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Notes to Accounts of Sarda Energy & Minerals Ltd.

Mar 31, 2015

1. Nature of Operation

The Company has integrated steel manufacturing facility starting from iron ore mining to the finished steel in the form of wire rod and H.B. wire. The Company is also a leading manufacturer and exporter of Ferro Alloys enjoying Star Export House Status. The manufacturing facilities are backed by captive thermal power plant. The Company has also promoted hydro power projects through SPVs.

b Terms/rights attached to equity shares

The company has only one class of shares - equity shares - having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share.

The Board of Directors of the Company, subject to the approval of the members in the ensuing general meeting, has proposed a dividend of Rs. 3/- per share (P.Y. Rs. 3/-).

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.

d SEML ESOP Scheme 2012

a. The Company has established an Employee Stock Option Plan ('ESOP') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, which has been approved by the Board of Directors and the shareholders. Nomination & Remuneration Committee of the Company administers the ESOPs. All options under the ESOPs are exercisable for equity shares. The Company plans to grant up to 7,17,000 options to eligible employees and directors of the Company and subsidiaries of the Company.

b. The options granted under the SEML ESOP Scheme 2012 shall vest as under:

i) 1 /3rd at the end of one year from the date of grant.

ii) 1/3rd at the end of two years from the date of grant.

iii) 1/3rd at the end of three years from the date of grant.

c. The Grantees have a period of 2 years to exercise the Options from the date of vesting, after which unexercised options will lapse.

d. Options in respect of the shares vested at each vesting date can be exercised in maximum four tranches subject to the exercise period of 2 years from the date of vesting. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant.

f. Proforma accounting for stock option grants

The Company has applied the intrinsic value-based method of accounting for determining compensation cost for its ESOP Plan. Had the compensation cost been determined using fair value approach, the Company's net income and basic/ diluted earnings per share as reported would have changed to the proforma amounts as indicated:

Terms of repayment

a) The Non-Convertible Debentures are redeemable in three equal annual installments commencing from July 2015. The Company has an option to redeem these debentures earlier; however, no redemption will take place before the end of 3rd year from the date of allotment.

b) Rupee term loan from a financial institution is payable in 12 equal quarterly installments commencing from September 2013. Seven installments have already been paid.

c) Rupee term loan of Rs. 5,000 lac from bank is payable in 11 quarterly installments starting from September 2013 quarter. 10% of the loan has been repaid in the financial year 2013-14, 20% has been repaid in the financial year 2014-15 and the remaining 4 installments involving 70% of the loan amount will be repaid in the financial year 2015-16.

d) Rupee term loan of Rs. 5,000 lac from bank is payable in 10 equal half yearly installments starting from August 2014. Two installments have been repaid in the financial year 2014-15.

e) Rupee term loan of Rs. 8,550 lac from bank is payable in 32 equal quarterly installments starting from June 2016.

f) Hire purchase loan of Rs. 1,080.08 lac from bank is payable in 35 equal installments starting from August 2014.

g) Deferred sales tax loan is interest free and payable at the end of fifth year from the end of the financial year of accrual.

Security

The Non-convertible Debentures are secured by a registered mortgage of an immovable property of the Company situated at Ahmedabad.

Term Loans from bank, financial institution and Debentures are secured by first pari-passu charge by way of hypothecation of entire movable assets of the Company situated at Industrial Growth Centre, Siltara, Raipur subject to prior charge on current assets in favour of Working Capital Bankers and by way of joint equitable mortgage of immovable properties of the Company situated at Industrial Growth Centre, Siltara, Raipur.

Term Loan of Rs. 5,000 lac from HDFC Bank is secured by way of mortgage of immovable properties of related companies.

Besides this, the term loan from banks are also secured by unconditional and irrevocable personal guarantees of Mr K. K. Sarda, Mr Manish Sarda & Mr. Pankaj Sarda.

Hire purchase loan from bank is secured by hypothecation of related vehicles.

