Mar 31, 2022
3.1 CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for) |
Rs. In Crore |
|||
Sr |
Particulars |
As at |
As at |
|
No |
March 31, 2022 |
March 31, 2021 |
||
A |
Contingent Liabilities |
|||
Claims aaainst the Company not acknowledaed as debt |
||||
i) |
Sales Tax |
3.60 |
7.43 |
|
ii) |
Income Tax disputed by the Company |
1.43 |
2.34 |
|
iii) |
Excise and Customs Duty |
27.50 |
27.13 |
|
iv) |
Claims filed by Banks / Lenders with Debt Recovery Tribunal * |
- |
119.37 |
|
v) |
Others |
11.96 |
11.93 |
|
B) |
Commitments |
|||
Capital Commitments |
||||
Estimated amount of contract remaining to be executed on capital account and |
9.48 |
5.21 |
||
not provided for (net of advances) |
The Company does not expect the outcome of the matters stated above to have a material adverse impact on the Companyâs financial condition, result of operations or cash flows. Future cash outflows in respect of liability under clause A (i) to (iii) is dependent on decisions by relevant authorities of respective disputes and in respect of liability under clause A (iv & v) is dependent on terms agreed upon with the parties.
* Refer Note No. 3.22 to Notes to Accounts, the lenders are in the process of withdrawing their claim before DRT, Pune, consequent to One Time Settlement Agreement.
3.2 The Company has in the past obtained Central Government approval for payment of Managerial Remuneration to Erstwhile the Managing Director. (âManaging Directorâ). The approval of lenders was still awaited pending restructuring. Pending the same, in compliance with Section 197 of the Companies Act 2013, the Managing Director has refunded Salary drawn for the period December 01, 2016 to November 30, 2019 and salary from December 01, 2019 has not been paid. As a result of One Time Settlement, the lenders dues have been paid off and the lenders approval is no longer applicable. The Board and the shareholders had also approved payment of remuneration to Erstwhile Non-Executive Director effective April 01, 2021 which is still payable. Accordingly, Employee Benefits Expense includes amounts provided for remuneration to the Managing Director of Rs.2.61 Crore for the period ended March 10, 2022 (Rs.9.24 Crore cumulative up to March 10, 2022, including Rs. 5.04 Crore refunded to the Company and disclosed as contingent liability) is payable to the Managing Director and Rs.0.40 Crore for the period ended March 10, 2022 is payable to Erstwhile Non-Executive Director. The Company is considering suitable steps including approval of appropriate authorities, if required, for discharging the above obligations.
3.3 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
3.4 The outbreak of corona virus (COVID-19) pandemic globally has caused significant disturbance and slowdown of economic activity. The Companyâs operations and revenue during the year has improved, yet the full impact of COVID-19 is not ascertainable. The Company continues to closely monitor the developments and possible effects that may result from current pandemic, on its financial condition, liquidity and operations and is actively working to minimize the impact of this unprecedented situation. The full assessment of the impact of the same on the Company and SHABâs operations, CPP and on Port and Power Project (TPPCL) will be only possible once the pandemic settled down and the eventual impact may be different from the estimates made as of the date of approval of these financial statements.
I Identification of Segments:
The Companyâs operating segments are established on the basis of those components of the Company that are evaluated regularly by the Executive Committee, the âChief Operating Decision Makerâ as defined in Ind AS 108 - âOperating Segmentsâ, in deciding how to allocate resources and in assessing performance. These segments have been identified taking into account nature of products and services, the differing risks and returns and the internal business reporting systems.
The Company is engaged primarily into manufacturing of Steel and Tubes. The Companyâs primary segments are Tube Segment and Steel Segment.
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.
Segment assets & segment liabilities represent assets & liabilities in respective segments. Investments, tax related assets & other assets & liabilities which cannot be allocated to a segment on a reasonable basis have been included under âUnallocable Assets/ Liabilitiesâ.
Inter Division Transfer represents transfer of finished / semi-finished products within the Segment for further processing and sale. Profit or loss on inter Division transfers are eliminated at the Company level.
III Revenue from Major Customers
Revenue under the segment âSteelâ include Rs 101.72 Crore (Previous Year: Rs 56.42 Crore of one customer) from one customer having more than 10% revenue of total segment revenue. There is no single customer that accounts for more than 10% of the revenue in Tube Segment.
3.6 Pending reconciliation/ confirmations of 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.
3.7 Dues to Micro and Small Enterprises
Disclosure as required by the Micro, Small and Medium Enterprises Act, 2006 is as given below, has been determined to the extent such parties have been identified on the basis of information available with the Company.
Principal outstanding amount due to MSME suppliers as on March 31,2022 is Rs. 18.49 Crore (Previous Year 16.16 Crore). Interest accrued and remaining unpaid of Rs. 0.99 Crore (Previous Year Rs. 0.69 Crore) and an amount of Rs.Nil (Previous Year Rs. 0.08 Crore) has been paid to MSME suppliers during the year.
The Company have taken various premises and plants and machinery under operating lease. These are generally cancellable and ranges from 11 months to 10 years and are renewable by mutual consent on mutually agreeable terms. There are no restrictions imposed by these lease arrangements and there are no sub leases. There are no contingent rents.
3.9 Foreign currency fluctuation on long term borrowing capitalised
The Company has elected to continue the policy adopted under previous GAAP for accounting the foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items outstanding as of April 1, 2016 i.e. foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset. Accordingly, the Company has capitalised such exchange fluctuation gain to Plant & Machinery of Rs Nil and Rs 4.91 Crore (gain) for the year ended March 31, 2022 and March 31,2021 respectively.
3.10 Related Party Transactions.
In accordance with the requirements of Ind AS 24, on related party disclosures, name of the related party, related party relationship, transactions, outstanding balances and with whom transactions have taken place during the reporting periods are given below:
Name and Relationships of the Related Parties:
a) Sale of finished goods to Subsidiary Companies includes sales to Structo Hydraulics AB Rs. 18.67 Crore (Previous Year Rs. 3.97 Crore) and ISMT Europe AB Rs. 45.03 Crore (Previous Year Rs. 33.98 Crore). Sale of finished goods to Associate Companies include sales to Indian Seamless Enterprises Limited Rs. 12.57 Crore (Previous Year Rs.10.39 Crore).
b) Commission on sales to Subsidiary Companies include paid/ provided for to ISMT Europe AB, Rs. 4.47 Crore (Previous Year Rs. 3.17 Crore) and Indian Seamless Inc, USA Rs. 0.13 Crore (Previous Year Rs. 0.13 Crore).
c) Quality claims to Subsidiary Company - paid/ provided for to Structo Hydraulics AB Rs. Nil (Previous Year Rs. 0.14 Crore).
d) Interest on unsecured loan from Holding Company - KFIL is Rs 1.05 Crore (Previous Year Rs N.A.)
e) Provision fo doubtful debts includes Rs. NIL (Previous Year Rs. 6.69 Crore - net) is relating to Subsidiary Company Structo Hydraulic AB.
f) Provision for impairment in the value of investment in subsidiary Companies includes Rs. 53. 17 Crore (Previous Year NIL) and Rs. 25.24 Crores (Previous year Rs. 58.37 Crore) is relating to Sructo Hydraulic AB and TPPCL respectively.
g) Purchases of Raw Material from Holding Company - KFIL is Rs. 13.32 Crore (Previous Year Rs. N.A.).
h) Advance given to Associate Company -Indian Seamless Enterprises Ltd. of Rs. Nil towards tender deposit (Previous Year Rs 0.50 Crore).
i) Advances given to Subsidiary Company Tridem Port and Power Company Private Limited Rs. 0.47 Crore (Previous Year Rs. 0.39 Crore) for operational expenses of its Port and Power Project.
j) The Company has not considered transactions with KFIL till March 10, 2022 i.e. transactions being prior to establishment of related party relationship between the Company and KFIL in the above stated Related Party Disclosure. These transactions are in the nature of purchase of Raw Material, Allotment of equity shares on preferential basis amounting to Rs 476.63 Crore (including share premium) and receipt of Unsecured Loan of Rs 194.00 Crore pursuant to Share Subscription Agreement and Unsecured Loan Agreement, respectively.
