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Notes to Accounts of Gallantt Ispat Ltd.

Mar 31, 2014

1) Contingent Liabilities (AS – 29) :

Contingent Liabilities are determined on the basis of available information and which are not provided for is disclosed by way of notes to the Accounts.

2. Disclosure regarding the Shares Issued for consideration other than cash

The Company, during the past years, undertook various Schemes including Merger of General Investment Division of Gallantt Udyog Limited and Merger of Companies with the Company. Further, the Company has concluded Bonus Issue of Equity Shares. Pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Honourable Calcutta High Court, the Company has recorded all necessary accounting effects, along with requisite disclosure in the notes to accounts. Further, during the financial year the company has alloted Equity Shares on account of conversion of Convertible Debentures into Equity Shares. The cumulative effets of these adjustments due to issue of Equity Shares for consideration other than cash has been disclosed hereunder.

2.1 Terms Rights attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs. 10/- share. Each holders of equity shares are entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend recommended by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

2.2 Shares reserved for Issue under option

On December 01, 2011 Company has allotted 25,00,000 Zero Coupon Fully Convertible Unsecured Debentures (the "FCDs) to the Promoter and Non-Promoters at a subscription price of Rs. 160/- each being a price higher than the price determined as per Regulation 76(1) of Securities & Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. As per the terms of issue, the Debentures have been converted into Equity Shares of Rs. 10 each on 25.05.2013.

a) Term loan secured by First pari pasu charge over all the borrower''s fixed assets (present & future), Second pari pasu charge over all the borrower''s current assets including Debtors and stock etc. and personal Guarantee of Mr. C.P. Agrawal, Mr. P.P. Agrawal and Mr. Nitin M. Kandoi.

b) Term loan includes Corporate Loan of Rs. 0.64 crores in Non Current & Rs. 11.18 crores in Current Liabilities.

c) Current Portion of Term Loans have been grouped as ''''Current maturities of long term debt'''' in Note No. 9.

d) Terms of repayment for secured borrowings are as under:

i) Term Loan from State Bank of India amounting to Rs. 70 crores sanctioned on 20.06.2008 repayable in 24 quarterly instalments of Rs. 2.92 crores each commencing from F.Y.2010-11, out of which 16 installments amounting to Rs. 46.72 crores has been paid upto 31.03.2014.

ii) Term Loan from State Bank of Patiala amounting to Rs. 30 Crores sanctioned on 23.09.2008 repayable in 24 quarterly installments of Rs. 1.25 crores each commencing from F.Y.2010-11 out of which 16 installments amounting to Rs. 20 crores has been paid upto 31.03.2014.

iii) Term Loan from State Bank of Mysore amounting to Rs. 24 Crores sanctioned on 11.10.2008 repayable in 24 quarterly installments of Rs. 1.00 crores each commencing from F.Y. 2010-11 out of which 16 installments amounting to Rs. 16.00 crores has been paid upto 31.03.2014.

iv) Corporate Loan from State Bank of India amounting to Rs. 18 Crores sanctioned on 01.12.2011 repayable in 12 quarterly installments. First 5 of Rs. 85 lakh and remaining 7 of Rs. 1.96 crore each commencing from 01.01.2012 out of which 9 installments amounting to Rs. 12.09 crores has been paid upto 31.03.2014.

v) Corporate Loan from State Bank of Patiala amounting to Rs. 8 Crores sanctioned on 01.12.2011 repayable in 12 quaterly installments.First 5 of Rs. 37.50 lakh and remaining 7 of Rs. 87.50 lakh each commencing from 01.01.2012 out of which 9 installments amounting to Rs. 5.375 Crores has been paid upto 31.03.2014.

vi) Corporate Loan from State Bank of Mysore amounting to Rs. 6 Crores sanctioned on 11.06.2011 repayable in 12 quaterly installments.First 5 of Rs. 28.00 lakh and remaining 7 of Rs. 66.00 lakh each commencing from 01.07.2012 out of which 7 installments amounting to Rs. 2.72 Crores has been paid upto 31.03.2014.

vii As on May 23, 2014 Company has repaid in full the outstanding Term Loan & Corporate Loan from State Bank of Mysore along with interest. As on date of signing of Annual Statements, outstanding loan of State Bank of Mysore is nil.

1) Cash credit is secured by Hypothecation of entire current assets of the company (present & future) consisting of Raw Material, SIP, Finished goods, Store & Spares and Book Debts, Extension of first pari pasu charge over all the borrower''s fixed assets (present & future) and personal Guarantee of Mr. C.P. Agrawal, Mr. P.P. Agrawal and Mr. Nitin M. Kandoi.

2) No provision for interest on unsecured loan outstanding on 31.03.2014 amounting to Rs. 54 Crore taken from Gallantt Udyog Ltd. has been made as merger proceedings are under process.

3) During the financial year 2013-14, the company has allotted 25,00,000 Equity Shares of Rs. 10 each on account of conversion of 0% Fully Convertible Unsecured Debentures of Rs. 10 each into Equity Shares in the ratio of 1:1 on 25th May, 2013.

