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Notes to Accounts of Monnet Ispat & Energy Ltd.

Mar 31, 2015

1. To comply with the guidance note on "Accounting Treatment of Excise Duty" issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs. 2867 Lacs (Previous Year Rs. 3478 lacs) has been included in the value of inventories as on 31st March, 2015 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Loss for the year.

2. a) In the opinion of the Management, the Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

b) No provision has been made for diminution in value of long term quoted investments as, in the opinion of the management, the diminution is temporary in nature.

3. Pre-operative Expenses capitalized as Capital Work in Progress during the year are as under:-

4. Rupee equivalent of export obligation to be completed by 20th March, 2022 under EPCG Scheme as on 31st March, 2015 is Rs. 34,205.91 Lacs (Previous year Rs. 53,236.29 lacs).

5. Some of the balances of trade/other receivables/payables and loans and advances are subject to confirmation/ reconciliation. Adjustments, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact.

# The details of amounts outstanding to Micro & Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 are as per available information with the Company.

6. Tax Expense is the aggregate of current year income tax and deferred tax charged to the statement of Profit and Loss for the year.

a) Current Year Tax:

No Income Tax on normative basis or MAT u/s 115JB is payable during the year as per provisions of the Income Tax Act.

b) Deferred Tax :

The Company estimates the deferred tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year.

As on 31st March, 2015, the deferred tax assets exceeded deferred tax liabilities. In view of there being no virtual certainty of availability of sufficient future taxable income against which the deferred tax assets (net) at the close of the year can be realized, deferred tax assets, have been recognized only to the extent of deferred tax liabilities.

7. Related Party Disclosures

In accordance with the Accounting Standard (AS-18) on related party disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

8. The Hon'ble Supreme Court of India by its Order dated 24th September, 2014 has cancelled a number of coal blocks allocated to various entities which includes one operational mine and five under development mines allotted to the Company or its joint venture companies.

a) It further directed the Company to pay an additional levy of Rs.295 per MT on coal extracted from its operational mine at Gare Palma from date of operation till date. The Company has paid such levy on coal extracted during the period 2004 to 30th September,2014 and duly provided for the balance amount for period ended 31st March 2015, aggregating to Rs. 252.91 crores. The said amount has been charged to statement of profit and loss and is shown as an exceptional item in the statement of profit & loss.

b) The Ministry of Law and Justice (Legislative Department), Government of India, has promulgated an Ordinance on October 21, 2014 for implementing the order of Hon'ble Supreme Court and fixation of compensation etc.

i. The Company's WDV of mining assets at Gare Palma including land, infrastructure and machinery amounted to Rs. 122.04 crores as on 31.3.2015 (Moveable assets Rs.54.78 lacs and Immoveable assets Rs.67.26 lacs). Against the immoveable assets, a compensation of Rs.31.12 crores has been determined which is being contested by the Company in court. In view of management's perception of having favourable decision in the matter, no provision has been made for impairment of such assets.

9. Corporate Social Responsibility Expenses (CSR)

As per Section 135 of the Companies Act, 2013, the Company is required to spend, in every financial year, at least two per cent of the average net profits of the Company made during the three immediately preceding financial years in accordance with its CSR Policy. The amount of two percent of average net profits comes out to Rs.404 lacs for the year 2014-15. The Company has spent an amount of Rs.408.56 lacs during the year on CSR as detailed below.

10. Depreciation and Amortization on tangible and intangible fixed assets: the Company was hitherto charging depreciation on Straight Line Method at the rates provided in Schedule XIV of the Companies Act, 1956. In the current year, the Company has reassessed the useful life of assets, and adopted the useful life as provided in Schedule II of the Companies Act, 2013 except in the following cases:

Consequent to change of useful life as above, an amount of Rs.2608.75 lacs representing WDV of those assets whose useful life had already expired as on 1st April, 2014 has been adjusted against the general reserve.

Had there been no change, depreciation charge for the year would have been higher by Rs. 439.30 lacs and profit for the year would have been lower by Rs.439.30 lacs.

