Accounting Policies of Steel Exchange India Ltd. Company
Mar 31, 2023
Significant accounting policies
2.1 Basis of preparation and Presentation
(a) Basis of measurement
The Financial Statements have been prepared on the historical cost convention on accrual basis except for
certain financial instruments that are measured at fair values at the end of each reporting period, as explained
in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and
services.
As the operating cycle has been assumed to have duration of 12 months. Accordingly, all assets and liabilities
have been classified as current or non-current as per the Company''s operating cycle and other criteria set out
in Ind AS-1 ''Presentation of Financial Statements'' and Schedule III to the Companies Act, 2013.
Accounting policies have been consistently applied except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting standard requires a change in the accounting policy
hitherto in use.
(c) Functional and presentation currency
The Standalone Financial Statements are presented in Indian Rupees and all values are rounded off to the
nearest rupee except otherwise stated.
(d) Use of estimates and judgement
The preparation of standalone financial statements in conformity with Ind AS requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates
are recognized in the period in which the estimates are revised and in any future periods affected.
2.2 Summary of significant accounting policies
2.2.1 Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date under current market conditions.
2.2.2 Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are carried at cost/deemed cost applied on transition
to Ind AS, less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying
amount of investment is assessed and an impairment provision is recognised, if required immediately to its
recoverable amount. On disposal of such investments, difference between the net disposal proceeds and
carrying amount is recognised in the statement of profit and loss.
2.2.3 Financial Instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual
provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from
the fair value measured on initial recognition of financial asset or financial liability. The transaction costs
directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and
loss are immediately recognised in the statement of profit and loss account.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of
allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly
discounts future cash receipts or payments through the expected life of the financial instrument, or where
appropriate, a shorter period
(a) Non-derivative financial assets
(i) Financial assets measured at amortized cost
A financial asset shall be measured at amortized cost if both of the following conditions are met:
⢠the financial asset is held within a business model whose objective is to hold financial assets in order to
collect contractual cash flows and
⢠the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
(ii) Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if such financial assets are
held within a business model whose objective is to hold these assets in order to collect contractual cash flows
and to sell such financial assets and the contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iii) Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
carried at fair value through profit and loss.
Cash and cash equivalents - which includes cash on hand, deposits held at call with banks and other short¬
term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of
change in value and have original maturities of less than one year.These balances with banks are unrestricted
for withdrawal and usage.
Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal and
usage.
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and
demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand and are considered
part of the Company''s cash management system.
(b) Non-derivative financial liabilities
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of
the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after
deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue
costs.
Financial liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently
measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value through profit and
loss account. Any transaction costs and the settlement or redemption of borrowings is recognised over the
term of the borrowings in the statement of profit and loss.
Compound financial instrument
⢠The component parts of compound instruments (compulsory convertible debentures) issued by the Company
are classified separately as financial liabilities and equity in accordance with the substance of the contractual
arrangements and the definitions of a financial liability and an equity instrument.
⢠A conversion option that will be settled by the exchange of a fixed number of the Company''s own equity
instruments is an equity instrument. At the date of issue, the fair value of the liability component is
estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is
recorded as a liability on an amortised cost basis using the effective interest method until extinguished
upon conversion or at the instrument''s maturity date. The conversion option classified as equity is determined
by deducting the amount of the liability component from the fair value of the compound instrument as a
whole. This is recognised and included in equity, and is not subsequently re measured.
⢠In addition, the conversion option classified as equity will remain in equity until the conversion is exercised,
in which case, the balance recognised in equity will be transferred to other component of equity. When the
conversion option remains unexercised at the maturity date of the convertible instrument, the balance
recognised in equity will be transferred to retained earnings. No gain or loss is recognised in statement of
profit and loss upon conversion or expiration of the conversion option.
2.2.4 Property, Plant and Equipment:
Recognition and measurement: Normally Property, plant and equipment are measured at cost less accumulated
depreciation and impairment losses, if any. Cost includes expenditures directly attributable to the acquisition of the
asset.
Depreciation on tangible assets is provided on the straight-line method over the useful lives of assets as per the
schedule II of the Companies Act.2013. Leasehold improvements are written off over the lower of the remaining
primary period of lease or the life of the asset.
The useful life of the assets adopted by the company is as per schedule II of the Companies Act, 2013 as follows:
Building 60 years
Factory Buildings 30 years
Plant and Machinery and Others 15 years
Plant and Machinery (Power Generation) 40 years
Plant and Machinery (Rolling Mill) 20 years
Office equipment 05 years
Computer equipment 03 years
Furniture and Fixtures 10 years
Electrical Installations 10 years
Vehicles (Other than two wheelers) 08 years
Vehicles 10 years
Roads (carpeted-other than RCC) 05 years
Roads (Non-carpeted) 03 years
Depreciation methods, useful lives and residual values are reviewed periodically at each financial year end.
Advances paid towards the acquisition of Property, Plant and Equipment outstanding at each Balance Sheet date is
classified as capital advances under other non-current assets.
Subsequent expenditure relating to Property, Plant and Equipment are capitalized only when it is probable that future
economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.
Repairs & maintenance costs are recognized in the statement of Profit & Loss when incurred.
Upon sale or retirement of assets, the Cost and related accumulated depreciation are eliminated from the financial
statements and the resultant gain or losses are recognized in the Statement of Profit and Loss.
Subsequent expenditure relating to Property, Plant and Equipment are capitalized only when it is probable that future
economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.
Repairs & maintenance costs are recognized in the statement of Profit & Loss when incurred.
Upon sale or retirement of assets, the Cost and related accumulated depreciation are eliminated from the financial
statements and the resultant gain or losses are recognized in the Statement of Profit and Loss.
2.2.5 Capital work-in progress:
The items of property, plant and equipment which are not yet ready for use are disclosed as capital work in progress and
carried at historical cost.
2.2.6 Leases:
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are
classified as operating leases.
Where the Company is the lessee
"Effective April 1,2019, Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognise right-
of-use assets and lease liabilities for all lease with a term of more than twelve months, unless the underlying asset is of a
low value.
As the company is engaged in short term lease contracts, new INDAS 116 has not been adopted.
Where the Company is the Lessor
Assets subject to operating Leases are included in fixed assets. Lease income is recognized in the Statement of profit and
loss. Costs including depreciation are recognized as an expense in the Statement of profit and loss.
2.2.7 Inventory:
Inventories are valued at the lower of cost and net realizable value. Cost of inventories comprises all cost of purchase,
costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is
determined by First in First out (FIFO) method.
2.2.8 Impairment:
(a) Financial Assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and
recognition of impairment loss.
(i) The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivable.
The application of simplified approach does not require the Company to track changes in credit risk.
Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from
its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines
that whether there has been a significant increase in the credit risk since initial recognition. If credit risk
has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit
risk has increased significantly, lifetime ECL is used. If in subsequent period, credit quality of the instrument
improves such that there is no longer a significant increase in credit risk since initial recognition, then the
entity reverts to recognising impairment loss allowance based on 12 month ECL.
Lifetime ECLs are the expected credit losses resulting from all possible default events over the expected
life of a financial instrument. The 12 month ECL is a portion of the lifetime ECL which results from default
events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with
the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the
original EIR. When estimating the cash flows, an entity is required to consider:
(ii) All contractual terms of the financial instrument (including prepayment, extension etc.) over the expected
life of the financial instrument. However, in rare cases when the expected life of the financial instrument
cannot be estimated reliably, then the entity is required to use the remaining contractual term of the
financial instrument.
