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Notes to Accounts of Facor Steels Ltd.

Mar 31, 2015

1) General Information

Facor Steels Limited ("The Company") is a Public Limited Company incorporated in India under the Companies Act, 1956. It is part of Worldwide reputed FACOR Group of Industries. The Company is listed at Bombay Stock Exchange. The Company, is one of the leading Producers of Carbon/Alloy steel/Stainless and special steel. The products are manufactured at its works in Nagpur and caters both domestic and international market.The products are meant for critical industrial application.

2) Abridged financial statement

The abridged financial statements have been prepared in prescribed Form AOC-3 pursuant to Rule 10 of the Companies (Accounts) Rules 2014 as per notification F. No. 1/19/2013-CL-V, dated March 31, 2014 and are based on the annual financial statements for the year ended March 31, 2015 approved by the Board of Directors at their meeting held on May 29, 2015.

3. (Note 27 of notes to financial statements)

Disclosure pursuant to Accounting Standard - 15 (Revised) "Employee Benefits" :

The company provides for Gratuity, a defined benefit retirement plan covering eligible employees. As per the scheme, the Gratuity fund trust, administered and managed by the Life Insurance corporation of India (LIC), make payment to vested employees at retirement, death or termination of employment of an amount based on the respective employees salary and the tenure of employment.

4. (Note 28 of notes to financial statements)

The slowing industrial activity and depressed market conditions had seriously affected the operations of the company. Considering the dwindling order position, the company has discussed with Workers union and reached an agreement for consensus lock out effective from Jan, 2013 and which was in force upto 8th Aug, 2013. The company restarted its operation from 9th Aug, 2013 after getting revised fund and non fund based limits approved and released by the individual banks. The company's application for Corporate Debt Restructure (CDR) has been approved by CDR - Empowered Group vide its Letter of Approval dated April 27, 2013. Inspite of the best efforts the company continued to incurr cash loss and the capacity utilisation could not be improved to avoid cash loss situation The Company has again reached an agreement for consensus lock out with its workers union effective from 30th May, 2014 which is still in force and exploring various alternatives to improve the operations of the company.

5. (Note 29 of notes to financial statements)

As per the Corporate Debt Restructure (CDR) package approved by Empowered Group of Corporate Debt Restructuring cell (CDR-EG) approval dated April 27, 2013 the amount of Recompense payable from cut off date to end of package period i.e. March 31,2023 ' 852 lakhs.

6. (Note 30 of notes to financial statements)

In view of accumulated losses and no reasonable certainty of future income to recover Deferred Tax Assets, no provision for deferred tax assets has been considered necessary.

7. (Note 31 of notes to financial statements)

No provision for current Income-Tax is considered necessary in view of the brought forward Business loss and unabsorbed depreciation. In view of current year book loss no provision for Minimum Alternate Tax is required.

8. (Note 32 of notes to financial statements)

The company and Baltic International Bank have reached and understanding and in term of the settlement Agreement, the lender has agreed to settle the account for an amount not less than USD 56872/-. The lender has agreed to release the obligation of the company arising from this loan agreement after the repayment of the above amount towards the principal amount, payment of loan interest and penalty charges. In view of this agreement, company has written back the balance amount of USD 2943128/- amounting to ' 1842.11 lacs and the same has been shown under exceptional item.

9. (Note 33 of notes to financial statements)

The company could not make the interest payment to the banks in time and company's drawing power was reduced considerably due to suspension of production. In view of this, All the bank accounts of the company has been classified as Non Performing Assets by the Bankers.

10. (Note 34 of notes to financial statements)

The Company has entered into a Power Delivery agreement with Wardha Power Company Limited (WPCL) for procurment of power for its manufacturing activity at the term set out in the said agreement for twenty five years from the commencement of commercial operation of power plant to be declared by WPCL. As per the terms of another related agreement with WPCL, the company has invested ' 440 lacs (Previous year ' 440 lacs) shown under Non current investments (Note 11) in Equity shares of 1945867 of ' 10 each aggregating to ' 19458670- and 2454133 no of 0.01% redeemable class A preference shares aggregating to ' 24541330.Therefore said shares are/shall be under lien with WPCL. Upon the expiry of Power Delivery agreement. Class A Equity Shares and Class A Redeemable Preference Shares will be bought back by WPCL for total consideration of ' 1. During the year company has sold the 1061382 equity shares on their face value of ' 10 each aggregating to ' 10613820/- (previous year Nil).

