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Notes to Accounts of ISMT Ltd.

Mar 31, 2015

1. Term Loans of Rs. 720.19 Crore (including current maturities of Rs. 74.06 Crore)(Previous Year Rs 347.48 Crore including current maturities of Rs. 38.20 Crore) are stipulated to be secured by a first charge ranking pari passu on the Company’s immovable properties and movable fixed assets both present and future with other term lenders, excluding term loan lenders where exclusive charge on movable fixed assets as mentioned in clause (iii) has been stipulated and assets of Captive Power Project of the Company located at Chandrapur district as mentioned in clause (iv). These loans are further stipulated to be secured by a second charge ranking pari passu by way of hypothecation with other term lenders on the current assets of the Company on which the first pari passu charge is stipulated to be covered in favour of consortium of banks as mentioned in Note No. 1.6.

2. Term Loans of Rs. 177.99 Crore ( including current maturities of Rs.68.18 Crore ) (Previous Year Rs. 270.91 Crore including current maturities of Rs. 105.50 Crore) are stipulated to be secured by a first charge ranking pari passu on the Company’s immovable properties and movable fixed assets both present and future with other term lenders, excluding term loans lenders where exclusive charge on movable fixed assets as mentioned in clause (iii) has been stipulated and assets of Captive Power Project of the Company located at Chandrapur district as mentioned in clause (iv).

3. Term Loans of Rs. 114.20 Crore ( including current maturities of Rs. 45.38 Crore ) (Previous Year Rs. 206.13 Crore including current maturities of Rs.114.71 Crore) are stipulated to be secured by exclusive charge on the equipment finance. Out of above, term loan of Rs.76.95 Crore is further stipulated to be secured with the land appurtenant thereto

4. Term Loans of Rs. 106.98 Crore (including current maturities of Rs. 34.92 Crore ) (Previous Year Rs. 136.92 Crore including current maturities of Rs. 29.79 Crore) are stipulated to be secured by first charge ranking pari passu on the Company’s immovable properties and movable fixed assets relating to Captive Power Projects of the Company located in Chandrapur district.

5. Term Loan of Rs. 39.49 Crore ( including current maturities of Rs. Nil) ( Previous Year Rs. 38.48 Crore including current maturities of Rs. Nil ) is secured by first charge ranking pari passu by hypothecation in respect of current assets of the Company present and future and are further secured by a second pari passu charge on the Company’s immovable properties and all movable fixed assets both present and future as referred in Note No.(i) above.

6. Further the above term loans from banks, amounting to Rs. 385.50 Crore, are guaranteed by the Managing Director of the Company.

7. Finance Lease Obligation is secured by Hypothecation of Assets taken under Finance Lease.

8. Maturity Schedule

9. Working Capital Borrowings from Consortium Banks is secured by first charge ranking pari passu by hypothecation in respect of current assets of the Company present and future and are further secured by a second pari passu charge on the Company’s immovable properties and all movable fixed assets both present and future as referred in Note No. 1.3 (i).

i) Additions to Plant and Machinery include Exchange Difference of Rs. 5.67 Crore (Previous Year Rs. 50.36 Crore) and Interest of Rs. Nil ( Previous Year Rs. 0.41 Crore).

ii) Depreciation for the year includes Rs.5.93 Crore charged to Retained Earnings ( Previous Year Rs. Nil) and depreciation on disposals and adjustments include excess provision for depreciation written back ofRs. 103.71 Crore. (Refer Note No. 3.3 ofNotes to Accounts)

10. i) Considering the uncertainty related to realisation, the following items are not considered to accrue till they are settled / sanctioned / received as the case may be: a) Insurance claims except specific claims stated separately b) Interest on receivables c) Electricity Refund ( Additional Supply Charges ).

ii) Upon petition filed by the Company regarding inter alia non implementation of Energy Banking Agreement (EBA) dated May 7, 2010 Maharashtra Electricity Regulatory Commission (MERC) had disallowed the petition and passed an order dated June 20, 2014 and subsequently confirmed the same by its order dated January 12, 2015. The Company has since appealed to Appellate Tribunal (APTEL) against this order. Based on legal advice, the Company, pending final disposal of the matter had accured EBA benefit aggregating to Rs. 49.97 Crore up to March 31, 2014, of which amount outstanding as on March 31, 2015 is Rs. 40.83 Crore, representing excess energy charges paid to Maharashtra State Electricity Distribution Company Limited (MSEDCL) on account of non availability of banking facility. There was no further accrual during the current financial year on account of temporary suspension of operation of power plant. *

* The Company, hitherto, provided depreciation in accordance with the Schedule XIV of the Companies Act,1956 based on the Straight Line Method. Part C of Schedule II of the Companies Act, 2013 permits to use estimated useful life for providing depreciation and accordingly the Company for the first time has adopted useful life, which is based on external experts’ report, for providing depreciation on Plant & Machinery located at Ahmednagar, Baramati and Jejuri from the date of acquisition of assets. The Company has also changed its depreciation policy effective from April, 01, 2014 for providing depreciation from Straight Line Method to Written Down Value Method. Consequent to the change in method of depreciation and the revision in depreciation calculation as per useful life of assets from the date of acquisition of assets and based on the experts’ opinion obtained on its treatment in the financial statements by the Company, excess depreciation provided till March 31, 2014 amounting to Rs. 103.71 Crore has been credited to the Statement of Profit and Loss.

Pursuant to Companies Act, 2013, becoming effective April 1, 2014, the Company has reworked depreciation with reference to the estimated useful life of the aforesaid Plant & Machinery based on technical evaluation and for other fixed assets based on the life prescribed under part C of Schedule II of the Companies Act, 2013. As a result, the charge of depreciation for the year is lower by Rs. 32.37 Crore. Further, in terms of Note 7(b) of schedule II of the Companies Act, 2013, in respect of assets whose life is already exhausted, carrying value as at April 1, 2014 of Rs. 5.93 Crore has been adjusted against the retained earnings.

# Provision for Doubtful Debts is relating to Subsidiary Company, Structo Hydraulics AB Sweden.

11. As per Accounting Standard 17, the Company has two segment viz “Seamless Tube and Steel”.

i) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as unallocable.

ii) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities which cannot be allocated to a segment on a reasonable basis have been included under “Unallocable Assets / Liabilities “.

12. Pending reconciliation / confirmations from Trade Receivables / Trade Payables, adjustments for differences, if any , would be made at the time of reconciliation or on receipt of confirmation. The management is of the opinion that the impact of such adjustments, if any, is not likely to be significant.

13. Dues to Micro, Small and Medium Enterprises

Disclosure as required by the Micro, Small and Medium Enterprises Act, 2006 ( Act ) is as given below, has been determined to the extent such parties have been identified on the basis of information available with the Company.

14. i) The Company had adopted Accounting Standard-11 “The effects of changes in Foreign Exchange Rates”, read with notifications issued by the Ministry of Corporate Affairs dated March 31, 2009, May 11, 2011 and December 29, 2011 and exercised the option to recognize exchange difference on long term monetary items related to Fixed Assets to the cost of Fixed Assets and the other long term monetary items ( other than those covered under “ Cash Flow Hedge “) to “Foreign Currency Monetary Item Translation Difference Account”. Accordingly the Company has accounted exchange differences as under :

a) Exchange difference related to acquisition of Capital Assets has been adjusted to respective Fixed Asset cost Rs 1.92 Crore Loss (Previous Year Rs.53.04 Crore Loss ).

b) Exchange difference loss amortised during the year Rs. 1.90 Crore (Previous Year Rs. 1.63 Crore ) from “Foreign Currency Monetary Item Translation Difference Account” and charged to the Statement of Profit and Loss and balance in the “Foreign Currency Monetary Item Translation Difference Account” as on March 31, 2015 is Rs. 9.52 Crore (Previous Year Rs. 9.78 Crore).

ii) The Company has recognised exchange difference arising on translation of foreign currency borrowing by following an appropriate hedge accounting policy and applying principles set out in Accounting Standard ( AS ) 30- “Financial Instrument Recognition and Measurement”. The objective of adopting hedge accounting is to ensure that the gain or losses of the hedging instrument is recognised in the Statement of Profit and Loss in same period when the gain or loss of hedged items is recognised in the Statement of Profit and Loss. The Company w.e.f. April 1, 2011 has designated borrowing in foreign currency, other than those utilised for capital expenditures and identified Long Term Loans, as hedge instrument to hedge its foreign currency risk of its firm commitments and highly probable forecast transactions ( of revenue streams ) to be accounted as cash flow hedge. During the year ,the net unrealised exchange difference in foreign currency borrowing, foreign currency receivables and payables aggregating to Rs. 30.32 Crore(Previous Year Rs. 20.73 Crore) has been recognised in Hedge Reserve Account.

iii) Had the Company not exercised the option under AS-11 as stated in para 3.11 (i) and not followed the accounting policy as stated in para 3.11 (ii) the Loss (net of tax) for the year would have been higher by Rs.3.43 Crore (Previous Year Rs.35.25 Crore), Gross Fixed Assets would have been lower by Rs.155.33 Crore (Previous Year Rs. 153.41 Crore) and consequently the Reserves and Surplus would have been lower by Rs.112.11 Crore (Previous Year Rs.109.70 Crore).

