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Notes to Accounts of Steel Exchange India Ltd.

Mar 31, 2015

1. Nature of business:

Steel Exchange India Limited was incorporated on 24th February 1999. The activities of the company are manufacture of steel products, trading of related products and generation and sale of Power.

The Company is a Public Limited Company incorporated and domiciled in India and has its registered office at Hyderabad, Telangana, India. The company has its listing on the BSE Limited.

2. Rights, Preferences and restrictions attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs.10 per share. Each Shareholder is eligible for one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

3. EQUITY SHARE CAPITAL SUSPENSE

59,82,720 Equity Shares are pending for allotment to shareholders of GSAL (India) Limited as per the Draft Rehabilitation Scheme (DRS) approved by the Hon'ble Board of Industrial and Financial Reconstruction and (BIFR) vide order dated 06th August' 2012 and 1,80,52,092 Equity Shares are pending for allotment to shareholders of Simhadri Power Limited consequent to the approval of amalgamation of Simhadri Power Limited with Steel Exchange India Limited effective from 1.4.2013 by the Honourable High Court of Judicature at Hyderabad for the state of Telagana and for the state of Andhra Pradesh.

4. 10.5% NON CONVERTIBLE REDEEMABLE PREFERENCE SHARE CAPITAL SUSPENSE

1,86,08,750 10.5% Non Convertible Redeemable Preference Share Capital pending for allotment to shareholders of Simhadri Power Limited consequent to the approval of amalgamation of Simhadri Power Limited with Steel Exchange India Limited effective from 1.4.2013 by the Honourable High Court of Judicature at Hyderabad for the state of Telagana and for the state of Andhra Pradesh.

5. In the opinion of the management, the Current Assets, Loans and Advances are expected to realise at least the amount at which they are stated, if realised in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

6. Contingent liabilities and commitments to the extent not provided for

Amount Rs. Amount Rs. Contingent Liabilities 31st March 31st March 2015 2014

a. Claim against the company by GAIL 1,84,07,569 1,84,07,569 not acknowledged as debt

b. Claim of APEDCL not acknowledged 9,48,98,100 9,48,98,100 as debt

c. Demands from Sales tax department 1,55,50,782 1.48,28,125 disputed

d. Demands from Excise departments 4,84,45,419 4,99,75,117 disputed

e. Others 2,73,89,984 2,02,40,093

f. Letters of credit and bank 1,30,00,000 1,30,00,000 guarantees

g. Corporate Guarantee given to - 288,00,00,000 the Term Loan and Working Capital lenders of M/s Simhadri Power Ltd

Contingent liabilities represents show cause notices received or pending for final consideration and the Company has already submitted its objections in writing against the demands.

7. The details of related party transactions in terms of Accounting Standard (AS 18) are as follows:

Names of Related Parties And Description of Relationship:

A Associate Concerns

1) VPL Projects Private Limited

2) Vizag Profile Constructions India Private Limited

3) Vizag Profiles Private Limited

4) Umashiv Garments Private Limited

5) World Future League Private Limited

6) Simhadri Wires Private Limited

7) Simhadri Pellets India limited

8) Satyatej Vyaapar Private Limited

9) VPL Integral CFS Private Limited.

B Key Management Personnel

1) B. Satish Kumar- Chairman and Managing Director

2) B. Suresh Kumar - Joint Managing Director

3) B. Suresh - Director 4) B. Ramesh Kumar - Joint Managing Director

C Relatives of Key Management Personnel

1) B. Rajesh - Vice President Finance

2) B. Mohit Sai Kumar - Manager Marketing

8. The Financial Statements of current period include Financial Statements of SIMHADRI POWER LIMITED, the merger of which has been approved by the Honourable High Court of Judicature at Hyderabad for the state of Telangana and for the state of Andhra Pradesh vide order dated 18th November'2014. The merger has been approved with effect from 01-04-2013 and the effect has been incorporated during the current financial year. As such the financial statements of 2014-15 are not comparable with that of previous year figures.

9. The balance shown in Sundry Debtors, Sundry Creditors, advances are subject to confirmation from the respective parties.

10. Director Remuneration: Rs. 2,28,41,983 (Previous Year Rs. 1,26,98,110)

11. Previous year figures have been regrouped / re arranged / re-classified wherever considered necessary to conform to the classification of the current year.


Mar 31, 2014

1. Steel Exchange India Limited was incorporated on 24th February 1999. The activities of the company are manufacture of steel products, trading of related products and generation and sale of power.

