Notes to Accounts of Electrotherm (India) Ltd.

Mar 31, 2018

1. CORPORATE INFORMATION:

Electrotherm (India) Limited (the “Company”) is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The registered office of the Company is located at A-1, Skylark Appartment, Satellite Road, Satellite, Ahmedabad, Gujarat. The Company is engaged in the manufacturing of Electronic Furnace, Sponge and Pig Iron, Ferrous and Non-Ferrous Billets/ bars/ Ingots, Duct Iron Pipes, Battery Operated Vehicles and Services relating to Electric Furnace and Other Capital equipment and battery operated vehicles.

The financial statements were authorized for issue in accordance with a resolution passed in Board Meeting held on 25th May 2018.

2. BASIS OF PREPARATION:

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (“Ind AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015.

For all periods up to and including the year ended March 31, 2017, the company prepared its financial statements in accordance with Accounting Standards notified under Section 133 of the Companies Act, 2013 (the “Act”) read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). These financial statements for the year ended March 31, 2018 are the first the Company has prepared in accordance with Ind AS.

The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities which have been measured at fair value. Refer accounting policy regarding financial instruments.

The financial statements are presented in Rupees in crore and all values are rounded to the nearest Crore, except where otherwise indicated.

2.1 SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS:

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuation. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation

The mortality rate is based on publicly available mortality tables for India. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for India.

(b) Fair value measurement for financial instruments

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

(a) The Company holds investment in equity shares of Shree Ram Electrocast Limited and in Electrotherm Mali SARI as subsidiary company. Due to heavy losses and non operation of Shree Ram Electrocast Limited the amount of Investment of Rs. 78.68 Crore has been written off during the financial year 2015-2016 and Electrotherm Mali SARI ceases to the subsidary of the company on 27th March 2017, as the company has been wound up and therefore the company has written off its investment of Rs. 0.01 Crore

(b) The company holds an investment in equity shares of ET Elec-Trans Limited as subsidary company and Bhaskarpara Coal Company Limited as a joint venture. These Companies have incurred heavy losses and/or are non-operating and therefore the fate of said Companies is uncertain. Provision for impairement of Rs. Nil (March 31, 2017 Rs. Nil and on April 1, 2016 Rs. 2.13 Crore) in the value of investment in joint ventures namely Bhaskarpara Coal Company Limited and in the value of investment in subsidiary namely ET Elec-Trans Limited Rs. Nil (March 31, 2017 Rs. Nil and on April 1, 2016 Rs. 0.72 Crore) has been provided.

(b) The settlement of loans and advances to subsidiaries is neither planned nor likely to occur in the next twelve months and are given as interest free.

(c) Loans and advances to subsidiaries are given for business purpose.

(d) Provision for the Expected Credit Loss on amount recoverable from Shree Hans Papers Limited has been made of as at March 31, 2018 Rs. Nil (As at March 31, 2017 Rs. Nil and on April 1, 2016 Rs. 4.18 Crore) due to uncertainity of it’s recovery.

(b) The settlement of loans and advances to subsidiaries and related parties is not planned but is likely to occur with in twelve months and are given interest free.

(c) Loans and advances to subsidiaries are given for the business purpose.

A formal credit policy has been framed and credit facilities are given to customer within the framework of the credit policy. As per credit risk management mechanism, a policy for doubtful debt has been formulated and risk exposure related to receivables are identified based on criteria mentioned in the policy and provided for credit loss allowance.

b) Rights, preference and restriction attached to Equity Shares

The face value of the Equity shares is Rs 10/- per share . Each holder of equity share 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.

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

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.

c) Rights, preference and restriction attached to Preference Shares

- The face value of the Preference shares is Rs 10/- per share . The Preference share holder have voting right in their meeting. During the year, the company has not declared any dividend.

- 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 .

d) Rights, preference and restriction attached to Partially Convertible Partially Redeemable Preference Shares (PCPRPS)

- The face value of the PCPRPS is Rs 10/- per share . The preference share holder does not have any voting right in their meeting. During the year, the company has not declared any dividend.

- 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.

- The Equity Shares arising upon conversion of the PCPRPS shall rank pari passu with the existing Equity Shares of the Company in all respects, including dividend.

f) The Company has calls in arrears / unpaid calls of Rs. Nil (March 31, 2017: Nil and April 1, 2016: Nil)

g) Details of Shares alloted as fully paid up persuant to contract(s) without payment being received in cash. ( during 5 years immediately preceeding March 31, 2018).

As per the terms and conditions of the settlement with Edelweiss Asset Reconstruction Company Limited (EARC), the company has issued and alloted 2,85,90,000 partially redeemable preference shares (PCPRPS) to EARC on 22nd August 2015.

h) As per the terms and conditions of the settlement with Edelweiss Asset Reconstruction Company Limited (EARC), the company has allotted 2,85,90,000 Partially convertible and Partially Redeemable Preference Shares (PCPRPS) of Rs.10 Each of amounting to Rs 28.59 Crore on August 22, 2015 and against the said PCPRPS, 12,66,440/- Equity shares of Rs. 10/- each at the price of Rs. 225.75 per equity share (inclusive of Share premium amount of Rs. 215.75 per equity share) were allotted during F.Y. 2016-17. As equity shares were allotted against such PCPRPS the entire amount of preference Share Capital of Rs. 28.59 Crore has been treated as part of Equity Share Capital as on April 1, 2016

a. Capital Reserve

Capital Reserve is not available for distribution of profits.

b. Securities Premium

Securities Premium is used to record the premium on issue of shares and is utilised in accordance with the provisions of the Companies Act, 2013.

c. General Reserve

General Reserve is used from time to time to transfer profits to/from Retained Earnings for appropriation purposes including the amount arising due to past revaluation of land and building under previous GAAP. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

d. Retained Earnings

Retained Earnings are the profits of the Company earned till date and net of appropriations.

(a) Rupee term loan and foreign currency loan are 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 the Directors of the Company.

(b) External Commercial Borrowings 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 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 stock 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.

