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Notes to Accounts of SAL Steel Ltd.

Mar 31, 2015

1. Segment Reporting

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17 "Segment Reporting" . Further, the Company has its business within the geographical territory of India Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 "Segment Reporting"

2. During the year, the Company has accumulated losses and its net worth has been fully eroded. The Financial results indicates that the Company has a net loss during the current and previous year and the Company's current liabilities exceeded its current assets as at the current and previous year balance sheet date. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a "going concern". However, the financial results of the Company hsave been prepared on a going concern basis based on that the Company is actively negotiating with the lenders for one time settlement (OTS) and expecting the waiver of interest with the banks. As a result, not only the Company's net worth will improve but also improve productivity on account of morale booster of the employees.

3. Since last many years lenders keep on ensuring the sanction and disbursement of the term loan for our ongoing projects and every year revised projections were submitted. The bankers even after the sanction of the term loan have not disbursed fully and hence funds of Rs. 103,89,20,943/- is blocked in the such ongoing projects. Since there is no active development in the ongoing project due to non sanction of funds by lenders as well as no accrual from the operations, as of now the Company does not anticipate execution of such ongoing capital projects and hence have charged back expense of pre-operative expense, trial run expense and borrowing cost element for Rs. 47,48,71,471/- to the statement of profit and loss during the current year which was earlier capitalized and carried in Capital work In Progress of our ongoing projects. For the remaining balance carried as Capital work In Progress, the company has not carried out any Techno-economic assessment during the year ended 31 March 2015 for the valuations of its ongoing Capital Projects and hence identification of impairment loss and provision thereof, if any, has not been made. Considering the emphasis of the matter, company agreed to appoint an approved valuer to access the impairment of the assets. We are expecting a report from the valuer and decision will be taken with regard to impairment, if any, on such assets. Apart from this, the Company has paid the capital advances for the amount of Rs.25,26,09,551/- which are currently shown under Long term loans and advances to the suppliers for the supply of customized equipments based of our specific design and requirements. The machines are manufactured and ready for dispatch but company does not have further fund to pay balance amount and to lift the machines. However, the management is trying to recover such advances from the suppliers and also anticipating full recovery of the said advances.

4. The company has reversed the Deferred Tax Asset for the amount of Rs. 16,44,16,320/- and charged it to Statement of Profit and Loss during the Year ended March 31, 2015 due to Management anticipating no sufficient future taxable Income to recover such Deferred Tax Asset.

5. Union Bank of India (UBI) and State Bank of Hyderabad (SBH) have confirmed 'NIL' balance as on date in the accounts of company as their competent authority have approved to assign rights in respect of financial assets in favour of Invent Assets Securitization and Reconstruction Private Limited. However, management is of the view that in absence of agreement and non transfer of charge / title of their financial assets during the year, the debts from UBI and SBH is continued and considered to be shown under the head of dues from banks. Balances of UBI and SBH will be transferred to the financial institution when assignment / agreement will be executed and charge / title would be transferred and brought to records in the name of financial institution.

32. Certain Balance of Debtors, Creditors, Loans & Advances for Capital expenditures are non- moving / sticky since last 3 years. However in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

33. The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VA T collected by the Company becomes Income of the Company and accordingly credited to Statement of profit And Loss.

35 In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

36. Balances of Secured and Unsecured borrowings, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

40 The Company has re-classified previous year figures to conform to this year's classification. Previous year figures have been re- grouped / rearranged, wherever necessary to make them comparable with those of current year.


Mar 31, 2014

CORPORATE INFORMATION

The company is engaged in manufacturing Sponge Iron, Ferro Alloys, MS & SS Angle and power and the same are sold in the domestic market. Because of the Captive power generation, company has advantage of low power cost per unit of manufacturing. Company is generating 40 MW Power from waste Heat recovery Boiler & Fluidized Bed Combustion boiler with economic price. Power generated is used for captive consumption and surplus power is sold resulting profit.

