Notes to Accounts of Vardhman Special Steels Ltd.

Mar 31, 2023

Provisions (other than for employee benefits)

Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of
resources embodying economic benefits will be
required to settle the obligation and a reliable
estimate can be made of the amount of the
obligation. The expense relating to a provision is
presented in the statement of profit and loss net of
any reimbursement. If the effect of the time value
of money is material, provisions are discounted
using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability.
When discounting is used, the increase in the
provision due to the passage of time is recognised
as a finance cost. Expected future losses are not
provided for.

Onerous contracts

A provision for onerous contract is recognised
when the expected benefits to be derived by
the company from a contract are lower than
the unavoidable cost of meeting its obligation
under the contract. The provision is measured
at the present value of the lower of the expected
cost of terminating the contract and the expected
net cost of continuing with the contract. Before a
provision is established, the company recognises
any impairment loss on assets associated.

m) Contingent liabilities and contingent assets

A contingent liability exists when there is a possible
but not probable obligation, or a present obligation
that may, but probably will not, require an outflow
of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities
do not warrant provisions, but are disclosed unless
the possibility of outflow of resources is remote.

Contingent assets usually arise from unplanned
or other unexpected events that give rise to the
possibility of an inflow of economic benefits to
the entity. Contingent assets are recognized when
the realisation of income is virtually certain, then
the related asset is not a contingent asset and its
recognition is appropriate.

A contingent asset is disclosed where an inflow of
economic benefits is probable.

n) Commitments

Commitments include the amount of purchase
order (net of advances) issued to parties for
completion of assets. Provisions, contingent
liabilities, contingent assets and commitments are
reviewed at each reporting date.

o) Revenue from contract with customers

Under Ind AS 115, the Company recognized
revenue when (or as) a performance obligation
was satisfied, i.e. when ''control'' of the goods
underlying the particular performance obligation
were transferred to the customer.

Further, revenue from sale of goods is recognized
based on a 5-Step Methodology which is as follows:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligation in
contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the
performance obligations in the contract

Step 5: Recognise revenue when (or as) the entity
satisfies a performance obligation

Deferred revenue is recognised when there is
a billing in excess of revenues. The Company
disaggregates revenue from contracts with
customers by geography.

Use of significant judgements in revenue
recognition

- The Company''s contracts with customers
could include promises to transfer multiple
products and services to a customer.
The Company assesses the products
/ services promised in a contract and

identifies distinct performance obligations
in the contract. Identification of distinct
performance obligation involves judgement
to determine the deliverables and the ability
of the customer to benefit independently
from such deliverables.

- Judgement is also required to determine
the transaction price for the contract.
The transaction price could be either a
fixed amount of customer consideration
or variable consideration with elements
such as cash discount, trade discount, and
rebate. The transaction price is also adjusted
for the effects of the time value of money if
the contract includes a significant financing
component. Any consideration payable to the
customer is adjusted to the transaction price,
unless it is a payment for a distinct product
or service from the customer. The estimated
amount of variable consideration is adjusted
in the transaction price only to the extent that
it is highly probable that a significant reversal in
the amount of cumulative revenue recognised
will not occur and is reassessed at the end of
each reporting period. The Company allocates
the elements of variable considerations to all
the performance obligations of the contract
unless there is observable evidence that they
pertain to one or more distinct performance
obligations.

- The Company uses judgement to determine
an appropriate standalone selling price for
a performance obligation. The Company
allocates the transaction price to each
performance obligation on the basis of the
relative standalone selling price of each
distinct product or service promised in the
contract.

- The Company exercises judgement in
determining whether the performance
obligation is satisfied at a point in time or over
a period of time. The Company considers
indicators such as how customer consumes
benefits as services are rendered or who
controls the asset as it is being created or
existence of enforceable right to payment for
performance to date and alternate use of such
product or service, transfer of significant risks

and rewards to the customer, acceptance of
delivery by the customer, etc.

- Revenue for fixed-price contract is recognised
using percentage-of-completion method.
The Company uses judgement to estimate
the future cost-to-completion of the contracts
which is used to determine the degree of
completion of the performance obligation.

- Contract fulfilment costs are generally
expensed as incurred except for certain
expenses which meet the criteria for
capitalisation. Such costs are amortised over
the contractual period. The assessment of
these criteria requires the application of
judgement, in particular when considering if
costs generate or enhance resources to be
used to satisfy future performance obligations
and whether costs are expected to be
recovered.

