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Notes to Accounts of Bihar Sponge Iron Ltd.

Mar 31, 2015

1. a) Disputed liability amounting to Rs.232381 thousands (P.Y. Rs.275409 thousands) on account of currency fluctuations on Foreign currency loans obtained by the Company and interest thereon, as per BIFR scheme dated 29.07.2004 and also confirmed by AAIFR/Single Bench of Jharkhand High Court, has not been provided by the Company pending disposal of Letters Patent Applent Jurisdiction (LPA) filed before the divisional bench of the Jharkhand High Court, Ranchi, against the above order.

b) The Term Loans (Rupee and Foreign Currency) from Indian and Foreign Financial Institutions and Banks are secured by first mortgage on all the Company's immovable properties, both present and future and a first charge by hypothecation of all the movable assets of the Company, save and except book debts, but including movable machinery, machinery spares, tools and accessories, both present and future, subject to the prior charges created / to be created in favour of the Company's Bankers on the Company's stocks of raw materials, semi-finished and finished goods, consumable stores, book debts and such other movables as may be agreed by the Financial Institutions and Commercial Banks for securing borrowings for working capital requirements in the ordinary course of business of the Company ranking pari-passu inter se.

c) Working Capital Loans from Banks are secured by first charge by way of Hypothecation of all the stocks of the raw materials, semi finished and finished goods, consumable stores, spares, book debts etc. ranking pari-passu. There has been no balance of working capital loans since earlier years.

d) Soft Loan (including interest thereon) under Jharkhand Industries Rehabilitation Scheme, 2003 from the State Government of Jharkhand are secured by

(i) A mortgage of all immovable properties both present and future; and a charge by way of hypothecation in favour of the lender of all the movable, including movable machinery, machinery spares, tools and accessories, present and future, stock of raw materials, semi-finished goods, consumable stores and such other movables as may be agreed upon

(ii) Additionally secured by way of pledge of new equity share capital of Rs.325000 thousands allotted to the private promoter. (MLCSL)

The mortgage and charge referred to in (i) and (ii) mentioned above; shall be in terms of the Rehabilitation Scheme 2003 of the Government of Jharkhkand Sanctioned by the BIFR and be subject and subservient to the mortgages and charges created and / or to be created in favour of the secured creditors.

e) The amount of term loans (included foriegn currency loans )of Rs.700000 thousands as per BIFR scheme dated 29.04.2004 was repayble in 30 quarterly instalments of Rs.23333 thousands each commencing from 15th July 2004 to 30th Spetember, 2011 which has been fully repaid except the element of disputed liability on account of currency fluctation as stated (a) above. The modification / satisfaction of the charges to this extent is still in the process of filing.

f) As per para 8.4 of the sanctioned BIFR Scheme dated 29.07.2004, the interest on Soft loan under Rehabilitation Scheme, 2003 from Govt.of Jharkhand shall be funded over the entire rehabilitation period i.e. upto 30.09.2011. The Soft loan and the funded interest is repayable after 30.09.2011 and the defaulted amount of Principal and interst as on 31.03.2015 comes to Rs.325000 thousands and Rs.355950 thousands (p/y Rs. 325000 thousands and Rs. 305145 thousand) respectively, for which the company has approached Government of Jharkhand for reschedulement which has also been proposed in the Modified Draft Rehabitation Scheme filed before the BIFR.

g) A sum of Rs. 265980 thuosands payable against the acceptance as on 31-3-2013 has been transfered to long term borrowing and shown as loans and advances from a body corporate as per Party ledger wide dated 24.09.2013 which carry interest @ 8% p.a upto 09.08.2013. No interest has been accrued since the party has waived such interest due to uncertainty involved (i.e. shut down of the plant). Since there is no stipulation regarding repayment, no disclosure has been made for amount of instalments due for repayment.

h) There has been no stipulation for repayment of unsecured loans & advances from related parties and hence no disclosure has been made.

(Rs. 000')

As at As at 31.3.15 31.3.14 2. Contingent Liabilities:

Claims not acknowledged as debts are as under: -

(i) Custom duty and interest on Imported Stores & Spares 15459 15459

(ii) (a) JVAT Demand under appeal before the Jt. Commissioner of Commercial Taxes (Appeals) Jamshedpur for the Asst. Year 2006-07. 2397 2397 (excludes amount Rs.23.07 lacs and paid by the company but not considered as credit by deptt.)

(b) Central Sales Tax demand (including interest) under appeal before the Jt. Commissioner of Commercial Taxes (Appeals) 311 311 Jamshedpur for the Financial Year 2006-07

(c) Disputed demand for JVAT for the F.Y. 2010-11 u/s 70(5)(b) under appeal before the Jt. Commissioner of Commercial Taxes 5879 5879 (Appeals), Jsr. However stay has been granted on 20.01.2012 (Amount paid as advance on appeal Rs. 5.87 Lacs previous year Rs. 5.87 Lacs).

(d) Demand raised by DCCT, Jsr for tax due and penalty imposed or interest payable under JVAT Act 2005 of the F.Y. 2010-11 under 24786 24786 dispute before JCCT(Appeals), Jamshedpur.

Stay has been granted on 06-10-2012 till final disposal(Adv paid on appeal Rs.15 lacs on 19.10.2012)

(e) JVAT demand for the assessed tax and penalty vide demand notice No.18872 dt. 28.03.2014 (order dt.12.03.2014) for F.Y. 8140 - 2010-11 raised by the Dy. Commissioner of Commercial Taxes, Adityapur, JSR (net of amount paid Rs.13489 thousands) for which the Company is seeking details for examining the merits of demand in order to consider filing of appeal with the appellant authority.

(f) CST Demand for assessed tax and penalty vide demand notice dt.28.03.2014 for the F.Y.2010-11 (vide order dt.12.03.2014) raised 3096 - by the Dy. Commissioner of Commercial Taxes, Adityapur, JSR (net of amount paid Rs.3055 thousands) for which the Company is seeking details for examining the merits of demand in order to consider filing of appeal with the appellant authority.

