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Notes to Accounts of Vardhman Special Steels Ltd.

Mar 31, 2015

Note 1. CORPORATE INFORMATION

Vardhman Special Steels Limited is a Public Limited Company incorporated under the provisions of the companies Act, 1956 on 14th May, 2010. The Company is engaged in the Manufacturing of Billet, Steel bars & rods and Bright bars of various categories of special and alloy steels.

Note 2. Leases

The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs. 46.09 Lacs (Previous year Rs. 13.39 lacs).

Note 3. In the opinion of the Board, Current Assets, Loan & Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.

Note 4. Balances of Sundry Debtors and Sundry creditors are subject to reconciliation and confirmation.

Note 5. The Liability in respect of External Commercial Borrowing (ECB) was re-stated as on 31st March, 2015 and foreign exchange loss of Rs. 431.49 Lac (Previous Year Rs.718.05 Lac) has been provided in books of account for the year ended 31st March 2015.

Note 6. Sundry creditors include amount of Rs.Nil owed to Small Scale Industries Undertakings, to the extent such enterprises have been identified, out of which amount outstanding for a period of more than 30 days is Rs. Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.

Note 7. Segment Reporting:

The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS-17) on Segment Reporting issued by The Institute of Chartered Accountants of India.

Note 8. Earnings Per Share :

The calculation of Earnings Per Share (EPS) as disclosed in the Profit & Loss Account has been made in accordance with the requirements of Accounting Standard (AS-20) on Earnings Per Share issued by the Institute of Chartered Accountants of India.

Note 9. No asset qualifies for impairment for the current year according to AS-28 issued by The Institute of Chartered Accountants of India.

Note 10. Figures in brackets indicate deductions. Figures have been rounded off to nearest lacs. Figures for previous year have been recast/regrouped, wherever necessary to make them comparable with current year's figures.

Note 11. Depreciation for the year has been provided on Straight Line Method on the basis of useful lives specified in the Schedule-II of the Companies Act, 2013 as against the amount of depreciation calculated on the basis of rates of depreciation in respect of various assets contained in Schedule XIV to the Companies Act 1956.

In view of this change, carrying amounts of various tangible fixed assets as at 1st April, 2014 after retaining the residual value an amount of Rs. 89.77 lacs has been recognized in the opening balance of retained earning (net of deferred tax) where the useful life of an asset is Nil. In other cases, the carrying amounts as at lst April, 2014 have been depreciated over the revised remaining useful life of the asset as per Schedule II. The depreciation for the

year ended 31st March, 2015 would have been higher by Rs. 154.62 lacs, had the Company continued with the previously prescribed depreciation rates as per Schedule-XIV of Companies Act, 1956.


Mar 31, 2014

Note 1. CORPORATE INFORMATION:

Vardhman Special Steel Limited is a Public Limited Company incorporated under the provisions of the companies Act ,1956 on 14th May, 2010. The Company is engaged in the Manufacturing of Billets, Steel bars & rods and Bright bars of various categories of special and alloys steels.

(a) The Aggregate number of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash in the last five years immediately preceeding the balance sheet date is NIL.

(b) Equity Shares calls unpaid by Directors and Officers of the Company is NIL.

(c) Shares held by holding Company or its ultimate holding Company or subsidiaries or associates of the holding Company or the ultimate holding Company in aggregate.

(d) Details of shareholders holding more than 5% shares of the Company

*The above mentioned ECB is secured by mortgage created or to be created on all the immovable assets of the Company, both present and future and hypothecation of all the movable assets including movable machinery, machinery parts, tools and accessories and other movables both present and future (except book debts), subject to charges created or to be created in favour of the Bankers for securing the working capital limits.

# Refer Note No. 32 on reinstatement of External Commercial Borrowings (ECB).

*Working Capital Borrowings from Consortium Banks are secured by hypothecation of entire present and future tangible current assets of the Company as well as a second charge on the entire present and future fixed assets of the Company.

* Lien Marked in Favour of Deutshe Bank AG against the overdraft facility sanction by it.

