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Notes to Accounts of Sunflag Iron & Steel Company Ltd.

Mar 31, 2015

1. Corporate information

Sunflag Iron and Steel Company Limited was incorporated in 1984 and engaged in the business of manufacturing and sale of Special Steel Rolled products.

a) Terms / Voting Rights attached to the Equity Shares

The paid up capital of the Company consists of only equity shares of Rs. 10/- each. Every equity shareholder is entitled to one vote per share.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion of the number of the Equity shares held by the Shareholders.

ii) Pursuant to resolution passed in Extra-ordinary Gerneral Meeting held on 5th August 2014, 10% Cummulative preference shares, have been reclassified into equity shares. Accordingly the Equity Share capital now stands at 2,050 Lacs shares of Rs. 10/- each.

iii) During the year the company issued 18,021,945 equity shares of Rs.10/- each fully paid at a premium to non-promoter investor by way preferencial allotment.

i) Term Loans from Banks are secured by a first mortgage of all the Company's immovable properties, situated at village Warthi, District Bhandara, both present and future ranking pari passu interse and a first charge by way of hypothecation of all the Company's movables subject to prior charges created in favour of Company's bankers on inventories, book debts and other movables for securing the borrowings for working capital requirement.

ii) Term loan of Rs. 40 Crores (outstanding Rs. 25 Crores) borrowed from State Bank of India and State Bank of Bikaner & Jaipur are further secured by Personal Guarantee of Shri Ravi Bhushan Bhardwaj, Vice Chairman & Managing Director.

iii) The Company has not defaulted in either repayment of principle or interest during the year.

@ The Unsecured loans comprising interest free loans given by Promotors. There is no stipulation as to the repayment hence there is no default in repayment during the period.

i) Working Capital Borrowings are secured by way of hypothecation of inventories and book debts and further secured by way of second charge ranking pari passu over the fixed assets situated at village Warthi, Dist. Bhadara, both present and future, subject to prior charges created by the Company in favour of banks for securing term loans. Working capital borrowings are further secured by the personal guarantee of Shri Ravi Bhushan Bhardwaj, Vice Chairman & Managing Director of the Company.

ii) The Company has not defaulted in either repayment of principle or interest during the year.

Pursuant to the Supreme Court Order dated 24th September, 2014, the Coal Block allocated to the company with other JV partners in the names of Khappa Coal Company Private Limited, Madanpur (North) Coal Company Private Limited, and CT Mining Private Limited, stands cancelled. Subsequent to the cancellation of previous allocation, the Government of India, Ministry of Law and Justice (Legislative Department) has promulgated "The Coal Mines (Special Provisions) Act, 2015" for implementing the order of Supreme Court and fixation of compensation etc to the prior allottees. But the process of re-allotment and crystallization of compensation amount in respect of the Company's mine, is pending at Nominated Authority, Ministry of Coal, Goverment of India. In view of aforesaid, the Company has not recognized any amount towards diminution in the value of the investments made in the JV companies.

For the year ended 31.03.2015 31.03.2014 (Rs. in Lacs)

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

i) Contingent liabilities

a) Unexpired Letter of Credit 4,549 6,102

b) Guarantees issued by Company's Bankers on behalf of the Company 8,204 3,275

c) Bonds / Undertakings given by the Company under Duty Exemption 2,598 2,598 Scheme to the Custom Authorities

d) Bills Discounted 6,935 7,170

e) Excise Duty & Custom Duty against which Company has preferred 65 65 an Appeal

f) Income Tax Liability - Disputed but paid 1,325 1,538

g) Corporate Guarantee issued to Banks on behalf of Subsidiaries 400 400

ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for :

_ Tangible Assets 497 882

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

Based on the data available with the Company, there were no dues to Micro, Small and Medium Enterprises as on 31st March 2015 due for a period of more than 45 days, accordingly, no interest was paid / is payable in terms of the said Act during the year under review.

2.3 Segment information

The Company's business activity primarily falls within a single business segment i.e., Iron & Steel business, however, the Company also generate power from its Captive Plant, which is entirely consumed in Iron & Steel Manufacturing Unit and no sale to third party has been made. The details of such consumed units are shown below. Hence there are no additional disclosures to be made under Accounting Standard (AS) 17, other than those already provided in the financial statements.

