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Vardhman Special Steels Ltd. ಖಾತೆಯ ಉಪಯುಕ್ತ ಮಾಹಿತಿ
l) Provisions (other than for employee benefits)
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the
amount of the obligation.
Where the Company expects some or all of the expenditure
required to settle a provision will be reimbursed by
another party, the reimbursement is recognised when,
and only when, it is virtually certain that reimbursement
will be received if the entity settles the obligation. The
reimbursement is treated as a separate asset.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost. Expected future losses are not provided for.
m) Contingent liabilities and contingent assets
Contingent liability is a possible obligation arising from
past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of
the entity or a present obligation that arises from past
events but is not recognized because it is not probable
that an outflow of resources embodying economic
benefits will be required to settle the obligation or the
amount of the obligation cannot be measured with
sufficient reliability. The Company does not recognize
a contingent liability but discloses its existence in the
financial statements.
Contingent asset is not recognised in financial statements
since this may result in the recognition of income that
may never be realised. However, when the realisation of
income is virtually certain, then the related asset is not a
contingent asset and is recognized.
Provisions, contingent liabilities and contingent assets
are reviewed at each Balance Sheet date.
Commitments include the amount of purchase order (net
of advances) issued to parties for completion of assets.
Provisions, contingent liabilities, contingent assets and
commitments are reviewed at each reporting date.
o) (i) Revenue from contract with customers
Under Ind AS 115, the Company recognized revenue
when (or as) a performance obligation was satisfied, i.e.
when ''control'' of the goods underlying the particular
performance obligation were transferred to the customer.
Further, revenue from sale of goods is recognized based
on a 5-Step Methodology which is as follows:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligation in contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance
obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies
a performance obligation
Contract assets are recognized when there is excess
of revenue earned over billings on contracts. Contract
assets are classified as unbilled receivables (only act of
invoicing is pending) when there is unconditional right to
receive cash, and only passage of time is required, as per
contractual terms.
Contract liability is recognized when billings are in excess
of revenues.
Contracts are subject to modification to account for
changes in contract specification and requirements. The
Company reviews modification to contract in conjunction
with the original contract, basis which the transaction
price could be allocated to a new performance obligation,
or transaction price of an existing obligation could
undergo a change. In the event transaction price is
revised for existing obligation, a cumulative adjustment
is accounted for.
Use of significant judgements in revenue recognition
- The Company''s contracts with customers could include
promises to transfer multiple products and services
to a customer. The Company assesses the products /
services promised in a contract and identifies distinct
performance obligations in the contract. Identification
of distinct performance obligation involves judgement
to determine the deliverables and the ability of
the customer to benefit independently from such
deliverables.
- Judgement is also required to determine the
transaction price for the contract. The transaction
price could be either a fixed amount of customer
consideration or variable consideration with elements
such as cash discount, trade discount, and rebate.
The transaction price is also adjusted for the effects
of the time value of money if the contract includes a
significant financing component. Any consideration
payable to the customer is adjusted to the transaction
price, unless it is a payment for a distinct product or
service from the customer. The estimated amount of
variable consideration is adjusted in the transaction
price only to the extent that it is highly probable that
a significant reversal in the amount of cumulative
revenue recognised will not occur and is reassessed
at the end of each reporting period. The Company
allocates the elements of variable considerations to
all the performance obligations of the contract unless
there is observable evidence that they pertain to one or
more distinct performance obligations.
- The Company uses judgement to determine an
appropriate selling price for a performance obligation.
The Company allocates the transaction price to each
performance obligation on the basis of the relative
selling price of each distinct product or service
promised in the contract.
Revenue Recognition
The Company recognises revenue generally at the point
in time when the products are delivered or dispatched
to customer or when it is delivered to a carrier for export
sale, which is when the control over product is transferred
to the customer.
Revenue towards satisfaction of a performance obligation
is measured at the amount of transaction price (net of
variable consideration) allocated to that performance
obligation. A receivable is recognised when the goods are
delivered as this is the point in time that the consideration
is unconditional because only passage of time is required
before payment is due.
Export incentives under various schemes notified by the
government are recognised on accrual basis when no
significant uncertainties as to the amount of consideration
that would be derived and as to its ultimate collection
exist.
(iii) Insurance and Other Claims
Revenue in respect of claims is recognized when no
significant uncertainty exists with regard to the amount
to be realized and the ultimate collection thereof.
Government grants in the form of transfers of resources
to the Company in return for past compliance with certain
conditions relating to the operating activities of the
Company are recognized as other income in profit or loss.
Government grants related to capital assets are
recognized initially as deferred income at fair value or
deducted from the carrying value of the asset when there
is reasonable assurance that they will be received and
the Company will comply with the conditions associated
with the grant; they are then recognised in profit or loss
as other income on a systematic basis or depreciated over
the remaining useful life of the asset, respectively.
Further, Grants that compensate the Company for
expenses incurred are recognised in profit or loss on a
systematic basis in the periods in which such expenses
are recognised.
q) Recognition of interest income or expense
Interest income or expense is recognised using the
effective interest method.
The ''effective interest rate'' is the rate that exactly
discounts the estimated future cash payments or receipts
through the expected life of the financial instrument to:
a) the gross carrying amount of the financial asset; or
b) the amortised cost of the financial liability.
In calculating interest income and expense, the effective
interest rate is applied to the gross carrying amount of
the asset (when the asset is not credit-impaired) or to
the amortised cost of the liability. However, for financial
assets that have become credit impaired subsequent
to initial recognition, interest income is calculated by
applying the effective interest rate to the amortised
cost of the financial asset. If the asset is no longer credit-
impaired, then the calculation of interest income reverts
to the gross basis.
Income tax comprises current and deferred tax. It is
recognised in Statement of Profit and Loss except to the
extent that it relates to a business combination or an item
recognised directly in equity or in other comprehensive
income.
The Company has determined that interest and
penalties related to income taxes, including uncertain
tax treatments, do not meet the definition of income
taxes, and therefore accounted for them under Ind AS 37
Provisions, Contingent Liabilities and Contingent Assets.
Current tax
Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year and
any adjustment to the tax payable or receivable in respect
of previous years. The amount of current tax reflects the
best estimate of the tax amount expected to be paid or
received after considering the uncertainty, if any, related
to income taxes. It is measured using tax rates (and tax
laws) enacted or substantively enacted by the reporting
date.
Current tax assets and current tax liabilities are offset
only if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise the asset
and settle the liability on a net basis or simultaneously.
Deferred tax
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of the assets
and liabilities for financial reporting purposes and the
corresponding amounts used for taxation purposes.
Deferred tax is also recognised in respect of carried
forward tax losses (if any) and tax credits.
Deferred tax assets are recognised to the extent that it
is probable that future profits will be available against
which they can be used. Deferred tax assets are reviewed
at each reporting date and are recognised to the extent
that it is probable that the related tax benefits will be
realized. Deferred tax is measured at the tax rates that are
expected to apply to the period when the asset is realized
or the liability is settled, based on the laws that have
been enacted or substantively enacted by the reporting
date. Deferred tax assets - unrecognised or recognised,
are reviewed at each reporting date and are recognised
/ reduced to the extent that it is probable / no longer
probable respectively that the related tax benefits will be
realized.
The measurement of deferred tax reflects the tax
consequences that would follow from the manner in
which the Company expects, at the reporting date, to
recover or settle the carrying amount of its assets and
liabilities.
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. The Company
has opted the new tax regime from 1 April 2022.
Deferred tax assets and liabilities are offset only if there
is a legally enforceable right to set off the current tax
liabilities and assets, and they relate to income taxes
levied by the same tax authorities.
An operating segment is a component of the Company
that engages in business activities from which it may
earn revenues and incur expenses, including revenues
and expenses that relate to transactions with any
of the Company''s other components, and for which
discrete financial information is available. All operating
segments'' operating results are reviewed regularly by
the Company''s Chief Operating Decision Maker (CODM)
to make decisions about resources to be allocated to the
segments and assess their performance.
CSR expenditure incurred by the Company is charged to
the Statement of the Profit and Loss.
For the purpose of presentation in the statement of cash
flows, cash and cash equivalents include cash in hand,
demand deposits held with banks, other short-term
highly liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value.
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals
of past or future operating cash receipts or payments and
item of income or expenses associated with investing
or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are
segregated.
w) Earnings per share
Basic earnings/ (loss) per share is calculated by dividing
the net profit/(loss) for the year attributable to equity
shareholders by the weighted average number of equity
shares outstanding during the year. The weighted average
number of equity shares outstanding during the period is
adjusted for events of bonus issue and share split. For the
purpose of calculating diluted earnings/ (loss) per share,
the net profit or loss for the period attributable to equity
shareholders and the weighted average number of shares
outstanding during the year are adjusted for the effects of
all dilutive potential equity shares.
Equity shares
Incremental costs directly attributable to the issue of
equity shares are recognized as a deduction from equity.
Income tax relating to transaction costs of an equity
transaction is accounted for in accordance with Ind AS 12.
Ministry of Corporate Affairs (MCA) notifies new standard
or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued
from time to time. On 13 August 2025, MCA amended the
Companies (Indian Accounting Standards) Rules, 2015
by issuing the Companies (Indian Accounting Standards)
Second Amendment Rules, 2025, applicable from l April
2026, as below:
covenant breach occurs on or before the reporting date
and the liability becomes payable on demand, it must
be classified as current, even if the lender subsequently
agrees not to demand repayment. It is classified as
current because, at the reporting date, the entity does
not have the right to defer settlement for at least 12
months. However, if the lender has already provided-
by the reporting date-a grace period extending at least
12 months beyond that date, during which the breach
can be rectified and repayment cannot be demanded,
the liability is classified as non-current. The Company
has evaluated the amendment and does not expect this
amendment to have any significant impact in its financial
statements.
This amendment is to be applied retrospectively for
annual reporting periods beginning on or after 1 April
2026, in accordance with Ind AS 8, Accounting Policies,
Changes in Accounting Estimates and Errors.
17.3 Rights, preferences and restrictions attached to shares
i) The Company has only one class of equity shares having par value of H10 per share. Accordingly all equity shares rank
equally with regard to dividends and share in the company''s residual assets on winding up. Each shareholder of equity
share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend
proposed by the Board of Directors is subject to approval of the shareholders (except for interim dividend) in the
ensuing Annual General Meeting. In the event of liquidation of the company, the equity shareholders will be entitled to
receive the remaining balance of assets if any, after preferential payments and to have a share in surplus assets of the
Company, proportionate to their Individual shareholding in the paid up equity capital of the Company.
ii) Pursuant to Share Subscription and Investment Agreement entered on 29 May 2025 with Aichi Steel Corporation (ASC)
a Japanese Corporation incorporated under the laws of Japan having its registered office at 1, Wanowari, Aro-machi,
Tokai-shi, Aichi-ken, 476-8666, Japan and the Company, ASC as minority protection, has rights in the Company such as
right to nominate on the Board, affirmative vote rights, participatory rights, etc.
17.4 Bonus shares, shares buyback and issue of shares for consideration other than in cash during five years immediately
preceding 31 March 2026.
During the five years immediately preceding 31 March 2026 (''the period''), the company had neither bought back any shares
nor it had issued any shares for consideration other than cash except as stated below.
i) During the year ended 31 March 2024, pursuant to approval given by its shareholders, the Company had issued
4,06,27,414 bonus equity shares of H10 each as fully paid up in the ratio of one equity share for every one existing equity
share and Capitalization of such sum out of Securities Premium Account of Company.
ii) Further, the Company has issued 91,125 for year ended 31 March 2026 (Previous year: 1,36,750) bonus equity shares
with employee stock option plan in the ratio of 1:1.
(also refer to Statement of Changes in Equity)
(a) Securities premium
Securities premium represents the excess consideration received by the Company over the face value of the shares
issued to shareholders. This will be utilised in accordance with the applicable provisions of the Companies Act, 2013.
(b) General reserve
The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.
As the General reserve is created by a transfer from one component of equity to another and is not an item of other
comprehensive income, items included in the General reserve will not be reclassified subsequently to the Statement of
Profit and Loss.
(c) Share Options Outstanding Account
The fair value of the equity settled share based payment transactions with employees is recognised in Statement of
Profit and Loss with corresponding credit to share based payment reserve.
(Refer note 42.4)
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends
or other distributions paid to shareholders.
(a) Security details:
Term loans of HNil (Previous year: H1,412.74) are secured by a first parri passu charge on entire movable & immoveable
property, plant and equipments of the Company (both present & future) including land and Building situated at C-58 & part
of land out of plot no. C-59, Focal Point, Ludhiana & Pioneer Industrial Park, Pathrerdi, Gurugram and second parri passu
charge on entire current assets of the Company.
(b) Terms & repayment schedule:
- Term loan of HNil (Previous year: H423.18) from ICICI Bank Limited. (31 March 2025: 1 instalment)
- Term loan of HNil (Previous year: H990.00) from HDFC Bank Limited. (31 March 2025: 6 instalments)
- During the current year, the nominal (floating) interest rate was in the range of 6.70% to 8.50% (31 March 2025: in the
range of 7.79% to 9.48% per annum)
19.2 Cash credit/overdraft and working capital demand loan facilities from Consortium banks aggregating to H9,264.95 (Previous
year: H8,072.39) against a sanctioned fund based and non-fund based working capital facility of H30,000 (Previous year:
H30,000) and H20,000 (Previous year: H20,000) respectively. These limits are secured by hypothecation of entire present and
future tangible current assets of the Company as well as a second charge on the entire present and future property, plant and
equipments of the Company.
