

(c) Other price risk

Other price risk is the risk that the fair value or future cash flows of the Company''s financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

The Company based on working capital requirement keeps its liquid funds in current accounts. Excess funds are invested in long term instruments/current investments. The Company has listed and non-listed equity securities that are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and reports on the equity portfolio are submitted to the management on a regular basis.

The following table demonstrates the sensitivity to the impact of increase/(decrease) of the index on the Company''s equity and profit for the period. The analysis is based on the assumption that index has increased or decreased by 10%, with all other variables held constant and that the Company''s equity instruments moved in line with the index.

(ii) Credit risk:

Credit risk is the risk of loss that may arise on outstanding financial instruments when a counterparty defaults on its obligations. The Company''s exposure to credit risk arises primarily from loans extended, security deposits, balances with bankers, investments in bonds, non-convertible debentures and fixed deposits other than banks and trade and other receivables. The Company minimises credit risk by dealing exclusively with high credit rating counterparties. The Company''s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Company trades only with recognised and creditworthy third parties. It is the Company''s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In addition, receivable balances are monitored on an ongoing basis with the result that the Company''s exposure to bad debts is not significant.

(a) Exposure to credit risk:

At the end of the reporting period, the Company''s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position. No other financial assets carry a significant exposure to credit risk.

(b) Credit risk concentration profile:

At the end of the reporting period, there were no significant concentrations of credit risk. The maximum exposures to credit risk in relation to each class of recognised financial assets is represented by the carrying amount of each financial assets as indicated in the balance sheet.

(c) Financial assets that are neither past due nor impaired:

None of the Company''s cash equivalents, other bank balances, loans, security deposits and other receivables were past due or impaired as at 31 March 2022. Trade and other receivables including loans that are neither past due nor impaired are from creditworthy debtors with good payment record with the Company. Cash and short-term deposits investment securities that are neither past due nor impaired, are placed with or entered with reputable banks financial institutions or companies with high credit ratings and no history of default.

(d) Financial assets that are either past due or impaired:

The Company doesn''t have any significant trade receivables or other financial assets which are impaired. The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. The Company''s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company has used a practical expedient 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 Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

(iii) Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation.

Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows.

38. Segment Information

In accordance with Indian Accounting Standard (Ind AS) 108 on "Operating Segments", segment information has been disclosed in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these standalone financial statements.

39. Capital Management

Capital includes equity capital and all other reserves attributable to the equity holders of the parent. The primary objective of the capital management is to ensure that it maintain an efficient capital structure and healthy capital ratios in order to support its business and maximise shareholder''s value. The Company manages its capital structure and make adjustments to it, in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

# Total Borrowings include long-term borrowing, current maturities of long-term borrowings and working capital loans like cash credit and buyer''s credit.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets the financial covenants attached to interest bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call back loans and borrowings.

There have been no breaches in the financial covenants of any interest bearing loans and borrowings in the current period.

No changes were made in the objectives, policies or processes for managing the capital during the year ended 31 March 2022 and 31 March 2021.

Notes:

i. Return on equity Ratio: Improvement in ratio was led by increased sales volumes of both ferro alloys and power business followed by significant improvement in the sale prices, resulting in significantly higher profits for the year.

ii. Inventory turnover ratio: In line with the improvement in sales, the quantum of raw materials consumed has also increased, whilst the inventories held being maintained at the same level and thus resulting in the improvement in inventory turnover ratio.

iii. Trade Receivables turnover ratio: Owing significant improvement in sales as mentioned above followed by better realisation during the period, whilst the balance of receivables held being maintained at the same level, the resultant improvement in ratio was noted.

iv. Trade payables turnover ratio: In line with the improvement in sales, the quantum of raw materials purchased and consumed and other expenses incurred has also increased, whilst the payables balance held being maintained at the same level, owing to timely payment of dues to vendor due to significant cash being realised from the operations, the resulting impact on ratio is noted.

v. Net profit ratio: Improvement in ratio was largely owing to increased sales volumes of both ferro alloys and power business followed by significant improvement in the sale prices whilst the consumption cost remaining at similar levels when compared to previous year.

vi. Return on Capital employed and Return on investment: Improvement in ratios is owing to the reasons mentioned in points (i) to (v) above.

42. Discontinued operations

Pursuant to a resolution passed at their meeting held on 2 March 2020, the Board of Directors have resolved to cease the sugar operations of the Company at its sugar manufacturing facility located at Samalkot,

Andhra Pradesh, (''Sugar division'') after completion of the crushing season during March 2020, owing to nonavailability of sugar cane and unviable sugar operations. The Board of Directors have also resolved to dispose the non-current assets of the said sugar division comprising of the underlying land available in Samalkot and the assets pertaining to the sugar manufacturing facility. Accordingly, these non-current assets have been classified as assets held for sale in these financial statements as at and for the years ended 31 March 2022 and 31 March 2021. Further, owing to the aforesaid resolution, the financial performance of the sugar division have been presented as discontinued operations in the Statement of Profit and Loss for the years ended 31 March 2022 and 31 March 2021 in accordance with the provisions of Ind AS 105 - Non-Current Assets Held for Sale and Discontinued Operations.

Pursuant to the overall plan of disposal of the non-current assets of the sugar division at Samalkot, management has already commenced necessary actions in this regard by assessing the realisable values of the underlying plant and equipment and certain buildings located in the said sugar manufacturing facility by engaging an independent valuer and by seeking necessary quotations from independent prospects. On the basis of the aforesaid exercise, management has recorded an impairment charge of R 588.03 towards a diminution in the carrying values of these assets held for sale and is confident of being able to sell these assets by the financial year ending 31 March 2023. Further, in accordance with the aforesaid plan, management has also re-classified the carrying values of land and certain other buildings as Property, plant and equipment in these standalone financial statements in accordance with the accounting principles.

* These amounts has been computed on the basis of the equity shares outstanding as at the date of recommendation of the proposed dividend by the Board of Directors of the Company.

Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability in accordance with the applicable accounting principles.

44. Disclosure pursuant to requirements of Rule 11(e) (i) & (ii) of the Companies (Audit and Auditors) Rules, 2014

(i) Details of funds that have been advanced or loaned or invested (either from borrowed funds or share

premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries):

(a) date and amount of fund advanced or loaned or invested in Intermediaries with complete details of each Intermediary:

(c) Relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and Companies Act have been duly complied.

(ii) The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

45. Disclosures pursuant to the requirement as specified under Paragraph 6(L)(ix)(a) and (b) of the General instruction for preparation as per Balance Sheet of Schedule III to the Act:

(i) Working capital facility with consortium of banks is secured against all the chargeable current assets of the Company including raw materials, stock in progress, finished goods, stores and spares and receivables both present and future. To comply with the provisions of loan arrangement, select information relating to trade receivables, inventories, and creditors for purchases are considered relevant. Further, information furnished to the lenders are restricted such as creditors limited to purchase of inventories, specified receivables aged less than 60-90 days. The differences as reported above is mainly attributed to use of information extracted from books prior to book closures. Management has taken necessary steps to minimise such differences by way of seeking extension for submission of information only after formal book closures for the relevant periods.

Note: Consortium of bankers led by State Bank of India have been considered as lenders for the purpose of this disclosure.

This is the summary of significant accounting policies and

other explanatory information referred to in our report of even date


Mar 31, 2018

1. Corporate information:

Nava Bharat Ventures Limited (“the Company”) was incorporated in India on 7 November, 1972 under the Companies Act, 1956 with its registered office situated at Nava Bharat Chambers, 6-3-1109/1 Rajbhavan road, Hyderabad - 500082. The Companies equity shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). At present the Company is engaged in the business of manufacture of ferro alloys, sugar, generation of power and rendering of operation and maintenance services from its principal place of business located in Paloncha, Hyderabad, Kharagprasad and Samalkot in the states of Telangana, Odisha and Andhra Pradesh, respectively.

These Financial Statements were approved by the Board of Directors and authorised for issue on May 30, 2018.

2.1 Recent accounting pronouncements:

Ind AS 115: Revenue from Contract with Customers: On

March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.

The standard permits two possible methods of transition:

- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors.

- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach).

The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.

The Company will adopt the standard on 1 April 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.

The amendment will come into force from 1 April 2018. The Company has evaluated the effect of this on the financial statements and the impact is not considered to be significant.

(d) Details of treasury shares held by the Company

(i) The paid up share capital includes 9,947,020 (March 31, 2017: 9,947,020) equity shares of Rs.2/- each fully paid up, owned by the Company, pursuant to order of Hon’ble High Court of Andhra Pradesh dated 30 December 1996 in the Scheme of amalgamation of Nav Chrome Limited with the Company, which are vested in a Trustee (Nav Energy Private Limited) for the benefit of the Company which are to be sold and net sale proceeds are to be paid to the Company and such shares are not considered for dividend and treated as treasury shares and reduced from other equity.

(ii) The paid up share capital includes 2,800,000 (March 31, 2017: 2,800,000) equity shares of Rs.2/- each fully paid up, held by Nava Bharat Employee Welfare Trust towards the General Employees Benefit Scheme (GEBS). Consequently, the said shares have been accounted for as a treasury stock as at March 31, 2018, thereby adjusting the balance of other equity.

(e) Aggregate number of bonus shares issued during five years immediately preceeding the date of Balance Sheet:

During the year ended March 31, 2017, the Company has issued 89,287,741 equity shares of Rs.2 each fully paid up by way of bonus shares in the ratio of one equity share for every one share held on the date of issue.

Nature and purpose of reserves Capital redemption reserve

Capital redemption reserve was created in earlier years for the purpose of redemption of preference shares. The Company uses capital redemption reserve for transactions in accordance with the provisions of the Act.

Securities premium reserve

The amount received in excess of face value of the equity shares is recognised in securities premium reserve. This reserve is utilised in accordance with the provisions of the Act.

General reserve

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.

Treasury shares

(i) Represents 9,947,020 equity shares of Rs.2/- each fully paid up, vested with the Company, pursuant to order of Hon’ble High Court of Andhra Pradesh dated 30 December 1996 in the Scheme of amalgamation of Nav Chrome Limited with the Company, which are vested in a Trustee (Nav Energy Private Limited) for the benefit of the Company which are to be sold and net sale proceeds are to be paid to the Company and such shares are not considered for dividend and treated as treasury shares and reduced from other equity.

(ii) Represents amounts paid to Nava Bharat Employee Welfare Trust in the earlier years towards acquisition of 1,400,000 equity shares of the Company of Rs.2 each. Consequently, the said shares along with the bonus shares issued during the year ended March 31, 2017 have been accounted for as a treasury stock as at March 31, 2018, thereby adjusting the balance of other equity.

Actuarial gain/(loss) on employment benefits

The reserve represents the remeasurement gains/(losses) arising from the actuarial valuation of the defined benefit obligations of the Company. The remeasurement gains/(losses) are recognized in other comprehensive income and accumulated under this reserve within equity. The amounts recognized under this reserve are not reclassified to Statement of Profit and Loss.

*Represents adjustment on account of repayment of monies lent to the Nava Bharat Employee Welfare Trust.

(a) Terms loans outstanding to the tune of Rs.15,986.24 lakhs (March 31, 2017: Rs.22,140.67 lakhs) is secured by the pari pasu first charge on fixed assets of the Company, both present and future excluding 38 acres of land at Paloncha and a second charge on the chargeable current assets of the Company. The loan is further secured by way of pleadge of 51% shares of Nava Bharat (Singapore) Pte. Limited held by NBVL. The loan is repayable in 26 quarterly installments of Rs.1,904.00 lakhs each, commencing from 1 April 2014. The Company has entered into a cross currency interest rate swap arrangement with the lenders duly converting the loan amount from INR to USD and fixing the interest rate in accordance with the terms of the arrangement.

