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Notes to Accounts of Surana Industries Ltd.

Mar 31, 2015

1 Corporate Information

Surana Industries Limited ("the Company") is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is into the business of manufacturing / trading of iron and steel products.

2 Owing to a number of factors such as non-availability of raw materials, depreciation in rupee, power curtail- ment, high interest burden, labour agitation and delay in time and cost overrun of its projects, the Raichur plant of the Company has not been operated since April 2013 and the water and electricity connection have been severed by the service providers. The Company had approached the lead lender (IDBI Bank) for a Corpo- rate Debt Restructuring ("CDR") Proposal which was approved by the CDR Empowered Group ("CDR EG") on 7th March, 2014 and Letter of Approval issued on 13th March, 2014. The Master Restructuring Agree- ment ("MRA") between the Company, the Monitoring Institution (IDBI Bank) and the CDR lenders was ex- ecuted on 24th March, 2014 effective 1st June, 2013. Subsequent to the CDR, the Company is negotiating with its bankers for release of working capital for re- commencement of its operations at Raichur.

3 As part of the restructuring exercise, the Company has also planned to divest its non core assets and its sub- sidiaries (Surana Power Limited, Surana Green Power Limited, Surana Mines and Mineral Limited) to raise fi- nances. The Company is into advanced negotiations with prospective buyers for divestment of these sub- sidiaries in the year 2015-16.

4 Subsequent to the Balance Sheet date, the Company has planned to shelve its Pelletisation and Benefication ("P&B") Project at Raichur and a separate techno-eco- nomic viability of the operations at Raichur without the above project is being considered by its bankers. The assessment of readiness of the Raichur plant has also been carried out by an external agency who have re- ported that the plant is in working order subject to re- furbishment, mechanical and electrical overhauling.

5 The Raichur Integral Steel Plant was not operational for the entire financial year 2014-15 due to labour dis- putes and paucity of working capital. The Company has been successful in resolving the labour disputes towards the end of the financial year 2014-15 and is also confident of arranging the required level of work- ing capital within first quarter of the financial year 2015- 16. The operations at Raichur is expected to be re- sumed in the financial year 2015-16.

i) There is no movement in equity share capital during the current and previous year.

ii) Rights preference and restrictions attached to the shares The Company has only one class of equity shares having a par value of Rs.10 per share. All these shares have the same rights and preferences with respect to payment of dividend, repayment of capital and voting. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in the 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 to their shareholding.

ii) Security

I. Term Loans (including WCTL and FITL) from banks and financial institution are secured by way of :

a) First charge on all movable and immovable fixed assets of the Company (present and future) on pari passu basis.

b) Second charge on entire current assets of the Company including raw materials, stock in progress, finished goods and receivables on pari-passu basis.

c) Non disposal undertaking from the promoters to the effect that their equity shareholding in the Company remains at least 30% during the currency of the facility.

d) Pledge of 100% of promoter and promoter group holdings in the Company in favour of lending institutions.

e) Personal Guarantee of the promoters

f) Priority loan to have priority share on the Pre Trust & Retention Account ("TRA")/ TRA cash flows of the Company

g) First pari passu charge on the commercial property held in the name of the Company located at Basavangadi, Bangalore on pari passu basis with term loan and working capital lenders in lieu of release of the equitable mortgage of certain agricultural land belonging to the promoters and a wind mill property belonging to the subsidiary company.

The additional security provided to a Financial Institution are as follows:

a) Pledge of 60 Million equity shares of Surana Power Limited, a subsidiary

b) Mortgage of 29.12 acres of agricultural land belonging to a shareholder

c) Corporate Guarantee given by a shareholder

d) Pledge of 16,072,526 number of equity shares of Surana Mines and Minerals Limited, a subsidiary During the year, certain banks have enhanced the working capital limits (both fund based and non fund based) extended to the Company. The Company is yet to create a charge for Rs. 22.07 crores towards the said facility as at the balance sheet date.

a) The repayments as per iii(A) and iii(B) above are to be made in structured quarterly instalments.

b) The above repayment schedules are after considering the moratorium periods allowed under the CDR package, wherever applicable.

iv) The Company is negotiating the interest payable for the pre-CDR dues with a financial institution (IFCI) for which the member banks have allowed time until 30th June, 2015 to resolve the issue and release of additional securities held by the financial institution to the common pool. Pending negotiations, the Company has not paid the interest of Rs.48,700,000, which has fallen due in June 2014.

