Home  »  Company  »  Electrosteel Cas  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Electrosteel Castings Ltd.

Mar 31, 2015

1 10.75% Non Convertible Debentures (privately placed) are secured by first pari-passu charge on company's fixed assets (immovable and movable) including land and buildings both present and future other than assets located at Chennai and Elavur and excluding furniture and fixture, vehicles and other intangible assets. These debentures were allotted on 11th April, 2012 and are redeemable at par in three annual installments at the end of 3rd, 4th & 5th year from the date of allotment.

2 External Commercial Borrowings is secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur.

3 External Commercial Borrowings of USD 77.50 million is repayable in 3 annual installments of 33.25% in July, 2013, 33.25% in July, 2014 & 33.50% in July, 2015. The outstanding as on 31.03.2015 is Rs. 1,62,25.26 lakhs (previous year Rs.3,09,92.19 lakhs). External Commercial Borrowings of USD 139.00 million is repayable in 12 semi annual installments from 29th August, 2015. The outstanding as on 31.03.2015 is Rs.8,68,68.05 lakhs (previous year Rs.8,32,74.90 lakhs). The interest rate ranges from 6M Libor 250 to 500 basis points.

4 Rupee Term Loan from bank of Rs.2,00,00.00 lakhs (Previous year Rs.2,00,00.00 lakhs) is secured by way of first pari¬passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur. Term Loan is repayable in 28 quarterly installments starting from June, 2015. The interest rate ranges from 13.00% p.a to 13.50% p.a.

5 Rupee Term Loan from bank of Rs.40,00.00 lakhs (Previous year Rs. nil lakhs) is to be secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai, Elavur and Vadgaon (Pune). Term Loan is repayable in 16 equal quarterly installments starting from Dec, 2015. The interest rate ranges from 11.00% p.a to 11.50% p.a.

6 Term Loan from financial institution of Rs. Nil lakhs (Previous year Rs.9,37.50 lakhs) was secured by way of first pari¬passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur.

7 Term Loan from a financial institution of Rs.23,52.94 lakhs (Previous year Rs.4117.65 lakhs) is secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur. Term Loan is repayable in 17 equal quarterly installments starting from 30th December, 2011. The interest rate ranges from 12.00% p.a to 12.50% p.a.

8 Term Loan from a financial institution of Rs. 50,00.00 lakhs (Previous year Rs. nil lakhs) is secured by way of first pari¬passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur. Term Loan is repayable in 24 equal quarterly installments starting from 01st July, 2016. The interest rate ranges from 12.00% p.a to 13.00% p.a.

9 Term Loan from a financial institution of Rs.39,54.00 lakhs (Previous year Rs.39,54.00 lakhs) is to be secured by way of second pari-passu charge on all movable Fixed Assets and Current Assets, both present and future of the Company. The loan is repayable in 54 monthly installments starting from April, 2015. The interest rate ranges from 14.00% p.a to 14.50% p.a.

10 Contingent Liabilities not provided for in respect of:

Amount Rs. in lakhs

As at 31.03.2015 As at 31.03.2014

a)Various show cause notices/demands issued/ raised, which in the opinion of the management are not tenable and are pending with various forum / authorities:

i) Sales Tax 75,21.84 75,48.52

ii) Excise, Custom Duty and Service tax [net of provision of Rs.5,00.00 lakhs(previous year Rs.5,00.00 lakhs)] 1,34,41.52 1,34,00.78

iii) Income Tax 1,14.48 28.45

b) Employees State Insurance Corporation has raised demand for contribution in respect of Gross Job Charges for the year 2001-02, 2003-04 and March'08 to January'10. In the opinion of the management demand is adhoc and arbitrary and is not sustainable legally. 92.51 92.51

c) Demand of Tamilnadu Electricity Board disputed by the Company. 8.20 8.20

d) During the year 1994 UPSEB had raised demand for electricity charges by revising the power tariff schedule applicable to the Company retrospectively from Feb'86. In the opinion of the management the revised power tariff is not applicable to the Company and accordingly the Company disputed the demand and the matter is pending before Hon'ble High Court at Allahabad. 2,61.74 2,61.74

e) Corporate guarantee issued to banks by the Company on behalf of :

(i) Subsidiary Companies 74,71.77 1,09,07.91

(ii) Others 21,61.17 -

f) Standby Letter of Credit issued by banks on behalf of the Company in favour of

(i) Subsidiary Companies 1,16,38.81 2,04,13.61

g) Guarantees given by banks on behalf of the Company 89,61.87 1,50,88.70

h) Bills Discounted with Banks. 69,69.41 67,47.88

i) The Company has disputed downward revision in the prices affected by the purchaser subsequent to sale of certain specified materials. In the opinion of the management and also on the merit of the case, as advised legally no liability is likely to arise. The matter is subjudice and pending final judgement the amount payable, if any is not ascertainable presently.

Note: Future cash outflows, if any, in respect of (a) to (d), and (i) above is dependent upon the outcome of judgments / decisions.

11 The company has opted for accounting the exchange difference arising on reporting of long term foreign currency monetary items as per Accounting Standard 11, "The Effects of Changes in Foreign Exchange Rates". During the year ended 31st March 2015 the net exchange difference of Rs. 4290.69 lakhs (net debit)(previous year Rs.12326.02 lakhs) on foreign currency loans have been adjusted in the carrying amount of fixed assets / Capital work in progress. The unamortised balance is Rs. 21854.69 lakhs (previous year Rs.17769.41 lakhs).

12 The Board of Directors of the Company has approved the Scheme of Amalgamation (Scheme) of its wholly owned subsidiary, Mahadev Vyapaar Private Limited with the Company with effect from April 1, 2014. No effect of the Scheme has been given in the Financial Statements pending receipt of necessary approvals.

13 Previous year figures have been regrouped / reclassified whereever necessary.


Mar 31, 2014

1.1.1 The Company has only one class of shares referred to as equity shares having a par value of Re 1/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, after distribution of all preferential amounts, in proportion of their shareholding.

1.1.2 During the year, the Company has issued 1,70,64,617 Equity Shares to Promoters/Promoters group of the Company on Preferential basis as approved by the members of the Company at the Extraordinary General Meeting held on 23.11.2013

1.1.3 The dividend propsed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

1.1.4 During the year ended March 31, 2014 the amount of per share dividend recognized as distribution to equity shareholders was Re 0.65.

1.2.1 The Company through Qualified Institutional Placements had issued 33568312 warrant at a price of Rs. 3 each, entitling the holder to 1 (one) equity share. As per terms and conditions of the issue, the warrant holders have an option to convert, warrant into equity at any time on or after three years and upto five years from the date of allotment (i.e. 08/02/2010) at exercise price of Rs. 59.58 per share. The warrant issue price aggregating to Rs. 10,07.05 lakhs, being non adjustable/non refundable has been credited to Capital Reserve.

1.3.1 11% Non Convertible Debentures (privately placed) are secured by second pari-passu charge on company''s fixed assets (immovable and movable) including land and buildings both present and future other than assets located at Chennai and Elavur. These debentures were allotted on 5th July, 2013 and are redeemable at par at the end of 5th year from the date of allotment i.e 5th July, 2018. However, there is a Put and Call option available to the issuer / investor which can be exercised at the end of three years from the date of allotment i.e 5th July, 2013.

1.3.2 12.50% Non Convertible Debentures (privately placed) are secured by second pari-passu charge on company''s fixed assets (immovable and movable) including land and buildings both present and future other than assets located at Chennai and Elavur. These debentures were allotted on 5th July, 2013 and are redeemable at par at the end of 5th year from the date of allotment i.e 5th July, 2018. However, there is a Put and Call option available to the issuer / investor which can be exercised at the end of 30 months from the date of allotment i.e 5th July, 2013 and every quarter thereafter.

1.3.3 10.75% Non Convertible Debentures (privately placed) are secured by first pari-passu charge on company''s fixed assets (immovable and movable) including land and buildings both present and future other than assets located at Chennai and Elavur and excluding furniture and fixture, vehicles and other intangible assets. These debentures were allotted on 11th April, 2012 and are redeemable at par in three equal annual installments at the end of 3rd, 4th & 5th year from the date of allotment i.e 11th April, 2012. However, there is a Put and Call option available to the issuer / investor which can be exercised at the end of three years from the date of allotment i.e 11th April, 2015.

1.3.4.1 External Commercial Borrowing is secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur.

1.3.4.2 External Commercial Borrowings of USD 77.50 million is repayable in 3 annual installments of 33.25% in July, 2013, 33.25% in July, 2014 & 33.50% in July, 2015. The outstanding as on 31.03.2014 is Rs. 3,09,92.19 lakhs (previous year Rs. 4,20,82.50 lakhs). External Commercial Borrowings of USD 139.00 million is repayable in 12 semi annual installments from 29th August, 2015. The outstanding as on 31.03.2014 is Rs. 7,54,77.00 lakhs (previous year Rs. 8,32,74.90 lakhs). The interest rate ranges from 6M Libor 250 to 500 basis points.