2 Short term borrowings

Security

Working Capital including buyers credit facilities from banks are secured by first pari-passu charge on stocks & book debts and second pari-passu charge on all present and future movable plant & machinery and second charge by way of joint equitable mortgage of immovable properties located at Industrial Growth Centre, Siltara, Raipur.

The working capital including buyers credit facilities and unsecured short term loans from banks are also secured by irrevocable personal guarantees of Mr. K.K.Sarda, Mr. Pankaj Sarda and Mr. Manish Sarda.

26.1 As per Accounting standard 15 "Employee benefits'; the disclosures as defined in the Accounting Standard are given below:

The present value of defined obligation and the related current service cost were measured using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date.

The following table sets out the funded status of the gratuity plan and the amounts recognized in the Company's Balance Sheet as at 31st March 2015.

3. Segment reporting

Segment information has been prepared in confirmity with the accounting policies adopted for preparing and presenting the financial statements of the Company.

As part of secondary reporting, the Company has no geographical segment by location.

4. Capitalization of expenditure

During the year, Company has capitalized the following expenses to the cost of fixed asset/ capital work-in-progress (CWIP) because these were attributable to the installation of fixed assets. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the Company.

5. Interest in joint ventures

The above joint venture companies are incorporated in India. The Company's share of assets and liabilities as on 31st March, 2015 and income and expenses for the year ended on that date are given below which are based on audited figures of the joint venture companies.

The Madanpur South Coal block allotted in JV (in which the Company's share is 20.63%) had been cancelled by the government because the JV could not achieve the milestones. The cancellation has been challenged in the High Court at Bilaspur because the delay was on account of delay in government approvals. The HC had granted stay on the cancellation. In the meantime, the Hon'ble Supreme Court has cancelled all coal blocks vide its order. The Company has invested Rs. 321.61 lac in the said Joint venture company as its contribution. No impairment has been booked against the investment because the Company feels that realizable value of the assets (including land) shall be more than the value of investment.

6. Capital and other commitments

i) Estimated amount of contracts remaining to be executed on Capital Account, net of advance given Rs. 3,330.66 lac (P.Y. Rs. 502.48 lac).

ii) Company has commitments of Rs. 911.88 lac (P.Y. Rs. 2,832 lac) for further investment in controlled entity Chhattisgarh Hydro Power LLP and Rs. 19,106.50 lac (P.Y. Rs. 5,443 lac) in Madhya Bharat Power Corporation Limited.

7. Proposed dividend

Board of Directors have recommended dividend of Rs. 3/- (P.Y. Rs. 3/-) per share for equity share of Rs. 10/- each totaling Rs. 1,078.57 lac (P.Y. Rs. 1,077.78 lac) for the year ended March 31,2015.

8. Contingent liabilities

(Rs. in lac)

Particulars Year Ended Year Ended 31st March 2015 31st March 2014

Guarantees given by Company's bankers 2,075.68 1,968.95

Share of guarantees given by the jointly controlled entity NIL 900.00

Guarantees given to DGFT on behalf of wholly owned subsidiary for meeting 98.88 98.88 export obligation

Guarantees given to Assistant Commissioner of Customs on behalf of wholly 318.21 318.21 owned subsidiary

Bills discounted with the Company's bankers under Letters of Credit 3,156.28 5,851.50

Corporate Guarantee given to Axis Bank Ltd. for disbursement of term loan to NIL 6,412.00

Sarda Metals & Alloys Ltd (SMAL), wholly owned subsidiary of the Company Claims against the Company not acknowledged as debt & disputed in appeals 179.63 219.63

Excise duty & service tax demand 418.36 379.27

VAT, CST & Entry Tax 124.81 111.75

Income tax 46.58 2,281.93

Energy development cess 3,933.80 3,363.80

i) Guarantee (equal to Company's share in Joint Venture) given by the Company to IDBI Bank Limited against guarantee issued by the Bank in favor of Government of India on behalf of Madanpur South Coal Company Limited (The Joint Venture Company for Coal Mining) NIL (P.Y. Rs. 900.00 lac).

