Home  »  Company  »  RMG Alloy Steel  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of RMG Alloy Steel Ltd.

Mar 31, 2015

1 Exceptional Item

As per the Letter dated 9th October 2013 of Government of Gujarat to BIFR in connection with G.R.No: 102012-593970- I, dated 8th July 2013, the Company is eligible to avail unutilized incentive. Accordingly, the Company has exercised the option for remission of VAT/Sales tax. Accordingly, the Company has accounted an amount of Rs. 3,519 lac (including interest provided up to 31st March 2013 Rs 152 lac) towards the remission of VAT/Sales tax based on the above stated letter in the previous year.

Further, the company has received final certificate of Entitlement from Industries Commissioner and issuance of notification No. GHN – 17 VAR – 2015 (36) dated 18th May, 2015 by finance department of Gujarat. Accordingly, the company is entitled to the benefits available under the relevant scheme as provided in such eligibility certificate and the provision of aforesaid G.R shall mutatis mutandis apply in respect of such industrial unit. Accordingly, during the year the Company has accounted for the refund on the purchase tax for an amount of Rs. 2,259 lac net off Sales tax liability of Rs. 624 lacs.

2 The slowdown in end user industries and overall global weakness continues to weigh on and adversely impact the performance. Having consideration to the impending infusion of long term funds by promoter/strategic investor, proposed /sanctioned fresh loans from the lenders and the expected receipt of fiscal incentive will result in improvement in the liquidity of the company. The value added products approved by major OEM's will result in increased demand of company's products. Already, the Company has started receiving orders from Defence, Railways and Energy sectors. Management thus, expects substantial improvement in the utilisation of the capacity. Accordingly, the financial statements have been prepared on going concern basis and no adjustments are required to the carrying amount of assets and liabilities.

3 The balances of trade receivables and trade payables are subject to confirmation from the respective parties and consequential adjustments arising there from, if any. The management however does not expect any material variations on reconciliation.

4 In the opinion of the Board, current assets, loans andadvances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet, unless stated otherwise. The provision for all known liabilities is adequate and not in excess of the amount reasonably stated.

5 SEGMENT REPORTING

The Company operates in a single business segment i.e. manufacture of steel and steel products such as seamless tubes and rolled products and as such there are no primary and secondary segments as per the requirement of Accounting Standard (AS-17) on "Segment Reporting" as notified in the Companies (Accounting Standards) Rules 2006. The Company has no reportable geographical segment.

6 RELATED PARTY DISCLOSURE

As for Accounting Standard (AS – 18) 'Related Party Disclosures', notified in the Companies (Accounting Standards) Rules 2006, the disclosures of transactions with the related parties as defined in the Standard are given below:

7 EMPLOYEE BENEFITS

a) Defined Contribution Plan

The Company makes contributions at a specified percentage of payroll cost towards Employees Provident Fund (EPF) for qualifying employees.

The Company recognized Rs.85 lac (Previous year Rs.95 lac) for provident fund contributions in the Statement of Profit and Loss.

b) Defined Benefit Plans

Gratuity is payable to all eligible employees of the company on superannuation, death and resignation in terms of the provision of the payment of Gratuity Act. The present value of obligations is determined based on actuarial valuation using Projected Unit Credit Method, which recognized each period of service as given rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

8 Disclosures relating to amounts payable as at the year end together with interest paid / payable to Micro, Small and Medium Enterprises have been made in the accounts, as required under Micro, Small and Medium Enterprises Development Act, 2006, (MSMEDA) to the extent of information available with the Company determined on the basis of intimation received from suppliers regarding their status.The required disclosures are the information required under thesaid Act as given below :

9 PREVIOUS YEAR'S FIGURES

Previous year figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification/disclosure.


Mar 31, 2014

1 a. Terms/ rights attached to Equity shares :

The Company has 108,435,840 equity share having par value of Rs 6/- each fully paid up. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends, if any, in indian rupees. The dividend proposed if any, by the board of Directors is subject to the approval of the Shareholders in ensuing annual general meeting.

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 share holders.

Preference Share :

The CRPS carry dividend (cumulative) of 12% per annum. The CRPS 40,242,857 are redeemable with premium of Rs.25 per share in three equal annual installments payable from the end of eight years to ten years from 19th February 2013, the date of allotment and The CRPS 4,285,714 are redeemable with premium of Rs.25 per share in three equal annual installments payable from the end of eight years to ten years from 11th February 2014, the date of allotment.

