Notes to Accounts of SAL Steel Ltd.

Mar 31, 2025

1.16 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

i) Provisions are made when (a) the Company has a present legal or constructive obligation as a result of past events; (b) it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and (c) a
reliable estimate is made of the amount of the obligation.

ii) Contingent liabilities are not provided for but are disclosed by way of Notes on Accounts. Contingent liabilities are disclosed
in case of a present obligation from past events (a) when it is not probable that an outflow of resources will be required to
settle the obligation;(b) when no reliable estimate is possible;(c) unless the probability of outflow of resources is remote.

iii) Contingent assets are not accounted but disclosed by way of Notes on Accounts where the inflow of economic
benefits is probable.

1.17 CURRENT AND NON-CURRENT CLASSIFICATION:

i) The Normal Operating Cycle for the Company has been assumed to be of twelve months for classification of its various assets
and liabilities into "Current" and "Non-Current".

ii) The Company presents assets and liabilities in the balance sheet based on current and non-current classification.

iii) An asset is current when it is (a) expected to be realized or intended to be sold or consumed in normal operating cycle; (b)
held primarily for the purpose of trading; (c) expected to be realized within twelve months after the reporting period; (d)
Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period. All other assets are classified as non-current.

iv) A liability is current when (a) it is expected to be settled in normal operating cycle; (b) it is held primarily for the purpose of
trading; (c) it is due to be discharged within twelve months after the reporting period; (d) there is no unconditional right to
defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified
as non-current.

1.18 RELATED PARTY TRANSACTIONS:

i) A related party is a person or entity that is related to the reporting entity preparing its financial statements

(a) A person or a close member of that person''s family is related to reporting entity if that person;

(i) Has control or joint control of the reporting entity;

(ii) Has significant influence over the reporting entity; or

(iii) Is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

(b) An entity is related to a reporting entity if any of the following conditions applies;

(i) the entity and the reporting entity are members of the same group (which means that each parent, subsidiary and
fellow subsidiary is related to the others);

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a
group of which the other entity is a member);

(iii) Both entities are joint ventures of the same third party;

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an
entity related to the reporting entity;

(vi) The entity is controlled or jointly controlled by a person identified in (a);

(vii) A person identified in (a)

(i) Has significant influence over the entity or is a member of the key management personnel of the entity(or of

a parent of the entity);

(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the
reporting entity or to the parent of the reporting entity.

ii) A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party,
regardless of whether a price is charged.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by,
that person in their dealings with the entity.

Compensation includes all employee benefits i.e. all forms of consideration paid, payable or provided by the entity, or on
behalf of the entity, in exchange for services rendered to the entity. It also includes such consideration paid on behalf of a
parent of the entity in respect of the entity.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.

iii) Disclosure of related party transactions as required by the accounting standard is furnished in the Notes on
Financial Statements.

1.19 EARNINGS PER SHARE:

i) 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.

ii) 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.

1.20 LEASE

The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease
requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated
renewals) and the applicable discount rate. The Company determines the lease term as the non-cancellable period of a lease,
together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that
option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.
In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to
terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise
the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is
a change in the non-cancellable period of a lease.

1.21 Critical Accounting Judgments, Assumptions and Key Sources of Estimation
Uncertainty

The preparation of the Standalone Financial Statements requires management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the
disclosure of contingent liabilities at the date of the financial statements. Estimates and assumptions are continuously evaluated
and are based on management''s experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. 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.

a) Judgements

In the process of applying the Company''s accounting policies, management has made the following judgements, which
have the most significant effect on the amounts recognized in the standalone financial statements:

(i) Determination of Functional Currency

Currency of the primary economic environment in which the Company operates ("the functional currency") is Indian
Rupee (?) in which the company primarily generates and expends cash. Accordingly, the Management has assessed its
functional currency to be Indian Rupee (?).

(ii) Evaluation of Indicators for Impairment of Property, Plant and Equipment

The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant
decline asset''s value, significant changes in the technological, market, economic or legal environment, market interest
rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the asset
etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment.

b) Assumptions and Estimation Uncertainties

Information about estimates and assumptions that have the significant effect on recognition and measurement of assets,
liabilities, income and expenses is provided below. Actual results may differ from these estimates.

(i) Useful lives of Property, Plant and Equipment/Intangible Assets

Property, Plant and Equipment/ Intangible Assets are depreciated/amortised over their estimated useful lives, after
taking into account estimated residual value. The useful lives and residual values are based on the Company''s historical
experience with similar assets and taking into account anticipated technological changes or commercial obsolescence.
Management reviews the estimated useful lives and residual values of the assets annually in order to determine the
amount of depreciation/amortisation to be recorded during any reporting period. The depreciation/amortisation for
future periods is revised, if there are significant changes from previous estimates and accordingly, the unamortised/
depreciable amount is charged over the remaining useful life of the assets.

(ii) Contingent Liabilities

In the normal course of business, Contingent Liabilities may arise from litigation and other claims against the company.
Potential liabilities that are possible but not probable of crystallising or are very difficult to quantify reliably are treated
as contingent liabilities. Such liabilities are disclosed in the Notes but are not recognised. Potential liabilities that are
remote are neither recognised nor disclosed as contingent liability. The management decides whether the matters
need to be classified as ''remote'', ''possible'' or ''probable'' based on expert advice, past judgements, experiences etc.

(iii) Evaluation of Indicators for Impairment of Property, Plant and Equipment

The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant
decline in asset''s value, economic or legal environment, market interest rates etc.) and internal factors (obsolescence
or physical damage of an asset, poor economic performance of the idle assets etc.) which could result in significant
change in recoverable amount of the Property, Plant and Equipment and such assessment is based on estimates, future
plans as envisaged by the Group.

(iv) Provisions

Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of
funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of
recognition and quantification of the liability requires the application ofjudgement to existing facts and circumstances,
which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to
take account of changing facts and circumstances.

Purpose of Reserve

Security Premium : Securities premium is used to record premium received on issue of shares. The reserve is utilised in accordance
with the provisions of the Companies Act, 2013.

Capital Redemption Reserve : As per Companies Act, 2013, capital redemption reserve is created when company purchases its own
shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital
redemption reserve. The reserve is utilised in accordance with the provisions of section 69 of the Companies Act, 2013

Retained Earnings : Retained Earnings are the profits and gains that the Company has earned till date, less any transfer to general
reserve, dividends or other distributions paid to shareholders.

Capital Reserve : The Company recognises profit and loss on purchase, sale, issue or cancellation of the Company''s own equity
instruments to capital reserve.

Secured Borrowings:

(a) Nature of security and terms of repayment for secured borrowings:

The above deposit is secured by way of first charge and mortgage of immovable property situated at Surevy no 316 (old block
/ survey no 245/ paikee ) together factory building thereon situated at Bharpur , Taluka Gandhidham District -Kutch .Further
Secured by way of movable assets excluding current assets but including movable plant and machinery , machinery spares, tools
and accessories , furniture and fixtures, vehicles and all other movable assets excluding current assets located on land situated at
survey no 316 (old block / survey 245/paikee ) both present and future.

Secured Borrowings:

(a) Nature of security for secured borrowings:

Secured by way of first & exclusive charge on all existing and future immovable fixed assets i.e. Land & building located at Revenue
Survey No 337,324,433,319,316,325 & 315 ( Old survey no 103,105,106,137,140,141,147/1,245/37,245/39) Village Bharapar , Taluka
Gandhidham, District Kutch 370201, Land measuring 731739 square meter owned by Company further secured by the way of first
& exclusive charge on all existing and future current assets of the company except current assets owned by /charged to M/s AIA
Engineering Ltd.

b) Further secured by way of personal guarantees of Shri Rajendrabhai V. Shah, Shri Karan Shah and Corporate guarantee
of M/s Shah Alloys Ltd

It is not practical for the company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the
respective proceedings as it is determinable only on receipt of judgments/decisions pending with various forums/authorities.

The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are
required and disclosed as contingent liabilities applicable, in its financial statements. The company does not expect the outcome
of these proceedings to have materially adverse impact on its financial results.

(B) Commitment:

Estimated amount of contracts, remaining to be executed on capital account and not provided for Rs.Nil net of advance (Previous
Year: Rs.Nil ).

Commercial Tax Department has challenged by way of Tax Appeal before Supreme Court, the order of Gujarat High Court
wherein Judgment of Joint Commissioner of Commercial Tax (Legal) was quashed and decided that non cooking coal used in the
manufacturing process for Sponge Iron as raw material and eligible for ITC under Section 11 (3)(b). The result of the appeal will
decide whether company has to claim amount of ITC or refund ITC already taken. However, amount of contingent liability cannot
be ascertained.

32. Segment Reporting:

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated
in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron
& Steel" and "Power" as Primary Reportable business segment, as per Indian Accounting Standard - 108 ''Operating Segments''
Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company
as well as interest of the stake holders involved, management has not made disclosure of Primary Reportable segment as per
Indian Accounting Standard - 108 ''Operating Segments''. All the assets are located in the company''s country domicile.

Four customers have contributed 10% or more to the company''s revenue for 2024-25 Amounting to Rs.37110.55 Lakh (Including
GST) and in 2023-24 Two customers have contributed 10% or more to the company revenue amounting to Rs. 45708.20 Lakh.
(Including GST)

33. Financial and derivative instruments

- Capital Management

The company''s objective when managing capital is to:

- Safeguard its ability to continue as a going concern so that the Company is able to provide maximum return to stakeholders
and benefits for other stakeholders.

- Maintain an optimal capital structure to reduce the cost of capital.

(ii) Fair Value Measurement

This note provides information about how the Company determines fair values of various financial assets.

Fair Value of financial assets and liabilities that are not measured at fair value (but fair value disclosures
are required)

Management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial
statements approximate their fair values.

(iii) Financial Risk Management Objectives

While ensuring liquidity is sufficient to meet Company''s operational requirements, the Company''s financial management
committee also monitors and manages key financial risks relating to the operations of the Company by analyzing exposures
by degree and magnitude of risks. These risks include market risk (including currency risk and price risk), credit risk and
liquidity risk.