2. Rights, Preferences and restrictions attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each Shareholder is eligible for one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

3. EQUITY SHARE CAPITAL SUSPENSE

59,82,720 Equity Shares are pending for allotment to sharholders of GSAL (INDIA) Limited as per the Draft rehabilitation Scheme (DRS) approved by the Hon''ble Board of Industrial and Finanacial Reconstruction and (BIFR) vide order dated 06th August'' 2012.

Nature of Security

Secured Corporate Term Loans availed from Banks are secured by exclusive first charge on specific fixed asset of the company and in other cases on first pari passsu charge on the remaining fixed assets of the company ( excluding the fixed assets secured in favour of Term Loan lenders) and second pari passu charge on the current assets of the company and personal guarantee of promoter directors of the company.

Secured Term Loans from consortium of banks lead by State Bank of India, Commercial Br., Visakhapatnam are secured by first charge on lease hold rights on the factory land, and assets created out of the funds raised plant and machinery, spares, tools and accessories both present and future and personal guarantee of promoter directors of the company.

* Disclosures : The company has no information as to weather any of its vendors constitute as supplier with in the meaning of section 2(n) of the Micro, Small and Medium Enterprises Development Act, 2006 as no declaration were received under the said act from them.

Trade Payables includes an amount of Rs. 10,14,10,306 (Previous Year Rs. 7,63,00,997) due to companies in which Directors are interested.

# There are no amount due for payment to the Investor Education Protection Fund(IEPF) U/s. 205 C of the companies Act,1956 as on reporting date ** Payble for expenses includes an amount of Rs. 75,346,618(Previous yegx-2.94,933,808) due to Companies in which Directors are interested.

* Disclosures:

The Trade Receivables includes an amount of Rs. 30,13,370 (Previous Year Rs. Nil) due from Companies in which Directors are interested.

Periodically, the Company evaluates all customer dues to the Company for collectibility. The need for provisions is assessed based on various factors including collectibility of specific dues, risk perceptions of the industry in which the customer operates, general economic factors, which could effect the Customer''s ability to settle. The Company normally provides for debtors dues outstanding for six months or longer from the invoice date, as at the Balance Sheet date if any. the Company pursues the recovery of the dues, in part or full.

Disclosures:

Cash and Cash equivalents as of March 31,2014 and March 31,2013 includes restricted cash balances of Rs. 45,56,28,563 and Rs. 33,51,09,206 respectively. The restriction is primarily on account of Cash and Bank balances held as margin money deposits against Letter of Credits sanctioned by banks.

Disclosures:

The Company has made provision for tax in the earlier years on basis of provision U/s. 115JB of the Income Tax Act, 1961. The same is taken into books as it can be adjusted against tax normal tax liability during the specified period. In accordance with the guidance note issued by ICAI, the company will review the same at each balance sheet date and write down the carrying amount of MAT Credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income tax during the speciied period.

5. In the opinion of the management, the Current Assets, Loans and Advances are expected to realise at least the amount at which they are stated, if realised in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

6. Disclosure of Sundry creditors under trade payables has been determined to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the Micro, Small and Medium Enterprises Development Act,2006 and relied upon by the Auditors.

7. Contingent liabilities and commitments to the extent not provided for

Amount (Rs.) Amount (Rs.) i) Contingent Liabilities 31st March 2014 31st March 2013

a. Claim against the company by GAIL not acknowledged as debt 1,84,07,569 1,84,07,569

b. Claim of APEDCL not acknowledged as debt 9,48,98,100 34,50,846

c. Demands from Sales tax department disputed 1.48,28,125 4,82,93,992

d. Demands from Excise departments disputed 4,99,75,117 1,88,75,244

e. Others 2,02,40,093 1,76,33,964

f. Letters of credit and bank guarantees 1,30,00,000 1,56,24,944

g. Corporate Guarantee given to the Term Loan and Working 288,00,00,000 288,00,00,000 Capital lenders of M/s Simhadri Power Ltd

Contingent liabilities represents show cause notices received or pending for final consideration and the Company has already submitted its objections in writing against the demands.

8. Due to change of the accounting year by the company, current period''s figures for 12 months are not comparable with the previous period figures for 9 months.

9. The balance shown in Sundry Debtors, Sundry Creditors, advances are subject to confirmation from the respective parties.

10. Director Remuneration: Rs. 1,26,98,110 (Previous Year Rs. 83,41,628)

11. Previous period figures have been regrouped / re arranged / re-classified wherever considered necessary to conform to the classification of the current year.