The revenue from operations for the year ended March 31, 2017 and part of the financial year ended March 31, 2018 (upto June 30, 2017) are inclusive of excise duty. As the Goods and Service Tax (“GST”) has been implemented with effect from July 1, 2017 and which replaced excise duty and other input taxes. In view of the said fact the revenue for the part of the year ended March 31, 2018 is reported net of GST and accordingly, is not comparable with earlier year.

viii) Claims against the Company not acknowledged as debts amounting to Rs.0.70 Crore (As at March 31, 2017: Rs.0.70 Crore and on April 1, 2016: Rs. 0.70 Crore), are pending before various courts, authorities, arbitration, Consumer Dispute Redressal Forum etc. Further during the year, in respect of one pending arbitration matter, the Company has claimed an amount of Rs.1.06 Crore (As at March 31, 2017: Rs. 1.06 Crore)and the counter claim of the respondent is Rs.0.72 Crore (As at March 31, 2017: Rs.0.72 Crore).

ix) The company has used advanced license for import of certain raw material against which company was under an obligation to export certain pre-determined quantity of finished goods within specified time period. However, there was a shortage in the goods exported by the company against its export obligation. Accordingly, in the opinion of the management, the company may be liable to pay Rs.5.37 Crore (including interest) (As at March 31, 2017: Rs.5.02 Crore and on April 1, 2016: Rs. 4.66 Crore) as import duty.

Note:-

i. Future cash flows in respect of above, if any, is determinable only on receipt of judgement/ decisions pending with relevant authorities.

ii. The above amounts are without the amount involved in the appeal preferred by the Department, if any, and further applicable interest on the demand

3 Employee benefit obligations

The Company has classified the various employee benefits provided to employees as under:

I Defined Contribution Plans

During the year, the Company has recognised the following amounts in the Statement of Profit and Loss-

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet. The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

i. The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

ii. The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

iii. Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognized in the balance sheet.

iv. There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

3.1 Risks associated with defined benefit plan

Gratuity is a defined benefit plan and company is exposed to the Following Risks:

I nterest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of assest.

Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.

Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality Risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company and a default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory guidelines.

4 Segment Reporting

The segment report is given in consolidated financial statements.

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

(a) Winding Up Petitions:

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 and which are pending before them. Winding up petition by UCO Bank and Syndicate bank has been withdrawn/ disposed off.

(b) Cases before Debt Recovery Tribunal (DRT)/DRAT Cases:

(i) Syndicate Bank, Central Bank of India, Corporation Bank and Vijaya Bank had filed Original Applications against the Company before the Hon’ble Debt Recovery Tribunal-1, Ahmedabad (“DRT”) under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. The DRT has granted ad-interim injunction orders against transfer of certain properties. Syndicate Bank has filed an appeal before DRAT, Mumbai against the order of DRT for modification of ex-parte adinterim injunction order. The Company had filed its reply/written statement/interim application and the said matters are pending for judgment/further hearing before DRT/DRAT.

(ii) In view of settlement/consent terms filed with DRT, the original application filed by Invent asset securitization and reconstruction Private Limited (being the assignee of debts of Allahabad Bank) was disposed of on 21^st March 2018.

(iii) In view of settlement/consent terms filed with DRT, the original application filed by Union Bank of India of India was disposed of on 28^th April 2018.

(iv) Subject to final terms to be agreed upon and provisional settlement with Vijaya Bank, the bank has agreed to withdrawn the original application filed with DRT.

(v) The Indian Overseas Bank and Dena Bank have assigned the debts associated with the company to Rare Asset Reconstruction Private Limited (formerly known as Raytheon Asset Reconstruction Private Limited) and the original application filed by them are pending before DRT, with some ad-interim injunction order in the matter of India Overseas Bank.

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

Syndicate Bank, Indian Overseas Bank and Vijaya 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 is contesting all the said cases and all the matters are pending for further hearing before the respective Hon’ble Metropolitan Magistrates, Ahmedabad.

(d) Wilful Defaulters:

(i) Central Bank of India has declared the Company as a wilful defaulter and reported the name of Company and its directors to the Reserve Bank of India and Credit Information Bureau (India) Limited (CIBIL) as wilful defaulter.

(ii) Dena Bank has declared the Company as a wilful defaulter and reported the name of Company and its directors to the Reserve Bank of India and Credit Information Bureau (India) Limited (CIBIL) as Wilful Defaulter. The Company has challenged the said action before the Hon’ble Gujarat High Court and the said petition is pending for further hearing. Dena Bank has assigned the debt associated with the company to Rare Asset Reconstruction Private Limited (formerly known as Raytheon Asset Reconstruction Private Limited).

(e) Notice under SARFAESI Act, 2002

Vijaya Bank had issued notices 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 (TLT) Division of the Company situated at Village : JuniJithardi, Tal : Karjan, Dist : Vadodara on 08/05/2012, 19/03/2015 and 04/11/2015. The company has filed its reply in respect of all the notices issued by the bank. Vijaya Bank has withdrawn its notice dated 19/03/2015.

Vijaya Bank vide possession notice dated 02.03.2017 taken the symbolic possession of the movable and immovable properties of TLT division of the Company. The Company has filed Securitization Application before DRT-1, Ahmedabad against the said action of symbolic possession and the matter is pending before DRT-1 Ahmedabad for further hearing.

6. Non Provisions of Disputed Advances and Claims/Liability

(a) The Company has VAT tax liability (including interest) of Rs. Nil (March 31, 2017: Rs.35.84 Crore) under Maharashtra Sales Tax Act (Rs. 9.25 Crore for the financial year 2009-10 and Rs.26.59 Crore for the financial year 2010-11) out of which the company had paid Rs. 4.00 Crore, under protest and the same has been shown as Balance with Revenue authority under the head Other Current Asset. The company has filed an appeal against the said order before the Appellate Authority and the appellate Authority has set aside the matter for fresh assessment. On account of the said order presently the liability of the company has become Rs. Nil (March 31, 2017: Rs. 35.84 Crore).

(b) During the Previous Year, VAT/CST Assessment for the financial year 2010-11 was completed and assessing officer has determined the tax liability of Rs.20.95 Crore of VAT and Rs.11.15 Crore of CST. The company has made part payment of Rs. 3.25 Crore for VAT and Rs. 1.50 Crore for CST under protest and the same has been shown as Balance with Revenue authority under the head Other Current Asset. Provision for the impugned disputed tax liability has not been made as the company is hopeful of matter being decided in its favor by the appellate authority. With regard to the payment of balance amount the company has been granted stay up to 30.09.2018. The Appellate Authority vides order dated 27.04.2018 has passed the refund order of Rs. 7.35 Crore for financial year 2009-10 and ordered for adjustment against demand for next financial year. On account of the said order the VAT liability for financial year 2010-11 has reduced to Rs. 13.60 Crore and is subject to order of the Appellate Authority.