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 two types of risk: interest rate, currency risk and other price risk, such as commodity
price risk and equity price risk. Financial instruments affected by market risk include FVTPL investments, trade payables,
trade receivables, etc.

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. The Company has a treasury department which monitors the foreign exchange fluctuations
on the continuous basis and advises the management of any material adverse effect on the Company.

Interest Rate Risk

The Company''s interest rate risk arises from the Long-Term Borrowings with fixed rates. The Company''s fixed rates borrowings
are carried at amortized cost.

Liquidity Risk

The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and
availability of funding through an adequate amount of committed credit facilities to meet the obligations when due.

Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash
flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to
meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios.

The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with
agreed repayment periods. The information included in the tables have been drawn up based on the undiscounted cash
flows of financial liabilities based on the earliest date on which the Company can be required to pay. The contractual maturity
is based on the earliest date on which the Company may be required to pay.

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).

Trade Receivables

An impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large
number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum
exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 3 as the Company
does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables
as low, as its customers are located in several jurisdictions and industries.

The Company has made assessment of Allowance for Credit Loss in respect of Trade Receivables. The Company has analyzed
its trade receivables for gaining analysis and grouped them accordingly and then applied ear wise percentage to calculate
the amount of Allowance for Credit Loss in respect of the same.

(i) Defined Contribution Plan: Employee benefits in the form of Provident Fund are considered as defined contribution plan
and the contributions to Employees Provident Fund Organization established under The Employees Provident Fund and
Miscellaneous Provisions Act 1952 and Employees State Insurance Act, 1948, respectively, are charged to the profit and loss
account of the year when the contributions to the respective funds are due.

(ii) Defined Benefit Plan: Retirement benefits in the form of Gratuity are considered as defined benefit obligation and are provided
for on the basis of third party actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

Every Employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the
provisions of The Payment of Gratuity Act, 1972.

As the Company has not funded its liability, it has nothing to disclose regarding plan assets and its reconciliation.

(iii) Major risk to the plan

I have outlined the following risks associated with the plan:

A. Actuarial Risk:

It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an
increase in Obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the
Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the
acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary
growth and discount rate.

Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the
Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested
as at the resignation date.

B. Investment Risk:

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the
fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future
discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes
in the discount rate during the inter-valuation period.

C. Liquidity Risk:

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If
some of such employees resign/retire from the company there can be strain on the cash flows.

D. Market Risk:

Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One
actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money.
An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This
assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed
to fluctuations in the yields as at the valuation date.

E. Legislative Risk:

Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/
regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher
benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will
have to be recognized immediately in the year when any such amendment is effective.

(vii) The above details are certified by the actuary.

35. Certain Balance of Debtors, Creditors, is non- moving / sticky since last 3 years. However, in view of the management, the same is
recoverable / payable. Hence no provision for the same is made in the books of accounts.

36. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized
in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and
not in excess of the amounts reasonably necessary.

37. The balance confirmations from the suppliers and customers have been called for, but the same are awaited till the date of audit.
Thus, the balances of receivables, advance from customers and trade payables have been taken as per the books of accounts
submitted by the management of the company and are subject to confirmation from the respective parties.

39 As stated by the Management, the Company has not recognized any Impairment of entire Capital Work in Progress (CWIP) of Rs.
100.94 lakhs for the year ended on 31/03/2025. The management has assessed the carrying amount of CWIP based on expected
future economic benefits. The management believes that the carrying value of CWIP is recoverable and does not warrant any
impairment as of the year ended on 31/03/2025.

40. As stated & Confirmed by the Management, the company does not have details w.r.t MSME Vendors as prescribed under MSME
Act, 2006 which states as specified Companies (Furnishing of information about payment to micro and small enterprise suppliers)
Order 2019 and hence the company has not provided the same.

41. As stated by the Management, the company has not made provision for Electricity Duty of Rs. 314.28 lakhs in the books of accounts
for the year ended on 31^st March, 2025.

42. During the year under review, the company has written back creditors amounting to Rs 44.71 lakhs. As per the management the
same is not payable, accordingly they have been written back and credited to statement of Profit and loss account as Other Income.

43. Previous year figures have been re-grouped / rearranged, wherever necessary to make them comparable with those of current year.

44. The financial statements were authorized for issue by the directors on 30^th May, 2025.

45. CORPORATE SOCIAL RESPONSIBILITY CONTRIBUTION-

Based on the average net profits of the Company after computation of Net Profit as per Section 198 of the Companies Act,
2013 for the preceding three financial years, the Company is not required to spend any amount on CSR activities during the
financial year 2024-25

46. In order to buy peace of mind and to put an end to the litigation, the Company has entered into a Settlement Agreement with
Shreenidhi Trading Company a creditor who had initiated legal proceedings against the Company. The Company has agreed to
pay a settlement amount of Rs 510.00 Lakhs, to the said alleged creditor against the principal outstanding of Rs 94.41 Lakhs. Thus,
the balance amount of Rs. 415.59 Lakhs is shown as "Exceptional Item" in the statement of profit and loss for the year ended on
31^st March 2025.

47. UNDISCLOSED TRANSACTIONS

As stated, & confirmed by the Board of Directors, 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.

48 BENAMI TRANSACTIONS

As stated & confirmed by the Board of Directors, The Company does not have any Benami property, where any proceeding has
been initiated or pending against the Group for holding any Benami property

49 LOAN OR INVESTMENT TO ULTIMATE BENEFICIARIES

As stated, & Confirmed by the Board of Directors, 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 entity(ies) 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

50. LOAN OR INVESTMENT FROM ULTIMATE BENEFICIARIES

As stated, & Confirmed by the Board of Directors, 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 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

51. WILLFUL DEFAULTER

As stated, & Confirmed by the Board of Directors, The Company has not been declared willful defaulter by the bank during the
year under review.

52. TRANSACTIONS WITH STRUCK OFF COMPANIES

As stated, & Confirmed by the Board of Directors, the company has not under taken any transactions nor has outstanding balance
with the company Struck Off either under section 248 of the Actor under Section 560 of Companies act 1956.

54. CRYPTO CURRENCY

As stated, & Confirmed by the Board of Directors. The Company has not traded or invested in Crypto Currency or Virtual Currency.

55. COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES:

As informed and confirmed by the Board of Directors, the Company has complied with the number of layers prescribed under
clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

56. COMPLIANCE WITH SCHEME OF ARRANGEMENT

As stated, & confirmed by the Board of Directors, The Company has not applied for any scheme of Arrangements under sections
230 to 237 of the Companies Act 2013.

57. The Company has assessed internal and external information upto the date of approval of the audited financial statements while
reviewing the recoverability of assets, adequacy of financial resources, Performance of contractual obligations, ability to service
the debt and liabilities etc. Based on such assessment, the company expects to fully recover the carrying amounts of the assets
and comfortably discharge its debts and obligations. Hence the management does not envisage any material impact on the
audited financial statements of the company for the year ended on 31^st March 2025.

58. As stated, & Confirmed by the Board of Directors, The company has not been sanctioned any term loan during the year not there
is outstanding term loans as at 31^st March 2025.

59. As stated, & Confirmed by the Board of Directors, the Property, plant and equipment is in the name of the company.

60. As stated, & confirmed by the board of Directors, the company has not revalued its Property, Plant and Equipment and intangible
assets during the year under review.

(c) Performance obligations

The performance obligation is satisfied upon delivery of the finished goods and payment is generally due within 1 to 3
months from delivery. The performance obligation to deliver the finished goods is started after receiving of sales order. The
customer can pay the transaction price upon delivery of the finished goods within the credit period, as mentioned in the
contract with respective customer.

Signatures to Notes - 1 to 65

Notes referred to herein above form an integral part of the Financial Statements.

As per our report of even date attached.

For Parikh & Majmudar For and on behalf of the Board of Directors,

Chartered Accountants SAL Steel Limited

(Firm Regn.No.107525W)

UDIN : 25107628BMHGBN3520

[Rajendra V Shah] [B L Singhal]

CA Satwik Durkal Chairman Whole Time Director cum CFO

Partner DIN: 0020904 DIN: 01484213

Membership No. : 107628

[Mrinal Sinha] [Radhika P. Soni]

Place : Ahmedabad Whole Time Director Company Secretary

Date : 30^th May, 2025 DIN: 09482143

---

Mar 31, 2024

b) Terms/rights, preferences and restrictions attached to securities:Equity shares:

The company has one class of equity share having a par value of '' 10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of directors is subject to the approval of shareholders in the ensuing Annual general meeting, except in case of interim dividend. In the case of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

Purpose of Reserve

Security Premium : Securities premium is used to record premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

Capital Redemption Reserve : As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. The reserve is utilised in accordance with the provisions of section 69 of the Companies Act, 2013

Retained Earnings : Retained Earnings are the profits and gains that the Company has earned till date, less any transfer to general reserve, dividends or other distributions paid to shareholders.

Capital Reserve : The Company recognises profit and loss on purchase, sale, issue or cancellation of the Company''s own equity instruments to capital reserve.

Secured Borrowings:

(a) Nature of security and terms of repayment for secured borrowings:

The above deposit is secured by way of first charge and mortgage of immovable property situated at Surevy no 316 (old block / survey no 245/ paikee ) together factory building thereon situated at Bharpur , Taluka Gandhidham District -Kutch .Further Secured by way of movable assets excluding current assets but including movable plant and machinery , machinery spares, tools and accessories , furniture and fixtures, vehicles and all other movable assets excluding current assets located on land situated at survey no 316 (old block / survey 245/paikee ) both present and future.