2.4 Employee benefit plans

In view of the mandatory applicability of the revised Accounting Standard on Employee Benefits (AS 15 Revised) to the Company, effective 1st January 2007, the additional charges are paid and charged to the statement of Profit & Loss according to the provisions of AS-15 (Revised) as under :

- Employees Provident Fund, the company has made good the shortfall of interest on fund Rs.Nil' (previous year Rs. 9.00 Lacs)

a) The investment details of Gratuity funds are as per the Scheme of Life Insurance Corporation of India (LIC).

b) The investment details of Superannuation funds are as per the Scheme of Life Insurance Corporation of India (LIC) under two plans. Eventhough these plans are still continuing, Company has stopped making contribution towards One plan i.e., Superannuation Scheme of Workers w.e.f. 01.04.1995 on payment of bonus in the year 1995 as per the terms and conditions of Rules framed at the time of subscribing to the designated policy of LIC. Company was liable as per terms and conditions of the Trust deed to pay contributions only till applicability of provisions of payment of Bonus Act.

3. Previous year figures have been rearranged or regrouped wherever necessary to conform to current year's classification. The line items which are either not applicable or were NIL for both the years are omitted in presentation.


Mar 31, 2014

1. Corporate information

Sunflag Iron and Steel Company Limited was incorporated in 1984 and engaged in the business of manufacturing and sale of Special Steel Rolled products.

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

(Rs.in Lacs)

For the year Ended Particulars 31.03.2014 31.03.2013

i. Contingent liabilities

a) Unexpired Letter of Credit 6,102 10,801

b) Guarantees issued by Company''s Bankers on behalf of the Company 3,275 2,692

c) Bonds / Undertakings given by the Company under Duty Exemption Scheme 2,598 2,598 to the Custom Authorities

d) Bills Discounted 7,170 6,400

e) Excise Duty & Custom Duty against which Company has preferred an Appeal 65 100

f) Income Tax Liability - Disputed but paid 1,538 1,074

g) Income Tax Liability - Disputed but not paid - 739

h) Corporate Guarantee issued to Banks on behalf of Subsidiaries 400 400

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

Based on the data available with the Company, there were no dues to Micro, Small and Medium Enterprises as on 31st March 2014 due for a period of more than 45 days, accordingly, no interest was paid /is payable in terms of the said Act during the year under review.

2.2 Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

Loans and advances in the nature of loans given to subsidiaries, associates and others and investment in shares of the Company by such Companies.

2.3 Segment information

The Company''s business activity primarily falls within a single business segment i.e., Iron & Steel business, however, the Company also generate power from its Captive Plant, which is entirely consumed in Iron & Steel Manufacturing Unit and no sale to third party has been made. The details of such consumed units are shown below. Hence there are no additional disclosures to be made under Accounting Standard (AS) 17, other than those already provided in the financial statements.

2.4 Employee benefit plans

In view of the mandatory applicability of the revised Accounting Standard on Employee Benefits (AS 15 Revised) to the Company, effective 1st January 2007, the additional charges are paid and charged to the statement of Profit & Loss according to the provisions of AS-15 (Revised) as under :

- Employees Provident Fund, the company has made good the shortfall of interest on fund Rs. 9.00 lacs (previous yearRs. Nil)

3. During the year, the Company has received letters from Ministry of Coal, Government of India for de-allocation of coal blocks allotted to the Company along with other Joint Venture partners as below :

i) Khappa & Khappa Extension coal block in the state of Maharashtra. The Company has filed a writ petition with Nagpur Bench of Bombay High Court, praying for setting aside the said de-allocation. On such petition the Bombay High Court has passed interim orders restraining the Central Government from taking coercive steps till further orders.

ii) Choritand Taliya coking coal block in the state of Jharkhand. The Company appealed to High Court of Jharkhand at Ranchi, and received an interim order, directing the Minstry of Coal, Government of India, not to take any coercive steps against the Company till further order.

iii) Madanpur (North) Coal Block in the State of Chhattisgarh, allocated to the Company with seven other allocatees. The allocatees have incorporated a JVC viz. Madanpur (North) Coal Company Private Limited. The JVC has filed a petition in the Delhi High Court against the de-allocation of the Coal Block. The Honorable Delhi High Court issued an interim order directing the Ministry of Coal, Government of India to maintain status-quo till further order by the court.