2 Defined benefit plan Gratuity
Gratuity is payable to all eligible employees of the Company on retirement, death, permanent disablement and resignation in terms of the provision of the Payment of Gratuity Act, 1972. The benefits would be paid at the time of separation.
The above sensitivity analysis is based on a change in an assumption while holding the other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be corelated. When calculating the sensivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation within the balance sheet.
The assumption of future salary increase takes into account the inflation, seniority, promotion and other relevant factors such as supply and demand in employment market. The above information is certified by the Actuary.
3.13 After considering the impact of One Time Settlement (OTS) as referred in Note No. 3.22 and business scenario post change in management, the Company based on the evaluation of impact of tax under normal provision of Income Tax Act and on adoption of section 115BAA of the Income Tax Act 1961, decided to exercise one time option of adopting section 115BAA as on March 31, 2022. Accordingly, on adoption of tax option under section 115BAA of the Income Tax Act 1961, the Company has written off MAT Credit (Deferred Tax Asset) of Rs. 82.05 Crore in the statement of profit and loss as on March 31, 2022.
3.19 The Company and through its Subsidiary Company, ISMT Enterprises S.A., Luxembourg has invested Rs. 48.43 Crore in Structo Hydraulics AB, Sweden (SHAB). The Company has received approval from regulatory authorities for conversion into equity of an amount of Rs. 33.33 Crore (USD 5 Million) due from SHAB, out of which Rs. 16.75 Crore has been converted into equity and the balance of Rs. 16.58 Crore is pending allotment. The net receivables on account of sales made to SHAB as on March 31, 2022 are Rs. 13.13 Crore and the same is considered as collectible. Covid has impacted businesses across the globe, including Europe.
Consequent upon change in management, the Company has initiated review of SHAB operations and its future growth potential to evaluate long term prospects of SHAB. Stronger Balance Sheet and positive net worth of the Company could also contribute in terms of greater market access and availability of working capital. However, there have been significant geo political developments with critical long term implications for Europe and Nordic region apart from continuing Covid impact in various parts of the world. International ocean freight has gone up more than double during the year affecting its business. Considering the challenging emerging global situation and notwithstanding that the business is considered strategic and long term and pending the assessment of the same, after considering the valuation report of the Independent Valuer, the Company has conservatively provided for impairment in the value of investment in SHAB of Rs. 53.17 Crore for the year ended March 31, 2022 as per Ind AS 36 âImpairment of Assetsâ and disclosed the same under the head âExceptional itemsâ in the Statement of Profit and Loss.
3.20 Tridem Port and Power Company Private Limited (TPPCL), a wholly owned subsidiary of the Company, along with its subsidiaries had proposed to set up a thermal power project and captive port in Tamil Nadu. TPPCL had obtained the approvals for the projects including acquisition of land but no construction activity had commenced. However, on account of subsequent adverse developments, the TPPCL could not pursue these projects. Government is giving considerable focus to infrastructure by both higher budgetary allocation and various other initiatives. This is expected to create multiple opportunities leading to positive impact on projects like TPPCL. Consequent upon change in management, considering the above, the Company is evaluating the future potential and opportunities for TPPCL.
Considering inter alia present status of the project, prevailing power sector scenario, long lasting impact of Covid pandemic on the project and recoverable amount as per the current project valuation report, the Company after considering the impairment provision made in previous financial year, have made additional provision for impairment of Rs.25.24 Crore of the amount invested in TPPCL for the year ended March 31, 2022 as per Ind AS 36 âImpairment of Assetsâ and disclosed under the head âExceptional Itemsâ in the Statement of Profit and Loss.
3.21 The Company has always been operationally profitable (positive EBIDTA) despite the net losses in earlier years. The successful OTS is inter alia resulting into positive net worth of the Company. Financial stability is also achieved with support of new management (KFIL), thereby enlarging the business opportunities including the abilities to participate in Government tenders. The Company also expects benefits from Atmanirbhar policies of the Government including continuation of Anti-Dumping Duty on import of seamless tubes from China. Accordingly, the Company believes that it can continue to operate as a Going Concern in the foreseeable future and accordingly, has continued to prepare its financial statements on âGoing Concern Basisâ.
3.22 a) In view of the rapidly growing economy, the Company had planned expansion in capacities and also envisaged setting up of Captive Power Plant. However, number of subsequent developments viz economic slow-down leading to steep fall in demand, dumping of tubes by China, regulatory changes and other adverse developments severely impacted the Company. Thus the assets created by the Company were highly under utilized resulting in inability to service the debt. The Company had since been working with lenders for resolution of debt in terms of RBI scheme prevailing from time to time.
The Banks had pursued various schemes for Debt Resolution - the Banks initially contemplated restructuring which was approved by JLM but could not be concluded at banks end. The Banks then opted for OSDR and despite successful conclusion of OSDR resulting in identification of the investor, the OSDR could not be implemented due to RBI Circular dated February 12, 2018 scrapping all their schemes for stressed assets. The Banks then agreed to take up assignment of debt as Resolution Plan in terms of the aforesaid circular, pursuant to which bulk of Bank Debt was assigned to Asset Restructuring Companies (ARCs). The majority of lenders of the Company had also signed Inter Credit Agreement as per RBI guidelines for restructuring of debt. However, restructuring and assignment of further debt could not be concluded due to covid pandemic.
After considering restructuring of debt subsequent to covid pandemic, the lenders opted for One Time Settlement (OTS) of entire outstanding debt for Rs 670 Crore along with change in management. After due process the lenders approved OTS along with change in management by Kirloskar Ferrous Industries Ltd (KFIL) acquiring majority stake in the Company. After requisite approvals, the lenders executed the OTS agreement on January 31, 2022.
(b) In order to fund the OTS, the Board of Directors of the Company proposed to make preferential allotment of 15.40 Crore equity shares at a price of Rs 30.95 per equity share (equivalent to 51.25% of the post issue equity share capital of the Company) to KFIL, for a total consideration of Rs 476.63 Crore, which was duly approved by shareholders of the Company at the Extra Ordinary General Meeting held on December 22, 2021. After obtaining various regulatory approvals, KFIL invested Rs.476.63 Crore towards preferential allotment of 15.40 Crore equity shares at Rs 30.95 per equity share and also extended unsecured loan of Rs 194 Crore. The proceeds of the Preferential Allotment together with unsecured loan from KFIL of Rs 194 Crore were utilized as per terms of Agreements towards payment of OTS amount.
Accordingly, the Company has written back outstanding principal debt and unpaid interest due to lenders amounting to Rs 2,775.96 Crore and disclosed the said write-back amounts under the head âExceptional Itemsâ in the Statement of Profit and Loss for the year ended March 31, 2022.
