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Notes to Accounts of Mukand Ltd.

Mar 31, 2017

1. Terms / rights attached to equity shares

The Company has only one class of equity share having a par value of Rs. 10/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian rupees.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

During the year ended 31 March 2017, the amount of dividend per share recognized as distribution to equity shareholders was Rs. Nil (31 March 2016 : Rs. Nil).

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2. Terms of redemption of CRPS

Pursuant to the order of the Hon’ble High Court of Judicature at Bombay dated October 14, 2003, the Company had cancelled 22^ equity shares issued and unallotted and reduced 20% of the then outstanding equity shares amounting to 5,626,320 equity shares. In lieu of cancelled shares, the company has issued 5,626,320 0.01% Cumulative Redeemable Preference Shares of Rs.10/- each entitled for cumulative Preference dividend of 0.01% p.a. and redeemable in five equal annual installments starting from September. 2019. In the event of liquidation of the company before redemption, the holders of CRPS will have priority over equity shares in the payment of dividend and repayment of capital.

3. The Company does not have any holding company.

4. There are no bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date.

Working Capital Facilities

Working Capital Facilities from the Banks and other non-funded facilities are secured by hypothecation of stocks (excluding machinery spares) and book debts. The said facilities are also secured by way of second and subservient pari passu charge against the same assets as given to lenders as shown at Note No.3(I)(1).

Assets excluded from security given to secured lenders at Note No. 3 & 7.

5. Security given for the term loans at Note No.3(I), and working capital facilities mentioned above exclude : 48 acres of grant land at Kalwe and Dighe, Dist. Thane in the State of Maharashtra.

Leasehold land at Dighe, Thane, as it is mortgaged to Lenders covered at Note No.3 (I) 2 (i) to (viii), (x) and (xi). 68.875 acres of Freehold land acquired at Ginigera / Kankapura, District Ginigera in the State of Karnataka.

Plant and Machinery of Captive Power Plant at Ginigera / Kankapura, District Ginigera in the State of Karnataka is given as security to lenders covered at Note No.3(I) 1 (v).

Plant and Machinery of Sinter Plant, Hot Blast Stove and Pulverising Plant at Ginigera / Kankapura, District Ginigera in the State of Karnataka is given as security to lenders covered at Note No.3(I) (2) (xv).

6. acres of freehold land in the state of Jharkhand, for Company’s projects in that state.

All other fixed asset situated at locations other than its plant at Kalwe, Dighe Thane in the state of Maharashtra and its existing steel plant at Ginigera in the state of Karnataka

Fixed Assets :

7. Revaluation :

Free-hold land at Kalwe / Dighe, Thane as at 30.6.1983 was revalued on 30.6.1984 and the addition to assets on account of this revaluation, aggregating Rs.12.27 crore was correspondingly credited to the Revaluation Reserve during the year ended 30th June, 1984. To reflect the current fair market value, the Company further revalued the freehold land at Kalwe as at 31.3.2001 during November, 2001. The registered valuer had carried out the valuation on the basis of the then market values of these lands. The addition to assets on account of this revaluation, aggregating Rs.114.36 crore was correspondingly credited to the Revaluation Reserve during the year ended 31st March, 2002. Company has further revalued the aforesaid land as at 31.03.2009 and an amount aggregating Rs.1,212.37 crore has been added to assets and correspondingly credited to the Revaluation Reserve as at 31.03.2009.

Leasehold land at Dighe, Thane as at 31.03.2011 has been revalued to reflect the current Fair Market Value of this land. The valuation was carried out by a Registered Valuer. The addition to assets on account of this revaluation, aggregating Rs.334.34 crore has been correspondingly credited to the revaluation reserve as at 31.03.2011. An amount of Rs. Nil (Previous year Rs 4.39 crore) has been transferred from the revaluation reserve to the statement of Profit & Loss towards charge of amortization of the said land for the year.

In view of enactment of The Companies (Accounting Standards) Amendment Rules, 2016 by Notification No. GSR 364(3) dated 30th March 2016, applicable from 1st April 2016, Company has chosen to adopt original cost in place of revalued amount as per Accounting Standard AS-10-Property, Plant and Equipment and accordingly, the revaluation reserve amounting to Rs.1,651.38 Crores appearing in the Books of Account of the Company as at 31st March 2016 with regard to revaluation of Company’s free hold/lease hold lands at Kalwe/Dighe, Thane is reversed in the Books of Account on 1st April 2016.

8. Gross Block of Buildings as at 31st March, 2017 includes value of offices, residential flats and garages in co-operative societies/proposed co-operative societies/association of apartment owners aggregating Rs.6.33 crore at cost (Previous Year Rs.6.34 crore) [including cost of shares in co-operative societies Rs.7,000/- (Previous Year Rs.7,000/-)].

Short Term Loans and Advances, Trade Receivables, non-current investments etc.

9. The Company has investments of Rs.0.19 crore (Previous Year Rs.0.19 crore) in equity shares of Bombay Forgings Limited (BFL), and has trade receivables due from BFL / advances recoverable which stood at Rs.81.82 crore as at 31.03.2017 (Previous Year Rs.78.09 crore) (collectively referred to as ‘Exposures’). Net worth of BFL has turned positive and BFL is no longer a sick industrial company. BIFR has discharged BFL from the purview of provisions of SICA. The management, considering its long term view on the ‘Exposures’ relies upon the valuation of unencumbered fixed assets of BFL as at 31st March, 2017 which was at Rs.65.41 crore, value of current assets aggregating Rs.51.73 crores and future earnings from the ongoing business of BFL. The management considers the balance ‘Exposures’ to be ‘Good’ at the close of the year and adequately covered and barring unforeseen circumstances expects full reliability of the same in future.

10. The Company has an investment of Rs.61.63 crore (Previous Year Rs. 61.63 crore) in equity shares of Vidyavihar Containers Ltd. (VCL) a wholly owned Subsidiary and has provided for diminution in the value of investments upto an amount of Rs.27.73 crore, (previous year Rs.27.73 crore). The Company has outstanding balances of loans amounting to Rs.13.23 crore (Previous Year Rs. 13.23 crore) (collectively referred to as ‘Exposures’). Management relies upon the estimation of future realizable values of financial assets of VCL to recover its exposures. The management barring unforeseen circumstances considers the balance ‘Exposures’ to be ‘Good’ at the close of the year and adequately covered.

11. The Company has an investment of Rs.26.25 crore (Previous Year Rs.26.25 crore) in equity shares of Mukand Global Finance Limited (MGFL), a wholly owned subsidiary, whose recovery is dependent upon realization of the financial assets that MGFL stands invested into at the close of the year. The management considers the ‘Exposure’ to be ‘Good’ and adequately covered. Ultimate shortfall if any, in the realization is not determinable at present.

12. For details of loans and advances given to related parties, please refer Note No. 33

13. Demand for Annual Bonus for the financial years 1995-96 to 2006-07 by Staff and Officers’ Association is pending at different stages in proceedings under The Industrial Disputes Act, 1947. Bulk of these employees are statutorily not covered by The Payment of Bonus Act, 1965 and many of the employees are also not covered by The Industrial Disputes Act, 1947. Liability arising there from cannot therefore be determined at present.

14. Government of Maharashtra had served a Demand Notice on the Company for payment of electricity duty for power generated during the period 01.04.2000 to 30.04.2005 and penal interest thereon in Company’s Captive Power Plant amounting to Rs.14.27 crore. The Writ Petition filed by the Company was disposed by the Hon’ble Bombay High Court on 7th November, 2009 quashing the said Demand Notice. Government of Maharashtra has however, filed an appeal in the Supreme Court of India against the aforesaid judgment of High Court.

15. There have been delays in payment of tax deducted at source in earlier years and also in FY2016-17. Interest payable on delays has been accounted for in respect of cases where appropriate orders have been received from Income Tax authorities or at the time of Filing the Quarterly TDS Returns.

16. A claim towards difference in price of calibrated iron ore for the period 1st April, 2006 to 28th February, 2007 amounting to Rs.33.07 crore has been raised by a supplier in March 2007. The Company has been legally advised that the supplier cannot seek this price revision under a concluded agreement and hence no provision is made in the Accounts for the same. The issue along with method of review and re-fixing of price of calibrated iron ore effective on 1st of April each year in terms of agreement is referred to an arbitral tribunal whose award was pronounced on 28th February 2014. In terms of the said award, the supplier is directed to re-compute amount payable by the Company. Pending receipt of the revised claim, the final liability arising there from is not ascertainable. Moreover, they said supplier has also unilaterally increased the price of calibrated iron ore w.e.f. 1st April, 2007 and thereafter w.e.f. 1st April, every year. This issue too was settled by the aforesaid arbitral tribunal. In terms of the said award, the Company is required to submit certain details to the supplier for recomposing its claim in terms of the award. However, pending such determination of final price, the supplier has raised invoices at an ad-hoc interim mutually agreed price on the marketing contractor who in turn, has billed the Company at the same price and which liability, has been fully accounted for. An appeal has been preferred for challenging the said arbitration award.

17. The Company in previous years executed road construction projects in the state of Uttar Pradesh with National Highway Authority of India (NHAI) along with Centrodorstroy (CDS), Russia. During the year the amount of Rs.23.20 crore (including interest) was realized towards various claims. The exposure on this account as at the end of the financial year aggregate Rs.113.54 crore (Previous Year: Rs.120.00 crore). The management has, keeping in view the accounting policy A(8)(v) adopted by the Company, technically determined the realizable value of Contracts in Progress compared to relatable revenues and claims raised on NHAI by CDS. The outcome of the Road Construction activity cannot be estimated with certainty at present. Pending claims excluding interest as at 31.03.2017 aggregate Rs.288.42 crore (Previous Year: Rs.298.93 crore). Bulk of these claims are now being processed at the level of Tribunal as against the level of consulting engineers in the previous year. It is the opinion of the management that in view of the substantially large claims for incremental jobs executed, escalations and time over-runs to be settled progressively over a period of 2 to 3 years, losses currently expected are already recognized till the close of the year. Since realization of these amounts is a judgmental matter, the auditors have placed reliance on the Management’s judgment of the losses currently expected in the contract considering reliasability of amounts.

18. Cash and cash equivalents presented in the Cash Flow Statement consist of cash on hand and unencumbered, highly liquid bank balances.

19. The Company expects to contribute Rs.4.42 crore (Previous year Rs.4.34 crores) to its gratuity plan for the next year. In assessing the Company’s post retirement liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables, the base being the IALM - Mortality - Tables (200608) ultimate (Previous year LIC, 1994-96 ultimate tables).

20. Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. The estimates of future salary increase considered in actuarial valuation take account of inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market.

21. The composition of the plan assets, by category from the insurers, LIC are on the basis of overall investment by them for all such insured entities and hence, the disclosures as required by Accounting Standard 15 in ‘Employee Benefits’ have not been given, and Auditors have relied upon the same.

22. In terms of the strategic alliance with Kalyani Steels Limited, the Company has accounted for its share towards gratuity in respect of employees of Hospet Steels Ltd. amounting to Rs.1.21 crore (Previous Year Rs.1.01 crore) on the basis of an actuarial valuation. This is under a funded plan with LIC.

23. In respect of certain employees of Road Construction Division, liability for gratuity is provided at actual on the basis of amount due as at 31st March, 2017, since the projects are for shorter duration. Such liability as at 31st March, 2017 (including Rs.0.0007 crore for the year) aggregate Rs.0.005 crore (Previous Year Rs.0.004 crore)

24. An amount of Rs.7.60 crore (Previous year Rs.7.48 crore) as contribution towards defined contribution plans [including Rs.0.95 crore (Previous year Rs.0.93 crore) in terms of strategic alliance referred in (b) above] is recognized as expense in the Statement of Profit and Loss.

25. Related Party Disclosures (a) Relationship :

26. Subsidiaries:

Mukand Global Finance Ltd., Mukand International Ltd. (MIL),

Vidyavihar Containers Ltd. (VCL), Mukand International FZE (MIFZE), Mukand Sumi Metal Processing Ltd. (MSMPL), Mukand Alloy Steels

Pvt. Ltd., Mukand Vijayanagar Steels Ltd., w.e.f. 30.12.2016, Whiteleaf Heavy Machinery Pvt.Ltd., w.e.f. 25.3.2017, Technosys Industrial

Machinery Pvt Ltd., w.e.f. 25.3.2017.

27. Other related parties where control exists :

Mukand Engineers Ltd. (MEL), Bombay Forgings Ltd. (BFL), Stainless India Ltd. (SIL), Hospet Steels Ltd. (HSL),

28. Joint Ventures :

Mukand Vini Mineral Ltd. (MVML).

29. Key Management Personnel:

Niraj Bajaj, Rajesh V. Shah, Suketu V. Shah , Relatives of a Director

30. Other related parties where significant influence exists or where the related party has significant influence on the Company :

Kalyani Mukand Ltd. , Jamnalal Sons Pvt. Ltd. (JSPL), Adonis Laboratories Pvt. Ltd.

31. The Board of Directors of the company on 12th January 2017, has considered and approved, a scheme of arrangement and amalgamation amongst the Company, Mukand Vijayanagar Steel Limited (MVSL) and Mukand Alloy Steels Private Limited (MASPL) and their respective shareholders and creditors under the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 for transfer of its Alloy Steel Rolling & Finishing business. The Appointed Date under the Scheme is 1st January 2017. BSE and NSE have in principle cleared the Scheme and their observations have been included in the Scheme filed with National Company Law Tribunal (NCLT). The Scheme is subject to the approval of the shareholders, creditors and other competent statutory/regulatory authorities.

32. The Board of Directors of Company at its meeting held on 27th March, 2017, considered and approved a scheme of arrangement and amalgamation amongst the Company, Whiteleaf Heavy Machinery Pvt Ltd. and Technosys Industrial Machinery Pvt Ltd and their respective shareholders and creditors under the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 for transfer of Industrial Machinery business . The Appointed Date under the Scheme is 1st January 2017. The Scheme is subject to the approval of the shareholders, creditors and other competent statutory/regulatory authorities.

As the Company is currently in the process of finalizing detailed formal plans it does not necessitate the requirements of disclosures of AS 24 - Discontinuing Operations.

33. In accordance with Accounting Standard - 17 “Segment Reporting”, segment information has been given in the consolidated financial statements of the Company, and therefore, no separate disclosure on segment information is given in these financial statements.

34. Previous years’ figures have been regrouped / recast wherever necessary


Mar 31, 2016

(1) STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES ADOPTED BY THE COMPANY

(1) Basis of preparation:

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, and the relevant provisions of the Companies Act, 2013 read with Rule 7 of The Companies (Accounts) Rules, 2014. These standards shall be deemed to be accounting standards until accounting standards are specified by the Central Government under section 133. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies have been consistently applied by the Company and except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year.