(iii) Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual
terms.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense
in the statement of profit and loss. The balance sheet presentation for various financial instruments is
described below:
Financial assets measured at amortised cost, contractual revenue receivable: ECL is presented as an
allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance
reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce
impairment allowance from the gross carrying amount.
(b) Non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non-financial
asset or a group of non-financial assets is impaired. If any such indication exists, the Company estimates the
amount of impairment loss.
An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount.
Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers
that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount
of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised, then the previously recognised impairment loss is reversed through profit
or loss.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use
and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped
together into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").
2.2.9 Employee benefits:
(a) Gratuity & Provident Fund:
(i) Gratuity payable to eligible employees is administered by a separate Trust. Payments to the trust towards
contributions and other demands are made on the basis of actuarial valuation.
The Company provides for gratuity, a defined benefit retirement plan ("the Gratuity Plan") covering
eligible employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement,
death, incapacitation or termination of employment, of an amount based on the respective employee''s
salary and the tenure of employment with the Company.
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an
independent actuary, at each Balance Sheet date using the projected unit credit method.
The Company recognizes the net obligation of the defined benefit plan in its Balance Sheet as an asset
or liability. Gains and losses through re measurements of the net defined benefit liability/(asset) are
recognized in other comprehensive income and are not reclassified to profit or loss in subsequent
periods. The actual return of the portfolio of plan assets, in excess of the yields computed by applying
the discount rate used to measure the defined benefit obligation is recognized in other comprehensive
income. The effects of any plan amendments are recognized in net profit in the Statement of Profit and
Loss.
(ii) Fixed contributions to Provident Fund are recognized in the accounts at actual cost to the Company,
(b) Other Benefits:
Other employee benefits are estimated and accounted as per the company''s policy and the terms of the
employment contract.
Mar 31, 2022
1. Corporate information
Steel Exchange India Limited was incorporated on 24th February 1999. The activities of the company are manufacture of steel products, trading of related products and generation and sale of Power.
The Company is a Public Limited Company incorporated and domiciled in India and has its registered office at Hyderabad, Telangana, India. The company has its listing on the BSE, NSE Limited and (CSE - under process of delisting)
2. Significant accounting policies2.1 Basis of preparation and Presentation
(a) Basis of measurement
The Financial Statements have been prepared on the historical cost convention on accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
As the operating cycle has been assumed to have duration of 12 months. Accordingly, all assets and liabilities have been classified as current or non-current as per the Company''s operating cycle and other criteria set out in Ind AS-1 ''Presentation of Financial Statements'' and Schedule III to the Companies Act, 2013.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
(c) Functional and presentation currency
The Standalone Financial Statements are presented in Indian Rupees and all values are rounded off to the nearest rupee except otherwise stated.
(d) Use of estimates and judgement
The preparation of standalone financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
2.2 Summary of significant accounting policies2.2.1 Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.
2.2.2 Investments in subsidiaries, associates and joint ventures
The Company records the investments in subsidiaries, associates and joint ventures at cost less impairment loss, if any.
All financial instruments are recognized initially at fair value. Transaction costs that are attributable to the acquisition of the financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets. Purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trade) are recognized on trade date. While, loans and borrowings and payable are recognized net of directly attributable transactions costs.
For the purpose of subsequent measurement, financial instruments of the Company are classified in the following categories: non-derivative financial assets comprising amortized cost; non derivative financial liabilities at amortized cost.
The classification of financial instruments depends on the objective of the business model for which it is held. Management determines the classification of its financial instruments at initial recognition.
Financial instrument is derecognized only when the Company has transferred its right to receive/ extinguish its obligation to pay cash flow from such financial instruments.
(a) Non-derivative financial assets Financial assets at amortized cost
A financial asset shall be measured at amortized cost if both of the following conditions are met:
> the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
> the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. Financial assets are measured initially at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest method, less any impairment loss.
Amortized cost is represented by security deposits, cash and cash equivalents, employee and other advances and eligible current and non-current assets.
Cash and cash equivalents comprise cash on hand and in banks and demand deposits with banks which can be withdrawn at any time without prior notice or penalty on the principal.
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand and are considered part of the Company''s cash management system.
Financial assets at fair value through profit or loss
Fair value through profit or loss is represented by investments in mutual funds.
(b) Non-derivative financial liabilities Financial liabilities at amortized cost
> Financial liabilities at amortized cost represented by trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method.
Compound financial instrument
> The component parts of compound instruments (compulsory convertible debentures) issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
> A conversion option that will be settled by the exchange of a fixed number of the Company''s own equity instruments is an equity instrument. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument''s maturity date. The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity, and is not subsequently re measured.
> In addition, the conversion option classified as equity will remain in equity until the conversion is exercised, in which
case, the balance recognised in equity will be transferred to other component of equity. When the conversion option remains unexercised at the maturity date of the convertible instrument, the balance recognised in equity will be transferred to retained earnings. No gain or loss is recognised in statement of profit and loss upon conversion or expiration of the conversion option.
2.2.4 Property, Plant and Equipment:
Recognition and measurement: Normally Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditures directly attributable to the acquisition of the asset.
Depreciation on tangible assets is provided on the straight-line method over the useful lives of assets as per the schedule II of the Companies Act.2013. Leasehold improvements are written off over the lower of the remaining primary period of lease or the life of the asset.
The useful life of the assets adopted by the company is as per schedule II of the Companies Act, 2013 as follows:
Building 60 years
Factory Buildings 30 years
Plant and Machinery and Others 15 years
Plant and Machinery (Power Generation) 40 years
Plant and Machinery (Rolling Mill) 20 years
Office equipment 05 years
Computer equipment 03 years
Furniture and Fixtures 10 years
Electrical Installations 10 years
Vehicles (Other than two wheelers) 08 years
Vehicles 10 years
Roads (carpeted-other than RCC) 05 years
Roads (Non-carpeted) 03 years
Depreciation methods, useful lives and residual values are reviewed periodically at each financial year end.
Advances paid towards the acquisition of Property, Plant and Equipment outstanding at each Balance Sheet date is classified as capital advances under other non-current assets.
Subsequent expenditure relating to Property, Plant and Equipment are capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.
Repairs & maintenance costs are recognized in the statement of Profit & Loss when incurred.
Upon sale or retirement of assets, the Cost and related accumulated depreciation are eliminated from the financial statements and the resultant gain or losses are recognized in the Statement of Profit and Loss.
2.2.5 Capital work-in progress:
The items of property, plant and equipment which are not yet ready for use are disclosed as capital work in progress and carried at historical cost.
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases.
Where the Company is the lessee
"Effective April 1,2019, Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognise right-of-use assets and lease liabilities for all lease with a term of more than twelve months, unless the underlying asset is of a low value.
As the company is engaged in short term lease contracts, new INDAS 116 has not been adopted.
Where the Company is the Lessor
Assets subject to operating Leases are included in fixed assets. Lease income is recognized in the Statement of profit and loss. Costs including depreciation are recognized as an expense in the Statement of profit and loss.
Inventories are valued at the lower of cost and net realizable value. Cost of inventories comprises all cost of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined by First in First out (FIFO) method.
(a) Financial Assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss.
(i) The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivable.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12 month ECL.
Lifetime ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12 month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:
(ii) All contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.
(iii) Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
Financial assets measured at amortised cost, contractual revenue receivable: ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
(b) Non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").
(a) Gratuity & Provident Fund:
(i) Gratuity payable to eligible employees is administered by a separate Trust. Payments to the trust towards contributions and other demands are made on the basis of actuarial valuation.