(c) In current year VAT/CST assessment for financial year 2013-14 was completed and the assessing officer has determined the tax liability of Rs. 6.13 Crore and against the said order company is under the process of filling appeal before the Appellate Authority.

(d) In view of the non-provision of the above items 34(a), 34(b) and 34(c) the Profit of the company are overstated by Rs. 30.88 Crore (Losses as on March 31, 2017 of Rs. 67.94 Crore are understated) and to that extent advances are overstated or the respective liabilities are understated.

(e) Loan accounts 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 profit has been overstated 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 unprovided interest, on approximate basis, on the said loans (Other than the loans of International Finance Corporation {Refer Note No. 35(h)}, Union Bank of India, UCO Bank, Vijaya Bank and loans which are assigned to Edelweiss Assets Reconstruction Company Limited (EARC), Invent Assets Securitization & Reconstruction Private Limited (Invent) and Rare Asset Reconstruction Private Limited (formerly known as Raytheon Asset Reconstruction Private Limited) is as under:-

7. Additional Disclosures

(a) Power and Fuel expenses are inclusive of duties and taxes of Rs. 14.91 Crore (March 31, 2017: Rs. 12.45 Crore) paid towards power generation.

(b) During the year, old non-recoverable amount of Rs. 18.96 Crore {which includes an amount of Rs. 5.61 Crore pertaining to related party} (March 31, 2017: Rs. 7.27 Crore) and the unclaimed amount of Rs. 3.45 Crore (March 31, 2017: Rs. 3.18 Crore) have been written off/ back on account of non-realization and payment. Its’ net balance of Rs. 15.51 Crore (March 31, 2017: Rs. 4.09 Crore) has been charged to the Statement of Profit and loss.

(c) During the previous year, the settlement amount of ICICI Bank, as per settlement agreement, has been fully paid by the company. After repayment of the settlement amount, there has been net reduction in debt by Rs. 43.47 Crore which has been accounted for as under:

(d) Product Development Cost includes total Research and Development expenses of Rs. 14.66 Crore (March 31, 2017: Rs. 14.38 Crore) incurred on development of CONTIFUR Project, which is still in progress and said expenses, would be written off in five years from the year of completion of the projects. During the previous year, product hybrid bus and T-Cab were subject to research but due to some technical reason/ non-performance up to the expected level, the product could not be launched in market. Accordingly management has decided to abandon the project and during the year the company has written off the research cost of Rs. Nil (March 31, 2017: Rs.17.81 Crore) incurred on the said project.

(e) The cost of material consumed includes freight, loading and unloading expenses, inspection fees, commission on purchase, taxes & duties (to the extent of credit not available),rate difference and interest cost on purchase of raw material and ancillary thereof (including reversal of any claims).

(f) In view of 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.

(g) Some of the creditors have filed cases of recovery against the company before the various Hon’ble Courts/Forums for Rs. 1.92 Crore (March 31, 2017 Rs. 2.04 Crore). The said amounts are excluding interest.

(h) Assignment /Settlement of Loans Taken Accounts and its Accounting Treatment

- Bank of India, Bank of Baroda, State Bank of India, Canara Bank and State Bank of Travancore have assigned their debts to Edelweiss Asset Reconstruction Company Limited. The Company has entered into settlement agreement on 10th March 2015 for the repayment of the Debts of the said Banks to Edelweiss Asset Reconstruction Company Limited. 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.

The Management is of the opinion that Fixed Deposit of Rs. 12.45 Crore held by Bank of Baroda will be adjusted against the outstanding liability payable to Edelweiss Asset Reconstruction Company Limited at the time of last installment. Accordingly, the said amount has been shown as advance recoverable in cash or kind under the head Other Current Asset.

- The amount of installments paid to Edelweiss Asset Reconstruction Company Limited, up to the balance sheet date are shown as part of other current asset and to that extent the amount of Loans from Asset Reconstruction Companies (Current Maturity of Long term Borrowings of Rs. 179.50 Crore and Non-Current Borrowings of Rs. 12.45 Crore)(March 31, 2017: Current Maturity of Long term Borrowings of Rs. 114.50 Crore and Non-Current of Rs. 12.45Crore) and the amount of advance recoverable in cash or kind are overstated by Rs. 191.95 Crore (March 31, 2017: Rs. 126.95 Crore).

- Oriental Bank of Commerce, Punjab National Bank and Allahabad Bank have assigned their debts to Invent Assets Securitization and Reconstruction Pvt. Ltd. vide settlement agreement for the repayment of debts of the said banks to Invent Assets Securitization and Reconstruction Pvt. Ltd. In terms of settlement, if all the terms and conditions are fully complied by the company, there would be a reduction in debt, as per books of accounts of the company by Rs. 325.01 Crore.

Further the amount of installments paid to Invent Assets Securitization and Reconstruction Pvt. Ltd., up to the balance sheet date are shown as part of other current asset and to that extent the amount of current maturities of long term borrowings from Invent Assets Securitization and Reconstruction Pvt. Ltd. and the amount of advance recoverable in cash or kind are overstated by Rs.13.14 Crore (March 31, 2017: Rs. 5.89 Crore).

- The company, subject to some terms, agreed for repayment of debts of Union Bank of India and in pursuance to the same, the company has made payment of Rs. 12.35 Crore (March 31, 2017: Rs. 1.50 Crore) and the said amount has been shown as part of other current asset and to that extent the amount of current maturities of long term borrowings from Union Bank of India and the amount of advance recoverable in cash or kind are overstated by Rs.12.35 Crore (March 31, 2017: Rs. 1.50 Crore).

- The company was informed vide letter dated 7^th April 2017 of Dena Bank and letter dated 27^th March 2017 of Rare Asset Reconstruction Pvt. Ltd. (formerly known as Raytheon Asset Reconstruction Private Limited), Dena Bank has assigned debt to Rare Asset Reconstruction Pvt. Ltd. on 18^th March 2017. However on account of non-finalization of repayment terms and condition the entire loan amount has been shown as current maturities of long term borrowings.

- The company was informed vide letter dated 12^th October 2017 of Indian Overseas Bank, that the bank has assigned debt to Rare Asset Reconstruction Pvt. Ltd. (formerly known as Raytheon Asset Reconstruction Private Limited). However on account of non-finalization of repayment terms and condition the entire loan amount has been shown as current maturities of long term borrowings.

- During the year the Company has deposited Rs. 7.70 Crore in corporation bank and Rs. 7.25 Crore in Central Bank of India subject to settlement with the banks which is shown under the head Cash and Cash Equivalents.