$ Non Current Investment having maturity period less than 12 months as on date of Balance Sheet have been shown under the head Current Investment as per the requirement of Guidance Note on the Revised Schedule VI to the Companies Act, 1956 issued by "The Institute of Chartered Accountants of India".

* Lien Marked in Favour of Deutshe Bank AG against the overdraft facility sanction by it.

# Non Current Investment having maturity period less than 12 months as on date of balance sheet have been shown under the head Current Investment as per the requirement of Guidance Note on the Revised Schedule VI to the Company act, 1956 issued by "The Institute of Chartered Accountants of India".

Notes

* Plant & Equipment amounting to 1580.34 lac ( previous year Nil ) and Buildings amounting to 152.96 lac ( previous year Nil ) has been adjusted for the amounts allocated out of Project and Pre-operative Expenses. (Refer Note No. 42)

* Borrowing Cost amounting to 409.00 lac (previous year Nil ) has been capitalised during the year.

* Depreciation for the year includes net depreciation of Rs. Nil (Previous Year Rs. ( - ) 2.89 lac pertaining to earlier years.

ii) Estimated amount of capital contracts remaining to be executed is Rs. 120.13 Lac (previous year Rs. 9560.97 Lac).

iii) Claims against the Company not acknowledged as debts include additional demands in respect of Excise Duty/Service Tax /Sale Tax amounting to Rs. 83.14 Lac (Previous year Rs. 109.81 Lac) in different cases, which have been contested by the Company and various appeals have been filed with the Appellate Authorities. No provision has been made in the books of accounts in respect thereof.

2. Leases

The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs. 13.39 Lacs , (Previous Year Rs. 31.87 lacs).

3. In the opinion of the Board, Current Assets, Loan & Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.

4. Balances of Sundry Debtors and Sundry creditors are subject to reconciliation and confirmation.

5. The Liability in respect of External Commercial Borrowing (ECB) was re-instated as on 31st March, 2014 and foreign exchange loss of Rs. 718.05 lacs has been provided in books of account for the year ended 31st March, 2014. As on 31st March 2013, the Company while following the conservative approach had carried the liability in respect of ECB at a level as determined on 30th June, 2012 and had not provided for notional foreign exchange gains amounting Rs. 219.91 lacs arising due to appreciation of rupee as on 31st March, 2013.

6. Sundry creditors include amount of Rs. Nil owed to Small Scale Industries Undertakings, to the extent such enterprises have been identified, out of which amount outstanding for a period of more than 30 days is Rs. Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.

a) During the year, the Company has recognized an expense of Rs. 89.39 Lacs (Previous year Rs. 82.01 lac) in respect of Contribution to Provident Fund and Rs. 5.30 Lacs (Previous Year Rs. 5.66 lac ) in respect of Contribution to superannuation Scheme.

7. Segment Reporting:

The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS )-17 on Segment Reporting issued by The Institute of Chartered Accountants of India.

8. Earnings Per Share :

The calculation of Earnings Per Share (EPS) as disclosed in the Statement of Profit & Loss has been made in accordance with the requirements of Accounting Standard(AS)-20 on Earnings Per Share issued by the Institute of Chartered Accountants of India.

9. Deferred Tax:

Accounting entries for deferred tax have been passed in accordance with the provisions of Accounting Standard (AS)-22 on ''Accounting for Taxes on Income'' issued by the Institute of Chartered Accountants of India.

* The Company has incurred losses in the current year. Accordingly, in the absence of virtual certainty of releasability of deferred tax assets, the deferred tax assets have been recognized only to the extent of deferred tax liability.

10. No asset qualifies for impairment for the current year according to AS-28 issued by The Institute of Chartered Accountants of India .

11. Figures in brackets indicate deductions.

12. Figures have been rounded off to nearest lacs . Figures for previous year have been recast/regrouped, wherever necessary to make them comparable with current year''s figures.