11. Previous year figures have been regrouped or recasted wherever necessary.


Mar 31, 2014

(Rs. in Lac)

As at As at 31-03-2014 31-03-2013

1. CONTINGENT LIABILITIES

(Excluding Matters Separately Dealt with in other notes): Claims against the Company not Acknowledged as Debt

- In respect of Disputed Excise Service Tax Demands 3044.70 1714.02

- In respect of Disputed Sales Tax Demands 684.23 579.40

- In respect of Disputed Entry Tax Demands 311.04 259.51

- In respect of Disputed Income Tax Demands 17783.35 16869.56

- In respect of Disputed Demands for water charges by 1284.94 1238.09 Water Resources Division

- In respect of Electricity Duty on Generation of Power 9277.18 4407.56

- Other claims against the Company not acknowledged as Debt 10326.82 5111.07 (The above are basic amounts excluding interest, if any)

2. The inventories are taken as per records duly certified by the Company. The same have been valued in accordance with Accounting Policies.

3. To comply with the guidance note on "Accounting Treatment of Excise Duty" issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs. 3478 Lacs (Previous Year Rs. 1452 lacs) has been included in the value of inventories as on 31st March, 2014 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Profit for the year.

4. a) In the opinion of the Management, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

b) No provision has been made for diminution in value of long term quoted investments as, in the opinion of the management, the diminution is temporary in nature.

5. Balance confirmations have not been received from number of parties showing debit/credit balances.

# The details of amounts outstanding to Micro & Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 are as per available information with the Company.

6. Rupee equivalent of export obligation to be completed by 20th March, 2022 under EPCG Scheme as on 31st March, 2014 is Rs. 53,236.29 Lacs (Previous year Rs. 73,861.10 lacs).

7. No provision has been made for Cess on Power Generation levied by the State of Chhattisgarh amounting to Rs. 3256.00 lacs upto 31st March, 2014 (Rs. 2962.00 lacs upto 31st March, 2013). The High Court of Chhattisgarh, in its order dated 15th December, 2006 has set aside the demand of the State of Chhattisgarh, terming the levy as ''unconstitutional''. However, the State Government has gone in appeal against the order of the High Court and the matter is pending before the Supreme Court.

8. As reported in earlier years, the Company had received risk purchase claims aggregating to Rs. 3505.90 Lacs during earlier years. The Company has disputed the claims and believes that the claims are untenable. The matter has been referred for arbitration. Necessary adjustment, if any, shall be made on finalization of the matter. No fresh claims have been received in this regard during the year.

9. RETIREMENT BENEFITS : Gratuity & Leave Encashment

The following tables summarises the components of the net employee benefit expenses recognized in the Statement of Profit & Loss and amount recognized in the balance sheet for gratuity & leave encashment:

10. Tax Expense is the aggregate of current year income tax, fringe benefit tax and deferred tax charged to the Profit and Loss Account for the year.

a) Current Year Charge:

Income Tax provision of Rs. 2089 lacs has been made on current year profits as per provisions of the Income Tax Act (MAT u/s 115JB). Further, MAT credit entitlement of Rs. 372 lacs has been written back as per last return filed.

b) Deferred Tax :

The Company estimates the deferred tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year. The Company has opted for tax exemption under section 80-IA of the Income Tax Act in respect of its Power Division. Pursuant to the clarification on AS22 of The Institute of Chartered Accountants of India, no Deferred Tax is provided on timing differences arising and reversing during the Tax Holiday period in respect of Assets of Power Division.

MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date.

11. RELATED PARTY DISCLOSURES

In accordance with the Accounting Standard (AS-18) on related party disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

A. Relationships

Key Managerial Personnel

: Shri Sandeep Jajodia

(Chairman & Managing Director)

Shri C. P. Baid

(Dy. Managing Director)

Shri Nirmal Chand Jha

(Whole-time Director)

Enterprise where KMP / Relative has significant influence

: A.P. Coal Washeries Pvt Ltd. Tirumala Balaji Alloys Pvt. Ltd.

Subsidiaries

: Monnet Global Ltd. Monnet Overseas Ltd. Monnet Daniel Coal Washeries Ltd. Monnet Power Company Ltd. Monnet Cement Ltd. Monnet Enterprises PTE LTD. Chattel Constructions Private Limited Chomal Exports Private Limited Monnet Sports Foundation

Subsidiary of Subsidiaries

: Pt Monnet Global

Monnet Enterprises DMCC Pt. Sarwa Sembada Karya Bumi Monnet Global Liberia Ltd. Monnet Global Guinea S.A. Monnet Global Mali S.A. Monnet Global Colombia S.A.S

Joint Ventures

: MP Monnet Mining Company Ltd. Mandakini Coal Company Ltd. Urtan North Mining Company Ltd. Monnet Ecomaister Enviro Pvt Ltd.

