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Notes to Accounts of KIC Metaliks Ltd.

Mar 31, 2018

1. Corporate information

K I C Metaliks Limited (the Company) is a Public Limited Company and incorporated under the provisions of the Companies Act, 1956. Its Shares are listed on the Bombay Stock Exchange (BSE). The Company is primarily engaged in manufacturing and sale of Pig Iron. The Company presently has manufacturing facilities at Vill- Raturia, Angadpur, near the city of Durgapur, in the state of West Bengal, India and registered office at “Sir RNM House, 4th floor, Room No. 2, 3B, Lal Bazar Street, Kolkata - 700 001.

2. Significant accounting policies and key estimates and judgements

2.1 Statement of compliance

These financial statements have been prepared to comply in all material aspects with Indian Accounting Standards (‘Ind AS’) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 notified under Section 133 of the Companies Act, 2013 and other provisions of the Companies Act, 2013 to the extent applicable.

Upto the year ended 31st March, 2016, the Company had prepared its financial statements in accordance with accounting standards notified under the Section 133 of the Companies Act 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 [Indian GAAP]. The date of transition to Ind AS is 1st April, 2016. Refer 2.4.t. for the details of firsttime adoption exemptions availed by the Company.

2.2 Basis of preparation of financial statements

The Company has adopted all the issued Ind AS and such adoption was carried out in accordance with Ind AS.

The financial statements have been prepared under the historical cost convention with the exception of certain assets and liabilities that are required to be carried at fair values by Ind AS.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosures in these financial statements is determined on such a basis, and measurements that have some similarities to fair value but are not fair value, such as value in use in Ind AS 36 Impairment of Assets.

2.3 Use of estimates

In preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and the associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.

Significant judgements and estimates relating to the carrying values of assets and liabilities include useful lives of property, plant and equipment and intangible assets, impairment of property, plant and equipment, intangible assets, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and contingencies.

3.1 Rights, preferences and restrictions attached to shares

The Equity Shares of the company have par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. All these Equity Shares have same right with respect to payment of dividend, repayment of capital and voting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of preferential amounts, in proportion to their shareholding.

Capital Redemption Reserve represents the reserve created against the redemption of 8% Redeemable Cumulative Preference Shares of Rs. 10/- each, during the financial year 2005-06. It is a statutory, non-distributable reserve into which amounts are transferred following the redemption of shares as per the relevant provisions of the Companies Act prevailing at that time.

Retained Earnings represents the undistributed profits of the Company. The amount that can be distributed by the Company as dividends to its Equity Shareholders is determined on the basis of the balance of the retained earnings of the financial statements after considering the requirements of the Companies Act, 2013.

Note:

(i) Vehicle loans are secured by hypothecation of vehicles purchased under the respective agreements. Interest rate varies from 9.70% to 10.12% p.a, repayable in equated monthly instalment.

(ii) Redeemable Non-Cumulative Preference Shares of Rs. 10/- each carries a fixed dividend rate of 7%. The Preference Shares are redeemable at par on completion of the 12th year (revised from earlier 19th year), however at the discretion of the Company, same can be redeemed any time after 5 years from the date of issue. In case of liquidation, the Preference Shareholders will have preference over the Equity Shareholders over the distribution of remaining assets of the Company.

(iii) Other loans carries interest rate of 10.70% p.a, repayable after 5 years from the date of the loan.

Note: The Working Capital loans from banks are secured by way of first charge on Current Assets of the Company comprising stock of raw materials, stock in process, finished goods, stores and book debts, both present and future and second charge on fixed assets of the Company and corporate guarantee of promoter Company and personal guarantee of the Promoter Director.

Note:

(i) Trade payables are non-interest bearing and are normally settled on 1-90 days.

(ii) There are no micro, small and medium class enterprises to whom the company owes dues, which are outstanding for more than 45 days as at 31.03.2018. The above information regarding micro, small and medium class enterprises has been determined to the extent such parties have been identified on the basis of available information with the Company.

The Government of India introduced Goods and Service Tax (GST) w.e.f July 01st, 2017. Since GST is collected on behalf of the Government , as per requirement of Ind AS 18, revenue from 1st July, 2017 to year ended March 31st, 2018, is presented net of GST. Revenue for the previous period includes excise duty which now has been subsumed in GST. Accordingly, revenue from operations for the current year ended March 31st, 2018 are not comparable with previous year.