*Interest on ECB Includes Rs. 256.71 Lac (Previous Year Rs. 144.58 lacs) being capitalised, and Travelling Outside India Includes Rs. 2.28 Lac (Previous Year Rs. Nil) being Capitalised"


Mar 31, 2013

1. CORPORATE INFORMATION:

Vardhman Special Steel Limited is a Public Limited Company incorporated under the provisions of the Companies Act ,1956 on 14th May, 2010. The Company is engaged in the Manufacturing of Billet, Steel bars & rods and Bright bars of various categories of special and alloys steels.

2. Leases

The Company has leased facilities under cancellable operating lease arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs. 31.87 lac (Previous Year Rs. 16.95 lac).

3. In the opinion of the Board, Current Assets, Loan & Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.

4. Balances of Sundry Debtors and Sundry creditors are subject to reconciliation and confirmation.

5. The Liability in respect of External Commercial Borrowing (ECB) was restated as on 30th June, 2012 for determining quarterly results. As on 31st March, 2013, the Company, while following the conservative approach, has decided to carry the liability in respect of ECB at a level as determined on 30th June, 2012 and has not provided for notional foreign exchange gains amounting to Rs. 220 lac (Previous Year Rs. 370 lac) arising on restatement of ECB as at 31st March, 2013. This has resulted in under-statement of profit to that extent for the financial year 2012-13.

6. Sundry creditors include amount of Rs. Nil owed to Small Scale Industries Undertakings, to the extent such enterprises have been identified, out of which amount outstanding for a period of more than 30 days is Rs. Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.

7. Segment Reporting:

The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS)-17 on Segment Reporting issued by The Institute of Chartered Accountants of India.

8. Related Party Disclosure:

Details of transactions entered into with related parties during the year as required by Accounting Standard (AS) - 18 on "Related Party Disclosures" issued by The Institute of Chartered Accountants of India are as under :

9. Earnings Per Share :

The calculation of Earnings Per Share (EPS) as disclosed in the Statement of Profit & Loss has been made in accordance with the requirements of Accounting Standard (AS)-20 on Earnings Per Share issued by the Institute of Chartered Accountants of India.

10. Deferred Tax:

Accounting entries for deferred tax have been passed in accordance with the provisions of Accounting Standard (AS)-22 on ''Accounting for Taxes on Income'' issued by the Institute of Chartered Accountants of India.

11. No asset qualifies for impairment for the current year according to AS-28 issued by The Institute of Chartered Accountants of India

12. Figures in brackets indicate deductions.

13. Figures have been rounded off to nearest lakhs. Figures for previous period have been recast/regrouped, wherever necessary to make them comparable with current year''s figures.


Mar 31, 2012

1. CORPORATE INFORMATION:

Vardhman Special Steels Limited is a Public Limited Company incorporated under the provisions of the Companies Act, 1956 on 14th May, 2010. The Company is engaged in manufacturing of Billets, Steel bars & rods and Bright bars of various categories of Special and Alloys steels.

Note: The Steel Business undertaking namely 'Vardhman Special Steels' was a unit of M/s.Vardhman Textiles Limited (VTXL) till 31.12.2010, and consequent to the Order of the Hon'ble High court of Punjab and Haryana dated 12.01.2011, said undertaking was demerged from Vardhman Textiles Ltd. and got vested in the Company from the appointed date i.e. 01.01.2011. As a result, accounting treatment was given to assets and liabilities of the said undertaking based on the scheme of Arrangement and Demerger approved by the Hon'ble High Court. In consideration of the assets, liabilities and reserves being vested in Vardman Special Steel Limited (VSSL), VSSL issued 1,27,30,376 equity shares of Rs. 10/- each credited as fully paid-up to the shareholders of VTXL in proportion of 1 share of VSSL for every 5 shares of Vardhman Textiles Limited (VTXL) held by Shareholders during the year.

Disclosures as required under the Micro, Small and Medium Enterprises Development Act, 2006 ("the Act") based on the information available with the Company are given below: -

There are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.

