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Notes to Accounts of Jayaswal Neco Industries Ltd.

Mar 31, 2015

1. The Company is entitled to defer its liability to pay Sales Tax (including a portion of Purchase Tax) in respect of its certain units. The liability under the Schemes as on 31st March, 2015 is Rs.7797.64 lacs (Previous Year : Rs. 7797.64 lacs) which is provided for on the basis of its Net Present Value of Rs.4411.10 lacs (Previous Year : Rs.3942.29 lacs). This Sales-tax liability is repayable in five equal annual installments starting at the end of the tenth year from the year to which it relates.

2. As on 31st March, 2015, the Company has overdue of principal of Rs.1618.89 lacs (Previous year Nil ) and Interest of Rs.6557.07 lacs (Previous year Nil ) included in current maturities of Long term debt and interest accrued and due on borrowings respectively in Note No. 10 for a period of less than 60 days.

As on 31st March, 2015, the Company has overdue of Lease Obligations of Rs. 23.29 lacs (Previous year Rs.17.62 lacs) included in current maturities of lease obligations in Note No. 10.

NOTE: 3. Previous Year's figures have been reworked / regrouped / rearranged / reclassified wherever necessary.

B Management is of the view that above litigations will not impact significantly on the financial position of the Company.

NOTE: 4 SEGMENT REPORTING :

A. Segment information as per Accounting Standard - 17 on Segment Reporting :

Information provided in respect of revenue items for the year ended 31st March 2015 and in respect of assets / liabilities as at 31st March, 2015.

Information about Primary (Product wise) segments :

B. Segment Identification, Reportable Segments and definition of each segment : i. Primary / Secondary Segment Reporting Format :

a) The risk-return profile of the Company's business is determined predominantly by the nature of its products. Accordingly, the business segments constitute the Primary Segments for disclosure of segment information.

b) Since all the operations of the Company are predominantly conducted within India, there are no separate reportable geographical segments.

ii. Reportable Segments :

Segments have been identified and reported taking into account the differing risks and returns, nature of products, the organizational structure and the internal reporting system of the Company.

iii. Segment Composition :

a) Steel Segment is engaged in manufacture and sale of Pig Iron, Billets, Rolled Products, Sponge Iron and includes its captive Power Plants at its unit located at Siltara, Raipur and Mining activities in the state of Chhattisgarh, Jharkhand and Maharashtra.

b) Iron and Steel Castings Segment comprises of manufacture and sale of Engineering and Automotive Castings with production facilities at Nagpur, Bhilai and Anjora.

c) Other Segment comprise of trading of cotton yarn, coal & PVC pipes.

NOTE : 5 IN ACCORDANCE WITH CLAUSE 32 OF LISTING AGREEMENT THE DETAILS OF ADVANCE IS AS UNDER : a. To Jayaswal Neco Urja Limited (JNUL), a Subsidiary , closing balance as on 31st March, 2015 is Rs.758.30 lacs (Previous year Rs. 758.30 lacs). Maximum balance outstanding during the year was Rs.758.30 lacs (Previous year Rs. 758.30 lacs).

NOTE: 6 The Exceptional item represents additional levy @ Rs. 295 per MT amounting to Rs.9161.53 lacs on the coal extracted till 31st March, 2014, in pursuance of the order dated 24th September, 2014 of Hon'ble Supreme Court .

NOTE: 7 Expenditure related to Corporate Social Responsibility as per Sec 135 of the Companies Act, 2013 read with Schedule VII.

a) Gross amount Rs. 161.84 lacs required to be spent by the Company during the year.

b) Amount spent during the year Rs. 101.12 lacs and Rs. 60.72 lacs short spend.

NOTE: 8 Details of Loan given, Investment made and Corporate Guarantee given covered u/s 186(4) of the Companies Act, 2013.


Mar 31, 2013

1.01 Buildings include cost of building aggregating to Rs. 144.43 lacs ( Previous Year Rs. 144.43 lacs) constructed on land, ownership of which does not vest with the Company.

