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Notes to Accounts of Welspun Corp Ltd.

Mar 31, 2015

A) Rights preferences and restrictions attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs.5 per share. Each holder of equity shares is entitled to one vote per share however the holders of global depository receipts (GDR's) do not have voting rights in respect of shares represented by the GDR's till the shares are held by the custodian. The dividend when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend.

In the event of liquidation of the company the holders of the equity shares will be entitled to receive remaining assets of the company after distribution of preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

B) Details of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash

The Company has issued 227,781 Equity shares of Rs. 5 each to Managing Director as Sweat equity in compliance with applicable laws including the Securities and Exchange Board of India (Issue of Sweat equity) regulations 2002. Employee benefits expense includes Rs.28.96 million (Previous year: Nil) on issue of Sweat equity during the year.

C) Refer note 44 for details of share issued under Employee Stock Options Scheme

D) The debentures together with interest are secured by first charge ranking pari passu by way of mortgage/ hypothecation of entire immovable and movable tangible assets of the Company both present and future and second/floating charge on current assets subject to prior charge in favour of banks for working capital facilities.

E) External commercial borrowings (ECB) of USD 67.3 million (March 31 2014: USD 70 million) is secured by first charge ranking pari passu by way of mortgage/ hypothecation of entire immovable and movable tangible assets of the Company both present and future. The ECB carries interest of LIBOR plus 3.60% to 4.50%.

F) Term loan from a bank

Term loan of USD 29.75 million equivalent to Rs.1,859.38 million (March 31 2014: Rs. 1,782.47 million) from bank Is se- cured by first charge ranking pari passu by way of mortgage/ hypothecation of entire movable and immovable tangible assets of the Company and second charge over the entire current assets of the Company both present and future. The loan carries interest of LIBOR plus 5.00%. The loan is repayable in 14 quarterly instalments after a moratorium of 30 months from the date of first disbursement i.e. November 2012.

G) Foreign currency convertible bonds (FCCB)

i) The outstanding FCCB of USD 75 million was redeemed on 17 October 2014 at 102.80% of the principal amount so as to give a gross yield of 5% per annum (calculated on semi annual basis) to the Bond holders.

ii) Premium on redemption of FCCB aggregating to Rs.31.57 million (Previous year: Rs.28.35 million) has been adjusted against securities premium as per Section 52 (2) (d) of the Companies Act 2013.

iii) Part of net proceeds received from the issue of FCCB has been utilized as per objects of the issue viz for funding of Plate and Coil Mill Pipe Mill Capex projects (Anjar and Mandya) and Investment in overseas subsidiary. Pending utilization the balance issue proceeds of USD Nil (Previous year: USD 0.40 million equivalent to INR 23.97 million) have been invested in short-term deposits.

H) Other loans

Loan from Hewlett Packard India Financial Services Private Limited amounting to Rs.18.66 million (Previous year: Rs. 26.09 million). The loan carries interest rate of 12.03%. The loan is repayable in 59 monthly instalments beginning from Oc- tober 2012.

2.Foreign exchange differences

a) The Companies (Accounting Standards) Amendment Rules 2011 has amended the provision of Accounting Standard-11 related to "The effects of changes in Foreign Exchange Rates" vide notification dated 11 May 2011 (as amended on 29 December 2011 and further clarification dated 9 August 2012) issued by the Ministry of Corporate Affairs. Accordingly, the Company has adjusted exchange loss amounting to Rs.83.26 million (Previous year: Rs.344.23 million) to the cost of fixed assets and exchange difference loss of Rs.773.67 million (Previous year: Rs.946.89 million) has been transferred to "Foreign Currency Monetary Item Translation Difference Account" to be amortized over the balance period of such long term liabilities. Out of the above, loss of Rs.355.35 million (Previous year: Rs.437.57 million) has been adjusted in the current year and loss of Rs.418.32 million (Previous year: Rs.509.32 million) has been carried over and included in reserves and surplus.

b) The Company has adopted Accounting Standard-30 as referred to in Note 1 (X) (b) of the Significant Accounting Policies and accordingly loss of Rs. 435.24 million (Previous year: gain of Rs.51.50 million) related to foreign exchange difference on Cash Flow Hedges for certain firm commitments and forecasted transactions has been recognized in Shareholders' Funds and shown under Hedging Reserve Account.

3. Derivative Instruments outstanding:

The Company is exposed to foreign currency fluctuations on foreign currency assets/ liabilities, receivables/payables denominated in foreign currency. In line with the company's risk management policies and procedures, the Company enters into foreign currency forward contracts, swaps and other derivative contracts to manage its exposure.

a) The following are outstanding foreign currency forward contracts, swaps and other derivative contracts against the future forecasted receivables/ payables and liabilities.

(iii) In addition to the above, the Company has following outstanding foreign currency forward contracts to hedge foreign currency exposure against payable as at balance sheet date.

Net Mark to Market (Fair Value) loss recognised in Hedging Reserve as on 31st March 2015 on forward contracts for Rs.425.63 million and on interest rate swap for Rs.9.61 million is expected to be recycled to the statement of Profit and Loss by March 2016 and March 2020 respectively.

4. Contingent liabilities not provided for

(Rs in million)

2015 2014

Claims against the Company not acknowledged as debts 102.20 570.62

Disputed direct taxes 1,614.61 2,000.26

Disputed indirect taxes 407.11 84.78

(i) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of above pending resolution of the respective proceedings.

(ii) The Company does not expect any reimbursements in respect of the above contingent liabilities.

b) Supreme Court of India has dismissed an appeal filed by the Commissioner of Customs, Kandla against the CESTAT Order dated May 22, 2014 which had set aside the Order of the Commissioner of Customs, Kandla for custom duty of Rs.8,609.82 million on account of alleged wrong classification of imported raw materials along with penalty of Rs.8,609.82 million on the Company and a penalty of Rs. 205 million on the directors and officers of the Company. On the same matter, a separate proceeding was initiated by Additional Director General of Foreign Trade, Mumbai, wherein the Hon'ble Bombay High Court has already granted interim stay in Company's favour. The matter is awaiting final disposal.

The company operates a gratuity plan managed jointly by Kotak Life Insurance Limited and India First Life Insurance Company Limited. Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the company or retirement, whichever is earlier.

5.Segment reporting

i) The Company is exclusively engaged in the business of steel products which, in the context of Accounting Standard 17 Segment Reporting, is considered to constitute a single primary segment. Thus, the segment revenue, segment results, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to acquire segment assets, total amount of charge for depreciation during the year are all as reflected in the financial statements for the year ended March 31,2015 and as on that date.

Notes:

a) Segment revenue in the geographical segments considered for disclosure is as follows:

- Revenue within India includes sales to customers located within India.

