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Notes to Accounts of Splendid Metal Products Ltd.

Mar 31, 2015

1 Corporate Information

"Sujana Metal Products Limited (SMPL) was incorporated on 02nd May 1988 under the name of Sujana Steel Re-rolling Industries Private Limited. The name of the company was changed to Sujana Steels Private Limited on 30 March 1992. The company was converted into public limited company on 20 April 1992. The company further changed its name as Sujana Metal Products Limited w.e.f. 09 November 2001. The Company was promoted by Sri YS.Chowdary, his associates and relatives.

The company was incorporated with an object to manufacture of steel re-rolled products. SMPL is engaging in the business of manufacturing and marketing value added steel products. SMPL is categorized as a secondary steel producer in the Industry.

SMPL is currently engaging in the business of Manufacture and trading of steel products like Thermo Mechanically Treated (TMT) bars in different sizes, Structural steels like Ms Angles, Ms Squares, Ms Beams and Ms Channels etc and smart steel of varying shapes and dimensions for the construction and infrastructure sector.

2. Redemption of Cumulative Redeemable Preference Shares (CRPS).

1,493,365 1% of Cumulative Redeemable Preference Shares of Rs.100 each aggregating to Rs. 1493.37 lakhs is redeemable in 12 quarterly installments co-terminus with principal payment commencing from October 01,2013 and ending July 01,2016. CRPS carry cumulative dividend@1% per annum. The company declares and pays dividend in Indian rupees. Each holder of CRPS is entitled to one vote per share only on resolutions placed before the company which directly effect the rights attached to CRPS

Six quarterly installments of Rs. 745.10 lakhs have been paid to IDBI (preference share holder) for redemption of 7,46,680 number of 1% preference shares of Rs. 100/- each. however these share were not received by the Company from IDBI for redemption. Hence the amount of Rs. 745.10 lakhs has been classified as advance.

3. As per CDR Terms of repayment are as follows:

i) Loan taken from Andhra Bank, Rs.50.91Crores, carries an interest rate of 11% p.a from 1st October, 2012 till 30th September, 2014 and there after 13% p.a and is repayable in 96 monthly installments commencing from 1st October, 2014.

ii) Loan taken from Indian Overseas Bank, Rs.32.60Crores, carries an interest rate of 11% p.a from 1st October, 2012 till 30th September, 2014 and there after 13% p.a and is repayable in 96 monthly installments commencing from 1 st October, 2014.

iii) Loan taken from Bank Of India, Rs. 54.61 Crores, carries an interest rate of 11% p.a from 1st October, 2012 till 30th September,2014 and there after 13% p.a and is repayable in 96 monthly installments commencing from 1 st October, 2014.

iv) Loan taken from Punjab National Bank, Rs.90.86Crores, carries an interest rate of 11% p.a from 1st October, 2012 till 30th September,2014 and there after 13% p.a and is repayable in 96 monthly installments commencing from 1 st October, 2014.

v) Loan taken from IDBI, Rs. 22.38Crores, carries an interest rate of 11% p.a from 1st October, 2012 till 30th September, 2014 and there after 13% p.a and is repayable in 96 monthly installments commencing from 1st October, 2014.

vi) Term loan from financial institutions viz Stressed Assets Stabilization Fund (SASF) secured by first charge on all the immovable and movable fixed assets of the company and second charge on the current assets of the company. As per SASF letter dated 15 March 2013, crystallizes the SASF dues to Rs.6,600 lakhs and is to be paid in cash carrying ROI @ 9% p.a payable over 9 1/2 years and balance Rs. 1800 lakhs to be converted into equity as per SEBI Guidelines. After giving effect to the CDR it was decided that SASF dues as per June, 2008 package should be considered for restructuring at par with other lenders including clearance of interest overdue as on Cut of Date (October 1,2012). As per Bank 's advice Interest and other overdues of Rs18.20 crore as on COD, is to be cleared for restructuring of dues at CDR.

vii) Overdue interest on Term Loans, SASF & Working Capital was converted to 'Funding of Interest on Term Loan ' amounting to Rs. 67.46Crores, which shall be repayable in 4.5years after completion of moratorium period i.e. October, 2014.

viii) Working Capital loans were converted to Working Capital Term Loans amounting Rs.41,735.66Lakhs, which shall be repayable in 8years, after completion of moratorium period i.e. Oct, 2014.

ix) Vehicle loans from banks and others are secured by hypothecation of the vehicles financed through the loan arrangements and are repayable over a period of 36 months to 60 months.

x) Additional Term Loan taken from Andhra Bank Rs.271.00 lakhs on 20th Jan 2014, Bank of Ondia Rs.269.00 laks, IOB Rs.154.00 lakhs and PNB Rs.406.00 lakhs carries an interest rate of 11% p.a for upgradation of technology at Shadnagar and Bollaram units.

4. Employee Benefits

Defined contribution plans:

The Company makes Provident Fund contribution to defined contribution plans for qualifying employees. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.69.26 lakhs (31.03.2014: Rs.60.66 lakhs) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plan by the Company are at rates specified in the rules of the scheme.

Defined benefit plans:

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Compensated absences

Liability for retiring gratuity as on March 31,2015 is Rs.313.11 lakhs (31-3-2014: Rs.298.87 lakhs ) of which Rs.2.65 lakhs (31.3.2014: 13.90 lakhs) is funded with the Life nsurance Corporation of India and Bajaj Allianz Life Insurance Company. The balance of Rs.310.46 lakhs (31-3-2014: Rs.284.97 lakhs) is included in Provision for Gratuity. The Liability for Gratuity and Cost of Compensated absences has been actuarially determined and provided for in the books.

Details of the company 's post-retirement gratuity plans for its employees including whole time directors are given below,which is certified by the actuary and relied upon by the auditors.

Note: In accordance with the payment of Gratuity Act, 1972 the company provides for gratuity covering eligible employees.

The liability on account of gratuity is covered partially through a recognized Gratuity Fund managed by Life Insurance Corporation of India, Bajaj Allianz life Insurance company and balance is provided on the basis of valuation of the liability by an independent actuary as at the year end. The management understands that their overall portfolio of assets is well diversified and as such, the long term return on the policy is expected to be higher than the rate of return on Central Government bonds.

i) Discount Rate

The discount rate is based on the prevailing market yield on Indian Government Securities as at the balance sheet date for the estimated term of the obligations.

ii) Expected Rate of Return on Plan Assets:

This is based on our expectation of the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

iii) Salary Escalation Rate

The estimates of future salary increase considered takes into account the inflation, seniority, promotion and other relevant factors.

5. Related Party Disclosure

The following are related parties as defined in "Accounting Standard (AS) 18 - Related Party Disclosures " notified under The Companies (Accounting Standards) Rules, 2006.

