Q. Provisions, Contingent Liabilities and Contingent Assets:
Provisions:
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. When the
Company expects some or all of a provision to be reimbursed, for example, under an insurance contract,
the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually
certain. The expense relating to a provision is presented in the Statement of Profit and Loss net of any
reimbursement.
Contingent Liabilities:
Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by the future
events not wholly within the control of the company or (ii) Present obligations arising from past events
where it is not probable that an outflow of resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made.
Contingent Assets:
Contingent Assets are not recognised but are disclosed in the notes to the financial statements.
The Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
R. Earnings Per Share:
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to
equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable
to equity shareholders and the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
2.5. Recent pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31,
2025, MCA has notified Ind AS - 117 Insurance Contracts and amendments to Ind AS 116 - Leases, relating to
sale and leaseback transactions, applicable to the Company w.e.f. April 1, 2024. The Company has reviewed
the new pronouncements and based on its evaluation has determined that it does not have any significant
impact in its financial statements.
33 Disclosure as required under Ind AS 19 - Employee Benefits
[A] Defined benefit plans:
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of
service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.The
scheme is funded. The following tables summaries the components of net benefit expense recognized in the
Statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity
plan.
Risks associated with defined benefit plan
Interest rate risk: A fall in the discount rate which is linked to the Government securities rate will increase the
present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark
to market value of the assets depending on the duration of asset.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future
salaries of members. As such, an increase in the salary of the members more than assumed level will increase
the plan's liability.
Investment Risk: 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. 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.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is
invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age
only, plan does not have any longevity risk.
Concentration Risk: Plan has a concentration risk as all the assets are invested with the insurance company and
a default will wipe out all the assets. Although probability of this is very less as insurance companies have to
follow regulatory guidelines.
The sensitivity analysis has been determined based on reasonably possible changes of the respective
assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the projected
benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as
some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the
present value of the projected benefit obligation has been calculated using the projected unit credit method at
the end of the reporting period, which is the same method as applied in calculating the projected benefit
obligation as recognised in the balance sheet.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity
plan and the amounts recognised in the Company's financial statements as at balance sheet date:
There was no change in the methods and assumption used in preparing the sensitivity analysis from prior years.
Level 1: Hierarchy includes financial instruments measured using quoted prices. This includes listed equity
instruments that have quoted price. The fair value of all equity instruments which are traded in the stock
exchanges is valued using the closing price as at the reporting period.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques which maximise the use of observable market data and rely as little as possible on
entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the
instrument is included in level 2.
Level 3: Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.
There are no transfers between levels 1 and 2 during the year.
The Company's policy is to recognise transfers into and transfers out of fair value hierarchy levels at the
end of the reporting period.
(ii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices or dealer quotes for similar instruments
- the fair value of the remaining financial instruments is determined using discounted analysis (if any).
38 Financial Risk Management
The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's
risk management framework.
The Company's risk management policies are established to identify and analyse the risks faced by the Company,
to set appropriate risk limits and controls and to monitor risks. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Company's activities.
(A) Credit risk
Credit risk is the risk of incurring a loss that may arise from a borrower or customer failing to make required
payments. Credit risk arises mainly from outstanding receivables from free market dealers, cash and cash
equivalents, employee advances and security deposits. The Company manages and analyses the credit risk for each
of its new clients before standard payment and delivery terms and conditions are offered.
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The
demographics of the customer and including the default risk of the industry, also has an influence on credit risk
assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring
the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
The Company considers the probability of default upon initial recognition of asset and whether there has been a
significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is a
significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting
date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding¬
looking information such as:
i) Actual or expected significant adverse changes in business;
ii) Actual or expected significant changes in the operating results of the counterparty;
iii) Financial or economic conditions that are expected to cause a significant change to the counterparty's ability
to meet its obligations;
iv) Significant increase in credit risk on other financial instruments of the same counterparty;
v) Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party
guarantees or credit enhancements.