Associates

: Orissa Sponge Iron & Steel Ltd.

Rameshwaram Steel & Power Pvt Ltd. (w.e.f.1.4.2013)

12. SEGMENT REPORTING

As per Accounting Standards (AS) 17 on "Segment Reporting", segment information has been provided in the Notes to Consolidated Financial Statements.

13. The Company has entered into transactions for hedging, cost reduction and risk diversification strategies to manage its loan portfolio. The Company is accounting for profit / loss on such transactions on actual receipt / payment basis. Recognition of effect on these transactions in the accounts as per AS 30 issued by ICAI shall be adhered to when the said accounting standard becomes mandatory on notification by NACAS.

14. INTEREST IN JOINT VENTURE

The Company has a 33.33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited & Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited and 50% interest in the assets, liabilities, income and expenses of M/s. Monnet Ecomaister Enviro Pvt Ltd. All these Companies are incorporated in India, and involved in setting up and operation of coal mines except for M/s. Monnet Ecomaister Enviro Pvt Ltd. which is setting up a plant for manufacturing of PS Balls from slag generated from steel plant.

15. Aggregate capital expenditure as on 31-3-2014 for projects under construction to be capitalized to fixed assets is Rs. 2871.64 Crores and includes capital work in progress Rs. 2158.07 Crores under the head non-current assets and the capital advances Rs. 713.56 Crores under the head long term loans and advances.

16. During the year, Ministry of Coal vide its letter dated 17.02.2014, informed that the recommendation of the IMG with regard to Rajgamar Coal Block allotted to the Company for de-allocation has been considered and accepted by the competent authority on 11.02.2014. However further action is put on hold in view of the interim order of Hon''ble High Court of Delhi filed by MIEL as pronounced on 12.02.2014.

An amount of Rs.1376.65 lacs has been incurred by the Company on development of the coal block upto 31.3.2014. The company is of the view that the decision of the court shall be in favour of the company. Accordingly, no impact for impairment has been taken in the financial statements of the company.

17. Previous year figures have been regrouped or recasted wherever necessary.


Mar 31, 2013

1. The inventories are taken as per records duly certified by the Company. The same have been valued in accordance with Accounting Policies.

2. To comply with the guidance note on "Accounting Treatment of Excise Duty" issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs.1,452 Lacs (Previous Year Rs.1,592 lacs) has been included in the value of inventories as on 31st March, 2013 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Profit for the year.

3. a) In the opinion of the Management, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

b) No provision has been made for diminution in value of long term quoted investments as, in the opinion of the management, the diminution is temporary in nature.

4. Balance confirmations have not been received from number of parties showing debit/credit balances.

5. Rupee equivalent of export obligation to be completed by 20th March, 2021 under EPCG Scheme as on 31st March, 2013 is Rs.73,861.10 Lacs (Previous year Rs.20,293.89 lacs).

6. No provision has been made for Cess on Power Generation levied by the State of Chhattisgarh amounting to Rs.2,962.00 lacs upto 31st March, 2013 (Rs.2,732.93 lacs upto 31st March, 2012). The High Court of Chhattisgarh, in its order dated 15th December, 2006 has set aside the demand of the State of Chhattisgarh, terming the levy as ''unconstitutional''. However, the State Government has gone in appeal against the order of the High Court and the matter is pending before the Supreme Court.

7. As reported in earlier years, the Company had received risk purchase claims aggregating to Rs.3,505.90 Lacs during earlier years. The Company has disputed the claims and believes that the claims are untenable. The matter has been referred for arbitration. Necessary adjustment, if any, shall be made on finalization of the matter. No fresh claims have been received in this regard during the year.

8. Tax Expense is the aggregate of current year Income Tax, Fringe Benefit Tax and Deferred Tax charged to the Profit and Loss Account for the year.

a) Current Year Charge:

Income Tax provision of Rs.6,839 lacs has been made on current year profits as per provisions of the Income Tax Act. Further, MAT credit entitlement of Rs.403.51 lacs has been utilised.

b) Deferred Tax :

The Company estimates the Deferred Tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year. The Company has opted for tax exemption under section 80-IA of the Income Tax Act in respect of its Power Division. Pursuant to the clarification on AS22 of The Institute of Chartered Accountants of India, no Deferred Tax is provided on timing differences arising and reversing during the Tax Holiday period in respect of Assets of Power Division.