- The company, subject to some terms, agreed for repayment of debts of Vijaya Bank and in pursuance to the same, the company has made payment of Rs. 10.00 Crore (March 31, 2017: Rs. Nil) and the said amount has been shown as part of other current asset and to that extent the amount of current maturities of long term borrowings from Vijaya Bank and the amount of advance recoverable in cash or kind are overstated.

- The company has received and accepted settlement terms with International Finance Corporation. But the payment schedule has been revised due to delay in obtaining required RBI permission for restructuring of External Commercial Borrowings and Foreign Currency Convertible Bonds. The company has been informed by Bank of India [Authorized Dealer] vide letter dated April 16, 2018 that required RBI permission has been received. Final terms of settlement agreement with IFC is in process and company expect it to be signed in the month of June-2018.

(i) The balances of Central Bank of India, Syndicate Bank, Indian Overseas Bank and International Financial Corporation are not being confirmed / reconciled by the borrowers, as these borrowers have treated the loan accounts as non performing assets account. (j) In view of the commercial prudence, during the year, the company has not restated the long outstanding export trade receivables and foreign currency loan at the rate prevailing as on March 31, 2018.

(k) Dispute with Micro, Small & Medium Enterprise

(i) There was dispute with Supreme Metallurgical Services Pvt. Ltd. (“Supreme Metallurgical”) in relation to material supplied by the said party and there was litigation pending before Hon’ble Gujarat High Court. However, the company entered into settlement with Supreme Metallurgical and it has agreed to withdraw the pending litigation from Hon’ble Gujarat High Court.

(ii) There is dispute with Prima Automation (India) Private Limited (a Micro, Small and Medium Enterprise) in relation to material supplied by the said party and for which the said party has filed an application before Gujarat State Level Industry Facilitation Council (“SLIFC”). In view of settlement with Prime Automation, they have withdrawn its application from SLIFC on 1^st November 2017.

(l) The Central Bureau of Investigation (CBI) 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. Central Bureau of Investigation has filed a charge sheet and a CBI special case number 27 of 2015 was registered against the company and its few Directors before the Hon’ble CBI Court, Ahmedabad on 6th October 2015 and now the matter is pending before Hon’ble CBI Court for hearing.

(m) The Ahmedabad Zonal Office of the Directorate of Enforcement (“ED”) has recorded a case under the provisions of the Prevention of Money Laundering Act, 2002 and during the course of investigation, the ED has passed an order dated 28^th March, 2018 under sub-section (1) of section 5 of the Prevention of Money Laundering Act, 2012 for provisional attachment of certain properties comprising Land having total area of 4,90,621 square meter at chhavada and samkhiyali of steel Plant, Building and Plant & Machinery for a period of 180 days. Thereafter, a complaint under sub-section (5) of section 5 of the Prevention of Money Laundering Act, 2012 was filed by ED before the Adjudicating Authority, New Delhi and the same is pending for hearing.

(n) The Company has filed recovery case against Victory Rich Trading Limited (“VRTL”) & its director for non-payment of amount in the High Court of Hong Kong and the High Court of Hong Kong has passed judgment for payment of recovery amount. Thereafter, VRTL has challenged the said order and the same is pending before the High Court of Hong Kong.

8. DIRECTOR’S REMUNERATION:

As per the approval of shareholders of the company at the 30^th annual general meeting held on 30^th September 2016 and approval of Central Government vide letter dated 21^st November 2017, the company has paid remuneration of Rs. 1,50,000/- per month to Mr. Mukesh Bhandari, Mr. Shailesh Bhandari and Mr. Avinash Bhandari with effect from 1^st February 2017. The central government has approved the remuneration of Rs.1,50,000/- per month for the said three appointees for a period from 1^st February 2017 to 31^st January 2020.

9. Account of Receivables / Payables in respect of Goods and Service Tax, Service Tax, CENVAT, and Vat are subject to reconciliation, submission of its return for its claim and/or its Audit/ Assessment, if any.

10. RELATED PARTY DISCLOSURE

As required by Indian Accounting Standard-24 “RELATED PARTY DISCLOSURE”, the disclosure of transaction with related parties are given below (with whom transaction taken place during the year):-A. List of Related Parties

I) SUBSIDIARY COMPANIES

1. Jinhua Indus Enterprises Limited

2. Jinhua Jahari Enterprises Limited

3. ET Elec-Trans Limited

4. Hans Ispat Limited

5. Shree Ram Electro Cast Limited

6. Shree Hans Papers Limited

II) JOINT VENTURE COMPANY

1. Bhaskarpara Coal Company Limited

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

1. EIL Software Services Offshore Pvt. Ltd.

2. Etain Electric Vehicles Limited

3. ETAIN Renewables Ltd.

4. Electrotherm Solar Ltd.

5. Bhandari Charitable Trust

IV) Key Management Personnel/Director of Companies

1. Mr. Mukesh Bhandari (Chairman & Managing Director)

2. Mr. Shailesh Bhandari (Managing Director)

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

4. Mr. Siddharth Bhandari (Whole time Director)

5. Mr. Pawan Gaur (Chief Financial Officer)

6. Mr. Fagesh R Soni (Company Secretary)

V) Relatives of Key Management Personnel

1. Mrs. Indubala Bhandari (Mother of Director)

2. Mrs. Jyoti Bhandari (Wife of Director)

3. Mr. Rakesh Bhandari (Brother of Director)

4. Mr. Anurag Bhandari (Son of Director)

5. Mrs. Shivani Bhandari (Daughter of Director)

6. Mrs. Panna Bhandari (Daughter of Director)

11. (a) In the opinion of the Management, the Other Assets and Financial Assets 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”, “Advances Recoverable In Cash or Kind”, “Advance to Suppliers and Other Parties” 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.0.72 Crore (March 31, 2017: Rs.0.89 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.

(iii) The amount of account of some of the same party under the Head “Advance from customers”, “Trade Payable”, “Advance to Suppliers and Others”, “Trade Receivables” appearing under more than one head are shown on gross basis and same are not netted off as its reconciliation and confirmations are pending.

12. (a) The amount of current maturity of Long Term Liability of Rs. 1168.04 Crore (March 31, 2017: Rs.959.54 Crore) shown under the head “Other Financial Liabilities” has been determined on the basis of the data available with the company and on the assumption that it is payable within one year.

(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 estimated net realizable value.

(c) The classification/grouping of items of the accounts are made by the management, on the basis of the available data with the company.

