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Notes to Accounts of Electrotherm (India) Ltd.

Mar 31, 2015

1. CORPORATE INFORMATION

Electrotherm (India) Limited (the Company) is a listed public company domiciled in India and incorporated under the provisions of the Companies Act, 1956.The Company is engaged in the Manufacturing of Electronic furnaces and other capital equipments, Sponge and PIG Iron, Ferrous and Non-ferrous Billets/Bars/Ingots, Duct Iron Pipes, Battery operated vehicles, Electric Power Generation and services relating to Electric furnaces, other capital equipments and battery operated vehicles.

2. Rights, preference and restriction attached to Equity Shares

(i) The face value of the Equity shares is ' 10/- per share . Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. During the year, the company has not declared any dividend.

(ii) The shareholders are not entitled to exercise any voting right either personally or proxy at any meeting of the Company in cases calls or other sums payable have not been paid.

(iii) In the event of liquidation of the company, holder of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. Rights, preference and restriction attached to Preference Shares

(i) The face value of the Preference shares is Rs. 10/- per share . The Preference share holder does not have any voting rights. During the year,the company has not declared any dividend.

(ii) In the event of liquidation of the company, the preference share holders will have priority over equity shares in the payment of dividend and repayment of capital .

4. There were no shares reserved at the year-end for issue under options and contracts / commitments for the sale of shares / disinvestment.

5. The Company have calls in arrears / unpaid calls of Rs. Nil (Previous Year Nil)

(a) Secured by first Charge by way of Equitable mortgage of all immovable properties and hypothecation of specified movable assets situated at Vatva, Palodia, Dhank, Samakhiyali - Kutch, and Chhadawada -Bhachau and Juni Jithardi, Karjan, Vadodara and Bank Fixed Deposits & as second charge on all Stock-in-Trade & Receivables. Further the loans are guaranteed by the personal guarantees of some of Directors.

(b) ECB Loan is secured by Pari Passu Charge over the movable assets and first Pari Passu Charge on immovable assets of the company.

(a) Secured by first Charge by way of Equitable mortgage of all immovable properties and hypothecation of specified movable assets situated at Vatva, Palodia, Dhank, Samakhiyali - Kutch, and Chhadawada -Bhachau and Juni Jithardi, Karjan, Vadodara and Bank Fixed Deposits & as second charge on all Stock-in-Trade & Receivables. Further the loans are guaranteed by the personal guarantees of some of Directors.

(b) Secured by first charge by way of hypothecation of all stocks of raw material, packing materials, fuel, stock in process, semi finished and finished goods, stores and spares not relating to the plant and machinery and stocks in trade & receivables and second charge on all movable fixed assets & second and subservient charge by way of equitable mortgage of all immovable properties situated at Vatva, Palodia, Dhank, Samakhyali- Kutch and Chhadawada -Bhachau. Further the loans are guaranteed by the personal guarantees of some of the Directors of the company.

6. As per the requirement of the "The Companies Act 2013" , the Company has evaluated the useful lives of its fixed Asstes and has computed depreciation according to the provisions of Schedule II of the Act. Consequently, in the financial results of the company, the depreciation charge for the year ended 31 March 2015 is higher by Rs. 3.63 Crore (Previous Period Rs.Nil)

7. During the Financial year 2009-10, in pursuance of the Scheme of Arrangement approved by the Hon'ble High Court of Gujarat vide its order dated November 30,2009 the immovable assets of the Company, namely Land and Building, on the basis of Revaluation report of the Government approved competent Valuer appointed by the Company were recorded at their respective fair values and resulting increase over Book Value of Rs. 248.20 Crore was transferred to General Reserve Revaluation Account. Accordingly, the depreciation for the Current Year includes depreciation of Rs.3.26 Crore on account of the said revaluation and which has been charged to Statement of Profit & Loss. However during the previous period the depreciation on account of revaluation of Rs. 1.73 Crore has been reduced from the balance of General Reserve.

8. The account under consideration is for the financial year 2014-15 commencing from 1st April 2014 to 31st March 2015 (Referred as "Current year") and the previous period is for the Six months commencing from 1st October 2013 to 31st March 2014 (Referred as "Previous Period") and therefore figures of the Current Year and Previous Period are not comparable.

9. Details of the Cases of Winding Up of the Company, Recovery by the Lenders / Creditors against the company

(a) Winding Up Petitions:

UCO Bank, Syndicate Bank, Shiv Sales Industries and Shiv Metal Industries have filed winding up petitions under section 433 and 434 of the Companies Act, 1956 against the company before the Hon'ble Gujarat High Court.

The winding up petition filed by UCO Bank, was admitted on March 7, 2012 and the Hon'ble Gujarat High Court has passed an order for advertisement of petition and appointment of Official Liquidator. The Company has challenged the said orders before Hon'ble Division Bench of Hon'ble Gujarat High Court by filing an appeal and the Division bench vide order dated August 13, 2013 has granted the stay against the said orders.

Winding up petition filed by Syndicate Bank, Shiv Sales Industries and Shiv Metals Industries are pending before with Hon'ble Gujarat High Court.

(b) DRT/DRAT Cases:

(i) UCO Bank, Syndicate Bank and ICICI Bank Limited had filed original applications against the Company before the Debt Recovery Tribunal, Ahmedabad ("DRT") under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. The company has filed its reply / application in all the three matters and the Ex-parte ad-interim injunction orders has been passed in the matter of UCO Bank and Syndicate Bank. The Company has got ad-interim injunction orders against transfer of certain properties in the matter of UCO Bank and Syndicate Bank. No order has been passed in the matter of ICICI Bank Limited. The company has filed an appeal before Debts Recovery Appellate Tribunal, Mumbai ("DRAT") in the matter of UCO Bank against the order of DRT for rejection of application of cross examination. Syndicate Bank has also filed an appeal before DRAT, Mumbai against the order of DRT for modification of ex-parte ad-interim injunction order.

(ii) Further, Allahabad Bank has filed an original application before Debt Recovery Tribunal, Ahmedabad and the DRT has passed an ex-party ad-interim injection order and the Company is in process of contesting the said order.

(iii) Central Bank of India and Dena Bank has filed original application against the Company before the Debt Recovery Tribunal, Ahmedabad ("DRT") under Section 19 of the recovery of Debt due to Banks/Financial Institution Act, 1993. DRT has passed an ex-party ad-interim injunction order in both the cases. In the matter of Central Bank of India, the Company has filed rejoinder and other submission in the DRT for the same and which is pending for further hearing before DRT.

Accordingly, all the aforesaid original applications / appeal are pending for further hearing before DRT/DRAT or appeal/ Application.

(c) Cases Under section 138 of the Negotiable Instruments Act,1881

UCO Bank, Syndicate Bank, Vijaya Bank, ICICI Bank and Indian Overseas Bank had filed criminal complaints against the company and its Directors/ officers under section 138 of Negotiable Instruments Act, 1881 for dishonor of various cheques issued by the Company and the Company has contested all the said cases and all the matters are pending for further hearing before the respective Hon'ble Metropolitan Magistrate, Ahmedabad.

(d) Willful Defaulters:

(i) UCO Bank had declared the Company and its guarantors as willful defaulter. The action of declaring the company and its guarantors as willful defaulter by UCO Bank has been challenged in the Hon'ble Gujarat High Court and the matter is pending for further hearing.

(ii) State Bank of Travancore, Central Bank of India and Oriental Bank of Commerce had written a letter to the Company for declaring the company & its guarantor as willful defaulter. The company has filed reply of the same. No further communication has been received thereafter.

(e) Notice under SARFAESI Act, 2002

Vijaya Bank had issued a notice under section 13(2) of Chapter III of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act, 2002") for assets of Transmission Line Tower Division of the Company situated at Village : Juni Jithardi, Tal : Karjan, Dist : Vadodara on 19/03/2015 and the bank has not taken any further action. The company has given its reply vide its letter dated 18/05/2015.

9. Net Worth and filing of Reference to BIFR:

As per CDR directives as described in Letter of Approval under the head of "critical conditions" and since the net worth of the

Company is fully eroded the company has filed Reference to BIFR on February 28, 2014 and the same has been registered on June

27, 2014 as Case No. 29/2014.