2. The share application money is received against proposed issue of 6,376,000 CRPS of Rs.10 each at a premium of Rs.25 per share carrying dividend (cumulative) of 12% per annum. The shares shall be allotted after approval from shareholders. The CRPS shall be redeemable with premium of Rs.25 per share in three equal annual installments payable from the end of eight years to ten years from the date of allotment.

a) Rupee loan of Rs.17,215 lac (Previous year Rs. 15,444 lac) pari passu basis, by way of:

i. Equitable mortgage of immoveable properties on first charge basis.

ii. Hypothecation of movable fixed assets on first charge basis.

iii. Second charge on current assets.

Rupee loans carry interest at bank prime lending rate /base rate plus margin. Loans of

i. Rs.15,400 lac are repayable in 30 quarterly installment starting from September 2016 and ending in April 2024.

ii. Rs.800 lac are repayable in 20 quarterly installment starting from June 2014 and ending in March 2019.

iii. Rs.1015 lac are repayable in quarterly installments starting from March 2012 and ending in June 2015.

b) Sales Tax Deferred Loan is repayable from April 2012 in six equal yearly installments. The payment of the sales tax installment due of Rs.673 lac due been stayed/kept in abeyance/put on hold/ by the Board for Industrial and Financial Reconstruction (BIFR) as modifications in the scheme of rehabilitation proposed by the company are under consideration.

c) Rupee Term loans include installment of Rs.150 lac (Previous Year Rupees. 141 Lac) due on the balance sheet date.

3. a) Working Capital Loans are secured, on pari passu basis, by way of

i. Hypothecation of current assets on first charge basis.

ii. Hypothecation of movable fixed assets on second charge basis.

iii) Equitable mortgage of immovable properties on second charge basis

b) Working Capital Loans carry interest, at bank prime lending rate/base rate plus margin, ranging from 11.50% to 14.75%.

c) Buyers Credit carry interest at LIBOR plus margin (65 bps to 125 bps).

4. Exceptional Item

As per the Letter dated 9th October 2013 of Government of Gujarat to BIFR in connection with G.R.No: 102012-593970- I, the Company is eligible to avail unutilized incentive. Accordingly, the Company has exercised the option for remission of VAT/Sales tax and refund on purchase tax. Accordingly, the Company has accounted an amount of Rs. 3,519 lac (including interest provided up to 31st March 2014 Rs 152 lac) towards the remission of VAT/Sales tax based on the above stated letter. However, the Company has not accounted for the refund on the purchase tax, and same will be accounted as per assessment by the authority.

5. The prolonged slowdown in end user industries and weak business sentiment continue to weigh on and adversely impact the performance. However, operating performance of the Company has been improved as compared to previous year. The management has taken steps to reduce the finance cost by infusing fresh share capital, reduction in the rate of interest on borrowings from the bankers and extension of fiscal incentives eligibility which will result into reduction of finance cost and also improve liquidity of the company. Further, it is expected that demand from auto motive, infrastructure and engineering industry will see a pickup from the multiyear lows during the year, resulting in increased demand for company''s products. Management expects substantial improvement in utilisation of capacity. Accordingly, the financial statements have been prepared on going concern basis and no adjustments are required to the carrying amount of assets and liabilities.

6. The balances oftrade receivables and trade payables are subject to confirmation from the respective parties and consequential adjustments arising there from, if any. The management however does not expect any material variations on reconciliation.

7. In the opinion of the Board, current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet, unless stated otherwise. The provision for all known liabilities is adequate and not in excess of the amount reasonably stated.

8. SEGMENT REPORTING

The Company operates in a single business segment i.e. manufacture of steel and steel products such as seamless tubes and rolled products and as such there are no primary and secondary segments as per the requirement of Accounting Standard (AS-17) on "Segment Reporting" as notified in the Companies (Accounting Standards) Rules 2006. The Company has no reportable geographical segment.

Note: - In the absence of virtual certainty, Deferred Tax asset on account of unabsorbed depreciation and business loss has been recognized to the extent it can be realized against reversal of deferred tax liability.

9. EMPLOYEE BENEFITS

a) Defined Contribution Plan

The Company makes contributions at a specified percentage of payroll cost towards Employees Provident Fund (EPF) for qualifying employees.

The Company recognized Rs.95 lac (Previous year Rs.149 lac) for provident fund contributions in the Statement of Profit and Loss.

b) Defined Benefit Plans

Gratuity is payable to all eligible employees of the company on superannuation, death and resignation in terms of the provision of the payment of Gratuity Act. The present value of obligations is determined based on actuarial valuation using Projected Unit Credit Method, which recognized each period of service as given rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

* The details of experience adjustments arising on account of plan assets and liabilities as required by paragraph 120(n)(ii) of AS 15 (Revised) on "Employee Benefits" are not available in the valuation report and hence, are not furnished.