NOTE NO : 31-A CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR): (Amount '' in Lakhs)
Particulars	Year Ended on 31.03.2024	Year Ended on 31.03.2023
(A) Contingent liabilities:
a) Claims against the Company not acknowledged as debts:
Disputed Excise Demand (Matter Under appeal)	1216.42	1216.42
Disputed Custom duty demand (Matter Under appeal)	499.85	499.85
Disputed service tax demand (Matter Under appeal)	150.26	150.26
Disputed Income Tax demand (Matter Under appeal)	3093.41	-
Disputed VAT demand (Matter Under appeal)	1607.21	1607.21
Disputed GST demand (Matter Under appeal)	503.36	-
Claims by Parties	275.76	626.21

b) Guarantees excluding Financial Guarantees:

Estimated amount of contracts remaining to be executed on capital account [net of advances] and not provided for '' NIL (P.Y '' NIL) (B) Commitment:

Commercial Tax Department has challenged by way of Tax Appeal before Supreme Court, the order of Gujarat High Court wherein Judgment of Joint Commissioner of Commercial Tax (Legal) was quashed and decided that non cooking coal used in the manufacturing process for Sponge Iron as raw material and eligible for ITC under Section 11 (3)(b). The result of the appeal will decide whether company has to claim amount of ITC or refund ITC already taken. However, amount of contingent liability cannot be ascertained.

Note :

It is not practical for the company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgments/decisions pending with various forums/authorities.

The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities applicable, in its financial statements. The company does not expect the outcome of these proceedings to have materially adverse impact on its financial results.

32. SEGMENT REPORTING:

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Indian Accounting Standard - 108 ''Operating Segments'' Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, management has not made disclosure of Primary Reportable segment as per Indian Accounting Standard - 108 ''Operating Segments''. All the assets are located in the company''s country domicile.

Two customers have contributed 10% or more to the company''s revenue for 2023-24 Amounting to '' 45708.20 Lakh (Including GST) and in 2022-23 Two customers have contributed 10% or more to the company revenue amounting to '' 31510.59 Lakh. (Including GST)

33. FINANCIAL AND DERIVATIVE INSTRUMENTS

- Capital Management

The company''s objective when managing capital is to:

- Safeguard its ability to continue as a going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders.

- Maintain an optimal capital structure to reduce the cost of capital.

The company''s Board of director''s reviews the capital structure on regular basis. As part of this review the board considers the cost of capital risk associated with each class of capital requirements and maintenance of adequate liquidity.

Disclosures

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 accounting policies as stated above:

(ii) Fair Value Measurement

This note provides information about how the Company determines fair values of various financial assets.

Fair Value of financial assets and liabilities that are not measured at fair value (but fair value disclosures are required)

Management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.

(iii) Financial Risk Management Objectives

While ensuring liquidity is sufficient to meet Company''s operational requirements, the Company''s financial management committee also monitors and manages key financial risks relating to the operations of the Company by analyzing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and price risk), credit risk and liquidity risk.

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 two types of risk: interest rate, currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include FVTPL investments, trade payables, trade receivables, etc.

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. The Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on the Company.

Interest Rate Risk

The Company''s interest rate risk arises from the Long-Term Borrowings with fixed rates. The Company''s fixed rates borrowings are carried at amortized cost.

Liquidity Risk

The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due.

Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios.

The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The information included in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The contractual maturity is based on the earliest date on which the Company may be required to pay.

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).

Trade Receivables

An impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 3 as the Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries.

The Company has made assessment of Allowance for Credit Loss in respect of Trade Receivables. The Company has analysed its trade receivables for gaining analysis and grouped them accordingly and then applied ear wise percentage to calculate the amount of Allowance for Credit Loss in respect of the same.

(i) Defined Contribution Plan: Employee benefits in the form of Provident Fund are considered as defined contribution plan and the contributions to Employees Provident Fund Organization established under The Employees Provident Fund and Miscellaneous Provisions Act 1952 and Employees State Insurance Act, 1948, respectively, are charged to the profit and loss account of the year when the contributions to the respective funds are due.

(ii) Defined Benefit Plan: Retirement benefits in the form of Gratuity are considered as defined benefit obligation and are provided for on the basis of third party actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

Every Employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of The Payment of Gratuity Act, 1972.

As the Company has not funded its liability, it has nothing to disclose regarding plan assets and its reconciliation.

(iii) Major risk to the plan

I have outlined the following risks associated with the plan:

A. Actuarial Risk:

It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

B. Investment Risk:

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

C. Liquidity Risk:

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cash flows.

D. Market Risk:

Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

E. Legislative Risk:

Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/ regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

35. Certain Balance of Debtors, Creditors, is non- moving / sticky since last 3 years. However, in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

36. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

37. The balance confirmations from the suppliers and customers have been called for, but the same are awaited till the date of audit. Thus, the balances of receivables, advance from customers and trade payables have been taken as per the books of accounts submitted by the management of the company and are subject to confirmation from the respective parties.

39. As stated by the Management, the Company has not recognized any Impairment of entire Capital Work in Progress (CWIP) of '' 100.94 lakhs for the year ended on 31/03/2024. The management has assessed the carrying amount of CWIP based on expected future economic benefits. The management believes that the carrying value of CWIP is recoverable and does not warrant any impairment as of the year ended on 31/03/2024.

40. As stated & Confirmed by the Management, the company does not have details w.r.t MSME Vendors as prescribed under MSME Act, 2006 which states as specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order 2019 and hence the company has not provided the same.

41. As stated by the Management, the company has not made provision for Electricity Duty of '' 296.91 lakhs in the books of accounts for the year ended on 31^st March, 2024.

42. During the year under review, the company has written back creditors amounting to '' 124.61 lakhs. As per the management the same is not payable, accordingly they have been written back and credited to statement of Profit and loss account as Other Income.

43. Previous year figures have been re-grouped / rearranged, wherever necessary to make them comparable with those of current year.

44. The financial statements were authorized for issue by the directors on 30^th May, 2024.

45. CORPORATE SOCIAL RESPONSIBILITY CONTRIBUTION-

Based on the average net profits of the Company after computation of Net Profit as per Section 198 of the Companies Act, 2013 for the preceding three financial years, the Company is not required to spend any amount on CSR activities during the financial year 2023-24.

46. As Stated, by the Management, the company does not currently have insurance coverage for its Property, Plant & Equipment. The Company may face the financial losses without any claim or compensation from an insurance provider.

47. UNDISCLOSED TRANSACTIONS

As stated, & confirmed by the Board of Directors, 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.

48. BENAMI TRANSACTIONS

As stated, & confirmed by the Board of Directors, The Company does not have any Benami property, where any proceeding has been initiated or pending against the Group for holding any Benami property.

49. LOAN OR INVESTMENT TO ULTIMATE BENEFICIARIES

As stated, & Confirmed by the Board of Directors, 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 entity(ies) 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

50. LOAN OR INVESTMENT FROM ULTIMATE BENEFICIARIES

As stated, & Confirmed by the Board of Directors, 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 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

51. WILLFUL DEFAULTER

As stated, & Confirmed by the Board of Directors, The Company has not been declared willful defaulter by the bank during the year under review.

52. TRANSACTIONS WITH STRUCK OFF COMPANIES

As stated, & Confirmed by the Board of Directors, the company has not under taken any transactions nor has outstanding balance with the company Struck Off either under section 248 of the Actor under Section 560 of Companies act 1956.

54. CRYPTO CURRENCY

As stated, & Confirmed by the Board of Directors. The Company has not traded or invested in Crypto Currency or Virtual Currency.

55. COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES:

As informed and confirmed by the Board of Directors, the Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

56. COMPLIANCE WITH SCHEME OF ARRANGEMENT

As stated, & confirmed by the Board of Directors, The Company has not applied for any scheme of Arrangements under sections 230 to 237 of the Companies Act 2013.

57. The Company has assessed internal and external information upto the date of approval of the audited financial statements while reviewing the recoverability of assets, adequacy of financial resources, Performance of contractual obligations, ability to service the debt and liabilities etc. Based on such assessment, the company expects to fully recover the carrying amounts of the assets and comfortably discharge its debts and obligations. Hence the management does not envisage any material impact on the audited financial statements of the company for the year ended on 31^st March 2024.

58. As stated, & Confirmed by the Board of Directors, The company has not been sanctioned any term loan during the year not there is outstanding term loans as at 31^st March 2024.

59. As stated, & Confirmed by the Board of Directors, the Property, plant and equipment is in the name of the company.

60. As stated, & confirmed by the board of Directors, the company has not revalued its Property, Plant and Equipment and intangible assets during the year under review.

61. As stated, & Confirmed by the board of Directors, the Company has not been sanctioned working capital limits from a bank on the basis of security of the current assets.

(c) Performance obligations

The performance obligation is satisfied upon delivery of the finished goods and payment is generally due within 1 to 3 months from delivery. The performance obligation to deliver the finished goods is started after receiving of sales order. The customer can pay the transaction price upon delivery of the finished goods within the credit period, as mentioned in the contract with respective customer.

---

Mar 31, 2023

Terms/rights, preferences and restrictions attached to securities:

Equity shares:

The company has one class of equity share having a par value of '' 10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of directors is subject to the approval of shareholders in the ensuing Annual general meeting, except in case of interim dividend. In the case of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

Purpose of Reserve

Security Premium : Securities premium is used to record premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

Capital Redemption Reserve : As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. The reserve is utilised in accordance with the provisions of section 69 of the Companies Act, 2013

Retained Earnings : Retained Earnings are the profits and gains that the Company has earned till date, less any transfer to general reserve, dividends or other distributions paid to shareholders.

Capital Reserve : The Company recognises profit and loss on purchase, sale, issue or cancellation of the Company''s own equity instruments to capital reserve.

Secured Borrowings:

(a) Nature of security and terms of repayment for secured borrowings:

The above deposit is secured by way of first charge and mortgage of immovable property situated at Surevy no 316 (old block / survey no 245/ paikee ) together factory building thereon situated at Bharpur , Taluka Gandhidham District -Kutch .Further Secured by way of movable assets excluding current assets but including movable plant and machinery , machinery spares, tools and accessories , furniture and fixtures, vehicles and all other movable assets excluding current assets located on land situated at survey no 316 (old block / survey 245/paikee ) both present and future.

b) Further secured by way of personal guarantees of Shri Rajendrabhai V. Shah

It is not practical for the company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgments/decisions pending with various forums/authorities.