BASIS OF PREPARATION OF FINANCIAL STATEMENT

The Financial Statements are prepared as per historical cost convention and in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the provisions of the Companies Act 1956, and the applicable Accounting Standards notified under the Companies(Accounting Standards) Rules,2006. All Incomes and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

1. SHARE CAPITAL

a) Terms/rights, preferences and restrictions attached to securities:

Equity shares

The company has one class of equity share having a par value of Rs. 10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of directors is subject to the approval of shareholders in the ensuing Annual general meeting, except in case of interim dividend. In the case of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

b) Terms of securities convertible into equity shares:

Convertible warrants

On February 3 2012,3,20,00,000 convertible warrants were issued for cash at Rs. 10/- each to strategic investors and to persons belonging to promoters and promoters group category agrregrating to Rs. 32,00,00,000 convertible into 3,20,00,000 no. of equity shares of face value of Rs. 10/- each, out of which the company has received amount equivalent to 25% of the total consideration per warrant. Accordingly company has received money to the extent of Rs. 8,00,00,000 and alloted 3,20,00,000 warrants of Rs.10/- each on February 3, 2012. The lock in requirements of above warrants and/or equity shares arising on conversion of warrants into equity shares be in accordance with the provisions of SEBI(ICDR) Regulations, 2009 [at the sole option of warrant holder(s) at any time within a period of 18 months from the date of allotment of warrants.]

The Company has fully utilised money received against issue of convertible warrant of 8,00,00,000 towards working capital requirements.

2. Secured Borrowings:

(a) Nature of security and terms of repayment for secured borrowings:

Term loan:

1) Term Loans are Secured by first charge on all the Immovable and Movable assets present & future ranking parri passu with charges created/to be created in favour of other institution/banks subject to prior charge on current assets in favour of the company''s bankers for working capital borrowings. Term loan of Rs. 50 cris secured by pledge of 1,07,56,989 shares of SAL Steel Limited hold by Shah Alloys Limited (restricted to new captive power project only).

2) Term loans are further secured by personal guarantees of (i) Shri Rajendrabhai V. Shah (ii) Smt. R.R. Shah (iii) Shri Jayesh V. Shah (iv) and Corporate Guarantee of M/s Shah Alloys Limited. (Amounting to Rs. 207,50,00,000/-) Term Loan is carrying rate of Interest(at present) from 14% to 16% p.a. repayable over a period of 6 years

(b) Period and amount of default as on the balance sheet date:

The company has made a default in repayment of Principal amount of Term Loan to the extent of Rs. 36,60,00,000/- as at the balance sheet date. The company has also defaulted in payment of interest on term loan to the extent of Rs. 22,91,24,406/-as at the balance sheet date. The period of default on repayment of principaland payment of interest is ranging for a period from 90 days to 547 days and 90 days to 455 days respectively.

Vehicle loan:

Vehicle loans from "banks" are secured by hypothecation of vehicles and are repayable over a period of 3 years carrying rate of interest 10 to 12% p.a. Vehicle loans from "financial institutions" are secured by hypothecation of vehicles and are repayable over a period of 3 years carrying rate of interest 10 to 12 %p.a.

Particulars

The company has defaulted in repayment of Inter corporate deposit to the extent of Rs. 10,00,00,000/-, Rs. 20,00,00,000/- and Rs. 20,00,00,000/- which was due for repayment in the Financial year 2011-12, 2012-13 and 2013-14 respectively. Consequently, the same is shown under Current Liabilities.

Nature of security provided for short term borrowings:

Cash Credit facilities are Secured by hypothecation of entire current assets of the company on parri passu basis with the consortium member banks & second charge on fixed assets of the company on parri passu basis with consortium member banks subject to first charge on parri passu basis with the Union bank of India and State bank of India for their respective Loans.

The Loans are further secured by personal guarantee of i) Shri Rajendrabhai V. Shah ii) Smt. R.R. Shah iii) Shri Jayesh .V. Shah and iv) Corporate guarantee of M/s Shah Alloys Limited (Amounting to Rs. 207,50,00,00)

Period and Amount of default as on the Balance sheet date:

The company has defaulted in payment of interest on working capital facilities to the extent of Rs. 11,71,25,768/- as at the balance sheet date. The period of default on payment of interest is ranging for a period from 1 day to 516 days. Moreover, the company has defaulted in honouring L/C payments to the extent of Rs. 36,34,09,044/-as at the balance sheet date.The period of defaultin honouring L/C payments is ranging for a period from 244 days to 418 days.