ii) Guarantee given to Director General of Foreign Trade Rs. 98.88 lac (P.Y. Rs. 98.88 lac) and Assistant Commissioner of Customs Rs. 318.21 lac (P.Y. Rs. 318.21 lac) on behalf of Sarda Metals & Alloys Limited, wholly owned subsidiary of the Company for fulfillment of export obligation against import of capital goods under Export Promotion Capital Goods Scheme.

iii) Excise Duty & Service Tax

a) Excise duty demand of Rs. 20.56 lac (P.Y. Rs. 20.56 lac) raised on account of Cenvat credit availed, which the Company has disputed in High Court.

b) Excise Duty demand of Rs. 174.51 lac (P.Y. Rs. 176.10 lac) raised on account of Cenvat credit availed which the Company has disputed and has filed appeal before the Central Excise & Service Tax Appellate Tribunal (CESTAT).

c) Excise Duty demand of Rs. 129.39 lac (P.Y. Rs. 130.27 lac) raised on account of Cenvat credit availed which the Department has disputed and has filed appeal before the CESTAT.

d) Rs. 6.97 lac (P.Y. Rs. 6.97 lac) on account of duty on VAT collected by the Company against which the Company has filed an appeal before the CESTAT.

e) Rs. 6.66 lac (P.Y. Rs. 6.66 lac) on account of duty on sale of waste and scrap by the Company. The case has been decided in favour of the Company by Commissioner Central Excise (Appeals) (CCE(A)). The Central Excise Department has filed appeal before the CESTAT against decision of the CCE(A).

f) Excise Duty demand of Rs. 41.56 lac (P.Y. Rs. NIL) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.

g) Excise Duty demand of Rs. 7.62 lac (P.Y. Rs. 7.62 lac) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.

h) Service Tax demand of Rs. 31.09 lac (P.Y. Rs. 31.09 lac) raised on account of Service Tax on foreign services availed, which the Department has disputed and has filed appeal before CESTAT.

iv) Value Added Tax/Central Sales Tax/Entry Tax

Value Added Tax/Central Sales Tax/ Entry Tax demands of Rs. 124.81 lac (P.Y. Rs. 111.75 lac) are pending in appeal against assessment of various years.

v) Income Tax

NIL (P.Y. Rs. 2,080.80 lac) for the Assessment Year 2009-10 and NIL (P.Y. Rs. 201.13 lac) for the Assessment year 2010-11 and 46.58 lac (P.Y. Rs. NIL) for the Assessment Year 2012-13 on account of partial disallowance of deduction claimed under Section 80IA of the Income Tax Act, 1961, disputing the transfer pricing of Power captively consumed by other divisions. For Assessment year 2012-13, the Company has filed appeals before Commissioner of Income Tax (Appeals), Nagpur and the matter is pending. For the A.Y. 2009-10 and A.Y. 2010-11, the Commissioner of Income Tax (Appeals), Nagpur has pronounced the judgments order in favour of the Company by its order dated 25.03.2015.

vi) Energy Development Cess of Rs. 3,933.80 lac (P.Y. Rs. 3,363.80 lac) net of amount deposited Rs. 294.34 lac (P.Y. Rs. 294.34 lac) demanded by the Chief Electrical Inspector, Govt. of Chhattisgarh for the period May 2006 to February 2014. The Honorable High Court of Chhattisgarh has held the levy of Energy Development Cess as unconstitutional vide its Order dated 20th June 2008. The State Govt. has filed a Special Leave Petition before the Honorable Supreme Court.

9. During the year, the Income Tax Department has conducted a search operation U/s 132 of the Income Tax Act, 1961. During the course of search:-

i) The various documents and records have been seized by them and physical verification of stocks was also conducted by independent agencies appointed by them.

ii) The company does not foresee any liability at this stage, however the due provision of liability, if any, shall be made after completion of the block assessment.

