1. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

The Company does not expect the outcome of the matters stated above to have a material adverse impact on the Company’s financial condition, result of operations or cash flows. Future cash outflows in respect of liability under clause A (i) to (iv) is dependent on decisions by relevant authorities of respective disputes and in respect of liability under clause A (v) and (vi) is dependent on terms agreed upon with the parties.

* Energy Cost being the second major cost after raw material the Company has envisaged cheaper source of engery procurement. In align with this the management proposed to set up renewable energy plants and the same is included in capital commitments above.

3.2 The Board of Directors and the Shareholders of the Company had approved remuneration to Erstwhile Managing Director for the period December 2016 to March 10, 2022 the date he ceased to be Managing Director. The same however could not be paid pending lenders approval and the lenders dues have since been paid as a result of One Time Settlement. Accordingly, remuneration payable to Erstwhile Managing Director is Rs. 9.24 Crores cumulative up to March 31, 2022 (including Rs. 5.04 Crores refunded to the Company and disclosed as contingent liability). The Company is seeking to discharge the above obligation based on suitable legal opinion and requisite approvals, if any.

3.3 Considering the uncertainty related to realisation, the following items are not considered to accrue till they are settled / sanctioned / received as the case may be:

a) Insurance claims except specific claims stated separately

b) Interest on receivables

3.4 Revenue Recognition:

a) The Company has generated Rs. Nil revenue during the year from its contract liabilities. (Previous Year Rs. Nil).

b) The Company generally recognise revenue when performance obligations is satisfied at a point in time when the control is transferred .i.e. either on shipment or on delivery in domestic and in case of exports either on the date of bill of lading or delivery at destination as per terms of contracts with customers. The payment is due from the date of sales and are generally on terms of 30 days to 120 days.

c) The Company is in the business of manufacturing of Seamless Tubes and Pipes, Steel and has a single obligation of delivery of goods as per commercial contract terms with its customers.

d) There are no provision pending to be recognised as per Ind AS 37 “Provisions, Contingent Liabilities and Contingent Assets”.

e) The Sales for the current year includes an amount of Rs. 16.41 Crores (Previous Year Rs. 13.17 Crores) on account of supplies to SEZ.

f) Reconciliation of the Company’s revenue from contract price with the revenue recognised in the Statement of Profit and Loss is as follows:

3.5 Segment Reporting :

I Identification of Segments:

Company’s operating segments are established on the basis of those components of the Company that are evaluated regularly by the Executive Committee, the ‘Chief Operating Decision Maker’ as defined in Ind AS 108 - ‘Operating Segments’, in deciding how to allocate resources and in assessing performance. These segments have been identified taking into account nature of products and services, the differing risks and returns and the internal business reporting systems.

The Company is engaged primarily into manufacturing of Steel and Tubes. The Company’s primary segments are Tube Segment and Steel Segment.

Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as unallocable.

Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities which cannot be allocated to a segment on a reasonable basis have been included under “Unallocable Assets / Liabilities”.

Inter Division Transfer represents transfer of finished / semi-finished products within the Segment for further processing and sale. Profit or loss on inter Division transfers are eliminated at the Company level.

III Revenue from Major Customers

Revenue under the segment ‘Steel’ include Rs 86.45 Crores (Previous Year: Rs 101.72 Crores of one customer) from one customer having more than 10% revenue of total segment revenue. There is no single customer that accounts for more than 10% of the revenue in Tube Segment .

3.6 Pending reconciliation / confirmations of Trade Receivables / Trade Payables, adjustments for differences, if any , would be made at the time of reconciliation or on receipt of confirmation. The management is of the opinion that the impact of such adjustments, if any, is not likely to be significant.

3.7 Dues to Micro and Small Enterprises

Disclosure as required by the Micro, Small and Medium Enterprises Act, 2006 (Act) is as given below. The information has been given in respect of such vendors on the basis of information available with the Company.

The information has been given in respect of such vendor on the basis on information available with the company.

