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Notes to Accounts of Balasore Alloys Ltd.

Mar 31, 2015

1. Corporate information

Balasore Alloys Limited (the Company) is a public company domiciled in India and incorporated in 1984 under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and The Calcutta Stock Exchange Limited. The Company have its registered office and manufacturing facility at Balasore, Odisha

The Company is primarily engaged in raising of Chrome Ore from its captive mines located in Odisha and manufacturing and selling of Ferro Chrome of various grades.

2. Terms/ rights attached to equity shares

(I) The company has only one class of equity shares having par value of Rs 5 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

(Ii) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.

8.1 Working capital loans from banks refer above are secured by first charge over current assets and by second charge over fixed assets of the Company. The loans are also secured by pledge of a part of shareholding of the promoter group [including shares held by Mr Pramod Mittal (a director) and Mr V K Mittal (ceased to be director w.e.f 28th July, 2010)]. The above loans are further guaranteed by personnel gurantees issued/ to be issued byMr Pramod Mittal and Mr V K Mittal and by corporate guarantee of Shakti Chrome Limited, Ispat Minerals Limited & Balasore Energy Limited. All the mortgages and charges created in favour of the Banks for Working Capital loans rank pari passu inter se.

3. Contingent liabilities not provided for in respect of: (Rs in Lacs)

Particulars As at 31st As at 31st March, 2015 March, 2014

a) Sales tax matters under appeal 479.76 36.86 {Amount paid under appeal Rs 65.31 lacs (Rs.21.31 lacs)}*

b) Entry tax matters 219.46 117.57 {Amount paid under appeal Rs 34.88 lacs (Rs. 18.71 lacs)}*

c) Excise / Service tax matters 1228.43 1200.79 {Amount paid under appeal Rs 23.14 lacs (Rs. 10.83 lacs)}*

d) Un-expired Bank Guarantees and Letters of Credit 863.01 636.89

e) Bills discounted with Banks 4,035.66 5,447.53

* In respect of above cases based on favorable decisions in similar cases the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in the financial statements.

4. Capital and other commitment:

Estimated amount of Capital commitments (Net of Advances) Rs 4,431.76 lacs (Rs 1684.81 lacs)

5. The Income-Tax Assessments of the Company have been completed up to Assessment Year 2012-13. The disputed demand for the assessment year 2012-13 is Rs.31.83 lacs. Based on the decisions of the Appellate authorities and the interpretations of other relevant provisions, the demand raised is likely to be either deleted or substantially reduced and accordingly no provision is considered necessary.

6. Deputy Director of Mines (DDM), Jajpur, Odisha issued a demand notice for Rs. 487.80 lacs towards payment of additional Royalty, as pointed out by Accountant General, for adopting wrong method of calculation of royalty by DDM for period December, 2009 to January, 2011. The company holds the view that the payment of royalty is correctly calculated and made. The Company has filed revision petition before revisional authority under section 30 of the MMDR Act, Challenging demand and the demand has been stayed by the authority. Based on the advise of external legal counsel, the company believes that demand being legally unjustifiable, company does not expect any liability in above matter.

7. Demand notices has been issued by Deputy Director of Mines, Jajpur road, Odisha amounting to Rs. 35,876.97 Lacs for the excess extraction over the quantity permitted under the mining plan/ scheme, environment clearance or consent to operate from SPCB, Odisha, during the period 2000-01 to 2007-08. The demand notices has been issued under Section 21(5) of the Mines & Minerals (Development and Regulations) Act (MMDR Act). However, the MMDR Act specifies that demand can be raised only when the land is occupied without lawful authority. The Company is of the view that Section 21(5) of the MMDR Act is not applicable as the mining is done under the approval of the State Government and accordingly the Company has filed revision application and has been granted the Stay by Revisionary authority, based on the advice of external legal counsel, the Company believes that demand being legally unjustifiable; the Company does not expect any liability in above matter.

8. Demand notice has been issued by State Trading Corporation of India (STC) amounting to Rs. 9,277 lacs towards the recovery of its alleged dues from the Company. The Company has not accepted the above liability and challenged the demand notice in the court. Further the Company has invoked the Arbitration clause mentioned in the agreement entered with STC. Presently, the matter is subjudice and pending before the court for final disposal. Out of abundant caution and prudence Company has accounted for but without admitting an amount of Rs.5,855 lacs towards the disputed liability as on 31st March 2015, based on the information provided for STC in public domain. Pending outcome of the court decision and based on discussion with external legal counsel, no further provision has been made towards above demand.