1.3.5 Rupee Term Loan from bank is to be secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur. Term Loan is repayable in 28 quarterely installments starting from June, 2015. The interest rate ranges from 13.00% p.a to 13.50% p.a.

1.3.6.1. Term loan from a financial institution of Rs. 1,50,00 lakhs and Rs. 1,00,00 lakhs are secured by way of first pari-passu charge over the movable fixed assets, lands and other immovable properties of the Company both present and future other than assets located at Chennai and Elavur.

1.3.6.2 Term loan of Rs. 1,50,00 lakhs is repayable in 16 quarterly equal installments from 14th August, 2010. The outstanding as on 31.03.2014 is Rs. 9,37.50 lakhs (previous year Rs. 46,87.50 lakhs). Term loan of Rs. 1,00,00 lakhs is repayable in 17 quarterly equal installments from 30th December, 2011. The outstanding as on 31.03.2014 is Rs. 41,17.65 lakhs (previous year Rs. 64,70.59 lakhs). The interest rate ranges from 11.00% p.a to 12.50%. p.a.

1.3.6.3 Term Loan of Rs. 39,54 lakhs is to be secured by way of second pari-passu charge on all movable Fixed Assets and Current Assets, both present and future of the Company. The loan is repayable in 54 monthly installments starting from April, 2015. The interest rate ranged from 14.00% p.a to 14.50% p.a.

1.7.1 Loans repayable on demand being Working Capital facilities from banks (both fund based and non fund based) are secured by first pari passu charge by way of joint hypothecation of raw materials, finished goods, work in progress, consumable stores and spares, book debts / receivables and other current assets of the company both present and future.

1.8.1 Including acceptances of Rs.1,49,50.56 lakhs (previous year Rs. nil)

1.8.2 Disclosure of Trade Payables is based on the information available with the company regarding the status of the suppliers as defined under the " Micro, Small and Medium Enterprise Development Act, 2006" (the Act). There are no delays in payment made to such suppliers and there is no overdue amount outstanding as at the balance sheet date. Based on above the relevant disclosures u/s 22 of the Act are as follows:

1.9.1 Other provisions include (a) provision relating to indirect taxes in respect of proceedings of various excise duty matters - carrying amount at the end of the year Rs. 5,00.00 lakhs (previous year Rs. 5,00.00 lakhs). No amount was used and reversed during the year. Outflows in these cases would depend on the final developments/outcomes; (b) Other class of provisions related to disputed customer claims/rebates/demands - carrying amount at the end of the year Rs.2,10.00 lakhs (previous year Rs. 15,00.00 lakhs), Rs.15,00.00 lakhs were reversed during the year.

Notes :

1.10.1 866750000 Equity shares of Rs 10/- each fully paid up of Electrosteel Steels Limited aggregating Rs 86675.00 lakhs held by the Company as Investment have been pledged in favour of Electrosteel Steels Limited lenders for securing financial assistance to Electrosteel Steels Limited.

1.10.2 The Company''s investment in Electrosteel Steels Limited being strategic and long term in nature, no provision has been considered necessary with regard to diminution in market value of these investment.

1.10.3 The Company has investment in equity shares of Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers). The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the Company on various matters including for forfeiture of the Company''s investment in equity shares of the DPL. The Company had inter alia filed petition before the Hon''ble High Court of Jharkhand at Ranchi. The Hon''ble High Court of Jharkhand at Ranchi upheld the Company''s appeal and decided that the matter would have to be referred for Arbitration. The Venturer has challenged the aforesaid judgment in the Divisional Bench of the Hon''ble High Court of Jharkhand at Ranchi. Pending final outcome of the matter and since , the other Venturer are not providing the financial statements of DPL, and thereby disclosures as regards to contingent liability, capital commitments, if any, aggregate amounts of the assets, liabilities, income and expenses related to the Company''s interest in DPL has not been made in these financial statements.

2.12.4 (a) The North Dhadhu Coal Block located in the state of Jharkhand was allocated to the Company, M/s. Adhunik Alloys & Power Limited (AAP), M/s. Jharkhand

Ispat Pvt. Ltd. (JPL) and M/s. Pawanjay Steel & Power Limited (PSPL) (collectively referred to as venturers) for working through a joint venture company. Accordingly, North Dhadhu Mining Company Private Limited (NDMCPL), a company in which the Company has joint control (proportion of ownership interest of the Company being 48.98 %) along with other venturers was formed. The Company has investment of Rs. 8,22.81 Lakhs in equity shares of NDMCPL.

(b) The Ministry of Coal, Government of India had issued an order for de-allocation of North Dhadhu Coal Block and deduction of Bank Guarantee of Rs. 56.03 crores issued for the same. The Company''s share in the Bank Guarantee is Rs 27.45 crores. On a writ petition filed by the Company for quashing the order, stay has been granted by the Hon''ble High Court of Jharkhand. Pending final judgement, no provision is considered necessary in respect of Company''s investment in NDMCPL and amount of Bank Guarantee.

2.13.1 Quoted Investments for which quotations are not available have been included in the market value at the face value/paid up value, whichever is lower except in case of debenture, bonds and government securities where the net present value at current yield to maturity have been considered.

2.13.2 Pledged with lenders against overdraft facility. (refer note no. 2.7.2)

2.14.1 Including loans and advance to employees amounting to Rs. 2.63 lakhs.

2.14.2 In the opinion of the Board of Directors, current assets and loans and advances have the value at which these are stated in the Balance Sheet, unless otherwise stated and adequate provisions for all known liabilities have been made and are not in excess of the amount reasonably required.

2.14.3 Security deposits include Rs. 5,57.50 lakhs (previous year Rs. 5,57.50 lakhs) with private limited companies in which directors are interested as a member / director and Rs.38,22.30 lakhs (previous year Rs.42,46.68 lakhs) with related parties.

2.14.4 Capital advances includes Rs 5.27 lakhs (previous year Rs.5.27 lakhs) paid to related party.

2.17.1 Balances of Trade Receivables including for Turnkey Contracts, Work-in-Progress, Creditors and advances are subject to confirmation/reconciliation and adjustments in this respect are carried out as and when amounts thereof, if any are ascertained.

2.18.1 Fixed Deposits with Banks include Fixed Deposit of Rs. 3,39.71 lakhs (previous year Rs. 20.79 lakhs) lodged with Government Departments, Customers and Bank.

2.18.2 Includes Fixed Deposit of Rs. 1,37,16.64 lakhs ( previous year Rs. 2,08,75.00 lakhs) and Bank Balances of Rs. 50,00.00 lakhs (previous year Rs. 75,00.00 lakhs ) in respect of External Commercial Borrowings loans pending utilisation for intended use.

2.29.3 Miscellaneous expenses include Charity and Donation of Rs. 3,07.70 lakhs (previous year Rs. 2,51.97 lakhs).

2.29.4 The Company has certain operating lease arrangements for office accommodations etc. with tenure extending upto 9 years. Term of certain lease arrangements include escalation clause for rent on expiry of 36 months from the commencement date of such lease and deposit / refund of security deposit etc. Expenditure incurred on account of rent during the year and recognized in the Statement of Profit and Loss amounts to Rs. 4,99.57 lakhs (previous year Rs. 4,31.63 lakhs).

2.29.5 During the year, the Company has incurred Rs. 89.47 lakhs (previous year Rs. 1,13.20 lakhs) on account of research and development expenses which has been charged to Statement of Profit and Loss.

2.30.1 The Company is entitled to MAT credit and accordingly based on evidences MAT credit of Nil (previous year Rs. 1,50.35 lakhs) has been recognised in these financial statements.

2.31 EMPLOYEEBENEFITS

The disclosures required under Accounting Standard 15 on ''''Employee Benefits" notified in the Companies (Accounting Standards) Rules 2006, are given below:

Defined Benefit Scheme

The employee''s gratuity fund scheme managed by Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Ltd. 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.

Compensated Absences

The obligation for compensated absences is recognized in the same manner as gratuity. The actuarial liability of Compensated Absences (unfunded) of accumulated privileged and sick leaves of the employees of the Company as at 31.03.2014 is given below :

Notes :

i) Assumptions relating to future salary increases, attrition, interest rate for discount & overall expected rate of return on Assets have been considered based on relevant economic factors such as inflation, market growth & other factors applicable to the period over which the obligation is expected to be settled.

ii) The Company expects to contribute Rs. 2,00 lakhs (previous year Rs. 2,00 lakhs) to Gratuity fund in 2014-15.

