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Notes to Accounts of Inducto Steel Ltd.

Mar 31, 2015

1. COMPANY OVERVIEW :

Inducto Steels Limited is a Public Company domiciled in India and incorporated under the provisions of the Companies Act,1956. The company has its primary listing on BSE LIMITED in India. '

During the year, the Company was engaged in the ship breaking business and trading activities in metal scrap, coals, aluminium foil & other inouts. However, as and when any surplus funds are available, the same is given on interest to other parties and also invested in the shares and securities to earn short term and long term capital gains.

2. 24,17,856 Equity Shares alloted as fully paid up bonus shares in the year 1994-95 by capitalisation of revaluation reserve of Rs.1,38,65,528/- capital subsidy of Rs.21,01,687/- and surplus in Profit and Loss account of Rs.82,11,344/-.

3. 4,99,078 Equity Sshares allotted to the shareholders of Inducto Technocastings Private Limited and Hariyana Industrial Gases Private Limited, which were merged with the Company w.e.f. 01.04.2005.

4. Terms/rights attached to equity shares

The Company has one class of Equity Shares having par value of Rs. 10/- each. Each shareholder of the equity shares is entitled to one vote per share entitled to receive dividend as declared from time to time. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of of Directors is subject to the approval of the share holders in the ensuing Annual General Meeting.

During the year ended 31st March 2015, the amount of per share dividend recognized as distributions to equity share holders was Rs. Nil (31st March 2014: Nil).

In the event of liquidation of the Company, the holders of the Equity shares will be entitled to receive remaining assets of the company, after distribution of preferential amounts. The ' distribution Will be in proporation to the number of equity shares held by the share holders.

As per records of the Company, including its register of shareholders/members and other declarations received from share holders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

Cash Credit facilities with Indian Overseas Bank is secured by way of hypothecation of stocks & book debts of the Company as primary security and equitable mortgage of immovable company property of the & associated concern as collateral security

Clean Overdraft - 8742 with Indian Overseas Bank is collaterally secured by Land Plots and Residential Properties of Directors' relatives. The same is also secured by personal guarantee of two directors and their two relatives. The overdraft is repayable on demand and carries interest @ 14.25% p.a.

Note: Trade payables are recognised at their original invoiced amounts which represent their fair value on initial recognition. The trade payables are considered to be of short duration and are - not discounted and the carrying values are assumed to approximate their fair values.

The company has no information as to whether any of its suppliers constitute micro, small and medium enterprises as per Micro, Small and Medium Enterprises Development Act, 2006 , and therefore the amount due to such suppliers has not been identified. .

5. SEGMENT INFORMATION

The business of the Company is divided into two segments: Trading and Ship Recycling activities and separate set of books of accounts are maintained. The principal activities of these segments are as under.

Segment Principal Activities

Trading Activity Trading in Metal Scrap, Coals, Aluminium Foil & Other Industrial Inouts

Ship Breaking Activity Dismantling / breaking of old and used ships

Segment Revenue, Segment Expenses and Segment Result include inter segment revenues / expenses between business segments. Those transfer are eliminated in total revenue/expense/ results.

6. RELATED PARTY TRANSACTIONS

a) Key Management personnel .

i) Rajeev Reniwal Managing Director

ii) Rakesh Reniwal CFO

iii) Sweety R Reniwal Non - Executive Director

b) Other related parties where there have been transactions:

Enterprises commonly controlled or influnced by major Shareholder/Directors/ Relative of Directors of the Company:

i) Hariyana Ship Breakers Limited

ii) Hariyana Ship Demolition Private Limited

iii) Hariyana Air Product

iv) Hariyana International Pvt Ltd

v) Shree Bata ii Associates

7. CONTINGENT LIABILITIES

CONTINGENT LIABILITIES & COMMITMENTS (TO EXTENT NOT PROVIDED FOR)

CONTINGENT LIABILITIES

(A) The Company was required to pay excise duty based on the capacity of the furnace during the year 1997-98 and the Company was paying the duty as per the capacity determined by the department based on the documents available with the Company. However subsequently the department has revised the capacity of the furnace and raised a demand of Rs.45,98,354/- on the company, which the company had disputed and the matter was pending before of the CEGAT. The Tribunal in its Judgmenet in July 2015, has given its verdict in favour of the Company. The company, as directed by the CEGAT, had paid an amount of Rs.10 Lacs. No provision for the demand has been madein the accounts and in case any future liability arises on this account, the same will be provided/ accounted for In the year in which such liability is raised.