39. Effective from 1st April 2014, the useful lives of fixed assets have been revised in accordance with Schedule II to the Companies Act, 2013. Consequently, the depreciation for the year ended 31st March 2015 is higher by Rs. 513.46 lac. Further, pursuant to the transitional provision provided in schedule II to the Act, the Company has opted to charge the carrying amount of the assets with no useful life as on 1st April 2014 being Rs. 117.35 lac, to the Statement of Profit & Loss as depreciation.

10. Exceptional item includes:

i) Additional Govt. levy of Rs. 10,755.36 lac paid in pursuance of the Supreme Court order dated 24th September 2014 on coal extracted from its captive coal mines since commissioning till 31.03.2014.

ii) Write off of expenses incurred on thermal power projects which have now been shelved in view of the change in the Government policy for allocation of coal blocks being Rs. 1,878.30 lac.

11. In pursuance of the order dated 24th September 2014 issued by the Hon'ble Supreme Court of India deallocating 204 coal blocks, the allotment of coal block Gare Palma IV/7 to the Company, which was in operation since 2009 stands cancelled w.e.f. 1st April 2015. The company has filed a writ petition before the Hon'ble High court of Delhi challenging the compensation amount and exclusion of washary from the mine infrastructure. Since, the matter is subjudice, pending settlement of the claim, no adjustment has been made in the accounts for the impairment, if any.

12. Corporate Social Responsibility

During the year, in terms of the requirements of Section 135 of the Companies Act, 2013, the Company has spent a sum of Rs. 227.52 lac on CSR activities. The details of the same are given in the annexure to the Directors' Report.

13. Dues to micro and small enterprises as defined under the MSMED Act, 2006

The Company has not received any memorandum (as required to be filed by the suppliers with the notified authority under the Micro, Small and Medium Enterprises Development Act, 2006) claiming their status as on 31st March, 2015 as micro, small or medium enterprises. Consequently the amount paid/ payable to these parties during the year is NIL.

14. Previous year figures have been recasted / regrouped / restated wherever necessary to make them comparable.


Mar 31, 2014

1. NATURE OF OPERATION

The Company has integrated steel manufacturing facility starting from iron ore and coal mining to the fnished steel in the form of wire rod and wire. The Company is also a leading manufacturer and exporter of Ferro Alloys enjoying Star Export House Status. The manufacturing facilities are backed by captive thermal power plant. The Company has also promoted hydro power projects through SPVs.

2. As per Accounting standard 15 "Employee benefits", the disclosures as Defined in the Accounting Standard are given below:

The present value of Defined obligation and the related current service cost were measured using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date.

2.2 SEML ESOP Scheme 2012

a. The Company has established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, which has been approved by the board of Directors and the shareholders. appointment & Compensation Committee of the Company comprising of independent non-executive members of the Board of Directors administers the ESOPs. All options under the ESOPs are exercisable for equity shares. the Company plans to grant upto 7,17,000 options to eligible employees and directors of the Company and subsidiaries of the Company.

b. The options granted under the SEML ESOP Scheme 2012 shall vest as under: i) 1/3rd at the end of one year from the date of grant.

ii) 1/3rd at the end of two years from the date of grant. iii) 1/3rd at the end of three years from the date of grant.

c. The employees have a period of 2 years to exercise the options from the date of vesting, after which unexercised options will lapse.

d. Options in respect of the shares vested at each vesting date can be exercised in maximum four tranches subject to the exercise period of 2 years from the date of vesting. Each option is exercisable for one equity share of Rs 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant.

f. Proforma accounting for stock option grants

The company has applied the intrinsic value-based method of accounting for determining compensation cost for its ESOP Plan. Had the compensation cost been determined using fair value approach, the Company''s net income and basic/diluted earnings per share as reported would have changed to the proforma amounts as indicated:

The volatility of the options is based on the historical volatility of the share price for the last one year as on the date of grant.

h. Details of weighted average exercise price and fair value of the stock options granted at price below market price (on the date of grant):

3. Segment reporting

Segment information has been prepared in confirmity with the accounting policies adopted for preparing and presenting the fnancial statements of the company.

