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Notes to Accounts of Shah Alloys Ltd.

Mar 31, 2015

1.1 CORPORATE INFORMATION :

The company is engaged in manufacturing of wide range of Stainless Steel, Alloy & Special steel, Carbon/ Mild Steel and Armour Steel in Flat and Long products. It is one of the key suppliers to many renowned companies in India and overseas. It exports various products to more than 50 countries around the world. Company has been successful in developing protection Armour Steel which is mainly required for defense purpose. Company has been registered with Defense Research and Development Organization as approved vendor and it is expected that good business will be available to the company. To reduce the cost of power, company has been making efforts to purchase power through Open Access which would be cheaper than the present cost of power.

1.2 BASIS OF PREPARATION OF FINANCIAL STATEMENT:

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. The Company's activities in its business segments have operating cycles which do not exceed 12 months. As a result, current assets comprise elements that are expected to be realized within 12 months after the reporting date and current liabilities comprise elements that are due for settlement within 12 months after the reporting date.

2. 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.

3 Corporate Debt Restructuring (CDR) Cell through their lead bank, Union Bank of India had sanctioned a comprehensive debt restructuring scheme vide their letter No. BY.CDR (ABP) No. 1084 dated 22.1.2008. As per scheme company was supposed to make monthly payment of interest & installment by 1st October 2009. Looking to prevailing condition and reciprocal obligation not fulfilled by the CDR lenders & consequential losses incurred by the company in the year 2008, company had again approached CDR Cell for extension of moratorium period and CDR Cell had approved the rework proposal of the company vide their letter dated BY.CDR (ABP) NO.380/ 2009-10 dated 03-07-2009. The principal terms of the 2nd CDR Scheme and its compliances are as under:

(a) Deferring repayment of Term loan Rs. 1,56,05,13,132/- Working capital term loan Rs. 1,77,82,65,205/- and Non Convertible Debentures Rs. 1,00,00,00,000/- for another 20 months, (from original due date for repayment of 01.10.2009) i.e. up to 31.05.2011. Repayment shall start from June 2011 and end on May 2019.

(b) Interest for the moratorium period i.e. up to May 2011 shall be converted into Funded interest term loan (FITL) carrying interest rate of 6% p.a. repayable in 20 equal quarterly installments commencing from December 2013 quarter. Interest on FITL shall be serviced as and when due.

Consequent upon the sanction of the restructuring package, the company had to start repaying the aforesaid loans sanctioned by banks/institutions and debenture holders from June 2011 onwards however the company has made default in repaying the dues as per the terms stipulated in the CDR rework proposal. The Amount and the period of default in respect of Term Loan, WCTL , Non convertible Debentures and FITL are as under:

As per CDR Terms, Interest on Term Loan, Working capital term loan (WCTL) and Non convertible debentures (NCD) had to be parked up to May 2011 into a separate account called Funded Interest Term loan (FITL). However, from June 2011 onwards , the interest on Term Loan, Working capital term loan (WCTL) and Non convertible debentures(NCD) has to be serviced as and when due.

However, the company has defaulted in payment of interest on Term Loan, Working capital term loan (WCTL) and Non convertible debentures (NCD) . The Amount and the period of default are as listed under:

Further the company has stopped making provision for interest on such borrowing from the date of transfer due to non execution of agreement with Asset Reconstruction Companies (ARC) and hence due to non availability of agreement with Asset Reconstruction Companies (ARC) , the company has taken the CDR – 2 orders as base for classification of current / non-current liability and default of total borrowing.

4 The company had filed a reference with BIFR u/s 15(1) of the Sick Industrial Companies (Special Provision) Act, 1985. The Honorable BIFR vide its order number 13/2010 dated 31st August, 2010 has declared that the company has become sick industrial company u/s 3(1)(o) of SICA. [Sick Industrial Companies (Special Provision) Act, 1985].

5 Balances of Secured Loan, Unsecured Loans, Bank balances, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

6 Certain balance of Debtors, Loans and Advances and Creditors are non moving/ slow moving since long, however in view of the management the same is recoverable / payable and hence no provision for the same is made in the books of accounts.

7 The Company has long term investment in the shares of SAL Steel Limited total amount of Rs. 39,94,96,276/-. Based on the audited financial statement of SAL Steel Limited as at 31st March, 2015, the Company has accumulated losses and its net worth has been fully eroded. The Financial results of SAL Steel Limited also 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. Also there is no movement in the prices of stock in share market. As per AS 13, all such circumstances indicate that there is decline, other than temporary, in the value of a long term investment. And as a result, we have provided investment at market rate of shares @ Rs. 1.75 per share total amount of Rs. 5,29,49,731/- and provided Rs. 34,65,46,545/- as diminution other than temporary in the value of investment in books of accounts.