1.02 Indefeasible Right to Use represents the cost incurred by the Company for the exclusive right of usage of certain pieces of land during the contract period.

1.03 Addition to Plant and Equipments includes Borrowing Cost of Rs 888.17 lacs (Previous Year Rs. 1968.92 lacs).

1.04 The gross block of fixed assets includes Rs. 44.28 lacs ( Previous Year Rs. 44.28 lacs) on account of revaluation of fixed assets. Consequent to said revaluation there is an additional charge of depreciation of Rs. 0.76 lacs (Previous Year Rs. 0.77 lacs) and an equivalent amount has been withdrawn from Revaluation Reserve and credited to Surplus.

1.05 The Company has undertaken Projects for enhancement of capacities of its Foundries in Nagpur and Integrated Steel Plant in Chattisgarh by expanding its Steel Melt Shop, Rolling Mills, Pellet Plant, Sponge Iron Plant, Captive Power Plants, Coal Washeries, and developing its Coal and Iron Ore Mines (the Projects). Since the projects are under construction stage, the expenditure incurred towards construction of projects has been considered as Pre- operative Expenditure, the details of which are as under:

1.06 During the year Ministry of Coal raised a demand for invoking the Bank Guarantee of Rs. 1000 Lacs furnished by the Company, in respect of the Company''s Moitra Coal Block in Jharkhand for delay in start of production of coal. The Company has filed a writ petition before the Hon''ble High Court at New Delhi, which has, by an interim order, restrained the Bank from transmitting the amount till the next date of hearing.

1.07 The Company had filed Mining Lease applications for Rowghat Iron Ore Deposit in Bastar District Chhattisgarh. The Chhattisgarh State Government (SG) had rejected the same which were challenged by the Company by filing a revision application. The SG had filed a complaint before Ministry of Mines which had referred the matter to the Chief Vigilance Officer (CVO) which couldn''t make out any case against the Company. Subsequently revision petition of the Company was allowed by the Adjudicating authority as well as the Delhi High Court which upheld the order of the Revisional Authority and also observed that the Company had successfully undertaken the Prospecting operations in the area. During the year, on a fresh complaint by the SG to the Chief Vigilance Commission (CVC) containing the same allegations the Central Bureau of Investigations(CBI) on the directions of the CVC had registered a FIR against the Company alleging certain irregularities against which the company has filed a writ petition for quashing of the FIR before the Hon''ble Delhi High Court, in which the High Court has directed CBI not to take any coercive action against the Petitioners till the next date of hearing.

1.08 In accordance with the Accounting Standard (AS-28) on "Impairment of Assets", the Management during the year carried out an exercise of identifying the assets that may have been impaired in respect of each cash generating unit in accordance with the said Accounting Standard. On the basis of this review carried out by the management, there was no impairment loss on Fixed Assets during the year ended 31st March, 2013.

1.09 Presently the company is liable to pay Minimum Alternate Tax (MAT) under section 115JB of the Income Tax Act, 1961 ( The Act) and the amount paid as MAT is allowed to be carried forward for being set off against the future tax liabilities computed in accordance with the provisions of the Act, other than Section 115JB, in next ten years. Based on the future projection of the performances, the Company will be liable to pay the income tax computed as per provisions, other than under section 115JB of the Act. Accordingly as advised in Guidance note on " Accounting for Credit available in respect of Minimum Alternate Tax under the Income Tax Act 1961 " issued by the Institute of Chartered Accountants of India, Rs. 864.84 lacs being the excess of tax payable under section 115JB of the Act over tax payable as per the provisions other than section 115JB of the Act has been considered as MAT Credit Entitlement and credited to Statement of Profit and Loss. The total MAT Credit as at 31st March, 2013 is Rs.7194.37 lacs (Previous Year Rs. 6329.53 lacs).

NOTE : 2

In the opinion of the management, Current Assets and Loans and Advances are of the value stated, if realised in the ordinary course of business.

