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Notes to Accounts of Vikash Metal & Power Ltd.

Mar 31, 2013

1 Contingent Liabilities

i) Bank Guarantee amounts to Rs. 214.15 lakhs (Previous year- Rs.214.15 lakhs), [FDR for Rs. 23.98 lakhs (Previous Year- 23.98 lakhs) pledged with the bank as margin].

ii) Demand for West Bengal VAT of Rs. 1,93,65,628 and for Central Sales Tax of Rs. 14,32,166 for the year 2005- 2006 disputed in Appeal with Senior Joint Commissioner Sales Tax and advance of Rs. 20 lakhs paid under protest.

iii) Demand for West Bengal VAT of Rs. 4,85,58,046 and for Central Sales Tax of Rs.13,99,114 for the year 2006-2007 disputed in appeal with West Bengal Commercial Taxes Appellate and Provisional Board Kolkata and advance of Rs. 30 Lakhs paid under protest.

iv) The Interest & Penalty on Statutory Dues is not accounted by the company and booked in the financial statements on the grounds that the company has referred the company in BIFR and they will ask concession and relief for the waiver of interest and penalty from the statutory departments and hence not booked in the financial statement and thus Interest and penalty on Statutory Dues can be created at Unascertainable Contingent Liabilities of the company.

2. In the opinion of the management, Current Assets, Loans & Advances have a value on realisation at least equal to the amount at which they are stated in the Balance Sheet. Adequate provisions have been made for all known losses and undisputed liabilities.

3. Certain balances of Advances, Sundry debtors & Sundry creditors are subject to confirmation.

4. There are no Micro, Small and Medium Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2013. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the auditors.

5. Managerial Remuneration:- a) Detail of payments and provisions on account of remuneration to managerial personnel is as under:

b) The computation of net profit for the purpose of director''s remuneration under Section 349 of the Companies Act, 1956 has not been enumerated since no commission has been paid to any director. Fixed Managerial remuneration has been paid to the Managing Director within the limit specified in Schedule XIII of the Companies Act, 1956.

6. There are no transactions which are required to be disclosed under Clause 32 of the Listing Agreement.

7. No forward contracts / hedging instruments are outstanding at the Balance Sheet date. Unhedged foreign currency exposure as at 31.03.2013 is Nil.

8. Based on the synergies, risks and returns associated with business operations and in terms of Accounting Standard-17, the Company is predominantly engaged in a single reportable segment of Iron and Steel during the year. The risks and returns of existing captive power plant are directly associated with the manufacturing operations of Iron & Steel and hence treated as a single reportable segment as per Accounting Standard-17. There is no separate geographical segment.

9. Related party disclosures

i. Name of the related parties where control exists irrespective of whether transactions have occurred or not

a) Enterprise on which the Company has control – None

b) Entities / Individuals owning directly or indirectly an interest in the voting power that gives them control – None

ii. Names of the other related parties with whom transactions have taken place during the year

a) Joint Venture Moira Mahujore Coal Ltd

b) Key Managerial Personnel (KMP) & Relatives Mr.Vikash Patni, Managing Director of KMP Mr.Vimal Kumar Patni, Director

Mr. Akash Patni, Director

Mrs. Premlata Patni, Mother of MD

Mrs. Sunita Patni, Wife of MD

c) Enterprises owned or significantly influenced by Impex Infotech Ltd. (b) above Brahmand Udyog Ltd.

Swami Vinimay Ltd. Unilever Enterprises Ltd. Sahyogi Distributors Ltd. Vikash Ores Ltd. Lucky Prime Dealers Pvt. Ltd.