19.3 During the current year, the interest rate on working capital demand loan facilities was in the range of 5.89% to 8.11% (31
March 2025: in the range of 6.67% to 7.95% per annum)
19.4 Unsecured working capital loan & corporate credit card facilities:
- From CTBC Bank corporation limited aggregating to H Nil (Previous year: H1,200.00) against a sanctioned limit of H5,000
(Previous year: H5,000).
- From Axis Bank Limited aggregating to H Nil (Previous year: H950.69) against a sanctioned limit of H3,000 (Previous year: H3,000).
- From ICICI Bank Limited aggregating to H Nil (Previous year: H337.02) against a sanctioned limit of H500 (Previous year: H500).
19.6 The Company has borrowings from banks and financial institutions on the basis of security of current assets. The quarterly
returns or statements of current assets filed by the Company with banks and financial institutions are in agreement with the
books of accounts in the current year and for previous year
19.7 In the year ended 31 March 2026 and 31 March 2025, the actual utilisation of working capital remained within the bank
sanction/DP limits.
19.8 There are no charges or satisfaction of charges which required registration for year ended 31 March 2026 and for 31 March
2025 and are pending as of the respective dates.
20 Lease liabilities
The Company has entered into agreement for taking office premises on lease and license basis. The one lease is running for
a period of up to 10 years with no restriction placed upon the Company for entering into said lease.
The Company also leases certain office premises/Guest house with contract terms up to one year. These leases are short¬
term in nature and the Company has elected not to recognise right-of-use assets and lease liabilities for these leases. Rental
expense recorded for short-term leases was H135.11 (Previous year: H122.98) (Refer note 36).
The Company participates in a supplier finance arrangement under which its suppliers may elect to receive early payment of
their invoices from TREDs Platform. Under the arrangement, A-TREDs platform agrees to pay amounts due to participating
suppliers in respect of invoices owed by the Company and the Company repays A-TREDs platform at a later date. The principal
purpose of this arrangement is to facilitate efficient payment processing and provide the willing suppliers early payment
terms, compared with the related invoice payment due date.
The Company derecognises the original trade payables upon entering into the arrangement, as the obligation to the suppliers
is settled through payment by the A-TREDs platform and a new liability is recognised in favour of A-TREDs. However, such
arrangement does not alter the rights and obligations of the Company.
The company does not have any unbilled revenue or contract assets as at 31 March 2026 and 31 March 2025. The contract
liabilities relate to the advance received from customers against which revenue will be recognized when the performance
obligation is satisfied.
Invoices are usually payable within 45-90 days.
The amount of H663.14 included in contract liabilities at 31 March 2025 has been recognised as revenue during the year
ended 31 March 2026. (31 March 2025: H47.23)
Revenue from contracts with customers is recognized when the control of the goods or services is transferred to the customers
on satisfaction of distinct performance obligations at the amount of transaction price (net of discounts, rebates etc.).
Information about major customers:
Revenue from sale of products to one customer which individually constitutes more than 10 percent of the Company''s total
revenue is H19,068.37 (previous year one customer total revenue H19,774.03).
#No information is provided about remaining performance obligations as at 31 March 2026 or 31 March 2025 that are part of contracts that
have an original expected duration of 1 year or less as allowed Ind AS 115.
39.3 Pursuant to judgement by the Hon''ble Supreme Court dated 28 February 2019, it was held that basic wages, for the purpose
of provident fund, to include special allowances which are common for all employees. However, there is uncertainty with
respect to the applicability of the judgement and period from which the same applies. Owing to the aforesaid uncertainty
and pending clarification from the authorities in this regard, the Company had not recognised any provision for the years
prior to 28 February 2019. Further, management also believes that the impact of the same on the Company though not
quantifiable will not be material.
Board of Directors of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS
108, Operating Segments. Operating Segments have been defined and presented based on the regular review by the CODM
to assess the performance of segment and to make decision about allocation of resources. The Company has identified only
one operating segment i.e.Manufacturing of Steel products and operations are mainly within India. Hence, it is the only
reportable segment under Ind AS 108 ''Operating Segments''. Entity wide disclosure required by Ind AS 108 are made as
follows:
42.2 Defined contribution plan:-
41 The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006
The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which
recommends that the Micro and Small Enterprises should mention in their correspondences with its customers the
Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect
of amounts payable to such enterprises as at the year end has been made in the financial statements based on information
available with the Company as under :
The Company''s provident fund scheme, employee''s state insurance (ESI) and others funds are defined contribution plans.
The Company has recorded an expense of H493.61 (Previous year: H443.27) under provident fund scheme, H43.78 (Previous
Year: H51.25) Unser ESI Scheme, H40.08 (Previous Year: H28.61) under national pension scheme and H3.30 (Previous Year:
H3.08)under labour welfare fund. These have been included in the note 33 Employees benefits expenses, in Statement of
Profit and Loss.
42.3 Defined benefit plan
Gratuity (funded)
The employees'' gratuity fund scheme managed by VSSL Gratuity fund trust is a defined benefit plan. The present value of
obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period
of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the
final obligation. The Company makes annual contributions to the VSSL Gratuity fund trust.
The above defined benefit plan exposes the Company to following risks:
The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined
benefit obligation will tend to increase.
Higher than expected increase in salary will increase the defined benefit obligation
Demographic risk:
This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability
and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon
the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because
in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long
service employee.
The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash
outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its
risks from previous periods. The funds are managed by specialised team of VSSL Gratuity Fund Trust
i) Funding
Gratuity is a funded benefit plan for qualifying employees. 100% of the plan assets are managed by VSSL Gratuity fund
trust. The assets managed are highly liquid in nature and the Company does not expect any significant liquidity risks.
The following table sets out the status of the defined benefit plan as required under Ind-AS 19 - Employee Benefits:
During the year ended 31 March 2026, the Central Government of India has notified the Code on Wages, 2019, the
Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working
Conditions Code, 2020, collectively referred to as the ''New Labour Codes'', effective from 21 November 2025 primarily
impacting the wage definition to be considered for the purpose of defined benefit obligation relating to gratuity. As a
result of this plan amendment, the company''s defined benefit obligation increased by H102.99 (31 March 2025: nil) and
H21.86 (31 March 2025: nil) on provision for compensated absences. A corresponding past service cost was recognised
in profit or loss during the current year.
42.4 Share based payments to employees (Equity Settled)
i) ESOP Plan 2016: Second (2nd) Grant
The Nomination and Remuneration Committee of the Company in its meeting held on 11 November 2020 has granted
135,000 options to its eligible employees against the plan under the Second grant out of 136,937 options lying un¬
granted at a price of H72 per share, other terms and conditions remaining the same.
During the year, the Company has allotted 23,375 (Previous year: 32,000) equity shares to the eligible employees at a
price of H72 per share. Along with this employees had also exercised 23,375 Bonus Shares in the ratio of 1:1 during the
year (Previous year: 32,000)
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option.
ii) ESOP Plan 2016: Third (3 rd) Grant
The Nomination and Remuneration Committee in its meeting held on 23rd July, 2022 has made a third grant of 9,000
options under ESOP Plan 2016 to its eligible employees out of 9,437 options lying ungranted under the said Plan at a
price of H72 per share.
During the year, the Company has allotted 2,250 (Previous year: 2,250) equity shares to the eligible employees at a price
of H72 per share. Along with this employees had also exercised 2,250 Bonus Shares in the ratio of 1:1 during the year
(Previous year: 2,250)
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option.
The Company has established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange
Board of India (Share Based Employee Benefits) Regulations, 2014) which has been approved by the Board of Directors
in its meeting held on 6 August 2020 and by the shareholders in their meeting held on 25 September, 2020. The Board
had delegated necessary power to the Nomination and Remuneration Committee to Implement and administer the
plan. Accordingly, the Nomination and Remuneration Committee of the Company in its meeting held on 11 November
2020 has granted 3,63,000 options to its eligible employees against the plan under the first grant out of total of 5,00,000
options.
During the year, the Company has allotted 40,250 (Previous year : 77,250) equity shares to the eligible employees at a
price of H72 per share. Along with this employees had also exercised 40,250 Bonus Shares in the ratio of 1:1 during the
year (Previous year: 77,250)
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option.
iv) ESOP Plan 2020: Second (2nd) Grant
The Nomination and Remuneration Committee in its meeting held on 23rd July, 2022 has made a second grant of
1,25,000 options under ESOP Plan 2020 to its eligible employees out of 2,20,500 options lying ungranted under the said
Plan at a price of H72 per share.
During the year, the Company has allotted 25,250 (Previous year : 25,250) equity shares to the eligible employees at a
price of H72 per share. Along with this employees had also exercised 25,250 Bonus Shares in the ratio of 1:1 during the
year (Previous year: 25,250)
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option.
The Nomination and Remuneration Committee in its meeting held on 18th July, 2024 has made a Third grant of 1,36,500
options under ESOP Plan 2020 to its eligible employees out of 1,37,125 options lying ungranted under the said Plan at
a price of H145 per share. These options will vest with the eligible employees after two years from the date of grant.
During the year no allotment has been made by the company to the eligible employees under 3rd Grant of ESOP Plan
2020, as vesting period is 2 years.
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option.
43.5 Terms and conditions of transactions with related parties
The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. This
assessment is undertaken each financial year through examining the financial position of the related party and the market in
which the related party operates. Outstanding balances at the year end are unsecured.
Current Year - On Environment Sustainability H151.26, On Women Empowerment - H43.31, On Preventive Health care H53.35,
On Promoting Education H48.29, On Promoting Sports H19.00, on Other sectors H24.65 and on CSR admin expense - H12.17
(This includes expenditure of H75.61 w.r.t. previous year shortfall). No amount has been spent on construction/acquisition of
any asset.
(Previous year - On Environment Sustainability H89.38, On Women Empowerment - H54.23, On Preventive Health care
H44.46, On Promoting Education H30.86, On Promoting Sports H12.50 and on Other sectors H32.33. (This includes expenditure
of H33.30 w.r.t. previous year shortfall) No amount has been spent on construction/acquisition of any asset.
Amount remaining unspent pertains to Ongoing/Multilayer Projects approved by CSR committee which will be spent in the
coming years.
Details of Deposit in Unspent CSR Account
In accordance with the provisions of Section 135 of the Companies Act, 2013, since the Company has fully spent the entire
CSR obligation during the financial year, there is no unspent CSR amount required to be transferred to a special CSR account,
and accordingly, the requirement to open a separate CSR bank account does not arise.
(Previous year: H46.25 had been deposited in the special account named Vardhman Special Steels Limited -Unspent CSR
Account FY 2024-25 on 18 April 2025 related to shortfall as on 31 March 2025, out of which H46.25 has been spent in current
year and balance stands HNil as on 31 March 2026.)
(For the year 2023-24: H70.60 had been deposited in the special account named Vardhman Special Steels Limited -Unspent
CSR Account FY 2023-24 on 12 April 2024 related to shortfall as on 31 March 2024, out of which H33.30 had been spent in the
financial year 2024-25 & H29.37 has been spent during the current year (2025-26) and balance H7.93 stands unspent as on 31
March 2026)
(i) Fair value of financial assets and liabilities with short term maturities is considered as approximate to respective carrying
amount due to the short term maturities of these instruments. Further, in accordance with amendment Ministry of Corporate
Affairs notified in Ind AS 113 on 30 March 2019, fair value measurement of lease liabilities is not required.
(ii) Fair value of non-current financial assets has not been disclosed as there is no significant differences between carrying value
and fair value.
(iv) Derivatives are carried at fair value at each reporting date. The fair values of the derivative financial instruments has been
determined using valuation techniques with market observable inputs. The company uses mark to market provided by
bank for valuation of this derivative contracts. There are no significant unobservable inputs used for Derivative financial
instruments. This is classified as at level II
There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2026 and 31 March 2025.
46 Financial risk management
46.1 Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk
management framework. The board of directors has established the risk management committee which is responsible for
developing the monitoring the company risk management policies. The Company''s risk management policies are established
to identify and analyse the risk faced by the Company, to set appropriate risk limits and controls and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly to effect changes in market conditions
and Company''s activities. The Company, through its training and management standards and procedures, aims to maintain
discipline and constructive control environment in which all employees understand their roles and obligations.
The Company''s audit committee oversees how management monitors compliance with Company''s risk management policies
and procedures, and reviews the adequacy of the risk management framework in relation to risk faced by the Company. The
audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews
of risk management controls and procedures, the result of which are reported to audit committee.
The Company has exposure to the following risks arising from financial instruments:
- credit risk (see (ii))
- liquidity risk (see (iii)): and
- market risk (see (iv))
Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet
its contractual obligations. The carrying amount of financial assets represents the maximum credit risk exposure and arises
principally from the Company''s receivable from customers and loans. The maximum exposure to credit risks is represented
by the total carrying amount of these financial assets in the Balance Sheet:
The Company has established a credit policy under which each new customer is analysed individually for creditworthiness
before the payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they
are available, financial statements, credit agency information, industry information and business intelligence. Sale limits are
established for each customer and reviewed annually. Any sales exceeding those limits require approval from the appropriate
authority as per policy. In monitoring customer credit risk, customers are grouped according to their credit characteristics,
including whether they are an individual or a legal entity, whether they are institutional, dealers or end-user customer, their
geographic location, industry, trade history with the Company and existence of previous financial difficulties.
