4.10. Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of these assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in statement of profit and loss in the period in which they are incurred.
4.12. Foreign currency Transactions
a) Foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction. The net gain or loss on account of exchange differences arising on settlement of foreign currency transactions are recognized as income or expense of the period in which they arise. Monetary assets and liabilities denominated in foreign currency as at the balance sheet date are translated at the closing rate. The resultant exchange rate differences are recognized in the statement of profit and loss. Non-monetary assets and liabilities are carried at the rates prevailing on the date of transaction.
b) The investment made in foreign company light work LLC in the form of investment in shares and loans and advances made is considered as Non-Integral operations. The loan has been translated at closing rate of foreign exchange and the resulted exchange difference is transfer to and accumulated in a foreign currency translation Reserve account. The exchange difference on repayment of loan is accounted for and transfer from foreign currency translation account to profit and loss account.
During the year under consideration the Company has withdrawn all the funds from the above mentioned Partnership Firms & LLP and as on 31/03/2024 the company has no outstanding balance from the above mentioned Partnership Firms & LLP and the Company has resigned as partner from all the Partnership firms and LLP.
> Notes Relating to Investment in Light works LLC.
During the F.Y. 2023-24, there is neither any new investment / conversion / sale made by the Company of Equity Shares (Common Share) of US $ 1 each fully paid up of Light works LLC. Further, the Company has also given loan to Light works LLC. Company has made total investment of 7,30,697 US$ the details of which are as under:
Section 129 (3) of the companies Act 2013, requires preparation of consolidated financial statement of the Company and of all the subsidiaries including associate company and joint venture businesses in the same form and manner as that of its own. Indian Accounting Standard (Ind AS) 28 on accounting for Investments in Associates in consolidated Financial Statements defines Associate as an entity, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture. It mentions that if an investing party holds, directly or indirectly through intermediaries, 20 per cent or more of the voting power of the enterprise, it is presumed that the investing party does have significant influence, unless it can be clearly demonstrated that this is not the case.
The Company holds investment in the Light Works LLC which by ownership are deemed to be an associate company.
However, the Company does not exercise significant influence in the above mention entity, as demonstrated below:
i) The Company does not have any representation on the board of directors or corresponding governing body of the investee.
ii) The Company does not participate in policy making process.
iii) The Company does not have any material transaction with the investee.
iv) The Company does not interchange any managerial personnel.
v) The Company does not provide any essential technical information to the investee.
vi) As these are not investments strategic to the core business of Ahmedabad Steel Craft Limited, these are intended to be divested/liquidated in the near future.
As the interests in above enterprise originated for investment purposes and are not of sufficient proportions for the company to be able to control or exercise significant influence on decisions of the investee, these are not being construed as associate company for the purpose of consolidation and therefore it has not been consolidated in the financial statement of the company.
The "Lightworks" LLC /with foreign investment RD: 5204291 has been liquidated and removed from the state register on December 25, 2023 as per Appendix No. 3 of Order No. A/395 of 2021 of the Chairman of the General Authority for State Registration of Mongolia where the company is having investment. As per the Liquidation certificate received from Mongolia, the Company has submitted the related documents to the AD bank HDFC as required under FEMA compliances for disinvestment and written off the Loan given to the Lightwork LLC and Investment in shares of Lightwork LLC, the approval from AD Bank HDFC is yet to be received as on 31.03.2024 and hence no effect has been provided in the books of the company however provision for impairment has been provided for Investment in shares and provision for expected credit loss has been created for loans and advances given along with interest receivable on the loan given .
4.14. Related Party Transactions :
Disclosure of transactions with Related Parties, as required by Ind AS 24 -"Related Party Disclosures" as notified by Ministry of Corporate Affair has been set out in a separate statement annexed to this note in Annexure - A . Related parties as defined under para 9 of the Ind AS 24 have been identified on the basis of representation made by the management and information available with the Company.
4.15.A Accounting Classification and Fair Value Hierarchy Financial Assets and Liabilities:
The Company's principal financial assets include loans and trade receivables, cash and cash equivalents and other receivables. The Company's principal financial liabilities comprise of trade and other payables.
Fair Value Hierarchy:
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
Level-1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level-2: Inputs are 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 are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on the assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
The following tables summaries carrying amounts of financial instruments by their categories and their levels in fair value hierarchy for each year end presented.
4.15.B Financial Instruments and Fair Value Measurement Financial risk management objectives and policies
The Company's principal financial liabilities comprise of trade and other payables. The Company's financial assets include trade and other receivables, short term loans & advances and cash & cash equivalents that it derives directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. The Company's senior management is supported by the Board of Directors that advises on financial risks and the appropriate financial risk governance framework for the Company. This provides assurance to the Company's senior management that the Company's financial risk activities are governed by appropriate policies and procedure and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. The Board of Directors reviews and agrees policies for managing each risk, which are summarized as below:
Market risk: Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk.
Interest Risk: 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. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's investment in bank deposits. The interest rates for the tenure of the fixed deposits are fixed. However, with the continuous decrease in the returns on fixed deposits, the income earned on such deposits may change in future based on the interest rates.
Foreign Currency Risk: Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company doesn't enter into any derivative instrument for trading or speculative purposes.
Foreign Currency sensitivity analysis
The Company is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to US Dollar. The following table details the Company's sensitivity to a 10% increase or decrease in the Rupees against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes receivables and payable in currency other than the functional currency of the Company.
A 10% strengthening of the INR against key currencies to which the Company is exposed would have led to additional gain in the Statement of Profit and Loss with a corresponding increase in total equity at the end of the reporting period. A 10% weakening of the INR against these currencies would have led to an equal but opposite effect.
Other Price Risk : Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. Other price risk arises from financial assets such as investments made by the company in equity instruments and
mutual funds. Majority of investments of the Company are fair valued. The Company invests after considering counterparty risks based on multiple criteria and such risks are monitored at regular intervals.
Credit Risk: Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is having majority of the receivables from foreign parties. The Company is having significant credit risk exposure to receivables from foreign parties.
Liquidity Risk: The Company monitors its risk of a shortage of funds by estimating the future cash flows. The Company's objective is to maintain a balance between working capital of the company. The Company generates sufficient cash flow from operations to maintain a healthy working capital balance.
The table below summarizes the maturity profile of the Company's current financial liabilities based on contractual undiscounted payments. [RS. IN LAKH]
Capital management
For the purpose of the Company's capital management, capital includes all other equity reserves attributable to the members of the Company. The Company strives to safeguard its ability to continue as a going concern so that they can maximize returns for the members. The Company maintains a debt free status.
4.17. Leases
Effective from 1st April, 2019, Ind AS 116 is applicable to the Company. Lease income from operating leases where the company is a lessor is recognised as income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases.
5. General notes:
i. As regards the other Indian Accounting Standards (Ind AS), they are statutorily applicable to our Company i.e Ahmedabad Steelcraft Limited but as there are no transactions inviting those Indian Accounting Standards (Ind AS), no specific disclosures on the same are made.
ii. Debtors and Creditors balances appearing in the balance sheet are subject to confirmation of respective parties.
6. Other Statutory Information
1. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
2. The Company do not have any transactions with companies struck off under Section 248 of the Companies Act, 2013.
3. The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
5. The Company have not advanced or loaned or invested funds to any other person or entity, 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.
6. The Company have not received any fund from any person or entity, 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.
7. The Company does not have 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.
8. The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority or other lender, in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India.
9. Previous year's figures have been regrouped/reclassified, wherever necessary, to conform to the current year's classification.
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