Notes to Accounts of Electrosteel Castings Ltd.
Mar 31, 2023
1 Net Block of Plant and Equipments includes Rs. 4,07.72 lakhs (previous year Rs.4,08.22 lakhs) being contribution for laying the power line, the ownership of which does not vest with the Company.
2 Railway Siding represents the cost of construction of the assets for Company''s use over the specified period as per the terms of the agreement.
3 Freehold land includes Rs.3,35.81 lakhs (previous year Rs.3,35.81 lakhs ) pertaining to the Parbatpur Coal Mine in respect of which the execution of conveyance deeds are pending execution (refer note no. 48). Freehold land also includes Rs. 2,75.27 lakhs (previous year Rs. 2,75.27 lakhs) towards contribution in relation of Joint Venture Company "North Dhadhu Mining Company Private Limited". (refer note no. 8.2)
4 Freehold land includes Rs. 18,89.04 lakhs (previous year Rs.18,89.04 lakhs), acquired on merger of erstwhile Mahadev Vyapaar Private Limited and Rs.3,51,50.37 lakhs (previous year Rs.3,51,50.37 lakhs) on merger of erstwhile Srikalahasthi Pipes Limited (SPL) where title deeds in favour of the company are in process of being registered.
5 Freehold land includes, land amounting to Rs.2,94,93.58 lakhs (previous year Rs.2,94,93.58 lakhs) situated at Elavur plant of the Company which are mortgaged in the favour of lender of ESL Steels Limited, an erstwhile associate of the Company. (Also refer note no. 9.1)
6 During the year 1942.56 sq. mtr. of land was acquired by Union of India under the provisions of National Highways Act, 1956 and a compensation amounting to Rs. 16.24 lakhs was determined and received by the company in the month of March 2023. The company being aggrieved of the compensation granted against the same has accepted the amount under protest and filed a petition on April 06, 2023 demanding higher compensation.
# Mahadev Vyapaar Private Limited and Srikalahasthi Pipes Limited were merged with the Company in earlier year. The transfer of the respective lands in the name of the Company is under process.
7 The Company doesn''t hold any Benami Property and there is no proceedings initiated or pending against the Company for holding any Benami Property under the Benami Transaction (Prohibition) Act, 1988 and rules made there under
8 Refer note no. 23 to financial statements in respect of charge created against borrowings.
5.10 The above includes assets pertaining to Parbatpur Coal Block, consequential adjustment whereof will be given effect to as dealt with in note no. 48 of the financial statement . Also refer note no. 49 in respect of Iron-ore and manganese ore mine.
6.1.1 Right to use Wagon represents cost incurred in connection with wagon procured under "Wagon investment Scheme" and handed over to railway authorities for their normal operations and ensuring the availability of the wagons to the company on priority for transportation by them as and when required.
6.1.2 The company being deprived of the availability of the wagons as per the "Wagon Investment Schemeâ (WIS) had terminated the agreement with South Eastern Railway (SER). Arbitration award pursuant to the claim for compensation for losses/damages has been allowed in favour of the Company. SER objected to the said award and the matter is currently pending before the Hon''ble Calcutta High Court. Pending decision of the Hon''ble Court, Rs. 2,52,85.27 lakhs deposited by SER in respect of the said award has been allowed to be withdrawn by the Company on submission of the Bank Guarantee. Subsequent to the Balance Sheet date, the said amount has been withdrawn and kept in fixed deposit. Pending final decision, no adjustment with respect to ROU Assets as above or claim amount has been given effect to in the financial statement.
6.2 Refer note no 23 to financial statements in respect of charge created against borrowings.
6.3 Refer note no. 48 dealing with coal mine assets.
8.1 The Company has investment of Rs. 30.00 lakhs (previous year Rs. 30.00 lakhs) in equity shares and given advance of Rs. 7,00.00 lakhs (previous year Rs. 7,00.00 lakhs) against equity to Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers) in terms of the Shareholder''s Agreement dated March 27, 2004. The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the Company against operation and mismanagement of the company inter alia on various matters including for forfeiture of the Company''s investment in equity shares of the DPL. The matter was later transferred to the Company Law Board, Kolkata Bench and is now being taken up by the National Company Law Tribunal, Kolkata Bench (NCLT). The Company had also inter alia filed an arbitration proceeding under Arbitration & Conciliation Act, 1996 against recovery of the said amount against which the ventures also filed their counter claims on the company. The matter is sub judice before the NCLT.
Pending final outcome of the above matter, the amounts in equity shares and advance have been fully provided for in the financial statements in earlier year. The other venturers are not providing the financial statements of DPL, and thereby necessary disclosures etc. could not be provided in these financial statements.
8.2 (a) The North Dhadhu Coal Block located in the state of Jharkhand was allocated to the Company, Amalgam Steel & Power Limited (ASPL)
(formerly known as Adhunik Alloys & Power Limited), Jharkhand Ispat Private Limited (JPL) and Pawanjay Steel & Power Limited (PSPL)
(collectively referred to as venturers) for working through North Dhadhu Mining Company Private Limited (NDMCPL), a joint venture company. The Company has joint control (proportion of ownership interest of the Company being 48.98 %) along with other venturers represented by investment of Rs. 8,22.81 lakhs in equity shares of NDMCPL.
(b) In pursuance of the Order dated September 24, 2014 issued by the Hon''ble Supreme Court of India (the Order) followed by the Ordinance promulgated by the Government of India, Ministry of Law & Justice (legislative department) dated October 21, 2014 (Ordinance) for implementing the Order, The Ministry of Coal, Government of India had issued an order for de-allocation of North Dhadhu Coal Block. The Company has submitted its claim for compensation which is awaiting acceptance. In the view of the management the compensation to be received in terms of ordinance is expected to cover the cost incurred by the Joint venture company. However as an abundant precaution, impairment in the value of the investment amounting to Rs. 8,22.81 lakhs in Joint venture has been provided in earlier year.
8.3 Particulars of investments as required in terms of section 186(4) of the Companies Act,2013 have been disclosed under note 8, 9 & 14.
9.1 The Company holds 19796000 equity shares (previous year 19796000 equity shares) of Rs. 10/- each in ESL Steel Limited (ESL) out of which 17334999 equity shares (previous year 17334999 equity share) of Rs. 10/- each amounting to Rs. 57,44.81 lakhs have been pledged with the consortium of lenders of ESL (lenders). The notices issued by the lenders for invocation of pledge of company''s investment was set aside by the Hon''ble High Court at Calcutta in the earlier year and the company''s plea for release of such pledge is pending before the Hon''ble Court. Further in the earlier years, certain land amounting to Rs. 2,94,93.58 lakhs (previous year Rs. 2,94,93.58 lakhs) of the company, situated at Elavur, Tamil Naidu, were mortgaged to another lender SREI Infrastructure Finance Limited (SREI) of ESL and SREI had subsequently assigned the right of the said property to an Asset Reconstruction Company (ARC) although the claims of the said lender were fully discharged by the ESL as per the Resolution Plan approved by NCLT, Kolkata. Subsequently the ARC had issued SARAFESI Notice and taken the symbolic possession of the said land against alleged claim in SARAFESI Notice in an earlier year. The Company had disputed the alleged assignment of the loan by the lender at Hon''ble Madras High Court. Subsequently, as per direction of the Hon''ble Supreme Court, the Company had filed an application before the Debt Recovery Tribunal (DRT), Chennai for setting aside the SARAFESI actions and release of the title deeds of such land. The DRT vide its order dated April 08, 2022 uploaded on April 27, 2022 had dismissed the application of the Company. On filing the appeal before the Debt Recovery Appellate Tribunal (DRAT) against the order of DRT, DRAT has directed the Company to deposit 50% of the SARAFESI demand i.e. Rs. 2,93,55.04 lakhs (previous year Rs. 2,93,55.04 lakhs) and was of the view that at admission stage it cannot go in to the merits of the case hence, cannot give any relief on the pre-deposit. The Company then has filed revision application at Hon''ble Madras High Court under Article 227 of the Indian Constitution and a Writ Application under Article 226 of Indian Constitution challenging provisions of pre-deposit under SARAFESI Act. The matter is now pending before Hon''ble Madras High Court.
Earlier, the ARC had also filed an application before the National Company Law Tribunal, Cuttack for initiation of Corporate Insolvency and Resolution Process (CIRP) process against the Company which has been decided in the favour of the Company vide NCLT order dated June 24, 2022 by dismissing the application of ARC. The ARC has challenged the order of NCLT, Cuttack and the matter is pending before National Company Law Appellate Tribunal (NCLAT), New Delhi.
Pending finalization of the matter, investments and land as dealt herein above, have been carried forward at their book value.
9.2 The Company has made an irrevocable decision to consider investment in equity instruments, other than in Subsidiaries and Joint ventures not held for trading (non current investments) to be recognized at FVTOCI.
19.4 (a) Includes Rs. 46,80.58 lakhs (previous year Rs. 46,80.58 lakhs) related to claim under West Bengal Incentive Scheme (WBIS) 2000. In absence
of any clarification from the Government of West Bengal regarding disbursal of incentive post implementation of GST, the West Bengal Industrial Development Corporation (WBIDC) the implementing agency is not releasing the fund in this respect. The company has filed a writ petition in Hon''ble High Court of Calcutta against the same and the matter is pending for final decision. The above claim being made in terms of incentive scheme, the amount thereof in view of the management are recoverable.
(b) Includes Rs. 12,02.49 lakhs (previous year Rs. 12,02.49 lakhs) in respect of sales tax subsidy receivable under Andhra Pradesh Industrial Investment Promotion Policy.
19.5 Refer note no.29.1 to Financial Statements in respect of charge created against borrowings.
21.1 The Company has only one class of shares referred to as equity shares having a par value of Re. 1/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, after distribution of all preferential amounts, in proportion of their shareholding.
21.2 During the previous year, 161650538 equity shares of Re.1 each has been issued to shareholders of erstwhile Srikalahasthi Pipes Limited pursuant to the scheme of amalgamation approved by Hon''ble National Company Law Tribunal, Cuttack Brach vide its order dated December 09, 2021.
The reserve was created on account of forfeiture of warrants convertible into equity shares.
22.2 Capital Reserve on Amalgamation
Capital Reserve on Amalgamation represent the excess of consideration paid i.e. equity shares issued with respect to net assets and reserves acquired consequent to amalgamation of erstwhile Mahadev Vyapaar Private Limited and Srikalahasthi Pipes Limited amounting to (Rs. 14,86.46 lakhs) and (Rs. 4,25,39.34 lakhs) respectively.
22.3 Securities Premium Reserve
Securities Premium Reserve represents the amount received in excess of par value of securities and is available for utilisation as specified under Section 52 of Companies Act, 2013.
General Reserve is a free reserve which is created by transfer of profit from retained earnings. As the Reserve is created by a transfer from one component to another and is not an item of OCI, item included in General Reserve is not reclassified subsequently to Statement of Profit and Loss.
Retained earnings generally represents the accumulated undistributed surplus earnings of the company. This includes Rs. 11,82,84.60 lakhs (previous year Rs. 11,80,62.49 lakhs) represented by changes in carrying amount of Property, Plant and Equipments being measured at fair value as on the date of transition as deemed cost. Further unrealised loss of Rs. 9,84,10.67 lakhs (previous year Rs. 9,84,10.67 lakhs) due to changes in carrying amount of investment has also been adjusted to the retained earning. Thereby Rs. 1,98,73.93 lakhs (previous year Rs. 1,96,51.82 lakhs) being represented by changes in carrying value of assets in terms of provisions of Companies Act 2013 is not available for distribution. This includes other comprehensive income of (Rs. 2,29.43 lakhs) relating to remeasurement of defined benefit plans (net of tax) which cannot be reclassified to statement of profit and loss.