8 A As at the year end the Company has accumulated losses and its net worth has been fully eroded. The Financial results indicate that the Company has net loss during the current and previous year and the Company's current liabilities exceed 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 have been prepared on a going concern basis based on that the Company is actively negotiating with the ARC / 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. Further, post OTS, Company will reduce the interest burden drastically and will be optimistic about vanishing of accumulated losses gradually.

9 Since last many years the company does not have internal accruals from the operations and as a result, management do not anticipate execution of its ongoing project of Cold Rolling Mill (CRM) Plant. Fund of Rs.18,31,84,363/- is blocked in the said ongoing projects. Since the capital project is not anticipate to complete in future, we have charged back expense of pre-operative expense, trial run expense and borrowing cost elements for Rs. 5,72,84,008/- 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 31st March 2015 for the valuations of such 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.

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

11 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.

As per our report attached to the Balance Sheet Signatures to Notes 1-41

The accompanying notes are an integral part of these financial statements.


Mar 31, 2013

1 1.1 CORPORATE INFORMATION

The company is engaged in manufacturing of wide range of Stainless Steel, Alloy & Special steel, Carbon/ Mild Steel and Armour Steel in Flat and Long products. It is one of the key suppliers to many renowned companies in India and overseas. It exports various products to more than 50 countries around the world. Company has been successful in developing protection Armour Steel which is mainly required for defense purpose. Company has been registered with Defense Research and Development Organization as approved vendor and it is expected that good business will be available to the company. To reduce the cost of power, company has been making efforts to purchase power through Open Access which would be cheaper than the present cost of power.

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 in India, the provisions of the Companies Act 1956 , and the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006. All Income and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

2. 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.

3. Corporate Debt Restructuring (CDR) Cell through their lead bank, Union Bank of India had sanctioned a comprehensive debt restructuring scheme vide their letter No. BY.CDR (ABP) No. 1084 dated 22.1.2008. As per scheme company was supposed to make monthly payment of interest & installment by 01st October 2009. Looking to prevailing condition and reciprocal obligation not fulfilled by the CDR lenders & consequential losses incurred by the company in the year 2008, company had again approached CDR Cell for extension of moratorium period and CDR Cell had approved the rework proposal of the company vide their letter dated BY.CDR (ABP) NO.380/2009-10 dated 03-07-2009. The principal terms of the 2nd CDR Scheme and its compliances are as under :

a) Deferring repayment of Term loan Rs. 1,56,05,13,132/- Working capital term loan Rs. 1,77,82,65,205/- and Non Convertible Debentures Rs. 1,00,00,00,000/- for another 20 months, (from original due date for repayment of 01.10.2009) i.e. up to 31.05.2011. Repayment shall start from June 2011 and end on May 2019.

b) Interest for the moratorium period i.e. up to May 2011 shall be converted into Funded interest term loan (FITL) carrying interest rate of 6% p.a. repayable in 20 equal quarterly installments commencing from December 2013 quarter. Interest on FITL shall be serviced as and when due.

Consequent upon the sanction of the restructuring package, the company had to start repaying the aforesaid loans sanctioned by banks/institutions and debenture holders from June 2011 onwards however the company has made default in repaying the dues as per the terms stipulated in the CDR rework proposal. The Amount and the period of default in respect of Term Loan, WCTL and Non convertible Debentures are as under :

4. The company had filed a reference with BIFR u/s 15(1) of the Sick Industrial Companies (Special Provision) Act, 1985. The Honorable BIFR vide its order number 13/2010 dated 31st August, 2010 has declared that the company has become sick industrial company u/s 3(1)(o) of SICA. [Sick Industrial Companies (Special Provision) Act, 1985]

5. Balances of Secured Loan, Unsecured Loans, Bank balances, Sundry debtors, Creditors and Loans and advances are subject to confirmation from respective parties.

6. Certain balance of Debtors, Loans and Advances and Creditors are non moving/ slow moving since long, however in view of the management the same is recoverable / payable and hence no provision for the same is made in the books of accounts.

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

8. The company had entered into a power purchase agreement with SAL Steel 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, Shah Alloys Limited has incurred an expense of short lifting of power from SAL Steel limited due to which the results of the company are not comparable to the extent of Rs. 31,09,85,750/-. This expense of short lifting of power from SAL Steel Limited is included in Power expense.