(b) Terms loans outstanding to the tune of Rs.10,613.42 lakhs (March 31, 2017: Rs.Nil) is secured by the pari pasu first charge on fixed assets of the Company, both present and future excluding 38 acres of land at Paloncha and a second charge on the chargeable current assets of the Company. The loan is further secured by way of pleadge of 51% shares of Nava Bharat (Singapore) Pte. Limited held by NBVL. The loan is repayable in 10 quarterly installments of Rs.1,060.00 lakhs each, commencing from 1 April 2018.

(c) Terms loans outstanding to the tune of Rs.486.76 lakhs (March 31, 2017: Rs.852.18 lakhs) is secured by the pari pasu first charge on fixed assets of the Company, both present and future excluding 38 acres of land at Paloncha and a second charge on the chargeable current assets of the Company. The loan is repayable in 36 monthly installments of Rs.30.14 lakhs each, commencing from 22 August 2016.

(d) All the above loans carry interest rates ranging from 3.89% to 11.40% per annum (March 31, 2017: 3.87% to 11.60%).

(e) Working capital loans outstanding represents cash credit facility availed from banks and carry an interest linked to the respective Bank’s prime/base lending rates, currently at 9.25% per annum (March 31, 2017: 9.25% per annum). The said facility is secured by hypothecation of all chargeable current assets of the Company, including raw materials, work-in-progress, finished goods, stores and spares and receivables both present and future and rank pari pasu with the other lenders. The facility is further secured by a pari pasu second charge on all fixed assets of the Company both present and future.

(f) Buyers credit outstanding are availed from banks and carry an interest rate linkted to the respective Bank’s margin and LIBOR on the date of loan and ranges between 1.73% to 1.75% per annum (March 31, 2017: 1.75%). The said facility is secured by hypothecation of all chargeable current assets of the Company and rank pari pasu with the other lenders. The facility is further secured by a pari pasu second charge on all fixed assets of the Company both present and future.

(a) Gratuity

The Company provides for gratuity for its employees as per the Payment of the Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is equivalent to employees 15 days of last drawn basic salary for each completed years of service. The gratuity plan is partly funded as at March 31, 2018 and March 31, 2017. The following table set out the reconciliation of opening and closing balances of the present value and defined benefit obligation.

The estimates of future salary increase considered in actuarial valuation take account of inflation, seniority, promotions and other relevant factors. The Company evaluates these assumptions annually based on its long-term plans of growth and industry standards.

3. Dues to Micro and small enterprises

The Micro, Small and Medium Enterprises have been identified on the basis of the information available with the Company. This has been relied upon by the auditors. Dues to such parties are given below:

4. Fair Value measurements

(i) Financial instruments by category

The Company’s principal financial liabilities, comprise 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, cash and cash equivalents and other bank balances that derive directly from its operations. The Company also holds FVTPL (Fair value through profit and loss) investments and investment in its subsidiary.

(ii) The carrying amounts of trade receivables, trade payables and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature. Difference between carrying amounts and fair values of bank deposits, earmarked balances with banks, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant in each of the years presented. For all other amortised cost instruments, carrying value represents the best estimate of fair value.

For the financial assets measured at fair values, the carrying amounts are equal to the fair values.

(iii) Valuation technique used to determine fair value:

The fair value of the financials assets and liabilities is reported at 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:

a. The fair values of the quoted shares are based on price quotations at the reporting dates.

b. The fair value of unquoted equity shares are based on the Net Assets Value, available for Equity Shareholders of the underlying Companies which was ascertained based on data available from the financial statements of the respective Companies.

c. Fair value of Interest free loan given to employees and security deposits have been calculated by discounting future cash flows using rates currently available for debt on similar terms credit risk and remaining maturities.

d. Management has assessed the fair value of the borrowings, which approximate their current value largely since they are carried at floating rate of interest.

(iv) Fair Value hierarchy:

Financial assets and financial liabilities measured at fair value in the balance sheet are grouped into three Levels of a fair value hierarchy. The three levels are defined based in the observability of significant inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

The following table shows the Levels within the hierarchy, of financial assets and liabilities measured at fair value on a recurring basis as at March 31, 2018 and March 31, 2017:

Notes:

(i) The Company has received demand notices from the Electricity Regulatory authorities of the states of Odisha and Telangana towards levy of cross-subsidy charges amounting to Rs.2,441.53 lakhs (March 31, 2017: Rs.2,441.53 lakhs) and Rs.1,486.00 lakhs (March 31, 2017: Nil) respectively. The management has filed necessary appeals against the aforesaid orders with the Honourable High Courts of the State of Odisha and the Honourable High Court of the Combined State of Andhra Pradesh and Telangana, which is pending for disposal as at March 31, 2018. However, on the basis of assessment of the facts of the demands in the light of the underlying facts, the management is of the view that the demands are frivolous in nature and not tenable as per the prevailing electricity supply regulations of the aforesaid states. Accordingly, no adjustments have been made to the financial statements in this regard.

(ii) During the year ended 31 March 2018 and earlier years, the Company has received demand notices from the Directorate of Electrical Safety, Government of Andhra Pradesh for amounts aggregating to Rs.542.43 lakhs (March 31, 2017: Rs.500.79 lakhs), towards levy of electricity duty on the sale of power made by it for the period beginning from March 2009 until March 2017 from the power generation station situated in Dharmavaram, Andhra Pradesh. Aggrieved by the order of the aforesaid authority, the management has filed necessary appeals in this regard with the Honourable High Court of the Combined State of Andhra Pradesh and Telangana, which is pending for disposal as at March 31, 2018. However, on the basis of assessment of the applicability of the provisions of the Electricity Duty Act and the nature of operations carried out at the aforesaid power generation station and the customers to whom the electricity generated has been sold, the management is confident about the non-applicability of the provisions of the Electricity Act to the power generated from the aforesaid power generation station and accordingly does not foresee any adjustment to these financial statements in this regard.

(iii) The Company had received a demand notice from the Northern Power Distribution Company Limited for an amount of Rs.186.93 lakhs (March 31, 2017: Rs.186.93 lakhs) towards electricity supply charges and the utilisation of the said energy along with penalties in accordance with the provisions of the Electricity Act, 2003. The management has filed a writ petition against the said demand with the Honourable High Court of Judicature at Hyderabad of the Combined State of Andhra Pradesh and Telangana alleging that the manufacturing facility of the Company located at Paloncha, Telangana had not drawn energy as alleged by the demand notice and that the utilisation of the energy generated by the captive power generation station in Paloncha are not governed by the provisions of the Electricity Act, 2003. The Company had also received an interim order from the Honourable High Court to this extent. Accordingly, pending final outcome of the case as at March 31, 2018, no adjustments have been made to the financial statements in this regard.

(iv) During the months of January 2016 and August 2015, the Government of Telangana had notified the formation of District Mineral Foundation Trust (DMFT) and the National Mineral Exploration Trust (NMET), respectively, in accordance with the provisions of the Mines and Minerals (Development and Regulation) Ammendment Act, 2015 (MMDRA), which was in effect from the 12 January 2015. Pursuant to applicability of the rules prescribed relating to the DMFT and NMET, royalities of 30% and 2% would be levied on the buyer of coal towards DMFT charges and NMET charges, respectively. Further, debit notes were raised on the Company for the coal procured by the manufacturing facilities in the states of Odisha and Telangana for amounts aggregating to Rs.828.73 lakhs (March 31, 2017: Rs.502.24 lakhs) and Rs.26.91 lakhs (March 31, 2017: Rs.26.91 lakhs), respectively, by the concerned authorities towards the aforesaid royalties for the period beginning from January 2015 until the date of notification of the DMFT and NMET. The management has filed a writ petition with the Honourable High Court of Judicature at Hyderabad of the Combined State of Andhra Pradesh and Telangana and Honourable High Court of the State of Odisha, respectively, duly challenging the aforesaid demands and the date of applicability of the rules from 12 January 2015 duly considering the notification of the DMFT rules and NMET rules during January 2016 and August 2015, respectively. The Company had also received an interim stay order from the concerned High Courts duly restricting the recoveries of the above amounts pending disposal of the case. The matter is currently pending with the Honourable High Courts as at March 31, 2018. However, on the basis of assessment of the date of notification of the relevant rules in relation to the DMFT and the NMET and the underlying MMRDA, the management is of the view that levy of the aforesaid royalties aggregating to the above mentioned sums is not tenable as per law and accordingly, have not made any adjustments to the financial statements in this regard.

(v) During the earlier years, the Company had entered into a lease agreement for 17.55 acres of land at Samalkot, Andhra Pradesh for setting up a sugar manufacturing facility therein. The said lease agreement had expired on the 12 August 1996, pursuant to which the Company had received intimations from the legal heirs of the landlord for vacation of the land and consequent relocation of the sugar manufacturing facility of the Company along with damages aggregating to Rs.274.86 lakhs (March 31, 2017: Rs.264.33 lakhs). Subsequently, legal cases had been filed by the aforesaid legal heirs against the Company with the local courts of Kakinada. The management is in the process of entering into a conciliation arrangement with the aforementioned parties and purchasing the underlying land and accordingly does not foresee the said matter to have a significant effect on the financial statements. The matter is currently pending for disposal as at March 31, 2018.

(vi) (i) The Company had in the prior years, received various demand notices from the Central Excise Authorities for sums aggregating to Rs.941.80 lakhs (March 31, 2017: Rs.941.45 lakhs) alleging non compliances with the provisions of the Central Excise Credit Rules during certain months of the financial years ended 31 March 1997, 1998, 2000, 2001, 2002, 2012 and 2013. Aggrieved by the above demands, the management has filed appeals with the Customs, Excise and Service Tax Appellate Tribunal of the states of New Delhi and Karnataka for amounts of Rs.55.29 lakhs (March 31, 2017: Rs.55.29 lakhs) and Rs.737.00 lakhs (March 31, 2017: Rs.935.34 lakhs) respectively and with the Honourable High Court of the Combined State of Andhra Pradesh and Telangana for a sum of Rs.136.90 lakhs (March 31, 2017: Rs.136.90 lakhs) and the Commissioner of Central Excise Appeals, Visakhapatnam for a sum of Rs.12.60 lakhs (March 31, 2017: Rs.12.26 lakhs), as applicable. However, on the basis of its internal assessment of the facts of the case and the applicable provisions of the Central Excise Credit Rules, the management is confident of these cases being settled in favour of the Company and accordingly, no adjustments have been made to the financial statements in this regard.

(ii) The Company had received a demand notice from the Commissioner of Central Excise for an amount of Rs.94.35 lakhs (March 31, 2017: Rs.92.28 lakhs) alleging certain non-compliances with the rules framed for determination of assessable value of the excisable goods sold and thereby demanding additional duty along with the interest and penalties aggregating to the aforementioned amounts. The management had filed necessary appeals with the Commissioner of Customs and Central Excise (Appeals), Hyderabad which was settled against the Company during the year ended March 31, 2018. Aggreived by the said order, the management has also filed an appeals with the Commissioner of Customs, Excise and Service Tax Appellate Tribunal, Hyderabad which is pending for disposal as at March 31, 2018. However, on the basis of its internal assessment of the facts of the case and the history of judgements passed by the Appellate Authorities in this regard, the management is confident of the matter being settled in favour of the Company and accordingly, no adjustments have been made to the financial statements in this regard.