2. Notes to Financial Statements

i). There are contingent liabilities in respect of:

As at 31st March, 2012 As at 31st March, 2011

a) Bank Guarantees and Letters of Credit outstanding 7,615.74 820.48

b) Other contingent liabilities 203.14 123.72

ii). Estimated amount of capital contracts remaining to be executed is Rs. 10,150.91 Lac (previous period Rs. 93.23 Lac).

iii). The Steel Business undertaking namely 'Vardhman Special Steels' was a unit of Vardhman Textiles Limited (VTXL) till 31.12.2010, and consequent to the Order of the Hon'ble High court of Punjab and Haryana dated 12.01.2011, said undertaking was demerged from Vardhman Textiles Ltd. and got vested in the Company from the Appointed Date i.e. 01.01.2011. As a result, accounting treatment was given to assets and liabilities of the said undertaking based on the Scheme of Arrangement and Demerger approved by the Hon'ble High Court. In consideration of the assets, liabilities and reserves being vested in VSSL, VSSL issued 1,27,30,376 equity shares of Rs. 10/- each credited as fully paid-up to the shareholders of VTXL in proportion of 1 share of VSSL for every 5 shares of VTXL held by Shareholders during the year.

iv). The Company has contested the additional demand in respect of Excise Duty/Service Tax /Sale Tax amounting to Rs.112.77 Lacs (Previous Period Rs. 88.04 Lacs) in different cases. The Company has filed an appeal with the Appellate Authorities. No provision has been made in the books of accounts in respect thereof.

v). Leases:

The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs. 16.95 Lacs (Previous Period Rs. 2.06 lacs).

vi). In the opinion of the Board, Current Assets, Loan and Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.

vii). Balances of Sundry Debtors and Sundry creditors are subject to reconciliation and confirmation.

viii). Computation of net profit under Section 198 read with Section 349 of the Companies Act,1956,for the purpose of commission payable to the Managing Director:

ix). Sundry creditors include amount of Rs. Nil owed to Small Scale Industries Undertakings, out of which amount outstanding for a period of more than 30 days is Rs. Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.

x) During the year, the Company has recognized an expense of Rs. 80.68 Lacs (Previous Period Rs.18.19 lac) in respect of Contribution to Provident Fund and Rs. 5.95 Lacs (Previous period Rs. 1.20 lac ) in respect of Contribution to Superannuation Scheme being continued from Vardhman Textiles Limited (VTXL). In due course a new superannuation fund shall be got incorporated separately for the Company.

xi). Segment Reporting:

The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS )-17 on Segment Reporting prescribed by Companies (Accounting Standards) Rules, 2006.

xii). Earning Per Share :

The calculation of Earnings Per Share (EPS) as disclosed in the Statement of Profit and Loss has been made in accordance with the requirements of Accounting Standard(AS)-20 on Earning Per Share prescribed by Companies (Accounting Standards) Rules, 2006.

xiii). Deferred Tax:

Accounting entries for deferred tax have been passed in accordance with the provisions of Accounting Standard (AS)-22 on 'Accounting for Taxes on Income' prescribed by Companies (Accounting Standards) Rules, 2006.

Deferred tax Asset /(Liability) (Net) as on 31st March, 2012 is as follows :

xiv. No asset qualifies for impairment for the current year according to AS-28 prescribed by Companies (Accounting Standards) Rules, 2006.

xv. Figures in brackets indicate deductions.

xvi. Figures have been rounded off to nearest lacs. Figures for previous periods have been recast/regrouped, wherever necessary to make them comparable with current year's figures.


Mar 31, 2011

1. There are contingent liabilities in respect of:

As at 31.03.2011 (Rs.in lac)

a) Bank Guarantees and Letters of Credit outstanding 820.48

b) Other contingent liabilities 123.72

2. Estimated amount of contracts remaining to be executed is Rs 93.23 Lac.

3. a) The Steel Business Undertaking including 'Vardhman Special Steels' was a part of Vardhman Textiles Limited (VTXL) till 31.12.2010, and consequent to the Order of the Humble High court of Punjab and Haryana dated 1 2.01.2011, the said undertaking was demerged from Vardhman Textiles Ltd. and got vested in the Company from the Appointed Date i.e. 01.01.2011. As a result, accounting treatment has been given to assets and liabilities of the said Undertaking based on the Scheme of Arrangement and Demerger approved by the Humble High Court.