22.6 Other Comprehensive Income
Other Comprehensive Income (OCI) represent the balance in equity for items to be accounted under OCI and comprises of the following:
i) Items that will not be reclassified to Profit and Loss
a. The company has elected to recognise changes in the fair value of non-current investments (other than in subsidiaries, associates and joint ventures) in OCI. This reserve represents the cumulative gains and losses arising on equity instruments being measured at fair value. The company transfers amounts from this reserve to retained earnings when the relevant equity securities are disposed.
b. This also includes actuarial gains and losses arising on defined benefit obligations recognised in OCI which is transferred to retained earning as stated in note no. 22.5.
ii) Items that will be reclassified to profit and loss.
a. This reserve represents the cumulative effective portion of changes in fair value of currency swap that are designated as cash flow hedge are recognised in OCI. This is reclassified to statement of Profit and Loss.
22.7 The company has allotted 23579344 warrants convertible into or exchangeable for 1 (one) fully paid-up equity shares of the company having face value of Re. 1 each at the issue price of Rs. 42.41 each payable in cash (''warrant issue price'') on preferential basis to Promoter/ Promoter group on December 27, 2022 as approved by the Shareholders vide their postal ballot resolution dated December 23, 2022. The said allotment has been done upon receipt of Rs. 10.60 for each warrants aggregating to Rs. 24,99.41 lakhs included under other equity being the amount equivalent to 25% of the warrant issue price as upfront contribution received by the company in this respect entitling the warrant holders to apply for and get allotted one equity shares of the company against each warrant held in one or more tranche within a maximum period of eighteen months from the date of allotment on payment of balance amount of Rs. 31.81 each which is equivalent to 75% of the warrant issue price.
22.8 The Board of Directors at its meeting held on May 17, 2023 recommended a final dividend of Re. 0.90 per equity share to be paid on fully paid up equity shares amounting to Rs. 53,51.45 lakhs for the financial year ended March 31,2023. The above is subject to approval of the shareholders at the ensuing Annual General Meeting and has not been included as a liability in these financial statement.
23.1.2 Rupee Term Loan of Rs. 50,00.00 lakhs from a bank was secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi Unit and Freehold Land at Haldia. The said loan has been fully repaid during the year.
23.1.3 Rupee Term Loan of Rs. 1,50,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi Unit and Freehold Land at Haldia . The outstanding as on March 31,2023 is Rs. 50,47.93 lakhs (previous year Rs. 1,02,34.39 lakhs). The balance loan is repayable in 7 equal quarterly installments starting from June 2024.
23.1.4 Rupee Term Loan of Rs. 50,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia. The outstanding as on March 31, 2023 is Rs. 33,12.65 lakhs (previous year Rs. 40,30.87 lakhs). The balance loan is repayable in 14 structured quarterly installments starting from April 2023 .
23.1.5 Rupee Term Loan of Rs. 4,00,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia. The outstanding as on March 31,2023 is Rs. 60,03.54 lakhs (previous year Rs. 64,39.18 lakhs). The balance loan is repayable in 26 structured quarterly installments starting from June 2023.
23.1.6 Rupee Term Loan of Rs. 60,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia. The outstanding as on March 31, 2023 is Rs. 51,00.92 lakhs (previous year Rs. 53,05.32 lakhs). The balance loan is repayable in 43 structured monthly installments starting from April 2023.
23.1.7 Rupee Term Loan of Rs. 75,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia . The outstanding as on March 31,2023 is Rs. 64,15.87 lakhs (previous year Rs. 70,10.16 lakhs). The balance loan is repayable in 15 structured quarterly installments starting from June 2023.
23.1.8 Rupee Term Loan of Rs. 50,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia. The outstanding as on March 31, 2023 is Rs. 36,43.80 lakhs (previous year Rs. 48,19.22 lakhs). The balance loan is repayable in 12 equal quarterly installments starting from May 2023.
23.1.9 Rupee Term Loan of Rs. 11,00.00 lakhs from a bank was secured by way of first pari passu charge over Current Assets of the company. This said loan has been fully repaid during the year.
23.1.10 Rupee Term Loan of Rs.75,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia. The outstanding as on March 31, 2023 is Rs. 33,60.83 lakhs (previous year Rs.55,68.10 lakhs). The balance loan is repayable in 9 equal quarterly installments starting from June 2024.
23.1.11 Rupee Term Loan of Rs.60,00.00 lakhs from a Bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia. The outstanding as on March 31, 2023 is Rs. 53,96.38 lakhs (previous year Rs. 59,94.85 lakhs). The balance loan is repayable in 18 equal quarterly installments starting from June 2023.
23.1.12 Rupee Term Loan of Rs.75,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia. The outstanding as on March 31, 2023 is Rs. 52,12.28 lakhs (previous year Rs.72,19.89 lakhs). The balance loan is repayable in 11 structured quarterly installments starting from May 2024.
23.1.13 Rupee Term Loan of Rs. 75,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment, both present and future, of the Company located at Srikalahasthi unit. The outstanding as on March 31, 2023 is Rs. 22,47.00 lakhs (previous year Rs. 29,92.00 lakhs). The balance loan is repayable in 6 equal quarterly installments starting from June 2023.
23.1.14 Rupee Term Loan of Rs. 1,00,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment, both present and future, of the Company located at Srikalahasthi unit. The outstanding as on March 31, 2023 is Rs.29,89.00 lakhs (previous year Rs. 49,71.00 lakhs). The balance loan is repayable in 6 equal quarterly installments starting from June 2023.
23.1.15 Rupee Term Loan of Rs. 1,45,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment, both present and future, of the Company located at Srikalahasthi unit. The outstanding as on March 31, 2023 is Rs. 18,61.68 lakhs (previous year Rs. 24,82.02 lakhs). The balance loan is repayable in 12 structured quarterly installments starting from May 2023.
23.1.16 Rupee Term Loan of Rs. 2,00,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company located at Srikalahasthi unit. The outstanding as on March 31,2023 is Rs.1,77,08.25 lakhs (previous year Rs. 1,93,98.91 lakhs). The balance loan is repayable in 20 structured quarterly installments starting from April 2023.
23.1.17 Rupee Term Loan of Rs. 15,00.00 lakhs from a bank was secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment, both present and future, of the Company located at Srikalahasthi unit. The said loan has been fully repaid during the year.
23.1.18 Rupee Term Loan of Rs. 120,00.00 lakhs from a bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment, both present and future, of the Company located at Srikalahasthi unit. The outstanding as on March 31, 2023 is Rs. 20,70.81 lakhs (previous year nil). The balance loan is repayable in 20 equal quarterly installments starting from June 2024.
23.2.1 Rupee Term Loan of Rs.50,00.00 lakhs from a financial institution is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia . The outstanding as on March 31,2023 is Rs.49,79.98 lakhs (previous year nil). The balance loan is repayable in 12 equal quarterly instalments starting from September 2024.
23.2.2 Rupee Term Loan of Rs.1,00,00.00 lakhs from a financial institution is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia. The outstanding as on March 31,2023 is Rs. 56,37.19 lakhs (previous year Rs. 87,50.02 lakhs). The balance loan is repayable in 13 equal quarterly instalments starting from June 2024.
23.2.3 Rupee Term Loan of Rs. 25,00.00 lakhs from a financial institution was secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia. The said loan has been fully repaid during the year.
23.2.4 Rupee Term Loan of Rs. 60,00.00 lakhs from a financial institution is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future, of the Company other than assets located at Elavur and Srikalahasthi unit and Freehold Land at Haldia. The outstanding as on March 31,2023 is Rs.56,84.00 lakhs (previous year nil). The balance loan is repayable in 18 equal quarterly instalments starting from May 2023.
23.3 The interest rate for the above loans ranges from 5.75% to 10.30%. p.a.
23.4 The outstanding balances disclosed in note 23.1 to 23.2 are based on the amortised cost in accordance with Ind AS 109 "Financial Instruments".
23.5 There are no registration/satisfaction of charges pending with Registrar of Companies beyond the statutory period as on the Balance Sheet date.
25.1 Provision for Mines closure and restoration charges had been made in terms of statutory obligations specified for the purpose and Rs. 3,67.58 lakhs (value as on March 31, 2023 Rs. 8,62.57 lakhs) deposited in the Escrow account in terms of the stipulation made by Ministry of Coal, for Mines closure Plan. In view of cancellation of allotment of coal mines no further provision and accrual of income on fixed deposit lying in Escrow account has been considered necessary. (Refer note no. 17 and 48).
The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the fair values:
1. The fair value of cash and cash equivalents, current trade receivables and payables, current loans, current financial liabilities and assets and borrowings approximate their carrying amount largely due to the short-term nature of these instruments. The management considers that the carrying amounts of financial assets and financial liabilities recognised at nominal cost/amortised cost in the financial statements approximate their fair values. In respect of non current trade receivables and loans, fair value is determined by using discount rates that reflect the present borrowing rate of the company.
2. A substantial portion of the company''s long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Fair value of variable interest rate borrowings approximates their carrying value subject to adjustments made for transaction cost. In respect of fixed interest rate borrowings, fair value is determined by using discount rates that reflects the present prevailing rates for similar borrowing in the market.
3. Investments (other than Investments in Joint Venture and Subsidiaries) traded in active market are determined by reference to the quotes from the Stock exchanges as at the reporting date. Investment in liquid and short term mutual fund, which are classified as Fair value through Profit and Loss are measured using quoted market prices at the reporting date and in case of debentures, bonds and government securities, the net present value at current yield to maturity have been considered. Unquoted investments in shares have been valued based on the historical net asset value as per the latest audited financial statements.
4. The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc. The said valuation has been carried out by the counter party with whom the contract has been entered with and management has evaluated the credit and non-performance risks associated with the counterparties and believes them to be insignificant and not requiring any credit adjustments.
2. During the year ended March 31,2023 and March 31,2022, there were no transfers between Level 1, Level 2 and Level 3.
3. The Inputs used in fair valuation measurement are as follows:
i) Fair valuation of Financial assets and liabilities not within the operating cycle of the company is amortised based on the borrowing rate of the company.
ii) 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 inputs used for forward contracts are Forward foreign currency exchange rates and Interest rates to discount future cash flow.
iii) Unquoted investments in equity shares have been valued based on the amount available to shareholder''s as per the latest audited financial statements wherever available. Further, external observable inputs or assumptions have been used in such valuation of equity shares in other cases.
(d) Derivatives financial assets and liabilities:
The Company follows established risk management policies, including the use of derivatives to hedge its exposure to foreign currency fluctuations on foreign currency assets / liabilities. The counter party in these derivative instruments is a bank and the Company considers the risks of non-performance by the counterparty as non-material.
In the normal course of business, the Company transfers its bill receivables to banks. Under the terms of the agreements, the Company surrenders control over the financial assets and the transfer is with recourse. Under arrangement with recourse, the company is obligated to repurchase the uncollected financial assets, subject to limits specified in the agreement with banks. Accordingly, in such cases the amount transferred are recorded as borrowings in the statement of financial position and cash flows from financing activities. As at March 31, 2023 and March 31, 2022 the maximum amount of recourse obligation in respect of financial assets are Rs 3,79,16.20 lakhs and Rs. 1,44,65.14 lakhs respectively.
The Company''s activities are exposed to variety of financial risks. The key financial risks includes market risk, credit risk and liquidity risk. The Company''s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Board of Directors reviews and approves policies for managing these risks. The risks are governed by appropriate policies and procedures and accordingly financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives.
Market risk is the risk or uncertainty arising from possible market fluctuations resulting in variation in the fair value of future cash flows of a financial instrument. The major components of Market risks are currency risk, interest rate risk, commodity price risk and other price risk. Financial instruments affected by market risk includes trade receivables, borrowings, investments in fixed deposit/ Mutual Funds/ Bonds and trade and other payables.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s foreign currency denominated borrowings, trade receivables and trade or other payables.
In order to mitigate forex losses, the Company has adopted a comprehensive risk management review system wherein it actively hedges its foreign exchange exposures within defined parameters through use of hedging instruments such as forward contracts, options and swaps. The Company periodically reviews its risk management initiatives and also takes experts advice on regular basis on hedging strategy.