The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities applicable, in its financial statements. The company does not expect the outcome of these proceedings to have materially adverse impact on its financial results.

(B) Commitment:

Estimated amount of contracts, remaining to be executed on capital account and not provided for '' Nil net of advance (Previous Year: '' Nil ).

Commercial Tax Department has challenged by way of Tax Appeal before Supreme Court, the order of Gujarat High Court wherein Judgment of Joint Commissioner of Commercial Tax (Legal) was quashed and decided that non cooking coal used in the manufacturing process for Sponge Iron as raw material and eligible for ITC under Section 11 (3)(b). The result of the appeal will decide whether company has to claim amount of ITC or refund ITC already taken. However, amount of contingent liability cannot be ascertained.

32. SEGMENT REPORTING

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Indian Accounting Standard - 108 ''Operating Segments'' Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, management has not made disclosure of Primary Reportable segment as per Indian Accounting Standard - 108 ''Operating Segments''. All the assets are located in the company''s country domicile.

Two customers have contributed 10% or more to the company''s revenue for 2022-23 Amounting to '' 31510.59 Lakh (Including GST) and in 2021-22 single customer have contributed 10% or more to the company revenue amounting to '' 30865.47 Lakh. (Including GST)

33. FINANCIAL AND DERIVATIVE INSTRUMENTS Capital Management

The company''s objective when managing capital is to:

- Safeguard its ability to continue as a going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders.

- Maintain an optimal capital structure to reduce the cost of capital.

The company''s Board of director''s reviews the capital structure on regular basis. As part of this review the board considers the cost of capital risk associated with each class of capital requirements and maintenance of adequate liquidity.

Disclosures

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 accounting policies as stated above:

(ii) Fair Value Measurement

This note provides information about how the Company determines fair values of various financial assets.

Fair Value of financial assets and liabilities that are not measured at fair value (but fair value disclosures are required)

Management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.

(iii) Financial Risk Management Objectives

While ensuring liquidity is sufficient to meet Company''s operational requirements, the Company''s financial management committee also monitors and manages key financial risks relating to the operations of the Company by analyzing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and price risk), credit risk and liquidity risk.

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 two types of risk: interest rate, currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include FVTPL investments, trade payables, trade receivables, etc.

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. The Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on the Company.

Interest Rate Risk

The Company''s interest rate risk arises from the Long Term Borrowings with fixed rates. The Company''s fixed rates borrowings are carried at amortized cost.

Liquidity Risk

The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due.

Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios.

The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The information included in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The contractual maturity is based on the earliest date on which the Company may be required to pay.

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).

Trade Receivables

An impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 3 as the Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries.

The Company has made assessment of Allowance for Credit Loss in respect of Trade Receivables The Company has analysed its trade receivables for gaining analysis and grouped them accordingly and then applied ear wise percentage to calculate the amount of Allowance for Credit Loss in respect of the same.

The Company has a detailed review mechanism of overdue customer receivables at various levels within organization to ensure proper attention and focus for realization.

(i) Defined Contribution Plan: Employee benefits in the form of Provident Fund are considered as defined contribution plan and the contributions to Employees Provident Fund Organization established under The Employees Provident Fund and Miscellaneous Provisions Act 1952 and Employees State Insurance Act, 1948, respectively, are charged to the profit and loss account of the year when the contributions to the respective funds are due.

(ii) Defined Benefit Plan: Retirement benefits in the form of Gratuity are considered as defined benefit obligation and are provided for on the basis of third party actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

Every Employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of The Payment of Gratuity Act, 1972.

As the Company has not funded its liability, it has nothing to disclose regarding plan assets and its reconciliation.

(iii) Major risk to the plan

I have outlined the following risks associated with the plan:

A. Actuarial Risk:

It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

B. investment Risk:

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

C. Liquidity Risk:

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cash flows.

D. Market Risk:

Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

E. Legislative Risk:

Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/ regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

35. Certain Balance of Debtors, Creditors, is non- moving / sticky since last 3 years. However in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

36. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

37. The company has sought balance confirmations from trade receivables and trade payables, wherever such balance confirmations are received by the Company, the same are reconciled and appropriate adjustments if required, are made in the books of account

39. In accordance with the Indian Accounting Standard (Ind AS-36) on "Impairment of Assets" the Company during the year carried out an exercise of identifying the assets that may have been impaired in respect of cash generating unit in accordance with the said Indian Accounting Standard. Based on the exercise, no impairment loss is required as at 31^st March, 2023.

40. Previous year figures have been re-grouped / rearranged, wherever necessary to make them comparable with those of current year.

41. The financial statements were authorized for issue by the directors on 29^th May, 2023.

42. CORPORATE SOCIAL RESPONSIBILITY CONTRIBUTION-

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are Promoting education, including special education and employment enhancing vocation skill and other activities as mentioned in Schedule VII of the Companies Act, 2013. A CSR committee has been formed by the company as per the Act. The funds were primarily utilized throughout the year on these activities which are specified in Schedule VII of the Companies Act, 2013:

(c) Performance obligations

The performance obligation is satisfied upon delivery of the finished goods and payment is generally due within 1 to 3 months from delivery. The performance obligation to deliver the finished goods is started after receiving of sales order. The customer can pay the transaction price upon delivery of the finished goods within the credit period, as mentioned in the contract with respective customer.

46. UNDISCLOSED TRANSACTIONS

As stated & confirmed by the Board of Directors, 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

47. BENAMI TRANSACTIONS

As stated & confirmed by the Board of Directors, The Company does not have any Benami property, where any proceeding has been initiated or pending against the Group for holding any Benami property.

48. LOAN OR INVESTMENT TO ULTIMATE BENEFICIARIES

As stated & Confirmed by the Board of Directors ,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 entity(ies) 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

49. LOAN OR INVESTMENT FROM ULTIMATE BENEFICIARIES

As stated & Confirmed by the Board of Directors ,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 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

so. willful defaulter

As stated & Confirmed by the Board of Directors, The Company has not been declared willful defaulter by the bank during the year under review.

si. transactions with struck off companies

As stated & Confirmed by the Board of Directors ,The company has not under taken any transactions nor has outstanding balance with the company Struck Off either under section 248 of the Actor under Section 560 of Companies act 1956.

s2. satisfaction of charge

As informed by the Management there are no charges which are yet to be registered or yet to be satisfied with Registrar of Companies beyond statutory period. However, while caring out search on MCA portal, following charges are yet to be satisfied beyond the statutory period, details of which are as under:

S3. crypto currency

As stated & Confirmed by the Board of Directors. The Company has not traded or invested in Crypto Currency or Virtual Currency.

s4. compliance with number of layers of companies

As informed and confirmed by the Board of Directors, the Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

55. compliance with scheme of arrangement

As stated & confirmed by the Board of Directors, The Company has not applied for any scheme of Arrangements under sections 230 to 237 of the Companies Act 2013.

56. The Company has assessed internal and external information upto the date of approval of the audited financial statements while reviewing the recoverability of assets, adequacy of financial resources, Performance of contractual obligations, ability to service the debt and liabilities etc. Based on such assessment, the company expects to fully recover the carrying amounts of the assets and comfortably discharge its debts and obligations. Hence the management does not envisage any material impact on the audited financial statements of the company for the year ended on 31^st March 2023.

57. As stated & Confirmed by the Board of Directors, The company has not been sanctioned any term loan during the year not there is outstanding term loans as at 31^st March 2023.

58. As stated & Confirmed by the Board of Directors, the Property, plant and equipment is in the name of the company.

59. As stated & confirmed by the board of Directors, the company has not revalued its Property, Plant and Equipment and intangible assets during the year under review.

60. As stated & Confirmed by the board of Directors, the Company has not been sanctioned working capital limits from a bank on the basis of security of the current assets.

---

Mar 31, 2018

a) Terms/rights, preferences and restrictions attached to securities:

Equity shares:

The company has one class of equity share having a par value of Rs. 10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of directors is subject to the approval of shareholders in the ensuing Annual general meeting, except in case of interim dividend. In the case of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

Secured Borrowings:

(a) Nature of security and terms of repayment for secured borrowings:

(a) The above loan is secured by way of Land Bearing Surevy no 243 & 245 situated at Bharpur , Taluka Gandhidham District -Kutch.Further Secured by way of all movable assets both present and future belonging to the company.

(b) Further secured by way of personal guarantees of (i) Shri Rajendrabhai V. Shah (ii) Smt. R.R. Shah ( iii) Shri Jayesh V. Shah (iv) and Corporate Guarantee of M/s Shah Alloys Limited.

(c) Further secured by way of Pledge of 10756989 equity shares of Shah Alloys ltd pleged to Consortium members

(B) Commitment:

Estimated amount of contracts, remaining to be executed on capital account and not provided for Rs.492.78 lac net of advance (Previous Year: Rs. 492.78 lac ).

Commercial Tax Department has challenged by way of Tax Appeal before Supreme Court, the order of Gujarat High Court wherein Judgment of Joint Commissioner of Commercial Tax (Legal) was quashed and decided that non cooking coal used in the manufacturing process for Sponge Iron as raw material and eligible for ITC under Section 11 (3)(b). The result of the appeal will decide whether company has to claim amount of ITC or refund ITC already taken. However, amount of contingent liability cannot be ascertained.

1. The Company’s current liabilities exceeded its current assets as at the previous year balance sheet date. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. However, considering the profit earned by the company for the year ended on 31st March 2018 and considering the view of the management, the financial results of the Company have been prepared on a “going concern basis”.

2. SEGMENT REPORTING:

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider “Iron & Steel” and “Power” as Primary Reportable business segment, as per Indian Accounting Standard - 108 ‘Operating Segments’.Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Indian Accounting Standard - 108 ‘Operating Segments’.

3 Financial and derivative instruments

- Capital Management

The company’s objective when managing capital is to:

- Safeguard its ability to continue as a going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders.

- Maintain an optimal capital structure to reduce the cost of capital.

The company’s Board of director’s reviews the capital structure on regular basis. As part of this review the board considers the cost of capital risk associated with each class of capital requirements and maintenance of adequate liquidity.