- Revenue outside India includes sales to customers located outside India.

b) Segment assets include the respective amounts identified to each of the segments and amounts allocated on a reasonable basis.

c) Capital expenditure also includes expenditure incurred on capital work-in-progress and capital advances.

6. Operating lease

As a lessee:

The Company has significant operating leases for premises and equipments. These lease arrangements range for a period between 11 months and 10 years, which includes both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms and also includes escalation clauses. The Company has entered into a sublease and such sublease is cancellable and for a period of 1 year with an option of renewal on mutually agreeable terms.

Name of the subsidiaries

Direct subsidiaries

Welspun Pipes Inc Welspun Tradings Limited Welspun Mauritius Holdings Limited Welspun Pipes Limited Indirect Subsidiaries

Held through Welspun Mauritius Holdings Limited

Welspun Middle East Pipes Company LLC Welspun Middle East Pipes Coating Company LLC Held through Welspun Tradings Limited Welspun Middle East DMCC Held through Welspun Pipes Inc.

Welspun Tubular LLC Welspun Global Trade LLC

b) Name of Associate companies

Red Lebondal Limited *

* Application filed with registrar of companies (Cyprus) for name strike off

c) Enterprises over which Key Management Personnel or relatives [refer (d) below] of such personnel exercise significant influence or control and with whom transaction have taken place during the year

Name of other related parties

Welspun India Limited Welspun Steel Limited

RMG Alloy Steel Limited (Formerly Remi Metal Gujarat Limited)

Welspun Foundation for Health and Knowledge Welspun Syntex Limited

Vipuna Trading Limited (merged with Mertz Securities Limited wef February 1,2015)

Welspun Logistics Limited

Welspun Realty Private Limited

Welspun Global Brands Limited

Welspun Projects Limited

Welspun Captive Power Generation Limited

Welspun Energy Limited

Welspun Enterprises Limited

Mertz Securities Limited

d) Directors / Key Management Personnel

B. K. Goenka Chairman

R. R. Mandawewala Director

Braja Mishra Managing Director

7.Employee Stock Options Scheme

a) In respect of options granted under the Welspun Employee Stock Options Scheme, in accordance with the guidelines issued by Securities and Exchange Board of India, the value of options (based on intrinsic value of the share on the date of the grant of the option) is accounted as deferred employee compensation, which is amortized on a straight line basis over the vesting period. Employee benefits expense includes Rs.36.47 million debited during the year (March 31,2014: credit of Rs.0.73 million).

b) The compensation costs of stock options granted to employees are accounted by the Company using the intrinsic value method as permitted by the SEBI Guidelines and the Guidance Note on Accounting for Employee Share Based Payments issued by the Institute of Chartered Accountants of India in respect of stock options granted.

The Company's earnings per share would have been as under, had the compensation cost of employee stock options been recognised based on the fair value at the date of grant in accordance with Black Scholes' model.


Mar 31, 2014

A) Terms and rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 5 per share. Each holder of equity shares is entitled to one vote per share, however the holders of global depository receipts (GDR''s) do not have voting rights in respect of shares represented by the GDR''s till the shares are held by the custodian. The dividend when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

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

B) Foreign currency convertible bonds (FCCB)

i) During the financial year 2009 -2010, the Company had raised US$ 150 million (Equivalent INR 6,942 million) by way of issue of 1500 4.5% FCCB of US$ 100,000 each. The Bond holders have an option to convert outstanding bonds (USD 75 million) into 12,005,000 equity shares of Rs. 5 each fully paid up at an initial conversion price of Rs. 300 per share with a fixed rate of exchange on conversion of Rs. 48.02 = US$ 1 at any time on or after 26 November 2009 until 10 days prior to Maturity date (i.e. 17 October 2014). Unless previously converted, redeemed or repurchased and cancelled, the Bonds will be redeemed on 17 October 2014 at 102.8028% of the principal amount so as to give a gross yield of 5% per annum (calculated on semi annual basis) to the Bond holders.

The Company has an option to redeem the Bonds at their Early Redemption amount upon occurrence of events specified in the Offering Circular for issue of the Bonds ("Offering Circular"). Further, the Company has an option to mandatorily convert the Bonds after three years as specified in the Offering Circular.

ii) Premium payable on redemption of FCCB aggregating to Rs. 28.35 million (Previous year credit of Rs. 11.70 million) has been adjusted against securities premium as per Section 78 of the Companies Act, 1956. In the event, Bond holders exercise the conversion option, the amount of premium utilized from securities premium will be suitably adjusted in respective years.

iii) During the year, the company has repurchased 65, 4.5% FCCB of US$ 100,000 each aggregating to US$ 6.50 million at a discount and gain of Rs. 12.46 million arising on repurchase of FCCB is shown under "Other income".

iv) Part of the net proceeds received from the issue of FCCB has been utilized as per objects of the issue viz for funding of Plate and Coil Mill, Pipe Mill Capex Projects (Anjar and Mandya) and Investment in overseas subsidiary. Pending utilization, the balance issue proceeds of USD 0.40 million equivalent INR 23.97 million (Previous year USD 0.55 million equivalent INR 30.09 million) have been invested in short-term deposits.

1. Foreign exchange differences

a) Loss on account of difference in foreign exchange on realignment/realization and on cancellation of derivative instruments of Rs. 3596.73 million (Previous year Rs. 1,088.64 million) is shown in other expenses other than (b) below.

b) The Companies (Accounting Standards) Amendment Rules 2011 has amended the provision of AS-11 related to "The effects of changes in Foreign Exchange Rates" vide notification dated 11 May 2011 (as amended on 29 December 2011 and further clarification dated 9 August 2012) issued by the Ministry of Corporate Affairs. Accordingly, the Company has adjusted exchange difference loss amounting to Rs. 344.23 million (Previous year Rs. 361.90 million) to the cost of fixed assets and capital work-in- progress and exchange difference loss of Rs. 946.89 million (Previous year Rs. 648.88 million) is transferred to "Foreign Currency Monetary Item Translation Difference Account" to be amortized over the balance period of such long term liabilities. Out of the above, loss of Rs. 437.57 million (Previous year Rs. 373.50 million) has been adjusted in the current year and loss of Rs. 509.32 million (Previous year Rs. 275.37 million) has been carried over and disclosed in shareholders funds.

c) The Company has adopted AS-30 as referred to in Note 1 (i) of the Significant Accounting Policies and accordingly gain of Rs. 51.50 million (Previous year Loss of Rs. 44.84 million) related to foreign exchange difference on Cash Flow Hedges for certain firm commitments and forecasted transactions is recognized in Shareholders'' Funds and shown as Hedging Reserve Account.