9. North Eastern Electricity Supply Company of Orissa Limited (NESCO) has revoked the waiver of dues granted under a settlement in an earlier year and raised total claim for Rs 20,099.05 lacs (including delayed payment surcharge). The matter of revocation of settlement is pending with Honourable High Court of Orissa. The Company has paid & provided Rs 3,400 lacs in earlier years towards such claims and also continues to receive un-interrupted power supply from NESCO. Pending outcome of the court decision and based on discussion with Company's legal counsel, no further provision has been made towards above demand.

10. Related Party Disclosures

As per accounting standard 18, the disclosures of transactions with the related parties are given below:

List of related parties where control exists and related parties with whom transactions have taken place and relationships:

Subsidiary Company

Milton Holdings Limited Balasore Metals Pte. Limited

Associate Company

Balasore Energy Limited

Key Management Personnel and their relative

Mr. Pramod Mittal (Chairman) Mr. V K Mittal (Brother of Chairman) Mr. Anil Sureka (Managing Director) Mr R K Parakh (Whole-time Director) Mr Anshuman Bhanja ( Whole-time Director wef 7th Nov'14)

Enterprises over which Key Management Personnel and their relatives are able to exercise significant influence*

Navoday Consultant Limited Navdisha Real Estate Private Limited Shakti Chrome Limited Gontermann-Peipers (India) Limited Dankuni Investment Limited Sri Mahalaxmi Solar Energy Pvt. Ltd Jaltarang Vanijya Pvt Ltd Ispat Profiles India Ltd

Disclosure in Respect of Material Related Party Transactions during the year:

1. Loan given to Ispat Profiles India Ltd. Rs: 1,917.00 lacs (Previous year Rs: Nil )

2. Repayment of Advances towards Promoter Contribution include Sri Mahalaxmi Solar Energy Pvt. Limited Rs:10,169.00 Lacs (Previous Year Rs: Nil) and Jal tarang Vanijya Pvt Limited Rs:9,236 Lacs (Previous Year Rs: Nil).

3. Sale of Finished Goods Include sales made to Gontermann-Peipers (India) Limited Rs: 88.50 lacs (Previous Year Rs: 140.85 Lacs).

4. Interest received on Investments in debentures & interest bearing advances & loans include Shakti Chrome Limited Rs: 2.11 Lacs (Previous Year Rs: 82.80 lacs) & Ispat profiles India limited Rs 14.97 Lacs (Previous year Rs: Nil).

5. Rent includes Navdisha Real Estate Private Limited Rs: 86.40 lacs (Previous Year Rs: 76.80 lacs).

6. Managerial Remuneration includes Mr. Anil Sureka Rs: 143.89 lacs (Previous Year Rs: 132.65 lacs), Mr. R K Parakh Rs. 56.82 lacs (Previous Year Rs. 40.09 lacs) and Mr.Ansuman Bhanja Rs:20.57 Lacs ( Previous Year Rs: Nil )

7. Advance received back from Navoday Consultant Limited Rs: 5.00 Lacs ( Previous year Rs :Nil )

8. Subscription of Share capital (Including Premium) includes subscription by Dankuni investment limited Rs: 528 lacs (Previous Year Nil) & Navodya consultants Ltd Rs: 528 Lacs (Previous Year Nil) .

9. Guarantees to be obtained include Mr. Pramod Mittal Rs: 9,897.64 lacs (Previous Year Rs: 12,263.28 lacs) and Mr. V K Mittal Rs: 9,897.64 (Previous Year Rs: 12,263.28 lacs).

10. Investments includes Milton Holdings Limited - Rs 2,194.83 lacs ( Previous Year Rs. 2,194.83 lacs),Balasore Energy Limited -Rs.1.70 lacs ( Previous Year Rs. 1.70 lacs ) and Shakti Chrome Limited Rs. Nil ( Previous Year Rs. 690 lacs)

11. Advance including (Interest Receivable) Shakti Chrome Limited Rs: Nil (Previous Year Rs: 24.37 lacs), Navoday Consultants Limited Rs: Nil (Previous Year Rs: 5.00 Lacs)

12. Long Term Borrowings- Advances towards Promoter Contribution include Sri Mahalaxmi Solar Energy Pvt. Limited Rs. Nil (PreviousYear Rs: 10,169 lacs) and Jaltarang Vanijya Pvt Limited Rs: Nil (Previous Year Rs: 9,236 lacs).

13. Deposits include Navdisha Real Estate Private Limited Rs.711.50 lacs (Previous Year Rs. 711.50 lacs).

14. Trade & other Payables include Mr.Anil Sureka Rs. Nil (Previous Year Rs 0.15 lacs) and Navdisha Real estate Pvt. Ltd. 15.73 Lacs (Previous year Rs. 7.36 lacs).