4. (SEGMENT REPORTING

Based on the “Management approach” as defined by Ind AS 108, the chief operating decision maker (CODM) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators. The company is predominantly engaged in a single reportable segment of Iron & Steel during the year. The risks and returns of manufacturing of pig iron and trading of its raw material are directly associated with Iron & Steel business and hence treated as single reportable business segment. The other activities for cement manufacturing is less than 10% of total revenue and hence there are no additional disclosures to be made other than those already provided in the financial statements. The company is operating within India only and hence India is the only geographical segment.

5. [EMPLOYEE BENEFITS

5.1 Defined contribution plans

The Company participates in a number of defined contribution plans on behalf of relevant personnel. Any expense recognised in relation to these schemes represents the value of contributions payable during the period by them at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior month’s contributions that were not due to be paid until after the end of the reporting period.

Provident fund

In accordance with Indian law, eligible employees of K I C Metaliks Limited are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees’ salary (currently 12% of employees’ salary). During the year, the company has recognised Rs. 70.27 lakhs (2016-17: Rs. 57.30 lakhs) as contribution in the Statement of profit and loss.

Employees’ state insurance

In accordance with Indian law, eligible employees of K I C Metaliks Limited are entitled to receive benefits in respect of employee’s state insurance, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees’ salary (currently 4.75 % of employees’ salary). During the year, the company has recognised Rs. 32.11 lakhs (2016-17: Rs. 25.20 lakhs) as contribution in the Statement of profit and loss.

5.2 Defined benefit plans Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 26 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation. The Company is exposed to interest risk, liquidity risk, salary escalation risk, demographic risk and regulatory risk.

i. Interest risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

ii. Liquidity risk: This is the risk that the Company is not able to meet the short-term gratuity payouts. This may arise due to nonavailability of enough cash / cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.

iii. Salary Escalation risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

iv. Demographic risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

v. Regulatory risk: Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act , 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (e.g. Increase in the maximum limit on gratuity of Rs. 20 Lakhs).

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at 31.03.2018 by Kushwant Pahwa, Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

The current service cost and the net interest expense for the year are included in the “Employee benefits expense” line item in the statement of profit and loss.

The remeasurement of the net defined liability is included in other comprehensive income.

The amount included in the balance sheet arising from the entity’s obligation in respect of its defined benefit plans is as follows:

Sensitivity analysis of significant assumptions

The following table present a sensitivity analysis to one of the relevant actuarial assumption, holding other assumptions constant, showing how the defined benefit obligation would have been affected by changes in the relevant actuarial assumptions that were reasonably possible at the reporting date.

Details of plan assets

The scheme is unfunded.

The average duration of the defined benefit plan obligation at the end of the reporting period is 9 years (as at 31.03.2017: 9 years, at as 01.04.2016: 9 years).

6.1 Capital Management

The Company’s objectives when managing capital are to:-

- maximize the shareholder value;

- safeguard its ability to continue as a going concern;

- maintain an optimal capital structure to reduce the cost of capital; and

- ensure Compliance with covenants related to its credit facilities.

The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management of deployed funds and leveraging opportunities in the financial markets so as to maintain and sustain future development of the business.

The Company’s capital management objective is to maintain an optimal debt-equity structure so as to reduce the Cost of Capital, thereby enhancing returns to shareholders. The Company also has a policy of making judicious use of various available debt instruments within its overall Working Capital drawing limit.

The Debt-Equity Ratio of the Company is as follows :

7. [FINANCIAL RISK MANAGEMENT

The Company’s principal financial liabilities comprises of loans and borrowings, trade and other payables. The main purpose of these financial liabilities are to finance the Company’s operations and to support its operations. The Company’s principal financial assets include trade and other receivables, and cash and short-term deposits that derive directly from its operations.

7.1 Risk Management Framework

Managing Director and Chief Financial Officer of the Company evaluates and manages the uncertainties in the Company. They conduct meetings at regular intervals involving other high level officers of the Company and provides updates to the Audit Committee/Board.

The management of financial risks by the Company is summarized below:-

7.1.1 Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk as a result of the risk of counterparties defaulting on their obligations. The Company’s exposure to credit risk primarily relates to investments, accounts receivable and cash and cash equivalents. The Company monitors and limits its exposure to credit risk on a continuous basis. The Company’s credit risk associated with accounts receivable is primarily related to lease rental and maintenance dues of let-out shops. To manage this the Company periodically reviews the financial reliability of its customers, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of accounts receivables.