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date.

9. Related Party Disclosures

In accordance with the Accounting Standard (AS-18) on Related Party Disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

A. Relationships

Key Managerial Personnel : Shri Sandeep Jajodia

(Chairman & Managing Director)

Shri C.P. Baid

(Dy. Managing Director)

Shri K.K. Khanna (till 13.08.2012)

(Executive Director)

Shri Nirmal Chand Jha (Whole-time Director) Enterprise where KMP has significant influence : A.P. Coal Washeries Pvt Ltd. Subsidiaries : Monnet Global Ltd.

Monnet Overseas Ltd.

Monnet Daniel Coal Washeries Ltd.

Monnet Power Company Ltd.

Monnet Cement Ltd.

Monnet Enterprises PTE Ltd.

Rameshwaram Steel & Power Pvt. Ltd.

Chattel Constructions Private Limited

Chomal Exports Private Limited

Monnet Sports Foundation Subsidiary of Subsidiaries : Pt Monnet Global

Monnet Enterprises DMCC

Pt. Sarwa Sembada Karya Bumi

Monnet Global Liberia Ltd.

Monnet Global Guinea S.A.

Monnet Global Mali S.A.

Monnet Global Colombia S.A.S. Joint Ventures : MP Monnet Mining Company Ltd.

Mandakini Coal Company Ltd.

Urtan North Mining Company Ltd.

Monnet Ecomaister Enviro Pvt Ltd. Associates : Orissa Sponge Iron & Steel Ltd.

10. Segment Reporting

As per Accounting Standards (AS) 17 on "Segment Reporting", segment information has been provided in the Notes to Consolidated Financial Statements.

11. The Company has entered into transactions for hedging, cost reduction and risk diversification strategies to manage its loan portfolio. The Company is accounting for profit / loss on such transactions on actual receipt / payment basis. Recognition of effect on these transactions in the accounts as per AS 30 issued by ICAI shall be adhered to when the said accounting standard becomes mandatory on notification by NACAS.

12. Interest in Joint Venture

The Company has a 33.33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited & Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited and 50% interest in the assets, liabilities, income and expenses of Monnet Ecomaister Enviro Private Limited. All these Companies are incorporated in India, and involved in setting up and operation of coal mines except for Monnet Ecomaister Enviro Private Limited which is setting up a plant for manufacturing of PS Balls from slag generated from steel plant.

13. Aggregate Capital Expenditure as on 31st March, 2013 for projects under construction to be capitalized to Fixed Assets is Rs.4469.65 Crores and includes Capital Work in Progress Rs.3,685.02 Crores under the head Non-Current Assets and the Capital Advances Rs.784.63 Crores under the head Long-term Loans & Advances.

14. Previous year figures have been regrouped or recasted wherever necessary. For And on Behalf of the Board


Mar 31, 2012

A) The holders of the equity shares are entitled to receive dividends as declared from time to time, and are entitled to voting rights proportionate to their share holding at the meetings of shareholders.

b) The Company has issued the following shares for a consideration other than cash or bonus shares during the immediately preceding 5 years:

47,22,539 equity shares of Rs.10 each were allotted as fully paid up for consideration other than cash pursuant to scheme of amalgamation of M/s.Mounteverest Trading & Investment Limited with the Company as per order dated 19-11-2010 passed by Honourable High Court of Chattisgarh.

1 Term Loans, External Commercial Borrowings (ECB) and Non Convertible Debentures (NCD) from financial institutions / Banks, are secured by first charge on all immovable and movable assets (present & future) of the Company (subject to prior charges on movables in favour of working capital banks) ranking pari - passu with the charges created in favour of participating financial institutions. Some of the loans / facilities are further guaranteed by the Managing Director of the Company.