v) The unsecured loans are repayable after one year and the repayment dates thereafter are under negotiation.

i) Security details:

Working capital loans are secured by way of:

a) First charge on the entire current assets of the Company (present and future) on pari-passu basis.

b) Second charge on all movable and immovable fixed assets of the Company, present and future on pari-passu basis.

c) Pledge of 100% of promoter and promoter group holdings in the Company in favour of lending institutions.

d) Personal Guarantee of the promoters

e) Priority loan to have priority share on the Pre TRA / TRA cash flows of the Company

f) First pari passu charge on the commercial property held in the name of the Company located at Basavangadi, Bangalore on pari passu basis with term loan and working capital lenders in lieu of release of the equitable mortgage of certain agricultural land belonging to the promoters and a wind mill property belonging to the subsidiary company.

6 FIXED ASSETS

Notes:

i) Freehold land represents land at Raichur purchased from Karnataka Industrial Area Development Board for which title is yet to be transferred to the Company.

ii) Represents land at Gummidipoondi taken on lease from SIPCOT for a period of 99 years

iii) Building includes superstructures constructed on land owned by the promoters and on leasehold land

iv) a) Capital work in progress represents the expenditure incurred on Pelletisation and Benefication ("P&B") project at Raichur. Subsequent to the Balance Sheet date, the Company has planned to shelve its P&B Project and a separate techno- economic viability of the operations at Raichur without the above project is being considered by its bankers. Accordingly, the Company is evaluating alternate use of the assets relating to the P&B project and intends capitalizing the said assets upon re-commencement of operations at Raichur. The Management is of the opinion that no impairment is considered necessary for the carrying value of the CWIP.

b) Capital work in progress includes

i. interest capitalized amounting to Rs. 655,436,190 (Previous Year - Rs. 432,049,871), including Rs. 223,386,319 for the year (Previous Year - Rs. 237,966,792)

ii. pre-operative expenditure amounting to Rs. 88,977,915 (Previous Year - Rs. 86,995,865) including Rs. 1,982,051 for the year (Previous Year - Rs. 7,057,944).

This interest and pre-operative expenditure capitalised as mentioned above includes Rs. 407,645,055 and pre-operative expenditure amounting to Rs. 6,835,660 relating to the periods for which the project was stalled. Considering the excep- tional nature of this industry and prolonged project implementation period and is being retained under capital work in progress as per the CDR package.

v) Refer to Note 5 for security and charge on fixed assets

ii) The Company's Board of Directors passed a resolution on 14th February 2015 to dispose the investments in the subsid- iaries namely Surana Mines and Minerals Limited (SMML), Surana Power Limited (SPL) and Surana Green Power Limited (SGPL) due to continuing adverse market scenario which is affecting the Company. Accordingly, the above investments are classified as current investments as at 3134 March, 2015. The Company is into advanced negotiations with prospective buyers and is seeking best alternatives for maximizing the value of the investments. In the opinion of the management, the Company will be able to realize the carrying value of the said investments and hence no adjustments to the carrying values of these investments is considered necessary.

iii) During the year, SPL has alloted 27,500,000 shares of Rs. 10 each to the Company on 19th December 2014 for consid- eration other than cash.

iv) Also refer to Note 5 for the details of shares pledged.

(i) The Company has carry forward losses and unabsorbed depreciation, which give rise to a deferred tax asset. In the absence of virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized, the deferred tax asset that can be recognized is restricted to the deferred tax liability. Accordingly, there is no deferred tax asset or liability as at 31st March 2015 to be recognized.

(ii) The net deferred tax asset arising on account of unabsorbed business loss / depreciation recognised in earlier years amounting to Rs. 25,591,242 has been reversed during the year.

7 Employee Benefit Plans

Defined contribution plans

The Company makes payment to Provident Fund, a defined contribution plan 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.2,163,259 (31 March, 2014: Rs.9,737,849) for Provident Fund contributions in the Statement of Profit and Loss. The contribution payable by the Company are at rates specified in the rules of the scheme.

8 Contingent Liabilities and commitments in respect of which no provision is considered necessary A. Commitments

Estimated Amount of Contracts remaining to be executed and not provided for:

Particulars As at 31st March, As at 31st March, 2015 2014 Rs. Rs.

On Capital Account - Refer Note below - -

As the P&B Project has been shelved there are no further capital commitements (Refer Note 12(iv)).