15. Advance from customers includes Gontermann-Peipers (India) Limited Rs. 52.23 Lacs (Previous year Rs. 141.65 Lacs)

16. Money received against share warrants includes Dankuni Investment Ltd Rs. Nil ( Previous Year Rs. 132 Lacs ) & Navoday Consultants Limited Rs Nil ( Previous Year Rs . 132 Lacs )

17. Loans Including Interest receivable represents Ispat Profiles India Limited Rs . 1,931.97 Lacs (Previous Year Rs. Nil )

11. Details of Loans given, Investment made and Guarantee given covered u/s 186 (4) of the Companies Act, 2013:

I) Loans given by the company to body corporate as at 31st March, 2015 (Refer Note No. 13). All the said loans and advances are given for business purposes.

12. Investments made by the company as at 31st March, 2015 (Refer Note No. 12)

13. During the current period, lenders have computed the recompense liability of Rs. 6,275.72 Lacs for the period from 1st April, 2004 till 30th Nov, 2014, as approved by Corporate Debt restructuring (CDR) Empowered Group (EG).Based on such approvals, during the year ended, provision of Rs. 4,367.31 Lacs has been made towards the balance recompense payable for the period upto 31st March, 2014 which has been shown as exceptional item. Subsequently, company has issued Redeemable Non-Convertible debentures against the recompense payable to its lenders aggregating to Rs. 4,685.72 Lacs and balance amount of Rs. 1,590 Lacs was paid provided from time to time.

Further CDR EG in its meeting dated 26th, March 2015 has given direction that company stands exited from CDR system.

14. There were no foreign currency remittances on account of dividend during the year.

15. Previous year's figures including those given in brackets have been regrouped / rearranged where necessary to conform to this year's classification.


Mar 31, 2014

1. Corporate information

Balasore Alloys Limited (the Company) is a public company domiciled in India and incorporated in 1984 under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange of India and The Calcutta Stock Exchange Limited. The Company have its registered office and manufacturing facility at Balasore, Odisha

The Company is primarily engaged in raising of Chrome Ore and Manganese Ore from its captive mines located in Odisha and Madhya Pradesh and manufacturing and selling of Ferro Alloys of various grades.

2. Contingent liabilities not provided for in respect of: (Rs in Lacs)

Particulars As at 31st As at 31st March, 2014 March, 2013

a) Sales tax matters under appeal 36.86 108.94 {Amount paid under appeal Rs 21.31 lacs (Rs. 106.71 lacs)}*

b) Entry tax matters 117.57 200.68 {Amount paid under appeal Rs 18.71 lacs (Rs. 23.98 lacs)}*

c) Excise / Service tax matters 1200.79 1384.42 {Amount paid under appeal Rs 10.83 lacs (Rs. 2.30 lacs)}*

d) Un-expired Bank Guarantees and Letters of Credit 636.89 968.59

e) Bills discounted with Banks 5,447.53 5,049.71

* In respect of above cases based on favorable decisions in similar cases/legal opinions taken by the Company/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in the financial statements.

3. Capital and other commitment:

Estimated amount of Capital commitments (net of advances) Rs 1684.81 lacs (Rs 1573.46 lacs)

4. The income tax assessment of the company have been completed up to Assessment year 2011-12. The disputed demand up to the said Assessment year is Rs. 2,586.25 lacs (Amount Paid under appeal Rs. 225 Lacs). Based on the decisions of the appellate authorities and the interpretations of other relevant provisions, the company has been advised that the demand is likely to be either quashed or substantially reduced and accordingly no provision has been made.

5. The Company had filed petitions against the orders of Dy. Director Mines, Jajpur demanding Rs. 487.80 lacs towards payment of additional Royalty pointed out by Accountant General (A.G) audit for adopting wrong method of calculation of royalty by them for period December, 2009 to January, 2011. The company holds the view that the payment of royalty is correctly made based on the actual quantity of chrome Ore extracted from the mining area. In view of above demand being legally unjustifiable, the Company does not expect any liability in above matter and hence not provided for.

6. Gratuity and other post retirement benefit plans The Company has a defined benefit gratuity plan. 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. The scheme is funded with Life Insurance Corporation of India in form of qualifying insurance policy.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of earned leave for encashment. This is an unfunded plan.

The following tables summaries the components of net expense recognised in the statement of profit and loss and balance sheet for the respective plans.

7. North Eastern Electricity Supply Company of Orissa Limited (NESCO) has revoked the waiver of dues granted under a settlement in an earlier year and disputed on take or pay benefit claimed in year 2012-13 and raised total claim for Rs 20,843.14 lacs (including delayed payment surcharge). The matter of revocation of settlement is pending with Honourable High Court of Orissa and that of demand towards take or pay benefit before Electricity Appellate Tribunal, New Delhi. The Company has paid & provided Rs 3,400 lacs towards such claims and also continues to receive un-interrupted power supply from NESCO. Pending outcome of the court/tribunal decision and based on discussion with Company''s legal counsel, no further provision has been made towards above demand.