(vii) (i) In connection with the service tax assessment for the financial years ended 31 March 2009 to 31 March 2014, the Company had received demands aggregating to Rs.147.79 lakhs (March 31, 2017: Rs.139.79 lakhs) in relation to certain non-compliances with the provisions of the service tax regulations notified under the Finance Act, 1994 (duly amended from time to time). The management has filed necessary appeals against the said orders with the Commissioner of Service Tax (Appeals), Hyderabad, which is pending for disposal as at March 31, 2018.

(ii) During the prior years, the Company had received certain demand notices from the Service tax Authorities for sums aggregating to Rs.98.12 lakhs (March 31, 2017: Rs.93.69 lakhs) alleging non compliances with the provisions of the Central Excise Credit Rules during certain months of the financial years beginning from April 1, 2016 until the March 31, 2017. Aggrieved by the said demands, the management has filed appeals with the Commissioner of Central Excise (Appeals), Visakhapatnam, Deputy Commissioner of Central Excise, Kakinada and Assistant Commissioner of Central Excise, Kakinada for sums of Rs.60.76 lakhs (March 31, 2017: Rs.59.10 lakhs), Rs.14.65 lakhs (March 31, 2017: Rs.13.56 lakhs) and Rs.22.71 lakhs (March 31, 2017: Rs.21.04 lakhs), respectively. However, on the basis of its internal assessment of the facts of the case and the applicable provisions of the Central Excise Credit Rules, the management is confident of these cases being settled in favour of the Company and accordingly, no adjustments have been made to the financial statements in this regard.

(iii) During the year ended 31 March 2013, the Company had received a demand notice from the Commissioner of Central Excise, Customs and Service Tax for an amount of Rs.482.97 lakhs (March 31, 2017: Rs.482.97 lakhs) in relation to nonpayment of service tax dues on certain imports made by the Company during the financial year ended 31 March 2008. The management had filed an appeals against the aforesaid order with the Commissioner of Central Excise (Appeals) which had been settled against the Company during the year ended March 31, 2017. The management, has however, filed an order against the said order with the Commissioner of Customs, Excise and Service Tax Appellate Tribunal during the year ended March 31, 2018 which is pending for disposal. However, on the basis of its internal assessment and considering that the said import transaction was subject to the payment of customs duty, the management is confident of the case being settled in favour of the Company.

(viii) During the year ended 31 March 2016, the Company had received a demand notice from the Commissionerate of Customs (Preventive), Bhubaneshwar, demanding an amount of Rs.214.09 lakhs (March 31, 2017: Rs.214.09 lakhs) representing the customs duty, along with interest and penalties, on an import of coal made during the year ended 31 March 2013. The management has filed an appeal against the said demand with the Commssioner of Customs, Excise and Service Tax Appellate Tribunal during the year ended March 31, 2017, which is pending for disposal as at March 31, 2018. However, on the basis of its assessment of the facts of the case and the prevailing regulations on classification of the imported coal, the management is confident of the case being settled in favour of the Company and consequently no adjustments have been made to the financial statements in this regard.

(ix) The Company had received demands from the Sales tax authorities of the state of Telangana for an aggregate of Rs.144.23 lakhs (March 31, 2017: Rs.144.23 lakhs) in relation to levy of sales tax on certain export entitlement licenses sold by the Company during the years ended 31 March 2001 and 31 March 2004. The management has filed necessary appeals against the said demand with the concerned appellate authorities which is pending for disposal as at March 31, 2018. However, on the basis of its internal assessment of the prevailing regulations and the facts of the case, the management is confident of the case being settled in favour of the Company.

(x) Pursuant to the income tax assessment for the years mentioned below, the Company had received various demands from the income tax authorities in relation to the inadmissibility of certain expenditure in accordance with the provisions of the income tax law and compliances of the international transactions with associate enterprises with the arm’s length guidelines. The management, on the basis of its internal assessment of the facts of the case, the underlying nature of transactions, the history of judgements made by the various appellate authorities and the necessary advise received from the independent expert engaged in this regard, is of the view that the probability of the case being settled against the Company is remote and accordingly do not foresee any adjustment to the financial statements in this regard. The details of the relevant financial year which is subject to the demands and the amount of demand along with the interest and penalties demanded is as follows:

(xi) The Company has filed a writ petition with the Honourable High Court of the Judicature at Hyderabad of the Combined State of Andhra Pradesh and Telangana challenging the applicability of the provisions of APERC - Renewal Power Purchase Obligation (Compliance by Purchase of Renewable Energy/Renewable Energy Certificates) Regulations, 2012 issued by the Andhra Pradesh Electricity Regulatory Commission. The management, on the basis of its assessment of the terms of the aforesaid regulations is of the view that the said regulations shall not be applicable to the Company owing to the nature of business engaged by it and accordingly are of the view that the financial statements as at and for the year ended March 31, 2018 do not warrant any adjustments to this effect.

Other pending litigations:

(xii) The Company, along with certain other petitioners, have filed a Special Leave Petition with the Honourable Supreme Court of India in relation to applicability of provisions of the Andhra Pradesh Electricity Duty Act, 1939 to the captive power generation facility of the Company situated at Samalkot, Andhra Pradesh for the period beginning 1 April 2003 until the 31 March 2013. During the aforesaid period, the Company had generated 944.75 lakhs units of power for captive consumption, thereby resulting in a electricity duty liability of Rs.236.19 lakhs (March 31, 2017: Rs.236.19 lakhs). The Honourable Supreme Court vide its interim order during the year ended March 31, 2017 had directed the Company and the other petitioners to pay a portion of the aforesaid dues in relation to the said matter, according to which sums aggregating to Rs.137.28 lakhs (March 31, 2017: Rs.137.28 lakhs) being deposited by the Company. However, on the basis of its assessment of the facts and status of the case and the underlying regulations on applicability of the electricity duty, the management has recognised a liability in the financial statements towards this matter in accordance with the provisions of Andhra Pradesh Electricity Duty Act, 1939 and are of the view that no additional provisions would be required in this regard.

(xiii) The balance of trade receivables as at March 31, 2018 includes an amount of Rs.189.93 lakhs (March 31, 2017: Rs.189.93 lakhs) receivable from the Grid Corporation of Odisha (GRIDCO) in relation to the sale of power made during the year ended 31 March 2014. GRIDCO had filed an appeal with the Supreme Court of India in relation to the payment of the said dues subsequent to an order passed by the Appellate Tribunal for Electricity of the state of Odisha, directing GRIDCO to pay a sum of Rs.2,582.00 lakhs (March 31, 2017: Rs.2,582.00 lakhs) to the Company in this regard. The management on the basis of its assessment of the status of the case, the follow up with the customers and the favourable order received from the appellate authorities in this regard is confident of recovering the balance of receivables as at March 31, 2018 along with the other dues from GRIDCO and accordingly does not foresee any adjustments to the financial statements in this regard.

(xiv) During the earlier years ferro alloy manufacturing unit of the Company at Paloncha, Telangana had received demands aggregating to Rs.668.00 lakhs (March 31, 2017: Rs.668.00 lakhs) from the erstwhile Andhra Pradesh State Electricity Board (‘Board’) towards the payment of Voltage Surcharge and additional charges for the period 1 March 1983 to 30 June 1987. The Company had filled a petition against the same in Supreme Court which was decided in favour of the Company. However in the meantime, bank guarantees furnished by the Company to the tune of Rs.409.00 lakhs (March 31, 2017: Rs.409.00 lakhs) were encashed by the Board. The management has further filled a petition with the Honourable High Court of the Combined State of Andhra Pradesh and Telangana against the said levy of voltage surcharge and additional charges and the aforesaid deductions made by the Board. Pending final outcome of the said petitions, the management has already recognised adequate liabilities in relation to the said dues and does not foresee any additional adjustments to the financial statements in this regard.

(xv) The Company is a party, as a petitioner and a respWondent, to certain other cases in respect of certain land allotments, illegal land encroachments and other matters which are pending for disposal as at March 31, 2018 with various civil courts and appellate authorities, as the case may be. The management, in consultation with its internal and external legal counsel is of the view that the probability of the same being settled against the Company is remote and accordingly are of the view that the financial statements as at and for the year ended March 31, 2018 do not require any adjustments in this regard.

(g) In accordance with the applicable provisions of the Income Tax Act, 1961, the Company is required to use certain specified methods in assessing that the transactions with the related parties, are carried at an arm’s length price and is also required to maintain prescribed information and documents to support such assessment. The appropriate method to be adopted will depend on the nature of transactions / class of transactions, class of associated persons, functions performed and other factors as prescribed. Based on certain internal analysis carried out, management believes that transactions entered into with the related parties were carried out at arms length prices. The Company is in the process of updating the transfer pricing documentation for the financial year ended March 31, 2018. In opinion of the management, the same would not have an impact on these financial statements. Accordingly, these financial statements do not include the effect of the transfer pricing implications, if any.

5. Financial Risk Management objectives and policies:

The Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include market risk, credit risk and liquidity risk. The Company’s risk management policies are established to identify and analyse the risks faced by the Company and seek to, where appropriate, minimize potential impact of the risk and to control and monitor such risks. There has been no change to the Company’s exposure to these financial risks or the manner in which it manages and measures the risks or the manner in which it manages and measures the risks.

The following sections provide details regarding the Company’s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives, policies and processes for management of these risks.

(i) Market risk

Market risk is the risk of loss of future earnings, fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates and prices. The Company is exposed to market risk primarily related to currency rate risk, interest rate risk and other price risks, such as equity risk. Thus, the Company’s exposure to market risk is a function of investing and borrowing activities and revenues generated and operating activities in foreign currencies.

(a) Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Company’s exposure to interest rate risk relates primarily to the floating interest rate borrowings. The Company’s investment in deposits with banks are for short durations and therefore do not expose the Company to significant interest rate risk. Further, the loans extended by the Company carries a fixed interest rate and therefore not subject to interest rate risk since neither the carrying value nor the future cash flows will fluctuate because of the change in market interest rates.

The Company’s exposure to changes in interest rates relates primarily to the Company’s outstanding floating rate debt. A major portion of foreign currency debt is linked to international interest rate benchmarks like LIBOR. The Company also hedges a portion of these risks by entering into derivative instruments like interest rate swaps and currency swaps.

The exposure of the Company to fixed rate and variable rate instruments at the end of the reporting period are as follows:

Interest Rate Sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the variable rate instruments. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings as follows:

* The Company has entered into interest rate swap arrangement against the variable rate borrowing amounting to Rs.15,986.24 lakhs (March 31, 2017: Rs.22,140.67 lakhs) and accordingly the impact of interest rate sensitivity as mentioned above is expected to be offset proportionately.

(b) Foreign Currency Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company’s exposure to the risk of change in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in foreign currency) and financing activities (when borrowings are denominated in foreign currency).

The Company has transactional currency exposures arising from services provided or availed that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company’s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The Company does use financial derivatives such as foreign currency forward contracts and swaps.

Derivative financial instruments

The following table gives details in respect of outstanding derivate contracts against principle amount. The counterparty for these contracts are banks.