15. Related party Disclosure as required by Accounting Standard 18 is as under : -

a) Key Management Personnel

i) Mr. Salil Taneja -Chief Executive Officer (upto November 30, 2014)

ii) Mr. B.R. Taneja -Managing Director (w.e.f December 01,2014)

iii) Mr. Rajiv Goel-Chief Financial Officer

iv) Mr. O.P. Kakkar- Non-Executive Director

b) Subsidiary Companies i) ISMT Enterprises SA, Luxembourg

ii) Structo Hydraulics AB, Sweden

iii) ISMT Europe AB, Sweden

iv) Structo (UK) Limited, United Kingdom

v) Tridem Port and Power Company Private Limited.

vi) Nagapattinam Energy Private Limited.

vii) Best Exim Private Limited.

viii) Success Power and Infraprojects Private Limited

ix) Marshal Microware Infrastructure Development Company Private Limited.

x) PT ISMT Resources, Indonesia

xi) Indian Seamless Inc, USA.

c) Associate Companies

i) Indian Seamless Enterprises Limited

ii) Taneja Aerospace and Aviation Limited

iii) Structo Hydraulics India Private Limited

iv) Lighto Technologies Private Limited .

d) Details of Transaction

i) Key Management Personnel

Remuneration for the year Rs. 2.38 Crore (Previous Year Rs.2.09 Crore)

ii) Subsidiary and Associate Companies

a) Sale of finished goods to Subsidiary Companies include sales to Indian Seamless Inc, USA Rs. 108.10 Crore (Previous Year Rs. 59.31 Crore), Stracto Hydraulics AB Rs. 24.39 Crore (Previous Year Rs. 33.57 Crore) ,ISMT Europe AB Rs. 41.83 Crore (Previous Year Rs. 42.24 Crore) . Sales of finished goods to Associate Companies include sales to Indian Seamless Enterprises Limited Rs. 6.02 Crore (Previous Year Rs. 9.45 Crore).

b) Purchases from Subsidiary Companies include scrap purchased from Structo Hydraulics AB Rs. 0.61 Crore (Previous Year Rs. 0.32 Crore). Purchases from Associate Companies include spares purchased from Taneja Aerospace and Aviation Limited Rs. 0.42 Crore (Previous Year Rs.0.42 Crore).

c) Commission on sales paid to Subsidiary Companies include paid to ISMT Europe AB, Rs. 1.56 Crore (Previous Year Rs. 0.96 Crore) and Indian Seamless Inc, USA Rs. 1.02 Crore ( Previous Year Rs. 1.21 Crore).

d) Lease rent paid to Associate Companies include paid to Taneja Aerospace and Aviation Limited Rs. Nil ( Previous Year Rs. 2.40 Crore) and Indian Seamless Enterprises Limited Rs. 0.30 Crore ( Previous Year Rs. 0.30 Crore).

e) Quality claims of Subsidiary Companies include paid to Structo Hydraulics AB Rs. 2.38 Crore ( Previous Year Rs. 6.72 Crore),ISMT Europe AB Rs. 1.12 Crore ( Previous Year Rs.0.95 Crore), Indian Seamless Inc, USA Rs. 7.20 Crore ( Previous year Rs.0.52 Crore ) and reimbursement of expenses paid to Indian Seamless Inc, USA Rs. 3.64.Crore on account of overseas freight and other clearing charges (Previous Year Rs.3.68 Crore).

f) Rent paid to Subsidiary Company Tridem Port and Power Company Private Limited Rs. 0.01 Crore ( Previous Year Rs. 0.01 Crore).

g) Inter corporate deposits ( net) to Associate Company Taneja Aerospace and Aviation Limited Rs. (8.05) Crore (Previous Year Rs. (3.95) Crore).

h) Interest received from Associate Company Taneja Aerospace and Aviation Limited Rs. 0.46 Crore ( Previous Year Rs. 1.14 Crore).

i) Interest paid to Associate Company Taneja Aerospace and Aviation Limited Rs. 0.13 Crore ( Previous Year Rs. Nil).

j) Investment in Subsidiary Company include in Tridem Port and Power Company Private Limited Rs. 0.04 Crore ( Previous Year Rs. 2.50 Crore) and Indian Seamless Inc, USA Rs. Nil (Previous Year Rs. 1.78 Crore).

k) Advances given to Subsidiary Company Tridem Port and Power Company Private Limited Rs. 3.08 Crore for its Port and Power Project ( Previous Year Rs. 4.64 Crore).

l) Advance received from Subsidiary Company include from Structo Hydraulics AB towards sale of finished goods amounting to Rs. Nil (Previous Year Rs. 10.88 Crore), Indian Seamless Inc, USA Rs. Nil ( Previous year Rs. 14.38 Crore).

m) Unsecured Loan received from Associate Company Indian Seamless Enterprises Limited Rs. 6.75 Crore (Previous Year Rs. Nil).

n) Provision for doubtful debts of Rs. 47.24 Crore (Previous Year Rs. Nil) is relating to Subsidiary Company Structo Hydraulics AB.

3.13 The Accounting Standard - 15 (Revised 2005) on “ Employee Benefits ‘’ has been adopted by the Company effective from April 1, 2007.

During the year, Company has recognised the following amounts in the financial Statements : i) Defined Contribution Plan :

16. The Company has recognized the following amounts as an expense and included under the head “ Employee Benefits Expense” - Contribution to Provident and other Fund :

Rs. in Crore

Particulars 2014-15 2013-14

a) Employer's Contribution to Provident Fund 5.33 5.28 and Employee Pension Scheme

b) Employer’s Contribution to Superannuation 2.96 3.16 Fund

In respect of Provident Fund Trust set up by the Company, there is no deficit of interest shortfall with regards to future obligation arising due to interest shortfall (i.e. government interest to be paid on the Provident Fund Scheme exceeding rate of interest earned on investment), pending issuance of the Guidance Note from Actuarial Society of India, the actuarial liability against the same cannot be reliably measured and quantified.

17. During the year ,based on valuation reports obtained, the Company has revalued its Leasehold Land located at Ahmednagar and Baramati. Additions so made, due to revaluation, in the leasehold lands amounting to Rs. 210.46 Crore has been credited to Revaluation Reserve. Depreciation provided on the revalued amount of Rs.0.78 Crore has been transferred from Revaluation Reserve to General Reserve. Similarly additional depreciation attributable to fair value adjustments consequent to Scheme of Arrangement sanctioned by the Hon’ble High court,Mumbai between The Indian Seamless Metal Tubes Limited and the Company amounting to Rs. 4.49 Crore has been transferred from Amalgamation Reserve to General Reserve.

18. The Company has Minimum Alternate Tax (MAT) credit entitlement as at March 31,2015 of Rs. 91.44 Crore, which is allowed to be carried forward for a period of ten years from the year in which MAT was paid and will lapse thereafter. Accordingly, the unabsorbed MAT credit shall be provided in the Statement of Profit and Loss to the extent of lapse of MAT credit in respective years.

19. The Company has invested Rs. 48.43 Crore in tis subsidiary ISMT Enterprises, S. A. Luxembourg which in turns holds 100% investment in Structo Hydraulics AB, Sweden (SHAB). The Company has given a corporate guarantee of Rs. 31.30 Crore (USD 5 Million) for loan availed by SHAB. The net recoverable on account of supplies made by the Company to SHAB is Rs. 55.62 Crore, of which Company has provided for the entire overdue reveivables of Rs. 47.24 Crore as doubtful debts and the balance of Rs. 8.38 Crore is collectible. No provision. however, has been made in respect of temporary diminution in the value of investment made in ISMT Enterprises which is in the nature of forward integration and considered Strategic and Long Term.

20. Previous Year figures have been regrouped and reclassified wherever necessary to conform to the Current Year Classification.