4 RELATED PARTY DISCLOSURE AS PER AS - 18 (AS IDENTIFIED BY THE MANAGEMENT)

Name of Related Party and Description of Relationship :

I. Associate Company & Firm Gallantt Udyog Ltd.

Gallantt Metal Ltd

Chandra Prakash Agrawal & Sons (HUF)

Prem Prakash Agrawal HUF

Jai Laxmi Solvents Pvt. Ltd.

Varuna Spinning Mills Pvt. Ltd.

II. Key Managerial Personnel Mr. Chandra Prakash Agrawal

Mr. Prem Prakash Agrawal Mr. Nitin M Kandoi

III. Relatives of Key Managerial Personnel Mr. Mayank Agrawal

Mr. Ashutosh Agrawal Mrs. Shyama Agrawal Mrs. Shruti Kandoi Mrs. Pallavi Agrawal Mrs. Uma Agrawal

5 SEGMENT REPORT

A Primary Segment (By Business Segment) :

The Company is engaged in the business of production of Steel Products, Wheat Products & Power. The Company has three reportable business segments i.e. Steel, Agro & Power which have been identified in line with the A.S. -17 "Segment Reporting". Information about Primary Segment is as follows :

B) Secondary Segment (By Geographical Segment):

The Secondary Segment is based on geographical demarcation i.e. India & Rest of the World. There is no reportable segment under above category

6 CONTINGENT LIABILITIES

Contingent Liabilities not provided for in respect of : 2013-14 2012-13

(i) Guarantee given by the bank on behalf of the Company to Purvanchal Vidyut Vitran 210.00 150.00 Nigam for Electricity connection.

(ii) Guarantees given by the bank on behalf of the Company to Uttar Pradesh Pollution 2.00 2.00 Control Board for NOCs.

(iii) Guarantees given by the bank on behalf of the Company to Coal India 200.00 0.00

(iv) Appeal against order of Assessing Officer: Vide its order dated 21.03.2013 Assessing 0.29 0.29 Office, Mr. V. K. Meena, Dy. C.I.T. Range-3, Kolkata has raised a tax demand worth Rs. 29,140/- (Rupees Twenty Nine Thousand One Hundred and Forty only) for the Assessment Year 2010-11 (previous year 2009-10). Based on the advice of Income Tax Consultants,Company has preferred an appeal with C.I.T.(Appeals)-I,Kolkata. The Matter is under consideration.

(v) Irrevocable Letter of Credit Issued by State Bank of India in favour of Transasia - 816.66 Pacific GGNR Pte Ltd Singapore amounting to USD 1503153.38 for Supply of Anglo South african Steam Coal. (Rate as on 31.03.2013 1USD = Rs54.33).

(vi) Irrevocable Letter of Credit Issued by StateBank of India in favour of Saraogi 500.26 - Globle Pte Ltd Singapore amounting to USD 834750 for Supply Coal. (Rate as on 31.03.2014 1USD = Rs 59.94).

Note 7: Impairment of Assets

Pursuant to the Accounting Standard (AS 28)- "Impairment of Assets" issued by The Institute of Chartered Accountant of India, the Company assessed its fixed assets for impairment as at March 31, 2014 and concluded that there is no significant impairment in fixed asset that needs to be recognized in the books of accounts.

Note 8: Disclosure as per Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

The company has not received any intimation from "suppliers" regarding status under the Micro, Small and medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished.

Note 9: Balance of the Sundry Debtors, Creditors, Loans and advances are subject to confirmation from respective parties.

Note 10:

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time, the company is eligible for Interest free loan equivalent to the amount of VAT & CST liability for 15 years and which shall be re-payable after 15 years. The company has claimed Rs. 5483.39 Lacs up to 31st March 2014 (upto previous year Rs. 3915.52 Lacs) on account of Interest Free Loan from State Government of Uttar Pradesh. Out of total claim of Rs. 5483.39 lacs, Rs. 3911.00 Lacs has not been deposited to Commercial Tax department in accordance with an order of Hon''ble High Court of Allahabad in writ petition no. 8886/2011, 12710/2011 and 2067/2012. However Rs. 1572.39 Lacs have already deposited upto 31.03.2014. State Government has vide order no E-6-534/10-2011dated 18/11/2011 has refused to consider pending applications under the schemes and company has obtained stay against payment of taxes from Hon''ble High Court Allahabad, Lucknow Bench. Accordingly, company has not deposited VAT amounting to Rs. 3911.00 lacs.

Hon''ble High Court Allahabad vide their judgement and order dated 12-08-2013 directed the State Government to take a fresh decision in the matter expeditiously and not to make any recovery of the unpaid VAT amount. Since, State Government, as they did in past, has not taken steps for disbursement of claimed amount of subsidy and is delaying the matter inordinately as the Hon''ble High Court has not fixed any time limit to take such decision, Company preferred a writ petition before Hon''ble Supreme Court. Writ so filed with Hon''ble Supreme Court is pending before them.

Note 11:

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time, the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment, infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. Company has claimed for Rs. 12262.00 Lacs against the capital investment made upto 31st May 2012. The incentive received of Rs. 2428.00 Lacs has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs. 9834.00 Lacs in the books.