2. a) Contingent liabilities not provided for

(Rs. in million)

2014 2013

Performance guarantees/Bid bond given by banks to company''s customers /government authorities etc. 9,306.49 15,630.87

Corporate guarantees given by the company (includes Rs. 15,277.48 million 17,148.95 18,203.96 (Previous year Rs. 11,998.22 million)) for Loans/Liabilities taken by the subsidiaries.

Loans / Liabilities outstanding against these guarantees are Rs. 2,913.06 million (Previous year Rs. 1,772.89 million)

Letters of credit outstanding (net of liability provided) for company''s sourcing 9,257.32 4,087.02

Claims against the Company not acknowledged as debts 570.62 450.54

Custom duty on pending export obligation against import of Raw Materials 380.81 1,387.25

Disputed direct taxes* 2,000.26 2,009.47

Disputed indirect taxes 84.78 100.73

*Income tax demands mainly include appeals filed by the Company before appellate authorities against disallowances i.e. depreciation/claims/deductions. The management is of the opinion that its tax disputes will be decided in its favour and no material tax liability is likely to be sustained, hence no provision is considered necessary.

b) The Company has challenged before CESTAT, the order of Commissioner of Customs (Kandla) for duty evasion of Rs. 8,609.82 million (Previous year Rs. 8,609.82 million) on account of alleged wrong classification of imported raw materials along with penalty of Rs. 8,609.82 million (Previous year Rs. 8,609.82 million) and penalty of Rs. 205 million (Previous year Rs. 205 million) on directors and officers of the Company. On the same matter and under a different proceeding, the additional DGFT, during the year imposed a penalty of Rs. 8,609.82 million (Previous year Rs. Nil) which has been unconditionally stayed by the Bombay High Court on petition filed by the Company. Based on DGFT''s clarification that, irrespective of whether it is alloy or non-alloy steel, if the grade of import and export is same, the licence can be redeemed. The Joint DGFT, Vadodara has confirmed that the grade of import and export is same, hence the whole amount of duty and penalty referred above may not be sustained and is not considered as contingent liability. However in any case, out of the above, Rs. 6,706.60 million (Previous year Rs. 6,706.60 million) is cenvatable duty which is revenue neutral and may not result into recoverable demand and accordingly relevant amount of penalty may not sustain.

3. Capital and Other Commitments

a) Estimated amount of contracts remaining to be executed on capital account (net of advances) is Rs. 120.42 million (Previous year Rs. 280.26 million)

b) Other long-term commitments- Rs. 2,000 million (Previous year Rs. 5,250 million)

c) The company has committed to provide continued need based financial support to subsidiaries.

4. Disclosures pursuant to adoption of Accounting Standard 15 (Revised 2005) Employee Benefits

The Employees gratuity fund scheme managed jointly by Kotak Life Insurance Limited and India First Life Insurance Company Limited is a defined benefit plan. The present value of obligation is based on actuarial valuation using the projected unit credit method. The obligation for leave encashment is recognized in the same manner as gratuity.

A. Disclosure in respect of transactions which are more than 10% of the total Transactions of the same type with related parties during the year:

i Sale of goods and services - Welspun Tradings Limited Rs. 19,710.20 million (Rs. 26,642.57 million), Welspun Tubular LLC Rs. 5,288.14 million (Rs. 9,958.35 million)

ii Interest and other income includes - Interest received from Welspun Natural Resources Private Limited Rs. Nil (Rs. 111.77 million), interest and guarantee commission received from Welspun Pipes Inc Rs. 25.13 million (Rs. 27.43 million), guarantee commission received from Welspun Middle East Pipe Company LLC Rs. 58.56 million (Rs. Nil).

iii Dividend received - Welspun Pipes Inc Rs. Nil (Rs. 220.38 million)

iv Redemption of preference shares of - Welspun Mauritius Holdings Limited Rs. 860.28 million (Rs. Nil) and Welspun Pipes Inc Rs. Nil (Rs. 879.92 million)

v Purchase of goods and services - Welspun Tubular LLC Rs. 7.50 million (Rs. 124.05 million), Welspun Logistics Limited Rs. 38.76 million (Rs. 54.74 million), Welspun Captive Power Generation Limited Rs. 302.37 million (Rs. 238.04 million)

vi Purchase of fixed assets-Welspun Projects Limited Rs. 180.77 million (Rs. 290.34 million)

vii Sale of fixed assets-Welspun India Limited Rs. Nil (Rs. 4.37 million)

viii Rent and license fees paid - Welspun Realty Private Limited Rs. 58.06 million (Rs. 58.99 million)

ix Donation paid - Welspun Foundation for Health and Knowledge Rs. Nil (Rs. 80.75 million) (meant for Corporate Social Responsibility activities)

x Reimbursement of expenses (paid) / recovered (net) includes recovered from Welspun Pipes Inc Rs. 36.52 million (Rs. Nil), Welspun Tubular LLC Rs. 34.31 million (Rs. 37.01 million), Welspun Tradings Limited Rs. 28.08 million (paid Rs. 1,186.56 million), Welspun Middle East Pipe Coating Company LLC Rs. 32.37 million (Rs. 0.15 million), Welspun Captive Power Generation Limited Rs. 15.28 million (Rs. 10.71 million) and paid to Welspun India Limited Rs. 25.70 million (Rs. 51.37 million),

xi Loans, advances and deposits given - Welspun Natural Resources Private Limited Rs. Nil (Rs. 1,333.36 million), Welspun Pipes Inc Rs. Nil (Rs. 271.43 million), Welspun Tradings Limited Rs. Nil (Rs. 2,721.72 million)

xii Loans, advances and deposits given repaid / adjusted - Welspun Natural Resources Private Limited Rs. Nil (Rs. 932.06 million), Welspun Tradings Limited Rs. Nil (Rs. 1,762.05 million), Welspun Maxsteel Limited Rs. Nil (Rs. 1,085.48 million).

xiii Deposits taken-Welspun Tradings Limited Rs. 2 million (Rs. Nil).

xiv Investment in shares of - Welspun Mauritius Holdings Limited Rs. 62.31 million (Rs. 3,296.62 million), Welspun Energy Limited Rs. Nil (Rs. 648.11 million), Welspun Captive Power Generation Limited Rs. 21.55 million (Rs. 151.45 million) and investment in optionally convertible debentures issued by Welspun Infratech Limited Rs. Nil (Rs. 1,398.90 million).

xv Share application money given - Welspun Pipes Limited Rs. 39.51 million (Rs. Nil), Welspun Infratech Limited Rs. Nil (Rs. 706.56 million), Welspun Mauritius Holdings Limited Rs. 8.46 million (Rs. 1837.07 million).

xvi Share application money given includes repaid / adjusted by - Welspun Energy Limited Rs. Nil (Rs. 699.76 million), Welspun Infratech Limited Rs. Nil (Rs. 1,421.66 million), Welspun Mauritius Holding Limited Rs. Nil (Rs. 3,296.62 million), Welspun Captive power Generation Limited Rs. 21.55 million (Rs. 181.45 million).