Mar 31, 2014

Security

i) Term Loans of Rs. 347.48 Crore (including current maturities of Rs. 38.20 Crore)(Previous Year Rs. 130.30 Crore including current maturities of Rs. 27.83 Crore) are stipulated to be secured by a first charge ranking pari passu on the Company''s immovable properties and movable fixed assets both present and future with other term lenders, excluding term loan lenders where exclusive charge on movable fixed assets as mentioned in clause (iii) has been stipulated and assets of Captive Power Project of the Company located at Chandrapur district as mentioned in clause (v). These loans are further stipulated to be secured by a second charge ranking pari passu by way of hypothecation with other term lenders on the current assets of the Company on which the first pari passu charge is stipulated to be covered in favour of consortium of banks as mentioned in Note No. 1.6.

ii) Term Loans of Rs. 270.91 Crore ( including current maturities of Rs.105.50 Crore ) (Previous Year Rs. 316.15 Crore including current maturities of Rs. 89.75 Crore) are stipulated to be secured by a first charge ranking pari passu on the Company''s immovable properties and movable fixed assets both present and future with other term lenders, excluding term loans lenders where exclusive charge on movable fixed assets as mentioned in clause (iii) has been stipulated and assets of Captive Power Project of the Company located at Chandrapur district as mentioned in clause (v).

iii) Term Loans of Rs. 206.13 Crore ( including current maturities of Rs. 114.71 Crore) (Previous Year Rs. 248.95 Crore including current maturities of Rs.64.63 Crore) are stipulated to be secured by exclusive charge on the equipment finance. Out of above, term loan of Rs.80.09 Crore is further stipulated to be secured with the land appurtenant thereto

iv) Term Loans of Rs. Nil (including current maturities ofRs. Nil) (Previous Year Rs. 11.15 Crore including current maturities of Rs. 11.15 Crore) are stipulated to be secured by first charge on the entire fixed assets ranking pari passu with other term lenders excluding term loans lenders where exclusive charge on movable fixed assets as mentioned in clause (iii) and (v) has been stipulated

v) Term Loans of Rs. 136.92 Crore (including current maturities of Rs.29.79 Crore) (Previous Year Rs. 136.71 Crore including current maturities of Rs.17.12 Crore) are stipulated to be secured by first charge ranking pari passu on the Company''s immovable properties and movable fixed assets relating to Captive Power Projects of the Company located in Chandrapur district.

vi) Term Loan of Rs.38.48 Crore (including current maturities of Rs.Nil) (Previous Year Rs.39.64 Crore including current maturities of Rs.Nil) is secured by first charge ranking pari passu by hypothecation in respect of current assets of the Company present and future and are further secured by a second pari passu charge on the Company''s immovable properties and all movable fixed assets both present and future as referred in Note No.(i) above.

vii) Finance Lease Obligation is secured by Hypothecation of Assets taken under Finance Lease.

viii) Maturity Schedule

CONTINGENT LIABILITIES AND COMMITMENTS

(To the extent not provided for) Rs. In Crore

Particulars As at As at March 31, 2013 March 31, 2014

i) Contingent Liabilities

a) Claims against the Company not acknowledged as debt

Sales Tax 12.16 12.17 Income Tax disputed by the Company 2.88 0.20 Excise and Customs Duty 32.08 40.98 Others 10.54 9.42

b) Corporate Guarantees 33.06 27.20

c) Bills discounted on behalf of third party 64.62 74.70

ii) Commitments

Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) 6.44 7.72

i) Considering the uncertainty related to realisation, the following items are not considered to accrue till they are settled / sanctioned / received as the case may be: a) Insurance claims except specific claims stated separately b) Interest on receivables c) Electricity Refund (Additional Supply Charges).

ii) Upon petition filed by the Company regarding non implementation of Energy Banking Agreement (EBA) dated May 7, 2010, Maharashtra Electricity Regulatory Commission (MERC) had passed an interim order dated May 13, 2013 inter alia restoring the banking. This order was challanged by Maharashtra State Electricity Distribution Company Limited (MSEDCL) on grounds of jurisdiction before the Appellate Tribunal for Electricity after being turned down by High Court at Bombay, which the Tribunal had remanded back to MERC after setting aside the above order. MERC has now passed an order dated December 3, 2013, confirming that they have jurisdiction to stipulate banking, Based on Legal advice, the Company, pending final disposal of the petition, has continued to accrue Banking Credit as per EBA Rs. 20.03 Crore (Previous Year Rs. 29.94 Crore), cumulative Rs. 49.97 Crore, representing excess energy charges paid to MSEDCL on account of non availability of banking facility.

Exceptional Item (Others) includes

* During the year the Company has received payment of Rs. 134.05 Crore in relation to an Arbitration case initiated by the Company against one of its equipment suppliers. The Company has adjusted Rs. 34.01 Crore, being relevant excess costs incurred during the year and Rs. 34.14 Crore (Previous Year Rs. 7.84 Crore) on account of legal and other expenses incurred against the settlement amount. The net balance amount of Rs. 65.90 Crore is disclosed as a credit item under "Exceptional Items".

As per Accounting Standard 17, the Comoany has two segment viz "Seamless Tube and Steel".

i) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as unallocable.

ii) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities which cannot be allocated to a segment on a reasonable basis have been included under "Unallocable Assets / Liabilities".

Pending reconciliation / confirmations from Trade Receivables / Trade Payables, adjustments for differences, if any , would be made at the time of reconciliation or on receipt of confirmation. The management is of the opinion that the impact of such adjustments, if any, is not likely to be significant.

Dues to Micro, Small and Medium Enterprises

The information as required to be disclosed under Schedule VI of the Companies Act, 1956 w.r.t. Micro and Small Enterprises under the Micro, Small and Medium Enterprises Act, 2006 ( Act ) is as given below, has been determined to the extent such parties have been identified on the basis of information available with the Company.

i) The Company had adopted Accounting Standard-11 "The effects of changes in Foreign Exchange Rates", read with notifications issued by the Ministry of Corporate Affairs dated March 31, 2009, May 11, 2011 and December 29, 2011 and exercised the option to recognize exchange difference on long term monetary items related to Fixed Assets to the cost of Fixed Assets and the other long term monetary items (other than those covered under "Cash Flow Hedge") to "Foreign Currency Monetary Item Translation Difference Account". Accordingly the Company has accounted exchange differences as under :

a) Exchange difference related to acquisition of Capital Assets has been adjusted to respective Fixed Asset cost Rs. 53.04 Crore Loss (Previous Year Rs.26.55 Crore Loss).

b) Exchange difference loss amortised during the year Rs. 1.63 Crore (Previous Year Rs. 0.97 Crore) from "Foreign Currency Monetary Item Translation Difference Account" and charged to the Statement of Profit and Loss and balance in the "Foreign Currency Monetary Item Translation Difference Account" as on March 31, 2014 is Rs. 9.78 Crore (Previous Year Rs. 6.75 Crore).

ii) The Company has recognised exchange difference arising on translation of foreign currency borrowing by following an appropriate hedge accounting policy and applying principles set out in Accounting Standard (AS) 30- "Financial Instrument Recognition and Measurement". The objective of adopting hedge accounting is to ensure that the gain or losses of the hedging instrument is recognised in the Statement of Profit and Loss in same period when the gain or loss of hedged items is recognised in the Statement of Profit and Loss. The Company w.e.f. April 1, 2011 has designated borrowing in foreign currency, other than those utilised for capital expenditures and identified Long Term Loans, as hedge instrument to hedge its foreign currency risk of its firm commitments and highly probable forecast transactions (of revenue streams) to be accounted as cash flow hedge. During the year ,the net unrealised exchange difference in foreign currency borrowing, foreign currency receivables and payables aggregating to Rs. 20.73 Crore (Previous Year Rs. 15.44 Crore) has been recognised in Hedge Reserve Account.

iii) Had the Company not exercised the option under AS-11 as stated in para 3.11 (i) and not followed the accounting policy as stated in para 3.11 (ii) the Loss (net of tax) for the year would have been higher by Rs.35.25 Crore (Previous Year Rs.4.95 Crore), Gross Fixed Assets would have been lower by Rs.153.41 Crore (Previous Year Rs. 100.37 Crore) and consequently the Reserves and Surplus would have been lower by Rs.109.70 Crore (Previous Year Rs. 74.51 Crore).

Related party Disclosure as required by Accounting Standard 18 is as under:-

a) Key Management Personnel

i) Mr. Salil Taneja - Chief Executive Officer

ii) Mr. Rajiv Goel - Chief Financial Officer

iii) Mr. B. R. Taneja - Non-Executive Director

iv) Mr. O. P. Kakkar - Non-Executive Director

b) Subsidiary Companies

i) ISMT Enterprises SA, Luxembourg

ii) Structo Hydraulics AB, Sweden

iii) ISMT Europe AB, Sweden

iv) Structo (UK) Limited, United Kingdom

v) Tridem Port and Power Company Private Limited.

vi) Nagapattinam Energy Private Limited.

vii) Best Exim Private Limited. (w.e.f March 26, 2014)

viii) Success Power and Infraprojects Private Limited.(w.e.f March 26, 2014)

ix) Marshal Microware Infrastructure Development Company Private Limited. (w.e.f March 26, 2014)

x) PT ISMT Resources, Indonesia

xi) Indian Seamless Inc, USA.

c) Associate Companies

i) Indian Seamless Enterprises Limited

ii) Taneja Aerospace and Aviation Limited

iii) Structo Hydraulics India Private Limited

iv) Lighto Technologies Private Limited

d) Details of Transaction

i) Key Management Personnel

Remuneration paid for the year Rs. 2.09 Crore (Previous Year Rs.2.16 Crore)

ii) Subsidiary and Associate Companies

a. Sale of finished goods to Subsidiary Companies include sales to Indian Seamless Inc, USA Rs. 59.31 Crore (Previous Year Rs. 60.06 Crore), Structo Hydraulics AB Rs. 33.57 Crore ( Previous Year Rs. 30.45 Crore), ISMT Europe AB Rs. 42.24 Crore (Previous Year Rs. 35.78 Crore). Sales of finished goods to Associate Companies include sales to Indian Seamless Enterprises Limited Rs. 9.45 Crore (Previous Year Rs. 17.40 Crore) and sales to Indian Seamless Inc, USA Rs.Nil ( Previous Year Rs. 5.37 Crore ).

