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Notes to Accounts of Sathavahana Ispat Ltd.

Mar 31, 2015

1 CORPORATE INFORMATION:

Sathavahana Ispat Limited (the Company) is a listed Company in India and is engaged in the manufacture of Pig iron Metallurgical Coke with Co-generation of Power. The Pig Iron Plant is in Anantapuramu District of Andhra Pradesh and the Metallurgical Coke with Co-generation Power facility is in Bellary District, Karnataka. The Company's head office is at Hyderabad, India. A major portion of Metallurgical Coke is captively used for manufacture of Pig Iron. The Company's turnover is mainly from domestic markets. The Equity Shares of the Company are listed on the BSE Limited and The National Stock Exchange of India Limited.

2 Previous year figures have been regrouped/ recast/ rearranged wherever necessary to conform to current year classification.

3 CHANGE IN ACCOUNTING ESTIMATE:

As per the requirements of the Companies Act, 2013 ("the Act"), the Company has computed depreciation on the basis of the useful lives of tangible fixed assets in the manner prescribed in Schedule II of the Act. Consequently, depreciation for the year is higher by Rs.7391322/- and depreciation of Rs. 16199140/- (net of deferred tax of Rs.7243899/-) on account of assets whose useful life is already exhausted as on 1st April, 2014 has been adjusted to Reserves and Surplus.

4 Confirmation letters have been issued in respect of trade receivables and other receivables, loans and advances and trade payables and other payables of the Company. Balances where confirmations are not forthcoming such balances are subject to reconciliation and consequential adjustment required, if any, would be determined/made on receipt of confirmation. However, in the opinion of the Board, assets other than fixed assets and non-current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known liabilities have been made.

5 EXCISE DUTY ON OPENING AND CLOSING STOCKS:

Excise Duty on sales for the year has been disclosed as reduction from turnover. Excise Duty relating to the difference between closing stock and opening stock has been included in Note 25 "Changes in inventories of finished goods and work-in-progress."

6 FOREIGN CURRENCY EXPOSURES THAT ARE HEDGED BY A DERIVATIVE INSTRUMENTS:

a. The Company uses foreign exchange forward contracts to hedge its foreign currency exposures relating to the underlying transactions and firm commitments to mitigate the foreign exchange fluctuation risk and to reduce the hedging cost to the Company. The Company does not use these derivative instruments for trading and speculative purposes.

b. The details of outstanding foreign exchange forward contracts are:

7 Disclosure on utilisation of proceeds of Preferential Issues in terms of SEBI (ICDR) Regulations 2009

The proceeds of preferential issue made in the year 2013-14 amounting to Rs. 450000000/-have been fully utilised for the purposes for which they were raised.

8 Corporate Social Responsibility (CSR):

In terms of provisions of sub section 5 to section 135 of the Companies Act 2013 the Company is not required to earmark any fund for Corporate Social Responsibility activities in view of the past losses.

9 DISCLOSURES UNDER ACCOUNTING STANDARD 17 ON SEGMENT REPORTING:

The Company's business consists of two reportable segments viz., Pig Iron and Metallurgical Coke with Co-generation Power as per Accounting Standard 17 "Segment Reporting".

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the Financial Statements of the Company. Inter/lntra segment transfers are accounted at selling price to the transferring segment. Inter segment transfers are eliminated on consolidation. Asa part of secondary reporting revenues are attributed to geographical markets based on the location of the customers. Tne following tables present the revenue, profit or loss, assets and liabilities information relating to the business/geographical segment for the year ended 31st March 2015.

10 DISCLOSURES UNDER ACCOUNTING STANDARD 19 ON LEASES:

Information on leases as per Accounting Standard 19 "Leases":

Operating Lease expenses:

The Company has various operating leases for various premises that are renewable on a periodic basis and cancelable at its option. Rental expenses for operating leases recognised in the Statement of Profit and Loss for the year is Rs.4909853/- (previous year Rs.4655088/-)

11 Leasehold land represents land purchased admeasuring 88.57 acres under lease-cum-sale agreement with Karnataka Industrial Area Development Board (KIADB), Government of Karnataka.

12 The Summary of Significant Accounting Policies and other Explanatory Information form an integral part of Balance Sheet, Statement of Profit and Loss and Cash Flow Statement.


Mar 31, 2014

1. (a) Terms / rights attached to Equity Shares

The Company has only one class of Equity Shares having par value of Rs. 10/- per share. Each holder of Equity Shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees.