10. Non Provisions of Disputed Advances and Claims/Liability/Impairment of Assets

(a) The Company has VAT tax liability (including interest) of Rs.21.94 Crore (Previous period Rs. 21.94 Crore) under Maharashtra Sales tax Act and out of which the company had paid Rs. 4.00 Crore on 22.07.2011, under protest and the same has been shown as Loans and Advances. Provision as expenditure for the impugned disputed tax liability of Rs. 21.94 Crore (Previous period Rs. 21.94 Crore) has not been made as the company is hopeful of matter being decided in its favor by the appellate authority.

(b) During the current year, VAT/CST Assessment for the financial year 2010-11 was completed and competent authority (DCCT, Rajkot) has determined the tax liability of Rs.20.95 Crore against VAT and Rs.11.15 Crore against CST. The company has made part payment of Rs. 1.50 Crore for CST on 12/05/2015 and Rs.25 Crore for VAT on 09/05/2015 and company has filed an appeal and the stay for payment of demand has been granted till 14.08.2015.

(c) The Company had filed application for refund of Excise Duty of Rs.12.23 Crore (Previous period Rs. 12.23 Crore) and the same has been treated as recoverable and has been shown as Short Term Loans and Advances. The said claim has been rejected by the Department but the Management is of the opinion that the company will receive the claim on resolution of the dispute on submission of further documents, and therefore the same is treated as good for its realization and not provided for as expenses.

(d) In view of the non-provision of the above items 2.29(a) to 2.29(c), the losses of the company are under stated by Rs. 66.29 Crore and to the extent advances are overstated or the respective liabilities are understated.

(e) During the previous period, VAT Assessment for financial year 2009-10 was completed and the competent Authority has determined the tax liability of Rs. 5.94 crore and against this demand the company has filed an appeal before the Joint Commissioner, Rajkot and during the year, the Learned Joint Commissioner, Rajkot has deleted the said demand and has determined refund of Rs. 9.50 Crore. The said amount of refund will be accounted on its actual receipt of the refund.

(f) Loan accounts of the Bank of the company have been classified as Non Performing Assets by the Bankers and some of the bankers has not charged interest on the said accounts and therefore provision for Interest (Other than upfront charges) has not been made in the books of accounts and to that extent loss and bankers loan liability has been understated. The extent of exact amount is under determination and reconciliation with the banks, however as per the details available with the company, the amount of un-provided interest, on approximate basis, on the said loans {(Other than the loans which are assigned to Edelweiss Assets Reconstruction Company Limited (EARC)} is as under:-

(Rs. In Crore)

Particulars Up to From April 14 Up to 31st March 2014 to March 15 March 2015

Interest on Corporate 698.66 234.35 933.01 Loan and working Capital Loan

11. A Special Civil Application in the nature of Public Interest Litigation was filed in the year 2010, inter alia, against the Company before the Hon'ble Gujarat High Court challenging the environment clearance for expansion of steel plant and No Objection Certificate (NOC) & Consolidated Consent and Authorization. The Gujarat High Court by its order dated May 11, 2012 set aside the environment clearance with liberty to the Company to apply once again and to stop the operation of the steel plant. The Company has filed a Special Leave Petition (SLP) before the Hon'ble Supreme Court of India, challenging the impugned order of Hon'ble Gujarat High Court. The Hon'ble Supreme Court of India stayed the order passed by the Hon'ble Gujarat High Court. The Hon'ble Supreme Court of India directed the Central pollution Control Board and Gujarat pollution Control Board to make a joint inspection and submit its report to Hon'ble Supreme Court. Central pollution Control Board and Gujarat pollution Control Board have submitted their joint report before the Hon'ble Supreme Court on 7th July 2014, regarding compliance of jobs done by the company and its next hearing has been fixed on 7th July 2015.

12. Additional Disclosures

(a) Power and Fuel expenses are inclusive of duties and taxes of Rs.11.15 Crore (Previous Period Rs. 3.25 Crore) paid towards power generation.

(b) During the year, the Terminal Excise Duty of Rs. 1.58 Crore (Previous Period Rs. Nil) has been written off considering its reliability as doubtful and has been debited it to cost of Material consumed. During the previous period Terminal Excise Duty of Rs. 1.58 Crore was included in Short Term Loan and Advance.

(c) During the year, Old Vat Input Credit Receivable of Rs. 69.13 Crore (Previous Period Rs. Nil) has been written off, by debiting it to cost of Material consumed, as company is not hopeful of its realization. During the previous period Old Vat Input Credit Receivable of Rs. 69.13 Crore was included in Short Term Loan and Advance.

(d) The cost of Material consumed includes freight, Loading and Unloading Expenses, inspection fees, Balance written off, commission, taxes & duties, and ancillary thereof (including reversal of any claims).

(e) In view to heavy accumulated losses and uncertainty of its realization/ payment of taxes in near future, no provision for Deferred Tax Asset/liability has been made by the company.

(f) Product Development Cost includes total Research and Development expenses of Rs. 32.11 Crore (Previous Period Rs. 31.70 Crore) incurred on development of Hybrid Bus/T-Cab/project and CONTIFUR Project, which is still in progress and said expenses, would be written off in five years from the year of completion.

(g) Some of the creditors have filed cases of recovery against the company before the various Hon'ble Courts/Forums for Rs. 1.96 Crore (Previous Period Rs. 1.96 Crore).

(h) During the year old non recoverable amount of Rs.158.15 Crore (Previous Period Rs. 19.57 Crore) and unclaimed amount of Rs. 16.77 Crore (Previous Period Rs. 9.33 Crore) have been written off/ back on account of non realization and payment. Its' net balance of Rs. 141.38 Crore (Previous period Rs. 10.24 Crore) has been charged to the Statement of Profit and loss.

(i) During the previous period, the company has paid Rs. 2.00 Crore to Allahabad Bank which has been adjusted by Bank against un- provided interest, but the company has adjusted the same against the existing liability as appearing in the books of the Company.

(j) Bank of India, the Lead bank of the consortium, Bank of Baroda, State Bank of India, Canara Bank and State Bank of Travancore has assigned their debt to Edelweiss Asset Reconstruction Company Limited (EARC). The Company has entered into settlement agreement on 10th March 2015 for the repayment of the Debts of the said Bank to EARC. In terms of settlement agreement, if all the terms and conditions are fully complied by the company upto the March 2023, there will be reduction in debt, as per Books of accounts of the Company by Rs.403.90 Crore.

(k) During the year, in view of non reliability/ non usability of stock of book value of Rs. 162.91 Crore (previous period Rs. 145.42 Crore), the company has not considered the said stock for the purpose of stock valuation and accordingly it has been written off.

(l) The Balances of Dena Bank, UCO Bank and Central Bank of India are not being properly confirmed / reconciled by the bank as these banks treated the loan account as NPA Account. Similarly, International Financial Corporation has not issued loan balance confirmation certificate.

(m) In view of the commercial prudence, during the year, the company has not restated the long outstanding export trade receivable at the rate prevailing as on 31st March 2015.

(n) There is dispute with the Supreme Metallurgical Services (P) Ltd (a Micro, Small and Medium Enterprise) in relation to material supplied by the said party and for which the said party has filed a case before the Hon'ble Madhya Pradesh Micro and Small Facilitation Council, Bhopal for the recovery of the principal amount and interest there on. The Hon'ble Council has passed the order dated August 12, 2013 and has ordered to the company to pay Rs. 0.91 Crore (Including interest upto July 31, 2013). The company has filed appeal before District Court Bhopal under Section 34 of Arbitration and Reconciliation Act 1996 against the order passed by Hon'ble Madhya Pradesh Micro and Small Facilitation Council, Bhopal.

(o) The company holds investment in Shree Ram Electrocast Limited, Electrotherm Mali SARL and Bhaskarpara Coal Company Limited (Subsidiaries of the Company).These Companies have incurred heavy losses and/or non operating and therefore the fate of said Companies are uncertain but Provision for the diminishing in the value of investment in subsidiary has not been made, as the Company treat it as temporary nature.

(p) The Central Bureau of Investigation has conducted certain proceedings, on the basis of the complaint filed by Central Bank of India with regard to the utilization of the loan disbursed by Central Bank of India. At present, the said matter is pending before the Central Bureau of Investigation for the investigation and the company is supporting them at various stages.