Loans and Advances from Related Parties:

The company has taken loan during the year from a related party as mentioned herewith: SAL Care Private Limited and SAL Hospital & Medical Institute (a division of SAL Care Private Limited) of Rs. 7,62,00,000 and repaid of Rs. 8,15,34,168 during the year. This party is covered under the register maintained under section 301 of the Companies Act, 1956.

3. Trade Payables

* The Company has not received information from the Suppliers regarding their status under The Micro, Small & Medium Enterprises Development Act, 2006. Hence, disclosures, if any relating to amounts unpaid as at the balance sheet date together with interest paid or payable as per the requirement under the said Act, have not been made.

4. Fixed Assets

Cost of Fixed Assets and pre-operative expenses, being technical matter, are capitalized or allocated to Capital work in progress on the basis of data certified by technical person & the Management.

Borrowing cost includes interest and other bank charges to the extent that they are regarded as an adjustment to interest costs which are directly related to the acquisition & construction of a qualifying asset.

5. Contigent liablities and commitments (to the extent not provided for): (Amount in Rs.) As at As at March 31, 2014 March 31, 2014

(A) Contigent liablities:

(i) Claims against the company not acknowledged as debts: With Government Authorities 31,35,45,426 31,35,45,426 Others

(ii) Guarantees:

Corporate guarantees given to banks for Shah Alloys Limited 80,00,00,000 80,00,00,000

Bank guarantee given 36,27,000 11,27,000

(III) Other money for which company is contigently liable:

Letter of credit 0 24,26,500

(B) Commitment:

Estimated amount of contracts, remaining to be executed on capital account and not provided for Rs. 22,04,08,637/- net of advance "(Previous Year: Rs. 22,83,57,801/-).

Commercial Tax Department has challenged by way of Tax Appeal before High Court, the order of Tribunal dated 27.12.2010 wherein judgment dated 15.09.2010 of Joint Commissioner of Commercial Tax (Legal) was quashed and decided that non cooking coal used in the manufacturing process for Sponge Iron as raw material and eligible for ITC under Section 11 (3)(b). The result of the appeal will decide whether company has to claim amount of ITC or refund ITC already taken. However, amount of contingent Liability cannot be ascertained.

6. Defined Benefit Plan:

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

I. Expected Employer''s Contribution for the financial year

On the basis of previous year''s trend company is expecting to contribute the same amount as in 2013-14 (Rs. 19,45,678/-) to the defined contribution plan.

However, for the defined benefit plan company is not liable to contribute any amount as the plans are unfunded.

The estimate of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

7. Segment reporting:

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17 "Segment Reporting". Further, the Company has its business within the geographical territory of India Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 "Segment Reporting".

8 The Company has applied for the Debt Restructuring to CDR Cell and flash report has been admitted by the competent authority. However, the detailed terms and conditions of the restructuring plan are not yet finalized.

9. Earnings per share:

Note: In computing diluted earnings per share, only potential equity shares that are dilutive and that either reduces earnings per share or increases loss per share are included.

10. Certain Balance of Debtors, Creditors, Loans & Advances for Capital expenditures are non- moving / sticky since last 3 years. However in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

11. The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VAT collected by the Company becomes Income of the Company and accordingly credited to Statement of profit And Loss.

12. In the opinion of the Board of Directors, the current assets, loans and advances are ap-proximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

13. Balances of Unsecured Loans, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

14. The Company has re-classified previous year figures to conform to this year''s classification. Previous year figures have been re-grouped / rearranged, wherever necessary to make them comparable with those of current year.


Mar 31, 2013

CORPORATE INFORMATION

The company is engaged in manufacturing Sponge Iron, Ferro Alloys, MS & SS Angle and power and the same are sold in the domestic market. Because of the Captive power generation, company has advantage of low power cost per unit of manufacturing. Company is generating 40 MW Power from waste Heat recovery Boiler & Fluidized Bed Combustion boiler with economic price. Power generated is used for captive consumption and surplus power is sold resulting profit.