2.33 a. Capital work in progress includes plant and equipments and other assets under installation and capital and other expenditure incured pending completion thereof.

b. The expenses incurred for projects/assets during the construction/mine development period are classified as "Pre-operative and Development Expenses" pending capitalization and are included under capital work in progress and will be allocated to the assets on completion of the project/assets. Consequently expenses disclosed under the respective head are net of amount so classified and details of these are as follows.

2.35 As regards construction contracts in progress as on 31.03.2014, aggregate amount of costs incurred and recognised profit (less recognized losses) upto the year end (to the extent ascertained by the management), aggregate amount of advances received and aggregate amount of retentions are Rs. 72,45.48 lakhs, Rs. 4,35.91 lakhs and Rs. 6,18.23 lakhs respectively. (previous year Rs. 1,90,38.15 lakhs, Rs. 1,46.88 lakhs and Rs. 12,68.47 lakhs respectively).

2.37 Contingent Liabilities not provided for in respect of:

a) Various show cause notices/demands issued/ raised, which in the opinion of the management are not tenable and are pending with various forum / authorities:

i) SalesTax 75,48.52 56,95.24

ii) Excise, Custom Duty and Service tax [net of provision of Rs. 5,00 lakhs (previous year Rs. 5,00 lakhs) 1,34,00.78 1,02,56.29

iii) Income Tax 28.45 42.60

b) Employees State Insurance Corporation has raised demand for contribution in respect of Gross Job Charges for the year 2001-02, 2003-04 and March, 08 to January, 10. In the opinion of the management demand is adhoc and arbitrary

andisnotsustainablelegally. 92.51 92.51

c) Demand of Tamilnadu Electricity Board disputed by the Company. 8.20 8.20

d) During the year 1994 UPSEB had raised demand for electricity charges by revising the power tariff schedule applicable to the Company retrospectively from Feb''86. In the opinion of the management the revised power tariff is not applicable to the Company and accordingly the Company disputed the demand and the matter is pending beforeHon''bleHighCourtatAllahabad. 2,61.74 2,61.74

e) Corporate guarantee issued to banks by the Company on behalf of:

(i) Subsidiary Companies 1,09,07.91 44,37.91

(ii) Associate Company - 4,52,00.00

f) Standby Letter of Credit issued by banks on behalf of the company in favour of:

(i) SubsidiaryCompanies 2,04,13.61 2,37,45.04

g) Guarantees given by banks on behalf of the Company (including Rs. 27,45.47 lakhs referred to in note 2.12.5) 1,50,88.70 1,61,44.87

h) BillsDiscountedwithBanks. 67,47.88 80,33.11

i) The Company has disputed downward revision in the prices affected by the purchaser subsequent to sale of certain specified materials. In the opinion of the management and also on the merit of the case, as advised legally no liability is likely to arise. The matter is subjudice and pending final judgement the amount payable, if any is not ascertainable presently.

Note : Future cash outflows, if any, in respect of (a) to (d), and (i) above is dependent upon the outcome of judgments / decisions.

2.38 Related party disclosure as identified by the management in accordance with the Accounting Standard (AS) 18 on "Related Party Disclosures" are as follows :

A) Names of related parties and description of relationship

1) Subsidiary Company

Electrosteel Europe SA

Electrosteel Algerie SPA

Electrosteel Castings (UK) Limited

Electrosteel USA LLC

WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC)

Mahadev Vyapaar Private Limted

Electrosteel Trading S.A, Spain

Singardo International Pte Ltd.

Electrosteel Castings Gulf Fze

Electrosteel Doha for Trading (LLC)

Electrosteel Brasil Ltda. Tubos e Conexoes Duteis

2) Associate Company

Lanco Industries Ltd.

Electrosteel Steels Limited

Electrosteel Thermal Power Ltd.

3) Joint Venture

North Dhadhu Mining Company Pvt. Ltd.

Domco Private Limited

4) Key Management Personnel (KMP) and their relative

Mr. Umang Kejriwal (Managing Director)

Mr. Mayank Kejriwal (Joint Managing Director )

Mr. Uddhav Kejriwal (Wholetime Director)

Mr. Vyas Mitre Ralli (Wholetime Director)

Mr. Mahendra Kumar Jalan (Wholetime Director)

Mr. Rama Shankar Singh (Director) till 5th February, 2014 he was Wholetime director of the company

Smt. Uma Kejriwal-mother of Mr. Umang Kejriwal-Managing Director and

Mr. Mayank Kejriwal - Joint Managing Director Umang Kejriwal (H.U.F)

5) Enterprise where KMP/Relatives of KMP have signifinant influnce or control :

Global Exports Ltd.

G. K. & Sons Private Limited

Badrinath Industries Ltd.

Akshay Ispat & Ferro Alloys Pvt. Ltd.

Electrocast Sales India Ltd Tulsi Highrise Pvt. Ltd.

Wilcox Merchants Pvt. Ltd.

Murari Investment & Trading Company Ltd.

Electrosteel Thermal Coal Ltd.

2.44 The Company has opted for accounting the exchange difference arising on reporting of long term foreign currency monetary items as per Accounting Standard 11, "The Effects of Changes in Foreign Exchange Rates". During the year ended 31st March 2014 the net exchange difference of Rs.1,23,26.02 lakhs (net debit) on foreign currency loans have been adjusted in the carrying amount of fixed assets / Capital work in progress. The unamortised balance is Rs.1,51,51.66 lakhs (previous year Rs.42,03.89 lakhs).


Mar 31, 2013

1.1.1 10.75% Non Convertible Debentures (privately placed) are secured by first pari-passu charge on company''s fixed assets (immovable and movable) including land and buildings both present and future other than assets located at Chennai and Elavur and excluding furniture and fixture, vehicles and other intangible assets. These Debentures were allotted on 11th April, 2012 and are redeemable at par in three equal annual installments at the end of 3rd, 4th & 5th year from the date of allotment i.e. 11th April, 2015. However, there is a Put and Call option available to the issuer / investor which can be exercised at the end of three years from the date of allotment.

1.1.2 9.15% Non Convertible Debentures (privately placed) were secured by second pari-passu charge on Company''s fixed assets (immovable and movable) including land and buildings both present and future other than certain property located at Chennai and Elavur. These Debentures were allotted on 8th February, 2010 and were redeemed during the year.

1.1.1.1 Term loan from a financial institution are secured by way of first pari-passu charge over the movable fixed assets, lands and other immovable properties of the Company both present and future other than assets located at Chennai and Elavur.

1.1.1.2 Term loan of Rs. 15000 lakhs is repayable in 16 quarterly equal installments of Rs. 937.50 lakhs from 14th August 2010 and term loan of Rs. 10000 lakhs is repayable in 17 quarterly equal installments of Rs. 588.23 lakhs from 30th December 2011. The interest rate ranges from 10% to 13%.

1.1.2.1 External Commercial Borrowings of Rs. 42082.50 lakhs is secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur, and External Commercial Borrowings of Rs. 75477.00 lakhs is secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur.

1.1.2.2 External Commercial Borrowings of Rs. 42082.50 lakhs is repayable in 3 annual installments of 33.25% in July''2013, 33.25% in July''2014 & 33.50% in July''2015 and external commercial borrowings of Rs. 75477.00 lakhs is repayable in 12 Semi annual installments from 29th August''2015. The interest rate ranges from 6M Libor 200 to 500 bps.

1.2.1 Loans repayable on demand being Working Capital facilities from Banks (both fund based and non fund based) are secured by pari passu charge by way of joint hypothecation of raw materials, finished goods, work in progress, consumable stores and spares, book debts / receivables and other current assets of the Company both present and future.

1.3.1 Including acceptances of Rs. Nil (previous year Rs. 10562.71 lakhs)

1.3.2 Disclosure of Trade payables is based on the information available with the company regarding the status of the suppliers as defined under the " Micro, Small and Medium Enterprise Development Act, 2006" (the Act). There are no delays in payment made to such suppliers and there is no amount outstanding as at the balance sheet date.

1.4.1 Other provisions include (a) provision relating to indirect taxes in respect of proceedings of various excise duty matters - carrying amount at the end of the year Rs. 500.00 lakhs (previous year Rs. 500.00 lakhs). No amount was used and reversed during the year. Outflows in these cases would depend on the final developments/outcomes; (b) Other class of provisions related to disputed customer claims/rebates/demands - carrying amount at the end of the year Rs. 1500.00 lakhs (previous year Rs. nil).

1.5.1 500000000 Equity shares of Rs 10/- each fully paid up of Electrosteel Steels Limited aggregating Rs. 50000.00 lakhs held by the Company as Investment have been pledged in favour of Electrosteel Steels Limited lenders for securing financial assistance to Electrosteel Steels Limited.

1.5.2 The Company''s investment in Electrosteel Steels Limited being strategic and long term in nature, no provision has been considered necessary with regard to diminution in market value of these investment.