Export Incentives

Export incentives under various schemes notified
by the government are recognised on accrual
basis when no significant uncertainties as to the
amount of consideration that would be derived
and as to its ultimate collection exist.

Insurance and Other Claims

Revenue in respect of claims is recognized when
no significant uncertainty exists with regard to the
amount to be realized and the ultimate collection
thereof.

p) Government grant

Government grants related to capital assets are
recognized initially as deferred income at fair value
or deducted from the carrying value of the asset
when there is reasonable assurance that they will
be received and the Company will comply with the
conditions associated with the grant; they are then
recognised in profit or loss as other income on a
systematic basis or depreciated over the remaining
useful life of the asset, respectively.

Grants that compensate the Company for
expenses incurred are recognised in profit or loss

on a systematic basis in the periods in which such
expenses are recognised.

q) Recognition of interest income or expense

Interest income or expense is recognised using the
effective interest method.

The ''effective interest rate'' is the rate that exactly
discounts the estimated future cash payments or
receipts through the expected life of the financial
instrument to:

a) the gross carrying amount of the financial
asset; or

b) the amortised cost of the financial liability.

In calculating interest income and expense,
the effective interest rate is applied to the gross
carrying amount of the asset (when the asset is
not credit-impaired) or to the amortised cost of
the liability. However, for financial assets that
have become credit impaired subsequent to
initial recognition, interest income is calculated by
applying the effective interest rate to the amortised
cost of the financial asset. If the asset is no longer
credit-impaired, then the calculation of interest
income reverts to the gross basis.

r) Income taxes

Income tax comprises current and deferred tax.
It is recognised in Statement of Profit and Loss
except to the extent that it relates to a business
combination or an item recognised directly in
equity or in other comprehensive income.

Current tax

Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable
in respect of previous years. The amount of current
tax reflects the best estimate of the tax amount
expected to be paid or received after considering
the uncertainty, if any, related to income taxes. It is
measured using tax rates (and tax laws) enacted or
substantively enacted by the reporting date.

Current tax assets and current tax liabilities are
offset only if there is a legally enforceable right to
set off the recognised amounts, and it is intended

to realise the asset and settle the liability on a net
basis or simultaneously.

Deferred tax

Deferred tax is recognised in respect of temporary
differences between the carrying amounts of the
assets and liabilities for financial reporting purposes
and the corresponding amounts used for taxation
purposes. Deferred tax is also recognised in respect
of carried forward tax losses (if any) and tax credits.

Deferred tax assets are recognised to the extent
that it is probable that future profits will be available
against which they can be used. Deferred tax
assets are reviewed at each reporting date and are
recognised to the extent that it is probable that the
related tax benefits will be realized. Deferred tax
is measured at the tax rates that are expected to
apply to the period when the asset is realized or
the liability is settled, based on the laws that have
been enacted or substantively enacted by the
reporting date. Deferred tax assets - unrecognised
or recognised, are reviewed at each reporting date
and are recognised / reduced to the extent that it
is probable / no longer probable respectively that
the related tax benefits will be realized.

The measurement of deferred tax reflects the tax
consequences that would follow from the manner
in which the Company expects, at the reporting
date, to recover or settle the carrying amount of
its assets and liabilities.

Section 115 BAA of the Income Tax Act 1961,
introduced by Taxation Laws (Amendment)
Ordinance, 2019 gives a one-time irreversible
option to Domestic Companies for payment of
corporate tax at reduced rates. The Company has
opted the new tax regime from 1 April 2022.

s) Operating segments

An operating segment is a component of the
Company that engages in business activities from
which it may earn revenues and incur expenses,
including revenues and expenses that relate to
transactions with any of the Company''s other
components, and for which discrete financial
information is available. All operating segments''
operating results are reviewed regularly by the
Company''s Chief Operating Decision Maker
(CODM) to make decisions about resources to

be allocated to the segments and assess their
performance.

t) Royalty

Payment of technical know-how in the form
of royalty for providing technical assistance is
being accounted for on accrual basis as per the
agreement between the parties.

u) Corporate Social Responsibility (CSR)
expenditure

CSR expenditure incurred by the Company is
charged to the Statement of the Profit and Loss.

v) Cash and cash equivalents

For the purpose of presentation in the statement of
cash flows, cash and cash equivalents include cash
in hand, demand deposits held with banks, other
short-term highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which
are subject to an insignificant risk of changes in
value.