Note 12:

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses upto maximum of 5% of the railway freight. During the year company has provided an amount of Rs. 3076.94 Lacs (Previous year Rs. 3101.11 Lacs), which has been adjusted with freight paid on Iron Ore in Statement of Profit Loss and shown as Advance recoverable in Balance sheet. The total amount receivable against the freight subsidy as on 31.03.2014 was Rs. 8791.53 Lacs (Previous year Rs. 5714.59 Lacs).

Note 13:

State Govt. Vide G.O. no. 1674/77-6-11-10/(Tax) 04 T.C.-12 dated November 18, 2011,has refused to consider pending applications under the schemes stated hereinabove. Being the unconstitutional decision and injustice on the part of the State Government of Uttar Pradesh, and for getting equal protection of law of land, Company has preferred a Writ petition bearing no.12710/2011 / Misc. Bench dated 17.12.2011 at Honourable High Court of Allahabad, Lucknow Bench, Uttar Pradesh, and the Honourable High Court has restrained the Govt. from realisation of the taxes. The total operational profit is inclusive of freight subsidy amounting to Rs. 3076.94 Lacs (Previous year Rs. 3101.11 Lacs) which is receivable and subject to the decision of Honourable Court.

Note 14:

i. License Agreement : Company has entered into a License Agreement dated 30th March, 2013 with Gallantt Udyog Limited (Licensor) and pursuant to the agreement, the Company has been granted leave and license by the Licensor to occupy, use, run and operate the Flour Mill unit of the Licensor located at 60 KM Stone, Gorakhpur-Lucknow Highway, Sabdaiyan Kalan, Basti District of Uttar Pradesh with a factory and other utilities along with building structures commonly known as Basti Flour Mill of Gallantt Udyog Limited established in the year 2002 having present production capacity at 72,000 M.T. per annum (hereinafter referred to as "Basti Flour Mill"). Terms and conditions and particulars have been clearly embodied in the said agreement. Company has complied with the requisite formalities for the above license agreement.

ii. In terms of the above agreement, a sum of Rs. 1.00 Lac per annum is payable to Gallantt Udyog Ltd as License Fees. Since, the entire undertaking of the Gallantt Udyog Limited is under process of amalgamation with Gallantt Ispat Limited, Company has not made provision for License fees Payable to Gallantt Udyog Ltd.

Note 44:

Amalgamation of Gallantt Udyog Limited (Unlisted Transferor Public Limited Company) with the Company (being Transferee Company): At their meeting held on 30th March, 2013 Board of Directors of the Company has proposed to amalgamate Gallantt Udyog Limited with the Company with effect from Transfer Date 01.04.2013 whereby the identity of both Companies would be blended into one single company. Company has filed application under Clause 24f of the Listing Agreement with the Stock Exchanges for their No-Objection for the said amalgamation. Simultaneously, Company has filed the said application with the Securities and Exchange Board of India for their comment/Observation on the Scheme of Amalgamation of Gallantt Udyog Limited with the Company. Company has complied with the requisite formalities of all the applicable laws pertaining to the said amalgamation. Securities and Exchange Board of India has, vide its letter bearing no. CFD/DIL/HB/MT/14086/2014 dated May 16, 2014, issued its letter of observation/comment to the Company. Bombay Stock Exchange Limited vide its letter bearing no. DCS/AMAL/BS/24(f)/050/2014-15 dated May 20, 2014 and National Stock Exchange of India Limited vide its letter bearing no. Ref: NSE/LIST/239345-W dated May 21, 2014 have also granted their No-Objection to the said amalgamation. Amalgamation proceedings are under process.

Note 15: Unpaid and Unclaimed Amount of Dividend and Share Application Money:

Following amount of Unpaid Share Application Money and Unpaid Dividend has not been claimed and paid till 31.03.2014

Note 16 : Rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares with par value of Rs. 10/- per share. 25,00,000 Zero Coupon Fully Convertible Unsecured Debentures have been converted into Equity Shares on 25th May, 2013 in the ratio of 1:1. Accordingly, new equity shares so allotted rank pari passu in all respects including dividends and share in the Company''s residual assets. The equity shareholders are entitled to receive dividend as declared from time to time. The voting right of an equity shareholder on a poll (not on show of hands) are in proportion to its shares of the paid up equity capital of the Company. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in the proportion to their shareholdings. During the year ended 31st March, 2014, the amount per share dividend recognized as distributions to equity shareholders was Paisa 50. The total dividend appropriation for the year ended 31st March, 2014 amounted to Rs 1,71,20,174/- including corporate dividend tax of Rs 24,86,921.

Note 17 : Previous year figures have been regrouped and reclassified wherever necessary to facilitate comparison with current year figures.


Mar 31, 2013

1 PRIOR PERIOD EXPENSES

During the year Rs. 2217136.00 paid on account of interest on late payment of Entery Tax of FY. 2011-12'' Rs. 95530.00 paid on account of interest on Excise of FY. 2011-12 and Rs. 33475 charged for Reversal of Service Tax credit wrongly taken in Previous Year.

2 IMPAIRMENT OF ASSETS

Pursuant to Accounting Standard (AS 28)-lmpairment of Assets issued by Institute of Chartered Accountant of India'' the Company assessed its fixed assets for impairment as at March 31'' 2013 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of accounts.