The Company based on internal assessment which is driven by the historical experience/ current facts available in relation
to default and delays in collection thereof, the credit risk for trade receivables is considered low. The Company estimates its
allowance for trade receivable using lifetime expected credit loss. Individual receivables which are known to be uncollectible
are written off by reducing the carrying amount of trade receivable and the amount of the loss is recognised in the Statement
of Profit and Loss within other expenses.
The loans primarily represents loans given to employees. The management believes these to be high quality assets with
negligible credit risk. The management believes the parties to which these loans have been given have strong capacity to
meet the obligations and where the risk of default is negligible or nil and accordingly no allowance for expected credit loss
has been provided on these financial assets.
Credit risk on cash and cash equivalents and bank deposits is limited as the Company generally invests in deposits with banks
with high credit ratings assigned by domestic credit rating agencies.
Other financial assets mainly includes Govt. Grant i.e. incentives under Industrial and Business Development Policy 2017 of
the State Government for its expansion cum upgradation project of Steel Melt Shop completed in FY 2019-20. Pursuant to
the necessary approvals from the competent authorities resulting in satisfaction of recognition conditions for government
grants in accordance with Ind AS 20, the Company has recorded these as financial assets.
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial assets. The Company''s approach to manage liquidity is to
have sufficient liquidity to meet it''s liabilities when they are due, under both normal and stressed circumstances, without
incurring losses or risking damage to the Company''s reputation.
Management manages the liquidity risk by monitoring cash flow forecasts on a periodic basis and maturity profiles of
financial assets and liabilities. This monitoring takes into account the accessibility of cash and cash equivalents and additional
undrawn financing facilities.
The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest
rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The risk is managed by the
Company by maintaining an appropriate mix between fixed and floating rate borrowings. The exposure of the Company''s
borrowing to interest rate changes as reported to the management at the end of the reporting period are as follows:
(a) Commodity price risk
The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company
has in place policies to manage exposure to fluctuations in the prices of the key raw materials used in operations. The
Company manages fluctuations in raw material price through hedging in the form of advance procurement when the prices
are perceived to be low and also enters into advance buying contracts as strategic sourcing initiative in order to keep raw
material and prices under check to the extent possible.
(b) Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s
borrowings with floating interest rates.
(c) Foreign Currency Risk and sensitivity
The functional currency of the Company is Indian Rupee (H). The Company is exposed to foreign exchange risk through
its sales in international markets and purchases from overseas suppliers in various foreign currencies. The Company has
foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk. The Company holds
derivative financial instruments such as foreign exchange contracts to mitigate the risk of changes in exchange rates on
foreign currency exposures. The exchange rate between the rupee and foreign currencies has changed substantially in recent
years and may fluctuate substantially in the future. Consequently, the results of the Company''s operations are affected as the
rupee appreciates/ depreciates against these currencies.
47 Capital Management
47.1 Risk management
For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other
equity reserves attributable to the equity shareholders . The primary objective of the Company''s capital management is to
maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend
payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing
ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans
and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations. The Company
policy is to keep the gearing ratio at less than 100%.
49 Additional regulatory information pursuant to the requirement in Division II of Schedule III to the Companies Act 2013:
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the
Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or
both during the current or previous year.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign
entities (Intermediaries) with the understanding that the Intermediary shall: (a) directly or indirectly lend or invest in
other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries)
or (b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with
the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or
invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate
Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company has not any such transaction which is not recorded in the books of accounts that has been surrendered
or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey
or any other relevant provisions of the Income Tax Act, 1961
(viii) The Company has not been declared wilful defaulter by any bank or financial institution or government or any
government authority.
(ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(x) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous
financial year.
(xi) The Company including the "Companies in the Group" (as per the provisions of the Core Investment Companies (Reserve
Bank) Directions, 2016) do not have any Core Investment Company ("CIC")
50 The Company has established a comprehensive system of maintenance of information and documents as required by the
transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such
information and documentation to be contemporaneous in nature, the Company continuously updates its documentation
for the international transactions entered into with the associated enterprises during the financial year and expects such
records to be in existence latest by the due date as required under law. The management is of the opinion that its international
transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements,
particularly on the amount of income tax expense and that of provision for taxation.
l) Provisions (other than for employee benefits)
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to
settle the obligation and a reliable estimate can be
made of the amount of the obligation.
Where the Company expects some or all of the
expenditure required to settle a provision will be
reimbursed by another party, the reimbursement is
recognised when, and only when, it is virtually certain
that reimbursement will be received if the entity
settles the obligation. The reimbursement is treated
as a separate asset.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to
the liability. When discounting is used, the increase in
the provision due to the passage of time is recognised
as a finance cost. Expected future losses are not
provided for.
Onerous contracts
A provision for onerous contract is recognised when
the expected benefits to be derived by the company
from a contract are lower than the unavoidable
cost of meeting its obligation under the contract.
The provision is measured at the present value of
the lower of the expected cost of terminating the
contract and the expected net cost of continuing
with the contract. Before a provision is established,
the company recognises any impairment loss on
assets associated.
m) Contingent liabilities and contingent assets
Contingent liability is a possible obligation arising from
past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or
more uncertain future events not wholly within the
control of the entity or a present obligation that arises
from past events but is not recognized because it is
not probable that an outflow of resources embodying
economic benefits will be required to settle the
obligation or the amount of the obligation cannot
be measured with sufficient reliability. The Company
does not recognize a contingent liability but discloses
its existence in the standalone financial statements.
Contingent asset is not recognised in consolidated
standalone financial statements since this may result
in the recognition of income that may never be
realised. However, when the realisation of income
is virtually certain, then the related asset is not a
contingent asset and is recognized.
Provisions, contingent liabilities and contingent assets
are reviewed at each Balance Sheet date
n) Commitments
Commitments include the amount of purchase order
(net of advances) issued to parties for completion of
assets. Provisions, contingent liabilities, contingent
assets and commitments are reviewed at each
reporting date.
o) (i) Revenue from contract with customers
Under Ind AS 115, the Company recognized revenue
when (or as) a performance obligation was satisfied,
i.e. when ''control'' of the goods underlying the
particular performance obligation were transferred to
the customer.
Further, revenue from sale of goods is recognized
based on a 5-Step Methodology which is as follows:
Step 1: Identify the contract(s) with a customer
Step 2: I dentify the performance obligation in
contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the
performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity
satisfies a performance obligation
Contract assets are recognized when there is excess
of revenue earned over billings on contracts. Contract
assets are classified as unbilled receivables (only act
of invoicing is pending) when there is unconditional
right to receive cash, and only passage of time is
required, as per contractual terms.
Contract liability is recognized when billings are in
excess of revenues.
Contracts are subject to modification to account for
changes in contract specification and requirements.
The Company reviews modification to contract in
conjunction with the original contract, basis which
the transaction price could be allocated to a new
performance obligation, or transaction price of
an existing obligation could undergo a change. In
the event transaction price is revised for existing
obligation, a cumulative adjustment is accounted for.
Use of significant judgements in revenue recognition
- The Company''s contracts with customers could
include promises to transfer multiple products
and services to a customer. The Company
assesses the products / services promised in
a contract and identifies distinct performance
obligations in the contract. Identification
of distinct performance obligation involves
judgement to determine the deliverables and the
ability of the customer to benefit independently
from such deliverables.
- Judgement is also required to determine the
transaction price for the contract. The transaction
price could be either a fixed amount of customer
consideration or variable consideration with
elements such as cash discount, trade discount,
and rebate. The transaction price is also adjusted
for the effects of the time value of money if
the contract includes a significant financing
component. Any consideration payable to the
customer is adjusted to the transaction price,
unless it is a payment for a distinct product
or service from the customer. The estimated
amount of variable consideration is adjusted in
the transaction price only to the extent that it
is highly probable that a significant reversal in
the amount of cumulative revenue recognised
will not occur and is reassessed at the end of
each reporting period. The Company allocates
the elements of variable considerations to all the
performance obligations of the contract unless
there is observable evidence that they pertain to
one or more distinct performance obligations.
- The Company uses judgement to determine
an appropriate standalone selling price for a
performance obligation. The Company allocates
the transaction price to each performance
obligation on the basis of the relative standalone
selling price of each distinct product or service
promised in the contract.
Revenue Recognition
The Company recognises revenue generally at the
point in time when the products are delivered or
dispatch to customer or when it is delivered to a
carrier for export sale, which is when the control over
product is transferred to the customer.
Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction
price (net of variable consideration) allocated to that
performance obligation. A receivable is recognised
when the goods are delivered as this is the point in
time that the consideration is unconditional because
only passage of time is required before payment is
due.
i) Export Incentives
Export incentives under various schemes notified
by the government are recognised on accrual basis
when no significant uncertainties as to the amount
of consideration that would be derived and as to its
ultimate collection exist.
(iii) Insurance and Other Claims
Revenue in respect of claims is recognized when
no significant uncertainty exists with regard to the
amount to be realized and the ultimate collection
thereof.
p) Government grant
Government grants in the form of transfers of
resources to the Company in return for past
compliance with certain conditions relating to the
operating activities of the Company are recognized
as other income in profit or loss.
Government grants related to capital assets are
recognized initially as deferred income at fair value
or deducted from the carrying value of the asset
when there is reasonable assurance that they will
be received and the Company will comply with the
conditions associated with the grant; they are then
recognised in profit or loss as other income on a
systematic basis or depreciated over the remaining
useful life of the asset, respectively.
Further, Grants that compensate the Company for
expenses incurred are recognised in profit or loss
on a systematic basis in the periods in which such
expenses are recognised.
q) Recognition of interest income or expense
Interest income or expense is recognised using the
effective interest method.
The ''effective interest rate'' is the rate that exactly
discounts the estimated future cash payments or
receipts through the expected life of the financial
instrument to:
a) the gross carrying amount of the financial asset;
or
b) the amortised cost of the financial liability.
In calculating interest income and expense, the
effective interest rate is applied to the gross carrying
amount of the asset (when the asset is not credit-
impaired) or to the amortised cost of the liability.
However, for financial assets that have become
credit impaired subsequent to initial recognition,
interest income is calculated by applying the effective
interest rate to the amortised cost of the financial
asset. If the asset is no longer credit-impaired, then
the calculation of interest income reverts to the gross
basis.
r) Income taxes
Income tax comprises current and deferred tax. It is
recognised in Statement of Profit and Loss except to
the extent that it relates to a business combination
or an item recognised directly in equity or in other
comprehensive income.
The Company has determined that interest and
penalties related to income taxes, including uncertain
tax treatments, do not meet the definition of income
taxes, and therefore accounted for them under Ind AS
37 Provisions, Contingent Liabilities and Contingent
Assets.
Current tax
Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable
in respect of previous years. The amount of current
tax reflects the best estimate of the tax amount
expected to be paid or received after considering
the uncertainty, if any, related to income taxes. It is
measured using tax rates (and tax laws) enacted or
substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset
only if there is a legally enforceable right to set off
the recognised amounts, and it is intended to realise
the asset and settle the liability on a net basis or
simultaneously.
Deferred tax
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of the
assets and liabilities for financial reporting purposes
and the corresponding amounts used for taxation
purposes. Deferred tax is also recognised in respect
of carried forward tax losses (if any) and tax credits.
Deferred tax assets are recognised to the extent that it
is probable that future profits will be available against
which they can be used. Deferred tax assets are
reviewed at each reporting date and are recognised
to the extent that it is probable that the related tax
benefits will be realized. Deferred tax is measured
at the tax rates that are expected to apply to the
period when the asset is realized or the liability is
settled, based on the laws that have been enacted or
substantively enacted by the reporting date. Deferred
tax assets - unrecognised or recognised, are
reviewed at each reporting date and are recognised
/ reduced to the extent that it is probable / no longer
probable respectively that the related tax benefits will
be realized.
The measurement of deferred tax reflects the tax
consequences that would follow from the manner in
which the Company expects, at the reporting date,
to recover or settle the carrying amount of its assets
and liabilities.
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. The Company has opted the
new tax regime from 1 April 2022.
Deferred tax assets and liabilities are offset only if there
is a legally enforceable right to set off the current tax
liabilities and assets, and they relate to income taxes
levied by the same tax authorities
;) Operating segments
An operating segment is a component of the Company
that engages in business activities from which it
may earn revenues and incur expenses, including
revenues and expenses that relate to transactions
with any of the Company''s other components, and
for which discrete financial information is available. All
operating segments'' operating results are reviewed
regularly by the Company''s Chief Operating Decision
Maker (CODM) to make decisions about resources
to be allocated to the segments and assess their
performance.