1.2 BASIS OF PREPARATION OF FINANCIAL STATEMENT

The Financial Statements are prepared as per historical cost convention and in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the provisions of the Companies Act 1956, and the applicable Accounting Standards notified under the Companies(Accounting Standards) Rules,2006. All Incomes and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

2. Foreign currency exposure at the year end not hedged by derivative instruments:

a) The Company has entered into forward contracts to offset foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee. The counter parties to such forward contracts are banks. Consequent to the announcement issued by the Institute of Chartered Accountants of India on Accounting of Derivatives, details of derivatives contracts outstanding as on 31-03-2013 are as under :

3. Segment reporting :

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17 "Segment Reporting". Further, the Company has its business within the geographical territory of India Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 "Segment Reporting".

4. The Company has applied for the Debt Restructuring to CDR Cell and flash report has been admitted by the competent authority. The detailed terms and conditions of the restructuring plan are under process for the approval.

5. Related party disclosures :

(a) List of Related Parties and Relationships:

i. Concern where significant interest exists.

6. Certain Balance of Debtors, Creditors, Loans & Advances for Capital expenditures are non- moving / sticky since last 3 years. However in view of the management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

7. The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VAT collected by the Company becomes Income of the Company and accordingly credited to Statement of profit And Loss.

8. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

9. Balances of Unsecured Loans, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

10. The company had entered into a power purchase agreement with Shah Alloys Limited on February 21st 2006 which enunciates minimum guarantee and uninterrupted supply of power. In pursuance of this contract during the last financial year 2011-12, SAL Steel Limited had recognized income on account of short wheeling of power by Shah Alloys Limited amounting to Rs. 31,09,85,750/-. This recovery of short wheeling of power by Shah Alloys Limited is included in Sale of power.

11. The Company has re-classified previous year figures to conform to this year''s classification. Previous year figures have been re-grouped / rearranged, wherever necessary to make them comparable with those of current year.


Mar 31, 2012

1 1.1 CORPORATE INFORMATION :

The company is engaged in manufacturing Sponge Iron, Ferro Alloys, MS & SS Angle and power and the same are sold in the domestic market. Because of the Captive power generation, company has advantage of low power cost per unit of manufacturing. Company is also generating 40 MW Power from waste Heat recovery Boiler & Fluidized Bed Combustion boiler with economic price. Power generated is used for captive consumption and surplus power is sold resulting profit.

1.2 BASIS OF PREPARATION OF FINANCIAL STATEMENT:

The Financial Statements are prepared as per historical cost convention and in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the provisions of the Companies Act 1956, and the applicable Accounting Standards notified under the Companies(Accounting Standards) Rules,2006. All Incomes and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

Contingent liabilities and commitments (to the extent not provided for):

As at As at March 31,2012 March 31,2011

(A) Contingent liabilities:

(i) Claims against the company not acknowledged as debts:

With Government Authorities 26 35 60 433 3 65 63 595

Others 5 35 88 531 5 00 07 352

(ii) Guarantees:

Corporate guarantee given for Shah Alloys Limited 80 00 00 000 80 00 00 000

Note: The guarantee amount keeps on reducing to the extent SAL Steel Limited repays Inter corporate deposit to Shah Alloys Limited. The Guarantee ceases to exist upon repayment of entire amount of Inter corporate deposit to Shah Alloys Limited

Bank guarantee given 11 27 000 26 27 000

(iii) Other money for which company is contingently liable:

Letter of credit 7 59 70 000 4 93 75 000

(B) Commitment:

Estimated amount of contracts, remaining to be executed on capital account and not provided for Rs. 11,46,93,887 net of advance (Previous Year : Rs. 49,69,11,814).

Defined Benefit Plan:

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity

VIII Expected Employer's Contribution for the financial year

On the basis of previous year's trend company is expecting to contribute the same amount as in 2011-12 (Rs. 16,87,655/-) to the defined contribution plan.

However, for the defined benefit plan company is not liable to contribute any amount as the plans are unfunded.