List of Related Parties

1. Subsidiaries

Country of Percentage of Subsidiaries held directly Incorporation owmership interest

i. Glade Steel Pvt Ltd. India 51.15%

ii. Alpha Ventures Ltd. Cayman Islands 100%

iii. Asian Tide Enterprises Ltd. Hong Kong 100%

Subsidiaries held indirectly

i. Optimix Enterprises Limited Mauritius 100%

2. Key Management Personnel

i. Mr. R. K. Birla Managing Director

ii. Mr. S. Hanumantha Rao Director (Finance)

6. Contingent liabilities and commitments (to the extent not provided for) (Rupees in lakhs)

As at 31 As at 31 Particulars March 2015 March 2014

a) Contingent liabilities

i) Claims against the Company not acknowledged as debts in respect of:

Excise Duty 2,071.70 2,120.20

Custom Duty 839.24 839.49

TNVAT/APGST/CST 2,198.12 2,198.12

Income Tax (Net of liability as per return) - 1,479.25

FEMA* 400.00 400.00

ii) Guarantees

Corporate Guarantees furnished on behalf of Sujana Universal 81,410.00 81,410.00 Industries Ltd

Corporate guarantee furnished on behalf of Optimix Enterprises 4,087.50 4,087.50 Limited (USD 75 lakhs)

b) Commitments

i) Export commitments on account of import of machinery and equipments at 112.16 112.16 concessional duty under EPCG scheme (31.03.2014 :Rs.112.16 Lakhs) .Such export commitments need to be fulfilled by the Company on or before 23 April 2016. As on 31 March 2015, the Company has fulfilled its export commitments and which are pending final approval of Director General of Foreign Trade. In the event of non- fulfillment of the export commitments by 23 April 2016 by the Company, the liability (excluding interest and penalties) towards customs duty

*Against which bank guarantee of Rs.215 lakhs has been issued.

7. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006.

Trade payables (Ref: Note No.10 -Trade payables include Rs.Nil (31.03.2014 : Rs. Nil) due to micro enterprises and small enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act 2006). The Company has not received any memorandum(as required to be filed by the supplier with the notified authority under the MSMED Act 2006) claiming their status as Micro or Small or Medium Enterprises.

8. Stressed Assets Stabilization Fund (SASF) has communicated as follows

As per SASF letter dated 15 March 2013, crystallizes the SASF dues to Rs.6,600 lakhs and is to be paid in cash carrying ROI @ 9% p.a payable over 9 1/2 years and balance Rs. 1800 lakhs to be converted into equity as per SEBI Guidelines. After giving effect to the CDR it was decided that SASF dues as per June, 2008 package should be considered for restructuring at par with other lenders including clearance of interest overdue as on COD (October 1,2012). As per Bank 's advice Interest and other overdues of Rs18.20 crore as on COD, is to be cleared for restructuring of dues at CDR. The negotiation are going on with respect to restruring of debts.

9. IMPLEMENTATION & TERMS OF CDR:

The loans of the company have been restructured under the Corporate Debt Restructuring (CDR) System, The CDR package was sanctioned by CDR Empowered Group, at the meeting held on 15.02.2013 and approval letters have been given by the CDR Cell on 25.03.2013. where all the banks, who have extended financial assistance & given the loans to the company, have aggreed for restructure of the loans.

The letters from individual banks also have been issued by Banks & Salient Features of the CDR package are given below:-

i) Cut-off date (COD) for loans has been cosnsidered as 1st October 2012. The loans outstanding as on this date has been cosnidered for restructuring.

ii) Interest rate on the loans has been fixed at 11%p.a. during the moratorium period (24 months) from cut off date after that it is 13%.

iii) Term Loans have been restructured with a moratorium of 24 months from COD and repayable in 96 equal monthly installments starting from 1st October 2014.

iv) The irregularity in the Cash Credit has been carved out as Working Capital Term Loan with a moratorium of 24 months from COD and repayable in 96 equal monthly installments starting from 1st October 2014.

v) The unpaid interest as on 30.09.2012 and interest from 01.10.2012 to 28.02.2013 on term loans and interest from 01.10.2012 to 28.02.2013 on WCTL has been restructured as Funded Interest Term Loan-I, repayable in 54 equal monthly installments starting from FY Oct 31, 2014 and ending with March 31,2019, after FITL - I is completely built up.

vi) The interest on Cash Credit from October 2012 to March, 2013 has been restructured as Funded Interest Term Loan-II, repayable in 54 equal monthly installments starting form April 30, 2013 and ending with September 2017, after FITL - II is completely built up.

vii) The Interest on loan of NBFC from cut off date Oct 1, 2012 till September 30, 2014 shall be converted into FITL I and interest would be charged at 11%p.a. at monthly rests with a right to reset after two years from cut-off date & thereafter annuallly. Interest on FITL - I shall be serviced as and when due. Interest overdue prior to COD would be converted to FITL I(A) to be repaid from FY 2014 to FY 2018 with 9% interest p.a. at monthly rests.

viii) The Principle of NBFC has been given moratorium of 24 months from COD and repayable in 96 equal monthly instalments over a period of 8 years starting from Oct 31, 2014 and ending with September 30, 2022.

ix) Cash Credit and the Non-fund based limits as per the apprisal of the banks.

x) Promoters shall bring funds as per the applicable terms of CDR package.

xi) The lenders shall have the right to recompense the reliefs/sacrifices/waivers extended by respective CDR lenders as per guidelines.

xii) The CDR package has been implemented in all respects with PNB as the monitoring agency for monitoring the implementation of the CDR package. The repayments of installments have commenced during the year.

10. The Company 's significant leasing arrangements are in respect of operating leases for premises (office, stores, godowns, etc.). The leasing arrangements, which are not non-cancellable, range between ten months and three years generally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals Rs.176.43 lakhs (31.03.2014:Rs.148.51 lakhs) payable are charged as rent in the statement of profit and loss.

11. Balances of Unsecured loans, receivables,payables and loans and advances are subjects to their confirmation and reconcilations.

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


Mar 31, 2014

1 Corporate information

Sujana Metal Products Limited (SMPL) was incorporated in 02 May 1988 under the name of Sujana Steel Re-rolling Industries Private Limited. The name of the company was changed to Sujana Steels Private Limited on 30 March 1992. The company was converted into public limited company on 20 April 1992. The company further changed its name as Sujana Metal Products Limited w.e.f. 09 November 2001. The Company was promoted by Sri Y.S.Chowdary, his associates and relatives.

The company was incorporated with an object to manufacture of steel re-rolled products. SMPL is engaging in the business of manufacturing and marketing value added steel products. SMPL is categorized as a secondary steel producer in the Industry.

SMPL is currently engaging in the business of Manufacture and trading of steel products like Thermo Mechanically Treated (TMT) bars in different sizes, Structural steels like Ms Angles, Ms Squares, Ms Beams and Ms Channels etc and smart steel of varying shapes and dimensions for the construction & infrastructure sector.

i) 13,140,489 Equity shares issued as fully paid up to the share holders of erstwhile Sujana Steels Limited on its amalgamation with the company, for consideration other than cash.

ii) The company has only one class of shares referred to as equity shares having a par value of Rs. 5/-. Each holder of equity shares is entitled to one vote per share held.

In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their share holding.

Nil (31.03.2013:12,946,000) equity shares represent the shares underlying outstanding Global Depository Receipts (GDRs). Each GDR represents 10 underlying equity shares.

iii) Redemption of Cumulative Redeemable Preference Shares (CRPS)

1,493,365 1% of Cumulative Redeemable Preference Shares of Rs.100 each aggregating to Rs.1493.37 lakhs is redeemable in 12 quarterly installments co-terminus with principal payment commencing from October 01,2013 and ending July 01,2016. CRPS carry cumulative dividend@1% per annum. The company declares and pays dividend in Indian rupees each. Each holder of CRPS is entitled to one vote per share only on resolutions placed before the company which directly effect the rights attached to CRPS.