NOTE : 3 SEGMENT REPORTING :

A Segment information as per Accounting Standard - 17 on Segment Reporting :

Information provided in respect of revenue items for the year ended 31st March 2013 and in respect of assets / liabilities as at 31st March, 2013.

Information about Primary (Product wise) segments :

B. Segment Identification, Reportable Segments and definition of each segment :

i. Primary / Secondary Segment Reporting Format :

a) The risk-return profile of the Company''s business is determined predominantly by the nature of its products. Accordingly, the business segments constitute the Primary Segments for disclosure of segment information.

b) Since all the operations of the Company are predominantly conducted within India, there are no separate reportable geographical segments.

ii. Reportable Segments :

Segments have been identified and reported taking into account the differing risks and returns, nature of products, the organisational structure and the internal reporting system of the Company.

iii. Segment Composition :

a) Steel Segment is engaged in manufacture and sale of Pig Iron, Billets, Rolled Products, Sponge Iron and includes its captive Power Plants at its unit located at Siltara, Raipur and Mining activities in the state of Chhattisgarh, Jharkhand and Maharashtra.

b) Iron and Steel Castings Segment comprises of manufacture and sale of Engineering and Automotive Castings with production facilities at Nagpur, Bhilai and Anjora.

NOTE : 4 RELATED PARTY DISCLOSURES :

A. List of related parties :

(As certified by the Company)

I. Subsidiary

Jayaswal Neco Urja Limited

II. Associate Companies Maa Usha Urja Limited

III. Key Management Personnel

Shri B L Shaw Shri Ramesh Jayaswal

Shri Arbind Jayaswal Shri P K Bhardwaj

IV. Enterprises in which key managerial personnel and their relatives are able to exercise significant influence with whom transactions have taken place during the year :

(Other related parties)

Abhijeet Infrastructure Limited

Neco Heavy Engineering & Castings Limited

Neco Ceramics Limited NSSL Limited

North Karnapura Coal Company Limited

Deify Infrastructures Limited

Jayaswal Neco Metallics Private Limited

Apex Spinning Mills Private Limited

Avon Sales & Services Private Limited

Jyotikant Investments Private Limited

Jayaswal Neco Infrastructures Private Limited

Jayaswal Neco Steel & Mining Limited

Parivar Food Industries Private Limited

Abhijeet Ferrotech Limited

AMR Iron & Steel Private Limited

Neco Mining Company Limited

Steel & Tube Exports Limited

Corporate Ispat Alloys Limited

Jayaswal Neco Power Holding Company Limited

Jayaswal Holdings Private Limited

Anurag Sales & Services Private Limited

Karamveer Impex Private Limited

Nine Star Plastic Packing Service Private Limited

Vibrant Electronics Limited

Jayaswal Neco Energy Private Limited

Jayaswal Neco Power Private Limited

Terra Infra Development Limited

Nagpur Scrap Suppliers Private Limited

NOTE : 5 IN ACCORDANCE WITH CLAUSE 32 OF LISTING AGREEMENT THE DETAILS OF ADVANCE IS AS UNDER:

a. To Jayaswal Neco Urja Limited (JNUL), a Subsidiary , closing balance as on March 31, 2013 is Rs. 603.79 lacs (Previous year Rs. 238.94 lacs). Maximum balance outstanding during the year was Rs. 603.79 lacs (Previous year Rs. 238.94 lacs).

b. JNUL has not made investment in the shares of the Company.

c. As per the Company''s policy loans to employees are not considered in ''a'' above.

NOTE : 6

Previous Year''s figures have been reworked / regrouped / rearranged / reclassified wherever necessary to make them comparable with those of current year.