11. (Note 35 of notes to financial statements)

Short term loans and advances includes ' 75.58 lacs(previous year ' 75.58) towards advance paid against supply of scrap by overseas supplier against which company has initiated action for recovery towards quality dispute.

12. (Note 36 of notes to financial statements)

M/s Madhur Engineering Pvt. Ltd. and M/s Tarini steel co. Ltd. have filed winding up petition u/s 433 and 434 of the companies Act, 1956 in the Nagpur bench of Bombay High court at Nagpur. The matter is yet to be heard before the court and company has taken all steps to suitably defend the case.

13. (Note 41 of notes to financial statements)

Segment Information :

The Management Information System of the Company identifies and monitors Steel Products as the business segment. The Company is managed organisationally as a single unit. In the opinion of the management, the Company is primarily engaged in the business of Steel Product. As the basic nature of these activities are governed by the same set of risk and return, these constitute and are grouped as single segment as per Accounting Standard (AS) 17 dealing with segment reporting issued by ICAI.

14. (Note 42 of notes to financial statements)

Contingent Liabilities and Commitments :

(I) Contingent Liabilities :

(a) Estimated amount of contracts on Capital Account & other Commitments remaining to be executed and not provided for in accounts ' Nil lacs (Previous Year ' 76.75 lacs).

(b) Claims against the Company not acknowledged as debts, since disputed ' 302.80 lacs (Previous Year ' 249.29 lacs). Amounts already paid under protest ' 35.89 lacs (Previous year ' 33.21 lacs) have been debited to Advance Account.

15. (Note 43 of notes to financial statements)

Related Party Disclosure:-

I List of related parties:-

A Name and nature of relationship with the related party where control exists:

Vidarbha Iron and Steel Corporation Limited (VISCO)- Associates

B Enterprise, over which key management personnel and their relatives exercise significant influence, with whom transactions have taken place during the year :

I Ferro Alloys Corporation Limited 2 Facor Alloys Limited

3 Rai Bahadur Shreeram And Company Private Limited 4 Dass Papers Products. Ltd.

5 Orchard consultancy Pvt. Ltd. 6 Godavaridevi Saraf & Sons.

7 S.D. Ores Pvt. Ltd. 8 Suchitra Investment & Leasing Ltd.

9 Saraf Bandhu Pvt. Ltd. 10 Facor Power Ltd.

II GDP Infrastructure Pvt. Ltd. 12 Queen Consultancy Services Pvt. Ltd.

13 Vineet Infin Pvt. Ltd. 14 Shreeram shipping services Pvt. Ltd.

C Key Management Personnel :

i) N.D. Saraf Chairman

ii) M.D.Saraf Vice Chairman & Director

iii) Vinod Saraf Managing Director

iv) Anurag Saraf Director

16. (Note 44 of notes to financial statements)

Previous year's figures have been re-grouped wherever necessary.


Mar 31, 2014

1.1 Terms/rights attached to Equity Shares:

The Company has only one class of Equity Shares having par value of Rs. 1/- per share. Each holder of Equity Share is entitled to one vote per share.

In the event of liquidation of the company, the holders 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.

1.2 Terms/rights attached to Preference Shares:

The Company has only one class of 5% Redeemable Cumulative Preference Shares having par value of Rs.100/- per share.

The company has alloted 1500000(nos.) 5% Redeemable cumulative Preference Share of Rs.100/- each to Rai Bahadur Shreeram And Company Private Limited On 4th March 2011 and 1000000(nos.) to other Promoter group entity on 17th March 2012. Further on 14th March 2013company has alloted 778000 (nos.) 5% Redeemable cumulative Preference Share of '' 100/- each to Rai Bahadur Shreeram And Company Private Limited & other Promoter group entity. The said 5% Redeemable Cumulative Preference Shares ( hereinafter called "Preference Shares") shall have the following rights,privileges and conditions attaching thereto. Viz.

a) The Preference Shares shall be entitled to fixed cumulative Preferential dividend at the rate of 5% per annum in priority to the equity shares, but shall not confer any further right to participate in the profits or assets.

b) Subject to the provisions of the Act, the said Preference Shares shall be redeemable in the manner following:

(i) The company may on the expiry of six years from the date of allotment thereto and after giving three months notice to the holders of the Preference shares, apply any profits or monies of the company which may be lawfully applied for the purpose of redemption of the Preference Shares for the time being issued and outstanding at par, together with a sum equal to the arrears of fixed dividend thereon,(whether earned or declared or not),upto the date of redemption.

