(xvi) Provisions and Contingent Liabilities/Assets
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.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost.
Contingent Liabilities
Contingent liabilities are disclosed when there is
a possible obligation arising from past events, the
existence of which will be confirmed only by the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the
Company or a present obligation that arises from past
events where it is either not probable that an outflow of
resources will be required to settle or a reliable estimate
of the amount cannot be made. Contingent liabilities
are not recognised but are disclosed in notes.
Contingent Assets are not recognised in standalone
financial statements but are disclosed, since the
former treatment may result in the recognition of
income that may or may not be realised. However,
when the realisation of income is virtually certain, then
the related asset is not a contingent asset, and its
recognition is appropriate.
(xvii) Cash Flow Statement
The Cash flow statement has been prepared under
the "Indirect Method" as set out in Indian Accounting
Standard-7, "Statement of Cash Flows" whereby profit
for the period is adj usted for the effects of transactions
of a non-cash nature, any deferrals or 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 financing activities of the Company are
segregated.
(xviii) Borrowing Costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost
of the asset. All other borrowing costs are expensed
in the period in which they occur. Borrowing costs
consist of interest and other costs that an entity incurs
in connection with the borrowing of funds. Borrowing
cost also includes exchange differences to the extent
regarded as an adjustment to the borrowing costs.
(xix) Fair Value Measurements
The Company measures financial instruments, such
as, derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
In the principal market for the asset or liability, or
In the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market must
be accessible by the Company.
The fair value of an asset or a liability is measured
using the assumptions that market participants would
use when pricing the asset or liability, assuming that
market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes
into account a market participant's ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs and
minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the standalone financial statements are
categorised within the fair value hierarchy, described
as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1- Quoted (unadjusted) market prices in active
markets for identical assets or liabilities.
Level 2- Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is directly or indirectly observable.
Level 3- Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable.
For assets and liabilities that are recognised in the
standalone financial statements on a recurring
basis, the Company determines whether transfers
have occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest level
input that is significant to the fair value measurement
as a whole) at the end of each reporting period.
The Company determines the policies and procedures
for both recurring fair value measurement, such
as derivative instruments and unquoted financial
assets measured at fair value, and for non-recurring
measurement, such as assets held for distribution in
discontinued operations.
External valuers are involved for valuation of significant
assets and liabilities, if any. At each reporting date,
the Company analyses the movements in the values
of assets and liabilities which are required to be
remeasured or re-assessed as per the Company's
accounting policies.
For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the
asset or liability and the level of the fair value hierarchy
as explained above.
(xx) Leases
The Company assesses at contract inception whether
a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified
asset for a period of time in exchange of consideration
is considered as lease.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition
exemption to its short-term leases (i.e., those leases
that have a lease term of 12 months or less from the
commencement date and do not contain a purchase
option). It also applies the lease of low-value assets
recognition exemption to leases that are considered to
be low value. Lease payments on short-term leases and
leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.
As a lessee
The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets. The
Company recognises lease liabilities to make lease
payments and right-of-use assets representing the
right to use the underlying assets.
As a Lessor
Lease income from operating leases where the
Company is a lessor is recognised in 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 the lessor for the
expected inflationary cost increases. The respective
leased assets are included in the balance sheet based
on their respective nature.
(xxi) Share-based payments
Eligible Employees (including senior executives) of the
Company receive remuneration in the form of share-
based payments, whereby employees render services
as consideration for equity instruments (equity-settled
transactions).
The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model. Further details
are given in Note No. 43
That cost is recognised, together with a corresponding
increase in share-based payment (SBP) reserves in
equity, over the period in which the performance and/
or service conditions are fulfilled in employee benefits
expense. The cumulative expense recognised for
equity-settled transactions at each reporting date
until the vesting date reflects the extent to which the
vesting period has expired and the Company's best
estimate of the number of equity instruments that will
ultimately vest. The expense or credit in the statement
of profit and loss for a period represents the movement
in cumulative expense recognised as at the beginning
and end of that period and is recognised in employee
benefits expense.