B Contingent Liabilities

Particulars As at 31st March, As at 31st March, 2015 2014 Rs. Rs.

(a) Claims against the Company not acknowledged as debt (Refer note (i) below)

Central Excise 329,515,493 23,889,948

Customs 2,868,511 26,697,511

Central Sales Tax 69,999,902 15,446,506

VAT 181,929,268 427,289

(b) Corporate Guarantees given to banks / financial institutions 1,466,700,000 1,466,700,000 on behalf of subsidiary companies

Notes:

i) Against the above demands, the Company has paid Rs. 11,453,941 under protest to the various authorities.

ii) In respect of the above demands disputed by the Company, appeals filed are pending before respective appellate authorities. The Company is of the view that there are reasonable chances of successful outcome of the appeals and accordingly no provision is considered necessary.

9 Earning and Expenditures in Foreign Currency

There are no foreign exchange earning or expenditure incurred by the Company during the current and previous financial year.

10 Related party transactions A. Details of related parties:

Description of relationship Names of related parties

(i) Subsidiaries Surana Power Limited

Surana Green Power Limited

Surana Mines and Minerals Limited, Singapore

Uday Energy Pvt Limited

Surana Holdings Pte Limited

(ii) Step Down Subsidiaries PT Borneo Mines and Minerals Limited, Indonesia Surana Green Energy Limited Power India Pte Limited

(iii) Key Managerial Personnel Shri G.R Surana - Chairman Shri Dineshchand Surana

Diluted EPS:

As per the MRA, the CDR lenders shall have a right to convert:

a. Entire / part of WCTL / FITL and / or entire defaulted interest and entire / part of defaulted principal into equity at par in the event of default.

b. Upto 20% of the term debt outstanding beyond seven years as per SEBI guidelines / loan covenants whichever is applicable, into equity

c. The entire WCTL / FITL into equity at any time during the restructuring period.

As at the Balance Sheet date, the conditions that relate to the conversion of the loans into equity do not exist and no shares have been converted during the year

11 Dues to Micro Small and Medium enterprises

There are no dues to enterprises as defined under Micro, Small and Medium enterprises Development Act, 2006, as at 31st March 2015 as well as 31st March 2014, which is on the basis of such parties having been identified by the management and relied upon by the auditors.

Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was deter- mined to be nil as on April 1,2014, and has adjusted an amount of Rs.64,465,025 against the opening Surplus balance in the Statement of Profit and Loss under Reserves and Surplus.

The depreciation expense in the Statement of Profit and Loss for the year is higher Rs.9,094,588 consequent to the change in the useful life of the assets.

12 Segment Reporting

The Company is engaged in a single business segment i.e. dealing with iron and steel products primarily in one geographical segment. Accordingly, there are no separate reportable segments as per the Accounting Standard 17 on Segment reporting.

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


Mar 31, 2013

1. SEGMENT REPORTING:

The company is p rincipally engaged in single business segment Viz., Iron and Steel Products and o perates in one geographical segment as per Accounting Standard 17 on Segment Reporting. Accordingly no seg ment reporting has been made by the company.

2. RELATED PARTY DISCLOSURE:

As Per Accounting Standard -18 issued by the Institute of Chartered Accountants of India, the disclosures of transaction s with related parties as defned in the Accounting Standard are given below:-

a. Subsidiaries, step down subsidiaries, associates and joint ventures : Subsiidiaries :

Surana Power Limited

Surana Green Power Limited

Surana Mines and Minerals Limited, Singapore

Uday Energy Pvt. Ltd

Surana Holdings Pte Ltd

Step down Subsidiaries:

PT Borneo Mines and Minerals Limited, Indonesia Sura n a G reen Energy Limited

b. key Managerial Persons

Shri. G.R. S u rana Chairman

S hri. Dineshchand Surana Managing Director

Shri. V.M. Swami Whole Time Director

Shri. Krishna Udupa Director Projects

Shri. V.Aranganathan Director - Finance & Accounts

Shri. Rajesh Surana Director - Commercial

S hri. Rajiv Surana Executive Director

3. DISCLOSURE AS PER CLAUSE 32 OF THE LISTING AGREEMENT:

Loans and advances in the nature of loans given by subsidiaries.