Mar 31, 2011

1. Contingent liabilities not provided for in respect of-

a) Bank Guarantees amounting to Rs. 214.15 Lacs (Previous year - Rs. 284.35 Lacs) [FDR for Rs. 23.98 Lacs (Previous year-Rs. 31.46 Lacs) pledged with the banks as margin.]

b) Demand for West Bengal VAT of? 19,365,628 (Previous year Nil) and for Central Sales Tax of Rs. 14,32,166 (Previous year Nil) for the year 2005-06 disputed in appeal with Senior Joint Commissioner Sales Tax. An Advance of? 20 Lacs paid under protest.

c) Demand for West Bengal VAT of Rs. 48,558,046 (Previous year - Rs. 67,186,278) and for Central Sales Tax of Rs. 1,399,114 (Previous year - Rs. 1,399,114) for the year 2006-07 disputed in appeal with West Bengal Commercial Taxes Appellete and Revisional Board, Kolkata. An Advance of Rs. 30 Lacs paid under protest.

2. Estimated amount of commitments on Capital Account (Net of Advances) - NIL (Previous year - Rs. 27.36 Lacs).

3. In the opinion of the management, Current Assets, Loans & Advances have a value on realisation at least equal to the amount at which they are stated in the Balance Sheet. Adequate provisions have been made for all known losses and liabilities.

4. Certain balances of Advances, Sundry debtors & Sundry creditors are subject to confirmation.

5. There are no Micro, Small and Medium Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the auditors.

6. Managerial Remuneration:

b) Liability for gratuity and leave encashment is provided on actuarial basis for the Company as a whole. The amount pertaining to directors is not ascertainable and, therefore, not included above.

c) The computation of net profit for the purpose of directors' remuneration under Section 349 of the Companies Act, 1956 has not been enumerated since no commission has been paid to any director. Fixed managerial remuneration has been paid to the Managing Director within the limit specified in Schedule XIII of the Companies Act, 1956.

7. Research and Development is assimilated to the production process of the Company and hence cannot be segregated. No specific expenditure was incurred under this head.

8. Amount of excise duty on variation in stocks shown in Schedule -16 represents differential excise duty on opening and closing stock of finished goods.

9. There are no transactions which are required to be disclosed under Clause 32 of the Listing Agreement.

10. No forward contracts/hedging instruments are outstanding at the Balance Sheet date. Unhedged foreign currency exposure as at 31.03.11 is Nil.

11. During the year, the Company has changed its accounting policy relating to write off of share issue expenses from amortising 1/5th of the expenditure every year to adjusting the same against the balance available in Securities Premium Account as permitted in Section 78 of the Companies Act, 1956. The change in accounting policy does not have any impact on the profit for the year

12. Several Parties including the Company have disputed the basis of levy of fuel surcharge in electricity bills of Damodar Valley Corporation (DVC). Based on the order of Appellate Tribunal of Electricity dated 10/05/2010, the provisional bills are issued by DVC and provided for in the accounts of the Company.

The Company has also during the year provided for disputed Electricity dues of DVC for Rs. 24,514,255/- in respect of earlier years as per the basis indicated in the said Order. However, the appeal filed by DVC in the matter is pending before the Hon'ble Supreme Court of India.

13. The Company is in the process of issuing Global Depository Receipts (GDR's) amounting to USD 12 million. Expenses incurred during the year in relation thereto have been shown under the head "Loans & Advances" to be adjusted in the year of issue with balance available in the Securities Premium inline with the provisions of Section 78 of the Companies Act, 1956.

14. The Company has made current tax provision for Minimum Alternate Tax (MAT) u/s 115JB of the Income Tax Act, 1961. As per the provisions of Section 115JAA, MAT Credit receivable has been recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India. The said asset is created by way of a credit to the profit & loss account and shown as MAT Credit Entitlement. The Company will review the same at each balance sheet date and write down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

15. Disclosure pursuant to accounting Standard-15 (Revised)-"Employee Benefits-

Defined Benefit Plan:

The employee gratuity fund scheme managed by SBI Life Insurance Company Ltd (insurer) is a defined benefit plan. The present value of obligation is determined based on the actuarial valuation using the Projected Unit Credit Method as on 31 st March 2011, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build ud the final obliaation.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan asset held, assessed risks, historical results of return on plan asset and the Company's policy for plan assets management.