Service and non-market performance conditions are
not taken into account when determining the grant date
fair value of awards, but the likelihood of the conditions
being met is assessed as part of the Company's best
estimate of the number of equity instruments that
will ultimately vest. Market performance conditions
are reflected within the grant date fair value. Any
other conditions attached to an award, but without
an associated service requirement, are considered to
be non-vesting conditions. Non-vesting conditions are
reflected in the fair value of an award and lead to an
immediate expensing of an award unless there are also
service and/or performance conditions.
No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met. Where
awards include a market or non-vesting condition,
the transactions are treated as vested irrespective
of whether the market or non-vesting condition is
satisfied, provided that all other performance and/or
service conditions are satisfied.
When the terms of an equity-settled award are modified,
the minimum expense recognised is the grant date fair
value of the unmodified award, provided the original
vesting terms of the award are met. An additional
expense, measured as at the date of modification,
is recognised for any modification that increases the
total fair value of the share-based payment transaction,
or is otherwise beneficial to the employee. Where an
award is cancelled by the entity or by the counterparty,
any remaining element of the fair value of the award is
expensed immediately through profit or loss.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted
earnings per share.
(xxii) Segment Reporting
As per the compliance of Ind AS 108 operating
segments are identified based on reports reviewed
by CODM (chief operating decision-maker). Operating
segments can either be based on products/services or
on geographical basis. It is reported in a manner which
is consistent with the internal reporting provided to the
judgment of CODM.
2c. Significant accounting judgments, estimates and
assumptions
The preparation of standalone financial statements
requires management to make judgements, estimates
and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities, the
accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes
that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods.
Judgements
In the process of applying the Company's accounting
policies, management has made the following
estimates and assumptions, which have the most
significant effect on the amounts recognised in the
standalone financial statements.
Estimates and assumptions
The key assumptions concerning the future and
other key sources of estimation uncertainty at the
reporting date, which have a significant risk of causing
a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are
described below. The Company based its assumptions
and estimates on parameters available when the
standalone financial statements were prepared.
Existing circumstances and assumptions about future
developments, however, may change due to market
changes or circumstances arising that are beyond the
control of the Company. Such changes are reflected in
the assumptions when they occur.
a. Useful life of property, plant and equipment and
intangible assets
The Company uses its technical expertise along with
historical and industry trends for determining the
economic useful life of an asset/component of an
asset. The useful lives are reviewed by management
periodically and revised, if appropriate. In case of a
revision, the unamortised amount is charged over the
remaining useful life of the assets.
b. Taxes
Uncertainties exist with respect to the interpretation
of complex tax regulations, changes in tax laws, and
the amount and timing of future taxable income.
Given the nature of business differences arising
between the actual results and the assumptions
made, or future changes to such assumptions, could
necessitate future adjustments to tax income and
expense already recorded. The Company establishes
provisions, based on reasonable estimates. The
amount of such provisions is based on various factors,
such as experience of previous tax audits and differing
interpretations of tax regulations by the taxable entity
and the responsible tax authority. Such differences of
interpretation may arise on a wide variety of issues
depending on the conditions prevailing in the respective
domicile of the companies.
Valuation of recoverable income tax assets especially
with respect to deferred tax assets on tax loss
carry forwards. Significant judgement is required in
determining the provision for income tax. The Company
recognises liabilities for anticipated tax audit issues
based on estimates of whether additional taxes will be
due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded,
such differences will impact the current and deferred
income tax assets and liabilities in the period in which
such determination is made.
c. Contingencies
The Company estimates the provisions and liabilities
and to the probability of expenses arising claims from
legal disputes/litigations that have present obligations
as a result of past events, and it is probable that outflow
of resources will be required to settle the obligations.