1.5.3 The Company has investment in equity shares of Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers). The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the Company on various matters including for forfeiture of the Company''s investment in equity shares of the DPL. The Company had inter alia filed petition before the Hon''ble High Court of Jharkhand at Ranchi,. The Hon''ble High Court of Jharkhand at Ranchi upheld the Company''s appeal and decided that the matter would have to be referred for Arbitration. The Venturer has challenged the aforesaid judgment in the Divisional Bench of the Hon''ble High Court of Jharkhand at Ranchi. Pending final outcome of the matter and since , the other Venturer are not providing the financial statements of DPL, and thereby disclosures as regards to contingent liability, capital commitments, if any, aggregate amounts of the assets, liabilities, income and expenses related to the Company''s interest in DPL has not been made in these financial statements.

1.5.4 (a) The North Dhadhu Coal Block located in the state of Jharkhand was allocated to the Company, M/s. Adhunik Alloys & Power Limited (AAP), M/s. Jharkhand Ispat Pvt. Ltd. (JPL) and M/s. Pawanjay Steel & Power Limited (PSPL) (collectively referred to as venturers) for working through ajoint venture company. Accordingly, North Dhadhu Mining Company Private Limited (NDMCPL), a company in which the Company has joint control (proportion of ownership interest of the Company being 48.98 %) along with other venturers was formed. The Company has investment of Rs. 822.81 Lakhs in equity shares ofNDMCPL.

(b) During the year, the Ministry of Coal, Government of India issued an order for de-allocation of North Dhadhu Coal block and deduction of Bank Guarantee of Rs. 56.03 Crores issued for the same. The Company''s share in the Bank Guarantee is Rs 27.45 crores. On a writ petition filed by the Company for quashing the order, stay has been granted by the Hon''ble High Court of Jharkhand. Pending final judgement, no provision is considered necessary in respect of Company''s investment in NDMCPL and amount of Bank Guarantee.

1.6.1 Quoted Investments for which quotations are not available have been included in the market value at the face value/paid up value, whichever is lower except in case of debenture, bonds and government securities where the net present value at current yield to maturity have been considered.

1.7.1 Includes loans and advances to employees.

1.7.2 Includes Rs. Nil (previous year Rs. 234.59 lakhs) paid towards share application money.

1.7.3 In the opinion of the Board of Directors, current assets and loans and advances have the value at which these are stated in the Balance Sheet, unless otherwise stated and adequate provisions for all known liabilities have been made and are not in excess of the amount reasonably required.

1.7.4 Security deposits include Rs. 557.50 lakhs (previous year Rs. 557.50 lakhs) with private limited Companies in which directors are interested as a member / director and Rs. 4246.68 lakhs (previous year Rs. 4246.68 lakhs) with related parties.

1.8.1 Balances of Trade receivables including for Turnkey Contracts, Work-in-progress, Creditors and advances are subject to confirmation/reconciliation and adjustments in this respect are carried out as and when amounts thereof, are ascertained.

1.7.2 ReferNoteNo.2.7

1.9.1 Fixed Deposits with Banks include Fixed Deposit of Rs. 20.79 lakhs (previous year Rs. 10.00 lakhs) lodged with Government Departments, Customers and Bank.

1.9.2 Represents amount lying in Escrow account pursuant to the stipulation made by Ministry of Coal, for Mine Closure Plan and shall be utilised for expenses to be incurred towards closure of the mine.

1.9.3 Miscellaneous expenses include Charity and Donation of Rs. 251.97 lakhs (previous year Rs. 15.78 lakhs).

1.9.4 The Marked-to-Market losses on derivative contract for the year stood at Rs. 96.28 lakhs (previous year Rs. 6861.35 lakhs). Even though such losses have not been determined and accrued during the year, keeping in view the announcement of Institute of Chartered Accountants of India dated March 29, 2008 regarding Accounting for Derivatives, the Company has recognized losses in the Statement of Profit and Loss for the year or capitalised as the case may be. Such losses crystalised during the year have been considered as revenue or capitalised depending upon the nature thereof and resultant excess amount of provision of Rs. 5060.16 lakhs being no longer required have been written back in these financial statements.

1.9.5 The Company has certain operating lease arrangements for office accommodations etc. with tenure extending upto 9 years. Term of certain lease arrangements include escalation clause for rent on expiry of 36 months from the commencement date of such lease and deposit / refund of security deposit etc. Expenditure incurred on account of rent during the year and recognized in the Statement of Profit and Loss amounts to Rs. 431.63 lakhs (previous year Rs. 561.03 lakhs).

1.9.6 During the year, the Company has incurred Rs. 113.20 lakhs (previous year Rs 91.44 lakhs) on account of research and development expenses which has been charged to Statement of Profit and Loss.

1.10.1 The Company is entitled to MAT credit and accordingly based on evidences MAT credit of Rs. 150.35 lakhs (previous year Rs. 700.21) has been recognised in these financial statements.

1.11 As regards construction contracts in progress as on 31.03.2013, aggregate amount of costs incurred and recognised profit (less recognized losses) upto the year end (to the extent ascertained by the management), aggregate amount of advances received and aggregate amount of retentions are Rs. 19038.15 lakhs, Rs. 146.88 lakhs and Rs. 1268.47 lakhs respectively. (previous year Rs. 17961.59 lakhs, Rs. 596.34 lakhs and Rs. 1010.09 lakhs respectively).

1.12 Related party disclosure as identified by the management in accordance with the Accounting Standard (AS) 18 on "Related Party Disclosures" are as follows :

A) Names of related parties and description of relationship

1) Subsidiary Company Electrosteel Europe SA

Electrosteel Algerie SPA Electrosteel Castings (UK) Ltd.

Electrosteel USA LLC

WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC) Mahadev Vyapaar Private Ltd.

Electrosteel Trading S.A, Spain Singardo International Pte Ltd.

Electrosteel Castings Gulf FZE

Electrosteel Doha for Trading LLC

Electrosteel Brasil Ltda. Tubos e Conexoes Duteis

2) Associate Company Lanco Industries Ltd.

Electrosteel Steels Ltd.

Electrosteel Thermal Power Ltd.

3) Joint Venture North Dhadhu Mining Company Pvt. Ltd.

Domco Private Ltd.

4) Key Management Personnel (KMP) and their relatives

Mr. Umang Kejriwal (Managing Director)

Mr. Mayank Kejriwal (Joint Managing Director )

Mr. Uddhav Kejriwal (Wholetime Director)

Mr. Vyas Mitre Ralli (Wholetime Director)

Mr. Mahendra Kumar Jalan (Wholetime Director)

Mr. Rama Shankar Singh (Wholetime Director)

Smt. Uma Kejriwal-mother of Mr. Umang Kejriwal-Managing Director and Mr. Mayank Kejriwal - Joint Managing Director Umang Kejriwal (H.U.F)

5) Enterprise where KMP/Relatives of KMP have signifinant influnce or control

Global Exports Ltd.

G.K.& Sons Private Ltd.

Badrinath Industries Ltd.

Akshay Ispat & Ferro Alloys Pvt. Ltd. Electrocast Sales India Ltd.

Tulsi Highrise Pvt. Ltd.

Wilcox Merchants Pvt. Ltd.

Murari Investment & Trading Company Ltd. Electrosteel Thermal Coal Ltd.

1.13 In accordance with the amendment to AS-11, exchange loss/gain arising on long term foreign currency loans, is being adjusted to the cost of fixed assets. Accordingly, such losses amounting to Rs. 4792.70 lakhs (previous year Rs. 6951.67 lakhs) have been adjusted to Capital work in progress and Fixed assets. During the year, based on clarification issued by Ministry of Corporate Affairs vide its circular 25/2012/09.08.12 , Rs. 534.05 lakhs charged to Statement of Profit and Loss in the previous year has been written back under respective head of account and adjusted to the cost of fixed assets / capital work in progress.

1.14 Previous year figures have been regrouped / reclassified wherever necessary.


Mar 31, 2012

1.1.1 The Company has only one class of shares referred to as equity shares having a par value of Re 1/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, after distribution of all preferential amount, in proportion of their shareholding.

1.1.2 The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

1.1.3 During the year ended 31 March 2012, the amount of per share dividend recognized as distribution to equity shareholders was Re. 0.50

1.2.1 The Company through Qualified Institutional Placements had issued 33568312 warrants at a price of Rs. 3 each, entitling the holder to 1 (one) equity share. As per terms and conditions of the issue, the warrant holders have an option to convert, warrant into equity at any time on or after three years from the date of allotment (i.e. 08/02/2010) and upto five years from the date of allotment (i.e. 08/02/2010) at exercise price of Rs. 59.58 per share. The warrant issue price aggregating to Rs. 1,007.05 lakhs, being non adjustable/non refundable has been credited to Capital Reserve.