13. The company is contingently liable for the following

(a) Claims against the Company not acknowledged as debts amounting to Rs. 0.70 Crore (Previous Period Rs. 0.70 Crore), are pending before various courts, authorities, arbitration, Consumer Dispute Redressal Forum etc.

(b) Guarantees / Counter Guarantees (including un-utilized Letters of Credit) issued Rs.7.47 Crore (Previous Period Rs. 19.50 Crore).

(c) Disputed Statutory Claims/Levies for which the company has preferred appeal in respect,

(i) Excise Duty Liability of Rs. 295.61 Crore (Previous period Rs. 296.97 Crore) and Service Tax Liability of Rs.5.41 Crore (Previous period Rs. 1.84 Crore),

(ii) Custom Duty Liability of Rs.20.31Crore (Previous period Rs. 21.05 Crore),

(iii) Income Tax liability of Rs. 31.55 Crore (Previous period Rs. 25.17 Crore),

(iv) VAT AND CST Liability of Rs. 50.04 Crore against the outstanding liability company has paid the Rs. 4.75 Crore subsequently there of (Previous Period ' 17.94 Crore),

(The above amounts (except where specifically stated)are excluding the amount of additional Interest payable and of the amount involved in appeal preferred by the department, if any.)

14. FOREIGN EXCHANGE EARNING & OUTGO (on Cash basis):

(a) Earning in Foreign Exchange for Export of Goods & Services Rs. 112.70 (Previous period Rs. 85.55 Crore).

(b) Expenditure in Foreign Currency for Import of Materials, Traveling & Others is Rs. 58.65 Crore (Previous period Rs. 22.45 Crore).

In view of loss during the year and non-payment of any Remuneration to the Directors of the Company, computation of Net Profit in accordance with the Companies Act, 2013, is not required to stated.

15. Previous Period amount has been regrouped / re-casted / re-arranged / re-classified / re-determined, wherever necessary, by the company on the basis of data available with the company, to make the figure of the current year with the previous period comparable.

16. RELATED PARTY (AS IDENTIFIED AND DETERMINED BY THE COMPANY) DISCLOSURES UNDER ACCOUNTING STANDARD 18:- A. List of Related Parties

I) SUBSIDIARY COMPANIES

1. Jinhua Indus Enterprises Limited

2. JinhuaJahari Enterprises Limited

3. Bhaskarpara Coal Company Limited

4. ET Elec-Trans Limited

5. Hans Ispat Limited

6. Shree Ram Electro Cast Limited

7. Shree Hans Paper Limited

8. Electrotherm Mali SARL

II) Enterprises owned or significantly influenced by key management personnel or their relatives*(Except foreign companies)

1. Ahmedabad Aviation and Aeronautics Ltd.

2. Western India Speciality Hospital Ltd.

3. E-Motion Power Ltd.

4. Indus Elec-Trans Pvt. Ltd.

5. Jayshri Petro-Yarn Pvt. Ltd.

6. Adroit Trading and Investment Co.

7. EIL Hospitality Pvt. Ltd.

8. EIL Software Services Offshore Pvt. Ltd.

9. EIL Technology Pvt. Ltd.

10. Electrotherm Engineering & Projects Ltd.

11. Kappa Consultancy Pvt. Ltd.

12. Electrotherm Foundation.

13. Gujarat Mint Alloys Ltd.

14. Etain Electric Vehicles Limited (Formerly Known as Electra Transformer Private Limited)

15. Airfones Innovatives Private Limited

16. BNB Real Estate Private Limited

17. ETAIN Energy Holdings Limited (Formerly Known as Electrotherm Energy Holdings Ltd.)

18. Electrotherm Solar Limited

19. Palace Solar Energy Pvt. Ltd.

20. SBRB Real Estate Pvt. Ltd.

21. Bhandari Real Estate Pvt. Ltd.

22. ETAIN Immodo Renewables Ltd.

23. Arjun Ceramics & Carbon Pvt. Ltd.

24. Indus Chargers & Controllers Pvt. Ltd.

25. Arjun Solar One Pvt. Ltd.

26. Arjun Green Power Pvt. Ltd.

27. Arjun Raj Solar One Pvt. Ltd.

28. Bhandari Charitable Trust

29. Arjun Raj Solar Five Pvt. Ltd

III) Key Management Personnel (Other than Nominee & Independent Director)

1. Mr. Mukesh Bhandari (Chairman)

2. Mr. Shailesh Bhandari (Managing Director)

3. Mr. Avinash Bhandari (Joint Managing Director & CEO)

4. Mr. Ram Singh (Independent Director)

5. Mr. Chaitnya Sharma (Independent Director)

IV) Relatives of Key Management Personnel (With whom transaction has taken place during the year)

1. Mrs. Indubala Bhandari

2. Mrs. Jyoti Bhandari

3. Mr. Rakesh Bhandari

4. Mr. Anurag Bhandari

5. Mr. Siddharth Bhandari

6. Ms. Shivani Bhandari

7. Mrs. Panna Bhandari

8. Ms. Radhika Bhandari

17. SEGMENT REPORTING UNDER ACCOUNTING STANDARD (A) Business Segment

Based on the guiding principles given as per Accounting Standard on "Segment Reporting" (AS-17) issued by The Institute of Chartered Accountants of India, the Company's primary business is manufacturing and marketing of Induction Furnaces, Steel items and Battery Operated Vehicles.

18. (a) In the opinion of the Management, the current assets, Trade Receivable, Loans & Advances are realizable at the values stated, if realized in the ordinary course of business and the provisions for all known Liabilities are adequate.

(b) (i) The account of "Trade Receivables", "Borrowings", "Trade payables", "Advances from Customer", "Short Term Loans and Advances" and some Bank Balances are subject to confirmation / reconciliation and the same includes very old non moving items and therefore the same are subject to necessary adjustments for accounting or re-grouping /classification.

(ii) The amount of "Advance from Customers" includes, Rs. 1.91 Crore (Previous Period Rs.2.06Crore) (net of receipts and payments) of the parties in the bank accounts of which names are not readily available with the company and which are to be accounted under the correct account head on receipt of accurate information from the Banker/parties.

(iii) During previous period the amount of account of some of the major single party under the Head "Advance from customers", "Trade Payable", "Advance to Suppliers and Others", "Trade Receivables" are shown on gross basis and the same are not netted off and which has resulted in overstatement of two account heads.

(c) The amount of current maturity of Long Term Liability of Rs.1374.17 Crore (Previous Period Rs. 1919.37 Crore) has been determined on the basis of the data available with the company and has been treated as short term Borrowings.

(d) The classification/grouping of items of the accounts are made by the management, on the basis of the available data with the company and which has been relied upon by the auditors.

(e) The amount of inventory has been taken by the management on the basis of information available with the company and without conducting physical verification of the slow moving inventory. The slow moving inventories have been valued by the management on estimate net realizable value and which has been relied upon by the auditors.

(f) Account of Service Tax Receivables, CENVAT Receivables and Vat input credit Receivables is subject to reconciliation, submission of its return for its claim and/or its assessment, if any.

(g) The management is of the opinion that the uncompleted projects shown as Capital Work in Progress of Rs. 10.45 Crore (Previous Period Rs. 10.45 Crore) require some further investment to bring them into commercial use and therefore these are not treated as impaired assets.

(h) In view of the non recovery of the amounts or non settlement of the accounts, the company has determined Rs. 63.26 Crore as doubtful Trade Receivable and Rs.28.78 Crore of Advance to Suppliers and in view of business prudence, the company has made provision of Rs. 28.47 Crore for said doubtful Trade Receivables and Rs.16.50 Crore for said doubtful Advance to Suppliers.

(i) Account of "Advance to staff" is under confirmation, reconciliation and subject to the settlement of the accounts with the respective employees (including ex-employees) of the company.

19. EARNINGS PER SHARE (EPS):

The basic Earnings per Share is calculated by dividing the profit/ loss attributable to the existing Equity Shares outstanding and in view of losses during the year, EPS has not been calculated.