(2) Use of Estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could defer from those estimated and actual materialized results and estimates are recognized in the period, in which the results are known.

(3) Fixed Assets:

(a) Tangible Assets

Fixed Assets are stated at cost of acquisition or construction. However, fixed assets, which are revalued by the Company, are stated at their revalued book values.

Cost of acquisition comprise all costs incurred to bring the assets to their location and working condition up to the date assets are put to use. Cost of construction comprise of those costs that relate directly to specific assets and those that are attributable to the construction activity in general and can be allocated to specific assets up to the date the assets are put to use.

(b) Intangible Assets

Intangible Assets are stated at their cost of acquisition less accumulated amortization and impairment losses. An asset is recognized, where it is possible that future economic benefits attributable to the assets will flow to the enterprise and where its cost can be reliably measured. The depreciable amount on intangible assets is allocated over the best estimate of its useful life on a straight line basis or the period of agreement whichever is lower.

(c) Depreciation / Amortization

(i) The Company provides depreciation on all its assets on the “Straight Line Method” in accordance with the provisions of Section 123 (2) of the Companies Act, 2013 which was made effective from 01.04.2014. Company has reworked depreciation with reference to the estimated useful life of fixed assets as prescribed under schedule II to the act or useful life of fixed assets as per technical evaluation.

(ii) Software is amortized over a period of 3 years.

(iii) Depreciation in respect of assets used for long term engineering contracts is provided on the estimated useful life of the assets.

(iv) Assets costing less than Rs.5,000/- are fully depreciated at the rate of 100% in the year of purchase.

(v) Depreciation on addition to assets or on sale / discernment of assets is calculated pro-rata from the month of such addition or up to the month of such sale / discernment, as the case may be.

(vi) Cost of Leasehold land is amortized over the period of lease.

(vii) Technical know-how is amortized over the period of agreement or six years, whichever is lower.

(4) Impairment of Assets :

An asset is considered as impaired in accordance with Accounting Standard 28 on “Impairment of Assets”, when at balance sheet date there are indications of impairment and the carrying amount of the assets or where applicable the cash generating unit to which the assets belong, exceeds its recoverable amount (i.e. the higher of the asset’s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Statement of Profit and Loss.

(5) Investments :

Investments are classified as current or long term in accordance with Accounting Standard 13 on “Accounting for Investments”. Long term Investments are stated at cost of acquisition. Provision for diminution is made to recognize a decline, other than temporary, in the value of such investments. Current investments are stated at lower of cost of acquisition and fair value. Any reduction in carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss.

(6) Inventories :

Inventories are valued at lower of cost or net realizable value. Materials-in-transit are valued at cost-to-date. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition including excise duty payable on goods produced. The cost formulae used for determination of cost are either ‘First in First Out’ or ‘Average Cost’, as applicable.

(7) Foreign currency translations :

(i) All transactions in foreign currency, are recorded at the rates of exchange prevailing as at the date of the transaction.

(ii) Monetary assets and liabilities in foreign currency, outstanding at the close of the year, are converted in Indian currency at the appropriate rates of exchange prevailing at the close of the year. The resultant gain or loss is accounted for during the year.

(iii) In respect of forward exchange contracts entered into towards hedge of foreign currency risks, the difference between the forward rate and the exchange rate at the inception of the contract is recognized as income or expenditure over the life of the contract. The outstanding forward contracts in case of firm commitments and highly probable forecast transactions are marked to market and its effect is recognized as income / expenditure. Further, the exchange differences arising on such contracts are recognized as income or expenditure along with the exchange differences on the underlying assets/liabilities. Profit or Loss on cancellations/renewals of forward contracts is accounted for during the year.

(iv) Non monetary items such as investments are carried at historical costs using the exchange rates on the date of the transactions.

(8) Revenue Recognition :

(i) Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection.

(ii) Revenue from sale of goods is recognized when all significant contractual obligations have been satisfied, the property in the goods is transferred for a price, significant risks and rewards of ownership are transferred to the customers and no effective ownership is retained. Sales are net of Sales Tax/ Value Added Tax. Excise Duty recovered is presented as a reduction from gross turnover. Sales are net of returns, discounts and rebates.

(iii) Liability for Excise Duty and Customs Duty payable on goods held in bond at the year end is provided for.

(iv) Export benefits under Duty Drawback Scheme is estimated and accounted in the year of export.

(v) Accounting for Long Term Engineering Contracts:

Revenue from construction/project related activity for supply/commissioning of Plant & Equipment is recognized on the percentage of completion method, in proportion that the contract costs incurred for the work performed up to the reporting date bear to the estimated total contract costs. Provision for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the current estimates.

At each reporting date, the contracts in progress (progress work) is valued and carried in the Balance Sheet under Current Assets.

(vi) Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is recognized when the right to receive dividend is established.

Working Capital Facilities from banks are against hypothecation of stock and book debts. Finance costs include interest on inventory and book debts. Company sells goods on credit on interest to customers to compensate it for such finance costs. Interest income generated from book debts is netted against same source of interest expense under finance costs.

(vii) Share / Debenture Issue expenses and premium on redemption of debentures are charged, first against available balance in securities premium account. This is in accordance with Section 52 of the Companies Act, 2013.

(9) Leases :

Operating lease:

Lease, where the lesser effectively retain substantially all the risks and benefits of ownership of the leased assets, are classified as operating lease. Operating lease receipts and payments are recognized as income or expense in the Statement of Profit and Loss on a straight line basis over the lease term.

(10) Employee benefits :

Employee benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined contribution plans such as provident fund and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense to the Statement of Profit and Loss in the period in which the service is rendered.

Employee benefits under defined benefit plans, such as compensated absences and gratuity which fall due for payment after a period of twelve months from rendering service or after completion of employment, are measured by the project unit cost method, on the basis of actuarial valuation carried out by third party actuaries at each balance sheet date. The Company’s obligations recognized in the balance sheet represent the present value of obligations as reduced by the fair value of plan assets, where applicable. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.

(11) Borrowing cost :

(i) Borrowing cost attributable to the acquisition or construction of qualifying assets, as defined in Accounting Standard 16 on “Borrowing Costs” are capitalized as part of the cost of such assets up to the date when the asset is ready for its intended use. Other borrowing costs are expensed as incurred.

(ii) Front-end fees/ other ancillary costs paid on borrowings are amortized over the period of loans/debentures or over a period of three years whichever is shorter.

(12) Taxation :

Tax expense comprises of current and deferred. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

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 Alternate 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 Statement of Profit and Loss 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.

(13) Segment Reporting Policies :

Identification of segments :

The Company’s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter segment Transfers :

The Company generally accounts for inter segment transfers at cost. However, in case of its captive power plant of Steel Division at Ginigera, Karnataka, the inter segment transfers are accounted at the per unit comparable cost of energy purchased from the supplier of energy at that plant.

Allocation of common costs :

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

Unallocated items :

Includes general corporate income and expense items which are not allocated to any business segment.

Segment Policies :

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

(14) Earnings per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

(15) Provisions and Contingent Liabilities :

Provisions involving a substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the Financial Statements.

(16) Cash Flow Statement :

The Cash Flow Statement is prepared by the “indirect method” set-out in Accounting Standard 3 on “Cash Flow Statement” and presents the Cash Flows by operating, investing and financing activities of the Company.

Cash and cash equivalents presented in the Cash Flow Statement consist of cash on hand and unencumbered, highly liquid bank balances.

(ii) The Company expects to contribute Rs.4.34 crore (Previous year Rs.4.16 crores) to its gratuity plan for the next year. In assessing the Company’s post retirement liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables, the base being the IALM - Mortality -Tables (2006-08) ultimate (Previous year LIC, 1994-96 ultimate tables).

(iii) Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. The estimates of future salary increase considered in actuarial valuation take account of inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market.

(iv) The composition of the plan assets, by category from the insurers, LIC are on the basis of overall investment by them for all such insured entities and hence, the disclosures as required by Accounting Standard 15 in ‘Employee Benefits’ have not been given, and Auditors have relied upon the same.

(c) In respect of certain employees of Road Construction Division, liability for gratuity is provided at actual on the basis of amount due as at 31st March,

2016, since the projects are for shorter duration. Such liability as at 31st March, 2016 (including Rs.0.0004 crore for the year) aggregate Rs.0.0004 crore (Previous Year Rs.0.004 crore)

(d) An amount of Rs.7.48 crore (Previous year Rs.6.84 crore) as contribution towards defined contribution plans [including Rs.0.93 crore (Previous year Rs.0.66 crore) in terms of strategic alliance referred in (b) above] is recognized as expense in the Statement of Profit and Loss.

(17) RELATED PARTY DISCLOSURES

(a) Relationship :

(i) Subsidiaries:

Mukand Global Finance Ltd., Mukand International Ltd. (MIL),

Vidyavihar Containers Ltd. (VCL), Mukand International FZE (MIFZE), Mukand Sumi Metal Processing Ltd. (MSMPL), Mukand Alloy Steels Pvt. Ltd.

(ii) Other related parties where control exists :

Mukand Engineers Ltd. (MEL), Bombay Forgings Ltd. (BFL), Stainless India Ltd. (SIL), Hospet Steels Ltd. (HSL),

(iii) Joint Ventures :

Mukand Vini Mineral Ltd. (MVML).

(iv) Key Management Personnel:

Niraj Bajaj, Rajesh V. Shah, Suketu V. Shah

(v) Other related parties where significant influence exists or where the related party has significant influence on the Company :

Kalyani Mukand Ltd. , Jamnalal Sons Pvt. Ltd. (JSPL), Adonis Laboratories Pvt. Ltd.

(b) (i) Details of transactions with the related parties referred in (a) above :

ncludes only Audit and Stakeholders Relationship Committee.

P: Promoter; CMD: Chairman & Managing Director; CCMD : Co-Chairman & Managing Director; I: Independent; NED: Non-Executive Director; Jt.MD: Joint Managing Director

Shri Rajesh V. Shah and Shri Suketu V. Shah are related to each other as brothers.

None of the directors is a member of more than ten committees or acting as Chairman of more than five committees across all companies in which he/she is a Director. As per declarations received, none of the directors serves as an independent director in more than 7 listed companies.

18. Information supplied to the Board

In advance of each meeting, the Board is presented with relevant information on various matters related to the working of the Company, especially those that require deliberation at the highest level. Presentations are also made to the Board by different functional heads on important matters from time to time. Directors have separate and independent access to officers of the Company. In addition to items which are required to be placed before the Board for its noting and /or approval, information is provided on various significant items. The information supplied by management to the Board of the Company is in accordance with Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI LODR, 2015].

19. Orderly succession to Board and Senior Management

The Board of the Company satisfied itself that plans are in place for orderly succession for appointments to the Board and to senior management


Mar 31, 2015

(1) (a) CONTINGENT LIABILITIES NOT PROVIDED FOR : 31st March, 2015 31st March, 2014 Rs.in crore Rs.in crore

(i) Disputed matters in appeal/ contested in respect of:

- Income Tax * 22.12 22.40

- Excise Duty, Customs Duty etc. 3.89 3.95

- Sales Tax, Works Contract Tax etc. ** 4.90 4.90

- Other matters 0.24 0.24

* included in this amount (not provided in the Accounts) is the liability under Sec 115JB of the Income Tax Act, 1961 for Assessment Year 2005-06 as the Company''s appeal is pending disposal. Company places reliance on certain jud icial pronouncements and has also obtained a legal opinion on the matter.

** In the matter of certain ex-parte assessments completed by Commercial Tax Officer in the State of Uttar Pradesh, Company is advised that liability if any, that may arise will be determined after the matter is remanded to the Assessing Officer and on completion of reassessment proceedings and therefore, the same is not included herein.

(ii) Claims against the Company not acknowledged as debt as these are disputed and pending disposal at 16.93 15.50 various fora.

For items (i) & (ii)

The Company has taken legal and other steps to protect its interest in respect of these matters, which is based on legal advice and/or precedents in its own/other cases. It is not possible to make any further determination of the liability which may arise in these matters.

(iii) Bills discounted with the Bankers and others

Sale Bills discounted 1.53 3.91

(iv) Guarantees and Counter guarantees given by the Company on behalf of :-

- Other Companies 99.95 70.15

(v) Bonds / Undertakings given by the Company under concessional duty/ exemption to Customs / Excise 0.66 0.66 Authorities (Net of redemption applied for)

(vi) Bonds given by the Company against import of machinery under EPCG Scheme (Net of redemption - 14.30 applied for)

(vii) Demand for Annual Bonus for the financial years 1995-96 to 2006-07 by Staff and Officers'' Association is pending at different stages in proceedings under The Industrial Disputes Act, 1947. Bulk of these employees are statutorily not covered by The Payment of Bonus Act, 1965 and many of the employees are also not covered by The Industrial Disputes Act, 1947. Liability arising there from cannot therefore be determined at present.

(viii) Government of Maharashtra had served a Demand Notice on the Company for payment of electricity duty for power generated during the period 01.04.2000 to 30.04.2005 and penal interest thereon in Company''s Captive Power Plant amounting to Rs.14.27 crore. The Writ Petition filed by the Company was disposed by the Hon''ble Bombay High Court on 7th November, 2009 quashing the said Demand Notice. Government of Maharashtra has however, filed an appeal in the Supreme Court of India against the aforesaid judgment of High Court.

(ix) There have been delays in payment of tax deducted at source in earlier years and also in FY2014-15. Interest payable on delays has been accounted for in respect of cases where appropriate orders have been received from Income Tax authorities or at the time of Filing the Quarterly TDS Returns.

(x) A claim towards difference in price of calibrated iron ore for the period 1st April, 2006 to 28th February, 2007 amounting to Rs.33.07 crore has been raised by a supplier in March 2007. The Company has been legally advised that the supplier cannot seek this price revision under a concluded agreement and hence no provision is made in the Accounts for the same. The issue along with method of review and re-fixing of price of calibrated iron ore effective on 1st of April each year in terms of agreement is referred to an arbitral tribunal whose award was pronounced on 28th February 2014. In terms of the said award, the supplier is directed to re-compute amount payable by the Company. Pending receipt of the revised claim, the final liability arising there from is not ascertainable. Moreover, the said supplier has also unilaterally increased the price of calibrated iron ore w.e.f. 1st April, 2007 and thereafter w.e.f. 1st April, every year. This issue too was settled by the aforesaid arbitral tribunal. In terms of the said award, the Company is required to submit certain details to the supplier for re-computing its claim in terms of the award. However, pending such determination of final price, the supplier has raised invoices at an ad-hoc interim mutually agreed price on the marketing contractor who in turn, has billed the Company at the same price and which liability, has been fully accounted for. An appeal has been preferred for challenging the said arbitration award.