3.8 Leases

The Company have taken various premises and plants and machinery under operating lease. These are generally cancellable and ranges from 13 months to 10 years and are renewable by mutual consent on mutually agreeable terms. There are no restrictions imposed by these lease arrangements and there are no sub leases. There are no contingent rents.

a) Contribution paid to Indian Seamless Superannuation Scheme Rs. 2.01 Crores (Previous Year Rs. 3.20 Crores), ISSAL Superannuation Fund Rs. 0.31 Crores (Previous Year Rs. 1.15 Crores), The Indian Seamless Metal Tubes Ltd Provident Fund Rs. 6.08 Crores (Previous Year Rs. 5.98 Crores), ISMTL Provident Fund (Unit B) Rs. 0.76 Crores (Previous Year Rs. 0.88 Crores)and Indian Seamless Gratuity Fund Rs. 5.28 Crores (Previous Year Rs. 4.10 Crores) and ISSAL Gratuity Fund Rs. 0.65 Crores (Previous Year Rs. 0.05 Crores)

b) Payable to Indian Seamless Superannuation Scheme Rs. 0.21 Crores (Previous Year Rs. 1.76 Crores), ISSAL Superannuation Fund Rs. 0.07 Crores (Previous Year Rs. 0.23 Crores), The Indian Seamless Metal Tubes Ltd Provident Fund Rs. 0.38 Crores (Previous Year Rs. 1.87 Crores), ISMTL Provident Fund (Unit B) Rs. 0.04 Crores (Previous Year Rs. 0.34 Crores) and receivable from Indian Seamless Gratuity Fund Rs. 1.79 Crores (Previous Year Rs. 1.16 Crores) and ISSAL Gratuity Fund Rs. 0.37 Crores (Previous Year Rs. 0.42 Crores)

Transactions entered into with Related Party’s are made on terms equivalent to those that prevail in arms length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.

In respect of provident fund trust of the Company, there is no deficit of interest shortfall with regards to future obligation arising due to interest shortfall.

2 Defined benefit plan

Gratuity and Leave Encashment

Gratuity is payable to all eligible employees of the company on retirement, death, permanent disablement and resignation in terms of the provision of the Payment of Gratuity Act, 1972. The benefits would be paid at the time of separation.

The following tables summarises the changes in the projected benefit obligation and plan assets and amounts recognised in the Balance Sheet as at March 31, 2023 and March 31,2022, being the respective measurement dates:

The above sensitivity analysis is based on a change in an assumption while holding the other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation within the balance sheet.

3.17 The Company and through its Subsidiary Company, ISMT Enterprises S.A., Luxembourg has invested Rs. 48.43 Crores in Structo Hydraulics AB, Sweden (SHAB). The Company has received approval from regulatory authorities for conversion into equity of an amount of Rs. 33.33 Crores (USD 5 Million) due from SHAB, out of which Rs. 16.75 Crores has been converted into equity. Considering the challenging emerging global situation and notwithstanding that the business is considered strategic and long term and pending the assessment of the same, based on the valuation report of the Independent Valuer, the Company has conservatively made additional provision for impairment of Rs. 7.51 Crores in the current financial year (Previous Year Rs. 53.17 Crores) (total impairment provision of Rs. 60.68 Crores as at March 31, 2023) as per Ind AS 36 “Impairment of Assets” and disclosed the same as an exceptional item.

3.18 Tridem Port and Power Company Private Limited (TPPCL), a wholly owned subsidiary of the Company, along with its subsidiaries had proposed to set up a thermal power project and captive port in Tamil Nadu. TPPCL had obtained the approvals for the projects including acquisition of land but no construction activity had commenced. However, on account of subsequent adverse developments, the TPPCL could not pursue these projects. Government is giving considerable focus to infrastructure by both higher budgetary allocation and various other initiatives. This is expected to create multiple opportunities leading to positive impact on projects like TPCPL. Consequent upon change in management, considering the above, the Company is evaluating the future potential and opportunities for TPPCL.