The following table demonstrates the sensitivity to a reasonably possible change in USD to the Indian Rupee with all other variables held constant. The impact on the Company’s profit before tax due to changes in the fair value of monetary assets and liabilities is given below:

(c) Other price risk

Other price risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

The Company based on working capital requirement keeps its liquid funds in current accounts. Excess funds are invested in long term instruments. The Company has listed and non-listed equity securities that are susceptible to market price risk arising from uncertainities about future values of the investment securities. The Company manages the equity price risk through diversification and reports on the equity portfolio are submitted to the management on a regular basis.

The following table demonstrates the sensitivity to the impact of increase/decrease of the index on the Company’s equity and profit for the period. The analysis is based on the assumption that index has increased or decreased by 10%, with all other variables held constant and that the Company’s equity instruments moved in line with the index.

(ii) Credit risk:

Credit risk is the risk of loss that may arise on outstanding financial instruments when a counterparty defaults on its obligations. The Company’s exposure to credit risk arises primarily from loans extended, security deposits, balances with bankers and trade and other receivables. The Company minimises credit risk by dealing exclusively with high credit rating counterparties. The Company’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Company trades only with recognised and creditworthy third parties. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant.

(a) Exposure to credit risk:

At the end of the reporting period, the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position. No other financial assets carry a significant exposure to credit risk.

(b) Credit risk concentration profile:

At the end of the reporting period, there were no significant concentrations of credit risk. The maximum exposures to credit risk in relation to each class of recognised financial assets is represented by the carrying amount of each financial assets as indicated in the balance sheet.

(c) Financial assets that are neither past due nor impaired:

None of the Company’s cash equivalents, other bank balances, loans, security deposits and other receivables were past due or impaired as at March 31, 2018 and March 31, 2017. Trade and other receivables including loans that are neither past due nor impaired are from creditworthy debtors with good payment record with the Company. Cash and short-term deposits investment securities that are neither past due nor impaired are placed with or entered with reputable banks financial institutions or companies with high credit ratings and no history of default.

(d) Financial assets that are either past due or impaired:

The company doesn’t have any significant trade receivables or other financial assets which are either past due or impaired. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. The Company’s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company has used a practical expedient 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 Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

(iii) Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company’s reputation.

Management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments as of March 31, 2018:

6. Segment Information

In accordance with Indian Accounting Standard (Ind AS) 108 on “Operating Segments”, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.

7. Capital management

Capital includes equity capital and all other reserves attributable to the equity holders of the parent. The primary objective of the capital management is to ensure that it maintain an efficient capital structure and healthy capital ratios in order to support its business and maximise shareholder’s value. The company manages its capital structure and make adjustments to it, in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, company may adjust the dividend payment to shareholders return capital to shareholders or issue new shares.

The Company monitors capital using a debt to capital employed ratio which is debt divided by total capital plus debt. The Company’s policy is to keep this ratio at an optimal level to ensure that the debt related covenants are complied with.

# Total Borrowings include long-term borrowing, current maturities of long-term borrowings and working capital loans like cash credit and buyer’s credit.

In order to achieve this overall objective, the company’s capital management, amongst other things, aims to ensure that it meets the financial covenants attached to interest bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call back loans and borrowings.

There have been no breaches in the financial covenants of any interest bearing loans and borrowings in the current period. No changes were made in the objectives, policies or processes for managing the capital during the year ended March 31, 2018 and March 31, 2017.

Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability (including DDT thereon) in accordance with the applicable accounting principles.

8. Restatement of financial statements:

During the year ended March 31, 2018, the management has reclassified and made adjustments to the following account balances in the Balance Sheet and Statement of Profit and Loss for compliances with the recognition, measurement, presentation and disclosure requirements of Ind AS:

(i) Balance Sheet as at March 31, 2017

(ii) Balance Sheet as at April 1, 2016

(iii) Statement of Profit and Loss:

Notes: Represents

(a) accouting for treasury stock to the tune of Rs.2,674.87 lakhs (April 1, 2016: Rs.2,674.87 lakhs) by adjusting the balance of other equity.

(b) reclassification of the balances with government authorities to the Rs.702.17 lakhs (April 1, 2016: Rs.889.71 lakhs) to other non-current assets.

(c) reclassification of the balances of MAT credit entitlement to the tune of Rs.21,436.21 lakhs (April 1, 2016: Rs.21,436.21 lakhs) from other non-current assets, recognition and reclassificaiton of deferred tax liabilities to the tune of Rs.3,998.58 lakhs (April 1, 2016: Rs.3,920.16 lakhs) and Rs.4,223.96 lakhs (April 1, 2016: Rs.2,710.78 lakhs), respectively, including recognition of deferred tax expense to the tune of Rs.79.42 lakhs for the year ended March 31, 2017.

(d) reclassification of prepaid expense amounting to Rs.122.66 lakhs (April 1, 2016: Rs.Nil) from other current assets to other non-current assets and de-reognition of interest acccrued on treasury stock to the tune of Rs.1,313.41 lakhs (April 1, 2016: Rs.1,054.27 lakhs) by adjusting the balance of other equity including adjustment of Rs.258.43 lakhs to other income for the year ended March 31, 2017.

(e) reclassification of the balances of margin money deposits from other financial assets.

(f) reclassification of the balances of accrued revenues and accrued interest to the tune of Rs.532.06 lakhs (April 1, 2016: Rs.138.77 lakhs) and Rs.58.04 lakhs (April 1, 2016: Rs.589.52 lakhs), respectively from other current assets, reclassification of other assets to the tune of Rs.195.33 lakhs (April 1, 2016: Rs.Nil) to other current assets and adjustment of derivative assets with other financial liabilities to the tune of Rs.1,945.35 lakhs (April 1, 2016: Rs.Nil).

(g) reclassification of interest accrued and unpaid dividends to the tune of Rs.252.17 lakhs (April 1, 2016: Rs.250.14 lakhs) and Rs.198.76 lakhs (April 1, 2016: Rs.207.45 lakhs), respectively from other current liabilities.

(h) reclassification of other operating income to the tune of Rs.1,103.46 lakhs from other income.

(i) reclassification of excise duty expense to the tune of Rs.3,641.66 lakhs from other expenses.

(j) reclassification of loss on forward contracts to the tune of Rs.1,342.19 lakhs to other expenses.

This is the summary of significant accounting policies and other explanatory information referred to in our report of even date.


Mar 31, 2017

* The loans are secured by first charge by way of equitable mortgage by deposit of title deeds to cover all immovable properties of the company and hypothecation of all movable properties including movable plant and machinery, spares, tools and accessories, both present and future and a second charge by way of hypothecation of all movable properties both present and futures (except book debts) subject to prior charges created/to be created in favour of Company''s Bankers on its stocks of raw materials, semi finished and finished goods, consumable stores for securing borrowings for working capital requirements. The mortgage/charge created above shall rank paripassu with the charges created/to be created in favour of other financial institutions/banks.

** Loan from State Bank of India is secured by pledge of 104,600,000 shares of USD 1/- each (being 51% of the shares) held by the company in its subsidiary, M/s Nava Bharat (Singapore) Pte Limited. The loan is repayable in 26 quarterly installments of '' 1,904.00 lakhs commencing from April 01, 2014. During the year company entered into a swap contract and converted the loan into FCNR Borrowing for a period of 6 months. After the expiry of the swap contract the loan will be re-converted into a rupee term loan.

*** The loan is repayable in monthly installments of Rs, 30.14 lakhs commencing from December 01, 2016.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation recognized within the Balance Sheet.

1. Other Information:

i. The company has invested plan assets with Life Insurance Corporation of India. Expected Return on Assets is based on rate of return declared by fund managers.

ii. Present value of defined benefit obligation:

Present value of the defined benefit obligation is calculated by using Projected Unit Credit method (PUC Method). Under the PUC method a "projected accrued benefit" is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the Plan. The "projected accrued benefit" is based on the Plan''s accrual formula and upon service as of the beginning or end of the year, but using a member''s final compensation, projected to the age at which the employee is assumed to leave active service. The Plan Liability is the actuarial present value of the "projected accrued benefits" as of the beginning of the year for active members.

iii. Expected average remaining service Vs. Average Remaining Future Service:

The average remaining service can be arithmetically arrived by deducting current age from normal retirement age whereas the expected average remaining service is arrived actuarially by applying multiple decrements to the average remaining future service namely mortality and withdrawals. Thus, the expected average remaining service is always less than the average remaining future service.

iv. Current and Non- Current Liability:

The total of current and non-current liability must be equal with the total of PVO (Present value obligation) at the end of the period plus short term compensated liability if any. It has been classified in terms of "Schedule III" of the Companies Act, 2013.

Accordingly, below is the Current and Non-Current classification of Gratuity and Compensated Absences:

2. SEGMENT INFORMATION:

For management purposes, the company is organized into business units based on its products and services and has three reportable segments as follows:

a. Ferro Alloys (FAP) Segment which produces various Alloy Metals viz., Ferro Chrome, Silico Manganese and Ferro Silicon and also carrying conversion work on job work basis to others.

b. Power Segment which generates Thermal energy for captive use and also for outside sale.

c. Sugar Segment which produces Sugar and its integrated By-Products.

No operating segments have been aggregated to form the above reportable operative segments.

The Executive Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements. The company manages its financing and income taxes separately, company as a whole and are not allocated to operating segments.

Transfer pricing between operating segments are on an arm''s length basis in a manner similar to transactions with third parties wherever available.

The management assessed that cash and cash equivalents trade receivables, trade payables and other current assets/ liabilities approximate their carrying amount largely due to the short-term maturities of these instruments.

The fair value of the financials assets and liabilities is reported at 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:

a. The fair values of the quoted shares are based on price quotations at the reporting dates. The fair value of unquoted equity shares are based on the Net Assets available for Equity Shareholders of the Companies.

b. Fair value of Interest free loan given to employees and security deposits have been calculated by discounting future cash flows using rates currently available for debt on similar terms credit risk and remaining maturities.

Description of significant observable inputs to valuation:

a. Loan given to employees'' trust:

Interest Rate factor has been considered at a rate of 12% p.a. by the company for discounting the loan to the date of transition.

b. Investments in Un-quoted equity shares:

The fair values have been ascertained based on data available from financial statements of the unlisted companies. The net asset available for equity shareholders have been considered.

c. Interest free employee staff advance:

Interest Rate factor has been considered at a rate of 12% p.a. by the company for discounting the cash flows by way of repayments by the employees.

e. Interest free Security Deposits (assets):

Interest Rate factor has been considered at a rate of 12% p.a. by the company for discounting the amount receivable at the time of maturity.

f. Interest free Security Deposits (liabilities):

Interest Rate factor has been considered at a rate of 12% p.a. by the company for discounting the amount receivable at the time of maturity.