8. During the year 2011-12, the lender''s have exercised their right to recompense under CDR Scheme sanctioned in earlier years and demanded Rs 3,219.95 lacs for the sacrifice made up to 31st March, 2007 towards which Rs 536 lacs was paid & provided as on 31st March, 2014. Further, the recompense amount for the period from 1st April, 2007 to till date has not been worked out. The management has approached its lenders to determine the final liability towards such recompense amount including liabilities pending which no liability has been provided for.

9. Segment Information

(a) Primary Segments:

Based on the synergies, risks and return associated with business operations and in terms of Accounting Standard-17, the Company is mainly engaged in the Manufacturing/Mining of Ferro alloys. All activity of the company revolves around this main business. As such, there are no separate reportable segments as per the Accounting Standard 17 (Segment Reporting) notified by Companies (Accounting Standard) Rules, 2006.

10. Derivative Instruments & Un hedged foreign currency Exposure :

(i) For Hedging of Foreign Trade Receivable :

Nominal amounts of Forward contract entered into by the company and outstanding as on 31st March 2014 amounting to Rs. 8987.25 lacs (Rs. 14176.01 Lacs)

(ii) Foreign currency exposure that are not hedged by derivative instruments are as under : -

11. Related Party Disclosures

As per accounting standard 18, the disclosures of transactions with the related parties are given below:

List of related parties where control exists and related parties with whom transactions have taken place and relationships:

Subsidiary Company : Milton Holdings Limited

Balasore Metals Pte. Limited Associate Company : Balasore Energy Limited

Key Management Personnel : Mr. Pramod Kumar Mittal (Chairman)

and their relative Mr. V K Mittal (Brother of Chairman)

Mr. Anil Sureka (Managing Director) Mr R K Parakh (Whole-time Director) Mr. B. N. Panda (Whole-time Director) (ceased w.e.f. 06.04.2013)

Enterprises over which Key : Navoday Consultants Limited

Management Personnel Navdisha Real Estate Private Limited and their relatives are able to Shakti Chrome Limited exercise significant influence* Gontermann-Peipers (India) Limited

Dankuni Investment Limited

Sri Mahalaxmi Solar Energy Pvt. Ltd

Jaltarang Vanijya Pvt Ltd

Disclosure in Respect of Material Related Party Transactions during the year:

1. Purchase of Fixed Assets include from Shakti Chrome Limited - Rs. Nil (Previous year Rs. 800.5 lacs)

2. Money Received against Share Warrants include Dankuni Investment Limited Rs. Nil (Previous Year Rs. 132 lacs) and Navodya Consultants Limited Rs. Nil (Previous Year Rs. 132 lacs).

3. Long Term Borrowings- Advances towards Promoter Contribution include Sri Mahalaxmi Solar Energy Pvt. Limited Rs .Nil (Previous Year Rs. 10,169 lacs) and Jal tarang Vanijya Pvt Limited Rs. Nil (Previous Year Rs. 9,236 lacs).

4. Sale of Finished Goods Include sales made to Gontermann-Peipers (India) Limited Rs. 140.85 lacs (Previous Year Rs. 84.96 Lacs).

5. Interest received on Investments in debentures & interest bearing advances include Shakti Chrome Limited Rs. 82.80 lacs (Previous Year Rs.82.80 lacs).

6. Raw Material purchased includes Shakti Chrome Limited Rs. Nil (Previous Year Rs. 405.61 lacs).

7. Inventory purchased include Shakti Chrome Limited Rs. Nil (Previous Year Rs. 102.15 Lacs).

8. Processing Charges paid include Shakti Chrome Limited Rs. Nil (Previous Year Rs.33.17 lacs).

9. Lease Rent Paid includes Shakti Chrome Limited Rs. Nil (Previous Year Rs. 8.20 Lacs).

10. Rent includes Navdisha Real Estate Private Limited Rs. 76.80 lacs (Previous Year Rs. 80.90 lacs).

11 . Managerial Remuneration includes Mr. Anil Sureka Rs. 132.65 lacs (Previous Year Rs. 163.35 lacs), Mr. B N Panda Rs. 8.73 lacs (Previous Year Rs. 57.01 lacs) and Mr. R K Parakh Rs. 40.09 lacs (Previous Year Rs. 40.20 lacs).

12. Guarantees Obtained/ to be obtained include Mr. Pramod Mittal Rs. 7,917.20 lacs (Previous Year Rs. 9,500.04 lacs) and Mr. V K Mittal Rs. 7,917.20 (Previous Year Rs. 9,500.04 lacs).