3.23 i) The Company had entered into Energy Banking Agreement dated May 07, 2010 with MSEDCL for a period of one year
with provision for annual renewals. MSEDCL did not, however, actually permit Banking of energy once the plant was commissioned resulting in significantly higher cost to the Company. The same was challenged by the Company before Maharashtra Electricity Regulatory Commission (MERC) which vide its Interim Order dated June 20, 2014 had allowed Banking. MERC finally disallowed Companyâs petition regarding banking of energy facility under Energy Banking Agreement (EBA) vide its orders dated June 20, 2014 and January 12, 2015. The Company filed an appeal before the Appellate Tribunal for Electricity (APTEL) against the said order which was not allowed by the APTEL vide its order dated April 1, 2016. The Companyâs appeal, challenging the APTEL order is pending before the Honâble Supreme Court. The Company had accrued EBA benefit aggregating to Rs. 49.97 Crore up to March 31, 2014, of which amount outstanding as on March 31,2022 is Rs. 39.53 Crore, representing excess energy charges paid to Maharashtra State Electricity Distribution Company Limited (MSEDCL) on account of non-availability of banking of energy facility. There has been no further accrual since April 1, 2014 on account of suspension of operation of power plant.
The Company has strong case for breach of contract. Consequent upon change in management, considering uncertainties and inordinate delays, the Company has decided to write off the recoverable dues of Rs. 39.53 Crore while continuing to pursue the case on merits and disclosed the said write-off amount under the head âExceptional Itemsâ in the Statement of Profit and Loss for the year ended March 31,2022.
ii) Consequent upon change in Management, the Company is evaluating afresh all the available options for Captive Power project (CPP) either operating the plant or closing it down as a whole or otherwise maximizing value. The Company continues to take adequate steps for preserving the value of the plant including pursuing for wrongful denial of the Banking at the Supreme Court. There is, however, an increasing focus on clean and renewable energy being environment friendly. There has also been a surge in commodity prices including coal and the recent geo political developments have added further uncertainty to both availability and pricing of coal. Considering these major developments and the fact that the plant has not been operated for over eight years and unstable CPP policies, the Company has valued the CPP on conservative basis, notwithstanding the upside potential of positive Supreme Court outcome or the surging demand for power, after considering the valuation report of the Independent Valuer provided for impairment of Rs. 163.92 Crore to the carrying amount of CPP for the year ended March 31, 2022 as per Ind AS 36 âImpairment of Assetsâ and disclosed the same under the head âExceptional Itemsâ in the Statement of Profit and Loss.
3.24 Interest income includes interest received from Banks of Rs. 1.37 Crore (Previous Year Rs. 2.92 Crore).
3.25 Financial risk management
The Companyâs financial liabilities comprise mainly of borrowings, trade payables and other payables. The Companyâs financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.
Companyâs board of directors has overall responsibility for establishment of Companyâs risk management framework and formed Risk Management Committee. Management is responsible for developing and monitoring Companyâs risk management policies, under the guidance of Risk Management Committee. Management identifies, evaluate and analyses the risks to which the Company is exposed to and set appropriate risk limits and controls to monitor risks and adherence to limits. Management periodically reviews its risk policy and systems to assess need for changes in the policies to adapt to the changes in market conditions and align the same to the business of the Company.
Company has exposure to following risk arising from financial instruments:
Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, financial institutions, foreign exchange transactions and other financial instruments.
Credit risk from Trade receivables is managed as per the Companyâs established policy, procedures and control relating to customer credit risk management. Credit limits are established for all customers based on internal criteria reviewed and monitored from time to time. Majority of the customers are long standing customers and regularly monitored by individual business managers who deal with those customers. Management monitors trade receivables on regular basis and take suitable action where needed to control the receivables crossing set criteria/ limits.
Management does an impairment analysis at each reporting date as per set procedure and computes credit loss allowance based on a provision matrix. Further, the Companyâs customers base is widely distributed both economically as well as geographically and in view of the same, the quantum risk also gets spread across wide base and hence management considers risk with respect to trade receivable as low.
The Company manages the liquidity risk by maintaining adequate funds in cash and cash equivalents. Working Capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels. The Company aims to maintain the level of its cash and cash equivalents at levels to meet its expected cash outflows on operational and financial liabilities. Also Refer Note No 3.22 regarding debt resolution with the lenders.
c) Competition and pricing risk
The Company faces competition from local and foreign competitors. Nevertheless, it believes that it has competitive advantage in terms of high quality products and by continuously upgrading its expertise and range of products to meet the needs of its customers.
d) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises following types of risks :
i. Interest Rate Risk
Depending upon the business requirements, the Companyâs exposure to the risk of changes in market interest rates relates primarily to the long term debt obligations and Buyerâs credit obligations with floating interest rates. The Company has not used any interest rate derivatives.
Refer Note No 3.22 regarding One -Time Settlement with lenders by making payment of agreed amount on March 11 and March 12, 2022. As of reporting date, there is a short term loan from the Holding Company and Associate Company at the agreed interest rate and hence there is no interest risk exposure related to the long term debt and working capital borrowings.
ii. Foreign Currency Risk and Sensitivity
The Company is exposed to foreign exchange risk arising from export sales, operating and capital expenditure in foreign currency, foreign currency loans and economic exposure on account of mismatch between foreign currency and INR assets and liabilities. The risk is measured through a forecast of highly probable foreign currency cash flows.
Primarily, the exposure in foreign currencies is denominated in USD, EURO. At any point in time, Company covers foreign currency risk by taking appropriate measures. The Company does not enter into derivative instruments.
5% appreciation in USD and EURO with respect to Indian Rupees would have result in increase in gain before tax by Rs 0.78 Crore for March 31, 2021 and increase in Losses before tax by Rs 18.63 Core for March 31, 2021.
5% depreciation in USD and EURO with respect to Indian Rupees would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
iii. Commodity price risk
The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company reviews the prices of key raw materials on periodically and enters into most of the contracts for procurement of material on short term fixed price basis.
For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs Capital management is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, long term borrowings and short term borrowings.
In order to achieve this overall objective, the Companyâs capital management, amongst other things, aim to ensure that its meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
Fair value of cash and cash equivalents, loan and advances, trade receivables, trade payables, other financial assets/liabilities approximate their carrying amounts largely due to the short term maturities of these instruments. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended March 31, 2021
During the reporting period ended March 31, 2022 and March 31,2021, there were no transfers between level 1, level 2 and level 3 fair value measurements.
3.28 Loans or Advances to Specified Persons :
During the year, the Company has not granted any Loans or Advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013) either severally or jointly with any other person.
3.31 Ultimate Beneficiary : Utilisation of Borrowed funds and share premium:
No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. No funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities (âFunding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
1 The amounts of assets, liabilities and net profits for the current year as well as previous year is inclusive of components of exceptional nature and hence these analytical ratios are not truly reflecting the operations and financials of the Company. These exceptional components includes negative net worth and unpaid overdue debts in previous year and one time settlement with lenders through infusion of capital and loan by investor and impairment of assets and investments in subsidiaries in current year.
2 Ratio of current year and previous year are strictly not comparable on account of Covid impact in the previous year and the exceptional item in the current year which results in wide deviation in ratio.
3 Exceptional items are not considered for the purpose of calculation of ratios pertaining to profitability ( Net Profit / Earnings)
4 *In case of any negative components in ratio working, the said ratio is considered as Not Applicable. ( N.A.)
5 âImprovement in current ratio and debt service coverage ratio is due to one time settlement of principle outstanding debt and unpaid interest with lenders.
6 # On account of lockdown due to Covid-19 pandemic, net sales for the previous financial year were low. The same for the year 2021-22 are higher by 74% over previous year. However, the inventory and trade receivables as on balance sheet dates in absolute terms were marginally higher. This resulted in higher turnover ratio in both the cases.