(b) In the event of liquidation of the Company, the holders of the 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.

i. Term loan borrowings from banks are secured by first mortgage and charge on entire fixed assets, both present and future, and second charge on current assets and guaranteed by two Directors of the Company. The principal amount on these term loans are generally repayable in 32 equated quarterly installments after moratorium period of one year with interest payable on monthly rests. The interest rates vary from 13.5% to 15.5% p.a.

The period of maturity with reference to four term loan borrowings from Balance Sheet date are: (a) Loan 1 comprises one installment of Rs. 34692640/- (b) Loan 2 comprises four quarterly installments of Rs. 27375000/- each; eight quarterly installments of Rs. 32625000/- each and six quarterly installments of Rs. 7875000/- each and (c) Loan 3 comprises sixteen quarterly installments of Rs. 12550000/- each and one installment of Rs. 10242283/-. (d) Loan 4 comprises eighteen quarterly installments of Rs. 87500000/- and (e) Loan 5 and 6 are yet to be drawn fully and hence period of maturities is not determined.

ii. Borrowings from other parties are on hypothecation of assets and guaranteed by the Managing Director of the Company. These loans are mostly repayable in 36 equated monthly installments including interest. The interest rates vary from 10.5% to 12.5% p.a. The future maturities from the Balance Sheet date comprises (a) loan 1 comprises twenty eight installments of Rs. 64335/- each (b) loan 2 comprises 27 installments of Rs. 36534/- each and (c) loan 3 comprises 34 installments of Rs. 44595/- each and loan 4 comprises 33 installments of Rs. 146969/- each, all installments includes interest.

iii. The rate of interest in respect of loan from related party is 12% p.a.

iv. The above borrowings and interest due thereon have been paid upto date and there are no continuing defaults.

v. Working capital loans from banks and buyer''s credit are secured by charge on the entire current assests and further secured by second charge on entire fixed assets of the Company and guaranteed by two Directors of the Company. The rate of interest on working capital loans varies from 14.50% to 15.25% p.a. The rate of interest in respect of Buyer''s credit varies from 6m LIBOR 70 bps to 6m LIBOR 120 bps p.a.

vi. The rate of interest in respect of loans from related parties is 12% p.a.

vii. The above borrowings and interest due there on have been paid upto date and there are no defaults.

Information as required to be disclosed under section 22 of Micro, Small and Medium Enterprises Development Act 2006 (MSMEDA 2006) as given below with reference to dues to micro, small and medium enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the Auditors.

II. OTHER EXPLANATORY INFORMATION::

1 CORPORATE INFORMATION:

Sathavahana Ispat Limited (the Company) is a listed company in India and is engaged in the manufacture of Pig iron, Metallurgical Coke with Co-generation of Power. The Pig Iron Plant is in Anantapuram District of Andhra Pradesh and the Metallurgical Coke with Co-generation Power facility is in Bellary District, Karnataka. The Company''s head office is at Hyderabad, Telangana, India. A major portion of Metallurgical Coke is captively used for manufacture of Pig Iron. The Company''s turnover is mainly from domestic markets. The Equity Shares of the Company are listed on the BSE Limited and The National Stock Exchange of India Limited.

2 Previous year figures have been regrouped/ recast/ rearranged wherever necessary to conform to current year classification.

3 CONTINGENT LIABILITIES AND COMMITMENTS:

As at As at 31st March 2014 31st March 2013

A Contingent Liabilities:

i. Claims against the Company not acknowledged as debt Rs. 12168141 12168141

ii. On account of bank guarantees issued by the bankers Rs. 6785000 22098289

iii. Taxes and Duty demands contested by the Company. Rs. 8135807 8135807

Rs. 27088948 42402237

B Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 1246974226 1296547179

The above liabilities aggregating to Rs. 2507883179/- (previous year Rs. 896383701/-) pertaining to project under implementation but classified as current liablities by following revised schedule VI to the Companies Act 1956. Un-drawn term loan is Rs. 1706574591/- (previous year Rs. 1490000000/-)

4 Confirmation letters have been issued in respect of trade receivables and other receivables, loans and advances and trade payables and other payables of the Company. Balances where confirmations are not forthcoming such balances are subject to reconciliation and consequential adjustment required, if any, would be determined/ made on receipt of confirmation. However, in the opinion of the Board, assets other than fixed assets and non- current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known liabilities have been made.