w) Cash flow statement

Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the
effects of transactions of a non-cash nature, any
deferrals or accruals of past or future operating
cash receipts or payments and item of income or
expenses associated with investing or financing
cash flows. The cash flows from operating,
investing and financing activities of the Company
are segregated.

x) Earnings per share

Basic earnings/ (loss) per share are calculated by
dividing the net profit/(loss) for the year attributable
to equity shareholders by the weighted average
number of equity shares outstanding during the
year. The weighted average number of equity
shares outstanding during the period is adjusted
for events of bonus issue and share split. For the
purpose of calculating diluted earnings/ (loss)
per share, the net profit or loss for the period
attributable to equity shareholders and the
weighted average number of shares outstanding

during the year are adjusted for the effects of all
dilutive potential equity shares.

y) Recent Indian Accounting Standards (Ind AS)

Ministry of Corporate Affairs (MCA) notifies
new standard or amendments to the existing
standards under Companies (Indian Accounting
Standards) Rules as issued from time to time.
On March 31, 2023, MCA amended the
Companies (Indian Accounting Standards) Rules,
2015 by issuing the Companies (Indian Accounting
Standards) Amendment Rules, 2023, applicable
from April 1, 2023, as below:

- Ind AS 1 - Presentation of Financial
Statements

The amendments require companies to
disclose their material accounting policies
rather than their significant accounting
policies. Accounting policy information,
together with other information, is material
when it can reasonably be expected to
influence decisions of primary users of general
purpose financial statements. The Company
does not expect this amendment to have any
significant impact in its financial statements.

- Ind AS 12 - Income Taxes

The amendments clarify how companies
account for deferred tax on transactions such
as leases and decommissioning obligations.
The amendments narrowed the scope of
the recognition exemption in paragraphs 15
and 24 of Ind AS 12 (recognition exemption)
so that it no longer applies to transactions
that, on initial recognition, give rise to equal
taxable and deductible temporary differences.
The Company is evaluating the impact, if any,
in its financial statements.

- Ind AS 8 - Accounting Policies, Changes in
Accounting Estimates and Errors

The amendments will help entities to
distinguish between accounting policies
and accounting estimates. The definition of
a change in accounting estimates has been
replaced with a definition of accounting
estimates. Under the new definition,
accounting estimates are monetary amounts
in financial statements that are subject to
measurement uncertainty. Entities develop
accounting estimates if accounting policies
require items in financial statements to be
measured in a way that involves measurement
uncertainty. The Company does not expect
this amendment to have any significant
impact in its financial statements.

---

Mar 31, 2018

1. CORPORATE INFORMATION

Vardhman Special Steels Limited (the Company) is a public company incorporated under the provisions of the Companies Act, 1956 on 14^th May, 2010. The company is engaged in manufacturing of Billets, Steel bars & Rods and Bright Bars of various categories of special and alloy steels.

These financial statements were approved and adopted by Board of Directors of the Company in its meeting held on April 27, 2018.

I BASIS OF PREPARATION OF FINANCIAL STATEMENTS

(i) STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION:

These financial statements are prepared in accordance with Indian Accounting Standard (Ind AS), under the historical cost convention on the accrual basis except for certain financial instrument which are measured at fair value, the provisions of the Companies Act, 2013 (the Act) (to the extent notified) and guidelines issued by Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.

Effective April 1, 2016, the company has adopted all the Ind As standards and the adoption was carried out in accordance with Ind AS 101, “First Time Adoption of Indian Accounting Standards, with April 1, 2015 as the transition date. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

(ii) USE OF ESTIMATES

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note.

Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

(iii) CLASSIFICATION OF ASSETS AND LIABILITIES AS CURRENT AND NON-CURRENT

All Assets and Liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of product & activities of the Company and their realisation in cash and cash equivalent, the Company has determined its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

a Rights, preferences and restrictions attached to shares Equity Shares:

The Company has only one class of Equity Shares having face value of RS.10/-. Each shareholder of equity share is entitled to one vote per share. In the event of liquidation of the company, the equity shareholders will be entitled to receive the remaining balance of assets if any, after preferential payments and to have a share in surplus assets of the Company, proportionate to their individual shareholding in the paid up equity capital of the Company.

b 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 preceding the balance sheet date is NIL

c. Share issue expenses amounting to RS.191.33 Lakhs have been charged to securities premium account as per the provisions of the Companies Act 2013 and expenses amounting to RS.39.70 Lakhs charged to profit & loss account as incurred in financial year 2016-17.

d Utilization of proceeds from right issue & Qualified Issue Placement

From the total proceeds of Rs.11,785.80 lakhs through right issue & Qualified Institutional Placement (QIP), the company has utilized Rs.6,936.03 lakhs.

