COMPANY OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES:
1. Corporate Information:
Panchmahal Steel Limited ("PSL" or the "Company") is a public Company domiciled in India and is
incorporated under the provisions of the Companies Act applicable in India. Its shares are listed with Bombay
Stock Exchange (BSE). The registered office of the Company is located at GIDC Industrial Estate, Kalol-389
330, Dist. Panchmahal, Gujarat. The Company is principally engaged in manufacturing of Stainless Steel
Long Products viz., Bars, Rods and Wires.
The financial statements are approved by the Company's Board of Directors on 23rd May, 2025.
2.1 Statement of compliance
The Company has prepared financial statements for the year ended March 31, 2025 in accordance with
Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules,
2015 (as amended) together with the comparative period data as at and for the year ended March 31, 2025.
2.2 Basis of preparation of financial statements:
The financial statements of the Company have been prepared in accordance with Indian Accounting
Standards as prescribed under Section 133 of the Act to be read with Rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
The financial statements for the year ended 31st March 2025 are prepared in accordance with Ind AS.
2.3 Composition of Financial Statements
The financial statements are drawn up in Indian Rupees, the functional currency of the Company, and in
accordance with Ind AS presentation. The financial statements comprise:
- Balance Sheet
- Statement of Profit and Loss
- Statement of Changes in Equity
- Statement of Cash Flow
- Notes to Financial Statements
2.4 Material Accounting Policies
A. Key Accounting Estimates, Assumptions and Management Judgments:
In preparing the financial statements, management has made judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates. Any revision to such estimates is recognized in
the period in which the same is determined.
Estimates and assumptions are reviewed on an ongoing basis. Any change in these estimates and
assumptions will generally be reflected in the financial statements in current period or prospectively,
unless they are required to be treated retrospectively under relevant accounting standard.
B. Historical cost convention:
The financial statements have been prepared on a historical cost basis, except the following:
" Certain financial assets and liabilities that are measured at fair value;
" Defined benefit plans- measured at fair value
C. Functional and presentation currency:
These financial statements are presented in Indian Rupees, which is the Company's functional currency.
D. Current and Non-Current classification:
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset as current when it is:
• Expected to be realised or intended to sold or consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months after the reporting period, or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
. Property, Plant and Equipment:
Recognition and measurement
Property, plant and equipment are recorded at cost of acquisition/construction less accumulated depreciation
and impairment losses, if any. Cost comprise of purchase price including non-refundable purchase taxes
and any directly attributable cost of bringing the assets to its working condition and location for its
intended use.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for, as separate items (major components) of property, plant and equipment. Any gains or
losses on their disposal, determined by comparing sales proceeds with carrying amount, are recognized
in the Statement of Profit or Loss.
Subsequent Expenditure
Subsequent expenditure on major maintenance or repairs includes the cost of the replacement of parts of
assets and overhaul costs. Where an asset or part of an asset is replaced and it is probable that future
economic benefits associated with the item will be available to the Company, the expenditure is
capitalized and the carrying amount of the item replaced is derecognized. Similarly, overhaul cost
associated with major maintenance are capitalized and depreciated over their useful lives where it is
probable that future economic benefits will be available and any remaining carrying amount of the cost
of previous overhauls are derecognized. All other costs are expensed as incurred.
Depreciation
Depreciation is recognized so as to write off the cost of the assets (other than freehold land and Capital
work in progress) less their residual values over their useful lives, using the written down value method as
per the useful life prescribed in schedule II to the Companies Act, 2013. The Estimated useful lives,
residual values and depreciation method are reviewed at the end of each reporting period, with the effect
of any changes in the estimated accounted for on a prospective basis. The estimated useful lives are as
mentioned below:
De-Recognition
An item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of that asset. Any gain or loss arising on the disposal
or retirement of an item of property, plant and equipment is determined as the difference between the net
disposal proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and
loss.
Capital Work-in-Progress
Project under commissioning and/or construction wherein assets are not ready for use in the manner
intended by the management are carried at cost. At the point when an asset is operating at management's
intended use, the cost of construction and/or commissioning is transferred to the appropriate category of
property, plant and equipment.
