1. CORPORATE INFORMATION
EARTHSTAHL & ALLOYS LIMITED is a company incorporated on 09.12.2009 under the companies Act,1956. The company is listed on the Bombay stock exchange (BSE) from 8th February,2023. The company's principal business is production of Cast Iron Lumps. In addition, it is also engaged in production of high-end ductile iron, cast iron, steels, alloys, and nonferrous castings.
The Financial Statements for the year ended 31st March 2024 are approved for issue in accordance with a resolution of the directors on 30th May 2024.
2. SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Preparation of Financial Statements:
The financial statements have been prepared under the historical cost convention and are prepared on accrual basis and in accordance with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and the relevant provisions of the Companies Act, 2013.
B. Use of Estimates:
The preparation of financial statements requires management to make estimates & assumptions that affect the reported amount of assets, liabilities including disclosure of contingent liabilities at the end of reporting period and revenue, expenses during the reporting period. Although such estimates and assumptions are made on a reasonable & prudent basis taking into account all available information, actual results could differ from these estimates & assumptions and such differences are recognized in the period in which the results are materialised.
C. Property Plant and Equipment & Capital Work in Progress:
a. Fixed Assets (Both Tangible and Intangible Assets) are stated at cost net of recoverable taxes less accumulated depreciation/amortization and impairment loss, if any.
b. Capital Work in Progress: All indirect and direct expenditures including borrowing costs directly attributable to Projects under commissioning till the commencement of commercial production are carried at costs under Capital work in Progress. The trial run expenditures constituting of costs of manufacturing and cost of materials consumed reduced by any sales or income earned during the trial run period are capitalized along with other pre-operative expenditures incurred till the commencement of commercial production. The longterm advances towards Capital Expenditures are shown under Long Term Advances.
c. Incidental expenditure prior to construction like preliminary project expenditures and indirect expenses like corporate office administrative expense are charged as period costs in the financial year to which they pertain.
D. Depreciation and Amortization:
a. As per the provisions of Companies Act, 2013, depreciation calculation has been done based on the Useful life given in the Schedule II of Companies Act, 2013.
b. Depreciation on all assets pertaining to the manufacturing facility is provided on the 'Straight Line Method' in the manner specified in Schedule II to the Companies Act 2013.
c. Depreciation on additions to the Fixed Assets or on Assets sold, discarded, demolished is being provided on complete year basis.
d. Assets costing up to Rs.5000/- are expensed out in the period they pertain to.
e. Capital & Machinery spares procured with an item of fixed asset are depreciated along with the related plant and machinery.
E. Impairment of Assets:
The carrying amount of assets are reviewed at the balance sheet date and if there is any indication of impairment based on internal/external factors, an impairment loss will be recognized wherever the carrying amount of the assets exceeds its recoverable value.
F. Investment:
Current Investments are carried at lower of cost and quoted/fair value if any. Non Current Investments are stated at costs. Provision of diminution in the value of Non current investments is made only if the decline is other than temporary.
G. Inventories:a. Finished Goods -
Cost of Inventories comprises of cost of purchases, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective location and condition. The items of finished goods and Semi Finished stock are measured at lower of cost and net realizable value.
b. Raw Materials, Stores and Spares and Other Consumables -
Raw Materials and Other Stores and Consumables are valued at average cost in bringing the goods to the place of its location and condition (Net of Refundable taxes and Duties)
c. By Products -
By products are valued at net realizable value.
H. Borrowing Cost
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset till the commencement of commercial production. The amounts of borrowing costs eligible for capitalization are determined in accordance with Accounting Standard 16 on Borrowing Costs. Other borrowing costs are recognized as an expense in the period in which they are incurred.
I. Revenue Recognition
Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations shall not include sale during trial run period. Expenses are accounted for on the accrual basis with necessary provisions of all the known liabilities and losses.
Revenue from operations includes sales of goods which is shown inclusive of excise duty and it excludes Taxes on Sales and is net of trade discounts, if any.
Interest Income on deposits is recognized on time proportion basis taking into account the amount outstanding and rate applicable.
Dividend income from investments is recognized when the right to receive payment has been established (provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably).
J. Provisions/Contingencies:
Provisions are determined based on the best estimate of the amount required to settle the obligation at the balance sheet date. The contingent liabilities, if any, are not recognized but are disclosed in the form of accounting notes. Contingent assets are neither recognized nor disclosed in the financial statements.
K. Provision for Current and Deferred Tax
a. Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period and in accordance with the provisions of section -115BAA of the Income Tax Act, 1961.
b. Deferred tax resulting from "timing difference" between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be adjusted in future.
L. Employee Retirement Benefits:
a. Company's contribution to provident fund is recognized as an expense in the statement of Profit and Loss for the year in which the related service is rendered.
b. The retirements benefit and long-term employee benefits are recognized as expense in the relevant period at the present value of amounts payable determined using actuarial valuation techniques in accordance with AS -15. Currently no Earned leaves are accrued in the hands of Employees as on 31.03.2024 which needs recognition as employee retirement benefits in the accounting period 2023-24.
M. Government Grants
a. Recognition: Grants are recognized only when there is a reasonable assurance that the entity has complied with the relevant conditions to receive such grants and when there is a reasonable certainty that the ultimate collection will take place.
b. Government Grants related to revenue (subsidies in interest, power costs and others) from State/Central and other Government undertakings is recognized in the profit & loss statement under "Other Income” in the respective period to match with the related costs in which they are intended to compensate.
c. The government grants related to depreciable capital assets are presented in the balance sheet by way of showing the grant amount as a deduction from the gross value of related assets in arriving at their book value. The capital grants that are not specific to any assets are shown under Capital Reserves.
N. Segment Reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. The company has identified two segments: -
(A) Submerged Arc Furnace (B) Foundary.
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