b) In accordance with the 'Scheme of Arrangement & Demerger' among Vardhman Textiles Limited (VTXL), Vardhman Special Steels Limited (VSSL) and their respective Shareholders and Creditors, the entire Steel Business Undertaking together with all its properties, assets, rights, benefits and interest therein of VTXL has vested in VSSL w.e.f 1st January, 2011 as per the order of the Humble Punjab and Haryana High Court dated 12.01.2011, received on 11.03.2011. As a result of the above, the following assets, liabilities and reserves of the Steel Business Undertaking of VTXL, as certified by the management, stand vested in VSSL as on 1st January, 2011:

In consideration of the aforesaid assets, liabilities and reserves being vested in VSSL, VSSL was required to issue 1,27,30,376 equity shares of Rs. 10/- each credited as fully paid-up to the shareholders of VTXL in proportion of 1 share of VSSL for every 5 shares of VTXL held by Shareholders. The said equity shares were to be issued by the Company after the record date, which was fixed as 30.03.2011. Accordingly as on the balance sheet date, the aforesaid number of shares valued at Rs 127,303,760/- have been disclosed as "Equity Share Capital Pending Allotment pursuant to the Scheme of Arrangement and Demerger" in the Balance Sheet in order to comply with the terms of Scheme.

The allotment of share was subsequently completed on 08-04-2011. The company is there after in the process of listing of Shares on the stock exchanges.

4. The Company has contested the additional demand in respect of Excise Duty/Service Tax /Sale Tax amounting to Rs. 88.04 Lac in different cases. The Company has filed an appeal with the Appellate Authorities. No provision has been made in the books of accounts in respect thereof.

5. Leases:

The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amount to Rs. 2.06 lacs.

6. In the opinion of the Board, Current Assets, Loans & Advances have a value in the ordinary course of business at least equal to that stated in the Balance Sheet.

7. Balances of Sundry Debtors and Sundry Creditors are subject to reconciliation and confirmation.

8. Sundry creditors include amount of Rs. Nil owed to Small Scale Industrial Undertakings, out of which amount outstanding for a period of more than 30 days is Rs. Nil. The Company has not made any delays in settlement of balance due to Small Scale Industrial undertakings and hence no provision for interest on delayed payment is required. Further, there are no outstanding amount payable beyond the agreed period to Micro, Small and Medium Enterprises as on the Balance Sheet date to the extent such enterprises have been identified, based on the information available with the Company.

9. Employee Benefits :

The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard (AS)-15 are as under:-

a) During the period, the Company has recognized an expense of Rs.18.19 lac in respect of Contribution to Provident Fund and Rs.1.20 lac in respect of Contribution to Superannuation Scheme being continued from VTXL. In due course a new Superannuation Scheme shall be got incorporated separately for the company.

10. Segment Reporting :

The Company operates only in one business segment viz. "Steel" which is the reportable segment in accordance with the requirements of Accounting Standard (AS )-17 on Segment Reporting issued by The Institute of Chartered Accountants of India.

11. Related Party Disclosure :

Details of transactions entered into with related parties during the period as required by Accounting Standard (AS)-18 on "Related Party Disclosures" issued by The Institute of Chartered Accountants of India are as under:

12. Earnings Per Share :

The calculation of Earnings Per Share (EPS) as disclosed in the Profit & Loss Account has been made in accordance with the requirements of Accounting Standard(AS)-20 on Earnings Per Share issued by the Institute of Chartered Accountants of India.

13. Deferred Tax :

Accounting entries for deferred tax have been passed in accordance with the provisions of Accounting Standard (AS)-22 on 'Accounting for Taxes on Income' issued by the Institute of Chartered Accountants of India.

14. No asset qualifies for impairment for the current period according to AS-28 issued by The Institute of Chartered Accountants of India.

15. Figures in brackets indicate deductions.

16. As this is the first year of the Company, no comparative figures for previous year have been given.

17. Figures have been rounded off to the nearest rupee.

 
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