(g) CST Demand for assessed tax and penalty vide demand notice dt.24.03.2015 for the F.Y. 2011-12 vide order dt.20.03.2015 by the 70549 - Dy. Commissioner of Commercial Tax, JSR is (net of amount paid Rs.2353 thousands for which the Company is seeking details for examining the merits of demand in order to consider filing of appeal with the appellant authority.

(h) JVAT Demand for assessed tax and penalty vide demand notice dt.24.03.2015 for the F.Y. 2011-12 vide order dt.20.03.2015 by 13977 - Dy. Commissioner of Commercial Tax, JSR (net of amount paid Rs.3060 thousands) for which the Company is seeking details for examining the merits of demand in order to consider filing of appeal with the appellant authority.

(i) Demand for electricity duty raised by the Dy. Commissioner / Asstt. Commissioner under Electricity Duty Rules (Rule 14) vide 2281 - Order No.18431 dt.18.03.2014 for Rs.1271 thousands (F.Y. 2012-13) for Rs.1011 thousands (FY) 2011-12 the Company is seeking details for examining the merits of demand in order to consider filing of appeal with the appellant authority.

(iii) Demand for water charges and interest thereon disputed under writ petition before Jharkhand High Court, Ranchi 250947 211975

(iv) Railway Authorities has imposed penalty on the Company earlier which was dismissed by the Jharkhand High Court, Ranchi. Railway 5600 5600 Authority has now filed a petition before Supreme Court, Delhi.

(v) (a) Disputed liability on account of currency fluctuation on foreign currency loans and interest thereon, pending before the 232381 275409 Hon'ble High Court, Jharkhand, Ranchi.

(b)Liability on account of currency fluctuation on upfront payment of foreign currency loan and additional 2% interest rate in lieu of 263714 279753 guarantee of Govt. of Jharkhand matter pending in SLP before the Hon'ble Supreme Court, Delhi

(vi) Disputed Income Tax demand including interest and penalty for short deduction/ collection or Tax at source based on NSDL 8334 8334 report for the F.Y. 2004-05 to 2008-09 u/s 156 raised by DCIT, JSR under appeal before the CIT (Appeal), JSR under section 246A (1) Of the Income Tax Act,1961.

(vii) Liability for price difference / other claims net of counter claims, if any, arising Not Not on account of procurement of raw materials ascer- ascer- under a contract (since terminated) pending tained tained before an Arbitrator / High Court.

(viii) (a) The company has received a show cause notice to explain as to why the production of Sponge Iron was low in comparison Not Not to iron ore consumed. The company has furnished ascer- ascer- its reply, justifying consumption of iron ore tained tained viz a viz Sponge iron production. The Matter is still pending.

(b) Demand for recovery of irregular Cenvat Credit for Service Tax and education cess for F.Y. 2010-11 under Rule 15(4) of CCR 2004 read 123 123 with section 78 of the Finance Act 1994 under appeal before The Appellate Tribunal Central Excise & Service Tax, Kolkata

(ix) Disputed penalty recovered by SECL for short lifting of Coal quantity as per Linkage. The matter pending under Writ Petition filed 21528 21528 by the Company before the Hon'ble High Court of Chattisgarh, Bilaspur.

(x) Liability on account of Bank Gurantees 96175 97675

3. COMMITMENTS :

3.1 Capital Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 4856 thousand (Previous Year Rs. 4856 thousand).

3.2. Other Commitments: Rs. Nil (P.Y.Nil)

4. Rehabilitation Scheme:

(I) The company was declared a Sick Industrial Company within the meaning of clause (0) of Sub-Section (1) of Section 3 of the Sick Industrial Companies (Special Provision) Act, 1985 by the Hon'ble BIFR vide its order dated 19.12.1996. The Hon'ble BIFR vide its order dated 29th July, 2004 had sanctioned the Rehabilitation Scheme. The said scheme envisaged a total payment of Rs. 1350000 Thousands, Rs.650000 Thousands was to be paid as upfront payment and the balance Rs. 700000 Thousands was to be paid in 30 quarterly installments effective from 15th July, 2004.

(II) In the review hearing held on 3rd September, 2007 & 22nd September, 2010, the BIFR, by exercising powers under Section 18 (5) and 18 (9) of the SICA, clarified / directed that the Company shall make payment of the due installments to its foreign lenders in 'Euro' as per the amount reflected in Euro in the statement annexed to the sanctioned scheme along with the applicable interest i.e. LIBOR plus 1% per annum (LIBOR 3% in case of delay/ default in payment of installments).

The Company has filed appeal before the Appellate Tribunal for Industrial and Financial Reconstruction (AAIFR) challenging the above said order. AAIFR in its order dated 23-12-2011 has dismissed the appeal. The above order of AAIFR was challenged by the Company by filling Writ Petition in Jharkhand High Court on 06.02.2012. In the hearing held on 22nd February, 2012, the Appeal was dismissed.

The Company has not recognized Rs.232381 Thousands (P.Y. 275409 Thousands) the liability on account of foreign currency fluctuation in Euro on foreign currency loans installments and interest thereon as per the BIFR Scheme. The Company has filed a Letters Patent Appellate Jurisdiction (LPA) on 27th July, 2012 before the higher bench in the High Court of Jharkhand, Ranchi against the order of the Single Judge which is still pending.

(III) The Net worth of the Company could not become positive during the implementation of BIFR Scheme till 30-09-2011. As per Order date 5th May 2012, BIFR directed to the company to submit Modified Draft Rehabilitation Scheme (MDRS) within four months for the rehabilitation of the Company.

(IV) The Modified Draft Rehabilitation Scheme of the company was filed before the Hon'ble BIFR on 3rd December 2012. The modified scheme is under consideration of the BFIR for which last hearing was held on 20.01.2014 in which the BIFR has made the following direction.