Mar 31, 2012

NOTE : 1 CONTINGENT LIABILITIES AND COMMITMENTS

(to the extent not provided for) 31.03.2012 31.03.2011 (Rs.in lacs) (Rs.in lacs)

A Contingent Liabilities (To the extent not provided for):

(No cash outflow is expected except stated otherwise)

a. Guarantees given by the Company's Bankers. 2834.36 2739.35

(Bank guarantees are provided under contractual/legal obligation)

b. Corporate Guarantee 1181.00 1181.00 (Given to Banks against the borrowings taken by one of the associate Company)

c. Demands not acknowledged as debts

i) Disputed Excise Duty and Service Tax 2724.49 2527.31

ii) Disputed Sales Tax 2971.85 1381.64

iii) Disputed Customs Duty 787.30 761.65 (Relating to cess on Metallurgical Coke)

iv) Other Disputed Demands 1680.91 1723.26

(Mainly related to demand of Cess on Power and Electricity Duty.)

v) Third Party Claims 407.21 321.61

(Matters are pending before various forum)

d. Liability in respect of Bills Discounted 14323.71 8158.92

e. Letters of credit opened in favour of suppliers 41634.26 9790.07 (Cash flow is expected on receipt of material from suppliers)

B Capital Commitments :

Estimated amount of contracts remaining to be executed on Capital Accounts and not provided for (net of advances) 135227.71 130277.93 (Cash flow is expected on execution of such capital contracts on progressive basis)

NOTE : 2

In the opinion of the management, Current Assets and Loans and Advances are of the value stated, if realised in the ordinary course of business.

NOTE : 3 SEGMENT REPORTING :

A. Segment information as per Accounting Standard - 17 on Segment Reporting :

Information provided in respect of revenue items for the year ended 31st March 2012 and in respect of assets / liabilities as at 31st March, 2012.

Information about Primary (Product wise) segments :

B. Segment Identification, Reportable Segments and definition of each segment : i. Primary / Secondary Segment Reporting Format :

a) The risk-return profile of the Company's business is determined predominantly by the nature of its products. Accordingly, the business segments constitute the Primary Segments for disclosure of segment information.

b) Since all the operations of the Company are predominantly conducted within India, there are no separate reportable geographical segments.

ii. Reportable Segments :

Segments have been identified and reported taking into account the differing risks and returns, nature of products, the organisational structure and the internal reporting system of the Company.

iii. Segment Composition :

a) Steel Segment is engaged in manufacture and sale of Pig Iron, Billets, Rolled Products, Sponge Iron and includes its captive Power Plants at its unit located at Siltara, Raipur and Mining activities in the state of Chhattisgarh, Jharkhand and Maharashtra.

b) Iron and Steel Castings Segment comprises of manufacture and sale of Engineering and Automotive Castings with production facilities at Nagpur, Bhilai and Anjora.

NOTE : 4

Previous Year's figures have been reworked / regrouped / rearranged / reclassified wherever necessary to make them comparable with those of current year.


Mar 31, 2011

31.03.2011 31.03.2010

(Rs.in Lacs) (Rs.in Lacs)

1 Previous Year's figures have been reworked / regrouped / rearranged / reclassified wherever necessary.

2 Contingent Liabilities :

a. Guarantees given by the Company's Bankers. 2739.35 2879.53 (Bank guarantees are provided under contractual/legal obligation. No cash outflow is expected.)

b. Corporate Guarantee 1181.00 457.83 (Given to Banks against the borrowings taken by one of the associate Company)

c. Demands not acknowledged as debts

i) Disputed Excise Duty and Service Tax 2527.31 734.88

(No cash outflow is expected in the near future.)

ii) Disputed Sales Tax 1381.64 1044.09

(No cash outflow is expected in the near future.)

iii) Disputed Customs Duty 761.65 736.01

(Relating to cess on Metallurgical Coke)

iv) Other Disputed Demands 1723.26 51.33

(Mainly related to demand of Cess on Power, no cash outflow is expected in the near future.)

v) Third Party Claims 321.61 329.44

(Matters are pending before various forum. No cash outflow is expected.)

e. Liability in respect of Bills Discounted 8158.92 3141.78 (No cash outflow is expected.)

f. Letters of credit opened in favour of suppliers 9790.07 2949.31 (Cash flow is expected on receipt of material from suppliers)

3 Estimated amount of contracts remaining to be executed on 130277.93 86.47 Capital Accounts and not provided for (net of advances)

(Cash flow is expected on execution of such capital contracts on progressive basis)

3 In the opinion of the management, Current Assets, Loans and Advances are of the value stated, if realised in the ordinary course of business.