Disclosure of closing balances as at 31 March 2014

i Loans, advances and deposits given - Welspun Logistics Limited Rs. 52.40 million (Rs. 52.40 million), Welspun Realty Private Limited Rs. 284.48 million (Rs. 284.48 million), Welspun Natural Resources Private Limited Rs. Nil (Rs. 1,583.57 million), Welspun Pipes Inc Rs. 299.58 million (Rs. 271.43 million), recoverable from Managing Director Rs. 83.01 million (Rs. Nil) {Refer note 45(b)}.

ii Corporate guarantees given - Welspun Pipes Inc Rs. 1,797.45 million (Rs. 1,628.55 million), Welspun Urja Private Limited Rs. Nil (Rs. 1,709.30 million), Welspun Middle East Pipes Company LLC Rs. 4,172.91 million (Rs. 5,357.31 million), Welspun Energy Limited Rs. 1,270 million (Rs. 1,270 million), Adani Welspun Exploration Limited Rs. Nil (Rs. 2,624.98 million), Welspun Tradings Limited Rs. 8,927.55 million (Rs. 4,668.51 million).

iii Investments held - Welspun Infratech Limited Rs. Nil (Rs. 1,920.85 million), Welspun Maxsteel Limited Rs. Nil (Rs. 8,079.57 million), Welspun Mauritius Holdings Limited Rs. 3,363.63 million (Rs. 3,981.36 million), Welspun Infratech Limited - optionally convertible debentures Rs. Nil (Rs. 4,228.90 million).

iv Share application money given - Welspun Pipes Limited Rs. 596.15 million (Rs. 556.64 million).

v Trade receivables - Welspun Tubular LLC Rs. 1,497.82 million (Rs. 214.06 million), Welspun Tradings Limited Rs. Nil (Rs. 5,031.14 million).

vi Interest receivable from Welspun Natural Resources Private Limited - Rs. Nil (Rs. 100.59 million), Welspun Pipes Inc Rs. 20.30 million (Rs. 1.76 million).

vii Advance and deposits taken from Welspun Tradings Limited Rs. 735.90 million (Rs. Nil).

viii Trade payables - Welspun India Limited Rs. Nil (Rs. 19.35 million), Welspun Captive power Generation Limited Rs. 22.27 million (Rs. 26.93 million), Welspun Projects Limited Rs. 9.01 million (Rs. Nil).

ix Other receivables - Welspun Pipes Inc Rs. 6.35 million (Rs. 220.38 million), Welspun Mauritius Holdings Limited Rs. 511 million (Rs. Nil), Welspun Middle East Pipes Company LLC Rs. 134.23 million (Rs. 140.85 million).

5. The Company''s management is of the opinion that its international and domestic transactions are at arm''s length as per the independent accountants report for the year ended 31 March 2013. Management continues to believe that its international transactions post March 2014 and the specified domestic transactions covered by the new regulations are at arm''s length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision of taxation.

6. The company has been getting export/domestic orders and executing those orders through one of its subsidiaries. The realisation, income/benefits/claims, or expenses relating to such transactions i.e. risks and reward of these transactions are all on company''s account, hence the said subsidiary is allowed to retain a small percentage as profit of turnover.

7. Scheme of Arrangement

a) A Scheme of Arrangement between Welspun Corp Limited ("WCL" or the "Demerged Company") and Welspun Enterprises Limited ("WEL" or a wholly owned subsidiary of WCL or the Resulting Company) and their respective shareholders and creditors (the "Scheme"), providing for inter alia transfer of Other Business undertakings {viz. the infrastructure business (including energy, water, road), the direct reduced iron ore (DRI), EPC contracting, oil and gas business} of WCL to WEL, was approved by the Hon''ble High Court of Gujarat at Ahmedabad on 10 January 2014. The Scheme became effective on 24 January 2014 on filing with the Registrar of Companies and consequently all the assets and liabilities of the Other Business undertakings of WCL have been transferred by WCL with respective book values w.e.f. appointed date 1 April 2012. The Scheme has been given effect to in these financial statements. However certain assets are under transfer in transferee''s name, hence held in the Company''s name till then.


Mar 31, 2013

1. Micro, Small and Medium Enterprises

Disclosure of amount due to suppliers under "The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act)"as at 31Marchisasunder:

2. Foreign exchange differences

a) Loss on account of difference in foreign exchange on realignment/realization and on cancellation of derivative instruments of Rs. 1,088.64 million (Rs. 831.82 million) and Rs. Nil (Rs. 268.07 million) is accounted in other expenses and finance costs respectively other than (b) below.

b) The Companies (Accounting Standards) Amendment Rules 2011 has amended the provision ofAS-11 related to "The effects of changes in Foreign Exchange Rates" vide notification dated 11 May 2011 (as amended on 29 December 2011 and further clarification dated 9 August 2012) issued by the Ministry of Corporate Affairs. Accordingly, the Company has adjusted exchange difference loss amounting to Rs. 361.90 million (Rs. 695.83 million) to the cost of fixed assets and capital work in progress and exchange difference loss of Rs. 648.88 million (Rs. 612.53 million) is transferred to "Foreign Currency Monetary Item Translation Difference Account" to be amortized over the balance period of such long term liabilities. Out of the above, loss of Rs. 373.50 million(Rs.289.56million)has been adjusted in the current year and loss ofRs. 275.37million (Rs.322.97 million)has been carried over and disclosed in shareholders'' funds.

c) The Company has adopted AS-30 as referred to in Note 1 (i) of the Significant Accounting Policies and accordingly loss of Rs.44.84million (Rs.178.18 million) related to foreign exchange difference on Cash Flow Hedges for certain firm commitments and Fore casted transaction sis recognized in Shareholders ''Fund sand Shown as Hedging Reserve Account.