20. Signed Notes No.1 and 2 forms part of the Annexed account of the Company


Mar 31, 2014

1. CORPORATE INFORMATION

Electrotherm (India) Limited (the Company) is a listed public company domiciled in India and incorporated under the provisions of the Companies Act, 1956.The Company is engaged in the Manufacturing of Electronic furnaces and other capital equipments, Sponge and PIG Iron, Ferrous and Non-ferrous Billets/Bars/Ingots, Duct Iron Pipes, Battery operated vehicles, Electric Power Generation and services relating to Electric furnaces, other capital equipments and battery operated vehicles.

2.(a) Rights, preference and restriction attached to Equity Shares

(i) The face value of the Equity shares is Rs. 10/- per share . Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. During the period, the company has not declared any dividend.

(ii) The shareholders are not entitled to exercise any voting right either personally or proxy at any meeting of the Company in cases calls or other sums payable have not been paid.

(iii) In the event of liquidation of the company, holder of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Rights, preference and restriction attached to Preference Shares

(i) The face value of the Preference shares is Rs. 10/- per share . The Preference share holder does not have any voting rights. During the period, the company has not declared any dividend.

(ii) In the event of liquidation of the company, the preference share holders will have priority over equity shares in the payment of dividend and repayment of capital .

(c) There were no shares reserved at the year-end for issue under options and contracts / commitments for the sale of shares / disinvestment.

3.(a) Secured by first Charge by way of Equitable mortgage of all immovable properties and hypothecation of specified movable assets situated at Vatva, Palodia, Dhank, Samakhiyali - Kutch, and Chhadawada -Bhachau and Juni Jithardi, Karjan, Vadodara and Bank Fixed Deposits & as second charge on all Stock-in-Trade & Receivables. Further the loans are guaranteed by the personal guarantees of some of Directors.

(b) ECB Loan is secured by Pari Passu Charge over the movable assets and first Pari Passu Charge on immovable assets of the company.

4.(a) Secured by first Charge by way of Equitable mortgage of all immovable properties and hypothecation of specified movable assets situated at Vatva, Palodia, Dhank, Samakhiyali - Kutch, and Chhadawada -Bhachau and Juni Jithardi, Karjan, Vadodara and Bank Fixed Deposits & as second charge on all Stock-in-Trade & Receivables. Further the loans are guaranteed by the personal guarantees of some of Directors.

(b) Secured by first charge by way of hypothecation of all stocks of raw material, packing materials, fuel, stock in process, semi finished and finished goods, stores and spares not relating to the plant and machinery and stocks in trade & receivables and second charge on all movable fixed assets & second and subservient charge by way of equitable mortgage of all immovable properties situated at Vatva, Palodia, Dhank, Samakhyali- Kutch and Chhadawada -Bhachau. Further the loans are guaranteed by the personal guarantees of some of the Directors of the company.

5. In view of common financial year under the Companies Act, 2013, the company has changed the accounting year and accordingly, the account under consideration is for the period of Six months commencing from 1st October 2013 to 31stMarch 2014 (Referred as "Current Period") and the previous year is for the Twelve months commencing from 1st October 2012 to 30th September 2013 (Referred as "Previous Year"), and therefore figures of the Current Period and Previous Year are not comparable.

6. Details of the Cases of Winding Up of the Company, Recovery by the Lenders / Creditors against the company

(a) UCO Bank, Syndicate Bank, Shiv Sales Industries and Shiv Metal Industries have filed winding up petitions under section 433 and 434 of the Companies Act, 1956 against the company before the Hon''ble Gujarat High Court. The winding up petition filed by UCO Bank, was admitted on March 7, 2012 and the Hon''ble Gujarat High Court has passed an order for advertisement of petition and appointment of Official Liquidator. The Company has challenged the said orders before Division bench of Hon''ble Gujarat High Court by filing an appeal and the Division bench vide order dated August 13, 2013 has granted the stay against the said orders and accordingly, all the aforesaid windings up petitions / appeal are now pending for further hearing before Hon''ble Gujarat High Court.

(b) (i) UCO Bank, Syndicate Bank and ICICI Bank Limited had filed original applications against the Company before the Debt Recovery Tribunal, Ahmedabad ("DRT") under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. The company has filed its reply / application in all the three matters and the Ex-parte ad-interim injunction orders passed in the matter of UCO Bank and Syndicate Bank were partly modified. Further, Allahabad Bank has filed an original application before Debt Recovery Tribunal, Ahmedabad. There are some ad-interim injunction orders against transfer of certain properties in the matter of UCO Bank, Syndicate Bank and Allahabad Bank. No order was passed in the matter of ICICI Bank Limited. The company has filed an appeal before Debts Recovery Appellate Tribunal, Mumbai ("DRAT") in the matter of UCO Bank against the order of DRT for rejection of application of cross examination. Syndicate Bank has filed an appeal before DRAT against the order of DRT for modification of ex-parte ad-interim injunction order. All the aforesaid original applications / appeal are now pending for further hearing before DRT / DRAT.

(ii) During the period Central Bank of India had filed Original application against the Company before the Debt recovery Tribunal, Ahmedabad ("DRT") under Section 19 of the recovery of Debt due to Banks/Financial Institution Act, 1993. DRT passed a ex-party ad-interim injunction order.

(c) UCO Bank, Syndicate Bank, Vijaya Bank, ICICI Bank and Indian Overseas Bank had filed criminal complaints against the company and its directors / officers under section 138 of Negotiable Instruments Act, 1881 for dishonor of various cheques issued by the Company and the Company has contested all the said cases and all the matters are pending for further hearing before the respective Hon''ble Metropolitan Magistrate, Ahmedabad.

(d) UCO Bank had declared the Company and its guarantors as willful defaulter, which was subsequently withdrawn by the UCO Bank in a petition filed by the Company with Hon''ble Gujarat High Court. During the previous year, the action of once again declaring the company and its guarantors as willful defaulter by UCO Bank has been challenged in the Hon''ble Gujarat High Court and the matter is pending for further hearing. State Bank of Travancore has not taken any further action after issuing a letter to classify the company as willful defaulter. Central Bank of India has issued a letter for classification of company and its guarantors as Willful Defaulter and the company has replied to the said letter.

(e) Vijaya Bank had issued a notice under section 13(2) of Chapter III of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act, 2002") for assets of Transmission Line Tower Division of the Company situated at Village : Juni Jithardi, Tal : Karjan, Dist : Vadodara and the bank has not taken any further action. The said Bank has given positive mandate for restructuring of the Debt under CDR scheme.

7. Corporate Debt Restructuring, Net Worth and filing of Reference to BIFR:

(a) The Empowered Group (EG) of CDR Cell has approved CDR package of the company on November 14, 2013 and issued letter conveying approval on February 03, 2014. However, the Monitoring Institution i.e. Bank of India has informed the Company vide their letter dated 24th April 2014 that they have decided, the withdrawal of the case under CDR mechanism and therefore, as on date the Company is out of CDR.

(b) As per CDR directives as described in Letter of Approval under the head of "critical conditions" and the since the net worth of the Company is fully eroded the company has filed Reference to BIFR on February 28, 2014.

8. Non Provisions of Disputed Advances and Claims/Liability/Impairment of Assets

(a) The Company has filed an application for refund of Terminal Excise Duty of Rs. 1.58 Crore (Previous year Rs. 1.58 Crore) and the same is included in Loans and Advances Balances. The said claim is under dispute and has been rejected by the Department but the Management is of the opinion that the company will receive the claim on submission of the further required documents and therefore the same is treated as good for its realization and not provided for as expenses.

(b) The Company has VAT tax liability (including interest of Rs. 21.94 Crore (Previous year Rs. 21.94 Crore) under Maharashtra Sales tax Act and out of which the company had paid Rs. 4.00 Crore in Previous year, under protest and the same has been shown as Loans and Advances. Provision for the impugned disputed liability of Rs. 21.94 Crore (Previous year Rs. 21.94 Crore) has not been made as the company is hopeful of matter being decided in its favor by the appellate authority.

(c) Old Vat Input Credit Receivable of Rs. 69.13 Crore (Previous year Rs. 69.13 Crore) is subject to approval / sanction from the respective Government authority and the company is hopeful of its realisability.