(i) Ministry of Coal, Government of India, Central Coalfields Limited and Coal India Limited to extend regular supply of coal as per the existing coal linkage with CCL, as envisaged in the sanctioned scheme and submit its report to the Board with a copy to IFCI (MA), within a month.

(ii) The Company to update the status of the writ petition /IA filed before the Hon,ble High Court of Jharkhand, Ranchi as and when the final decision is arrived at.

The Company has made an interlocutor application for the withdrawal of the Writ Petition before the Hon'ble High Court of Jharkhand, Ranchi and it is expected that on withdrawal of the said Writ Petition the Fuel Supply Agreement (FSA) would be entered into for the regular supply of the Coal. This would expedite the process of finalization and sanction of the Draft Modified Rehabilitation Scheme with the grant of reliefs and concessions, the restructuring of the soft loan and other measures for the fresh induction of fund etc. for making the unit viable as a going concern.

5. The demand of water charges Rs. 250947 thousands (inclusive of interest on arrear of water bills of Rs.23103 thousands) as on 31.03.2015 (P.Y. Rs.231494 thousands inclusive of interest of Rs.20528 thousands as on 31.3.2014) raised by Chief Engineer, Subernarekha Multipurpose Project, Chandil has been disputed by the company under a Writ Petition with Jharkhand High Court, Ranchi. However, pending disposal of Writ Petition, the company based on its own estimate of liability has made total provision for Rs. 13869 thousands up to 31st March, 2015, (Rs.13869 thousands as on 31.3.2014.)

6. South Eastern Coalfield Ltd. has imposed a penalty of Rs.21528 Thousands in 2011-12 on account of short lifting of coal quantity in terms of Fuel Supply Agreement (FSA) dated 02.05.2008 and recovered the same by encashment of the bank guarantee. The Company has taken up the matter with Coal India Limited/ South Eastern Coalfield Ltd. for refund of the said amount as settlement of dispute under clause 15.3 of the FSA. No provision has been made for penalty recovered since the matter is pending under writ petition filled by the Company before the Hon'ble High Court of Chattisgarh, Bilaspur.

7. The company was allocated for captive use a Coal Block in the Macherkunda Coal Block in the State of Jharkhand on 5th August 2008 by the Ministry of Coal, Government of India. The Ministry of Coal vide letter date 20.11.2012 deallocated the above coal block on the ground that the company has failed to develop the coal block allotted within the prescribed milestone/time frame.

On being aggrieved with the above order, the company has filled a Writ Petition before the Jharkhand High Court, challenging the decision of the Ministry of Coal to de-allocate the Coal block. The matter was transferred to Hon'ble Supreme Court of India, and the said court vide its order dated 24.09.2014 has cancelled all coal blocks allotted on and after 2003. In view of the above Rs. 894 Thousands incurred by the company on this account appearing under CWIP Coal block has been written off during the year and shown under the head of exceptional item.

8. The Central Coalfield Limited has recovered a penalty of Rs 5468 Thousands on account of short lifting of coal quantity in terms of fuel supply agreements (FSA) during the Financial Year 2012-13 and F.Y. 2013-14(April 2013) and Rs.5263 Thousands for rate differences. These amounts has been shown as exceptional items.

9. In accordance with the Companies Act, 2013 the Company has revised the useful life of the fixed assets during the current year to comply with the useful / remaining useful life of assets as mentioned under Schedule II of the Act. As per the transitional provision the company has adjusted Rs. 126918 thousands net of deferred tax (including Rs.124981 thousands for depreciation on revaluation reserve) with the opening balance of retained earning (i.e., deficit in the statement of Profit and Loss on April 01,2014). Had the Company continued to follow the earlier life, the depreciation expense for the year ended on 31.03.2015 would have been higher by 10438 Thousands(excluding depreciation on revaluation reserve), and the loss before tax increased with that amount.

10. (a) Shri Satish Kumar Gupta, has been appointed as Additional Director and then Whole Time Director w.e.f. 13.12.2013. During the F.Y. 2013-14 a sum of Rs. 325 Thousands has been provided as remuneration as a Whole time director which was subject to the approval of shareholders of the Company in the ensuing general meeting (32nd AGM) and the approval of the Central Govt. in terms of the provisions of section 198, 269,309 & Schedule XIII as amended from time to time & other applicable provisions, if any of the Companies Act, 1956. The Shareholders has approved the payment of aforesaid remuneration by way of special resolution in the said Annual General Meeting (AGM).

Since, Shri S. K. Gupta vide letter dated 13.11.2014 has voluntarily waived off his entire remuneration for the period 13.12.2013 to 12.12.2014, the provision for remuneration made in earlier year has been reversed & not paid to him and hence no Central Govt, approval has been sought.

(b) The remuneration to the whole tine director has been paid /provided w.e.f. 13-12-2014 to 31-03-2015 is in compliance of Section 197 and Schedule V of the ACT.

11. Shut down of Plant and suspension of operations.

Central Coalfields Ltd has stopped supply of linkage coal as per existing Fuel Supply Agreements to the Company w.e.f. 5th February 2013 for reason stated at para 7 above. Due to non-supply of Coal by CCL, the operations of the company has been shutdown and operation suspended w.e.f. 9th August 2013. The aforesaid action of Coal India Ltd, Central Coalfields Ltd and the Ministry of Coal, GOI. has been challenged by the company by way of Writ Petition (C) vtde No. 1660 of 2013 before the Hon'ble Jharkhand High Court and the same is still pending.

In view of the above, provision for the undernoted items of expense have not been made in the accounts for the period from 10th August, 2013 to 31st March. 2015:

(a) Interest on Unsecured Loans of Rs. 686001 thousands taken from Promoters and other Parties (amounts unascertained),

(b) Interest on Soft Loan from Government of Jharkhand under Jharkhand Industrial Rehabilitation Scheme 2003 amounting to Rs. 81331 Thousands (Rs. 30526 thousands upto March 2014) which is subject to representations for waiver, and

(c) Salaries, Wages and allowances, provident fund including as well as employee benefits expense (amount unascertained) except for KMP.