) Royalty
Payment of technical know-how in the form of royalty
for providing technical assistance is being accounted
for on accrual basis as per the agreement between
the parties.
j) Corporate Social Responsibility ("CSR") expenditure
CSR expenditure incurred by the Company is charged
to the Statement of the Profit and Loss.
v) Cash and cash equivalents
For the purpose of presentation in the statement of
cash flows, cash and cash equivalents include cash in
hand, demand deposits held with banks, other short¬
term highly liquid investments with original maturities
of three months or less that are readily convertible to
known amounts of cash and which are subject to an
insignificant risk of changes in value.
w) Cash flow statement
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects
of transactions of a non-cash nature, any deferrals or
accruals of past or future operating cash receipts or
payments and item of income or expenses associated
with investing or financing cash flows. The cash flows
from operating, investing and financing activities of
the Company are segregated.
x) Earnings per share
Basic earnings/ (loss) per share is calculated by
dividing the net profit/(loss) for the year attributable
to equity shareholders by the weighted average
number of equity shares outstanding during the
year. The weighted average number of equity shares
outstanding during the period is adjusted for events
of bonus issue and share split. For the purpose of
calculating diluted earnings/ (loss) per share, the
net profit or loss for the period attributable to equity
shareholders and the weighted average number of
shares outstanding during the year are adjusted for
the effects of all dilutive potential equity shares.
y) Asset held for sale
The Company classifies assets as held for sale if
their carrying amounts will be recovered principally
through a sale transaction rather than through
continuing use. This condition is regarded as met
only when the asset is available for immediate sale
in its present condition subject only to terms that are
usual and customary for sales of such asset and its
sale is highly probable. Such assets or group of assets
/ liabilities are presented separately in the Balance
Sheet, in the line "Assets held for sale" and "Liabilities
held for sale" respectively. Once classified as held
for sale, intangible assets and PPE are no longer
amortised or depreciated.
Such assets or disposal groups held for sale are stated
at the lower of carrying amount and fair value less
costs to sell."
z) Recent Indian Accounting Standards (Ind AS)
Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. For the year
ended March 31, 2025, MCA has notified Ind AS - 117
Insurance Contracts and amendments to Ind AS 116
- Leases, relating to sale and leaseback transactions,
applicable to the Company w.e.f. April 1, 2024. The
Company has reviewed the new pronouncements
and based on its evaluation has determined that it
does not have any significant impact in its standalone
financial statements
40.3 Pursuant to judgement by the Hon''ble Supreme Court dated 28 February 2019, it was held that basic wages, for
the purpose of provident fund, to include special allowances which are common for all employees. However,
there is uncertainty with respect to the applicability of the judgement and period from which the same applies.
Owing to the aforesaid uncertainty and pending clarification from the authorities in this regard, the Company
had not recognised any provision for the years prior to 28 February 2019. Further, management also believes
that the impact of the same on the Company though not quantifiable will not be material.
41 Segment information
Board of Directors of the Company has been identified as the Chief Operating Decision Maker (CODM) as
defined by Ind AS 108, "Operating Segments". Operating Segments have been defined and presented based on
the regular review by the CODM to assess the performance of segment and to make decision about allocation
of resources. The Company has identified only one operating segment i.e."Manufacturing of Steel products"
and operations are mainly within India. Hence, it is the only reportable segment under Ind AS 108 ''Operating
Segments''. Entity wide disclosure required by Ind AS 108 are made as follows:
43.2 Defined contribution plan:-
The Company''s provident fund scheme and employee''s state insurance (ESI) fund scheme are defined contribution
plans. The Company has recorded an expense of C414.71 (Previous year: C360.22) under provident fund scheme
and C51.25 (Previous year: C52.02) under ESI scheme. These have been included in the note 34 Employees
benefits expenses, in Statement of Profit and Loss.
43.3 Defined benefit plan
Gratuity (funded)
The employees'' gratuity fund scheme managed by VSSL Gratuity fund trust is a defined benefit plan. The present
value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures
each unit separately to build up the final obligation. The Company made annual contributions to the VSSL Gratuity
fund trust.
The above defined benefit plan exposes the Company to following risks:
Interest rate risk:
The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the
defined benefit obligation will tend to increase.
Salary inflation risk:
Higher than expected increase in salary will increase the defined benefit obligation
Demographic risk:
This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal,
disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward
and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to
overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically
costs less per year as compared to a long service employee.
The Company actively monitors how the duration and the expected yield of the investments are matching the
expected cash outflows arising from the employee benefit obligations. The Company has not changed the
processes used to manage its risks from previous periods. The funds are managed by specialised team of VSSL
Gratuity Fund Trust
i) Funding
Gratuity is a funded benefit plan for qualifying employees. 100% of the plan assets are managed by VSSL Gratuity
fund trust. The assets managed are highly liquid in nature and the Company does not expect any significant
liquidity risks. The following table sets out the status of the defined benefit plan as required under Ind-AS 19 -
Employee Benefits:
43.4 Share based payments to employees (Equity settled)
i) ESOP Plan 2016: Second (2nd) Grant
The Nomination and Remuneration Committee of the Company in its meeting held on 11 November 2020 has
granted 135,000 options to its eligible employees against the plan under the Second grant out of 136,937 options
lying un-granted at a price of C72 per share, other terms and conditions remaining the same.
During the year, the Company has allotted 32,000 (Previous year: 26,250) equity shares to the eligible employees
at a price of C72 per share. Along with this employees had also exercised 32,000 Bonus Shares in the ratio of 1:1
during the year (Previous year: 26,250)
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise
price, the term of the option, the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option.
ii) ESOP Plan 2016: Third (3rd) Grant
The Nomination and Remuneration Committee in its meeting held on 23rd July, 2022 has made a third grant of
9,000 options under ESOP Plan 2016 to its eligible employees out of 9,437 options lying ungranted under the said
Plan at a price of C72 per share.
During the year, the Company has allotted 2,250 (Previous year : Nil) equity shares to the eligible employees at a
price of C72 per share. Along with this employees had also exercised 2,250 Bonus Shares in the ratio of 1:1 during
the year (Previous year: Nil)
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise
price, the term of the option, the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option.
*The fair value of borrowings is based upon a discounted cash flow analysis that used the aggregate cash flows from
principal and finance costs over the life of the debt and current market interest rates.
(iv) Derivatives are carried at fair value at each reporting date. The fair values of the derivative financial instruments has
been determined using valuation techniques with market observable inputs. The company uses mark to market
provided by bank for valuation of this derivative contracts. There are no significant unobservable inputs used for
Derivative financial instruments.
There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2025 and 31 March
2024.
47 Financial risk management
47.1 Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s
risk management framework. The board of directors has established the risk management committee which is
responsible for developing the monitoring the company risk management policies. The Company''s risk manage¬
ment policies are established to identify and analyse the risk faced by the Company, to set appropriate risk limits
and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed
regularly to effect changes in market conditions and Company''s activities. The Company, through its training and
management standards and procedures, aims to maintain discipline and constructive control environment in
which all employees understand their roles and obligations.
The Company''s audit committee oversees how management monitors compliance with Company''s risk man¬
agement policies and procedures, and reviews the adequacy of the risk management framework in relation to
risk faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit
undertakes both regular and adhoc reviews of risk management controls and procedures, the result of which are
reported to audit committee.
The Company has exposure to the following risks arising from financial instruments:
- credit risk (see (ii))
- liquidity risk (see (iii)): and
- market risk (see (iv))
47.2 Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails
to meet its contractual obligations. The carrying amount of financial assets represents the maximum credit risk
exposure and arises principally from the Company''s receivable from customers and loans. The maximum expo¬
sure to credit risks is represented by the total carrying amount of these financial assets in the Balance Sheet:
The loans primarily represents loans given to employees. The management believes these to be high quality
assets with negligible credit risk. The management believes the parties to which these loans have been given
have strong capacity to meet the obligations and where the risk of default is negligible or nil and accordingly no
allowance for expected credit loss has been provided on these financial assets.
Credit risk on cash and cash equivalents and bank deposits is limited as the Company generally invests in deposits
with banks with high credit ratings assigned by domestic credit rating agencies.
47.3 Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial assets. The Company''s approach to
manage liquidity is to have sufficient liquidity to meet it''s liabilities when they are due, under both normal and
stressed circumstances, without incurring losses or risking damage to the Company''s reputation.
Management manages the liquidity risk by monitoring cash flow forecasts on a periodic basis and maturity profiles
of financial assets and liabilities. This monitoring takes into account the accessibility of cash and cash equivalents
and additional undrawn financing facilities.
47.4 Market risk
(a) Commodity price risk
The Company is exposed to the movement in price of key raw materials in domestic and international markets.
The Company has in place policies to manage exposure to fluctuations in the prices of the key raw materials used
in operations. The Company manages fluctuations in raw material price through hedging in the form of advance
procurement when the prices are perceived to be low and also enters into advance buying contracts as strategic
sourcing initiative in order to keep raw material and prices under check to the extent possible.
(b) Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to
the Company''s borrowings with floating interest rates.
Exposure to interest rate risk
The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest
rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The risk
is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. The
exposure of the Company''s borrowing to interest rate changes as reported to the management at the end of the
reporting period are as follows:
50 Additional regulatory information pursuant to the requirement in Division II of Schedule III to the Companies
Act 2013:
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending
against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible
assets or both during the current or previous year.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including
foreign entities (Intermediaries) with the understanding that the Intermediary shall: (a) directly or indirectly
lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company
(Ultimate Beneficiaries) or (b) provide any guarantee, security or the like to or on behalf of the Ultimate
Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding
Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly
or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf
of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries
(vii) The Company has not any such transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961
(such as, search or survey or any other relevant provisions of the Income Tax Act, 1961
(viii) None of the entities in the Company have been declared wilful defaulter by any bank or financial institution
or government or any government authority.
(ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(x) The Company has not entered into any scheme of arrangement which has an accounting impact on current
or previous financial year.
(xi) The Company including the "Companies in the Group" (as per the provisions of the Core Investment
Companies (Reserve Bank) Directions, 2016) do not have any Core Investment Company ("CIC")
51 The Company has established a comprehensive system of maintenance of information and documents as required
by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires
existence of such information and documentation to be contemporaneous in nature, the Company continuously
updates its documentation for the international transactions entered into with the associated enterprises during
the financial year and expects such records to be in existence latest by the due date as required under law. The
management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation
will not have any impact on the financial statements, particularly on the amount of income tax expense and that
of provision for taxation.
As per our report of even date attached For and on behalf of Board of Directors of
For B S R & Co. LLP Vardhman Special Steels Limited
Chartered Accountants
ICAI Firm Registration No 101248W/W-100022
Gaurav Mahajan Sachit Jain R. K. Rewari
Partner Vice Chairman & Managing Director Executive Director
Membership number 507857 DIN 00746409 DIN 00619240
Sanjeev Singla Sonam Dhingra
Chief Financial Officer Company Secretary
Place: Ludhiana Place: Ludhiana
Date: 22 April 2025 Date: 22 April 2025
l) Provisions (other than for employee benefits)
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Company expects some or all of the expenditure required to settle a provision will be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Expected future losses are not provided for.
Onerous contracts
A provision for onerous contract is recognised when the expected benefits to be derived by the company from a contract are lower than the unavoidable cost of meeting its obligation under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the company recognises any impairment loss on assets associated.
m) Contingent liabilities and contingent assets
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the consolidated financial statements.
Contingent asset is not recognised in consolidated financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognized.
Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
n) Commitments
Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets. Provisions, contingent liabilities, contingent assets and commitments are reviewed at each reporting date.
o) (i) Revenue from contract with customers
Under Ind AS 115, the Company recognized revenue when (or as) a performance obligation was satisfied, i.e. when ''control'' of the goods underlying the particular performance obligation were transferred to the customer.
Further, revenue from sale of goods is recognized based on a 5-Step Methodology which is as follows: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligation in contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Contract assets are recognized when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.
Contract liability is recognized when billings are in excess of revenues.
Contracts are subject to modification to account for changes in contract specification and requirements. The Company reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for.
Use of significant judgements in revenue recognition
- The Company''s contracts with customers could include promises to transfer multiple products and services to a customer. The Company assesses the products / services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables.
- Judgement is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as cash discount, trade discount, and rebate. The transaction price is also adjusted for the effects of the time value of money if the contract includes a significant financing component. Any consideration payable to the
customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations.
- The Company uses judgement to determine an appropriate standalone selling price for a performance obligation. The Company allocates the transaction price to each performance obligation on the basis of the relative standalone selling price of each distinct product or service promised in the contract.
Revenue Recognition
The Company recognises revenue generally at the point in time when the products are delivered or dispatch to customer or when it is delivered to a carrier for export sale, which is when the control over product is transferred to the customer.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only passage of time is required before payment is due.
(ii) Export Incentives
Export incentives under various schemes notified by the government are recognised on accrual basis when no significant uncertainties as to the amount of consideration that would be derived and as to its ultimate collection exist.
(iii) Insurance and Other Claims
Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.
p) Government grant
Government grants in the form of transfers of resources to the Company in return for past compliance with certain conditions relating to the operating activities of the Company are recognized as other income in profit or loss.
Government grants related to capital assets are recognized initially as deferred income at fair value or deducted from the carrying value of the asset when there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant; they are then recognised in profit or loss as other income on a systematic basis or depreciated over the remaining useful life of the asset, respectively.
Further, Grants that compensate the Company for expenses incurred are recognised in profit or loss on a systematic basis in the periods in which such expenses are recognised.
q) Recognition of interest income or expense
Interest income or expense is recognised using the effective interest method.