5 EXCISE DUTY ON OPENING AND CLOSING STOCKS:

Excise Duty on sales for the year has been disclosed as reduction from turnover. Excise Duty relating to the difference between closing stock and opening stock has been included in Note 25"Changes in inventories of finished goods and work-in-progress."

6 FOREIGN CURRENCY EXPOSURES THAT ARE HEDGED BY A DERIVATIVE INSTRUMENTS:

a. The Company uses foreign exchange forward contracts to hedge its foreign currency exposures relating to the underlying transactions and firm commitments to mitigate the foreign exchange fluctuation risk. The Company does not use these derivative instruments for trading and speculative purposes.

(d) The present value of obligation in respect of provision for payment of leave encashment is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises 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 recognised and charged off to Statement of Profit and Loss.

(e) The estimates of rate of escalation in salary considered in actuarial valuation is determined after taking 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 DISCLOSURES UNDER ACCOUNTING STANDARD 17 ON SEGMENT REPORTING:

The Company''s business consists of two reportable segments viz., Pig Iron and Metallurgical Coke with Co-generation Power as per Accounting Standard 17"Segment Reporting"issued under the Companies (Accounting Standard) Rules 2006.

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company. Inter/Intra segment transfers are accounted at selling price to the transferring segment. Inter segment transfers are eliminated on consolidation. As a part of secondary reporting revenues are attributed to geographical markets based on the location of the customers. The following tables present the revenue, profit or loss, assets and liabilities information relating to the business/ geographical segment for the year ended 31st March 2014.

8 DISCLOSURES UNDER ACCOUNTING STANDARD 19 ON LEASES:

Information on leases as per Accounting Standard 19"Leases"issued under the Companies (Accounting Standard) Rules 2006:

Operating Lease expenses:

The Company has various operating leases for various premises that are renewable on a periodic basis and cancelable at its option. Rental expenses for operating leases recognised in the Statement of Profit and Loss for the year is Rs. 4655088/- (previous year Rs. 4510663/-)

9 PROVISION FOR TAXATION:

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

10 Leasehold land represents land purchased admeasuring 88.57 acres under lease-cum-sale agreement with Karnataka Industrial Area Development Board (KIADB), Government of Karnataka.

11 The Summary of Significant Accounting Policies and other Explanatory Information form an integral part of Balance Sheet, Statement of Profit and Loss and Cash Flow Statement.


Mar 31, 2013

1 CORPORATE INFORMATION:

Sathavahana I spat Limited (the Company) is a listed company in India and is engaged in the manufacture of Pig iron, Metallurgical Coke with Co-generation of Power. The Pig Iron Plant is in Anantapuram District of Andhra Pradesh and the Metallurgical Coke with Co-generation Power facility is in Bellary District, Karnataka. The Company''s head office is at Hyderabad, India. A major portion of Metallurgical Coke is actively used for manufacture of Pig Iron. The Company''s turnover is mainly from domestic markets. The Equity Shares of the Company are listed on the BSE Limited and The National Stock Exchange of India Limited.

2 Previous year figures have been regrouped/ recast/ rearranged wherever necessary to conform to current year classification.

As at As at

31st March 2013 31st March 2012

3 CONTINGENT LIABILITIES AND COMMITMENTS:

A Contingent Liabilities:

i. Claims against the Company not acknowledged as debt Rs. 12168141 12168141

ii. On account of bank guarantees issued by the bankers Rs. 22098289 36124135

iii. Taxes and duty demands contested by the Company. Rs. 8135807 6756707

Rs. 42402237 55048983

B Commitments:

i. Estimated amount of contracts remaining to be Rs. 1296547179 918233772 executed on capital account and not provided for (net of advances)

4 Confirmation letters have been issued in respect of trade receivables and other receivables, loans and advances and trade payables and other payables of the Company. Balances where confirmations are not forthcoming such balances are subject to reconciliation and consequential adjustment required, if any, would be determined/made on receipt of confirmation. However, in the opinion of the Board, assets other than Fixed Assets and non-current investments have a value on realization in the ordinary course of business at least equal to the amount at which they are stated and provision for all known liabilities have been made.

5 EXCISE DUTY ON OPENING AND CLOSING STOCKS:

Excise Duty on sales for the year has been disclosed as reduction from turnover. Excise Duty relating to the difference between closing stock and opening stock has been included in Note 27 "Changes in inventories of finished goods and work-in-progress."

(d) The present value of obligation in respect of provision for payment of leave encashment 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 recognized and charged off to Statement of Profit and Loss.