7.1.2 Liquidity Risk

The Company is exposed to liquidity risk related to its ability to fund its obligations as they become due. The Company monitors and manages its liquidity risk to ensure access to sufficient funds to meet operational and financial requirements. The Company has access to credit facilities and monitors cash balances daily. In relation to the Company’s liquidity risk, the Company’s policy is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions as they fall due while minimizing Finance Costs, without incurring unacceptable losses or risking damage to the Company’s reputation.

7.1.3 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.

i) Foreign Currency Risk

Foreign Currency Risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Any weakening of the functional currency may impact the Company’s cost of imports and cost of borrowings and consequently may increase the cost of financing the Company’s capital expenditures. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.

ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company manages its interest risk exposure relating to the financial instrument classified at amortised cost by using the market interest rate as the effective interest rate and the changes in the assets liabilities is accounted for as interest income/expenses with respect to Financial Assets/Financial Liabilities respectively. The Company however has only fixed interest rate term loan.

As there is no primary exposure to the interest rate risk the sensitivity analysis has not been performed by the Company.

8. Previous year’s figure have been re-grouped/re-classified wherever necessary.


Mar 31, 2015

1. Estimated amount of contracts remaining to be executed (Net of advances) on capital account and not provided for Rs. 22.06 ' Lakhs (previous year Rs. 28.64 Lakhs).

2. Contingent Liabilities not provided for in respect of :

a) Excise Duty matters pending Rs. 127.08 Lakhs (previous year Rs. 127.08 Lakhs) before CESTA Tribunal.

b) West Bengal Vat Appeal matters pending Rs. 12.68 Lakhs before WB Sales Tax Tribunal and Rs. 312.31 Lakhs before Senior ; Joint Commissioner, Commercial Taxes. (previous year Rs. NIL).

c) Jharkhand Entry Tax matters pending Rs. 81.75 Lakhs (previous year Rs. 81.75 Lakhs).

d) Electricity matters with The Durgapur Projects Limited pending Rs. 97.94 Lakhs (previous year Rs. 97.94 Lakhs).

3. Employee Benefits : Disclosure Pursuant to Accounting Standard - 15 (Revised 2005). The Employee's gratuity scheme - is unfunded and the Actuarial Valuation of Gratuity Scheme is prepared as at 31st March, 2015 under revised Accounting Standard - 15 norms and accordingly Rs. 11.59 Lakhs has been provided in the books in the current financial year.

4. a) Primary Segment (by Business Segment) :

Based on the risks and returns associated with the business operations and in terms of Accounting Standard - 17, the Company is predominantly engaged in a single reportable segment of Iron and Steel during the year. The risks and returns of manufacturing of pig iron and trading of its raw material are directly associated with Iron and Steel business and hence treated as a single reportable business segment. The other activities for Cement manufacturing is less than 10% of Total Revenue and hence there are no additional disclosures to be made under Accounting Standard - 17, other than those already provided in the financial statements.

b) Secondary Segment (by Geographical Segment) :

i) Te secondary segment is based on geographical demarcation i.e., in India and outside India.

5. Tere are no micro, small and medium class enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2015. Te above information regarding micro, small and medium class enterprises has been determined to the extent such parties have been identified on the basis of available information with the Company.

6. In pursuance of the provisions of the Companies Act, 2013, effective from 1st April, 2014, the Company has reassessed the - remaining useful lives of Fixed Assets to comply with the useful life as mentioned in Schedule II of the said Act. As a consequence of such reassessment, the charge for depreciation for the year ended 31st March, 2015 is lower than the previously applied rates by Rs. 155.53 Lakhs. The transitional impact of Rs. 81.55 Lakhs has been adjusted from the opening balance of retained earnings.

7. Excise Duty and Cess on Inventory of Finished Goods represent differential Excise Duty and Cess on opening and closing stock of - Finished Goods.

8. There is no expenditure in foreign currency on account of royalty, know how, professional and consultancy fees, interest, etc and there is no earnings in foreign currency during the year.

9. In the opinion of the Board and to the best of their knowledge and belief, the value of the realization of Current Assets, Loan and Advances, in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

10. Previous year figures have been re-grouped/re-arranged wherever necessary.


Mar 31, 2014

1. Estimated amount of contracts remaining to be executed (Net of advances) on capital account and not provided for Rs. NIL (Previous Year Rs. 800.37 Lakhs).