The ''effective interest rate'' is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument to:
a) the gross carrying amount of the financial asset; or
b) the amortised cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.
r) Income taxes
Income tax comprises current and deferred tax. It is recognised in Statement of Profit and Loss except to the extent that it relates to a business combination or an item recognised directly in equity or in other comprehensive income.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses (if any) and tax credits. Deferred tax assets are recognised to the extent that it is probable that future profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are recognised to the extent that it is probable that the related tax benefits will be realized. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised / reduced to the extent that it is probable / no longer probable respectively that the related tax benefits will be realized.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
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. The Company has opted the new tax regime from 1 April 2022.
s) Operating segments
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Company''s Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segments and assess their performance.
t) Royalty
Payment of technical know-how in the form of royalty for providing technical assistance is being accounted for on accrual basis as per the agreement between the parties.
u) Corporate Social Responsibility ("CSR") expenditure
CSR expenditure incurred by the Company is charged to the Statement of the Profit and Loss.
v) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash in hand, demand deposits held with banks, other shortterm highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
w) Cash flow statement
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
x) Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net profit/(loss) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue and share split. For the purpose of calculating diluted earnings/ (loss) per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
y) Asset held for sale
The Company classifies assets as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. Such assets or group of assets / liabilities are presented separately in the Balance Sheet, in the line "Assets held for sale" and "Liabilities held for sale" respectively. Once classified as held for sale, intangible assets and PPE are no longer amortised or depreciated.
Such assets or disposal groups held for sale are stated at the lower of carrying amount and fair value less costs to sell."
z) Recent Indian Accounting Standards (Ind AS)
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
17.3 Rights, preferences and restrictions attached to shares
i) The Company has only one class of equity shares having par value of C10 per share. Accordingly all equity shares rank equally with regard to dividends and share in the company''s residual assets on winding up. Each shareholder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders (except for interim dividend) in the ensuing Annual General Meeting. In the event of liquidation of the company, the equity shareholders will be entitled to receive the remaining balance of assets if any, after preferential payments and to have a share in surplus assets of the Company, proportionate to their Individual shareholding in the paid up equity capital of the Company.
ii) Pursuant to Share Subscription and Investment Agreement entered on 10 August 2019 with Aichi Steel Corporation (ASC) a Japanese Corporation incorporated under the laws of Japan having its registered office at 1, Wanowari, Aro-machi, Tokai-shi, Aichi-ken, 476-8666, Japan and the Company, ASC as minority protection, has rights in the Company such as right to nominate on the Board, affirmative vote rights, participatory rights, etc.
18 Other equity
(also refer to Statement of Changes in Equity)
(a) Securities premium
Securities premium represents the excess consideration received by the Company over the face value of the shares issued to shareholders. This will be utilised in accordance with the applicable provisions of the Companies Act, 2013.
(b) General reserve
The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be reclassified subsequently to the Statement of Profit and Loss.
(c) Share Options Outstanding Account
The fair value of the equity settled share based payment transactions with employees is recognised in Statement of Profit and Loss with corresponding credit to share based payment reserve.
(d) Retained earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
19.1 Notes
(a) Security details:
Term loans of C3.710.86 (Previous year: C6,462.53) are secured by a first parri passu charge on entire movable & immoveable property, plant and equipments of the Company (both present & future) including land and Building situated at C-58 & C-59, Focal Point, Ludhiana & Pioneer Industrial Park, Pathrerdi, Gurugram and second parri passu charge on entire current assets of the Company.
(b) Terms & repayment schedule:
- Term loan of C Nil (Previous year: C2,096.65) from State Bank of India.
- Term loan of C2,061.85 (Previous year: C2,057.70) from ICICI Bank Limited repayable in 5 quarterly instalments from June 2024 till Q1 of FY 2025-26 (31 March 2023: 5 instalments)
- Term loan of C1,649.01 (Previous year: C2,308.18) from HDFC Bank Limited repayable in 10 quarterly instalments from April 2024 till Q2 of FY 2026-27 (31 March 2023: 14 instalments)
- During the current year, the nominal (floating) interest rate was in the range of 8.55 % to 10.80 % per annum (31 March 2023: in the range of 7.20 % to 9.80 % per annum)
20 Lease liabilities
The Company has entered into agreement for taking office premises on lease and license basis. The one lease is running for a period of up to 10 years with no restriction placed upon the Company for entering into said lease.
The Company also leases certain office premises/Guest house with contract terms up to one year. These leases are short-term in nature and the Company has elected not to recognise right-of-use assets and lease liabilities for these leases. Rental expense recorded for short-term leases was C116.54 (Previous year: C110.34) (Refer note 37).
19.2 Cash credit/overdraft and working capital demand loan facilities from Consortium banks aggregating to C2,767.66 (Previous year: C6,295.10) against a sanctioned fund based and non-fund based working capital facility of C30,000 (Previous year: C30,000) and C20,000 (Previous year: C15,000) respectively. These limits are secured by hypothecation of entire present and future tangible current assets of the Company as well as a second charge on the entire present and future property, plant and equipments of the Company.
19.3 Unsecured corporate credit card facilities taken from Axis Bank Limited aggregating to C1,815.53 (Previous year: C1,534.49) against a sanctioned limit of C3,000 (Previous year:C2,000)
43.2 Defined contribution plan:-
The Company''s provident fund scheme and employee''s state insurance (ESI) fund scheme are defined contribution plans. The Company has recorded an expense of C360.22 (Previous year: C320.43) under provident fund scheme and C52.02 (Previous year: C47.94) under ESI scheme. These have been included in the note 34 Employees benefits expenses, in Statement of Profit and Loss.
43.3 Defined benefit plan Gratuity (funded)
The employees'' gratuity fund scheme managed by VSSL Gratuity fund trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The Company made annual contributions to the VSSL Gratuity fund trust.
The above defined benefit plan exposes the Company to following risks:
Interest rate risk:
The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.
Salary inflation risk:
Higher than expected increase in salary will increase the defined benefit obligation Demographic risk:
This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.
The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The funds are managed by specialised team of VSSL Gratuity Fund Trust
i) Funding
Gratuity is a funded benefit plan for qualifying employees. 100% of the plan assets are managed by VSSL Gratuity fund trust. The assets managed are highly liquid in nature and the Company does not expect any significant liquidity risks. The following table sets out the status of the defined benefit plan as required under Ind-AS 19 -Employee Benefits:
43.4 Share based payments to employees
i) ESOP Plan 2016: First (1st) Grant
All the options granted under the First grant of ESOP Plan 2016 were fully exercised by the eligible employees up to 31 March 2022.
ii) ESOP Plan 2016: Second (2nd) Grant
The Nomination and Remuneration Committee of the Company in its meeting held on 11 November 2020 has granted 1,35,000 options to its eligible employees against the plan under the Second grant out of 1,36,937 options lying un-granted at a price of C72 per share, other terms and conditions remaining the same.
During the year, the Company has allotted 26,250 (Previous year : 28,125) equity shares to the eligible employees at a price of C72 per share. Along with this employees had also exercised Bonus Shares 26,250 in the ratio of 1:1 during the year (Previous year: Nil)
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
iii) ESOP Plan 2016: Third (3rd) Grant
The Nomination and Remuneration Committee in its meeting held on 23rd July, 2022 has made a third grant of 9,000 options under ESOP Plan 2016 to its eligible employees out of 9,437 options lying ungranted under the said Plan at a price of C72 per share. These options will vest with the eligible employees after two years from the date of grant.
During the year no allotment has been made by the company to the eligible employees under 3rd Grant of ESOP Plan 2016, as vesting period is 2 years.
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
iv) ESOP Plan 2020: First (1st) Grant
The Company has established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014) which has been approved by the Board of Directors in its meeting held on 6 August 2020 and by the shareholders i n their meeting held on 25 September, 2020. The Board had delegated necessary power to the Nomination and Remuneration Committee to Implement and administer the plan. Accordingly, the Nomination and Remuneration Committee of the Company in its meeting held on 11 November 2020 has granted 3,63,000 options to its eligible employees against the plan under the first grant out of total of 5,00,000 options.
During the year, the Company has allotted 76,250 (Previous year : 38,125) equity shares to the eligible employees at a price of C72 per share. Along with this employees had also exercised Bonus Shares 76,250 in the ratio of 1:1 during the year (Previous year: Nil)
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
v) ESOP Plan 2020: Second (2nd) Grant
The Nomination and Remuneration Committee in its meeting held on 23rd July, 2022 has made a second grant of 1,25,000 options under ESOP Plan 2020 to its eligible employees out of 2,20,500 options lying ungranted under the said Plan at a price of C72 per share. These options will vest with the eligible employees after two years from the date of grant.
During the year no allotment has been made by the company to the eligible employees under 3rd Grant of ESOP Plan 2020, as vesting period is 2 years.
The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
47 Financial risk management
47.1 Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company''s risk management policies are established to identify and analyse the risk faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to effect changes in market conditions and Company''s activities. The Company, through its training and management standards and procedures, aims to maintain discipline and constructive control environment in which all employees understand their roles and obligations.
The Company''s audit committee oversees how management monitors compliance with Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to risk faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the result of which are reported to audit committee.
The Company has exposure to the following risks arising from financial instruments:
- credit risk (see (ii))
- liquidity risk (see (iii)): and
- market risk (see (iv))
47.2 Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations. The carrying amount of financial assets represents the maximum credit risk exposure and arises principally from the Company''s receivable from customers and loans. The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the Balance Sheet:
Trade receivables
The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, financial statements, credit agency information, industry information and business intelligence. Sale limits are established for each customer and reviewed annually. Any sales exceeding those limits require approval from the appropriate authority as per policy. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are institutional, dealers or end-user customer, their geographic location, industry, trade history with the Company and existence of previous financial difficulties
47.3 Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial assets. The Company''s approach to manage liquidity is to have sufficient liquidity to meet it''s liabilities when they are due, under both normal and stressed circumstances, without incurring losses or risking damage to the Company''s reputation.
Management manages the liquidity risk by monitoring cash flow forecasts on a periodic basis and maturity profiles of financial assets and liabilities. This monitoring takes into account the accessibility of cash and cash equivalents and additional undrawn financing facilities.
47.4 Market risk
(a) Commodity price risk
The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company has in place policies to manage exposure to fluctuations in the prices of the key raw materials used in operations. The Company manages fluctuations in raw material price through hedging in the form of advance procurement when the prices are perceived to be low and also enters into advance buying contracts as strategic sourcing initiative in order to keep raw material and prices under check to the extent possible.
(b) Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s borrowings with floating interest rates.
Exposure to interest rate risk
The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. The exposure of the Company''s borrowing to interest rate changes as reported to the management at the end of the reporting period are as follows:
48 Capital Risk Management 48.1 Risk management
For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity shareholders . The primary objective of the Company''s capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.
50 Additional regulatory information pursuant to the requirement in Division II of Schedule III to the Companies Act 2013:
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company has not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961
(viii) None of the entities in the Company have been declared wilful defaulter by any bank or financial institution or government or any government authority.
(ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(x) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(xi) The Company including the Companies in the Group (as per the provisions of the Core Investment Companies (Reserve Bank) Directions, 2016) do not have any Core Investment Company (CIC)
51 The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.
As per our report of even date attached
For B S R & Co. LLP For and on behalf of the Board of Directors of
Chartered Accountants Vardhman Special Steels Limited
ICAI Firm Registration No 101248W/W-100022
Gaurav Mahajan Sachit Jain R. K. Rewari
Partner Vice Chairman & Managing Director Executive Director
Membership number 507857 DIN 00746409 DIN 00619240
Sanjeev Singla Sonam Dhingra
Chief Financial Officer Company Secretary
Place: Chandigarh Place: Ludhiana
Date: 1 May 2024 Date: 1 May 2024
Provisions (other than for employee benefits)
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of
resources embodying economic benefits will be
required to settle the obligation and a reliable
estimate can be made of the amount of the
obligation. The expense relating to a provision is
presented in the statement of profit and loss net of
any reimbursement. If the effect of the time value
of money is material, provisions are discounted
using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability.
When discounting is used, the increase in the
provision due to the passage of time is recognised
as a finance cost. Expected future losses are not
provided for.
A provision for onerous contract is recognised
when the expected benefits to be derived by
the company from a contract are lower than
the unavoidable cost of meeting its obligation
under the contract. The provision is measured
at the present value of the lower of the expected
cost of terminating the contract and the expected
net cost of continuing with the contract. Before a
provision is established, the company recognises
any impairment loss on assets associated.
m) Contingent liabilities and contingent assets
A contingent liability exists when there is a possible
but not probable obligation, or a present obligation
that may, but probably will not, require an outflow
of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities
do not warrant provisions, but are disclosed unless
the possibility of outflow of resources is remote.
Contingent assets usually arise from unplanned
or other unexpected events that give rise to the
possibility of an inflow of economic benefits to
the entity. Contingent assets are recognized when
the realisation of income is virtually certain, then
the related asset is not a contingent asset and its
recognition is appropriate.
A contingent asset is disclosed where an inflow of
economic benefits is probable.
Commitments include the amount of purchase
order (net of advances) issued to parties for
completion of assets. Provisions, contingent
liabilities, contingent assets and commitments are
reviewed at each reporting date.
o) Revenue from contract with customers
Under Ind AS 115, the Company recognized
revenue when (or as) a performance obligation
was satisfied, i.e. when ''control'' of the goods
underlying the particular performance obligation
were transferred to the customer.