Disclosures

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 Note (A) j, k, l and m.

(ii) Fair Value Measurement

This note provides information about how the Company determines fair values of various financial assets.

Fair Value of financial assets and liabilities that are not measured at fair value (but fair value disclosures are required). Management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.

(iii) Financial Risk Management Objectives

While ensuring liquidity is sufficient to meet Company’s operational requirements, the Company’s financial management committee also monitors and manages key financial risks relating to the operations of the Company by analyzing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and price risk), credit risk and liquidity risk.

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 two types of risk: in-terest rate, currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include FVTPL investments, trade payables, trade receivables, etc. 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. The Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on the Company.

Interest Rate Risk

The Company’s interest rate risk arises from the Long Term Borrowings with fixed rates. The Company’s fixed rates borrowings are carried at amortised cost.

Liquidity Risk

The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due.

Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios.

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The information included in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The contractual maturity is based on the earliest date on which the Company may be required to pay.

Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instru-ment or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables).

Trade Receivables

An impairment analysis is performed at each reporting date on an individual basis for all the customers. In addition, a large number of minor receivables are grouped into homoge-nous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 3and 7, as the Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries.

The Company has a detailed review mechanism of overdue customer receivables at vari-ous levels within organisation to ensure proper attention and focus for realisation.

4.Disclosures Regarding Employee Benefits

As per Indian Accounting Standard 19 “Employee Benefits” the disclosures are given below: Defined Contribution Plan Contribution to defined contribution plan, recognized as expense for the year is as under:

(i) Defined Contribution Plan: Employee benefits in the form of Provident Fund are considered as defined contribution plan and the contributions to Employees Provident Fund Organization established under The Employees Provident Fund and Miscellaneous Provisions Act 1952 and Employees State Insurance Act, 1948, respectively, are charged to the profit and loss account of the year when the contributions to the respective funds are due.

(ii) Defined Benefit Plan: Retirement benefits in the form of Gratuity are considered as defined benefit obligation and are provided for on the basis of third party actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet. Every Employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of The Payment of Gratuity Act, 1972.

As the Company has not funded its liability, it has nothing to disclose regarding plan assets and its reconciliation.

(iii) Major risk to the plan

I have outlined the following risks associated with the plan:

A. Actuarial Risk:

It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the as-sumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mor-tality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cashflow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate. Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than ex-pected. The impact of this will depend on whether the benefits are vested as at the resignation date.

B. Investment Risk:

For funded plans that rely on insurers for managing the assets, the value of as-sets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

C. Liquidity Risk:

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cashflows.

D. Market Risk:

Market risk is a collective term for risks that are related to the changes and fluctu-ations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corpo-rate/government bonds and hence the valuation of liability is exposed to fluctua-tions in the yields as at the valuation date.

E. Legislative Risk:

Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/ regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

(viii) The above details are certified by the actuary.

5. Management is of the view that they do not anticipate execution of its ongoing capital projects. However, the Company has not made ad-equate provision towards recovery of advances for the said capital projects for the amount of Rs. 912.32/- which are currently shown under Other Non Current assets as Advance for capital Goods for the supply of customized equipments based of our specific design and requirements . The machines are manufactured and ready for dispatch but company does not have further fund to pay balance amount and to lift the machines.However the management is trying to recover such advances from the suppliers fully subject to provision of Rs 2.37 lacs made in the books of accounts.

6. The Company has not assessed the impact of Effective Interest Method to the finance cost as per the requirement of lnd AS 109 ‘Financial Instruments and hence, the effect of the same, if any, on the financial results is not identifiable.

7. The Company’s current liabilities exceeded its current assets as at the previous year balance sheet date. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. However, considering the profit earned by the company for the year ended on 31st March 2018 and considering the view of the management, the financial results of the Company have been prepared on a “going concern basis”.

8. RELATED PARTY DISCLOSURES:

(a) List of Related Parties and Relationships:

i. Concern where significant interest exists.

Name of the Concern Nature of Relationship

Shah Alloys Limited Promoter Group Company

SAL Care Private Limited Promoter Group Company

SAL Corporation Pvt Ltd Promoter Group Company

ii. Key Management Personnel

Name of the Key Management Personnel Nature of Relationship

Shri Rajendra V Shah Chairman

Shri Sujal A Shah Executive Director

Shri B M Singhal Whole Time Director Cum CFO

Shri Anil Pandya Whole Time Director

Shri Ambalal C Patel Independent Director

Shri Tejpal S Shah Independent Director

Shri Harshad M Shah Independent Director

Shri Jethalal M Shah Independent Director

Shri Shrikant N ZaveriIndependent Director

Smt Shefali M Patel Independent Director

Shri Jayant J Garai CEO

Shri Nirajkumar Jain Company Secretary

(Related Parties have been identified by the Management)

9. Certain Balance of Debtors, Creditors, Loans & Advances for Capital expenditures are non- moving / sticky since last 3 years. However in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

10. The company with effect from 22nd February 2018 for the entire dues in re-spect of various facilities and assistance provided by Union bank of In-dia,State Bank of Saurashtra, State Bank of India and State Bank of Hyderabad which is now assigned to Invent Assets Securitization & Reconstruction Pvt. Ltd. The company has accounted for the Waiver of Interest portion (as per the books of the company) as Income in the statement of Profit and loss.The said agreements provides for the settlement of entire dues in respect of financial assistance and facilities with the underlying Securities for the payment of Rs 18051.50 lacs towards full and final settlement against the total liability (Principal and Interest) of Rs 24430 lacs resulting in to the waiver of liability (Principal and Interest as per the books of the company ) for the amount of Rs 6378.26 lacs. The said waiver of liability (Interest) for the amount of Rs 6378.26 has been shown as income in the Statement of Profit and loss and has been reflected as an Exceptional Item in the Statement of Profit and loss for the year ended on 31st March 2018.

11. The balance confirmation from the suppliers, customers as well as to vari-ous loans or advances given have been called for, but the same are awaited till the date of audit. Thus, the balances of receivables, trade payables as well as loans and advances have been taken as per the books of accounts submitted by the company and are subject to confirmation from the respective parties

12. Vide the Order of Hon’ble National Company Law Tribunal (NCLT), Ah-medabad Bench dated 6th Sep 2017 [C P (IB) no. 94/9/NCLT/AHM/2017] which had admitted the company under Corporate Insolvency Resolution Process (CIRP) under section 9(5) (i) of the Insolvency and Bankruptcy Code, 2016 and accordingly appointed Interim Resolution Professional (IRP).However, on the basis of the records produced before us, and as explained to us,the promoters of the company have entered in to a settlement with operational creditor who had filed application before Hon’ble NCLT,Ahmedabad and obtained no objection from other operational credi-tors as well as financial creditors and moved a petition under Article 142 of the constitution before the Hon’ble Supreme Court of India, New Delhi. As per the order dated 10th January 2018 of the Hon’ble Supreme court of India, the order passed by the Hon’ble NCLT, Ahmedabad dated 06th September,2017 has been set aside and accordingly the CIRP proceedings have been effectively discontinued and powers of the Board of Directors of the Company have been reinstated.

13. The company against whom an application for Corporate Insolvency Resolution Process (CIRP) has been admitted under the Insolvency & Bank-ruptcy Code 2016 vide order of the National Company Law Tribunal Ahmed-abad dated 06th Septemeber,2017 [CP(IB) No.94/9/NCLT/AHM/2017] u/s 9 of the IBC 2016 and in line with the press release of the CBDT dated 06th Janudary,2018, while computing the liability of MAT u/s 115JB of the Income Tax Act the amount of total loss brought forward (including unabsorbed de-preciation) has been allowed to be reduced from the book profit for the year under review.

14. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

15. Inventories are as taken, valued and certified by the management.

16. The Company has not received information from the Suppliers regarding their status under The Micro, Small & Medium Enterprises Development Act, 2006. Hence, disclosures, if any relating to amounts unpaid as at the balance sheet date together with interest paid or payable as per the requirement under the said Act, have not been made. However, on prima facie scrutiny, no interest has been paid to suppliers.

17. The Company has re-classified previous year figures to conform to this year’s classification. Previous year figures have been re-grouped / rearranged, wherever necessary to make them comparable with those of current year.

18. A) Effects of Ind AS adoption on Balance Sheet as at 31st March, 2017 and 1st April, 2016

Notes to first time adoption

a Property Plant and Equipment

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment as at 1st April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment .

b Re-Classification

Assets / liabilities which do not meet the definition of financial asset / financial liability have been reclassified to other asset / liability. c Prior Period Items

This company has recorded a prior period error in the FY 2016-17 pertaining to the year FY 2015-16. Hence the same is adjusted in the opening reserves of the Balance Sheet as at 1-4-2016. Moreover, the prior period error with respect to the FY 2016-17, which was to be recorded in FY 2017-18, has been adjusted under the head Other Admin Expenses in the Statement of Profit or Loss. d Excise Duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of statement of profit and loss as part of expenses e Deferred Tax

As per Ind AS 12, Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date. On transition date, certain adjustments were made by charge/ credit to profit and loss account. The tax effect of such adjustments resulting into deferred tax asset of Rs. 864.10 lacs has been recognised by credit to retained earnings. This is on account of the fact that upto this period, deferred tax asset on unabsorbed depreciation and brought forward losses were not recognized since as per the consideration of “Prudence” under AS 22 as well as Ind AS 12, the same is not permitted. Now, as per the management contention, there is a reasonable and virtual certainty that sufficient future taxable income shall be available against which such deferred tax assets can be realized. The virtual certainty has been established on the basis of speedy reduction of current losses f Actuarial gain/(loss) on Defined Benefit plans for Employee Benefits:

Under Ind AS, the change in defined benefit liability is split into changes arising out of service and interest cost and changes arising out of remeasurements. Changes due to”service and interest cost are to be recognised in Profit and Loss account and the changes arising out of re-measurements are to be recognised directly in Other Comprehensive Income (OCI).

The accompanying Notes 1 to 53 are integral part of these Financial Statements.