12. Related Party Transaction (RPT) in respect of renting of the office of the Company is Rs. 6146 thousands and the availing or rendering of services amounting to Rs. 6788 thousands as covered under section 188 (1) (c) and (d) respectively and Rules made thereunder and is within the overall limits of Rule 15 of the Companies (Meetings of Board and its Power) Rules, 2014.

13. Income Tax assessment of the Company for the Asstt. Year 2012-13 has been completed under Section 143 (3) of the Act vide order dt.24.03.2015 by the Asstt. Commissioner of Income Tax, JSR. The Assessing Officer has disallowed the Returned loss on the ground that the company has not furnished the required information, documents, books of accounts and records inspite of questionnaire & the various reminders show cause notice given to the assessee. Since the plant was under shut down and laborers did not allow the entry of staff and officer to factory premises and hence the information / documents / papers were produced to the extent possible. On being aggrieved with the said order, the Company has filed an appeal before the CIT (Appeal-3), Patna on 27.04.2015.

14. Credit/Debit balances of the Creditors, Lenders, Debtors and Advances are subject to reconciliation/confirmation at the year end.

15. Earning in Foreign Currency: Nil

16. Subsidiary Company:

Chandil Power Limited (CPL) has become Subsidiary of the Company under Section 4(1)(a) of the Companies Act 1956 and Section 2 (87) of the Companies Act, 2013 w.e.f 17th August 2011 and ceased to be subsidiary from 29.09.2014 with the termination of Supplemental Agreement dated 15.06.2010.

17. Previous year figures have been recast / restated to conform to the classification required by the Revised Schedule VI Notes 1 to 29 and Annexure - I containing Accounting Policies and General Notes form part of the Financial Statements.


Mar 31, 2014

1. Segmental Reporting

The company is a single location single product company and hence the requirements of AS -17 on Segment Reporting are not relevant.

2. Related Party Transactions - AS 18

As per AS-18 issued by the Institute of Chartered Accountants of India, the Company''s related parties transactions with them are disclosed below:

(a) By virtue of control

Moderate Leasing & Capital Services Ltd.

(b) Key Management Personnel and their relatives Key Managerial Personal:

Shri U K Modi - Chairman & Managing Director upto 28.02.2014 and Chairman & Director w.e.f. 01.03.2014.

Shri B.K. Thakur - Director Finance up to 19.12.2013

Shri Satish Kumar Gupta -Whole Time Director designated as Director (Works) w.e.f. 20.12.2013.

Relatives to Key Managerial Persons :

Mrs. Kum Kum Modi, Director, Shri Abhishek Modi, Director and Shri Jayesh Modi, Director are related to Shri U.K. Modi.

(c) Enterprises over which (b) above have significant influence and with whom transactions have taken place. (i) SBEC Sugar Ltd.

(ii) SBEC Bio-Energy Ltd.

(Hi) Modi Industries Limited

(iv) Modi Mundipharma Pvt. Ltd.

(v) Modi Revlon Pvt. Ltd.

(vi) Modi Line Travel Services Pvt. Ltd.

(vii) Win Medicare Pvt. Ltd.

(viii) Modi Motors Pvt. Ltd.

(ix) Modi Senator India Pvt. Ltd

(x) Modi Hitech India Ltd.

(xi) M.G. Mobiles India Pvt. Ltd.

(xii) H.M. Tube & Containers Pvt. Ltd.

(xiii) Chandil Power Ltd.

(xiv) Longwell Investment Pvt Ltd.

(xv) A to Z Holdings Pvt Ltd.

(xvi) Jayesh Tradex Pvt. Ltd.

III: OTHER NOTES REQUIRED BY PART I & PART II OF SCHEDULE VI (Rs. Lacs) As at 31.3.14 As at 31.3.13

1. Contingent Liabilities:

Claims not acknowledged as debts are as under: -

(i) Custom Duty on Plant & Machinery 106.92 106.92

(ii) Custom duty and interest on Imported Stores & Spares 154.59 154.59

(iii) (a) JVAT Demand under appeal before the Jt. Commissioner of Commercial Taxes (Appeals) Jamshedpur for the 23.97 23.97 Asst. Year 2006-07. (excludes amount Rs.23.07 lacs and paid by the company but not considered as credit by deptt.) Jt. Commissioner (Appeal) Commerical Taxes, Jsr. Vide order no. 740 dt. 08.10.2013 remanded the case to DCIT, Adityapur to verify and allow the credit for the amount of Rs. 23.07 lacs paid by the company against the demand.

(b) Central Sales Tax demand (including interest) under appeal before the Jt. Commissioner of Commercial Taxes 3.11 3.11 (Appeals) Jamshedpur for the Financial Year 2006-07

(c) Disputed demand for JVAT for the F.Y. 2010-11 u/s 70(5)(b) under appeal before the Jt. Commissioner of Commercial 58.79 58.79 Taxes (Appeals), Jsr. However stay has been granted on 20.01.2012 (Amount paid as advance on appeal Rs. 5.87 Lacs previous year Rs. 5.87 Lacs).

(d) Demand raised by DCCT, Jsr for tax due and penalty imposed or interest payable under JVAT Act 2005 of 247.86 247.86 the F.Y. 2010-11 under dispute before JCCT(Appeals), Jamshedpur. Stay has been granted on 06-10-2012 till final disposalfAdv paid on appeal Rs.15 lacs on 19.10.2012)

(iv) Demand for water charges and interest thereon disputed under writ petition before Jharkhand High Court, Ranchi 2119.75 2193.91

(v) Railway Authorities has imposed penalty on the Company earlier which was dismissed by the Jharkhand High Court, Ranchi. Railway Authority has now filed a petition before Supreme Court, Delhi. 56.00 56.00

(vi) (a) Disputed liability on account of currency fluctuation on foreign currency loans and interest thereon, 2754.09 2251.93 pending before the Hon''ble High Court, Jharkhand, Ranchi.