A 5% strengthening of INR would have an equal and opposite effect on the Company''s financial statements. ii) Interest rate risk
The company''s exposure in market risk relating to change in interest rate primarily arises from floating rate borrowing with banks and financial institutions. Considering the same, the carrying amount of said borrowing was considered to be at fair value. Borrowings at fixed interest rate exposes the company to the fair value interest rate risk. The company maintains a portfolio mix of fixed and floating rate borrowings. As at March 31,2023, approximately 64.42% (Previous Year 61.47%) of the company''s borrowings become fixed rate interest borrowing.
Further there are deposits with banks which are for short term period are exposed to interest rate risk, falling due for renewal. These deposits are however generally for trade purposes as such do not cause material implication.
The company''s revenue is exposed to the market risk of price fluctuation related to sale of products which is generally determined by market forces. These prices may be influenced by factors such as supply and demand, production costs (including cost of raw material inputs) and global and regional economic conditions and growth. Adverse changes in any of these factors may reduce revenue for the company. The company is subject to fluctuation in prices of iron ore, coking coal, ferro alloys, zinc and other raw material inputs.
The company aims to sell the products at prevailing market prices. Similarly the company procures key raw material based on prevailing market rates. However, contracts with the customers are generally with a delivery period of 90-180 days, results in the mismatch of cost and sales realisation.
The Company''s equity exposure in Subsidiaries and Joint Ventures are carried at cost or deemed cost and these are subject to impairment testing as per the policy followed in this respect. The company''s current investments are fair valued through profit and loss and non current investment at fair value through OCI. The company invest in mutual fund schemes of leading fund houses. Such investments are susceptible to market price risk that arise mainly from changes in interest rate which may impact return and value of such investments. However, given the relatively short tenure of underlying portfolio of mutual fund schemes in which the company has invested, such price risk is not significant.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables). The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Major water infrastructure projects are Government funded or foreign aided and the risk involved in payment default is minimum with respect to these customers. Besides, export receivables are primarily from subsidiaries and sales made by them is covered under Credit Insurance. The Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends and ageing of accounts receivable. Individual risk limits are set accordingly. Further the company obtains necessary security including letter of credits and/or bank guarantee to mitigate its credit risk.
The carrying amount of respective financial assets recognised in the financial statements, (net of impairment losses) represents the Company''s maximum exposure to credit risk. The concentration of credit risk is limited due to the customer base being large and unrelated. Of the trade receivables balance at the end of the year (other than subsidiaries), there are no single customer accounted for more than 10% of the accounts receivable and 10% of revenue as at March 31,2023 and March 31,2022. The company takes collateral or other credit enhancements to secure its credit risk.
The Company extends credit to customers as per the internal credit policy. Any deviation are approved by appropriate authorities, after due consideration of the customers credentials and financial capacity, trade practices and prevailing business and economic conditions. The Company''s historical experience of collecting receivables and the level of default indicate that credit risk is low and generally uniform across markets; consequently, trade receivables are considered to be a single class of financial assets. All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the customers etc. The company computes credit loss allowance based on a matrix based historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates.
Financial assets that are neither past due nor impaired
Cash and cash equivalents, investment and deposits with banks are neither past due nor impaired. Cash and cash equivalents with banks are held with reputed and credit worthy banking institutions.
Financial assets that are past due but not impaired
Trade receivables amounts that are past due at the end of the reporting period, no credit losses there against are expected to arise. The company also takes advance, letter of credit and bank guarantee from its customers, which mitigates the credit risk to that extent.
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s objective is to maintain optimum level of liquidity to meet it''s cash and collateral requirements at all times. The company relies on borrowings and internal accruals to meet its long term and short term fund requirement. The current committed line of credit are sufficient to meet its short to medium term fund requirement.
i) Liquidity and interest risk tables
The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows as at balance sheet date:
The company has current financial assets which will be realised in ordinary course of business. The Company ensures that it has sufficient cash on demand to meet expected operational expenses. The company relies on mix of borrowings and operating cash flows to meet its need for funds and ensures that it does not breach any financial covenants stipulated by the lender.
Capital Management
The primary objective of the Company''s capital management is to ensure that it maintains a healthy capital ratio in order to support its business and maximise shareholder value. The Company''s objective when managing capital is to safeguard their ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stake holders. The Company is focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without where the risk profile of the Company.
b) Post Employment Defined Benefit Plans
Post Employment Defined Benefit Plans are managed by Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. Details of such funds are as follows:
The company''s gratuity scheme, a defined plan is as per the Payment of Gratuity Act 1972, covers the eligible employees and is administered through gratuity fund trust. Such gratuity fund, whose investments are managed by Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited an insurer makes payment to vested employees or their nominee upon retirement, death, incapacitation or cessation of employment of an amount based on the respective employee''s salary and tenure of employment. Vesting occurs on completion of five year of service. The amount of gratuity payable is the last drawn basic salary per month computed proportionately for 15 days of salary multiplied for the number of year service.
Through its defined benefit plans, the Company is exposed to a number of risks in the defined benefit plans. Most significant risks pertaining to defined benefit plans and, management''s estimation of the impact of these risks are as follows:
The Gratuity plan is funded with Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited and the company does not have any liberty to manage the fund provided to them. The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.
A decrease in the interest rate on plan assets will increase the plan liability.
Longevity risk / Life expectancy
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability Salary growth risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
48(a). In pursuance of the Order dated September 24, 2014 issued by the Hon''ble Supreme Court of India (the Order) followed by the Ordinance promulgated by the Government of India, Ministry of Law & Justice (legislative department) dated October 21,2014 (Ordinance) for implementing the Order, allotment of Parbatpur coal block (coal block/mines) to the Company which was under advanced stage of implementation, had been cancelled w.e.f. April 01,2015. In terms of the Ordinance, the Company was allowed to continue the operations in the said block till March 31, 2015. Accordingly, the said block had been handed over to Bharat Coking Coal Limited (BCCL) as per the direction from Coal India Limited (CIL) with effect from April 01,2015 and the same was thereafter allotted to Steel Authority of India Limited (SAIL) and pending final determination, compensation of Rs. 83,12.14 lakhs was received. The company also came to understand that SAIL subsequently handed over back the said coal block to the custody of BCCL.
Following a petition filed by the Company, the Hon''ble High Court at Delhi had pronounced its judgement on March 09, 2017. Accordingly and based on the said judgement, the Company has claimed Rs.15,49,44.48 lakhs towards compensation against the said coal block and acceptance of the same is awaited. Aggrieved due to delay in acceptance of claim, on a petition filed by the Company, the Hon''ble High Court had directed the Nominated Authority appointed under Ministry of Coal to determine the amount of compensation to be paid to the company. Earlier the Nominated Authority had upheld its decision of compensation already paid which was set aside by the Hon''ble High Court with a direction to the Nominated Authority to reconsider the said decision. The Nominated authority further passed an order dated November 11,2019 awarding an additional compensation of Rs. 1,80.00 lakhs and with a further direction to re-determine the value of certain assets by the appropriate authority. Subsequently, a newly appointed Nominated Authority (New Nominated Authority) had appointed a valuer to determine the value of those specified assets as per the direction of Nominated Authority dated November 11,2019. The company came to understand that valuation report recommending a valuation of total direct/hard cost for specified assets has been submitted to the New Nominated Authority and the same is under consideration and a final compensation is yet to be decided. The company had also earlier approached the New Nominated Authority/ Ministry of Coal (Ministry) to similarly reconsider the compensation determined by the previous Nominated Authority, for land and some other major assets. Pending such decision, in the meantime, the Ministry vide notification dated November 03, 2022 had included the said Parbatpur Coal Block in the "16th Tranche of Auction Under Coal Mines (Special Provisions) Act, 2015â and JSW Steel Limited (JSW) has emerged as successful bidder in the said auction. Accordingly, the claim for compensation in this respect therefore is to be determined on receipt of order for vesting of the said mine to JSW. The company''s management however, is pursuing to revise and determine the amount of entire compensation for coal block in terms of the aforesaid judgement passed by the Hon''ble High Court of Delhi.
(i) Rs.12,88,84.11 lakhs incurred pertaining to the coal block till March 31, 2015 after setting off income, stocks etc. there against as per the accounting policy then followed by the Company has been continued to be shown as freehold land, capital work in progress, other fixed assets and other respective heads of account.
(ii) Interest and other finance cost for the year ended March 31, 2016 against the fund borrowed and other expenses directly attributable in this respect amounting to Rs. 95,14.74 lakhs has been considered as other recoverable under current assets; and
(iii) Compensation of Rs. 83,12.34 lakhs so far received and net realisations/claims against sale of assets, advances, input credits etc. amounting to Rs. 20,90.04 lakhs have been adjusted. Bank guarantee amounting to Rs. 9,20.00 lakhs (previous year Rs. 9,20.00 lakhs) has been given against the compensation received.
Necessary disclosures in terms of Indian Accounting Standard and adjustments arising with respect to above will be given effect to on final acceptance/settlement of the claim.
48(c). Due to reasons stated in note no. 48 (a) and pending determination of the amount of the claim, balances under various heads which otherwise would have been measured and disclosed as per the requirements of various Indian Accounting Standard '' have been included under various heads as disclosed under note no. 48 (b) considering the circumstances and objective of the financial statements.
49. Due to delay in grant of forest, environment and other clearances from various authorities and execution of mining lease of an area of 192.50 ha. by the State Government of Jharkhand for iron and manganese ores at Dirsumburu in Kodilabad Reserve Forest, Saranda of West Singhbhum, Jharkhand, the validity period of letter of intent granted in this respect got expired on January 11,2017. Pending decision of Hon''ble High Court at Jharkhand on the matter pursuant to the writ petition filed before the said court, the company without prejudice to the decision to pursue the said petition has decided during the year, as a matter of abundant caution to charge off the amounts so paid pertaining to the said mine and carried forward under Capital work in progress and advances and thereby, Rs. 27,56.99 lakhs has been disclosed as sundry balances/advances/ cwip written off under other expenses for the year ended March 31,2023.
(c) Projects overdue and expected completion date:
(i) As stated in note no. 48, the allotment of Parbatpur coal mine which were under advanced stage of implementation was cancelled vide order dated September 24, 2014. Thereby, as dealt with in note no. 48, the project could not be further progressed and completed. Pending determination of the amount of claim, the balances as were appearing prior to the cancellation, i.e. capital work in progress and other balances pertaining to said coal mine have not been adjusted and carried forward in the financial statement.
D. Terms and conditions of transactions with related parties
a. The transactions with related parties have been entered at an amount which are not materially different from those on normal commercial terms. For the year ended March 31, 2023, the company has not recorded impairment of receivable relating to amount owned by the parties. The measurement is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
b. The amounts outstanding are unsecured and will be settled in cash and cash equivalent. No guarantees have been given or received.
c. The remuneration of directors is determined by the Nominations & Remuneration Committee having regard to the performance of individuals and market trends.
57. Additional Information pursuant to amendments made in Schedule III to the extent applicable to the company (Other than those that have been disclosed under the respective Notes to the financial statements:
(A) Utilisation of borrowed funds and share premium
(i) The Company has not advanced or loaned or invested funds to any other persons or entities, including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
(ii) The Company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(B) Details of crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
(D) Compliance with number of layers of companies
The Company has complied with number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of layers) Rules, 2017.
59. The company has opted for continuing accounting policy in respect of exchange difference arising on reporting of long term foreign currency monetary items in accordance with Ind AS 101 "First time adoption of Indian Accounting Standards". The unamortised balance in the carrying amount of Property, Plant and Equipments / capital work in progress is Rs 2,80,06.55 lakhs (previous year Rs 2,83,40.19 lakhs).
60. These financial statements have been approved by the Board of Directors of the Company on May 17, 2023 for issue to the shareholders for the adoption.
61. The previous year figures have been regrouped/reclassified wherever necessary to correspond with current year''s classification/disclosure.
Mar 31, 2018
1. Corporate Information
Electrosteel Castings Limited (âthe companyâ) is a public limited company in India having its corporate office in Kolkata in the State of West Bengal and registered office at Rajgangpur, District: Sundergarh in the State of Odisha and is engaged in the manufacture and supply of Ductile Iron (DI) Pipes, Ductile Iron Fittings (DIF) and Cast iron (CI) Pipes as its core business and produces & supplies Pig Iron, in the process. It also produces Metallurgic Coke, Sinter and Power for captive consumption. The company caters to the needs of Water Infrastructure Development. The Companyâs shares are listed on National Stock Exchange of India Limited and BSE Limited.