13. Investments includes Milton Holdings Limited - Rs 2,194.83 lacs ( Previous Year 2194.83 lacs), and Shakti Chrome Limited Rs. 690 lacs( Previous Year Rs. 690 lacs)

14. Trade Receivables include Gontermann-Peipers (India) Limited Rs. Nil (Previous Year Rs. 18.85 lacs).

15. Advance including (Interest Receivable) Shakti Chrome Limited Rs. 29.37 lacs (Previous Year Rs. 99.65 lacs), Navoday Consultants Limited Rs. 5.00 lacs (Previous Year Rs. Nil) and Gontermann-Peipers (India) Limited Rs. Nil (Previous Year Rs. 6.25 lacs).

16. Long Term Borrowings- Advances towards Promoter Contribution include Sri Mahalaxmi Solar Energy Pvt. Limited Rs. 10,169 lacs (Previous Year Rs. 10,169 lacs) and Jaltarang Vanijya Pvt Limited Rs. 9,236 lacs (Previous Year Rs. 9,236 lacs).

17. Deposits include Navdisha Real Estate Private Limited Rs.711.50 lacs (Previous Year Rs. 285 lacs).

18. Trade & other Payables include Mr. Anil Sureka Rs. 0.15 lacs (Previous Year Rs.5.07 lacs), Mr. B N Panda Rs. Nil (Previous Year Rs. 0.27 lacs) Navdisha Real Estate Pvt. Ltd. 7.36 Lacs (Previous year Rs. Nil) and Mr. R K Parakh Rs. Nil (Previous Year Rs. 2.97 lacs).

19. Advance from customers includes Gontermann-Peipers (India) Limited Rs. 141.65 Lacs (Previous year Rs. Nil )

20. Money Received against Share Warrants include Dankuni Investment Limited Rs.132 lacs (Previous Year Rs. 132 lacs) and Navodya Consultants Limited Rs. 132 Lacs (Previous Year Rs. 132 lacs).

21. Creditors for Fixed Assets include Shakti Chrome Limited Rs. Nil (Previous Year Rs. 215.20 lacs ).

22. There were no foreign currency remittances on account of dividend during the year.

23. Previous year''s figures including those given in brackets have been regrouped / rearranged where necessary to conform to this year''s classification. Expenses incurred in respect of Mines, Briquetting & Chrome Ore Beneficiation (COB) operations amounting to Rs. 684.97 lacs during the previous financial year 2012-13 have been regrouped from raw material consumption and included in respective head of expenses in accordance with current year presentation.


Mar 31, 2013

1. Corporate information

Balasore Alloys Limited (the Company) is a public company domiciled in India and incorporated in 1984 under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange of India and The Calcutta Stock Exchange Limited. The Company have its registered office and manufacturing facility at Balasore, Odisha

The Company is primarily engaged in raising of Chrome Ore and Manganese Ore from its captive mines located in Odisha and Madhya Pradesh and manufacturing and selling of Ferro Alloys of various grades.

2. Capital and other commitment:

Estimated amount of Capital commitments (net of advances) Rs 1573.46 lacs (Rs 4,598.79 lacs).

3. The income tax assessment of the company have been completed up to Assessment year 2011-12. The disputed demand outstanding up to the said Assessment year is Rs. 3,498.78 lacs. Based on the decisions of the appellate authorities and the interpretations of other relevant provisions, the company has been advised that the demand is likely to be either quashed or substantially reduced and accordingly no provision has been made.

4. Gratuity and other post retirement benefit plans

The Company has a defined benefit gratuity plan. 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. The scheme is funded with Life

Insurance Corporation of India in form of qualifying insurance policy. The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of earned leave for encashment. This is an unfunded plan. The following tables summaries the components of net expense recognised in the statement of profit and loss and balance sheet for the respective plans.

5. North Eastern Electricity Supply Company of Orissa Limited (NESCO) has revoked the waiver of dues granted under a settlement in an earlier year and disputed on take or pay benefit claimed during the year and raised total claim for Rs 18,927.66 lacs (including delayed payment surcharge). The Company is under discussion with NESCO and has also referred the matter to Honourable High Court of Orissa & Appellate Tribunal, New Delhi. The Company has paid & provided Rs 3,400 lacs towards such claims and also continues to receive un-interrupted power supply from NESCO. Pending outcome of the court case/discussion and based on discussion with Company''s legal counsel, no provision has been made towards above demand.

6. During the previous year 2011-12, the lender''s have exercised their right to recompense under CDR Scheme sanctioned in earlier years and demanded Rs 3,219.95 lacs for the sacrifice made up to 31st March, 2007 towards which Rs 452 lacs was paid & provided. Further, the recompense amount for the period from 1st April, 2007 to till date has not been worked out and presently it is unascertainable. The management has approached its lenders to determine the final liability towards such recompense amount including liabilities for the period from 1st April, 2007 to till date, which is unascertainable, pending which no liability has been provided for.