---

Mar 31, 2016

1. Terms/rights, preferences and restrictions attached to securities:

Equity shares:

The company has one class of equity share having a par value of Rs. 10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of directors is subject to the approval of shareholders in the ensuing Annual general meeting, except in case of interim dividend. In the case of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

Forfeited Share warrant (amount originally paid up): 3,20,00,000 convertible warrants of Rs. 10/- each forfeited on 2^nd August, 2013 on account of nonpayment of remaining amount due as per terms of the issue. Amount forfeited is Rs. 800 lacs only.

Secured Borrowings:

1. Nature of security and terms of repayment for secured borrowings

Term loan:

2. Term Loans are Secured by first charge on all the Immovable and second charge on Movable assets present & future ranking parri passu with charges created/to be created in favour of other institution/banks subject to prior charge on current assets in favour of the company''s bankers for working capital borrowings. Term loan of Rs. 5000 lacs is secured by pledge of 1,07,56,989 shares of SAL Steel Limited hold by Shah Alloys Limited ( restricted to new captive power project only)

3. Term loans are further secured by personal guarantees of (i) Shri Rajendrabhai V. Shah (ii) Smt. R.R. Shah ( iii) Shri Jayesh V. Shah (iv) and Corporate Guarantee of M/s Shah Alloys Limited.(Amounting to Rs. 20750 lacs) Term Loan is carrying rate of Interest(at present) from 14% to 16% p.a. repayable over a period of 6 years.

4. During the year term Loan Borrowings from banks have been transferred / assigned to Invent Assets Securitization and Reconstruction Pvt Ltd (ARC) together with all their rights, title and interest in the financial documents and any underline security interest / pledged and / or guarantees in respect of such loans. However the company has not yet entered any agreement with ARC and hence no charge is transferred to ARC.

5.Period and amount of default as on the balance sheet date:

The company has made a default in repayment of Principal amount of Term Loan and Interest of Rs. 8900 lacs and Rs. 4649.43 lacs respectively as at the balance sheet date. The bank wise position of default is as under:

Nature of security provided for short term borrowings:

Cash Credit facilities:

Cash Credit facilities are Secured by hypothecation of entire current assets of the company on parri passu basis with the consortium member banks & second charge on fixed assets of the company on parri passu basis with consortium member banks.

The Loans are further secured by personal guarantee of i) Shri Rajendrabhai V. Shah ii) Smt. R.R. Shah iii) Shri Jayesh .V. Shah and iv) Corporate guarantee of M/s Shah Alloys Limited(Amounting to Rs. 20750 lacs.

During the year, working capital facilities from banks have been transferred / assigned to Invent Assets Securitization and Reconstruction Pvt Ltd (ARC) together with all their rights, title and interest in the financial documents and any underline security interest / pledged and / or guarantees in respect of such loans. However, the company has not yet entered any agreement with ARC and hence no charge is transferred to ARC.

6. Cost of Fixed Assets and pre-operative expenses, being technical matter, are capitalized or allocated to Capital work in progress on the basis of data certified by technical person & the Management.

7. Borrowing cost includes interest and other bank charges to the extent that they are regarded as an adjustment to interest costs which are directly related to the acquisition & construction of a qualifying asset.

8. Advances to Project suppliers are shown under Long term loans & advances included in Capital advances.

9. Commitment:

Estimated amount of contracts, remaining to be executed on capital account and not provided for Rs.. 522.78 lac net of advance (Previous Year : Rs. 2,215.07 lac ).

Commercial Tax Department has challenged by way of Tax Appeal before High Court, the order of Tribunal dated 27.12.2010 wherein judgment dated 15.09.2010 of Joint Commissioner of Commercial Tax (Legal) was quashed and decided that non cooking coal used in the manufacturing process for Sponge Iron as raw material and eligible for ITC under Section 11 (3)(b). The result of the appeal will decide whether company has to claim amount of ITC or refund ITC already taken. However, amount of contingent liability cannot be ascertained.

Defined Benefit Plan:

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity

10. Segment Reporting:

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17 "Segment Reporting" . Further, the Company has its business within the geographical territory of India Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 "Segment Reporting"

11. The Company had filed a reference with BIFR u/s 15(1) of the Sick Industrial Companies (Special Provision) Act, 1985. The Honorable BIFR vide its letter reference no 3(S-10)/BC/2015 dated 24^th August 2015 had registered the reference fled by the company vide case no 109/2015.

12. As at the yearend the Company has accumulated losses and its net worth has been fully eroded. The Financial results indicates that the Company has a net loss during the current and previous year and the Company''s current liabilities exceeded its current assets as at the current and previous year balance sheet date. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a "going concern". However, the financial results of the Company have been prepared on a going concern basis based on that the Company is actively negotiating for settlement. As a result, not only the Company''s net worth will improve but also improve productivity on account of morale booster of the employees. Further, post settlement, the Company will reduce interest burden drastically and will be optimistic about reducing of accumulated losses gradually.

13. Secured Borrowings from the below mentioned banks have been transferred / assigned to Invent Assets Securitization and Reconstruction Pvt Ltd (Financial Institution) together with all their rights, title and interest in the financial documents and any underlined security interest / pledged and / or guarantees in respect of such loans.

The Company has stopped making provision for interest on such borrowing from the date of transfer due to pending settlement with Invent Assets Securitization and Reconstruction Pvt Ltd and hence due to pending settlement, the company has taken last sanction letter as a base for classification of current / non-current liability and default of the said borrowings.

14. During the year, the Company has obtained technical valuation of their Capital work In Progress from the approved valuer and booked impairment loss of Rs.. 31,70,24,474/- to the statement of Profit and Loss and shown as an extraordinary items. Apart from this, the Company has paid the capital advances for the amount of Rs..9,41,22,080/- which are currently shown under Long term loans and advances to the suppliers for the supply of customized equipments based of our specific design and requirements. The machines are manufactured and ready for dispatch but company does not have further fund to pay balance amount and to lift the machines. However, the management is trying to recover such advances from the suppliers fully subject to provision of Rs.. 1,69,32,523/- made in the books of accounts.

15. The Company has not recognized deferred tax assets as per AS 22 issued by ICAI due to the management anticipating no sufficient future taxable Income to recover such Deferred Tax Asset in near future.

16. Certain Balance of Debtors, Creditors, Loans & Advances for Capital expenditures are non- moving / sticky since last 3 years. However in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

17. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

18. Balances of Secured and Unsecured borrowings, Sundry debtors, Creditors, Loans & advances and banks are subject to confirmation and reconciliation with respective accounts.

19. The Company has re-classified previous year figures to conform to this year''s classification. Previous year figures have been regrouped / rearranged, wherever necessary to make them comparable with those of current year.

---

Mar 31, 2015

1. Segment Reporting

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17 "Segment Reporting" . Further, the Company has its business within the geographical territory of India Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 "Segment Reporting"

2. During the year, the Company has accumulated losses and its net worth has been fully eroded. The Financial results indicates that the Company has a net loss during the current and previous year and the Company's current liabilities exceeded its current assets as at the current and previous year balance sheet date. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a "going concern". However, the financial results of the Company hsave been prepared on a going concern basis based on that the Company is actively negotiating with the lenders for one time settlement (OTS) and expecting the waiver of interest with the banks. As a result, not only the Company's net worth will improve but also improve productivity on account of morale booster of the employees.

3. Since last many years lenders keep on ensuring the sanction and disbursement of the term loan for our ongoing projects and every year revised projections were submitted. The bankers even after the sanction of the term loan have not disbursed fully and hence funds of Rs. 103,89,20,943/- is blocked in the such ongoing projects. Since there is no active development in the ongoing project due to non sanction of funds by lenders as well as no accrual from the operations, as of now the Company does not anticipate execution of such ongoing capital projects and hence have charged back expense of pre-operative expense, trial run expense and borrowing cost element for Rs. 47,48,71,471/- to the statement of profit and loss during the current year which was earlier capitalized and carried in Capital work In Progress of our ongoing projects. For the remaining balance carried as Capital work In Progress, the company has not carried out any Techno-economic assessment during the year ended 31 March 2015 for the valuations of its ongoing Capital Projects and hence identification of impairment loss and provision thereof, if any, has not been made. Considering the emphasis of the matter, company agreed to appoint an approved valuer to access the impairment of the assets. We are expecting a report from the valuer and decision will be taken with regard to impairment, if any, on such assets. Apart from this, the Company has paid the capital advances for the amount of Rs.25,26,09,551/- which are currently shown under Long term loans and advances to the suppliers for the supply of customized equipments based of our specific design and requirements. The machines are manufactured and ready for dispatch but company does not have further fund to pay balance amount and to lift the machines. However, the management is trying to recover such advances from the suppliers and also anticipating full recovery of the said advances.

4. The company has reversed the Deferred Tax Asset for the amount of Rs. 16,44,16,320/- and charged it to Statement of Profit and Loss during the Year ended March 31, 2015 due to Management anticipating no sufficient future taxable Income to recover such Deferred Tax Asset.

5. Union Bank of India (UBI) and State Bank of Hyderabad (SBH) have confirmed 'NIL' balance as on date in the accounts of company as their competent authority have approved to assign rights in respect of financial assets in favour of Invent Assets Securitization and Reconstruction Private Limited. However, management is of the view that in absence of agreement and non transfer of charge / title of their financial assets during the year, the debts from UBI and SBH is continued and considered to be shown under the head of dues from banks. Balances of UBI and SBH will be transferred to the financial institution when assignment / agreement will be executed and charge / title would be transferred and brought to records in the name of financial institution.

32. Certain Balance of Debtors, Creditors, Loans & Advances for Capital expenditures are non- moving / sticky since last 3 years. However in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

33. The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VA T collected by the Company becomes Income of the Company and accordingly credited to Statement of profit And Loss.

35 In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

36. Balances of Secured and Unsecured borrowings, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

40 The Company has re-classified previous year figures to conform to this year's classification. Previous year figures have been re- grouped / rearranged, wherever necessary to make them comparable with those of current year.