2. Statement of Compliance and Recent Pronouncements
2.1 Statement of Compliance
The Company excepting as stated in Note 7.2, 7.4 and 46 has adopted Indian Accounting Standards (referred to as âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) read with Section 133 of the Companies Act, 2013 (âthe Actâ) with effect from April 1, 2016 and therefore Ind ASs issued, notified and made effective till the financial statements are authorized have been considered for the purpose of preparation of these financial statements.
2.2 Recent Pronouncements
New Standards / Amendments to Existing Standard issued but not yet effective upto the date of issuance of the Companyâs Financial Statement are disclosed below :
On 28th March, 2018, the Ministry of Corporate Affairs (MCA) has notified Ind AS 115 - Revenue from Contracts with Customers and certain amendment to existing Ind AS. These amendments shall be applicable to the Company from 1st April 2018.
(a) Ind AS 115-Revenue from Contracts with Customers
Ind AS 115 supersedes Ind AS 11, Construction Contracts and Ind AS 18, Revenue. Ind AS 115 requires an entity to report information regarding nature , amount, timing and uncertainty of revenue and cash flows arising from contract with customers. The principle of Ind AS 115 is that an entity should recognise revenue that demonstrates the transfer of promised goods and services to the customers at an amount that reflects the consideration to which the entiry expects to be entitled in exchange for those goods and services.
Based on preliminary assessment performed by the Company, the impact of the application of the standard is not expected to be material.
(b) Amendment to Existing issued Ind AS
i. Ind AS 12 - Income Taxes
ii. Ind AS 21 - The Effects of Changes in Foreign Exchange Rates
iii. Ind AS 28 - Investment in Associates and Joint Ventures and
iv. Ind AS 112 - Disclosure of Interests in Other Entities
The impact of the above standards on the financial statements, as assessed by the Company, is not expected to be material.
3. Critical accounting judgments, assumptions and key sources of estimation and uncertainty
The preparation of the financial statements in conformity with the measurement principle of 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. 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. Differences between the actual results and estimates are recognized in the year in which the results are known / materialized and, if material, their effects are disclosed in the notes to the financial statements.
Application of accounting policies that require significant areas of estimation, uncertainty and critical judgments and the use of assumptions in the financial statements have been disclosed below. The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below :
3.1 Depreciation / amortization and impairment on property, plant and equipment / intangible assets
Property, plant and equipment and intangible assets are depreciated / amortized on straight-line /written down value basis over the estimated useful lives (or lease term if shorter) in accordance with Schedule II of the Companies Act, 2013, taking into account the estimated residual value, wherever applicable.
The company reviews its carrying value of its Tangible and Intangible Assets whenever there is objective evidence that the assets are impaired. In such situation Assetsâ recoverable amount is estimated which is higher an assetâs or cash generating units (CGU) fair value less cost of disposal and its value in use. In assessing value in use the estimated future cash flows are discounted using pre-tax discount rate which reflect the current assessment of time value of money. In determining fair value less cost of disposal, recent market realisations are considered or otherwise in absence of such transactions appropriate valuations are adopted. The Company reviews the estimated useful lives of the assets regularly in order to determine the amount of depreciation / amortization and amount of impairment expense to be recorded during any reporting period. This reassessment may result in change estimated in future periods.
3.2 Impairment on Investments in Subsidiaries, Associates and Joint Ventures
Investments in Subsidiaries, Associates and Joint Ventures are being carried at cost or deemed cost. The company has tested for impairment at year end based on the market value where the shares are quoted, P/E ratio of similar sector company along with premium / discount for nature of holding and Net Asset Value computed with reference to the book value / projected discounted cash flow of such company in respect of unquoted investments.
3.3 Arrangements containing leases and classification of leases
The Company enters into service / hiring arrangements for various assets / services. The determination of lease and classification of the service / hiring arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lesseeâs option to purchase and estimated certainty of exercise of such option, proportion of lease term to the assetâs economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
3.4 Claims and Compensation
Claims including insurance claims are accounted for on determination of certainity of realisation thereof. Compensation receivable against acquistion of coal mine (Refer Note No. 46) pending final acceptance or settlement thereof even though has not been given effect to, as amount expected to be realised in this respect has been considered to be covering the carrying amount of the relevant assets and other recoverables.
3.5 Impairment allowances for on trade receivables
The Company evaluates whether there is any objective evidence that trade receivables are impaired and determines the amount of impairment allowance as a result of the inability of the customers to make required payments. The Company bases the estimates on the ageing of the trade receivables balance, credit-worthiness of the trade receivables and historical write-off experience.
3.6 Income taxes
Significant judgment is required in determination of taxability of certain income and deductibility of certain expenses during the estimation of the provision for income taxes.
3.7 Defined benefit obligation (DBO)
Critical estimate of the DBO involves a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate, anticipation of future salary increases etc. as estimated by Independent Actuary appointed for this purpose by the Management. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
3.8 Provisions and Contingencies
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change.
Management judgment is required for estimating the possible outflow of resources, if any, in respect of contingencies/ claim/ litigations/ against the Company as it is not possible to predict the outcome of pending matters with accuracy.
The carrying amounts of provisions and liabilities and estimation for contingencies are reviewed regularly and revised to take account of changing facts and circumstances.
Notes :
4.1 Plant and Equipments of Rs.4,13.68 lakhs (previous year Rs.4,17.94 lakhs) being contribution for laying the Power line, the ownership of which does not vest with the company.
4.2 Railway Siding represents the cost of construction of the assets for companyâs use over the specified period as per the terms of agreement.
4.3 Freehold land includes Rs.3,35.81 lakhs (previous year Rs.3,35.81 lakhs ) in respect of which the execution of conveyance deeds is pending.
4.4 Other adjustments includes Rs.66.68 lakhs (previous year nil) being interest capitalized during the year and Rs.82.72 lakhs [previous year Rs.(1,24.08) lakhs] representing foreign exchange fluctuation.
4.5 Land with factory buildings of Rs.2,95,93.21 lakhs (previous year Rs.2,97,11.81 lakhs) at Elavur plant of the Company are mortgaged in the favour of lender to Electrosteel Steels Limited, an associate of the Company.
4.6 Refer note no 22 to financial statements in respect of charge created against borrowings.
4.7 Refer note 46 dealing with coal mine assets and note no 47(a) in respect of Iron-ore and manganese Ore mine.
Notes :
5.1 Right to use Wagon represents cost incurred in connection with wagon procured under âWagon investment Schemeâ and handed over to railway authorities for their normal operations against priority over availability of the wagons for transportation as and when required.
5.2 Refer note no 22 to financial statements in respect of charge created against borrowings.
5.3 Refer note 46 dealing with coal mine assets.
* Figures below rounding off limit
6.1 866750000 Equity shares of Rs 10/- each fully paid up of Electrosteel Steels Limited (ESL) held by the Company as Investment have been pledged in favour of lenders of Electrosteel Steels Limited for securing financial assistance to ESL.
6.2 The company has an Investment of Rs.6,05,92.88 lakhs in equity shares of Electrosteel Steels Limited (ESL), an associate company. ESL was referred to Honâble National Company Law Tribunal (NCLT) for Corporate Insolvency Resolution Process (CIRP). The Resolution Professional appointed by NCLT and the Committee of Creditors of ESL had approved a resolution plan, which has also been approved by NCLT, for the acquisition of ESL to a bidder which has been subsequently challenged by another bidder and status quo has been granted and the matter is pending before the Honâble National Company Law Appellate Tribunal (NCLAT). Pending decision of NCLAT and in absence of any communication of resolution plan as approved above, the Companyâs investment in ESL has been carried forward at its carrying value and no impairment in value thereof has been considered necessary. Further, Advances and Trade receivable amounting to Rs.2,11,51.25 lakhs receivable from ESL along with mortgage of certain land & Building of the company situated at Elavur, Tamilnadu, in the favour of one of the lenders of ESL has been carried forward at their carrying value in view of pendency of resolution proceedings.
6.3 The Company has investment of Rs.30.00 lakhs (previous year Rs.30.00 lakhs) in equity shares and given advance of Rs.7,00.00 lakhs (previous year Rs.7,00.00 lakhs) against equity to Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers) in terms of the Shareholderâs Agreement dated March 27, 2004. The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the Company against operation and mismanagement of the company interalia on various matters including for forfeiture of the Companyâs investment in equity shares of the DPL. The matter was later transfered to the Company Law Board, Kolkata Bench and is now being taken up by the National Company Law Tribunal, Kolkata Bench. The Company had also inter alia filed an arbitration proceeding under Arbitration & Conciliation Act, 1996 against recovery of the said amount.
Pending final outcome of the above matter, the amounts have been fully provided for in the financial statements. The other venturers since not providing the financial statements of DPL, and thereby necessary disclosures could not be provided in these financial statements.
6.4 (a) The North Dhadhu Coal Block located in the state of Jharkhand was allocated to the Company, Adhunik Alloys & Power Limited (AAP), Jharkhand Ispat Pvt. Ltd. (JPL) and Pawanjay Steel & Power Limited (PSPL) (collectively referred to as venturers) for venturing through North Dhadhu Mining Company Private Limited (NDMCPL), a joint venture company. The Company has joint control (proportion of ownership interest of the Company being 48.98 %) along with other venturers represented by investment of Rs.8,22.81 lakhs in equity shares of NDMCPL.
(b) In pursuance of the Order dated September 24, 2014 issued by the Honâble Supreme Court of India (the Order) followed by the Ordinance promulgated by the Government of India, Ministry of Law & Justice (legislative department) dated October 21, 2014 (Ordinance) for implementing the Order, The Ministry of Coal, Government of India had issued an order for de-allocation of North Dhadhu Coal Block and deduction of Bank Guarantee of Rs.56,03.00 lakhs issued for the same. The Companyâs share in the Bank Guarantee is Rs.27,45.00 lakhs. On a writ petition filed by the Company for quashing the order, stay in the matter together with encashement of bank guarantee has been granted by the Honâble High Court of Jharkhand. The company has also submitted its claim for compensation which is awaiting acceptance. Pending final judgement & acceptance of claim and in the view of the management that the compensation to be received in terms of ordinance is expected to cover the cost incurred by the Joint venture company, no provision in the respect of Companyâs investment in NDMCPL and amount of Bank Guarantee, has been considered necessary.
6.5 Particulars of investments as required in terms of section 186(4) of the Companies Act, 2013 have been disclosed under note 7 & 13.
6.6 The Company has made an irrevocable decision to consider investment in equity instruments, other than in Subsidiaries , Associates and Joint ventures not held for trading to be recognized at FVTOCI.
7.1 Security deposits include Rs.5,57.50 lakhs ( previous year Rs.5,22.66 lakhs) with private limited companies in which directors are interested as a member / director, Rs.2,00.18 lakhs ( previous year Rs.1,98.68 lakhs) with related parties. Also include Rs.9,99.35 lakhs (previous year Rs.1,10.70 lakhs) lying with customer interms of agreement/ order towards supplies of goods.
8.1 Capital advances includes Rs. 5.27 lakhs (previous year Rs. 5.27 lakhs) paid to related party (Refer note no. 54).
8.2 Including loans and advance to employees amounting to Rs. 1.93 lakhs (previous year Rs. 2.11 lakhs).
9.1. Refer note no. 27.1 to Financial Statements in respect of charge created against borrowings.
10.1 Balances of Trade Receivables including for Turnkey Contracts, Trade payable and Advances are subject to confirmation/reconciliation and adjustments in this respect are carried out as and when amounts thereof, if any are ascertained.
10.2 Refer note no. 27.1 to Financial Statements in respect of charge created against borrowings.
11.1 Includes bank balance of Rs.11,02.52 lakhs (previous year Rs.15,90.41 lakhs) in respect of External Commercial Borrowings loan pending utilisation for intended use.