(b) The Company in previous years executed road construction projects in the state of Uttar Pradesh for National Highway Authority of India (NHAI) along with Centrodorstroy (CDS), Russia. The exposure on this account as at the end of the financial year aggregate Rs.126.80 crore (Previous Year: Rs.134.78 crore). The management has, keeping in view the accounting policy A(8)(v) adopted by the Company, technically determined the realisable value of Contracts in Progress compared to relatable revenues and claims raised on NHAI by CDS. The outcome of the Road Construction activity cannot be estimated with certainty at present. Pending claims as at 31.03.2015 aggregate Rs.223.36 crore (Previous Year: Rs.225.28 crore). Bulk of these claims are now being processed at the level of Tribunal as against the level of consulting engineers in the previous year. It is the opinion of the management that in view of the substantially large claims for incremental jobs executed, escalations and time over-runs to be settled progressively over a period of 2 to 3 years, losses currently expected are already recognized till the close of the year. Since realization of these amounts is a judgmental matter, the auditors have placed reliance on the Management''s judgment of the losses currently expected in the contract considering reliasability of amounts.

Note :

During the previous year, the Company arrived at settlement with the Corporate Debt Restructuring members for an adhoc amount of Rs.24.90 crores payable in monthly installments till the maturity of the loans without any further interest thereon. This settlement was arrived at to compensate the Lenders for the lower interest charged by them during the period FY 2002-03 to FY 2011-12. A proportionate charge of Rs.12.45 crores has been made in the current year. An amount of Rs 1.89 crores being differential interest for FY 2012-13 was also charged in FY 2013-14.

(2) RELATED PARTY DISCLOSURES (a) Relationship :

(i) Subsidiaries:

Mukand Global Finance Ltd., Mukand International Ltd. (MIL),

Vidyavihar Containers Ltd. (VCL), Mukand Vijayanagar Steel Ltd. upto March 30, 2015, Mukand International FZE (MIFZE), Mukand Sumi Metal Processing Ltd. (MSMPL), Mukand Alloy Steels Pvt. Ltd. w.e.f. January 27, 2015.

(ii) Other related parties where control exists :

Mukand Engineers Ltd. (MEL), Bombay Forgings Ltd. (BFL), Stainless India Ltd. (SIL), Hospet Steels Ltd. (HSL),

(iii) Joint Ventures :

Mukand Vini Mineral Ltd. (MVML).

(iv) Key Management Personnel :

Niraj Bajaj, Rajesh V. Shah, Suketu V. Shah.

(v) Other related parties where significant influence exists or where the related party has significant influence on the Company Kalyani Mukand Ltd., Jamnalal Sons Pvt. Ltd. (JSPL), Adonis Laboratories Pvt Ltd.

(3) Shareholders by way of a postal ballot have approved a transfer of Alloy Steel business as a going concern on slump sale basis on 18th February 2015 to a prospective subsidiary of the Company. Accordingly, Company has signed business transfer agreement dated 14th March 2015 for the said business with Mukand Alloy Steels Pvt. Ltd. a subsidiary of the Company. This agreement will be effective after approval of Lenders, release of charge by lenders, other authorities and fulfillment of conditions precedent as stipulated in the agreement. Company is in various stages of obtaining these approvals/ consents. Even after such approvals, the amount of consideration receivable is to change on account of debt to be transferred and changes in net working capital. In view of this, no further disclosures are deemed necessary in terms of Accounting Standard - 24 Discontinued Operations.

(4) In accordance with Accounting Standard - 17 "Segment Reporting", segment information has been given in the consolidated financial statements of the Company, and therefore, no separate disclosure on segment information is given in these financial statements.

(5) Previous years''s figures have been regrouped / recast wherever necessary


Mar 31, 2014

As at As at 31-3-2014 31-3-2013 Un-Audited Audited

ii) Contingent liabilities in respect of Joint Venture.

a) Directly incurred by the Company. - 4.90

b) Share of the Company in contingent liabilities incurred by jointly controlled entity (to the extent ascertainable)

Based on the terms of the Letter of Intent dated 5th August, 2008 from the Ministry of Coal (MOC), Government of India, allocating the Rajhara North (Central and Eastern) Non Coking Coal Block in Jharkhand to the Company and Vini Iron & Steel Udyog Ltd.(VISUL), the Company formed a JV Company viz., Mukand Vini Mineral Pvt. Ltd. (now known asMukand Vini Mineral Ltd.) for captive mining of the coal block. The JV Company was in the process of obtaining various statutory permissions / approvals and clearances for development of the coal block. Meanwhile, the Company received a letter dated February 17, 2014 from the MOC conveying de-allocation of the aforesaid coal block. The Company has filed a writ petition before the Hon''ble High Court of Jharkhand at Ranchi challenging the de-allocation. The Hon''ble Court has ordered that no coercive steps betaken against the Petitioner Company. Hearing of the Petition is pending. The investment made by the Company in this JV Company is of long term nature and therefore does not require any provision for diminution in value there against.

2 Previous year''s figures include business of cold finished bars & wires upto 30th September, 2012 which was subsequently transferred to a subsidiary, Mukand Sumi Metal Processing Ltd. and hence the figures are not comparable.

3 In accordance with Accounting Standard - 17 "Segment Reporting", segment information has been given in the consolidated financial statements of the Company, and therefore, no separate disclosure on segment information is given in these financial statements.

4 Previous years''s figures have been regrouped / recast wherever necessary


Mar 31, 2013

(1) (a) Contingent liabilities not provided for :

31st March, 2013 31st March, 2012 Rs.in crore Rs.in crore

(i) Disputed matters in appeal/ contested in respect of:

- Income Tax * 21.79 20.10

- Excise Duty, Customs Duty etc. 3.80 4.53

- Sales Tax, Works Contract Tax etc. ** 5.63 2.83

- Other matters 0.24 0.24

* included in this amount (not provided in the Accounts) is the liability under Sec 115JB of the Income

Tax Act, 1961 for Assessment Year 2005-06 as the Company''s appeal is pending disposal. Company

places reliance on certain judicial pronouncements and has also obtained a legal opinion on the matter.

** In the matter of certain ex-parte assessments completed by Commercial Tax Offcer in the State of Uttar Pradesh, Company is advised that liability if any, that may arise will be determined after the matter is remanded to the Assessing Offcer and on completion of reassessment proceedings and therefore, the same is not included herein.

(viii) The Company has implemented the award given by the Industrial Tribunal in the matter relating to emoluments of staff and offcers. The said award was under challenge in the High Court of Bombay by way of a Writ Petition. High Court has upheld the Award and dismissed the Writ Petition against the said Award.

Demand for Annual Bonus for the fnancial years 1995-96 to 2006-07 by Staff and Offcers'' Association is pending at different stages in proceedings under The Industrial Disputes Act, 1947. Bulk of these employees are statutorily not covered by The Payment of Bonus Act, 1965 and many of the employees are also not covered by The Industrial Disputes Act, 1947. Liability arising there from cannot therefore be determined at present.

(ix) Government of Maharashtra had served a Demand Notice on the Company for payment of electricity duty for power generated during the period 01.04.2000 to 30.04.2005 and penal interest thereon in Company''s Captive Power Plant amounting to Rs.14.27 crore. The Writ Petition fled by the Company was disposed by the Hon''ble Bombay High Court on 7th November, 2009 quashing the said Demand Notice. Government of Maharashtra has however, fled an appeal in the Supreme Court of India against the aforesaid judgment of High Court.

(x) There have been delays in payment of tax deducted at source in earlier years and also in FY2012-13. Interest payable on delays has been accounted for in respect of cases where appropriate orders have been received from Income Tax authorities.

(xi) A claim towards difference in price of calibrated iron ore for the period 1st April, 2006 to 28th February, 2007 amounting to Rs.33.07 crore has been raised by a supplier in March 2007. The Company has been legally advised that the supplier cannot seek this price revision under a concluded agreement and hence no provision is made in the Accounts for the same. The issue along with method of review and re-fxing of price of calibrated iron ore effective on 1st of April each year in terms of agreement is referred to an arbitral tribunal whose award is awaited. Moreover, the said supplier has also unilaterally increased the price of calibrated iron ore w.e.f. 1st April, 2007 and thereafter w.e.f. 1st April, every year. This issue too is to be settled by the aforesaid arbitral tribunal. However, pending such determination of fnal price, the supplier has raised invoices at an ad-hoc interim mutually agreed price on the marketing contractor who in turn, has billed the Company at the same price and which liability, has been fully accounted for.

(2) Related Party Disclosures

(a) Relationship :

(i) Subsidiaries:

Mukand Global Finance Ltd. (MGFL), Mukand International Ltd. (MIL),

Vidyavihar Containers Ltd. (VCL), Mukand Vijayanagar Steel Ltd.,

Mukand International FZE (MIFZE),

Mukand Sumi Metal Processing Ltd. (MSMPL) w.e.f. 29.10.2012 (ii) Other related parties where control exists :

Mukand Engineers Ltd. (MEL), Bombay Forgings Ltd. (BFL), Stainless India Ltd. (SIL), Hospet Steels Ltd. (HSL), (iii) Joint Ventures :

Mukand Vini Mineral Ltd. (MVML). (iv) Key Management Personnel :

Niraj Bajaj, Rajesh V. Shah, Suketu V. Shah.

(v) Relatives of key management personnel and enterprises in which signifcant infuence can be exercised by persons at (iv) above or their relatives where transactions have taken place : Viren J. Shah upto 09.03.2013.

(vi) Other related parties where signifcant infuence exists or where the related party has signifcant infuence on the Company :

Kalyani Mukand Ltd., Lineage Investments Ltd. (upto 29.03.2013), Catalyst Finance Ltd. (upto 29.03.2013), Econium Investments & Finance Ltd. (upto 29.03.2013), Fusion Investments & Financial Services Ltd. (upto 29.03.2013), Primus Investments & Finance Ltd. (upto 29.03.2013), Conquest Investments & Finance Ltd. (upto 29.03.2013), Jamnalal Sons Pvt. Ltd. (JSPL), Adonis Laboratories Pvt Ltd.

Note : Related party relationship is as identifed by the Company and relied upon by the Auditors.

(3) Company has during the year transferred the business of cold fnished bars & wires to a subsidiary - Mukand Sumi Metal Processing Limited (MSMPL). The Company has invested an amount of Rs.118.09 crore in MSMPL under its Agreement with Sumitomo Corporation (Group).

(4) In accordance with Accounting Standard – 17 "Segment Reporting", segment information has been given in the consolidated fnancial statements of the Company, and therefore, no separate disclosure on segment information is given in these fnancial statements.

(5) Previous years''s fgures have been regrouped / recast whereever necessary


Mar 31, 2012

A. Terms / rights attached to equity shares

The Company has only one class of equity share having a par value of Rs. 10/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian rupees.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

During the year ended 31st March 2012, the amount of dividend per share recognized as distribution to equity shareholders was Rs. Nil (31 March 2011 : Re. 1/-).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

b. Terms of redemption of CRPS

Pursuant to the order of the Hon'ble High Court of Judicature at Bombay dated October 14, 2003, the Company had cancelled 22 1/2 equity shares issued and unallotted and reduced 20% of the outstanding equity shares amounting to 5,626,320 equity shares. In lieu of cancelled shares, the Company has issued 5,626,320 0.01% Cumulative Redeemable Preference Shares of Rs.10/- each entitled for cumulative Preference dividend of 0.01% p.a. and redeemable in five equal annual installments starting from September 2019. In the event of liquidation of the Company before redemption, the holders of CRPS will have priority over equity shares in the payment of dividend and repayment of capital.

c. The Company does not have any holding company.

d. There are no bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date.

(I) Effect and Progress of Restructuring Package

In terms of the Financial Restructuring Package (FRP) approved by the Corporate Debt Restructuring (CDR) Cell in July 2003 and April 2009, the terms of security, redemption and conversion have been rescheduled. A separate disclosure is made hereunder to explain the same, as also the progress made so far :

(i) Promoters/Associates have pledged 11,426,514 equity shares and 546,652 cumulative redeemable preference shares out of their share-holding in the Company.

(ii) Pledge of Promoters' holding of shares of Bajaj Auto Limited is to the tune of Rs.14.65 crore.

(iii) The Company shall ensure balance realization of non-core assets and investments aggregating Rs.82.73 crore (net of amounts realized till 31.03.2012) over a specified time schedule ending on 30th September, 2012.

(iv) Lenders shall have a right of recompense upto 12% per annum in excess of the effective IRR charge / credit in FRP for 8 years commencing from the date of approval.

(v) In the event of default, as defined in the restructuring package, the lenders have the right to cancel, suspend, reduce or modify all or any of the relief and concessions or vary the terms and conditions thereof.

(II) For details of loans received from related parties, please refer Note No. 33.

(III) Deferred sales tax liability is to be paid in 5 annual instalments commencing from FY2012-13 to FY 2016-17.

(a) Working Capital Facilities from the Banks and other non-funded facilities are secured/to be secured by hypothecation of stocks (excluding machinery spares) and book debts excluding stocks, book debts and movable assets of Road Construction Division. The said facilities are also secured by way of second and subservient pari passu charge against the same assets as given to Trustees for Debentures as shown at Note No.3. The said charge shall be second and subservient to all other first charges created in favour of Trustees for all the series of Debentures and Lenders for their term loans at (i) and (ii) at Note No.3(I).

Note : Security given for the debentures, term loans at Note No.3(I) and working capital facilities mentioned above exclude :

48 acres of grant land at Kalwe and Dighe, Dist. Thane in the State of Maharashtra.

Leasehold land at Dighe, Thane, as it is mortgaged to Lenders covered at Note No.3(I) (iv) and (ix).

Freehold land acquired for Coke Oven Plant at Ginigera / Kankapura, District Ginigera in the State of Karnataka.

Plant and Machinery of Captive Power Plant at Ginigera / Kankapura, District Ginigera in the State of Karnataka is given as security to lenders covered at Note No.3(I) (vi).

1.1 acres leasehold land at Lonand, Dist. Satara in the State of Maharashtra, for Company's project of expansion of finishing facilities for steel products.

2.1 acres of leasehold land at Sinnar, Dist. Nasik, in the State of Maharashtra, for Company's project of expansion of its Industrial Machinery Division.

3.1 acres of freehold land in the State of Jharkhand, for Company's projects in that State.