7. Segment Information

(a) Primary Segments:

Based on the synergies, risks and return associated with business operations and in terms of Accounting Standard-17, the Company is mainly engaged in the Manufacturing/Mining of Ferro alloys. All activity of the company revolves around this main business. As such, there are no separate reportable segments as per the Accounting Standard 17 (Segment Reporting) notified by Companies (Accounting Standard) Rules, 2006.

The Company has common fixed assets in India for producing goods for domestic and overseas markets. Hence, separate figures for fixed assets / additions to fixed assets cannot be furnished. The year-end balance of overseas trade receivables is Rs 242.35 lacs (Rs 77.09 lacs).

8. Confirmation certificates in respect of loans given aggregating to Rs 500 Lacs (Rs. 962.00 Lacs) to certain parties as well as interest receivable thereon amounting to Rs 366.98 Lacs (Rs. 543.13 Lacs) are still awaited from the respective parties. Based on present status of negotiation, all these loans and interest receivable are considered good of recovery by the management.

9. During the year, the company has migrated to new ERP system i.e SAP, for which the Company has changed the method of valuation of inventory from Weighted Average to Real time Moving weighted average. Had such change not been made the value of the inventory as at the year end and the profit for the year would be higher by Rs. 77.74 Lacs.

10. Previous year''s figures including those given in brackets have been regrouped / rearranged where necessary to conform to this year''s classification.


Mar 31, 2012

1. Corporate information

Balasore Alloys Limited (the Company) is a public company domiciled in India and incorporated in 1984 under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange of India and The Calcutta Stock Exchange Limited. The Company have its registered office and manufacturing facility at Balasore, Odisha

The Company is primarily engaged in raising of Chrome Ore and Manganese Ore from its captive mines located in Odisha and Madhya Pradesh and manufacturing and selling of Ferro Alloys of various grades. The Company is also engaged in trading business of various allied products like Coke, Chrome Ore Lumpy etc.

(a) Terms/ rights attached to equity shares

(i) The company has only one class of equity shares having par value of Rs 5 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

(ii) The amount of per share dividend recognized as distribution to equity shareholders is Rs 0.50 per share (Rs 0.50 per share).

(iii) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

(i) Term loans and Funded interest term loans are secured by a first charge over Plant & Machinery and other fixed assets (including factory land and building) and by way of second charge over current assets of the Company. The loans are also secured by pledge of a part of shareholding of the promoter group [including shares held by Mr Pramod Kumar Mittal (a director) and Mr V K Mittal (ceased to be director w.e.f 28th July, 2010)]. The above loans are further guaranteed by Mr Pramod Kumar Mittal and Mr V K Mittal (ceased to be director w.e.f 28th July, 2010) and by corporate guarantee of Shakti Chrome Limited & Ispat Minerals Limited. All the mortgages and charges created in favour of the Banks for Term Loan and Working Capital Facilities rank pari passu inter se.

(ii) Deferred Payment Credits are secured against hypothecation of Vehicles purchased against such loans.

As per the requirement of Accounting Standard - 29, the management has estimated future expenses on site restoration at mines on best judgment basis and due provision thereof has been made in the accounts. There is no movement in the aforesaid provision in current year and previous year as compared to corresponding previous year.

Working capital facilities are secured by first charge over current assets and by second charge over fixed assets of the Company. The loans are also secured by pledge of a part of shareholding of the promoter group [including shares held by Mr Pramod Kumar Mittal (a director) and Mr V K Mittal (ceased to be director w.e.f. 28th July, 2010)]. The above loans are further guaranteed by Mr Pramod Kumar Mittal and Mr V K Mittal and by corporate guarantee of Shakti Chrome Limited & Ispat Minerals Limited. All the mortgages and charges created in favour of the Banks for Term Loan and Working Capital Facilities rank pari passu inter se.

2. Contingent liabilities not provided for in respect of :

(Rs.in Lacs)

Particulars As at 31st As at 31st March 2012 March 2011

a) Sales tax matters under appeal 98.06 169.41 {Amount paid under appeal Rs 103.94 Lacs (Rs. 204.15 Lacs)}*

b) Entry tax matters 114.11 - {Amount paid under appeal Rs 14.67 Lacs (Rs. Nil)}*

c) Excise / Service tax matters 1,221.31 - {Amount paid under appeal Rs 2.30 Lacs (Rs. Nil)}

d) Un-expired Bank Guarantees and Letters of Credit 751.97 606.67

e) Bills discounted with Banks 5,523.54 6,769.52

f) Guarantee given by way of pledge of certain Investments as security. [Refer Note No. 12(d)] 57.03 101.47

g) Liabilities on account of dues under Orissa Rural Infrastructure and Socio Economic Development Act, 2004 Amount Unascertainable

* In respect of above cases based on favourable decisions in similar cases/legal opinions taken by the Company/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in the financial statements.