b. Purchases from Subsidary Companies include scrap purchases from Structo Hydraulics AB Rs. 0.32 Crore ( Previous Year Rs. 0.91 Crore)). Purchases from Associate Companies include spares from Taneja Aerospace and Aviation Limited Rs. 0.42 Crore ( Previous Year Rs.0.49 Crore)

c. Commission on sales paid to Subsidiary Companies ISMT Europe AB, Rs. 0.96 Crore ( Previous Year Rs. 1.78 Crore) and Indian Seamless Inc, USA Rs. 1.21 Crore (Previous Year Rs. 0.60 Crore).

d. Lease rent paid to Associate Companies Taneja Aerospace and Aviation Limited Rs. 2.40 Crore (Previous Year Rs. 2.40 Crore) and Indian Seamless Enterprises Limited Rs. 0.30 Crore (Previous Year Rs. 0.30 Crore).

e. Quality claims paid to Subsidiary Companies Structo Hydraulics AB Rs. 6.72 Crore (Previous Year Rs. 0.42 Crore), ISMT Europe AB Rs. 0.95 Crore (Previous Year Rs.0.10 Crore), Indian Seamless Inc, USA Rs. 0.52 Crore (Previous Year Rs. Nil) and reimbursement of expenses paid to Indian Seamless Inc, USA Rs. 3.68 Crore on account of overseas freight and other clearing charges (Previous Year Rs. 3.55 Crore).

f. Rent paid to Subsidiary Company Tridem Port and Power Company Private Limited Rs. 0.01 Crore (Previous Year Rs. 0.01 Crore) .

g. Inter corporate deposits given to Associate Companies Taneja Aerospace and Aviation Limited Rs. (3.95) Crore (Previous Year Rs. (2.90) Crore) and Indian Seamless Enterprises Limited Rs. Nil ( Previous Year Rs. 5.70 Crore).

h. Interest received from Associate Companies Taneja Aerospace and Aviation Limited Rs. 1.14 Crore (Previous Year Rs. 2.02 Crore) and Indian Seamless Enterprises Limited Rs. Nil (Previous Year Rs. 0.23 Crore).

i. Investment in Subsidiary Companies Tridem Port and Power Company Private Limited Rs. Nil (Previous Year Rs. 2.50 Crore) and Indian Seamless Inc, USA Rs. Nil (Previous Year Rs. 1.78 Crore).

j. Dividend of 2012-13 is paid to Associate Company Indian Seamless Enterprises Limited Rs. Nil (Previous Year Rs. 4.17 Crore).

k. Advances given to Subsidiary Company Tridem Port and Power Company Private Limited Rs. 4.64 Crore (Previous Year Rs. 22.28 Crore)

l. Advance received from Subsidiary Company Structo Hydraulics AB towards sale of finished goods amounting to Rs. 10.88 Crore (Previous Year Rs. 14.96 Crore), Indian Seamless Inc, USA Rs. 14.38 Crore (Previous Year Rs. Nil.).

The Company has been advised that the Amalgamation Reserve created upon recording of fair value of assets in terms of the Scheme of Arrangement sanctioned by the Hon''ble High Court, Bombay between The Indian Seamless Metal Tubes Limited and the Company is similar in nature to a Revaluation Reserve and therefore can be adjusted against the additional depreciation attributable to fair value adjustment. Accordingly during the year the Company has adjusted depreciation of Rs. 6.72 Crore for the year ended March 31, 2014 ( Previous Year Rs. 6.72 Crore) against the Amalgamation Reserve.

The Company has invested Rs. 48.43 Crore in its subsidiary ISMT Enterprises, S. A. Luxembourg which in turns holds 100% investment in Structo Hydraulics AB, Sweden (SHAB). The Company has given a corporate guarantee of Rs. 18.03 Crore (USD 3 Million) for loan availed by SHAB. The net recoverable on account of supplies by the Company to SHAB is Rs. 53.85 Crore. While SHAB had cash losses and the net worth of SHAB is eroded. The management is of the opinion that the investment made in ISMT Enterprises group is strategic and as a forward integration in the value chain of core business of the Company and the diminution is temporary in natutre, as such no provision for the same is considered necessary.

In the opinion of the management, based on the projected future taxable profits, the outstanding MAT Credit entitlement as at March 31, 2014 of Rs. 91.44 Crore will be utilized within the stipulated time period prescribed as per the provisions of Income Tax Act, 1961. However in case of inadequate profit, difference will be charged to respective years Statement of Profit and Loss as per the provisions of Income Tax Act,1961.

Previous Year figures have been regrouped and reclassified wherever necessary to conform to the Current Year Classification.

Notes:

1. The accounts of subsidiaries have been re-stated in line with Indian GAAP and as required by Accounting Standard 21 issued by The Institute of Chartered Accountants of India, wherever applicable.

2. The Financial Statement of the subsidiaries whose reporting currency are other than INR are converted into Indian Rupees on the basis of following exchange rates.


Mar 31, 2013

1.1 CONTINGENT LIABILITIES AND COMMITMENTS (To the extent not provided for)

Rs in Crore

Particulars As at As at March 31,2013 March 31,2012

i) Contingent Liabilities

a) Claims against the Company not acknowledged as debt

Sales Tax 12.17 12.17

Income tax disputed by the Company 0.20 0.20

Excise Duty 40.98 38.50

Others 9.42 8.94

b) Corporate / Guarantees 27.20 49.36

c) Bills discounted on behalf of third party 74.70 37.06

ii) Commitments

Capital Commitments

Estimated amount of contracts remaining to be executed on 7.72 23.12

Capital Account and not provided for (Net of Advances)

1.2 i) Considering the uncertainty related to realisation, the following items are not considered to accrue till they are settled 7 sanctioned / received as the case may be: a) Insurance claims except specific claims stated separately b) Interest on receivables c) Electricity Refund (Additional Supply Charges).

ii) The Company had recognised insurance claim amounting to Rs. 14.98 Crore in the Financial Year 2011-12. After accounting for receipt of part claim and credit for rejected material, balance amount of Rs. 2.45 Crore is yet to be received from the Insurance Company. The Company expects that the said claim would be settled by the Insurance Company and there would be no material difference in the settlement of the claim.

iii) During the Finacial Year 2011-12 the Company had accrued Rs. 9.88 Crore as Regulatory Liability Charges to be received from Maharashtra State Electricty Distribution Company Limited (MSEDCL) out of it Rs. 5.42 Crore have been received during the year and the balance amount outstanding as on March 31, 2013 is Rs. 4.46 Crore.

iv) The Company had entered in to Energy Banking Agreement (EBA) dated May 7,2010 with Maharashtra State Electricity Distribution Company Limited (MSEDCL) which was not implemented by MSEDCL while granting Open Access permission. Upon petition filed by the Company in this matter, an interim order has been passed by Maharashtra Electricity Regulatory Comission (MERC), staying Open Access circular No. 170 of MSEDCL and making the EBA operative. Consequent on the order of MERC and based on the legal opinion, the Company has accounted refund claim of Rs. 29.94 Crore to representing excess energy charges paid to MSEDCL on account of non availability of banking facility.

1.3 As per Accounting Standard 17, the Company has two segment viz "Seamless Tube and Steel".

i) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as unallocable.

ii) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities which cannot be allocated to a segment on a reasonable basis have been included under "Unallocable Assets / Liabilities".

1.4 Pending reconciliation / confirmations, from Debtors / Creditors, the adjustments for differences, if any, would be made at the time of reconcilation or on receipt of confirmation. The management is of the opinion that the impact of such adjustments, if any, is not likely to be significant.

1.5 i) The Company had adopted Accounting Standard-11 "The effects of changes in Foreign Exchange Rates", read with notifications issued by the Ministry of Corporate Affairs dated March 31,2009, May 11, 2011 and December 29,2011 and exercised the option to recognize exchange difference on long term monetary items related to Fixed Assets to the cost of Fixed Assets and the other long term monetary items (other than those covered under "Cash Flow Hedge") to "Foreign Currency Monetary Item Translation Difference Account". Accordingly the Company has accounted exchange differences as under :

a) Exchange difference related to acquisition of Capital Assets has been adjusted to respective Fixed Asset cost Rs. 26.55 Crore Loss (Previous Year Rs. 51.49 Crore Loss).

b) Exchange difference loss amortised during the year Rs. 0.97 Crore (Previous Year Rs. 0.63 Crore) from "Foreign Currency Monetary Item Translation Difference Account" and charged to Statement of Profit and Loss and balance in the "Foreign Currency Monetary Item Translation Difference Account" as on March 31, 2013 is Rs. 6.75 Crore (Previous Year Rs. 5.02 Crore).

ii) The Company has recognised exchange difference arising on translation of foreign currency borrowing by following an appropriate hedge accounting policy and applying principles set out in Accounting Standard (AS) 30- "Financial Instrument Recognition and Measurement". The objective of adopting hedge accounting is to ensure that the gain or losses of the hedging instrument is recognised in the Statement of Profit and Loss in same period when the gain or loss of hedged items is recognised in the Statement of Profit and Loss. The Company w.e.f. April 1, 2011 has designated borrowing in foreign currency, other than those utilised for capital expenditures and identified Long Term Loans, as hedge instrument to hedge its foreign currency risk of its firm commitments and highly probable forecast transactions (of revenue streams) to be accounted as cash flow hedge. During the year, the net unrealised exchange difference in foreign currency borrowing aggregating to Rs. 15.44 Crore (Previous Year Rs. 31.09 Crore) has been recognised in Hedge Reserve Account.

iii) Had the Company not exercised the option under AS-11 as stated in para 3.11 (i) and not followed the accounting policy as stated in para 3.11 (ii), the Loss (net of tax) for the year would have been higher by Rs. 28.79 Crore (Previous Year Rs. 56.74 Crore), Gross Fixed Assets would have been lower by Rs. 100.37 Crore (Previous Year Rs. 73.82 Crore) and consequently the Reserves and Surplus would have been Lower by Rs. 74.51 Crore (Previous Year Rs. 71.13 Crore).