2. Contingent Liabilities not provided for in respect of :

a) Excise Duty Matters Pending Rs. 127.08 Lakhs (Previous Year Rs. 127.08 Lakhs) plus Interest and Penalty if any.

b) Jharkhand Entry Tax Matters Pending Rs. 81.75 Lakhs (Previous Year Rs. 81.75 Lakhs)

c) Electricity Matters with The Durgapur Projects Limited pending Rs. 97.94 Lakhs (Previous Year Rs. 97.94 Lakhs)

3. Employee Benefits : Disclosure pursuant to Accounting Standard-15 (Revised 2005). The Employee''s Gratuity Scheme is unfunded and the Actuarial Valuation of Gratuity Scheme is prepared as at 31st March, 2014 under revised AS-15 norms and accordingly Rs. 10.67 Lakhs has been provided in the books in the current financial year.

4. i] Based on the risks and returns associated with the business operations and in terms of Accounting Standard-17, the Company is predominantly engaged in a single reportable segment of Iron and Steel during the year. The risks and returns of manufacturing of pig iron and trading of its raw material are directly associated with Iron and Steel business and hence treated as a single reportable business segment. The other activities for Cement manufacturing is less than 10% of Total Revenue and hence there are no additional disclosures to be made under Accounting Standard-17, other than those already provided in the financial statements.

ii] Geographical Segments

5. RELATED PARTY DISCLOSURES

a] List of Related Parties and relationship

Party Relationship

I. KEY MANAGEMENT PERSONNEL

A. Mr. Radhey Shyam Jalan Managing Director

B. Mr. Barun Kumar Singh Executive Director

II. RELATED PARTY

A. Karni Syntex Pvt. Ltd. Holding Company

6. During the year, there has been a replacement of major equipments of the Mini Blast Furnace by way of modernization cum expansion plan. As a result, the installed annual capacity has been increased from 1.10 Lakh MT to 1.65 Lakh MT. The Company has incurred a total expenditure of Rs. 3,864.74 Lakh which has been capitalized under the head Plant and Machinery. The new Mini Blast Furnace was installed and put to use for commercial production on 15/12/2013. The major component of the existing MBF plant was substantially dismantled and the loss arising therefrom being the difference between the written down value as on 14/08/2013 i.e. Rs. 540.04 Lakhs and the value realized from the sale of the scrap and other dismantled Assets i.e. Rs. 225.90 Lakhs and thereby resulting into Net Loss of Rs. 314.14 Lakhs has been written off and disclosed as exceptional item in the Statement of Profit & Loss.

7. Excise duty and cess on Inventory of Finished Goods represent differential Excise Duty and Cess on opening and closing stock of finished goods.

8. In the opinion of the Board and to the best of their knowledge and belief, the value of the realization of Current Assets, Loan and Advances, in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

9. Previous year figures have been re-grouped/re-arranged wherever necessary.


Mar 31, 2013

1. Estimated amount of contracts remaining to be executed (Net of advances) on capital account and not provided for Rs. 800.37 Lakhs (Previous YearRs. Nil).

2. Contingent Liabilities not provided for in respect of:

a) Excise Duty Matters Pending Rs. 127.08 Lakhs (Previous Year Rs. 127.08 Lakhs) Plus Interest & Penalty if any.

b) Jharkhand Entry Tax Matters PendingRs. 81.75 Lakhs (Previous YearRs. 81.75 Lakhs).

c) Electricity Matters with The Durgapur Projects Ltd. Pending Rs. 97.94 Lakhs (Previous Year Rs. 97.94 Lakhs).

3. Employee Benefits : Disclosure Pursuant to Accounting Standard - 15 (Revised 2005). The Employee''s gratuity scheme is unfunded and the Actuarial Valuation of Gratuity Scheme is prepared as at 31st March, 2013 under revised AS -15 norms and accordingly Rs. 5.46 Lakhs has been provided in the books in the current financial year.