The Company provides for gratuity, a defined benefit retirement plan ("the Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the Company.
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method.
The Company recognizes the net obligation of the defined benefit plan in its Balance Sheet as an asset or liability. Gains and losses through re measurements of the net defined benefit liability/(asset) are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent periods. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation is recognized in other comprehensive income. The effects of any plan amendments are recognized in net profit in the Statement of Profit and Loss.
(ii) Fixed contributions to Provident Fund are recognized in the accounts at actual cost to the Company.
(b) Other Benefits:
Other employee benefits are estimated and accounted as per the company''s policy and the terms of the employment contract
All the provisions are recognized as per Ind AS 37. Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
The Company derives revenues primarily from business of Iron & Steel and power.
Effective April 1,2018, the Company adopted "Ind AS 115, Revenue from Contracts with Customers", using the cumulative catch-up transition method, applied to contracts that were not completed as of April 1,2018. In accordance with the cumulative catch-up transition method, the comparatives have not been retrospectively adjusted. The following is a summary of new and / or revised significant accounting policies related to revenue recognition.
Revenue is recognized upon transfer of control of promised goods or services to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Revenue is measured net of returns, trade discounts and volume rebates. The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement.
An Entity''s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than passage of time is treated as contract asset.
An entity''s obligation to transfer goods or service to a customer for which the entity has received consideration (or the amount is due) from the customer is treated as contract liability.
The Company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on performance obligation that corresponds to the progress by the customer towards earning the discount / incentive. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then the discount is not recognized until the payment is probable and the amount can be estimated reliably. The Company recognizes changes in the estimated amount of obligations for discounts in the period in which the change occurs.
Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the goods/services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Goods/ services added that are not distinct are accounted for on a cumulative catch-up basis, while those that are distinct are accounted for prospectively, either as a separate contract, if the additional Goods/ services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price.
The Company presents revenues net of indirect taxes in its Statement of Profit and Loss.
Disaggregate revenue information
Revenue from Operations presents disaggregated revenues from contracts with customers for the year ended March 31,2022 by type of goods or services. Refer table in note no.3.20
The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.
Trade receivables and contract balances
The Company classifies the right to consideration in exchange for deliverables as a receivable.
A receivable is a right to consideration that is unconditional upon passage of time.
Revenue for time-and-material contracts are recognized as related control in goods is transferred and services are performed.
T rade receivable is presented net of impairment in the Balance Sheet.
During the year ended March 31,2022, the Company recognized revenue of Rs.42.19 crore arising from opening unearned revenue as of April 1,2021.
Performance obligations and remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue.
Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognized corresponds directly with the value to the customer of the entity''s performance completed to date, typically those contracts where invoicing is on time-and-material basis.
Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, and adjustment for revenue that has not materialized and adjustments for currency.
The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31, 2022, other than those meeting the exclusion criteria mentioned above, is ''.35.42 crore. Out of this, the Company expects to recognize revenue of around 97% within the next one year and the remaining thereafter. This includes contracts that can be terminated for convenience without a substantive penalty since, based on current assessment; the occurrence of the same is expected to be remote.
The impact on account of applying the erstwhile Ind AS 18, Revenue instead of Ind AS 115, Revenue from Contracts with Customers on the financials results of the Company for the year ended and as at March 31,2022 is insignificant. terminations, changes in the scope of contracts, periodic revalidations, and adjustment for revenue that has not materialized and adjustments for currency.
The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31, 2021, other than those meeting the exclusion criteria mentioned above, is Rs.44.55 crore. Out of this, the Company expects to recognize revenue of around 98% within the next one year and the remaining thereafter. This includes contracts that can be terminated for convenience without a substantive penalty since, based on current assessment; the occurrence of the same is expected to be remote.
The impact on account of applying the erstwhile Ind AS 18, Revenue instead of Ind AS 115, Revenue from Contracts with Customers on the financials results of the Company for the year ended and as at March 31,2022 is insignificant.
2.2.12Finance income and expense
> Finance income consists of interest income on deposits, Lease rental income, un realized gain on mutual fund and other miscellaneous income. Interest income is recognized as it accrues in the statement of profit and loss.
> Finance expenses consist of interest expense on loans and borrowings. Borrowing costs are recognized in the statement of profit and loss.
> Foreign currency gains and losses are reported on a net basis.
Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to the extent it relates to items directly recognized in equity or in other comprehensive income.
(a) Current income tax
Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable income for the period. The tax rates and tax laws used to compute the current tax amount are those that are enacted or substantively enacted by the reporting date and applicable for the period. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis or to realize the asset and liability simultaneously.
Section 115 BAA of the Income Tax Act 1961, introduced by Taxation Laws (Amendment) Ordinance, 2019 gives a one-time irreversible option to Domestic Companies for payment of corporate tax at reduced rates. In view of the unabsorbed depreciation and MAT Credits, the Company has determined that it will continue to recognize tax expense at the existing income tax rate as applicable to the Company.
(b) Deferred income tax
Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profits or loss at the time of the transaction.
Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. Deferred income tax liabilities are recognized for all taxable temporary differences. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Basic earnings per share are computed using the weighted average number of equity shares outstanding during the year.
Diluted EPS is computed by dividing the net profit after tax by the weighted average number of equity shares considered for deriving basic EPS and also weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless issued at a later date. Dilutive potential equity shares are determined independently for each year presented. The number of equity shares and potentially dilutive equity shares are adjusted for bonus shares, as appropriate.
2.2.15Foreign Currency Transactions:
Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary foreign currency assets and liabilities are reported at the exchange rate prevailing on the balance sheet date. Exchange differences relating to long term monetary items, arising during the year, as so far as they relate to the acquisition of the depreciable capital asset is dealt with in the profit and loss statements.
Borrowings costs directly attributable to acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which it occurs.
Borrowing costs consists of interest and other costs that an entity incurs in connection with the borrowing of funds.
Mar 31, 2018
1. Significant accounting policies
1.1. Basis of preparation
(a) Statement of Compliance
All applicable Ind AS have been applied consistently and retrospectively wherever required. The resulting difference between the carrying amounts of the assets and liabilities in the financial statements under both Ind AS and Indian GAAP as of transition date have been recognized directly in equity at the transition date.
In accordance with Ind AS 101-âFirst Time adoption of Indian Accounting Standardsâ (Ind AS 101), the Company has presented a reconciliation of Shareholdersâ equity under Previous GAAP and Ind AS as at March 31, 2017, and April 1, 2016 and of the Profit after tax as per Previous GAAP and Total Comprehensive Income under Ind AS for the year ended March 31, 2017.
(b) Basis of measurement
The Financial Statements have been prepared on the historical cost convention on accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
As the operating cycle has been assumed to have duration of 12 months. Accordingly, all assets and liabilities have been classified as current or non-current as per the Companyâs operating cycle and other criteria set out in Ind AS-1 âPresentation of Financial Statementsâ and Schedule III to the Companies Act, 2013.
( c ) Functional and presentation currency
The Standalone Financial Statements are presented in Indian Rupees and all values are rounded off to the nearest rupee except otherwise stated.
(d) Use of estimates and judgement
The preparation of standalone financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
1.2 Summary of significant accounting policies
1.2.1 Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.
1.2.2 Investments in subsidiaries, associates and joint ventures
The Company records the investments in subsidiaries, associates and joint ventures at cost less impairment loss, if any.