(B) The Jt. Commissioner of Central Excise & Service Tax, Bhavnagar has raised a demand of Service Tax amounting to Rs. 17,63,750/-, penalty of an equal amount and interest applicable thereon in the case of matter pertaining to FY : 2005-06, vide their order dated November 30, 2011. The company has disputed the demand at the forum of appellate authorities and succeeded, and the matter is pending with appellate authorities. However, the Department of Service Tax have now taken the matter to Tribunal and the matter is pending. The company is hopeful that the matter will be decided in favour of the company, hence no provision for demand has been made in the books of accounts for the year and in case the final decision goes against the company, the same will be provided/accounted in the year in which matter is finalised by the competent authorities.

8. The previous year figures have been reclassified /regrouped wherever considered necessary to confirm to this year's classification/grouping.


Mar 31, 2014

A) During the year, the company was engaged ship breaking activities and in trading in metal scrap, coals, aluminium foil & other industrial inouts. However, as and when any surplus fund are available, the same is given on interest to other parties and also invested in the shares and securities to earn short term and long term capital gains.

b) In the opinion of the Management, the realisable value of the fixed assets of the com- pany are much higher than the carrying cost and therefore, no provision for impair- ment is required to be made.

c) The company has no information as to whether any of its suppliers constitute micro, small and medium enterprises as per Micro, Small and Medium Enterprises Develop- ment Act, 2006 and therefore the amount due to such suppliers has not been identi- fied.

d) The major components of the Deferred Tax Assets/Liabilities, based on the tax effect of the timing differences, as at 31st March 2014, are as under.

e) The company has taken lease right of the ship Breaking plot No. 45 Alang ship break- ing yard. The consideration paid to GMB and party from which such plot has been taken over as treated as deferred revenue expenses and written off over the balance lease period.

f) Income Tax assessment has been completed upto the year assessment year 2011-12. The Management has an opinion that no additional liability will arise in the case of pending assessment.

g) Sales tax assessment has been completed upto the year 2007-08. The Company does not anticipate any liability on account of the pending sales tax assessment .

h) In the opinion of the Board of Directors, Current Assets, Loans & Advances have a value of realisation at least equal to the amount at which they are stated in the Balance Sheet. Adequate provision have been made in the accounts for all the known liabilites.

i) The Balance of Sundry Creditors, Sundry Debtors, Loans & Advances are unsecured, considered goods and subject to confirmation.

j) Previous years figures have been regrouped/rearranged wherever necessary so as to make them comparable with current years figures.

2 ADDITIONAL INFORMATION AS REQUIRED UNDER PART-IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956.

Note: ine issuea ana paia-up capital inciuaes :

1 24,17,856 equity shares alloted as fully paid up bonus shares in the year 1994-95 by capitalisation of revaluation reserve of Rs.1,38,65,528/-, capital subsidy of Rs.21,01,687/- and surplus in profit and loss accounts of Rs.82,11,344/-.

2 4,99,078 equity shares allotted to the shareholders of Inducto Technocastings Private Limited and Hariyana Industrial Gases Private Limited, which were merged with the company w.e.f. 01.04.2005.

B. Reconcilaition of the number of outstanding shares as at the beginning and at the end of the reporting period.

C. Terms/rights attached to equity shares

The Company has one class of equity shares having par value of '' 10/- each. Each shareholder of the equity shares is entitled to one vote per share entitled to receive dividend as declared from time to time. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the share holders in the ensuing Annual General Meeting.

During the year ended 31 March 2014, the amount of per share dividend recognized as distributions to equity share holders was Rs. Nil (31 March 2013: Rs. 3.50).

In the event of liquidation of the company, the holders of the Equity shares will be entitled to receive remaining assets of the company, after distribution of preferential amounts. The distribution will be in proporation to the number of equity shares held by the share holders.

As per records of the company, including its register of shareholders/members and other decla- rations received from share holders regarding beneficial interest, the above shareholding repre- sents both legal and beneficial ownership of shares.

Cash credit from Indian Overseas Bank is primarily secured against Stocks, Receivables and other current assets of the company and colleterally secured by Land Plots and Residential Proprties of Director''s Relatives. The same is also secured by personal guarantee of two direc- tors and their two relatives. The cash credit is repayable on demand and carries interest @ 14 to 14.75% p.a.

Clean Overdraft from Indian Overseas Bank is colleterally secured by Land Plots and Residential Proprties of Director''s relatives. The same is also secured by personal guarantee of two directors and their two relatives.The overdraft is repayable on demand and carries interest @ 16% p.a.

There is no stipulation as to repayment of loans & advances from relatives hence question of overdue amount as at March 31, 2014 does not arises.