Mar 31, 2013

Nature of business:

Steel Exchange India Limited was incorporated on 24th February 1999. The activities of the company are manufacture of steel products, trading of related products and generation and sale of power.

1.1 In the opinion of the management, the Current Assets, Loans and Advances are expected to realise at least the amount at which they are stated, if realised in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

1.2 Disclosure of Sundry creditors under trade payables has been determined to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the Micro, Small and Medium Enterprises Development Act,2006 and relied upon by the Auditors.

1.3 Contingent liabilities and commitments to the extent not provided for

Amount Rs.. Amount Rs.. 31st March 2013 30th June 2012

a. Claim against the company by GAIL not acknowledged as debt 1,84,07,569 1,84,07,569

b. Claim of APEDCL not acknowledged as debt 34,50,846 34,50,846

c. Demands from Sales tax department disputed 4,82,93,992 64,65,925

d. Demands from Excise departments disputed 1,88,75,244 1,58,15,848

e. Others 1,76,33,964 1,72,97,900

f. Letters of credit and bank guarantees 1,56,24,944 62,00,000

g. In the event of non payment of dues of PARAS as per DRS, amounts claimable against the company as per the debts of IDBI and ICICI of GSAL (India) limited assigned in favour of PARAS along with interest there on as per the assignment Deed. Amount not ascertained. Contingent liabilities represents show cause notices received or pending for final consideration and the Company has already submitted its objections in writing against the demands.

1.4 The details of related party transactions in terms of Accounting Standard (AS 18) are as follows: Names of Related Parties And Description of Relationship:

A Associate Concerns

1) VPL Projects Private Limited 2) Vizag Profile Constructions India Private Limited

3) Vizag Profiles Private Limited 4) Umashiv Garments Private Limited

5) World Future League Private Limited 6) Simhadri Power Limited

7) Simhadri Wires Private Limited 8) Simhadri Pellets India limited

9) Satyatej Vyaapar Private Limited 10) Simhadri Infrastructure Developers Private Limited

B Key Management Personnel

1) B. Satish Kumar- Chairman cum Managing Director

2) B. Suresh Kumar - Jt. Managing Director

3) B. Suresh - Director

C Relatives of Key Management Personnel

1) B. Rajesh - Vice President (Finance)

1.5 Due to change of the accounting year by the company, current period''s figures being for 9 months are not comparable with the previous period figures of 15 months.

1.6 Directors Remuneration: Rs..86,41,628 (Previous Period : Rs..92,46,022) And Perquisites

1.7 In the opinion of the Board of Directors the Current Assets, Loans & Advances are approximately of the value stated in the accounts, if realized in the ordinary course of business.

1.8 The balance shown in Sundry Debtors, Sundry Creditors, advances are subject to confirmation from the respective parties


Jun 30, 2012

Nature of business:

Steel Exchange India Limited was incorporated on 24th February 1999. The activities of the company are manufacturing of steel products and trading of steel and steel related products.

Rights, Preferences and restrictions attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each Shareholder is eligible for one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

* The Authorised equity share capital of the company was increased by Rs.60,00,00,000 on amalgamation of GSAL (India) Limited as per the Draft Rehabilitation Scheme (DRS) approved by the Hon'ble Board of Industrial and Financial Reconstruction and (BIFR) vide order dated 06th August' 2012.

$ The Authorised preference share capital of the company was increased by Rs.73,00,00,000 on amalgamation of GSAL (India) Limited as per the Draft Rehabilitation Scheme (DRS) approved by the Hon'ble Board of Industrial and Financial Reconstruction and (BIFR) vide order dated 06th August' 2012.

# 40,00,000 Equity shares of face value of Rs. 10 per share were allotted on 08.04.2011 to Umashiv Garments Private Limited on preferential basis on conversion of warrants at a price of Rs.38 per share.

@ 51,00,000 Equity shares of face value of Rs. 10 per share were allotted on 02.04.2012 to Umashiv Garments Private Limited on preferential basis on conversion of warrants at a price of Rs.45 per share.

5,50,400 10.25% Redeemable Preference Shares Rs.10 /- each were redeemed during the accounting period.

Details of terms of repayment for long-term borrowings and security provided in respect there of:

Nature of Security

Secured Corporate Term Loans are secured by first pari passsu charge on all stocks, book debts and other current assets of the company along with other working capital lendors under consortium, second charge on company's fixed assets both present and future on pari passu basis, and personal guarantee of promotar directors of the company.

