a) Disposal of Leasehold Land represents amortisation of Prepaid Lease Payment.
b) The cost of capitalisation of Corporate Office Building of Company on the date of completion is as approved by Board of Directors, project closure and settlement with the PMC has been done during the FY 2022-23.
c) The Title Deed of the immovable property are held in the name of the Company.
d) All assets, wherever applicable have been duly registered with the Registrar of Companies for the charges.
e) At the time of implementation and adoption of IndAS w.e.f. 1st April, 2015 in terms of IndAS 101, the Net Block of Assets was considered as Gross Block treating Accumulated Depreciation on that date as “NIL”. Depreciation has been charged since in terms of Companies Act, 2013. Hence, the Accumulated Depreciation represents cumulative figures since 1st April, 2015 only. Due to this, there are differences in the figure of Gross Block and Accumulated Depreciation between the Fixed Assets schedule as above and Fixed Assets Register. However the Net Block figures are in complete agreement with Fixed assets Register.
f) Freehold Building other than RCC Structure represents Steel Structure.
a) The shareholders of MSTC Limited in an Extra-Ordinary General Meeting dated 22nd December, 2021 have decided to sell the entire stake in Ferro Scrap Nigam Limited (FSNL). Accordingly, the process for sale has already started.
b) During F.Y. 2023-24 MSTC Limited have invested NIL (PreviousYear '140.00 Lakhs) towards unquoted equity contribution in Mahindra MSTC Recycling Private Limited.
c) The Board of Directors of MSTC Limited in its 324thmeeting held on15th March 2024 has approved the further investment of ' 500 Lakhs in the form of equity in JV company Mahindra MSTC Recycling Private Limited. Till date no cashflow has occurred in this regard.
Pursuant to the introduction of Section 115BAA under the Income Tax Act, 1961, the Company has, during the year, opted for lower tax regime under the said Section for the financial year ended 31st March, 2024 and onwards resulting in reduction of Current Tax by ' 253.54 Lakhs and additional charge of ' 123.06 Lakhs to Other Comprehensive Income. Consequently, the Company has charged off the Deferred Tax Assets arising due to MAT credit and restated the Deferred Tax Assets, based on the revised effective tax rate 25.168%, resulting in one time charge of ' 3,706.72 Lakhs in the Statement of Profit and Loss, for the year ended 31st March, 2024.
Due date of Trade Receivables is considered from the date of Bill.
8.2:The Current Borrowings includes '14,361.97 Lakhs (Previous period '14,361.97 Lakhs) towards payment made by Standard Chartered Bank (SCB), after purchase of export bills of MSTC raised on foreign buyers against export of Gold Jewelleries to the buyers during 2008-09, under a Receivable Purchase Agreement. On non-receipt of the proceeds from the foreign buyers against the bills, SCB submitted claims with the Insurance Company, who, however, wrongfully repudiated the claim of SCB. Thereafter, SCB converted the receivables purchased from MSTC under the Receivables Purchase Agreement into loans/debts as if owing by MSTC, claimed the amount from MSTC with interest and filed a case, being the Original Application in the Debt Recovery Tribunal (DRT), Mumbai in the year 2012, which MSTC has denied and disputed. Against this petition, an Interim order claiming '22,251 lakhs was passed by the DRT, Mumbai on 16th September, 2017 which has been set aside by the Debt Recovery Appellate Tribunal (DRAT), Mumbai by its order dated 7th August, 2023. Consequently, the recovery proceedings have since been dropped. As a result of which MSTC has got refund of '9,000.00 Lakhs (pre-deposit amount towards hearing of appeal) along with interest of '534.03 lakhs. The attached properties have also been released. Other proceedings challenging the claim of SCB are also pending before various forums including Hon'ble High Court of Bombay, the Civil Court at Alipore, Kolkata initiated by MSTC both against SCB and the Insurance Company. SCB had also filed a Summary Suit in late 2012 in the Hon'ble Bombay High Court against ICICI Lombard claiming the same amount under the Policy from ICICI Lombard on account of the repudiation of the claim of SCB by ICICI Lombard. SCB has since withdrawn the suit against ICICI Lombard and Hon'ble Bombay High Court has also passed an order dated 17th January, 2024 to this effect. The claim of SCB is contingent upon the outcome of the legal cases. Pending final disposal of all such Court cases where the matters are currently pending, MSTC has disclosed the amount simultaneously as Borrowings (vide Note No 18) and as Trade Receivables. The matter is sub-judice and is contingent in nature, at this juncture.