3. Contingent liabilities not provided for

(Rs. in millions)

2013 2012

Performance guarantees/Bid bond given by banks to company''s customers / government authorities etc. 15,630.87 18,948.50

Corporate guarantees given by the company (includes Rs. 11,998.22 million (Rs. 6,427.23 million)) 18,203.96 12,249.50

for Loans/Liabilities taken by the subsidiaries. Loans /Liabilities outstanding against these

guarantees are Rs. 1772.89 million (Rs. 3,172.34 million)

Letters of credit outstanding (net of liability provided) for company''s sourcing 4,087.02 7,960.46

Claims against the Company not acknowledged as debts 450.54 423.66

Custom duty on pending export obligation against import of Raw Materials 1,387.25 961.18

Disputed direct taxes* 2,009.47 -

Disputed indirect taxes** 100.73 74.29

*Income tax demands mainly include appeals filed by the Company before appellate authorities against disallowances i.e. depreciation/claims/deductions. The management is of the opinion that its tax disputes will be decided in its favor and no material tax liability is likely to be sustained, hence no provision is considered necessary.

**Demand notice received during the year for duty evasion of Rs.8,609.82 million on account of alleged wrong classification of imported raw materials along with penalty of Rs. 8,609.82 million and penalty of Rs. 205 million on directors and officers of the company. In the opinion of management, without prejudice to overall merits, inanycaseRs.6,706.60millionis convictable duty which is revenue neutral and may not resultant recoverable demand and accordingly relevant amount of penalty may not sustain. The matter is under dispute with appellate authority and thus whole amount of duty and penalty referred above is not considered as contingent liability.

4. CapitaLand Other Commitments

a) Estimated amount of contracts remaining to be executed on capital account (net of advances) is Rs. 280.26 million (Rs. 579.94 million)

b) Other long-term commitments-Rs.5,250million(Rs.3,250million)

c) The company has committed to provide continued need based financial support to subsidiaries/associates.

5. Exceptional Item

Adani Welspun Exploration Limited - "AWEL" (joint venture between Welspun Natural Resources Private Limited -"WNRPL" and Adani Enterprises Limited - "AEL") had two blocks in Thailand L39/489 and Thailand L22/50. After initial seismic studies and carrying out detailed diligence of the drilling prospectively in the adjacent Blocks, AWEL concluded that it was not prudent to pursue drilling and decided to relinquish these blocks and abandoned the drilling campaign and pay the cost towards unfinished work program. Accordingly, AWEL, has charged off Rs.1,537.6 million being the expenditure on abortive exploration activities on the these Blocks. Accordingly, the company has charged off its share (representing 35%) of Rs.538.20 million advanced for Thailand project in these financial.

6. Disclosures pursuant to adoption of Accounting Standard15(Revised 2005)Employee Benefits

The Employees gratuity fund scheme managed jointly by Kotak Life Insurance Limited and India First Life Insurance Company Limited is a defined benefit plan. The present value of obligation is based on actuarial valuation using the projected unit credit method. The obligation for leave encashment is recognized in the same manners gratuity.

7. Segment reporting

i) The Company is engaged in the business of steel products which in the opinion of the management is considered as the only reportable business segment in the context of Accounting Standard – 17 on "Segment Reporting.

ii) Information about Secondary-Geographical Segment

8. Operating lease

The Company leases office, residential facilities, equipment etc. under operating lease agreements that are renewable on a periodic basis at the option of both the less or and the lessee. The tenure of lease is generally for eleven months to one twenty months.

9. Conversion and Issue of Optionally Convertible Debentures (OCD) by Welspun Infratech Limited

During the year, Welspun In fratech Limited (awholly owned subsidiary of the company)has furtherallotted13,989 (15,000) OCDs of Rs. 100,000 each amounting to Rs. 1,398.90 million (Rs. 1,500 million). The tenure of OCDs is five years and carries interest @ 11% p.a. from April 2015 onwards and are redeemable at apremiumof5%. The company has the option to convert the said OCDs into equity shares at any time within three years as per the terms of the issue.

10. The company had collected VATofRs.368.75million on sales in earlier years which was not paid to VAT authorities and shown as liabilities, claiming it within VAT incentive limit and VAT authorities disputed the sanctioned claim. During the year, claim of the company is accepted in assessment order of earlier years by VAT authorities; hence the VAT collected is accounted as income and reported under other operating revenues.

11. The company has been getting export/domestic orders and executing those orders through one of its subsidiaries. The realization, income/benefits/claims, or expenses relating to such transactions i.e. risks and reward of these transactions are all on company''s account, hence the said subsidiary is allowed to retain a small percentage as profit of turnover.

12. Miscellaneous expenses include donation of Rs. 0.05 million paid during the year to a political party named "Bharatiya Janata Party".

13. The international transactions with Associated Enterprises (AE''s) are at arm''s length price as per the independent accountants report for the year ended31March 2012. Further, the Finance Bill, 2012 had sought to bring in certain class of domestic transactions in the ambit of the transfer pricing regulations with effect from 1 April 2012. The Management is of the opinion that its international transactions with AE''s and the specified domestic transactions for the year are at arm''s length price and will not have any impact on the amount of tax expense and provision of taxation in these financials.

14. Previous year''s figure have been regrouped / reclassified wherever necessary to correspond with current years classifications / disclosures.


Mar 31, 2012

A) Terms / right attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 5 per share. Each holder of equity shares is entitled to one vote per share, however the holders of global depository receipts (GDR's) do not have voting rights in respect of shares represented by the GDR's till the shares are held by the custodian [ Refer note 2(e) ]. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

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

b) Employee Stock Options Scheme

In respect of options granted under the Welspun Employee Stock Options Scheme, in accordance with the guidelines issued by Securities and Exchange Board of India, the value of options (based on intrinsic value of the share on the date of the grant of the option) is accounted as deferred employee compensation, which is amortized on a straight line basis over the vesting period. Employee benefits expense include credit of Rs.1.51 million (Rs. 0.56 million) being amortization of deferred employee compensation.

During the year, 78,250 equity shares and 7,875 equity shares of Rs. 5 each fully paid up were issued at a price of Rs. 80.00 and Rs. 66.75 each respectively. Discount allowed aggregating to Rs. 2.27 million (Rs. 9.24 million) in respect of shares allotted pursuant to the Employee Stock Options Scheme is credited to Securities Premium Account as per guidelines of Securities and Exchange Board of India.

c) Global Depository Receipts

During the year, the Company has raised US$ 115.00 million (Equivalent INR 5,180.85 million) byway of issue of 23,026,000 equity shares of Rs 5 each fully paid up at a premium of Rs. 220 each (equivalent 23,026 Non Voting Global Depository Receipts each of US$ 4,994.45 each representing 1000 Equity Shares of par value of Rs.5 each). The entire proceeds have been invested in short term securities as at 31 March 2012.

d) Compulsorily Convertible Debentures (CCD)