Three quarterly installment of Rs. 369.93 has been paid to IDBI(preference share holder) for redemption of 3,73,340 numbers of 1% preference shares of Rs.100 each. However these shares were not received by the company from IDBI for redemption. Hence the amount of Rs.369.93 lakhs has been classified as advance.

Notes:

Term loan from banks viz. Punjab National Bank, Bank of India, Indian Overseas Bank, IDBI Bank and Andhra Bank are secured by first chare on all the immovable and movable fixed asets of the company both present and future and second charge on the current assets of the company. Further these loans are secured by personal guarantees and properties of certain directors.

During the year the company availed additional Term Loan taken from Andhra Bank Rs.271.00 lakhs, Bank of Ondia Rs.269.00 laks, IOB Rs.154.00 lakhs and PNB Rs.406.00 lakhs carries an interest rate of 11 % p.a for upgradation of technology at Shadnagar and Suryapet units.

As per CDR Terms of repayment are as follows:

i) Loan taken from Andhra Bank, Rs. 50.91Crores, carries an interest rate of 11 % p.a from 1st October, 2012 till 30th September,2014 and there after 13% p.a and is repayable in 96 monthly installments commencing from 1 st October, 2014.

ii) Loan taken from Indian Overseas Bank, Rs.32.60Crores, carries an interest rate of 11 % p.a from 1st October, 2012 till 30 th September,2014 and there after 13% p.a and is repayable in 96 monthly installments commencing from 1 st October, 2014.

iii) Loan taken from Bank Of India, Rs. 54.61Crores, carries an interest rate of 11 % p.a from 1st October, 2012 till 30 th September,2014 and there after 13% p.a and is repayable in 96 monthly installments commencing from 1 st October, 2014.

iv) Loan taken from Punjab National Bank, Rs.90.86Crores, carries an interest rate of 11 % p.a from 1st October, 2012 till 30 th September,2014 and there after 13% p.a and is repayable in 96 monthly installments commencing from 1 st October, 2014.

v) Loan taken from IDBI, Rs. 22.38Crores, carries an interest rate of 11 % p.a from 1st October, 2012 till 30th September,2014 and there after 13% p.a and is repayable in 96 monthly installments commencing from 1 st October, 2014.

vi) Term loan from financial institutions viz Stressed Assets Stabilization Fund (SASF) secured by first charge on all the immovable and movable fixed assets of the company and second charge on the current assets of the company. As per SASF letter dated 15 March 2013, crystallizes the SASF dues to Rs.6,600 lakhs and is to be paid in cash carrying ROI @ 9% p.a payable over 9 1/2 years and balance Rs. 1800 lakhs to be converted into equity as per SEBI Guidelines. After giving effect to the CDR it was decided that SASF dues as per June, 2008 package should be considered for restructuring at par with other lenders including clearance of interest overdue as on COD (October 1,2012). As per Bank''s advice Interest and other overdues of Rs18.20 crore as on COD, is to be cleared for restructuring of dues at CDR.

vii) Overdue interest on Term Loans, SASF & Working Capital was converted to ''Funding of Interest on Term Loan'' amounting to Rs. 67.46Crores, which shall be repayable in 4.5years after completion of moratorium period i.e. October, 2014.

viii) Working Capital loans were converted to Working Capital Term Loans amounting Rs.41,735.66Lakhs, which shall be repayable in 8years, after completion of moratorium period i.e. Oct, 2014.

ix) Vehicle loans from banks and others are secured by hypothecation of the vehicles financed through the loan arrangements and are repayable over a period of 36 months to 60 months.

2.i) Loans repayable on demand includes an amount of Rs. 63281.98 lakhs (31.03.2013:Rs.51,566.87 lakhs) represents working capital loans from banks are inter alia secured by way of parri passu first charge on current assets and parri passu second charge on fixed assets both present and future. Further these loans are secured by personal guarantee and properties of certain directors.

ii) Rs.4085.02 lakhs has been brought by promoters as interest free unsecured loan under CDR scheme which shall be converted in to equity shares as per SEBI norms and Rs.100 lakhs from others in the previous year carring an interest of 17% per annum.

3 Employee Benefits

Defined contribution plans:

The Company makes Provident Fund contribution to defined contribution plans for qualifying employees. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.60.66 lakhs (31.03.2013: Rs. 66.77 lakhs) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plan by the Company are at rates specified in the rules of the scheme.

Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Compensated absences

Liability for retiring gratuity as on March 31,2014 is Rs.298.87 lakhs (31-3-2013: Rs.248.20 lakhs ) of which Rs.13.90 lakhs (31.3.2013: 5.02 lakhs) is funded with the Life Insurance Corporation of India. The balance of Rs.284.97 lakhs (31-3-2013: Rs.243.18 lakhs) is included in Provision for Gratuity. The Liability for Gratuity and Cost of Compensated absences has been actuarially determined and provided for in the books.

Note: In accordance with the payment of Gratuity Act, 1972 the company provides for gratuity covering eligible employees.

The liability on account of gratuity is covered partially through a recognized Gratuity Fund managed by Life Insurance Corporation of India and balance is provided on the basis of valuation of the liability by an independent actuary as at the year end. The management understands that LIC''s overall portfolio of assets is well diversified and as such, the long term return on the policy is expected to be higher than the rate of return on Central Government bonds.

i) Discount Rate

The discount rate is based on the prevailing market yield on Indian Government Securities as at the balance sheet date for the estimated term of the obligations.

ii) Expected Rate of Return on Plan Assets:

This is based on our expectation of the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

4 Contingent liabilities and commitments (to the extent not provided for) (Rupees in lakhs)

As at 31 As at 31 Particulars March 2014 March 2013

a)Contingent liabilities

i)Claims against the Company not acknowledged as debts in respect of:

Excise Duty 2,120.20 2,116.87

Custom Duty 839.49 797.67

TNVAT/APGST/CST 2,198.12 2,179.39

Income Tax (Net of liability as 1,479.25 1,517.25 per return)

FEMA* 400.00 630.00

ii) Guarantees

Corporate Guarantees furnished 81,410.00 81,410.00 on behalf of Sujana Universal Industries Ltd Corporate guarantee furnished on 4,087.50 4,087.50 behalf of Optimix Enterprises Limited (USD 75 lakhs)

b) Commitments

i) Export commitments on account of import of machinery and equipments at 112.16 112.16

concessional duty under EPCG scheme (31.03.2012 :Rs.112.916Lakhs) .Such export commitments need to be fulfilled by the Company on or before 23 April 2016. As on 31 March 2012,the Company has fulfilled its export commitments and which are pending final approval of Director General of Foreign Trade. In the event of non-fulfillment of the export commitments by 23 April 2016 by the Company, the liability (excluding interest and penalties) towards customs duty

*Against which bank guarantee of Rs.215 lakhs has been issued.

5 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

Trade payables (Ref: Note No.10 -Trade payables include Rs.Nil (31.03.2013: Rs.Nil) due to micro enterprises and small enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act 2006). The Company has not received any memorandum(as required to be filed by the supplier with the notified authority under the MSMED Act 2006) claiming their status as Micro or Small or Medium Enterprises.

6 Scheme of Amalgamation

The management committee has decided to withdraw the Scheme of Amalgamation of M/s Lakshmi Gayatri Industries Private Limited, M/s Glade Steel Private Limited, M/s Sri Ganga Steel Enterprises Private Limited and M/s Topaz Steel India Limited, the company filed its petetion before Hon''ble High Court of Andhra Pradesh and withdrawl of amalgamation order was issued by Hon''ble High Court,Ap on 17-12-2013.