1.2.3 Financial instruments
All financial instruments are recognized initially at fair value. Transaction costs that are attributable to the acquisition of the financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets. Purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trade) are recognized on trade date. While, loans and borrowings and payable are recognized net of directly attributable transactions costs.
For the purpose of subsequent measurement, financial instruments of the Company are classified in the following categories: nonderivative financial assets comprising amortized cost; non derivative financial liabilities at amortized cost.
The classification of financial instruments depends on the objective of the business model for which it is held. Management determines the classification of its financial instruments at initial recognition.
Financial instrument is derecognized only when the Company has transferred its right to receive/ extinguish its obligation to pay cash flow from such financial instruments.
(a) Non-derivative financial assets Financial assets at amortized cost
A financial asset shall be measured at amortized cost if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. Financial assets are measured initially at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest method, less any impairment loss.
Amortized cost is represented by security deposits, cash and cash equivalents, employee and other advances and eligible current and non-current assets.
Cash and cash equivalents comprise cash on hand and in banks and demand deposits with banks which can be withdrawn at any time without prior notice or penalty on the principal.
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand and are considered part of the Companyâs cash management system.
Financial assets at fair value through profit or loss
Fair value through profit or loss is represented by investments in mutual funds.
(b) Non-derivative financial liabilities Financial liabilities at amortized cost
- Financial liabilities at amortized cost represented by trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method.
1.2.4 Property, Plant and Equipment:
Recognition and measurement: Normally Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditures directly attributable to the acquisition of the asset. The Company has elected to apply the optional exemption to use this previous GAAP value as deemed cost at 1 April 2016, the date of transition except for land and buildings which are revalued as on 01.04.2016.
Depreciation on tangible assets is provided on the straight-line method over the useful lives of assets as per the schedule II of the Companies Act.2013. Leasehold improvements are written off over the lower of the remaining primary period of lease or the life of the asset. The useful life of the assets adopted by the company is as per schedule II of the Companies Act, 2013 as follows:
Fixed Assets costing Rs.5,000/- or less are fully depreciated in the year of purchase.
1.2.5 Capital work-in progress:
The items of property, plant and equipment which are not yet ready for use are disclosed as capital work in progress and carried at historical cost.
On transition to Ind AS the Company has elected to continue with the carry value of all items of capital work in progress recognized as at 1st April, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of such items of capital work in progress.
1.2.6 Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases.
Where the Company is the lessee
Operating lease payments are recognized as an expense in the Statement of profit and loss on straight-line basis over the lease term. Where the Company is the Lessor
Assets subject to operating Leases are included in fixed assets. Lease income is recognized in the Statement of profit and loss. Costs including depreciation are recognized as an expense in the Statement of profit and loss.
For arrangements entered into prior to 1st April, 2016 the date of inception is deemed to be 1st April, 2016 in accordance with Ind AS 101 , First time adoption of Indian Accounting Standards.
1.2.7 Inventory:
Inventories are valued at the lower of cost and net realizable value. Cost of inventories comprises all cost of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined by First In First Out (FIFO) method.
1.2.8 Impairment:
(a) Financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss.
(i) The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivable.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12 month ECL.
Lifetime ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12 month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider
(ii) All contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.
(iii) Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
Financial assets measured at amortised cost, contractual revenue receivable: ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
(b) Non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non financial asset or a group of non financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
An impairment loss is calculated as the difference between an assetâs carrying amount and recoverable amount. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ).
1.2.9 Employee benefits
(a) Gratuity & Provident Fund:
(i) Gratuity payable to eligible employees is administered by a separate Trust. Payments to the trust towards contributions and other demands are made on the basis of actuarial valuation.
(ii) Fixed contributions to Provident Fund are recognized in the accounts at actual cost to the Company
(b) Other Benefits:
Other employee benefits are estimated and accounted as per the companyâs policy and the terms of the employment contract
1.2.10 Provisions
All the provisions are recognized as per Ind AS 37. Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
1.2.11 Revenue recognition:
Revenue is recognized when the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Revenue is measured net of returns, trade discounts and volume rebates. The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement.
(a) Domestic sales: Domestic sales are accounted on the date of Forwarding Note (Rail dispatches/ Lorry receipt/Delivery challan).
(b) Obsolete Stores & Scrap: Income is accounted on realization basis in respect of used/ surplus/obsolete/unserviceable materials/waste products and scrap.
1.2.12 Finance income and expense
Finance income consists of interest income on deposits, forex gain and other miscellaneous income. Interest income is recognized as it accrues in the statement of profit and loss.
- Finance expenses consist of interest expense on loans and borrowings. Borrowing costs are recognized in the statement of profit and loss.
- Foreign currency gains and losses are reported on a net basis.
1.2.13 Income tax
Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to the extent it relates to items directly recognized in equity or in other comprehensive income.
(a) Current income tax
Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable income for the period. The tax rates and tax laws used to compute the current tax amount are those that are enacted or substantively enacted by the reporting date and applicable for the period. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis or to realize the asset and liability simultaneously.
(b) Deferred income tax
Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profits or loss at the time of the transaction.
Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. Deferred income tax liabilities are recognized for all taxable temporary differences. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
1.2.14 Earnings per share
Basic earnings per share are computed using the weighted average number of equity shares outstanding during the year.
Diluted EPS is computed by dividing the net profit after tax by the weighted average number of equity shares considered for deriving basic EPS and also weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless issued at a later date. Dilutive potential equity shares are determined independently for each year presented. The number of equity shares and potentially dilutive equity shares are adjusted for bonus shares, as appropriate.
1.2.15 Foreign Currency Transactions:
Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary foreign currency assets and liabilities are reported at the exchange rate prevailing on the balance sheet date. Exchange differences relating to long term monetary items, arising during the year, as so far as they relate to the acquisition of the depreciable capital asset are dealt with in the profit and loss statements.
1.2.16 Borrowing costs
Borrowings costs directly attributable to acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which it occurs.
Borrowing costs consists of interest and other costs that an entity incurs in connection with the borrowing of funds.
Disclosures:
Cash and Cash equivalents as of March 31, 2018,March 31, 2017 and April 1, 2016 includes restricted cash balances of Rs. 6,80,86,900, Rs. 14,71,55,896 and Rs. 83,63,10,549 respectively. The restriction is primarily on account of Cash and Bank balances held as margin money deposits against Letter of Credits and Bank guarantees sanctioned by banks.
Cash and Cash Equivalents includes deposits maintained by the Company with banks, which can be withdrawn by the Company at any point of time without prior notice or penalty on the principal.
Disclosures:
The Company has made provision for tax in the earlier years on basis of provision U/s. 115JB of the Income Tax Act, 1961. The same is taken into books as it can be adjusted against tax normal tax liability during the specified period. In accordance with the guidance note issued by ICAI, the company will review the same at each balance sheet date and write down the carrying amount of MAT Credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income tax during the specified period.
Mar 31, 2016
Nature of business:
Steel Exchange India Limited was incorporated on 24th February 1999. The activities of the company are manufacture of steel products, trading of related products and generation and sale of Power.
The Company is a Public Limited Company incorporated and domiciled in India and has its registered office at Hyderabad, Telangana, India. The company has its listing on the BSE Limited.