4 a. The Company has undertaken Projects for enhancement of Capacities of its Intergrated Steel Plant in Chattisgarh by expanding its Steel Melt Shop, Rolling Mills, Sponge Iron Plant, Captive Power Plants, Coal Washeries and developing its Coal and Iron Ore Mines (the Project). A part of the cost of the Project is to be financed by the Equity Contribution. Accordingly the Promoters along with their Associates have contributed Rs.22029 Lacs which has been accounted as "Advance received against Share Application" pending necessary approvals and compliance of the legal requirements as required under the Companies Act, 1956 and SEBI Guidelines for issuance of shares on preferential basis.

5 During the year, the Board of Directors has approved the Scheme of Arrangement ("the Scheme") under section 391-394 of the Companies Act, 1956, between the Company and Corporate Ispat Alloys Limited ("CIAL") providing for demerger of Steel Division of CIAL for the purpose of its merger with the Company with effect from 1st April, 2008. Necessary approvals from the Stock Exchanges under clause 24(f) of the Listing Agreement have been received. The Company is in the process of filing the application to the High Court seeking directions for convening meetings of Shareholders and Creditors of the Company.

On obtaining the required statutory approvals and sanction of the High Court, and the Scheme coming into force, the Company shall pursuant to the Scheme issue as consideration for transfer of Assets and Liabilities of the Steel Division, 3,26,49,600 Equity Shares of Rs. 10/- each credited as fully paid up to the eligible shareholders of CIAL in the ratio of 114 Equity Shares of the Company for every 10 Equity Shares held by them in CIAL as on the record Date.

iii) The expenditure on account of exchange difference on outstanding forward exchange to be recognised in the Profit and Loss account of subsequent period - Rs. 20.45 Lacs (Rs 26.10 Lacs) 8 The Company is entitled to defer its liability to pay Sales Tax (including a portion of Purchase Tax) in respect of its certain units. The liability under the Schemes as on 31st March, 2011 is Rs. 5096.14 Lacs (Previous Year : Rs.4147.55 Lacs) which is provided for on the basis of its Net Present Value of Rs. 2124.96 Lacs (Previous Year : Rs.1687.51 Lacs).

B. Segment Identification, Reportable Segments and definition of each segment :

i. Primary / Secondary Segment Reporting Format :

a) The risk-return profile of the Company's business is determined predominantly by the nature of its products. Accordingly, the business segments constitute the Primary Segments for disclosure of segment information.

b) Since all the operations of the Company are predominantly conducted within India, there are no separate reportable geographical segments.

ii. Reportable Segments :

Segments have been identified and reported taking into account the differing risks and returns, nature of products, the organisational structure and the internal reporting system of the Company.

iii. Segment Composition :

a) Steel Segment is engaged in manufacture and sale of Pig Iron, Billets, Rolled Products, Sponge Iron and includes its captive Power Plants at its unit located at Siltara, Raipur and Mining activities in the state of Chhattisgarh, Jharkhand and Maharashtra.

b) Iron and Steel Castings Segment comprises of manufacture and sale of Engineering and Automotive Castings with production facilities at Nagpur, Bhilai and Anjora.