Further, revenue from sale of goods is recognized
based on a 5-Step Methodology which is as follows:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligation in
contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the
performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity
satisfies a performance obligation
Deferred revenue is recognised when there is
a billing in excess of revenues. The Company
disaggregates revenue from contracts with
customers by geography.
Use of significant judgements in revenue
recognition
- The Company''s contracts with customers
could include promises to transfer multiple
products and services to a customer.
The Company assesses the products
/ services promised in a contract and
identifies distinct performance obligations
in the contract. Identification of distinct
performance obligation involves judgement
to determine the deliverables and the ability
of the customer to benefit independently
from such deliverables.
- Judgement is also required to determine
the transaction price for the contract.
The transaction price could be either a
fixed amount of customer consideration
or variable consideration with elements
such as cash discount, trade discount, and
rebate. The transaction price is also adjusted
for the effects of the time value of money if
the contract includes a significant financing
component. Any consideration payable to the
customer is adjusted to the transaction price,
unless it is a payment for a distinct product
or service from the customer. The estimated
amount of variable consideration is adjusted
in the transaction price only to the extent that
it is highly probable that a significant reversal in
the amount of cumulative revenue recognised
will not occur and is reassessed at the end of
each reporting period. The Company allocates
the elements of variable considerations to all
the performance obligations of the contract
unless there is observable evidence that they
pertain to one or more distinct performance
obligations.
- The Company uses judgement to determine
an appropriate standalone selling price for
a performance obligation. The Company
allocates the transaction price to each
performance obligation on the basis of the
relative standalone selling price of each
distinct product or service promised in the
contract.
- The Company exercises judgement in
determining whether the performance
obligation is satisfied at a point in time or over
a period of time. The Company considers
indicators such as how customer consumes
benefits as services are rendered or who
controls the asset as it is being created or
existence of enforceable right to payment for
performance to date and alternate use of such
product or service, transfer of significant risks
and rewards to the customer, acceptance of
delivery by the customer, etc.
- Revenue for fixed-price contract is recognised
using percentage-of-completion method.
The Company uses judgement to estimate
the future cost-to-completion of the contracts
which is used to determine the degree of
completion of the performance obligation.
- Contract fulfilment costs are generally
expensed as incurred except for certain
expenses which meet the criteria for
capitalisation. Such costs are amortised over
the contractual period. The assessment of
these criteria requires the application of
judgement, in particular when considering if
costs generate or enhance resources to be
used to satisfy future performance obligations
and whether costs are expected to be
recovered.
Export Incentives
Export incentives under various schemes notified
by the government are recognised on accrual
basis when no significant uncertainties as to the
amount of consideration that would be derived
and as to its ultimate collection exist.
Insurance and Other Claims
Revenue in respect of claims is recognized when
no significant uncertainty exists with regard to the
amount to be realized and the ultimate collection
thereof.
p) Government grant
Government grants related to capital assets are
recognized initially as deferred income at fair value
or deducted from the carrying value of the asset
when there is reasonable assurance that they will
be received and the Company will comply with the
conditions associated with the grant; they are then
recognised in profit or loss as other income on a
systematic basis or depreciated over the remaining
useful life of the asset, respectively.
Grants that compensate the Company for
expenses incurred are recognised in profit or loss
on a systematic basis in the periods in which such
expenses are recognised.
q) Recognition of interest income or expense
Interest income or expense is recognised using the
effective interest method.
The ''effective interest rate'' is the rate that exactly
discounts the estimated future cash payments or
receipts through the expected life of the financial
instrument to:
a) the gross carrying amount of the financial
asset; or
b) the amortised cost of the financial liability.
In calculating interest income and expense,
the effective interest rate is applied to the gross
carrying amount of the asset (when the asset is
not credit-impaired) or to the amortised cost of
the liability. However, for financial assets that
have become credit impaired subsequent to
initial recognition, interest income is calculated by
applying the effective interest rate to the amortised
cost of the financial asset. If the asset is no longer
credit-impaired, then the calculation of interest
income reverts to the gross basis.
r) Income taxes
Income tax comprises current and deferred tax.
It is recognised in Statement of Profit and Loss
except to the extent that it relates to a business
combination or an item recognised directly in
equity or in other comprehensive income.
Current tax
Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable
in respect of previous years. The amount of current
tax reflects the best estimate of the tax amount
expected to be paid or received after considering
the uncertainty, if any, related to income taxes. It is
measured using tax rates (and tax laws) enacted or
substantively enacted by the reporting date.
Current tax assets and current tax liabilities are
offset only if there is a legally enforceable right to
set off the recognised amounts, and it is intended
to realise the asset and settle the liability on a net
basis or simultaneously.
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of the
assets and liabilities for financial reporting purposes
and the corresponding amounts used for taxation
purposes. Deferred tax is also recognised in respect
of carried forward tax losses (if any) and tax credits.
Deferred tax assets are recognised to the extent
that it is probable that future profits will be available
against which they can be used. Deferred tax
assets are reviewed at each reporting date and are
recognised to the extent that it is probable that the
related tax benefits will be realized. Deferred tax
is measured at the tax rates that are expected to
apply to the period when the asset is realized or
the liability is settled, based on the laws that have
been enacted or substantively enacted by the
reporting date. Deferred tax assets - unrecognised
or recognised, are reviewed at each reporting date
and are recognised / reduced to the extent that it
is probable / no longer probable respectively that
the related tax benefits will be realized.
The measurement of deferred tax reflects the tax
consequences that would follow from the manner
in which the Company expects, at the reporting
date, to recover or settle the carrying amount of
its assets and liabilities.
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. The Company has
opted the new tax regime from 1 April 2022.
An operating segment is a component of the
Company that engages in business activities from
which it may earn revenues and incur expenses,
including revenues and expenses that relate to
transactions with any of the Company''s other
components, and for which discrete financial
information is available. All operating segments''
operating results are reviewed regularly by the
Company''s Chief Operating Decision Maker
(CODM) to make decisions about resources to
be allocated to the segments and assess their
performance.
Payment of technical know-how in the form
of royalty for providing technical assistance is
being accounted for on accrual basis as per the
agreement between the parties.
u) Corporate Social Responsibility (CSR)
expenditure
CSR expenditure incurred by the Company is
charged to the Statement of the Profit and Loss.
For the purpose of presentation in the statement of
cash flows, cash and cash equivalents include cash
in hand, demand deposits held with banks, other
short-term highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which
are subject to an insignificant risk of changes in
value.
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the
effects of transactions of a non-cash nature, any
deferrals or accruals of past or future operating
cash receipts or payments and item of income or
expenses associated with investing or financing
cash flows. The cash flows from operating,
investing and financing activities of the Company
are segregated.
x) Earnings per share
Basic earnings/ (loss) per share are calculated by
dividing the net profit/(loss) for the year attributable
to equity shareholders by the weighted average
number of equity shares outstanding during the
year. The weighted average number of equity
shares outstanding during the period is adjusted
for events of bonus issue and share split. For the
purpose of calculating diluted earnings/ (loss)
per share, the net profit or loss for the period
attributable to equity shareholders and the
weighted average number of shares outstanding
during the year are adjusted for the effects of all
dilutive potential equity shares.
y) Recent Indian Accounting Standards (Ind AS)
Ministry of Corporate Affairs (MCA) notifies
new standard or amendments to the existing
standards under Companies (Indian Accounting
Standards) Rules as issued from time to time.
On March 31, 2023, MCA amended the
Companies (Indian Accounting Standards) Rules,
2015 by issuing the Companies (Indian Accounting
Standards) Amendment Rules, 2023, applicable
from April 1, 2023, as below:
- Ind AS 1 - Presentation of Financial
Statements
The amendments require companies to
disclose their material accounting policies
rather than their significant accounting
policies. Accounting policy information,
together with other information, is material
when it can reasonably be expected to
influence decisions of primary users of general
purpose financial statements. The Company
does not expect this amendment to have any
significant impact in its financial statements.
The amendments clarify how companies
account for deferred tax on transactions such
as leases and decommissioning obligations.
The amendments narrowed the scope of
the recognition exemption in paragraphs 15
and 24 of Ind AS 12 (recognition exemption)
so that it no longer applies to transactions
that, on initial recognition, give rise to equal
taxable and deductible temporary differences.
The Company is evaluating the impact, if any,
in its financial statements.
- Ind AS 8 - Accounting Policies, Changes in
Accounting Estimates and Errors
The amendments will help entities to
distinguish between accounting policies
and accounting estimates. The definition of
a change in accounting estimates has been
replaced with a definition of accounting
estimates. Under the new definition,
accounting estimates are monetary amounts
in financial statements that are subject to
measurement uncertainty. Entities develop
accounting estimates if accounting policies
require items in financial statements to be
measured in a way that involves measurement
uncertainty. The Company does not expect
this amendment to have any significant
impact in its financial statements.
1. CORPORATE INFORMATION
Vardhman Special Steels Limited (the Company) is a public company incorporated under the provisions of the Companies Act, 1956 on 14th May, 2010. The company is engaged in manufacturing of Billets, Steel bars & Rods and Bright Bars of various categories of special and alloy steels.
These financial statements were approved and adopted by Board of Directors of the Company in its meeting held on April 27, 2018.
I BASIS OF PREPARATION OF FINANCIAL STATEMENTS
(i) STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION:
These financial statements are prepared in accordance with Indian Accounting Standard (Ind AS), under the historical cost convention on the accrual basis except for certain financial instrument which are measured at fair value, the provisions of the Companies Act, 2013 (the Act) (to the extent notified) and guidelines issued by Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
Effective April 1, 2016, the company has adopted all the Ind As standards and the adoption was carried out in accordance with Ind AS 101, âFirst Time Adoption of Indian Accounting Standards, with April 1, 2015 as the transition date. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP
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.
(ii) USE OF ESTIMATES
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note.
Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
(iii) CLASSIFICATION OF ASSETS AND LIABILITIES AS CURRENT AND NON-CURRENT
All Assets and Liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of product & activities of the Company and their realisation in cash and cash equivalent, the Company has determined its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
a Rights, preferences and restrictions attached to shares Equity Shares:
The Company has only one class of Equity Shares having face value of RS.10/-. Each shareholder of equity share is entitled to one vote per share. In the event of liquidation of the company, the equity shareholders will be entitled to receive the remaining balance of assets if any, after preferential payments and to have a share in surplus assets of the Company, proportionate to their individual shareholding in the paid up equity capital of the Company.
b The Aggregate number of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash in the last five years immediately preceding the balance sheet date is NIL
c. Share issue expenses amounting to RS.191.33 Lakhs have been charged to securities premium account as per the provisions of the Companies Act 2013 and expenses amounting to RS.39.70 Lakhs charged to profit & loss account as incurred in financial year 2016-17.
d Utilization of proceeds from right issue & Qualified Issue Placement
From the total proceeds of Rs.11,785.80 lakhs through right issue & Qualified Institutional Placement (QIP), the company has utilized Rs.6,936.03 lakhs.
2. Leases
The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to ten years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized for the year ended March 31, 2018 amounts to Rs.90.58 Lakhs (PY Rs.87.13 Lakh). The future minimum lease payments are given below:
3. Segment information
The Company has only one operating segment i.e. âSTEELâ and operations are mainly within India. Hence, it is the only reportable segment under IND AS 108 âOperating Segmentsâ. Entity wide disclosure required by IND AS 108 are made as follows:
a. Major customers
2017-18 Revenues from 2 major customers represented 11.06% and 10.82% (21.88% in aggregate) of the total sales of the Company.
2016-17 Revenues from 1 major customer represented 12.47% of the total sales of the Company.
4. The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006
Based on the information available, there are no vendors who have confirmed that they are covered under the Micro, Small and Medium Enterprises Development Act, 2006. Disclosures as required by section 22 of âThe Micro, Small and Medium Enterprises Development Act, 2006, are given below:
5. Employee benefits
a. Defined contribution plans:-
During the year, the Company has recognized an expense of Rs.193.64 Lakhs (Previous year Rs.173.01 Lakhs) in respect of contribution to Provident Fund and Nil (Previous Year Rs.4.57 Lakhs) in respect of contribution to superannuation scheme.
b. Defined benefits plans - as per actuarial valuation
c) Share based payments to employees
The Board of director in its meeting held on August 24, 2016, approved introduction of an equity based compensation scheme called âVardhman Special Steels Limited Employee Stock option plan 2016â for its eligible employees. The Board had delegated necessary power to the Nomination and Remuneration Committee to Implement and administer the plan. Accordingly, the Nomination and Remuneration Committee of the company in its meeting held on November 12, 2016 has granted 2,10,000 options to its eligible employees against the plan under the first grant out of total of 3,71,108 options.
III Assumptions
1. Stock Price - Closing price on National Stock Exchange on the date of grant has been considered.
2. Volatility - The historical volatility over the expected life has been considered to calculate the fair value.
3. Risk-free rate of return - The risk free interest rate being considered for the calculation is the interes arte applicable for a maturity equal to the expected life of the options based on the bond yield.
4. Exercise Price - Exercise price is the price as mentioned in âVardhman Special Steels Limited Employee Stock option plan 2016
The transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. Outstanding balances at the year- end are unsecured.