(ii) The said Preference Shares shall be redeemed in five annual installments commencing from the seventh year from the date of allotment thereof.

1.3 (a) During the previous year, Company filed an application for Corporate Debt Restructure(CDR) through its lead banks before the CDR cell.

The Empowered Group of Corporate Debt Restructuring cell (CDR-EG) has approved the final restructuring pacakage of the company. The details thereof is as under.

(b) The CDR-EG in its meeting held on March''25th 2013 has approved the CDR package of the company. Bank of India (BOI) has been appointed as Monitoring Institution (MI).Final Letter of approval (LOA) has been issued by the CDR cell to all the lenders with a copy to the company on April 27 2013. Individual sanction letter in line with LOA is received. Company has signed the Master Restructure Agreement (MRA) with all the member Banks of the consortium lenders.

(c) Cut-off date (COD) is Jan 01''2013 Holding on operation is allowed i.e. continuance of working capital limits at existing sanctioned level till implementation of CDR package.

The Letter of credit payment devolved upto Dec 312012 has been converted into working capital Term loan -I.

(d) The Letter of credit payments devolved during the period between Jan 01''2013 to March 31''2013 has been converted into working capital Term loan -II (WCTL-II).

(e) WCTL-I and WCTL-II are proposed to be repaid in equal quarterly Instalments over a period of 8 years commencing after a principal and interest moratorium of 24 months Repayments in 32 quarterly instalments commencing from quarter April 2015 and ending on quarter ending Jan'' 2023.

(f) Unpaid interest on working capital cash credit limit from 01.01.2013 to 31.03.2013 to be repaid within six months from April''2013. The future interest accrued on WCTL-I and WCTL-II for the period of two years from cut-off date will be converted into FITL-I. The FITL is proposed to be repaid over a period of 2 3 years in equal quarterly instalments commencing from April''2015.

( g ) All facility to carry interest at the rate of 10.75% per annum.

( h) All working capital facilities, Working capital Term Loan(WCTL),Fresh Term loan and Funded Interest Term Loan (FITL) are secured by....

(i) First charge by way of hypothecation of Movable Fixed Assets Plant & machinery spares,tools and accessories and other movable Fixed assets both present and future of the company.

(ii) First charge on Immovable Fixed Assets including building of Factory.

(iii) second charge by way of hypothecation of entire stock of Raw materials,stock in process, finished goods, consumable stores & sapres and Receivables etc, and all other current assets of the company both present andfuture on pari passu basis.

(iv) First charge by way of equtable mortgage of Lease hold Land in the name of Vidarbha Iron & steel corporation Ltd.

(v) Pledge of 100% shares of the company held by promoters.

(vi) Inter - company guarantees by Ferro Alloys corpn.Ltd. Facor Alloys Ltd and vidarbha Iron & Steel corporation Ltd.

(vii) Personal guarantee of two Directors.

1.4 External Commercial Borrowing (ECB loan) outstanding USD 3000000 lakhs (Pre. Yr. USD 3000000 lakhs) During the year company has taken new ECB loan from Baltic International Bank Latvia and paid the loan of Israel discount Bank London same is repayable in six annual Instalment w.e.f. sept''2019.

1.5 Other loans taken in August 2011 and repayable after 31st march 2015 .

2. Disclosure pursuant to Accounting Standard - 15 ( Revised) "Employee Benefits" :

The company provides for Gratuity, a defined benefit retirement plan covering eligible employees. As per the scheme, the Gratuity fund trust , administered and managed by the Life Insurance corporation of India (LIC), make payment to vested employees at retirement , death or termination of employment of an amount based on the respective employees salary and the tenure of employment.

Liability for employee benefit has been determined by an acturial valuation in conformity with the principles set out in the accounting standard 15 (Revised) the details of which are as under.

3 The slowing industrial activity and depressed market conditions had seriously affected the operations of the company. Considering the dwindling order position, the company has discussed with Workers union and reached an agreement for consensus lock out effective from Jan'' 2013 and which was in force upto 8th Aug''2013. The Company restarted its operations from 9th August, 2013 after getting revised fund and non fund based limits approved and released by the individual banks. The company''s application for Corporate Debt Restructure (CDR) has been approved by CDR - Empowered Group vide its Letter of Approval dated April 27, 2013. Inspite of the best efforts the company continued to incurr cash loss and the capacity utilisation could not be improved to avoid cash loss situation. The Company has again reached an agreement for consensus lock out with its workers union effective from 30th May''2014 and exploring various alternatives to improve the operations of the company.