7 Stressed Assets Stabilization Fund (SASF) has communicated as follows

SASF vide their letter dated 02 December 2010 has confirmed a Negotiated Settlement (NS) for the aggregate balance term loan outstanding as on 31 December 2009 (being the cut-off date) in respect of the Company and other Company viz.Sri Ganga Enterprises Limited (Company to be taken over in the scheme of amalgamation) to the extent of Rs.7,706.00 lakhs, with following terms and conditions:

a) Rs.3,051.00 lakhs to be paid in cash of which an amount of Rs.600 lakhs was paid against the crystallized cash portion of the settlement amount and balance amount shall be payable in equal 5 installments the date of issue of letter of approval (LOA). The first installment shall be payable within a period of one week from the date of issue of LOA, of which the Company has paid Rs.1,150 lakhs towards interest and principal during the previous period.

b) Of the balance restructured term loan Rs.4,655 lakhs is to be converted into equity share of Company as per SEBI Guidelines and 9% p.a interest shall be payable till the date of conversion. Based on the NS, a consolidated interest waiver of Rs.1300 lakhs has been given by SASF. In view of pending amalgamation of Sri Ganga Enterprises Limited and non compliance of certain terms and conditions, the Company has not accounted the term loan liability relating to amalgamating Company (payable to SASF) and the interest waiver to the extent of Rs.1,300 lakhs in the books during the period.

Further the company vide its letter dated 21 March 2012 requested the SASF for modifications in the terms of negotiated settlement conveyed above vide letter No.BY/SASFSujana Metal/No.1793 dated 02 December 2010. The SASF vide its letter dated 02 April 2012 has agreed to extend the time for conversion of Rs.4,655 lakhs into equity upto 31 March 2013 subject to payment of interest @ 9% per annum w.e.f 01 April 2010 and also agreed to reschedule the payment of balance cash portion of settlment amount aggregating Rs.2,400 lakhs(subject to reconciliation) . The terms of payment are as follows.

a) Payment of 50 lakh per quarter during the first year commencing from 01 July 2011, payment of Rs.75 lakhs per quarter during the second year commencing from 01 July 2013 and balance amount shall be payable in 12 equal quarterly installments commencing from 01 July 2014.

b) Interest @9% p.a on the settlement shall be payable along with the above installments. In view of the pending compliance of certain terms and conditions mentioned above, the scheme has not been given effect in the books.

Further as per SASF letter dated 15th March, 2013, crystallizes the SASF dues to Rs.6,600 lakhs and is to be paid in cash carrying ROI @ 9% p.a payable over 9 1/2 years and balance Rs. 1800 lakhs to be converted into equity as per SEBI Guidelines. After giving effect to the CDR it was decided that SASF dues as per June, 2008 package should be considered for restructuring at par with other lenders including clearance of interest overdue as on COD (October 1, 2012). As per Bank''s advice Interest and other overdues of Rs18.20 crore as on COD, is to be cleared for restructuring of dues at CDR.

8 IMPLEMENTATION & TERMS OF CDR:

The loans of the company have been restructured under the Corporate Debt Restructuring (CDR) System, The CDR package was sanctioned by CDR Empowered Group, at the meeting held on 15.02.2013 and approval letters have been given by the CDR Cell on 25.03.2013. where all the banks, who have extended financial assistance & given the loans to the company, have aggreed for restructure of the loans.

The letters from individual banks also have been issued by Banks & Salient Features of the CDR package are given below:-

i) Cut-off date (COD) for loans has been cosnsidered as 1st October, 2012. The loans outstanding as on this date has been cosidered for restructuring.

ii) Interest rate on the loans has been fixed at 11% p.a. during the moratorium period (24 months) from cut off date after that it is 13%.

iii) Term Loans have been restructured with a moratorium of 24 months from COD and repayable in 96 equal monthly installments starting from 1st October 2014.

iv) The irregularity in the Cash Credit has been carved out as Working Capital Term Loan with a moratorium of 24 months from COD and repayable in 96 equal monthly installments starting from 1st October 2014.

v) The unpaid interest as on 30.09.2012 and interest from 01.10.2012 to 28.02.2013 on term loans and interest from 01.10.2012 to 28.02.2013 on WCTL has been restructured as Funded Interest Term Loan-I, repayable in 54 equal monthly installments starting from FY Oct 31, 2014 and ending with March 31,2019, after FITL - I is completely built up.

vi) The interest on Cash Credit from October 2012 to March, 2013 has been restructured as Funded Interest Term Loan-II, repayable in 54 equal monthly installments starting form April 30, 2013 and ending with September 2017, after FITL - II is completely built up.

vii) The Interest on loan from SASF cut off date Oct 1,2012 till September 30, 2014 shall be converted into FITL I and interest would be charged at 11%p.a. at monthly rests with a right to reset after two years from cut-off date & thereafter annuallly. Interest on FITL - I shall be serviced as and when due. Interest overdue prior to COD would be converted to FITL I(A) to be repaid from FY 2014 to FY 2018 with 9% interest p.a. at monthly rests.

viii) The Principle of SASF has been given moratorium of 24 months from COD and repayable in 96 equal monthly instalments over a period of 8 years starting from Oct 31, 2014 and ending with September 30, 2022.

ix) Cash Credit and the Non-fund based limits as per the apprisal of the banks.

x) Promoters shall bring funds as per the applicable terms of CDR package.

xi) The lenders shall have the right to recompense the reliefs/sacrifices/waivers extended by respective CDR lenders as per guidelines.

The CDR package has been implemented in all respects with PNB as the monitoring agency for monitoring the implementation of the CDR package.

9 The Company''s significant leasing arrangements are in respect of operating leases for premises (office, stores, godowns, etc.). The leasing arrangements, which are not non-cancellable, range between ten months and three years generally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals Rs.148.51 lakhs (31.03.2013:Rs.145.20 lakhs) payable are charged as rent in to the statement of profit and loss.

10 Balances of Unsecured loans, receivables,payables and loans and advances are subjects to their confirmation and reconcilations.

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


Mar 31, 2013

1 Corporate information

"Sujana Metal Products Limited (SMPL) was incorporated in 02 May 1988 under the name of Sujana Steel Re-rolling Industries Private Limited. The name of the company was changed to Sujana Steels Private Limited on 30 March 1992. The company was converted into public limited company on 20 April 1992. The company further changed its name as Sujana Metal Products Limited w.e.f. 09 November 2001. The Company was promoted by Sri Y.S.Chowdary, his associates and relatives.

The company was incorporated with an object to manufacture of steel re-rolled products SMPL is engaged in the business of manufacturing and marketing value added steel products. SMPL is categorized as a secondary steel producer in the Industry.

SMPL is currently engaged in the business of Manufacture and trading of steel products like Thermo Mechanically Treated (TMT) bars in different sizes, Structural steels like Ms Angles, Ms Squares, Ms Beams and Ms Channels etc and smart steel of varying shapes and dimensions for the construction & infrastructure sector."

2 Employee Benefits

Defined contribution plans:

The Company makes Provident Fund contribution to defined contribution plans for qualifying employees. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.66.77 lakhs (31.03.2012: Rs.61.22 lakhs) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plan by the Company are at rates specified in the rules of the scheme.

Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Compensated absences

Liability for retiring gratuity as on March 31, 2013 is Rs.248.20 lakhs (31-3-2012: Rs.230.25 lakhs ) of which Rs.5.02 lakhs (31.3.2012: 15.67lakhs) is funded with the Life nsurance Corporation of India. The balance of Rs.243.18 lakhs (31-3-2012: Rs.214.58 lakhs) is included in Provision for Gratuity. The Liability for Gratuity and Cost of Compensated absences has been actuarially determined and provided for in the books.

i) Discount Rate

The discount rate is based on the prevailing market yield on Indian Government Securities as at the balance sheet date for the estimated term of the obligations.

ii) Expected Rate of Return on Plan Assets:

This is based on our expectation of the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

iii) Salary Escalation Rate

The estimates of future salary increase considered takes into account the inflation, seniority, promotion and other relevant factors

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

As at 31 As at 31 Particulars March 2013 March 2012

a) Contingent liabilities

i) Claims against the Company not acknowledged as debts in respect of:

Excise Duty 2,116.87 1,823.36

Custom Duty 797.67 523.37

TNVAT/APGST/CST 2,179.39 1,979.39

Income Tax (Net of liability as per return) 1,517.25 1,037.07

FERA 630.00 630.00

ii) Guarantees

Corporate Guarantees furnished on behalf of Sujana Universal 81,410.00 81,410.00 Industries Ltd

Joint Corporate Guarantee executed by the Company along with - -

Sujana Universal Industries Ltd and Sujana Towers Limited in favour of Alpha Ventures Ltd and Sujana Holdings Ltd, Wholly Owned Subsidiary of the Company and Sujana Universal Industries Ltd respectively [USD Nil (31.03.2012:Nil)]

Corporate guarantee furnished on behalf of Optimix Enterprises 4,087.50 3,117.97 Limited (USD 75 lakhs)

4 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

Trade payables (Ref: Note No.10 -Trade payables include Rs.Nil (31.03.2012: Rs.Nil) due to micro enterprises and small enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act 2006). The Company has not received any memorandum(as required to be filed by the supplier with the notified authority under the MSMED Act 2006) claiming their status as Micro or Small or Medium Enterprises.

5. Scheme of Amalgamation

A Scheme of Amalgamation of M/s Lakshmi Gayatri Industries Private Limited, M/s Glade Steel Private Limited, M/s Sri Ganga Steel Enterprises Private Limited and M/s Topaz Steel India Limited with the Company with effective from 1 October, 2009 (being Appointed Date)has been approved by the shareholders and secured creditors of the Company in the extra ordinary general meeting held on 28 April 2011. The company filed its main petition with the Hon''ble High Court of Andhra Pradesh for the sanction of Scheme of Amalgamation under Section 391 and 394 of the Companies Act, 1956 ,which was admitted on 15th July''2011. In view of pending order of High Court of Andhra Pradesh, the scheme has not been given effect in the Audited Financials of the Company for the period ended 31 March 2012 and for the year ended 31.03.2013. Further the short-term loans and advances of Rs.7984.00 lakhs (31.03.2012:Rs774.77 lakhs)outstanding and receivable from these amalgamating companies as on 31 March 2013 are considered good for recovery by the management.

6. Stressed Assets Stabilization Fund (SASF) has communicated as follows

"SASF vide their letter dated 02 December 2010 has confirmed a Negotiated Settlement (NS) for the aggregate balance term loan outstanding as on 31 December 2009 (being the cut-off date) in respect of the Company and other Company viz.Sri Ganga Steel Enterprises Private Limited (Company to be taken over in the scheme of amalgamation) to the extent of Rs.7,706.00 lakhs, with following terms and conditions:

a) Rs.3,051.00 lakhs to be paid in cash of which an amount of Rs.600 lakhs was paid against the crystallized cash portion of the settlement amount and balance amount shall be payable in equal 5 installments the date of issue of letter of approval (LOA). The first installment shall be payable within a period of one week from the date of issue of LOA, of which the Company has paid Rs.1,150 lakhs towards interest and principal during the previous period.

b) Of the balance restructured term loan Rs.4,655 lakhs is to be converted into equity share of Company as per SEBI Guidelines and 9% p.a interest shall be payable till the date of conversion. Based on the NS, a consolidated interest waiver of Rs.1300 lakhs has been given by SASF. In view of pending amalgamation of Sri Ganga Steel Enterprises Private Limited and non compliance of certain terms and conditions, the Company has not accounted the term loan liability relating to amalgamating Company (payable to SASF) and the interest waiver to the extent of Rs.1,300 lakhs in the books during the period."

"Further the company vide its letter dated 21 March 2012 requested the SASF for modifications in the terms of negotiated settlement conveyed above vide letter No.BY/SASFSujana Metal/No.1793 dated 02 December 2010. The SASF vide its letter dated 02 April 2012 has agreed to extend the time for conversion of Rs.4,655 lakhs into equity upto 31 March 2013 subject to payment of interest @ 9% per annum w.e.f 01 April 2010 and also agreed to reschedule the payment of balance cash portion of settlment amount aggregating Rs.2,400 lakhs(subject to reconciliation) The terms of payment are as follows.

a) Payment of 50 lakh per quarter during the first year commencing from 01 July 2011, payment of Rs.75 lakhs per quarter during the second year commencing from 01 July 2013 and balance amount shall be payable in 12 equal quarterly installments commencing from 01 July 2014.

b) Interest @9% p.a on the settlement shall be payable along with the above installments. In view of the pending compliance of certain terms and conditions mentioned above, the scheme has not been given effect in the books."

Further as per SASF letter dated 15 March 2013, crystallizes the SASF dues to Rs.6,600 lakhs and is to be paid in cash carrying ROI @ 9% p.a payable over 9 1/2 years and balance Rs. 1800 lakhs to be converted into equity as per SEBI Guidelines. After giving effect to the CDR it was decided that SASF dues as per June, 2008 package should be considered for restructuring at par with other lenders including clearance of interest overdue as on COD (October 1, 2012). As per Bank''s advice Interest and other overdues of Rs18.20 crore as on COD, to be cleared for restructuring of dues.

7. CDR IMPLEMENTATION & TERMS:

The loans of the company have been restructured under the Corporate Debt Restructuring (CDR) System, The CDR package was sanctioned by CDR Empowered Group, at the meeting held on 15.02.2013 and approval letters have been given by the CDR Cell on 25.03.2013. where all the banks, who have extended financial assistance & given the loans to the company, have aggreed for restructure of the loans.