Since the matter is now sub-judice before the respective Hon''ble High Courts, the Company has neither provided for any contingencies nor recognised any amount towards diminution in the value of the investments made in the Subsidiary / JVCs and accordingly, the financial statements have been prepared on going concern basis.

5. Previous years figures have been rearranged or regrouped wherever necessary to conform to current year''s classification. The line items which are either not applicable or were NIL for both the years are omitted in presentation.


Mar 31, 2013

1. Corporate information

Sunflag Iron and Steel Company Limited was incorporated in 1984 and engaged in the business of manufacturing and sale of Special Steel Rolled products.

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

(Rs.in Lacs)

For the year Ended Particulars 31.03.2013 31.03.2012

i. Contingent liabilities

a) Unexpired Letter of Credit 10,801 6,740

b) Guarantees issued by Company''s Bankers on behalf of the Company 2,692 2,666

c) Bonds / Undertakings given by the Company under Duty Exemption Scheme 2,598 2,782 to the Custom Authorities

d) Bills Discounted 6,400 3,367

e) Excise Duty & Custom Duty against which Company has preferred an Appeal 100 100

f) Income Tax Liability - Disputed but paid 1,074 1,324

g) Income Tax Liability - Disputed but not paid 739 -

h) Corporate Guarantee issued to Banks on behalf of Subsidiaries 400 400

ii. Commitments

Estimated amount of contracts remaining to be executed on capital account 507 3,765 and not provided for :-

Tangible Assets

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

Based on the data available with the Company, there were no dues to Micro, Small and Medium Enterprises as on 31st March 2013 due for a period of more than 45 days, accordingly, no interest was paid /is payable in terms of the said Act during the year under review.

2.3 Segment information

The Company''s business activity primarily falls within a single business segment i.e., Iron & Steel business, however, the Company also generate power from its Captive Plant, which is entirely consumed in Iron & Steel Manufacturing Unit and no sale to third party has been made. The details of such consumed units are shown below. Hence there are no additional disclosures to be made under Accounting Standard (AS) 17, other than those already provided in the financial statements.

3. Previous years figures have been rearranged or regrouped wherever necessary to conform to current year''s classification. The amounts have been reclassified as per Revised Schedule VI and line items which are either not applicable or were NIL for both the years are omitted in presentation.


Mar 31, 2012

1. Corporate information

Sunflag Iron and Steel Company Limited was incorporated in 1984 and engaged in the business of manufacturing and sale of Special Steel Rolled products.

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

(Rs. in Lacs)

For the year Ended

Particulars 31.03.2012 31.03.2011

i. Contingent liabilities

a) Unexpired Letter of Credit 6,740 5,034

b) Guarantees issued by Company's Bankers on behalf of the Company 2,666 1,800

c) Bonds / Under Takings given by the Company under Duty Exemption Scheme 2,782 3,408 to the Custom Authorities

d) Bills Discounted 3,367 2,935

e) Excise Duty & Custom Duty against which Company has preferred an Appeal 100 103

f) Sales Tax Liability against which Company has preferred an Appeal - -

g) Income Tax Liability even though paid against which Company has preferred 1,324 364 an Appeal

h) Corporate Guarantee issued to Banks on behalf of Subsidiaries 400 400

ii. Commitments

Estimated amount of contracts remaining to be executed on capital account 3,765 11,913 and not provided for :- Tangible Assets

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

Based on the data available with the Company, there were no dues to Micro, Small and Medium Enterprises as on 31st March 2012 due for a period of more than 45 days, accordingly, no interest was paid / is payable in terms of the said Act during the year under review.

2.3 Segment information

The Company's business activity primarily falls within a single business segment i.e., Iron & Steel business, however, the Company also generate power from its Captive Plant, which is entirely consumed in Iron & Steel Manufacturing Unit and no sale to third party has been made. The details of such consumed units are shown below. Hence there are no additional disclosures to be made under Accounting Standard (AS) 17, other than those already provided in the financial statements.