3. RELATED PARTY TRANSACTIONS: DURING THE YEAR UNDER REFERENCE THE COMPANY HAS ENTERED FOLLOWING TRANSACTIONS WITH RELATED PARTIES:

Names of the Related parties and description of relationship:

i) Key Management Personnel

1. Mr. D. Ashok, Chairman

2. Mr. P. Trivikrama Prasad, Managing Director

3. Mr. G.R.K. Prasad, Executive Director

4. Mr. C.V. Druga Prasad, Director (Business Development)

ii) Relatives of Key Management Personnel

1. Smt. D. Ramaa - wife of Mr. D Ashok

2. Mr. D. Ashwin - son of Mr. D Ashok

3. Mr. D. Nikhil - son of Mr. D Ashok

4. Dr. D. Rajasekhar - brother of Mr. D Ashok

5. Smt. D. Bhaktapriya - mother of Mr. D Ashok

6. Smt. A. Nilima - sister of Mr. D Ashok

7. Smt. P. Rajashree - wife of Mr. P Trivikrama Prasad

8. Smt. P. Sruthi - daughter of Mr. P Trivikrama Prasad

9. Smt. G. S. P. Kumari - wife of Mr. G R K Prasad

10. Smt. C. Umamaheswari - wife of Mr. C V Durga Prasad

iii) Enterprises controlling the reporting enterprise:

Subsidiaries 1. Nava Bharat Energy India Limited

2. Nava Bharat Projects Limited

3. Nava Bharat Realty Limited (upto 30.12.2016)

4. Nava Bharat Sugar and Bio Fuels Limited (upto 30.12.2016)

5. Brahmani Infratech Private Limited

6. Nava Bharat (Singapore) Pte. Limited

7. Maamba Collieries Limited

8. Kariba Infrastructure Development Limited (upto 17.02.2017)

9. NB Rufiji Private Limited

10. NB Tanagro Limited

11. Nava Energy Pte. Limited

12. Nava Bharat Lao Energy Pte. Limited (upto 30.10.2016)

13. Namphak Power Company Limited (upto 30.10.2016)

14. Nava Energy Zambia Limited

15. Nava Agro Pte. Limited

iv) Enterprises over which key management personnel/their relatives exercise significant influence:

1. Nav Developers Limited

2. S R T Investments Private Limited

3. A N Investments Private Limited

4. V9 Avenues Private Limited

5. A9 Homes Private Limited

6. AV Dwellings Private Limited

7. V9 Infra Ventures Private Limited

8. Malaxmi Highway Private Limited

9. Kinnera Power Company Private Limited

10. Dr. Devineni Subba Rao Trust

11. Gunnam Subbarao and Ramayamma Trust

12. Chapter One Books Pte. Limited

13. Kariba Sugar Limited

14. The Indian Ferro Alloys Producers Association

4.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES:

The company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include interest rate risk foreign currency risk market risk credit risk and liquidity risk. The company''s risk management policies focus on the unpredictability of financial markets and seek to where appropriate minimize potential and guidelines and there has been no change to the company''s exposure to these financial risks or the manner in which it manages and measures the risks or the manner in which it manages and measures the risks.

The following sections provide the details regarding the Company''s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives policies and processes for the management of these risks.

i. Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk, currency rate risk, interest rate risk and other price risks such as equity risk. Financial instruments affected by market risk include loans and advances deposits investments in debt securities mutual funds and other equity funds.

a. Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company''s financial instruments will fluctuate because of changes in market interest rates. The Company''s exposure to interest rate risk arises primarily from the loans and advances given by the company investment in debt securities investment in debt mutual funds and cash and cash equivalents.

The company''s policy is to manage its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings

b. Foreign Currency Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from services provided or availed that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company''s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The Company does uses financial derivatives such as foreign currency forward contracts and swaps for hedging purposes.

c. Other price risk:

Other price risk is the risk that the fair value or future cash flows of the Company''s financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

The company based on working capital requirement keeps its liquid funds in current accounts. Excess funds are invested in long term instruments. Hence the company doesn''t have any significant other price risk.

ii. Credit risk:

Credit risk is the risk of loss that may arise on outstanding financial instruments when a counterparty default on its obligations. The Company''s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities cash and short-term deposit) the Company minimize credit risk by dealing exclusively with high credit rating counterparties. The Company''s objective is to seek continual revenue growth while minimizing losses incurred due to increased credit risk exposure. The Company trades only with recognized and creditworthy third parties. It is the Company''s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In addition, receivable balances are monitored on an ongoing basis with the result that the Company''s exposure to bad debts is not significant.

a. Exposure to credit risk:

At the end of the reporting period the Company''s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognized in the statement of financial position. No other financial assets carry a significant exposure to credit risk.

b. Credit risk concentration profile:

At the end of the reporting period there were no significant concentrations of credit risk. The maximum exposures to credit risk in relation to each class of recognized financial assets is represented by the carrying amount of each financial assets as indicated in the balance sheet.

c. Financial assets that are neither past due nor impaired:

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Company. Cash and short-term deposits investment securities that are neither past due nor impaired are placed with or entered with reputable banks financial institutions or companies with high credit ratings and no history of default.

d. Financial assets that are either past due or impaired:

The company doesn''t have any trade receivables or other financial assets which are either past due or impaired.

iii. Liquidity risk:

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The company ensures that it has sufficient cash on demand to meet expected operational demands including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

The table below summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments:

5. CAPITAL MANAGEMENT:

Capital includes equity attributable to the equity holders of the parent. The primary objective of the capital management is to ensure that it maintain an efficient capital structure and healthy capital ratios in order to support its business and maximize shareholder''s value.

The company manages its capital structure and make adjustments to it in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure company may adjust the dividend payment to shareholders return capital to shareholders or issue new shares.

The Company monitors capital using a debt to capital employed ratio which is debt divided by total capital plus debt. The Company''s policy is to keep this ratio at an optimal level to ensure that the debt related covenants are complied with.

# Total Borrowings include Long term borrowing short term maturities of long term borrowings and working capital loans like Cash Credit and Buyer''s Credit excluding Inter Corporate Deposit.

6. LEASE DISCLOSURE:

Operating Lease:

All the non-cancellable operating lease obligations are prepaid in nature and hence the company does not have any future obligation on account of such non-cancellable operating leases.

7. The dividends declared by the company are based on the profits available for distribution as reported in the financial statements of the company. The Board of Directors of the company have proposed a final dividend of Rs 1.00 per share in respect of the year ended March 31, 2017 subject to the approval of shareholders at the Annual General Meeting. If approved, the dividend would result in a cash outflow of Rs, 2,029.57 lakhs inclusive of dividend distribution tax of Rs, 343.29 lakhs.

8. FIRST TIME ADOPTION OF IND AS:

For all periods, up to and including the year ended March 31, 2016 the company has prepared its financial statements in accordance with generally accepted accounting principles and accounting standards notified under section 133 of the Companies Act 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014 ("Previous GAAP").

These financial statements for the year ended March 31, 2017 are the company''s first annual Ind AS complied financial statements.

The company has prepared financial statements which comply with Ind AS applicable for period beginning on or after April 01, 2015 (transition date) as described in the accounting policies. This note explains the principal adjustment made by the company in restating its Previous GAAP Balance Sheet.

Exemptions Applied: The company has applied following exemptions as per Ind AS 101 First Time Adoption:

i. For transition to Ind AS the company has elected to carry the values of Property Plant and Equipment as well as all of its intangible assets recognized as of March 31, 2015 measured as per previous GAAP and used that carrying value as its deemed cost.

ii. On the date of transition the Company has elected to designate all the investments in financial instruments at Fair Value through profit or loss that were acquired before the date of transition.

The reconciliation of equity as at April 01, 2015 and March 31, 2016 and profit for the year ended March 31, 2016 is as follows:

Explanatory Notes:

1 Leasehold land:

Under Previous GAAP leasehold lands were recognized as assets under PPE. As per Ind AS 17, the company has treated leasehold lands as operating leases and premium paid is considered as pre-paid lease rentals.

2 Intangible Assets:

Under previous GAAP intangibles were generally amortized for 10 years. Based on Ind AS 38 Intangibles are amortized based on effective useful life.

As a result, the written down value of Water drawing rights have been premeasured and shown under intangible assets.

3 Guarantee Commission:

The company has issued financial guarantees on behalf of its subsidiaries for borrowings taken by them and also for performance guarantees. As on the date of transition the company has recognized financial guarantee obligation at fair value and considered the same as an additional investment in subsidiaries.

4 Non-current investments:

As on the date of transition, the company decided to classify non-current investments other than investment in subsidiaries as Financial Assets which are measured at fair value with gains or losses recognized in profit and loss (FVTPL).

As per previous GAAP these are carried at cost. However, provision for permanent diminution in value is made to recognize any decline other than temporary in value of investments. As per Ind AS 109 all Equity Investments within the scope of Ind AS 109 are measured at Fair Value with the default recognition of gains and losses in Profit and Loss (FVTPL).

5 Loan to employees and Non-corporate entities:

Company has given interest free loans to employees. Further loans have been provided to non-corporate entities at below market interest rates. Under previous GAAP these loans have been accounted at transaction price. Based on Ind AS 109 such loans have been fair valued and measured at amortized cost. The resultant difference between carrying amount of those loans and the fair value as on date of transition are to be recognized in retained earnings.

6 Security deposits:

Rental and water security deposits were recognized at transaction value under previous GAAP. Based on Ind AS 109 these security deposit has to be recognized at amortized cost and the difference between fair value and carrying cost is to be treated as prepaid lease rental. Further the difference amount relating to period before date of transition to Ind AS is charged to retained earnings.

7 Treasury Shares:

Own fully paid equity shares held by the company, pursuant to order of Hon''ble High Court of Andhra Pradesh dated 30.12.1996 in the Scheme of amalgamation of Nav Chrome Limited with the company, which are vested in a Trustee for the benefit of the Company and which are to be sold and net sale proceeds are to be paid to the company are and treated as treasury shares and reduced from other equity.

8 Borrowings:

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in statement of profit or loss over the tenure of the borrowings as part of the interest expense by applying the effective interest method.

Under the previous GAAP these transactions costs were amortized on a straight-line basis over the period of loan.

9 Security Deposit and Employee Retention Deposits

Security deposits and Employee Retention Deposits were recognized at transaction value under previous GAAP. ¦

Based on Ind AS 109 these have been recognized at amortized cost. The resultant Ind AS adjustments have been - given in retained earnings.

10 Deferred Tax [

The company under previous GAAP calculated deferred tax based on income statement approach whereby - tax effect of timing differences as a consequence of any mismatch between accounting income and taxable \ income were recognized. Based on Ind AS 12 the company has calculated deferred tax based on balance j sheet approach which focuses on temporary differences between carrying amount of an asset or liability in the : balance sheet and its tax base.

11 Proposed Dividends:

Under the previous GAAP dividends proposed by the board of directors after the balance sheet date but before ¦ the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed ¦ dividend was recognized as a liability. Under Ind AS such dividends are recognized when the same is approved by the shareholders in the general meeting.

Explanatory Notes:

1 Revenue recognition:

Under previous GAAP sale of goods was presented as net of excise duty. However, under Ind AS sale of goods includes excise duty. Thus, sale of goods under Ind AS has increased with a corresponding increase in other expenses.

Further prompt payment rebate extended to energy customers which was reported as finance cost under previous GAAP is netted of from Sale of energy as per Ind AS.

2 Other Income - Fair Valuation Gain:

Interest and other income arising as a result differences on account of fair valuation of various financial assets and liabilities have been credited to Profit and Loss.

3 Guarantee Commission:

Guarantee Commission net of forex gain has been recognized based on Ind AS 109.

4 Defined Benefit:

Under Ind AS actuarial gains on remeasurement of defined benefit obligations are recognized in other comprehensive income. Under previous GAAP the company recognized such remeasurements in profit or loss. However, this has no impact on total comprehensive income

Explanatory Notes:

1 Capital Spares:

Spares which meet the recognition criteria of Property Plant and Equipment has been reduced from Inventories and reclassified as Property Plant and Equipment (net of accumulated depreciation).

2 Intangible Assets:

Under previous GAAP intangibles were generally amortized for 10 years. Based on Ind AS 38 Intangibles are amortized based on effective useful life.

As a result, the written down value of Water drawing rights have been premeasured and shown under intangible assets.