MSTC has initiated all steps including legal action to realise the dues from the above customer. The related cases are pending before adjudicating authorities at various levels.
8.5: Trade Receivables include ' 16,411.42 Lakhs (Previous Year ' 18,692.99 Lakhs), against business done in facilitator mode (net of provision).
8.6: Trade Receivables include ' 5,478.11 Lakhs (Previous Year ' 4,842.18 Lakhs), against E-Commerce business (net of provision).
a) Loan from Indian Overseas Bank (IOB) amounting to ' 138.23 Lakhs : (lying since 19th September, 2011). This amount represents legal fees paid by the bank in defending their claims to which the Company has lodged its protest with the Bank. MSTC has filed a case in Hon'ble High Court of Calcutta against IOB for ' 3,656.00 Lakhs (which includes ' 2,798.00 Lakhs towards debit of LC value & ' 858.00 Lakhs as debit towards legal expenses).
b) The Current Borrowings includes ' 14,361.97 Lakhs (Previous period ' 14,361.97 Lakhs) towards payment made by Standard Chartered Bank (SCB), after purchase of export bills of MSTC raised on foreign buyers against export of Gold Jewelleries to the buyers during 2008-09, under a Receivable Purchase Agreement. On non-receipt of the proceeds from the foreign buyers against the bills, SCB submitted claims with the Insurance Company, who, however, wrongfully repudiated the claim of SCB. Thereafter, SCB converted the receivables purchased from MSTC under the Receivables Purchase Agreement into loans/ debts as if owing by MSTC, claimed the amount from MSTC with interest and filed a case, being the Original Application in the Debt Recovery Tribunal (DRT), Mumbai in the year 2012, which MSTC has denied and disputed. Against this petition, an Interim order claiming ' 22,251 lakhs was passed by the DRT, Mumbai on 16th September, 2017, which has been set aside by the Debt Recovery Appellate Tribunal (DRAT), Mumbai by its order dated 7th August, 2023. Consequently, the recovery proceedings have since been dropped. As a result of which MSTC has got refund of ' 9,000.00 Lakhs (pre-deposit amount towards hearing of appeal) along with interest of ' 534.03 lakhs. The attached properties have also been released. Other proceedings challenging the claim of SCB are also pending before
various forums including Hon'ble High Court of Bombay, the Civil Court at Alipore, Kolkata initiated by MSTC both against SCB and the Insurance Company. SCB had also filed a Summary Suit in late 2012 in the Hon'ble Bombay High Court against ICICI Lombard claiming the same amount under the Policy from ICICI Lombard on account of the repudiation of the claim of SCB by ICICI Lombard. SCB has since withdrawn the suit against ICICI Lombard and Hon'ble Bombay High Court has also passed an order dated 17th January, 2024 to this effect. The claim of SCB is contingent upon the outcome of the legal cases. Pending final disposal of all such Court cases where the matters are currently pending, MSTC has disclosed the amount simultaneously as Unsecured Borrowings and as Trade Receivables (vide Note No. 8.2). The matter is sub-judice and is contingent in nature, at this juncture.
(a) Due date is from the date of billing and/or from the date of accounting, as the case may be. There is no disputed dues.
(b) Both as at 31st March, 2024 and as at 31st March 2023, there is no interest and overdue payment of more than 45 days outstanding to Micro, Small and Medium Enterprises (MSME).
(a) * Includes ' 353.81 Lakhs (Previous Year ' 316.38 Lakhs) towards provision for pension benefit of employees, and ' 2.42 Lakhs (Previous Year ' 940.00 Lakhs) towards wage revision of the employees due from 1st January 2017.
(b) The wage agreement has been reached for wages for non-executive employees, due for revision w.e.f. 1st January, 2017. Consequential adjustment in provision for NIL (Previous Year ' 496.00 lakhs) by way of reversal on this account has been made in the Books of Accounts.