(d) The management is of the opinion that the uncompleted projects shown as Capital Work in Progress of Rs.10.45 Crore (March 31, 2017: Rs. 10.45 Crore) requires some further investment to bring them into commercial use and the company desire to complete the project, 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.

12.2 Category-wise Classification of Financial Instruments

i) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1:Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date.

iii) Valuation process

The Company obtains valuation results from external valuers for level 2 measurements. Inputs to level 2 measurements are verified by the Company’s treasury department

iv) Fair value of financial assets and liabilities measured at amortised cost

The carrying amounts of trade receivables, security deposits, cash and cash equivalents, interest accrued on fixed deposits, loans, unbilled revenue and trade payables are considered to be the same as their fair values, due to their short-term nature.

13 Financial Instrumet Risk, Management, Objectives & Policies

13.1 Financial risk management

The management of the Company has implemented a risk management system that is monitored by the Board of Directors. The general conditions for compliance with the requirements for proper and future-oriented risk management within the Company are set out in the risk management principles. These principles aim at encouraging all members of staff to responsibly deal with risks as well as supporting a sustained process to improve risk awareness. The guidelines on risk management specify risk management processes, compulsory limitations, and the application of financial instruments. The risk management system aims at identifying, analyzing, managing, controlling and communicating risks promptly throughout the Company. Risk management reporting is a continuous process and part of regular Group reporting. In addition, our Corporate Function Internal Auditing regularly checks whether Company complies with risk management system requirements.

The Company is exposed to credit, liquidity and market risks (interest rate risk, foreign currency risk and other price risk) during the course of ordinary activities. The aim of risk management is to limit the risks arising from operating activities and associated financing requirements by applying selected derivative and non-derivative hedging instruments.

13.2 Credit risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments. The balances with banks and security deposits are subject to low credit risk since the counter-party has strong capacity to meet the obligations and where the risk of default is negligible or nil. Trade receivables, Loans and Advances to Suppliers & Others

Credit risk arises from the possibility that customer/borrowers will not be able to settle their obligations as and when agreed. To manage this, the Company periodically assesses the financial reliability of customers and the borrowers, taking into account the financial condition, current economic trends, analysis of historical bad debts, ageing of accounts receivable and forward looking information.

The provision on trade receivables for expected credit loss is recognised on the basis of life-time expected credit losses (simplified approach). Trade receivables are evaluated separately for balances towards progress billings and retention money due from customers. An expected loss rate is calculated at each year-end, based on combination of rate of default and rate of delay. The Company considers the rate of default and delay upon initial recognition of asset, based on the past experience and forward-looking information, wherever available. The provision on loans for expected credit loss is recognised on the basis of 12-month expected credit losses and assessed for significant increase in the credit risk.

13.3 Liquidity risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company’s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.

The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended March 31, 2018 and March 31, 2017. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis. The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and mutual funds with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

The following table shows the maturity analysis of the Company’s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.

Maturities of financial liabilities

The table below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities:

13.4 Market risk

Market risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk. Financial instruments affected by market risk includes borrowings, deposits, investments, trade and other receivables, trade and other payables and derivative financial instruments.

The potential economic impact, due to these assumptions, is based on the occurrence of adverse / inverse market conditions and reflects estimated changes resulting from the sensitivity analysis. Actual results that are included in the Statement of Profit and Loss may differ materially from these estimates due to actual developments in the global financial markets. The company is mainly exposed to interest rate risk and foreign currency risk.

i) Interest Rate Risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the market rates. Since the borrowing of the company are classified as non performing assets or are transfer to assets reconstruction company or the settlement agreement have been executed, the borrowers are not charging interest, therefore the exposure to risk of changes in market interest rates is minimal.

ii) Foreign currency risk

The international nature of the Company’s business activities generates numerous cash flows in different currencies -especially in USD and EURO. To contain the risks of numerous payment flows in different currencies- in particular in USD and EURO- the Company follows groupwide policies for foreign currency management.

The above table represent only total major exposure of the company towards foreign exchange denominated trade receivables and trade payables.

The company is mainly exposed to change in USD and Euro. The below table demonstrates the sensitivity to a 5% increase or decrease in the USD and Euro against INR, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents management’s assessment of resonably possible change in foreign exchange rate.

14 Capital Management:

The Company’s objectives when managing capital are to:

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

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

For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholders value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders. The Capital structure of the Company is as follows:

15 First-time adoption of Indian Accounting Standards (IND AS)

Transition to Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of the opening Ind AS balance sheet at April 1, 2016 (the Company’s date of transition) subject to certain exemptions and exceptions provided in Ind AS 101 with respect to transition date (refer note below). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

I Exemptions availed

a) The Company has elected to measure investments in subsidiaries as per the statement of financial position prepared in accordance with previous GAAP as a deemed cost (Net off Impariment) at the date of transition as per exemption available under Ind AS 101

b) Since there is no change in the functional currency, the Company has elected to continue with the carrying value for all of its Property, plant and equipment and Intangible assets as recognised in its Indian GAAP financial as deemed cost at the transition date.

II Exceptions applied

a) Estimates

An entity’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for Impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

b) De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the derecognition “requirements in Ind AS 109 retrospectively from a date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions. The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

c) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

Notes to First time adoption:-a Expected credit loss provision

As per Ind AS 109, the Company is required to apply expected credit loss model for recognising the allowance for doubtful debts on financial assets. b Reclassification of Redeemable Preference Shares

As per Ind AS, redeemable preference shares are classified as financial liabilties. c Deferral of Sales and related costs

Under Ind AS 18, revenue and related costs are recognised when the risks and rewards are passed to the customers and the Company retains no continuing managerial involvement. d Fair Valuation/ Impariment adjustment under Ind AS

Under Ind AS, investments in units of mutual funds are measured at fair value and Impariment of the Investment of the subsidaries due to heavy losses and/or are non-operating. e Remeasurement of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability, are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. f Material Adjustment to Statement of Cash flow

No material adjustments have been identified to the Statement of Cash flows on account of transition to Indian Accounting Standards. g Bhaskarpara Coal Company Limited considered as Joint Venture Bhaskarpara Coal Company Limited is Jointly control by two different entities having the same power, exposure, rights, returns, etc.

16 Events occurred after the Balance Sheet Date

The Company evaluates events and transactions that occur subsequent to the Balance Sheet date but prior to the approval of the financial statements to determine the necessity for recognition and/or reporting of any of these events and transactions in the financial statements. As of 25th May 2018, there were no subsequent events to be recognized or reported that are not already disclosed elsewhere in the financial statements.