As part of secondary reporting, the company has no geographical segment by location.

4. Capitalization of expenditure

During the year, Company has capitalized the following expenses to the cost of fixed asset/ capital work-in-progress (CWIP) because these were attributable to the installation of fixed assets. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

The above joint venture companies are incorporated in India. The Company''s share of assets and liabilities as on 31st March, 2014 and income and expenses for the year ended on that date are given below which are based on audited figures of the joint venture companies.

5. Related party disclosure

a) Names of related parties and description of relationship

NoDescription of Relationship Names of Related Parties

1 Subsidiaries Sarda Energy & Minerals Hongkong Limited, Hongkong

Sarda Global Ventures Pte Limited, Singapore

Sarda Metals & alloys Limited

Sarda Energy Limited

Parvatiya Power Limited

Madhya Bharat Power Corporation Ltd

Sarda Hydro Power Private Limited

Raipur Fabritech Private Limited

Raipur industrial Gases Private Ltd

2 Controlled entities Chhattisgarh Hydro Power LLP

Shri Ram Electricity LLP

3 associate companies Chhattisgarh investments Limited

4 Related enterprises where R.R. Sarda & Company significant infuence exists Sarda Power and Steels Limited

5 Key management personnel Mr. Kamal Kishore Sarda

Mr. Pankaj Sarda Mr. Ghanshyam Das Mundra

6 Relative of key management Mrs. Uma Sarda personnel Mrs. Veena Sarda

7 Joint ventures Raipur infrastructure Company Limited Madanpur South Coal Company Limited

Note: Figures in bracket represents previous year''s figures.

Out of the above items, transactions in excess of 10% of the total related party transactions are as unde

6. Capital and other commitments

a) Estimated amount of contracts remaining to be executed on Capital account, net of advance given Rs 502.48 lac (P.Y. Rs 298.18 lac).

b) Company has commitments of Rs 2,832 (P.Y.NIL) for further investment in subsidiary Chhattisgarh Hydro Power LLP and Rs 5,443 lac (P.Y. Rs 5,440 lac) in Madhya Bharat Power Corporation Limited.

7. Proposed dividend

board of Directors have recommended dividend of Rs 3/- (P.Y. Rs 3/-) per share for equity share of Rs 10/- each totaling Rs 1,075.50 lac (P.Y. Rs 1,075.50 lac) for the year ended March 31, 2014. Tax on proposed dividend will be Rs 182.78 lac (P.Y. Rs 182.78 lac).

8. Contingent liabilities

(Rs in lac) Particulars Year Ended 31st Year Ended 31st March 2014 March 2013

Guarantees given by Company''s bankers 1,968.95 1,428.45

Share of guarantees given by the jointly controlled entity 900.00 900.00

Guarantees given to DGFT on behalf of wholly owned subsidiary for 98.88 98.88 meeting export obligation

Guarantees given to assistant Commissioner of Customs on behalf of 318.21 300.71 wholly owned subsidiary

Penal interest for non creation of securities for rupee term loan from iDFC NiL 391.86

Bills discounted with the Company''s bankers under Letters of Credit 5,851.50 3,778.28

Corporate Guarantee given to axis bank Ltd. for disbursement of term 6,412.00 6,412.00

loan to Sarda Metals & Alloys Ltd., wholly owned subsidiary of the Company (SMaL)

Claims against the Company not acknowledged as debt & disputed in 219.63 163.49 appeals

Excise duty & service tax demand 379.27 388.92

VAT, CST & Entry tax 111.75 138.55

income tax 2,281.93 3,498.27

Energy development cess 3,363.80 2,913.60

i) Guarantee (equal to Company''s share in Joint Venture) given by the Company to IDBI Bank Limited against guarantee issued by the bank in favor of Government of india on behalf of Madanpur South Coal Company Limited (The Joint Venture Company for Coal Mining) Rs.900.00 lac ( P.Y. Rs.900.00 lac).