1.6 i) Related party Disclosure as required by Accounting Standard 18 is as under : -

a) Key Management Personnel i) Mr. Salil Taneja - Chief Executive Officer

ii) Mr. B.R. Taneja - Non-Executive Director iii) Mr. Rajiv Goel - Chief Financial Officer

iv) Mr. Nirmal Chandra - President (Project & Product Development)

(up to November 30, 2012) v) Mr. O. P. Kakkar - Non-Executive Director (w.e.f. December 1, 2012)

b) Subsidiary Companies i) ISMT Enterprises SA, Luxembourg

ii) Structo Hydraulics AB, Sweden

iii) ISMT Europe AB, Sweden

iv) Structo (UK) Limited, United Kingdom

v) Structo Hydraulics India Private Limited (up to December 4, 2012)

vi) Tridem Port and Power Company Private Limited

vii) Nagapattinam Energy Private Limited

viii) PT ISMT Resources, Indonesia

ix) Indian Seamless Inc., USA (w.e.f. June 12, 2012)

c) Associate Companies i) Indian Seamless Enterprises Limited

ii) Taneja Aerospace and Aviation Limited

iii) Structo Hydraulics India Private Limited (w.e.f. December 5, 2012)

iv) Indian Seamless Inc., USA (up to June 11, 2012)

v) Lighto Technologies Private Limited

d) Details of Transaction i) Key Management Personnel

Remuneration paid for die year Rs. 2.16 Crore (Previous Year Rs. 2.48 Crore) ii) Subsidiary and Associate Companies

Year Rs. 2.10 Crore) and purchases of Asset Rs. Nil (Previous Year Rs. 19.49 Crore). Purchases from Associate Companies include spares from Taneja Aerospace and Aviation Limited Rs. 0.49 Crore (Previous Year Rs. 0.13 Crore).

c) Commission on sales paid to Subsidiary Companies ISMT Europe AB, Rs. 1.78 Crore (Previous Year Rs. 3.85 Crore) and Indian Seamless Inc, USA Rs. 0.60 Crore (Previous Year Rs. Nil).

d) Lease rent paid to Associate Companies Taneja Aerospace and Aviation Limited Rs. 2.40 Crore (Previous Year Rs. 2.40 Crore) and Indian Seamless Enterprises Limited Rs. 0.30 Crore (Previous Year Rs. 0.30 Crore).

e) Quality claims paid to Subsidiary Companies Sttucto Hydraulics AB Rs. 0.42 Crore (Previous Year Rs, 1.82 Crore), ISMT Europe AB Rs. 0.10 Crore Previous Year Rs. 1.09 Crore) and reimbursement of expenses paid to Indian Seamless Inc, USA Rs. 3.55 Crore on account of overseas freight and other clearing charges (Previous Year Rs. Nil).

f) Rent paid to Subsidiary Company Tridem Port and Power Company Private Limited Rs. 0.01 Crore (Previous Year Rs. 0.01 Crore).

g) Inter corporate deposits given to Associate Companies Taneja Aerospace and Aviation Limited Rs. (2.90) Crore (Previous Year Rs. 2.15 Crore) and Indian Seamless Enterprises Limited Rs. 5.70 Crore (Previous Year Rs. 1.00 Crore).

h) Interest received from Associate Companies Taneja Aerospace and Aviation Limited Rs. 2.02 Crore (Previous Year Rs. 2.26 Crore) and Indian Seamless Enterprises Limited Rs. 0.23 Crore (Previous Year Rs. 0.07 Crore).

i) Investment in Subsidiary Companies Tridem Port and Power Company Private Limited Rs. 2.50 Crore (Previous Year Rs. Nil) and Indian Seamless Inc, USA Rs. 1.78 Crore (Previous Year Rs. Nil).

j) Dividend of 2011-12 is paid to Associate Company Indian Seamless Enterprises Limited Rs. 4.17 Crore (Previous Year Rs. 6.90 Crore).

k) Loans and Advances are given to Subsidiary Company Tridem Port and Power Company Private Limited Rs. 22.28 Crore (Previous Year Rs. 28.45 Crore).

1) Advance received from Subsidiary Company Structo Hydraulics AB towards sale of finished goods amounting to Rs. 14.50 Crore (Previous Year Rs. 6.25 Crore). * ¦

1.8 The Accounting Standard - 15 (Revised 2005) on "Employee Benefits" has been adopted by the Company effective from April 1,2007.

During the year, Company has recognised the following amounts in the financial Statements :

i) Defined Contribution Plan :

The Company has recognized the following amounts as an expense and included under the head " Personnel Cost" - Contribution to Provident and other Fund : , 3.20 The Company has invested Rs. 48.43 Crore in its subsidiary ISMT Enterprises, S. A. Luxembourg which in turns holds 100% investment in Structo Hydraulics AB, Sweden (SHAB). Hie Company has given a corporate gurantee of Rs. 27.20 Crore (USD 5 Million) for loan availed by SHAB. The net recoverable on account of supplies by the Company to SHAB is Rs. 27.98 Crore. While SHAB had cash profit in the Previous Year, it has incurred cash loss in the current year and the net worth of SHAB is eroded. The management is of the opinion that the investment made in ISMT Enterprises group is strategic and with a long term view as a forward integration in the value chain of core business of the Company and hence no provision for the same is considered necessary.

1.9 Previous Year figures have been regrouped and reclassified wherever necessary to conform to the Current Year Classification.


Mar 31, 2012

Security

i) Term Loans of Rs. 142.19 Crore (including current maturities of Rs. 36.78 Crore) (Previous year Rs. 111.67 Crore including current maturities of Rs.61.78 Crore) are stipulated to be secured by a first charge ranking pari passu on the Company's immovable properties and movable fixed assets both present and future with other term lenders, excluding term loan lenders where exclusive charge on movable fixed assets as mentioned in clause (iii) has been stipulated and assets of captive power project ofthe Company located at Chandrapur district as mentioned in clause (v). These loans are further stipulated to be secured by a second charge ranking pari passuby way of hypothecation with other term lenders on the current assets ofthe Company on which the first pari passu charge is stipulated to be covered in favor of consortium banks as mentioned in Note No. 1.6.

ii) Term Loans of Rs. 393.45 Crore (including current maturities of Rs. 92.12 Crore) (Previous year Rs. 343.73 Crore including current maturities of Rs. 85.03 Crore) are stipulated to be secured by a first charge ranking pari passu on the Company's immovable properties and movable fixed assets both present and future with other term lenders, excluding term loans lenders where exclusive charge on movable fixed assets as mentioned in clause (iii) has been stipulated and assets of captive power project of the Company located at Chandrapur district as mentioned in clause (v).

iii) Term Loans of Rs. 213.89 Crore (including current maturities of Rs. 22.07 Crore) (Previous year Rs. 195.41 Crore including current maturities ofRs.18.15 Crore) are stipulated to be secured by exclusive charge on the equipment finance. Out of above, term loan of Rs.89.30 Crore is further stipulated to be secured with the land appurtenant thereto.

iv) Term Loans of Rs. 25.18 Crore (including current maturities of Rs. 14.39 Crore) (Previous year Rs. 40.73 Crore including current maturities of Rs. 15.00 Crore) are stipulated to be secured by first charge on the entire fixed assets ranking pari passu with other term lenders excluding term loans lenders where exclusive charge on movable fixed assets as mentioned in clause (i) and (iv) has been stipulated.

v) Term Loans of Rs. 144.79 Crore (including current maturities of Rs. 12.46 Crore) (Previous year Rs. 69.99 Crore) are stipulated to be secured by first charge ranking pari passu on the Company's immovable properties and movable fixed assets relating to captive power projects ofthe Company located in Chandrapur district.

vi) Term Loan of Rs. 38.62 Crore (including current maturities of Rs. Nil) (Previous Year Rs. 39.49 Crore) is secured by first charge ranking pari passu by hypothecation in respect of current assets of the Company present and future and are further secured by a second pari passu charge on the Company's immovable properties and all movable fixed assets both present and future as referred in Note No. (i) above.

vii) Finance Lease Obligation is secured by Hypothecation of Assets taken under Finance Lease.