(b) Working capital and other facilities from a Bank to M/s. JSC Centrodorstroy, Russia with whose co-operation Company executed a Road Construction Project in the State of Uttar Pradesh are secured by stocks, book debts and movable assets of Road Construction Division and second charge against a residential flat at Mumbai.

(c) Company has defaulted in repayment of current maturity of Long Term Debt to a bank to extent of Rs.17.50 crore out of which Rs.8.75 crore has been paid after close of the year.

(a) 'Trade Payables' include (i) Rs.1.02 crore (Previous year Rs.1.63 crore) due to creditors registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME) (ii) Rs. 373.69 crore (Previous year Rs. 251.83 crore) due to other creditors.

(b) Disclosure in respect of creditors registered under Micro, Small and Medium Enterprises Development Act, 2006 (MSME).

(i) Revaluation :

Free-hold land at Kalwe / Dighe, Thane as at 30.6.1983 was revalued as at 30.6.1984 and the addition to assets on account of this revaluation, aggregating Rs.12.27 crore was correspondingly credited to the Revaluation Reserve during the year ended 30th June, 1984. To reflect the current fair market value, the Company further revalued the freehold land at Kalwe as at 31.3.2001 during November, 2001. The registered valuer had carried out the valuation on the basis of the then market values of these lands. The addition to assets on account of this revaluation, aggregating Rs.114.36 crore was correspondingly credited to the Revaluation Reserve during the year ended 31st March, 2002. Company has further revalued the aforesaid land as at 31.03.2009 and an amount aggregating Rs.1,212.37 crore has been added to assets and correspondingly credited to the Revaluation Reserve as at 31.03.2009.

Leasehold land at Dighe, Thane as at 31.03.2011 has been revalued to reflect the current Fair Market Value of this land. The valuation was carried out by a Registered Valuer. The addition to assets on account of this revaluation, aggregating Rs.334.34 crore has been correspondingly credited to the revaluation reserve as at 31.03.2011. An amount of Rs.4.39 crore has been transferred from the revaluation reserve to the statement Profit & Loss towards charge of amortization of the said land for the year.

(ii) Gross Block of Buildings as at 31st March, 2012 includes value of offices, residential flats and garages in co-operative societies/proposed co-operative societies/association of apartment owners aggregating Rs.6.39 crore at cost (Previous Year Rs.6.39 crore) [including cost of shares in co-operative societies Rs.7,500/- (Previous Year Rs.7,500/-)].

(iii) Fixed assets include net book value of assets at Ginigera Steel Plant aggregating Rs.1.40 crore which have been retired from active use and are held for disposal as tabulated hereunder. The said net book value is on the basis of realisable value as per valuation report of an approved valuer.

Assets held for disposal

(iv) Fixed Assets include borrowing costs of Rs.5.86 crore capitalised during the year (Previous Year Rs.5.74 crore).

(v) As lessee: Future Rental obligations in respect of premises taken on lease - Operating Lease.

These premises comprise office premises and a residential flat given on lease for tenure of two years with a provision for renewal in case of office premises. Gross carrying amount of assets: Rs.2.40 crore.

Accumulated depreciation upto 31.03.2012: Rs.0.65 crore.

Depreciation for the year: Rs.0.04 crore.

Short Term Loans and Advances, Trade Receivables, non-current investments etc.

(a) The Company has investments of Rs. 0.19 crore (Previous Year Rs. 0.19 crore) in equity shares of Bombay Forgings Limited (BFL), and has trade receivables due from BFL / advances recoverable which stood at Rs. 70.66 crore as at 31.03.2012 (Previous Year Rs. 66.98 crore) (collectively referred to as 'Exposures'). Net worth of BFL has turned positive and BFL is no longer a sick industrial company. BIFR has discharged BFL from the purview of provisions of SICA. The management, considering its long term view on the 'Exposures' relies upon on the valuation of unencumbered assets of BFL as at 31st March, 2012 which is at Rs. 79.92 crore (Previous Year Rs. 75.57 crore) and barring any significant uncertainties in future, relies upon the earnings from the ongoing business of BFL. The management considers the balance 'Exposures' to be 'Good' at the close of the year and adequately covered and expects full realisability of the same in future, upon which, the Auditors, being unable to make an informed judgement, have placed their reliance.

(b) The Company has an investment of Rs. 61.63 crore (Previous Year Rs. 61.63 crore) in equity shares of Vidyavihar Containers Ltd. (VCL) a wholly owned subsidiary. The Company has outstanding balances of loans amounting to Rs. 33.23 crore (net of amount received during the year Rs. 33.39 crore) (Previous Year Rs. 66.62 crore) (collectively referred to as 'Exposures'). Although the Net Worth of VCL has eroded, the management considers it appropriate to recognise diminution in value of investments only upto an amount of Rs.18.49 crore and consider no further provision necessary. Management, barring any significant uncertainties in future, relies upon the VCL management's estimation of realizable values of financial assets of VCL and expected additional realization from its real estate development agreement with a developer to be able to recover its exposures. The management considers the balance 'Exposures' to be 'Good' at the close of the year and adequately covered, and expects full realisability of the same in future, upon which, the Auditors, being unable to make an informed judgement, have placed their reliance.

(c) The Company has an investment of Rs.13.09 crore (Previous Year Rs.13.09 crore) in equity shares of Stainless India Limited (SIL), has trade receivables recoverable Rs. 1.12 crore (Previous Year Rs. 0.85 crore), loans and interest receivable outstanding aggregating Rs. Nil (Previous Year Rs. 0.47 crore) and has trade advances, aggregating Rs. 39.16 crore (Previous Year Rs. 38.34 crore).

The Net-worth of SIL has eroded. The management has recognised fully the diminution in value of investments. The management, barirng any significant uncertainties, relies upon the estimated realisable values of unencumbered assets of SIL, as at 31st March, 2012 estimated at Rs. 45.35 crore (Previous Year Rs. 49.50 crore). The management considers the balance 'Exposures' to be 'Good' at the close of the year and adequately covered and expects full realisability of the same in future, upon which, the Auditors, being unable to make an informed judgement, have placed their reliance.

(d) The Company has an investment of Rs. 26.25 crore (Previous Year Rs. 26.25 crore) in equity shares of Mukand Global Finance Limited (MGFL), a wholly owned subsidiary, whose recovery is dependent upon realisation of the financial assets that MGFL stands invested into at the close of the year. The management considers the 'Exposure' to be 'Good' and adequately covered since it is in the process of disposing off this investment. As the negotiated price is yet undecided, any ultimate shortfall in the realization is not determinable at present, the Auditors being unable to make an informed judgment have placed reliance on the judgment of the management.

(e) For details of loans and advances given to related parties, please refer Note No. 33

Other current assets represent an amount of Rs.2.94 crore due from Ispat Group of Companies. The Company had entered into an agreement dated 31st March, 1998 to sell 500,000 Equity shares of Rs.10/- each of Kalyani Mukand Ltd., for an aggregate consideration of Rs.6.94 crore. Under the terms of the said agreement, the sale of shares was based on certain conditions to be complied with subsequent to sale, and which conditions have been fulfilled.

Since the sale and transfer of the shares were considered to be legally complete upon execution of the Agreement of Sale of shares, the Company had taken credit for the consideration aggregating Rs.6.94 crore, during the Accounting Year 1997-98. The Company has, upto the close of the accounting year 2011-12, received amounts aggregating Rs.4.00 crore against the aggregate consideration of Rs.6.94 crore, and management considers the balance amount to be good and recoverable in due course and this has been relied upon by the Auditors.

(4) (a) Contingent Liabilities not provided for :

31-Mar-12 31-Mar-11

Rs.in crore Rs.in crore

(i) Disputed matters in appeal/ contested in respect of:

- Income Tax * 20.10 20.83

- Excise Duty, Customs Duty etc. 4.53 2.76

- Sales Tax, Works Contract Tax etc. ** 4.90 2.83

- Other matters 0.24 0.24

* included in this amount (not provided in the Accounts) is the liability under Sec 115JB of the Income Tax Act, 1961 for Assessment Year 2005-06 as the Company's appeal is pending disposal. Company places reliance on certain judicial pronouncements and has also obtained a legal opinion on the matter.

** In the matter of certain ex-parte assessments completed by Commercial Tax Officer in the State of Uttar Pradesh, Company is advised that liability if any that may arise will be determined after the matter is remanded to the Assessing Officer and on completion of reassessment proceedings and therefore, the same is not included herein.

(ii) Claims against the Company not acknowledged as debt as these are disputed and pending disposal at 20.89 17.26 various fora.

For items (i) & (ii)

The Company has taken legal and other steps to protect its interest in respect of these matters, which is based on legal advice and/or precedents in its own/other cases. It is not possible to make any further determination of the liability which may arise in these matters.

(iii) Bills discounted with the Bankers and others

Sale Bills discounted 9.80 17.27

(iv) Guarantees and Counter guarantees given by the Company on behalf of :-

- Other Companies 22.75 18.96

(v) Bonds / Undertakings given by the Company under concessional duty/ exemption to Customs / Excise 0.66 0.66 Authorities (Net of redemption applied for)

(vi) Bonds given by the Company against import of machinery under EPCG Scheme. 30.02 19.37 (Net of redemption applied for)

(vii) Lenders shall have a right of recompense upto 12% per annum in excess of the effective IRR charged in FRP for 8 years commencing from the date of approval.

(viii) The Company has implemented the award given by the Industrial Tribunal in the matter relating to emoluments of staff and officers. The said award is under challenge in the High Court of Bombay by way of a Writ Petition, and is pending disposal.

Demand for Annual Bonus for the financial years 1995-96 to 2006-07 by Staff and Officers' Association is pending at different stages in proceedings under The Industrial Disputes Act, 1947. Bulk of these employees are statutorily not covered by The Payment of Bonus Act, 1965 and many of the employees are also not covered by The Industrial Disputes Act, 1947. Liability arising there from cannot therefore be determined at present.

(ix) Government of Maharashtra had served a Demand Notice on the Company for payment of electricity duty for power generated during the period 01.04.2000 to 30.04.2005 and penal interest thereon in Company's Captive Power Plant amounting to Rs. 14.27 crore. The Writ Petition filed by the Company is disposed by the Hon'ble Bombay High Court on 7th November, 2009 quashing the said Demand Notice. Government of Maharashtra has however, filed an appeal in the Supreme Court of India against the aforesaid judgment of High Court.

(x) There have been delays in payment of tax deducted at source in earlier years and also in FY2011-12. Interest payable on delays has been accounted for in respect of cases where appropriate orders have been received from Income Tax authorities.

(xi) A claim towards difference in price of calibrated iron ore for the period 1st April, 2006 to 28th February, 2007 amounting to Rs. 33.07 crore has been raised by a supplier in March 2007. The Company has been legally advised that the supplier cannot seek this price revision under a concluded agreement and hence no provision is made in the Accounts for the same. The issue along with method of review and re-fixing of price of calibrated iron ore effective on 1st of April each year in terms of agreement is referred to an arbitral tribunal whose award is awaited. Moreover, the said supplier has also unilaterally increased the price of calibrated iron ore w.e.f. 1st April, 2007 and thereafter w.e.f. 1st April, every year. This issue too is to be settled by the aforesaid arbitral tribunal. However, pending such determination of final price, the supplier has raised invoices at an ad-hoc interim mutually agreed price on the marketing contractor who in turn, has billed the Company at the same price and which liability, has been fully accounted for.

(b) The management has, keeping in view the accounting policy 31(8)(v) adopted by the Company, technically determined the realisable value of Contracts in Progress (including incidental income by way of disposal of plant and equipment at the end of the contract) compared to relatable revenues and claims raised by the Company in respect of its Road Construction Contracts. Although the outcome of the Road Construction activity cannot be estimated with reliability at present, it is the opinion of the management that in view of the substantially large claims by the Company aggregating Rs.113.27 crore (Previous Year Rs.114.73 crore) for incremental jobs executed, escalations and time over-runs, losses currently expected are already recognized till the close of the year. Since realization of these claims is a judgmental matter, on which auditors are not able to make an informed judgment, the auditors have placed reliance on the Management's judgment of the losses currently expected, reliasability of claims which is expected to be settled progressively by 31st March, 2013, and further losses if any, would be entirely recognized and fully expensed by that date.

(e) The Company had, during the Financial Year 1998-99, entered into a strategic alliance with Kalyani Steels Limited to set-up a steel plant to be operated by a Company - Hospet Steels Limited.

Expenses and liabilities arising out of this alliance to Hospet Steels Limited are shared on the basis stipulated in the relevant Agreements, and its accounting in the books of the Company is carried out, accordingly.

Wherever, due to the terms of the alliance, estimations are required to be made in respect of expenses, liabilities, production, etc., the same have been relied upon by the auditors, being technical matters.

(ii) The Company expects to contribute Rs.1.68 crores to its gratuity plan for the next year. In assessing the Company's post retirement liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables, the base being the LIC, 1994-96 ultimate tables.

(iii) Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. The estimates of future salary increase considered in actuarial valuation take account of inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market.

(iv) The composition of the plan assets, by category from the insurers, LIC are on the basis of overall investment by them for all such insured entities and hence, the disclosures as required by Accounting Standard 15 in 'Employee Benefits' have not been given, and Auditors have relied upon the same.

(b) In terms of the strategic alliance with Kalyani Steels Limited, the Company has accounted for its share towards gratuity in respect of employees of Hospet Steels Ltd. amounting to Rs. 0.20 crore (Previous Year Rs. 0.19 crore) on the basis of an actuarial valuation.

(c) In respect of certain employees of Road Construction Division, liability for gratuity is provided at actuals on the basis of amount due as at 31st March, 2012, since the projects are for shorter duration. Such liability as at 31st March, 2012 (including Rs. 0.14 crore for the year which has been paid) aggregate Rs. 0.05 crore (Previous Year Rs. 0.05 crore)

(d) An amount of Rs. 3.70 crore as contribution towards defined contribution plans [including Rs. 0.74 crore in terms of strategic alliance referred in (b) above] is recognised as expense in the Profit and Loss Account.

(33) Related Party Disclosures

(a) Relationship :

(i) Subsidiaries:

Mukand Global Finance Ltd., Mukand International Ltd. (MIL),

Vidyavihar Containers Ltd. (VCL), Mukand Vijayanagar Steel Ltd.,

Mukand International FZE (MIFZE) w.e.f. 09.01.2011

Step-down Subsidiary: Mukand International FZE (MIFZE) upto 08.01.2011.