11.2 Refer note no. 27.1 to Financial Statements in respect of charge created against borrowings.
12.1 Fixed Deposits with banks include Fixed Deposit of Rs.1,25,68.46 lakhs (previous year Rs.61,66.88 lakhs) have been pledged with Banks against guarantee issued by them.
12.2 Refer note no. 27.1 to Financial Statements in respect of charge created against borrowings.
13.1 Include Rs.16,22.12 lakhs (previous year Rs.3,95.27 lakhs) lying with customer interms of agreement/order towards supplies of goods.
13.2 Movement of Allowances for doubtful advances
13.3 Refer note no. 27.1 to Financial Statements in respect of charge created against borrowings.
14.1 Includes Rs.161.43 lakhs (previous year Nil) receivable from Directors of the company towards recovery of excess remuneration paid.
14.2 Refer note no. 27.1 to Financial Statements in respect of charge created against borrowings.
15.1 The above advances have been given for general corporate purpose. Refer note no.54 and 58
15.2 Refer note no.27.1 to Financial Statements in respect of charge created against borrowings.
16.1 The Company has only one class of shares referred to as equity shares having a par value of Re 1/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, after distribution of all preferential amounts, in proportion of their shareholding.
16.2 Reconciliation of the number of equity shares outstandings
17.1 Refer Statement of changes in Equity for movement in balances of reserves
17.2 Capital Reserve
The reserve was created mainly on account of forfeiture of warrants convertible into equity shares.
17.3 Securities Premium Reserve
Securities Premium Reserve represents the amount received in excess of par value of securities and is available for utilisation as specified under Section 52 of Companies Act, 2013.
17.4 General Reserve
The reserve arises on transfer portion of the net profit pursuant to the provisions of Companies Act.
17.5 Debenture Redemption Reserve
Debenture Redemption Reserve is required to be created out of the profits available for payment of dividend in terms of Section 71 of the Companies Act, 2013, which is equal to 25% of the face value of the debentures issued and outstanding. This reserve will be released on redemption of the debentures.
17.6 Retained Earnings
Retained earnings generally represents the undistributed profit/ amount of accumulated earnings of the company. This includes Rs. 7,76,12.03 lakhs (previous year Rs. 7,60,45.52 lakhs) which is not available for distribution as these are represented by changes in carrying amount of Property, Plant and Equipments and Investment in associates being measured at fair value as on the date of transition as deemed cost.
17.7 Other Comprehensive Income
Other Comprehensive Income (OCI) represent the balance in equity for items to be accounted under OCI and comprises of the following:
i) Items that will not be reclassified to profit and loss
a. The company has elected to recognise changes in the fair value of non-current investments(other than in subsidiaries, associates and joint ventures) in OCI. This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value. The company transfers amounts from this reserve to retained earnings when the relevant equity securities are disposed.
b. The actuarial gains and losses arising on defined benefit obligations have been recognised in OCI.
ii) Items that will be reclassified to profit and loss.
a. This Reserve represents the cumulative effective portion of changes in fair value of currency swap that are designated as cash flow hedge are recognised in OCI. This is reclassified to statement of Profit and Loss.
17.8 Subsequent to Balance Sheet date, the Board of Directors has recommended a dividend of Re.0.30 per share to be paid on fully paid equity shares in respect of the financial year ended March 31, 2018. This equity dividend is subject to approval by shareholders at the ensuing Annual General Meeting and has not been included as a liability in these financial statements. The total estimated equity dividend to be paid is Rs.1070.87 lakhs and the dividend distribution tax thereon amounts to Rs. 220.12 lakhs.
18.1.1 11.75% Non Convertible Debentures (privately placed) is to be secured by first pari-passu charge on companyâs Property, Plant and Equipment and other intangible assets (immovable and movable) including land and buildings both present and future other than assets located at Elavur. These debentures were allotted on March 7, 2017 and are redeemable in 20 equal quarterly instalments at the end of 5th quarter from the date of allotment. However, there is a Put and Call option available to the investor / issuer which can be exercised at the end of three years from the date of allotment and every 12 months thereafter.
18.1.2 12.00% Non Convertible Debentures (privately placed) is to be secured by second pari-passu charge on companyâs Property, Plant and Equipment and other intangible assets (immovable and movable) including land and buildings both present and future other than assets located at Elavur. These debentures were allotted on March 7, 2017 and are redeemable in 16 equal quarterly instalments at the end of 9th quarter from the date of allotment. However, there is a Put and Call option available to the investor / issuer which can be exercised at the end of three years from the date of allotment and every 12 months thereafter.
18.1.3 11.00% Non Convertible Debentures (privately placed) are secured by second pari-passu charge on companyâs Property, Plant and Equipment and other intangible assets (immovable and movable) including land and buildings both present and future other than assets located at Elavur. These debentures were allotted on July 5, 2013 and are redeemable at par at the end of 5th year from the date of allotment.
18.2.1 External Commercial Borrowings of USD1,39.00 million is repayable in 12 semi annual instalments from August 29, 2015. The outstanding as on March 31, 2018 is Rs.4,27,13.70 lakhs (previous year Rs.6,12,91.49 lakhs). The interest rate ranges from 6M Libor 400 to 500 basis points. External Commercial Borrowings is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur.
18.2.2 FCNR Loan of USD16.62 million is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur and Vadgaon(Pune). FCNR Loan is repayable in 25 equal quarterly instalments starting from Dec, 2016. The interest rate ranges from 3M Libor 275 to 325 basis points. The outstanding as on March 31, 2018 is Rs.79,67.81 lakhs (previous year Rs.95,47.90 lakhs).
18.2.3 Rupee Term Loan of Rs.50,00.00 lakhs from bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur and Vadgaon (Pune). Rupee Term Loan is repayable in 25 equal quarterly instalments starting from July, 2017. The interest rate ranges from 9.00% p.a to 10.00% p.a. The outstanding as on March 31, 2018 Rs.40,25.95 lakhs (previous year Rs.44,95.09 lakhs).
18.2.4 Rupee Term Loan of Rs.2,00,00.00 lakhs from bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur. Term Loan is repayable in 28 quarterly instalments starting from June,2015. The interest rate ranges from 12.50% p.a to 13.50% p.a. The outstanding as on March 31, 2018 is Rs.1,87,25.96 lakhs (previous year Rs.1,91,05.01 lakhs)
18.2.5 Rupee Term Loan of Rs.40,00.00 lakhs from bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur and Vadgaon (Pune). Rupee Term Loan is repayable in 16 equal quarterly installments starting from Dec, 2015. The interest rate ranges from 10.50% p.a to 12.00% p.a. The outstanding as on March 31, 2018 is Rs.14,83.45 lakhs (previous year Rs.24,56.77 lakhs)
18.3.1 Term Loan of Rs.50,00.00 lakhs from a financial institution is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur. Term Loan is repayable in 24 equal quarterly installments starting from July, 2016. The interest rate ranges from 11.00% p.a to 12.00% p.a. The outstanding as on March 31, 2018 is Rs.35,31.87 lakhs (previous year Rs.43,60.56 lakhs)
18.4.1 Term Loan of Rs.41,00.00 lakhs from a financial institution is repayable in 16 quarterly instalments starting from June, 2018. The interest rate ranges from 11.00% p.a to 12.00 % p.a. The outstanding as on March 31, 2018 is Rs.41,00.00 lakhs (previous year Rs.41,00.00 lakhs)
18.4.2 Term Loan of Rs.33,00.00 lakhs from a financial institution is repayable in 16 quarterly instalments starting from March, 2018. The interest rate ranges from 11.00% p.a to 12.00 % p.a. The outstanding as on March 31, 2018, is Rs.24,28.98 lakhs ( previous year Rs.25,11.48 lakhs)
18.4.3 Term Loan of Rs.25,00.00 lakhs from a financial institution is repayable in 16 quarterly instalments starting from March, 2019. The interest rate ranges from 11.00% p.a to 12.00 % p.a. The outstanding as on March 31, 2018, is Rs.25,00.00 lakhs ( previous year NIL)
18.5 The outstanding balances disclosed in Note no. 22.1 to 22.4 are based on the amortised cost in accordance with Ind AS 109 âFinancial Instrumentsâ.
19.1 Provision for Mines closure and restoration charges are made in terms of statutory obligations specified for the purpose and deposited in the Escrow account in terms of the stipulation made by Ministry of Coal, for Mines closure Plan. In view of cancellation of allotment of coal mines, no further provision has been considered necessary. (Refer note 16 and 46 )
19.2 Movement in Mine closure and Restoration Obligation provision are provided below:
20.1 Advance from customers amounting to Rs.1,78,47.89 lakhs (previous year Rs. 2,00,32.57 lakhs) received as interest bearing advance for sale of DI Pipes, Fittings and related accessories has been classified and disclosed as aforesaid as per terms of the contract.
21.1 Includes Rs. 11,37.01 lakhs (net) [previous year Rs. 8,44.18 lakhs (net)] being interest received pertaining to Assessment Years 2003-04 to 201112 as the Income Tax Department has filed an appeal before the Kolkata High Court against the order of the the Income Tax Appellate Tribunal, Kolkata and the said appeal is pending.
Further includes Rs. 97.55 lakhs (net) (previous year Nil) being interest received pertaining to Assessment Year 2012-13 and Assessment Year 201314 as the Income Tax Department has filed an appeal before the Income Tax Appellate Tribunal, Kolkata against the order of the Commissioner of Income Tax (Appeals) and the said appeal is pending.
22.1 Loans repayable on demand being Working Capital facilities from Banks (both fund based and non fund based) are secured by first pari passu charge by way of joint hypothecation of raw materials, finished goods, work in progress, consumable stores and spares, book debts/receivables and other current and non current assets of the company both present and future.
23.1 Disclosure of Trade payables as required under section 22 of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, based on the confirmation and information available with the company regarding the status of suppliers.
24.1 Advance from customers amounting to Rs.26,04.34 lakhs (previous year Rs. 24,27.99 lakhs) received as interest bearing and Rs. 4,69.27 lakhs (previous year Nil) received from related party against sale of DI Pipes, Fittings and related accessories has been classified and disclosed as aforesaid as per terms of the contract.
25.1 Other Provisions includes :
(a) Provision relating to indirect taxes in respect of proceeding of various excise duty matter amounting to Nil (previous year Rs. 5,00.00 lakhs)
(b) Provision relating to disputed customer claims/rebates/demands amounting to Rs. 90.63 lakhs (previous year Rs. 4,76.74 lakhs)
25.2 Movement in other provisions are provided below:
26.1 Includes Rs Nil (previous year Rs.33,58.90 lakhs) representing profit on sale of property situated at Chennai.
27.1 Cost of material consumed includes Rs. 49,74.01 lakhs (previous year Rs.8,67.96 lakhs ) in relation to cost of goods sold for raw materials.
27.2 During the year, the Company has incurred Rs. 1,15.65 lakhs (previous year Rs. 1,02.06 lakhs) in the nature of salary and wages on account of research and development expenses which has been charged to Statement of Profit and Loss.
27.3 During the year, the Company has incurred Rs. 1,56.00 lakhs (previous year Rs.2,10.00 lakhs) on account of Corporate Social Responsibility (CSR) included under Other Miscellaneous Expenses.
27.4 Obligation under leases
A. Finance Lease disclosures :
The leasehold lands are located at Kashberia, Haldia, East Mednipur, West Bengal and has been classified under finance lease having lease term for a period of 90 years.
The net carrying amount of the leasehold land is Rs. 12,11.24 lakhs as at March 31, 2018 (previous year Rs.12,26.81 lakhs).
B. Operating Lease disclosures :
The Company has certain operating lease arrangements for office accommodations etc. with tenure extending upto 9 yrs. Term of certain lease arrangements include escalation clause for rent on expiry of 36 months from the commencement date of such lease and deposit/ refund of security deposit etc. Expenditure incurred on account of rent during the year and recognized in the Profit and Loss account amounts to Rs. 4,73.52 lakhs ( previous year Rs. 6,09.20 lakhs).