Considering inter alia present status of the project, prevailing power sector scenario, long lasting impact of Covid pandemic on the project and recoverable amount as per the project valuation report, the Company after considering the impairment provision made in previous financial year, have made additional provision for impairment of Rs. 0.26 Crores of the amount invested in TPPCL for the year ended March 31, 2023 as per Ind AS 36 “Impairment of Assets” and disclosed under the head “Exceptional Items” in the Statement of Profit and Loss. (Previous Year Rs. 25.24 Crores). Total impairment provision of Rs. 83.88 Crores as at March 31,2023.

3.19 i) The Company had entered into Energy Banking Agreement dated May 07, 2010 with MSEDCL for a period of one year

with provision for annual renewals. MSEDCL did not, however, actually permit Banking of energy once the plant was commissioned resulting in significantly higher cost to the Company. The same was challenged by the Company before Maharashtra Electricity Regulatory Commission (MERC) which vide its Interim Order dated June 20, 2014 had allowed Banking. MERC finally disallowed Company’s petition regarding banking of energy facility under Energy Banking Agreement (EBA) vide its orders dated June 20, 2014 and January 12, 2015. The Company filed an appeal before the Appellate Tribunal for Electricity (APTEL) against the said order which was not allowed by the APTEL vide its order dated April 1, 2016. The Company’s appeal, challenging the APTEL order is pending before the Hon’ble Supreme Court. The Company had accrued EBA benefit aggregating to Rs. 49.97 Crores up to March 31, 2014, of which amount outstanding as on March 31, 2022 is Rs. 39.53 Crores, representing excess energy charges paid to Maharashtra State Electricity Distribution Company Limited (MSEDCL) on account of non-availability of banking of energy facility. There has been no further accrual since April 1, 2014 on account of suspension of operation of power plant.

The Company has strong case for breach of contract. Consequent upon change in management, considering uncertainties and inordinate delays, the Company has decided to write off the recoverable dues of Rs. 39.53 Crores while continuing to pursue the case on merits and disclosed the said write-off amount under the head “Exceptional Items” in the Statement of Profit and Loss for the year ended March 31,2022.

ii) Consequent upon change in Management, the Company was evaluating afresh all the available options for Captive Power project (CPP) either operating the plant or closing it down as a whole or otherwise maximizing value. The Company continued to take adequate steps for preserving the value of the plant including pursuing for wrongful denial of the Banking at the Supreme Court. There was, however, an increasing focus on clean and renewable energy being environment friendly. There had also been a surge in commodity prices including coal and the recent geo political developments have added further uncertainty to both availability and pricing of coal. Considering these major developments and the fact that the plant has not been operated for over eight years and unstable CPP policies, the Company had valued the CPP on conservative basis, notwithstanding the upside potential of positive Supreme Court outcome or the surging demand for power, after considering the valuation report of the Independent Valuer provided for impairment of Rs. 163.92 Crores to the carrying amount of CPP for the year ended March 31,2022 as per Ind AS 36 “Impairment of Assets” and disclosed the same under the head “Exceptional Items” in the Statement of Profit and Loss of previous year. The management after considering all available options clasified these assets as held for sales during current financial year and effectively sold the captive power plant in the current year on Slump Sale basis at a consideration of Rs 65.71 Crores as on 28th February 2023, resulting in profit on sale of assets of Rs 6.45 Crores.

3.20 a) In view of the rapidly growing economy, the Company had planned expansion in capacities and also envisaged setting up

of Captive Power Plant. However, number of subsequent development viz economic slow-down leading to steep fall in demand, dumping of tubes by China, regulatory changes and other adverse developments severely impacted the Company. Thus the assets created by Company were highly under utilized resulting in inability to service the debt. The Company had since been working with lenders for resolution of debt in terms of RBI scheme prevailing from time to time.