4. i] Based on the risks and returns associated with the business operations and in terms of Accounting Standard-17, the Company is predominantly engaged in a single reportable segment of Iron and Steel during the year. The risks and returns of manufacturing of pig iron and trading of its raw material are directly associated with Iron and Steel business and hence treated as a single reportable business segment. The other activities for Cement manufacturing is less than 10% of Total Revenue and hence there are no additional disclosures to be made under Accounting Standard-17, other than those already provided in the financial statements.

ii] Geographical Segments

a] The following table shows the distribution of the Company''s sales by Geographical Market:

5. During the year the Company has spent a sum ofRs. 263.64 Lakhs towards relining of the Mini Blast fumance which inter-alia includes replacement of the Refractories & few other major component which is quite usual in the manufacturing process of a Pig Iron Plant at a interval of every 5-6 years. Although the relining work does not result in the enhancement of the installed capacity of the Plant but is essential to retain the depleting production capacity of the plant and therefore the same has been treated as Capital expenditure. On the basis of the technical opinion and the past experience, the management has thought it prudent to amortize 95% value of the capital expenditure over a period of 5 years from the date of completion of relining work.

6. The outstanding balances of Contractors, Suppliers, Debtors, Creditors and others are subject to confirmation and reconciliation.

7. As required by Accounting Standard - 20 "Earnings Per Share", necessary figures are furnished below :

8. Excise Duty and cess on Inventory of Finished Goods represent differential excise duty and cess on opening and closing stock of finished goods.

9. In the opinion of the ''Board'' and to the best of their knowledge and belief, the value of the realization of Current Assets, Loan and Advances, in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

10. Previous year figures have been re-grouped/re-arranged wherever necessary.


Mar 31, 2012

1) Estimated amount of contracts remaining to be executed (Net of Advances) on capital account and not provided for Rs. NIL(Previous Year Rs. 552.14 Lakhs).

2) Contingent Liabilities not provided for in respect of:

a) Excise Duty Matters pending Rs. 127.08 Lakhs (Previous Year Rs. 132.15 Lakhs) Plus Interest and Penalty if any.

b) Jharkhand Entry Tax Matters pending Rs. 81.75 Lakhs (Previous Year Rs. 81.75 Lakhs).

c) Electricity Matters with The Durgapur Projects Limited pending Rs. 97.94 Lakhs (Previous Year Rs. 97.94 Lakhs).

3) Employee Benefits : Disclosure Pursuant to Accounting Standards (15) (Revised 2005). The Employee's gratuity scheme is unfunded and the Actuarial Valuation of Gratuity Scheme is prepared as at 31st March, 2012 under revised AS -15 norms and accordingly Rs. 6.64 Lakhs has been provided in the books in the current financial year.

4) i. Based on the risks and returns associated with the business operations and in terms of Accounting Standard-17, the Company is predominantly engaged in a single reportable segment of Iron and Steel during the year. The risks and returns of manufacturing of Pig Iron and trading of its raw material are directly associated with Iron and Steel business and hence treated as a single reportable business segment. The other activities for Cement manufacturing is less than 10% of Total Revenue and hence there are no additional disclosures to be made under Accounting Standard-17, other than those already provided in the financial statements.

ii. Geographical Segments

a) The following table shows the distribution of the Company's sales by Geographical Market:

5) Depreciation on Coke Oven Plant has not been provided during the year, since the Plant was not in operation due to commercial reasons. The total unprovided depreciation is Rs. 224.52 Lakhs (Previous year Rs. 188.80 Lakhs) which has not been charged in the Statement of Profit and Loss in the current year as well as in the earlier years since 30th September, 2005.

6) The outstanding balances of Contractors, Suppliers, Debtors, Creditors and others are subject to confirmation and reconciliation.

7) As required by Accounting Standard AS - 20 "Earnings per Share" necessary figures are furnished below :

8) Excise duty and cess on stock represent differential excise duty and cess on opening and closing stock of finished goods.

9) In the opinion of the Board and to the best of their knowledge and belief, the value of the realization of Current Assets, Loan and Advances, in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

10) The financial statements for the year ended 31st March, 2011 has been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31st March, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

1. Estimated amount of contracts remaining to be executed (Net of advances) on capital account and not provided for Rs. 55,214,228 (Previous yearRs. 201,880,519).

2. Contingent Liabilities not provided for in respect of:

a) Excise Duty Matters Pending Rs. 13,215,155 (Previous year Rs. 13,215,155) plus Interest and Penalty if any.

b) Jharkhand Entry Tax Matters Pending Rs. 8,175,000 (Previous yearRs. 8,175,000)

c) Electricity Matters with The Durgapur Projects Limited Pending Rs. 9,793,882 (Previous year Rs. 9,793,882)

3. Travelling expenses include Directors Travelling Rs. 66,925 (Previous year Rs. 632,253).

4. Employee Benefits : Disclosure pursuant to Accounting Standard -15 (Revised 2005). The Employee's Gratuity Scheme is unfunded and the Actuarial Valuation of Gratuity Scheme is prepared as at 31st March, 2011 under revised AS -15 norms and accordingly Rs. 1,188,775 has been provided in the books in the current financial year.