ii) Guarantee given to Director General of Foreign trade Rs.98.88 lac (P.Y.Rs.98.88 lac) and assistant Commissioner of Customs Rs.318.21 lac (P.Y.Rs.300.71 lac) on behalf of Sarda Metals & Alloys Limited, wholly owned subsidiary of the Company for fulfllment of Export Obligation against import of capital goods under Export Promotion Capital Goods Scheme.

iii) Excise Duty & Service tax

a) Excise duty demand ofRs.20.56 lac (P.Y. Rs.20.56 lac) raised on account of Cenvat credit availed, which the Company has disputed in High Court.

b) Excise Duty demand ofRs.176.10 lac (P.Y. Rs.166.24 lac) raised on account of Cenvat credit availed which the Company has disputed and has fled appeal before the Central Excise & Service Tax Appellate Tribunal (CESTAT).

c) Excise Duty demand ofRs.130.27 lac (P.Y. Rs.111.17 lac) raised on account of Cenvat credit availed which the Department has disputed and has fled appeal before the CESTAT.

d) Rs.6.97 lac (P.Y. Rs.6.97 lac) on account of duty on VAT collected by the Company against which the Company has fled an appeal before the CESTAT.

e) Rs..66 lac (P.Y. Rs.6.66 lac) on account of duty on sale of waste and scrap by the Company. The case has been decided in favour of the Company by Commissioner Central Excise (appeals) (CCE(a)). the Central Excise Department has fled appeal before the CESTAT against decision of the CCE(A).

f) Excise Duty demand of NiL (P.Y. Rs.38.60 lac) raised on account of Cenvat credit availed has been disputed before Commissioner (appeals), Raipur.

g) Excise Duty demand of Rs.7.62 lac (P.Y. Rs.7.62 lac) raised on account of Cenvat credit availed has been disputed before Commissioner (appeals), Raipur.

h) Service tax demand of Rs.31.09 lac (P.Y. Rs.31.09 lac) raised on account of Service tax on foreign services availed, which the Department has disputed and has fled appeal before CESTAT.

iv) Value Added Tax/Central Sales Tax/Entry Tax

Value Added Tax/Central Sales Tax/ Entry Tax demands of RS.111.75 lac (P.Y. Rs.138.55 lac) are pending in appeal against assessment of various years.

v) income tax

Nil ( P.Y. Rs.1,216.34 lac) for the assessment Year 2008-09 and Rs. 2,080.80 lac (P.Y. Rs.2,080.80 lac) for the assessment year 2009-10 and Rs.201.13 lac ( P.Y. Rs.201.13) for the Assessment Year 2010-11 on account of partial disallowance of deduction claimed under Section 80IA of the Income Tax Act, 1961, disputing the transfer pricing of Power captively consumed by other divisions. For Assessment year 2009-10 and 2010-11, the Company has fled appeals before CIT (Appeals) and the matters are still pending. For the A.Y 2008-09 pending matter before ITAT, Nagpur is now resolved and decided in favor of the Company by the income tax appellate tribunal E-bench Nagpur order dated 03.02.2014. this issue has also been decided in favor of the Company by the income tax appellate tribunal for earlier assessment years.

vi) Energy Development Cess of Rs.3,363.80 lac (P.Y. Rs.2,913.60 lac) net of amount deposited Rs.294.34 lac (P.Y. Rs.94.34 lac) demanded by the Chief Electrical inspector, Govt. of Chhattisgarh for the period May 2006 to February 2014. the Honorable High Court of Chhattisgarh has held the levy of Energy Development Cess as unconstitutional vide its Order dated 20th June 2008. The State Govt. has fled a Special Leave Petition before the Honorable Supreme Court.

Note: as per Company''s policy loans given to employees are not considered in above.

9. Dues to micro and small enterprises as Defined under the MSMED Act, 2006

The Company has not received any memorandum (as required to be fled by the suppliers with the notifed authority under the Micro, Small and Medium Enterprises Development act, 2006) claiming their status as on 31st March, 2014 as micro, small or medium enterprises. Consequently the amount paid/ payable to these parties during the year is NiL.