Note: Trade payables are recognised at their original invoiced amounts which represent their fair value on initial recognition. The trade payables are considered to be of short duration and are not discounted and the carrying values are assumed to approximate their fair values.

The company has no information as to whether any of its suppliers constitute micro, small and medium enterprises as per Micro, Small and Medium Enterprises Development Act, 2006 and therefore the amount due to such suppliers has not been identified.

2. 29 SEGMENT INFORMATION

The business of the company is divided into Two segment: Trading and Ship Recycling activities and separate set of books of accounts are maintained. The principal activities of these segments are as under.

Segment Principal Activities

Trading Activity Trading in Metal Scrap, Coals, Aluminium Foil & Other Industrial

Inouts

Ship Breaking Activity Dismentling / breaking of old and used ships

Segment Revenue, Segment Expenses and Segment Result include inter segment revenues / expenses between business segments. Those transfer are eliminated in total revenue/expense/ results.

2. 30 Related Party Transactions :

a) Key Management personnel

i) Sweety R Reniwal

b) Other related parties where there have been transactions:

Enterprises commonly controlled or influnced by major shareholder/directors/ relative of directors of the Company:

i) Hariyana Ship Breakers Limited

ii) Hariyana Ship Demolition Private Limited

iii) Hariyana Air Product

iv) Hariyana International Pvt Ltd.

2. 31 CONTINGENT LIABILITIES

CONTINGENT LIABILITIES & COMMITMENTS (TO EXTENT NOT PROVIDED FOR)

CONTINGENT LIABILITIES

(A) The Company was required to pay excise duty based on the capacity of the furnace during the year 1997-98 and the company was paying the duty as per the capacity determined by the department based on the documents available with the company. However subsequently the department has revised the capacity of the furnace and raised a demand of Rs.45,98,354/- on the company, which the company has disputed and the matter is pending before of the CEGAT. Pending decision on the appeal of the company, as directed by the CEGAT, paid an amount of Rs.15 Lacs. The company is hopeful that the matter will be decided in favour of the company,hence no provision for the demand has been made in the accounts and in case the decision is against the company, the same will be provided/accounted for in the year in which such a decision comes.

(B) The Jt. Commissioner of Central Excise & Service Tax, Bhavnagar has raised a demand of Service Tax amounting to Rs. 17,63,750/- , penalty of an equal amount and interest applicable thereon in the case of matter pertaining to FY : 2005-06, vide their order dated November 30, 2011. However, the company has disputed the demand and the matter is pending with appellate authorities. The company is hopeful that the matter will be decided in favour of the company , hence no provision for demand has been made in the books of accounts for the year and in case the final decision goes against the company, the same will be provided/accounted in the year in which matter is finalised by the competent authorities.

2.2 The previous year figures have been reclassified /regrouped wherever considered necessary to confirm to this year''s classification/grouping.


Mar 31, 2013

CORPORATE INFORMATION :

Inducto Steels Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its snares is listed on BSE (Bombay Stock Exchange) in India.

During the year, the Company was engaged in the ship breaking business and trading activities in ferrous and non ferrous metals, coal etc. However, as and when any surplus fund are available, the same is given on interest to other parties and also invested in the shares and securities to earn short term and long term capital gains.

1.1 BASIS OF PRESENTATION :

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards noti- fied under the Companies (Accounting Standards) Rules, 2006 (as amended) and the rel- evant provisions of the Companies Act, 1956. The financial statements have been pre- pared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

a) During the year, the company was engaged ship breaking activities and in trading in metal scrap, coals, aluminium foil & other industrial inouts. However, as and when any surplus fund are available, the same is given on interest to other parties and also invested in the shares and securities to earn short term and long term capital gains.

b) In the opinion of the Management, the realisable value of the fixed assets of the company are much higher than the carrying cost and therefore, no provision for impairment is required to be made.

c) The company has no information as to whether any of its suppliers constitute micro, small and medium enterprises as per Micro, Small and Medium Enterprises Development Act, 2006 and therefore the amount due to such suppliers has not been identified.

d) The major components of the Deferred Tax Assets/Liabilities, based on the tax effect of the timing differences, as at 31st March 2013, are as under.

e) The company has taken lease right of the ship Breaking plot No. 45Alang ship breaking yard. The consideration paid to GMB and party for which such plot has been taken over as treated as deferred revenue expenses and written off over the balance lease period.

f) Income Tax assessment has been completed upto the year assessment year 2010- 11. The Management has an opinion that no additional liability will arise in the case of pending assessment.

g) Sales tax assessment has been completed upto the year 2007-08. The Company does not anticipate any liability on account of the pending sales tax assessment.

h) In the opinion of the Board of Directors, Current Assets, Loans & Advances have a value of realisation at least equal to the amount at which they are stated in the Balance Sheet. Adequate provision have been made in the accounts for all the known liabilites.

i) The Balance of Sundry Creditors, Sundry Debtors, Loans & Advances are unsecured, considered goods and subject to confirmation.

j) Previous years figures have been regrouped/rearranged wherever necessary so as to make them comparable with current years figures.

