A) General Information
Mangalam Alloys Limited is a public Limited company domiciled in India with its registered office situated at Plot No. 3123-3126, GIDC Phase III, Chhatral, Dist. Gandhinagar, Gujarat, India, 382729. It was incorporated on 1st August, 1988 under the provisions of the Companies Act, 1956 and Governed by Companies Act, 2013 vide Corporate Identification Number (CIN-L27109GJ1988PLC011051). The company is engaged in the business of manufacturing and distribution of high quality Stainless Steel Products.
The Company has completed the Initial Public Offer (IPO) and the Equity Shares of Company got listed on the National Stock Exchange of India Limited (Emerge) in India on 4th October, 2023
B) Basis of preparation and presentation
a) Statement of Compliance
The Company has prepared these financial statements to comply in all material respects with the accounting standards notified u/s.133 of Companies Act, 2013 ('the Act') read together with Rule 7 of the Companies (Accounts) Rules, 2014, accounting standard issued by the Institute of Chartered Accountants of India (ICAI) and the relevant provisions of the Companies8 Act, 2013.
b) Accounting Convention
The financial statements have been prepared on historical cost basis. The company prepares its financial statement on accrual basis in accordance with generally accepted accounting principles.
c) Operating Cycle
Based on the nature of product/activities of the company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the company has determined its operating cycle as12 months for the purpose of classification of its assets and liabilities as current and non- current.
C) Significant Accounting Policies:
a) Revenue Recognition:
Revenue from sale of goods is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated cost can be estimated reliably, there is no continuing effective control or managerial involvement with the goods, and the amount of revenue can be measured reliably.
Revenue from sale of goods is measured at the fair value of the consideration received or receivable, . taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Interest income is recognized on time proportion method.
D.E.P.B. and DFRC (Balance) licenses at market rate. Export Incentives are accounted on Entitlement basis.
Dividend Income is recognized when the unconditional right to receive the income is established.
b) Borrowing Cost:
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Borrowing costs includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
All other borrowing costs are recognized in profit and loss in the period in which they are incurred.
c) TaxExpenses:
The tax expensefor the period comprises current and deferred tax.
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date.
Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period
d) Employee Benefit:
Short Term Employee Benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized as an expense during the period when the employees render the services.
Long Term Employee Benefits
Liabilities recognized in respect of other long- term employee benefits such as Gratuity, is measured at the present value of the estimated future cash outflows expected to be made by the companyin respect of services provided by employees up to the reporting date.
Post-Employment Benefits-
i) Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which the company pays specified contributions to a separate entity. The company makes specified monthly contributions towards Provident Fund and Pension Scheme. The company's contribution is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
ii) DefinedBenefit Plans
For defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuation being carried out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in the statement of profit and loss in the period in which they occur. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorized as follows: i) Servicecost
ii) Net interestexpense or income
iii) Re-measurement
e) Property, Plantand Equipment (Fixed Asset, Depreciation & Amortization):
Property, plant, and equipment (Fixed Assets) are stated at cost, net of recoverable taxes, trade discounts, and rebates, less accumulated depreciation and impairment losses, if any. Such cost includes the purchase price, borrowing costs, and any costs directly attributable to bringing the assets to their working condition for their intended use, net changes on foreign exchange contracts, and adjustments arising from exchange rate variations attributable to the assets.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Depreciation is charged on a pro-rata basis at the straight-line method over estimated economic useful lives of its property, plant, and equipment generally in accordance with that provided in Schedule II to the Act.
f) Inventories:
Raw materials, stock-in-process, and stores are valued at cost. Inventory of finished goods is measured at the lower of cost and net realizable value after providing for obsolescence, if any, except in the case of by-products, which are valued at net realizable value.
The cost of inventories comprises the cost of purchase, cost of conversion, and other costs, including manufacturing overheads net of recoverable taxes incurred in bringing them to their respective present location and condition.
g) Impairment of non-financial assets-Property, Plantand Equipment (Fixed Assets):
The company assesses at each reporting date whether there is any indication that any property, plant, and equipment or group of assets, called cash-generating units (CGU), may be impaired. If it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.
An impairment loss is recognized in the Statement of Profit and Loss to the extent the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less cost of disposal and its value in use. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.
The impairment loss recognized in a prior accounting period is reversed if there has been a change in the estimate of recoverable amount
h) Foreign currencies transaction and translation:
Transactions in Foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement ortranslation of monetary items are recognized in Statement of Profit and Loss except to the extent of exchange differences which are regarded as an adjustment to interest costs on foreign currency borrowing.
That are directly attributable to the acquisition or construction of qualifying assets, are capitalized as cost of assets.
i) Cash flow statement:
Cash flows are reported using the indirect method, whereby profit/ (loss) after tax is adjusted for effects of transactions of non-cash nature and any deferrals or accruals ofpast or future cash receipt or payments. The cash flows from operating, investing and financing activities of the company are segregated based on the available information.
^j) Earnings pershare:
Basic earnings per share is computed by dividing the profit after tax by weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit after tax as adjusted for interest and other charges to expense or income relating to dilutive potential equity shares, by the weighted average number of equity shares considered for deriving earning per share.
k) Investment:
Non-CurrentInvestments are stated at cost price. Provision for diminution in the value of noncurrent investment is made only 1f such a decline is other than temporary in the opinion of the management.
l) Contingentliability:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non - occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.
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