These provisions are reviewed at the end of each
reporting date and are adjusted to reflect the current
best estimates.
d. Defined Benefit Plans
The cost of the defined benefit gratuity plan and
other post-employment defined benefits and the
present value of the gratuity obligation are determined
using actuarial valuations. An actuarial valuation
involves various assumptions that may differ from
actual developments in future. These Includes the
determination of the discount rate, future salary
increases, mortality rates and attrition rate. Due to the
complexities involved in the valuation and its long-term
nature, a defined benefit obligation is highly sensitive
to changes in these assumptions. All assumptions are
reviewed at each reporting date.
Further details about gratuity obligations are given in
Note 33.
e. Fair Value Measurement of Financial Instruments
When the fair values of financial assets and financial
liabilities recorded in the balance sheet cannot be
measured based on quoted prices in active markets,
their fair value is measured using valuation techniques
including the Discounted Cash Flow (DCF) model. The
inputs to these models are taken from observable
markets where possible, but where this is not feasible,
a degree of judgment is required in establishing fair
values. Judgments include considerations of inputs
such as liquidity risk, credit risk and volatility. Changes
in assumptions about these factors could affect the
reported fair value of financial instruments. See Note
36 and 37 for further disclosures.
f. Revenue from contracts with customers
The Company applies the judgements in respect to
transactions relating to recognition of point in time
of Sale of Goods, when the control is transferred
generally on delivery of goods, that significantly affect
the determination of the amount and timing of revenue
from contracts with customers. For more details, refer
note 2b(i).
g. Provision for expected credit losses of trade
receivables and contract assets
The Company uses a provision matrix to calculate
ECLs for trade receivables and contract assets. The
provision rates are based on days past due for various
customer segments that have similar loss patterns
(i.e., by geography, product type, customer type and
rating, and coverage by letters of credit and other forms
of credit insurance). The provision matrix is initially
based on the Company's historical observed default
rates. The Company will calibrate the matrix to adjust
the historical credit loss experience with forward¬
looking information. For instance, if forecast economic
conditions (i.e., gross domestic product) are expected
to deteriorate over the next year which can lead to an
increased number of defaults in the manufacturing
sector, the historical default rates are adjusted. At
every reporting date, the historical observed default
rates are updated and changes in the forward-looking
estimates are analysed. The assessment of the
correlation between historical observed default rates,
forecast economic conditions and ECLs is a significant
estimate. The amount of ECLs is sensitive to changes
in circumstances and of forecast economic conditions.
The Company's historical credit loss experience and
forecast of economic conditions may also not be
representative of customer's actual default in the
future.
h. Share-based payments
Estimating fair value for share-based payment
transactions requires determination of the most
appropriate valuation model, which depends on the
terms and conditions of the grant. This estimate also
requires determination of the most appropriate inputs
to the valuation model including the expected life of
the share option or appreciation right, volatility and
dividend yield and making assumptions about them.
For the measurement of the fair value of equity-settled
transactions with employees at the grant date, the
Company uses a Black Scholes model for Employee
Share Option Plan (ESOP). The assumptions and
models used for estimating fair value for share-based
payment transactions are disclosed in Note 43.
2d. New and amended standards
The Company applied for the first-time certain
standards and amendments, which are effective for
annual periods beginning on or after 1st April, 2024.
The Company has not early adopted any standard,
interpretation or amendment that has been issued but
is not yet effective.
a. Ind AS 117 Insurance Contracts
The Ministry of Corporate Affairs (MCA) notified
the Ind AS 117, Insurance Contracts, vide
notification dated 12th August, 2024, under
the Companies (Indian Accounting Standards)
Amendment Rules, 2024, which is effective from
annual reporting periods beginning on or after 1st
April, 2024.