(a) During the year, an amount of ' 1,034.13 Lakhs (Previous Year ' 1,137.90 Lakhs) was collected towards E-auction Registration. Out of total collection of current year, an amount of ' 681.67 Lakhs (Previous Year ' 910.32 Lakhs) has been kept in liabilities to be distributed in subsequent four years as per accounting policy, since related registration is valid for life long. Accumulated undistributed balance standing as on 31st March, 2024 is ' 1,798.98 Lakhs (Previous Year ' 1,709.84 Lakhs). Balances for which registration is valid upto one year is accounted for as income during the current period.
(b) Other Operating Revenues also include Interest from customers ' 1,709.28 Lakhs (Previous Year ' 1,900.43 Lakhs).
Pursuant to the introduction of Section 115BAA under the Income Tax Act, 1961, the Company has, during the year, opted for lower tax regime under the said Section for the financial year ended 31st March, 2024 and onwards resulting in reduction of Current Tax by ' 253.54 Lakhs and additional charge of ' 123.06 Lakhs to Other Comprehensive Income. Consequently, the Company has charged off the Deferred Tax Assets arising due to MAT credit and restated the Deferred Tax Assets, based on the revised effective tax rate 25.168%, resulting in one time charge of ' 3,706.72 Lakhs in the Statement of Profit and Loss, for the year ended 31st March, 2024.
The tax rate used for the year 2023-24 in the reconciliations above is the corporate tax rate of 25.168% payable by corporate entities in India on taxable profits under the new regime of Indian tax law. The tax rate used for the year 2022-23 in the reconciliations above is the corporate tax rate of 34.944% payable by corporate entities in India on taxable profits under the old regime of Indian tax law. For Deferred Tax calculation of financial year 2023-24, income tax rate is 25.168%.
33. Disclosures on Financial Instruments
This section gives an overview of the significance of financial instruments for the Company and provides additional information on Balance Sheet items that contain financial instruments. The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in notes to the Standalone Financial Statements.
(1) Categories of Financial Instruments
The following table presents carrying amount and fair value of each category of financial assets and liabilities as at the year end. The Fair value is equivalent to the Carrying value.
(2) Capital Management
The Company manages its capital to ensure that the Company is able to continue as going concern while maximising the return to shareholders through optimisation of the debt and equity balance. The Company is not subject to any externally imposed capital requirements.
(3) Financial Risk Management Objectives
The Company's Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the fianancial risks relating to the operations of the Company. These risks include market risks (like- currency risk, interest rate risk and other price risk), credit risk and liquidity risk. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Company does not enter into or trade of financial instruments, including derivative financial instruments, for speculative purposes.
(a) Market Risk
The Company's activities exposes it, primarily to the financial risks of changes in foreign currency exchange rates . On a case to case basis, the Company enters into Forward foreign exchange contracts to hedge the exchange rate risk, as and when necessary.
(i) Interest Rate Risk Management
The Company endeavours to convert its loans to MCLR based, hence the rate is firm for a contract period usually for a year, as and when necessary.
(ii) Foreign Currency Risk Management
Whenever foreign exchange fluctuations are to be borne by the customers as per agreement with them, foreign exchange gain/loss are not recognized in the books of the Company.
(b) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in fianacial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties , where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transact with entities that are rated by agencies where available and if not available the company uses other publicly available financial information and its own past records to rate its major customers. The Company's exposure and the credit ratings of its counterparties are monitored and the aggregated value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the Senior management committee. Furthermore, in case of Marketing Segment, the Business is done with backup of Bank Guarantee.
(c) Liquidity risk management
The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liablities.
The table below provides details regarding the contractual undiscounted cash obligations of financial liabilities including estimated interest payments for the period 31st March 2024 and as at 31st March 2023.
35. Employee Benefits
Defined Contribution Plans
1. Provident Fund
12% of Basic Pay and Dearness Allowance is contributed to the Provident Fund Trust by the Company.
2. Pension
In terms of Ministry of Steel Directives, Pension Scheme for the employees of MSTC has been formulated, under Defined Contribution Plan. The Company contributes annually to LIC of India/NPS through a Trust. LIC/NPS will provide the pension to the employees from the corpus created on account of employees by way of contribution from MSTC (The Employer).