1. SIGNIFICANT ACCOUNTING POLICIES:
i) Basis of Preparation:
The financial statements are prepared under historical cost convention in accordance with the generally accepted accounting principles in India ("Indian GAAP") and comply in all material respects with the mandatory Accounting Standards ("AS") prescribed under section 133 of the Companies Act'' 2013 read with rules 7 of the Companies (Accounts) Rules, 2014 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting Policies have been consistently applied except where a newly issued accounting standard is initially adopted or revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
ii) Operating Cycle:
All assets and liabilities have been classified as Current and Non-Current as per the company''s normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of Current and Non-Current classification of Assets and Liabilities.
iii) Revenue Recognition:
Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products, when all significant contractual obligations have been satisfied, the property in the goods is transferred for price, significant risks and rewards of ownership is retained. Sales are net of sales tax/Value added tax. Excise duty recovered is presented as a reduction from gross turnover.
iv) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and estimated useful lives of fixed assets. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.
v) Fixed Assets:
Fixed Assets are stated at cost less accumulated depreciation inclusive of freight, duties, taxes and incidental expenses relating to the cost of acquisition and finance cost.
vi) Borrowing costs:
Borrowing costs attributable to the acquisition or construction of qualifying assets, as defined in Accounting Standard 16 on "Borrowing Costs" are capitalized as part of the cost of such asset up to the date when the asset is ready for its intended use. Other borrowing costs are expensed as incurred.
vii) Capital Work in progress:
Projects under which assets are not ready for their intended use and other capital work-in- progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
viii) Depreciation:
Depreciation on tangible assets is provided on the straight-line method over the useful lives of assets as per the schedule II of the Companies Act.2013. Leasehold improvements are written off over the lower of the remaining primary period of lease or the life of the asset. The useful life of the assets adopted by the company is as per schedule II of the Companies Act, 2013 as follows:
ix) Inventories:
Inventories are valued at the lower of cost and net realizable value. Cost of inventories comprises all cost of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined by First In First Out (FIFO) method.
The liability towards excise duty on finished goods lying in excise go down is provided in the books and therefore the stock is valued inclusive of excise duty payable thereon in accordance with the provisions of AS-2 "Valuation of Inventories". However this has no impact on the profit of the year.
x) Investments:
Long-term investments are carried at cost less provision for diminution other than temporary, if any, in value of such investments. Current investments are carried at lower of cost and fair value.
xi) Income Tax:
Income taxes are accrued in the same period that the related revenue and expenses arise. A provision is made for income tax, based on the tax liability computed, after considering tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due to disallowances or other matters is probable. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognized as an asset in the Balance Sheet.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.
xii) Retirement and other Employee Benefits:
a. Defined Contribution Plan: Fixed contributions to Provident Fund are recognized in the accounts at actual cost to the Company.
b. Defined Benefit Plan: The Company makes contribution to a scheme administered by the insurer to discharge gratuity liabilities to the employees. The Company records its gratuity liability based on independent actuarial valuation as at the Balance Sheet date.
c. Other Employee Benefits: Other employee benefits are estimated and accounted as per the company''s policy and the terms of the employment contract.
xiii) Foreign Currency Transactions:
Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary foreign currency assets and liabilities are reported at the exchange rate prevailing on the balance sheet date. Exchange differences relating to long term monetary items, arising during the year, as so far as they relate to the acquisition of the depreciable capital asset are added to/deducted from the cost of the asset and depreciated over the balance life of the asset after the commencement of actual production.
xiv) Cash flow statement:
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments.
Cash and cash equivalents presented in the cash flow statement consist of cash on hand and unencumbered highly liquid cash bank balances.
xv) Provisions:
A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
xvi) Earnings Per Share:
The company reports basic Earnings per share (EPS) in accordance with Accounting Standard 20 on "Earnings per share". Basic EPS is computed by dividing the net Profit or Loss for the year attributable to equity share holders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
xvii) Segmenting Reporting:
The Company is primarily engaged in the business of manufacture and sale of iron and steel products and generation and sale of power. The primary segment of the company is steel which in the context of Accounting Standard 17 on "Segment Reporting" constitutes reportable segment. However the company has captive power generation for manufacture of steel products. The unutilized power is sold to power traders and the revenue so generated is included in the sales.
xviii) Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
xix) Prior period items
All items of income/expenditure pertaining to prior period, which are material, are accounted through "prior period adjustments".
xx) Leases
Leases where the less or effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases.
Where the Company is the lessee
Operating lease payments are recognized as an expense in the Statement of profit and loss on straight-line basis over the lease term.
Where the Company is the Lesser
Assets subject to operating Leases are included in fixed assets. Lease income is recognized in the Statement of profit and loss. Costs including depreciation are recognized as an expense in the Statement of profit and loss.
xxi) Contingent Liabilities
A contingent Liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize contingent liability but discloses its existence in the financial statements.
Mar 31, 2014
I) Basis of Preparation:
The financial statements are prepared under historical cost convention
in accordance with the generally accepted accounting principles in
India ("Indian GAAP") and comply in all material respects with the
mandatory Accounting Standards ("AS") prescribed in the Companies
(Accounting Standard) Rules, 2006, the provisions of the Companies
Act,2013 (to the extent notified), the Companies Act,1956 (to the
extent applicable), and guidelines issued by the Securities and
Exchange Board of India (SEBI). Accounting Policies have been
consistently applied except where a newly issued accounting standard is
initially adopted or revision to an existing accounting standard
requires a change in the accounting policy hitherto in use.
ii) Operating Cycle:
All assets and liabilities have been classified as Current and
Non-Current as per the company''s normal operating cycle and other
criteria set out in the Schedule VI of the Companies Act, 1956. Based
on the nature of products and the time between the acquisition of
assets for processing and their realization in cash and cash
equivalents, the company has ascertained its operating cycle as 12
months for the purpose of Current and Non-Current classification of
Assets and Liabilities.
iii) Revenue Recognition:
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for price, significant risks and
rewards of ownership is retained. Sales are net of sales tax/Value
added tax. Excise duty recovered is presented as a reduction from gross
turnover.
iv) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and estimated
useful lives of fixed assets. Although these estimates are based upon
management''s best knowledge of current events and actions, actual
results could differ from these estimates. Any revision to accounting
estimates is recognized prospectively in the current and future
periods.
v) Fixed Assets:
Fixed Assets are stated at cost less accumulated depreciation inclusive
of freight, duties, taxes and incidental expenses relating to the cost
of acquisition and finance cost.
vi) Borrowing costs:
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on "Borrowing
Costs" are capitalized as part of the cost of such asset up to the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
vii) Capital Work in progress:
Projects under which assets are not ready for their intended use and
other capital work-in- progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
viii) Depreciation:
Depreciation on Fixed Assets is charged under Straight Line Method
(SLM)/ Written Down Value Method (WDV) in accordance with Schedule XIV
of the Companies Act, 1956.
Depreciation on assets of sponge iron unit acquired on account of
amalgamation of GSAL (India) Limited as per the DRS approved by BIFR
vide order dated 6.8.2012 and additions to the sponge iron unit are
provided under written down value method (WDV).
ix) Inventories:
Inventories are valued at the lower of cost and net realizable value.
Cost of inventories comprises all cost of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined by First In First Out (FIFO)
method.