(ii) Other related parties where control exists :

Mukand Engineers Ltd. (MEL), Bombay Forgings Ltd. (BFL), Stainless India Ltd. (SIL), Hospet Steels Ltd. (HSL),

(iii) Joint Ventures :

Mukand Vini Mineral Ltd. (MVML), Bekaert Mukand Wire Industries Pvt. Ltd. (upto 28.03.2011).

(iv) Key Management Personnel :

Niraj Bajaj, Rajesh V. Shah, Suketu V. Shah.

(v) Relatives of key management personnel and enterprises in which significant influence can be exercised by persons at (iv) above or their relatives where transactions have taken place : Viren J. Shah

(vi) Other related parties where significant influence exists or where the related party has significant influence on the Company :

Kalyani Mukand Ltd., Lineage Investments Ltd., Catalyst Finance Ltd., Econium Investments & Finance Ltd., Fusion Investments & Financial Services Ltd., Primus Investments & Finance Ltd., Conquest Investments & Finance Ltd., Jamnalal & Sons Pvt. Ltd. (JSPL).

Note : Related party relationship is as identified by the Company and relied upon by the Auditors.

(5) In accordance with Accounting Standard - 17 "Segment Reporting", segment information has been given in the consolidated financial statements of the Company, and therefore, no separate disclosure on segment information is given in these financial statements.

(6) As notified by Ministry of Corporate Affairs, Revised Schedule VI under the Companies Act, 1956 is applicable to the Financial Statements for the financial year commencing on or after 1st April, 2011. Accordingly, the financial statements for the year ended March 31, 2012 are prepared in accordance with the Revised Schedule VI. The amounts and disclosures included in the financial statements of the previous year have been reclassified to conform to the requirements of Revised Schedule VI.


Mar 31, 2011

1. Impairment of Assets :

An asset is considered as impaired in accordance with Accounting Standard 28 on “Impairment of Assets”, when at balance sheet date there are indications of impairment and the carrying amount of the assets or where applicable the cash generating unit to which the assets belong, exceeds its recoverable amount (i.e. the higher of the asset’s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Profit and Loss Account.

2. Investments:

Investments are classified as current or long term in accordance with Accounting Standard 13 on “Accounting for Investments”. Long term Investments are stated at cost of acquisition. Provision for diminution is made to recognize a decline, other than temporary, in the value of such investments. Current investments are stated at lower of cost of acquisition and fair value. Any reduction in carrying amount and any reversals of such reductions are charged or credited to the Profit and Loss Account.

3. Inventories:

Inventories are valued at lower of cost or net realizable value. Materials-in-transit are valued at cost-to-date. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition including excise duty payable on goods produced. The cost formulae used for determination of cost are either ‘First in First Out’ or ‘Average Cost’, as applicable.

7. Foreign currency translations :

(i) All transactions in foreign currency, are recorded at the rates of exchange prevailing as at the date of the transaction.

(ii) Monetary assets and liabilities in foreign currency, outstanding at the close of the year, are converted in Indian currency at the appropriate rates of exchange prevailing at the close of the year. The resultant gain or loss is accounted for during the year.

(iii) In respect of forward exchange contracts entered into towards hedge of foreign currency risks, the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expenditure over the life of the contract. Further, the exchange differences arising on such contracts are recognised as income or expenditure along with the exchange differences on the underlying assets/liabilities. Profit or Loss on cancellations/renewals of forward contracts is accounted for during the year.

Non monetary items such as investments are carried at historical costs using the exchange rates on the date of the transactions.

8. Revenue Recognition:

(i) Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.

(ii) Revenue from sale of goods is recognized when all significant contractual obligations have been satisfied, the property in the goods is transferred for a price, significant risks and rewards of ownership are transferred to the customers and no effective ownership is retained. Sales are net of Sales Tax/Value Added Tax. Excise Duty recovered is presented as a reduction from gross turnover.

(iii) Liability for Excise Duty and Customs Duty payable on goods held in bond at the year end is provided for.

(iv) Benefit on account of entitlement to import duty-free materials under the Advance Licence and Duty Entitlement Pass-Book Scheme, is estimated and accounted in the year of export.

(v) Accounting for Long Term Engineering Contracts:

Revenue from construction/project related activity for supply/commissioning of Plant & Equipment is recognised on the percentage of completion method, in proportion that the contract costs incurred for the work performed upto the reporting date bear to the estimated total contract costs.

Provision for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the current estimates.

At each reporting date, the contracts in progress (progress work) is valued and carried in the Balance Sheet under Current Assets.

(vi) Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is recognized when the right to receive dividend is established.

Interest income earned on trade dues is reduced from finance and lease charges (Schedule 18).

(vii) Front-end fees paid on borrowings are amortised over the period of loans/debentures or over a period of three years whichever is shorter.

9. Leases:

(a) Operating lease:

Lease, where the lessor effectively retain substantially all the risks and benefits of ownership of the leased assets, are classified as operating lease. Operating lease receipts and payments are recognized as income or expense in the Profit and Loss Account on a straight line basis over the lease term.

(b) In respect of Other Assets taken on Lease upto 31-3-2001:

(i) Interest and other charges are deferred over the “specified period” of the assets or the term of lease, whichever is shorter.

(ii) Lease rentals are charged over the “specified period” of the assets or the term of lease, whichever is shorter.

The “specified period” is worked out at the rates of depreciation on the Straight Line Method in Schedule XIV to the Companies Act, 1956, and it commences from the year in which the asset is installed.

10. Employee Benefits :

Employee benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined contribution plans such as provident fund and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense to the Profit and Loss Account in the period in which the service is rendered.

Employee benefits under defined benefit plans, such as compensated absences and gratuity which fall due for payment after a period of twelve months from rendering service or after completion of employment, are measured by the project unit cost method, on the basis of actuarial valuation carried out by third party actuaries at each balance sheet date. The Company’s obligations recognized in the balance sheet represent the present value of obligations as reduced by the fair value of plan assets, where applicable. Actuarial gains and losses are recognized immediately in the Profit and Loss Account.

11. Borrowing Costs:

Borrowing cost attributable to the acquisition or construction of qualifying assets, as defined in Accounting Standard 16 on “Borrowing Costs” are capitalized as part of the cost of such assets upto the date when the asset is ready for its intended use. Other borrowing costs are expensed as incurred.

12. Taxation:

Tax expense comprises of current and deferred. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

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.

13. Segment Reporting Policies :

Identification of segments:

The Company’s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter segment Transfers:

The Company generally accounts for inter segment transfers at cost.

Allocation of common costs:

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

Unallocated items :

Includes general corporate income and expense items which are not allocated to any business segment.

Segment Policies:

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

14. Earnings Per Share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

15. Provisions and Contingent Liabilities:

Provisions involving a substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the Financial Statements.

16. Cash Flow Statement:

The Cash Flow Statement is prepared by the “indirect method” set-out in Accounting Standard 3 on “Cash Flow Statement” and presents the Cash Flows by operating, investing and financing activities of the Company.

Cash and cash equivalents presented in the Cash Flow Statement consist of cash on hand and unencumbered, highly liquid bank balances.

B. Notes forming part of the Accounts:

1. Share Capital

(a) Share Capital includes:

(i) 359,400 Equity Shares issued to Vendors as fully paid up for consideration other than cash, pursuant to a contract.

(ii) 611,667 Equity Shares [including 293,510 issued to Vendors in (i) above] issued as fully paid up for consideration other than cash on

account of conversion of Deferred Shares into Equity Shares.

(iii) 10,538,644 Equity Shares issued as fully paid up Bonus shares by capitalising Securities Premium Account and Reserves.

(iv) 1,750,000 Equity Shares issued on 1st July, 1983 as fully paid up on conversion of the convertible portion of Convertible Debentures.

(v) 23,759 Equity Shares issued on 1st March, 1993 as fully paid up, at par, to the shareholders of Beco Engineering Company Ltd., pursuant to a scheme of merger.

(b) The 0.01% Cumulative Redeemable Preference Shares are redeemable in five equal annual installments commencing from September, 2019.

2. Loan Funds

(I) Secured Loans

(A) Nature of Security

(i) Debentures [included in Schedule 3(a)]

800,000, 10.50% (2006-15) Mortgage Debentures (balance outstanding as at 31.03.2011 Rs. 67,344 thousands, Previous Year Rs.70,000 thousands), 2,500,000, 10.5% (2006-15) Mortgage Debentures (balance outstanding as at 31.03.2011 Rs. 210,430 thousands, Previous Year Rs.218,730 thousands), 2,500,000, 10.5% (2006-15) Mortgage Debentures (balance outstanding as at 31.03.2011 Rs. 210,450 thousands, Previous Year Rs.218,750 thousands), are secured by way of first pari-passu charge against mortgage / hypothecation of Company’s freehold land, immovable and movable fixed assets both present and future of the Company at Kalwe and Dighe, Dist. Thane, in the State of Maharashtra and leasehold land, immovable and movable fixed assets both present and future of the Company at Ginigera/Kankapura, Dist. Ginigera in the State of Karnataka and such mortgage and charge shall rank pari-passu with the existing mortgages and charges created in favour of financial institutions, banks and a company for their loans except loans at (ii)(c) to (ii)(f) below. These debentures are also secured by way of a second and subservient pari-passu charge on stocks (excluding machinery spares) and book debts.

(ii) Loans [included in Schedule 3(b)]

(a) Loans from Financial Institutions, Banks and a Company (balance outstanding as at 31.03.2011 Rs. 4,771,092 thousands, Previous Year Rs.5,074,513 thousands), are secured by way of first pari-passu charge against mortgage / hypothecation of Company’s freehold land, immovable and movable fixed assets, both present and future of the Company at Kalwe and Dighe, Dist. Thane, in the State of Maharashtra and leasehold land, immovable and movable fixed assets both present and future of the Company at Ginigera/Kankapura, Dist. Ginigera in the State of Karnataka and such mortgage and charge shall rank pari-passu with the existing mortgages and charges created in favour of financial institutions, banks and a company for their loans and in favour of Trustees for the series of Debentures at (i) above except loans at (ii)(c) to (ii)(f) below. These loans are also secured by way of a second and subservient pari-passu charge on stocks (excluding machinery spares) and book debts.

(b) Priority Loan of Rs.3,000,000 thousands (balance outstanding as at 31.03.2011 - Rs.500,000 thousands, Previous Year Rs.1,500,000 thousands) from ICICI Bank Ltd. is secured by way of first pari-passu charge against mortgage / hypothecation of Company’s freehold land, immovable and movable fixed assets, both present and future of the Company at Kalwe and Dighe, Dist. Thane, in the State of Maharashtra and leasehold land, immovable and movable fixed assets, both present and future of the Company at Ginigera/Kankapura, Dist. Ginigera in the State of Karnataka and such mortgage and charge shall rank pari-passu with the existing mortgages and charges created in favour of financial institutions, banks and a company for their loans and in favour of Trustees for series of debentures at (i) above, except loans at (ii)(c) to (ii)(f) below. This loan is also secured by way of a second and subservient pari-passu charge on stocks (excluding machinery spares) and book debts.

(c) Loan of Rs.400,000 thousands from a Bank is secured against office premises at Mumbai and one residential premises at Mumbai.

(d) Loan of Rs.3,500,000 thousands (balance outstanding as at 31.03.2011 - Rs.3,350,000 thousands, Previous Year Rs.2,250,000 thousands) from a Bank is secured / to be secured against mortgage of 50 acres of leasehold land at Dighe, Thane.

(e) Loan of Rs.350,000 thousands from a Bank is secured against plant and machinery and other moveable assets of Captive Power Plant at Ginigera / Kankapura, District Ginigera in the State of Karnataka.

(f) Loan of Rs.125,000 thousands (outstanding as at 31.03.2011 - Rs.97,977 thousands, Previous Year Rs.143,072 thousands) from a Company is secured against hypothecation of specific movable plant and machinery, furniture and fixtures and office equipment.

(iii) Working Capital Facilities [included in Schedule 3(d)]

Working Capital Facilities from the Banks [included in Schedule 3(d)] and other non-funded facilities are secured/to be secured by hypothecation of stocks (excluding machinery spares) and book debts excluding stocks, book debts and movable assets of Road Construction Division. The said facilities are also secured by way of second and subservient pari passu charge against mortgage/hypothecation of freehold land, immovable and movable fixed assets, both present and future of the Company at Kalwe and Dighe, Dist. Thane, in the State of Maharashtra and leasehold land, immovable and movable fixed assets both present and future of the Company at Ginigera/Kankapura, Dist. Ginigera in the State of Karnataka. The said charge shall be second and subservient to all other first charges created in favour of Trustees for all the series of Debentures and Lenders for their loans at (ii) (a) and (b) above.

Note: Security given for the above referred debentures, loans at (ii)(a) and (ii)(b) and working capital facilities mentioned above exclude:

- 48 acres of grant land at Kalwe and Dighe, Dist. Thane in the State of Maharashtra.

- Leasehold land at Dighe, Thane, as it is mortgaged to Lenders covered at (ii)(d) above.

- Freehold land acquired for Coke Oven Plant at Ginigera / Kankapura, District Ginigera in the State of Karnataka.

- Plant and Machinery of Captive Power Plant at Ginigera / Kankapura, District Ginigera in the State of Karnataka is given as security to lenders covered at (ii)(e) above.

- 39.58 acres leasehold land at Lonand, Dist. Satara in the State of Maharashtra, for Company’s project of expansion of finishing facilities for steel products.

- 43.14 acres of leasehold land at Sinar, Dist. Nasik, in the State of Maharashtra, for Company’s project of expansion of its Industrial Machinery Division.

- 122.60 acres of freehold land in the State of Jharkhand, for Company’s projects in that State.

(iv) Working capital and other facilities from a Bank to M/s. JSC Centrodorstroy, Russia with whose co-operation Company is executing a Road Construction Project in the State of Uttar Pradesh are secured by stocks, book debts and movable assets of Road Construction Division, first charge against two residential flats at Mumbai and second charge against a residential flat at Mumbai.

(B) Terms of Redemption and rescheduling of loan instalments

Terms of Redemption

(i) 800,000, 10.50% (2006-15) Privately placed Mortgage Debentures of Rs.100/- each aggregating Rs.80,000 thousands were redeemable in full on expiry of 3 years from 2nd April, 1998. Rescheduled for repayment in 90 installments from 2006 to 2015 in terms of Financial Restructuring Package approved by Corporate Debt Restructuring Cell (CDR) in July 2003 and April 2009.

(ii) 2,500,000, 10.5% (2006-15) Privately placed Mortgage Debentures of Rs.100/- each aggregating Rs.250,000 thousands were redeemable in full on expiry of 5 years from 15th April, 1998. Rescheduled for repayment in 90 monthly installments from 2006 to 2015 in terms of financial restructuring package approved by CDR in July 2003 and April 2009.