17 Previous year amount has been regrouped/re-casted/re-arranged/ re-classified/re-determined, wherever necessary, to make the figure of the current year comparable with the previous year.

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Mar 31, 2016

(c) 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 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.

(d) 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.

(e) Rights, preference and restriction attached to Partially Convertible Partially Redeemable Preference Shares(PCPRPS)

(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 repayment of capital.

(iii) The Equity Shares arising upon conversion of the PCPRPS shall rank pari passu with the existing Equity Shares of the Company in all respects, including dividend.

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

(g) Shareholders holding more than 5% of the Shares in the Company :

Equity Shares

(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 movab assets situated at Vatva, Palodia, Dhank, Samakhiyali - Kutch, and Chhadawada -Bhachau and Juni Jithardi, Karjan, Vadoda and Bank Fixed Deposits & as second charge on all Stock-in-Trade & Receivables. Further the loans are guaranteed by t 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, sei finished and finished goods, stores and spares not relating to the plant and machinery and stocks in trade & receivables ai second charge on all movable fixed assets & second and subservient charge by way of equitable mortgage of all immovab properties situated at Vatva, Palodia, Dhank, Samakhyali- Kutch and Chhadawada -Bhachau. Further the loans are guarantee by the personal guarantees of some of the Directors of the company.

Note: (1) 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. 3.23 Crore ( Previous Period Rs. 3.26 Crore) on account of the said revaluation, and which has been charged to Statement of Profit & Loss.

2. The account under consideration is for the Financial year 2015-16 commencing from 1^st April 2015 to 31^st March 2016 (Referred as "Current year") and the previous financial year commencing from 1^stApril 2014 to 31^st March 2015 (Referred as "Previous Year ").

3. 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 Hon''ble Division bench vide order dated August 13, 2013 has granted the stay against the said orders. Further in view of the reference of the company registered with the Hon''ble BIFR Board (governed by the Sick Industrial Companies (Special Provisions) Act, 1985), the Hon''ble Gujarat High Court vide order dated August 19, 2015 has adjourned the matter sine die until the proceedings before the Hon''ble BIFR Board are completed.

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

(b) Cases before Debt Recovery Tribunal (DRT)/DRAT Cases:

(i) UCO Bank, Syndicate Bank, ICICI Bank Limited, Allahabad Bank, Central Bank of India, Dena Bank, and Corporation Bank had filed Original Applications against the Company before the Debt Recovery Tribunal-1, Ahmedabad ("DRT") under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. The DRT has granted ad-interim injunction orders against transfer of certain properties. The Company had filed its reply / application in all the matters and has requested the DRT to suspend the proceedings in view of registration of reference before the Hon''ble BIFR Board.

The Company has filed an appeal before Debt 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.

During the current year Allahabad Bank has assigned the debt associated with the company to Invent Assets Securitization & Reconstruction Private Limited (ARC). Company has settled its debt with ICICI Bank in OTS (one time settlement) and on complying with the repayment as per the settlement agreement; the matter will be withdrawn from the Hon''ble DRT.

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

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

UCO Bank, Syndicate Bank, Vijaya Bank, ICICI Bank Limited 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 Magistrates, 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 said matter is pending for further hearing.

(ii) Central Bank of India and Corporation Bank has declared the Company as willful defaulter and reported the name of Company and its directors to the Reserve Bank of India, Credit Information Bureau (India) Limited (CIBIL) as Willful Defaulter.

(iii) Allahabad Bank, Dena Bank, Punjab National Bank and Union Bank of India had written a letter to the Company for declaring the company and its directors as willful defaulter. The company has filed its reply with all the banks. After receiving the letter for personal hearing before Grievance Redressal Committee, company has not received any further communication in respect of these cases.

(e) Notice under SARFAESI Act, 2002

(i) Vijaya Bank had issued notices 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 8/05/2012, 19/03/2015 and 04/11/2015. Company has filed its reply in respect of all the notices issued by the bank. Vijaya Bank has withdrawn its notice dated 19/03/2015. No further action has been taken by the Vijaya Bank.

(ii) Allahabad Bank and Corporation Bank has issued a notice under Section 13(2) of SARFAESI Act, 2002 vide letter dated 23^rd February, 2016 and 27^th May, 2015 respectively and the company has filed reply against the said notices on 12^th April,2016 and 27^th July,2015 respectively.

4. Net Worth and filing of Reference to the Hon''ble BIFR Board:-

The net worth of the Company is fully eroded and therefore the company has filed Reference to Hon''ble BIFR Board (governed by the Sick Industrial Companies (Special Provisions) Act, 1985) on February 28, 2014 and the same has been registered on June 27, 2014 as Case No. 29/2014. Further company has filed various Miscellaneous Applications to seek protection under section 22 of SICA 1985, in respect of disputed matters of tax & duty liability.

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

(a) The Company has VAT tax liability (including interest) of Rs. 35.84 Crore (Previous Year Rs. 21.94 Crore) under Maharashtra Sales Tax Act (Rs. 9.25 Crore for financial year 2009-10 and ''26.59 Crore for financial year 2010-11) out of which the company had paid Rs. 4.00 Crore, under protest and the same has been shown as Loans and Advances. The company has filed appeal against the said order before Appellate Authority. Provision for the impugned disputed tax liability of Rs. 35.84 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.

(b) During the Previous Year, VAT/CST Assessment for the financial year 2010-11 was completed and assessing officer has determined the tax liability of Rs. 20.95 Crore of VAT and Rs. 11.15 Crore of CST. The company has made part payment of Rs. 3.25 Crore for VAT and Rs. 1.50 Crore for CST under protest and the same has been shown as Loans and Advances. Provision for the impugned disputed tax liability has not been made as the company is hopeful of matter being decided in its favor by the appellate authority.

(c) The company has filed an application for refund of Excise Duty of Rs. Nil (Previous Year Rs. 12.23 Crore) and in the earlier year has treated the said amount as recoverable and has been shown as recoverable but during the year under consideration, company has written off the said amount as non recoverable and has been charged to Cost of Materials consumed.

(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. 67.94 Crore (Previous Year Rs. 66.29 Crore) and to the extent advances are overstated or the respective liabilities are understated.