28.1 Reconciliation of Income tax expense for the year with accounting profit is as follows:
Taxable Income differs from âprofit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. Details in this respect are as follows:
Fair Valuation Techniques
The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the fair values:
The fair value of cash and cash equivalents, current trade receivables and payables, current loans, current financial liabilities and assets and borrowings approximate their carrying amount largely due to the short-term nature of these instruments. The management considers that the carrying amounts of financial assets and financial liabilities recognised at nominal cost/amortised cost in the financial statements approximate their fair values. In respect of non current trade receivables and loans, fair value is determined by using discount rates that reflect the present borrowing rate of the company.
A substantial portion of the companyâs long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Fair value of variable interest rate borrowings approximates their carrying value subject to adjustments made for transaction cost. In respect of fixed interest rate borrowings, fair value is determined by using discount rates that reflects the present prevailing rates for similar borrowing in the market.
Investments (other than Investments in Associates, Joint Venture and Subsidiaries) traded in active market are determined by reference to the quotes from the Stock exchanges as at the reporting date. Quoted Investments for which quotations are not available have been included in the market value at the face value/paid up value, whichever is lower except in case of debentures, bonds and government securities where the net present value at current yield to maturity have been considered. Unquoted investments in shares have been valued based on the historical net asset value as per the latest audited financial statements.
The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc. These derivatives are estimated by using the pricing models, where the inputs to those models are based on readily observable market parameters, contractual terms, period to maturity, maturity parameters and foreign exchange rates. These models do not contain a high level of subjectivity as the valuation techniques used do not require significant judgement, and inputs thereto are readily observable from market rates. The said valuation has been carried out by the counter party with whom the contract has been entered with and management has evaluated the credit and non-performance risks associated with the counterparties and believes them to be insignificant and not requiring any credit adjustments.
Fair value hierarchy
The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as at balance sheet date:
(*) Figures in round brackets ( ) indicate figures as at March 31, 2017
During the year ended March 31, 2018 and March 31, 2017, there were no transfers between Level 1, Level 2 and Level 3.
The Inputs used in fair valuation measurement are as follows:
Fair valuation of Financial assets and liabilities not within the operating cycle of the company is amortised based on the borrowing rate of the company.
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 inputs used for forward contracts are Forward foreign currency exchange rates and Interest rates to discount future cash flow.
Unquoted investments in shares have been valued based on the amount available to shareholderâs as per the latest audited financial statements. There were no external unobservable inputs or assumptions used in such valuation.
Derivatives financial assets and liabilities:
The Company follows established risk management policies, including the use of derivatives to hedge its exposure to foreign currency fluctuations on foreign currency assets / liabilities. The counter party in these derivative instruments is a bank and the Company considers the risks of non-performance by the counterparty as non-material.
d) The company has entered into USD INR Currency Swap to hedge both the principal and interest payments of the borrowing from bank amounting to USD 16.62 Mn. The critical terms of both the hedging instrument (i.e the Full currency swap) and the hedged item (i.e the borrowing) are closely aligned, thereby establishing an economic relationship between them. The Currency Swap is hence designated as hedging instrument in cash flow hedges. As the economic relationship continues to exist, no hedge ineffectiveness arises requiring recognition through statement of profit and loss. The Currency Swap is measured at fair value through Other comprehensive income (OCI).
Sale of Financial Assets
In the normal course of business, the Company transfers its bill receivables to banks. Under the terms of the agreements, the Company surrenders control over the financial assets and the transfer is with recourse. Under arrangement with recourse, the company is obligated to repurchase the uncollected financial assets, subject to limits specified in the agreement with banks. As at March 31, 2018 and March 31, 2017 the maximum amount of recourse obligation in respect of financial assets are Rs 29,04.98 lakhs and Rs. 13,51.06 lakhs respectively.
FINANCIAL RISK FACTORS
The Companyâs activities are exposed to variety of financial risks. The key financial risks includes market risk, credit risk and liquidity risk. The Companyâs focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Board of Directors reviews and approves policies for managing these risks. The risks are governed by appropriate policies and procedures and accordingly financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives.
MARKET RISK
Market risk is the risk or uncertainty arising from possible market fluctuations resulting in variation in the fair value of future cash flows of a financial instrument. The major components of Market risks are currency risk, interest rate risk and other price risk. Financial instruments affected by market risk includes trade receivables, borrowings, investments and trade and other payables.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs foreign currency denominated borrowings, trade receivables and trade or other payables.
The Company has adopted a comprehensive risk management review system wherein it actively hedges its foreign exchange exposures within defined parameters through use of hedging instruments such as forward contracts, options and swaps. The Company periodically reviews its risk management initiatives and also takes experts advice on regular basis on hedging strategy.
Derivative financial assets and liabilities dealing with outstanding derivative contracts and unhedged foreign currency exposure has been detailed in earlier paras. Unhedged foreign currency exposure is primarily on account of long term foreign currency borrowings for which hedge cover is taken as per the policy followed by the company depending upon the remaining period of maturity of the installments falling due for payment.
Sensitivity analysis resulting in profit or loss mainly from USD, EURO, GBP & SGD denominated receivables and payables are as follows:
Interest rate risk
The companyâs exposure in market risk relating to change in interest rate primarily arises from floating rate borrowing with banks and financial institutions. Borrowings at fixed interest rate exposes the company to the fair value interest rate risk. The Company has entered into interest rate swap contracts in respect of certain foreign currency borrowings whereby interest at an agreed rate are to be applied on agreed upon principal amount. The company maintains a portfolio mix of fixed and floating rate borrowings. As at March 31, 2018, after taking into account interest rate swaps, approximately 63.57% (March 31, 2017: 60.81%) of the companyâs borrowings become fixed rate interest borrowing.
Further there are deposits with banks which are for short term period are exposed to interest rate risk, falling due for renewal. These deposits are however generally for trade purposes as such do not cause material implication.
With all other variables held constant, the following table demonstrates the impact of the borrowing cost on floating rate portion of loans and borrowings and excluding loans on which interest rate swaps are taken.
A decrease in 0.50 basis point in Rupee Loan and 0.25 basis point in Foreign Currency Loan would have an equal and opposite effect on the Companyâs financial statements.
Other price risk
The Companyâs equity exposure in Subsidiaries, Associates and Joint Ventures are carried at cost or deemed cost and these are subject to impairment testing as per the policy followed in this respect. The companyâs current investments which are fair valued through profit and loss are not material. Accordingly, other price risk of the financial instrument to which the company is exposed is not expected to be material.
CREDIT RISK
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables). The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Major water infrastructure projects are Government funded or foreign aided and the risk involved in payment default is minimum with respect to these customers. Besides, export receivables are primarily from subsidiaries and sales made by them is covered under Credit Insurance. The Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends and ageing of accounts receivable. Individual risk limits are set accordingly and the company obtains necessary security including letter of credits and/or bank guarantee to mitigate.
The carrying amount of respective financial assets recognised in the financial statements, (net of impairment losses) represents the Companyâs maximum exposure to credit risk. The concentration of credit risk is limited due to the customer base being large and unrelated. Of the trade receivables balance at the end of the year (other than subsidiaries), there are no single customer accounted for more than 10% of the accounts receivable and 10% of revenue as at March 31, 2018 and March 31, 2017.
The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. Receivables from customers are reviewed/evaluated periodically by the management and appropriate provisions are made to the extent recovery is considered to be remote.
Financial assets that are neither past due nor impaired
Cash and cash equivalents, investment and deposits with banks are neither past due nor impaired. Cash and cash equivalents with banks are held with reputed and credit worthy banking institutions.
Financial assets that are past due but not impaired
Trade receivables amounts that are past due at the end of the reporting period against which no credit losses has been expected to arise.
LIQUIDITY RISK
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Companyâs objective is to maintain optimum level of liquidity to meet itâs cash and collateral requirements at all times. The companyâs assets represented by financial instruments comprising of receivables, and those relating to Parbatpur Coal mines (refer note no. 46) are largely funded by borrowed funds. The company relies on borrowings and internal accruals to meet its fund requirement. The current committed line of credit are sufficient to meet its short to medium term fund requirement.
Liquidity and interest risk tables
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows as at balance sheet date :
The company has current financial assets which will be realised in ordinary course of business. The Company ensures that it has sufficient cash on demand to meet expected operational expenses.
The company relies on mix of borrowings and operating cash flows to meet its need for funds and ensures that it does not breach any financial covenants stipulated by the lender.
CAPITAL MANAGEMENT
The primary objective of the Companyâs capital management is to ensure that it maintains a healthy capital ratio in order to support its business and maximise shareholder value. The Companyâs objective when managing capital is to safeguard their ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stake holders. The Company is focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without where the risk profile of the Company.
29. Post Retirement Employee Benefits
The disclosures required under Indian Accounting Standard 19 on ââEmployee Benefitsââ are given below :
a) Defined Contribution Plans
Contribution to Defined Contribution Plan, recognized for the year are as under :
b) Defined Benefit Plans
The employeeâs gratuity fund scheme managed by Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Ltd. is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
Compensated Absences
The obligation for compensated absences is recognized in the same manner as gratuity except remeasurement benefit which is treated as part of OCI. The actuarial liability of Compensated Absences (unfunded) of accumulated privileged and sick leaves of the employees of the
Company as at March 31, 2018 is given below:
Notes : i) Assumptions relating to future salary increases, attrition, interest rate for discount & overall expected rate of return on Assets have been considered based on relevant economic factors such as inflation, market growth & other factors applicable to the period over which the obligation is expected to be settled.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation recognised within the Balance Sheet.
46(a). In pursuance of the Order dated September 24, 2014 issued by the Honâble Supreme Court of India (the Order) followed by the Ordinance promulgated by the Government of India, Ministry of Law & Justice (legislative department) dated October 21, 2014 (Ordinance) for implementing the Order, allotment of Parbatpur coal block (coal block/mines) to the Company which was under advanced stage of implementation, had been cancelled w.e.f. April 01, 2015. In terms of the Ordinance, the Company was allowed to continue the operations in the said block till March 31, 2015. Accordingly, the same had been handed over to Bharat Coking Coal Limited (BCCL) as per the direction from Coal India Ltd. (CIL) with effect from April 01, 2015 and the same has been subsequently allotted to Steel Authority of India Limited (SAIL).
Following a petition filed by the Company, the Honâble High Court at Delhi had pronounced itâs judgement on March 09, 2017. Accordingly based on the said judgement, the Company has claimed Rs.15,31,76.00 lakhs towards compensation against the said coal block now being allotted to SAIL, acceptance whereof is awaited. Aggrieved due to delay in acceptance of claim, on a petition filed by the company before the Honâble High Court , the court had directed to ministry of commerce to expedite the matter and the matter has been pending before the court.
Pending acceptance of the Companyâs claim as above;
(i) Rs.12,88,84.11 lakhs incurred pertaining to the coal block till March 31, 2015 after setting off income, stocks etc. there against as per the accounting policy then followed by the company has been continued to be shown as freehold land, capital work in progress, other fixed assets and other respective head of accounts;
(ii) Interest and other finance cost for the year ended March 31, 2016 against the fund borrowed and other expenses directly attributable in this respect amounting to Rs. 95,14.74 lakhs has been considered as other recoverable under current assets; and
(iii) Compensation of Rs. 83,12.34 lakhs so far received and net realisations against sale of assets, advances etc. amounting to Rs. 654.92 lakhs have been adjusted. Bank guarantee amounting to Rs.9,20.00 lakhs (previous year Rs. 9,20.00 lakhs) has been given against the compensation received.
Disclosures of above balances as per Indian Accounting Standard and adjustments arising with respect to above will be given effect to on final acceptance/settlement of the claim.
29(b). Various balances pertaining to Coal Block claim and handing over the same as detailed in different heads of accounts includes :
29(c). Due to reasons stated in note no. 46(a) and pending determination of the amount of the claim, balances under various heads which otherwise would have been measured and disclosed as per the requirements of various Indian Accounting Standard â have been included under various heads as disclosed under note no. 46(b) considering the circumstances and objective of the financial statements.