(iii) 2,500,000, 10.5% (2006-15) Privately placed Mortgage Debentures of Rs.100/- each aggregating Rs.250,000 thousands were redeemable in one installment on 15th October, 2001. Rescheduled for repayment in 90 monthly installments from 2006 to 2015 in terms of financial restructuring package approved by CDR in July 2003 and April 2009.

(iv) The balance amount of Rs.100,000 thousands of 50 floating rate (2007-11) Mortgage Debentures has been paid during the year.

Rescheduling of loan instalments

(i) The principal term debt is to be repaid in 144 monthly installments commencing from April 2006 and ending in March, 2018 with a pre-determined ballooning schedule. During April 2009 CDR Cell approved deferment of principal amount due for payment aggregating Rs.1,190,000 thousands during the period of 18 months commencing from 1st April, 2009 and ending on 30th September, 2010. The total loan amount is now rescheduled to be paid during FY2010-11 to FY2014-15 in place of the earlier schedule of payments by FY2017-18 without any increase in the rate of interest. The Company has improved its operations as well as the resultant cash flows. Based on an assessment of its financial commitments and the estimated cash flows, the management is confident of meeting all its financial commitments in the foreseeable future.

(ii) Interest/lease rentals payable on all the principal term debt for the period from 1st April, 2002 to 30th September, 2004 have been converted into Future Funded Interest Term Loan (FFITL) and would be repaid in 78 installments commencing from April 2005 and ending in March, 2013 with a ballooning schedule.

(C) Effect and Progress of Restructuring Package

In terms of the Financial Restructuring Package (FRP) approved by the Corporate Debt Restructuring (CDR) Cell in July 2003 and April 2009, the terms of security, redemption and conversion have been rescheduled. A separate disclosure is made hereunder to explain the same, as also the progress made so far :

(i) Promoters/Associates have pledged 11,426,514 equity shares and 546,652 cumulative redeemable preference shares out of their share-holding in the Company.

(ii) Pledge of Promoters’ holding of shares of Bajaj Auto Limited is to the tune of Rs.170,181 thousands.

(iii) The Company shall ensure balance realization of non-core assets and investments aggregating Rs.1,161,220 thousands (net of amounts realized till 31.03.2011) over a specified time schedule ending on 30th September, 2012. After the close of the year, Company has realised Rs.130,000 thousands till date.

(iv) Lenders shall have a right of recompense upto 12% per annum in excess of the effective IRR charge in FRP for 8 years commencing from the date of approval.

(v) In the event of default, as defined in the restructuring package, the lenders have the right to cancel, suspend, reduce or modify all or any of the relief and concessions or vary the terms and conditions thereof.

II. Unsecured loans

(a) ‘Fixed Deposits in Schedule 4’ includes unclaimed Fixed Deposits as at 31st March, 2011 amounting to Rs.9,117 thousands (Previous Year Rs.7,775 thousands).

(b) Deferred of sales tax liability is to be paid in 5 annual instalments commencing from FY2011-12 to FY2016-17. 3. Fixed Assets :

(i) Revaluation :

Free-hold land at Kalwe / Dighe, Thane as at 30.6.1983 was revalued as at 30.6.1984 and the addition to assets on account of this revaluation, aggregating Rs.122,705 thousands was correspondingly credited to the Revaluation Reserve during the year ended 30th June, 1984. To reflect the current fair market value, the Company further revalued the freehold land at Kalwe as at 31.3.2001 during November, 2001. The registered valuer had carried out the valuation on the basis of the then market values of these lands. The addition to assets on account of this revaluation, aggregating Rs.1,143,588 thousands was correspondingly credited to the Revaluation Reserve during the year ended 31st March, 2002. Company has further revalued the aforesaid land as at 31.03.2009 and an amount aggregating Rs.12,123,691 thousands has been added to assets and correspondingly credited to the Revaluation Reserve as at 31.03.2009.

Leasehold land at Dighe, Thane as at 31.03.2011 has been revalued to reflect the current Fair Market Value of this land. The valuation was carried out by a Registered Valuer. The addition to assets on account of this revaluation, aggregating Rs.3,343,357 thousands has been correspondingly credited to the revaluation reserve as at 31.03.2011.

(ii) Gross Block of Buildings as at 31st March, 2011 includes value of offices, residential flats and garages in co-operative societies/proposed co-operative societies/association of apartment owners aggregating Rs.63,904 thousands at cost (Previous Year Rs. 63,904 thousands) [including cost of shares in co-operative societies Rs.7 thousands (Previous Year Rs.7 thousands)].

4. Current Assets

In the opinion of the Board of Directors of the Company, all items of ‘Current Assets, Loans and Advances’, continue to have a realizable value of at least the amounts at which they are stated in the Balance Sheet, unless otherwise stated.

5. Debtors

Debtors include an amount of Rs.29,403 thousands due from Ispat Group of Companies. The Company had entered into an agreement dated 31st March, 1998 to sell 500,000 Equity shares of Rs.10/- each of Kalyani Mukand Ltd., for an aggregate consideration of Rs.69,375 thousands. Under the terms of the said agreement, the sale of shares was based on certain conditions to be complied with subsequent to sale, and which conditions have been fulfilled.

Since the sale and transfer of the shares were considered to be legally complete upon execution of the Agreement of Sale of shares, the Company had taken credit for the consideration aggregating Rs.69,375 thousands, during the Accounting Year 1997-98. The Company has, upto the close of the accounting year 2010-11, received amounts aggregating Rs.39,972 thousands against the aggregate consideration of Rs.69,375 thousands, and management considers the balance amount to be good and recoverable in due course and this has been relied upon by the Auditors.

6. Loans, Advances, Debts, investments etc.

(a) The Company has investments of Rs.1,930 thousands (Previous Year Rs.1,930 thousands) in equity shares of Bombay Forgings Limited (BFL), and has debts due from BFL which has reduced to Rs.669,774 thousands as at 31.03.2011 (Previous Year Rs.803,336 thousands) (collectively referred to as ‘Exposures’). Net worth of BFL has turned positive and BFL is no longer a sick industrial company. BIFR has discharged BFL from the purview of provisions of SICA. The management, considering its long term view on the ‘Exposures’ relies upon on the valuation of unencumbered assets of BFL as at 31st March, 2011 which is at Rs.755,700 thousands (Previous Year Rs.567,261 thousands) and barring any significant uncertainties in future, relies upon the earnings from the ongoing business of BFL. The management considers the balance

‘Exposures’ to be ‘Good’ at the close of the year and adequately covered and expects full realisability of the same in future, upon which, the Auditors, being unable to make an informed judgement, have placed their reliance.

(b) The Company has an investment of Rs.616,300 thousands (Previous Year Rs. 616,300 thousands) in equity shares of Vidyavihar Containers Ltd. (VCL) a wholly owned Subsidiary. The Company has outstanding balances of loans amounting to Rs.666,189 thousands (net of amount received during the year Rs.8,780 thousands and of interest receivable amounting to Rs.155,674 thousands) (Previous Year Rs. 674,969 thousands) (collectively referred to as ‘Exposures’). Although the Net Worth of VCL has eroded, the management considers it appropriate to recognise diminution in value of investments only upto an amount of Rs.184,890 thousands and had, during FY2008-09, fully provided for doubtful recovery of interest receivable from VCL and consider no further provision necessary. This interest receivable has been written-off during the year against the provision made in FY2008-09. After the close of the year, Company has received Rs.130,000 thousands against the outstanding balances of loans and further amounts are likely to be realised in FY2011-12. Management, barring any significant uncertainties in future, relies upon the VCL management’s estimation of realizable values of financial assets of VCL and expected additional realization from it real estate development agreement with a developer to be able to recover its exposures. The management considers the balance ‘Exposures’ to be ‘Good’ at the close of the year and adequately covered, and expects full realisability of the same in future, upon which, the Auditors, being unable to make an informed judgement, have placed their reliance.

(c) The Company has an investment of Rs.130,915 thousands (Previous Year Rs. 130,915 thousands) in equity shares of Stainless India Limited (SIL), has trade debts Rs.153,432 thousands (Previous Year Rs. 153,432 thousands) (including considered doubtful and provided during FY2005-06 Rs.144,981 thousands), loans and interest receivable outstanding aggregating Rs.4,712 thousands(since received) (Previous Year Rs. 4,280 thousands) and has trade advances / interest receivable, aggregating Rs.773,435 thousands (Previous Year Rs. 774,259 thousands) (including doubtful of recovery and provided during FY2005-06 Rs.200,000 thousands and an amount of Rs.190,000 thousands written-off during the year). Company has during the year written-off trade debts amounting to Rs.144,981 thousands against the provision made in FY2005-06. It has also written-off an amount of Rs.390,000 thousands towards trade advances (including Rs.200,000 thousands against the provision made in FY2005-06).

The Net-worth of SIL has eroded. The management has recognised fully the diminution in value of investments and has made further provision of balance ‘Exposures’ in SIL, as referred above. The management, baring any significant uncertainties, relies upon the estimated realisable values of unencumbered assets of SIL, as at 31st March, 2011 estimated at Rs.494,969 thousands (Previous Year Rs. 592,161 thousands). The management considers the balance ‘Exposures’ to be ‘Good’ at the close of the year and adequately covered and expects full realisability of the same in future, upon which, the Auditors, being unable to make an informed judgement, have placed their reliance.

(d) The Company has an investment of Rs.262,495 thousands (Previous Year Rs. 262,495 thousands) in equity shares and interest recoverable from Mukand Global Finance Limited (MGFL), a wholly owned subsidiary, aggregating Rs.118,848 thousands (Previous Year Rs. 118,848 thousands) (collectively referred to as ‘Exposures’) whose recovery is dependent upon realisation of the financial assets that MGFL stands invested into at the close of the year. Company had during FY2008-09, provided as doubtful of recovery the interest receivable from MGFL amounting to Rs.118,848 thousands. Company has written-off the amount of interest receivable during the year against the provision made during FY2008-09. The management considers the balance ‘Exposure’ to be ‘Good’ and adequately covered since it is in the process of disposing off this investment. As the negotiated price is yet undecided, any ultimate shortfall in the realization is not determinable at present, the Auditors being unable to make an informed judgment have placed reliance on the judgment of the management.

(f) During the year, the Joint Venture agreement with NV Bekaert SA of Belgium stands terminated w.e.f. 29.03.2011 due to additional infusion of capital by NV Bekaert SA. In case of the Company’s investments in Mukand Bekaert Wire Industries Pvt. Ltd., (MBWL), the Joint Venture Company, no provision for diminution in the value of investments in MBWL is considered even though MBWL’s net-worth has eroded by 46.47% since this is a long term investment by the Company. Moreover, NV Bekaert SA has infused additional capital in MBWL to double the capacity of its plant and this is expected to earn sufficient profits in the coming years and recoup the losses incurred till 31.03.2011. The Auditors being unable to make an informed judgment have placed reliance on the judgment of the management.

7. (a) “Sundry Creditors” in Schedule ‘11’ include (i) Rs.16,252 thousands (Previous year Rs.12,648 thousands) due to creditors registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME) (ii) Rs.2,705,013 thousands (Previous year Rs. 2,458,118 thousands) due to other creditors.

9.(a) Contingent Liabilities not provided for :

31.03.2011 31.03.2010 Rs.'000 Rs.'000

(i) Disputed matters in appeal/ contested in respect of:

- Income Tax * 208,330 203,566

- Excise Duty, Customs Duty etc. 27,561 27,231

- Sales Tax, Works Contract Tax etc. ** 28,321 141,189

- Other matters 2,416 2,416

* included in this amount (not provided in the Accounts) is the liability under Sec 115JB of the Income Tax Act, 1961 for Assessment Year 2005-06 as the Company’s appeal is pending disposal. Company places reliance on certain judicial pronouncements and has also obtained a legal opinion on the matter.

** In the matter of certain ex-parte assessments completed by Commercial Tax Officer in the State of Uttar Pradesh, Company is advised that liability if any, that may arise will be determined after the matter is remanded to the Assessing Officer and on completion of reassessment proceedings and therefore, the same is not included herein.

(ii) Claims against the Company not acknowledged as debts as these 172,614 168,383 are disputed and pending disposal at various fora. For items (i) & (ii)

The Company has taken legal and other steps to protect its interest in respect of these matters, which is based on legal advice and/or precedents in its own/other cases. It is not possible to make any further determination of the liability which may arise in these matters.

(iii) Bills discounted with the Bankers and others Sale Bills discounted 172,699 132,170

(iv) Guarantees and Counter guarantees given by the Company on behalf of :- - Other Companies 189,576 517,539

(v) Bonds / Undertakings given by the Company under concessional duty/ exemption to Customs / Excise Authorities (Net of redemption applied for) 6,569 6,569

(vi) Bonds given by the Company against import of machinery under EPCG Scheme. (Net of redemption applied for) 193,702 256,004



(vii) Lenders shall have a right of recompense upto 12% per annum in excess of the effective IRR charged in FRP for 8 years commencing from the date of approval.

(viii) The Company has implemented the award given by the Industrial Tribunal in the matter relating to emoluments of staff and officers. The said award is under challenge in the High Court of Bombay by way of a Writ Petition, and is pending disposal.

Demand for Annual Bonus for the financial years 1995-96 to 2006-07 by Staff and Officers’ Association is pending at different stages in proceedings under The Industrial Disputes Act, 1947. Bulk of these employees are statutorily not covered by The Payment of Bonus Act, 1965 and many of the employees are also not covered by The Industrial Disputes Act, 1947. Liability arising there from cannot therefore be determined at present.

(ix) Government of Maharashtra had served a Demand Notice on the Company for payment of electricity duty for power generated during the period 01.04.2000 to 30.04.2005 and penal interest thereon in Company’s Captive Power Plant amounting to Rs.142,744 thousands. The Writ Petition filed by the Company is disposed by the Hon’ble Bombay High Court on 7th November, 2009 quashing the said Demand Notice. Government of Maharashtra has however, filed an appeal in the Supreme Court of India against the aforesaid judgment of High Court.

(x) Under provisions of an Order dt. 16th August, 2006 issued by the Maharashtra Electricity Regulatory Commission (MERC), it is mandatory for Company’s grid synchronised captive power plant to use a minimum of 4% renewable energy like wind power, co- generation etc. in its total consumption of energy generated from its own captive power plant with effect from FY 2007-08. Similarly, for FY 2008-09, the said percentage is 5% and for FY2009-10 it is 6%. In response to several petitions, MERC has permitted compliance of this requirement on a cumulative basis for three years viz., FY 2007-08 to FY 2009-10. Accordingly, Company has already purchased 6,487,016 Kwh and given in the grid of Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) which holds/ held these units to the credit of Company’s account. The balance of units are not required to be purchased in view of MERC’s order dated 7th August 2009.