Ind AS 117 Insurance Contracts is a
comprehensive new accounting standard for
insurance contracts covering recognition and
measurement, presentation and disclosure. Ind AS
117 replaces Ind AS 104 Insurance Contracts. Ind
AS 117 applies to all types of insurance contracts,
regardless of the type of entities that issue them
as well as to certain guarantees and financial
instruments with discretionary participation
features; a few scope exceptions will apply. Ind AS
117 is based on a general model, supplemented
by:
• A specific adaptation for contracts with
direct participation features (the variable fee
approach)
• A simplified approach (the premium
allocation approach) mainly for short-
duration contracts
The application of Ind AS 117 does not have
material impact on the Company's Standalone
financial statements as the Company has not
entered any contracts in the nature of insurance
contracts covered under Ind AS 117.
b. Amendments to Ind AS 116 Leases - Lease
Liability in a Sale and Leaseback
The MCA notified the Companies (Indian
Accounting Standards) Second Amendment
Rules, 2024, which amend Ind AS 116, Leases,
with respect to Lease Liability in a Sale and
Leaseback.
The amendment specifies the requirements that a
seller-lessee uses in measuring the lease liability
arising in a sale and leaseback transaction, to
ensure the seller-lessee does not recognise any
amount of the gain or loss that relates to the right
of use it retains.
The amendment is effective for annual reporting
periods beginning on or after 1st April, 2024 and
must be applied retrospectively to sale and
leaseback transactions entered into after the date
of initial application of Ind AS 116.
The amendments do not have a material impact on
the Company's Standalone financial statements.
c. Geopolitical implications of US “reciprocal"
tariffs
In recent weeks, the United States government has
imposed new tariffs including reciprocal tariffs
against other countries and several countries
have responded with retaliatory tariffs. On 9th April,
2025 the US government announced a 90 day
pause for the reciprocal tariffs for many countries.
However, baseline tariffs remain, as well as tariffs
related to certain countries and industries. These
tariffs, some of which are subject to change,
impact all US trading partners to varying degrees.
Much
uncertainty remains as to the duration, possible
exemptions and exclusions, as well as the extent
of any retaliatory tariffs imposed on the US by
other countries.
The Company has made the assessment against
the same and there is meagre exposure in terms
of dependency on the export to the particular
region.
2e. Climate - related matters
The Company considers climate-related matters
in estimates and assumptions, where appropriate.
This assessment includes a wide range of possible
impacts on the Company due to both physical and
transition risks. Even though the Company believes
its business model and products will still be viable
after the transition to a low-carbon economy, climate-
related matters increase the uncertainty in estimates
and assumptions underpinning several items in the
standalone financial statements. Even though climate-
related risks might not currently have a significant
impact on measurement, the Company is closely
monitoring relevant changes and developments,
such as new climate-related legislation. The items
and considerations that are most directly impacted
by climate-related matters are Useful life of property,
plant and equipment and Impairment of non-financial
assets.
Note 1: Refer to note 14A for information on property plant and equipment pledged as security by the Company.
Note 2: The title deed of all the immovable properties are held in the name of the Company.
Note 3: The Company has capitalised certain expenses of revenue nature amounting to ' 1,110.16 Lakhs (31st March, 2024:
' 583.66 Lakhs) to the cost of Property, plant and equipment/Capital work in progress (CWIP) and Intangible Asset Under
Development (IAUD) (Refer note 27(b)).
Note 4: On transition to Ind As (i.e. 1st April 2018) the Company has elected to continue with the carrying value of all property,
plant and equipment measured as per the previous GAAP and use the carrying value as deemed cost of property, plant and
equipment.
*The amount was transferred from Asset held for sale to Capital Work in Progress (CWIP) during the FY 2023-24 due to change
in management decision to use this asset in near future.
(c) Share Based Payment Reserve
The share options-based payment reserve is used to recognise the grant date fair value of options issued to employees
under Employee stock option plan. Refer Note no 43.
(d) Cash Flow Hedge Reserve
The Company uses hedging instruments as part of its management of exposure to risks associated with foreign currency.