(b) Liability on account of currency fluctuation on upfront payment of foreign currency loan and additional 2% interest 2797.53 2027.06 rate in lieu of guarantee of Govt, of Jharkhand matter pending in SLP before the Hon''ble Supreme Court, Delhi

(vii) Disputed Income Tax demand including interest and penalty for short deduction/collection or Tax at source based on NSDL report for the F.Y. 2004-05 to 2008-09 u/s 156 raised by DCIT, JSR under appeal before the CIT (Appeal), JSR under section 246A (1) Of the Income Tax Act, 1961. 83.34 83.34

(viii) Liability for price difference / other claims net of counter claims, if any, arising on account of procurement of Not ascertained Not ascertained raw materials under a contract (since terminated) pending before an Arbitrator / High Court.

(ix) (a) The company has received a show cause notice to explain as to why the production of Sponge Iron was Not Not ascertained ascertained low in comparison to iron ore consumed. The company has furnished its reply, justifying consumption of iron ore viz a viz Sponge Iron production. The Matter is still pending.

(b) Demand for recovery of irregular Cenvat Credit for Service Tax and education cess for F.Y. 2010-11 under 1.23 1.23 Rule 15(4) of CCR 2004 read with section 78 of the Finance Act 1994 under appeal before The Appellate Tribunal Central Excise & Service Tax, Kolkata

(x) 40% additional price over the prevailing price of Coal pending before Hon''ble High Court Jharkhand. 171.79 171.79

(xi) Disputed penalty recovered by SECL for short lifting of Coal quantity as per Linkage. 215.28 215.28

(xii) Liability on account of Bank Guarantees 975.22 1058.67



2 COMMITMENTS:

2.1 Capital Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 48.56 lacs (Previous Year Rs 48 56 lacsl 2.2. Other Commitments: Rs. Nil (P.Y. 3.00 Lacs) -

3. Rehabilitation Scheme:

(I) The company was declared a Sick Industrial Company within the meaning of clause (0) of Sub-Section (1) of Section 3 of the Sick Industrial Companies (Special Provision) Act, 1985 by the Hon''ble BIFR vide its order dated 19.12.1996. The Hon''ble BIFR vide its order dated 29th July, 2004 had sanctioned the Rehabilitation Scheme. The said scheme envisaged a total payment of Rs. 13500 lacs, out of which Rs.6500 lacs was to be paid as upfront payment and the balance Rs 7000 lacs was to be paid in 30 quarterly installments effective from 15th July, 2004. The Rehabilitation Scheme is under implementation.

(II) In the review hearing held on 3rd September, 2007 & 22nd September, 2010, the BIFR, by exercising powers under Section 18 (5) and 18 (9) of the SICA clarified / directed that the Company shall make payment of the due installments to its foreign lenders in ''Euro'' as per the amount reflected in Euro in the statement''annexed to the sanctioned scheme along with the applicable interest i.e. LIBOR plus 1% per annum (LIBOR 3% in case of delay/ default in payment of installments) The Company has filed appeal before the Appellate Tribunal for Industrial and Financial Reconstruction (AAIFR) challenging the above said order.

AAIFR in its order dated 23-12-2011 has dismissed the appeal. The above order of AAIFR was challenged by the Company by filling Writ Petition in Jharkhand Hiah Court on 06.02.2012. In the hearing held on 22nd February, 2012, the Appeal was dismissed.

The Company has not recognized Rs.2754.09 lacs the liability on account of foreign currency fluctuation in Euro on foreign currency loans installments and interest thereon as per the BIFR Scheme. The Company has filed a Letters Patent Appellate Jurisdiction (LPA) on 27th July, 2012 before the higher bench in the High Court of Jharkhand, Ranchi against the order of the Single Judge.

(III) The Net worth of the Company could not become positive during the implementation of BIFR Scheme till 30-09-2011. As per Order date 5th Mav 2012 BIFR directed to the company to submit Modified Draft Rehabilitation Scheme (MDRS) within four months from the said date.

(IV) The Modified Draft Rehabilitation Scheme of the company was filed before the Hon''ble BIFR on 3rd December 2012. The modified scheme is under consideration Ot tr)6 BrIR.

4. The demand of water charges Rs. 2258.14 lacs (inclusive of interest on arrear of water bills of Rs.226.81 lacs) as on 31.03 2014 (FY Rs 2314 94 lacs inclusive Rs 15,281 lackS raised by Chief En9ineer. Subernarekha Multipurpose Project, Chandil has been disputed''by the company under a Wnt Petition with Jharkhand High Court Ranchi. However, pending disposal of Writ Petition, the company based on its own estimate of liability has made total provision for Rs. 138.69 lacs up to 31st March, 2014, (Rs.121.03 lacs as on 31.3.2013.)

5 No provision has been penealty recorved by south eastern coal fields ltd for rs 215.28 lacks in the fy 2011-2012 on account short lifiting of coal quantity 2011-2012 on account short lifting of coal quantity in terms of Fuel Suuply Agreement (FSA) since the matter is pending before the Hon''ble High Court of Chhattisgarh, Bilaspur. However the penatty recover of Rs 215.28 lacs is shown under Long Term Loan and Advances.

6. The company has been allotted for captive use a Coal Block in the Macherkunda Coal Block in the State of Jharkhand on 5th August 2008 by the Ministry of Coal Governmen of India The Ministry of Coal yide letter date 20.11.2012 deallocated the above coal block on the ground that the company has failed to develop the coal block allotted within the prescribed milestone/time frame. »Â™»11,ii. On being aggrieved with the above order the company has filled a Writ Petition (C) vide no. 7331 of 2012 before the Jharkhand High Court, challenging the decision of the Ministry of Coal to de-a oca e the Coal block. The Hon''ble High Court, by an order dated 12th December 2012 has passed the interim order thit untH further order, no coercive steps shall be taken against the petioner pursuant to the impunged order.