Financial assests are written off when there is no reasonable expectations of recovery, such as a debtor failing
to engage in a repayment plan with the Company. Where loans or receivables have been written off, the
Company continues to engage in enforcement activity to attempt to recover the receivable due. Where
recoveries are made, these are recognized as income in the statement of profit and loss.
(i) Trade Receivables
For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial
Instrument, which requires expected lifetime losses to be recognized from initial recognition of the
receivables. When determining whether the credit risk of a financial asset has increased significantly
since initial recognition and when estimating expected credit Losses (ECL), the Company considers
reasonable and relevant information that is available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Company's historical experience and
informed credit assessment and including forward looking information.
The reconciliation of ECL is as follows:
(ii) Cash and Cash Equivalents
As at the year end, the company held cash and cash equivalents of Rs. 31.64 lakhs (31.03.2024 Rs. 3.77
lakhs). The cash and cash equivalents are held with bank and financial institution counterparties with
good credit rating.
(iii) Other Financials Assets
Others Financial Assets are considered to be of good quality and there is no significant increase in credit
risk.
(B) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with
its financial liabilities that are settled by delivering cash or another financial asset. The responsibility for
liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk
management framework for the management of the Company's short-term, medium-term and long-term
funding and liquidity management requirements. 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 liabilities.
Maturities of Financial Liabilities
The tables herewith analyse the Company's financial liabilities into relevant maturity groupings based on their
contractual maturities for:
(C) Market Risk
Currency Risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity
prices - will affect the Company's income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return.
The risk is measured through a forecast of foreign currency for the Company's operations.
The Company's exposure to foreign currency risk at the end of the reporting period expressed in Indian Rupee,
are as follows:
39 Capital Management
For the purpose of the Company's capital management, equity includes equity share capital and all other equity
reserves attributable to the equity holders of the Company. The Company manages its capital to optimise returns to
the shareholders and makes adjustments to it in light of changes in economic conditions or its business
requirements. The Company's objectives are 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
and maximise the shareholders value. The Company funds its operation through long term and short term borrowings
from holding company and cash credit and other working capital facilities from the bankers. The management and
Board of Directors monitor the return on capital.
Note 1 General Stores & spares are not included in the stock as the same are not required to be submitted to bank
Note 2 Stock Statement filed with the banks are after adjusting the Vendor Advance payment made.
Note 3 Creditors submitted to the banks are only related to the creditors for goods
(d) Others:
(i) The company does not have any Benami property, where any proceeding has been initiated or pending
against the company for holding any Benami property.
(ii) The quarterly returns and statement of current assets filled by the company with Banks are gven in Note
40(c).
(iii) The company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.
(iv) The company have not traded or invested in Crypto currency or Virtual Currency during the period/year.
(v) The company have not advanced or loaned or invested funds to any other person(s) or entity(ies), 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.
(vi) The company have not received any fund from any person(s) or entity(ies), 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,
vii) The company has no 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.
viii) The company is not declared as wilful defaulter by any bank or financial Institution or other lender.
ix) There is no Scheme of Arrangements approved by the Competent Authority in terms of sections 230 to
237of the Companies Act, 2013
This proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting and
therefore not recognised as liability at year end.
43 These Financial Statements were authorised for issue in accordance with the resolution of the Board of Directors in
its meeting held on 23rd May, 2025. The financial statements as approved by the Board of Directors are subject to
final approval by its Shareholders.
The accompanying notes are an integral part of the financial statement For and on behalf of the Board of Directors
Panchmahal Steel Limited
As per our Report of even date.
For CNK & Associates LLP. Kalpesh Parmar Ashok Malhotra
Chartered Accountants Director Chairman & Managing Director
Firm Reg. No. 101961W/W-100036 (DIN: 00230588) (DIN: 00120198)
Pareen Shah
Partner Nilesh Shah Deepak Nagar
Membership No. 125011 Chief Financial Officer GM (Legal) & Company Secretary
Vadodara, 23rd May, 2025 Vadodara, 23rd May, 2025
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