For hedging foreign currency, the Company uses foreign exchange forward contracts. To the extent these hedges are
effective, the change in fair value of the hedging instrument is recognised in the cash flow hedge reserve. Amount recognised
in the cash flow hedge reserve is reclassified to the statement of profit or loss when the hedged item affects profit or loss.
(e) Distribution made and proposed
a) The final dividend on equity shares of ' 4.00 per share amounting to ' 3,768.20 Lakhs (31st March, 2024: ' 1.30 per
share, amounting to ' 1,163.49 Lakhs) has been approved at the annual general meeting held on 29th July, 2024
and dividend amount was transferred to dividend distribution account on 2nd August, 2024 during the year ended
31st March, 2025.
b) The proposed dividend on equity shares of '3.00 per share amounting to ' 2,827.27 Lakhs (31st March, 2024: ' 4.00
per share, amounting to ' 3,768.20 Lakhs) are subject to approval at the annual general meeting and is not recognised
as liability at the year end.
The Company has complied with the provisions of Section 123 of the Companies Act, 2013 related to dividend declared.
e) Aggregate number of equity shares issued as bonus, shares issued for bonus other than cash and shares bought back
during the period of five years immediately preceding the reporting date:
- During the year ended 31st March, 2022, the Company had issued 4,47,49,500 equity shares of ' 2/- each aggregating to
' 894.99 Lakhs as bonus shares.
f) Aggregate number of equity shares issued under Employee stock option scheme:
- During the year ended 31st March, 2025, the Company has issued 37,318 Equity shares of ' 2/- each at exercise price of '
190/- each aggregating to ' 70.90 Lakhs. For details related to employee stock option, Refer Note 43.
13. | OTHER EQUITY (ALSO REFER TO STATEMENT OF CHANGES IN EQUITY)
Nature and purpose of reserves
(a) Securities premium
Securities premium represents the excess consideration received by the Company over the face value of the shares issued
to the shareholders. This will be utilised in accordance with the provisions of the Companies Act, 2013.
(b) Retained earnings
Retained earnings are the profit that the Company has earned till date, less any transfers to general reserve, dividends or
other distributions paid to the Shareholders. Retained earning includes re-measurement (loss)/ gain on defined benefit
plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available
to the Company and eligible for distribution to shareholders, in case where it is having positive balance representing net
earnings till date.
Notes:
1. The Company has been sanctioned working capital limits in excess of ' Five Crores in aggregate from banks during
the year on the basis of security of current assets of the Company. The quarterly returns/statements filed from time to
time by the Company with such banks are in agreement with the books of accounts of the Company.
2. During the current year, the Company has established a supplier finance arrangement amounting to ' 9,624.62 Lakhs,
that is offered to one of the Company's key supplier. For the supply chain fiinancing agreement entered by the Company,
it provides no security to the finance provider. However, the Cost of this arrangement is borne by the Company. Also,
the payment to the vendors will be at a credit period offered by the banks and not on the original terms of the contract.
Accordingly, the same has been recognised as Borrowings from the Bank as on 31st March, 2025.
31. | LEASE
The Company incurred ' 42.19 Lakhs during the year ended 31st March, 2025 (March 31 2024'29.55 Lakhs) towards expenses
relating to short terms leases and leases of low value assets and the same is recognised under other expenses in statement of
Profit and loss account. Leases mainly comprise of facilities taken for sales office and as warehouse facilities.
32. | SEGMENT INFORMATION
The Company business comprises only the Forging segment where the Company sells forged products comprising of forgings
and machined components for the automotive and industrial sector. Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating decision maker. The disclosure requirements of Ind AS 108- operating
Segments" notified by the Companies (Accounting standard) Rules 2006 (as amended) is not applicable.
The Company's Chairman and Managing Director is the Chief Operating Decision Maker (CODM) and monitors all operating
segments' operating results to make decisions about resources to be allocated to the segments and assess their performance.