3 DISCLOSURE AS PER SECTION 22 OF THE MICRO'' SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT'' 2006

"The company has not received any intimation from "suppliers" regarding status under the Micro'' Small and medium Enterprises Development Act 2006 and hence disclosures'' if any'' relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished."

4 Balance of the Sundry Debtors'' Creditors'' Loans and advances are subject to confirmation from respective parties.

5 i) As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for Interest free loan of equivalent amount of VAT & CST liability for 15 years and which shall be re-payable after 15 years. The company has claimed Rs. 3915.52 lacs up to 31st March 2013 (upto previous year Rs. 2833.36 Lacs) on account of Interest Free Loan to State Government of Uttar Pradesh. Out of total claim of Rs. 3915.52 Lacs'' Rs. 2343.14 Lacs has not been deposited to Commercial Tax department in accordance with an order of Honorable High Court of Allahabad in writ petition no. 8886/2011''12710/2011 and 2067/2012. State Government has vide order no E-6-534/10-2011dated 18/11/2011 has refused to consider pending applications under the schemes and company has obtained stay against payment of taxes from Honorable High Court Allahabad'' Lucknow Bench'' accordingly company has not deposited VAT amounting toRs. 2343.14 Lacs.

ii) During the year the company has done regrouping in its accounting treatment in respect of Interest free Loan under incentive scheme of State Govt'' of Uttar Pradesh by showing full amount of Vat Liability upto 31.03.2013 amounting to Rs. 3915.52 Lacs as other Long Term Borrowing and Rs. 1572.39 Lacs in current Assets being amount already deposited upto 31.03.2013 and recoverable from state Govt of Uttar pradesh. Till Previous year amount not deposited till 31.03.2012 amounting to Rs. 953.36 Lacs was shown as current liability.

6 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment'' infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. Company has claimed for Rs. 12262.00 Lacs against the capital investment made upto 31st May 2012. The incentive received of Rs. 2428.00 Lacs has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs. 9834.00 Lacs in the books.

7 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses upto maximum of 5% of the railway freight. During the year company has provided an amount of Rs. 3101.11 Lacs (Previous year Rs. 1753.89 Lacs)'' which has been adjusted with freight paid on Iron Ore in Statement of Profit Loss and shown as Advance recoverable in Balance sheet. The total amount receivable against the freight subsidy as on 31.03.2013 was Rs. 5714.59 Lacs (Previous year Rs. 2613.48 Lacs).

8 State Govt. Vide G.O. no. 1674/77-6-ll-10/(Tax) 04 T.C-12 dated November 18'' 2011'' has refused to consider pending applications under the schemes stated hereinabove. Being the unconstitutional decision and injustice on the part of the State Government of Uttar Pradesh'' and for getting equal protection of law of land'' Company has preferred a Writ petition bearing no.12710/2011 / Misc. Bench dated 17.12.2011 at Honorable High Court of Allahabad'' Lucknow Bench'' Uttar Pradesh'' and the Honorable High Court has restrained the Govt'' from realisation of the taxes and the case is pending for final order. The total operational profit includes Rs. 3101.11 Lacs (Previous year Rs. 1753.89 Lacs) of freight subsidy which is receivable and subject to the decision of Honorable High Court.

9 License Agreement: Company has entered into a License Agreement dated 30th March'' 2013 with Gallantt Udyog Limited (Licensor) and pursuant to the agreement'' the Company has been granted leave and license by the Licensor to occupy'' use'' run and operate the Flour Mill unit of the Licensor located at 60 KM Stone'' Gorakhpur-Lucknow Highway'' Sabdaiyan Kalan'' Basti District of Uttar Pradesh with a factory and other utilities along with building structures commonly known as Basti Flour Mill of Gallantt Udyog Limited established in the year 2002 having present production capacity at 72''000 M.T. per annum (hereinafter referred to as "Basti Flour Mill"). Terms and conditions and particulars have been clearly embodied in the said agreement. Company has complied with the requisite formalities for the above license agreement.

10 Company has purchased Steam Coal from various parties on High Sea Sale Purchase basis. Based on the specification of the coal so imported'' Company has assumed and considered coal so imported as a steam coal'' however'' vide its various letters issued'' by Directorate of Revenue Intelligence'' Kolkata (DRI) has stated to the Company that Coal purchased on HSS basis fall under the category of Bituminous Coal. Import Duty on Steam coal attracts at 1% whereas import duty on Bituminous coal is 11%. (Including Cenvatable duty 6%). As per the contention of the DRI the Company is required to pay additional customs duty amounting to Rs. 4.89 Crores. Company has made provision in the Books of Accounts for the above sum and liabilities have been created thereby. Simultaneously'' Company has also provided for credit of CENVAT in the books of accounts amounting to Rs. 2.93 Crores.

11 A proposal of Merger of Gallantt Udyog Limited with the Company : At their meeting held on 30th March'' 2013 Board of Directors of the Company has proposed to amalgamate Gallantt Udyog Limited with the Company with effect from Transfer Date 01.04.2013 whereby the identity of both Companies would be blended into one single company. However'' shape'' manner and other things shall be decided by the Board of Directors in due course.