During the year, the Company has raised US$ 178.01 million (Equivalent INR 7,883.75 million) by way of issue of unsecured compulsorily convertible debentures. The CCD holders have an option to convert the CCD into 35,038,889 equity shares of Rs. 5 each fully paid up at a conversion price of Rs. 225 per share at anytime during a period of 18 months from the date of issue of the CCD i.e. on or before 17 February 2013. If not already fully converted before 17 February 2013, at the expiry of a period of 18 months from the date of issue of the CCD, the unconverted part of the CCD shall be deemed to be automatically converted into Equity Shares. The CCD carry a coupon of 5% (Five) annually until issue of Equity Shares upon conversion of the CCD.

a) The debentures together with interest are secured by first charge ranking pari passu by way of mortgage/ hypothecation of entire immovable and movable fixed assets of the Company, both present and future and second/floating charge on current assets, subject to prior charge in favour of banks for working capital facilities.

b) External Commercial Borrowings (ECB) is secured by first charge ranking pari passu by way of mortgage/ hypothecation of entire immovable and movable tangible fixed assets of the Company both present and future. Further, the ECB is also secured by exclusive charge by way of hypothecation of Debt Service Reserve Account. The Loan amount comprises of USD 140 million (USD 140 million) and JPY 1015.20 million (JPY 1015.20 million). The loan carries Interest of LIBOR plus 1.25%.

c) Foreign Currency Convertible Bonds (FCCB)

i) During the financial year 2009-2010, the Company had raised US$ 150 million (Equivalent INR 6,942 million) byway ofissueofl500 4.5% Foreign Currency Convertible Bonds(FCCB)ofUS$100,000each.The Bondholders have an option to convert these bonds into 24,010,000 equity shares of Rs. 5 each fully paid up at an initial conversion price of Rs. 300 per share with a fixed rate of exchange on conversion of Rs. 48.02 = US$ 1 at anytime on or after 26 November 2009 until 10 days prior to Maturity date (i.e. 17 October 2014).Unless previously converted, redeemed or repurchased and cancelled, the Bonds will be redeemed on 17 October 2014 at 102.8028% of the principal amount so as to give a gross yield of 5% per annum (calculated on semi annual basis) to the Bond holders.

The Company has an option to redeem the Bonds at their Early Redemption Amount upon occurrence of events specified in the Offering Circular for issue of the Bonds ("Offering Circular"). Further, the Company has an option to mandatorily convert the Bonds after three years as specified in the Offering Circular.

ii) Premium payable on redemption of FCCB aggregating to Rs. 45.75 Million (Rs. 33.80 million) has been adjusted against Securities Premium as per Section 78 of the Companies Act, 1956. In the event, Bond holders exercise the conversion option, the amount of premium utilized from securities premium will be suitably adjusted in respective years.

iii) Part of the net proceeds received from the issue of FCCB has been utilized as per object of the issue viz for funding of Plate and Coil Mill, Pipe Mill Capex Projects (Anjar and Mandya) and Investment in overseas Subsidiary. Pending utilization, the balance issue proceeds of USD 17.04 million equivalent INR 866.91 million (USD 77.41 million - equivalent INR 3,452.28 million) have been invested in short term deposits/current account with a Bank abroad and Rs. 1.46 million (Rs. 2.8 million) lying in current account with a bank in India.

1. Gross block of Plant and Machinery includes Rs 63.49 million (Rs.63.49 million) in respect of expenditure incurred on capital asset, ownership of which does not vest in the Company.

2. Depreciation/Amortisation for the year includes Rs. 4.30 million (Rs. 1.38 million) transferred to pre-operative expenses.

3. For details of exchange difference capitalised as per amended AS-11, refer note 31 (b)

4. Pre-operative expenses of Rs. 249.44 million (Rs. 42.58 million) in respect of projects have been capitalized during the year.

5. Borrowing cost allocated to fixed assets / Capital work in progress is Rs. 241.41 million (Rs. Nil)

6. Capital Work in progress includes Pre-operative expenses of Rs. 52.60 million (Rs. 18.55 million)

7. During the year, the company has revised useful life of computers and mobile phone (Office equipments) to 4 years and 3 years respectively due to which depreciation is higher by Rs. 15.49 million charged to statement of profit and loss.

Note 1 Foreign Exchange Differences

a) Loss on account of difference in foreign exchange on realignment/realization and on cancellation of derivative instruments of Rs. 831.82 million (Rs. 428.39 million) and Rs.268.07 million (Rs. Nil) is accounted in other expenses and finance costs respectively other than (b) below.

b) The Companies (Accounting Standards) Amendment Rules 2009 has amended the provision of AS-11 related to "The effects of changes in Foreign Exchange Rates" vide notification dated 31 March 2009 (as amended on 11 May 2011 and 29 December 2011) issued by the Ministry of Corporate Affairs. Accordingly, the Company has adjusted exchange difference loss amounting to Rs. 695.83 million (Rs. 8.84 million) to the cost of fixed assets and capital work in progress and exchange difference loss of Rs. 612.53 million (Gain of Rs. 93.76 million) is transferred to "Foreign Currency Monetary Item Translation Difference Account" to be amortized over the balance period of such long term liabilities. Out of the above, loss of Rs. 289.56 million (Gain of Rs. 65.14 million) has been adjusted in the current year and loss of Rs. 322.97 million (Gain of Rs. 65.14 million) has been carried over.

c) The Company has early adopted AS-30 as referred to in Note 1 (i) of the Significant Accounting Policies and accordingly loss of Rs. 178.18 million (Rs. 54.29 million) related to foreign exchange difference on Cash Flow Hedges for certain firm commitments and forecasted transactions is recognized in Shareholders' Funds and shown as Hedging Reserve Account.

Note : *The Net un-hedged short term payables as on 31 March 2012 is Rs. 9,616.02 million (Rs.l,459.02million) resulting in natural hedge against foreign exchange rate fluctuation.

** Other derivative Hedge instruments include Coupon Only Swap for notional Rupee liability of Rs. 5,000.00 million (Rs. 5,000.00 million), Interest Rate Swap for notional foreign currency liability of USD 90 million equivalent to Rs.4,578.75 million (USD 50.00 million equivalent to Rs. 2,229.75 million) and Currency Swap for notional Rupee liability of Rs. 1,000.00 million (Rs. 2,000.00 million).

Note. 2

a) Contingent liabilities not provided for

(Rs in million)

31 March 2012 31st March 2011

Performance Guarantees/Bid Bond given by banks to company's customers / government authorities etc. 18,948.50 20,025.53

Corporate Guarantees given by the company (includes Rs. 6,427.23 million (Rs. 4,793.97 million) for Loans/Liabilities taken by the subsidiaries. Loans / Liabilities outstanding against these guarantees are Rs. 3,172.34 million (Rs. 3,658.57 million) 12,249.50 9,400.57

Letters of Credit outstanding (net of liability provided) for company's sourcing. 7,960.46 8,798.71

Claims against the company not acknowledged as debts 423.66 47.82

Custom duty on pending export obligation against import of Raw Materials 961.18 313.89

Disputed Indirect Taxes 74.29 160.61

b) During the year, the Company has received show cause notices alleging duty evasion of Rs. 8,609.82 million on account of wrong classification of imported raw materials. Out of the above, Rs. 6,706.60 million is cenvatable duty which is revenue neutral and balance Rs. 1,903.22 million is custom duty. However, the company does not expect any monetary liability based on the opinion obtained.