4 As per the Corporate Debt Restructure (CDR) package approved by Empowered Group of Corporate Debt Restructuring cell (CDR-EG) approval dated April 27, 2013 the amount of Recompense payable from cut off date to end of package period i.e. March 31, 2023''852 lakhs.

5 Considering the present losses and accumulated depreciation, the company feels there is no need to provide deferred tax Assets/ liability.

6 No provision for current Income-Tax is considered necessary in view of the brought forward Business loss and unabsorbed depreciation. In view of current year book loss no provision for Minimum Alternate Tax is required.

7 The Company has entered into a Power Delivery agreement with Wardha Power Company Limited (WPCL) for procurment of power for its manufacturing activity at the term set out in the said agreement for twenty five years from the commencement of commercial operation of power plant to be declared by WPCL. As per the terms of another related agreement with WPCL, the company has invested Rs.440 lacs(Previous year Rs.440 lacs) shown under Non current investments (Note 11 ) in Equity shares of 1945867 of Rs.10 each aggregating to Rs.19458670 and 2454133 no of 0.01% redeemable class A preference shares aggregating to Rs.24541330.Therefore said shares are/shall be under lien with WPCL.Upon the expiry of Power Delivery agreement. Class A Equity Shares and Class A Redeemable Preference Shares will be bought back by WPCL for total consideration of Rs.1.

8 Short term loans and advances includes Rs.75.58 lacs(previous year Rs. 75.58 lacs) towards advance paid against supply of scrap by overseas supplier against which company has initiated action for recovery towards quality dispute.

9 M/s Madhur Engineering Pvt. Ltd. and M/s Tarini steel co. Ltd. have filed winding up petition u/s 433 and 434 of the companies Act, 1956 in the Nagpur bench of Bombay High court at Nagpur. The matter is yet to be heard before the court and company has taken all steps to suitably defend the case.

10 Segment Information:

The Management Information System of the Company identifies and monitors Steel Product as the business segment. The Company is managed organisationally as a single unit. In the opinion of the management, the Company is primarily engaged in the business of Steel Product. As the basic nature of these activities are governed by the same set of risk and return, these constitute and are grouped as single segment as per Accounting Standard (AS) 17 dealing with segment reporting issued by ICAI.

11 CONTINGENT LIABILITIES AND COMMITMENTS

(I) Contingent Liabilities :

(a) Estimated amount of contracts on Capital Account & other Commitments remaining to be executed and not provided for in accounts Rs.76.75 lacs (Previous Year Rs.15.25 lacs).

(b) Claims against the Company not acknowledged as debts, since disputed Rs.249.29 lacs (Previous Year Rs.249.29 lacs). Amounts already paid under protest Rs.33.21lacs (Previous year Rs.33.21 lacs) have been debited to Advance Account.

12 Related Party Disclosure:-

I List of related parties:-

A Name and nature of relationship with the related party where control exists:

Vidarbha Iron and Steel Corporation Limited (VISCO)- Associates

B Enterprise, over which key management personnel and their relatives exercise significant influence, with whom transactions have taken place during the year :

1 Ferro Alloys Corporation Limited 2 Facor Alloys Limited

3 Rai Bahadur Shreeram And Company Pvt Ltd 4 Dass Papers Products. Ltd

5 Orchard consultancy Pvt. Ltd. 6 Godavari Devi Saraf & Sons.

7 S.D. Ores Pvt. Ltd. 8 Suchitra Investment & Leasing Ltd.

9 Saraf Bandhu Pvt. Ltd. 10 Facor Power Ltd.

11 GDP Infrastructure Pvt. Ltd. 12 Queen Consultancy Services Pvt. Ltd.

13 Vineet Infin Pvt. Ltd. 14 Shreeram shipping services Pvt. Ltd.

C Key Management Personnel :

i) N.D. Saraf Chairman

ii) M.D.Saraf Vice Chairman & Managing Director

iii) Vinod Saraf Managing Director

iv) Anurag Saraf Director

II Transactions with Related Parties during the year ended 31-03-2014 in the ordinary course of business.


Mar 31, 2013

1. General Information

Facor Steels Limited ("The Company") is a Public Limited Company incorporated in India under the Companies Act, 1956. It is part of Worldwide reputed FACOR Group of Industries. The Company is listed at Bombay Stock Exchange . The Company, is one of the leading Producers of Carbon/Alloy steel/Stainless and special steel. The products are manufactured at its works in Nagpur and caters both domestic and international market.The products are meant for critical industrial application.