(d) During the current financial period VAT Assessment for financial year 2009-10 was completed and the competent Authority has determined the tax liability of Rs. 5.94 crore and against this demand the company has filed an appeal and the same is pending before the appellate Authority and the company is hopeful for favorable decision in the appeal and therefore the said amount has not been provided as expenses.

(e) The Company had filed application for refund of Excise Duty of Rs. 12.23 Crore (Previous year Rs. 12.23Crore) and the same has been shown as Loans and Advances Balances. The said claim has been rejected by the Department but the Management is of the opinion that the company will receive the claim on resolution of the dispute on submission of further documents and therefore the same is treated as good for its realization and not provided for as expenses.

(f) In view of the non-provision of the above items 2.29(a) to 2.29(e), the losses of the company are under stated and to the extent advances are overstated or the liabilities are understated.

9. A Special Civil Application in the nature of Public Interest Litigation was filed in the year 2010, inter alia, against the Company before the Hon''ble Gujarat High Court challenging the environment clearance for expansion of steel plant and No Objection Certificate (NOC) & Consolidated Consent and Authorization. The Gujarat High Court by its order dated May 11, 2012 set aside the environment clearance with liberty to the Company to apply once again and to stop the operation of the steel plant. The Company has filed a Special Leave Petition (SLP) in the Hon''ble Supreme Court of India challenging the impugned order of Hon''ble Gujarat High Court dated May 11, 2012. After hearing, the Hon''ble Supreme Court of India on May 18, 2012 stayed the order passed by the Hon''ble Gujarat High Court. All the parties to the petition have filed their reply before the Hon''ble Supreme Court of India and now the Hon''ble Supreme Court of India directed the Central pollution Control Board and Gujarat pollution Control Board to make a joint inspection in 3rd week of June, 2014 & to submit the report before 5th July 2014 and matter has been listed for the consideration of the said report on 15th July 2014, before the Hon''ble Supreme Court.

10. Additional Disclosures

(a) Power and Fuel expenses are inclusive of duties and taxes of Rs. 3.25 Crore (Previous year Rs. 3.38 Crore) paid towards power generation.

(b) During the period Foreign Exchange Fluctuation Loss of Rs. Nil (Previous year Loss of Rs. 0.29 Crore) has been adjusted to Material Cost and Loss of Rs. 0.55 Crore (Previous year Loss of Rs. 7.78 Crore) has been charged to Finance Cost.

(c) The cost of Material consumed includes freight, taxes and inspection fees.

(d) In view to heavy accumulated losses and uncertainty of its realization/ payment in near future, no provision for Deferred Tax Asset/liability has been made by the company.

(e) Miscellaneous expenditure includes total Research and Development expenses of Rs. 31.70 Crore (Previous year Rs. 30.82 Crore) incurred on development of Hybrid Bus/T-Cab/project and CONTIFUR Project, which is still in progress and said expenses, would be written off in five years from the year of completion.

(f) Some of the creditors have filed cases of recovery against the company before the various Hon''ble Courts/ Forums for Rs. 1.96 Crore (Previous year '' 1.97 Crore).

(g) During the period old non recoverable amount of Rs. 19.57 Crore and unclaimed amount of Rs. 9.33 Crore have been written off/ back and the net balance of Rs. 10.24 Crore has been charged to the Statement of Profit and loss.

(h) During the period, the company has paid Rs 2.00 Crore to Allahabad Bank which has been adjusted by Bank against un- provided interest, but the company has adjusted the same against the existing liability as appearing in the books of the Company.

(i) Bank of Baroda has informed to the company and other participating consortium lenders vide letter dated May 01, 2014 that bank has sold out its debt to Edelweiss Asset Reconstruction Company Limited (EARC) on March 26, 2014. Bank of Baroda has also mentioned that EARC has become secured lender and all the rights, title and interests of Bank of Baroda have vested in EARC. Edelweiss Asset Reconstruction Company Limited has confirmed the aforesaid transaction vide letter dated May 08, 2014.

(j) During the period, in view of non realisability/ non usability of work in process of book value of Rs. 145.42 Crore, the company has not considered the said work in process for the purpose of stock valuation.

(k) Central bank of India, Dena Bank, and State bank of Travancore has written off the loan given to the company of Rs. 4.17 Crore, Rs. 22.64 Crore and Rs. 6.92 Crore respectively, by debiting to suspense account and therefore the balance is not confirmed by the respective Bankers. However, the company has shown the said loans from the respective banks in its books of account, as the said liabilities has not been waived by the respective bankers.

(l) The company had acquired some Computer Servers and other related accessories on lease basis and made payments of Rs. 1.34 Crore to the lessor on regular basis in earlier years. During the period the lease period is over and accordingly the total payments of Rs. 1.34 Crore made by the Company, has been capitalized under the head Computer in Fixed Asset.

(m) In view of the commercial prudence, during the period, the company has restated, the amount of long outstanding Export Sales, at the Foreign Exchange Rate prevailing at the time of Export made and the Foreign exchange gain of Rs. 27.54 Crore accounted thereon, in earlier year(s) has been reversed under the head "Exceptional and Extra Ordinary item", as the amount has not been realized.

(n) There is dispute with the Supreme Metallurgical Services (P) Ltd (a Micro, Small and Medium Enterprise) in relation to material supplied by the said party and for which the said party has filled a case before the Hon''ble Madhya Pradesh Micro and Small Facilitation Council, Bhopal for the recovery of the principal amount and interest there on. The Hon''ble Council has passed the order dated August 12, 2013 and has ordered to the company to pay Rs. 0.91 Crore (Including interest upto July 31, 2013) and for which the company is in process of taking appropriate action against the said party and the order of the said Council.

(o) During the period, the company has amortized Deferred Advertisement expenses of Rs. 0.65 Crore relating to earlier year, under the head "Advertisement Expenses"

11. The company is contingently liable for the following :-

(a) Claims against the Company not acknowledged as debts amounting to Rs. 0.70 Crore (Previous year Rs. 0.70 Crore), are pending before various courts, authorities, arbitration, Consumer Dispute Redressal Forum etc.

(b) Guarantees / Counter Guarantees (including un-utilized Letters of Credit) issued Rs. 19.50 Crore (Previous year Rs. 12.19 Crore).

(c) Disputed Statutory Claims/Levies for which the company has preferred appeal in respect, Excise Liability of Rs. 298.81 Crore (Previous year Rs. 299.35 Crore) and Custom Duty Liability of Rs. 21.05 Crore (Previous year Rs. 26.29 Crore) and Income Tax liability of Rs. 25.17 Crore (including interest) (Previous year Rs. Nil.)

(The above amounts (except where specifically stated) are excluding the amount of Interest payable and of the amount involved in appeal preferred by the department, if any.)

(d) The company has executed Legal Undertaking Bond to pay Central Excise Duty (Terminal Excise Duty), levies and liquidated damages payable, if any, in respect of imported and indigenous capital goods and stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. In this regard aggregate duty liability amounts to Rs. 1.68 Crore (Previous year Rs. 16.38 Crore approx.) as at March 31, 2014. Against these, exports amounting to Rs. 7.24 Crore (approx.) (Previous year Rs. 70.46 Crore (approx.)) will have to be made within next 8 years from the date of issue of license.

12. FOREIGN EXCHANGE EARNING & OUTGO:

(a) Earning in Foreign Exchange for Export of Goods & Services Rs. 85.55 Crore. (Previous year Rs. 129.82 Crore).

(b) Expenditure in Foreign Currency for Import of Materials, Traveling & Others is Rs. 22.45 Crore (Previous year Rs. 66.11 Crore).

13. Previous year amount has been regrouped/re-casted/re-arranged/ re-classified/re-determined, wherever necessary, by the company on the basis of data available with the company, to make the figure of the current period with the previous year comparable.