Mar 31, 2013

1. NATURE OF OPERATION

The company has integrated steel manufacturing facility starting from iron ore and coal mining to the fnished steel in the form of wire rod and wire. The company is also a leading manufacturer and exporter of ferro alloys enjoying Star Export House Status. The manufacturing facilities are backed by captive thermal power plant. The company has also promoted hydro power projects through SPVs.

2.1 SEML ESOP Scheme 2012

a. The company has established an Employee Stock Option Plan (‘ESOP'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, which has been approved by the Board of Directors and the shareholders. Appointment & Compensation Committee of the company comprising of independent non-executive members of the Board of Directors administer the ESOP. All options under the ESOP are exercisable for equity shares. The company plans to grant upto 7,17,000 options to eligible employees and directors of the company and subsidiaries of the company.

b. The options granted under the SEML ESOP Scheme 2012 shall vest as under: i) 1/3rd at the end of one year from the date of grant.

ii) 1/3rd at the end of two years from the date of grant. iii) 1/3rd at the end of three years from the date of grant.

c. The employees have a period of 2 years to exercise the options from the date of vesting, after which unexercised options will lapse.

d. Options in respect of the shares vested at each vesting date can be exercised in maximum four tranches subject to the exercise period of 2 years from the date of vesting. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant.

3. Capitalization of expenditure

During the year, company has capitalized the following expenses to the cost of fxed asset/ capital work-in-progress (CWIP) because these were attributable to the installation of fxed assets. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

4. Capital and other commitments

a) Estimated amount of contracts remaining to be executed on capital account, net of advance given Rs. 298.18 Lacs (P.Y. Rs. 501.91 Lacs).

b) Company has commitments of Nil (P.Y. Rs. 1,812 Lacs) for further investment in subsidiary Sarda Metals & Alloys Limited and Rs. 5,440 Lacs (P.Y. Rs. 5,510 Lacs) in Madhya Bharat Power Corporation Limited.

5. Proposed dividend

Board of directors have recommended dividend of Rs. 3/- (P.Y. Rs. 3/-) per share for equity share of Rs. 10/- each totaling Rs. 1,075.50 Lacs (P.Y. Rs. 1,075.50 Lacs) for the period ended March 31, 2013. Tax on proposed dividend will be Rs. 182.78 Lacs (P.Y. Rs. 174.48 Lacs).

6. Contingent liabilities

(Rs.in Lacs) Particulars 31.03.2013 31.03.2012

Guarantees given by company''s bankers 1,428.45 704.89

Share of guarantees given by the jointly controlled entity 900.00 900.00

Guarantees given to DGFT on behalf of wholly owned subsidiary for 98.88 98.88 meeting export obligation

Guarantees given to Assistant Commissioner of Customs on behalf of 300.71 299.21 wholly owned subsidiary

Penal Interest for non creation of securities for rupee term loan from IDFC 391.86 65.43

Bills discounted with the company''s bankers under Letters of Credit 3,778.28 1,625.77

Corporate Guarantee given to Axis Bank Ltd. for disbursement of term 6,412.00

loan to Sarda Metals & Alloys Ltd., wholly owned subsidiary of the company (SMAL)

Claims against the company not acknowledged as debt & disputed in 163.49 85.29 appeals

Excise duty & service tax demand 388.92 353.90

VAT, CST & Entry Tax 138.55 200.20

Income tax 3,498.27 3,986.14

Energy development cess 2,913.60 2,189.80

i) Guarantee (equal to company''s share in Joint Venture) given by the company to IDBI Bank Limited against guarantee issued by the Bank in favour of Government of India on behalf of Madanpur South Coal Company Limited (The Joint Venture Company for Coal Mining) Rs. 900.00 Lacs ( P.Y. Rs. 900.00 Lacs).