2 Vehicle Loans from Banks are secured by hypothecation of the respective assets financed.

3 The repayment terms and rate of interest of term loans are as under:

a) Rupee Term Loan for Steel Project :- The Company has an outstanding balance of Rs.1094.99 Crore of Rupee term loan with interest band of 1.50% to 2.25% plus base rate. These loans are repayable in 26 variable quarterly installments commencing from Financial Year 14.

b) Rupee Term Loan for Power Project :- The Company has an outstanding balance of Rs.93.75 Crore of Rupee term loan with interest band of 11.75% to 13% repayable by Financial Year 2016.

c) Foreign Currency Term Loan $ 192 Million : the loan is repayable in installments from Financial Year 2014-15 to Financial Year 2019-20 and carries interest rate of libor plus 4.25 to 4.6%.

d) Foreign Currency Term Loan $ 90 Million : the loan is repayable in Financial Year 2012-13 and Financial Year 2013-14 and carries interest rate of libor plus 1.90%.

e) Unsecured Term Loan of Rs.150 Crore is repayable in monthly installments from Financial Year 2013-14 to Financial Year 2017-18.

a) Working capital facilities from banks are secured by first charge on movable current assets and second charge on all immovable assets of the Company. These working capital loans are further guaranteed by Managing Director of the Company.

b) Out of the Short Term Rupee Loans, Rs.249.94 Crore since repaid.

Disclosure w.r.t. Micro and Small Enterprises as required by MSMED Act is made in Note No.42

a) Inventories include material in transit.

b) Inventory items have been valued considering the significant accounting policy no. VI disclosed in Note No. 1 to these financial statements.

(Rs. in Lac)

As at As at 31-03-2012 31-03-2011

4. Contingent Liabilities

(excluding matters separately dealt with in other notes):

Claims against the Company not acknowledged as debt

- In respect of disputed Excise Demands 1616.97 815.33

- in respect of disputed Sales Tax Demands 714.60 95.14

- in respect of disputed Entry Tax Demands 1016.89 642.33

- in respect of disputed Income Tax Demands 2908.60 2952.00

- in respect of disputed Demands for water charges by Water Resources 1075.44 402.44 Division.

- In respect of electricity Duty on generation of power 3525.09 1870.58

- Other claims against the Company not acknowledged as debt. 1076.70 336.10

5. The inventories are taken as per records duly certified by the Company. The same have been valued in accordance with Accounting Policies.

6. To comply with the guidance note on "Accounting Treatment of Excise Duty" issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs.1592 Lac (Previous Year Rs.758 Lac) has been included in the value of inventories as on 31-03-2012 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Profit for the year.

7. In the opinion of the Management, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

8. Balance confirmations have not been received from number of parties showing debit/credit balances.

# The details of amounts outstanding to Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 are as per available information with the Company.

9. Rupee equivalent of export obligation to be completed by 20-03-2020 under EPCG Scheme as on 31-03-2012 is Rs.20293.89 Lac (Previous year Rs.26728.82 Lac).

10. No provision has been made for Cess on Power Generation levied by the State of Chhattisgarh amounting to Rs.2732.93 Lac upto 31-03-2012 (Rs.2364.99 Lac upto 31-03-2011). The High Court of Chhattisgarh, in its order dated 15-12- 2006 has set aside the demand of the State of Chhattisgarh, terming the levy as 'unconstitutional'. However, the State Government has gone in appeal against the order of the High Court and the matter is pending before the Supreme Court.

11. As reported in earlier years, the Company had received risk purchase claims aggregating to Rs.3505.90 Lac during earlier years. The Company has disputed the claims and believes that the claims are untenable. The matter has been referred to arbitration. Necessary adjustment, if any, shall be made on finalization of the matter. No fresh claims have been received in this regard during the year.

12. Retirement Benefits : Gratuity & Leave Encashment

The following tables summarizes the components of the net employee benefit expenses recognized in the Statement of Profit & Loss and amount recognized in the balance sheet for gratuity & leave encashment:

13. Tax Expense is the aggregate of current year income tax, fringe benefit tax and deferred tax charged to the Profit and Loss Account for the year.

a) Current Year Charge:

Income Tax provision of Rs.7551 Lac has been made on current year profits as per provisions of the Income Tax Act. Further, MAT credit entitlement of Rs.408.55 Lac has been utilized.

b) Deferred Tax :

The Company estimates the deferred tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year. The Company has opted for tax exemption under section 80-IA of the Income Tax Act in respect of its Power Division. Pursuant to the clarification on AS22 of The Institute of Chartered Accountants of India, no Deferred Tax is provided on timing differences arising and reversing during the Tax Holiday period in respect of Assets of Power Division.

MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date.