1.2.2 Premium on Zero Coupon Convertible Bond has been provided proportionately and accordingly Rs. 519.88 lakhs (out of total redemption premium amounting to Rs. 3,563.48 lakhs) (previous year Rs. 611.29 lakhs, out of total redemption premium amounting to Rs. 3,137.73 lakhs) on this account has been debited to Securities Premium Account.

1.3.1 11.80% Non Convertible Debentures (privately placed) are secured by first pari-passu charge on company's fixed assets (immovable and movable) including land and buildings both present and future other than assets located at Chennai and Elavur. However the Company exercised the put option during the year and re-paid the outstanding amount.

1.3.2 9.15% Non Convertible Debentures (privately placed) are secured by second pari-passu charge on company's fixed assets (immovable and movable) including land and buildings both present and future other than assets located at Chennai and Elavur. These debentures were allotted on 8th February, 2010 and redeemable at par on 8th February, 2013.

1.3.3.1 Term loan from a financial institution are secured by way of first pari-passu charge over the movable fixed assets, lands and other immovable properties of the Company both present and future other than assets located at Chennai and Elavur.

1.3.3.2 Term loan of Rs. 1,50,00 lakhs is repayable in 16 quarterly equal Installments of Rs. 9,37.50 lakhs from 14th August 2010 and term loan of Rs. 1,00,00 lakhs is repayable in 17 quarterly equal installments of Rs. 5,88.23 lakhs from 30th December 2011. The interest rate ranges from 10% to 12%.

1.3.4.1 External Commercial Borrowing of Rs. 3,94,24.25 lakhs is secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur, and External Commercial Borrowing of Rs. 3,51,00.30 lakhs is to be secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur.

1.3.4.2 External Commercial Borrowings of Rs. 3,94,24.25 lakhs is repayable in 3 annual installments of 33.25% in July'2013, 33.25% in July'2014 & 33.50% in July'2015 and external commercial borrowings of Rs. 3,51,00.30 lakhs is repayable in 12 Semi annual installments from 29th August'2015. The interest rate ranges from 6M Libor 200 to 500 bps.

1.4.1 Working Capital facilities from Banks (both fund based and non fund based) are secured by pari passu charge by way of joint hypothecation of inventories and book debts, both present and future.

1.5.1 Including acceptances of Rs. 1,05,62.71 lakhs (previous year Rs. 2,39,67.81 lakhs)

1.5.2 Disclosure of Trade payables is based on the information available with the company regarding the status of the suppliers as defined under the " Micro, Small and Medium Enterprise Development Act, 2006" (the Act). There are no delays in payment made to such suppliers and there is no overdue amount outstanding as at the balance sheet date. Based on above the relevant disclosures u/s 22 of the Act are as follows :

1.6.1 Other provisions include (a) provision relating to indirect taxes in respect of proceedings of various excise duty matters - carrying amount at the end of the year Rs. 5,00.00 lakhs and carrying amount at the beginning of the year Rs. 5,00.00 lakhs. No amount was used and reversed during the year. Outflows in these cases would depend on the final developments/outcomes; (b) Other class of provisions related to disputed customer claims/rebates/demands - carrying amount at the end of the year Rs. nil and at the beginning of the year Rs. 28,40.00 lakhs. Amount reversed during the year was Rs. 28,40.00 lakhs.

Notes :

1.7.1. Plant and Equipments indudes Rs.8,03.021akhs (Previous year Rs.3,40.87 lakhs) being contribution for laying the Power line, the ownership of which does not vest with the company

1.7.2 Depreciation and amortization for the year includes Rs.11,90.62 lakhs (Previous year Rs. 10,92.69 lakhs) transferred to Pre-operative expenses.

1.7.3 Leasehold Land of Rs.2,04.00 lakhs( Previous Year Rs.2,04.00 lakhs) is pending execution of lease agreement and registration thereof.

1.7.4 Freehold land includes Rs. 1,31.39 lakhs (Previous year Rs.2,05.97 lakhs) in respect of which the execution of conveyance deeds is under process.

1.7.5 Plant and Equipments includes Rs. 24,98.72 lakhs (Previous year Rs. 24,98.72 lakhs) being cost of wagons procured under "Wagon Investment Scheme".

1.7.6 Other adjustment(net) includes Rs. 4,74.39 lakhs(Previous Year 17.70 lakhs) being interest capitalised during the year, Rs. 359.41 lakhs(Previous Year nil) representing foreign exchange fluctuation.

1.7.7. Railway siding includes Rs. 40,35.96 lakhs (Previous year Rs. nil) being amount incurred for construction, the ownership of which does not vest with the company

1.7.8 Land with factory buildings (net block Rs. 61.02 lakhs) at Elavur plant of the Company are mortgaged in the favour of lender to Electrosteel Steel limited, an associate of the Company

1.7.9 Refer note 2.3 and 2.7

1.8.1 500000000 Equity shares of Rs 10/- each fully paid up of Electrosteel Steels Ltd. aggregating Rs. 5,00,00.00 lakhs held by the Company as Investment have been pledged in favour of Electrosteel Steels Ltd. lenders for securing financial assistance to Electrosteel Steels Ltd.

1.8.2 The Company has investment in equity shares of Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers). The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the Company on various matters including for forfeiture of the Company's investment in equity shares of the DPL. The Company had inter alia filed petition before the Hon'ble High Court of Jharkhand at Ranchi,. The Hon'ble High Court of Jharkhand at Ranchi upheld the Company's appeal and decided that the matter would have to be referred for Arbitration. The Venturer has challenged the aforesaid judgment in the Divisional Bench of the Hon'ble High Court of Jharkhand at Ranchi. Pending final outcome of the matter and since, the other Venturer are not providing the financial statements of DPL, disclosures as regards contingent liability and capital commitments, if any, aggregate amounts of each of the assets, liabilities, income and expenses related to the Company's interest in DPL has not been made in these financial statements.

1.8.3 The Company's investment in Electrosteel Steels Limited being strategic and long term in nature, no provision has been considered necessary with regard to diminution in market value of these investment.

1.9.1 Quoted Investments for which quotations are not available have been included in the market value at the face value/paid up value, whichever is lower except in case of debenture, bonds and government securities where the net present value at current yield to maturity have been considered.

1.10.1 Includes loans and advances to employees.

1.10.2 Includes Rs. 2,34.59 lakhs (previous year Rs. 60.98 lakhs) paid towards share application money.

1.10.3 In the opinion of the Board of Directors, current assets and loans and advances have the value at which these are stated in the Balance Sheet, unless otherwise stated and adequate provisions for all known liabilities have been made and are not in excess of the amount reasonably required.

1.10.4 Security deposits include Rs. 5,57.50 lakhs (previous year Rs. 5,57.50 lakhs) with Private Limited Companies in which directors are interested as a member / director.

1.11.1 Balances of Trade receivables including for Turnkey Contracts, Work-in-progress, Creditors and advances are subject to confirmation/reconciliation and adjustments in this respect are carried out as and when amounts thereof, if any are ascertained.

1.12.1 Fixed Deposits with Banks include Fixed Deposit of Rs. 4,96.70 lakhs (previous year Rs. 4,08.28 lakhs) lodged with Government Departments, Customers and Banks.

1.13.1 Includes Rs. 9,97.93 lakhs (previous year Rs. nil) receivable from banks on account of derivative settlement.

1.14.1 Miscellaneous expenses include Charity and Donation of Rs. 15.78 lakhs (previous year Rs. 63.97 lakhs), Rs. nil (previous year Rs. 3,00.00 lakhs) towards relocation of certain assets of Elavur unit.

1.14.2 The Marked-to-Market losses on derivative contract for the year stood at Rs. 68,61.35 lakhs (previous year Rs. 18.26 lakhs). Even though such losses have not been determined and accrued during the year, keeping in view the announcement of Institute of Chartered Accountants of India dated March 29, 2008 regarding Accounting for Derivatives, the Company has recognized losses in the Statement of Profit and Loss for the year.

1.14.3 The Company has certain operating lease arrangements for office accommodations etc. with tenure extending upto 9 yrs. Term of certain lease arrangements include escalation clause for rent on expiry of 36 months from the commencement date of such lease and deposit / refund of security deposit etc. Expenditure incurred on account of rent during the year and recognized in the Statement of Profit and Loss amounts to Rs. 5,61.03 lakhs (previous year Rs. 5,15.86 lakhs).

1.14.4 During the year, the Company has incurred Rs. 91.44 lakhs (previous year Rs 83.26 lakhs) on account of research and development expenses which has been charged to Statement of Profit and Loss.

1.15.1 The Company has provided for Minimum Alternate Tax (MAT). The Company is entitled to MAT credit and accordingly based on evidences MAT credit of Rs. 7,00.21 lakhs (previous year Rs. Nil) has been recognised in this financial statements.

Defined Benefit Scheme

The employee's gratuity fund scheme managed by Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Ltd. 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.