9. 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, 2012

1 1.1 CORPORATE INFORMATION :

The company is engaged in manufacturing of wide range of Stainless Steel, Alloy & Special steel, Carbon/Mild Steel and Armour Steel in Flat and Long products. Its is is one of the key suppliers to many renowned companies in India and overseas. It exports various products to more than 50 countries around the world. Company has been successful in developing protection Armour Steel which is mainly required for defense purpose. Company has been registered with Defense Research and Development Organization as approved vendor and it is expected that good business will be available to the company. To reduce the cost of power, company has been making efforts to purchase power through Open Access which would be cheaper than the present cost of power.

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 in India, the provisions of the Companies Act 1956 , and the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006. All Income and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

Note 2: SHARE CAPITAL

b) Rights, Preferences and restrictions attached to shares

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.

Note 3: LONG TERM BORROWINGS

(A) SECURED :

a) Nature of security and terms of repayment for secured borrowings I) Non Convertible Debentures

First Mortgage and charge on the company's all immovable and movable properties (other than working capital assets), both present and future, ranking pari-passu with all term lenders. Second charges on Working Capital assets of the company. Pledge of promoter's entire shareholding ranking pari passu with all Corporate Debts Restructuring lenders. Unconditional and irrevocable personal guarantee of the promoter-director Shri Rajendra Shah.

Non Convertible Debentures is repayable in equal monthly installment starting from June 2011 till May 2019.

b) Period and Amount of default as on the Balance sheet

During the year 2011-12 as per the terms of the CDR, Principal amount of Non Convertible Debentures were due for repayment amounting Rs. 10,41,66,667/- and Interest amounting to Rs. 8,18,90,411/- However the company has defaulted in repayment of Principal amount as well as the interest on the same. The default is subsisting for a period from 91-366 days.

II) Term Loan from Bank/Financial Institution:

First Mortgage and charge on the company's all immovable and movable properties (other then working capital assets), both present and future, ranking pari-passu with all term lenders. (except Punjab National Bank's Corporate loan which has exclusive charge on 26,00,000 shares of Shah Alloys Limited. Thus First charge on fixed assets is not extended to Punjab national bank over the Corporate loan) Second charges on WC assets of the company. Pledge of promoter's entire shareholding ranking pari passu with all CDR lenders except for 26,00,000 shares on which Punjab national bank has exclusive charge . Unconditional and irrevocable personal guarantee of the promoter-director Shri Rajendra Shah.

Term Loan is repayable in equal monthly installment starting from June 2011 till May 2019.

(B) UNSECURED :

Loan from Directors

Loans from Director are interest free. The amount of loan is repayable after a period of 1 year from the date of Balance Sheet.

Note 4 : SHORT TERM BORROWINGS

a) Nature of security and terms of repayment for secured borrowings Cash Credit Facilities

Hypothecation first charges on company's entire stocks of raw material, stock in progress, finished goods, book debts/receivables and all current assets stored in the company's factory premises, at all plants and/or elsewhere including those in transit covered by documents of title thereto, local and export usance bill ranking pari-passu in favor of all the working capital banks. Second charge on the entire movable and immovable assets both present and future on pari-passu basis. Pledge of promoter's entire shareholding ranking pari-passu with all CDR lenders. Unconditional and irrevocable personal guarantee of the promoter-director Shri Rajendra Shah.

Note 5: CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for) As At As At March 31, 2012 March 31, 2011

Contingent Liabilities

(a) Claims against the company not acknowledged as debts

- Claim by Parties 273 42 22 336 23 68 54 000

(b) Guarantees

- Corporate guarantee given to consortium Banks for SAL Steel Ltd. 207 50 00 000 207 50 00 000

- Corporate guarantee given to ABN AMRO Bank for SAL Steel Ltd. 0 2 25 00 000

- Corporate guarantee given to Banks for Adarsh foundation 0 10 00 00 000

- Bank guarantee given 2 00 82 313 2 51 02 471

- Corporate Guarantee given to L&T for Atithi Gokul 0 22 80 000

(c) Other money for which the company is contingently liable

- Disputed Income Tax Demand (net of Payment) 1 30 000 1 30 000

- Disputed sales tax demand (net of Advance) 38 04 35 702 4 13 25 791

- Disputed matter with excise and service tax 1 31 97 095 1 31 97 095

Note 6: RELATED PARTY DISCLOSURES

As per Accounting Standard 18, the disclosures of transactions with the related parties are given below:

i) Concern where significant interest exists.