2. Leases

The Company has leased facilities under cancellable operating leases arrangements with a lease term ranging from one to ten 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 for the year ended March 31, 2018 amounts to Rs.90.58 Lakhs (PY Rs.87.13 Lakh). The future minimum lease payments are given below:

3. Segment information

The Company has only one operating segment i.e. ‘STEEL’ and operations are mainly within India. Hence, it is the only reportable segment under IND AS 108 ‘Operating Segments’. Entity wide disclosure required by IND AS 108 are made as follows:

a. Major customers

2017-18 Revenues from 2 major customers represented 11.06% and 10.82% (21.88% in aggregate) of the total sales of the Company.

2016-17 Revenues from 1 major customer represented 12.47% of the total sales of the Company.

4. The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006

Based on the information available, there are no vendors who have confirmed that they are covered under the Micro, Small and Medium Enterprises Development Act, 2006. Disclosures as required by section 22 of ‘The Micro, Small and Medium Enterprises Development Act, 2006, are given below:

5. Employee benefits

a. Defined contribution plans:-

During the year, the Company has recognized an expense of Rs.193.64 Lakhs (Previous year Rs.173.01 Lakhs) in respect of contribution to Provident Fund and Nil (Previous Year Rs.4.57 Lakhs) in respect of contribution to superannuation scheme.

b. Defined benefits plans - as per actuarial valuation

c) Share based payments to employees

The Board of director in its meeting held on August 24, 2016, approved introduction of an equity based compensation scheme called “Vardhman Special Steels Limited Employee Stock option plan 2016” for its eligible employees. The Board had delegated necessary power to the Nomination and Remuneration Committee to Implement and administer the plan. Accordingly, the Nomination and Remuneration Committee of the company in its meeting held on November 12, 2016 has granted 2,10,000 options to its eligible employees against the plan under the first grant out of total of 3,71,108 options.

III Assumptions

1. Stock Price - Closing price on National Stock Exchange on the date of grant has been considered.

2. Volatility - The historical volatility over the expected life has been considered to calculate the fair value.

3. Risk-free rate of return - The risk free interest rate being considered for the calculation is the interes arte applicable for a maturity equal to the expected life of the options based on the bond yield.

4. Exercise Price - Exercise price is the price as mentioned in “Vardhman Special Steels Limited Employee Stock option plan 2016

The transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. Outstanding balances at the year- end are unsecured.

6. Impairment Review

Assets are tested for impairment whenever there are any internal or external indicators of impairment. Impairment test is performed at the level of each Cash Generating Unit (‘CGU’) or groups of CGUs within the Company at which the assets are monitored for internal management purposes, within an operating segment. The impairment assessment is based on higher of value in use and value from sale calculations. During the year, the testing did not result in any impairment in the carrying amount of other assets. The measurement of the cash generating units’ value in use is determined based on financial plans that have been used by management for internal purposes. The planning horizon reflects the assumptions for short to- mid-term market conditions. Key assumptions used in value-in-use calculations:

- Operating margins (Earnings before interest and taxes)

- Discount rate

- Growth rates

- Capital expenditures

7. Introduction of Goods and Service Tax (GST) with effect from July 1, 2017

Consequent to the introduction of Goods and Service Tax (GST) with effect from July 1, 2017, Central Excise, Value Added Tax (VAT) etc. have been subsumed into GST. In Accordance with Indian Accounting Standards-18 on Revenue and Schedule-II of the Companies Act, 2013, unlike Excise Duties, levies like GST, VAT etc. are not part of revenue. Accordingly the excise duty expense in the year ended March 31, 2018 contains the excise expense amount up to June 30, 2017 only whereas in the year ended March 31, 2017 excise expense amount pertains to full year.

* Donation of RS.3 Lakhs to a woman mountaineer as support to climb Mount Everest , Plantation at Municipal Corporation Park for B0.66 Lakh, Safety jackets distributed for road safety for B0.78 Lakh, Donation of B0.59 Lakh to Local Police for CCTV installation and Donation of B0.50 Lakh to The North India Cerebral Palsy Association.

The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties in an orderly market transaction, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values.

A. The fair values of derivatives are on MTM as per Bank

B. Company has opted to fair value its Long term and Current investments through profit & loss

C. Company has adopted effective rate of interest for calculating Interest. This has been calculated as the weighted average of effective interest rates calculated for each loan. In addition processing fees and transaction cost relating to each loan has also been considered for calculating effective interest rate.