Notes :

i) Assumptions relating to future salary increases, attrition, interest rate for discount & overall expected rate of return on Assets have been considered based on relevant economic factors such as inflation, market growth & other factors applicable to the period over which the obligation is expected to be settled.

ii) The Company expects to contribute Rs 1,30.00 lakhs (previous year Rs 1,00.00 lakhs) to Gratuity fund in 2012-13.

1.16 The expenses incurred for projects/assets during the construction/mine development period are classified as "Pre-operative Expenses" pending capitalization and are included under capital work in progress and will be allocated to the assets on completion of the project/assets. Consequently expenses disclosed under the respective head are net of amount classified as preoperative expenses by the Company. The details of these expenses are as follows :

1.17 As regards construction contracts in progress as on 31.03.2012, aggregate amount of costs incurred and recognised profit (less recognized losses) upto the year end (to the extent ascertained by the management), aggregate amount of advances received and aggregate amount of retentions are Rs. 1,79,61.59 lakhs, Rs. 5,96.34 lakhs and Rs. 10,10.09 lakhs respectively. (previous year Rs. 2,87,81.12 lakhs, Rs. 8,23.69 lakhs and Rs.7,90.41 lakhs respectively).

i) The Company has disputed downward revision in the prices effected by the purchaser subsequent to sale of certain specified materials. In the opinion of the management and also on the merit of the case, as advised legally no liability is likely to arise. The matter is subjudice and pending final judgement the amount payable, if any is not ascertainable presently.

Note : Future cash outflows, if any, in respect of (a) to (d), and (i) above is dependent upon the outcome ofjudgments / decisions.

1.18 Related party disclosure as identified by the management in accordance with the Accounting Standard (AS) 18 on "Related Party Disclosures" are as follows :

A) Names of related parties and description of relationship

1) Subsidiary Company Electrosteel Europe SA

Electrosteel Algeria SPA

Electrosteel Castings (UK) Limited

Electrosteel USA LLC

WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC)

Mahadev Vyapaar Private Limted

Electrosteel Trading S.A, Spain Singardo International Pte Ltd.

2) Associate Company Lanco Industries Ltd.

Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited)

Electrosteel Thermal Power Ltd.

3) Joint Venture North Dhadhu Mining Company Pvt. Ltd.

Domco Private Limited

4) (a) Key Management

Personnel (KMP)

Mr. Umang Kejriwal (Managing Director)

Mr. Mayank Kejriwal (Joint Managing Director )

Mr. Uddhav Kejriwal (Wholetime Director)

Mr. Vyas Mitre Ralli (Wholetime Director)

Mr. Mahendra Kumar Jalan (Wholetime Director)

Mr. Rama Shankar Singh (Wholetime Director)

Mr. S Y Rajagopalan (Director)

4) (b) Relatives of Key Management

Personnel (KMP)

Smt. Uma Kejriwal-mother of Mr. Umang Kejriwal-Managing Director Mr. S. Y Ganapathy - brother of Mr. S Y Rajagopalan, Director Umang Kejriwal(H.U.F)

5) Enterprise where KMP/Relatives of KMP have signifinant influnce or control

Global Exports Ltd.

G. K. & Sons Private Limited

Badrinath Industries Ltd.

Akshay Ispat & Ferro Alloys Pvt. Ltd.

Electrocast Sales India Ltd

Tulsi Highrise Pvt. Ltd.

Wilcox Merchants Pvt. Ltd.

Murari Investment & Trading Company Ltd.

Electrosteel Thermal Coal Ltd.

1.19.1 The Company has given Corporate Guarantee amounting to Rs. 2,50,00.00 lakhs on behalf of Electrosteel Steels Limited. Out of the aforesaid amount, Electrosteel Steels Limited has drawn Rs. 1,38,00.00 lakhs.

1.20 The company operates mainly in one business segment viz Pipes being primary segment and all other activities revolve around the main activity. The secondary segment is geographical, information related to which is given as under :

1.21 The Ministry of Corporate Affairs (MCA) has issued the amendment dated 29th December 2011 to AS-11. The effect of changes in foreign exchange rates, to allow companies deferral / capitalisation of exchange differences arising on long term foreign currency monetary items. In accordance with the amendment to AS-11, the Company has capitalised / decapitalised exchange loss/gain respectively arising on long term foreign currency loans, amounting to Rs. 69,51.67 lakhs (previous year Rs. Nil) to Capital work in progress and Fixed assets. The Company does not have any other long term foreign currency monetary items. Hence, the amount of exchange loss deferred in the "Foreign Currency Monetary Item Translation Difference Account" is Rs. Nil (previous year Rs. Nil).

1.21 Till the year ended March 31, 2011, the company was using pre-revised Schedule VI to the Companies Act 1956, for the preparation and presentation of its financial statements. During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year's classification.


Mar 31, 2011

(Rs. in lakhs)

2010-11 2009-10

1. Contingent Liabilities not provided for in respect of:

a) Various show cause notices/demands issued/raised, which in the opinion of the management are not tenable and are pending with various forum / authorities:

i) Sales Tax 8,12.80 4,89.74

ii) Excise, Custom Duty and Service tax [net of provision of Rs. 500.00 lakhs (previous year Rs. 500.00 lakhs)] 68,51.18 60,85.79

b) Employees State Insurance Corporation has raised demand for contribution in respect of Gross Job Charges for the year 2001-02, 2003-04 and March08 to January10. In the opinion of the management demand is adhoc and arbitrary and is not sustainable legally. 96.11 1,13.13

c) Demand of Tamilnadu Electricity Board disputed by the Company. 8.20 8.20

d) During the year 1994 UPSEB had raised demand for electricity charges by revising the power tariff schedule applicable to the Company retrospectively from Feb86. In the opinion of the management the revised power tariff is not applicable to the Company and accordingly the Company disputed the demand and the matter is pending before Honble High Court at Allahabad. 2,61.74 2,61.74

e) Corporate guarantee issued to banks by the Company on behalf of:

(i) Subsidiary Companies 14,15.22 60,46.00

(ii) Associate - 21,00.00

f) Standby Letter of Credit issued by banks on behalf of the company in favour of

(i) Subsidiary Companies 2,08,10.53 87,95.53

g) Guarantees given by banks on behalf of the Company 1,85,33.31 1,73,87.30

h) Bills Discounted with Banks. 88,94.72 44,36.01

i) The Company has disputed downward revision in the prices affected by the purchaser subsequent to sale of certain specified materials. In the opinion of the management and also on the merit of the case, as advised legally no liability is likely to arise. The matter is subjudice and pending final judgement the amount payable, if any is not ascertainable presently.

Note : Future cash outflows, if any, in respect of (a) to (d), and (i) above is dependent upon the outcome of judgments / decisions.

2. No allocation has been made in respect of stores and spare parts and wages for repairs to Machinery and Building.

3. (a) Miscellaneous expenses include Charity and Donation of Rs. 63.97 lakhs (previous year Rs. 2,82.45 lakhs), Rs. 3,00.00 lakhs towards relocation of certain assets of Elavur unit, Job charges includes Rs. 33.17 lakhs (previous year Rs. 51.74 lakhs) incurred towards insurance on Turnkey Contracts.

(b) Miscellaneous income include gain on exchange difference of Rs. 6,55.34 lakhs (previous year Rs. 42,68.18 lakhs)

4. Employee Benefits

The disclosures required under Accounting Standard 15 on "Employee Benefits" notified in the Companies (Accounting Standards) Rules 2006, are given below:

Defined Benefit Scheme

The employees gratuity fund scheme managed by Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Ltd. 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.

5. In the opinion of the Board of Directors, current assets and loans and advances have the value at which these are stated in the Balance Sheet, unless otherwise stated and adequate provisions for all known liabilities have been made and are not in excess of the amount reasonably required.

6. Balance of Sundry Debtors including for Turnkey Contracts, Work-in-progress, Creditors and advances are subject to confirmation/reconciliation and adjustments in this respect are carried out as and when amounts thereof, if any are ascertained.

7. Rs. 61,87.39 lakhs being net gain (previous year Rs 57,78.95 lakhs being net gain) on account of exchange difference has been adjusted to the respective heads of account in Profit and Loss Account.

8. Other deposits under Loans and Advances include Rs. 5,57.50 lakhs (previous year Rs. 5,57.50 lakhs) with Private Limited companies in which directors are interested as a member / director.

9. Based on the current Exchange Control Procedure in Algeria, as per the Algerian Finance Law, there is a restriction in repatriating the advance amount given by the Company to its wholly owned subsidiary at Algeria. This is to be converted into equity, however pending outcome on the representation made by the company through Indian Embassy at Algeria, this advance continued to be reflected under Loans & Advances.