7 A As a result of better inventory and debtors turnover ratios, the Company could bring down average payment to suppliers from 55 days to 40 days.
8 @ Not applicable as the Company has not made any investments.
3.33 Corporate Social Responsibility (CSR)
In view of losses in three immediately preceding financial years, the Company is not required to incur expenditure on CSR Activities under Section 135(5) of the Companies Act, 2013.
3.34 Events occurring after the Balance Sheet date
No adjusting or significant non - adjusting events have occurred between the reporting date and the date of authorisation of these financial statements.
3.35 Previous Year figures have been regrouped/ rearranged, wherever considered necessary to conform to current yearâs classification.
Mar 31, 2018
1. Corporate Information :
ISMT Limited (âISMTâ or âthe Companyâ) is a public limited company incorporated in India (CIN: L27109PN1999PLC016417) having its registered office in Pune. The Company is mainly engaged in manufacturing of seamless tubes and engineering steels.
These financial statements for the year ended March 31, 2018 were approved for the issue by the Board of Directors at their Board meeting dated June 11, 2018.
* Given on behalf of Structo Hydraulics AB, Sweden of Rs.Nil Crore (March 31, 2017 Rs Nil and April 1, 2016 Rs 16.58 Crore in respect of loans availed.
2.1 Considering the uncertainity related to realisation, the following items are not considered to accrue till they are setlled / sanctioned / received as the case may be:
a) Insurance claims except specific claims stated separately
b) Interest on receivables and
c) Electricity Refund (Additional Supply Charges).
2.2 In accordance with Ind AS 18 on âRevenueâ and Schedule III to the Companies Act, 2013, Sales for the previous year ended March 31, 2017 and for the period April 1, 2017 to June 30, 2017 were reported gross of Excise Duty and net of Value Added Tax (VAT)/ Sales Tax. Excise Duty was reported as a separate expense line item. Consequent to the introduction of Goods and Services Tax (GST) with effect from 1 July 2017, VAT/Sales Tax, Excise Duty etc. have been subsumed into GST and accordingly the same is not recognised as part of sales as per the requirements of Ind AS 18. Accordingly, Revenue from operation for the year ended March 31, 2018 are not comparable with the figures of the previous year.
2.3 Segment Reporting :
Companyâs operating segments are established on the basis of those components of the Company that are evaluated regularly by the Executive Committee, the âChief Operating Decision Makerâ as defined in Ind AS 108 - âOperating Segmentsâ, in deciding how to allocate resources and in assessing performance. These have been identified taking into account nature of products and services, the differing risks and returns and the internal business reporting systems.
The Company is engaged primarily into manufacturing of Steel and Tubes. The Companyâs primary segments are Tube Segment and Steel Segment.
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.
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 âUnallocable Assets / Liabilitiesâ.
Inter Division Transfer represents transfer of finished / semi-finished products within the Segment for further processing and sale. Profit or loss on inter Division transfers are eliminated at the Company level.
III Revenue from Major Customers
Revenue under the segment âSteelâ include Rs 61.02 Crore (Previous Year: Rs Nil Crore) from one customer (Previous Year: Nil customers) having more than 10% revenue of total segment revenue. There is no single customer that accounts for more than 10% of the revenue in Tube Segment .
2.4 Pending reconciliation / confirmations of 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
2.5 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.
2.6 Leases
Operating Lease:
a) The Company has entered into lease agreements for certain office premises and Plant and Machinery for a period ranging from 5 to 10 years which are renewable by mutual consent on mutually agreeable terms. There are no restrictions imposed by lease arrangements and there are no sub leases. There are no contingent rents. Disclosures as required under Ind-AS 17 on âLeaseâ are given below:
Future minimum Lease payments under operating lease:
b) The Company enters into cancellable operating leases in respect of office premises, staff quarters and others which are cancellable by giving appropriate notices as per respective agreements. During the year Rs 0.58 Crores (Previous year Rs 0.51 Crores) has been charged to Statement of Profit and Loss on account of lease rentals.
2.7 Foreign currency fluctuation on long term borrowing capitalised
The Company has elected to continue the policy adopted under previous GAAP for accounting the foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items outstanding as of April 1, 2016 i.e. foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset. Accordingly, the Company has capitalised such exchange fluctuation loss to fixed assets of Rs 5.48 Crore and gain of Rs 6.75 Crore ( including Assets held for sale) for the year ended March 31, 2018 and March 31, 2017 respectively.
2.8 Related Party Transactions.
In accordance with the requirements of Ind AS 24, on related party disclosures, name of the related party, related party relationship, transactions, outstanding balances and with whom transactions have taken place during the reporting periods, are given below:
i Details of Transaction with Key Management Personnel:
Remuneration for the year Rs 3.15 Crore* (Previous Year Rs 2.76 Crore)
* Excludes provision for compensated leave and gratuity for KMP as liabilities are provided on overall company basis and is not identified separately in actuarial valuation.
a) Sale of finished goods to Subsidiary Companies include sales to Indian Seamless Inc, USA Rs. Nil (Previous Year Rs. 7.86 Crore), Structo Hydraulics AB Rs. 17.89 Crore (Previous Year Rs. 16.39 Crore) ,ISMT Europe AB Rs. 76.98 Crore (Previous Year Rs. 30.16 Crore). Sales of finished goods to Associate Companies include sales to Indian Seamless Enterprises Limited Rs. 6.18 Crore (Previous Year Rs. 7.69 Crore), Taneja Areospace and Aviation Limited Rs.3.27 Crore ( Previous Year Rs. Nil), First Airways Inc, USA Rs. 4.44 Crore (Previous year Rs. Nil).
b) Commission on sales paid to Subsidiary Companies include paid to ISMT Europe AB, Rs. 6.70 Crore (Previous Year Rs. 4.72 Crore) and Indian Seamless Inc, USA Rs. 0.22 Crore (Previous Year Rs. 0.30 Crore).
c) Lease rent paid to Associate Companies - Indian Seamless Enterprises Limited is Rs. Nil (Previous Year Rs. 0.30 Crore).
d) Quality claims of Subsidiary Companies include paid/ provided for to Structo Hydraulics AB Rs. 0.59 Crore (Previous Year Rs. 0.52 Crore), ISMT Europe AB Rs. 0.34 Crore (Previous Year Rs. NIL Crore), and reimbursement of expenses paid to Indian Seamless Inc, USA Rs. 0.05 Crore on account of overseas freight and other clearing charges (Previous Year Rs.0.94 Crore).
e) Rent paid to Subsidiary Company - Tridem Port and Power Company Private Limited is Rs. 0.01 Crore (Previous Year Rs. 0.01 Crore).
f) Interest paid to Associate Company - Taneja Aerospace and Aviation Limited is Rs. 0.15 Crore (Previous Year Rs.0.15 Crore).
g) Advances given to Subsidiary Company Tridem Port and Power Company Private Limited Rs. 1.10 Crore (Previous Year Rs. 0.53 Crore ) for its Port and Power Project and Rs. Nil (Previous Year Rs. 16.75 Crore) due from Structo Hydraulics AB (SHAB), Sweden on account payment towards invocation of guarantee by lender of SHAB against Stand by Letter of Credit invoked by the lender of SHAB .
h) Provision for doubtful debts includes Rs. Nil is relating to Subsidiary Company Structo Hydraulics AB (Previous Year Rs 3.15 Crore), Indian Seamless Inc, USA Rs. Nil Crore (Previous Year Rs. 1.97 Crore) and ISMT Europe AB Rs. 0.03 Crore (Previous Year Rs. 0.24 Crore).
i) Advance received from Subsidiary Company - ISMT Europe AB towards sale of finished goods is amounting to Rs. 1.96 Crore (Previous Year Rs. Nil).