3. Capital and other commitment:

Estimated amount of Capital commitments (net of advances) Rs 4,598.79 Lacs (Rs 4,735.03 Lacs)

4. Gratuity and other post retirement benefit plans

The Company has a defined benefit gratuity plan. 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. The scheme is funded with Life Insurance Corporation of India in form of qualifying insurance policy.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of earned leave for encashment. This is an unfunded plan.

The following tables summaries the components of net expense recognised in the statement of profit and loss and balance sheet for the respective plans.

(h) The estimate of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employee market.

(i) The Company expects to contribute Rs. 100 Lacs (Rs 60 Lacs) to gratuity fund in the year 2012-2013.

5. North Eastern Electricity Supply Company of Orissa Limited (NESCO) has revoked the waiver of dues granted under a settlement in an earlier year and raised claim for Rs 16,418.28 Lacs (including delayed payment surcharge). The Company is under discussion with NESCO and has also referred the matter to Hon'ble High Court of Orissa after receipt of disconnection notice from NESCO. The Company has paid Rs 1,400 Lacs towards such claims which has been shown as advance and also continues to receive un-interrupted power supply from NESCO. Pending outcome of the court case/discussion and based on discussion with Company's legal counsel, no provision has been made towards above demand.

6. The Company has incurred capital expenditure (including capital advances) on various projects and made investments, in excess of the normal capex approved under Corporate Debt Restructuring (CDR) Scheme, which are pending approval of the monitoring committee of the lenders in terms of the Financial Restructuring Scheme as approved by the CDR Empowered Group in earlier years.

7. During the year, the lender's have exercised their right to recompense under CDR Scheme sanctioned in earlier years and demanded Rs 3020 Lacs for the sacrifice made upto 31st March, 2007 towards which Rs 252 Lacs has been paid. The recompense amount for the period from 1st April, 2007 to till date has not been worked out and presently it is unascertainable. The management has approached its lenders to determine the final liability towards such recompense amount including liabilities for the period from 1st April, 2007 to till date, which is unascertainable, pending which no liability has been provided for.

8. Segment Information Business Segments:

Based on the synergies, risks and return associated with business operations and in terms of Accounting Standard-17, the Company is engaged in following business segments:

a) Manufacturing/Mining - Consists of mining and manufacturing of Silicon & Ferro alloys.

b) Trading Consists of trading of Coke, Chrome Ore Lumpy etc.

Geographical Segments:

The Company's secondary geographical segment has been identified based on location of the customers and are demarcated into its Indian and Overseas Operations.

The Company has common fixed assets in India for producing goods for domestic and overseas markets. Hence, separate figures for fixed assets / additions to fixed assets cannot be furnished. The year-end balance of overseas trade receivables is Rs 77.09 Lacs (Rs 172.25 Lacs).

9. Confirmation certificates in respect of loans given aggregating to Rs 962.00 Lacs to certain parties as well as interest receivable thereon amounting to Rs 543.13 Lacs are still awaited from the respective parties. Based on present status of negotiation, all these loans and interest receivable are considered good of recovery by the management.

10. Previous year's figures including those given in brackets have been regrouped / rearranged where necessary to conform to this year's classification.


Mar 31, 2011

NATURE OF OPERATIONS:

Balasore Alloys Limited ("the Company"), having its manufacturing facility at Balasore, Odisha, is primarily engaged in raising of Chrome Ore and Manganese Ore from its captive mines located in Odisha and Madhya Pradesh and manufacturing and selling of Ferro Alloys of various grades. The Company is also engaged in trading business of various allied products like Coke, Chrome Ore Lumpy etc.

1. Contingent liabilities not provided for in respect of :

(Rs.in Lacs)

Particulars As at 31st As at 31st

March, 2011 March, 2010

a) Sales Tax matters under appeal 169.41 225.14 {Amount paid under appeal Rs 169.21 lacs (Rs. 204.15 lacs)}

b) Un-expired Bank Guarantees and Letters of Credit 606.67 412.73

c) Bills discounted with Banks 6,769.52 5,189.97

d) Guarantee given by way of pledge of certain Investments as security. (Refer Note No. 10) 101.47 87.88

e) Liabilities on account of dues under Odisha Rural Amount Unascertainable Infrastructure and Socio Economic Development Act, 2004

In respect of above cases based on favourable decisions in similar cases/legal opinions taken by the Company/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in the financial statements.