14. RELATED PARTY (AS IDENTIFIED AND DETERMINED BY THE COMPANY) DISCLOSURES UNDER ACCOUNTING STANDARD 18:-

A. List of Related Parties

I) SUBSIDIARY COMPANIES

1. Jinhua Indus Enterprises Limited

2. Jinhua Jahari Enterprises Limited

3. Bhaskarpara Coal Company Limited

4. ET Elec-Trans Limited

5. Hans Ispat Limited

6. Shree Ram Electro Cast Limited

7. Shree Hans Papers Limited

8. Electrotherm Mali SARL

II) Enterprises owned or significantly influenced by key management personnel or their relatives*(Except foreign companies)

1. Ahmedabad Aviation and 2. Western India Speciality Aeronautics Ltd. Hospital Ltd.

3. E-Motion Power Ltd. 4. Indus Elec-Trans Pvt. Ltd. *

5. Jayshri Petro-Yarn Pvt. Ltd. 6. Adroit Trading and Investment Co.

7. EIL Hospitality Pvt. Ltd. 8. EIL Software Services Offshore Pvt. Ltd.

9. EIL Technology Pvt. Ltd. 10. Electrotherm Engineering & Projects Ltd.

11. Kappa Consultancy Pvt. Ltd. 12. Electrotherm Foundation.

13. Gujarat Mint Alloys Ltd. 14. Electra Transformer Ltd. (Formerly Known as Electra Transformer Pvt. Ltd.)

15. Airfones Innovatives 16. BNB Real Estate Private Private Limited Limited

17. ETAIN Energy Holdings Limited 18. Electrotherm Solar Limited (Formerly Known as Electrotherm Energy Holdings Ltd.)

19. Palace Solar Energy Pvt. Ltd. 20. SBRB Real Estate Pvt. Ltd.

21. Bhandari Real Estate Pvt. Ltd. 22. ETAIN Immodo Renewables Ltd.

23. Arjun Ceramics & Carbon 24. Indus Chargers & Controllers Pvt. Ltd. Pvt. Ltd.

25. Arjun Solar One Pvt. Ltd. 26. Arjun Green Power Pvt. Ltd.

27. Arjun Raj Solar One Pvt. Ltd. 28. Bhandari Charitable Trust

29. Arjun Raj Solar Five Pvt. Ltd

* Enterprises namely Palace Tours and Air Charters Pvt. Ltd., Crystal Real Estate Pvt. Ltd., Afghan Trading Pvt. Ltd., Bhandari Brothers Commercial Pvt. Ltd., EIL Realty Pvt. Ltd., EIL Software Pvt. Ltd., Indus Real Estate Pvt. Ltd., New Delhi Real Estate Pvt. Ltd., Palace Infrastructure Pvt. Ltd., S N Advisory Pvt. Ltd., Suraj Real Estate Pvt. Ltd. and Suraj Advisory Services Private Limited have amalgamated with Indus Elec-Trans Pvt. Ltd. in pursuance to Scheme of Amalgamation vide the order dated September 13, 2013 of Hon''Ble Gujarat High Court.

III) Key Management Personnel (Other than Nominee & Independent Director)

1. Mr. Mukesh Bhandari (Chairman)

2. Mr. Shailesh Bhandari (Managing Director)

3. Mr. Avinash Bhandari (Joint Managing Director & CEO)

4. Mr. Nilesh Desai (Non-Executive Director)

5. Mr. Ram Singh (Non-Executive Director)

6. Mr. Pradeep Krishna Prasad (Non-Executive Director)

IV) Relatives of Key Management Personnel (With whom transaction has taken place during the year)

1. Mrs. Indubala Bhandari

2. Mrs. Jyoti Bhandari

3. Mr. Rakesh Bhandari

4. Mr. Anurag Bhandari

5. Mr. Siddharth Bhandari

6. Ms. Shivani Bhandari

15. (a) In the opinion of the Management, the current assets, loans & Advances are realizable at the values stated, if realized in the ordinary course of business and the provisions for all known Liabilities are adequate.

(b) (i) The account of "Trade Receivables", "Borrowings", "Trade payables", "Advances from Customer", "Short Term Loans and Advances" and some Bank Balances are subject to confirmation / reconciliation and the same includes very old non moving items and therefore the same are subject to necessary adjustments for accounting or re-grouping /classification.

(ii) The amount of "Trade receivable", "Advances Recoverable In cash or Kind", and "Advances to suppliers/Other Parties", includes very old Trade receivables and/or payments made and the management is hopeful of the recovery and therefore these are not treated as doubtful for the recovery and not provided for.

(iii) The amount of "Advance from Customers" includes, Rs. 2.06 Crore (Previous Year Rs. 6.92 Crore) (net of receipts and payments) of the parties in the bank accounts of which names are not readily available with the company and which are to be accounted under the correct account head on receipt of accurate information from the Banker/parties.

(iv) During previous year the amount of account of some of the major single party under the Head "Advance from customers", "Trade Payable", "Advance to Suppliers and Others", "Trade Receivables" are shown on gross basis and the same are not netted off and which has resulted in overstatement of two account Heads and the determination of the exact amount of the said overstatement is in progress.

(v) The account of the stale cheques of Rs. 0.30 Crore Credit balance (Previous Year Rs. 0.56 Crore Debit Balance) shown under the head Trade Payable (Previous Year "Advance to Suppliers and Others") is subject to reconciliation and proper accounting.

16. (a) The classification/grouping of items of the accounts are made by the management, on the basis of the available data with the company and which has been relied upon by the auditors.

(b) The amount of inventory has been taken by the management on the basis of information available with the company and without conducting physical verification of the slow moving inventory. The slow moving inventories have been valued by the management on estimate net realizable value and which has been relied upon by the auditors.

(c) Account of Service Tax Receivables is subject to reconciliation, submission of its return for its claim and/or its assessment, if any.

(d) The management is of the opinion that the uncompleted projects shown as Capital Work in Progress require some further investment to bring them into commercial use and therefore these are not treated as impaired assets.

(e) Account of "Advance to staff" is under confirmation, reconciliation and subject to the settlement of the accounts with the respective employees (including ex-employees) of the company.

17. Signed Notes No.1 and 2 forms part of the Annexed account of the Company.


Sep 30, 2013

CORPORATE INFORMATION

Electrotherm (India) Limited (the Company) is a listed public company domiciled in India and incorporated under the provisions of the Companies Act, 1956.The Company is engaged in the Manufacturing of Electronic furnaces and other capital equipments, Sponge and PIG Iron, Ferrous and Non ferrous Billets/Bars/Ingots, Duct Iron Pipes, Battery operated vehicles, Electric Power Generation and services relating to Electric furnaces, other capital equipments and battery operated vehicles.

1.1 Additional Disclosures

(a) Power and Fuel expenses are inclusive of duties and taxes of Rs. 33.83 Million (Previous Period Rs. 79.73 Million) paid towards power generation.

(b) During the year Foreign Exchange Fluctuation Loss of Rs. 2.96 Million (Previous Period Gain of Rs. 11.98 Million) has been adjusted to Material Cost and Loss of Rs. 77.81 Million (Previous Period Loss Rs. 454.26 Million) has been charged to Finance Cost.

(c) The cost of material consumed includes freight, taxes and inspection fees.

(d) During the year the company has reversed interest provision of Rs. 198.85 Million by crediting it to interest expenses account as the bank has reversed the amount classifing the account as non performing assets.

(e) In view to heavy accumulated losses incurred by the company and no certinity of its realisation/payment of tax in near future no provision for Deferred Tax Asset/liability has been made.

(f) Miscellaneous expenditure includes total Research and Development expenses of Rs. 308.15 Million (Previous Period Rs. 237.99 Million) incurred on development of Hybrid Bus/T Cab/project and CONTIFUR Project, which is still in progress and said expenses, would be written off in five years from the year of completion.

(g) On account of non payment of duties and other taxes, the company could not lift the material lying with custom authority and shown as goods in transit in earlier year of Rs. 318.00 Million (Previous Period Rs. Nil) has been written off during the current year, by debting to cost of material consumed.

(h) Advance Custom Duty of Rs. 29.75 Million (Previous Period Rs. Nil), shown under the head Loans & Advances in the previous period, has been charged under the head Cost of Material Consumed.

(i) Some of the creditors has filed cases of recovery against the company before the various Hon''ble Courts/ Forums Rs. 19.74 Million (Previous Year Rs. 18.51 Million) (j) In view of the various circumstances and factors, beyond the control of the company,the Steel division & Heavy Electric Vehicle division of the Company are not working on full capacity of the production.