Sl. Name of the Concern Nature of Relationship No.

1 SAL Steel Limited Associate

2 SAL Pharmacy (A Division of SAL Corporation Pvt. Ltd.) Enterprise with significant influence

3 Adarsh Foundation Enterprise with significant influence

4 SAL Hospital & Medical Enterprise with significant Institute (A Division of influence SAL Care Pvt Ltd.)

5 Kesar SAL Hospital (A Enterprise with significant Division of Adarsh Foundation) influence



ii) Key Management Personnel and Relatives

1 Mr. Rajendra V. Shah Chairman

2 Mr. K. S. Kamath Jt. Managing Director

3 Mr. Bhupendra T. Jha Jt. Managing Director (Ceased from 08/07/2010)

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 Corporate Debt Restructuring (CDR) Cell through their lead bank, Union Bank of India had sanctioned a comprehensive debt restructuring scheme vide their letter No. BY.CDR (ABP) No. 1084 dated 22.1.2008. As per scheme company was supposed to make monthly payment of interest & installment by 1st October 2009. Looking to prevailing condition & losses incurred by the company in the year 2008, company had again approached CDR Cell for extension of moratorium period and CDR Cell had approved the rework proposal of the company vide their letter dated BY.CDR (ABP) NO.380/2009-10 dated 03-07-2009. The principal terms of the 2nd CDR Scheme and its compliances are as under:

a) Deferring repayment of Term loan Rs. 1,56,05,13,132/- Working capital term loan Rs. 1,77,82,65,205/- and Non Convertible Debentures Rs. 1,00,00,00,000/- for another 20 months, (from original due date for repayment of 01.10.2009) i.e. up to 31.05.2011. Repayment shall start from June 2011 and end on May 2019.

b) Interest for the moratorium period i.e. up to May 2011 shall be converted into Funded interest term loan (FITL) carrying interest rate of 6% p.a. repayable in 20 equal quarterly installments commencing from December 2013 quarter. Interest on FITL shall be serviced as and when due.

c) Rate of interest on Term Loan, Non Convertible Debenture and WCTL will be 10% p.a. for the term lenders who are presently charging more than 10% p.a. payable monthly. Existing rates will continue for those lenders who are charging less than 10% p.a. payable monthly and FITL will carry interest at the rate of 6 percent per annum.

d) The company had extended an inter corporate loan of Rs. 95,00,00,000/- to SAL Steel Limited in earlier years out of which at present, the balance outstanding is Rs. 80,00,00,000/-. The terms of the Repayment of the same amount of is Rs. 10,00,00,000/- in FY 2012, Rs. 20,00,00,000/- each in FY 2013 to 2015 and Rs. 10,00,00,000/- in FY 2016. The company shall make all efforts to bring back the amount faster. The Monitoring committee shall monitor the same on half yearly basis.

As per the terms of the CDR, the company had to recover Rs. 10,00,00,000/- in FY 2012 from SAL Steel Ltd. However, the company has not received/recovered the same from SAL Steel Ltd.

e) As per the terms of the CDR, the company has brought in Promoters' contribution during the year 2009-10.

9 The company had filed a reference with BIFR u/s 15(1) of the Sick Industrial Companies (Special Provision) Act, 1985. The Honorable BIFR vide its order number 13/2010 dated 31st August, 2010 has declared that the company has become sick industrial company u/s 3(1)(o) of SICA. (Sick Industrial Companies (Special Provision) Act, 1985)

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

11 Certain balance of Debtors, Loans and Advances and Creditors are non moving/slow moving since long, however in view of the management the same is recoverable/payable and hence no provision for the same is made in the books of accounts.

12 The company had entered into a power purchase agreement with SAL Steel Limited on February 21, 2006 which enunciates minimum guarantee and uninterrupted supply of power. In pursuance of this contract during the year, Shah Alloys Limited has incurred an expense of short lifting of power from SAL Steel limited amounting Rs. 31,09,85,750/- since the date of the agreement. This expense of short lifting of power from SAL Steel Limited is included in Power expense.

13 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, the 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, 2010

1. (a) Estimated amount of contracts remaining to be executed on capital account [net of advances] and not provided for Rs. 67.90 lacs [P.Y. Rs.67.90 lacs].