12 Inspection under Section 209A of the Companies Act'' 1956 : Office of the Regional Director'' East'' Ministry of Corporate Affairs (hereinafter referred to as "RD Office" had initiated inspection of Books of Accounts and other statutory records of the Company pursuant to the provisions of Section 209A of the Companies Act'' 1956. Contravention of few provisions of Companies Act'' 1956 have been revealed in the inspection report of the Officer of the RD Office. Company is in the process of making good the contravention and offences are under process of compounding under Section 621A of the Companies Act'' 1956.

13 Rights'' preferences and restrictions attached to equity shares : The Company has a single class of equity shares with par value of Rs. 10/- per share. Accordingly'' all equity shares rank equally with regard to dividends and share in the Company''s residual assets. The equity shareholders are entitled to receive dividend as declared from time to time. The voting right of an equity shareholder on a poll (not on show of hands) are in proportion to its shares of the paid up equity capital of the Company. In the event of liquidation'' the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts'' in the proportion to their shareholdings. During the year ended 31st March'' 2013'' the amount per share dividend recognised as distributions to equity shareholders was Paisa 50. The total dividend appropriation for the year ended 31st March'' 2013 amounted to Rs. 17''007''134/- including corporate dividend tax of Rs. 2''373''881. The above appropriation of Dividend also includes Rs. 1''250''000/- as dividend and Rs. 202''781/- as dividend tax on FCD'' converted into Equity Shares on 25.05.2013.

14 Previos year figures have been regrouped and reclaasified wherever nacessary to faciliate comparison with current year figures.


Mar 31, 2012

1.1 Of the above 8100208 Equity share (Net) (P.Year 8100208 Equity Share) were issued as fully paid-up under Initial Public Offer.

1.2 Disclosure regarding the Shares Issued for consideration other than cash for last five years

The Company, during the past years, undertook various Schemes including Merger of General Investment Division of Gallantt Udyog Limited and Merger of Other Seven Companies with the Company. Further, the Company has concluded Bonus Issue of Equity Shares. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon'ble Calcutta High Court, the Company, during the respective years, recorded all necessary accounting effects, along with requisite disclosure in the notes to accounts, the cumulative effects of the Schemes in case of Equity Share Capital of the Company due to allotment of equity shares as fully paid up without payment being received in cash have been disclosed herein below.

1.3 During the year the Company has allotted 2500000, 0% Fully Convertible Debentures of Rs. 10 each at a premium of Rs. 150.00 each convertible in to Equity shares within a period of 18 months from the date of allotment in the ratio of 1:1.

a) Term loan include Corporate Loan of Rs 24.68 Crores

b) Current Portion of Loan have been grouped under ''current maturity of long term debt'' (refer note 10)

c) Term of repayment for secured borrowing

i) Term Loan from State Bank of India amounting to Rs. 70 Crores sanctioned on 20.06.2008 repayable in Twenty Four quarterly installments of Rs 2.92 crores each commencing from F.Y.2011 out of which Seven installments amounting to Rs 20.44 crores has been paid upto 31.03.2012 & Installment of March Quarter 2012 of Rs 2.92 crores has been paid on 09.04.2012.

ii) Term Loan from State Bank Patiala amounting to Rs. 30 Crores sanctioned on 23.09.2008 repayable in Twenty Four quarterly installments of Rs. 1.25 crores each commencing from F.Y.2011 out of which Seven installments amounting to Rs. 8.75 crores has been paid upto 31.03.2012 & Installment of March Quarter 2012 of Rs. 1.25 crores has been paid on 25.04.2012.

iii) Term Loan from State Bank Mysore amounting to Rs. 24 Crores sanctioned on 11.10.2008 repayable in Twenty Four quarterly installments of Rs. 1.00 Crore each commencing from F.Y. 2011 out of which Seven installments amounting to Rs. 7.00 Crores has been paid upto 31.03.2012 & Installment of March Quarter 2012 of Rs 1.00 Crore has been paid on 25.04.2012.

iv) Corp Loan from State Bank of India amounting to Rs. 18 Crores sanctioned on 01.12.2011 repayable in Twelve quarterly installments. First five of Rs. 85 lakh and remaining Seven of Rs. 1.96 Crores each commencing from 01.01.2012 out of which one installment amounting to Rs. 85 lakh has been paid on 30.01.2012

v) Corp Loan from State Bank of Patiala amounting to Rs. 8.00 Crores sanctioned on 01.12.2011 repayable in Twelve quarterly installments. First Five installment of Rs. 37.50 lakh and remaining Seven installment of Rs. 87.50 lakh each commencing from 01.01.2012 out of which one installment amounting to Rs 37.50 lakh.

2.1 The company has not received any intimation from 'suppliers' regarding status under the Micro, Small and Medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the yearend together with the interest paid/payable as required under the said Act have not been furnished.

Advance from customer includes Rs 1775.00 Lakhs from 6 parties with whom neither any sales nor any written agreements for sale has been made.