2. Abridged fi nancial statement

The abridged financial statements have been prepared pursuant to Rule 7A of the Companies (Central Government'' s) General Rules and Forms, 1956 as per notification F. No. 17/51/2012-CL-V, dated May 31, 2012 and are based on the annual financial statements for the year ended March 31, 2013 approved by the Board of Directors at their meeting held on May 29, 2013.

3. (Note 28 of notes to fi nancial statements)

The slowing industrial activity and depressed market conditions had seriously affected the operations of the company. Considering the dwindling order position, the company has discussed with Workers union and reaches an agreement for consensus lock out effective from Jan'' 2013 and which is still in force. The company'' s application for Corporate Debt Restructure (CDR) has been approved by CDR - Empowered Group vide its Letter of Approval dated April 27, 2013. Company will restart its operation once the revised Non fund based limits are approved and released by the individual banks.

4. (Note 29 of notes to fi nancial statements)

As per the Corporate Debt Restructure (CDR) package approved by Empowered Group of Corporate Debt Restructuring cell (CDR-EG) vide its letter of approval dated April 27, 2013 the amount of Recompense payable during this period from the cut off date i.e. January 1, 2013 to March 31, 2013 is Rs.Nil. The cummulative Recompense amount payable from cut off date to end of package period i.e. March 31, 2023 Rs. 852 lakhs.

5. (Note 30 of notes to fi nancial statements)

The Deferred Ta x Liability accounted in the earlier period considering the timing difference between the book value and tax basis of an assets created tax liability in future periods. But considering the present losses and accumulated depreciation, the company feels there is no need for continuation of deferred tax liability of Rs. 465.60 lakhs in the books and hence the same is reversed during the year under review.

6. (Note 31 of notes to fi nancial statements)

No provision for current Income-Tax is considered necessary in view of the brought forward Business loss and unabsorbed depreciation. In view of current year book loss no provision for Minimum Alternate Ta x is required.

7. (Note 32 of notes to fi nancial statements)

The Company has entered into a Power Delivery agreement with Wardha Power Company Limited (WPCL) for procurment of power for its manufacturing activity at the term set out in the said agreement for twenty five years from the commencement of commercial operation of power plant to be declared by WPCL. As per the terms of another related agreement with WPCL, the company has invested Rs. 440 lacs(Previous year Rs. 440 lacs) shown under Non current investments (Note 11 ) in Equity shares of 1945867 of Rs. 10/- each aggregating to Rs. 19458670- and 2454133 no of 0.01% redeemable class A preference shares aggregating to Rs. 24541330. Therefore said shares are/shall be under lien with WPCL.Upon the expiry of Power Delivery agreement. Class A Equity Shares and Class A Redeemable Preference Shares will be bought back by WPCL for total consideration of Rs. 1/-.

8. (Note 33 of notes to fi nancial statements)

During the year Company has issued 778000 (nos.)[Previous year 1000000(nos.)] 5% Redeemable Cumulative Preference Shares of Rs. 100/- each to Promoter group entities against Inter Corporate Deposit worth Rs. 778 lacs (Previous year Rs.1000 lacs).

9. (Note 34 of notes to fi nancial statements)

Maharashtra Electricity Regulatory Commission (MERC) vide its order dated 27th April, 2007 has directed Maharashtra State Electricity Distribution company Limited (MSEDCL) to refund, Regulatory Liability Charges (RLC)collected by it during the period commencing December 2003 to September 2006, to selected consumer category within which the company gets covered. In the Financial year 2010-11 company has recognised refund of Rs.41924123/- of which Rs. 8210503/-(previous year 18892046/-) is outstanding as on 31.03.2013 and the same is grouped under other current assets.

10. (Note 35 of notes to fi nancial statements)

Short term loans and advances includes Rs. 75.58 lacs(previous year Rs.75.58) towards advance paid against supply of scrap by overseas supplier against which company has initiated action for recovery towards quality dispute.

11. (Note 40 of notes to fi nancial statements)

Segment Information :

The Management Information System of the Company identifies and monitors Steel Products as the business segment. The Company is managed organisationally as a single unit. In the opinion of the management, the Company is primarily engaged in the business of Steel Product. As the basic nature of these activities are governed by the same set of risk and return, these constitute and are grouped as single segment as per Accounting Standard (AS) 17 dealing with segment reporting issued by ICAI.