(e) The estimates of rate of escalation in salary considered in actuarial valuation is determined after taking 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.

6 DISCLOSURES UNDER ACCOUNTING STANDARD 17 ON SEGMENT REPORTING:

The Company''s business consists of two Reportable segments viz., Pig Iron and Metallurgical Coke with Co-generation of Power as per Accounting Standard 17 "Segment Reporting" issued under the Companies (Accounting Standard) Rules 2006. Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company. Inter/Intra segment transfers are accounted at selling price to the transferring segment. Inter segment transfers are eliminated on consolidation. The following tables present the revenue, profit or loss, assets and liabilities information relating to the business/geographical segment for the year ended 31st March 2013.

7 DISCLOSURES UNDER ACCOUNTING STANDARD 19 ON LEASES:

Information on leases as per Accounting Standard 19 Teases "issued under the Companies (Accounting Standard) Rules 2006: Operating Lease expenses:

The Company has various operating leases for various premises that are renewable on a periodic basis and cancelable at its option.

8 PROVISION FORTAXATION:

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

9 Leasehold land represents land purchased admeasuring 88.57 acres under lease-cum-sale agreement with Karnataka Industrial Area Development Board (KIADB), Government of Karnataka.

10 The Summary of Significant Accounting Policies and other Explanatory Information form an integral part of Balance Sheet, Statement of Profit and Loss and Cash Flow Statement.


Mar 31, 2012

Notes:

1 The Cash Flow Statement has been prepared under 'Indirect Method' in accordance with the requirement of Accounting Standard-3 "Cash Flow Statement" issued under Companies (Accounting Standards) Rules, 2006

2 Significant Accounting Policies and Notes to accounts (Note 31) forms an integral part of Cash Flow Statement.

3 Previous year's figures have been regrouped wherever necessary to conform to this year's classification

(a) Terms of Securities convertible into Equity Shares:

38,00,000 Share Warrants allotted on 15th March 2011 at an issue price of A60/- each, comprising of A10/- each towards face value and A50/- each towards premium are convertible at the option of the holder thereof in one or more tranches to 38,00,000 Equity Shares on or before expiry of 18 months from the date of allotment. The last date for exercise of option by the holder is 15th September 2012.

(b) Terms / rights attached to Equity Shares

The Company has only one class of Equity Shares having par value of A10/- per Share. Each holder of Equity Shares is entitled to one vote per Share. The Company declares and pays dividend in Indian Rupees.

(c) During the year ended 31st March 2012, the amount of per Share dividend recognised as distribution to Equity Shareholders was Nil. (Previous year A1.80)

(d) In the event of liquidation of the Company, the holders of the 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.

During the year on exercise of option of conversion by the allottee, 18,30,000 (previous year 4,00,000) Share Warrants to 18,30,000 (previous year 4,00,000) Equity Shares were allotted and accordingly a sum of Rs 1,83,00,000/- (previous year Rs 40,00,000/-) and Rs 9,15,00,000/- (previous year Rs 2,00,00,000/-) was adjusted to Paid-up Capital (at Rs 10/- per share) and Share Premium account (at Rs 50/- per share) respectively.

i. Term Loan borrowings from banks are secured by first mortgage and charge on all the immovable and movable assets, present and future, subject to the charges created in favour of the Company's Bankers on current assets for securing borrowings for working capital and guaranteed by two Directors of the Company. The Principal amount on these term loans are generally repayable in 32 equated quarterly installments after moratorium period of one year with interest payable on monthly rests. The interest rates vary from 13.5% to 15.5% p.a. and interest amount payable at monthly rests.

The period of maturity with reference to four term Loan Borrowings from Balance Sheet date are: (a) Loan 1 comprises nine quarterly installments comprising eight quarterly installments of Rs 37188000/- each and one installment of Rs 37172000/- (Rs ) Loan 2 comprises twelve quarterly installments of Rs 27375000/- each; eight quarterly installments of Rs 32625000/- each and six quarterly installments of Rs 7875000/- each and (c) Loan 3 comprises twenty four quarterly installments of Rs 12550000/- each and one installment of Rs 10950000/-. Loan 4 is yet to be drawn fully and hence period of maturities is not determined.

ii. Borrowings from other parties are on hypothecation of assets and guaranteed by the Managing Director of the Company. These loans are mostly repayable in 36 equated monthly installments including interest. The interest rates vary from 10.5% to 12.5% p.a. The future maturities from the Balance Sheet date comprises (a) loan 1 comprises ten installments of A361111/- each and Loan two comprises fourteen installments of Rs 132004/- each.