Secured Term Loans from consortium of banks lead by State Bank of India, Commercial Br., Visakhapatnam are secured by first charge on lease hold rights on the factory land, and assets created out of the funds raised plant and machinery, spares, tools and accessories both present and future and personal guarantee of promotar directors of the company.

Term Loan from Pridhvi Asset Reconstruction and Securitisation Company Limited (PARAS) was secured by first charge on fixed assets of Sponge iron division.

1.1. In the opinion of the management, the Current Assets, Loans and Advances are expected to realise at least the amount at which they are stated, if realised in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

1.2 Disclosure of Sundry creditors under trade payables has been determined to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 and relied upon by the Auditors.

1.3 Contingent liabilities to the extent not provided for

15 Months Ended Year Ended 30.06.2012 31.03.2011 Amount Rs. Amount Rs.

a. Claim against the company by GAIL not acknowledged as debt 1,84,07,569 -

b. Claim of APEDCL not acknowledged as debt 34,50,846 -

c. Demands from Sales tax department disputed 64,65,925 50,71,067

d. Demands from Excise departments disputed 1,58,15,848 54,35,648

e. Others 1,72,97,900 -

f. Letters of credit 62,00,000 -

g. In the event of non payment of dues of PARAS as per DRS, amounts claimable against the company as per the debts of IDBI and ICICI of GSAL (India) limited assigned in favour of PARAS along with interest there on as per the assignment Deed amount not ascertained.

h. Corporate Guarantee given to the term Loan lenders of M/s Simhadri Power Ltd 230,00,00,000 -

Contingent liabilities represents show cause notices received or pending for final consideration and the Company has already submitted its objections in writing against the demands.

1.4 The financial Statements of 2011-12 include the financial statements of GSAL (India) Limited the merger of which has been approved by BIFR vide its order dated 6th August 2012.

The merger has been approved w.e.f 1.4.2010 and the effect has been incorporated during the financial period of 2011-12. As such the statements of 2011-12 are not comparable with that of previous year figures.

1.5 The financial statements for the period ended 31st March, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification under the Companies Act, 1956, the financial statements for the period ended 30th June, 2012 are prepared under revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this period's classification.

1.6 Due to change of the accounting year by the company, current period's figures being for 15 months are not comparable with the previous year figures of 12 months.

1.7 Directors Remuneration and Perquisites : Rs.92,46,022 (Previous Year: Rs.72,61,998)

1.8 In the opinion of the Board of Directors the Current Assets, Loans & Advances are approximately of the value stated in the accounts, if realized in the ordinary course of business.

1.9 The balance shown in Sundry Debtors, Sundry Creditors, advances are subject to confirmation from the respective parties.


Mar 31, 2011

1. During the year the company has allotted 35,50,000 Equity shares of Rs.10/- each at a premium of Rs.27/- per share resulting in increase in paid up equity share capital of the company.

2. During the year the company allotted 40,00,000 convertible share warrants of Rs. 10/- each at a premium of Rs. 28/- per share warrant and issued 51,00,000 share warrants of Rs. 10 each at a premium of Rs. 35/- per share warrant.

3. SECURED LOANS:

The term loans, Corporate Loans and working capital loans availed are secured by mortgage / hypothecation of all fixed assets both present and future including land, building, plant and machinery, other equipments, stocks and book debts and personal guarantees of the Directors, B. Suresh Kumar, V.V. Krishna Rao, B. Suresh and B. Satish Kumar in their personal capacities.

4. During the year, the company has subscribed to 1,66,87,066 Equity shares of Rs.10 each fully paid of M/s. Simbadri Power Limited, a company promoted by the company as a special purpose vehicle (SPV) to setup the 60MW power plant at GSAL premises. The same has been reflected under Investments.

5. DEFERRED REVENUE EXPENDITURE

a. During the financial year 2009-2010, the company incurred an expenditure of Rs.1,40,00,000 towards brand promotion of Simhadri TMT by way of sponsorship of the sports event (Afro Asia T20 cup) conducted by World Future League Private limited. The same has been shown under deferred revenue expenditure to be written off over a period of five years.

b. During the year the company incurred an expenditure of Rs.1,92,50,000 towards processing fee and professional charges for availing Corporate term loans from State Bank of India and State bank of Hyderabad. The same has been shown under deferred revenue expenditure to be written off over a period of five years.

6. During the year the company incurred expenditure of Rs. 30,30,000 towards increase in authorised capital. The same has been shown under deferred revenue expenditure to be written off over a period of five years.