Security

Above working capital borrowings from consortium banks are secured by first charge ranking pari passu by hypothecation in respect of current assets of the Company present and future and are further secured by a second pari passu charge on the Company's immovable properties and all movable fixed assets both present and future as referred in Note No. 1.3 (i)

* The Company had issued zero percent Foreign Currency Convertible Bonds (FCCB) aggregating to US $ 20 Million to finance inter-alia capital expenditure, repayment of foreign currency loan and acquisitions.

Out of the proceeds of the FCCB, the Company has utilised Rs. 85.66 Crore towards the object of the issue and the balance Rs. 0.07 Crore are lying in the Fixed Deposit Account with Bank.

# The amounts of unclaimed matured debentures including interest accrued and unclaimed dividends will be transferred to Investor Education and Protection Fund when due.

Other Liabilities include Buyer's Credit of Rs. 252.42 Crore (Previous Year Rs. 155.56 Crore).

1.1 CONTINGENT LIABILITIES AND COMMITMENTS (To the extent not provided for)

Rs, in Crore As on As on Particulars March 31,2012 March 31,2011

i) Contingent Liabilities

a) Claims against the Company not acknowledged as debt Sales Tax 12.17 12.17

Income Tax disputed by the Company 0.20 0.30

Excise Duty 38.50 31.29

Others 8.94 7.53

b) Corporate Guarantees 49.36 28.47

c) Bills discounted on behalf of third party 37.06 43.64

ii) Commitments

Capital Commitments

Estimated amount of contracts remaining to be executed on 23.12 47.34 capital account and not provided for (net of advances)

1.2 i) Considering the uncertainty related to realisation, the following items are not considered to accrue till they are settled / sanctioned / received as the case may be:

a) Insurance claims except specific claims stated separately b) Interest on receivables

c) Electricity Refund. (Additional Supply Charges)

ii) The insurance claim lodged during the year amounting to Rs. 14.98 Crore has been accounted on accrual basis as the Company expects that the said claim would be settled by the Insurance Company and there would be no material difference in the settlement of the claim.

iii) Considering the certainty of refund against Regulatory Liability Charges to be received from Maharashtra State Electricity Distribution Company Limited (MSEDCL), the Company has recognized the outstanding amount of refund of Rs. 9.88 Crore.

1.3 As per Accounting Standard 17, the Company has two segment viz. "Seamless Tube and Steel".

i) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as unallocable.

ii) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities which cannot be allocated to a segment on a reasonable basis have been included under "Un-allocable Assets / Liabilities ",

1.4 The Company, based on legal advice has transferred the balance in the Restructuring Reserve of Rs. NIL (Previous Year Rs. 12.93 Crore) towards diminution in value of deferred tax asset of erstwhile The Indian Seamless Metal Tubes Ltd., to the Statement of Profit and Loss. The said transfer is in terms of the Scheme of Arrangement having Appointed Date as April 01, 2004 between the erstwhile The Indian Seamless Metal Tubes Ltd. and the Company.

1.5 Dues of Micro, Small and Medium Enterprises

The information as required to be disclosed under Schedule VI of the Companies Act, 1956 w.r.t. Micro and Small Enterprises under the Micro, Small and Medium Enterprises Act, 2006 (Act) is as given below, has been determined to the extent such parties have been identified on the basis of information available with the Company.

1.6 i) The Company had adopted Accounting Standard-11 "The effects of changes in Foreign Exchange Rates", read with notification issued by the Ministry of Corporate Affairs dated March 31, 2009, May 11, 2011 and December 29, 2011 and exercised the option to recognize exchange difference on long term monetary items related to Fixed Assets to the cost of Fixed Assets and the other long term monetary items (other than those covered under "Cash Flow Hedge)" to "Foreign Currency Monetary Item Translation Difference Account" (FCMITDA). Accordingly the Company has accounted exchange differences as under:

a) Exchange difference loss of Rs. 51.49 Crore (Previous Year Gain of Rs. 0.49 Crore) related to acquisition of Capital Assets has been adjusted to respective Fixed Assets.

b) Exchange difference loss of Rs. 0.63 Crore (Previous Year Rs. 2.59 Crore) for the Current Year relating to long term monetary items has been charged to the Statement of Profit and Loss and the balance of Rs. 5.02 Crore (Previous Year Rs. NIL) has been carried over as on March 31,2012inFCMITDA.

ii) The Company has changed its accounting policy with regard to recognition of exchange difference arising on translation of foreign currency borrowing by following an appropriate hedge accounting policy and applying principles set out in Accounting Standard (AS) 30 - 'Financial Instrument Recognition and Measurement'. The objective of adopting hedge accounting is to ensure that the gain or losses of the hedging instrument is recognized in statement of profit and loss in same period when the gain or loss of hedged items is recognized in statement of profit and loss. The Company w.e.f. April 1, 2011 has designated borrowing in foreign currency other than those utilized for capital expenditures and identified Long Term Loans as hedge instrument to hedge its foreign currency risk of its firm commitments and highly probable forecast transactions (of revenue streams) to be accounted as cash flow hedge. During the year, the net unrealized exchange difference in foreign currency borrowing aggregating to Rs. 31.09 Crore has been recognized in Hedge Reserve Account

iii) Had the Company not exercised the option under AS-11 as stated in para 3.11 (i) and not changed the accounting policy as stated in para 3.11 (ii) the profit (net of tax) for the year would have been lower by Rs. 56.74 Crore (Previous Year Rs. 2.95 Crore), Gross Fixed Assets would have been lower by Rs. 73.82 Crore (Previous Year Rs. 22.33 Crore) and consequently the Reserves and Surplus would have been lower by Rs. 71.13 Crore (Previous Year Rs. 14.39 Crore).

a) Sale of finished goods include sales to Indian Seamless Inc., Rs. 56.22 Crore (Previous Year Rs. 17.99 Crore), Structo Hydraulics AB Rs. 23.78 Crore (Previous Year Rs. 59.93 Crore), ISMT Europe AB Rs. 53.08 Crore (Previous Year Rs. 38.80 Crore).

b) Purchases include scrap purchases from Structo Hydraulics AB Rs. 2.10 Crore (Previous Year Rs. 3.00 Crore) and purchases of Asset Rs. 19.49 Crore (Previous YearRs. 1.07 Crore).

c) Commission on sales paid to ISMT Europe AB, Rs. 3.85 Crore (Previous YearRs. 2.87 Crore).

d) Lease rent paid include paid to Taneja Aerospace and Aviation Ltd. Rs. 2.40 Crore (Previous YearRs. 2.40 Crore).

e) Quality claims include paid to Structo Hydraulics AB Rs. 1.82 (Previous Year Rs. 9.26 Crore), ISMT Europe AB Rs. 1.09 Crore (Previous Year Rs. 0.22 Crore).

f) Rent paid to Tridem Port and Power Company Pvt. Ltd. Rs. 0.01 Crore (Previous Year Rs. 0.01 Crore).

g) Inter corporate deposit include deposit given to Taneja Aerospace and Aviation Ltd. Rs. 2.15 Crore (Previous Year Rs. 4.32 Crore), Indian Seamless Enterprises Ltd. Rs. 1.00 Crore (Previous Year Rs. 5.00 Crore).

h) Interest received include received from Taneja Aerospace and Aviation Ltd. Rs. 2.26 Crore (Previous Year Rs. 1.36 Crore).

i) Investment include investment in ISMT Enterprises SA Rs. NIL (Previous Year Rs. 12.73 Crore), Tridem Port and Power Company Pvt. Ltd. Rs.NIL (Previous Year Rs. 1.50 Crore).

j) Dividend is paid to Indian Seamless Enterprises Ltd. Rs. 6.90 Crore (Previous Year Rs. 5.52 Crore).

k) Loans and advances are given to Tridem Port and Power Company Pvt. Ltd. Rs. 28.45 Crore (Previous Year Rs. 27.65 Crore).

1) Advance received against sales is from Structo Hydraulics AB Rs. 6.25 Crore (Previous Year Rs. NIL).

1.7 The Accounting Standard -15 (Revised 2005) on " Employee Benefits " has been adopted by the Company effective from April 01, 2007.

During the year, Company has recognised the following amounts in the financial Statements: i) Defined Contribution Plan:

In respect of Provident Fund Trust set up by the Company, there is no deficit of interest shortfall as on the date of Balance Sheet. With regards to future obligation arising due to interest shortfall (i.e. government interest to be paid on the Provident Fund Scheme exceeding rate of interest earned on investment), pending issuance of the Guidance Note from Actuarial Society of India, the actuarial liability against the same cannot be reliably measured and quantified.

1.8 Tax treatment of certain items was reviewed while filing the income tax return for the Assessment Year 2011-12 during the current year, resulting in a higher tax liability for the previous year. The difference between the provision for taxes made in the financial year 2010-11 accounts and actual tax liability as per income tax return amounting to Rs. 8.26 Crore has been accounted for as the tax liability in respect of earlier year. However, this has no impact on Statement of Profit and Loss as corresponding credit is available under MAT.