The liability towards excise duty on finished goods lying in excise
godown is provided in the books and therefore the stock is valued
inclusive of excise duty payable thereon in accordance with the
provisions of AS-2 "Valuation of Inventories". However this has no
impact on the profit of the year.
x) Investments:
Long-term investments are carried at cost less provision for diminution
other than temporary, if any, in value of such investments. Current
investments are carried at lower of cost and fair value.
xi) Income Tax:
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act, 1961
enacted in India. Deferred income taxes reflects the impact of current
year timing differences between taxable income and accounting income
for the year and reversal of timing differences of earlier years.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax after
setting off of brought forward losses. Accordingly, MAT is recognised
as an asset in the balance sheet when it is probable that the future
economic benefit associated with it will flow to the Company and the
asset can be measured reliably.
xii) Retirement and other Employee Benefits:
a. Defined Contribution Plan: Fixed contributions to Provident Fund
are recognized in the accounts at actual cost to the Company.
b. Defined Benefit Plan: The Company makes contribution to a scheme
administered by the insurer to discharge gratuity liabilities to the
employees. The Company records its gratuity liability based on
independent actuarial valuation as at the Balance Sheet date using the
Projected Unit Credit Method. Actuarial gains and losses are
immediately recognized in the Statement of Profit and Loss.
c. Other Employee Benefits: Other employee benefits are estimated and
accounted as per the company''s policy and the terms of the employment
contract.
xiii) Foreign Currency Transactions:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of the transaction. Monetary foreign currency
assets and liabilities are reported at the exchange rate prevailing on
the balance sheet date. Exchange differences relating to long term
monetary items, arising during the year, as so far as they relate to
the acquisition of the depreciable capital asset are added to/deducted
from the cost of the asset and depreciated over the balance life of the
asset after the commencement of actual production.
xiv) Cash flow statement:
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or
payments.
Cash and cash equivalents presented in the cash flow statement consist
of cash on hand and unencumbered highly liquid cash bank balances.
xv) Provisions:
A provision is recognized when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
xvi) Earnings Per Share:
The company reports basic Earnings per share (EPS) in accordance with
Accounting Standard 20 on "Earnings per share". Basic EPS is computed
by dividing the net Profit or Loss for the year attributable to equity
share holders by the weighted average number of equity shares
outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
xvii) Segmenting Reporting:
The Company is primarily engaged in the business of manufacture and
sale of iron and steel products. The primary segment of the company is
steel which in the context of Accounting Standard 17 on "Segment
Reporting" constitutes reportable segment. However the company has
captive power generation for manufacture of ingots. The unutilized
power is sold to power traders and the revenue so generated is included
in the sales.
xviii) Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
xix) Prior period items
All items of income/expenditure pertaining to prior period, which are
material, are accounted through "prior period adjustments".
xx) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases.
Where the Company is the lessee
Operating lease payments are recognized as an expense in the Statement
of profit and loss on straight-line basis over the lease term.
Where the Company is the Lessor
Assets subject to operating Leases are included in fixed assets. Lease
income is recognized in the Statement of profit and loss. Costs
including depreciation are recognized as an expense in the Statement of
profit and loss.
xxi) Contingent Liabilities
A contingent Liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize contingent liability but discloses its existence in the
financial statements.
Mar 31, 2013
I) Basis of Preperation:
The financial statements are prepared under historical cost convention
in accordance with the generally accepted accounting principles in
India ("Indian GAAP") and comply in all material respects with the
mandatory Accounting Standards ("AS") prescribed in the Companies
(Accounting Standard) Rules, 2006 as amended by the Companies
(Accounting Standard) Amendment Rules, 2009 ("the Rules") and with the
relevant provisions of the Act, pronouncements of The Institute of
Chartered Accountants of India (''ICAI''), other relevant provisions of
the Act. The financial statements have been prepared under the
historical cost convention on an accrual basis and the accounting
policies applied by the Company are consistent with those used in the
previous period.
ii) Operating Cycle:
All assets and liabilities have been classified as Current and
Non-Current as per the company''s normal operating cycle and other
criteria set out in the Schedule VI of the Companies Act, 1956. Based
on the nature of products and the time between the acquisition of
assets for processing and their realization in cash and cash
equivalents, the company has ascertained its operating cycle as 12
months for the purpose of Current and Non-Current classification of
Assets and Liabilities.
iii) Revenue Recognition:
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for price, significant risks and
rewards of ownership is retained. Sales are net of sales tax/Value
added tax. Excise duty recovered is presented as a reduction from gross
turnover
iv) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and estimated
useful lives of fixed assets. Although these estimates are based upon
management''s best knowledge of current events and actions, actual
results could differ from these estimates. Any revision to accounting
estimates is recognized prospectively in the current and future
periods.
v) Fixed Assets:
Fixed Assets are stated at cost less accumulated depreciation inclusive
of freight, duties, taxes and incidental expenses relating to the cost
of acquisition and finance cost.
vi) Borrowing costs:
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on "Borrowing
Costs" are capitalized as part of the cost of such asset up to the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
vii) Capital Work in progress:
Projects under which assets are not ready for their intended use and
other capital work-in- progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
viii) Depreciation:
Depreciation on Fixed Assets is charged under Straight Line Method
(SLM)/ Written Down Value Method (WDV) in accordance with Schedule XIV
of the Companies Act, 1956.
Depreciation on assets of sponge iron unit acquired on account of
amalgamation of GSAL (India) Limited as per the
DRS approved by BIFR vide order dated 6.8.2012 and additions to the
sponge iron unit are provided under written down value method (WDV).
ix) Inventories:
Inventories are valued at the lower of cost and net realizable value.
Cost of inventories comprises all cost of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined by weighted average cost
method.
The liability towards excise duty on finished goods lying in excise
godown is provided in the books and therefore the stock is valued
inclusive of excise duty payable thereon in accordance with the
provisions of AS-2 "Valuation of Inventories". However this has no
impact on the profit of the period.
x) Investments:
Long-term investments are carried at cost less provision for diminution
other than temporary, if any, in value of such investments. Current
investments are carried at lower of cost and fair value.
xi) Income Tax:
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act, 1961
enacted in India. Deferred income taxes reflects the impact of current
period timing differences between taxable income and accounting income
for the period and reversal of timing differences of earlier years.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax after
setting off of brought forward losses. Accordingly, MAT is recognised
as an asset in the balance sheet when it is probable that the future
economic benefit associated with it will flow to the Company and the
asset can be measured reliably.
xii) Retirement and other Employee Benefits:
a. Defined Contribution Plan: Fixed contributions to Provident Fund
are recognized in the accounts at actual cost to the Company.
b. Defined Benefit Plan: The Company makes contribution to a scheme
administered by the insurer to discharge gratuity liabilities to the
employees. The Company records its gratuity liability based on
independent actuarial valuation as at the Balance Sheet date using the
Projected Unit Credit Method. Actuarial gains and losses are
immediately recognized in the Statement of Profit and Loss.
c. Other Employee Benefits: Other employee benefits are estimated and
accounted as per the company''s policy and the terms of the employment
contract.
xiii) Foreign Currency Transactions:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of the transaction. Monetary foreign currency
assets and liabilities are reported at the exchange rate prevailing on
the balance sheet date. Exchange differences relating to long term
monetary items, arising during the period, as so far as they relate to
the acquisition of the depreciable capital asset are added to/deducted
from the cost of the asset and depreciated over the balance life of the
asset after the commencement of actual production.
xiv) Cash flow statement:
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or
payments.
Cash and cash equivalents presented in the cash flow statement consist
of cash on hand and unencumbered highly liquid cash bank balances.
xv) Provisions:
A provision is recognized when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
xvi) Earnings Per Share:
The company reports basic Earnings per share (EPS) in accordance with
Accounting Standard 20 on "Earnings per share". Basic EPS is computed
by dividing the net Profit or Loss for the period attributable to
equity share holders by the weighted average number of equity shares
outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
xvii) Segmenting Reporting:
The Company is primarily engaged in the business of manufacture and
sale of iron and steel products. The primary segment of the company is
steel which in the context of Accounting Standard 17 on "Segment
Reporting" constitutes reportable segment. However the company has
captive power generation for manufacture of ingots. The unutilized
power is sold to power traders and the revenue so generated is included
in the sales.
xviii) Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
xix) Prior period items
All items of income/expenditure pertaining to prior period, which are
material, are accounted through "prior period adjustments".
xx) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases.