1.2 SEGMENT INFORMATION

The business of the company is divided into Two segment: Trading and Ship Recycling activities and separate set of books of accounts are maintained. The principal activities of these segments are as under.

1.3 Related Party Transactions :

a) Key Management personnel i) Sweety R Reniwal

b) Other related parties where there have been transactions:

Enterprises commonly controlled or influnced by major shareholder/directors/ relative of directors of the Company:

i) Hariyana Ship Breakers Limited

ii) Hariyana Ship Demolition Private Limited

iii) Hariyana Air Product

iv) Hariyana International Pvt Ltd.

1.4 CONTINGENT LIABILITIES

(A) The Company was required to pay excise duty based on the capacity of the furnace during the year 1997-98 and the company was paying the duty as per the capacity determined by the department based on the documents available with the company. However subsequently the department has revised the capacity of the furnace and raised a demand of Rs.45,98,354/- on the company, which the company has disputed and the matter is pending before of the CEGAT Pending decision on the appeal of the company, as directed by the CEGAT paid an amount of Rs.10 Lacs. The company is hopeful that the matter will be decided in favour of the companyhence no provision for the demand has been made in the accounts and in case the decision is against the company, the same will be provided/accounted for in the year in which such a decision comes.

(B) The Jt. Commissioner of Central Excise & Service Tax, Bhavnagar has raised a demand of Service Tax amounting to Rs. 17,63,750/-, penalty of an equal amount and interest applicable thereon in the case of matter pertaining to F Y 2005-06, vide their order dated November 30,2011. However, the company has disputed the demand and the matter is pending with appellate authorities. The company is hopeful that the matter will be decided in favour of the company , hence no provision for demand has been made in the books of accounts for the year and in case the final decision goes against the company, the same will be provided/accounted in the year in which matter is finalised by the competent authorities.

1.5 The previous year figures have been reclassified /regrouped wherever considered necessary to confirm to this year''s classification/grouping.


Mar 31, 2012

1. CORPORATE INFORMATION :

Inducto Steels Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares is listed on BSE (Bombay Stock Exchange) in India. The company is engaged in ship breaking/ ship recycling business.

During the year, the Company was engaged in the ship breaking business only and did not do any trading activity. However, as and when any surplus fund are available, the same is given on interest to other parties and also invested in the shares and securities to earn short term and long term capital gains.

1.1 BASIS OF PRESENTATION :

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

a) During the year, the Company was engaged in the ship breaking business and trading activity in ships and iron and steel. However, as and when any surplus fund are available, the same is given on interest to other parties and also invested in the shares and securities to earn short term and long term capital gains.

b) In the opinion of the Management, the realisable value of the fixed assets of the company are much higher than the carrying cost and therefore, no provision for impairment is required to be made.

c) The company has no information as to whether any of its suppliers constitute micro, small and medium enterprises as per Micro, Small and Medium Enterprises Development Act, 2006 and therefore the amount due to such suppliers has not been identified.

e) The company has taken lease right of the ship Breaking plot No. 45 Alang ship breaking yard. The consideration paid to GMB and party for which such plot has been taken over has treated as deferred revenue expenses and written off over the balance lease period.

f) Income Tax assessment has been completed upto the year A. Y. 2009-10. The Management has an opinion that no Additional Liability will arise in the case of Pending Assessment.

g) Sales tax assessment has been completed upto the year 2005-06. The Company does not anticipate any liability on account of the pending sales tax assessment.

h) In the opinion of the Board of Directors, Current Assets, Loans & Advances have a value of realisation at least equal to the amount at which they are stated in the Balance Sheet. Adequate provision have been made in the accounts for all the known liabilities.

i) The Balance of Sundry Creditors, Sundry Debtors, Loans & Advances are unsecured, considered goods and subject to confirmation.

j) Previous years figures have been regrouped/rearranged wherever necessary so as to make them comparable with current years figures.

2.1 SHARE CAPITAL A. SHARE CAPITAL

Note: The issued and paid-up capital include:

1. 2417856 equity shares alloted as fully paid up bonus shares in the year 1994-95 by capitalisation of revaluation reserve of Rs. 1,38,65,528, capital subsidy of Rs. 21,01,687 and surplus in profit and loss accounts of Rs. 82,11,344.