The letters from individual banks also have been issued by Banks & Salient Features of the CDR package are given below:-

i) Cut-off date (COD) for loans has been cosnsidered as 1st October 2012. The loans outstanding as on this date has been cosnidered for restructuring.

ii) Interest rate on the loans has been fixed at 11%p.a. during the moratorium period (24 months) from cut off date after that it is 13%.

iii) Term Loans have been restructured with a moratorium of 24 months from COD and repayable in 96 equal monthly installments starting from 1st October 2014.

iv) The irregularity in the Cash Credit has been carved out as Working Capital Term Loan with a moratorium of 24 months from COD and repayable in 96 equal monthly installments starting from 1st October 2014.

v) The unpaid interest as on 30.09.2012 and interest from 01.10.2012 to 28.02.2013 on term loans and interest from 01.10.2012 to 28.02.2013 on WCTL has been restructured as Funded Interest Term Loan-I, repayable in 54 equal monthly installments starting from FY Oct 31, 2014 and ending with March 31, 2019, after FITL - I is completely built up.

vi) The interest on Cash Credit from October 2012 to March, 2013 has been restructured as Funded Interest Term Loan-II, repayable in 54 equal monthly installments starting form April 30, 2013 and ending with September 2017, after FITL - II is completely built up.

vii) The Interest on loan of SASF from cut off date Oct 1, 2012 till September 30, 2014 shall be converted into FITL I and interest would be charged at 11%p.a. at monthly rests with a right to reset after two years from cut-off date & thereafter annuallly. Interest on FITL - I shall be serviced as and when due. Interest overdue prior to COD would be converted to FITL I(A) to be repaid from FY 2014 to FY 2018 with 9% interest p.a. at monthly rests.

viii) The Principle of SASF has been given moratorium of 24 months from COD and repayable in 96 equal monthly instalments over a period of 8 years starting from Oct 31, 2014 and ending with September 30, 2022.

ix) Cash Credit and the Non-fund based limits as per the apprisal of the banks.

x) Promoters shall bring funds as per the applicable terms of CDR package.

xi) The lenders shall have the right to recompense the reliefs/sacrifices/waivers extended by respective CDR lenders as per guidelines.

The CDR package has been implemented in all respects with PNB as the monitoring agency for monitoring the implementation of the CDR package.

8. The Company''s significant leasing arrangements are in respect of operating leases for premises (office, stores, godowns, etc.). The leasing arrangements, which are not non-cancellable, range between ten months and three years generally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals Rs.140.20 lakhs (31.03.2012:Rs.118.25 lakhs) payable are charged as rent in to the statement of profit and loss.

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

10. Balances of unsecured loans, receivables, payables and loans and advances are subject to thier confirmation and reconciliations.


Mar 31, 2012

1 Corporate Information

Sujana Metal Products Limited (SMPL) was incorporated on 02 May 1988 under the name of Sujana Steel Re-rolling Industries Private Limited. The name of the Company was changed to Sujana Steels Private Limited on 30 March 1992. The Company was converted into public limited Company on 20 April 1992. The Company further changed its name as Sujana Metal Products Limited w.e.f. 09 November 2001.

The Company was promoted by Sri Y.S.Chowdary, his associates and relatives. The Company was incorporated with an objective to manufacture steel re-rolled products. SMPL is into the business of manufacturing and marketing value added steel products. SMPL is categorized as a secondary steel producer in the industry.

SMPL is currently engaged in the business of manufacture and trading of steel products like Thermo Mechanically Treated (TMT) bars in different sizes, structural steels like MS Angles, MS Squares, MS Beams and MS Channels etc and smart steel of varying shapes and dimensions for the construction & infrastructure sectors.

i) 13,140,489 Equity shares issued as fully paid up to the share holders of erstwhile Sujana Steels Limited on its amalgamation with the Company, for consideration other than cash in the last five years immediately preceding the balance sheet date.

ii) The Company has only one class of shares referred to as equity shares having a par value of Rs.5. Each holder of equity shares is entitled to one vote per share held (other than the shares represented by underlying GDR's which do not carrying a voting right).

In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their share holding.

12,946,000 (31.03.2011:17,331,500) equity shares represent the shares underlying outstanding Global Depository Receipts (GDRs). Each GDR represents 10 underlying equity shares.

iii) Redemption of Cumulative Redeemable Preference Shares (CRPS)

1,493,365 1% Cumulative Redeemable Preference Shares of Rs.100 each aggregating to Rs.1,493.37 lakhs is redeemable in 12 quarterly installments co-terminus with principal payment commencing from 01 October 2013 and ending 01 July 2016. CRPS carry cumulative dividend @1% per annum. The Company declares and pays dividend in Indian rupees. In the event of liquidation, the preference shareholders are eligible to receive the outstanding amount after distibution of all other preferential amouts, in proportion to their shareholding.

Notes:

i) Term loan from banks viz. Punjab National Bank, Bank of India, Indian Overseas Bank, IDBI Bank and Andhra Bank are secured by first charge on all the immovable and movable fixed assets of the company both present and future and second charge on the current assets of the company. Further these loans are secured by personal guarantees and properties of certain directors.

ii) Terms of repayments are given below:

a. Loan taken from Punjab National Bank carries an interest rate of 17% p.a and is repayable in 21 quarterly installments of Rs.472.17 lakhs each.

b. Loan taken from Bank of India carries an interest rate of 15% p.a and is repayable in 21 quarterly installments of Rs.304.17 lakhs each.

c. Loan taken from Indian Overseas Bank carries an interest rate of 15% p.a and is repayable in 21 quarterly installments of Rs.181.38 lakhs each.

d. Loan taken from Andhra Bank carries an interest rate of 16.5% p.a and is repayable in 21 quarterly installments of Rs.278.83 lakhs each.

e. Loan taken from IDBI Bank carries an interest rate of 13.75% and is repayable in 18 quarterly installments of Rs.135.32 lakhs each.

iii) Term loan from financial institution viz. Stressed Assets Stabilization Fund (SASF) secured by first charge on all the immovable and movable fixed assets of the company and second charge on the current assets of the company. As per SASF letter dated 02 December 2010, Rs.3,051 lakhs is to be paid in cash of which an amount of Rs.600 lakhs was paid against the crystallized cash portion of the settlement amount and balance amount shall be payable in five equal monthly installments from the date of issue of letter of approval (LOA) which is 02 December 2010 and the balance restructured term loan of Rs.4,655 lakhs is to be converted into equity shares of Company as per SEBI Guidelines and 9% p.a interest shall be payable till date of conversion.

iv) Vehicle loans from banks and others are secured by hypothecation of the vehicles financed through the loan arrangements and are repayable over a period of 3 months to 35 months.

i) Loans repayable on demand include an amount of Rs. 55,026.14 lakhs (31.03.2011:Rs.45,436.16 lakhs) represent working capital loans from banks are inter alia secured by way of parri passu first charge on current assets and parri passu second charge on fixed assets both present and future. Further, these loans are secured by personal guarantee and properties of certain directors.

ii) Loans repayable on demand also include an amount of Rs.600 lakhs taken from Punjab National Bank which is secured by pledge of fixed deposit amounting to Rs.696 lakhs.

iii) Unsecured loans from others in the previous period include certain trade payables to the extent of Rs.9,780.42 lakhs, have been converted into unsecured loans after obtaining the consent from the payees. These unsecured loans are repayable within a period of one and half year and carries an interest at the rate of 6% per annum.

Note:

Balances with banks include deposits amounting to Rs. Nil (31.03.2011: Rs.696 lakhs) and margin monies amounting to Rs.1,449.50 lakhs (31.03.2011: Rs.1,317.54 lakhs) which have an original maturity of more than 12 months.

2 Employee Benefits

Defined contribution plans:

The Company makes Provident Fund contribution to defined contribution plans for qualifying employees. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.61.22 lakhs (31.03.2011: Rs.79.59 lakhs) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plan by the Company are at rates specified in the rules of the scheme.

Defined benefit plans:

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Compensated absences

Liability for retiring gratuity as on 31 March 2012 is Rs.230.25 lakhs (31.03.2011: Rs.192.75 lakhs ) of which Rs.15.67 lakhs (31.03.2011: Nil) is funded with the Life Insurance Corporation of India. The balance of Rs.214.58 lakhs (31.03.2011: Rs.192.75 lakhs) is included in Provision for Gratuity.