30(a). Due to delay in grant of forest, environment and other clearences from various authorities and execution of mining lease of an area of 192.50 ha. by the State Government of Jharkhand for iron and manganese ores at Dirsumburu in Kodilabad Reserve Forest, Saranda of West Singhbhum, Jharkhand, the validity period of letter of intent granted in this respect has expired on January 11, 2017. The Company has filed a writ petition before the Honâble High Court of Jharkhand on January 10, 2017, praying inter-alia for direction for grant of said lease in favour of the Company. The Honâble High Court in its order while observed, being not averse in granting relief with respect to cut off date, has admitted the said petition and fixed the case for further hearing and adjudication. Pending decision of the High Court, Rs. 61,10.38 lakhs so far incurred in connection with these Mines/related facilities, have been carried forward under respective heads of fixed assets, capital work in progress, advances and security deposit.
30(b). Capital work in progress and security deposits includes a sum of Rs. 40,66.42 lacs and Rs. 30.04 lacs respectively towards construction of railway siding in Haldia, West Bengal. The railways authorities have withdrawn permission for the railways siding which is contested by the company. The company is also exploring alternate avenues to utilise the siding and hence carried at book value.
31. Capital work in progress includes plant and equipments and other assets amounting to Rs.3,22,13.31 lakhs (previous year Rs. 3,28,51.74 lakhs) under installation and capital and other expenditure incured pending completion thereof. (refer note no. 46 and 47).
32. The expenses incurred for projects/assets during the construction/mine development period are classified as âPre-operative Expensesâ pending capitalization are included under capital work in progress and will be allocated to the assets on completion of the project/assets. Consequently expenses disclosed under the respective head are net of amount classified as preoperative expenses by the Company (refer note no. 46 and 47). The details of these expenses are as follows :
33. As regards construction contracts in progress as on March 31, 2018, aggregate amount of costs incurred and recognised profit (less recognized losses) upto the year end (to the extent ascertained by the management), aggregate amount of advances received and aggregate amount of retentions are Nil, Nil and Rs 1,28.41 lakhs respectively.(previous year are Rs 25,00.99 lakhs, Rs 20,59.55 lakhs and Rs 1,14.24 lakhs respectively).
34.(i) The amount of contract revenue recognised as revenue Rs.1,64.21 lakhs (previous year Rs.50.80 lakhs).
Note : The Companyâs pending litigations comprises of claim against the company and proceedings pending with Taxation/ Statutory/ Government Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, and disclosed contingent liabilities, where applicable, in its financial statements. The company does not expect the outcome of these proceedings to have a material impact on its financial position. Future cash outflows, if any, in respect of (a) to (e), and (h) above is dependent upon the outcome of judgments/ decisions.
** Pre Goods & Service Tax (GST), the Company was enjoying certain benefits under Industrial Promotion scheme of state government. Post GST, pending notifications by the state government, on prudent basis, the company has not recognised any income under the scheme for the period July 01, 2017 to March 31, 2018.
D. Terms and conditions of transactions with related parties
a) The transactions with related parties have been entered at an amount which are not materially different from those on normal commercial terms.
b) The amounts outstanding are unsecured and will be settled in cash and cash equivalent. No guarantees have been given or received.
c) The remuneration of directors is determined by the Nominations & Remuneration Committee having regard to the performance of individuals and market trends.
35.1 In respect of the above parties, there is no provision for doubtful debts as on March 31,2018 and no amount has been written off or written back during the year in respect of debt due from/to them.
35.2 The above related party information is as identified by the management.
35.3 Details of Loans, Investments and Guarantees covered u/s 186(4) of the Companies Act, 2013 :
a) Details of Loans and Investments are given under the respective heads (Refer Note no. 7, 13 and 19.2)
b) Details of Corporate Guarantee/ Standby Letter of Credit given by the Company are as follows :
36. The company operates mainly in one business segment viz Pipes being primary segment and all other activities revolve around the main activity. The secondary segment is geographical, information related to which is given as under :
37. Post the applicability of Goods and Service Tax (GST) with effect from July 01, 2017, revenue from operations is disclosed net of GST. Accordingly, the revenue from operations and other expenses for the year ended March 31, 2018 are not comparable with the previous periods presented in the Financial Statements. The impact of the same however is not significant.
38. The company has opted for continuing accounting policy in respect of exchange difference arising on reporting of long term foreign currency monetary items in accordance with Ind AS 101 âFirst time adoption of Indian Accounting Standardsâ. Accordingly, during the year ended 31st March, 2018 the net exchange difference of Rs. 7.12 lakhs [previous year Rs. 1,24.08 lakhs (net credit)] on foreign currency loans have been adjusted in the carrying amount of fixed assets/capital work in progress. The unamortised balance is Rs. 2,66,33.54 lakhs (previous year Rs. 2,68,19.56 lakhs)
39. The Board of Directors of the Company, at its meeting held on August 11, 2014 had approved the Scheme of Amalgamation (âthe Schemeâ) of its wholly owned subsidiary, Mahadev Vyapaar Private Limited with the Company with effect from April 1, 2014 (âAppointed Dateâ). Mahadev Vyapaar Private Limited had filed an application before the Honâble High Court at Calcutta, which has sanctioned the said Scheme. The application filed by the Company before the Honâble High Court at Orissa will be taken by the National Company Law Tribunal, Kolkata Bench (âNCLTâ) as per Notification no.S.O. 3677(E) dated December 7, 2016 and Rule 3 of Companies (Transfer of Pending Proceedings) Rules, 2016. The said application is yet to be transferred to NCLT. No effect of the Scheme has therefore been given in these financial statements.
40. These financial statements have been approved by the Board of Directors of the Company on 15th May 2018 for issue to the shareholders for their adoption.
40.1 The previous yearâs figures have been reworked, regrouped, rearranged and reclassified wherever necessary.
Mar 31, 2017
1. Corporate Information
Electrosteel Castings Limited (âthe companyâ) is a public limited company in India having its corporate office in Kolkata in the State of West Bengal and registered office at Rajgangpur, District: Sundergarh in the State of Odisha and is engaged in the manufacture and supply of Ductile Iron (DI) Pipes, Ductile Iron Fittings (DIF) and Cast iron (CI) Pipes as its core business and produces and supplies Pig Iron in the process. It also produces Metallurgic Coke, Sinter and Power for captive consumption. The company caters to the needs of Water Infrastructure Development. The Companyâs shares are listed on the National Stock Exchange of India Limited and BSE Limited.
2. Statement of Compliance and Recent Pronouncements
3. Statement of Compliance
TThe Company excepting as stated in Note 46(c) and 47 has adopted Indian Accounting Standards (referred to as âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) read with Section 133 of the Companies Act, 2013 (âthe Actâ) with effect from April 1, 2016 and therefore Ind ASs issued, notified and made effective till the financial statements are authorized have been considered for the purpose of preparation of these financial statements.
These are the Companyâs first Ind AS Standalone Financial Statements and the date of transition to Ind AS as required has been considered to be April 1, 2015.
The financial statement up to the year ended March 31, 2016, were prepared under the historical cost convention on accrual basis in accordance with the Generally Accepted Accounting Principles and Accounting Standards as prescribed under the provisions of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 then applicable (Previous GAAP) to the Company. Previous period figures in the Financial Statements have been recasted/restated to make it comparable with current yearâs figure.
In accordance with Ind AS 101-âFirst Time adoption of Indian Accounting Standardsâ (Ind AS 101), the Company has presented (Note No. 59(a)), a reconciliation of Shareholdersâ equity as given earlier under Previous GAAP and those considered in these accounts as per Ind AS as at March 31, 2016, and April 1, 2015 and also the Net Profit as per Previous GAAP and that arrived including Other Comprehensive Income under Ind AS for the year ended March 31, 2016.The mandatory exceptions and optional exemptions availed by the Company on First-time adoption have been detailed in Note No. 59(b) of the financial statement.
4. Recent Pronouncements
In March 201 7, Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 201 7, notifying amendments to the Ind AS 7 âStatement of Cash flowsâ and Ind AS 102, âShare - Based Paymentâ which are applicable w.e.f. 1st April, 2017.
The amendment to Ind AS 7 âStatement of Cash Flowsâ requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. The effect of this amendment on the financial statements of the Company is being evaluated.
The amendment to Ind AS 102 âShare Based Paymentâ provides specific guidance to measurement of cash-settled share based payment transaction and share based payment transaction with a net settlement feature for withholding tax obligations. As the Company has not issued any stock options plans this amendment does not have any impact on the financial statements of the Company.
3. Critical accounting judgments, assumptions and key sources of estimation and uncertainty
The preparation of the financial statements in conformity with the measurement principle of 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. 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. Differences between the actual results and estimates are recognized in the year in which the results are known / materialized and, if material, their effects are disclosed in the notes to the financial statements.
Application of accounting policies that require significant areas of estimation, uncertainty and critical judgments and the use of assumptions in the financial statements have been disclosed below. The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below :
6. Depreciation / amortization and impairment on property, plant and equipment / intangible assets
Property, plant and equipment and intangible assets are depreciated/ amortized on straight-line /written down value basis over the estimated useful lives (or lease term if shorter) in accordance with Schedule II of the Companies Act, 2013, taking into account the estimated residual value, wherever applicable.
The company reviews its carrying value of its Tangible and Intangible Assets whenever there is objective evidence that the assets are impaired. In such situation assetâs recoverable amount is estimated which is higher of assetâs or cash generating units (CGU) fair value less cost of disposal and its value in use. In assessing value in use the estimated future cash flows are discounted using pre-tax discount rate which reflect the current assessment of time value of money. In determining fair value less cost of disposal, recent market realisations are considered or otherwise in absence of such transactions appropriate valuations are adopted. The Company reviews the estimated useful lives of the assets regularly in order to determine the amount of depreciation / amortization and amount of impairment expense to be recorded during any reporting period. This reassessment may result in change estimated in future periods.
7. Impairment on Investments in Subsidiaries, Associates and Joint Ventures
Investments in subsidiaries, associates and Joint Ventures are been carried at cost or deemed cost. The company has tested for impairment at year end based on the market value where the shares are quoted, P/E ratio of similar sector company along with premium/discount for nature of holding and Net Asset Value computed with reference to the book value/ projected discounted cash flow of such company in respect of unquoted investments.
8. Arrangements containing leases and classification of leases
The Company enters into service / hiring arrangements for various assets / services. The determination of lease and classification of the service / hiring arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lesseeâs option to purchase and estimated certainty of exercise of such option, proportion of lease term to the assetâs economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
9. Claims and Compensation
Claims including insurance claims are accounted for on determination of certainity of realisation thereof. Compensation receivable against acquisition of coal mines (Refer Note no. 46) pending final acceptance or settlement thereof even though has not been given effect to, as amount expected to be realised in this respect has been considered to be covering the carrying amount of relevant assets and other recoverables.
10. Impairment allowances on trade receivables
The Company evaluates whether there is any objective evidence that trade receivables are impaired and determines the amount of impairment allowance as a result of the inability of the customers to make required payments. The Company bases the estimates on the ageing of the trade receivables balance, credit-worthiness of the trade receivables and historical write-off experience. If the financial conditions of the trade receivable were to deteriorate, actual write-offs would be higher than estimated.
11. Income taxes
Significant judgment is required in determination of taxability of certain income and deductibility of certain expenses during the estimation of the provision for income taxes.
12. Defined benefit obligation (DBO)
Critical estimate of the DBO involves a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate, anticipation of future salary increases etc. as estimated by Independent Actuary appointed for this purpose by the Management. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
13. Provisions and Contingencies
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change.
Management judgment is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/litigations/ against the Company as it is not possible to predict the outcome of pending matters with accuracy.
The carrying amounts of provisions and liabilities and estimation for contingencies are reviewed regularly and revised to take account of changing facts and circumstances.
14. The Gross Block as on the transition date i.e. April 01, 2015 includes certain Property, Plant and Equipment i.e. freehold land and building which have been valued by an Independent valuer and considered as âdeemed costâ as per the provision of Ind AS 101 âFirst-time Adoption of Indian Accounting Standardsâ- refer note no. 59.