** 1) In the year 2009-10 credit of govt Subsidy received from PICUP on 31.03.2010, but while calculating depreciation for the year 2009-10 credit of this in fixed assets was not considered resulting charging of excess depreciation amounting Rs 32742

2) In the year 2010-11 depreciation on plant & Machinery (Sponge Iron) a Continuous Process Plant was charged wrongly @4.75% instead of 5.28% resulting in short charging of depreciation of Rs 1386376

3) Power Plant Unit of the Company commenced its operation w.e.f 31.07.2011

3.1 Balance with bank in clues unclaimed dividend of Rs9930

3.2 Fixed Deposit with bank include deposit of Rs. 1720986 (previous year Rs. 2015607) with maturity of more than 12 months.

4.1 Other Advances includes advances to sundry creditors, subsidy receivable from PICUP of Rs. 261,347,861 and Abhijeet New India Cement Pvt ltd.of Rs 130,000,000 being receivable on account of sale of land rights.

4.1 Profit on sale of long term investment had been arrived on sale of quoted shares in F.Y. 2010-11

4.2 Commission Received from Jindal Steel & Power Limited of Rs. 49,718,000 for procurement of Material for them. And Rs. 129,580,000 from Abhijeet New India Cement Pvt Ltd, on account of profit of sale of rights on land.

5.1 As per Accounting Standard 15 "Employee Benefits" the disclosures as defined in the A.S. are given below : Defined Contribution Plans

Contribution to Defined Contribution Plans, recognized as expense for the year is as under:

Employer' contribution to Provident Fund Rs. 611,593

Employer' contribution to ESIC Rs. 475,515

Defined Benefit Plans

The Employee' gratuity fund scheme managed by a Life Insurance Corporation of India is a defined benefit Plan.

6 PRIOR PERIOD EXPENSES

i. In the year 2009-10 credit of Govt Subsidy received from PICUP. on 31.03.2010, but while calculating depreciation for the year 2009-10 credit of this in fixed assets was not considered resulting charging of excess depreciation amounting Rs. 32742

ii. In the year 2010-11 depreciation on plant & Machinery (Sponge Iron) a Continuous Process Plant was charged wrongly @4.75% instead of 5.28% resulting in short charging of depreciation of Rs 1386376

a) Contingent liabilities not provided for in respect of: Guarantee given by the bank on behalf of the Company to

Purvanchal Vidyut Vitran Nigam for Electricity Load Sanction. 292.07 150.00

Guarantees given by the bank on behalf of the Company to

Uttar Pradesh Pollution Control Board for NOCs. 2.00 12.00

b) Estimated amount of contracts remaining to be executed on capital account is Rs. 177.14 lacs.

During the year the company has paid Rs. 34,000.00 against sitting fee to the directors. The Company has not given any perquisite to its directors during the year.

(A) Primary Segment (By Business Segment):

The Company is engaged in the business of production of Iron, Steel & Wheat Products. The Company has two reportable business segments i.e. Steel and Agro which have been identified in line with the A.S. -17 on "Segment

Reporting". Information about Primary Segment is as follows :

(B) Secondary Segment (By Geographical Segment):

The Secondary Segment is based on geographical demarcation i.e. India & Rest of the World. There is no reportable segment under above category

7 Impairment of Assets :

Pursuant to Accounting Standard (AS 28)-Impairment of Assets issued by Institute of Chartered Accountant of India, the Company assessed its fixed assets for impairment as at March 31, 2012 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of accounts.

8 Disclosure as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 :

The company has not received any intimation from "suppliers" regarding status under the Micro, Small and medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished.

9 Sundry Creditors include Rs. Nil (Previous Year Rs. Nil) due to Small Scale industrial undertaking to the extent such parties have been identified from the available documents / information.

10 Balance of the Sundry Debtors, Creditors, Loans and advances are subject to confirmation from respective parties.

11 "As per Government Order of State Government of Uttar Pradesh the company is eligible for interest free loan of equivalent amount of VAT liability paid for 15 years and which shall be re-payable after 15 years. The company has claimed Rs. 2833.36 lacs up to 31st March 2012 (upto previous year Rs. 1517.55 Lacs) on account of Interest Free Loan to State Government of Uttar Pradesh. Out of total claim of Rs. 2833.36 lacs, Rs. 953.96 lacs has not been deposited to Commercial Tax department in accordance with an order of Honorable High Court of Allahabad in writ petetion no. 8886/2011, 12710/2011 and 2067/2012. State Government has vide order no E-6-534/10-2011dated 18/11/2011has refused to consider pending applications under the schemes and company has obtained stay against payment of taxes from Honorable High Court Allahabad, Luck now Bench, accordingly company has not deposited VAT amounting to Rs. 953.36 Lacs which has been shown as Current Liability in the books of accounts as on 31.03.2012 further company have to receive Rs. 1879.40 lacs from State Government on account of Interest Free Loan and this has not been provided in books."

12.1 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment, infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. Company has claimed for Rs. 11621.57 lacs against the capital investment made up to 31st July 2011. The incentive received of Rs. 2428 lacs has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs. 9193.57 lacs in the books.