The Liability for Gratuity and Cost of Compensated absences has been actuarially determined and provided for in the books.

Details of the company's post-retirement gratuity plans for its employees including whole time directors are given below, which is certified by the actuary and relied upon by the auditors.

Note: In accordance with the payment of Gratuity Act, 1972 the company provides for gratuity covering eligible employees.

The liability on account of gratuity is covered partially through a recognized Gratuity Fund managed by Life Insurance Corporation of India (LIC) and balance is provided on the basis of valuation of the liability by an independent actuary as at the year end. The management understands that LIC's overall portfolio of assets is well diversified and as such, the long term return on the policy is expected to be higher than the rate of return on Central Government bonds.

i) Discount Rate

The discount rate is based on the prevailing market yield on Indian Government Securities as at the balance sheet date for the estimated term of the obligations.

ii) Expected Rate of Return on Plan Assets:

This is based on our expectation of the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

iii) Salary Escalation Rate

The estimates of future salary increase considered taking into account the inflation, seniority, promotion and other relevant factors

3 Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily manufacture and trading of steel and steel products. Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are India and Others.

4 Contingent liabilities and commitments (to the extent not provided for) Rupees in lakhs

As at As at

Particulars 31 March 2012 31 March 2011

a) Contingent liabilities

i) Claims against the Company not acknowledged as debts in respect of:

Excise Duty 1,823.36 1,888.95

Custom Duty 523.37 593.59

TNVAT/APGST/CST 1,979.39 4,286.66

Income Tax (Net of liability as per return) 1,037.07 -

FERA [Against which bank guarantee of Rs.215 630.00 630.00

lakhs (31.03.2011: Rs.215 lakhs) has been issued]

ii) Guarantees:

Corporate Guarantees furnished on behalf of 81,410.00 53,100.00 Sujana Universal Industries Ltd Joint corporate guarantee executed by the - 29,022.50

Company along with Sujana Universal Industries Limited (SUIL) and Sujana Towers Limited in favour of Alpha Ventures Limited (wholly owned subsidiary of the Company) and Sujana Holdings Limited, wholly owned subsidiary of SUIL [ USD Nil (31.03.2011: USD 650 lakhs)] Corporate guarantee furnished on behalf of 3,117.97 - Optimix Enterprises Limited [USD 60 lakhs (31.03.2011:USD Nil)]

b) Commitments

i. Estimated amount of contracts remaining to be - 9,059.74 executed on capital account and not provided for on account of tangible assets [net of advances of Rs.5,275.96 lakhs (31.03.2011: 19,682.72 lakhs] ii. Export commitments on account of import of 112.16 112.16 machinery and equipments at concessional duty under EPCG scheme Rs.672.96 lakhs (31.03.2011 : Rs.672.96 lakhs). Such export commitments need to be fulfilled by the Company on or before 23 April 2016. As on 31 March 2012, the Company has fulfilled its export commitments and which are pending final approval of Director General of Foreign Trade. In the event of non-fulfillment of the export commitments by 23 April 2016 by the Company, the liability (excluding interest and penalties) towards customs duty



5 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

Trade payables (Ref: Note No.10 -Trade payables include Rs. Nil (31.03.2011: Rs. Nil) due to micro enterprises and small enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act 2006). The Company has not received any memorandum (as required to be filed by the supplier with the notified authority under the MSMED Act 2006) claiming their status as Micro or Small or Medium Enterprises.

6 Scheme of Amalgamation

A Scheme of Amalgamation of M/s Lakshmi Gayatri Industries Private Limited, M/s Glade Steel Private Limited, M/s Sri Ganga Steel Enterprises Private Limited and M/s Topaz Steel India Limited with the Company with effective from 1 October, 2009 (being Appointed Date) has been approved by the shareholders and secured creditors of the Company in the extra ordinary general meeting held on 28 April 2011. The Company filed its main petition with the Hon'ble High Court of Andhra Pradesh for the sanction of Scheme of Amalgamation under Section 391 and 394 of the Companies Act, 1956 ,which was admitted on 15 July 2011. In view of pending order of High Court of Andhra Pradesh, the scheme has not been given effect in the Audited Financials of the Company for the financial year/period ended 31 March 2012 and 31 March 2011. Further the short-term loans and advances of Rs.774.77 lakhs (31.03.2011:Rs.5,202.50 lakhs) outstanding and receivable from these amalgamating companies as on 31 March 2012 are considered good for recovery by the management.

7 Stressed Assets Stabilization Fund (SASF) has communicated as follows

SASF vide their letter dated 02 December 2010 has confirmed a Negotiated Settlement (NS) for the aggregate balance of the term loans outstanding as on 31 December 2009 (being the cut-off date), to the extent of Rs.7,706.00 lakhs, in respect of: Sujana Steels Limited (since merged with the company), Sri Ganga Enterprises Limited (scheme of amalgamation consisting of its merger with the Company is awaiting High Court approval); Handum Industries Limited and Sarita Steels Limited, whose operating divisions were acquired by the Company under slump sale, on following terms and conditions:

a) Rs.3,051.00 lakhs to be paid in cash, with a down payment and balance in 5 installments;

b) The balance amount of Rs.4,655 lakhs is to be converted into equity shares of Company as per SEBI Guidelines and 9% p.a interest shall be payable till the date of conversion.

Further the Company vide its letter dated 21 March 2012 requested the SASF for modifications in the terms of negotiated settlement conveyed above vide letter dated 02 December 2010. The SASF vide its letter dated 02 April 2012 has agreed to extend the time till 31 March 2013, for conversion of Rs.4,655 lakhs together with interest at 9% p.a, from 01 April 2010, into equity, up to 31 March 2013. SASF also agreed to reschedule the payment of balance cash portion of settlement amount aggregating Rs.2,400 lakhs (subject to reconciliation) as under:

a) Payment of 50 lakh per quarter during the first year commencing from 01 July 2012, payment of Rs.75 lakhs per quarter during the second year commencing from 01 July 2013 and balance amount shall be payable in 12 equal quarterly installments commencing from 01 July 2014.

b) Interest @9% p.a on the settlement shall be payable along with the above installments.

Based on the negotiated settlement, a consolidated interest waiver of Rs.1,300 lakhs has been given by SASF. In view of pending amalgamation as said above, the Company has not accounted the term loan liability relating to amalgamating Company (payable to SASF) and the interest waiver to the extent of Rs.1,300 lakhs in the books during the year. The balance outstanding as at 31 March 2012 has not been confirmed by SASF.

8 The Company's significant leasing arrangements are in respect of operating leases for premises (office, stores, godowns, etc.). The leasing arrangements, which are not non-cancellable, range between ten months and three years generally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals Rs.118.25 lakhs (31.03.2011:Rs.272.38 lakhs) payable are charged as rent to the statement of profit and loss.

9 Acquisition of a Unit of Handum Industries Limited

During the year, the Company acquired an operating unit from Handum Industries Limited on 'slump sale basis'. As part of this acquisition, the Company has taken over the outstanding dues of Rs. 2,168.30 lakhs payable to SASF (Stressed Assets Stabilization Fund), a division of IDBI. SASF had approved of the takeover of this loan and restructured the same to Rs. 1,050 lakhs which is part of the negotiated settlement as explained in note no.41 of the financial statements.

10 The financial statements have been prepared for 12 months i.e. 01 April 2011 to 31 March 2012 and are not strictly comparable with previous period's figures as the same is for 18 months period i.e., from 01 October 2009 to 31 March 2011.