12. (Note 41 of notes to fi nancial statements) Contingent Liabilities and Commitments :

(I) Contingent Liabilities :

(a) Estimated amount of contracts on Capital Account & other Commitments remaining to be executed and not provided for in accounts Rs.15.25 lacs (Previous Year Rs.15.25 lacs).

(b) Claims against the Company not acknowledged as debts, since disputed Rs.249.29 lacs (Previous Year Rs.249.29 lacs). Amounts already paid under protest Rs. 33.21lacs (Previous year Rs. 33.21 lacs) have been debited to Advance Account.

13. (Note 42 of notes to fi nancial statements) Related Party Disclosure:- I List of related parties:-

A Name and nature of relationship with the related party where control exists:

Vidarbha Iron and Steel Corporation Limited (VISCO)- Associates

B Enterprise, over which key management personnel and their relatives exercise significant influence, with whom transactions have taken place during the year :

14. (Note 43 of notes to financial statements)

Previous year'' s figures have been re-grouped wherever necessary.


Mar 31, 2012

1.1 Terms/rights attached to Equity Shares:

The Company has only one class of Equity Shares having par value of Re. 1/- per share. Each holder of Equity Share is entitled to one vote per share.

In the event of liquidation of the company, the holders 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.

1.2 Terms/rights attached to Preference Shares:

The Company has only one class of 5% Redeemable Cumulative Preference Shares having par value of Rs. 100/- per share. The company has alloted 1500000 (nos.) 5% Redeemable cumulative Preference Share of Rs. 100/- each to R.B. Shreeram & co. Pvt. Ltd. On 4th March 2011 and 1000000 (nos.) to other Promoter group entity on 17th March 2012.

The said 5% Redeemable Cumulative Preference Shares ( hereinafter called "Preference Shares") shall have the following rights, privileges and conditions attaching thereto. Viz.

a) The Preference Shares shall confer upon the holders thereof the right out of the profits of the company resolved under the Articles of Association to a fixed cumulative Preferential dividend at the rate of 5% per annum (free of income tax but subject to deduction of taxes at the prescribed rates) on the capital for the time being paid thereon including in a winding up to repayment of such capital and all arrears of such fixed dividend accrued up to commencement of the winding up (whether earned or declared or not) in priority to the equity shares, but shall not confer any further right to participate in the profits or assets.

b) Subject to the provisions of the Act, the said Preference Shares shall be redeemable in the manner following:

(i) The company may on the expiry of six years from the date of allotment thereto and after giving three months notice to the holders of the Preference shares, apply any profits or monies of the company which may be lawfully applied for the purpose of redemption of the Preference Shares for the time being issued and outstanding at par, together with a sum equal to the arrears of fixed dividend thereon,(whether earned or declared or not),upto the date of redemption.

(ii) The said Preference Shares shall be redeemed in five annual installments commencing from the seventh year from the date of allotment thereof.

(iii) The Company shall be at liberty to create and issue, from time to time, further Preference Shares ranking pari passu in all respects with the said Preference Shares."

1.3 During the year 2007-08 company has reached One Time Settlement (OTS) with relevant Preference Share holder for pre-mature redemption of 150705- 0.01% Redeemable Preference Shares of Rs. 100/- each.

2.1 Secured by hypothecation of stocks of raw-materials, finished products, book debts, and other receivables and by way of first charge on fixed assets of the Company and guaranteed by two Directors. These are also secured by Inter-compnay guarantees by Ferro Alloys corpn. Ltd. and Facor Alloys Ltd.as well as by pledge of promoter's shareholding.

2.2 PLR-4% FITL Payable in equal 14 half yearly instalments. The Company has not paid Rs. 47.79 lacs last instalment and interest thereon to CBI vizag which was due in march 2011 and there is default in payment. However same is paid in June 2012.

2.3 0% Funded interest term loans due for payment as on March 2013.

2.4 External Commercial Borrowing (ECB loan) outstanding USD 3000000 lacs (Pre. Yr. USD 3000000 lacs) repayable in 5 equal Annual instalments w.e.f April'2014.

2.5 During the year the Inter corporate deposits/loan of Rs. 1000 lacs from related parties converted into 5% Redeemable cumulative Preference shares of Rs. 100/- each.

2.6 Inter corporate Deposits/ Loans repayble after 31st march 2014 and carrying 0% interest w.e.f. August 2009.

2.7 Other loans taken in August 2011 and repayable after 31st march 2014 .

3.1 Secured by hypothecation of stocks of raw-materials, finished products, book debts, and other receivables and by way of first charge on fixed assets of the Company and guaranteed by two Directors. These are also secured by Inter-company guarantees by Ferro Alloys Corpn. Ltd. and Facor Alloys Ltd. as well as by pledge of promoter's shareholding.