1.2 The company is contingently liable for the following :

(a) Claims against the Company not acknowledged as debts amounting to Rs. 6.99 Million (Previous Period Rs. 25.50 Million), are pending before various courts, authorities, arbitration, Consumer Dispute Redressal Forum etc.

(b) Guarantees / Counter Guarantees (including un utilized Letters of Credit) issued Rs. 121.97 Million (Previous Period Rs. 309.82 Million).

(c) Disputed Statutory Claims/Levies for which the company has preferred appeal in respect, Excise Liability of Rs. 2993.51 Million (Previous Period Rs. 2746.59 Million) and Custom Duty Liability of Rs. 262.90 Million (Previous Period Rs. 70 Million).

(The above amounts are excluding the amount of Interest payable and of the amount involved in appeal preferred by the department, if any.)

(d) The company has executed Legal Undertaking Bond to pay Central Excise Duty (Terminal Excise Duty), levies and liquidated damages payable, if any, in respect of imported and indigenous capital goods and stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. In this regard aggregate duty liability amount of Rs. 163.89 Million (approx.) as at September 30, 2013 (Previous Period: Rs. 261.32 Million (approx.)). Against these, exports amounting to Rs. 704.67 Million (approx.) (Previous Period Rs. 1285.17 Million (approx.)) will have to be made within next 8 years from the date of issue of license.

(e) The company has received show cause notice for non compliance of some of export obligations, raised due to usage of license for payment of custom duty. In this regards the company has paid custom duty and has replied to those show cause notices. However the exact remaining liability of the said is unquantifiable.

1.3 FOREIGN EXCHANGE EARNING & OUTGO:

(a) Earning in Foreign Exchange for Export of Goods & Services Rs.1298.15Million. (Previous Period Rs. 1389.63 Million).

(b) Expenditures in Foreign Currency for Import of Materials, Traveling & Others is Rs. 661.13Million (Previous Period Rs. 3337.38 Million).

1.4 Previous period amount has been regrouped/re casted /re arranged/ re classified/re determined, wherever necessary, by the company on the basis of data available with the company, to make the figure of the current year with the previous year comparable.

1.5 RELATED PARTY (AS IDENTIFIED AND DETERMINED BY THE COMPANY) DISCLOSURES UNDER ACCOUTING STANDARD 18: A. List of Related Parties

I) SUBSIDIARY COMPANIES

1. Jinhua Indus Enterprises Limited

2. Jinhua Jahari Enterprises Limited

3. Bhaskarpara Coal Company Limited

4. ET Elec Trans Limited

5. Hans Ispat Limited

6. Shree Ram Electro Cast Limited

7. Shree Hans Papers Limited

8. Electrotherm Mali SARL

II) Enterprises owned or significantly influenced by key management personnel or their relatives*(Except foreign companies)

I. Ahmedabad Aviation and Aeronautics Ltd. 2. Crystal Real Estate Pvt. Ltd.

3. Palace Tours and Air Charters Pvt. Ltd. 4. Western India Speciality Hospital Ltd.

5. E Motion Power Ltd. 6. Indus Elec Trans Pvt. Ltd.

7. Afghan Trading Pvt. Ltd. 8. Bhandari Brothers Commercial Pvt. Ltd.

9. Jayshri Petro Yarn Pvt. Ltd. 10. Adroit Trading and Investment Co.

II. EIL Hospitality Pvt. Ltd. 12. EIL Realty Pvt. Ltd.

13. EIL Software Pvt. Ltd. 14. EIL Software Services Offshore Pvt. Ltd.

15. EIL Technology Pvt. Ltd. 16. Electrotherm Engineering & Projects Ltd.

17. Kappa Consultancy Pvt. Ltd. 18. Electrotherm Foundation.

19. Gujarat Mint Alloys Ltd. 20. Indus Real Estate Pvt. Ltd.

21. Electra Transformer Ltd. 22. New Delhi Real Estate Pvt. Ltd.

(Formerly Known as Electra Transformer Private Limited) 23. Palace Infrastructure Pvt. Ltd. 24. Suraj Real Estate Pvt. Ltd.

25. S N Advisory Pvt. Ltd. 26. Suraj Advisory Services Pvt. Ltd.

27. Airfones Innovatives Private Limited 28. BNB Real Estate Private Limited

29. ETAIN Energy Holdings Limited 30. Electrotherm Solar Limited

(Formerly Known as Electrotherm Energy Holdings Ltd.) 31. Palace Solar Energy Pvt. Ltd. 32. SBRB Real Estate Pvt. Ltd.

33. Bhandari Real Estate Pvt. Ltd. 34. ETAIN Immodo Renewables Ltd.

35. Arjun Ceramics & Carbon Pvt. Ltd. 36. Indus Chargers & Controllers Pvt. Ltd.

37. Arjun Solar One Pvt. Ltd. 38. Arjun Green Power Pvt. Ltd.

39. Arjun Raj Solar One Pvt. Ltd. 40. Bhandari Charitable Trust

41. Arjun Raj Solar Five Pvt. Ltd.

III) Key Management Personnel (Other than Nominee & Independent Director)

1. Mr. Mukesh Bhandari (Chairman)

2. Mr. Shailesh Bhandari (Managing Director)

3. Mr. Narendra Dalal (Whole Time Director)*

4. Mr. Avinash Bhandari (Joint Managing Director & CEO)

5. Mr. Nilesh Desai (Non Executive Director)

6. Mr. Ram Singh (Non Executive Director)

7. Mr. Pradeep Krishna Prasad (Non Executive Director) *Has ceased to be Director of the Company during the year.

IV) Relatives of Key Management Personnel (With whom transaction has taken place during the year)

1. Mrs. Indubala Bhandari

2. Mrs. Jyoti Bhandari

3. Mr. Rakesh Bhandari

4. Mr. Anurag Bhandari

5. Mr. Siddharth Bhandari

6. Mrs. Shivani Bhandari

1.6 (a) In the opinion of the Management, the current assets, loans & Advances are realizable at the values stated, if realized in the ordinary course of business and the provisions for all known Liabilities are adequate.

(b) (i) The account of "Trade Receivables","Borrowings","Trade payables","Advances from Customer", "Short Term Loans and Advances" and some Bank Balances are subject to confirmation / reconciliation and the same includes very old non moving items and therefore the same are subject to necessary adjustments for accounting or re grouping /classification.

(ii) The amount of "Trade receivable", "Advances Recoverable In cash or Kind", and "Advances to suppliers/Other Parties",includes very old Trade receivables and/or payments made and the management is hopeful of the recovery and therefore these are not treated as doubtful for the recovery and not provided for.

(iii) The Balance of "Trade Payable Others" of Rs. 1999.01 Million includes Rs.10.46 Million payable and similarly,the amount of "Trade Receivable" includes Rs. 6.67 Million, of Inter Departmental amount (Steel Division) for transfer of the material. The said amount is under reconciliation and it may affect the net result of the company by Rs.3.79 Million and accordingly "Trade Payable Others" and "Trade Receivable"are overstated by Rs.10.46 Million and Rs.6.67 Million, respectively.


Mar 31, 2011

1 (a) In the opinion of the Management, the current assets, loans & advances are realizable at the values stated, if realized in the ordinary course of business and the provisions for all known liabilities are adequate.

(b) The account of Debtors, Loans, Creditors and Loans & advances are subject to confirmation / reconciliation and the amounts of Sundry Debtors, Creditors and Advances are stated on net basis, on the basis of control account, and accordingly the same are subject to necessary adjustments or re-grouping /classification. In this process, the previous year figures of loans have been re- grouped and reclassified.

(c) Sales include Export Sales of Rs. 219.70 Million of which shipment has taken place in next Financial Year.

(d) Power and Fuel expenses are inclusive of duties and taxes of Rs. 53.32 Millions(Previous year Rs. Nil) paid towards power generation.

(e) During the year Foreign Exchange Fluctuation loss of Rs. 308.10 Million has been charged to Material Cost and Rs. 157.95 Million to Interest Expenses.

(f) The Company has filed application for refund of Terminal Excise Duty of Rs. 15.7 Million and the same is included in Loans and Advances Balances. The said claim is under dispute and has been rejected by the Department but the Management is of the opinion that the company will receive the claim; therefore the same is treated as good for its realization and not provided for as expenses.