The above information is certified by the actuary.

The Company expects to contribute Rs. 2.51 Lacs to the Gratuity Fund managed by the SBI Life Insurance Company Ltd during the Financial Year 2011-12.

16. Based on the synergies, risks and returns associated with business operations and in terms of Accounting Standard -17, the Company is predominantly engaged in a single reportable segment of Iron and Steel during the year. The risks and returns of existing captive power plant are directly associated with the manufacturing operations of Iron & Steel and hence treated as a single reportable segment as per Accounting Standard-17. There is no separate geographical segment.

17. Related party disclosures

i. Name of the related parties where control exists irrespective of whether transactions have occurred or not a) Enterprise on which the Company has control None

b) Entities/Individuals owning directly or indirectly - None an interest - in the voting power that gives them control

ii. Names of the other related parties with whom transactions have taken place during the year

a) Joint Venture Moira Mahujore Coal Ltd

b) Key Managerial Personnel (KMP) & Relatives of KMP Mr.Vikash Patni, Managing Director

Mr.Vimal Kumar Patni, Director

Mr. Akkash Patni, Director

Mrs. Premlata Patni, Mother of MD

Mrs. Sunita Patni, Wife of MD

c) Enterprises owned or significantly Influenced by (b) above Impex Infotech Ltd

Brahmand Udyog Ltd.

Swami Vinimay Ltd.

Impex Ferro Tech Ltd.

Vikash Smelters & Alloys Ltd.

Unilever Enterprises Ltd.

Sahyogi Distributors Ltd.

Vikash Ores Ltd.

Lucky Prime Dealers Pvt Ltd

18. Components of Deferred tax liability as on 31st March, 2011 are as follows:

Deferred tax asset on account of unabsorbed depreciation has been recognised as there exists virtual certainty of realisation on reversal of deferred tax liability in future years on account of depreciation.

19. In compliance with Accounting Standard - 27 on "Financial Reporting for Interests in Joint Venture" as notified under Companies (Accounting Standards) Rules, 2006, brief description of Joint Venture of the Company are:

Moira Madhujore Coal Ltd - A Joint Venture with five other Companies for the purpose of development of Coal Block. The Company's share in the said Venture is 23.32%.

20. Previous year's figures have been reworked, re-grouped, re-arranged and reclassified, wherever considered necessary. Accordingly amounts and other disclosures for the preceding year are included as an integral part of the current year financial Statements and are to be read in relation to the amounts and other disclosures relating to the current year.


Mar 31, 2010

1. Contingent liabilities not provided for in respect of -

a) Bank Guarantees amounting to Rs. 284.35 Lacs (Previous Year - Rs. 377.16 Lacs) [FDR for Rs. 31.46 Lacs (Previous Year- Rs. 37.72 Lacs) pledged with the banks as margin.]

b) Excise duty liability arising out of search operation by the Directorate General of Central Excise Intelligence. However, the Company has paid under protest a sum of Rs. 5,000,000, pending issuance of any show cause notice.

c) Sales Tax Demand of Rs. 67,186,278 for the year 2006-07 (Previous Year Nil) disputed in appeal.

d) Central Sales Tax Demand of Rs. 1,399,114 for the year 2006-07 (Previous Year Nil) disputed in appeal.

e) Several Parties including the Company have disputed the basis of levy of Fuel Surcharge in the electricity bills of Damodar Valley Corporation (DVC). Accordingly an amount of Rs. 80,857,963/- (after considering waiver of electricity duty admitted by DVC) has not been provided for by the Company. Pending adjudication of final demand, the Company has made adhoc payments against the bills.