The estimate of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

* Excise duty adjustment for stock represents the difference between excise duty on opening and closing stock of finished goods. ** Excise duty expense pertains to availment of re-credit of amounts disallowed by the excise department

2 Foreign currency exposure at the year end not hedged by derivative instruments:

a) The Company has entered into forward contracts to offset foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee. The counter parties to such forward contracts are banks. Consequent to the announcement issued by the Institute of Chartered Accountants of India on Accounting of Derivatives, details of derivatives contracts outstanding as on 31-03-2012 are as under:

3 Segment Reporting

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting issued by The Institute of Chartered Accountants of India. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stake holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17. Further, the Company has its business within the geographical territory of India Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 issued by the Institute of Chartered Accountants of India.

4 RELATED PARTY DISCLOSURES

(a) List of Related Parties and Relationships:

i. Concern where significant interest exists.

Name of the Concern Nature of Relationship

Shah Alloys limited Associate

SAL Care Private Limited Promoter Group company

SAL Corporation Private Limited Promoter Group company

ii. Key Management Personnel and Relatives.

1. Shri Rajendra V. Shah Chairman

2. Shri K.C.Thatoi Managing Director

3. Shri Sujal Shah Executive Director

5 Certain Balance of Debtors, Creditors, Loans & Advances for capital Expenditures are non- moving / sticky since last 3 years. However in view of management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

6 The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VAT collected by the Company becomes Income of the Company and accordingly credited to Statement of profit And Loss.

7 In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

8 Balances of Unsecured Loans, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

9 The company had entered into a power purchase agreement with Shah Alloys Limited on February 21st, 2006 which enunciates minimum guarantee and uninterrupted supply of power. In pursuance of this contract during the year, SAL Steel Limited has recognized income on account of short wheeling of power by Shah Alloys Limited amounting Rs. 31,09,85,750/- since the date of the agreement. This recovery of short wheeling of power by Shah Alloys Limited is included in Sale of power.

10 Till the year ended 31st March, 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31st March, 2012, Revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has re-classified previous year figures to conform to this year's classification. Previous year figures have been re-arranged and re-grouped, wherever necessary to make them comparable with those of current year as per Revised Schedule-VI.


Mar 31, 2011

1. Contingent Liabilities

i. Estimated amount of contracts remaining to be executed on capital account [net of advances] and not provided for Rs. 4969.12 Lacs [P.Y. 4338.04 Lacs].

ii. Contingent Liability not Provided for in respect of :-

[Rs. in Lacs]

Particulars As at As at 31-03-2011 31-03-2010

Letter of Credit 493.75 1223.69

Bank Guarantee Given 26.27 265.65

Corporate Guarantees Given to Banks for Shah Alloys Ltd. 8,000.00 8,000.00

Claim lodged by party not acknowledge by us 500.07 234.90

Disputed Value Added Tax Demand 365.63 -

2. Foreign currency exposure at the year end not hedged by derivative instruments.

a) The Company has not entered into any forward contracts to offset foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee.

3. Segment Reporting

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider "Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting issued by The Institute of Chartered Accountants of India. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stack holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17. Further, the Company has its business within the geographical territory of India Therefore, Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 issued by the Institute of Chartered Accountants of India.

4. Related Party Disclosures

Associates : Shah Alloys Ltd., Adarsh Foundation (Charitable Trust)

Key Management Personnel : Rajendra V. Shah, Dr. K. C Thatoi, Sujal A. Shah (KMP)

5. As informed to us, the Company has not received information from the Suppliers regarding their status under The Micro, Small & Medium Enterprises Development Act, 2006. Hence, disclosures, if any, relating to amounts unpaid as at the Balance Sheet date together with interest paid or payable as per the requirement under the said Act, have not been made.

6. As per Accounting Standard - 15 "Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are given below:

Defined Benefit Plan

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obliga- tion. The obligation for leave encashment is recognized in the same manner as gratuity.

vi. Actuarial assumptions

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company's policy for plan assets management.

7. Certain Balance of Debtors, Creditors, Loans & Advances for capital Expenditures are non- moving / sticky since last 3 years. However in view of management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

8. Expenses have been capitalized and transferred to pre-operative expenses on the basis of bifurcation made by the management. This being technical matter, auditors have accepted the same as correct.