14. Related Party Disclosures

In accordance with the Accounting Standard (AS-18) on related party disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

A. Relationships

Key Managerial Personnel : Shri Sandeep Jajodia

(Chairman & Managing Director)

Shri C. P. Baid

(Dy. Managing Director)

Shri K.K. Khanna

(Executive Director)

Enterprise where KMP has significant influence : A.P Coal Washeries Private Limited

Subsidiaries : Monnet Global Limited

Monnet Overseas Limited

Monnet Daniel Coal Washeries Private Limited

Monnet Power Company Limited

Monnet Cement Limited

Monnet Enterprises PTE Limited

Rameshwaram Steel & Power Private Limited

Chattel Constructions Private Limited

Chomal Exports Private Limited

Subsidiary of Subsidiaries : Pt Monnet Global

Monnet Enterprises DMCC

Pt. Serwa Sembada Karya Bumi

Monnet Global Liberia Limited

Monnet Global Guinea S.A.

Monnet Global Mali S.A.

Joint Ventures : MP Monnet Mining Company Limited

Mandakini Coal Company Limited

Urtan North Mining Company Limited

Monnet Ecomaister Enviro Private Limited

15. Segment Reporting

As per Accounting Standards (AS) 17 on "Segment Reporting", segment information has been provided in the Notes to Consolidated Financial Statements.

16. The Company has entered into transactions for hedging, cost reduction and risk diversification strategies to manage its loan portfolio. The Company is accounting for profit / loss on such transactions on actual receipt / payment basis. Recognition of effect on these transactions in the accounts as per AS 30 issued by ICAI shall be adhered to when the said accounting standard becomes mandatory on notification by NACAS.

17. Interest in joint venture

The Company has a 33.33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited & Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited and 49.96% interest in the assets, liabilities, income and expenses of M/s. Monnet Ecomaister Enviro Private Limited All these Companies are incorporated in India, and involved in setting up and operation of coal mines except for M/s. Monnet Ecomaister Enviro Private Limited which is setting up a plant for manufacturing of PS Balls from slag generated from steel plant.

18. Aggregate capital expenditure as on 31-03-2012 for projects under construction to be capitalized to fixed assets is Rs.2440.28 Crore and includes capital working progress Rs.2021.92 Crore under the head non-current assets and the capital advances Rs.418.36 Crore under the head long term loans advances.

19. Previous year figures have been regrouped or recasted wherever necessary.


Mar 31, 2011

(Rs. in lacs)

Current Previous

Year Year

1. Contingent Liabilities not provided for *

In respect of disputed Excise Demands 815.33 1084.82

in respect of disputed Sales Tax Demands 95.14 1121.58

in respect of disputed Entry Tax Demands 642.33 494.96

in respect of disputed Income Tax Demands 2952.00 0.00

in respect of disputed Demands for water charges by Water 402.44 279.68 Resources Division.

Other claims against the Company not acknowledged as debt. 336.10 110.18

In respect of electricity Duty on generation of power 1870.58 549.17

* Does not include matters dealt with elsewhere in the Notes on Accounts.

2. The inventories are taken as per records duly certified by the Company. The same have been valued in accordance with Accounting Policies.

3. To comply with the guidance note on "Accounting Treatment of Excise Duty" issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs. 758 Lacs (Previous Year Rs. 394 lacs) has been included in the value of inventories as on 31st March, 201 1 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Profit for the year.

4. In the opinion of the Management, the Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

5. Balance confirmations have not been received from number of parties showing debit/credit balances.

6. As per the information available with the Company in response to the enquiries from existing suppliers with whom Company deals, none of the suppliers are registered with The Micro, Small and Medium Enterprises Development Act, 2006.

7. Rupee equivalent of export obligation to be completed by 29th March, 2018 under EPCG Scheme as on 31st March, 2011 isRs. 26728.82 lacs.

8. No provision has been made for Cess on Power Generation levied by the State of Chhattisgarh amounting to Rs. 2364.99 lacs upto 31st March, 2011 (Rs. 1969.42 lacs upto 31 st March, 2010). The High Court of Chhattisgarh, in its order dated 15th December, 2006 has set aside the demand of the State of Chhattisgarh, terming the levy as 'unconstitutional'. However, the State Government has gone in appeal against the order of the High Court and the matter is pending before the Supreme Court.

9. The Company had received risk purchase claims aggregating to Rs.3505.90 Lacs during earlier years. The Company has disputed the claims and believes that the claims are untenable. The matter has been referred to arbitration. Necessary adjustment, if any, shall be made on finalization of the matter.