12.2 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses up to maximum of 5% of the railway freight. During the year company has provided an amount of Rs. 1753.89 lacs ( Previous year Rs. 859.59 lacs), which has been adjusted with freight paid on Iron Ore in Statement of Profit Loss and shown as Advance recoverable in Balance sheet. The total amount receivable against the freight subsidy as on 31.03.2012 was Rs. 2613.48 lacs. State Govt. Vide G.O. no. 1674/77-6-11-10/(Tax) 04 T.C.-12 dated November 18, 2011,has refused to consider pending applications under the schemes stated hereinabove. Being the unconstitutional decision and injustice on the part of the State Government of Uttar Pradesh, and for getting equal protection of law of land, our Company has preferred a Writ petition bearing no.12710/2011 / Misc. Bench dated 17.12.2011 at Honorable High Court of Allahabad, Luck now Bench, Uttar Pradesh, and the Honorable High Court has restrained the Govt. from realization of the taxes and the case is pending for final order. The total operational profit includes Rs.1753.89 Lacs (Previous year Rs. 859.59 lacs) of freight subsidy which is receivable and subject to the decision of Honorable High Court.

13 Adjustment of subsidies etc under the heading 'Fixed Assets' as on March 31, 2012 includes Rs. 2428.00 lacs received from State Government of Uttar Pradesh and Rs. 1251.97 lacs on account of duties and taxes.

14 During the year the company has transferred Rs. 6.23 lacs from administrative expenses to pre-operative expenses pending capitalization.

15 Expenses under head office building to the tune of Rs 186.143 lacs has been incurred on account of construction of office building at Purdilpur, Bank Road Gorakhpur, U.P. The said building is constructed on a piece of land admeasuring 16000 sq. feetjointly owned by Gallantt Ispat Ltd. (25% share ) and Chandra Prakash Agarwal & Sons HUF (75% Share). On the basis of Agreement between both the parties, Commercial Building comprising of Ten Floors (inclusive of ground and basement floors for common use) has been constructed and as per the Agreement between the parties Seventh and Eight Floors area is being possessed, owned and used by Gallantt Ispat Ltd.


Mar 31, 2011

1. Contingent Liabilities:

a. Contingent liabilities not provided for in respect of:

(Rs. in Lacs)

Description 2010-2011 2009-2010

Guarantee given by the bank on behalf of the Company to Purvanchal Vidyut Vitran Nigam for Electricity Load Sanction. 150.00 150.00

Guarantees given by the bank on behalf of the Company to Uttar Pradesh Pollution Control Board for NOCs. 12.00 10.00

Guarantees given by the bank on behalf of the Company to Gorakhpur Industrial Development Authority. - 14.91

Claims not acknowledged as debts (Amount paid to Commercial Tax Department, UP) 24.82 11.14

b. Estimated amount of contracts remaining to be executed on capital account is Rs. 13780.80 lacs.

2.1.(a) Primary Securities:

i) Term Loans:

(a) First Pari pasu charge over all the borrower's fixed assets (Present & Future).

(b) Second Pari pasu charge over all the borrowers' current assets including Debtors and Stock etc.

(c)Corpoarte& Personal Guarantee

Personal Guarantee of the Sri C.P Agarwal, Sri Prem Prakash Agarwal and Sri Nitin M. Kandoi.

ii) Cash credit:

(a) Hypothecation of entire current assets of the company (present and future) consisting of raw material, Sip finished goods, store & spares and book debts.

(b) Extension of First Pari pasu charge over all the borrower's fixed assets (Present & Future).

(c)Corpoarte& Personal Guarantee

Personal Guarantee of the Sri C.P Agarwal, Sri Prem Prakash Agarwal and Sri Nitin M. Kandoi.

6. Impairment of Assets:

Pursuant to Accounting Standard (AS 28)-lmpairment of Assets issued by Institute of Chartered Accountant of India, the Company assessed its fixed assets for impairment as at March 31, 2011 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of accounts.

8. During the year the company concluded its Initial Public offering through which 81,00,208 Equity Shares (including 14,00,000 Equity Shares issued to promoters and Promoers group, contribution proceeds of which Rs. 7,00,00,000/- had been brought in before opening of the IPO) of Rs. 10/-each at a premium of Rs. 40/- each issued by the company to Qualified Institutional Buyers, Non Institutional Investors and to Retail Individual Investors which closed on 24th September, 2010. The Equity Shares of the Company has been listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited ("Stock Exchanges") and trading in Equity Shares started from 11th October, 2011.

11. Disclosure as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 :

The company has not received any intimation from "suppliers" regarding status under the Micro, Small and Medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished.

12. Sundry Creditors include Rs. Nil (Previous Year Rs. Nil) due to Small Scale industrial undertaking to the extent such parties have been identified from the available documents / information.

13. Balance of the Sundry Debtors, Creditors, Loans and advances are subject to confirmation from respective parties.

14. Other Receivable under the head Loans & Advances includes Excise duty and service tax of Rs. 576.11 Lacs and VAT receivable of RS163.35 Lacs.

15. As per Government Order of State Government of Uttar Pradesh the company is eligible for interest free loan of equivalent amount of VAT liability paid for 15 years and which shall be re-payable after 15 years. The company has claimed Rs. 1517.55 Lacs up to 31st March 2011 (upto previous year Rs. 502.76 Lacs) on account of this tax liability the amount is yet to be received. However no provision of this amount has been made in the books.

16 (a) As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 01st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment, infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. During the year the company has received Rs. 2428.00 Lacs of such incentives against the claim made by company of Rs. 7589.33 Lacs of the capital investment made upto 31st October 2010. The incentive received has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs. 5161.33 Lacs in the books.