Name of the Company : SuranaPowerL imited

Relationship : Subsidiary

Amount outstanding as on 31/03/2013 : Rs.12,77,49,243 Dr balance

Name of the Company : Surana Green Power Limited

Relationship : Subsidiary

Amount outstanding as on 31/03/2013 : Rs.4,58,53,838 Cr balance

Name of the Company : Surana Mines and Minerals Ltd

Relationship : Subsidiary

Amount outstanding as on 31/03/2013 : Rs.2,31,67,500 Dr balance

4. OTHERS

a. Figures in financial statements and notes have been rounded off to nearest rupee. Quantity figures have been rounded off to the nearest metric tonne.

b. Previous year’s figures have been regrouped, recast and re arranged wherever found necessary.

c. Balances of trade receivables / Payable, Advances given / Advance received are subject to confrmation & reconciliation with the parties.

5. The Ministry of Corporate Affairs, Government of India, vide General Circular 2 & 3 dt 8th February 2011 & 21st February 2011 resp, has granted a general exemption from compliance with section 212 of the Companies Act 1956, subject to fullfllment of condition stipulated in the circular. The company has satisfed the necessary condi- tion and is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the consolidated Financial Statements.


Mar 31, 2012

1. SEGMENT REPORTING:

The company is principally engaged in single business segment Viz., Iron and Steel Products and operates in one geographical segment as per Accounting Standard 17 on Segment Reporting. Accordingly no segment reporting has been made by the company.

2. RELATED PARTY DISCLOSURE:

As Per Accounting Standard -18 issued by the Institute of Chartered Accountants of India, the disclosures of transactions with related parties as defined in the Accounting Standard are given below:-

a. Subsidiaries, step down subsidiaries, associates and joint ventures:

Subsidiaries:

Surana Power Limited

Surana Green Power Limited

Surana Mines and Minerals Limited, Singapore

Uday Energy India Pvt. Ltd.

b. Step down Subsidiaries:

1). PT Borneo Mines and Minerals Limited, Indonesia

3. The Company has so far not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year-end together with interest paid / payable under this Act have not been given.

4. As per Accounting Standard (AS-15) "Employee Benefits, the disclosure of employee benefits as defined in the Accounting Standard is given below:

5. Figures in financial statements and notes have been rounded off to nearest rupee. Quantity figures have been rounded off to the nearest metric tons.

6. Previous year's figures have been regrouped, recast and re arranged wherever found necessary.


Mar 31, 2011

A. CONTINGENT LABILITIES NOT PROVIDED FOR:

(Rs. In Lakhs)

No Nature of Contingent Liabilities 2010-11 2009-10

1 Bank Guarantee 202.50 348.90

2 Disputed Excise Duty Liability 1905.87* 210.90

3 Disputed Income Tax Liability 66.50 66.50

4 Customs duty on import 100.00 100.00

5 Export obligation Duty 1989.69** 105.02

6 Customs duty on import of scrap 138.29 138.29

7 Karnataka VAT disputed liabilities Nil 734.00

8 Civil Cases 103.00 103.00

Note:

In case of disputed excise duty liability Rs. 33,48,742 is paid as deposit to the department during the year 2004-05 and Rs. 88,32,710 was paid during the year 2007-08.

In case of disputed income tax liability Rs. 32,31,967 paid during the year 2006-07.

Management Stand:

*Disputed Central Excise duty liability includes a demand of Rs. 11.76 crores raised by the Department of Central Excise reversing the CENVAT credit taken on Steel and cements used for factory shed and fabrication of equipments. The management has preferred an appeal before CESTAT, Bengalore and is expecting favourable order.

** The customs duty is payable if export obligation is not completed on or before 2016 mainly on account of duty saved on import of Capital machineries for our Integrated Steel Plant, Raichur.

b. Secured Loan

(i) Term loan from IDBI towards setting up of steel plant and for modernization project is secured by first charge on Fixed Assets situated at Gummidipoondi and also guaranteed by two directors.

(ii) Term loan obtained from various banks including IDBI Bank Limited for setting up an Integrated Steel Complex at Raichur, Karnataka State is secured by the first charge on fixed assets located at Raichur. Two promoter directors have extended their personal guarantee for the said loan.

(iii) Cash credit facilities from various banks are secured by hypothecation of raw material, stock in process, finished goods, stores and consumables and book debts and also secured by second charge on block of assets. These loans are also guaranteed by two directors.