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


Sep 30, 2009

1 Contingent Liabilities not provided for:

a) Letters of Credit/Bills Discounted and Guarantees issued

Particulars As at As at 30.09.2009 30.09.2008

i) Letters of Credit/Bills Discounted INR 413,739,676 INR 1,787,965,481

ii) Counter Guarantees given to Bankers towards:

- Bank Guarantees issued INR 117,827,959 INR 73,889,000

iii) Corporate Guarantees furnished on behalf of

Sujana Universal Industries Ltd INR 1,086,000,000 INR 1,164,440,000

iv) Corporate Guarantees furnished on behalf of

Sujana Universal Industries Ltd. USD 4,916,992 USD 4,916,992

v) Joint Corporate Guarantee executed by the USD 65,000,000 USD 65,000,000 company along with Sujana Universal Industries Ltd (SUIL) and Sujana Towers Limited (STL) in favour of Alpha Ventures Ltd and Sujana Holdings Ltd, which are wholly owned subsidiaries of Sujana Metal Products Limited and Sujana Universal Industries Ltd respectively.

2 Secured and Unsecured Loans a> Secured Loans

i) Term Loans availed from banks and others are secured by way of first charge on the entire assets of the Company, both present and future, subject to the prior charges, created for the borrowing of working capital and further secured by the personal guarantees of certain directors.

ii) Working Capital facilities availed from banks are inter alia secured by way of pari passu first charge on the current assets and pari passu second charge on fixed assets both present and future and secured by the personal guarantees of certain directors of the Company. Further one of the facilities availed from bank is secured by Corporate Guarantee of Sujana Universal Industries Ltd.

iii) Secured loans includes interest accrued and due of Rs. 33,300,988 (30.09.2008 - Rs.14,331,095)

b) Unsecured Loans

i) During the year the Company has obtained Unsecured loans from certain Companies which are repayable within one year to meet Capital & Working Capital requirements. These loans are interest free for a initial period of six^nonths and thereafter carry interest @ BPLR+2%.

ii) Unsecured loans: Due to Director Rs. Nil (30.09.2008 -Rs. Nil)"Maximum due during the year - Rs. Nil (30.09.2008 - Rs.9,275,000) 4 Dues from Directors

a) Sundry Debtors Sundry debtors include:

Receivable from directors - Rs. Nil (30.09.2008 -Rs. 1,632,133)

Maximum outstanding during the year - Rs. 1,632,133 (30.09.2008-Rs. 1,632,133)

b) Loans and Advances Loans and Advances include:

Advances to directors - Rs. 468,825 (30.09.2008- Rs.700,907)

Maximum outstanding during the year - Rs. 1,169,732 (30.09.2008- Rs.700,907)

3 Related Party Transactions

The following are related parties as defined in Accounting Standard 18 notified under The Companies (Accounting Standards) Rules, 2006.

3.1 List of Related Parties Relationship

A). Enterprises Where Control Exists:

Subsidiaries

Name Country of Incorporation

1). Glade Steel Pvt Ltd. India Wholly Owned Subsidiary

2). Alpha Ventures Ltd. Cayman Islands Wholly Owned Subsidiary

3). AsianTlde Enterprises Ltd. Hong Kong Wholly Owned Subsidiary

B). Associate

1). Sujana Power (Gangikondan) Ltd.

2). Sujana Power (Tuticorin) Ltd.

C). Key Management Personnel

1). Mr R.K.Birla Managing Director

2). Mr. S.Hanumantha Rao Executive Director

4 Segment Reporting

The company is primarily engaged in the business of manufacturing and sales of Steel & Steel products and trading of Steel and Steel products. The company has identified two primary business segments, namely manufacting of Steel and Steel products and trading of Steel & Steel products, which in the contest of accounting standard -17 on "Segment Reporting" constitute reportable segments.

5 Employee Benefits

a) Gratuity

Gratuity This is a unfunded defined benefit plan. Scheme Description The Scheme provides for a lump sum benefit, subject to a vesting period of 5 years in case of early separation, based on final salary drawn and years of service.

b) Compensated absences

The accrual for unutilized leave is determined for the entire available leave balance standing to the credit of the employees at year -end. The value of such leave balance eligible for carry forward, is determined by an independent actuarial valuation and charged to profit and loss account in the year determined

6 Additional information pursuant to the provisions of Paragraph 3,4C and 4D of Part II of Schedule VI to the Companies Act. (a) Purchase of finished goods for resale

During the year, the company purchased 361,532 MT(previous period 253,842 MT) of finished Steel Products in order for resale.

7 Sundry creditors (Schedule 11- Current Liabilities) include Rs. nil due to micro enterprises and small enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act 2006). The Company has not received any memorandum (as required to be filed by the supplier with the notified authority under the MSMED Act 2006) claiming their status as Micro or Small or Medium Enterprises.

8 Forfeiture of advance for Share Warrants.

The promoter group had applied for 60,500,000 share warrants which would be converted into equity shares at a price of Rs. 36 each (Rs. 5 per share and Rs.31 premium) as per the DIP Guidelines of SEBI and had paid Rs.938,400,000 which in excess of 10% of the excercised price payable on allotment of warrants. The holder of share warrants did not exercise the option to convert 51,300,000 share warrants in a stipulated period of 18 months. The company is legally advised that the amount paid in excess of 10% issue price, interms of DIP guidelines can be refunded to the warrant holders. Consequently, in accordance with SEBI Guidelines, the amount equivalent to 10% of issue price aggregating to Rs. 184,680,000 has been forfeited and transferred to Capital Reserve, the amount of Rs.61,920,000 has been refunded and the balance amount of Rs.360,600,000 has been treated as unsecured loan as per agreement entered by the Company.

9 Cumulative Redeemable Preference Shares

Cumulative Redeemable Preference Shares consist of:

2,038,260 1% of Cumulative Redeemable Preference Shares of Rs. 1QQ each aggregating to Rs. 203,826,000 would be redeemable in 12 quarterly installments co-terminous with principal payment commencing from July 01, 2015 and ending on April 01, 2018.

1,493,365 1% of Cumulative Redeemable Preference Shares of Rs. 100 each aggregating to Rs. 149,336,500 would be redeemable in 12 quarterly installments co-terminous with principal payment commencing from October 01, 2013 and ending on July 01, 2016.

10 Stressed Assets Stabilization Fund (SASF) has communicated as follows:

a) In terms of letter dated June 25,2008 outstanding term loan of Rs. 187,500,000 is to be converted into equity shares of the company as per SEBI Guidelines with in a period of 4 months.

b) In terms of letter dated December 04, 2008 accrued interest approximately of Rs. 9,300,000 is to be converted into equity shares of the company as per extant SEBI Guidelines before February 28, 2009.

c) In terms of letter dated December 06,2008 accrued interest approximately of Rs. 19,800,000 is to be converted into equity shares of the company at par and all formalities relating to allotment are required to be completed by the company before February 28, 2009.

In veiw of above terms, the company has allotted 12,377,143 equity shares of Rs. 5 each at a premium of Rs. 12.50 per share to SASF on November 19, 2009.

11 Comparatives

The accounts have been prepared for 12 months i.e. October 1, 2008 to September 30, 2009 and are not strictly comparable with previous periods numbers15 months i.e., for the period July 1, 2007 to September 30, 2008.

12 Previous periods figures have been recast/restated wherever necessary.

 
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