There are certain income-tax related legal proceedings which are pending against the Company. Potential liabilities, if any have been adequately provided for.
*Deferred tax assets on unabsorbed depreciation/business loss have been recognised to the extent of deferred tax liabilities on taxable temporary differences available.
*Deferred tax assets on unabsorbed business loss have been recognised to the extent of deferred tax liabilities on taxable temporary differences available. It is expected that any reversals of the deferred tax liability would be offset against the reversal of the deferred tax assets.
The Company has unused tax losses under the head Business Loss and unabsorbed depreciation as per the Income Tax Act, 1961.Based on the probable uncertainty regarding the set off of these losses, the Company has not recognized deferred tax asset in the Balance Sheet. Details of tax losses under the head business losses and unabsorbed depreciation with expiry is as follows:
2.9 Disclosure as required by Ind AS - 19 Employee Benefits
Retirement benefit obligations
1 Defined Contribution plan
The Company has recognized the following amounts as an expense and included under the head â Employee Benefits Expenseâ - Contribution to Provident and other Fund :
In respect of provident fund trust setup 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.
2 Defined benefit plan A Gratuity
Gratuity is payable to all eligible employees of the company on retirement, death, permanent disablement and resignation in terms of the provision of the Payment of Gratuity Act, 1972. The benefits would be paid at the time of separation.
The following tables summarises the changes in the projected benefit obligation and plan assets and amounts recognised in the Balance Sheet as at March 31, 2018 and March 31, 2017, being the respective measurement dates:
The above sensitivity analysis is based on a change in an assumption while holding the other assumptions costant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensivity of the defined benefit obligation to significant acturial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation within the balance sheet.
The assumption of future salary increase takes into account the inflation, seniority, promotion and other relevant factors such as supply and demand in employment market. Same assumptions were considered for comparative period i.e 2016-2017 as considered in previous GAAP on transition to IND AS. The above information is certified by the Actuary.
2.10 As per Ind AS 12 â Income Taxâ, Minimum Alternate Tax ( MAT) credit (unused tax credit) is regarded as Deferred Tax Assets and the same shall be recognised to the extent that it has become probable that future taxable profit will be available against which the unused tax credit can be utilised. In view of business uncertainties and pending debt Resolution, it is difficult for the company to fairly ascertain the probable future taxable profit against which Mat Credit can be utilised. Accordingly, the unabsorbed MAT credit of Rs 82.05 Crores as at March 31, 2018, if any, shall be charged in the Statement of Profit and Loss to the extent it lapses in the respective years.
2.11 Earnings per share
Net profit available to equity holders of the Company used in the basic and diluted earnings per share was determined as follows:
2.12 The Company through its subsidiary Company, ISMT Enterprises SA. Luxembourg has invested Rs. 48.43 Crore in Structo Hydraulics AB, Sweden (SHAB). The Company has received the approval from regultory Authorities for conversion into equity of an amount of Rs 33.33 Crore (USD 5 Million) due from SHAB on account of payment towards invocation of guarantee by lender of SHAB, which is considered as investment on adoption of Ind AS and the Company is taking steps for the implementation of the same.The net receivable on account of sales made to SHAB as on March 31, 2018 is Rs. 15.43 Crore ( March 31, 2017 Rs. 14.27 Crore and April 1, 2016 Rs. 10.09 Crore ) and the same is considered as collectible. No provision,however, has been made in respect of diminution in the value of investment, which is in the nature of forward integration and considered Strategic and Long Term.
2.13 As a result of various measures taken by the Company, net loss for the financial year 2017 -2018 had come down to Rs 239.35 Crore against loss of Rs 278.88 Crore of financial year 2016 -2017. The levy of anti-dumping duty by the Government of India on import of tubes from China effective February 17, 2017, an increasing trend in international oil prices and the gradual pick-up in domestic demand are some of the factors resulting in increase in revenue and EBIDT. The Company has, therefore, continued to prepare its financial statements on Going Concern basis.
2.14 The Company and its lenders had been exploring various options including OSDR for Debt Resolution. Subsequent to RBI Circular dated February 12, 2018 the lenders have decided to explore assignment of debt as a Resolution Plan. Pending the same, interest on the loans has been provided as per the terms of sanction letters of the respective banks on simple interest basis. However, no overdue / penal / compounding of interest, if any,has been provided.
2.15 Tridem Port and Power Company Private Limited ( TPPCL ) , the wholly owned subsidiary of the Company, along with its subsidiaries had proposed to set up a thermal power project and captive port in Tamil Nadu. However, on account of subsequent adverse developments , the Company had decided not to pursue these projects. No provision has, however, been considered necessary for the amount invested of Rs. 108.97 Crore (including advances given to TPPCL of Rs. 106.39 Crore as on March 31, 2018, Rs. 105.29 Crore as on March 31, 2017 and Rs. 104.76 Crore as on April 1, 2016, being considered as investment on adoption of Ind AS), since in the opinion of the management, the Company expects to realise not less than the amount invested/ advanced.
2.16 i) Maharashtra Electricity Regulatory Commission (MERC) had disallowed Companyâs petition regarding banking of energy facility under Energy Banking Agreement (EBA) vide its orders dated June 20, 2014 and January 12, 2015. The Company filed an appeal before the Appellate Tribunal (APTEL) against the said order and the same has been dismissed by the APTEL vide their order dated April 1, 2016 . The Companyâs appeal, challenging the APTEL order is pending before the Honâble Supreme Court. The Company had accrued EBA benefit aggregating to Rs. 49.97 Crore up to March 31, 2014, of which amount outstanding as on March 31, 2018 is Rs. 39.53 Crore, ( March 31, 2017 is Rs. 39.53 Crore and April 1, 2016 is Rs. 39.53 Crore) representing excess energy charges paid to Maharashtra State Electricity Distribution Company Limited (MSEDCL) on account of non-availability of banking of energy facility. There has been no further accrual since April 1 , 2014 on account of suspension of operation of power plant.
ii) In view of the above, the Company has not been able to operate the 40 MW Captive Power Plant(CPP) and is held for sale. In the opinion of the management, the Company expects to realise not less than its carrying amount of Rs. 254.00 Crore as on March 31, 2018.
2.17 Assets classified as held for sale
Captive Power Project ( CPP) at Chandrapur, Maharashtra (Refer Note No. 3.19 (ii).
Includes Exchange Difference loss of Rs. 5.09 Crore (March 31,2017 gain of Rs. 3.87 crore; April 01,2016 loss Rs. 7.14 Crore).
2.18 Financial risk management
The Companyâs financial liabilities comprise mainly of borrowings, trade payables and other payables. The Companyâs financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.
Risk management framework
Companyâs board of directors has overall responsibility for establishment of Companyâs risk management framework and formed Risk Management Committee. Management is responsible for developing and monitoring Companyâs risk management policies, under the guidance of Risk Management Committee. Management identifies, evaluate and analyses the risks to which the company is exposed to and set appropriate risk limits and controls to monitor risks and adherence to limits. Management periodically reviews its risk policy and systems to assess need for changes in the policies to adapt to the changes in market conditions and align the same to the business of the Company.
Company has exposure to following risks arising from financial instruments:
a) Credit risk
Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, financial institutions, foreign exchange transactions and other financial instruments.