As the Chief operating decision maker of the Company assesses the financial performance and position of the Company as a
whole and maker strategic decision, the management considers manufacturing of forgings and related components as a single
operating segment as per Ind As 108, hence separate segment disclosure, have not been furnished.
The following table shows the distribution of the Company's net revenue by geographical market, regardless of where the goods
were produced:
The management assessed that the fair value of current financial assets and liabilities approximate their carrying value
largely due to the short term maturities of these instruments. Further, for non-current financial assets, the management
assessed that the fair value approximate their carrying value largely due to the fact that majority of balance is represented
by fixed deposits with bank created out of IPO Proceeds.
There have been no transfers between Level 1, Level 2 and Level 3 during the year.
The Following method and assumptions were used to estimate the fair value :
- The Company enters into investments in mutual funds, being valued using valuation techniques, which employs the
use of market observables inputs. The Company uses net asset value provided by mutual fund managers for valuation
of these investments.
C Fair Value hierarchy:
The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by
valuation techniques:
(i) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
(ii) Level 2: inputs 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).
(iii) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
37. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company's principal financial liabilities, other than derivatives, comprise borrowings and trade payables. The main purpose
of these financial liabilities is to finance the Company's working capital requirements. The Company has various financial assets
such as trade receivable, short term deposits and cash & cash equivalents, which arise directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's Board of Directors oversees the management
of these risks and also ensures that financial risk activities are governed by appropriate policies and procedures 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 of these risks, which are summarised below:
A. 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, such as equity
price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, debt and equity
investments and derivative financial instruments. The sensitivity analyses in the following sections relate to the position as
at 31st March, 2025 and 31st March, 2024.
(i) 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's exposure to the risk of changes in foreign exchange rates relates primarily
to the Company's operating activities by way of direct imports/exports. The Company evaluates the exchange rate
exposure arising from foreign currency transactions and follows established risk management policies.
Foreign currency sensitivity
The following table represents the sensitivity to a reasonably possible change in US$, GBP and EURO exchange rates,
with all other variables held constant. The sensitivity analysis includes only outstanding foreign currency denominated
monetary items as mentioned above and adjusts their translation at the year end for a 5% change in foreign currency
rates. A positive number below indicates an increase in profit or equity and vice-versa.
(ii) Interest Rate 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 is exposed to interest rate risk on short-term and long-term floating rate instruments. The borrowings
of the Company are principally denominated in Indian Rupees with a mix of fixed and floating rates of interest. The
Company has a policy of selectively using interest rate swaps and other derivative instruments to manage its exposure
to interest rate movements. These exposures are reviewed by appropriate levels of management on a regular basis.
The exposure of company's borrowing to interest rate changes as reported to the management at the end of reporting
year are as follows:
(iv) Equity price risk
The Company's non-listed equity securities are susceptible to market price risk arising from uncertainties about future
values of the investment securities. The Company's Board of Directors reviews and approves all equity investment
decisions. At the reporting date, the exposure to unlisted equity securities at cost was ' 10.00 Lakhs (As at 31st March,
2024: ' 10.00 Lakhs).
B. 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 exposed to credit risk from its operating activities (primarily trade receivables)
and from its financing activities, including deposits with financial institutions, and other financial instruments.
Trade receivables
Customer credit risk is managed subject to the Company's established policy, procedures and control relating to customer
credit risk management. Credit quality of a customer is assessed and individual credit limits are defined in accordance
with this assessment. Outstanding customer receivables are regularly monitored by Management & President Sales and
corrective actions are taken. Any shipments to major customers are generally covered by letters of credit or other forms of
credit insurance obtained from reputable banks and other financial institutions.