(b) Contingent Liability/Asset not Provided for in respect of :

Particular Amount Amount ( Rs in Lacs) ( Rs in Lacs) 31-03-2010 31-03-2009

Inland Letters of credit. 1784.20 863.71

Foreign Letters of credit. 2033.88 532.60

Disputed Income Tax Demand (net of Payment) 306.46 620.53

Disputed sales tax demand ( net of Advance) 6.98 6.98

Disputed service tax demand 41.63 41.63

Disputed Excise Cenvat demand 10.98 -

Corporate guarantee given to consortium 20750.00 20750.00

Banks for SAL Steel Ltd.

Corporate guarantee given to ABNAMRO 225.00 225.00

Bank for SAL Steel Ltd.

Corporate guarantee given to Bank for 1000.00 1000.00

Adarsh foundation

Bank guarantee given 239.03 167.86

Claim by Supplier (Quadrant EppSurlon (I) Ltd.) 2.28 2.28

Claim by GEB 240.41 585.00

Corporate Guarantee given to L&T for Athiti Gokul 22.80 22.80

2. 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.

3. As on 31st March 2010 accumulated losses exceeds the paid up capital and free reserve, since the total erosion of net-worth has taken place the company has become a " Sick Industrial company" within the meaning of Sec3(l)(o) of the sick industrial companies (Special Provision) act 1985. The company has made intimation to the Board of Industrial and Financial Recon- struction (BIFR) for erosion of more than fifty Percent of the net worth.

4. Corporate Debt Restructuring (CDR) Cell through their lead bank, Union Bank of India has sanctioned a comprehensive debt restructuring scheme vide their letter No. BY.CDR (ABP) No. 1084 dated 22.1.2008. As per scheme company is supposed to make monthly payment of interest & installment by 01st October 2009.

Looking to prevailing condition & losses incurred by the company in the year 2008, company had again approached CDR Cell for extension of moratorium period and CDR Cell has approved the rework proposal of the company vide their letter dated BY.CDR (ABP) NO.318/2009-10 dated 25.06.2009. The principal terms of the 2nd CDR Scheme are as under:

(a) Deferring repayment of Term loan (Rs 156.05 Crore), WCTL (Rs. 177.83 Crores) and Non Convertible Debentures (Rs. 100 Crores) for another 20 months,( from original due date for repayment of 01.10.2009) i.e. up to 31.05.2011. Repayment shall start from June 2011 and ending on May 2019.

(b) Interest for the moratorium period i.e. up to May 2011 shall be converted into FITL carrying interest rate of 6% p.a., repayable in 20 equal quarterly installments commenc- ing from December 2013 quarter. Interest on FITL shall be serviced as and when due.

(c) Rate of interest on Term Loan, Non Convertible Debenture and WCTL will be 10 % p.a. for the term lenders who are presently charging more than 10 percent per annum payable monthly. Existing rates will continue for those lenders who are charging less than 10 percent per annum payable monthly and FITL will carry interest at the rate of 6 percent per annum.

(d) As per the terms of the CDR, the company has brought in Promoters contribution during the year.

(e) Deferment in repatriation of balances ICDs of Rs. 80 crores by two years from the date of revised CDR sanction.

5. Balances of Unsecured Loans, bank balances, Sundry debtors, Creditors and Loans and ad- vances are subject to confirmation from respective parties.

6. The Company, in September 2006, has raised US $ 10 million through Unsecured Zero Coupon Foreign Currency Convertible Bonds (FCCB), due in 2011.On full conversion of FCCB, the FCCB will be converted in to 26,41,143 Equity shares of Rs 10 each at a premium of Rs 165 per share, at the option of the Bondholders at any time before the maturity of the bonds. On Conversion Capital will increase by Rs 2.64 Crores and Share Premium by Rs 43.58 Crores. If Bonds are not converted the company will have to repay the bonds at a premium & in US Dollars. The company has provided the premium for this year, which has been adjusted against Security Premium in accordance with Section 78 of Companies Act, 1956.

7. Inventories are as taken, valued and certified by the Director.

8. In absence of the complete information regarding the status of the suppliers as micro small or medium enterprise as per the micro small and medium enterprise development act 2006, the information regarding the amount due to such parties as on the balance sheet date and provision for interest if any required by the said act is not been made.

9. Certain balance of Debtors, Loans and Advances and Creditors are nonmoving /slow moving since long, however in view of the management same is recoverable/payable and hence no provision for the same is made in the books of accounts.

10. Previous years figures have been re-organised/rearranged wherever necessary so as to confirm with current years groupings.

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

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