F. Impairment of Assets:
The carrying values of assets / cash generating units at each balance sheet date are reviewed for
impairment if any indication of impairment exists. If the carrying amount of the assets exceeds the
estimated recoverable amount, impairment is recognised for such excess amount. The impairment loss is
recognised as an expense in the Statement of Profit and Loss
G. Inventories:
Inventories are stated at the lower of cost and net realisable value. Cost is ascertained on a weighted
average basis. Costs comprise direct materials and, where applicable, direct labour costs and those
overheads that have been incurred in bringing the inventories to their present location and condition. Net
realisable value is the price at which the inventories can be realised in the normal course of business
after allowing for the cost of conversion from their existing state to a finished condition and for the cost
of marketing, selling and distribution.
Provisions are made to cover slow-moving and obsolete items based on historical experience of
utilisation on a product category basis, which involves individual businesses considering their product
lines and market conditions.
H. Trade receivables:
Trade receivables that do not contain a significant financing component are measured at transaction
price less any provisions for doubtful debts based on expected credit loss calculation. Provisions are
made where there is evidence of a risk of non-payment, taking into account ageing, previous experience
and general economic conditions. When a trade receivable is determined to be uncollectable it is
written off, firstly against any provision available and then to the Statement of Profit and Loss.
I. Financial instruments:
Financial instruments are recognized when the Company becomes a party to the contractual provisions
of the instrument.
i) Financial Assets:
Initial recognition and measurement
All financial assets except trade receivables that do not contain a significant financing component
are recognized initially at fair value plus, in the case of financial assets not recorded at fair value
through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established
by regulation or convention in the market place (regular way trades) are recognised on the trade date
i.e, the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For the purpose of subsequent measurement, financial assets are classified in three categories:
a) Amortized Cost:
A financial asset is subsequently measured at amortized cost if it is held within a business model
with the objective of collecting the contractual cash flows and the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal outstanding.
Financial assets at amortized cost includes loans receivable, trade and other receivable and
other financial assets that are held with the object of collecting contractual cash flows. After
initial measurement at fair value, the financial assets are measured at amortized cost using the
effective interest rate (EIR) method less impairment.
b) Fair Value through Other Comprehensive Income:
A financial asset is subsequently measured at fair value through other comprehensive income if
it is held within the business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets and the contractual terms of the financial asset give rise
on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Movements in the carrying amount are taken through other comprehensive income, except for
recognition of impairment gains or losses, interest revenue and foreign exchange gains and
losses which are recognized in the Statement of Profit and Loss.
c) Fair Value through Profit or Loss:
Financial assets, which are not classified in any of the above categories, are subsequently faired
valued through profit or loss.
d) De-recognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from
the asset expire or when it transfers the financial asset and substantially all the risks and rewards
of ownership of the asset to another party.
e) Impairment
The Company recognizes loss allowance using the expected credit loss (ECL) model for the
financial assets, which are not fair valued through profit or loss/OCI. Loss allowance for trade
receivables with no significant financing component is measured at an amount equal to lifetime
ECL. Trade receivables are of short duration, normally less than twelve months and hence the
loss allowance measured as lifetime ECL does not differ from that measured as twelve months
ECL. For all other financial assets, expected credit losses are measured at an amount equal to
the twelve months ECL, unless there has been a significant increase in credit risk from initial
recognition in which case those are measured at lifetime ECL.
ii) Financial Liabilities:
Initial recognition and measurement
The financial liabilities are classified at initial recognition as at fair value through profit or loss or as
those measured at amortized cost. The Company's financial liabilities include trade and other
payables, loans and borrowings including bank overdrafts and financial guarantee contracts.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as under:
a) Fair Value through Profit or Loss:
Financial liabilities at fair value through profit or loss include financial liabilities held for
trading. The Company has not designated any financial liabilities upon initial recognition at fair
value through profit or loss.
b) Amortized Cost:
After initial recognition, interest bearing loans and borrowings are subsequently measured at
amortized cost using the effecting interest rate method.
c) De-recognition :
A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or expires. Gains and losses are recognized in Statement of Profit and Loss when the
liabilities are derecognized as well as through the Effective Interest rate (EIR) amortization
process.
J. Cash and Cash equivalents:
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original
maturity of three months or less, which are subject to an insignificant risk of changes in value.
Cash Flow Statement:
Cash flow are reported using indirect method, whereby net profit before tax is adjusted for the effects of
transactions of a non-cash nature, any deferrals of 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 finance activities of the Company are segregated.