6. Impairment Review
Assets are tested for impairment whenever there are any internal or external indicators of impairment. Impairment test is performed at the level of each Cash Generating Unit (âCGUâ) or groups of CGUs within the Company at which the assets are monitored for internal management purposes, within an operating segment. The impairment assessment is based on higher of value in use and value from sale calculations. During the year, the testing did not result in any impairment in the carrying amount of other assets. The measurement of the cash generating unitsâ value in use is determined based on financial plans that have been used by management for internal purposes. The planning horizon reflects the assumptions for short to- mid-term market conditions. Key assumptions used in value-in-use calculations:
- Operating margins (Earnings before interest and taxes)
- Discount rate
- Growth rates
- Capital expenditures
7. Introduction of Goods and Service Tax (GST) with effect from July 1, 2017
Consequent to the introduction of Goods and Service Tax (GST) with effect from July 1, 2017, Central Excise, Value Added Tax (VAT) etc. have been subsumed into GST. In Accordance with Indian Accounting Standards-18 on Revenue and Schedule-II of the Companies Act, 2013, unlike Excise Duties, levies like GST, VAT etc. are not part of revenue. Accordingly the excise duty expense in the year ended March 31, 2018 contains the excise expense amount up to June 30, 2017 only whereas in the year ended March 31, 2017 excise expense amount pertains to full year.
* Donation of RS.3 Lakhs to a woman mountaineer as support to climb Mount Everest , Plantation at Municipal Corporation Park for B0.66 Lakh, Safety jackets distributed for road safety for B0.78 Lakh, Donation of B0.59 Lakh to Local Police for CCTV installation and Donation of B0.50 Lakh to The North India Cerebral Palsy Association.
The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties in an orderly market transaction, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values.
A. The fair values of derivatives are on MTM as per Bank
B. Company has opted to fair value its Long term and Current investments through profit & loss
C. Company has adopted effective rate of interest for calculating Interest. This has been calculated as the weighted average of effective interest rates calculated for each loan. In addition processing fees and transaction cost relating to each loan has also been considered for calculating effective interest rate.
D. The carrying amounts of current assets/ liability are to be the same as their fair values due to short term nature. Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
8. Derivative financial instruments
The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.
The company offsets a financial asset and a financial liability when it currently has a legally enforceable right to set off the recognized amounts and the company intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
9. Financial risk management objectives and policies
9.1 Financial risk factors
The Companyâs activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Companyâs primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Companyâs exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.
i. Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. This is based on the financial assets and financial liabilities held as at March 31, 2018 and March 31, 2017.
ii. Credit Risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
iii. Liquidity Risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses.
The Companyâs overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Companyâs financial performance. The Company uses derivative financial instruments to hedge certain risk exposures. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes.
Risk management is carried out by the treasury department under policies approved by the board of directors. The treasury team identifies, evaluates and hedges financial risks in close co-operation with the Companyâs operating units. The board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, and credit risk, use of derivative financial instruments and nonderivative financial instruments, and investment of excess liquidity.â
MARKET RISK
a.) Foreign Currency Risk and sensitivity
The functional currency of the Company is Indian Rupee (INR). The Company is exposed to foreign exchange risk through its sales in international markets and purchases from overseas suppliers in various foreign currencies. . The Company has obtained foreign currency loans and has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk. The Company holds derivative financial instruments such as foreign exchange contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Companyâs operations are affected as the rupee appreciates/ depreciates against these currencies.
Foreign currency sensitivity
The Impact on the company profit before tax due to changes in the fair value of monetary assets and liability including foreign currency derivatives on account of 1% change in USD and Euro exchange rate (With all other variables held consant) will be as under:
CASH AND CASH EQUIVALENTS
Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, quoted bonds issued by government and quasi government organizations and certificates of deposit which are funds deposited at a bank for a specified time period.
Liquidity risk
The companyâs approach in managing liquidity risk is to ensure that , as far as possible, it will have sufficient liquidity to meet its liabilities as and when they fall due under both normal and stressed conditions, without incurring unacceptable losses or risking damage to companyâs reputation.
9.2 Competition and Price risk
The Company faces competition from local and foreign competitors. Nevertheless, it believes that it has competitive advantage in terms of high quality products and by continuously upgrading its expertise and range of products to meet the needs of its customers.
9.3 Capital Risk Management
For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity shareholders . The primary objective of the Companyâs capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.
In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.
3(a) The Aggregate number of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash in the last five years immediately preceding the balance sheet date is NIL 3(b) Equity Shares calls unpaid by Directors and Officers of the Company is NIL
3(c) Shares held by holding company or its ultimate holding company or subsidiaries or associates of the holding company or the ultimate holding company in aggregate.
a) The above mentioned borrowings are secured by mortgage created or to be created on all the immovable assets of the Company, both present and future and hypothecation of all the movable assets including movable machinery, machinery parts, tools and accessories and other movables, both present and future (except book debts), subject to charges created or to be created in favour of the Bankers for securing the working capital limits.
# Refer Note No. 33 on restatement of External Commercial Borrowings
b) Terms of repayment of term loans*
ii) Estimated amount of capital contracts remaining to be executed is Rs. 2,436.44 Lac (Previous Year Rs.1,407.88 Lac).
iii) Other Contingent Liabilities include additional demands in respect of Income Tax/Excise Duty/Service Tax / Sale Tax/VAT amounting to Rs.2,209.93 Lac (Previous Year Rs.603.74 Lac) in different cases, which have been contested by the Company and various appeals have been filed with the Appellate Authorities. No provision has been made in the books of accounts in respect thereof.
1. Leases
The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs.78.20 Lacs (Previous Year Rs.46.09 Lacs).
2. In the opinion of the Board, Current Assets, Loan & Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.
3. Balances of Sundry Debtors and Sundry Creditors are subject to reconciliation and confirmation.
4. The Liability in respect of External Commercial Borrowing (ECB) was re-stated as on 31st March, 2016 and foreign exchange loss of Rs.583.12 Lac (Previous Year Rs.431.49 Lac) has been provided in books of account for the year ended 31st March 2016.
5. Sundry creditors include amount of Rs.Nil owed to Small Scale Industries Undertakings, to the extent such enterprises have been identified, out of which amount outstanding for a period of more than 30 days is Rs.Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.
6. Segment Reporting:
The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS-17) on Segment Reporting issued by The Institute of Chartered Accountants of India.
7. Earnings Per Share:
The calculation of Earnings Per Share (EPS) as disclosed in the Profit & Loss Account has been made in accordance with the requirements of Accounting Standard (AS-20) on Earnings Per Share issued by the Institute of Chartered Accountants of India.
8. Deferred Tax:
Accounting entries for deferred tax have been passed in accordance with the provisions of Accounting Standard (AS)-22 on ''Accounting for Taxes on Income'' issued by the Institute of Chartered Accountants of India.
9. No asset qualifies for impairment for the current year according to AS-28 issued by The Institute of Chartered Accountants of India.
10. Figures in brackets indicate deductions.
11. During the previous year, depreciation calculations had undergone a change w.e.f. 1st April 2014 in accordance with the provisions of Schedule-II of the Companies Act, 2013 as against Schedule XIV to the Companies Act, 1956.
In view of that change, carrying amounts of various tangible fixed assets as at 1st April, 2014 after retaining the residual value, an amount of Rs.89.77 lacs had been recognized in the opening balance of retained earnings (net of deferred tax) where the useful life of an asset was Nil. In other cases, the carrying amounts as at 1st April, 2014 is being depreciated over the revised remaining useful life of the asset as per Schedule-II.
12. The Company uses forward contracts to hedge its risk associated with fluctuation in foreign currency relating to foreign currency assets and liabilities, firm commitment and highly probable forecast transactions. The use of the aforesaid financial instruments is governed by the Company''s overall strategy. The Company does not use forward contracts and options for speculative purposes. The detail of the outstanding forward contracts as at 31st March, 2016 is as under:
13. Figures have been rounded off.
Vardhman Special Steels Limited is a Public Limited Company incorporated under the provisions of the companies Act, 1956 on 14th May, 2010. The Company is engaged in the Manufacturing of Billet, Steel bars & rods and Bright bars of various categories of special and alloy steels.
Note 2. Leases
The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs. 46.09 Lacs (Previous year Rs. 13.39 lacs).
Note 3. In the opinion of the Board, Current Assets, Loan & Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.
Note 4. Balances of Sundry Debtors and Sundry creditors are subject to reconciliation and confirmation.
Note 5. The Liability in respect of External Commercial Borrowing (ECB) was re-stated as on 31st March, 2015 and foreign exchange loss of Rs. 431.49 Lac (Previous Year Rs.718.05 Lac) has been provided in books of account for the year ended 31st March 2015.
Note 6. Sundry creditors include amount of Rs.Nil owed to Small Scale Industries Undertakings, to the extent such enterprises have been identified, out of which amount outstanding for a period of more than 30 days is Rs. Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.
Note 7. Segment Reporting:
The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS-17) on Segment Reporting issued by The Institute of Chartered Accountants of India.
Note 8. Earnings Per Share :
The calculation of Earnings Per Share (EPS) as disclosed in the Profit & Loss Account has been made in accordance with the requirements of Accounting Standard (AS-20) on Earnings Per Share issued by the Institute of Chartered Accountants of India.
Note 9. No asset qualifies for impairment for the current year according to AS-28 issued by The Institute of Chartered Accountants of India.
Note 10. Figures in brackets indicate deductions. Figures have been rounded off to nearest lacs. Figures for previous year have been recast/regrouped, wherever necessary to make them comparable with current year's figures.
Note 11. Depreciation for the year has been provided on Straight Line Method on the basis of useful lives specified in the Schedule-II of the Companies Act, 2013 as against the amount of depreciation calculated on the basis of rates of depreciation in respect of various assets contained in Schedule XIV to the Companies Act 1956.
In view of this change, carrying amounts of various tangible fixed assets as at 1st April, 2014 after retaining the residual value an amount of Rs. 89.77 lacs has been recognized in the opening balance of retained earning (net of deferred tax) where the useful life of an asset is Nil. In other cases, the carrying amounts as at lst April, 2014 have been depreciated over the revised remaining useful life of the asset as per Schedule II. The depreciation for the
year ended 31st March, 2015 would have been higher by Rs. 154.62 lacs, had the Company continued with the previously prescribed depreciation rates as per Schedule-XIV of Companies Act, 1956.
Vardhman Special Steel Limited is a Public Limited Company incorporated under the provisions of the companies Act ,1956 on 14th May, 2010. The Company is engaged in the Manufacturing of Billets, Steel bars & rods and Bright bars of various categories of special and alloys steels.
(a) The Aggregate number of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash in the last five years immediately preceeding the balance sheet date is NIL.
(b) Equity Shares calls unpaid by Directors and Officers of the Company is NIL.
(c) Shares held by holding Company or its ultimate holding Company or subsidiaries or associates of the holding Company or the ultimate holding Company in aggregate.
(d) Details of shareholders holding more than 5% shares of the Company
*The above mentioned ECB is secured by mortgage created or to be created on all the immovable assets of the Company, both present and future and hypothecation of all the movable assets including movable machinery, machinery parts, tools and accessories and other movables both present and future (except book debts), subject to charges created or to be created in favour of the Bankers for securing the working capital limits.
# Refer Note No. 32 on reinstatement of External Commercial Borrowings (ECB).
*Working Capital Borrowings from Consortium Banks are secured by hypothecation of entire present and future tangible current assets of the Company as well as a second charge on the entire present and future fixed assets of the Company.
* Lien Marked in Favour of Deutshe Bank AG against the overdraft facility sanction by it.
$ Non Current Investment having maturity period less than 12 months as on date of Balance Sheet have been shown under the head Current Investment as per the requirement of Guidance Note on the Revised Schedule VI to the Companies Act, 1956 issued by "The Institute of Chartered Accountants of India".
* Lien Marked in Favour of Deutshe Bank AG against the overdraft facility sanction by it.
# Non Current Investment having maturity period less than 12 months as on date of balance sheet have been shown under the head Current Investment as per the requirement of Guidance Note on the Revised Schedule VI to the Company act, 1956 issued by "The Institute of Chartered Accountants of India".
Notes
* Plant & Equipment amounting to 1580.34 lac ( previous year Nil ) and Buildings amounting to 152.96 lac ( previous year Nil ) has been adjusted for the amounts allocated out of Project and Pre-operative Expenses. (Refer Note No. 42)
* Borrowing Cost amounting to 409.00 lac (previous year Nil ) has been capitalised during the year.
* Depreciation for the year includes net depreciation of Rs. Nil (Previous Year Rs. ( - ) 2.89 lac pertaining to earlier years.
ii) Estimated amount of capital contracts remaining to be executed is Rs. 120.13 Lac (previous year Rs. 9560.97 Lac).
iii) Claims against the Company not acknowledged as debts include additional demands in respect of Excise Duty/Service Tax /Sale Tax amounting to Rs. 83.14 Lac (Previous year Rs. 109.81 Lac) in different cases, which have been contested by the Company and various appeals have been filed with the Appellate Authorities. No provision has been made in the books of accounts in respect thereof.
2. Leases
The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs. 13.39 Lacs , (Previous Year Rs. 31.87 lacs).