C) Other Long Term Employee Benefits

The compensated absences charge for the year ended 31st March, 2014, based on actuarial valuation carried out using the Projected Unit Credit Method, amounting to Rs.14 lac (Previous year Rs.14 lac) has been recognized in the Statement of Profit and Loss.

As at 31st March

2014 2013

10. Contingent Liability

Capital Commitments not provided for (net of advances) 23 23

Bank Guarantees 1035 1,104

Bills Discounted 561 1,177

Service Tax 184 119

Excise Duty 34 34

Disputed Sales Tax Demands 48 49

Disputed Income Tax Demand 86 86

Claim against the Company not acknowledged as debts 153 73

Dividend on Cumulative Redeemable Preference Shares (CRPS) 544 54

11. Pursuant to resolution passed in the shareholders'' meeting held on 14th May, 2013,name of company be and is hereby changed from Remi Metals Gujarat Limited to RMG Alloy Steel Limited . The approval from Central Government/Registrar of Companies is received on 31st May, 2013.

12. PREVIOUS YEAR''S FIGURES

Previous year figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2013

1. Losses incurred in the financial year due to sharp slowdown in the industry, increased finance costs and volatility in foreign exchange movements have further eroded the net worth. The proposed modification in the scheme of rehabilitation which includes capital expenditure plans (majority funds tied up with banks), infusion of capital, monetization of surplus assets and other mitigating factors is pending for approval before the BIFR. Together with rationalisation of operations, release & mobilisation of additional long term funds already done, the Company expects to achieve earnings recovery to recoup its recent operative losses and as such financial statements have been prepared on going concern basis and no adjustment is required to the carrying amount of assets and liabilities.

2. The balances of trade receivables and trade payables are subject to confirmation from the respective parties and consequential adjustments arising there from, if any. The management however does not expect any material variations on reconciliation.

3. In the opinion of the Board, current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet, unless stated otherwise. The provision for all known liabilities is adequate and not in excess of the amount reasonably stated.

4. SEGMENT REPORTING

The Company operates in a single business segment i.e. manufacture of steel and steel products such as seamless tubes and rolled products and as such there are no primary and secondary segments as per the requirement of Accounting Standard (AS-17) on "Segment Reporting" as notified in the Companies (Accounting Standards) Rules 2006. The Company has no reportable geographical segment.

5. The remuneration paid to the Executive Director is subject to approval of shareholders and Central Government. Application made in this respect is pending with the Central Government.

6. EMPLOYEE BENEFITS

a) Defined Contribution Plan

The Company makes contributions at a specified percentage of payroll cost towards Employees Provident Fund (EPF) for qualifying employees.

The Company recognized Rs.149 lac (Previous year Rs.171 lac) for provident fund contributions in the Statement of Profit and Loss.

b) Defined Benefit Plans

Gratuity is payable to all eligible employees of the company on superannuation, death and resignation in terms of the provision of the payment of Gratuity Act. The present value of obligations is determined based on actuarial valuation using Projected Unit Credit Method, which recognized each period of service as given rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

As at 31st March

2013 2012 f) Contingent liability

Capital commitments not provided for (net of advances) 23 23

Bank guarantees 1,104 1,354

Bills discounted 1,177 2,301

Service tax 119 130

Excise duty 34 34

Disputed sales tax demands 49 44

Disputed Income tax demand 86 86

Claim against the Company not acknowledged as debts 73 73

Dividend on cumulative redeemable preference shares (CRPS) 54 -

7. Name of the company is proposed to be changed to RMG Alloy Steel Limited pursuant to resolution passed in the shareholders'' meeting held on 14th May, 2013. The approval from Central Government/Registrar of Companies is awaited.

8. PREVIOUS YEAR''S FIGURES

Previous year figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2012

A. Terms/ rights attached to equity shares

The company has 108,435,840 equity share having par value of Rs 6/- each fully paid up. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends, if any, in indian rupees. The dividend proposed if any, by the board of directors is subject to the approval of the shareholders in ensuing annual general meeting.

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 share holders.

a) Rupee loan of Rs.7,860 lac (Previous year Rs.7,700 lac) and Foreign Currency loan of Rs.2,164 lac (Previous year Rs.3,748 lac)are secured, on pari passu basis, by way of:

i. Equitable mortgage of fixed assets on first charge basis.

ii. Hypothecation of movable machinery on first charge basis.

iii. Second charge on current assets.