7. The details of related party transactions in terms of Accounting Standard (AS 18) are as follows:

a. Names Of Related Parties And Description of Relationship:

i. Associate Concerns 1. VPL Projects Pvt. Ltd

2. Vizag Profile Constructions India Pvt. Ltd.

3. Vizag Profiles Pvt. Ltd

4. Umashiv Garments Pvt Ltd

5. World Future League Pvt Ltd.

6. Simhadri Power Ltd

ii. Key Management Personnel 1. B. Satish Kumar-Managing Director

2. B. Suresh Kumar-Jt. Managing Director

3. B. Suresh - Director (Finance)

i i i. Relatives of key Management Personnel

1. B. Ramesh Kumar

2. B. Rajesh

8. Employee benefits as per AS-15 (Revised): Gratuity

As per the accounting policy on retirement benefits(AS-15) the Gratuity liability is provided for the employees covering upto Rs. 10,00,000 ( Previous year Rs. 3,50,000) as per actuarial valuation.

9. Contingent Liability not provided for:

a. Demand by Sales Tax Authority for the FY 2002-03 amounting to Rs. 22,43,895/-(previous year 22,43,895) towards CST is pending in appeal. A sum of Rs. 2,80,487/- was deposited and is included in Loans and Advances.

b. Demand by Central Excise and Customs Authorities towards customs duty amount refunded in respect of exports amounting to Rs.54,35,648. The Company has filed an appeal with the Hon'ble High Court against the demand.

c. A case has been filed against the Company by Rashtriya Ispat Nigam Limited (RINL) for infringement of Trade Mark and the final orders were passed by the trail Court at Vishakapatnam not granting any damages to RINL. However the Company appealed before the Hon'ble High Court of Andhra Pradesh and a cross appeal was also filed by RINL. The Hon'ble High Court of Andhra Pradesh had suspended the orders of the trail Court and aggrieved by the same, RINL preferred a special leave petition before the Hon'ble Supreme Court of India and the SLP was dismissed by the Hon'ble Supreme Court of India.

d. Demand by Sales Tax Authority for the F.Y 2004-05 amounting to Rs.28,27,172/- (previous year Rs. 28,27,172/-) pending in appeal. A sum of Rs. 3,53,397/- has been paid under protest during the year 2008-09 and is included in Loans and Advances.

e. Letters of credit for purchases ~ Nil (previous year Rs. nil lakhs)

f. The company has given guarantee of Rs.25.00 crores to Pridhvi Asset Reconstruction and Securitisation Company Limited

10. Previous year figures have been regrouped/or rearranged wherever necessary. Amounts have been rounded off to nearest rupee.

11. The balance shown in Sundry Debtors, Sundry Creditors, advances are subject to confirmation from the respective parties.

12. In the opinion of the management, the Current Assets, Loans and Advances are expected to realise at least the amount at which they are stated in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.


Mar 31, 2010

1. During the Year the company has allotted 34,89,090 shares of Rs. 10/- each at a premium of Rs. 19/- per share against the convertible share warrants issued in the previous year resulting in increase in paid up equity share capital of the company. Further the company has allotted 29,00,000 shares of Rs. 10/ each fully paid up at a premium of Rs. 25/ per share resulting in increase in paid up equity share capital of the company.

2. DEFERRED TAX:

The company has adopted Accounting Standard -22 "Accounting for Taxes on Income "issued by the Institute of Chartered Accountants of India, mandatory with effect from accounting period commencing from 1 st April 2002. During the year Rs.5,04,50,845/- arising deferred tax liability has been shown in the current years Profit & Loss Account

3. SECURED LOANS:

The term loans (including those availed during the year) and working capital loans availed from State Bank of India, Overseas branch, State Bank of Travancore, State Bank of Bikaner & Jaipur, State Bank of Mysore, The Lakshmi Vilas Bank Gajuwaka Branch, Visakhapatnam, Bank of India Suryabagh Branch Visakhapatnam, State Bank of Hyderabad Steel Plant Branch Visakhapatnam, IDBI Bank Ltd Visakhapatnam, Karur Vysya Bank Ltd, Dabagarden Branch, Visakhapatnam and Working Capital term Loan and corporate Loan from State Bank of Hyderabad Steel Plant Branch are secured by mortgage / hypothecation of all fixed assets both present and future including land, building, plant and machinery, other equipments, stocks and book debts and personal guarantees of the Directors, B. Suresh Kumar, V.V. Krishna Rao, B. Suresh and B. Satish Kumar in their personal capacities.