iii. The Sales Tax Deferment is an interest free loan granted by the Government of Andhra Pradesh on sales tax collections and repayable in ten installments, each installment comprising one year collections. The period of maturies from the Balance Sheet date of this borrowal comprises two installments of Rs 32650739/- and Rs 38487138/-.

iv. The above borrowings and interest due thereon have been paid upto date and there are no continuing defaults.

i. Working capital loans from banks and Buyer's credit are secured by hypothecation of stocks and book debts and further secured by second charge on fixed assets of the Company and guaranteed by two Directors of the Company. The rate of interest on working capital loans varies from 14.50% to 15.25% p.a. The rate of interest in respect of Buyer's credit varies from LIBOR 110 bps to LIBOR 250 bps p.a.

ii. The rate of interest in respect of loans from related parties is 12% p.a.

iii. The above borrowings and interest due there on have been paid upto date and there are no defaults.

1 CORPORATE INFORMATION:

Sathavahana Ispat Limited (the Company) is a listed company in India and is engaged in the manufacture of Pig iron, Metallurgical Coke with Co-generation of Power. The Pig Iron plant is in Anantapur District of Andhra Pradesh and the Metallurgical Coke with Co-generation Power facility is in Bellary District, Karnataka. The Company's head office is at Hyderabad, India. A major portion of Metallurgical Coke is captively used for manufacture of Pig Iron. The Company's turnover is mainly from domestic markets. The Equity Shares of the Company are listed on The Bombay Stock Exchange Limited and The National Stock Exchange of India Limited.

2 PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS:

During the year ended 31st March 2012, the Revised Schedule VI notified under the Companies Act, 1956 has become applicable to the Company for preparation and presentation of its financial statements. The adoption of Revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

3 In the opinion of the Board, assets other than Fixed Assets and non-current investments have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated and provision for all known liabilities have been made.

4 EXCISE DUTY ON OPENING AND CLOSING STOCKS:

Excise Duty on sales for the year has been disclosed as reduction from turnover. Excise Duty relating to the difference between closing stock and opening stock has been included in Note 27 "Changes in inventories of finished goods, work-in-progress and scrap".

(a) The present value of obligation in respect of provision for payment leave encashment is determined based on actuarial valuation using the projected unit credit method, which recognises 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 recognised and charged off to Statement of Profit and Loss.

(b) The estimates of rate of escalation in salary considered in actuarial valuation is determined after taking 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.

5 DISCLOSURES UNDER ACCOUNTING STANDARD 17 ON SEGMENT REPORTING:

The Company's business consists of two reportable segments viz., Pig Iron and Metallurgical Coke with Co-generation Power as per Accounting Standard 17 "Segment Reporting" issued under the Companies (Accounting Standard) Rules 2006. Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company. Inter/Intra segment transfers are accounted at selling price to the transfering segment. Inter segment transfers are eliminated on consolidation. The following tables present the revenue, profit or loss, assets and liabilities information relating to the business/geographical segment for the year ended 31st March 2012.

6 DISCLOSURES UNDER ACCOUNTING STANDARD 19 ON LEASES:

Information on leases as per Accounting Standard 19 "Leases" issued under the Companies (Accounting Standard) Rules 2006: Operating lease expenses:

The Company has various operating leases for various premises that are renewable on a periodic basis and cancellable at its option. Rental expenses for operating leases recognised in the Statement of Profit and Loss for the year is Rs 4503210/- (previous year Rs 3970822/-)


Mar 31, 2011

1. Contingent Liabilities Not Provided For:

2010-11 2009-10 Rs. Rs.

i) Claims against the Company not acknowledged as debt 12168141 12466141

ii) Taxes and Duty demands and show cause notices contested by the Company 198768 190301

iii) On account of Bank Guarantees executed by the bankers 14314025 9467212

Total 26680934 22123654

ii. Computation of net profit in accordance with Section 198 of the Companies Act, 1956 with relevant details of calculation of commission payable by way of percentage of such profits to Managing Director and Executive Vice Chairman for the year ending 31sl March, 2011.

2. Confirmation letters have been issued in respect of sundry debtors, loans and advances and sundry creditors of the Company but not responded to in some cases. Hence unconfirmed balances are subject to reconciliation and consequent adjustments, if any, would be determined/made on receipt of confirmation. However, in the opinion of the Board of Directors the current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known liabilities has been made.