(iii) Commodity price risk
The Company is affected by price volatility of certain commodities. The principal raw materials for the Company
products are alloy and carbon steel in the form of rounds and billets which are purchased by the Company from
the approved list of suppliers. Most of the input materials are procured from domestic vendors which is subject to
price negotiations. Due to significant volatility in prices of steel, the Company has agreed with its customers for pass
through of increase/decrease of prices of steel. There may be a lag effect in case of such pass-through arrangements.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company's finance & accounts department
in accordance with the Company's policy. Investments of surplus funds are made with banks in Fixed deposits.
. 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 assets. The Company's approach to manage liquidity is to
have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed circumstances, without
incurring unacceptable losses or risking damage to the Company's reputation.
Management manages the liquidity risk by monitoring cash flow forecasts on a yearly basis and maturity profiles of financial
assets and liabilities. This monitoring takes into account the accessibility of cash and cash equivalents and additional
undrawn financing facilities. The Company will continue to consider various borrowings options to maximise liquidity and
supplement cash requirements as necessary. The Company's objective is to maintain a balance between continuity of
funding and flexibility through the use of bank overdrafts, cash credit facilities and buyers' credit facilities. As at 3181 March,
2025, the Company has available ' 34,663.58 Lakhs (3181 March, 2024: ' 23,649.26 Lakhs) in form of undrawn committed
borrowing limits.
38. | CAPITAL RISK MANAGEMENT
For the purpose of the Company's capital management, capital includes issued equity capital, security premium and all other
equity, and reserves attributable to the equity holders. The primary objective of the Company's capital management is to
maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by
total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash
equivalents and other bank balances.
39. | RECOGNITION OF GOVERNMENT GRANTS
a) Under Invest Punjab scheme, the Company is eligible for various incentives like 100% exemption of electricity duty and
Infrastructure development fund and Net SGST Incentive calculated based on GST deposited and applicable GST Rate,
100% exemption/refund of stamp duty and Change of Land Use(CLU) fees and 50% exemption of property tax.
During the current year, the Company has recognised government grant in relation to exemption of electricity duty and
Infrastructure development fund amounting to ' 641.60 Lakhs (3181 March, 2024: ' 547.06 Lakhs). The grant amount is
netted from the Power & Fuel Expenses under other expenses. As on 3181 March, 2025, ' 16.93 Lakhs (3181 March, 2024:
' 16.78 Lakhs) of grant amount is receivable under this scheme.
Also, during the current year, the Company has recognised government grant in relation to refund of eligible Net SGST
Incentive (which is calculated based on GST paid on eligible sales) amounting to ' 805.21 Lakhs (3181 March, 2024: 737.62
Lakhs) under other operating revenue. As at 3181 March, 2025'2,606.17 Lakhs (3181 March, 2024, ' 3,161.79 Lakhs) of grant
amount is receivable under this scheme.
b) The Company has recognised export incentives under the Duty drawback Scheme and Remission of Duties or Taxes on
Export of Products Scheme (RoDTEP) aggregating to ' 593.00 Lakhs (3181 March, 2024: ' 613.36 Lakhs). The amount of
incentive recognised has been disclosed as other operating revenue.
40. | HEDGING ACTIVITIES AND DERIVATIVES
a) Derivatives not designated as hedging instruments:
The Company uses foreign exchange forward contracts to manage its exposure to risks associated with foreign currency.
These derivative contracts are not designated as hedging instrument in cash flow hedge and are entered into for years
consistent with foreign currency exposure of the underlying transactions, generally from one to twelve months.
b) Derivatives designated as hedging instruments:
Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash
flow hedges of forecast sales in EURO; and thereafter as a fair value hedge for the resulting receivables. These forecast
transactions are highly probable.
The foreign exchange forward contract balances vary with the level of expected foreign currency sales and changes in
foreign exchange forward rates.
The fair value of derivative financial instruments is as follows:
In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it
meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Any
breach in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no
breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.
No changes were made in the objectives, policies or processes for managing capital during the year ended 3181 March, 2025 and
31s1 March, 2024.