2. Estimated amount of commitments on Capital Account (Net of Advances) - Rs. 27.36 Lacs (P.Y. Rs. 27.36 Lacs).

3. The Company has entered into an agreement for assignment of specific debts with a Company on 24th March, 2010. Accordingly the Company as a beneficial owner has assigned unto the Purchaser all the several debts and sums of money as specified in the agreement and amounting to Rs. 108 Lacs on non-recourse basis. The amount receivable from the Purchaser is shown in Schedule 9 "Loans and Advances" under the head "Amount receivable under assignment". The Company has received the amounts due subsequent to the Balance Sheet date.

4. In the opinion of the management, Current Assets, Loans & Advances have a value on realisation at least equal to the amount at which they are stated in the Balance Sheet. Adequate provisions have been made for all known losses and liabilities.

5. Certain balances of Advances, Sundry debtors & Sundry creditors are subject to confirmation.

6. There are no Micro, Small and Medium Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the auditors.

b) Liability for gratuity and leave encashment is provided on actuarial basis for the Company as a whole. The amount pertaining to directors is not ascertainable and, therefore, not included above.

c) The computation of net profit for the purpose of directors remuneration under Section 349 of the Companies Act, 1956 has not been enumerated since no commission has been paid to any director. Fixed managerial remuneration has been paid to the Managing Director as per Schedule XIII of the Companies Act, 1956.

7. Research and Development is assimilated to the production process of the Company and hence cannot be segregated. No specific expenditure was incurred under this head.

8. Amount of excise duty on variation in stocks shown in Schedule -15 represents differential excise duty on opening and closing stock of finished goods.

9. No forward contracts/hedging instruments are outstanding at the Balance Sheet date. Unhedged foreign currency exposure as at 31.03.10 is Nil.

10.The Company has made current tax provision for Minimum Alternate Tax (MAT) u/s 115JB of the Income Tax Act, 1961. As per the provisions of Section 115JAA, MAT Credit receivable has been recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India. The said asset is created by way of a credit to the profit & loss account and shown as MAT Credit Entitlement. The Company will review the same at each balance sheet date and write down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

11. There are no transactions which are required to be disclosed under Clause 32 of the Listing Agreement.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan asset held, assessed risks, historical results of return on plan asset and the Companys policy for plan assets management.

The above information is certified by the actuary.

12. Based on the synergies, risks and returns associated with business operations and in terms of Accounting Standard-17, the Company is predominantly engaged in a single reportable segment of Iron and Steel during the year. The risks and returns of existing captive power plant are directly associated with the manufacturing operations of Iron & Steel and hence treated as a single reportable segment as per Accounting Standard-17. There is no separate geographical segment.

13. Related party disclosures

i. Name of the related parties where control exists irrespective of whether transactions have occurred or not

a) Enterprise on which the Company has control None

b) Entities/Individuals owning directly or indirectly an interest in the voting power that gives them control None

ii. Names of the other related parties with whom transactions have taken place during the year

a) Key Managerial Personnel (KMP) & Relatives of KMP Mr. Vikash Patni, Managing Director

Mr. Vimal Kumar Patni, Director

Mr. Akkash Patni, Director

Mrs. Premlata Patni, Mother of MD Mrs.

Sunita Patni, wife of MD

b) Enterprises owned or significantly Impex Infotech Ltd.

Influenced by (a) above Brahmand Udyog Ltd.

Swami Vinimay Ltd.

Impex Ferro-Tech Ltd.

Vikash Smelters & Alloys Ltd.

Unilever Enterprises Ltd.

Sahyogi Distributors Ltd.

Vikash Ores Ltd.

Impex Metal & Ferro Alloys Ltd.

Deferred tax asset on account of unabsorbed depreciation has been recognised as there exists virtual certainty of realisation on reversal of deferred tax liability in future years on account of depreciation.

14. Previous years figures have been reworked, re-grouped, re-arranged and re-classified, wherever considered necessary. Accordingly amounts and other disclosures for the preceding year are included as an integral part of the current year financial Statements and are to be read in relation to the amounts and other disclosures relating to the current year.

 
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