(iv) Corporate loan received from IFCI is secured by the pledge of equity shares of Surana Industries Limited held by the promoter directors, equity shares of Surana Power Limited held by the company as investment and also by the personal guarantee of two directors.

c. Unsecured Loan

(i) Unsecured loan includes Foreign Currency Convertible Bonds (FCCB) issued for USD 25 Million on 15th June 2007 carrying interest at the rate of 2% pa payable half yearly with an option to convert them into equity shares. As per the terms of the offer the Maturity Date is 20th June 2012. The Bonds are convertible into Equity Shares at any time before the maturity date at the option of the Bondholders. Further as per the terms of the offer if any Bonds are not converted the same will have to be redeemed on maturity at 129.4253% of the principal amount in USD. Pending exercise of conversion by the Bondholders the company has provided the premium upto 31st March 2011.

(ii) Unsecured Loan from others - ICD includes Rs. 20 crores availed from subsidiary company viz Surana Power Limited.

d. Issue of Shares on Preferential Basis

As per the approval of share holders, the company has received the share application money of Rs. 38.13 crores during the year 2009-10 for issuing 7,40,000 equity chares to select group of persons on preferential basis at a price of Rs.500 per equity share (Rs. 10/- paid up and premium of Rs. 490/- per share). The total amount received was repaid during the year, as the allotment was delayed due to open offer procedures and approval from RBI is awaited for such repayment of share application money.

e. Revaluation Reserve

The Company has during the year 2000 - 2001 revalued certain assets and the resultant surplus aggregating to Rs. 18.07 crores was credited to Revaluation Reserve Account. Depreciation on such revalued amount is reduced from the revaluation reserve amount each year. During the year depreciation amounting to Rs.65.89 lacs was reduced from Revaluation Reserve.

During the year 2010-11, the company has revalued the wind mill assets and the resultant surplus of Rs. 9.64 crores was credited to the Revaluation Reserve Account. During the year, the Depreciation amounting to Rs. 0.38 crores on such revalued amount is reduced from the Revaluation Reserve Amount. On sale of windmill, the balance amount of Rs. 9.26 crores lying in the Revaluation Reserve Account is transferred to Capital Reserve Account.

f. Sale of Assets

The Company during the year with the consent of the members under Asset Transfer Agreement dated 1st January 2011 between the Company and M/s Surana Green Power Limited (Subsidiary Company) has transferred the assets relating to Windmill for a total consideration of Rs.70.11 crores. Out of the total consideration due to the company consideration amounting to Rs. 44.90 crores was settled by the subsidiary company by way of allotment of equity shares of Rs.44.90 crores comprising 4,49,00,000 shares of Rs. 10 each at par. The profit on transfer of Power Plant aggregating to Rs.3.73 crores is reflected as an Exceptional Item.

i. ADDITIONAL INFORMATIONS PURSUANT TO PARAS 3, 4C, AND 4D OF PART II OF SCHEDULE VI TO THE COMPANIES ACT 1956. i. Licensed and Installed Capacities:

(As certified by the Management and accepted by the Auditors, being a technical matter)

Name of the Product manufactured : TMT/CTD Bars, MS Rounds, Structurals, Sponge iron, MS Billets

Licensed Capacity : Not Applicable

j. SEGMENT REPORTING:

The company is principally engaged in single business segment Viz., Iron and Steel Products and operates in one geographical segment as per Accounting Standard 17 on Segment Reporting. Accordingly no segment reporting has been made by the company.

k. RELATED PARTY DISCLOSURE:

As Per Accounting Standard -18 issued by the Institute of Chartered Accountants of India, the disclosures of transactions with related parties as defined in the Accounting Standard are given below:-

Subsidiaries, step down subsidiaries, associates and joint ventures: Subsidiaries:

Surana Power Limited

Surana Green Power Limited

Surana Mines and Minerals Limited, Singapore

Step down Subsidiaries:

PT Borneo Mines and Minerals Limited, Indonesia

Key Managerial Persons

Shri. G.R. Surana Chairman

Shri. Dineshchand Surana Managing Director

Shri. V.M. Swami Wholetime Director

Shri. Krishna Uduppa Director Projects

Shri. Rajesh Surana Director - Commercial

Shri. Mahaveer Surana Executive Director

Shri. Rajiv Surana Executive Director

Shri. Deepak Surana Executive Director

n. In the opinion of the Board, Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known liabilities has been made.

o. The Company has so far not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year-end together with interest paid / payable under this Act have not been given.

q. Disclosure as per Clause 32 of the Listing Agreement:

Loans and advances in the nature of loans given to subsidiaries.