Credit risk from Trade receivables is managed as per the Companyâs established policy, procedures and control relating to customer credit risk management. Credit limits are established for all customers based on internal criteria reviewed and monitored from time to time. Majority of the customers are long standing customers and regularly monitored by individual business managers who deal with those customers. Management monitors trade receivables on regular basis and take suitable action where needed to control the receivables crossing set criteria / limits.
Management does an impairment analysis at each reporting date as per set procedure and computes credit loss allowance based on a provision matrix. Further, the Companyâs customers base is widely distributed both economically as well as geographically and in view of the same, the quantum risk also gets spread across wide base and hence management considers risk with respect to trade receivable as low.
Expected credit loss for trade receivables under simplified approach as at the end of each reporting period is as follows:
b) Liquidity risk.
The Company manages the liquidity risk by maintaining adequate funds in cash and cash equivalents. Working capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels. Company aims to maintain the level of its cash and cash equivalents at levels to meet its expected cash outflows on operational and financial liabilities. Also Refer note no 3.17 regarding exploring of various options including OSDR for Debt resolution with the lenders.
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
c) Competition and price risk
The Company faces competition from local and foreign competitors. Nevertheless, it believes that it has competitive advantage in terms of high quality products and by continuously upgrading its expertise and range of products to meet the needs of its customers.
d) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises following types of risks :
i. Interest Rate Risk
The Companyâs exposure to the risk of changes in market interest rates relates primarily to the long term debt obligations and Buyerâs credit obligations with floating interest rates. The Company has not used any interest rate derivatives.
We refer to note no 3.17 regarding exploring of various options including OSDR for Debt resolution with the lenders. Pending the same, the company is not able to determine its exposure to interest rate risk which primary related to the long term debt.
ii. Foreign Currency Risk and sensitivity
The company is exposed to foreign exchange risk arising from export sales, operating and capital expenditure in foreign currency, foreign currency loans and economic exposure on account of mismatch between foreign currency and INR assets and liabilities. The risk is measured through a forecast of highly probable foreign currency cash flows.
Primarily, the exposure in foreign currencies is denominated in USD, EURO. At any point in time, Company covers foreign currency risk by taking appropriate percentage of its net foreign currency exposure by entering into forward exchange contracts on past performance basis mostly with a maturity of less than one year. The Company does not enter into derivative instruments.
5 % appreciation in USD and EURO with respect to Indian Rupees would have result in increase in loss before tax by Rs 13.90 crore for March 31, 2018 and increase in Losss before tax by Rs 12.53 crore for March 31, 2017.
5 % depreciation in USD and EURO with respect to Indian Rupees would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
iii. Commodity price risk
The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company reviews the prices of key raw materials on weekly basis and enters into most of the contracts for procurement of material on short term fixed price basis.
2.19 Capital Management
For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs Capital management is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, long term borrowings and short term borrowings.
In order to achieve this overall objective, the Companyâs capital management, amongst other things, aim to ensure that its meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
Fair value of cash and cash equivalents, short term loans, trade receivables, trade payables, other financial assets/liabilities approximate their carrying amounts largely due to the short term maturities of these instruments. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended March 31, 2017.
During the reporting period ended March 31, 2018 and March 31, 2017, there were no transfers between level 1, level 2 and level 3 fair value measurements.
Reconciliation of Level 3 fair values
The following table shows a reconciliation of the opening and closing balances for Level 3 fair values.
A one percentage point change in the unobservable inputs used in fair valuation of level 3 assets or liabilities does not have significant input in its value.
2.20 First Time Adoption of Ind AS
These are the Companyâs first standalone financial statements prepared in accordance with Ind AS.
The accounting policies set out in note 2.1 have been applied in preparing the Ind AS financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS Standalone Balance Sheet at April 01, 2016 (the Companyâs date of transition). In preparing its opening Ind AS standalone Balance Sheet, the Company has adjusted the amounts reported previously in standalone financial statements prepared in accordance with the Accounting Standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.
Ind AS 101 deals with First time adoption of Indian Accounting Standards which allows exemptions from the retrospective application and exemption from application of certain requirements of other Ind AS. On transition, the Company has availed / adopted the following exemptions / exception as per Ind AS 101:
a) The company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at 1st April, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
b) The Company has elected to continue the policy adopted under previous GAAP for accounting the foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items outstanding as of April 1, 2016 i.e. foreign exchange differences arising on settlement or translation of longterm foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset.
c) Appendix C of Ind AS 17 requires an entity to assess whether a contract of arrangement contains a lease. This assessment should be carried out at the inception of the contract or arrangement. The company has used Ind AS 101 exemption and assessed all the arrangements based for embedded leases based on the conditions in place as at the date of transition.
d) The carrying amounts of the Companyâs investments in its subsidiary companies as per the financial statements which were prepared under Previous GAAP, are considered as deemed cost for measuring such investments in the opening Ind AS Balance Sheet.
e) The Company has elected not to apply Ind AS 103- Business Combinations, retrospectively to past business combinations that occurred before 1st April, 2016. Consequent to use of this exemption from retrospective application.
i) The carrying amounts of assets and liabilities acquired pursuant to past business combinations and recognized in the financial statements prepared under Previous GAAP, are considered to be the deemed cost under Ind AS, on the date of acquisition. On the date of transition, measurement of such assets and liabilities is in accordance with respective Ind AS. Also, there is no change in classification of such assets and liabilities.
ii) The company has not recognized assets and liabilities that neither were recognized in the financial statements prepared under Previous GAAP nor qualify for recognition under Ind AS in the Balance Sheet of the acquiree;
iii) The company excluded from its opening Ind AS Balance sheet as at April 1, 2016, those assets and liabilities which were recognized in accordance with Previous GAAP but do not qualify for recognition as an asset or liability under Ind AS;
f) Derecognition of financial assets and liabilities:
The Company has elected to use the exemption for derecognition of financial assets and liabilities prospectively i.e. April 01, 2016.
g) The requirement of Ind AS 20- âAccounting for Government Grants and Disclosure of Government Assistanceâ is opted to be applied prospectively to interest free sales tax deferral loan existing at the date of transition to Ind AS as a government grant and which is to be amortised to the Statement of Profit and Loss over the period of sales tax deferral loan. Further, the Company has applied Ind AS 109 to carrying amount of such loan as per the previous GAAP as on the date of transition to Ind AS to arrive at fair value.
h) Classification and measurement of financial assets:
Ind AS 101 requires an entity to assess classification of financial assets on the basis of the facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.
i) Non-current assets held for sale:
This exemption requires non-current assets (or disposal groups) that meet the criteria to be classified as held for sale to be carried at lower of its carrying amount and fair value less cost to sell as per Ind AS 105 and recognize directly in retained earnings any difference between that amount and the carrying amount of those assets at the date of transition to Ind AS. The company has elected to apply this exemption and measured the assets held for sale at lower of carrying value and fair value less costs to sell at the date of transition.
Impact of transition to Ind AS
The following is a summary of the effects of the differences between Ind AS and Indian GAAP on the Companyâs total equity shareholdersâ funds and profit and loss for the financial period for the periods previously reported under Indian GAAP following the date of transition to Ind AS.
Footnotes:
A. Sales Tax Deferral Loan
The Company has fair valued the interest free sales tax deferral loan prospectively by availing exemption under Ind AS 101 and difference between the fair value of the loan and amount payable is considered to be in the nature of a government grant since it represents an incentive received by the company from the government. This incentive is accounted for in accordance with Ind AS 20, Accounting for Government Grants based on the terms of the scheme applicable to the company, and is deferred and amortised to the statement of profit and loss over the period of the sales tax deferral loan. Further The company has accrued interest expense on the loan liability at the effective interest rate (being the discount rate used to determine initial fair value) over the term of the sales tax deferral loan.