Defined Benefits Plans
1. Gratuity :
The Gratuity is payable on service severance in respect of eligible employees. The Gratuity is funded with LIC of India. The Company contributes in the fund every year as premium on the basis of demand raised by LIC of India.
(a) Executives:
The Gratuity is calculated and paid as per the Payment of Gratuity Act, 1972.
(b) Non Executives:
The Gratuity is payable as per the Payment of Gratuity Act, 1972 except for:
(i) The Gratuity is calculated at the rate of one month's wages last drawn by the employee for every completed years of service in excess of 30 years
(ii) In case employees who joined before 1st July 2014, the Gratuity is payable without any ceiling.
2. Post Retirement Medical Benefit :
The Post Retirement Medical Benefit is a medical benefit to the superannuated employees and their spouse. The members will be covered through Mediclaim Insurance of the Insurance Company. This is available to superannuated employees at any hospital under the Mediclaim Insurance Policy. In addition to this expenses incurred in domiciliary treatment is also reimbursed as per prescribed ceiling. The benefits are funded through a separate trust formed for this purpose. The Company provides the corpus for this. Deficit, if any, is being compensated by the Company.
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3.
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Risk Management
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Investment Risk
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The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. For other defined benefit plans, the discount rate is determined by reference to market yields at the end of the reporting period on high quality corporate bonds when there is a deep market for such bonds; if the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
Further, the overseas plan has a relatively balanced investment in equity securities, debt instruments and real estates. Due to the long-term nature of the plan liabilities, the board of the overseas Fund considers it appropriate that a reasonable portion of the plan assets should be invested in equity securities and in real estate to leverage the return generated by the fund.
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Interest Risk
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A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan's debt investments.
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Longevity Risk
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The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability.
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Salary Risk
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The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan's liability.
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Notes
1. Current Ratio has improved due to continuous cash profit earned by the company.
2. MSTC do not have any long- term debt, hence, not applicable.
3. MSTC do not have any long- term debt, hence, not applicable.
4. Return on Equity ratio has decreased on account of decrease in Net Profit after Tax (Mainly on account of adjustment in Deferred Tax, Refer Note No.6) and increase in Total Equity.
5. MSTC do not have any inventory, hence, not applicable.
6. Trade Receivable Turnover Ratio increased due to reduction in Trade Receivables on account of better realisation.
7. Trade Payable Turnover Ratio increased due to increase in purchase of goods and services.
8. Net Capital Turnover Ratio decreased due to reduction in sale of goods and services and increase in working capital.
9. Net Profit Ratio has decreased on account of reduction in Net Profit after Tax.
10. The Return on Capital Employed Ratio has decreased due to reduction in Profit.
11. The Return on Investment ratio has decreased on account of reduction in Net Profit after Tax and increase in Total Equity.
(c) There is no related party transaction involved in CSR expenditure.
(d) Above figures are disclosed separately in note no. 27(aa).
38. Balances of Trade Receivables, Trade Payables and Advances includes balances subject to confirmation/reconciliation and consequential adjustment, if any. Reconciliations are carried out on on-going basis. Provisions, wherever considered necessary, have been made.
39. The shareholders of MSTC Limited in Extra-Ordinary General Meeting dated 22nd December, 2021 have decided to sold the entire stake in Ferro Scrap Nigam Limited (FSNL). Accordingly the process for sale has already started.
40. The company did not have any unrecorded transactions in the Books of Accounts which have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
41. The company has not traded or involved in Crypto or Virtual currency during the year.
42. The Board of Directors of the Company adopted the Financial Statements in 325th Board Meeting held on 27th May, 2024.
43. The Board of Directors of the Company in its 325th Board Meeting held on 27th May 2024 has proposed a final dividend of ' 5.00 per share in respect of year ending 31st March, 2024 @ 50% on equity share capital which is ' 7,040.00 Lakhs as on date. The payment of Dividend is subject to approval of shareholders at Annual General Meeting. If approved it will result in a cash outflow of ' 3,520.00 Lakhs.
44. The figures for the corresponding previous years have been regrouped/reclassified wherever necessary to make them comparable.
In terms of our report of even date
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