10. Other provisions include (a) provision relating to indirect taxes in respect of proceedings of various excise duty matters - carrying amount at the end of the year Rs. 500.00 lakhs and carrying amount at the beginning of the year Rs. 500.00 lakhs. No amount was used and reversed during the year. Outflows in these cases would depend on the final developments/outcomes; (b) Other class of provisions related to disputed customer claims/rebates/demands - carrying amount at the end of the year Rs. 28,40.00 lakhs and at the the beginning of the year Rs. 28,40.00 lakhs. Amount reversed during the year and additional provisions made during the year was Rs. 18,40.00 lakhs. Outflows in these cases would depend on the developments/settlements.

11. Fixed Deposits with Scheduled Banks include Fixed Deposit of Rs. 4,08.28 lakhs (previous year Rs. 3,51.60 lakhs) lodged with Government Departments, Customers and Bank.

12. Premium payable on ZCCB has been provided proportionately and accordingly Rs. 6,11.29 lakhs (out of total redemption premium amounting to Rs. 31,37.73 lakhs) (previous year Rs. 3,97.93 lakhs, out of total redemption premium amounting to Rs. 31,58.84 lakhs) on this account has been debited to Share Premium Account.

13. The Company through Qualified Institutional Placements had issued 3,35,68,312 warrant at a price of Rs. 3/- each, entitling the holder to 1 (one) equity share. As per terms and conditions of the issue, the warrant holders have an option to convert, warrant into equity at any time on or after three years from the date of allotment (i.e 08/02/2010) and upto five years from the date of allotment (i.e 08/02/2010) at exercise price of Rs. 59.58 per share. The warrant issue price aggregating to Rs. 10,07.05 lakhs, being non adjustable/non refundable has been credited to Capital Reserve account.

14. The Marked-to-Market losses on derivative contract for the year stood at Rs. 18.26 lakhs (previous year Rs. 1,02.90 lakhs). Even though such losses have not been determined and accrued during the year, keeping in view the announcement of Institute of Chartered Accountants of India dated March 29, 2008 regarding Accounting for Derivatives, the Company has recognized losses in the profit and loss account for the year.

15. a) The Company has investment in equity shares of Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers). The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the Company on various matters including for forfeiture of the Companys investment in equity shares of the DPL. The Company had inter alia filed petition before the Honble High Court of Jharkhand at Ranchi. The Honble High Court of Jharkhand at Ranchi upheld the Companys appeal and decided that the matter would have to be referred for Arbitration. The Venturer has challenged the aforesaid judgment in the Divisional Bench of the Honble High Court of Jharkhand at Ranchi. Pending final outcome of the matter and since , the other Venturer are not providing the financial statements of DPL, disclosures as regards contingent liability and capital commitments, if any, aggregate amounts of each of the assets, liabilities, income and expenses related to the Companys interest in DPL has not been made in these accounts.

b) During the year, the Company has invested in equity shares of Vishwa Utilities Pvt. Ltd. (VUPL), a company incorporated in India, has joint control over VUPL being 11% interest alongwith other venturers. However, the Company has aquired and held this interest exclusively with a view to its subsequent disposal in the near future and accordingly interest in the said Joint Venture Company has been accounted for as an investment in accordance with Accounting Standard 13 on Accounting for Investment.

16. As regards construction contracts in progress as on 31.03.2011, aggregate amount of costs incurred and recognised profit (less recognized losses) upto the year end (to the extent ascertained by the management), aggregate amount of advances received and aggregate amount of retentions are Rs. 2,87,81.12 lakhs, Rs. 8,23.69 lakhs and Rs.7,90.41 lakhs respectively. (Previous year Rs. 4,34,45.65 lakhs, Rs. 9,35.54 lakhs and Rs. 13,68.23 lakhs respectively).

17. The Company has certain operating lease arrangements for office accommodations etc. with tenure extending upto 9 yrs. Term of certain lease arrangements include escalation clause for rent on expiry of 36 months from the commencement date of such lease and deposit / refund of security deposit etc. Expenditure incurred on account of rent during the year and recognized in the Profit and Loss account amounts to Rs. 5,15.86 lakhs (previous year Rs. 4,50.45 lakhs).

18. During the year, the Company has incurred Rs. 83.26 lakhs (previous year Rs 80.93 lakhs) on account of research and development expenses which has been charged to profit and loss account.

19. Related party disclosure as identified by the management in accordance with the Accounting Standard (AS) 18 on "Related Party Disclosures" are as follows:

A) Names of related parties and description of relationship

1) Subsidiary Company Electrosteel Europe SA

Electrosteel Algeria SPA

Singardo International Pte Ltd.

Electrosteel Castings (UK) Limited

Electrosteel USA, LLC

WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC)

2) Associate Company Lanco Industries Ltd.

Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited)

Electrosteel Thermal Power Ltd.

3) Joint Venture North Dhadhu Mining Company Pvt. Ltd.

Domco Private Limited

4) Key Management Personnel (KMP) and their relative Mr. Umang Kejriwal (Managing Director)

Mr. Mayank Kejriwal (Joint Managing Director)

Mr. Uddhav Kejriwal (Wholetime Director)

Mr. Vyas Mitre Ralli (Wholetime Director)

Mr. Mahendra Kumar Jalan (Wholetime Director)

Mr. Rama Shankar Singh (Wholetime Director)

Mr. S Y Rajagopalan (Director)

Smt. Uma Kejriwal - mother of Mr. Umang Kejriwal, Managing Director

Mr. S.Y. Ganapathy - brother of Mr. S.Y. Rajagopalan, Director

5) Enterprise where KMP/Relatives of KMP have signifinant influnce or control Global Exports Ltd

G.K.& Sons Private Limited

Badrinath Industries Ltd.

Akshay Ispat & Ferro Alloys Pvt. Ltd.

* Acharya Multicon Pvt. Ltd. Electrocast Sales India Ltd.

* Flora Conductions Pvt. Ltd. **Highrise Multicon Pvt. Ltd.

** Kabir Projects Pvt. Ltd. ** New City Enclave Pvt. Ltd.

** Nilmoni Developers Pvt. Ltd.

* Nimpith Developers Pvt. Ltd.

* Paramount Tracom Pvt. Ltd.

* Stewart Agencies Pvt. Ltd.

Tulsi Highrise Pvt. Ltd.

Wilcox Merchants Pvt. Ltd.

** Royal Multicon Pvt. Ltd.

* Samar Properties Pvt. Ltd.

** Tulip Fabicon Pvt. Ltd.

Murari Investment & Trading Company Ltd.

Electrosteel Thermal Power Ltd.

* Amalgmated into Tulsi Highrise Pvt. Ltd. as per Honble Calcutta High Court order dated 06-10-2010

** Amalgmated into Wilcox Merchants Pvt. Ltd. as per Honble Calcutta High Court order dated 06-10-2010

20. Previous Years Figures have been re-grouped/re- arranged wherever neccessary.


Mar 31, 2010

(Rs. in lakhs)

Current Year Previous Year

1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances): 33,00.31 35,98.99

2. Contingent Liabilities not provided for in respect of:

a) Various show cause notices/ demands issued/raised, which in the opinion of the management are not tenable and are pending with various forum / authorities: Sales Tax [net of provision of Rs.13.49 lakhs (previous year Rs. 13.49 lakhs)] 4,89.74 7,41.26

ii) Excise, Custom Duty and Service tax [net of provision of Rs. 500 00 lakhs (previous year nil)] 60,85.79 53,94.77

b) Employees State Insurance Corporation has raised demand for contribution in respect of Gross Job Charges for the year 2001-02, 2003-04 and March08 to January10. In the opinion of the management demand is adhoc and arbitrary and is not sustainable legally. 1,13.13 63.55

c) Demand of Tamilnadu Electricity Board disputed by the Company. 8.20 8.20

d) During the year 1994 UPSEB had raised demand for electricity charges by revising the power tariff schedule applicable to the Company retrospectively from Feb86. In the opinion of the management the revised power tariff is not applicable to the Company and accordingly the Company disputed the demand and the matter is pending before Honble High Court at Allahabad. 2,61.74 2,61.74

e) Corporate guarantee issued to banks by the Company on behalf of:

(i) Subsidiary Companies 60,46.00 89,66.00

(ii) Associate 21,00.00 48;25.00

f) Standby Letter of Credit issued by banks on behalf of the company in favour of

(i) Subsidiary Companies 87,95.53 --

g) Guarantees given by banks on behalf of the Company 1,73,87.30 1,90,89.87

h) Bills Discounted with Banks. 44,36.01 18,36.62

i) The Company has disputed downward revision in the prices affected by the purchaser subsequent to sale of certain specified materials. In the opinion of [he management and also on the merit of the case, as advised legally no liability is likely to arise. The matter is subjudice and pending final judgement the amount payable, if any is not ascertainable presently

Note: Future cash outflows, if any, in respect of (a) to (d), and (i) above is dependent upon the outcome of judgments / decisions.