6 Related Party Disclosures :

A. List of related parties :

(As certified by the Company)

I. Subsidiary

Jayaswal Neco Urja Limited (formerly known as Raigarh Energy Limited)

II. Associate Companies

Maa Usha Urja Limited

Ferromax Mines and Minerals Private Limited (upto 02.02.2011)

III. Key Management Personnel

Shri B.L. Shaw

Shri Arbind Jayaswal

Shri Ramesh Jayaswal

Shri P.K.Bhardwaj

IV. Enterprises in which key managerial personnel and their relatives are able to exercise significant influence with whom transactions have taken place during the year:

(Other related parties)

Abhijeet Infrastructure Limited

AMR Iron and Steel Private Limited

Neco Heavy Engineering and Castings Limited

Neco Mining Company Limited

Neco Ceramics Limited

Steel & Tube Exports Limited

NSSL Limited

Corporate Ispat Alloys Limited

JLD Yavatmal Energy Limited

Neco Industries Limited

North Karnapura Coal Company Limited

Jayaswal Holdings Private Limited

Deify Infrastructures Limited

Anurag Sales & Services Private Limited

Nilhat Commodities Private Limited

Karamveer Impex Private Limited

Apex Spinning Mills Private Limited

Nine Star Plastic Packaging Services Private Limited

Avon Sales & Services Private Limited

Vibrant Electronics Limited

Jyotikant Investments Private Limited

Jayaswal Neco Energy Private Limited

Jayaswal Neco Infrastructures Private Limied

Jayaswal Neco Power Private Limited

Jayaswal Neco Steel and Mining Private Limited

7 During the year ended 31st March 2011, the Company disposed off its entire investment in Ferromax Mines and Minerals Private Limited (FMMPL). Resultantly, FMMPL has ceased to be an associate of the Company.

8 In accordance with the Accounting Standard (AS-28) on "Impairment of Assets", the Management during the year carried out an exercise of identifying the assets that may have been impaired in respect of each cash generating unit in accordance with the said Accounting Standard. On the basis of this review carried out by the management, there was no impairment loss on Fixed Assets during the year ended 31st March, 2011.

9 Presently the Company is liable to pay Minimum Alternate Tax (MAT) under section 115JB of the Income Tax Act, 1961 ( The Act) and the amount paid as MAT is allowed to be carried forward for being set off against the future tax liabilities computed in accordance with the provisions of the Act, other than Section 115JB, in next ten years. Based on the future projection of the performances, the Company will be liable to pay the income tax computed as per provisions, other than under section 115JB, of the Act. Accordingly as advised in Guidance note on " Accounting for Credit available in respect of Minimum Alternate Tax under the Income Tax Act 1961 " issued by the Institute of Chartered Accountants of India, Rs. 2977.09 Lacs being the excess of tax payable u/s 115JB of the Act over tax payable as per the provisions other than section 115JB of the Act has been considered as MAT credit entitlement and credited to Profit and Loss Account. Further, during the year, pursuant to the Scheme of Arrangement between the Company and Inertia Iron and Steel Industries Private Limited (IISPL) for the Assessment Year: 2008-09, the Company has accounted for MAT Credit Entitlement which is relating to IISPL aggregating to Rs.25.18 Lacs by adjusting the General Reserves. The aggregate MAT Credit Entitlement available to the Company as on 31st March, 2011 is Rs. 5390.88 Lacs.

10 The Company has received various Show-cause Notices from the Office of the Commissioner of Central Excise which mainly relates to availment of Cenvat /Customs Duty /Service Tax Credit on Inputs/ Services taken under lease etc. The Company does not foresee any losses on this account and accordingly no provision has been made in the books of account.

11 a. The cost of assets taken on lease prior to 1st April, 2001 amounted to Rs. 665.16 Lacs (Previous Year Rs. 1270.66 Lacs). Future Obligations towards Lease Rentals under the lease agreements are Nil (Previous Year Nil).

(i) The above Cash Flow Statement has been prepared under the "Indirect Method" as set out in Accounting Standard - 3 "Cash Flow Statements" issued by the Institute of Chartered Accountants of India.

(ii) Figures in brackets indicate Outflows.

(iii) Cash and Cash Equivalents at the end of the year includes deposits with banks aggregating to Rs. 5508.21 Lacs (Previous Year Rs. 2433.92 Lacs) which are pledged with banks as margin for Bank Guarantee and Letters of Credit.

(iv) Previous year's figures have been regrouped / rearranged wherever necessary to make them comparable with those of current year.

 
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