1.9 The Company has been advised that the Amalgamation Reserve created upon recording of fair value of assets in terms of the Scheme of Arrangement sanctioned by the Hon'ble High Court, Bombay between The Indian Seamless Metal Tubes Limited and the Company is similar in nature to a Revaluation Reserve and therefore can be adjusted against the additional depreciation attributable to fair value adjustment. Accordingly during the year the Company has adjusted depreciation of Rs. 6.72 Crore for the year ended March 31,2012 against the Amalgamation Reserve.

1.10 The Company has invested Rs. 48.43 Crore in its subsidiary ISMT Enterprises S. A., Luxembourg which in turns holds 100% investment inStructo Hydraulics AB, Sweden (SHAB), manufacturing Hydraulic Cylinder and Components. SHAB holds 100% investment in ISMT Europe AB, Sweden which has equity of SEK 10.10 million. ISMT Europe AB, is a trading company. The management is of the opinion that the investment in ISMT Enterprises group is strategic and with a long term view as a forward integration in the value chain of core business of the Company and the erosion of net worth is regarded as temporary in nature and no provision for diminution in the value of investment is considered necessary.

1.11 Previous Year figures have been regrouped and reclassified wherever necessary to conform to the Current Year Classification.


Mar 31, 2011

Rs. in Crore

As on As on

March 31, 2011 March 31, 2010

1) Contingent Liabilities not provided for in respect of

i) Claims against the Company not acknowledged as debt

a) Sales Tax 12.16 -

b) Income Tax-disputed by the Company 0.29 -

c) Excise Duty 31.29 23.03

d) Quality Claims by the Customers (Subsidiary Company) - 4.59

e) Others 7.51 4.71

ii) Bills Discounted on behalf of the third party 43.64 63.27

iii) Corporate Guarantees 28.47 26.77

2) Estimated amounts of contracts remaining to be executed on Capital Accounts Rs. 47.34 Crore (net of advances) (Previous Year Rs. 141.42 Crore).

3) Loans and Advances include interest free advances given by the Company in earlier years to Employees Welfare Funds aggregating to Rs. 3.25 Crore (Previous Year 3.90 Crore) for the benefit of designated employees pursuant to the proviso (b) to Section 77 (2) of the Companies Act, 1956.

4) Loans and Advances include loans to officers of the Company Rs. 19,825/- (Previous Year Rs. 24,925/-), (Maximum amount outstanding during the year Rs. 24,925/-, Previous Year Rs. 30,025/-).

5) Considering the uncertainty related to realisation, the following items are not considered to accrue till they are settled / sanctioned / received as the case may be : a) Insurance claims b) Interest on receivables c) Electricity Refund (Regulatory Liability Charges ).

6) As per the Accounting Standard 17, the company has two segment viz "Seamless Tube and Steel".

i) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as unallocable.

ii) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities which cannot be allocated to a segment on a reasonable basis have been included under ''Un-allocable Assets / Liabilities ''.

7) Other Liabilities include buyer's credit of Rs. 155.56 Crore (Previous Year Rs. 107.93 Crore).

8) The Company had issued zero percent Foreign Currency Convertible Bonds (FCCB) aggregating to US $ 20 Million as detailed hereunder, to finance inter-alia capital expenditure, repayment of foreign currency loan and acquisitions.

Bond Series No. of Bonds Price per Bond (in US $) Aggregate Value (in US $) Conversion price (in INR)

A 48,76,146 2.0508 10,000,000 92.00

B 36,68,648 2.7258 10,000,000 122.28

Each Bond in Series A and Series B would be convertible into one Equity Share of Rs. 5/- each fully paid any time until redemption i.e. after five years and one day from the date of allotment subject to terms and conditions of the Subscription. Unless previously redeemed or converted or purchased and cancelled as herein provided, the Company will redeem the Series A Bond and the Series B Bond along with the premium calculated at the rate of six months LIBOR plus 2% p.a. of their principal amount (the "Redemption Amount ") at the end of five years and one day from the date of issue and allotment of the said Series A Bonds and Series B Bonds i.e. on December 01, 2011.

Out of the proceeds of the FCCB, the Company has utilised Rs. 76.91 Crore towards the object of the issue and the balance Rs.12.01 Crore are lying in the Fixed Deposit Accounts with Bankers, including interest and exchange difference.

9) Security and other particulars of Secured Loans

(i) a) Term Loans of Rs. 112.16 Crore are stipulated to be secured by a first charge ranking pari passu on the Company's immovable properties and movable fixed assets both present and future with other term lenders, excluding term loan lenders where exclusive charge on moveable fixed assets as mentioned in clause (d) has been stipulated and assets of Captive Power project of the Company located at Chandrapur district as mentioned in clause (f). These loans are further stipulated to be secured by a second charge ranking pari passu by way of hypothecation with other term lenders on the current assets of the Company on which the first pari passu charge is stipulated to be created in favour of the Consortium Banks as mentioned in clause (c) below.

b) Term Loans of Rs. 344.85 Crore are stipulated to be secured by a first charge ranking pari passu on the Company's immovable properties and movable fixed assets both present and future with other term lenders, excluding term loans where exclusive charge on moveable fixed assets as mentioned in clause (d) has been stipulated and assets of Captive Power project of the company located at Chandrapur district as mentioned in clause (f) below.

c) Working Capital borrowings from the Consortium Banks are stipulated to be secured by a first charge ranking pari passu by hypothecation in respect of the current assets of the Company and are further stipulated to be secured by a second pari passu charge on the Company's immovable properties and all the movable fixed assets both present and future.

d) Foreign Currency Term Loans of Rs. 195.40 Crore are stipulated to be secured by an exclusive charge on the equipment financed. Out of the above, term loan of Rs. 87.57 Crore is further stipulated to be secured with the land appurtenant thereto.

e) Foreign Currency Term loan of Rs. 40.73 Crore is stipulated to be secured by first charge on the entire fixed assets ranking pari passu with other term lenders, excluding term loan lenders where exclusive charge on fixed assets as mentioned in clause (d) and (f) has been stipulated.

f) Term Loans of Rs. 69.99 Crore are stipulated to be secured by first charge ranking pari passu on the Company's immovable properties and movable fixed assets relating to Captive Power project of the Company located at Chandrapur district.

(ii) Term Loan installments falling due within one year is Rs. 179.96 Crore (Previous Year Rs. 146.51 Crore).

10) Additional information as required by Part - II of Schedule - VI to the Companies Act, 1956 (figures in brackets pertain to the Previous Year).

ii) Provision of Income Tax is made based on the provisions of Section 115 JB of the Income Tax Act, 1961.

iii) The company, based on legal advice, has transferred the balance in the Restructuring Reserve of Rs. 12.93 Crore towards diminution in value of deferred tax asset of erstwhile The Indian Seamless Metal Tubes Ltd. to Profit and Loss Account, in terms of the Scheme of Arrangement having Appointed Date as April 01, 2004 between the erstwhile The Indian Seamless Metal Tubes Ltd. and the company.

iv) The Company (earlier Jejuri Steels & Alloys Ltd., before amalgamation of Indian Seamless Steels and Alloys Limited with it) had created " Deferred Tax Asset " in respect of unabsorbed losses, allowances, etc., of Indian Seamless Steels & Alloys Ltd., by corresponding credit to "General Reserve" in the first year after amalgamation and reflected in its first Balance Sheet as on September 30, 2001, thereafter, pursuant to the amalgamation and in terms of the Scheme as well as relevant Accounting Standard, the assets and liabilities vested in the Company were accounted on " Purchase Method ". Upon the review of the said " Deferred Tax Asset" on the balance sheet date, in terms of the applicable Accounting Standards or otherwise, the amount as required is charged on reversal of the said amount of Deferred Tax Asset, which necessitates equivalent write-down of the said General Reserve. The Deferred Tax charge arising as aforesaid has been disclosed in the Profit and Loss Account and the corresponding withdrawal from the said General Reserve has also been disclosed in the Profit and Loss Account.

11) Dues of Micro and Small Enterprises

The Information as required to be disclosed under Schedule VI of the Companies Act, 1956 w.r.t. Micro and Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (Act) is as given below, has been determined to the extent such parties have been identified on the basis of information available with the Company.

12) The Company had adopted Accounting Standard-11 "The effects of changes in Foreign Exchange Rates", read with notification issued by the Ministry Of Corporate Affairs dated March 31, 2009 and exercised the option to recognize exchange difference on long term monitory items related to Fixed Assets to the cost of Fixed Assets and the other long term monitory items to "Foreign Currency Monitory Item Translation Difference Account" from April 01, 2007. Accordingly the Company has accounted exchange differences as under :

i) Exchange difference related to acquisition of Capital Assets has been adjusted to respective Fixed Asset cost Rs 0.49 Crore (Gain) (Previous year Rs. 27.33 Crore Gain ).

ii) Exchange difference amortised during the year Rs. 2.59 Crore (Loss) (Previous Year Rs. 8.19 Crore, Loss) from "Foreign Currency Monitory Item Translation Difference Account" and charged to Profit and Loss Account and balance in the "Foreign Currency Monitory Item Translation Difference Account" as on March 31, 2011 is Rs. Nil.

iii) Had this change not been effected, the profit for the year would been higher by Rs. 5.40 Crore (Privious Year Rs. 62.61 Crore), Fixed Assets would have been lower by Rs. 22.33 Crore (Privious Year Rs. 22.82 Crore) and consequently the Reserves and Surplus would have been lower by Rs. 21.30 Crore (Privious Year Rs. 27.72 Crore).