Foreign Currency loan carries interest at LIBOR plus bank margin and is repayable in 10 quarterly installments starting from March 13 and ending in June 15.

Rupee term loans of Rs.3,360 lac carry interest at bank prime lending rate /base rate plus margin and are repayable in 20 quarterly installment starting from September 2010 and ending in September 2015.

Rupee term loans of Rs.4,500 lac carry interest at base rate plus margin and are repayable in single bullet payment/installment at the end of 36 months from the date of drawdown, i.e. December, 2012.

b) Sales tax deferment loan is interest free and is repayable from April 2012 in six equal yearly installments.

c) Loan from body corporate carry nil interest till the Company is deregistered from BIFR and is repayable after March 2013 on mutually agreed terms.

d) Installments of rupee term loans aggregating to Rs.390 lac due have been paid after the balance sheet date. The rephasement proposal has been sanctioned by major lender in the consortium and is under advanced consideration by other member banks. Post the sanction by all, amount remitted over and above the installment as per revised schedule is to be adjusted against the dues arising in future.

a) Working Capital Loans are secured, on pari passu basis, by way of

i. Hypothecation of current assets on first charge basis.

ii. Hypothecation of movable machinery on second charge basis.

iii. Equitable mortgage of fixed assets on second charge basis.

b) Working Capital Loans carry interest, at bank prime lending rate/base rate plus margin, ranging from 13.50% to 15.15%.

c) Rupee loan is secured by second pari passu charge on immoveable properties of the company. It carries interest at 13.15%.

d) Buyers Credit carry interest at LIBOR plus margin (115 bps to 250 bps).

1. The balances of Trade receivables and Trade payables are subject to confirmation from the respective parties and consequential adjustments arising there from, if any. The management however does not expect any material variations on reconciliation.

2 In the opinion of the Board, Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet, unless stated otherwise. The provision for all known liabilities is adequate and not in excess of the amount reasonably stated.

3. SEGMENT REPORTING

The Company operates in a single business segment i.e. manufacture of steel and steel products such as seamless tubes and rolled products and as such there are no primary and secondary segments as per the requirement of Accounting Standard (AS-17) on "Segment Reporting" as notified in the Companies (Accounting Standards) Rules 2006. The Company has no reportable geographical segment.

4. EMPLOYEE BENEFITS a) Defined Contribution Plan

The Company makes contributions at a specified percentage of payroll cost towards Employees Provident Fund (EPF) for qualifying employees.

The Company recognized Rs.171 lac (Previous year Rs.184 lac) for provident fund contributions in the Statement of Profit and Loss.

b) Defined Benefit Plans

Gratuity is payable to all eligible employees of the company on superannuation, death and resignation in terms of the provision of the payment of Gratuity Act. The present value of obligations is determined based on actuarial valuation using Projected Unit Credit Method, which recognized each period of service as given rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The following table sets out the status of the gratuity plan and the amounts recognized in the company's financial statements as at 31st March, 2012:

d) Other Long Term Employee Benefits

The Leave encashment charge for the year ended 31st March, 2012, based on actuarial valuation carried out using the Projected Unit Credit Method, amounting to Rs.28 lac (Previous year Rs.38 lac) has been recognized in the Statement of Profit and Loss.

5. PREVIOUS YEAR'S FIGURES

The Revised Schedule VI has become effective from 1st April, 2011 for the preparation of Financial Statements. This has significantly impacted the disclosure and presentation made in the Financial Statements. Previous year figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification/disclosure.


Mar 31, 2010

1. In pursuance to the approved rehabilitation scheme, the Company has written back Rs. Nil (previous year Rs.474 lac) and Rs.Nil (previous year Rs.665 lac) as waiver of principal and interest including funded interest term loan respectively on receipt of sanction from the remaining Secured Lender vide letter dated January 5, 2009.

The equity share capital was reduced by 90% amounting to Rs.6805 lac in the previous year and the same was adjusted against brought forward losses.

The equity share capital of the Company is increased on conversion of optionally convertible preference shares of Rs.30 crores into 5,00,00,000 equity shares of Rs.6 each pursuant to the scheme.

2. The rehabilitation scheme has been implemented with the raising of long term funds and utilization thereof for capital expenditure and other purposes as envisaged. The Company has also tied up working capital funds during the year.

With additional facilities, balancing equipments for debottlenecking and outsourcing, the product mix is widened to enhance productivity and profitability. The management is continuously taking initiatives directed towards wider/richer product mix and improving operating margin.

The Management is hopeful of improved performance in the coming year. In view of the foregoing, the accounts have been prepared on a going concern basis despite the fact that the Companys accumulated losses exceed its net worth.