The critical terms of the foreign currency forward contracts match the terms of the expected highly probable forecast sale
transactions. As a result, no hedge effectiveness arise requiring recognition through profit or loss.
The cash flow hedges of the forecasted sale transactions during the year ended 31 81 March, 2025 were assessed to be
highly effective and unrealised (loss) gain of ' 170.44 Lakhs (3181 March, 2024: ' 797.15 Lakhs), with a deferred tax (liability)
asset of ' (42.90) Lakhs (3181 March, 2024: ' (200.63) Lakhs) relating to the hedging instruments, is included in OCI.
Valuation Technique
The Company enters into derivative financial instruments with Banks. Foreign exchange forward contracts are valued
using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation
techniques include forward pricing models, using present value calculations. Where quoted market prices are not available,
fair values are based on management's best estimates, which are arrived at by the reference to market prices.
44. | INITIAL PUBLIC OFFER ( IPO)
During the year ended 31st March 2024, the Company completed its Initial Public Offer ('IPO') of 1,18,65,802 equity shares of face
value of 2 each at an issue price of ' 850 per share (including a share premium of ' 848 per share). The issue comprised of a
fresh issue of 47,05,882 equity shares aggregating to ' 40,000 Lakhs and offer for sale of 71,59,920 equity shares aggregating
to ' 60,859.32 Lakhs. The equity shares of the Company were listed on the National Stock Exchange of India Limited (NSE) and
BSE Limited (BSE) on December 27, 2023.
Consequent to allotment of fresh issue, the paid-up equity share capital of the Company stands increased from ' 1,789.98 Lakhs
consisting of 8,94,99,000 equity shares of '2 each to ' 1,884.10 Lakhs consisting of 9,42,04,882 equity Shares of ' 2 each.
The total offer expenses were estimated to the fresh issue are ' 2,217.67 Lakhs (including taxes). The utilisation of IPO proceeds
from fresh issue (net of IPO related expense of ' 2,217.67 Lakhs) is summarised below:
46. The Company has used accounting software for maintaining its books of account which has a feature of recording audit
trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software
at the application, except that audit trail feature is not enabled for certain changes made using privileged/ administrative
access rights to the SAP application and the underlying HANA database. Further no instance of audit trail feature being
tampered with was noted in respect of accounting software, wherever audit log was enabled. Additionally, the audit trail
in respect of prior years has not been preserved by the Company as per the statutory requirements for record retention.
47. | RE-GROUPING/RE-CLASSIFICATION
In accordance with recent expert advisory committee, the Company has reclassified accrued interest which has been included in
the respective balances of assets and liabilities. Previously, accrued interest was presented as a separate line item in respective
notes. There are no other re-grouping/reclassification done during the current year.
48. | OTHER STATUTORY INFORMATION
(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 Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory year.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year/year.
(v) The Company has 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 has 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 i dentified in any manner whatsoever by or on behalfofthe Funding
Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vii) 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.
(viii) the Company is not declared as wilful defaulter by any bank or financial institution.
49. Events after reporting date:
There are no events occurred after the reporting year which may impact the financial position as on 31st March, 2025.
49. | EVENTS AFTER REPORTING DATE:
There are no events occurred after the reporting year which may impact the financial position as on 31st March, 2025.
As per our report of even date For and on behalf of the board of directors of
For S.R.BATLIBOI and Co. LLP Happy Forgings Limited
Chartered Accountants
ICAI Firm registration no. 301003E/E300005 (Paritosh Kumar) (Ashish Garg)
Chairman Cum Managing Director Managing Director
DIN :00393387 DIN :01829082
per Pravin Tulsyan
Partner (Pankaj Kumar Goyal) (Bindu Garg)
Membership No. 108044 Chief Financial Officer Company Secretary
Membership No. 500683 Membership No. 6997
Place: Gurugram Place: Ludhiana
Date: 17th May, 2025 Date: 17th May, 2025
|