Name of the Company : Surana Power Limited

Relationship : Subsidiary

Amount outstanding as on 31/03/2011 : Rs.10,45,76,827 Cr balance in current account.

Amount outstanding as on 31/03/2011 : Rs.20,00,00,000 Cr balance in loan account.

Name of the Company : Surana Green Power Limited

Relationship : Subsidiary

Amount outstanding as on 31/03/2011 : Rs.2,19,02,799 Dr balance

Name of the Company : Surana Mines and Minerals Limited

Relationship : Subsidiary

Amount outstanding as on 31/03/2011 : Rs.11,89,158 Dr balance

s. Figures in financial statements and notes have been rounded off to nearest rupee. Quantity figures have been rounded off to the nearest metric tonne.

t. Previous years figures have been regrouped, recast and re arranged wherever found necessary.


Mar 31, 2010

(Rs. In Lakhs) CONTINGENT LIABILITIES NOT PROVIDED FOR: 2009-2010 2008-2009 1 Bank Guarantee 348.90 376.59 2 Disputed Excise Duty Liability 210.90 210.90 3 Disputed Income Tax Liability 66.50 66.50 4 Customs duty on import 100.00 100.00 5 Customs Duty on export obligation 105.02 105.02 6 Customs duty on import of scrap 138.29 138.29 7 Karnataka VAT disputed liabilities 734.00 - 8 Civil Cases 103.00 103.00

Note:

In case of disputed excise duty liability, Rs. 33,48,742 is paid as deposit to the department during the year 2004-05.

In case of disputed excise duty liability, the company has paid Rs. 88,32,710 during the year 2007-08. In case of disputed income tax liability Rs. 32,31,967 was paid during the year 2006-07.

b. Secured Loan

(i) Term loan from IDBI towards setting up of steel plant and for modernization project is secured by first charge on Fixed Assets situated at Gummidipoondi and also guaranteed by two directors.

(ii) Term loan from various banks towards setting up windmill is secured by first charge on the fixed assets pertaining to windmill and also guaranteed by two directors.

(iii) Term loan obtained from various banks for setting up an Integrated Steel Complex at Raichur, Karnataka State is secured by the first charge on fixed assets located at Raichur. Two directors have extended their personal guarantee for the said loan.

(iv) Cash credit facilities from various banks are secured by hypothecation of raw material, stock in process, finished goods, stores and consumables and book debts and also secured by second charge on block of assets. These loans are also guaranteed by two directors.

c. Unsecured Loan

(i) Unsecured loan represents Foreign Currency Convertible Bonds (FCCB) issued for USD 25 Million on 15th June 2007 carrying interest at the rate of 2% pa payable half yearly with an option to convert them into equity shares. As per the terms of the offer, the Maturity Date is 20th June 2012. The Bonds are convertible into Equity Shares at any time before the maturity date at the option of the Bondholders. Further as per the terms of the offer, if any Bonds are not converted, the same will have to be redeemed on maturity at 129.4253% of the principal amount in USD. Pending exercise of conversion by the Bondholders, the company has provided the premium upto 31st March 2010.

(ii) Corporate loan received from IFCI is secured by the pledge of equity shares of Surana Industries Limited held by the promoter, directors and also by the personal guarantee of two directors.

d. Equity Share Warrants

In terms of the approval of the shareholders of the Company and as per the applicable statutory provisions including Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000, the Company, on 29th August 2008 had issued and allotted 70,00,000 warrants on preferential basis to Promoters entitling them to apply for equivalent number of fully paid up equity shares of Rs. 10/- each of the Company, at a price of Rs.300/- per equity share on the following terms and conditions.

An amount equivalent to 10% of the exercise price arising out of the share warrants shall be payable on or before the date of allotment of share warrants which will be kept by the Company as a deposit to be adjusted and appropriated against the price of the equity shares payable by the share warrant holder at the time of exercising the option. The warrants shall be compulsorily convertible into equity shares of the Company on or before 18 months from the date of allotment of the share warrants. The warrants proposed to be allotted shall be subject to a lock-in to be determined in accordance with the provisions of the SEBI guidelines.

The holder of the warrants have to pay the balance amount of 90% of the Issue price for conversion of the share warrants into equity shares of the Company on or before expiry of 18 Months from the date of allotment of the warrants.