B. Excise Duty
Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Thus, sale of goods under Ind AS has increased by the excise duty amounting to Rs 111.38 Crore with a corresponding increase in other expenses.
C. Provision for expected credit loss under Ind AS 109
Under Indian GAAP, the Company had recognized provision on trade receivables based on the expectation of the Company. Under Ind AS, the Company provides loss allowance on receivables based on the Expected Credit Loss (ECL) model which is measured following the âsimplified approachâ at an amount equal to the lifetime ECL at each reporting date.
D. Other financial assets - Security deposits
Under Ind AS, interest free lease deposits are valued at present value as compared to being carried at transaction value in the previous GAAP. The adjustment includes the difference between the book value and present value of interest free security deposits which has been recognised as deferred rent expense. This amount is subsequently charged to the Statement of Profit and Loss on a straight line basis as an interest expense. Further, interest income computed on the present value of the security deposit is recognised over the tenure of the security deposit using the EIR method.
E. Unsecured Loans
Under Ind AS, loans are valued at present value as compared to being carried at cost in the previous GAAP. This adjustment includes the difference between the book value and the present value of an interest free loan or loan below market rate. The interest on the present value of this loan is recognised over the tenure of the loan using the EIR method
F. Reclassification:
Other adjustments on account of transition to Ind AS include reclassification of items of assets, liabilities and taxes to appropriate line items of Ind-AS balance sheet prescribed under Schedule III to the Companies Act, 2013.
G. Assets held for sale
Under the previous GAAP, asset held for sale was presented as part of Property, Plant and Equipment and the same were depreciated over the useful life. Under Ind AS, asset held for sale are separately presented on the face of the Balance Sheet and the company has reversed the depreciation charged to statement of profit and loss for the year ended March 31, 2017 with corresponding effect to retained earnings.
H. Defined Benefit Liabilities
Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit and loss. Under the previous GAAP, these remeasurements were forming part of the Statement of Profit and Loss for the year. There is no impact on the total equity.
I. Advance to Subsidiary Company
Under Indian GAAP, Interest free advance to Subsidiary Company were presented at transaction value under Long Term Loan and Advances. However, under Ind AS, the advance for which repayment is neither planned nor likely in the foreseeable future will forms part of its investment in the subsidiary Company. Accordingly, the company has accounted the advance paid to Subsidiary Company as part of Investment in Subsidiary Company at cost ( since the discount will be 100% of the advance amount and the fair value of the advance itself is zero).
J. Deferred Tax
Under Indian GAAP, deferred tax is accounted using the income statement approach as per timing differences between taxable profits and accounting profits for the period. Ind AS 12 requires accounting for deferred taxes using the balance sheet approach as per temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. In addition, the various transitional adjustments lead to temporary differences as on the transition date. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.
K. Other Comprehensive Income
Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to total comprehensive income as per Ind AS.
L. Statement of Cash Flow
The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.
2.21 Events occurring after the Balance Sheet date
No adjusting or significant non - adjusting events have ocurred between the reporting date and the date of authorisation.
2.22 Previous year figures have been regrouped/ rearranged, wherever considered necessary to conform to current yearâs classification.
Mar 31, 2016
1. i) Considering the uncertainty related to realization, 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) Maharashtra Electricity Regulatory Commission (MERC) had disallowed Company''s petition regarding non implementation of Energy Banking Agreement (EBA) vide its orders dated June 20, 2014 and January 12, 2015. The Company had appealed to Appellate Tribunal (APTEL) against the said order and the same has been dismissed by the APTEL vide their order dated April 1, 2016 . Based on legal advice, the Company, will file an appeal against the order of the APTEL in the Supreme Court. The Company had accrued EBA benefit aggregating to Rs. 49.97 Crore up to March 31, 2014, of which amount outstanding as on March 31,2016 is Rs. 39.53 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, 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 the 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 2014 -15 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 in 2014 -15.
# Provision for Doubtful Debts is relating to Subsidiary Company, Struc to Hydraulics AB Sweden.
2. 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 ".
3. 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.
4. Disclosure regarding exposure of the Company in respect of outstanding foreign currency transactions as on the date of Balance Sheet and which are not hedged by a derivative instruments or otherwise.
5. 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.
6. 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 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 15.15 Crore Loss (Previous Year Rs.1.92 Crore Loss ).
b) Exchange difference loss amortized during the year Rs. 9.52 Crore (Previous Year Rs. 1.90 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, 2016 is Rs. Nil Crore (Previous Year Rs. 9.52 Crore).
ii) Had the Company not exercised the option under AS-11 as stated in para 3.10 (i) the Loss (net of tax) for the year would have been higher by Rs.5.72 Crore (Previous Year Rs.3.43 Crore), Gross Fixed Assets would have been lower by Rs.170.48 Crore (Previous Year Rs. 155.33 Crore) and consequently the Reserves and Surplus would have been Lower by Rs.91.77 Crore (Previous Year Rs.112.11 Crore).
iii) The Company had adopted the Hedge Accounting policy and principles set out in Accounting Standard (AS) 30- "Financial Instrument Recognition and Measurement". As a result of non fulfillment of hedge effectiveness, from September, 2015 quarter onwards Foreign Exchange Gain / ( Loss) including exchange difference recognized as an adjustment to interest cost on designated borrowings in foreign currency and highly probable forecast transactions of revenue streams has been charged to statement of profit and Loss. Amount of unrealized exchange loss including exchange difference recognized as an adjustment to interest cost and foreign currency receivables and payables aggregating to Rs. 22.49 Crore has been recognized in statement of profit and Loss.
7. i) Related party Disclosure as required by Accounting Standard 18 is as under : - |
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a) |
Key Management Personnel |
i) |
Mr. B.R. Taneja - Managing Director |
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u) |
Mr. Rajiv Goel - ChiefFinancial Officer |
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iii) |
Mr. O.P. Kakkar - Non-Executive Director |
b) |
Subsidiary Companies |
i) |
ISMT Enterprises SA, Luxembourg |
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ii) |
Structo Hydraulics AB, Sweden |
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iii) |
ISMT Europe AB, Sweden |
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iv) |
Structo (UK) Limited, United Kingdom |
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v) |
Tridem Port and Power Company Private Limited. |
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vi) |
Nagapattinam Energy Private Limited. |
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vii) |
Best Exim Private Limited. |
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viii) |
Success Power and Infraprojects Private Limited |
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ix) |
Marshal Microware Infrastructure Development Company Private Limited. |
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x) |
PT ISMT Resources, Indonesia |
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xi) |
Indian Seamless Inc, USA. |
c) |
Associate Companies |
i) |
Indian Seamless Enterprises Limited |
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ii) |
Taneja Aerospace and Aviation Limited |
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iii) |
Structo Hydraulics India Private Limited |
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iv) |
Lighto Technologies Private Limited . |
d) |
Details of Transaction |
i) |
Key Management Personnel |
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|
|
Remuneration for the year Rs. 2.52 Crore |
|
|
|
(Previous Year Rs.2.38 Crore) |
|
|
ii) |
Subsidiary and Associate Companies |
a) Sale of finished goods to Subsidiary Companies include sales to Indian Seamless Inc, USA Rs. 12.74 Crore (Previous Year Rs. 108.10 Crore), Structo Hydraulics AB Rs. 13.43 Crore (Previous Year Rs. 24.39 Crore), ISMT Europe AB Rs. 28.42 Crore (Previous Year Rs. 41.83 Crore). Sales of finished goods to Associate Companies include sales to Indian Seamless Enterprises Limited Rs. 7.57 Crore (Previous Year Rs. 6.02 Crore).