2.4 Employee benefit plans

In view of the mandatory applicability of the revised Accounting Standard on Employee Benefits (AS 15 Revised) to the Company, effective 1st January 2007 the additional charges are paid and charged to statement of Profit and Loss according to the provisions of AS 15 (Revised) as under :

- Employee Provident Fund, the Company has made good the shortfall of interest on fund Rs. Nil (Previous Year Rs. 0.51 lacs)

3. Previous years figures have been rearranged or regrouped wherever necessary to conform to current year's classification. The amounts have been reclassified as per Revised Schedule VI and line items which are either not applicable or are NIL for both the years are omitted in presentation.


Mar 31, 2011

1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for are Rs. 11,913 Lacs (Previous year Rs. 9,756 Lacs).

2. Contingent Liabilities not provided for:

Rs. in Lacs

Sr. Particulars As at As at No. 31.03.2011 31.03.2010

i. Unexpired Letters of Credit 5,034 10,850

ii. Guarantees issued by Company's Bankers on behalf of the Company 1,800 1,161

iii. Bonds / Undertakings given by the Company under Duty Exemption 3,408 36 Scheme to Customs Authorities

iv. Bills Discounted 2,935 3,994

v. Excise Duty & Customs Duty against which Company has preferred 103 400 an appeal

vi. Sales Tax liability against which Company has preferred an appeal Nil 2,803

vii. Corporate Guarantee issued to Banks on behalf of Subsidiaries 400 400

viii.Income Tax Liability even though paid against which Company has 364 Nil preferred an appeal

3. PAYMENTS DUE TO SMALL AND MEDIUM ENTERPRISES (SME)

The Company is in the process of compiling information from its suppliers in respect of their registration under the Micro, Small and Medium Enterprises Development Act, 2006. However, based on the information available with the company, there were no dues to Micro, Small and Medium Enterprises as on 31st March 2011 due for a period of more than 45 days. Further, no interest during the year under review was paid / is payable in terms of the said Act.

4. The Company has Rs. 71 Lacs (Previous year Rs. 75 Lacs) of Export benefits under Scheme of DEPB in hand pending utilisation or sale.

5. RELATED PARTY DISCLOSURE : (as identified by the Management)

Related Party Relationship

Sunflag Power Limited Sunflag Special Steels Limited Subsidiary Companies Khappa Coal Company Private Limited

Haryana Television Limited Associate Enterprise Sunflag Limited, Channel Islands, Enterprise which have UK significant influence

Mr. P. B. Bhardwaj Mr. Ravi Bhardwaj Mr. Pranav Bhardwaj Key Managerial Personnel (KMP) Mr. Surendra Kumar Gupta

Ridge Farm Developers Private Relative to Key Managerial Limited Personnel

Madanpur (North) Coal Company Private Limited C T Mining Private Limited Joint Venture Companies Gujarat State Mining & Resources Corporation Limited

6. SEGMENT INFORMATION

The Company's business activity primarily falls within a single business segment i.e., Iron & Steel business, however, the Company also generate power from its Captive Plant, which is entirely consumed in Iron & Steel Manufacturing Unit and no sale to third party has been made. The details of such consumed units are shown below. Hence there are no additional disclosures to be made under Accounting Standard (AS) 17, other than those already provided in the financial statements.

7. DISCLOSURE OF EMPLOYEE BENEFIT AS PER ACCOUNTING STANDARD 15 (REVISED)

In view of the mandatory applicability of the revised Accounting Standard on Employee Benefits (AS 15 Revised) to the Company effective 1st January 2007, the additional charges are paid and charged to Profit and Loss Account according to the provisions of AS 15 (Revised) as under :

- Employee Provident Fund, the Company has made good the shortfall of interest on fund Rs. 51 Lacs (Previous year Rs. 6 Lacs)

a. The investment details of Gratuity funds are as per the Scheme of Life Insurance Corporation of India (LIC).

b. The investment details of Superannuation funds are as per the Scheme of Life Insurance Corporation of India (LIC) under two plans. Even though these plans are still continuing, Company has stopped making contribution towards One plan i.e., Superannuation Scheme of Workers w.e.f. 01.04.1995 on payment of bonus in the year 1995 as per the terms and conditions of Rules framed at the time of subscribing to the designated policy of LIC. Company was liable as per terms and conditions of the Trust deed to pay contributions only till applicability of provisions of payment of Bonus Act.