10. Retirement Benefits : Gratuity & Leave Encashment

The following tables summarise the components of the net employee benefit expenses recognized in the profit & loss account and amount recognized in the balance sheet for gratuity & leave encashment:

11. Tax Expense is the aggregate of current year income tax, fringe benefit tax and deferred tax charged to the Profit and Loss Account for the year.

a) Current Year Charge:

Income Tax provision of Rs. 7036 lacs has been made on current year profits as per provisions of the Income Tax Act, after deducting MAT credit entitlement of Rs.1 91 lacs.

b) Deferred Tax :

The Company estimates the deferred tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year. The Company has opted for tax exemption under section 80-IA of the Income Tax Act in respect of Power Division for a period of 10 years commencing from the financial year 2004-2005. Pursuant to the clarification on AS22 of The Institute of Chartered Accountants of India, no Deferred Tax is provided on timing differences arising and reversing during the Tax Holiday period in respect of Assets of Power Division.

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income -tax during the specified period.

12. Related Party Disclosures

In accordance with the Accounting Standard (AS-18) on related party disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

A. Relationships

Key Managerial Personnel : Shri Sandeep Jajodia

(Executive Vice Chairman & Managing Director)

Shri C. P. Baid

(Dy. Managing Director)

Shri K.K. Khanna (Executive Director)

Enterprise where KMP has significant influence

: A.R Coal Washeries Pvt Ltd

Subsidiaries : Monnet Global Ltd

Monnet Overseas Ltd

Monnet Daniel Coal Washeries Pvt. Ltd.

Monnet Power Company Ltd.

Monnet Cement Ltd

Monnet Enterprises PTE LTD.

Rameshwaram Steel & Power Pvt Ltd.

Chattel Constructions Private Limited

Chomal Exports Private Limited

Subsidiary of Subsidiaries : Pt Monnet Global

Monnet Enterprises DMCC

Pt. Serwa Sembada Karya Bumi

Joint Ventures : MP Monnet Mining Company Ltd

Mandakini Coal Company Ltd

Urtan North Mining Company Limited

13. Segment Reporting

As per Accounting Standards (AS) 1 7 on "Segment Reporting", segment information has been provided in the Notes to Consolidated Financial Statements.

14. Share Warrants:

a) The Company had, in its EOGM dated 17.6.2009 allotted warrants to promoter companies. Each warrant was convertible into one equity share of Rs.10/- each at a premium of Rs.191.50 per share as per SEBI guidelines for Preferential issues. Out of the above, 47 lacs warrants were converted into equity shares during the year.

b) M/s Mounteverest Trading and Investment Ltd had, in its EOGM dated 1 7.6.2009 allotted 15 lac warrants to promoter companies. Each warrant was convertible into one equity share of Rs.10/- each at a premium of Rs.75.50 per share as per SEBI guidelines for Preferential issues. Out of the above, equity shares were allotted against 11 33250 warrants as per exchange ratio passed in the scheme of amalgamation of M/s Mounteverest Trading and Investment Ltd with the Company. The holders of remaining 366750 warrants did not exercise their option for conversion into equity shares and consequently, in the meeting of board of directors held on 8th February, 2011, an amount of Rs.78.39 lacs received against these warrants was forfeited and transferred to Capital Reserve.

15. Cash and Bank balances include fixed deposits amounting to Rs.20460.55 lacs (previous year Rs.1 31 76.75 lacs) in no lien / escrow accounts or kept as margin against LCs / bank guarantees by Company's bankers.

16. The Company has entered into hedge derivative transactions for cost reduction and risk diversification strategies to manage its loan portfolio. The Company is accounting for profit / loss on such transactions on actual receipt / payment basis. Recognition of effect on these transactions in the accounts as per AS 30 issued by ICAI shall be adhered to when the said accounting standard becomes mandatory on notification by NACAS.

17. Interest in joint venture

The Company has a 33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited & Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited. All these Companies are incorporated in India, and involved in setting up and operation of coal mines.

18. The Company had paid dividend @ Rs.5 per share for the year ended 31.3.201 0. Dividend (including dividend distribution tax) paid on shares allotted between balance sheet signing date and the record date for dividend amounting to Rs.250.30 lacs has been shown as differential dividend on equity shares.

19. Previous year figures have been regrouped or recasted wherever necessary.









 
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