3 Guarantee Commission:

The company has issued financial guarantees on behalf of its subsidiaries for borrowings taken by them and also for performance guarantees. As on the date of transition the company has recognized financial guarantee obligation at fair value and considered the same as an additional investment in subsidiaries.

4 Non-current investments:

The company has decided to classify non-current investments other than investment in subsidiaries as Financial Assets which are measured at fair value with gains or losses recognized in profit and loss (FVTPL).

As per previous GAAP these are carried at cost. However, provision for permanent diminution in value is made to recognize any decline other than temporary in value of investments. As per Ind AS 109 all Equity Investments within the scope of Ind AS 109 are measured at Fair Value with the default recognition of gains and losses in Profit and Loss (FVTPL).

5 Loan to employees and Non-corporate entities:

Company has given interest free loans to employees. Further loans have been provided to non-corporate entities at below market interest rates. Under previous GAAP these loans have been accounted at transaction price. Based on Ind AS 109 such loans have been fair valued and measured at amortized cost. The resultant difference between carrying amount of those loans and the fair value as on date of transition is recognized in retained earnings.

6 Security deposits:

Rental and water security deposits were recognized at transaction value under previous GAAP. Based on Ind AS 109 these security deposits have to be recognized at amortized cost and the difference between fair value and carrying cost is to be treated as prepaid lease rental. Further the difference amount relating to period before date of transition to Ind AS is recognized in retained earnings.

7 Treasury Shares:

Own fully paid equity shares held by the company, pursuant to order of Hon''ble High Court of Andhra Pradesh dated 30.12.1996 in the Scheme of amalgamation of Nav Chrome Limited with the company, which are vested in a Trustee for the benefit of the Company and which are to be sold and net sale proceeds are to be paid to the company are and treated as treasury shares and reduced from other equity.

8 Borrowings:

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in statement of profit or loss over the tenure of the borrowings as part of the interest expense by applying the effective interest method.

Under the previous GAAP these transactions costs were amortized on a straight-line basis over the period of loan.

9 Security Deposits and Employee Retention Deposits:

Security deposits and Employee Retention Deposits were recognized at transaction value under previous GAAP. Based on Ind AS 109 these have been recognized at amortized cost. The resultant Ind AS adjustments have been given in retained earnings.

10 Deferred Tax:

The company under previous GAAP calculated deferred tax based on income statement approach whereby tax effect of timing differences as a consequence of any mismatch between accounting income and taxable income were recognized. Based on Ind AS 12 the company has calculated deferred tax based on balance sheet approach which focuses on temporary differences between carrying amount of an asset or liability in the balance sheet and its tax base.

11 Proposed Dividends:

Under the previous GAAP dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS such dividends are recognized when the same is approved by the shareholders in the general meeting.


Mar 31, 2016

A. Rights attached to equity Shares:

The company has only one class of equity shares having a face value of Rs. 2/- per share with one vote per each equity share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The amount of dividend proposed to be distributed for the year ended 31st March 2016, to equity shareholders is Rs. 3.00 per share (31st March 2015 Rs. 5.00 per share).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

b The paid up share capital includes 49,73,510 equity shares of Rs. 2/- each fully paid-up, owned by the company, pursuant to the order of Hon''ble High Court of Andhra Pradesh dated 30.12.1996 in the Scheme of amalgamation of Nav Chrome Limited with the Company, which are vested in a Trustee for the benefit of the Company which are to be sold and net sale proceeds are to be paid to the Company and such shares are not considered for dividend.

* The loans are secured by first charge by way of equitable mortgage by deposit of title deeds to cover all immovable properties of the Company and hypothecation of all movable properties including movable Plant and Machinery, spares, tools and accessories, both present and future and a second charge by way of hypothecation of all movable properties both present and future (except book debts) subject to prior charges created/to be created in favour of Company''s bankers on its stocks of raw materials, semi-finished and finished goods, consumable stores for securing borrowings for working capital requirements. The mortgage/charge created above shall rank pari-passu with the charges created/to be created in favour of other Financial Institutions/Banks.

** Loan from State Bank of India is secured by pledge of 104,600,000 shares of USD 1/- each (being 51% of shares) held by the Company in its subsidiary, M/s. Nava Bharat (Singapore) Pte. Limited.

i) Carries floating rate of interest (at present 11.00% p.a. and previous year 11.80% p.a.) payable monthly. The Loan is repayable in 26 quarterly installments of Rs. 1,904.00 lakhs commencing from 1st April, 2014.

ii) Carries floating rate of interest (at present 11.40% p.a. and previous year 12.10% p.a.) payable monthly. The principal is repayable in 12 quarterly installments of Rs. 90.42 lakhs commencing from 1st December, 2016.

1. In the opinion of the management, the Current Assets, Loans and Advances are expected to realise at least the amount at which they are stated, if realised in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

2. Considering the projects being implemented and in view of expected cash inflows in subsidiaries in coming years, the management is of the opinion that there is no need to provide for the losses so far incurred by the subsidiaries.

3. i) Disclosure of Sundry Creditors under Trade Payables is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006" and relied upon by the Auditors.

ii) Details of total outstanding dues to Micro and Small Enterprises as per "Micro, Small and Medium Enterprises Development Act, 2006".

4. The Company uses derivative financial instruments such as forward contracts and currency swap to hedge currency exposures, present and anticipated, denominated mostly in US Dollars and all financial and derivative contracts entered into by the Company are for hedging purpose only.

The information on derivative instruments are as follows:

a) Derivative contracts outstanding as at the year end: nil (previous year: USD 25.00 lakhs)

b) Foreign currency exposure not hedged by derivative instruments:

5. SEGMENT INFORMATION AS PER AS 17:

A. Primary disclosures:

The company has identified the reportable primary business segments considering:

i) the nature of products and services;

ii) the differing risks and returns;

iii) the organisation structure; and

iv) the internal financial reporting system.

6. As required by Accounting Standard (AS 28) "Impairment of Assets", the management has carried out the assessment of impairment of assets and no impairment loss has been recognised during the year other than the assets discarded/ dismantled and written off.

7. Previous year figures have been re-grouped and/or reclassified wherever necessary to make them comparable with those of current year.


Mar 31, 2015

01 NATURE OF OPERATIONS:

Nava Bharat Ventures Limited (the Company) has been incorporated on 7th November, 1972. At present the Company is engaged in the business of manufacture of ferro alloys, sugar and generation of power.

02 BASIS OF ACCOUNTING:

The financial statements have been prepared to comply in all material respects with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013, and in accordance with the generally accepted Accounting Principles in India under the historical cost convention and on accrual basis, except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies are consistent with those used in the previous year.

03 SHARE CAPITAL:

a. Rights attached to equity Shares:

The company has only one class of equity shares having a face value of RS. 2/- per share with one vote per each equity share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The amount of dividend proposed to be distributed for the year ended 31st March 2015, to equity shareholders is RS. 5.00 per share (31st March 2014 RS. 5.00 per share).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

b. The paid up share capital includes 49,73,510 equity shares of RS. 2/- each fully paid-up, owned by the company, pursuant to the order of Hon''ble High Court of Andhra Pradesh dated 30.12.1996 in the Scheme of amalgamation of Nav Chrome Limited with the Company, which are vested in a Trustee for the benefit of the Company which are to be sold and net sale proceeds are to be paid to the Company and such shares are not considered for dividend.

04. Depreciation for the year is provided as per Schedule II of the Companies Act, 2013, accordingly RS. 510.24 lakhs being the remaining carrying amount of the assets whose remaining useful life is nil and the deferred tax thereon amounting to RS. 84.72 lakhs are recognised in the opening balance of retained earnings.

05. In the opinion of the management, the Current Assets, Loans and Advances are expected to realise at least the amount at which they are stated, if realised in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

06. Considering the projects being implemented and in view of expected cash inflows in subsidiaries in coming years, the management is of the opinion that there is no need to provide for the losses so far incurred by the subsidiaries.

07. i) Disclosure of Sundry Creditors under Trade Payables is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006" and relied upon by the Auditors.

ii) Details of total outstanding dues to Micro and Small Enterprises as per "Micro, Small and Medium Enterprises Development Act, 2006".

08. The Company uses derivative financial instruments such as forward contracts and currency swap to hedge currency exposures, present and anticipated, denominated mostly in US Dollars and all financial and derivative contracts entered into by the Company are for hedging purpose only.

The information on derivative instruments are as follows:

a) Derivative contracts outstanding as at the year end: USD 25.00 lakhs (previous year: nil)

b) Foreign currency exposure not hedged by derivative instruments:

09. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

Particulars 31st March,2015 31st March,2014

i) Contingent liabilities:

a) Claims against the Company not acknowledged as debts 2,863.22 2,625.29

b) Guarantees 62,415.92 50,720.20

c) Other money for which the Company is contingently liable:

i) Demand from Income Tax department 926.63 660.08 disputed

ii) Showcause notices received from 1,313.80 1,339.05 Central Excise Dept.*

iii) Others 198.81 198.81

d) As per the "Renewal Power Purchase obligation (Compliance by Purchase of Renewal Energy/Renewable Energy Certificates) Regulations 2012" of APERC, the Company is under obligation for the year to comply with the said regulations. However as the Company contested the applicability of regulations to the Company in the Hon''ble High Court of A.P., compliance cost is not provided to the extent of 849.69 548.46

ii) Commitments:

Estimated amount of contracts remaining 124.55 104.68 to be executed on capital account and not provided for

* Represent showcause notices received to issue demands and pending for final consideration. The Company has already submitted its objections in writing against the said notices.

10. As required by Accounting Standard (AS 28) "Impairment of Assets", the management has carried out the assessment of impairment of assets and no impairment loss has been recognised during the year other than the assets discarded/ dismantled and written off.

11. Previous year figures have been re-grouped and/or reclassified wherever necessary to make them comparable with those of current year.


Mar 31, 2012

01 Nature of operations:

Nava Bharat Ventures Limited (the Company) has been incorporated on 7th November 1972. At present the Company is engaged in the business of manufacture of ferro alloys, sugar and generation of power.

02 Basis of Accounting:

The financial statements have been prepared to comply in all material respects with the notified Accounting Standards by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared in accordance with the generally accepted Accounting Principles in India under the historical cost convention and on accrual basis, except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies are consistent with those used in the previous year.

NOTE 34

In the opinion of the management, the Current Assets, Loans and Advances are expected to realise at least the amount at which they are stated, if realised in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

NOTE 35

i) Disclosure of Sundry Creditors under Trade Payables is based on the information available with the Company regarding the status of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006” and relied upon by the Auditors

ii) Details of total outstanding dues to Micro and Small Enterprises as per “Micro, Small and Medium Enterprises Development Act, 2006”.

NOTE 36

The Company uses derivative financial instruments such as forward contracts and currency swap to hedge currency exposures, present and anticipated, denominated mostly in US Dollars and Japanese Yen and all financial and derivative contracts entered into by the Company are for hedging purpose only.

The information on derivative instruments are as follows:

a) Derivative contracts outstanding as at the year end: nil (previous year: nil)

NOTE 37 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

(Rs. in lakhs)

31st March, 31st March, i) Contingent liabilities: 2012 2011

a) Claims against the Company not acknowledged as debts 1,328.22 1,033.08

b) Guarantees 57,319.70 33,057.16

c) Other money for which the Company is contingently liable:

i) Demand from Income Tax department disputed 2,555.00 1,191.51

ii) Showcause notices received from Central Excise Dept. 12,149.96 10,169.35

iii) Others 386.12 585.95

NOTE 37 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR) (Contd.)