(e) 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 of ICICI Bank and loans which are assigned to Edelweiss Assets Reconstruction Company Limited (EARC), Invent Assets Securitization & Reconstruction Private Limited (Invent)} is as under:-

(f) 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. After hearing, the Hon''ble Supreme Court of India on May 18, 2012 stayed the order passed by the Hon''ble Gujarat High Court. As per the direction of the Hon''ble Supreme Court of India, the Central pollution Control Board and Gujarat Pollution Control Board has carried out the joint inspection and submitted its report to Hon''ble Supreme Court of India. The Company has filed its compliance status report and the final hearing has been concluded before the Hon''ble Supreme Court of India. The arguments are concluded on 8th April, 2016 and the judgment is reserved.

6. Additional Disclosures

(a) Power and Fuel expenses are inclusive of duties and taxes of Rs. 12.40 Crore (Previous Year Rs. 11.15 Crore) paid towards power generation.

(b) During the year old non recoverable amount of Rs. 47.50 Crore (Previous Year Rs. 113.19 Crore) and unclaimed amount of Rs 9.59 Crore (Previous Year Rs. 16.77 Crore) have been written off/ back on account of non realization and payment. Its'' net balance of Rs. 37.91 Crore (Previous Year Rs. 96.42 Crore) has been charged to the Statement of Profit and loss.

(c) During the year, on account of non admission of claim of Excise Duty Refund of Rs. 12.23 Crore (''Nil), the company has written off the said amount by charging it to the Cost of Materials Consumed.

(d) During the year, the Terminal Excise Duty of Rs. Nil (Previous Year Rs. 1.58 Crore) has been written off considering its realizability as doubtful and has been debited to cost of Material consumed.

(e) During the year, Old Vat Input Credit Receivable of Rs. Nil (Previous Year Rs. 69.13 Crore) has been written off, by debiting it to cost of Material consumed, as company is not hopeful of its realization.

(f) During the FY 2013-14, 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 Appellate Authority and on 29/5/2014 the Appellate Authority has deleted the said demand and has determined refund of Rs. 9.50 Crore vide order dated 29/05/2014 but till the end of the year, the said refund has not been received by the company and it will be accounted on its receipt.

(g) The cost of Material consumed includes freight, Loading and Unloading Expenses, inspection fees, commission on purchase, taxes & duties (to the extent of credit not available), rate difference and interest cost on purchase of raw material and ancillary thereof (including reversal of any claims).

(h) 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.

(i) Product Development Cost includes total Research and Development expenses of Rs 32.19 Crore (Previous Year Rs. 32.11 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 of the projects.

(j) Some of the creditors have filed cases of recovery against the company before the various Hon''ble Courts/Forums for Rs 1.86 Crore (Previous Year Rs 1.96 Crore).

(k) Bank of India, 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 up to the March 2023, there will be reduction in debt, as per Books of accounts of the Company, by Rs. 391.50 Crore. The amount of said debt reduction is after adjustment of FDRs of Rs. 12.39 Crore held by Bank of Baroda and the company is in process to recover the said amount and accordingly there is possibility of refinement in debt reduction.

(l) During the year, Oriental Bank of Commerce, Punjab National Bank and Allahabad Bank has assigned its debt to Invent Assets Securitization & Reconstruction Pvt. Ltd. (ARC) vide settlement agreement for the repayment of debts of the said bank to ARC. In terms of settlement, if all the terms and conditions are fully complied by the company, there would be a reduction in debt, as per books of accounts of the company by Rs. 325.01 Crore. In the case of Punjab National Bank and Allahabad Bank, settlement agreement is yet to be executed.

(m) During the year, Company has settled debts of ICICI Bank vide settlement agreement dated 1st September 2015 for the repayment of debts to ICICI Bank. In terms of settlement, if all the terms and conditions are fully complied by the company up to the July 2016, there will be reduction in debt, as per books of accounts of the company by Rs. 43.47 Crore.

(n) During the year, in view of non realisability / non usability of stock of book value of Rs. 2.88 Crore (Previous Year Rs. 162.91 Crore), the company has not considered the said stock for the purpose of stock valuation and accordingly it has been written off.

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

(p) In view of the commercial prudence, during the year, the company has not restated the long outstanding export trade receivables and foreign currency loan at the rate prevailing as on 31st March 2016.

(q) 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 thereon. The Hon''ble Council has passed the order dated August 12, 2013 and has ordered to the Company to pay Rs. 0.91 Crores (including interest up to July 31, 2013). The Company had 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. The said appeal was not entertained by the Court in view of Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006. The Company is exploring various other legal options to challenge the said order.

(r) 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 are non operating and therefore the fate of said Companies is uncertain. Provision for the diminution in the value of investment in subsidiary companies namely Electrotherm Mali SARL and Bhaskarpara Coal Company Limited has not been made as the Company treat this diminution as temporary in nature. However during the year company has written off Rs 78.68 Crores representing Shree Ram Electrocast Limited, in its books, treating it as operating loss of the company.

(s) The Central Bureau of Investigation (CBI) 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. Central Bureau of Investigation has filed charge sheet and a CBI special case number 27 of 2015 was registered against the company and its few Directors before the Hon''ble CBI court Ahmedabad on 6th October, 2015 and now the matter is pending before Hon''ble CBI court for hearing.

(t) The amount of Income tax receivable shown under the head "Balance with revenue authority in Short Term Loans and Advances'''' is subject to reconciliation as the refund amount of earlier years has been adjusted against outstanding Income Tax liability.

(u) The company has used advance license for import of certain raw material against which company was under an obligation to export certain pre-determined quantity of finished goods within specified time period. However there was shortage in the goods exported by the company against its export obligation. Accordingly in the opinion of the management, the company may be liable to pay Rs. 4.66 Crore (including interest) (Previous Year Rs. 4.31 Crore) as import duty.

7. 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. 26.96 Crore (Previous Year Rs. 7.47 Crore).

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

i) Excise Duty Liability of Rs 338.64 Crore (Previous Year Rs. 295.61 Crore),

ii) Service Tax Liability of Rs. 2 Crore (Previous Year Rs. 5.41 Crore),

iii) Custom Duty Liability of Rs. 20.31 Crore (Previous Year Rs 20.31 Crore),

iv) Income Tax liability of Rs 31.55 Crore (Previous Year Rs. 31.55 Crore),

v) VAT and CST Liability of Rs. 59.19 Crore (Previous Year Rs. 50.04 Crore) against the outstanding liability company has paid Rs. Nil (Previous Year Rs. 4.75 Crore) and total affiliated amount paid by the company against the said liability Rs. 8.75 Crore (Previous Year Rs. 8.75 Crore) till 31^st March, 2016.

Note: The above amounts are without the amount involved in the appeal preferred by the Department, if any, and further applicable interest on the demand.