7. In respect of Coal supplied under Coal linkage for the month of January 2013, the CCL has charged 40% additional price on the prevailing price of coal by applyinq tapering linkage policy amounting to Rs 171.79 Lacs and recovered the said amount out of the advance payment for supply of coal and forfeited the bank guarantee. In view of he dispute for applying tapering linkage policy, the Company has not recognized the additional cost of coal. The sum of Rs 171 79 lacs appear as short term loans and advance.

8. Shut down of Plant and suspension of operations.

Central Coalfields Ltd has stopped supply of linkage coal as per existing Fuel Supply Agreements to the Company w.e.f. 5th February 2013 for reason stated at para 7 above Due to non-supp y of Coa by CCL the operations of the company has been shutdown and operation suspended w.e.f. 9th August 2013. The all act,of Coal lnd,a L,d'' Cen,ral Coalfields Ltd and the Ministry of Coal, GOI, has been challenged by the company by way of Writ Petition (C) vide No 1660 of 2013 before the Hori''ble Jharkhand High Court and the same is still pending. .

In view of the above, provision for the undernoted items of expense have not been made in the accounts for the period from 10th August 2013 to 31st March 2014-

(a) Interest on Unsecured Loans of Rs. 6863.90 lacs taken from Promoters and other Parties (amounts unascertained)

(b) Interest on Soft Loan from Government of Jharkhand under Jharkhand Industrial Rehabilitation Scheme 2003 amounting to Rs. 305.26 lacs which is subiect to representations for waiver.

(c) Salaries, Wages and allowances as well as emloyee benefits expenses (amount unascertained).

18. Subsidiary Company:

19 Previous year figures have been recast / restated to conform to the classification required by the Revised Schedule VI Notes 1 to 29 and Annexure - I containing Accounting Policies and General Notes form part of the Financial Statements.


Mar 31, 2013

1. Employee Benefits.

The disclosure of ''Employee Benefits'' as defined in Accounting Standard 15 (revised) are as under:

(a) There is no plan assets at the beginning and at the closing of the year.

(d) Enterprise best estimate of contribution payable for the next year the gratuity plan is Rs. 116.24 lacs and for earned leave liability for Rs.12.49 lacs.

2 . Segmental Reporting

The company is a single location single product company and hence the requirements of AS - 17 on Segment Reporting are not relevant.

3. Related Party Transactions - AS 18

As per AS-18 issued by the Institute of Chartered Accountants of India, the Company''s related parties transactions with them are disclosed below:

(a) By virtue of control

Moderate Leasing & Capital Services Ltd.

(b) Key Management Personnel and their relatives

Shri U K Modi Chairman and Managing Director, Shri B.K. Luthra, Executive Director (Works) upto 23-08-2012 and Shri B.K. Thakur Director-Finance w.e.f 20- 12-2012 are the Key Management Personnel.

Mrs. Kum Kum Modi, Director, Shri Abhishek Modi, Director and Shri Jayesh Modi, Director are related to Shri U.K. Modi Chairman and Managing Director.

(c) Enterprises over which (b) above have significant influence and with whom transactions have taken place. (i) SBEC Sugar Ltd.

(ii) SBEC Bio-Energy Ltd.

(iii) Modi Industries Limited

(iv) Modi Mundipharma Pvt. Ltd.

(v) Modi Revlon Pvt. Ltd.

(vi) Modi Line Travel Services Pvt. Ltd.

(vii) Win Medicare Pvt. Ltd.

(viii) Modi Motors Pvt. Ltd.

(ix) Modi Senator India Pvt. Ltd

(x) Morgardshammar (India) Ltd.

(xi) M.G. Mobiles India Pvt. Ltd.

(xii) H.M. Tube & Containers Pvt. Ltd.

(xiii) Chandil Power Ltd.

(xiv) G.S. Pharmbutors Pvt Ltd.

(xv) A to Z Holdings Pvt Ltd.

4. The management is of the opinion that except the assets written off during the year and the assets retired from active use, there is no further impairment of assets as at 31-3-2013 as contemplated in the Accounting Standard (AS) 28.

5. Operating Leases

The Company''s leasing arrangements are in respect of premises (for office, godown and accommodation of Company''s officer & directors). These arrangements are both cancelable and non-cancelable in nature and ranging between one to three years as at 31s'' March, 2013.

6. COMMITMENTS:

6.1 Capital Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 48.56 lacs (Previous Year Rs. 48.56 lacs).

6.2 Other Commitments: Rs. 3.00 Lacs (P.Y. Nil)

7. Rehabilitation Scheme:

(I) The company was declared a Sick Industrial Company within the meaning of clause (0) of Sub-Section (1) of Section 3 of the Sick Industrial Companies (Special Provision) Act, 1985 by the Hon''ble BIFRvide its order dated 19.12.1996. The Hon''ble BIFR vide its order dated 29,h July, 2004 had sanctioned the Rehabilitation Scheme. The said scheme envisaged a total payment of Rs. 13,500 lacs, Rs.6,500 lacs was to be paid as upfront payment and the balance Rs. 7,000 lacs was to be paid in 30 quarterly installments effective from 15,h July, 2004. The Rehabilitation Scheme is under implementation.

(II) In the review hearing held on 3rd September, 2007 & 22n0 September, 2010, the BIFR, by exercising powers under Section 18 (5) and 18 (9) of the SICA, clarified / directed that the Company shall make payment of the due installments to its foreign lenders in ''Euro'' as per the amount reflected in Euro in the statement annexed to the sanctioned scheme along with the applicable interest i.e. LIBOR plus 1% per annum (LIBOR 3% in case of delay/ default in payment of installments).

The Company has filed appeal before the Appellate Tribunal for Industrial and Financial Reconstruction (AAIFR) challenging the above said order.