9. The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VAT collected by the Company becomes Income of the Company and accordingly credited to Profit and Loss Account.

10. In the opinion of the Board of Directors, the current assets, loans and advances are approxi- mately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

11. Inventories are as taken, valued and certified by the Management.

12. Balances of Unsecured Loans, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

13. Previous year's figures have been re-grouped / rearranged wherever necessary so as to confirm to current year's groupings.


Mar 31, 2010

1. CONTINGENT LIABILITIES

i. Estimated amount of contracts remaining to be executed on capital account [net of advances] and not provided for Rs. 4338.04 Lacs [P.Y. 4,349.28 Lacs].

ii. Contingent Liability not Provided for in respect of :-

[Rs. In lacs]

Particulars Amount Amount 2009-2010 2008-2009

Inland Letter of Credit 1223.69 961.67

Bank Guarantee Given 265.65 661.15

Corporate Guarantees Given to Banks for Shah Alloys Ltd. 8,000.00 8,000.00

Claim lodged by party not acknowledge by us 234.90 0.00

2. Foreign currency exposure at the year end not hedged by derivative instruments:

a) The Company has not entered into any forward contracts to offset foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee.

3. Segment Reporting

The Company is manufacturing Ferro Alloys & Sponge Iron, which is basically used in Iron & Steel Industry. Further power generated in the company in its power plant is used for captive as well as trading purpose. In view of this, the company has to consider " Iron & Steel" and "Power" as Primary Reportable business segment, as per Accounting Standard -17, Segment Reporting issued by The Institute of Chartered Accountants of India. However, due to substantial competition, risk, on-going position of Company and largely in the interest of the Company as well as interest of the stack holders involved, therefore, management has not made disclosure of Primary Reportable segment as per Accounting Standard -17. Further, the Company has its business within the geographical territory of India. Therefore; Company has considered "INDIAN GEOGRAPHY" as the only secondary reportable business segment, as per the Accounting Standard 17 issued by the Institute of Chartered Accountants of India.

4. RELATED PARTY DISCLOSURES

Associates : Shah Alloys Ltd., Adarsh Foundation (Charitable Trust),

Key Management Personnel : Rajendra V. Shah, Rajinder Arora, Dr. K. C Thatoi, Sujal Shah

5. As informed to us, the Company has not received information from the Suppliers regarding their status under The Micro, Small & Medium Enterprises Development Act, 2006. Hence, disclo- sures, if any, relating to amounts unpaid as at the Balance Sheet date together with interest paid or payable as per the requirement under the said Act, have not been made.

6. As per Accounting Standard 15 "Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are given below :

Defined Benefit Plan:

The employees gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

7. Certain Balance of Debtors, Creditors, Loans & Advances for capital expenditure are non- moving / sticky since last 3 years. However in view of management, the same is recoverable / payable. Hence no provision for the same is made in the books of accounts.

8. The Company was in process of implementing the integrated steel project. The company had in- curred certain capital expenditure, which was reflected as Capital Work In Progress. However during the previous year, the company had decided to use certain stores, spares and consumables which were earlier forming part of Capital Work In Progress for normal production purpose. Hence the said stores, spares and consumables values at Rs 9.35 Cr had been transferred from the Capital Work In Progress Account to stores, spares and consumable, inventory and the same had been accordingly reflected in the closing balance of inventory as stores and spares as on 31.03.2009

9. Expenses have been capitalized and transferred to pre-operative expenses on the basis of bifurca- tion made by the management. This being technical matter, auditors have accepted the same as correct.

10. The company has opted for Tax Remission Scheme in place of original composite scheme of Sales Tax. Due to this change, the VAT collected by the Company becomes Income of the Company and accord- ingly credited to Profit and Loss Account.

11. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business and the provisions for depreciation and all known and ascertained liabilities are adequate and not in excess of the amounts reasonably necessary.

12. Inventories are as taken, valued and certified by a Director.

13. Balances of Unsecured Loans, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

14. Previous years figures have been re-grouped / rearranged wherever necessary so as to confirm to current years groupings.

15. Information required in terms of part IV to Schedule VI to the Companies Act, 1956 is attached.

 
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