The Banks had pursued various schemes for Debt Resolution - the Banks initially contemplated restructuring which was approved by JLM but could not be concluded at banks end. The Banks then opted for OSDR and despite successful conclusion of OSDR resulting in identification of the investor, the OSDR could not be implemented due to RBI Circular dated February 12, 2018 scrapping all their schemes for stressed assets. The Banks then agreed to take up assignment of debt as Resolution Plan in terms of the aforesaid circular, pursuant to which bulk of Bank Debt was assigned to Asset Restructuring Companies (ARCs). The majority of lenders of the Company had also signed Inter Credit Agreement as per RBI guidelines for restructuring of debt. However, restructuring and assignment of further debt could not be concluded due to covid pandemic.

After considering restructuring of debt subsequent to covid pandemic, the lenders opted for One Time Settlement (OTS) of entire outstanding debt for Rs 670 Crores along with change in management. After due process the lenders approved OTS along with change in management by Kirloskar Ferrous Industries Ltd (KFIL) acquiring majority stake in the Company. After requisite approvals, the lenders executed the OTS agreement on January 31,2022.

(b) In order to fund the OTS, the Board of Directors of the Company proposed to make preferential allotment of 15.40 Crores equity shares at a price of Rs 30.95 per equity share (equivalent to 51.25% of the post issue equity share capital of the Company) to KFIL, for a total consideration of Rs 476.63 Crores, which was duly approved by shareholders of the Company at the Extra Ordinary General Meeting held on December 22, 2021. After obtaining various regulatory approvals, KFIL invested Rs.476.63 Crores towards preferential allotment of 15.40 Crores equity shares at Rs 30.95 per equity share and also extended unsecured loan of Rs 194 Crores. The proceeds of the Preferential Allotment together with unsecured loan from KFIL of Rs 194 Crores were utilized as per terms of Agreements towards payment of OTS amount.

Accordingly, during the FY 2021-22 the Company has written back outstanding principal debt and unpaid interest due to lenders amounting to Rs 2,775.96 Crores and disclosed the said write-back amounts under the head “Exceptional Items” in the Statement of Profit and Loss for the year ended March 31, 2022.

3.21 Interest income includes interest received from Banks of Rs. 1.85 Crores (Previous year Rs. 1.37 Crores).

3.22 Financial risk management

The Company’s principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables and other financial liabilities. The main purpose of these financial liabilities is to finance and support the Company’s operations. The Company’s principal financial assets include investments, loans, trade and other receivables, cash and short-term deposits and other financial assets that have been derived directly from its operations. The Company also enters into derivative transactions. Risk management framework

Company’s board of directors has overall responsibility for establishment of Company’s risk management framework and formed Risk Management Committee. Management is responsible for developing and monitoring Company’s risk management policies, under the guidance of Risk Management Committee. Management identifies, evaluate and analyses the risks to which the company is exposed to and set appropriate risk limits and controls to monitor risks and adherence to limits. Management periodically reviews its risk policy and systems to assess need for changes in the policies to adapt to the changes in market conditions and align the same to the business of the Company.

a) Credit risk

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness.

Credit risk from Trade receivables is managed as per the Company’s established policy, procedures and control relating to customer credit risk management. Credit limits are established for all customers based on internal criteria reviewed and monitored from time to time. Majority of the customers are long standing customers and regularly monitored by individual business managers who deal with those customers. Management monitors trade receivables on regular basis and take suitable action where needed to control the receivables crossing set criteria / limits.

Management does an impairment analysis at each reporting date as per set procedure and computes credit loss allowance based on a provision matrix. Further, the Company’s customers base is widely distributed both economically as well as geographically and in view of the same, the quantum risk also gets spread across wide base and hence management considers risk with respect to trade receivable as low. There is no single customer have more than 10% outstanding trade receivables.