AAIFR in its order dated 23-12-2011 has dismissed the appeal. The above order of AAIFR was challenged by the Company by filling Writ Petition in Jharkhand High Court on 06.02.2012. In the hearing held on 22na February, 2012, the Appeal was dismissed.

The Company has not recognized Rs.2,251.93 lacs the liability on account of foreign currency fluctuation in Euro on foreign currency loans installments and interest thereon as per the BIFR Scheme. The Company has filed a Letters Patent Appellate Jurisdiction (LPA) on 27''" July, 2012 before the higher bench in the High Court of Jharkhand, Ranchi against the order of the Single Judge.

(III) The Net worth of the Company could not become positive during the implementation of BIFR Scheme till 30-09-2011. As per Order date 5th May 2012, BIFR directed to the company to submit Modified Draft Rehabilitation Scheme (MORS) within four months for the rehabilitation of the Company.

(IV) The Modified Draft Rehabilitation Scheme of the company was filed before the Hon''ble BIFR on 3rd December 2012. The modified scheme is under consideration of the BIFR.

8. The demand of water charges Rs. 2,314.94 lacs (inclusive of interest on arrear of water bills of Rs.205.28 lacs) as on 31.03.2013 (P.Y. Rs.1,843.73 lacs inclusive of interest of Rs.161.29 lacs as on 31.3.2012) raised by Chief Engineer, Subernarekha Multipurpose Project, Chandil has been disputed by the Company under a Writ Petition with Jharkhand High Court, Ranchi. However, pending disposal of Writ Petition, the Company based on its own estimate of liability has made total provision for Rs. 121.03 lacs up to 31st March, 2013, (Rs.104.94 lacs as on 31.3.2012.)

9. South Eastern Coalfield Ltd. has imposed a penalty of Rs.215.28 lacs in 2011-12 on account of short lifting of coal quantity in terms of Fuel Supply Agreement (FSA) dated 02.05.2008 and recovered the same by encashment of the bank guarantee. The Company has taken up the matter with Coal India Limited/ South Eastern Coalfield Ltd. for refund of the said amount as settlement of dispute under clause 15.3 of the FSA. The matter is still under process as such no provision has been made.

10. (i) Coal Block :

The Company has been allotted for captive use a Coal Block in the Macherkunda Coal Block in the State of Jharkhand on 5th August 2008 by the Ministry of Coal, Government of India. The Ministry of Coal vide letter date 20.11.2012 deallocated the above coal block on the ground that the Company has failed to develop the coal block allotted within the prescribed milestone/time frame.

On being aggrieved with the above order, the Company has filled a Writ Petition before the Jharkhand High Court, challenging the decision of the Ministry of Coal to de-allocate the Coal block. The Hon''ble High Court, by an order dated 12th December 2012 has passed the interim order that until further order, no coercive steps shall be taken against the petioner pursuant to the impunged order.

(ii) Coal Tapering Linkage Policy:

a) CCL by applying the Tapering Linkage Policy have stopped supplying Coal to the Company w.e.f 05.02.2013 and insisting upon the Company to execute a Side Agreement with it for future supply of the coal with the following conditions;

— Coal quantity to be supplied to the BSIL would be reduced to zero in the fourth year i.e. reduction of 25%, 50%, 75% during the 1st, 2nd, and 3rd respectively.

— A 40% additional price on the prevailing coal price of Coal India Limited would be payable by the Company.

The Company has filed a Writ Petition before the Jharkhand High Court against the CCL''s decision to apply the tapering linkage policy even though the coal block earlier allotted to the Company has been deallocated. The matter is pending before the High Court.

(b) In respect of Coal supplied under Coal linkage for the month of January 2013, the CCL has charged 40% additional price on the prevailing price of coal by applying tapering linkage policy amounting to Rs. 171.79 Lacs and adjusted the advance payment of Rs. 80.08 Lacs against the supply of coal for the month of February 2013. In view of the dispute for applying tapering linkage policy, the Company has not recognized the additional cost of coal.

11. Shri B.K.Thakur, Chartered Accountant was working as Chief Financial Officer of the Company w.e.f. 04.06.2011.He was appointed a Additional Director and then as the Whole-time Director of the Company w.e.f 20th December 2012 and designated as Director Finance of the Company. The remuneration paid to Shri B.K.Thakur as Director Finance amounting to Rs.4.81 lacs w.e.f.201" December, 2012 till 31st March 2013 is subject to the approval of Shareholders of the Company in their General Meeting and the Central Government in terms of the provisions of sec 198,269,309, Schedule XIII and other applicable provisions of the Companies Act, 1956.

12. Credit/Debit balances of some of the Creditors, Lenders, Debtors and advances are subject to reconciliation/confirmation at the year end.

13. In the opinion of the Board, Current Assets have a realizable value equivalent to the amount at which they are stated in the Balance Sheet and the provision for all known liabilities have been made except to the extent as appearing in other notes.

14. Value of imported and indigenous raw materials and components consumed and percentage of each to total Consumption :

15. Earning in Foreign Currency: Nil

16. Subsidiary Company:

Chandil Power Limited (CPL) has become subsidiary of the Company under Section 4(1 )(a) of the Companies Act 1956 w.e.f 17,h August 2011. CPL''s project is still under development stage and hence no consolidation has been done in line with the provision of AS -21.

Since the Company does not have Share holding interest in the Subsidiary Company, hence the discolouser w.r.t. the subsidiary company in terms of Sec 212 (1)(f) read with section 212 (3) of the Companies Act 1956 is not required.

17. Previous ye,ar figures have been recast / restated to conform to the classification required by the Revised Schedule VI Notes 1 to 29 and Annexure - I containing Accounting Policies and General Notes form part of the Financial Statements.