(b) There have been delays in payment of tax deducted at source in earlier years and also in FY2010-11. Interest payable on delays has been accounted for in respect of cases where appropriate orders have been received from Income Tax authorities.

10. A claim towards difference in price of calibrated iron ore for the period 1st April, 2006 to 28th February, 2007 amounting to Rs.330,678 thousands has been raised by a supplier in March 2007. The Company has been legally advised that the supplier cannot seek this price revision under a concluded agreement and hence no provision is made in the Accounts for the same. The issue along with method of review and re-fixing of price of calibrated iron ore effective on 1st of April each year in terms of agreement is referred to an arbitral tribunal whose award is awaited. Moreover, the said supplier has also unilaterally increased the price of calibrated iron ore w.e.f. 1st April, 2007 and thereafter w.e.f. 1st April, every year. This issue too is to be settled by the aforesaid arbitral tribunal. However, pending such determination of final price, the supplier has raised invoices at an ad-hoc interim mutually agreed price on the marketing contractor who in turn, has billed the Company at the same price and which liability, has been fully accounted for.

12. Sales in – Schedule 14:

(a) (i) Sales is net of Returns, etc. relating to earlier years aggregating Rs.14,021 thousands (Previous Year Rs. 4,081 thousands), Rebates and Allowances on Sales relating to earlier years Rs.71,097 thousands (Previous Year Rs. 26,385 thousands) and is also net of early payment discounts aggregating Rs.87,758 thousands (Previous Year Rs.68,505 thousands). (ii) Sales includes export incentives (net) Rs.69,076 thousands (Previous Year Rs.34,136 thousands). At the close of the year, the Company has, estimated and accounted, an amount of Rs.33,021 thousands (Previous Year Rs.10,417 thousands) as Export Incentives receivables, being the benefit on account of entitlement to import duty-free materials under Duty Entitlement Pass-Book Scheme, as detailed in Accounting Policy A (7) (iv).

(c) The management has, keeping in view the accounting policy A(8)(v) adopted by the Company, technically determined the realisable value of Contracts in Progress (including incidental income by way of disposal of plant and equipment at the end of the contract) compared to relatable revenues and claims raised by the Company in respect of its Road Construction Contracts. Although the outcome of the Road Construction activity cannot be estimated with reliability at present, it is the opinion of the management that in view of the substantially large claims by the Company aggregating Rs.1,147,274 thousands (Previous Year Rs.1,191,933 thousands) for incremental jobs executed, escalations and time over-runs, losses currently expected are already recognized till the close of the year. Since realization of these claims is a judgmental matter, on which auditors are not able to make an informed judgment, the auditors have placed reliance on the Management’s judgment of the losses currently expected, reliasability of claims which is expected to be settled progressively by 31st March, 2012, and further losses if any, would be entirely recognized and fully expensed by that date.

(e) For the year under consideration, the Company has followed Accounting Standard 7 – “Construction Contracts” and has given accounting treatment of revenue and costs associated with such contracts for the contracts of Industrial Machinery Division in place of Accounting Standard 9 – “Revenue Recognition”. The effect of this change is that the revenue is higher by Rs. 222,708 thousands.

14. The Company had, during the Financial Year 1998-99, entered into a strategic alliance with Kalyani Steels Limited to set-up a steel plant to be operated by a Company – Hospet Steels Limited.

Expenses and liabilities arising out of this alliance to Hospet Steels Limited are shared on the basis stipulated in the relevant Agreements, and its accounting in the books of the Company is carried out, accordingly.

Wherever, due to the terms of the alliance, estimations are required to be made in respect of expenses, liabilities, production, etc., the same have been relied upon by the auditors, being technical matters.

16. Disclosures under Accounting Standard 15 on Employee Benefits

(ii) The Company expects to contribute Rs.12,364 thousands to its gratuity plan for the next year. In assessing the Company’s post retirement liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables, the base being the LIC, 1994-96 ultimate tables.

(iii) Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. The estimates of future salary increase considered in actuarial valuation take account of inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market.

(iv) The composition of the plan assets, by category from the insurers, LIC are on the basis of overall investment by them for all such insured entities and hence, the disclosures as required by Accounting Standard 15 in ‘Employee Benefits’ have not been given, and Auditors have relied upon the same.

(b) In terms of the strategic alliance with Kalyani Steels Limited, the Company has accounted for its share towards gratuity in respect of employees of Hospet Steels Ltd. amounting to Rs.1,904 thousands (Previous Year Rs.3,090 thousands) on the basis of an actuarial valuation.

(c) In respect of certain employees of Road Construction Division, liability for gratuity is provided at actuals on the basis of amount due as at 31st March, 2011, since the projects are for shorter duration. Such liability as at 31st March, 2011 (including Rs.89 thousands for the year) aggregate Rs.481 thousands (Previous Year Rs.729 thousands)

(d) An amount of Rs.35,264 thousands as contribution towards defined contribution plans [including Rs.5,844 thousands in terms of strategic alliance referred in (b) above] is recognised as expense in the Profit and Loss Account.

19. Remuneration to the Managing Directors and Whole-time Director paid / payable during the year, under Section 198 of the Companies Act, 1956 :

* includes encashment of leave

Sitting fees paid to Non-Executive Directors Rs.850 thousands (Previous Year Rs.855 thousands).

i) Remuneration to the Managing Directors has been paid in terms of approvals of Shareholders to the said appointments.

ii) As the liabilities for gratuity and leave entitlement are provided on actuarial basis for the Company as a whole, the amounts pertaining to the Managing Directors is not ascertainable and therefore, not included above.

iii) Since no commission is payable to any Managing Director, computation of net profit U/S 349 of the Companies Act, 1956 is not given.

21. Related Party Disclosures

(a) Relationship :

(i) Subsidiaries : Mukand Global Finance Ltd., Mukand International Ltd. (MIL), Vidyavihar Containers Ltd. (VCL), Mukand Vijayanagar Steel Ltd., Mukand International FZE (MIFZE) w.e.f. 09.01.2011.

Step-down Subsidiary: Mukand International FZE (MIFZE) upto 08.01.2011.

(ii) Other related parties where control exists :

Mukand Engineers Ltd. (MEL), Bombay Forgings Ltd. (BFL), Stainless India Ltd. (SIL), Hospet Steels Ltd. (HSL),

(iii) Joint Ventures : Mukand Vini Mineral Ltd. (MVML), Mukand Bekaert Wire Industries Pvt. Ltd. (upto 28.03.2011).

(iv) Key Management Personnel :

Niraj Bajaj, Rajesh V. Shah, Suketu V. Shah.

(v) Relatives of key management personnel and enterprises in which significant influence can be exercised by persons at (iv) above or their relatives where transactions have taken place :

Viren J. Shah

(vi) Other related parties where significant influence exists or where the related party has significant influence on the Company :

Kalyani Mukand Ltd., Lineage Investments Ltd., Catalyst Finance Ltd., Econium Investments & Finance Ltd., Fusion Investments & Financial Services Ltd., Primus Investments & Finance Ltd., Conquest Investments & Finance Ltd., Jamnalal & Sons Pvt. Ltd. (JSPL).

Note : Related party relationship is as identified by the Company and relied upon by the Auditors.

28. In accordance with Accounting Standard – 17 “Segment Reporting”, segment information has been given in the consolidated financial statements of the Company, and therefore, no separate disclosure on segment information is given in these financial statements.

29. The accounts of previous year were audited by another Auditor and opening balances are as per such accounts.

30. Figures less than Rs.500/- have, wherever necessary, been shown at actuals in brackets since all the figures have been rounded off to the nearest thousand.

31. Previous year's figures have been regrouped/recast wherever necessary.


Mar 31, 2010

1. Share Capital

(a) Share Capital includes:

(i) 359,400 Equity Shares issued to Vendors as fully paid up for consideration other than cash, pursuant to a contract.

ii) 611,667 Equity Shares [including 293,510 issued to Vendors in (i) above! issued as fully paid up for consideration other than cash on account of conversion of Deferred Shares into Equity Shares. ,

(iii) 10,538,644 Equity Shares issued as fully paid up Bonus shares by capitalising Securities Premium Account and Reserves.

(iv) 1,750,000 Equity Shares issued on 1st July, 1983 as fully paid up on conversion of the convertible portion of Convertible Debentures.

(v) 23,759 Equity Shares issued on 1st March, 1993 as fully paid up, at par, to the shareholders of Beco Engineering Company Ltd., pursuant to a scheme of merger.

(b) The 0.01% Cumulative Redeemable Preference Shares are redeemable in five equal annual installments commencing from September, 2019.

2. Loan Funds

(I) Secured Loans

(A) Nature of Security

(i) Debentures [included in Schedule 3(a))

800,000,10.50% (2006-18) Mortgage Debentures, 2,500,000, 10.5% (2006-18) Mortgage Debentures, 2,500,000,10.5% (2006-18) Mortgage Debentures, 50 Floating Rate (2007-11) Mortgage Debentures are secured by way of first pari-passu charge against mortgage of Companys freehold land, immovable assets and movable assets both present and future of the Company at Kalwe and Dighe, Dist. Thane, in the State of Maharashtra and leasehold land, immovable assets and movable assets both present and future of the Company at Ginigera/Kankapura, Dist. Ginigera in the State of Karnataka and such mortgage and charge shall rank pari-passu with the existing mortgages and charges created in favour of financial institutions, banks and a company for their loans subject to the prior charge of the Companys bankers on stocks (excluding machinery spares) and book debts for working capital facilities referred at (iii) below.

(ii) Loans [included in Schedule 3(b)]

(a) Loans from Financial Institutions, Banks and a Company are secured / to be secured by way of first pari-passu charge against mortgage of Companys freehold land, immovable assets and movable assets both present and future of the Company at Kalwe and Dighe, Dist. Thane, in the State of Maharashtra and leasehold land, immovable assets and movable assets both present and future of the Company at Ginigera/Kankapura, Dist. Ginigera in the State of Karnataka and such mortgage and charge shall rank pari-passu with the existing mortgages and charges created in favour of financial institutions, banks and a company for their loans and in favour of Trustees for the series of Debentures at (i) above except loans at (ii)(c) to |ii)(g| and working capital facilities from banks at (iii) below, subject to the prior charge (except for a term loan from a Bank) of the Companys bankers on stocks (excluding machinery spares) and book debts.

(b) Priority Loan of Rs.1,500,000,000/- (balance outstanding as at 31.3.2010 -original loan was for Rs.3,000,000,000/-) from ICICI Bank Ltd. is secured by way of first pari-passu charge against mortgage of Companys freehold land, immovable assets and movable assets both present and future of the Company at Kalwe and Dighe, Dist. Thane, in the State of Maharashtra and leasehold land, immovable assets and movable assets both present and future of the Company at Ginigera/Kankapura, Dist. Ginigera in the State of Karnataka and such mortgage and charge shall rank pari-passu with the existing mortgages and charges created in favour of financial institutions, banks and a company for their loans and in favour of trustees for series of debentures at (i) above, except loans at (ii)(c) to (ii)(g) and working capital facilities from banks at (iii) below, subject to the prior charge of the Companys bankers on stocks (excluding machinery spares) and book debts.

(c) Loan of Rs.375,000,002/- from HDFC Ltd. is to be secured against mortgage of 10 acres of lease hold land at Dighe, Thane.

(d) Loans of Rs.2,250,000,000/- from a Bank is secured against mortgage of 50 acres of lease hold land at Dighe, Thane.

(e) Loan of Rs.264,817,642/- from a Bank is secured by way of second charge against office premises at Mumbai and one residential premises at Mumbai.

(f) Loan of Rs.143,072,368/- from a Company is secured against hypothecation of specific movable plant and machinery, furniture and fixtures and office equipment.

g) Vehicle Loans from ICICI Bank Ltd. amounting to Rs.l,805,465/- are secured by way of hypothecation of specific vehicles.

(iii) Working Capital Facilities [included in Schedule 3(d)]

Working Capital Facilities from the Banks [included in Schedule 3(d)) and other non-funded facilities are secured by hypothecation of stocks (excluding machinery spares) and book debts excluding stocks, book debts and movable assets of Road Construction Division. The said facilities are also secured by way of second and subservient charge against mortgage of Companys immovable assets at Kalwe and Dighe, Dist. Thane, in the State of Maharashtra and Ginigera / Kanakapura, Dist. Ginigera in the State of Karnataka. The said charge shall be second and subservient to all other first charges created in favour of Trustees for all the series of Debentures and Lenders for their loans.

Note : Security given for the above referred debentures, loans and working capital facilities mentioned above exclude :

• 48 acres of grant land at Kalwe and Dighe, Dist. Thane in the State of Maharashtra.

• Leasehold land at Dighe, Thane, as it is mortgaged to Lenders covered at (ii)(c) and (ii)(d) above.

• Freehold land acquired for Coke Oven Plant at Ginigera / Kankapura, District Ginigera in the State of Karnataka.

• Plant and Machinery of Captive Power Plant at Ginigera / Kankapura, District Ginigera in the State of Karnataka.

• 39.58 acres leasehold land at Lonand, Dist. Satara in the State of Maharashtra, for Companys project of expansion of finishing facilities for steel products.

• 43.14 acres of leasehold land at Sinar, Dist. Nasik, in the State of Maharashtra, for Companys project of expansion of its Industrial Machinery Division.

• 52.49 acres of freehold land in the State of Jharkhand, for Companys projects in that State.

|iv) Dena Bank has provided working capital and other facilities to M/s. JSC Centrodorstroy, Russia with whose co-operation Company is executing a Road Construction Project in the State of Uttar Pradesh. The said facilities are secured by stocks, book debts and movable assets of Road Construction Division, first charge against two residential flats at Mumbai, first charge against a residential flat at Delhi and second charge against a residential flat at Mumbai.

(B) Terms of Redemption and rescheduling of loan instalments

Terms of Redemption

0) 800,000, 10.50% 12006-18) Privately placed Mortgage Debentures of Rs.100/- each aggregating Rs.80,000,000/- were redeemable in full on expiry of 3 years from 2nd April, 1998. Rescheduled for repayment in 144 installments from 2006 to 2018 in terms of Financial Restructuring Package approved by Corporate Debt Restructuring Cell (CDR) in July 2003.