Where the Company is the lessee
Operating lease payments are recognized as an expense in the Statement
of profit and loss on straight-line basis over the lease term.
Where the Company is the Lessor
Assets subject to operating Leases are included in fixed assets. Lease
income is recognized in the Statement of profit and loss. Costs
including depreciation are recognized as an expense in the Statement of
profit and loss.
xxi) Contingent Liabilities
A contingent Liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize contingent liability but discloses its existence in the
financial statements.
Jun 30, 2012
I) Basis of Preperation:
The financial statements are prepared under historical cost convention
in accordance with the generally accepted accounting principles in
India ("Indian GAAP") and comply in all material respects with the
mandatory Accounting Standards ("AS") prescribed in the Companies
(Accounting Standard) Rules, 2006 as amended by the Companies
(Accounting Standard) Amendment Rules, 2009 ("the Rules") and with the
relevant provisions of the Act, pronouncements of The Institute of
Chartered Accountants of India ('ICAI'), other relevant provisions of
the Act. The financial statements have been prepared under the
historical cost convention on an accrual basis and the accounting
policies applied by the Company are consistent with those used in the
previous year.
ii) Change in accounting policy:
Presentation and disclosure of financial statements
During the 15 month period ended 30th June 2012, the revised Schedule
VI notified under the Companies Act, 1956, has become applicable to the
Company, for preparation and presentation of its financial statements.
The adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current period.
iii) Revenue Recognition:
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for price, significant risks and
rewards of ownership is retained. Sales are net of sales tax/Value
added tax. Excise duty recovered is presented as a reduction from gross
turnover.
iv) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and estimated
useful lives of fixed assets. Although these estimates are based upon
management's best knowledge of current events and actions, actual
results could differ from these estimates. Any revision to accounting
estimates is recognized prospectively in the current and future
periods.
v) Fixed Assets:
Fixed Assets are stated at cost less accumulated depreciation inclusive
of freight, duties, taxes and incidental expenses relating to the cost
of acquisition and finance cost.
vi) Borrowing costs:
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on "Borrowing
Costs" are capitalized as part of the cost of such asset up to the date
when the asset is ready for its intended use. Other borrowing costs
are expensed as incurred.
vii) Capital Work in progress:
Projects under which assets are not ready for their intended use and
other capital work-in- progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
viii) Depreciation:
Depreciation on Fixed Assets is charged under Straight Line Method
(SLM)/ Written Down Value Method (WDV) in accordance with Schedule XIV
of the Companies Act, 1956.
Change in Accounting Policy:
Depreciation on assets of sponge iron unit acquired on account of
amalgamation of GSAL (India) Limited as per the DRS approved by BIFR
vide order dated 6.8.2012 are provided under written down value method
(WDV). Additions to the sponge iron unit are provided on written down
value method (WDV).
ix) Inventories:
Inventories are valued at the lower of cost and net realizable value.
Cost of inventories comprises all cost of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined by weighted average cost
method.
The liability towards excise duty on finished goods lying in excise
godown is provided in the books and therefore the stock is valued
inclusive of excise duty payable thereon in accordance with the
provisions of AS-2 "Valuation of Inventories". However this has no
impact on the profit of the period.
x) Investments:
Long-term investments are carried at cost less provision for diminution
other than temporary, if any, in value of such investments. Current
investments are carried at lower of cost and fair value.
xi) Income Tax:
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act, 1961
enacted in India. Deferred income taxes reflects the impact of current
year timing differences between taxable income and accounting income
for the year and reversal of timing differences of earlier years.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax after
setting off of brought forward losses. Accordingly, MAT is recognised
as an asset in the balance sheet when it is probable that the future
economic benefit associated with it will how to the Company and the
asset can be measured reliably.
xii) Retirement and other Employee Benefits:
Gratuity liability is defined benefit obligation and is provided for
and on behalf of an actuarial valuation on projected unit credit method
made at the end of each financial year.
Provident Fund is a defined contribution scheme and the contributions
are charged to the statement of profit and loss of the year when the
contributions to the respective funds are due. There are no other
obligations other than contribution payable to the respective trusts.
Acturial gains or losses are recognized immediately in the statement of
profit and loss.
Employee Benefits such as salaries, allowances, Non-monetary benefits
and employee benefits under defined contribution plans such as
provident fund, which fall due for payment within a period of twelve
months after rendering services are accounted as pre operative
expenditure in the period in which the service is rendered.
xiii) Foreign Currency Transactions:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of the transaction. Monetary foreign currency
assets and liabilities are reported at the exchange rate prevailing on
the balance sheet date. Exchange differences relating to long term
monetary items, arising during the year, as so far as they relate to
the acquisition of the depreciable capital asset are added to/deducted
from the cost of the asset and depreciated over the balance life of the
asset after the commencement of actual production.
xiv) Cash flow statement:
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or
payments.
Cash and cash equivalents presented in the cash flow statement consist
of cash on hand and unencumbered highly liquid cash bank balances.
xv) Provisions:
A provision is recognized when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
xvi) Earnings Per Share:
The company reports basic Earnings per share (EPS) in accordance with
Accounting Standard 20 on "Earnings per share". Basic EPS is computed
by dividing the net Profit or Loss for the period attributable to
equity share holders by the weighted average number of equity shares
outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
xvii) Segmenting Reporting:
The Company is primarily engaged in the business of manufacture and
sale of iron and steel products. The primary segment of the company is
steel which in the context of which in the context of Accounting
Standard 17 on "Segment Reporting" constitute reportable segments.
However the company has captive power generation for manufacture of
ingots. The unutilized power is sold to power traders and the revenue
so generated is included in the sales.
xviii) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
xix) Prior period items
All items of income/expenditure pertaining to prior period, which are
material, are accounted through "prior period adjustments".
xx) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases.
Where the Company is the lessee
Operating lease payments are recognized as an expense in the Statement
of profit and loss on straight-line basis over the lease term.
Where the Company is the Lessor
Assets subject to operating Leases are included in fixed assets. Lease
income is recognized in the Statement of profit and loss. Costs
including depreciation are recognized as an expense in the Statement of
profit and loss.
xxi) Contingent Liabilities
A contingent Liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize contingent liability but discloses its existence in the
financial statements.
Mar 31, 2011
1. General:
The Accompanying financial statements have been prepared under the
historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (GAAP) and the provisions of the
Companies Act, 1956.
2. Revenue Recognition:
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for price, significant risks and
rewards of ownership is retained. Sales are net of sales tax/Value
added tax. Excise duty recovered is presented as a reduction from gross
turnover.
3. Fixed Assets and Depreciation :
Fixed assets are stated at their cost of acquisition or construction
less accumulated depreciation. Costs of acquisition comprise all costs
incurred to bring the assets to their location and working condition up
to the date the assets are put to use. Cost of construction are
composed of those costs that relate directly to specific assets and
those that are attributable to the construction activity in general and
can be allocated to the specific assets up to the date the assets are
put to use.
Depreciation on assets is provided pro-rata for the period of use, by
the straight line method (SLM) at the prescribed in Schedule XIV to the
Companies Act, 1956.
4. Inventories:
Inventories are valued at the lower of cost or net realizable value.
Cost of inventories comprises all cost of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined by weighted average cost
method.