D. The carrying amounts of current assets/ liability are to be the same as their fair values due to short term nature. Fair value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

8. Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

The company offsets a financial asset and a financial liability when it currently has a legally enforceable right to set off the recognized amounts and the company intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

9. Financial risk management objectives and policies

9.1 Financial risk factors

The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.

i. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. This is based on the financial assets and financial liabilities held as at March 31, 2018 and March 31, 2017.

ii. Credit Risk

Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.

iii. Liquidity Risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses.

The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance. The Company uses derivative financial instruments to hedge certain risk exposures. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes.

Risk management is carried out by the treasury department under policies approved by the board of directors. The treasury team identifies, evaluates and hedges financial risks in close co-operation with the Company’s operating units. The board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, and credit risk, use of derivative financial instruments and nonderivative financial instruments, and investment of excess liquidity.”

MARKET RISK

a.) Foreign Currency Risk and sensitivity

The functional currency of the Company is Indian Rupee (INR). The Company is exposed to foreign exchange risk through its sales in international markets and purchases from overseas suppliers in various foreign currencies. . The Company has obtained foreign currency loans and has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk. The Company holds derivative financial instruments such as foreign exchange contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company’s operations are affected as the rupee appreciates/ depreciates against these currencies.

Foreign currency sensitivity

The Impact on the company profit before tax due to changes in the fair value of monetary assets and liability including foreign currency derivatives on account of 1% change in USD and Euro exchange rate (With all other variables held consant) will be as under:

CASH AND CASH EQUIVALENTS

Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, quoted bonds issued by government and quasi government organizations and certificates of deposit which are funds deposited at a bank for a specified time period.

Liquidity risk

The company’s approach in managing liquidity risk is to ensure that , as far as possible, it will have sufficient liquidity to meet its liabilities as and when they fall due under both normal and stressed conditions, without incurring unacceptable losses or risking damage to company’s reputation.

9.2 Competition and Price risk

The Company faces competition from local and foreign competitors. Nevertheless, it believes that it has competitive advantage in terms of high quality products and by continuously upgrading its expertise and range of products to meet the needs of its customers.

9.3 Capital Risk Management

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity shareholders . The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

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Mar 31, 2016

3(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 preceding the balance sheet date is NIL 3(b) Equity Shares calls unpaid by Directors and Officers of the Company is NIL

3(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.

a) The above mentioned borrowings are 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. 33 on restatement of External Commercial Borrowings

b) Terms of repayment of term loans*

ii) Estimated amount of capital contracts remaining to be executed is Rs. 2,436.44 Lac (Previous Year Rs.1,407.88 Lac).

iii) Other Contingent Liabilities include additional demands in respect of Income Tax/Excise Duty/Service Tax / Sale Tax/VAT amounting to Rs.2,209.93 Lac (Previous Year Rs.603.74 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.

1. 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 amounts to Rs.78.20 Lacs (Previous Year Rs.46.09 Lacs).

2. 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.

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

4. The Liability in respect of External Commercial Borrowing (ECB) was re-stated as on 31^st March, 2016 and foreign exchange loss of Rs.583.12 Lac (Previous Year Rs.431.49 Lac) has been provided in books of account for the year ended 31^st March 2016.

5. 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.

6. 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.

7. 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.

8. 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.

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

10. Figures in brackets indicate deductions.

11. During the previous year, depreciation calculations had undergone a change w.e.f. 1^st April 2014 in accordance with the provisions of Schedule-II of the Companies Act, 2013 as against Schedule XIV to the Companies Act, 1956.

In view of that change, carrying amounts of various tangible fixed assets as at 1^st April, 2014 after retaining the residual value, an amount of Rs.89.77 lacs had been recognized in the opening balance of retained earnings (net of deferred tax) where the useful life of an asset was Nil. In other cases, the carrying amounts as at 1^st April, 2014 is being depreciated over the revised remaining useful life of the asset as per Schedule-II.

12. The Company uses forward contracts to hedge its risk associated with fluctuation in foreign currency relating to foreign currency assets and liabilities, firm commitment and highly probable forecast transactions. The use of the aforesaid financial instruments is governed by the Company''s overall strategy. The Company does not use forward contracts and options for speculative purposes. The detail of the outstanding forward contracts as at 31^st March, 2016 is as under:

13. Figures have been rounded off.

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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.

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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"

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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.

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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.

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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.