3. Stores and spares consumption include pipe moulds written off

4. No allocation has been made in respect of stores and spare parts and wages for repairs to Machinery and Building.

5. Inventories of stores and spares include the estimated net realizable value of pipe mould (fixed assets) retired from the active use Rs. nil (previous year Rs. 88.431akhs)

6. (a) Miscellaneous expenses include Charity and Donation of Rs. 2,82.45 lakhs (Previous Year Rs. 97.20 lakhs), Job charges includes Rs. 51.74 lakhs (previous year Rs. 47.58 lakhs) incurred towards insurance on Turnkey Contracts, loss on exchange difference Rs. nil (previous year Rs. 24,04.54 lakhs) (b) Miscellaneous income include gain on exchange difference of Rs. 42,68.18 lakhs (previous year Rs. nil)

7. In the opinion of the Board of Directors, current assets and loans and advances have the value at which these are stated in the Balance Sheet, unless otherwise stated and adequate provisions for all known liabilities have been made and are not in excess of the amount reasonably required.

8. Balance of Sundry Debtors including for Turnkey Contracts, Work-in-progress, Creditors and advances are subject to confirmation/reconciliation and adjustments in this respect are carried out as and when amounts thereof, if any are ascertained.

9. Rs. 57,78.95 lakhs being net gain (Previous Year Rs 1,33,06.71 lakhs being net loss) on account of exchange difference has been adjusted to the respective heads of account in Profit and Loss Account.

10. Power and fuel consumption is net of Rs. nil lakhs (Previous Year Rs. 97.00 lakhs ) being subsidy receivable on use of coal gas.

11. The Company has not received information from vendors regarding the status of the suppliers as defined under the " Micro, Small and Medium Enterprise Development Act, 2006" (the Act) and accordingly disclosure relating to unpaid amounts at the year end together with interest paid /payable has not been given.

12. Other deposits under Loans and Advances include Rs. 5,57.50 lakhs (Previous year Rs. 5,57.50 lakhs) with Private Limited companies in which directors are interested as a member / director.

13. Other provisions include (a) provision of Rs.5,00.00 lakhs made during the year relating to indirect taxes in respect of proceedings of various excise duty matters and is outstanding as on 31.03.2010. Outflows in these cases would depend on the final developments/outcomes; (b) Rs.28,40.00 lakhs provided during the year being other class of provisions related to disputed customer claims/rebates and is outstanding as on 31.03.2010. Outflows in these cases would depend on the developments/settlements.

14. Fixed Deposits with Scheduled Banks include Fixed Deposit of Rs. 8.14 lakhs (Previous Year Rs. 23.55 lakhs) lodged with Government Departments and Customers.

15 Premium payable on ZCCB has been provided proportionately and accordingly Rs. 3,97.93 lakhs (out of total redemption premium amounting to Rs. 31,58.84 lakhs) (Previous year Rs. 9,84.94 lakhs, out of total redemption premium amounting to Rs. 35,69.25 lakhs) on this account has been debited to Share Premium Account.

16. (a) During the year, the Company has raised Rs.28,98.00 lakhs through preferential issue of equity shares being 90% of the total amount due against conversion of 1,40,00,000 warrents (issued in earlier year) into 140.00 lakhs equity share of face value of Re. 1 each at a price of Rs. 23.00 per share and the same have been utilized for business purposes including working capital requirements of the Company.

(b) During the year the Company through Qualified Institutional Placements has issued 3,35,68,312 warrant at a price of Rs. 3 each, entitling the holder to 1 (one) equity share. As per terms and conditions of the issue, the warrant holders have an option to convert, warrant into equity at any time on or after three years from the date of allotment and upto five years from the date of allotment at exercise price of Rs. 59.58 per share. The warrant issue price aggregating to Rs. 10,07.05 lakhs, being non adjustable/non refundable has been credited to Capital Reserve account.

17. The company during the financial year 2007-08, had allotted 4,08,37,146 convertible warrants to promoters and others at predetermined conversion prices for which the option was not exercised till last date of its conversion. Accordingly the said warrants stands cancelled and the amount of Rs. 30,94.71 lakhs received upfront from the warrant holders has been forfeited and credited to the Capital Reserve during the year.

18. The Marked-to-Market losses on derivative contract as at March 31, 2010 stood at Rs. 1,02.90 lakhs (previous year Rs. 26,32.75 lakhs). Even though such losses have not been determined and accrued during the year, keeping in view the announcement of Institute of Chartered Accountants of India dated March 29, 2008 regarding Accounting for Derivatives, the Company has recognized losses in the profit and loss account for the year.

19 a) The Company has investment in equity shares of Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers). The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the Company on various matters including for forfeiture of the Companys investment in equity shares of the DPL. The Company had inter alia filed petition before the Honble High Court of Jharkhand at Ranchi,. The Honble High Court of Jharkhand at Ranchi upheld the Companys appeal and decided that the matter would have to be referred for Arbitration. The Venturer has challenged the aforesaid judgment in the Divisional Bench of the Honble High Court of Jharkhand at Ranchi. Pending final outcome of the matter and since , the other Venturer are not providing the financial statements of DPL, disclosures as regards contingent liability and capital commitments, if any, aggregate amounts of each of the assets, liabilities, income and expenses related to the Companys interest in DPL has not been made in these accounts.

20. As regards construction contracts in progress as on 31.03.2010, aggregate amount of costs incurred and recognised profit (less recognized losses) upto the year end (to the extent ascertained by the management), aggregate amount of advances received and aggregate amount of retentions are Rs. 4,34,45.65 lakhs, Rs. 9,35.54 lakhs and Rs.13,68.23 lakhs respectively.(Previous Year Rs. 5,64,21.66 lakhs, Rs. 22,62.41 lakhs and Rs.16,71.28 lakhs respectively).

21. The Company has certain operating lease arrangements for office accommodations etc. with tenure extending upto 9 yrs. Term of certain lease arrangements include escalation clause for rent on expiry of 36 months from the commencement date of such lease and deposit / refund of security deposit etc. Expenditure incurred on account of rent during the year and recognized in the Profit and Loss account amounts to Rs. 4,50.45 lakhs (Previous Year Rs. 4,88.76 lakhs).

22. During the year, the Company has incurred Rs. 80.93 lakhs (previous year Rs 58.89 lakhs) on account of research and development expenses which has been charged to profit and loss account.

23. Related party disclosure as identified by the management in accordance with the Accounting Standard (AS) 18 on "Related Party Disclosures" are as follows:

A) Names of related parties and description of relationship

1) Subsidiary Company

Electrosteel Europe SA

Electrosteel Algeria SPA

Singardo International Pte Ltd.

Electrosteel Castings (UK) Limited

Electrosteel USA, LLC

WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC)

2) Associate Company

Lanco Industries Ltd.

Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited)

Electrosteel Thermal Power Ltd.

3) Joint Venture

North Dhadhu Mining Company Pvt. Ltd.

Domco Private Limited

4) Key Management Personnel (KMP) and their relative

Mr. Umang Kejriwal (Managing Director)

Mr. Mayank Kejriwal (Joint Managing Director )

Mr. Uddhav Kejriwal (Wholetime Director)

Mr. N C Bahl (Director) Resigned during the year

Mr. SYRajagopalan (Director)

Smt. Uma Kejriwal - mother of Mr. Umang Kejriwal, Managing Director

SmtUsha Bahl-wife of Mr. N.C Bahl

Mr. SY. Ganapathy - brother of Mr. SY. Rajagopalan, Director

Mr. Vyas Mitre Ralli (Wholetime Director)

Mr. Rama Shankar Singh (Wholetime Director)

Mr. Mahendra Kumar Jalan (Wholetime Director)

5) Enterprise where KMP/Relatives of KMP have signifinant influnce or control

Global Exports Ltd.

Badrinath Industries Ltd.

Akshaylspat&Ferro Alloys Pvt. Ltd.

AcharyaMulticonPvtLtd.

Flora Constuctions Pvt. Ltd.

HighriseMulticonPvt.Ltd.

Kabir Projects Pvt. Ltd.

New City Enclave Pvt. Ltd.

Nilmoni Developers Pvt. Ltd.

Paramount Tracom Pvt. Ltd.

Stewart Agencies Pvt. Ltd.

TulsiHighrisePvtLtd.

Wilcox Merchants Pvt. Ltd.

Nimpith Developers Pvt. Ltd.

Royal Multicon Pvt. Ltd.

Samar Properties Pvt. Ltd.

Tulip Fabicon Pvt. Ltd.

Murari Investment & Trading Company Ltd.

Electrosteel Thermal Coal Ltd.

BiswaMicrofinancePvtLtd.

Elecrrocast Sales India Ltd

24. Previous Years Figures have been re-grouped/re- arranged wherever neccessary.

 
Subscribe now to get personal finance updates in your inbox!