5. Mat Credit Entitlement amounting to Rs. 49,538,937 includes Rs. 1,37,72,489 on account of taxes paid in earlier Assessment Years under section 115JB of the Income Tax Act, being Rs. 5,204,586 for the AY. 2006-2007, Rs. 5,389,658 for the A.Y 2007- 2008, Rs. 3,178,245 for the A.Y. 2010-2011 which are eligible for credit under Section 115JAA of the Income Tax Act, from the future Financial Year Tax Liabilities of the Company and the same has been accounted for this year though part of the credit had accrued in earlier Accounting Years.

6. i) Based on the risks and returns associated with the business operations and in terms of Accounting Standard -17, the Company is predominantly engaged in a single reportable segment of Iron and Steel during the year. The risks and returns of manufacturing of Pig Iron and trading of its Raw Material, Coking Coal & Iron Ore Fines, are directly associated with Iron and Steel business and hence treated as a single reportable business segment. The management is of the view that the disclosure already provided in the financial statements relating with the quantitative details of manufacturing and trading activities under paragraph 19(B) & (C) of Notes to Accounts, are in compliance with the requirement of Accounting Standard -17. The other activities for Cement manufacturing is less than 10% of Total Revenue and hence there are no additional disclosures to be made under Accounting Standard -17, other than those already provided in the financial statements.

7. Depreciation on Coke Oven Plant has not been provided during the year, since the Plant was not in operation due to commercial reason. The total unprovoked depreciation is Rs. 18,880,168 which has not been charged in the Profit and Loss Account in the current year as well as in the earlier years since 30th September, 2005.

8. During the year the company has spent a sum of Rs. 36,262,509 towards relining of the Mini Blast Furnace which inter- alia includes replacement of the Refractory’s & few other major component which is quite usual in the manufacturing process of a Pig Iron Plant at a interval of every 5-6 years. Although the relining work does not result in the enhancement of the installed capacity of the Plant but is essential to retain the depleting production capacity of the plant and therefore the same has been treated as Capital Expenditure. On the basis of the technical opinion and the past experience, the management has thought it prudent to amortize 95% value of the Capital Expenditure over a period of 5 years from the date of completion of relining work.

9. All related expenses of project, which is under implementation, are treated as Capital Work-in-progress. Administrative Expenses to said project as identified by the management, have been transferred to Pre-Operative Expenses Account.

10. Salary, Wages, Allowances and Bonus and Contribution to Provident Fund and ESIC includes following remuneration to the Managing Director and Executive Director.

11. The outstanding balances of Contractors, Suppliers, Debtors, Creditors and other are subject to confirmation and reconciliation.

12. Unsecured Loan consists of Rs. 1,340,711,453 (Previous year Rs. 901,269,002) from Banks against Letter of Credit, and advances for Supplies and Rs. 307,946,756 (Previous year Rs. 6,487,018) from Body Corporate.

13. Excise Duty and Cess on Stock represent differential Excise Duty and Cess on Opening and Closing Stock of Finished Goods.

14. The Foundry Division of the Durgapur Plant was licensed on short term basis for 11 months to M/s. Kajaria Iron & Steel Company Private Limited with effect from 1st August, 2010 on a Lease Rental of Rs. 300,000 per month.

15. The Company has allotted on 31st March, 2011, 14,550,000 of 7% Redeemable Non-Cumulative Preference Shares of Rs. 10 each, fully paid up, which is redeemable at par at any time between end of fifth year to twelfth year from the date of allotment, subject to approval from statutory bodies and Financial Institutions, if any.

16. Balance Sheet Abstract and Company's General Business Profile (Additional Information under Part IV of the Schedule VI to the Companies Act, 1956) is annexed herewith.

17. In the opinion of the Board and to the best of their knowledge and belief, the value of the realization of Current Assets, Loan and Advances, in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

18. Micro, Small and Medium Class Enterprises :

There are no Micro, Small and Medium Class Enterprises, to whom the company owes dues, which are outstanding for more than 45 days as at 31st March, 2011. The above information regarding Micro, Small and Medium Class Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

19. Previous year figures have been re-grouped/re-arranged wherever necessary. Signature to Schedules 1 to 18


Mar 31, 2010

1. Estimated amount of contracts remaining to be executed (Net of advances) on capital account and not provided for Rs 2,018.81 Lakhs (Previous year - Rs.65.37 Lakhs).