---

Mar 31, 2014

CORPORATE INFORMATION

The company is engaged in manufacturing Sponge Iron, Ferro Alloys, MS & SS Angle and power and the same are sold in the domestic market. Because of the Captive power generation, company has advantage of low power cost per unit of manufacturing. Company is generating 40 MW Power from waste Heat recovery Boiler & Fluidized Bed Combustion boiler with economic price. Power generated is used for captive consumption and surplus power is sold resulting profit.

BASIS OF PREPARATION OF FINANCIAL STATEMENT

The Financial Statements are prepared as per historical cost convention and in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the provisions of the Companies Act 1956, and the applicable Accounting Standards notified under the Companies(Accounting Standards) Rules,2006. All Incomes and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

1. SHARE CAPITAL

a) Terms/rights, preferences and restrictions attached to securities:

Equity shares

The company has one class of equity share having a par value of Rs. 10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of directors is subject to the approval of shareholders in the ensuing Annual general meeting, except in case of interim dividend. In the case of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

b) Terms of securities convertible into equity shares:

Convertible warrants

On February 3 2012,3,20,00,000 convertible warrants were issued for cash at Rs. 10/- each to strategic investors and to persons belonging to promoters and promoters group category agrregrating to Rs. 32,00,00,000 convertible into 3,20,00,000 no. of equity shares of face value of Rs. 10/- each, out of which the company has received amount equivalent to 25% of the total consideration per warrant. Accordingly company has received money to the extent of Rs. 8,00,00,000 and alloted 3,20,00,000 warrants of Rs.10/- each on February 3, 2012. The lock in requirements of above warrants and/or equity shares arising on conversion of warrants into equity shares be in accordance with the provisions of SEBI(ICDR) Regulations, 2009 [at the sole option of warrant holder(s) at any time within a period of 18 months from the date of allotment of warrants.]

The Company has fully utilised money received against issue of convertible warrant of 8,00,00,000 towards working capital requirements.

2. Secured Borrowings:

(a) Nature of security and terms of repayment for secured borrowings:

Term loan:

1) Term Loans are Secured by first charge on all the Immovable and Movable assets present & future ranking parri passu with charges created/to be created in favour of other institution/banks subject to prior charge on current assets in favour of the company''s bankers for working capital borrowings. Term loan of Rs. 50 cris secured by pledge of 1,07,56,989 shares of SAL Steel Limited hold by Shah Alloys Limited (restricted to new captive power project only).

2) Term loans are further secured by personal guarantees of (i) Shri Rajendrabhai V. Shah (ii) Smt. R.R. Shah (iii) Shri Jayesh V. Shah (iv) and Corporate Guarantee of M/s Shah Alloys Limited. (Amounting to Rs. 207,50,00,000/-) Term Loan is carrying rate of Interest(at present) from 14% to 16% p.a. repayable over a period of 6 years

(b) Period and amount of default as on the balance sheet date:

The company has made a default in repayment of Principal amount of Term Loan to the extent of Rs. 36,60,00,000/- as at the balance sheet date. The company has also defaulted in payment of interest on term loan to the extent of Rs. 22,91,24,406/-as at the balance sheet date. The period of default on repayment of principaland payment of interest is ranging for a period from 90 days to 547 days and 90 days to 455 days respectively.

Vehicle loan:

Vehicle loans from "banks" are secured by hypothecation of vehicles and are repayable over a period of 3 years carrying rate of interest 10 to 12% p.a. Vehicle loans from "financial institutions" are secured by hypothecation of vehicles and are repayable over a period of 3 years carrying rate of interest 10 to 12 %p.a.

Particulars

The company has defaulted in repayment of Inter corporate deposit to the extent of Rs. 10,00,00,000/-, Rs. 20,00,00,000/- and Rs. 20,00,00,000/- which was due for repayment in the Financial year 2011-12, 2012-13 and 2013-14 respectively. Consequently, the same is shown under Current Liabilities.

Nature of security provided for short term borrowings:

Cash Credit facilities are Secured by hypothecation of entire current assets of the company on parri passu basis with the consortium member banks & second charge on fixed assets of the company on parri passu basis with consortium member banks subject to first charge on parri passu basis with the Union bank of India and State bank of India for their respective Loans.

The Loans are further secured by personal guarantee of i) Shri Rajendrabhai V. Shah ii) Smt. R.R. Shah iii) Shri Jayesh .V. Shah and iv) Corporate guarantee of M/s Shah Alloys Limited (Amounting to Rs. 207,50,00,00)

Period and Amount of default as on the Balance sheet date:

The company has defaulted in payment of interest on working capital facilities to the extent of Rs. 11,71,25,768/- as at the balance sheet date. The period of default on payment of interest is ranging for a period from 1 day to 516 days. Moreover, the company has defaulted in honouring L/C payments to the extent of Rs. 36,34,09,044/-as at the balance sheet date.The period of defaultin honouring L/C payments is ranging for a period from 244 days to 418 days.

Loans and Advances from Related Parties:

The company has taken loan during the year from a related party as mentioned herewith: SAL Care Private Limited and SAL Hospital & Medical Institute (a division of SAL Care Private Limited) of Rs. 7,62,00,000 and repaid of Rs. 8,15,34,168 during the year. This party is covered under the register maintained under section 301 of the Companies Act, 1956.

3. Trade Payables

* The Company has not received information from the Suppliers regarding their status under The Micro, Small & Medium Enterprises Development Act, 2006. Hence, disclosures, if any relating to amounts unpaid as at the balance sheet date together with interest paid or payable as per the requirement under the said Act, have not been made.

4. Fixed Assets

Cost of Fixed Assets and pre-operative expenses, being technical matter, are capitalized or allocated to Capital work in progress on the basis of data certified by technical person & the Management.

Borrowing cost includes interest and other bank charges to the extent that they are regarded as an adjustment to interest costs which are directly related to the acquisition & construction of a qualifying asset.

5. Contigent liablities and commitments (to the extent not provided for): (Amount in Rs.) As at As at March 31, 2014 March 31, 2014

(A) Contigent liablities:

(i) Claims against the company not acknowledged as debts: With Government Authorities 31,35,45,426 31,35,45,426 Others

(ii) Guarantees:

Corporate guarantees given to banks for Shah Alloys Limited 80,00,00,000 80,00,00,000

Bank guarantee given 36,27,000 11,27,000

(III) Other money for which company is contigently liable:

Letter of credit 0 24,26,500

(B) Commitment:

Estimated amount of contracts, remaining to be executed on capital account and not provided for Rs. 22,04,08,637/- net of advance "(Previous Year: Rs. 22,83,57,801/-).

Commercial Tax Department has challenged by way of Tax Appeal before High Court, the order of Tribunal dated 27.12.2010 wherein judgment dated 15.09.2010 of Joint Commissioner of Commercial Tax (Legal) was quashed and decided that non cooking coal used in the manufacturing process for Sponge Iron as raw material and eligible for ITC under Section 11 (3)(b). The result of the appeal will decide whether company has to claim amount of ITC or refund ITC already taken. However, amount of contingent Liability cannot be ascertained.

6. Defined Benefit Plan:

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

I. Expected Employer''s Contribution for the financial year

On the basis of previous year''s trend company is expecting to contribute the same amount as in 2013-14 (Rs. 19,45,678/-) to the defined contribution plan.

However, for the defined benefit plan company is not liable to contribute any amount as the plans are unfunded.

The estimate of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

7. Segment reporting:

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17 "Segment Reporting". Further, the Company has its business within the geographical territory of India Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 "Segment Reporting".

8 The Company has applied for the Debt Restructuring to CDR Cell and flash report has been admitted by the competent authority. However, the detailed terms and conditions of the restructuring plan are not yet finalized.

9. Earnings per share:

Note: In computing diluted earnings per share, only potential equity shares that are dilutive and that either reduces earnings per share or increases loss per share are included.

10. Certain Balance of Debtors, Creditors, Loans & Advances for Capital expenditures are non- moving / sticky since last 3 years. However in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

11. The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VAT collected by the Company becomes Income of the Company and accordingly credited to Statement of profit And Loss.

12. In the opinion of the Board of Directors, the current assets, loans and advances are ap-proximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

13. Balances of Unsecured Loans, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

14. The Company has re-classified previous year figures to conform to this year''s classification. Previous year figures have been re-grouped / rearranged, wherever necessary to make them comparable with those of current year.

---

Mar 31, 2013

CORPORATE INFORMATION

The company is engaged in manufacturing Sponge Iron, Ferro Alloys, MS & SS Angle and power and the same are sold in the domestic market. Because of the Captive power generation, company has advantage of low power cost per unit of manufacturing. Company is generating 40 MW Power from waste Heat recovery Boiler & Fluidized Bed Combustion boiler with economic price. Power generated is used for captive consumption and surplus power is sold resulting profit.

1.2 BASIS OF PREPARATION OF FINANCIAL STATEMENT

The Financial Statements are prepared as per historical cost convention and in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the provisions of the Companies Act 1956, and the applicable Accounting Standards notified under the Companies(Accounting Standards) Rules,2006. All Incomes and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

2. Foreign currency exposure at the year end not hedged by derivative instruments:

a) The Company has entered into forward contracts to offset foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee. The counter parties to such forward contracts are banks. Consequent to the announcement issued by the Institute of Chartered Accountants of India on Accounting of Derivatives, details of derivatives contracts outstanding as on 31-03-2013 are as under :

3. Segment reporting :

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17 "Segment Reporting". Further, the Company has its business within the geographical territory of India Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 "Segment Reporting".

4. The Company has applied for the Debt Restructuring to CDR Cell and flash report has been admitted by the competent authority. The detailed terms and conditions of the restructuring plan are under process for the approval.

5. Related party disclosures :

(a) List of Related Parties and Relationships:

i. Concern where significant interest exists.

6. Certain Balance of Debtors, Creditors, Loans & Advances for Capital expenditures are non- moving / sticky since last 3 years. However in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

7. The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VAT collected by the Company becomes Income of the Company and accordingly credited to Statement of profit And Loss.

8. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

9. Balances of Unsecured Loans, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

10. The company had entered into a power purchase agreement with Shah Alloys Limited on February 21st 2006 which enunciates minimum guarantee and uninterrupted supply of power. In pursuance of this contract during the last financial year 2011-12, SAL Steel Limited had recognized income on account of short wheeling of power by Shah Alloys Limited amounting to Rs. 31,09,85,750/-. This recovery of short wheeling of power by Shah Alloys Limited is included in Sale of power.

11. The Company has re-classified previous year figures to conform to this year''s classification. Previous year figures have been re-grouped / rearranged, wherever necessary to make them comparable with those of current year.

---

Mar 31, 2012

1 1.1 CORPORATE INFORMATION :

The company is engaged in manufacturing Sponge Iron, Ferro Alloys, MS & SS Angle and power and the same are sold in the domestic market. Because of the Captive power generation, company has advantage of low power cost per unit of manufacturing. Company is also generating 40 MW Power from waste Heat recovery Boiler & Fluidized Bed Combustion boiler with economic price. Power generated is used for captive consumption and surplus power is sold resulting profit.

1.2 BASIS OF PREPARATION OF FINANCIAL STATEMENT:

The Financial Statements are prepared as per historical cost convention and in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the provisions of the Companies Act 1956, and the applicable Accounting Standards notified under the Companies(Accounting Standards) Rules,2006. All Incomes and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

Contingent liabilities and commitments (to the extent not provided for):

As at As at March 31,2012 March 31,2011

(A) Contingent liabilities:

(i) Claims against the company not acknowledged as debts:

With Government Authorities 26 35 60 433 3 65 63 595

Others 5 35 88 531 5 00 07 352

(ii) Guarantees:

Corporate guarantee given for Shah Alloys Limited 80 00 00 000 80 00 00 000

Note: The guarantee amount keeps on reducing to the extent SAL Steel Limited repays Inter corporate deposit to Shah Alloys Limited. The Guarantee ceases to exist upon repayment of entire amount of Inter corporate deposit to Shah Alloys Limited

Bank guarantee given 11 27 000 26 27 000

(iii) Other money for which company is contingently liable:

Letter of credit 7 59 70 000 4 93 75 000

(B) Commitment:

Estimated amount of contracts, remaining to be executed on capital account and not provided for Rs. 11,46,93,887 net of advance (Previous Year : Rs. 49,69,11,814).

Defined Benefit Plan:

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity

VIII Expected Employer's Contribution for the financial year

On the basis of previous year's trend company is expecting to contribute the same amount as in 2011-12 (Rs. 16,87,655/-) to the defined contribution plan.

However, for the defined benefit plan company is not liable to contribute any amount as the plans are unfunded.

The estimate of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

* Excise duty adjustment for stock represents the difference between excise duty on opening and closing stock of finished goods. ** Excise duty expense pertains to availment of re-credit of amounts disallowed by the excise department

2 Foreign currency exposure at the year end not hedged by derivative instruments:

a) The Company has entered into forward contracts to offset foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee. The counter parties to such forward contracts are banks. Consequent to the announcement issued by the Institute of Chartered Accountants of India on Accounting of Derivatives, details of derivatives contracts outstanding as on 31-03-2012 are as under:

3 Segment Reporting

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting issued by The Institute of Chartered Accountants of India. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17. Further, the Company has its business within the geographical territory of India Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 issued by the Institute of Chartered Accountants of India.

4 RELATED PARTY DISCLOSURES

(a) List of Related Parties and Relationships:

i. Concern where significant interest exists.

Name of the Concern Nature of Relationship

Shah Alloys limited Associate

SAL Care Private Limited Promoter Group company

SAL Corporation Private Limited Promoter Group company

ii. Key Management Personnel and Relatives.

1. Shri Rajendra V. Shah Chairman

2. Shri K.C.Thatoi Managing Director

3. Shri Sujal Shah Executive Director

5 Certain Balance of Debtors, Creditors, Loans & Advances for capital Expenditures are non- moving / sticky since last 3 years. However in view of management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

6 The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VAT collected by the Company becomes Income of the Company and accordingly credited to Statement of profit And Loss.

7 In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

8 Balances of Unsecured Loans, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

9 The company had entered into a power purchase agreement with Shah Alloys Limited on February 21st, 2006 which enunciates minimum guarantee and uninterrupted supply of power. In pursuance of this contract during the year, SAL Steel Limited has recognized income on account of short wheeling of power by Shah Alloys Limited amounting Rs. 31,09,85,750/- since the date of the agreement. This recovery of short wheeling of power by Shah Alloys Limited is included in Sale of power.

10 Till the year ended 31st March, 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31st March, 2012, Revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has re-classified previous year figures to conform to this year's classification. Previous year figures have been re-arranged and re-grouped, wherever necessary to make them comparable with those of current year as per Revised Schedule-VI.

---

Mar 31, 2011

1. Contingent Liabilities

i. Estimated amount of contracts remaining to be executed on capital account [net of advances] and not provided for Rs. 4969.12 Lacs [P.Y. 4338.04 Lacs].

ii. Contingent Liability not Provided for in respect of :-

[Rs. in Lacs]

Particulars As at As at 31-03-2011 31-03-2010

Letter of Credit 493.75 1223.69

Bank Guarantee Given 26.27 265.65

Corporate Guarantees Given to Banks for Shah Alloys Ltd. 8,000.00 8,000.00

Claim lodged by party not acknowledge by us 500.07 234.90

Disputed Value Added Tax Demand 365.63 -

2. Foreign currency exposure at the year end not hedged by derivative instruments.

a) The Company has not entered into any forward contracts to offset foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee.

3. Segment Reporting

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting issued by The Institute of Chartered Accountants of India. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stack holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17. Further, the Company has its business within the geographical territory of India Therefore, Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 issued by the Institute of Chartered Accountants of India.

4. Related Party Disclosures

Associates : Shah Alloys Ltd., Adarsh Foundation (Charitable Trust)

Key Management Personnel : Rajendra V. Shah, Dr. K. C Thatoi, Sujal A. Shah (KMP)

5. As informed to us, the Company has not received information from the Suppliers regarding their status under The Micro, Small & Medium Enterprises Development Act, 2006. Hence, disclosures, if any, relating to amounts unpaid as at the Balance Sheet date together with interest paid or payable as per the requirement under the said Act, have not been made.

6. As per Accounting Standard - 15 "Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are given below:

Defined Benefit Plan

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obliga- tion. The obligation for leave encashment is recognized in the same manner as gratuity.

vi. Actuarial assumptions

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company's policy for plan assets management.

7. Certain Balance of Debtors, Creditors, Loans & Advances for capital Expenditures are non- moving / sticky since last 3 years. However in view of management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

8. Expenses have been capitalized and transferred to pre-operative expenses on the basis of bifurcation made by the management. This being technical matter, auditors have accepted the same as correct.

9. The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VAT collected by the Company becomes Income of the Company and accordingly credited to Profit and Loss Account.

10. In the opinion of the Board of Directors, the current assets, loans and advances are approxi- mately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

11. Inventories are as taken, valued and certified by the Management.

12. Balances of Unsecured Loans, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

13. Previous year's figures have been re-grouped / rearranged wherever necessary so as to confirm to current year's groupings.

---

Mar 31, 2010

1. CONTINGENT LIABILITIES

i. Estimated amount of contracts remaining to be executed on capital account [net of advances] and not provided for Rs. 4338.04 Lacs [P.Y. 4,349.28 Lacs].

ii. Contingent Liability not Provided for in respect of :-

[Rs. In lacs]

Particulars Amount Amount 2009-2010 2008-2009

Inland Letter of Credit 1223.69 961.67

Bank Guarantee Given 265.65 661.15

Corporate Guarantees Given to Banks for Shah Alloys Ltd. 8,000.00 8,000.00

Claim lodged by party not acknowledge by us 234.90 0.00

2. Foreign currency exposure at the year end not hedged by derivative instruments:

a) The Company has not entered into any forward contracts to offset foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee.

3. Segment Reporting

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider " Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting issued by The Institute of Chartered Accountants of India. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stack holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17. Further, the Company has its business within the geographical territory of India. Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 issued by the Institute of Chartered Accountants of India.

4. RELATED PARTY DISCLOSURES

Associates : Shah Alloys Ltd., Adarsh Foundation (Charitable Trust),

Key Management Personnel : Rajendra V. Shah, Rajinder Arora, Dr. K. C Thatoi, Sujal Shah

5. As informed to us, the Company has not received information from the Suppliers regarding their status under The Micro, Small & Medium Enterprises Development Act, 2006. Hence, disclo- sures, if any, relating to amounts unpaid as at the Balance Sheet date together with interest paid or payable as per the requirement under the said Act, have not been made.

6. As per Accounting Standard 15 "Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are given below :

Defined Benefit Plan:

The employees gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

7. Certain Balance of Debtors, Creditors, Loans & Advances for capital expenditure are non- moving / sticky since last 3 years. However in view of management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

8. The Company was in process of implementing the integrated steel project. The company had in- curred certain capital expenditure, which was reflected as Capital Work In Progress. However during the previous year, the company had decided to use certain stores, spares and consumables which were earlier forming part of Capital Work In Progress for normal production purpose. Hence the said stores, spares and consumables values at Rs 9.35 Cr had been transferred from the Capital Work In Progress Account to stores, spares and consumable, inventory and the same had been accordingly reflected in the closing balance of inventory as stores and spares as on 31.03.2009

9. Expenses have been capitalized and transferred to pre-operative expenses on the basis of bifurca- tion made by the management. This being technical matter, auditors have accepted the same as correct.

10. The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VAT collected by the Company becomes Income of the Company and accord- ingly credited to Profit and Loss Account.

11. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

12. Inventories are as taken, valued and certified by a Director.

13. Balances of Unsecured Loans, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

14. Previous years figures have been re-grouped / rearranged wherever necessary so as to confirm to current years groupings.

15. Information required in terms of part IV to Schedule VI to the Companies Act, 1956 is attached.