K. Foreign Currencies:
Initial Recognition
The financial statements are presented in Indian Rupees which is the Company's functional and
presentation currency.
Conversion
Transactions in foreign currencies are initially recorded at the exchange rate prevailing at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into
functional currency at the rates prevailing on the reporting date.
Foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis within
other gains/(losses).
L. Revenue Recognition:
Revenue is measured based on the identification of performance obligations in a contract and is
recognised when or as those performance obligations are satisfied. Revenue towards satisfaction of
performance obligation is measured at the amount of transaction price(net of variable consideration)
allocated to that performance obligation. The transaction price of goods sold and services rendered if any
are net off variable consideration on account of various discounts, schemes, rebates offered by the
company as the part of the contract.
Revenue from contracts with customers is recognised when control of the goods or services are
transferred to the customer.
Revenue is recognised when the amount can be measured reliably , it is probable that the economic
benefits associated with the transaction will flow to the company , the costs incurred or to be incurred
can be measured reliably..
Sale of Goods
With regard to sale of goods revenue is recognized when significant control connected with the
ownership have been transferred to the Customers. This usually occurs upon dispatch after the price has
been determined. The company does not provide any extended warranties or maintenance contract to its
customers. Sales are stated net of returns, trade discounts, and other applicable taxes or duties collected
on behalf of the government.
Income from operations includes revenue earned on account ofjob work income which is accounted as
per the terms agreed with the customers.
M. Other Income:
Interest Income
Interest income from a financial asset is recognized when it is probable that the economic benefits will
flow to the Company and the amount of income can be measured reliably. Interest income is accrued on
time basis and is included in other income in the Statement of Profit and Loss.
Export Incentives
Export incentives available under prevalent schemes are recognized as income in the year of exports and
when there is reasonable assurance that the Company will comply with the conditions and the incentives
will be received.
The benefits accrued under the duty drawback scheme as per the Import and export Policy in respect of
exports under the said scheme are recognized when there is a reasonable assurance that the benefit will
be received and the company will comply with all attached conditions. The above benefit has been
included under the head 'Export Incentives.'
N. Employee Benefits:
A liability is recognized in respect of short-term employee benefits accruing to employees in respect of
wages and salaries in the period the related service is rendered at the undiscounted amount of the
benefits expected to be paid in exchange for that service.
Contribution towards defined benefit contribution schemes
Company's contribution to Provident Fund, Superannuation Fund, Employee State Insurance and other
funds are determined under the relevant schemes and/or statue and charged to revenue.
Defined Benefit Obligation Plans:
Gratuity
The Company operates a defined benefit gratuity plan which requires contributions to be made to a
separately administered fund held with Life Insurance of India.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit
method.
The service cost and the net interest cost are charged to the Statement of Profit and Loss. Actuarial gains
and losses arise due to re-measurement as result of the actual experience and the assumed parameters
and changes in the assumptions used for valuation are recognized in the Other Comprehensive Income
(OCI).
Compensated absences
The Company has a policy to allow accumulation of leave by employees up to certain days. The excess
leave will be encashed. Accordingly, the excess leave liability is discharged by the Company. Remaining
accumulated leave liability as at the year end is provided.
O. Borrowing Costs:
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs)
and the redemption amount is recognised in profit or loss over the period of the borrowings using the
effective interest method.
Borrowing Costs directly attributable to acquisition or construction of qualifying fixed assets are
capitalized as part of cost of such assets. A qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use.
All other borrowing costs are charged to the Statement of Profit and Loss account in the year in which
they are incurred.
P. Taxation:
Current Income Tax
Income tax expense comprises of current tax and deferred tax. Income tax expense is recognized in the
Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity/
OCI, in which case it is recognized in Other Comprehensive Income. Tax on income for the current
period is determined on the basis of taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961 using the tax rates and tax laws that have been enacted or
substantively enacted on the reporting date. The Company offsets current tax assets and current tax
liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends
either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred Tax
Deferred income tax assets and liabilities are recognized for all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred
income tax is determined using tax rates and laws that have been enacted or substantially enacted by the
end of the reporting period and are expected to apply when the related deferred income tax assets is
realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if
it is probable that future taxable amounts will be available to utilize those temporary differences and
losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets and liabilities and when the deferred tax balances relate to the same taxation
authority.
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