4. DEFERRED REVENUE EXPENDITURE

During the year the company incurred an expenditure of Rs.1,40,00,000 towards brand promotion of Simhadri TMT by way of sponsorship of the sports event (Afro Asia T20 cup) conducted by World Future League Private limited. The same has been booked under deferred revenue expenditure to be written off over a period of five years.

5. NAMES OF RELATED PARTIES AND DESCRIPTION OF RELATIONSHIP:

i. Associate Concerns 1. VPL Projects Pvt. Ltd

2. Vizag Profile Constructions India Pvt. Ltd.

3. Vizag Profiles Ltd

4. Uma Shiv Garments Pvt Ltd

5. World Future League Pvt Ltd.

6. Vizag Steel Profiles (Hyd) Pvt Ltd

7. Simhadri Power Pvt Ltd

8. Gulmohar Advisors Pvt Ltd

9. Maa Gayatri Lohh Products Ltd 10.Brahma Chemicals Ltd

ii. Key Management Personnel 1. B. Satish Kumar- Chairman & Managing Director

2. B. Suresh Kumar-Jt. Managing Director

3. B. Suresh - Director (Finance)

6. Sundry Debtors includes Rs.79.15 lakhs (previous year Rs. 84.65 lakhs), the recovery of which is doubtful. However the management is of the opinion that no provision is required during the year as the Company is pursuing the matter and the amount may be recovered.

7. GRATUITY

As per the accounting policy on retirement benefits(AS-15) the Gratuity liability is provided for the employees covering upto Rs.3,50,000 (Previous year Rs. 3,50,000) amounts to Rs.9,75,962 (previous Year Rs 9,38,564) As per the accounting policy on retirement benefits(AS-15) the Gratuity liability is provided for the employees covering upto Rs.3,50,000 (Previous year Rs.3,50,000) based on the actuarial valuation to the extent of total accrued Gratuity amounts to Rs.41,74,681 (previous Year Rs.31,98,719)

8. Contingent Liability not provided for:

a. Claims from Sales Tax Authorities contested by the company for the F.Ys 1999-2000 and 2000-01 amounting to Rs.115,32,692/-(previousyear Rs. 11,532,692/-)

b. Demand by Sales Tax Authority for the F.Y 2001-02 amounting to Rs.28,48,015/-(previous year Rs. 28,48,015/-) pending in appeal. A sum of Rs. 14,24,007/- has been paid under protest during the year 2005-06 and is included in Loans and Advances.

c. Demand by Sales Tax Authority for the F.Y 2002-03 amounting to Rs. 22,43,895/-(previous year 22,43,895) towards CST is pending in appeal. A sum of Rs. 2,80,487/- was deposited towards admit charges and is included in Loans and Advances.

d. Demand by Central Excise and Customs Authorities towards customs duty amount refunded in respect of exports amounting to Rs.54,35,648. The Company has filed an appeal with the Honorable High Court against the demand.

e. A case has been filed against the Company by Rashtriya Ispat Nigam Limited (RINL) for infringement of Trade Mark and the final orders were passed by the trail Court at Vishakapatnam not granting any damages to RINL. However the Company appealed before the Honble High Court of Andhra Pradesh and a cross appeal was also filed by RINL. The Honble High Court of Andhra Pradesh had suspended the orders of the trail Court and aggrieved by the same, RINL preferred an appeal before the Honble Supreme Court of India and no orders are passed in favour of RINL and the case is pending for adjudication.

f. Demand by Sales Tax Authority for the F.Y 2004-05 amounting to Rs.28,27,172/- (previous year Rs. 28,27,172/-) pending in appeal. A sum of Rs. 3,53,397/- has been paid under protest during the year 2008-09 and is included in Loans and Advances.

g. Letters of credit for purchases - Nil (previous year Rs. nil lakhs)

h. Export obligation under EPCG Scheme amounting to USD 36,00,964.40 to be fulfilled before 2012-13. However the company has fulfilled the Export obligation by making deemed exports to SEZ units.

i. The company has given guarantee of Rs.25.00 Crores to Pridhvi Asset Reconstruction and Securitisation Company Limited, Hyderabad for the debt of GSAL (India) Limited, a BIFR referred company in which the company has invested as a strategic investor cum new promoter for revival.

9. Previous Years figures have been regrouped or re arranged wherever necessary.

10.Debit and credit balances are subject to confirmation

 
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