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

(a) Earning in Foreign Exchange for Export of Goods & Services Rs. 93.07 Crore (Previous Year Rs. 112.70 Crore).

(b) Expenditure in Foreign Currency for Import of Materials, Traveling & Others is Rs. 70.96 Crore (Previous Year Rs. 58.65 Crore).

9. DIRECTOR''S REMUNERATION :

In view of loss during the year no payment of Remuneration to the Directors of the Company has been made.

10. 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 year with the Previous Year comparable. In some case Previous Year amount has not been stated, if there is Nil amount for the current year.

11. 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.

* The Rate of Discounting for Leave Encashment Undfunded is taken as average of Divisions.

12. (a) In the opinion of the Management, the current assets, Trade Receivables, 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. 0.98 Crore (Previous Year Rs. 1.91 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.

(iii) 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 in the opinion of the Company same are not netted off and which has resulted in overstatement of two account Heads and in the opinion of the company, the amount is not significant.

13. (a) The amount of current maturity of Long Term Liability of Rs. 975.04 Crore (Previous Year Rs. 1374.17 Crore) has been determined on the basis of the data available with the company and has been treated as short term Borrowings.

(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 estimated net realizable value.

(c) The classification/grouping of items of the accounts are made by the management, on the basis of the available data with the company.

(d) 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.

(e) The management is of the opinion that the uncompleted projects shown as Capital Work in Progress of Rs. 10.45 Crore (Previous Year Rs. 10.45 Crore) requires some further investment to bring them into commercial use and the company desire to complete the project, therefore these are not treated as impaired assets.

(f) 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 Receivables and Rs. 28.78 Crore as doubtful Advance to Suppliers and in view of business prudence, during the year the company has made provision of Rs. 34.79 crore (Previous Year Rs. 28.47 Crore) for doubtful Trade Receivables and Rs. 16.50 crore (Previous Year Rs. 12.28 Crore) for doubtful Advance to Suppliers.

(g) 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.

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

---

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

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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.

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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.

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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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Mar 31, 2010

1 (a) In the opinion of the Directors, 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, 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.

2. 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. In view of the above Rs. 145.25 Millions has been reduced from the cost of fixed assets and Rs. 0.90 Millions of depreciation thereon.

3. Miscellaneous expenditure includes total Research and Development expenses of Rs. 152.02 Millions (Previous Year Rs. 124.34 Millions) 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.

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 Ltd.

2. Jinhua Jahari Enterprises Ltd.

3. Bhaskarpara Coal Company Ltd.

4. ET Elec-Trans Ltd.

(II) Associates

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. Mangalam Information Technologies Pvt. Ltd.

6. Liberty Finance and Leasing Company Pvt. Ltd.

7. E-Motion Power Ltd.

8. Indus Elec-Trans Pvt. Ltd.

9. Magnum Ltd.

10. Alwar Trading and Investment Company

II. Afghan Trading Pvt. Ltd.

12. Bhandari Brothers Commercial Pvt. Ltd.

13. Palanpur Reality Developers Pvt. Ltd.

14. Jayshri Petro-Yarn Pvt. Ltd.

15. Adroit Trading and Investment Co.

16. EIL Hospitality Pvt. Ltd.

17. EIL Realty Pvt. Ltd.

18. EIL Software Pvt. Ltd.

19. EIL Software Services Offshore Pvt. Ltd.

20. EIL Technology Pvt. Ltd.

21. Electro Salt & Water Ltd.

22. Electrotherm Engineering & Projects Ltd.

23. Electrotherm Infrastructure Pvt. Ltd.

24. Electrotherm Renewables Ltd.

25. Electrotherm Foundation

26. Global Avianautics Ltd.

27. Gujarat Mint Alloys Ltd.

28. Indus Real Estate Pvt. Ltd.

29. ICS Commercial Pvt. Ltd.

30. New Delhi Real Estate Pvt. Ltd.

31. Palace Infrastructure Pvt. Ltd.

32. S B Realty Developers Pvt. Ltd.

33. Sun Infrapower Pvt. Ltd.

34. Sun Residency Pvt. Ltd.

35. Suraj Real Estate Pvt. Ltd.

36. S N Advisory Pvt. Ltd.

37. Suraj Advisory Services Pvt. Ltd.

38. Bhandari Charitable Trust

(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. Mrs. Siddhi Bhandari

5. The Company has determined Pre-Operative Expenditure (including borrowing cost) of Rs. 388.66 Millions (Previous year: Rs. 468.79 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. 120.39 Millions (Rs. 172.56 Millions) has been provided.

7. Contingent Liabilities

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 (excluding interest leviable, if any) of Rs. 1.42 Millions (Previous Year Rs. 1.42 Millions).

(ii) Guarantees / Counter Guarantees (including un-utilized Letters of Credit) issued Rs. 362.49 Millions (Rs. 297.29 Millions in Previous year).

(iii) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 58.73 Millions (P.Y. Rs. 100.13 Millions).

(iv) The company is contingently liable for the pending disputed labour and other matters, amount is Rs. 2.28 Millions (P.Y. Rs. 7.76 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. 299.57 Millions as at March 31, 2010 (Previous Year Rs. 374.65 Millions). Against these, exports amounting to Rs. 2396.56 Millions (Previous Year Rs. 2997.21 Millions) will have to be made within next 8 years from the date of issue of license.

8. Under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. The company has not received intimation from vendors regarding their status under MSMED Act, 2006 and hence disclosures relating to amount unpaid as at the year end under this Act have not been given.

9. The Company has filed a Scheme of Arrangement (the “Scheme”) envisaging the utilization of share premium account against the expenses as provided in the scheme and transfer to a Business Development Reserve Account and also provide for recording of immovable assets at their respective fair value, between the Company and its equity shareholders under section 391 and section 78 read with section 100, 102 and 103 of the Companies Act, 1956. The said Scheme was approved by the Board of Directors vide its resolution dated April 13, 2009, by the shareholders in their Court convened meeting held on June 16, 2009 and by the Honble High Court of Gujarat vide its order dated November 30, 2009. The Company has filed the Order with the Registrar of Companies, Gujarat on December 21, 2009. The financial statements of the Company are based on the Scheme of Arrangement approved by the Honble Gujarat High Court and its effects on the financial accounts are 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 have been recorded at their respective fair values and resulting increase over Book Value of Rs. 2481.95 Millions, has been transferred to General Reserve Account.

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

10. Previous years figures have been re-arranged/ regrouped /reclassified/re-casted wherever necessary.

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