3. With effect from April 1, 2009 the Company has implemented SAP R3 as ERP platform and accordingly valuation of inventories of raw materials and stores and spares is done on the basis of weighted average price method instead of first in first out basis applied in earlier years. The impact on the loss due to this change is not material.

4. CAPITAL EXPENDITURE PLAN

The Company, as envisaged in the approved modified rehabilitation scheme, has undertaken capital expenditure programme. The programme involves acquisition of new machineries, balancing equipments, complete revamping and modernization of existing plant facilities.

i) Pre-operative expenses including (net expenditure during trial run of Rs.Nil) of Rs.517 lac during the year (previous year Rs.302 lac) in respect of assets capitalized during the year has has been allocated to the direct cost of the respective assets.

5. The balances of Sundry Debtors and Sundry Creditors- are subject to confirmation from the respective parties and consequential adjustments arising there from, if any. The management however does not expect any material variations on reconciliation.

6. In the opinion of the Board, Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet, unless stated otherwise. The provision for all known liabilities is adequate and not in excess of the amount reasonably stated.

7. SEGMENT REPORTING

The Company operates in a single business segment i.e. manufacture of steel and steel products such as seamless tubes and rolled products and as such theFe are no primary and secondary segments as per the requirement of Accounting Standard (AS-17) on "Segment Reporting" as notified in the Companies (Accounting Standards) Rules 2006. The Company has no reportable geographical segment.

8. RELATED PARTY DISCLOSURE

As for Accounting Standard (AS - 18) Related Party Disclosures, notified in the Companies (Accounting Standards) Rules 2006, the disclosures of transactions

9. In terms of Accounting Standard 22 issued by ICAI, in respect of "Accounting of Taxes on Income" the company has computed deferred tax asset amounting to Rs.12138 lac (previous year Rs. 10864 lac) on account of carried forward losses and disallowances and the deferred tax liability amounting to Rs.3407 lac (previous year Rs.3058lac). The net deferred tax assets amounting to Rs.8731 lac (previous year Rs.7806 lac) has not been recognized as a matter of prudence.

10. EMPLOYEE BENEFITS

a) Defined Contribution Plan

The Company makes contributions at a specified percentage of payroll cost towards Employees Provident Fund (EPF) for qualifying employees.

The Company recognized Rs.141 lac (previous year Rs.107 lac) for provident fund contributions in the profit and loss account.

b) Defined Benefit Plans

Gratuity payable to all eligible employees of the company on superannuation, death and resignation in terms of the provision of the payment of Gratuity Act. The present value of obligations is determined based on actuarial valuation using Projected Unit Credit Method, which recognized each period of service as given rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

d) Other Long Term Employee Benefits

The Leave encashment charge for the year ended 31st March, 2010, based on actuarial valuation carried out using the Projected Accrued Benefit Method, amounting to Rs.52 lac (previous year Rs.54 lac) has been recognized in the Profit and Loss Account.

11. FINANCIAL AND DERIVATIVE INSTRUMENTS

The forward exchange to hedge the foreign currency exposure for payments to be made against foreign currency loan is Rs.3488.73 lac equivalent to USD 77.70 lac (previous year nil).

The foreign currency exposure, that have not been hedged by any derivative instrument or otherwise, related to current liabilities as on 31st March, 2010 is Rs.383.79 lac, equivalent to USD 8.44 lac and Euro 0.06 lac (previous year Rs.1091.13 lac equivalent to USD 20.52 lac and Euro 0.75 lac).

12. ADDITIONAL INFORMATION

Pursuant to the provisions of paras 3 and 4 of Part II of Schedule VI to the Companies Act, 1956:

f) Contingent Liability Year Ended Year Ended

31.03.2010 31.03.2009 a) Estimated amount of

unexecuted contracts

on Capital A/c not provided

for (net of advances) 283 2371

b) Bank Guarantee 387 223

c) Bill Discounting 230 637

d) Others 4 4 e) Cumulative Preference

Share Dividend - 1

f) Sales tax 20 -

13. Disclosures relating to amounts payable as at the year end together with interest paid / payable to Micro, Small and Medium Enterprises have been made in the accounts, as required under Micro, Small and Medium Enterprises Development Act, 2006, (MSMEDA) to the extent of information available with the Company determined on the basis of intimation received from suppliers regarding their status and the required disclosures are the information required under the said Act could not be compiled and discloses are given below.

14. Previous year figures have been rearranged and regrouped, wherever necessary.

 
Subscribe now to get personal finance updates in your inbox!