2. 499078 equity shares allotted to the shareholders of Inducto Technocastings Private Limited and Hariyana Industrial Gases Private Limited, which were merged with the company w.e.f. 01.04.2005.

C. Terms/rights attached to equity shares

The Company has one class of equity shares having par value of Rs. 10/- each. Each shareholder of the equity shares is entitled to one vote per share entitled to receive dividends as declared from time to time. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of of Directors is subject to the approval of the share holders in the ensuing Annual General Meeting.

During the year ended 31st March 2012, the amount of per share dividend recognized as distributions to equity share holders was Rs. 3 (31st March 2011: Rs. 2.50).

In the event of liquidation of the company, the holders of the Equity shares will be entitled to receive remaining assets of the company, after distribution of preferential amounts. The distribution will be in proportion to the number of equity shares held by the share holders.

2.2 RELATED PARTY TRANSACTIONS

a) Key Management personnel

i) Sweety Reniwal

b) Other related parties where there have been transactions:

Enterprises commonly controlled or influenced by major shareholder/directors/ relative of directors of the Company:

i) Hariyana Ship Breakers Limited

ii) Hariyana Ship Demolition Private Limited

iii) Hariyana Air Product

2.3 CONTINGENT LIABILITIES

CONTINGENT LIABILITIES & COMMITMENTS (TO EXTENT NOT PROVIDED FOR)

CONTINGENT LIABILITIES

(A) The Company was required to pay excise duty based on the capacity of the furnace during the year 1997-98 and the company was paying the duty as per the capacity determined by the department based on the documents available with the company. However subsequently the department has revised the capacity of the furnace and raised a demand of Rs. 45,98,354/- on the company, which the company has disputed and the matter is pending before of the CEGAT. Pending decision on the appeal of the company, as directed by the CEGAT, paid an amount of Rs. 10 Lacs. The company is hopeful that the matter will be decided in favour of the company, hence no provision for the demand has been made in the accounts and in case the decision is against the company, the same will be provided/accounted for in the year in which such a decision comes.

(B) During the year , the Jt. Commissioner of Central Excise & Service Tax, Bhavnagar has raised a demand of Service Tax amounting to Rs. 17,63,750/-, penalty of an equal amount and interest applicable thereon in the case of matter pertaining to F Y 2005-06, vide their order dated November 30,2011. However, the company has disputed the demand and the matter is pending with appellate authorities. The company is hopeful that the matter will be decided in favour of the company , hence no provision for demand has been made in the books of accounts for the year and in case the final decision goes against the company, the same will be provided/accounted in the year in which matter is finalised by the competent authorities.

2.4 The financial statements for the year ended 31st March, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification under the Companies Act, 1956, the financial statements for the year ended 31st March, 2012 are prepared under revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification.


Mar 31, 2010

A) During the year,the Company was engaged in the ship breaking business only and did not do any trading activity. However, as and when any surplus fund are available, the same is given on interest to other parties and also invested in the shares and securities to earn short term and long term capital gains.

b) In the opinion of the Management, the realisable value of the fixed assets of the company are much higher than the carrying cost and therefore, no provision for impairment is required to be made.

c) Deferred tax has been accounted in accordance with the requirement of accounting standard on "Taxes on Income" (AS-22) taking into account the present earning of the company, the anticipated earning etc and are subject to adjustment on year to year. The deferred tax assets on carry forward long term capital loss has not been considered, due to uncertinity in its realisaiton.

d) There are no Micro,small and Medium Enterprised , to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

2 Contingent Liabilities not provided for

a) The Company was required to pay excise duty based on the capacity of the furnace during the year 1997-98 and the company was paying the duty as per the capacity determined by the department based on the documents available with the company. However subsequently the department has revised the capacity of the furnace and raised a demand of Rs.45,98,354/- on the company, which the company has disputed and the matter is pending before of the CEGAT. Pending decision on the appeal of the company, as directed by the CEGAT, paid an amount of Rs.15 Lacs. The company is hopeful that the matter will be decided in favour of the company,hence no provision for the demand has been made in the accounts and in case the decision is against the company, the same will be provided / accounted for in the year in which such a decision comes.

b) Income Tax assessment has been completed upto the year assessment year 2007-08 The Management has been advised that no additional liability will arise in the case of pending assessment.

c) Sales tax assessment has been completed upto the year 2005-06 The Company does not anticipate any liability on account of the pending sales tax assessment

3 Previous year figures have been regrouped/rearranged wherever necessary so as to make them comparable current year figures. Figures of previous year has been shown in the brackets wherever required.

 
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