The Company manages the liquidity risk by maintaining adequate funds in cash and cash equivalents. Working capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels. Company aims to maintain the level of its cash and cash equivalents at levels to meet its expected cash outflows on operational and financial liabilities.

c) Competition and pricing 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.

d) 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 following types of risks :

i. Interest Rate Risk

Depending upon the business requirements, the Company’s exposure to the risk of changes in market interest rates relates primarily to the debt obligations. The Company has not used any interest rate derivatives.

The Company has fixed interest rate borrowing in form of Buyers Credit as at March 31,2023 of Rs. 68.90 Crores, Hence the Company does not foresee any interest rate risk.

ii. Foreign Currency Risk and sensitivity

The company is exposed to foreign exchange risk arising from export sales, operating and capital expenditure in foreign currency, foreign currency loans and economic exposure on account of mismatch between foreign currency and INR assets and liabilities. The risk is measured through a forecast of highly probable foreign currency cash flows.

Primarily, the exposure in foreign currencies is denominated in USD, EURO. At any point in time, Company covers foreign currency risk by taking appropriate measures.

The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company reviews the prices of key raw materials on periodically and enters into most of the contracts for procurement of material on short term fixed price basis. Hence the Company does not forsee any commodity price risk as such.

3.23 Capital Management

For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s Capital management is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, long term borrowings and short term borrowings.

In order to achieve this overall objective, the Company’s capital management, amongst other things, aim to ensure that its meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.

Fair value of cash and cash equivalents, loan and advances, trade receivables, trade payables, other financial assets/liabilities approximate their carrying amounts largely due to the short term maturities of these instruments. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended March 31, 2022

Carrying value of non-current financial assets and liabilities are considered to be same as their fair value due to discounting at rate which are an approximation of incremental borrowing rate.

In accordance with Ind AS 27 “Separate Financial Statement”, the Company has valued its investment in subsidiaries at cost. During the reporting period ended March 31,2023 and March 31,2022, there were no transfers between level 1, level 2 and level 3 fair value measurements.

All the financial assets and financial liabilities are measured at amortised cost using level 3 inputs.

3.25 Loans or Advances to Specified Persons :

During the year, the Company has not granted any Loans or Advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person.

3.28 Ultimate Beneficiary : Utilisation of Borrowed funds and share premium:

No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

1 The amounts of assets, liabilities and net profits for the current year as well as previous year is inclusive of components of exceptional nature and hence these analytical ratios are not truly reflecting the operations and financials of the Company. These exceptional components includes unpaid overdue debts in previous year and impairment of assets and investments in subsidiaries in current year.

2 improvement in current ratio and Debt equity ratio due to reduction in bank borrowing.

3 “Improvement in Debt Service Coverage ratio due to better earning after settlement of long pending Overdue Debt through settlement process.

4 *** Better payment settlement terms after improved cash flow situation had resulted in temporary increased working capital requirement.

5 **** Better operational efficiency had resulted in better return on capital employed.

6 # Previous year Return on Equity ratio and Net profit ratio was impacted due to one time settlement of borrowings with banks.

7 @ The ratio is worked out on Fixed Deposit investments return. Which is not actual return but an annualised return.

*Nature of Expense

The Company has contributed funds to implementing agency for ongoing projects of promoting education by way of construction of Hostel, civil and other work. Out of above Rs. 0.34 Crores are spent during the year and the Company has ensured that the unutilised CSR funds are kept in a separate Bank account as required by Section 135 (6) of the Companies Act 2013.

There are no transactions related to CSR expenditure with related parties as defined in Ind AS-24 “Related Party Disclosure.

3.31 Events occurring after the Balance Sheet date

No adjusting or significant non - adjusting events have occurred between the reporting date and the date of authorisation of these financial statements.

3.32 Undisclosed income

There are no transactions that has been not recorded in the books of accounts and has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

3.33 Details of Crypto Currency or Virtual currency

There are no transaction/holding of crypto or virtual currency.

3.34 Previous year figures have been regrouped/ rearranged, wherever considered necessary to conform to current year’s classification.