(b) As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 01st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses upto maximum of 5% of the railway freight. During the year company has provided an amount of Rs. 859.59 Lacs, which has been adjusted with freight paid on Iron Ore in Profit Loss account and shown as Advance recoverable in Balance sheet.

17. During the year the company has earned Rs. 17.34 Crore from sale of right in land. Right on land was acquired from the original sellers through negotiation and on terms and conditions as embodied in the agreements entered into with them and afterwards Company has sold the right on land so acquired.

18. Related Party Disclosures (As identified by the Management): Name of Related Parties and Description of Relationship.

I. Associate Company & Firm Gallant Udyog Ltd

Gallantt Metal Ltd

Chandra Prakash Agrawal & Sons (HUF)

Gallantt Landmark (Properitor C.P.Agrawal & Sons HUF) Prem Prakash Agrawal HUF

II. Key Managerial Personnel Mr. Chandra Prakash Agrawal

Mr. Prem Prakash Agrawal

Mr. Nitin Kandoi

III. Relatives of Key Managerial Personnel Mr. Mayank Agrawal

Mr. Ashutosh Agrawal

19. Adjustment of subsidies etc under the heading 'Fixed Assets' as on March 31, 2011 includes Rs. 2428.00 Lacs received from State Government of Uttar Pradesh and Rs. 591.96 Lacs on account of duties and taxes.

20. During the year the company has transferred Rs. 31.83 Lacs from administrative expenses to pre-operative expenses pending capitalisation.

Previous year figures have been regrouped and reclassified wherever necessary to facilitate comparison with Current year figures.


Mar 31, 2009

1.1 Contingent liabilities:

Contingent liabilities not provided for in respect of:

(Rs. In Lacs)

Description 2008-2009 2007-2008

Guarantee given by the Company in favour 150.00 NIL

of M/s Vidyut Vitran Nigam Limited, Gorakhpur

Guarantee given by the Company in favour 14.91 14.91 of Gorakhpur Industrial Development Authority

Claims not acknowledged as debts 4.18 NIL (Amount paid to Commercial Tax Department, UP)

1.2 Securities given against Term Loan:

(a) First Pari pasu charge on all the immovable and movable properties of the Project, both present and future.

(b) Second charge on Pari- pasu basis on the current assets of the Company pertaining to the project.

(c) Personal Guarantee of the Sri C.P Agarwal, Sri Prem Praksh Agarwal, Sri Nitin M. Kandoi

1.3 Impairment of Assets:

Pursuant to Accounting Standard (AS 28)-Impairment of Assets issued by Institute of Chartered Accountant of India, the Company assessed its fixed assets for impairment as at March 31, 2009 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of accounts.

1.4 Balance of some of the Sundry Debtors, Creditors, and Loans & Advances are subject to confirmation from respective parties.

1.5 Related Party Disclosures (As identified by the Management). (A) Name of Related Parties and Description of Relationship.

I. Associate Company M/s Gallant Udyog Ltd

M/s Gallantt Metal Ltd

II. Key Managerial Personnel Mr. Chandra Prakash Agrawal

Mr. Prem Prakash Agarwal Mr. Nitin Kandoi

III. Relative of Key Managerial Person Mr. Mayank Agarwal

Mr. Ashutosh Agarwal

1.6 Disclosure as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006.

The company has not received any intimation from "suppliers" regarding status under the Micro, Small and Medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished.

1.7 (a) Pursuant to the scheme of arrangement approved by the Honble High Court at Kolkata vide its order dated April 5 % 2009, the companies namely, Zircon Commercial Private Limited, D. R. Advisory Services Private Limited, Mantra Vanijya Private Limited, Dynasty Sales Private Limited, Sridhar Tie-Up Private Limited, Sanhati Trade-Link Private Limited and Mrinmoyee Sales Private Limited (all the Transferor Companies) have been amalgamated with GALLANTT ISPAT LIMITED (the Transferee Company)with effect from 1st April, 2008. The certified copy of the aforesaid order has been filed with the Registrar of Companies, West Bengal on 29th April, 2009 and thus the scheme has become operational. Accordingly all the assets and liabilities of the transferor companies as existing on 1st April, 2008 have been vested with the company at book value.

(b) Pursuant to the scheme of arrangement, 450000 equity shares shall be allotted to the equity shareholders of the erstwhile transferor companies and accordingly Rs. 45,00,000/- has been transferred to Share Capital Suspense Account (Pending Allotment) and Rs.43,56,85,082/- has been credited to Security Premium Account being excess of Assets over liabilities (including share capital suspense) taken over.

1.8 Sundry Creditors include Rs. Nil (Previous Year Rs. Nil) due to Small Scale industrial undertaking to the extent such parties have been identified from the available documents / information.

1.9 This is the first year of Company Operation. Therefore previous year figure in Profit & Loss Account has not been given.

1.10 Previous year figures have been regrouped and reclassified wherever necessary.

1.11 Schedule A to S form an integral part of Balance Sheet as at 31st march, 2009 and Profit & Loss Account for the year ended on 31 st March, 2009.

 
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