13) (i) Related party Disclosure as required by Accounting Standard - 18 is as under : -

a) Key Management Personnel

i) Mr. Salil Taneja - Chief Executive Officer

ii) Mr. B.R. Taneja - Non Executive Director

iii) Mr. Rajiv Goel - Chief Financial Officer

iv) Mr. Nirmal Chandra - President (Project & Product Development)

b) Subsidiary Companies i) ISMT Enterprises SA, Luxembourg

ii) Structo Hydraulics AB, Sweden

iii) ISMT Europe AB, Sweden

iv) Structo (UK) Limited, U.K.

v) Structo Hydraulics India Limited

vi) Tridem Port and Power Company Pvt. Ltd.

vii) Nagapattinam Energy Pvt. Ltd.

viii) PT ISMT Resources, Indonesia

c) Associate Companies

i) Indian Seamless Enterprises limited

ii) Indian Seamless Incorporated, USA.

iii) Taneja Aerospace and Aviation limited

d) Details of Transaction

i) Key Management Personnel

Remuneration Paid for the year Rs. 2.74 Crore (Previous Year Rs. 2.53 Crore)

ii) Subsidiary and Associate Companies

In respect of Provident Fund Trust set up by the Company, there is no deficit of interest shortfall as on the date of Balance sheet. With regards to future obligation arising due to interest shortfall (i.e. government interest to be paid on the Provident Fund Scheme exceeding rate of interest earned on investment), pending issuance of the Guidance Note from Actuarial Society of India, the actuarial liability against the same cannot be reliably measured and quantified.

14) Previous Year figures have been regrouped and reclassified wherever necessary to conform to the Current Year classification.












Mar 31, 2010

Rs. in Crore

As on As on March 31, 2010 March 31, 2009

1) Contingent Liabilities not provided for in respect of

i) Claims against the Company not acknowledged as debt

a) Sales Tax - 0.32

b) Excise Duty 23.03 15.61

c) Quality Claims by the Customers (Subsidiary Company) 4.59 6.14

d) Others 4.71 4.41

ii) Bills Discounted on behalf of the third party 63.27 53.04

iii) Corporate Guarantees 26.77 14.76

iv) Estimated amount of contracts remaining to be executed on 141.42 208.36 Capital Accounts (Net of advances)

2) Gross sales and income from operations include Conversion Charges of Rs. 0.13 Crore, Tax Deducted at Source Nil (Previous Year Rs. 0.01 Crore, Tax Deducted at Source Rs. Nil).

3) Loans and Advances include interest free advances given by the Company in earlier years to Employees Welfare Funds aggregating to Rs. 3.90 Crore (previous year 4.53 Crore), for the benefit of designated employees pursuant to the proviso (b) to Section 77 (2) of the Companies Act, 1956.

4) i) Loans and Advances include loans to officers of the Company Rs. 24,925/- (Previous Year Rs. 30,025/-), (Maximum amount outstanding during the year Rs. 30,025/-, Previous Year Rs. 59,500/-).

ii) Loans and Advances include advances to subsidiary companies Rs. 19.42 Crore (Previous year Rs. Nil) (Maximum amount outstanding during the year Rs. 29.34 Crore) (Previous year Rs. Nil)

5) Considering the uncertainty related to realisation, the following items are not considered to accrue till they are settled / sanctioned / received as the case may be : a) Insurance claims b) Interest on receivables c) Electricity Refund (Regulatory Liability Charges ).

6) As per the Accounting Standards (AS) 17, the Company has two segments viz; Seamless Tube and Steel.

i) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as unallocable.

ii) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities that can not be allocated to a segment on a reasonable basis have been included under " Unallocable Assets / Liabilities ".

7) Deposit with Scheduled Banks include Rs. 4.74 Crore (Previous year Rs. 6.50 Crore) towards margin money on capital account

8) Security and other particulars of Secured Loans

i) a) Term Loans of Rs. 183.27 Crore are stipulated to be secured by a first charge ranking pari passu on the Companys immovable properties and movable fixed assets both present and future with other term lenders, excluding term loan lenders where exclusive charge on moveable fixed assets as mentioned in clause no. (d) has been stipulated. These loans are further stipulated to be secured by a second charge ranking pari passu by way of hypothecation with other term lenders on the current assets of the company on which the first pari passu charge is stipulated to be created in favour of the Banks as mentioned in clause (c) below.

b) Term Loans of Rs. 237.39 Crore are stipulated to be secured by a first charge ranking pari passu on the Companys immovable properties and movable fixed assets both present and future with other term lenders, excluding term loans where exclusive charge on moveable fixed assets as mentioned in clause no. (d) has been stipulated.

c) Working Capital borrowings from the Banks are stipulated to be secured by a first charge ranking pari passu by hypothecation in respect of the current assets of the company and are further stipulated to be secured by a second pari passu charge on the Companys immovable properties and all the movable fixed assets both present and future.

d) Foreign Currency Term Loans of Rs. 197.17 Crore are stipulated to be secured by an exclusive charge on the equipment financed. Out of the above, term loan of Rs. 93.19 Crore is further stipulated to be secured by the land appurtenant thereto.

e) Foreign Currency Term loan of Rs. 54.25 Crore is stipulated to be secured by first charge on the entire moveable fixed assets ranking pari passu with other term lenders, excluding term loan lenders where exclusive charge on moveable fixed assets as mentioned in clause no. (d) has been stipulated.

ii) Term Loan installments falling due within one year is Rs. 146.51 Crore (Previous Year Rs. 122.92 Crore).

9) Additional information as required by Part II of Schedule VI to the Companies Act, 1956 (figures in brackets pertain to the Previous Year).

10) In absence of any intimation received from vendors regarding the status of their registration under the " Micro, Small and Medium Enterprises Development Act, 2006 " the Company is unable to comply with the disclosures required to be made under the said Act.

11) Other Liabilities include buyers credit of Rs. 107.93 Crore (Previous Year Rs. 108.36 Crore).

12) The Company had allotted 57,50,000 Optional Convertible Warrant in the year 2007-08 by way of a preferential allotment to the Promoters on the conversion terms of one equity share of Rs. 5/- each at a premium of Rs. 86.80 per Equity Share. The option to exercise the right for conversion was available to the holder not later than 18 months from the date of allotment. As per the terms of warrants, 10% of the total issue price of Rs. 9.20 per warrant amounting to Rs. 5.29 Crore were received from the allottees. The Promoters have not exercised their option to convert their Warrants into Equity Shares on or before June 17, 2009, being the last date to exercise the option and accordingly the amount already paid thereon has been forfeited and credited to Capital Reserve Account.

13) The Company has adopted AS-11 "The effects of changes in Foreign Exchange Rates", read with notification issued by the Ministry of Corporate Affairs dated 31st March 2009 and exercised the option to recognize exchange difference on long term monitory items related to Fixed Assets to the cost of Fixed Assets and the long term monitory items to "Foreign Currency Monitory Item Translation Difference Account" from 1st April, 2007. Accordingly the Company has accounted exchange differences as under :

i) Exchange difference related to acquisition of Capital Assets has been adjusted to respective Fixed Asset cost Rs 27.33 Crore (Gain) (Previous year Rs. 50.15 Crore Loss). ii) Exchange difference amortised during the year Rs. 8.19 Crore (Loss) (Previous year Rs. 7.55 Crore Loss) from "Foreign Currency Monitory Item Translation Difference Account" and charged to Profit & Loss Account. iii) Balance in the "Foreign Currency Monitory Item Translation Difference Account" will be amortised by 31st March, 2011. iv) Had this change not been effected, the profit for the year would been higher by Rs. 62.61 Crore, Fixed Assets would have been lower by Rs. 22.82 Crore and consequently the reserves & surplus would have been lower by Rs. 27.72 Crore.

14) i) Related party Disclosure as required by Accounting Standard 18 is as under : -

a) Key Management Personnel

i) Mr. Salil Taneja - Chief Executive Officer

ii) Mr. B.R. Taneja - Non Executive Director

iii) Mr. Rajiv Goel - Chief Financial Officer

iv) Mr. Nirmal Chandra - President (Project & Product Development)

b) Subsidiary Companies

i) ISMT Enterprises SA, Luxembourg

ii) Tridem Port and Power Company Pvt. Ltd., India

iii) Structo Hydraulics AB, Sweden

iv) Structo (UK) Limited, U.K.

v) Structo Hydraulics India Limited, India

vi) ISMT Europe AB, Sweden

vii) Nagapattinam Energy Pvt. Ltd., India

c) Associate Companies

i) Indian Seamless Enterprises limited

ii) Taneja Aerospace and Aviation limited iii) Indian Seamless Incorporated, USA.

15) The Accounting Standard 15 (Revised 2005) on " Employee Benefits " has been adopted by the Company effective from April 1, 2007. During the year, Company has recognised the following amounts in the financial statements :

16) Previous year figures have been regrouped and reclassified wherever necessary to conform to the current year classification.

 
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