Note 3 Capital and Other Commitments

a) Estimated amount of contracts remaining to be executed on Capital account (Net of advances) is Rs. 579.94 million (Rs. 2,559.62 million)

b) Other long-term commitments - Rs.3,250.00 million (Rs. Nil)

c) The company has committed to provide continued financial support to subsidiaries / associates based on the requirement from time to time.

Note 4 Product Compensation and Claims

During the year, the Company arrived at an out of court settlement of USD 30 million with one of its customer who has initiated counter legal action against the company in the United States of America claiming loss / damages on account of defects in the pipes supplied.

As per the terms of settlement the company will pay USD 10 million within 12 months (in two equal installments) and balance USD 20 million will be adjusted from potential business from the said customer. In case the customer fails to give business to the company, then the settlement amount will be restricted to USD 22.50 million. The Company has accordingly provided the quality claim of USD 22.50 million in these accounts and reported USD 7.5 million as Contingent Liability.

Further, the Company has also entered into an out of Court settlement of USD 10 million with one of its steel supplier against which the company has initiated legal action in the Court at United States of America. As per the terms of settlement, the company has received USD 7 million from the said steel supplier and balance USD 3 million will be received within 24 months (in two equal installments). The Company has accordingly accounted for USD 10 million in these accounts.

Note 5 Disclosures pursuant to adoption of Accounting Standard 15 (Revised 2005) Employee Benefits

The Employees gratuity fund scheme managed jointly by Kotak Life Insurance Limited and India First Life Insurance Company Limited is a defined benefit plan. The present value of obligation is based on actuarial valuation using the Projected unit credit method. The obligation for leave encashment is recognized in the same manner as gratuity.

Defined Benefit Plan

Details of defined benefit plan of Gratuity (Funded) and Leave Encashment (Non-Funded) are as follows

Note 6 Segment Reporting

i) The Company is engaged in the business of steel products which in the opinion of the management is considered as the only reportable business segment in the context of Accounting Standard - 17 on "Segment Reporting".

Notes:

a) The Segment revenue in the geographical segments considered for disclosure is as follows:

- Revenue within India includes sales to customers located within India.

- Revenue outside India includes sales to customers located outside India.

b) Segment assets and liabilities include the respective amounts identified to each of the segments and amounts allocated on a reasonable basis.

Note 7 Operating lease

The Company leases office, residential facilities, equipment etc. under operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. The initial tenure of lease is generally for eleven months.

* Direct and Indirect subsidiaries of Welspun Energy Limited (an associate company): Welspun Energy Madhya Pradesh Limited, Welspun Energy Anuppur Private Limited, Welspun Energy UP Private Limited, Welspun Urja India Limited, Welspun Energy Chattisgarh Limited, Welspun Renewables Energy Limited, Welspun Urja Gujarat Private Limited.,Welspun Energy Meghalaya Private Limited, Welspun Energy Jharkhand Private Limited, Welspun Energy Orissa Private Limited, Welspun Energy Resources Private Limited, Welspun Solar Park Private Limited, Welspun Energy Park Private Limited, Welspun Solar Tech Private Limited, Welspun Energy Maharashtra Private Limited, Welspun Energy Rajasthan Private Limited, Solarsys Renewable Energy Private Limited, Welspun Solar Madhya Pradesh Private Limited, Welspun Solar Rajasthan Private Limited, Welspun Solar Punjab Private Limited, Welspun Solar UP Private Limited, Welspun Solar AP Private Limited, Unity Power Private Limited, Northwest Energy Private Limited, Dreisatz Mysolar24 Private Limited.

Other related parties with whom transactions have taken place during the year and balances outstanding as on the last day of the year.

Welspun India Limited, Welspun Steel Limited, Welspun Retail Limited, Welspun Anjar SEZ Limited, Welspun Foundation for Health and Knowledge, Welspun Syntex Limited, Vipuna Trading Limited, Welspun Logistics Limited, Welspun Realty Private Limited, Welspun Enterprises (Cyprus) Limited, Remi Metals Gujarat Limited, Welspun Captive Power Generation Limited

* Denotes figures less than Rs. 10,000/-

Disclosure in respect of transactions which are more than 10% of the total Transactions of the same type with related parties during the year:

i Sale of Goods/Services and Recoveries - Welspun Tradings Limited Rs. 8,701.43 million (Rs. 12,646.43 million) (Refer note 55), Welspun Tubular LLC Rs. 7,703.42 million (Rs. 8,437.01 million)

ii Sale of Fixed Assets-Welspun Tubular LLC Rs. 27.97 million (Rs. Nil), Remi Metals Gujarat Limited Rs. Nil (Rs. 1.80 million)

iii Purchase of Goods and Services - Welspun Tubular LLC Rs. 561.94 million (Rs. 297.79 million), Welspun Projects Limited Rs. 167.34 million (Rs. 104.21 million), Welspun Steel Limited Rs. 24.73 million (Rs. 74.41 million), Welspun Logistics Limited Rs. 50.20 million (Rs. 49.23 million), Welspun Tradings Limited Rs. 0.76 million (Rs. 2,569.52 million)

iv Purchase of Fixed assets - welspurn pipes Limited Rs - Nil ( Rs- 825.09 million)

v Rent paid - Welspun Realty Private Limited Rs. 65.03 million (Rs. 92.53 million)

vi Donation paid - Welspun Foundation for Health and Knowledge Rs. 22.65 million (Rs. 25.33 million) (meant for Corporate Social Responsibility activities)

vii Interest received - Welspun Natural Resources Private Limited Rs. 73.29 million (Rs. 29.01 million), Welspun Infratech Limited Rs. 196.07 million (Rs. Nil)

viii Loans, Advances and Deposits given - Welspun Natural Resources Private Limited Rs. 424.45 million (Rs. 963.97 million), Welspun Maxsteel Limited Rs. 1085.48 million (Rs. Nil), Welspun Infratech Limited Rs. Nil (Rs. 841.49 million)

ix Loans, Advances and Deposits given repaid / adjusted - Welspun Natural Resources Private Limited Rs. 272.10 million (Rs. Nil), Welspun Maxsteel Limited Rs. 1085.48 million (Rs. Nil), Welspun Infratech Limited Rs. Nil (Rs. 841.49 million)