Mar 31, 2010

1. Contingent Liabilities:

(a) Claims not acknowledged as debts are as under: -

(Rs. Thousands)

As at 31.03.10 As at 31.03.09

(i) Custom Duty on Plant & Machinery 1,06,92 1,06,92

(ii) Custom duty and interest on Imported Stores & Spares 1,54,59 1,54,59

(iii) (a) JVAT demand under appeal before the Jt. Commissioner of Commercial Taxes (Appeals) Jamshedpur

for the asstt. Year 2006-07.(excludes amount Rs.23,07 thousand paid by the company but not considered as credit by deptt.) 23,97 -

(b) Central Sales Tax demand (including interest) under appeal before the Jt. Commissioner of Commercial Taxes (Appeals) Jamshedpur for the asstt. Year 2006-07. 3,11 -

(iv) Demand for Water Charges and interest thereon. 11,47,75 9,92,47

(v) Disputed liability on account of currency fluctuation on foreign currency loans and interest thereon, pending before the Honble AAIFR / Honble High Court Delhi. 17,09,65 37,52,60

(vi) Liability for price difference / other claims net of counter claims, if any, arising on account of procurement of

raw materials under a contract (since terminated) pending before an Arbitrator / Orissa High Court. Not ascertained Not ascertained

(vii) (a) The company has received a show cause notice to explain as to why the production of Sponge Iron was low in comparison to iron ore consumed. The company has furnished its reply, justifying consumption of iron ore viz a viz iron ore comsumption. The matter is still pending. Not ascertained Not ascertained

(b) The Company has received a Show Cause Notice from Assistant Commissioner, Central Excise Division IV, JSR for recovery of irregular Cenvat Credit availed by the company of service tax and education cess thereon input services availed by the company. The Company has furnished its reply stating that it has claimed cenvat credit on input services as per the provision of the CCR 2004. The matter is pending for disposal. 1,23 -

(viii) Liability on account of Bank Guarantee 2,81,00 2,81,00

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 46,43 thousand (Previous Year Rs. 44,20 thousand.).

3. Rehabilitation Scheme:

The company was declared a Sick Industrial Company within the meaning of clause (o) of Sub-Section (1) of Section 3 of the Sick Industrial Companies (Special Provision) Act, 1985 by the Honble BIFR vide its order dated 19.12.1996. The Honble BIFR vide its order dated 29th July, 2004 had sanctioned the Rehabilitation Scheme. The said scheme envisaged a total payment of Rs. 135 crores, Rs.65 crores was to be paid as upfront payment and the balance Rs. 70 crores was to be paid in 30 quarterly installments effective from 15* July, 2004. The Rehabilitation Scheme is under implementation.

In the review hearing held on 3rd September, 2007, the BIFR, by exercising powers under Section 18 (5) and 18 (9) of the SICA, clarified / directed that the Company would make payment of the due instalments to its foreign currency lenders in Euro as per the amount reflected in Euro in the statement annexed to the sanctioned scheme alongwith the applicable interest i.e. LIBOR plus 1% per annum. (LIBOR + 3% in case of delay/ default in payment of instalments)

The Company has filed appeal with AAIFR challenging the said order of BIFR which is pending.

4. The demand of water charges Rs. 12,49,06 thousands (inclusive of interest on arrear of water bills of Rs.1,23,66 thousands) as on 31.03.2010 (Rs. 10,86,31 thousands as on 31.3.2009) raised by Chief Engineer, Subernarekha Multipurpose Project, Chandil has been disputed by the Company under a Writ Petition with Jharkhand High Court, Ranchi. However, pending disposal of Writ Petition, the company based on its own estimate of liability has made total provision for Rs 1,01,32 thousands upto 31st March, 2010, (Rs.93,84 thousands as on 31.3.2009).

5. The amount of borrowing cost capitalized in accordance with requirement of AS-16, amounts to Rs.4,01 Thousand (Previous year Rs.3,95 Thousand).

Estimated amounts of defined benefits payable for the gratuity plan within next year is Rs. 39,82 thousands.

6. Balances from some of the Debtors, Creditors / Suppliers and Lenders are subject to confirmation as at 31.03.2010.

7. In the opinion of the management. Current Assets, Loans and Advances have a realizable value equivalent to the amount at which they are stated in the Balance Sheet and the provision for all known liabilities have been made except to the extent as appearing in other notes.

8. Segmental Reporting

The company is a single location single product company and hence the requirements of AS - 17 on Segment Reporting are not relevant.

9. Related Party Transactions - AS 18

As per AS-18 issued by the Institute of Chartered Accountants of India, the Companys related parties transactions with them are disclosed below:

(a) By virtue of control

Moderate Leasing & Capital Services Ltd. Longwell Investments Private Ltd.

(b) Key Management Personnel and their relatives

Mr. U K Modi being Chairman and Managing Director is the Key Management Personnel and Mr. Abhishek Modi, Director is related to him being son.

There has been no transaction with the key management personnel except payment of remuneration.

(c) Enterprises over which (b) above have significant influence and with whom transactions have taken place.

(i) SBEC sugar Ltd.

(ii) SBEC Bioenergy Ltd.

(iii) Modi Industries Limited

Civ) Modi Mundipharma Pvt. Ltd.

(v) Modi Revlon Pvt. Ltd.

(vi) Modiline Travel Services Pvt. Ltd.

(vii) Win Medicare Pvt. Ltd.

(viii) Modi Motors Pvt. Ltd.

Cm) Modi Senator (India) Pvt. Ltd

(x) Morgardshammar India Ltd.

(xi) M.G. Mobiles India Pvt. Ltd.

(xii) H.M. Tube & Containers Pvt Ltd.

(xiii) Chandil Power Ltd.

10. The management is of the opinion that except the assets written off during the year and the assets retired from active use, there is no further impairment of assets as at 31-3-2010 as contemplated in the accounting standard 28.

11. Previous year figures have been regrouped / rearranged wherever necessary.

12. Schedule 1 to 18 form an integral part of the Balance Sheet and Profit & Loss Account and have been duly authenticated.

 
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