Notes:

4.1 Depreciation on Fixed Assets capitalised up to 30.06.1986 as per written down value method and depreciation on addition thereafter as per straight line method has been charged at the rates of Depreciation as per Schedule XIV of Companies Act,1956 as amended.

4.2 Additions and adjustment in Plant & machinery includes Rs. 201.60 lacs (net loss) [previous year Rs.11.70 lacs (net loss) ] on account of exchange difference during the year.

5. Disclosure pursuant to Accounting Standard - 15 ( Revised) "Employee Benefits" :

The company provides for Gratuity, a defined benefit retirement plan covering eligible employees. As per the scheme, the Gratuity fund trust, administered and managed by the Life Insurance corporation of India (LIC), make payment to vested employees at retirement , death or termination of employment of an amount based on the respective employees salary and the tenure of employment.

Liability for employee benefit has been determined by an acturial valuation in conformity with the principles set out in the accounting standard 15 (Revised) the details of which are as under.

6 Salaries,Wages & Bonus includes reimbursement for services to Vidarbha Iron & Steel corporation Ltd.(VISCO) upto 30th Sept 2011 Rs. 568.08 lacs. (Previous year Rs. 1064.45 lacs) w.e.f. 1st oct' 2011 the services of all such employees have been transferred to the company. Further the Provision for company's obligation under the employee's leave policy is provided on actual basis for the period from Oct'11 to March'12.

7 The Deferred Tax Assets on unabsorbed depreciation has been recognised as timing difference to the extent of Deferred tax liability arising in the current year.

8 No provision for current Income-Tax is considered necessary in view of the brought forward Business loss and unabsorbed depreciation. In view of current year book loss no provision for Minimum Alternate Tax is required.

9 The Company has entered into a Power Delivery agreement with Wardha Power Company Limited (WPCL) for procurment of power for its manufacturing activity at the term set out in the said agreement for twenty five years from the commencement of commercial operation of power plant to be declared by WPCL. As per the terms of another related agreement with WPCL, the company has invested Rs. 440 lacs(Previous year Rs. 440 lacs) shown under Non current investments (Note 11 ) in the class A Equity shares of 1945867 of Rs10 each aggregating to Rs19458670- and 2454133 no of 0.01% redeemable class A preference shares aggregating to Rs 24541330.Therefore said shares are/shall be under lien with WPCL. Upon the expiry of Power Delivery agreement. Class A Equity Shares and Class A Redeemable Preference Shares will be bought back by WPCL for total consideration of Rs. 1.

10 During the year Company has issued 1000000 (nos.)[Previous year 1500000(nos.)] 5% Redeemable Cumulative Preference Shares of Rs. 100/- each to Promoter group entities against Inter Corporate Deposit worth Rs. 1000 lacs (Previous year 1500 lacs).

11 Maharashtra Electricity Regulatory Commission (MERC) vide its order dated 27th April 2007 has directed Maharashtra State Electricity Distribution company Limited (MSEDCL) to refund, Regulatory Liability Charges (RLC)collected by it during the period commencing December 2003 to September 2006, to selected consumer category within which the company gets covered. In the Financial year 2010-11 company has recognised refund of Rs.41924123/- of which Rs. 18892046/-(previous year 29573589/-) is outstanding as on 31.03.2012 and the same is grouped under other current assets.

12 Short term loans and advances includes Rs. 75.58 lacs(previous year Rs.75.58) towards advance paid against supply of scrap by overseas supplier against which company has initiated action for recovery towards quality dispute.

13 Earnings in Foreign Exchange on account of Export of Goods on F.O.B. basis

14 Segment Information:

The Management Information System of the Company identifies and monitors Steel Product as the business segment. The Company is managed organisationally as a single unit. In the opinion of the management, the Company is primarily engaged in the business of Steel Product. As the basic nature of these activities are governed by the same set of risk and return, these constitute and are grouped as single segment as per Accounting Standard (AS) 17 dealing with segment reporting issued by ICAI.

15 CONTINGENT LIABILITIES AND COMMITMENTS

(I) Contingent Liabilities :

(a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts Rs.15.25 lacs (Previous Year Rs.20 lacs).

(b) Claims against the Company not acknowledged as debts, since disputed Rs.249.29 lacs (Previous Year Rs.249.29 lacs). Amounts already paid under protest Rs. 33.21lacs (Previous year Rs. 33.21 lacs) have been debited to Advance Account.