2. Contingent Liabilities not provided for in respect of:

a) Excise Duty matters pending Rs. 132.15 Lakhs (Previous year- Rs. 209.70 Lakhs) plus interest & penalty if any.

b) Jharkhand Entry Tax matters pending Rs. 81.75 Lakhs (Previous year - Rs. 81.75 Lakhs).

c) The Durgapur Projects Limited electricity matters pending Rs. 97.94 Lakhs (Previous year- Rs. 97.94 Lakhs).

3. Traveling Expenses include Directors Travelling Rs. 6.32 Lakhs (Previous year - Rs. 3.96 Lakhs).

4. Employee Benefits: Disclosure pursuant to Accounting Standard -15 (Revised 2005). The Employees Gratuity Scheme is unfunded and the Actuarial Valuation of Gratuity Scheme is prepared as at 31st March, 2010, under revised AS -15 norms. Rs. 8.38 Lakhs has been written back in the books in the current financial year.

In accordance with Accounting Standard (AS) - 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the Company has accounted for Deferred Tax during the year. During the current year the Company generates a Deferred Tax Liability of Rs. 395.63 Lakhs. Deferred Tax Assets on account of carried forward business losses and unabsorbed depreciation under Income Tax Act has been recognised as there exists virtual certainty of realization on reversal of deferred tax liability in future years on account of depreciation. However, as a matter of prudence Deferred Tax Asset has been recognized to the extent there is Deferred Tax Liability.

5. In view of brought forward losses under Income Tax, the Company is liable to pay only the Minimum Alternative Tax (MAT). The Company has provided for/paid MAT (net of normal tax liabilities, if any) of Rs. 31.78 Lakhs. As per applicable provisions of Income Tax Act, the Company is eligible to adjust the MAT against its regular Income Tax Liability arising within subsequent 10 years.

6. i) The Companys business activity primarily falls within a single business segment i.e. Iron & Steel business including manufacturing activities of Pig Iron, C.I. Castings and Trading activities of Coking Coal, Met Coke and Iron Ore Fines are directly associated with manufacturing operation of Iron & Steel business and the risk and return are same with the manufacturing operations. The other activities for Cement manufacturing is less than 10% of Total Revenue and hence there are no additional disclosures to be made under Accounting Standard -17, other than those already provided in the financial statements.

ii) Geographical Segments

7. Related Party Disclosures

a) List of related parties and relationship:

I. KEY MANGEMENT PERSONNEL

A. Mr.RadheyShyamJalan Managing Director

B. Mr. Pradeep Chandra Sahoo Executive Director

C. Mr. Ravi Kumar Kajaria Ex-Managing Director (Ceases tobe director w.e.f., 30th January, 2010)

II. OTHER RELATED PARTY

A. Apex Energy Resources Limited Associate Company

B. Bengal Energy Limited Associate Company

C. Kajaria Iron & Steel Co. Pvt. Limited Associate Company

D. Kami Syntex Pvt. Limited Promoter Company

8. Depreciation on Coke Oven Plant has not been provided during the year, since the Plant was not in operation due to commercial reason.

9. The outstanding balances of Contractors, Suppliers, Debtors, Creditors and others are subject to confirmation and reconciliation.

10. Unsecured Loan consists of Rs. 9,012.69 Lakhs (Previous year Rs. Nil) from Bank being discounting of bills against Letter of Credit and Rs. 64.87 Lakhs (Previous year Rs. 1,985.21 Lakhs) from Body Corporates.

11. Balance Sheet Abstract and Companys General Business Profile (in terms of amendment to Schedule VI Part IV) is annexed herewith.

12. In the opinion of the Board and to the best of their knowledge and belief, the value of the realization of Current Assets, Loan and Advances, in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

13. Micro, Small and Medium Class Enterprises :

There are no Micro, Small and Medium Class Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2010. The above information regarding Micro, Small and Medium Class Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

14. Previous year figures have been regrouped/rearranged wherever necessary.

15. Figures have been shown in the lakhs only in accordance with the Notification 46/116/2002 - CL III dt 01.08.2002 in term of our report of even date.

Signature to Schedules 1 to 19 referred to above which form part of the Balance Sheet and Profit & Loss Account for the year ended 31 st March, 2010.

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