3. In the opinion of the Board, Current Assets, Loan & Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.
4. Balances of Sundry Debtors and Sundry creditors are subject to reconciliation and confirmation.
5. The Liability in respect of External Commercial Borrowing (ECB) was re-instated as on 31st March, 2014 and foreign exchange loss of Rs. 718.05 lacs has been provided in books of account for the year ended 31st March, 2014. As on 31st March 2013, the Company while following the conservative approach had carried the liability in respect of ECB at a level as determined on 30th June, 2012 and had not provided for notional foreign exchange gains amounting Rs. 219.91 lacs arising due to appreciation of rupee as on 31st March, 2013.
6. Sundry creditors include amount of Rs. Nil owed to Small Scale Industries Undertakings, to the extent such enterprises have been identified, out of which amount outstanding for a period of more than 30 days is Rs. Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.
a) During the year, the Company has recognized an expense of Rs. 89.39 Lacs (Previous year Rs. 82.01 lac) in respect of Contribution to Provident Fund and Rs. 5.30 Lacs (Previous Year Rs. 5.66 lac ) in respect of Contribution to superannuation Scheme.
7. Segment Reporting:
The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS )-17 on Segment Reporting issued by The Institute of Chartered Accountants of India.
8. Earnings Per Share :
The calculation of Earnings Per Share (EPS) as disclosed in the Statement of Profit & Loss has been made in accordance with the requirements of Accounting Standard(AS)-20 on Earnings Per Share issued by the Institute of Chartered Accountants of India.
9. Deferred Tax:
Accounting entries for deferred tax have been passed in accordance with the provisions of Accounting Standard (AS)-22 on ''Accounting for Taxes on Income'' issued by the Institute of Chartered Accountants of India.
* The Company has incurred losses in the current year. Accordingly, in the absence of virtual certainty of releasability of deferred tax assets, the deferred tax assets have been recognized only to the extent of deferred tax liability.
10. No asset qualifies for impairment for the current year according to AS-28 issued by The Institute of Chartered Accountants of India .
11. Figures in brackets indicate deductions.
12. Figures have been rounded off to nearest lacs . Figures for previous year have been recast/regrouped, wherever necessary to make them comparable with current year''s figures.
*Interest on ECB Includes Rs. 256.71 Lac (Previous Year Rs. 144.58 lacs) being capitalised, and Travelling Outside India Includes Rs. 2.28 Lac (Previous Year Rs. Nil) being Capitalised"
Vardhman Special Steel Limited is a Public Limited Company incorporated under the provisions of the Companies Act ,1956 on 14th May, 2010. The Company is engaged in the Manufacturing of Billet, Steel bars & rods and Bright bars of various categories of special and alloys steels.
2. Leases
The Company has leased facilities under cancellable operating lease arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs. 31.87 lac (Previous Year Rs. 16.95 lac).
3. In the opinion of the Board, Current Assets, Loan & Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.
4. Balances of Sundry Debtors and Sundry creditors are subject to reconciliation and confirmation.
5. The Liability in respect of External Commercial Borrowing (ECB) was restated as on 30th June, 2012 for determining quarterly results. As on 31st March, 2013, the Company, while following the conservative approach, has decided to carry the liability in respect of ECB at a level as determined on 30th June, 2012 and has not provided for notional foreign exchange gains amounting to Rs. 220 lac (Previous Year Rs. 370 lac) arising on restatement of ECB as at 31st March, 2013. This has resulted in under-statement of profit to that extent for the financial year 2012-13.
6. Sundry creditors include amount of Rs. Nil owed to Small Scale Industries Undertakings, to the extent such enterprises have been identified, out of which amount outstanding for a period of more than 30 days is Rs. Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.
7. Segment Reporting:
The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS)-17 on Segment Reporting issued by The Institute of Chartered Accountants of India.
8. Related Party Disclosure:
Details of transactions entered into with related parties during the year as required by Accounting Standard (AS) - 18 on "Related Party Disclosures" issued by The Institute of Chartered Accountants of India are as under :
9. Earnings Per Share :
The calculation of Earnings Per Share (EPS) as disclosed in the Statement of Profit & Loss has been made in accordance with the requirements of Accounting Standard (AS)-20 on Earnings Per Share issued by the Institute of Chartered Accountants of India.
10. Deferred Tax:
Accounting entries for deferred tax have been passed in accordance with the provisions of Accounting Standard (AS)-22 on ''Accounting for Taxes on Income'' issued by the Institute of Chartered Accountants of India.
11. No asset qualifies for impairment for the current year according to AS-28 issued by The Institute of Chartered Accountants of India
12. Figures in brackets indicate deductions.
13. Figures have been rounded off to nearest lakhs. Figures for previous period have been recast/regrouped, wherever necessary to make them comparable with current year''s figures.
Vardhman Special Steels Limited is a Public Limited Company incorporated under the provisions of the Companies Act, 1956 on 14th May, 2010. The Company is engaged in manufacturing of Billets, Steel bars & rods and Bright bars of various categories of Special and Alloys steels.
Note: The Steel Business undertaking namely 'Vardhman Special Steels' was a unit of M/s.Vardhman Textiles Limited (VTXL) till 31.12.2010, and consequent to the Order of the Hon'ble High court of Punjab and Haryana dated 12.01.2011, said undertaking was demerged from Vardhman Textiles Ltd. and got vested in the Company from the appointed date i.e. 01.01.2011. As a result, accounting treatment was given to assets and liabilities of the said undertaking based on the scheme of Arrangement and Demerger approved by the Hon'ble High Court. In consideration of the assets, liabilities and reserves being vested in Vardman Special Steel Limited (VSSL), VSSL issued 1,27,30,376 equity shares of Rs. 10/- each credited as fully paid-up to the shareholders of VTXL in proportion of 1 share of VSSL for every 5 shares of Vardhman Textiles Limited (VTXL) held by Shareholders during the year.
Disclosures as required under the Micro, Small and Medium Enterprises Development Act, 2006 ("the Act") based on the information available with the Company are given below: -
There are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.
2. Notes to Financial Statements
i). There are contingent liabilities in respect of:
As at 31st March, 2012 As at 31st March, 2011
a) Bank Guarantees and Letters of Credit outstanding 7,615.74 820.48
b) Other contingent liabilities 203.14 123.72
ii). Estimated amount of capital contracts remaining to be executed is Rs. 10,150.91 Lac (previous period Rs. 93.23 Lac).
iii). The Steel Business undertaking namely 'Vardhman Special Steels' was a unit of Vardhman Textiles Limited (VTXL) till 31.12.2010, and consequent to the Order of the Hon'ble High court of Punjab and Haryana dated 12.01.2011, said undertaking was demerged from Vardhman Textiles Ltd. and got vested in the Company from the Appointed Date i.e. 01.01.2011. As a result, accounting treatment was given to assets and liabilities of the said undertaking based on the Scheme of Arrangement and Demerger approved by the Hon'ble High Court. In consideration of the assets, liabilities and reserves being vested in VSSL, VSSL issued 1,27,30,376 equity shares of Rs. 10/- each credited as fully paid-up to the shareholders of VTXL in proportion of 1 share of VSSL for every 5 shares of VTXL held by Shareholders during the year.
iv). The Company has contested the additional demand in respect of Excise Duty/Service Tax /Sale Tax amounting to Rs.112.77 Lacs (Previous Period Rs. 88.04 Lacs) in different cases. The Company has filed an appeal with the Appellate Authorities. No provision has been made in the books of accounts in respect thereof.
v). Leases:
The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs. 16.95 Lacs (Previous Period Rs. 2.06 lacs).
vi). In the opinion of the Board, Current Assets, Loan and Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.
vii). Balances of Sundry Debtors and Sundry creditors are subject to reconciliation and confirmation.
viii). Computation of net profit under Section 198 read with Section 349 of the Companies Act,1956,for the purpose of commission payable to the Managing Director:
ix). Sundry creditors include amount of Rs. Nil owed to Small Scale Industries Undertakings, out of which amount outstanding for a period of more than 30 days is Rs. Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.
x) During the year, the Company has recognized an expense of Rs. 80.68 Lacs (Previous Period Rs.18.19 lac) in respect of Contribution to Provident Fund and Rs. 5.95 Lacs (Previous period Rs. 1.20 lac ) in respect of Contribution to Superannuation Scheme being continued from Vardhman Textiles Limited (VTXL). In due course a new superannuation fund shall be got incorporated separately for the Company.
xi). Segment Reporting:
The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS )-17 on Segment Reporting prescribed by Companies (Accounting Standards) Rules, 2006.
xii). Earning Per Share :
The calculation of Earnings Per Share (EPS) as disclosed in the Statement of Profit and Loss has been made in accordance with the requirements of Accounting Standard(AS)-20 on Earning Per Share prescribed by Companies (Accounting Standards) Rules, 2006.
xiii). Deferred Tax:
Accounting entries for deferred tax have been passed in accordance with the provisions of Accounting Standard (AS)-22 on 'Accounting for Taxes on Income' prescribed by Companies (Accounting Standards) Rules, 2006.
Deferred tax Asset /(Liability) (Net) as on 31st March, 2012 is as follows :
xiv. No asset qualifies for impairment for the current year according to AS-28 prescribed by Companies (Accounting Standards) Rules, 2006.
xv. Figures in brackets indicate deductions.
xvi. Figures have been rounded off to nearest lacs. Figures for previous periods have been recast/regrouped, wherever necessary to make them comparable with current year's figures.
As at 31.03.2011 (Rs.in lac)
a) Bank Guarantees and Letters of Credit outstanding 820.48
b) Other contingent liabilities 123.72
2. Estimated amount of contracts remaining to be executed is Rs 93.23 Lac.
3. a) The Steel Business Undertaking including 'Vardhman Special Steels' was a part of Vardhman Textiles Limited (VTXL) till 31.12.2010, and consequent to the Order of the Humble High court of Punjab and Haryana dated 1 2.01.2011, the said undertaking was demerged from Vardhman Textiles Ltd. and got vested in the Company from the Appointed Date i.e. 01.01.2011. As a result, accounting treatment has been given to assets and liabilities of the said Undertaking based on the Scheme of Arrangement and Demerger approved by the Humble High Court.
b) In accordance with the 'Scheme of Arrangement & Demerger' among Vardhman Textiles Limited (VTXL), Vardhman Special Steels Limited (VSSL) and their respective Shareholders and Creditors, the entire Steel Business Undertaking together with all its properties, assets, rights, benefits and interest therein of VTXL has vested in VSSL w.e.f 1st January, 2011 as per the order of the Humble Punjab and Haryana High Court dated 12.01.2011, received on 11.03.2011. As a result of the above, the following assets, liabilities and reserves of the Steel Business Undertaking of VTXL, as certified by the management, stand vested in VSSL as on 1st January, 2011:
In consideration of the aforesaid assets, liabilities and reserves being vested in VSSL, VSSL was required to issue 1,27,30,376 equity shares of Rs. 10/- each credited as fully paid-up to the shareholders of VTXL in proportion of 1 share of VSSL for every 5 shares of VTXL held by Shareholders. The said equity shares were to be issued by the Company after the record date, which was fixed as 30.03.2011. Accordingly as on the balance sheet date, the aforesaid number of shares valued at Rs 127,303,760/- have been disclosed as "Equity Share Capital Pending Allotment pursuant to the Scheme of Arrangement and Demerger" in the Balance Sheet in order to comply with the terms of Scheme.
The allotment of share was subsequently completed on 08-04-2011. The company is there after in the process of listing of Shares on the stock exchanges.
4. The Company has contested the additional demand in respect of Excise Duty/Service Tax /Sale Tax amounting to Rs. 88.04 Lac in different cases. The Company has filed an appeal with the Appellate Authorities. No provision has been made in the books of accounts in respect thereof.
5. Leases:
The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amount to Rs. 2.06 lacs.
6. In the opinion of the Board, Current Assets, Loans & Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.
7. Balances of Sundry Debtors and Sundry Creditors are subject to reconciliation and confirmation.
8. Sundry creditors include amount of Rs. Nil owed to Small Scale Industrial Undertakings, out of which amount outstanding for a period of more than 30 days is Rs. Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.
9. Employee Benefits :
The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard (AS)-15 are as under:-
a) During the period, the Company has recognized an expense of Rs.18.19 lac in respect of Contribution to Provident Fund and Rs.1.20 lac in respect of Contribution to Superannuation Scheme being continued from VTXL. In due course a new Superannuation Scheme shall be got incorporated separately for the company.
10. Segment Reporting :
The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS )-17 on Segment Reporting issued by The Institute of Chartered Accountants of India.
11. Related Party Disclosure :
Details of transactions entered into with related parties during the period as required by Accounting Standard (AS)-18 on "Related Party Disclosures" issued by The Institute of Chartered Accountants of India are as under:
12. Earnings Per Share :
The calculation of Earnings Per Share (EPS) as disclosed in the Profit & Loss Account has been made in accordance with the requirements of Accounting Standard(AS)-20 on Earnings Per Share issued by the Institute of Chartered Accountants of India.
13. Deferred Tax :
Accounting entries for deferred tax have been passed in accordance with the provisions of Accounting Standard (AS)-22 on 'Accounting for Taxes on Income' issued by the Institute of Chartered Accountants of India.
14. No asset qualifies for impairment for the current period according to AS-28 issued by The Institute of Chartered Accountants of India.
15. Figures in brackets indicate deductions.
16. As this is the first year of the Company, no comparative figures for previous year have been given.
17. Figures have been rounded off to the nearest rupee.
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