(Rs. in lakhs)

31 st March, 31st March, 2012 2011

ii) Commitments:

a) Estimated amount of contracts remaining to be executed on capital 31.72 944.33 account and not provided for

b) Other commitments:

Customs duty payable on imports-in-transit - 0.62

c) Export obligation 1,362.28 3,097.23

(c) (ii) Contingent liabilities represents showcause notices received to issue demand notices are pending for final consideration and the Company has already submitted its objections in writing against the said demands.

NOTE 41

As required by Accounting Standard (AS 28) “Impairment of Assets”, the management has carried out the assessment of impairment of assets and no impairment loss has been recognised during the year other than the assets discarded/dismantled and written off to Statement of Profit and Loss.

NOTE 44 PREVIOUS YEAR FIGURES HAVE BEEN RE-GROUPED AND/OR RECLASSIFIED WHEREVER NECESSARY TO MAKE THEM COMPARABLE WITH THOSE OF CURRENT YEAR.


Mar 31, 2011

1. Nava Bharat Ventures Limited (the Company) has been incorporated on 7th November,1972. At present the Company is engaged in the business of manufacture of ferro alloys, sugar and generation of power.

2. The following are the signifcant Accounting Policies adopted by the Company in preparation and presentation of financial statements.

3. i) Disclosure of Sundry Creditors under Current Liabilities is based on the information available with the Company regarding the status of the suppliers as defned under the "Micro, Small and Medium Enterprises Development Act, 2006" and relied upon by the Auditors.

4. In terms of Accounting Standard 22 "Accounting for Taxes on Income" (AS 22) issued by The Institute of Chartered Accountants of India, the Company has accounted for the deferred taxes during the year. The following are the major components of deferred tax (asset)/liability.

5. Out of 76,364,668 (previous year 76,255,458) Equity Shares of Rs 2/- each fully paid-up of the Company:

i) 14,167,095 shares were allotted as fully paid-up pursuant to schemes of amalgamation without receiving the payment in cash.

ii) 12,137,095 shares are allotted as fully paid-up by way of bonus shares by capitalising Reserves.

iii) Pursuant to the order of Hon’ble High Court of Andhra Pradesh dated 30.12.1996 in the Scheme of amalgamation of Nav Chrome Limited with the Company, 4,973,510 equity shares of Rs 2/- each fully paid up owned by the Company are vested in a Trustee for the benefit of the Company which are to be sold and net sale proceeds are to be paid to the Company and such shares are not considered for dividend.

iv) During the year, the Company has allotted 109,210 (Previous Year 282,730) Equity Shares of Rs 2/- each at a premium of Rs 111.15 (including the difference between the fair value and the exercise price) per share on exercise of 109,210 (Previous Year 282,730) Employees Stock options.

v) Dividend for the year is provided on the equity shares arising out of proposed conversion of FCCBs into capital also, as the conversion is expected to take place before book closure.

6. a) During the year 2006-07, the Company has issued Zero Coupon Foreign Currency Convertible Bonds for an amount of JPY 6.00 billion at par. These bonds are convertible into Equity Shares with a fixed rate of exchange of Rs 0.3976 per 1 JPY at an initial conversion price of Rs 136.50 per Share at the option of bondholders at any time on or after 14th October, 2006 and on or before the close of business hours (i.e. 5.00 P.M.) on 31st August 2011. The Company also has an option to convert all these bonds on or after 29th September 2009 and prior to 30th September 2011 at the then prevailing conversion price as per the terms of issue. Out of the above, 2.48 billion Bonds were converted during the year 2007-08 and if all the remaining bonds are converted into Equity Shares, the paid up Equity Share Capital of the Company will increase by 9,700,620 Equity Shares of Rs 2/- each. If no such conversion takes place, the Bonds are redeemable on 30th September 2011 at a redemption premium of 25.96% so as to give the bondholders gross yield to maturity of 4.67% per annum compounded semi-annually.

b) The Company issued Conversion notice on 17th January 2011 to the Trustees for Bondholders fixing the date of conversion as 28th February 2011. The Issuers’ Conversion Right will be restricted to the conversion of Bonds into Equity Shares which works out to less than 14.5% of the enhanced Capital for each bondholder. The Bondholders have to comply with the procedures to enable the Company to complete the conversion process.

c) As the variables are indeterminate at present, the premium on actual redemption is not computable and hence will be recognised, as and when the redemption option is exercised, as a charge to the Securities Premium Account in terms of Section 78(2)(d) of the Companies Act,1956.

7. Fixed Deposit Receipts for Rs 504.86 Lakhs (Previous year Rs 391.81 Lakhs) are in lien with Bankers towards Margin Money for Bank Guarantees and Letters of Credit issued by them.

8. a) The Company’s land of about 5.08 acres was given possession to M/s.Hyderabad Vanaspathi Limited. The sale price of the same is yet to be adjusted pending permission from the Government of Andhra Pradesh.

b) The title in respect of the land costing Rs 1.23 Lakhs (previous year Rs 1.23 Lakhs) admeasuring 6 acres and 23 guntas (previous year 6 acres 23 guntas) is yet to be transferred in the name of the Company.

c) Land costing Rs 26.06 Lakhs admeasuring 5.05 acres allotted by APIIC Limited during the year 2009-10, is not yet transferred in the name of the Company.

d) Cost of leasehold land amounting to Rs 140.33 Lakhs shown under the head Fixed Assets represents the premium paid to the State Government of Orissa for alienation of 56.36 acres in favour of the Company by virtue of lease deeds for 90/99 years and the said land can be resumed by the said Government by giving 6 months notice in writing during the tenure of lease.

9. As required by Accounting Standard (AS 28) "Impairment of Assets", the management has carried out the assessment of impairment of assets and no impairment loss has been recognised during the year other than the assets discarded/ dismantled and written off to profit and Loss Account.

c) 6 year National Savings Certifcates of the face value of Rs 3.24 Lakhs (Previous year Rs 2.91 Lakhs) shown under the investments are in the names of employees of the Company and the certifcates in respect of face value of Rs 3.19 Lakhs (Previous year Rs 2.86 Lakhs) were pledged with various Government Departments as security.

10. a) In the opinion of the management, the Current Assets, Loans and Advances are expected to realise at least the amount at which they are stated, if realised in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

b) Sundry Debtors due for less than six months amounting to Rs 19,570.75 Lakhs (Previous year Rs 14,502.52 Lakhs) include Rs 14,171.53 Lakhs (Previous year Rs 8,731.82 Lakhs) due from a foreign subsidiary Company viz., M/s.Nava Bharat (Singapore) Pte. Limited, Singapore.

The rate of escalation in salary considered in actuarial valuation is estimated taking into account infation, seniority, promotion and other relevant factors.

The above information is certifed by an actuary.

11. The Company uses derivative financial instruments such as forward contracts and currency swap to hedge currency exposures, present and anticipated, denominated mostly in US Dollars and Japanese Yen and all financial and derivative contracts entered into by the Company are for hedging purpose only.

12. a) Working Capital Loans from Banks are secured by hypothecation of raw materials, work-in-progress, fnished goods, stores and spares and book debts to the extent of Rs 20,000 Lakhs and a second charge on fixed assets of the Company.

b) The Term Loans from IDBI Bank Limited, Infrastructure Development Finance Company Limited, Andhra Bank, State Bank of India, Bank of India, State Bank of Hyderabad, UCO Bank are secured by First Charge by way of equitable mortgage by deposit of title deeds to cover all immovable properties of the Company and hypothecation of all movable properties including movable Plant and Machinery, spares, tools and accessories, both present and future and a second charge by way of hypothecation of all movable properties both present and future (except book debts) subject to prior charges created/to be created in favour of Companys bankers on its stocks of raw materials, semi-fnished and fnished goods, consumable stores for securing borrowings for working capital requirements. The mortgage/charges created above shall rank pari-passu with the charges created/ to be created in favour of other Financial Institutions/Banks.

c) The Term Loan availed from Andhra Bank amounting to Rs 6,000.00 Lakhs out of the sanction of Rs 20,000 Lakhs for funding a foreign subsidiary Company, i.e. Nava Bharat (Singapore) Pte Limited is also secured by pledge of 6,300,000 equity shares of US$1/- each held by Company in the said subsidiary and hypothecation of mineral and mining rights of subsidiary.

d) All the above said loans are also guaranteed by some of the directors of the Company in their personal capacity.

13. Contingent liabilities not provided for on account of:

(Rs in Lakhs)

As at As at

31st March 2011 31st March 2010

a) Guarantees given by the Bankers 941.96 543.37

b) Guarantees given by the Company on behalf of others 32,115.20 10.40

c) Claims against the Company not acknowledged as debts 1,033.08 883.92

d) Demand raised by A. P. State Electricity Board (reconstituted as Transmission Corporation of Andhra Pradesh Limited) towards additional charges on power tariff difference between HT I and HT

III categories and surcharge on belated payments disputed by the 136.45 136.45

Company, pending in appeal with High Court of A.P.

e) Interest on dues to A. P. State Electricity Board (reconstituted as Transmission Corporation of Andhra Pradesh Limited). 62.35 62.35

f) Demand from Income-tax department disputed 1,191.51 684.41

g) Customs duty payable on imports-in-transit 0.62 -

14. The Company has imported certain goods under the Export Promotion Capital Goods Scheme of the Government of India at concessional rates of duty on an undertaking to fulfl quantifed exports against which the remaining future obligations aggregate to Rs 1,362.27 Lakhs and Rs 1,734.95 Lakhs which is to be fulflled within next 2 years and 5 years respectively. Non-fulflment of the balance obligation within the said period render the Company liable to pay the balance duty of Rs 387.15 Lakhs and other penalties under the above referred Scheme.

15. Showcause notices received from Central Excise Department to issue demand notices for an amount of Rs 10,169.35 Lakhs (Previous year Rs 9,064.91 Lakhs) are pending for fnal consideration and the Company has already submitted its objections in writing against the said demands.

16. The amount of contracts remaining to be executed on capital account and not provided for are estimated at Rs 944.33 Lakhs (previous year Rs 29,366.91 Lakhs).

17. Excise Duty included in Rates and Taxes and debited to profit and Loss Account represents the aggregate of Excise Duty borne by the Company and the difference between Excise Duty on opening and closing stock of fnished/saleable goods.

18. Segment reporting as per AS 17 issued by the Institute of Chartered Accountants of India.

A. Primary disclosures:

The company has identifed the reportable primary business segments considering:

i) the nature of products and services;

ii) the differing risks and returns;

iii) the organisation structure; and

iv) the internal financial reporting system.

19. Previous year fgures have been re-grouped and/or reclassifed wherever necessary to make them comparable with those of current year.


Mar 31, 2010

1. Nava Bharat Ventures Limited (the Company) has been incorporated on 7th November,1972. At present the Company is engaged in the business of manufacture of ferro alloys, sugar and generation of power.

2. The following are the significant Accounting Policies adopted by the Company in preparation and presentation of financial statements.

3. i. Disclosure of Sundry Creditors under Current Liabilities is based on the information availabe with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006" and relied upon by the Auditors. During the year the Company has paid no interest in terms of Section 16 of the said Act.

ii. Details of total outstanding dues to Micro and Small Enterprises as per "Micro, Small and Medium Enterprises Development Act, 2006".