[ii) 2,500,000, 10.5% (2006-18) Privately placed Mortgage Debentures of Rs.100/- each aggregating Rs.250,000,000/- were redeemable in full on expiry of 5 years from 15th April, 1998. Rescheduled for repayment in 144 monthly installments from 2006 to 2018 in terms of financial restructuring package approved by CDR in July 2003.

iii) 2,500,000, 10.5% (2006-18) Privately placed Mortgage Debentures of Rs.100/- each aggregating Rs.250,000,000/- were redeemable in one installment on 15th October, 2001. Rescheduled for repayment in 144 monthly installments from 2006 to 2018 in terms of financial restructuring package approved by CDR in July 2003.

(iv) 50 Floating Rate (2007-11) Privately Placed Mortgage Debentures of Rs.5,000,000/- each aggregating Rs.250,OO0,O00/- are redeemable in 5 equal annual installments of Rs.50,000,000/- each commencing from 15th December 2007.

Rescheduling of loan instalments

fi) The principal term debt is to be repaid in 144 monthly installments commencing from April, 2006 and ending in March, 2018 with a pre-determined ballooning schedule. During April, 2009 CDR Cell approved deferment of principal amount due for payment aggregating Rs.1,190 million during the period of 18 months commencing from 1st April, 2009 and ending on 30th September, 2010. The total loan amount is now rescheduled to be paid during FY2010-11 to FY2014-15 in place of the earlier schedule of payments by FY2017-18 without any increase in the rate of interest. The Company has improved its operations as well as the resultant cash flows. Based on an assessment of its financial commitments and the estimated cash flows, the management is confident of meeting all its financial commitments in the foreseeable future.

(ii) Interest/lease rentals payable on all the principal term debt for the period from 1st April, 2002 to 30th September, 2004 have been converted into Future Funded Interest Term Loan (FFITL) and would be repaid in 96 installments commencing from April, 2005 and ending in March, 2013 with a ballooning schedule. Installments due during the year have been paid.

(C) Effect and Progress of Restructuring Package

In terms of the Financial Restructuring Package (FRP) approved by the Corporate Debt Restructuring (CDR) Cell in July, 2003 and April, 2009, the terms of security, redemption and conversion have been rescheduled. A separate disclosure is made hereunder to explain the same, as also the progress made so far:

(i) Promoters/Associates have pledged 11,426,514 equity shares and 546,652 cumulative redeemable preference shares out of their share-holding in the Company.

(ii) Pledge of Promoters holding of shares of Bajaj Auto Limited, Bajaj Auto Finance Limited and Bajaj Holdings Limited is to the tune of Rs.176 million.

(iif) The Company shall ensure balance realization of non-core assets and investments aggregating Rs.1,170 million (net of amounts realized till 31.03.2010) over a specified time schedule ending on 30th September, 2010.

(iv) Debts of about Rs.118 million were to be converted into equity. CDR has waived this condition on Company repaying debt along with interest @ 18% per annum compounded on quarterly basis w.e.f. 1st April, 2002. Company has repaid the said debt along with interest during FY2OO9-10.

Iv) Lenders shall have a right of recompense upto 12% per annum in excess of the effective IRR charge in FRP for 8 years commencing from July 2003.

(vi) In the event of default, as defined in the restructuring package, the lenders have the right to cancel, suspend, reduce or modify all or any of the relief and concessions or vary the terms and conditions thereof.

II. Unsecured loans

Fixed Deposits in Schedule 4 includes unclaimed Fixed Deposits as at 31st March, 2010 amounting to Rs.7,775,000/- IPrevious Year Rs.5,034,000/-).

3 . Fixed Assets :

5) The Company was allowed leasehold land at Trans -Thane Creek Industrial Area, Dighe, at a provisional occupancy price of Rs.20,400,000/- by Maharashtra Industrial Development Corporation (MIDC). The Order of the Court at Thane by which partial refund of Rs.5,400,000/- was granted to the Company was under appeal by MIDC in Jhe Bombay High Court. As per consent terms signed on 4th April, 2009 between MIDC and Company, a total price of Rs.90,000,000/- is paid for the said leasehold land. The Honble Court has passed an Order dated 15th April, 2009 and Company has paid Rs.69,600,000/- on 7th May, 2009, being the balance amount. The accounting effect of this transaction has been given during FY2008-09.

(ii) Revaluation :

Free-hold land at Kalwe / Dighe, Thane as at 30.6.1983 was revalued as at 30.6.1984. To reflect the current fair market value, the Company further revalued the freehold land at Kalwe as at 31.3.2001 during November, 2001. The registered valuer had carried out the valuation on the basis of the then market values of these lands. The addition to assets on account of this revaluation, aggregating Rs.1,143,588,433/- was correspondingly credited to the Revaluation Reserve during the year ended 31st March, 2002. Company has further revalued the aforesaid land as at 31.3.2009 and an amount aggregating Rs.12.123,691,000/- has been added 1o assets and correspondingly credited to the Revaluation Reserve as at 31.3.2009.

iii) Gross Block of Buildings as at 31st March, 2010 includes value of offices, residential flats and garages in co-operative societies/ proposed co-operative societies/association of apartment owners and cost of time-sharing-property at a Holiday Resort, aggregating Rs.64,604,552/- at cost (Previous Year Rs. 64,604,552/-) (including cost of shares in co-operative societies Rs.7,250/- (Previous Year Rs.7,250/-)].

(iv) Capital Work-in-Progress includes Machinery-in-transit, if any.

ty) Fixed assets include net book value of assets at Ginigera Steel Plant aggregating Rs.16,000,000/- which have been retired from active use and are held for disposal as tabulated hereunder. The said net book value is on the basis of realisable value as per

4. Current Assets

In the opinion of the Board of Directors of the Company, all items of Current Assets, Loans and Advances, continue to have a realizable value of at least the amounts at which they are stated in the Balance Sheet, unless otherwise stated.

5. Debtors

The Company had entered into an agreement dated 31st March, 1998 to sell 500,000 Equity shares of Rs.10/- each of Kalyani Mukand Ltd., for an aggregate consideration of Rs.69,375,000/-. Under the terms of the said agreement, the sale of shares was based on certain conditions to be complied with subsequent to sale, and which conditions have been fulfilled.

Since the sale and transfer of the shares were considered to be legally complete upon execution of the Agreement of Sale of shares, the Company had taken credit for the consideration aggregating Rs.69,375,000/-, during the Accounting Year 1997-98. The Company has, upto the close of the accounting year 2009-10, received amounts aggregating Rs.39,971,860/- against the aggregate consideration of Rs.69,375,000/-.

6. Loans, Advances, Debts etc.

(a) The Company has investments of Rs.1,929,600/- in equity shares of Bombay Forgings Limited (BFL), and also has debts amounting to Rs.803,335,561/- (Net of recoveries of Rs.161,554,790/-) (collectively referred to as Exposures) due from BFL whose net worth has turned positive and BFL is no longer a sick industrial company. BIFR has discharged BFL from the purview of provisions of SICA. The management, considering its long term view on the Exposures relies on the valuation of unencumbered assets of BFL as at 31st January, 2010 which is at Rs.567,261,000/- and barring any significant uncertainties in future, relies upon the earnings from the ongoing business of BFL. It considers the Exposures to be Good at the close of the year and adequately covered and expects full realisability of the same in future, upon which, the Auditors have placed their reliance.

(b) The Company has an investment of Rs.616,300,000/- in equity shares of Vidyavihar Containers Ltd. (VCL) a wholly owned Subsidiary. The Company has outstanding balances of loans amounting to Rs.674,968,557/- and of interesl receivable amounting to Rs.155,674,392/- (collectively referred to as Exposures). Although the Net Worth of VCL has eroded, the management considers it appropriate to recognise diminution in value of investments only upto an amount of Rs.184,890,000/- and had, during the previous year, fully provided for doubtful recovery of interest receivable from VCL and consider no further provision necessary. Management, barring any significant uncertainties in future, relies upon the VCL managements estimation of realizable values of financial assets of VCL and expected additional realization from its real estate development agreement with a developer to be able to recover its exposures. The management considers the balance Exposures to be Good at the close of the year and adequately covered, and expects full realisability of the same in future, upon which, the Auditors, being unable to make an informed judgement, have placed their reliance.

(c) The Company has an investment of Rs.130,915,468/- in equity shares of Stainless India Limited (SIL), has trade debts Rs.153,432,237/- (including considered doubtful and provided during an earlier year Rs.144,980,561/-), loans outstanding aggregating Rs.4,000,000/- granted during the year (net of recoveries) and has trade advances/interest receivable, aggregating Rs.774,538,869/- [including granted during the year (net) Rs.26,303,524/- and doubtful and provided during an earlier year Rs.200,000,000/-).

The Net-worth of SIL has eroded. Although, the Companys Exposures have increased, the management has recognised fully the diminution in value of investments and has made no further provision of balance Exposures; in SIL. The management, barring any significant uncertainties, relies upon the estimated realisable values of unencumbered assets of SIL, as at 31st March, 2010 estimated at Rs.592,160,965/-. The management considers the balance Exposures to be Good at the close of the year and adequately covered and expects full realisability of the same in future, upon which, the Auditors, being unable to make an informed judgement, have placed their reliance.

(d) The Company has an investment of Rs.262,495,000/- in equity shares of, loans outstanding aggregating Rs.6,000,0007- granted during the year (net of recoveries) and interest recoverable from Mukand Global Finance Limited (MGFL), a wholly owned subsidiary, aggregating Rs.118,848,390/- (collectively referred to as Exposures) whose recovery is dependent upon realisation of the financial assets that MGFL stands invested into at the close of the year. Company had during the previous year, provided as doubtful of recovery the interest receivable from MGFL amounting to Rs.118,848,390/-. The management considers the balance Exposure to be Good and adequately covered since it is in the process of disposing off this investment. As the negotiated price is yet undecided, any ultimate shortfall in the realization is not determinable at present.

(e) Details of loans and advances in the nature of loans recoverable from subsidiaries/associates and shares held by loanees (stipulated under clause 32 of the listing agreement with Stock Exchanges).

vii) Proportionate liability that may arise on account of loss on realisation of assets in terms of the agreement and out of pending litigations referred in the agreement for sale of shares of Kalyani Mukand Ltd in which Company held 25% of the share capital - Amount not ascertained at present. In the matter of pending litigations, the Arbitral tribunal has given an award. The said award has been challenged in the High Court. After close of the year, the High Court at New Delhi has upheld the award with certain modifications. No liabilities devolve on the Company.

(viii) Lenders shall have a right of recompense upto 12% per annum in excess of the effective IRR charged in FRP for 8 years commencing from July, 2003.

(ix) The Company has implemented the award given by the Industrial Tribunal in the matter relating to emoluments of staff and officers. The said award is under challenge in the High Court of Bombay by way of a Writ Petition, and is pending disposal.

Demand for Annual Bonus for the financial years 1995-96 to 2006-07 by Staff and Officers Association is pending at different stages in proceedings under The Industrial Disputes Act, 1947. Bulk of these employees are statutorily not covered by The Payment of Bonus Act, 1965 and many of the employees are also not covered by The Industrial Disputes Act, 1947. Liability arising there from cannot therefore be determined at present.

A charter of demands raised by the Union of Workmen at Companys Unit at Dighe, Thane is pending with the appropriate authority and therefore, amount payable if any, is not ascertainable at present.

(x) Government of Maharashtra had served a Demand Notice on the Company for payment of electricity duty for power generatedduring the period 01.4.2000 to 30.4.2005 and penal interest thereon in Companys Captive Power Plant amounting to Rs.142,743,646/-. The Writ Petition filed by the Company is disposed by the Honble Bombay High Court on 7th November, 2009 quashing the said Demand Notice. Government of Maharashtra has however, filed an appeal in the Supreme Court of India against the aforesaid judgment of High Court.

xi) Under provisions of an Order dt. 16th August, 2006 issued by the Maharashtra Electricity Regulatory Commission IMERC), it is mandatory for Companys grid synchronised captive power plant to use a minimum of 4% renewable energy like wind power, co-generation etc. in its total consumption of energy generated from its own captive power plant with effect from FY 2007-08. Similarly, for FY 2008-09, the said percentage is 5% and for FY2009-10 it is 6%. In response to several petitions, MERC has permitted compliance of this requirement on a cumulative basis for three years viz., FY 2007-08 to FY 2009-10. Accordingly, Company has already purchased 6,487,016 Kwh and given in the grid of Maharashtra State Electricily Distribution Co. Ltd. (MSEDCL) which holds/held these units to the credit of Companys account. The balance of units to be purchased and given to MSEDCL for FY 2007-08, FY 2008-09 and FY2009-10 aggregate 6,570,698 Kwh. No demand is raised on the Company in this connection, as the matter is under review by MERC.

b] There have been delays in payment of tax deducted at source in earlier years and also in FY2009-10. Interest payable on delays has been accounted for in respect of cases where appropriate orders have been received from Income Tax authorities.

10. A claim towards difference in price of calibrated iron ore for the period 1st April, 2006 to 28th February, 2007 amounting to Rs.330,678,120/- has been raised by a supplier in March 2007. The Company has been legally advised that the supplier cannot seek this price revision under a concluded agreement and hence no provision is made in the Accounts for the same. The issue is referred to an arbitral tribunal whose award is awaited. Moreover, the said supplier has also unilaterally increased the price of calibrated iron ore w.e.f. 1st April, 2007 and thereafter w.e.f. 1st April, every year. This issue too is to be settled by the aforesaid arbitral tribunal. However, pending such determination of final price, the supplier has raised invoices at an ad-hoc interim price on the marketing contractor who in turn, has billed the Company at this price and which liability, has been fully accounted for.

(c) The management has, keeping in view the accounting policy A(7)|vi) adopted by the Company, technically determined the realisable value of Accumulated Direct Costs (including incidental income by way of disposal of plant and equipment at the end of the contract) compared to relatable revenues and claims raised by the Company in respect of its Road Construction Contracts. Although the outcome of the Road Construction activity cannot be estimated with reliability at present, it is the opinion of the management that in view of the substantially large claims by the Company aggregating Rs.l, 191,933,000/- for incremental jobs executed, escalations and time over-runs, losses currently expected are already recognized till the close of the year. Since realization of these claims is a judgmental matter, on which auditors are not able to make an informed judgment, the auditors have placed reliance on the Managements judgment of the losses currently expected, reusability of claims which is expected to be settled by 30th September, 2011, and determination of the period in which further losses if any, should be entirely recognized and fully expensed.

11. In accordance with Accounting Standard - 17 "Segment Reporting", segment information has been given in the consolidated financial statements of the Company, and therefore, no separate disclosure on segment information is given in these financial statements.

12. Figures less than Rs.500/- have, wherever necessary, been shown at actuals in brackets since all the figures have been rounded off to the nearest thousand.

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