If the option of conversion is not exercised by the allottee of warrants on or before 18 months from the date of allotment, the total amount paid by such allottee shall be forfeited.

The Company during the year on receipt of balance 90% of the consideration has converted the warrants into 70,00,000 equity shares on 28th February 2010.

e. Issue of Shares on Preferential Basis

As per the approval of share holders, the company has during the year issued 7,40,000 equity shares to select group of persons on preferential basis at a price of Rs.500 per equity share (Rs. 10 paid up and premium of Rs. 490 per share). The total amount received aggregating to Rs.38.13 crores is yet to be allotted in account of open offer. Pending allotment of shares the amount received is reflected under Share Application Money.

f. Revaluation Reserve

The Company has during the year 2000 - 2001 revalued certain assets and the resultant surplus aggregating to Rs.18.07 crores was credited to Revaluation Reserve Account. Depreciation on such revalued amount is reduced from the revaluation reserve amount each year. During the year, depreciation amounting to Rs.65.89 lacs was reduced from Revaluation Reserve.

g. Sale of Assets

The Company during the year with the consent of the members under Asset Transfer Agreement dated 13lh November 2009 between the Company and M/s Surana Power Limited (Subsidiary Company) has transferred the assets relating to 35MW Power Plant for a total consideration of Rs.236.52 crores. Out of the total consideration due to the company, consideration amounting to Rs. 67.77 crores was settled by the subsidiary company by way of allotment of equity shares of Rs.67.77 crores comprising 6,77,00,000 shares of Rs. 10 each at par. The profit on transfer of Power Plant aggregating to Rs.38.71 crores is reflected as an Exceptional Item. Further the company during the year sold leasehold rights in respect of 149.50 acres of land to M/s Surana Power Limited (Subsidiary Company) for a consideration of Rs.15 lacs per acre. The profit on sale of such leasehold rights aggregating to Rs. 16.82 crores is reflected as an exceptional item.

j. ADDITIONAL INFORMATIONS PURSUANT TO PARAS 3, 4C, AND 4D OF PART II OF SCHEDULE VI TO THE

COMPANIES ACT 1956. /. Licensed and Installed Capacities:

(As certified by the Management and accepted by the Auditors, being a technical matter)

Name of the Product manufactured

: TMT/CTD Bars, MS Rounds, Structurals, Sponge iron, MS Billets

Licensed Capacity : Not Applicable

k. SEGMENT REPORTING:

The company is principally engaged in single business segment Viz., Iron and Steel Products and operates in one geographical segment as per Accounting Standard 17 on Segment Reporting. Accordingly, no segment reporting has been made by the company.

I. RELATED PARTY DISCLOSURE:

As Per Accounting Standard -18 issued by the Institute of Chartered Accountants of India, the disclosures of transactions with related parties as defined in the Accounting Standard are given below:-

Subsidiaries, step down subsidiaries, associates and joint ventures: Subsidiaries:

Surana Power Limited Surana Green Power Limited

Step down Subsidiaries:

Surana Mines and Minerals Limited, Singapore

Associates and Joint Ventures:

PTAgate Resources, Indonesia

Key Managerial Persons Shri. G.R. Surana Chairman Shri. Dineshchand Surana Managing Director Shri. V.M. Swami Director Finance Shri. Krishna Uduppa Director Projects Shri. M. Ramasubramanian Director operations (Ceased on 14/05/2009) Shri. Rajesh Surana Executive Director Shri. Mahaveer Surana President Finance Shri. Rajiv Surana Sr. Vice President - Project Shri. Deepak Surana Sr. Vice President - Marketing

o. In the opinion of the Board, Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known liabilities has been made.

p. The Company has so far not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year-end together with interest paid / payable under this Act have not been given.

r. Disclosure as per Clause 32 of the Listing Agreement:

Loans and advances in the nature of loans given to subsidiaries. Name of the Company : Surana Power Limited

Relationship : Subsidiary

Amount outstanding as on 31/03/2010 : Rs.8,61,83,185 Dr balance

Name of the Company : Surana Green Power Limited

Relationship : Subsidiary

Amount outstanding as on 31/03/2010 : Rs. 15,53,750 Dr balance

t. Figures in financial statements and notes have been rounded off to nearest rupee. Quantity figures have been rounded off to the nearest metric tonne.

u. Previous years figures have been regrouped, recast and re arranged wherever found necessary.

 
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