x Investment in Shares of - Welspun Maxsteel Limited Rs. 8,042.17 million (Rs. Nil), Welspun Infratech Limited Rs. 920 million (Rs. Nil) converted out of Optionally Convertible Debentures, Welspun Mauritius Holdings Limited Rs. 0.10 million (Rs. 684.65 million), Investment in Optionally Convertible Debentures issued by Welspun Infratech Limited Rs. 1,500 million (Rs. 2,250 million)

xi Sale of Investments in Welspun Constructions Private Limited Rs. 0.13 million (Rs. Nil)

xii Share Application Money given - Welspun Energy Limited Rs. 2,594.77 million (Rs. 549.00 million), Welspun Infratech Limited Rs. 1,126.55 million (Rs. 2,641.00 million), Welspun Mauritius Holdings Limited Rs. 1,513.40 million (Rs. 681.06 million), Welspun Natural Resources Private Limited Rs. 45 million (Rs. 985.30 million)

xiii Share Application Money given includes repaid / adjusted by - Welspun Energy Limited Rs. 2,003.40 million (Rs. 202.60 million), Welspun Infratech Limited Rs. 411.35 million (Rs. 3,420.85 million), Welspun Natural Resources Private Limited Rs. 45 million (Rs. 1,056.86 million)

xiv Reimbursement of Expenses (net)-Welspun India Limited Rs. 42.66 million (Rs. 80.77 million), Welspun Tubular LLC Rs. 281.13 million (Rs. Nil), Welspun Infratech Limited Rs Nil (Rs 19.25 million)

Disclosure of Closing balances as at 31 March 2012

i Loans, Advances and Deposits - Welspun Logistics Limited Rs. 52.40 million (Rs. 52.40 million), Welspun Realty Private Limited Rs. 320.48 million (Rs. 356.48 million), Welspun Natural Resources Private Limited Rs. 1,189.61 million (Rs. 963.97 million).

ii Trade Receivables - Welspun Tubular LLC Rs. 1,140.97 million (Rs. Nil), Welspun Tradings Limited Rs. 1,555.82 million (Rs. Nil), Welspun Projects Limited Rs. Nil (Rs. 115.80 million)

iii Trade Payables - Welspun India Limited Rs. 0.63 million (Rs. Nil), Welspun Retail Limited Rs. 2.57 million (Rs. Nil)

iv Trade Advances received - Welspun Tradings Limited Rs. Nil (Rs. 1,068.12 million), Welspun Tubular LLC Rs. Nil (Rs. 1,136.09 million)

v Investments held - Welspun Infratech Limited Rs. 1,920.85 million (Rs. 1,000.85 million), Welspun Maxsteel Limited Rs. 8,042.17 million (Rs. Nil), Welspun Pipes Inc. Rs. 645.94 million (Rs. 645.94 million), Welspun Mauritius Holdings Limited Rs. 684.74 million (Rs. 684.65 million), Welspun Infratech Limited - Optionally Convertible Debentures Rs. 2,830 million (Rs. 2,250 million)

vi Share Application Money given - Welspun Energy Limited Rs. 699.76 million (Rs. 368.40 million), Welspun Infratech Limited Rs. 715.20 million (Rs. Nil), Welspun Pipes Limited Rs. 578.64 million (Rs. 555.54 million), Welspun Mauritius Holdings Limited Rs. 1,513.40 million (Rs. Nil), Welspun Captive Power Generation Limited Rs. 195 million (Rs. 130 million)

vii Guarantees and Collaterals given - Welspun Pipes Inc Rs. 4,070 million (Rs. 3,567.60 million), Welspun Urja Private Limited Rs. 1,709.30 million (Rs. 1,709.30 million), Welspun Mauritius Holdings Limited Rs. Nil (Rs. 1,181.77 million), Welspun Middle East Pipes Company LLC Rs. 2,035 million (Rs. Nil), Welspun Energy Limited Rs. 1,270 million (Rs.750 million), Adani Welspun Exploration Limited Rs. 1,470 million (Rs. 700 million)

Note 8 Acquisitions during the year

a) The Company acquired 113,622,058 (87.35%) Equity shares of Welspun Maxsteel Limited (WMSL) at an aggregate consideration of Rs. 8,042.17 million pursuant to Share Purchase and Investment Agreement dated 29 June 2011 entered with Insight Solutions Limited, Welspun Maxsteel Limited and Welspun Steel Limited. Accordingly, WMSL became a subsidiary of the Company w.e.f. the date of acquisition i.e. 13 August 2011.

b) Welspun Infra Projects Private Limited, a subsidiary of Welspun Infratech Limited has acquired 35% equity shares in Leighton Contractors (India) Private Limited ('LCPL'), (an Indian unit of Leighton Holdings) at a total consideration of Rs. 4,700 million. LCPL was subsequently renamed as Leighton Welspun Contractors Private Limited ("LWIN").

c) Welspun Infratech Limited (subsidiary of company) has subscribed to 7,772,727 equity shares of Rs. 10 each fully paid up in ARSS Bus Terminal Private Limited (ARSS) for Rs. 77.72 million representing 45% of equity shares of ARSS.

Note 9 Conversion and Issue of Optionally Convertible Debentures (OCD) by Welspun Infratech Limited

On 28 April 2011, Welspun Infratech Limited (a wholly owned subsidiary of the company) allotted 23,889,899 equity shares of Rs. 10 each at Rs. 38.51 per share aggregating to Rs. 920 million to the company, consequent to conversion of 9,200 OCDs of Rs. 100,000 each. During the year, the company has additionally subscribed to 15,000 7% OCDs of Rs. 100,000 each, amounting to Rs. 1,500 million. The tenure of OCDs is five years and bearing interest @ 7% p.a. for first three years and @ 11% p.a. for the remaining period if not redeemed earlier. The company has the option to convert the said OCDs into equity shares at any time within three years as per the terms of the issue.

Note 10 Other current liabilities include an amount of Rs. 368.75 Million (Rs. 368.75 million) being VAT collected on Sales, claiming it within VAT incentive limit, not paid. If the claim of the Company is not accepted, the amount may have to be paid and/or contested in appeal.

Note 11 The company has been getting export / domestic orders and executing those orders through one of its subsidiaries. The realisation, income / benefits / claims, or expenses relating to such transactions are on company's account allowing it to retain a reasonable profit margin.

Note 12 Schedule VI to the Companies Act, 1956 is revised effective from 1 April 2011. This has significantly impacted the disclosures and presentation in the financial statements. Previous years figure have been regrouped / reclassified wherever necessary to correspond with current years classifications / disclosures.

 
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