The liability towards excise duty on finished goods lying in excise
godown amounting to Rs. 2,70,42,857/- is provided in the books and
therefore the stock is valued inclusive of excise duty payable thereon
in accordance with the provisions of AS-2 "Valuation of Inventories".
However this has no impact on the profit of the year.
5. Foreign Currency Transactions :
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of the transaction. Monetary foreign currency
assets and liabilities are reported at the exchange rate prevailing on
the balance sheet date. Exchange differences are dealt with in the
Profit & Loss account.
6. Borrowing costs:
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on "Borrowing
Costs" are capitalized as part of the cost of such asset up to the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
7. Employee Benefits:
Employee benefits such as salaries, allowances, non-monetary benefits
and employee benefits under defined contribution plans such as
provident fund, which fall due for payment within a period of twelve
months after rendering services are charged as expenses to the Profit &
Loss account in the period in which the service is rendered.
8. Income Tax:
Income taxes are accounted for in accordance with Accounting Standard
22 on "Accounting for Taxes on Income". Taxes Comprise both current
and deferred tax.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax after
setting off of brought forward losses. Accordingly, MAT is recognised
as an asset in the balance sheet when it is probable that the future
economic benefit associated with it will flow to the Company and the
asset can be measured reliably.
Current tax is measured at the amount expected to be paid/recovered
from the revenue authorities, using the applicable tax rates and tax
laws.
The tax effect of timing differences that result between taxable income
and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or deferred tax
liability. Deferred tax assets and liabilities are recognized for
future tax consequences attributable to timing differences. During the
year, deferred tax liability of Rs.6,16,70,721/- has been provided in
the current year's Profit & Loss Account.
Tax on distributed profits payable in accordance with the provisions of
section 115 O of the Income Tax Act, 1961 is in accordance with the
guidance note on Accounting for Corporate Dividend Tax regarded as a
tax on distribution of profits and is not considered in determination
of profits for the year.
9. Earnings Per Share (EPS):
The company reports basic Earnings per share (EPS) in accordance with
Accounting Standard 20 on "Earnings per share". Basic EPS is computed
by dividing the net Profit or Loss for the year attributable to equity
share holders by the weighted average number of equity shares
outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
10. Cash Flow Statement:
The Cash flow statement is prepared by the "Indirect Method" set out in
Accounting Standard 3 on "Cash flow Statement" and presents the cash
flows by operating, investing and financing activities of the Company.
Cash and Cash equivalents presented in the cash flow statement consist
of cash on hand and demand deposits with banks.
11. Contingent Liabilities:
Contingent liabilities as defined in Accounting Standard 28 on
"Provisions, Contingent Liabilities and Contingent Assets" are
disclosed by way of notes to the accounts. Disclosure is not made if
the possibility of an outflow of future economic benefits will be
required to settle the obligation.
12. Segmenting Reporting:
The Company is primarily engaged in the business of manufacture and
sale of iron and steel products. The primary segment of the company is
steel which in the context of which in the context of Accounting
Standard 17 on "Segment Reporting" constitute reportable segments.
However the company has captive power generation for manufacture of
ingots. The unutilized power is sold to power traders and the revenue
so generated is included in the sales.
13. Investments:
Long-term investments are stated at cost, less provision for other than
temporary diminution in value, if any.
14. Operating Lease:
Operating lease payments are recognized as expense in the profit and
loss account on a straight line basis over the lease term.
Mar 31, 2010
1. General
The Accompanying financial statements have been prepared under the
historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (GAAP) and the provisions of the
Companies Act, 1956.
2. Revenue Recognition
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for price, significant risks and
rewards of ownership is retained. Sales are net of sales tax/Value
added tax. Excise duty recovered is presented as a reduction from gross
turnover.
3. Fixed Assets and Depreciation
Fixed assets are stated at their cost of acquisition or construction
less accumulated depreciation. Costs of acquisition comprise all costs
incurred to bring the assets to their location and working condition up
to the date the assets are put to use. Cost of construction are
composed of those costs that relate directly to specific assets and
those that are attributable to the construction activity in general and
can be allocated to the specific assets up to the date the asset are
put to use.
Depreciation on assets is provided, prorata for the period of use, by
the straight line method (SLM) at the SLM rates prescribed in Schedule
XIV to the Companies Act, 1956.
4. Inventories
Inventories are valued at the lower of cost and net realizable value.
Cost of inventories comprises all cost of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined by weighted average cost
method.
The liability towards excise duty on finished goods lying in excise
godown amounting to Rs. 5814699/- is provided in the books and
therefore the stock is valued inclusive of excise duty payable thereon
in accordance with the provisions of AS-2 "Valuation of Inventories".
However this has no impact on the profit of the year.
5. Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of the transaction. Monetary foreign currency
assets and liabilities are reported at the exchange rate prevailing on
the balance sheet date. Exchange differences are dealt with in the
Profit & Loss account.
6. Borrowing costs:
Borrowing costs attributable to the acquisition or construction of
qualify assets, as defined in Accounting Standard 16 on "Borrowing
Costs" are capitalized as part of the cost of such asset up to the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
7. Employee Benefits:
Employee Benefits such as salaries, allowances, Non-monetary benefits
and employee benefits under defined contribution plans such as
provident fund, which fall due for payment within a period of twelve
months after rendering services are charged as expenses to the profit &
Loss Account in the period in which the service is rendered.
8. Income Tax:
Income taxes are accounted for in accordance with Accounting Standard
22 on "Accounting for Taxes on Income" Taxes Comprise both current and
deferred tax.
Current tax is measured at the amount expected to be paid/recovered
from the revenue authorities, using the applicable tax rates and tax
laws.
The tax effect of timing differences that result between taxable income
and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or deferred tax
liability. Deferred tax assets and liabilities are recognized for
future tax consequences attributable to timing differences.
Tax on distributed profits payable in accordance with the provisions of
section 1150 of the Income Tax Act, 1961 is in accordance with the
guidance note on Accounting for Corporate Dividend Tax regarded as a
tax on distribution of profits and is not considered in determination
of profits for the year.
9. Earnings Per Share:
The company reports basic Earnings per share (EPS) in accordance with
Accounting Standard 20 on "Earnings per share" basic EPS is computed by
dividing the net Profit or Loss for the year attributable to equity
share holders by the weighted average number of equity shares
outstanding during the year.
10. Operating Lease:
Operating lease payments are recognized as expense in the profit and
loss account on a straight line basis over the lease term.
11. Cash Flow Statement:
The Cash flow statement is prepared by the "Indirect Method" set out in
Accounting Standard 3 on "Cash flow Statement" and presents the cash
flows by operating, investing and financing activities of the Company.
Cash and Cash equivalents presented in the cash flow statement consist
of cash on hand and demand deposits with banks.
12. Contingent Liabilities:
Contingent liabilities as defined in Accounting Standard 28 on
"provisions, Contingent Liabilities and Contingent Assets" are
disclosed by way of notes to the accounts. Disclosure is not made if
the possibility of an outflow of future economic benefits will be
required to settle the obligation.
13. Segmenting Reporting:
The Company is primarily engaged in the business of manufacture and
sale of iron and steel products. The primary business segment of the
company is steel which in the context of Accounting Standard 17 on
"Segment Reporting" constitutes reportable segments. However the
company has captive power generation for manufacture of ingots. The
unutilized power is sold to power traders and the revenue so generated
is included in the sales.
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Steel Exchange India Ltd. Financial Data
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Steel Exchange India Ltd. Reports
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Steel Exchange India Ltd. Corporate Announcements
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