4. a) During the year the Company has bought back 1,52,596 (Previous year 17,79,904) Equity Shares of Rs.2/- each at an average price of Rs.140.60 (Previous year Rs.119.20) per share and accordingly

i) The face value of shares has been reduced from the paid up Equity Share Capital.

ii) The balance of Rs.138.60 (Previous year Rs.117.20) paid on these shares aggregating to Rs.211.50 lakhs (Previous year Rs.2,086.10 lakhs) has been adjusted against General Reserve.

iii) As required under the provisions of the Companies Act 1956, Rs.3.05 lakhs (Previous year Rs.35.60 lakhs) has been transferred to Capital Redemption Reserve from current year Surplus.

b) Out of 7,62,55,458 (previous year 7,61,25,324) Equity Shares of Rs.2/- each fully paid-up of the Company:

i) 1,41,67,095 shares were allotted as fully paid-up pursuant to schemes of amalgamation without receiving the payment in cash.

ii) 1,21,37,095 shares are allotted as fully paid-up by way of bonus shares by capitalising Reserves.

iii) Pursuant to the order of Hon’ble High Court of Andhra Pradesh dated 30.12.1996 in the Scheme of amalgamation of Nav Chrome Limited with the Company, 49,73,510 equity shares of Rs.2/- each fully paid up owned by the company are vested in a Trustee for the benefit of the Company which are to be sold and net sale proceeds are to be paid to the Company and such shares are not considered for dividend.

iv) During the year, the Company has allotted 2,82,730 (Previous Year 31,560) Equity Shares of Rs.2/- each at a premium of Rs.111.15 (incl -uding the difference between the fair value and the exercise price) per share on exercise of 2,82,730 (Previous Year 31,560) Employees Stock options. Consequent to the above allotment and buy back of Shares during the year, the paid up Equity Share Capital of the Company stands increased from Rs.1,522.51 lakhs to Rs.1,525.11 lakhs and the Securities Premium stands increased from Rs.13,732.49 lakhs to Rs.14,046.74 lakhs.

c) The Company has granted 6,00,000 stock options under the Company’s Employees Stock Option Scheme 2006 (ESOS) during the year ended 31st March, 2007 to be converted into 6,00,000 Equity Shares at a premium of Rs.88.52 per share and stock options outstanding as at 31 March, 2010 are 1,09,210. During the year 2,82,730 (Previous Year 31,560) options were exercised and 4,560 (Previous Year 53,750) options were cancelled.

7. a) During the year 2006-07, the Company has issued Zero Coupon Foreign Currency Convertible Bonds for an amount of JPY 6.00 billion at par. These bonds are convertible into Equity Shares with a fixed rate of exchange of Rs.0.3976 per 1 JPY at an initial conversion price of Rs.136.50 per Share at the option of bondholders at any time on or after 14th October, 2006 and on or before the close of business hours (i.e. 5.00 P.M.) on 31st August, 2011. The Company also has an option to convert all these bonds on or after 29th September, 2009 and prior to 30th September, 2011 at the then prevailing conversion price as per the terms of issue. Out of the above, 2.48 billion Bonds were converted during the year 2007-08 and if all the remaining bonds are converted into Equity Shares, the paid up Equity Share Capital of the Company will increase by 97,00,620 Equity Shares of Rs.2/- each. If no such conversion takes place, the Bonds are redeemable on 30th September, 2011 at a redemption premium of 25.96% so as to give the bondholders gross yield to maturity of 4.67% per annum compounded semi-annually.

c) As the variables are indeterminate at present, the premium on actual redemption is not computable and hence will be recognised, as and when the redemption option is exercised, as a charge to the Securities Premium Account in terms of Section 78(2)(d) of the Companies Act,1956.

8. Fixed Deposit Receipts for Rs.391.81 lakhs (Previous year Rs.429.34 lakhs) are in lien with Bankers towards Margin Money for Bank Guarantees and Letters of Credit issued by them.

9. a) The Company’s land of about 5.08 acres was given possession to M/s. Hyderabad Vanaspathi Limited. The sale price of the same is yet to be adjusted pending permission from the Government of Andhra Pradesh.

b) Land costing Rs.1.23 lakhs (previous year Rs.1.23 lakhs) admeasuring 6 acres and 23 guntas (previous year 6 acres 23 guntas) is not in the name of the Company.

c) Land costing Rs.26.06 lakhs admeasuring 5.05 acres allotted by APIIC Ltd during the year, is not yet transferred in the name of the Company.

d) Cost of leasehold land amounting to Rs.140.33 lakhs shown under the head Fixed Assets represents the premium paid to the State Government of Orissa for alienation of 56.36 acres in favour of the Company by virtue of lease deeds for 90/99 years and the said land can be resumed by the said Government by giving 6 months notice in writing during the tenure of lease.

e) Motor Vehicles costing Rs.1.09 lakhs shown under the head Fixed Assets are not in the name of the Company.

10. As required by Accounting Standard (AS 28) "Impairment of Assets”, the management has carried out the assessment of impairment of assets and no impairment loss has been recognised during the year other than the assets discarded/dismantled

c) 6 year National Savings Certificates of the face value of Rs.2.91 lakhs (Previous year Rs.3.01 lakhs) shown under the investments are in the names of employees of the Company and the certificates in respect of face value of Rs.2.86 lakhs (Previous year Rs.2.79 lakhs) were pledged with various Government Departments as security.

11. a) In the opinion of the management, the Current Assets, Loans and Advances are expected to realise at least the amount at which they are stated, if realised in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts. b) Sundry Debtors due for less than six months amounting to Rs.14,502.52 lakhs (Previous year Rs.9,392.34 lakhs) include Rs.8,731.82 lakhs (Previous year Rs.2,292.76 lakhs) due from a foreign subsidiary Company viz., M/s.Nava Bharat (Singapore) Pte. Ltd, Singapore.

The rate of escalation in salary considered in actuarial valuation is estimated taking into account inflation, seniority, promotion and other relevant factors.

The Company has determined the liability for employee benefits as at 31st March, 2008 in accordance with the revised Accounting Standard 15 - Employee benefits issued by ICAI and the transitional liability in respect of gratuity is recognised as an expense on straight line basis over a period of 3 years commencing from the year 2007-08 in terms of the said Standard

The above information is certified by an actuary. 14. The Company uses derivative financial instruments such as forward contracts and currency swap to hedge currency exposures, present and anticipated, denominated mostly in US Dollars and Japanese Yen and all financial and derivative contracts entered into by the Company are for hedging purpose only.

12. a) Working Capital Loans from Banks are secured by hypothecation of raw materials, work-in-progress, finished goods, stores and spares and book debts to the extent of Rs.20,000 lakhs and a second charge on fixed assets of the Company.

b) The Term Loans from IDBI Bank Limited, Infrastructure Development Finance Company Limited, Andhra Bank, State Bank of India, HDFC Bank Limited, Bank of India, State Bank of Hyderabad, UCO Bank are secured by First Charge by way of equitable mortgage by deposit of title deeds to cover all immovable properties of the Company and hypothecation of all movable properties including movable Plant and Machinery, spares, tools and accessories, both present and future and a second charge by way of hypothecation of all movable properties both present and future (except book debts) subject to prior charges created/to be created in favour of Company’s bankers on its stocks of raw materials, semi-finished and finished goods, consumable stores for securing borrowings for working capital requirements. The mortgage/charges created above shall rank pari-passu with the charges created/to be created in favour of other Financial Institutions/Banks.

c) The Term Loan availed from Andhra Bank amounting to Rs.6,000.00 lakhs out of the sanction of Rs.20,000 lakhs for funding a foreign subsidiary Company, i.e. Nava Bharat (Singapore) Pte Ltd is also secured by pledge of 6,300,000 equity shares of US$1/- each held by Company in the said subsidiary and hypothecation of mineral and mining rights of subsidiary.

d) All the above said loans are also guaranteed by some of the directors of the Company in their personal capacity.

13. Contingent liabilities not provided for on account of:

(Rs. in lakhs)

Particulars As at 31.3.2010 As at 31.3.2009

a) Guarantees given by the Bankers 543.37 1,007.09

b) Guarantees given by the Company on behalf of others 10.40 10.40

c) Claims against the Company not acknowledged as debts 883.92 727.59

d) Demand raised by A. P. State Electricity Board (reconstituted as Transmission Corporation of Andhra Pradesh Ltd) towards additional charges on power tariff difference between HT I and HT III categories and surcharge on belated payments disputedby the Company, pending in appeal with High Court of A.P. 136.45 136.45

e) Interest on dues to A. P. State Electricity Board (reconstituted as Transmission Corporation of Andhra Pradesh Ltd). 62.35 62.35

f) Demand from Income-tax department disputed 684.41 1,377.71

14. The Company has imported certain goods under the Export Promotion Capital Goods Scheme of the Government of India at concessional rates of duty on an undertaking to fulfill quantified exports against which the remaining future obligations aggregate to Rs.1362.27 lakhs and Rs.1734.95 lakhs which is to be fulfilled within next 3 years and 6 years respectively. Non-fulfillment of the balance obligation within the said period render the Company liable to pay the balance duty of Rs.387.15 lakhs and other penalties under the above referred Scheme.

15. Showcause notices received from Central Excise Department to issue demand notices for an amount of Rs.9064.91 lakhs (Previous year Rs.5374.89 lakhs) are pending for final consideration and the Company has already submitted its objections in writing against the said demands.

16. The amount of contracts remaining to be executed on capital account and not provided for are estimated at Rs.29366.91lakhs (previous year Rs.385.75 lakhs).

17. Excise Duty included in Rates and Taxes and debited to Profit and Loss Account represents the aggregate of Excise Duty borne by the Company and the difference between Excise Duty on opening and closing stock of finished/saleable goods.

18. Segment reporting as per AS 17 issued by the Institute of Chartered Accountants of India.

A. Primary disclosures:

The company has identified the reportable primary business segments considering:

i) the nature of products and services;

ii) the differing risks and returns;

iii) the organisation structure; and

iv) the internal financial reporting system.

19. The details of related party transactions in terms of Accounting Standard (AS 18) are as follows:

a) Names of related parties and description of relationship:

Name of the related party Nature of relationship

i) Key Management Personnel:

Sri D Ashok Chairman

Sri P.Trivikrama Prasad Managing Director

Sri C.V. Durga Prasad Director (Business Development)

Sri G.R.K.Prasad Director (Finance & Corporate Affairs)

ii) Relatives of key management personnel:

Smt D Bhakta Priya Mother of Sri D Ashok

Dr D Rajasekhar Brother of Sri D Ashok

Smt C Umamaheswari Wife of Sri C V Durga Prasad

Smt G S P Kumari Wife of Sri G.R.K.Prasad

Mr G Raghu Chaitanya Son of Sri G.R.K.Prasad

Kum G Ramya Sudha Daughter of Sri G.R.K.Prasad

iii) Subsidiaries:

M/s.Nava Bharat (Singapore) Pte Ltd M/s.Brahmani Infratech Private Limited M/s.Nava Bharat Projects Limited M/s.Nava Bharat Realty Limited

M/s.Kinnera Power Company Limited

M/s.Nava Bharat Energy India Limited

M/s.Nava Bharat Sugar and Bio Fuels Limited

M/s.Malaxmi Highway Private Limited

M/s.PT Nava Bharat Sungaicuka, Indonesia

M/s.PT Nava BharatIndonesia

iv) Associates/Enterprises over which shareholders, key management personnel and their relatives exercise control or significant influence:

Dr. Devineni Subbarao Trust Promoter Group Entity

M/s.Navabharat Power Private Limited Associate Company

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