ii) Guarantee given to Director General of Foreign Trade Rs. 98.88 Lacs (P.Y. Rs. 98.88 Lacs) and Assistant Commissioner of Customs Rs. 300.71 Lacs (P.Y. Rs. 301.13 Lacs) on behalf of Sarda Metals & Alloys Limited, wholly owned subsidiary of the company for fulfllment of Export Obligation against import of capital goods under Export Promotion Capital Goods Scheme.

iii) Excise Duty & Service Tax

a) Excise duty demand of Rs. 20.56 Lacs (P.Y. Rs. 20.56 Lacs) raised on account of Cenvat credit availed, which the company has disputed in High Court.

b) Excise Duty demand of Rs. 166.24 Lacs (P.Y. Rs. 165.38 Lacs) raised on account of Cenvat credit availed which the company has disputed and has fled appeal before the Central Excise & Service Tax Appellate Tribunal (CESTAT).

c) Excise Duty demand of Rs. 111.17 Lacs (P.Y. Rs. 97.87 Lacs) raised on account of Cenvat credit availed which the department has disputed and has fled appeal before the CESTAT.

d) Rs. 6.97 Lacs (P.Y. Rs. 6.97 Lacs) on account of duty on VAT collected by the company against which the company has filed an appeal before the CESTAT.

e) Rs. 6.66 Lacs (P.Y. Rs. 6.96 Lacs) on account of duty on sale of waste and scrap by the company. The case has been decided in favour of the company by Commissioner Central Excise (Appeals) (CCE(A)). The Central Excise department has fled appeal before the CESTAT against decision of the CCE(A).

f) Excise Duty demand of Rs. 38.60 Lacs (P.Y. Rs. 10.10 Lacs) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.

g) Excise Duty demand of Rs. 7.62 Lacs (P.Y. Rs. 7.62 Lacs) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.

h) Service Tax demand of Rs. 31.09 Lacs (P.Y. Rs. 38.44 Lacs) raised on account of Service Tax on foreign services availed, which the department has disputed and has fled appeal before CESTAT.

iv) Value Added Tax/Central Sales Tax/Entry Tax

Value Added Tax/Central Sales Tax/ Entry Tax demands of Rs. 138.55 Lacs (P.Y. Rs. 200.20 Lacs) are pending in appeal against assessment of various years.

v) Income Tax

Rs. 1,216.34 Lacs (P.Y. Rs. 1,896.34 Lacs) for the Assessment Year 2008-09 and Rs. 2,080.80 Lacs (P.Y. Rs. 2,080.80 Lacs) for the Assessment Year 2009-10 and Rs. 201.13 Lacs (P.Y. Nil) for the Assessment Year 2010-11 on account of partial disallowance of deduction claimed under Section 80IA of the Income Tax Act, 1961, disputing the transfer pricing of Power captively consumed by other divisions. For Assessment Year 2009-10 and 2010-11, the company has fled appeals before CIT (Appeals) and for Assessment Year 2008-09 the appeal is pending before ITAT. The CIT (Appeals) has decided the similar issue in favour of the company for the Assessment Year 2007-08. This issue has also been decided in favour of the company by the Income Tax Appellate Tribunal for earlier assessment years.

vi) Energy development cess of Rs. 2,913.60 Lacs (P.Y. Rs. 2,189.80 Lacs) net of amount deposited Rs. 294.34 Lacs (P.Y. Rs. 294.34 Lacs) demanded by the Chief Electrical Inspector, Govt. of Chhattisgarh for the period May 2006 to March 2013. The Honorable High Court of Chhattisgarh has held the levy of Energy Development Cess as unconstitutional vide its Order dated 20th June 2008. The State Govt. has fled a Special Leave Petition before the Honorable Supreme Court.

7. Dues to micro and small enterprises as defned under the MSMED Act, 2006

The company has not received any memorandum (as required to be fled by the suppliers with the notifed authority under the Micro, Small and Medium Enterprises Development Act, 2006) claiming their status as on 31st March, 2013 as micro, small or medium enterprises. Consequently the amount paid/ payable to these parties during the year is NIL.

 
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