3. Excise Duty on sales for the year has been disclosed as reduction from turnover. Excise Duty relating to the difference between closing stock and opening stock has been included in Schedule 16 "Increase/(Decrease) in stocks".

4. Deposits include an amount of Rs. 1215000/-{previous year Rs.8100007-) due from a Director of the Company towards rental deposit of office premises. Maximum amount outstanding during the year Rs. 1215000/- (Previous year: Rs. 810000/-).

5 Previous year figures have been regrouped / rearranged wherever necessary and paise have been rounded off to the nearest rupee.

6 Information as required to be disclosed under schedule VI of the Companies Act, 1956 with reference to Micro, Small and Medium Enterprises Development Act, 2006 (Act) as given below and the information mentioned at Schedule No.13 -Current Liabilities with reference to dues of Micro, Small and Medium enterprises, has been determined to the extent such parties have been identified on the basis of information available with the Company and relied on by the Auditors:

7 terms of approval accorded by the Company at the Extraordinary General Meeting held on 15Lh December 2010, the Company on 15th March 2011 allotted by a preferential issue to Ganapati Adusumilli Fininvest Private Limited, an associate entity of Promoters'group, 4200000 Share Warrants at an issue price of Rs.60/- (including Share Premium of Rs.50/- for each) per Share Warrant against twenty five percent upfront payment of Rs.630O000O/-. Each Share Warrant carries a right to apply for 1 (one) Equity Share of Rs.10/-each at a premium of Rs.50/- per share within a period not exceeding eighteen months from the date of allotment of Share Warrants.The ailottee has since exercised option of conversion of 400000 Share Warrants by paying the balance seventy five percent of the outstanding amount of Rs. 18000000/-. On exercise of this option, the Company appropriated a sum of Rs.4000000/- towards paid up capital and balance of Rs.20000000/- towards Share Premium account The balance 3800000 Share Warrants where an amount of Rs.15/- per Share Warrant (Rs.2.50/- towards share capital and Rs.12.50/- towards share premium) paid up aggregating to Rs.57O0OOO0/- has been shown as "Money received against Share Warrants" under Shareholders' funds. On exercise of option of conversion of these outstanding Share Warrants, the paid up Share Capital and Share Premium will increase by Rs.38000000/- and Rs. 190000000/- respectively. The upfront payment would stand forfeited if the option of conversion is not exercised within stipulated time.

During the year, the Company has also by way of the above preferential issue, allotted 800000 Equity Shares of Rs. 10/- each at a premium of Rs.50/- per share on a private placement by preferential allotment basis to Stemcor AG on 15th March 2011 in terms of approval accorded by the Company at the Extraordinary General Meeting held on 15th December 2010, whereby the paid up capital has gone up by Rs.8000000/- and the Share Premium account by Rs.40000000/-.

Disclosure on Utilisation of proceeds of Preferential Issues in terms of SEB1 (iCDR) Regulations 2009 :

i) The proceeds of preferential issue made in January 2008 amounting to Rs.426000000/- has been fully utilised for project and other related business expenditure.

8 The Company's business consists of two reportable segments viz., Pig Iron and Metallurgical Coke with Co- generation Power as per Accounting Standard 17"SegmentReporting"issued under the Companies (Accounting Standard) Rules 2006.

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company. Inter segment transfers are eliminated on consolidation.

9 Information on leases as per Accounting Standard 19"Leases" issued under the Companies (Accounting Standard) Rules 2006:

Operating lease expenses:

The Company has various operating leases for various premises that are renewable on a periodic basis and cancellable at its option. Rental expenses for operating leases recognised in the Profit and Loss Account for the year is Rs.3970823/- (previous year Rs.3671782/-)

10 Provision for taxation:

(i) The provision for taxation is made based on an estimate of assessable income determined by the Company under the Income Tax Act, 1961.

11. Leasehold land represents land purchased admeasuring 88.57 acres under lease-cunvsale agreement with Karnataka Industrial Area Development Board (KIADB), Government of Karnataka.

12. During the year Company purchased 9994004 units, accumulated 117172 units and sold 10111176 units of Rs.10/- each in Ultra Short Term Fund - Institutional plan- Daily Dividend of SBI Mutual Fund. Dividend earned thereof is Rs.1172426/-.

13. The schedules referred to in the Balance Sheet and Profit and Loss statements form an integral part of the accounts.

14. Information as required under part IV of Schedule VI to the Companies Act, 1956 is as per Annexure.

 
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