8. Previous year's figures have been regrouped / re-classified wherever necessary to make them more comparable.


Mar 31, 2010

1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for are Rs. 975,601,430 (Previous year Rs. 441,270,445).

2. Interest free deferred Sales Tax liability has been accounted for at its actual value i.e. Rs. 1,307,478,592 (Previous year Rs. 1,201,211,258) (Refer point no. 12-Part A). Accordingly an additional amount of Rs. 95,032,499 is charged to Profit and Loss Account.

3. The Company has revised the estimated useful life of Plant & Machinery and related building (as stated in Point no. 2 - Part A of Accounting Policy). The depreciation charged to the Profit and Loss account based on the revised estimated useful life of these assets is Rs. 3,788.35 Lacs. In view of this change an additional amount of Rs. 61,528,729 is charged to Profit and Loss Account.

4. Contingent Liabilities not provided for:

(Rs. In 000)

Sr. As at As at

Particulars No. 31.03.2010 31.03.2009

i. Unexpired Letters of Credit 1,084,962 263,013

ii. Guarantees issued by Companys Bankers on behalf of the Company 116,126 151,505

iii. Bonds/Undertakings given by the Company under Duty Exemption 3,622 3,622 Scheme to Customs Authorities

iv. Bills Discounted 399,355 203,950

v. Excise Duty & Customs Duty against which Company has preferred 39,963 38,134 perferred an appeal

vi. Sales Tax liability against which Company has preferred an appeal 280,336 1,959

vii. Corporate Guarantee issued to Banks on behalf of Subsidiaries 40,000 -

5. PAYMENTS DUE TO SMALL AND MEDIUM ENTERPRISES (SME)

The Company is in the process of compiling information from its suppliers in respect of their registration under the Micro, Small and Medium Enterprises Development Act, 2006. However, based on the information available with the company, there were no dues to Micro, Small and Medium Enterprises as on 31st March 2010 due for a period of more than 45 days. Further, no interest during the year under review was paid / is payable in terms of the said Act.

6. The Company has Rs. 7,548,103 (Previous year Rs. Nil) of Export benefits under Scheme of DEPB in hand pending utilisation or sale.

7. DISCLOSURE OF EMPLOYEE BENEFIT AS PER ACCOUNTING STANDARD 15 (REVISED)

In view of the mandatory applicability of the revised Accounting Standard on Employee Benefits (AS 15 Revised) to the Company effective 1st January 2007, the additional charges are paid and charged to Profit and Loss Account according to the provisions of AS 15 (Revised) as under :

- Employee Provident Fund, the Company has made good the shortfall of interest on fund Rs. 644,034. (Previous year Rs. 791,574)

Significant Accounting Policies and Notes forming part of the Accounts for the year ended 31st March 2010

a. The investment details of Gratuity funds are as per the Scheme of Life Insurance Corporation of India (LIC).

b. The investment details of Superannuation funds are as per the Scheme of Life Insurance Corporation of India (LIC) under two plans. Even though these plans are still continuing, Company has stopped making contribution towards One plan i.e., Superannuation Scheme of Workers w.e.f. 01.04.1995 on payment of bonus in the year 1995 as per the terms and conditions of Rules framed at the time of subscribing to the designated policy of LIC. Company was liable as per terms and conditions of the Trust deed to pay contributions only till applicability of provisions of payment of Bonus Act.

8. SUBSIDIARY

Coal Block at Khappa in the State of Maharashtra has been allotted to Joint Venture Company, viz. M/s. Khappa Coal Company Private Limited. The Joint Venture partners are Sunflag Iron and Steel Company Limited and Dalmia Cement (Bharat) Limited where Sunflag Iron and Steel Company Limited is holding a share of 63.27%.

9. Pervious years figures have been regrouped / re-classified wherever necessary to make them more comparable.

 
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