2. Estimated amount of Capital commitments (net of advances) Rs 4,735.03 lacs (Rs 4,739.21 lacs).

3. Gratuity and other post retirement benefit plans

The Company has a defined benefit gratuity plan. 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. The scheme is funded with Life Insurance Corporation of India in form of qualifying insurance policy.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of earned leave for encashment. This is an unfunded plan.

The following tables summaries the components of net expense recognised in the profit and loss account and balance sheet for the respective plans.

(h) The estimate of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employee market.

(i) The Company expects to contribute Rs. 60.00 lacs to gratuity fund in the year 2011-2012.

4. North Eastern Electricity Supply Company of Odisha Limited (NESCO) has revoked the waiver of dues granted under a settlement in an earlier year and raised demand for Rs 9,874.34 lacs (including delayed payment surcharge). The Company has made necessary representation to NESCO and the matter is under negotiation. Pending such, no provision has been made towards above demand.

5. One of the overseas customer has filed a claim of Rs 603.03 lacs relating to price differential for non supply of materials in earlier years by the Company, which is contested at International Arbitration court. The management is hopeful to resolve the dispute with no additional liability on the Company.

6. During the year, as per mutual agreement, certain loans and its related interest receivable were converted into Unsecured Debentures of Rs 1,540 lacs bearing interest rate of 12% per annum. These debentures are redeemable at the end of 5 years.

7. a) The Company has incurred capital expenditure (including capital advances) on various projects and made investments, in excess of the normal capex approved under Corporate Debt Restructuring (CDR) Scheme, which are pending approval of the monitoring committee of the lenders in terms of the Financial Restructuring Scheme as approved by the CDR Empowered Group in earlier years.

b) In terms of CDR scheme sanctioned for the Company, the Lenders continue to have the right to recompense on the sacrifices being made over and above the amount of recompense quantified at Rs 3,020 lacs for the period upto 31st March, 2007.

8. Investments in the Equity Shares of Ispat Industries Limited (IIL) (an associate company of the Promoter Group) have been pledged with the lenders of IIL as collateral security against financial facilities provided by the lenders to IIL as a part of debt restructuring arrangement of IIL.

9. Segment Information

Business Segments:

Based on the synergies, risks and return associated with business operations and in terms of Accounting Standard-17, the Company is engaged in following business segments

a) Manufacturing/Mining - Consists of mining and manufacturing of Silicon & Ferro alloys

b) Trading - Consists of trading of Coke, Chrome Ore Lumpy etc.

Geographical Segments:

The Company's secondary geographical segment has been identified based on location of the customers and are demarcated into its Indian and Overseas Operations.

10. In terms of Accounting Standard 22, Net Deferred Tax Liability of Rs 721.52 lacs has been recognized in the accounts up to 31st March, 2011.

11. a) The supply of raw materials against advances of Rs. 500.00 lacs (Rs 500.00 lacs) to various parties is pending beyond the stipulated time as per the respective purchase orders. The management is following up the matter and expects to recover/adjust such advances in the near future.

b) Confirmation certificates in respect of loans aggregating to Rs 962.00 lacs to certain parties as well as interest receivable thereon amounting to Rs 585.79 lacs (including Rs 42.66 lacs in respect of loans where no principal amount is outstanding) are still awaited from the respective parties. All these loans and interest receivable are, however, considered good of recovery by the management.

12. Related Party Disclosures

(a) Names of the related parties :

Subsidiary Company : Milton Holdings Limited

Associate Company : Balasore Energy Limited

Key Management Personnel and their relative : Mr. Pramod Mittal (Chairman)

Mr. V K Mittal (Brother of Chairman) (ceased to be director w.e.f. 28th July, 2010)

Mr. R.K Jena (Managing Director)

Mr C.R. Pradhan (Whole-time Director)

Enterprises over which Key Management Personnel / Shareholders / Relatives have significant influence*

: Ispat Industries Limited

Navoday Consultant Limited (formerly Mudra Ispat Limited)

Denro Holdings Private Limited

Kartik Credit Private Limited

Navdisha Real Estate Private Limited (formerly Kanoria Plastokem (P) Ltd)

Shakti Chrome Limited

* The parties stated above are related parties in the broader sense of the term and are included for making the financial statements more transparent.

13. The Company has accounted for differential interest of Rs 395.74 lacs (including Rs 206.11 lacs relating to earlier years) on advances which have been converted into unsecured loan in earlier year based on the statement of accounts received from the party during the year.

14. Excise Duty & Cess on stocks represents differential excise duty and cess on opening and closing stock of Finished Goods and processable scrap.

15. The Board of Directors has recommended, dividend of Rs 0.50 per share (10%) subject to approval of CDR Empowered group and shareholders.

16. Previous year's figures including those given in brackets have been regrouped / rearranged where necessary to conform to this year's classification.

 
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