b) Purchases from Subsidiary Companies include scrap purchased from Structo Hydraulics AB Rs. 0.59 Crore (Previous Year Rs. 0.61 Crore). Purchases from Associate Companies include spares purchased from Taneja Aerospace and Aviation Limited Rs. Nil Crore (Previous Year Rs.0.42 Crore) .
c) Commission on sales paid to Subsidiary Companies include paid to ISMT Europe AB, Rs. 3.56 Crore (Previous Year Rs. 1.56 Crore) and Indian Seamless Inc, USA Rs. 0.74 Crore ( Previous Year Rs. 1.02 Crore).
d) Lease rent paid to Associate Companies include paid to 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. 1.24 Crore ( Previous Year Rs. 2.38 Crore), ISMT Europe AB Rs. 0.09 Crore ( Previous Year Rs.1.12 Crore), Indian Seamless Inc, USA Rs. 0.05 Crore (Previous year Rs.7.20 Crore ) and reimbursement of expenses paid to Indian Seamless Inc, USA Rs. 1.90.Crore (Previous Year Rs.3.64 Crore) on account of overseas freight and other clearing charges.
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 received from (net) Associate Compnay Taneja Aerospace and Aviation Limited Rs. (0.50) Crore (Previous Year Rs. (8.05) Crore) .
h) Interest received from Associate Company Taneja Aerospace and Aviation Limited Rs. Nil Crore (Previous Year Rs. 0.46 Crore).
i) Interest paid to Associate Company Taneja Aerospace and Aviation Limited Rs. 0.18 Crore (Previous Year Rs.0.13 Crore).
j) Investment in Subsidiary Companies include in Tridem Port and Power Company Private Limited Rs. Nil Crore (Previous Year Rs. 0.04 Crore).
k) Advances given to Subsidiary Company Tridem Port and Power Company Private Limited Rs. 0.54 Crore (Previous Year Rs.
3.08 Crore) for its Port and Power Project and Rs. 16.58 Crore (Previous Year Nil) paid on behalf of Stucto Hydraulics AB ,Sweden against Stand by Letter of Credit invoked by the lender of Structo Hydraulics AB.
l) Unsecured Loan received from Associate Company Indian Seamless Enterprises Limited Rs.1.00 Crore (Previous Year Rs.6.75 Crore).
m) Provision for doubtful debts includes Rs. Nil Crore (Previous Year Rs 47.24 Crore) is relating to Subsidiary Company Structo Hydraulics AB, Indian Seamless Inc, USA Rs. 4.85 (Previous Year Rs. Nil Crore) Crore, ISMT Europe AB Rs. 0.04 Crore (Previous Year Rs. Nil Crore) .
8. The Accounting Standard - 15 (Revised 2005) on âEmployee Benefits " has been adopted by the Company effective from April 1, 2007.
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.
9. The Company had revalued its Leasehold Land located at Ahmednagar and Baramati in 2014-15. 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. 3.14 Crore (Previous Year 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, Bombay between The Indian Seamless Metal Tubes Limited and the Company amounting to Rs. 4.23 Crore ( Previous Year Rs. 4.49 Crore ) has been transferred from Amalgamation Reserve to General Reserve.
10. The Company has Minimum Alternate Tax ( MAT) credit entitlement , which is allowed to be carried forward for a period of ten years under the Income Tax Act ,1961 from the year in which MAT was paid and would lapse thereafter. Accordingly, the unabsorbed MAT credit as onMarch31,2016 of Rs. 9.39 Crore lapsed during the year is charged to statement of Profit and Loss and the balance unabsorbed MAT credit as on March 31,2016 ofRs. 82.05 Crore shall be provided in the statement of Profit and Loss to the extent of lapse of MAT credit in the respective years.
11. The Company through its subsidiary Company, ISMT Enterprises SA. Luxembourg has invested Rs. 48.43 Crore in Structo Hydraulics AB, Sweden (SHAB). The Company had given a corporate guarantee /Stand by Letter of Credit of Rs. 33.16 Crore ( USD 5 Million) in respect of loan availed by SHAB, of which an amount of Rs. 16.58 Crore ( USD 2.50 Million) has been invoked by the lender of SHAB and the Company is seeking requisite approvals from the regulatory authorities for treating the said payment as equity investment in SHAB.The receivable on account of sales made to SHAB is Rs. 57.33 Crore against which a provision for doubtful debts is made of Rs. 47.24 Crore in financial year 2014-15 and the net balance of Rs. 10.09 Crore is collectible. No provision however has been made in respect of temporary diminution in the value of investment made in ISMT Enterprises SA, which is in the nature of forward integration and considered Strategic and Long Term.
12. Consequent upon erosion of more than 50 % of Peak Net Worth of the Company as at March 31, 2015, the Company had reported the same to Board of Industrial and Financial Restructuring on November 19, 2015. The Company has continued to incur losses during current year on account of adverse market conditions in both domestic and export markets. A provisional anti-dumping duty has already been levied by Government on import of tubes from China. The Company is taking various corrective steps-All round reduction of fixed and variable costs; restructuring of its debts in line with the available cash flows and sale of non-core assets. The Company has therefore continued to prepare its financial statements on Going Concern basis.
13. The lenders of the Company had constituted a Joint Lenders Forum (JLF) and undertaken a Corrective Action Plan ( CAP) for the Company during the year 2014-15, which could not be effective on account of steep decline in volumes during latter part of the year 2014-15 due to weak domestic / export demand and dumping of Chinese imports. The JLF on June 13 , 2015 agreed in principle for restructuring the debt of the Company and initiated various steps as per JLF guidelines culminating into an agreed Restructuring Scheme on January 5, 2016. After Lead Bank''s approval, the scheme will require approval of the Independent Evaluation Committee (IEC) before implementation by respective Banks.
14. Tridem Port and Power Company Private Limited (TPPCL), the wholly owned subsidiary of the Company, along with its subsidiaries had proposed to set up a thermal power project along with its captive port at Tamil Nadu. However, on account of subsequent adverse developments, the group has decided not to pursue these projects. No provision has, however, been considered necessary for the amount invested in Fixed Assets including Capital Work-in-Progress of the said project, since in the opinion of the management, the group expects to realize not less than its carrying amount of assets.
15. The Company had set up a modern 40 MW Captive Power Project (CPP) at Chandrapur, Maharashtra. Though the CPP has not been operational for last two years and held for disposal, in view of the management, the net realizable value of the CPP is not less than its carrying amount.
16. Previous Year figures have been regrouped and reclassified wherever necessary to conform to the Current Year Classification.
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 CompanyÂs 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 CompanyÂs 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 CompanyÂs 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
CompanyÂs 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 CompanyÂs 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
ÂSeamless Tube and SteelÂ.
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 ÂUnallocable Assets /
Liabilities Â.
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 ÂThe effects
of changes in Foreign Exchange RatesÂ, 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 Â) to ÂForeign
Currency Monetary Item Translation Difference AccountÂ. 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 ÂForeign Currency Monetary Item
Translation Difference Account and charged to the Statement of
Profit and Loss and balance in the ÂForeign 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- ÂFinancial Instrument Recognition and
MeasurementÂ. 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 ÂÂ 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) EmployerÂs 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 HonÂble 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.