(c ) Counter guarantees in favour of Consortium Banks in respect of their out standings with Ferro Alloys corporation Limited and Facor Alloys Limited. Due to the nature of the liability, its financial impact is not ascertainable.

16 The revised Schedule VI to the Companies Act, 1956 has become effective from 1-04-2011 for preparation and presentation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Accordingly, the figures for the previous year have been reclassified, wherever necessary to conform with the current year's classification.


Mar 31, 2010

1. Contingent Liabilities:

(a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts is Rs.Nil lacs( Previous- Year Rs.119.79 lacs).

(b) Claims not acknowledged as debts since disputed Rs.249.29lacs (Previous Year Rs.376.63 lacs). Amounts already paid under protest Rs.33.21 lacs(Previous Year :Rs.33.61 lacs) have been debited to Advance Account.

(c) Counter guarantees in favour of Consortium Banks in respect of their outstandings with Ferro Alloys Corporation Limited and Facor Alloys Limited. Due to the nature of the liability, its financial impact is not ascertainable.

2. The Company has entered into Share subscription and Power delivery agreement with M/s Wardha Power co. Ltd. By way of subscription to 1945867 classA Equity shares of Rs. 10/- each and Rs. 1/- paid up and 2454133 class A 0.01% Redeemable Preference shares of Rs. 10/- each fully paid up. The company will be entitled to 11MW of power generated from the group captive power plant as per the power and delivery agreement dated 28th March 2008.

3. Miscellaneous receipts includes Rs.1008.14 lacs (Previous year Rs. 509.74 lacs) towards conversion charges received.

4. No provision for current Income-Tax is considered necessary in view of the brought forward Business loss and unabsorbed depreciation. In view of current year book loss no provision for Minimum Alternate Tax is required.

5 (a) The Company has been advised that the computation of net profits for the purpose of directors remuneration under Section 349 of the Companies Act,1956 need not be enumerated since no commission has been paid to the Directors. Fixed monthly remuneration paid to the Directors are well within the limits prescribed under Schedule XIII to the Companies Act,1956.

6 Loans and Advances includes Rs. 75.58 lacs(previous year Rs. 75.58 lacs) towards advance paid against supply of scrap by overseas supplier against which company has initiated action for recovery towards quality dispute.

7 In accordance with the accounting policy followed by the Company, Excise Duty in respect of goods manufactured by the Company is being accounted for at the time of removal of goods from the factory.Such Excise Duty payable on goods awaiting clearances from the factory is estimated at Rs. 340.21 lacs (previous year Rs. 296.79 lacs). However, the said liability, if accounted, would have no impact on the results for the year.

8 Particulars of Licensed and Installed Capacity :

Licensed and Installed Capacities are not applicable,since the plant is taken on leave and licence from Vidarbha Iron & Steel Corporation Ltd. (VISCO).

8 Segment Information:

The Management Information System of the Company identifies and monitors Steel Product as the business segment. The company is managed organisationally as a single unit. In the opinion of the management, the company is primarily enganged in the business of Steel Product. As the basic nature of these activities are governed by the same set of risk and return, these constitute and are grouped as single segment as per Accounting Standard AS-17 dealing with segment reporting issued by ICAI.

10 Previous Years figures have been re-grouped wherever necessary.

11 Related Party Disclosure:- I List of related parties:- A Name and nature of relationship of the related party where control exists:- Vidarbha Iron and Steel Corporation Limited (VISCO)- Associates

B Enterprises,over which Key management personnel and their relatives exercise significant influence, with whom transactions have taken place during the year.

1 Ferro Alloys Corporation Limited 2 Facor Alloys Limited

3 Rai Bahadur Shreeram & Co. Pvt. Ltd. 4 Dass Papers Products. Ltd.

5 Orchard Consultancy Pvt. Ltd. 6 Godavari Devi Saraf & Sons.

7 S.D. Ores Pvt. Ltd. 8 Suchitra Investment & Leasing Ltd.

9 Saraf Bandhu Pvt. Ltd. 10 Facor Power Ltd.

11 GDP Infrastructure Pvt. Ltd. 12 Queen Consultancy Services Pvt. Ltd.

C Key Management Personnel :

1 N.D. Saraf Chairman & whole Time Director

2 M.D. Saraf Vice chairman & Managing Director

3 Vinod Saraf Managing Director

4 Anurag Saraf Joint Managing Director

 
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