(g) During the year foreign interest hedging expenses of Rs. 89.91 Millions paid towards settlement has been deferred over the entire period of the forward contract.

(h) Company is recognizing the exchange rate difference on settlement or restatement of foreign currency monetary assets and liabilities in the profit & loss account as per the pre-revised Accounting Standard -11 'Accounting for effects of changes in foreign exchange rates' issued by The Institute of Chartered Accountants of India. By exercising the option related to amortization of foreign exchange fluctuation differences as per the notification dated March 31, 2009 issued by the Ministry of Corporate Affairs the exchange difference arising on restatement or settlement of long term foreign currency monetary items in so far as they relate to acquisition of a depreciable capital asset are adjusted to the cost of such asset and depreciated over the balance life of the asset. Accordingly, in the Financial Year 2009-10, on the full payment of the loan, foreign exchange gain of Rs. 145.25 Millions has been reduced from the cost of fixed assets and consequently depreciation thereon for the current year is provided on the balance value of the assets.

2. Miscellaneous expenditure includes total Research and Development expenses of Rs. 176.07 Million (Previous Year Rs. 152.02) incurred on development of Hybrid Bus/T-Cab/project, which is still in progress and said expenses would be written off in five years from the year of completion.

3. SEGMENT REPORTING UNDER ACCOUNTING STANDARD 17 :

(A) Business Segment

Based on the guiding principles given as per Accounting Standard on "Segment Reporting" (AS-17) issued by The Institute of Chartered Accountants of India, the Company's primary business is manufacturing and marketing of Induction Furnaces, Steel items and Battery Operated Vehicles.

4. RELATED PARTY (AS IDENTIFIED BY THE COMPANY) DICLOUSURES UNDER ACCOUNTING STANDARD 18:-

A. List of Related Parties

I) SUBSIDIARY COMPANIES

1. Jinhua Indus Enterprises Limited.

2. Jinhua Jahari Enterprises Limited.

3. Bhaskarpara Coal Company Limited

4. ET Elec-Trans Limited

5. Hans Ispat Limited

6. Shree Ram Electrocast Private Limited

7. Shree Hans Papers Limited

8. Electrotherm Mali SARL

II) ASSOCIATES:

I. Ahmedabad Aviation and Aeronautics Limited

2. Crystal Real Estate Pvt. Limited

3. Palace Tours and Air Charters Pvt. Limited

4. Western India Speciality Hospital Limited

5. Mangalam Information Technologies Pvt. Limited

6. Liberty Finance and Leasing Co. Pvt. Limited

7. E-Motion Power Limited

8. Indus Elec-Trans Pvt. Limited

9. Magnum Limited.

10. Alwar Trading and Investment Company

11. Afghan Trading Pvt. Limited

12. Bhandari Brothers Commercial Pvt. Limited

13. Palanpur Reality Developers Pvt. Limited

14. Jayshri Petro-Yarn Pvt. Limited

15. Adroit Trading and Investment Co.

16. EIL Hospitality Pvt. Limited

17. EIL Realty Pvt. Limited

18. EIL Software Pvt. Limited

19. EIL Software Services Offshore Pvt. Limited

20. EIL Technology Pvt. Limited

21. Electrotherm Engineering & Projects Limited

22. Electrotherm Infrastructure Pvt. Limited

23. Electrotherm Renewables Pvt. Limited

24. Electrotherm Foundation.

25. Gujarat Mint Alloys Limited

26. Indus Real Estate Pvt. Limited

27. ICS Commercial Pvt. Limited

28. New Delhi Real Estate Pvt. Limited

29. Palace Infrastructure Pvt. Limited

30. S B Realty Developers Pvt. Limited

31. Sun Infrapower Pvt. Limited

32. Sun Residency Pvt. Limited

33. Suraj Real Estate Pvt. Limited

34. S N Advisory Pvt. Limited

35. Suraj Advisory Services Pvt. Limited

36. Bhandari Charitable Trust.

37. Airfones Innovatives Pvt. Limited

38. BNB Real Estate Pvt. Limited

39. Electrotherm Energy Holdings Limited

40. Electrotherm Solar Limited

41. Firefly Energy Limited

42. Indus Coils & Plates Limited

43. Inspira Solar Energy Limited

44. NET Architectures Pvt. Limited

45. Bhandari Real Estate Pvt. Limited

III) KEY MANAGEMENT PERSONNEL: (Other than Nominee & Independent Director)

1. Mr. Mukesh Bhandari (Chairman & Chief Technology Officer)

2. Mr. Shailesh Bhandari (Managing Director)

3. Mr. Narendra Dalal (Whole-time Director)

4. Mr. Avinash Bhandari (Joint Managing Director & CEO)

IV) RELATIVES OF KEY MANAGEMENT PERSONNEL: (With whom Transaction has taken Place during the year)

1. Mrs. Indubala Bhandari

2. Mrs. Jyoti Bhandari

3. Mr. Rakesh Bhandari

5. The Company has determined Pre-Operative Expenditure (including borrowing cost) of Rs. 260.09 Millions (Previous year: Rs. 388.66 Millions) and the same have been allocated towards the respective fixed assets.

6. In compliance of Accounting Standard 22 issued by Institute of Chartered Accountants of India, Deferred Tax liability mainly arising on account of difference between book and income tax written down value of fixed assets, after adjusting unabsorbed depreciation, during the year deferred tax liability of Rs. 50.63 Millions (Rs. 120.39 Millions) has been provided.

7. CONTINGENT LIABILITIES/ UNPROVIDED LIABILITY:-

(A) The Company is liable for following contingent liabilities:-

(i) Disputed Statutory Claims/Levies for which the company has preferred appeal in respect of Income Tax liability of Rs. 1.42 Millions (Previous Year Rs. 1.42 Millions), VAT liability of Rs. 0.61 Millions (Previous Year Nil), Excise Liability of Rs. 2788.40 Millions (Previous Year Nil). The above amounts are excluding the amount of Interest payable and of the amount involved in appeal preferred by the department, if any.

(ii) Guarantees / Counter Guarantees (including un-utilized Letters of Credit) issued Rs. 2808.86 Millions (Rs. 362.49 Millions in Previous year).

(iii) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 40.00 Millions. (Previous Year Rs. 58.73 Millions.).

(iv) The company is contingently liable for the pending disputed labour and other matters, approximately amounting to Rs. 1.00 Millions (Previous Year Rs. 2.28 Millions).

(v) The company has executed Legal Undertaking Bond to pay Central Excise Duty (Terminal Excise Duty), levies and liquidated damages payable, if any, in respect of imported and indigenous capital goods and stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. In this regard aggregate duty liability amount of Rs. 271.05 Millions as at March 31, 2011 (Previous Year: Rs. 299.57 Millions). Against these, exports amounting to Rs. 1972.76 Millions (previous year Rs. 2396.56 Millions) will have to be made within next 8 years from the date of issue of license.

(vi) The amount of sundry debtors is net of Bills discounted of Rs. 34.99 Million with bankers (Previous year Rs. Nil).

(B) The Company is liable for Un-provided liabilities of VAT of Rs. 0.39 Million(Previous Year Rs.Nil).

(C) The Claim for Input Vat Credit receivable of Rs.691.67Millions is subject to the sanction of the additional amount of Incentive of VAT, by Industries Commissioner.

8. During the Financial year 2009-10, in pursuance of the Scheme of Arrangement approved by the Hon'ble High Court of Gujarat vide its order dated November 30, 2009, the financial statements of the company were restated as under:-

i. Immovable assets of the Company, namely Land and building, on the basis of Revaluation report of the Government approved competent Valuer appointed by the Company were recorded at their respective fair values and resulting increase over Book Value, of Rs. 2481.95 million, was transferred to General Reserve Revaluation Account.

ii. Rs. 500 million was transferred from Share Premium Account to Business Development Reserve (BDR) Account and entire BDR Account had been utilized for writing off obsolete or unrealizable assets, unrealizable loans and/or advances etc.

9. Previous year's figures have been re-arranged/ regrouped /reclassified/Re-casted wherever necessary.

10. Signed Schedule No.1 to 21 forms part of the Annexed account of the Company.

 
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