15 Property, Plant and Equipments includes Rs. 4,17.94 lakhs (March 31, 2016 : Rs. 4,22.21 lakhs and April 1, 2015 : Rs. 4,26.47 lakhs) being contribution for laying the power line, the ownership of which does not vest with the company.
16. Railway Siding represents the cost of construction of the assets for companyâs use over the specified period.
17 Leasehold Land of NIL (March 31, 2016 : Rs. 2,40.00 lakhs and April 1, 2015 : Rs. 2,40.00 lakhs) is pending execution of lease agreement and registration thereof.
18. Freehold land includes Rs. 3,35.81 lakhs (March 31, 2016 : Rs. 3,35.81 lakhs and April 1, 2015 : Rs. 3,35.81 lakhs) aquired for coal mines in respect of which the execution of conveyance deeds is pending (Refer Note no. 46).
19. Other adjustments includes NIL (March 31, 2016 : Rs. 44.37 lakhs) being interest capitalised during the year and Rs. (1,24.08) lakhs (March 31, 2016 : Rs. 3,02.29 lakhs) representing foreign exchange fluctuation.
20. Land with factory buildings of Rs. 2,97,11.81 lakhs (March 31, 2016 : Rs. 2,97,56.08 lakhs and April 1, 2015 : Rs. 2,98,21.78 Lakhs) at Elavur plant of the Company are mortgaged in the favour of lender to Electrosteel Steel limited, an associate of the Company.
21. Refer note no. 22 to financial statements in respect of charge created against borrowings.
22. Also refer note no. 46 dealing with coal mine assets and note no. 48 in respect of Iron and manganese Ore mine.
23. The Gross Block as on the transition date i.e. April 01, 2015 given herein above represents previous GAAP written down value of Other Intangible assets considered as âdeemed costâ as per the provision of Ind AS 101 âFirst-time Adoption of Indian Accounting Standardsâ- refer note no. 59.
24. Right to use Wagon represents cost incurred in connection with wagons procured under âWagon Investment Schemeâ and handed over to railway authorities for their normal operations against priority over availability of the wagons for transportation as and when required.
25. Refer note no. 22 to financial statements in respect of charge created against borrowings.
26. Also refer note no. 46 dealing with coal mine assets.
27. 86,67,50,000 Equity shares of Rs. 10/- each fully paid up of Electrosteel Steels Limited(ESL) held by the Company as Investment have been pledged in favour of lenders of Electrosteel Steels Limited for securing financial assistance to ESL.
28. The Companyâs investments in ESL, an Associate as required in terms has been carried at Rs. 6,05,92.88 lakhs. ESL is passing through financial stringency and therefore debt and other restructuring proposal are under consideration by lenders, final outcome whereof is awaited. Pending this, Companyâs investment in the said associate measured at fair value on transition date considered as deemed cost, has been carried as above and no further impairment in value thereof has been considered necessary.
29. The Company has investment of Rs. 30 lakhs (March 31, 2016 : Rs. 30 lakhs and April 1, 2015 : Rs. 30 lakhs) in equity shares and given advance of Rs. 7,00 lakhs (March 31, 2016 : Rs. 7,00 lakhs and April 1, 2015 : Rs. 7,00 lakhs) against equity to Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers) in terms of the Shareholderâs Agreement dated March 27, 2004. The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the Company against operation and mismanagement of the company interalia on various matters including for forfeiture of the Companyâs investment in equity shares of the DPL. The matter was later transfered to the Company Law Board, Kolkata Bench and is now being taken up by the National Company Law Tribunal, Kolkata Bench. The Company had also inter alia filed an arbitration proceeding under Arbitration & Conciliation Act, 1996 against recovery of the said amount.
Pending final outcome of the above matter, the amounts have been fully provided for in the financial statements. The other venturers since not providing the financial statements of DPL, and thereby necessary disclosures could not be provided in these financial statements.
30. (a) The North Dhadhu Coal Block located in the state of Jharkhand was allocated to the Company, Adhunik Alloys & Power Limited (AAP), Jharkhand Ispat Pvt. Ltd. (JPL) and Pawanjay Steel & Power Limited (PSPL) (collectively referred to as venturers) for working through North Dhadhu Mining Company Private Limited (NDMCPL), a joint venture company. The Company has joint control (proportion of ownership interest of the Company being 48.98 %) along with other venturers represented by investment of Rs. 8,22.81 lakhs in equity shares of NDMCPL. (refer note no. 47)
(b) The Ministry of Coal, Government of India had issued an order for de-allocation of North Dhadhu Coal Block and deduction of Bank Guarantee of Rs. 56,03.00 lakhs issued for the same. The Companyâs share in the Bank Guarantee is Rs. 27,45.00 lakhs. On a writ petition filed by the Company for quashing the order, stay has been granted by the Honâble High Court of Jharkhand. Pending final judgement, no provision in the respect of Companyâs investment in NDMCPL and amount of Bank Guarantee, has been considered necessary. (refer note no. 47)
31. Rainbow Steels Limited, a company incorporated in Uttar Pradesh is under liquidation as per Ministry of Corporate Affairs. In absence of the financial statements of the said Company, the carrying amount has been assumed to be the fair value and no impairment in value thereof has been considered necessary.
32. Particulars of investments as required in terms of section 186(4) of the Companies Act, 2013 have been disclosed under note 7 & 13.
33. Details of Subsidiaries, Associates and Joint Ventures in accordance with Ind AS 112 âDisclosure of interests in other entitiesâ :
34. The Company as on the transition date i.e. April 01, 2015 fair valued its Investment in Srikalahasthi Pipes Limited and Electrosteel Steels Limited, as valued by an Independent valuer and considered as âdeemed costâ as per the provision of Ind AS 101 âFirst-time Adoption of Indian Accounting Standardsâ- Refer Note no. 59.
35. The Company has made an irrevocable decision to consider equity instruments not held for trading to be recognized at FVTOCI.
36. Security deposits include Rs. 5,22.66 lakhs (March 31, 2016 : Rs. 4,67.82 lakhs and April 1, 2015 : Rs. 4,18.85 lakhs) with private limited companies in which directors are interested as a member / director and Rs. 1,94.00 lakhs (March 31, 2016 : Rs. 1,94.00 lakhs and April 1, 2015 : Rs. 2,03.00 lakhs) with related parties.
37. Capital advances includes Rs. 5.27 lakhs (March 31, 2016 : Rs. 5.27 lakhs and April 1, 2015 : Rs. 5.27 lakhs) paid to related party (Refer note no. 55).
38. Including loans and advance to employees amounting to Rs. 2.11 lakhs (March 31, 2016 : Rs. 5.77 lakhs and April 1, 2015 : Rs. 14.21 lakhs).
39. Refer note no. 27.1 to Financial Statements in respect of charge created against borrowings.
40 Quoted Investments for which quotations are not available have been included in the market value at the face value/paid up value, whichever is lower except in case of debentures, bonds and government securities where the net present value at current yield to maturity have been considered.
41. Refer note no. 7.6 for particulars of investments.
42. Balances of Trade Receivables including for Turnkey Contracts, Work-in-progress, Creditors and Advances are subject to confirmation/ reconciliation and adjustments in this respect are carried out as and when amounts thereof, if any are ascertained.
44. Refer note no. 27.1 to Financial Statements in respect of charge created against borrowings.
45. Refer note no. 27.1 to Financial Statements in respect of charge created against borrowings.
46. Fixed Deposits with banks include Fixed Deposit of Rs. 61,66.88 lakhs (March 31, 2016 : Rs. 9,04.23 lakhs and April 1, 2015 : Rs. 31,07.27 lakhs) including NIL (March 31, 2016 : Rs. 0.50 lakhs and April 1, 2015 : Rs. 0.54 lakhs) disclosed under Other Non-Current Assest have been lodged with Banks against guarantee issued by them.
47. Includes Fixed Deposits of NIL (March 31, 2016 NIL and April 1, 2015 : Rs. 95,16.64 lakhs) and bank balance of Rs. 15,90.41 lakhs (March 31, 2016: Rs.17,35.86 lakhs and April 1, 2015 : NIL) in respect of External Commercial Borrowings loan pending utilisation for intended use.
48. Refer note no. 27.1 to Financial Statements in respect of charge created against borrowings.
49. Includes Rs. 16,67.45 lakhs (March 31, 2016 : Rs. 15,05.45 lakhs and April 01, 2015 : Rs. 9,78.83 lakhs) lying with customers in terms of agreement/ orders with/from customers.
50. Movement of Allowances for doubtful Advances.
51. Refer note no.27.1 to Financial Statements in respect of charge created against borrowings.
52. Refer note no.27.1 to Financial Statements in respect of charge created against borrowings.
53. Refer note no.27.1 to Financial Statements in respect of charge created against borrowings.
54 Disclosure of Loans and Advances as per the Regulation 34(3) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) are as follows :
55 All the above advances have been given for general corporate purpose. In respect of advance given to Mahadev Vyapaar Pvt. Ltd., reference should be made to note no. 58.
56. The Company has only one class of shares referred to as equity shares having a par value of Rs. 1/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, after distribution of all preferential amounts, in proportion of their shareholding.
57. Reconciliation of the number of equity shares outstandings
58. Shareholders holding more than 5% equity shares
59. Refer Statement of changes in Equity for movement in balances of reserves.
60. Capital Reserve
Capital Reserve comprises of :
61. Securities Premium Reserve
Securities Premium Reserve represents the amount received in excess of par value of securities and is available for utilisation as specified under Section 52 of Companies Act, 2013.
62. General Reserve
The general reserve is created from time to time by appropriating profits from retained earnings. The general reserve is created by a transfer from one component of equity to another and accordingly it is not reclassified to the Statement of profit and loss.
63. Debenture Redemption Reserve
Debenture Redemption Reserve is required to be created out of the profits available for payment of dividend in terms of Section 71 of the Companies Act, 2013, which is equal to 25% of the face value of the debentures issued and outstanding. This reserve will be released on redemption of the debentures.
64. Retained Earnings
Retained earnings generally represents the undistributed profit/ amount of accumulated earnings of the company. This includes Rs. 7,60,45.52 lakhs (March 31, 2016 : Rs. 7,76,42.06 lakhs and April 1, 2015 : Rs. 7,81,88.23 lakhs) which is not available for distribution as these are represented by changes in carrying amount of Property, Plant and Equipments and Investment in associates being measured at fair value as on the date of transition as deemed cost.
65. Other Comprehensive Income
Other Comprehensive Income (OCI) represent the balance in equity for items to be accounted under OCI and comprises of the following:
i) Items that will not be reclassified to profit and loss
a. The company has elected to recognise changes in the fair value of investments(other than in subsidiaries, associates and joint ventures) in OCI. This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value. The company transfers amounts from this reserve to retained earnings when the relevant equity securities are disposed.
b. The actuarial gains and losses arising on defined benefit obligations have been recognised in OCI.
ii) Items that will be reclassified to profit and loss.
a. This Reserve represents the cumulative effective portion of changes in fair value of currency swap that are designated as cash flow hedge are recognised in OCI. This is reclassified to statement of Profit and Loss.
66. Subsequent to Balance Sheet date, the Board of Directors has recommended a dividend of Rs. 0.50 per share to be paid on fully paid equity shares in respect of the financial year ended March 31, 2017. This equity dividend is subject to approval by shareholders at the enshuing Annual General Meeting and has not been included as a liability in these financial statements. The total estimated equity dividend to be paid is Rs.17,84.78 lakhs and the dividend distribution tax thereon amounts to Rs. 3,63.34 lakhs.
67. 11.75% Non Convertible Debentures (privately placed) is to be secured by first pari-passu charge on companyâs Property, Plant and Equipment and other intangible assets (immovable and movable) including land and buildings both present and future other than assets located at Elavur. These debentures were allotted on March 7, 2017 and are redeemable in 20 equal quarterly instalments at the end of 5th quarter from the date of allotment. However, there is a Put and Call option available to the investor / issuer which can be exercised at the end of three years from the date of allotment and every 12 months thereafter.
68. 12% Non Convertible Debentures (privately placed) is to be secured by second pari-passu charge on companyâs Property, Plant and Equipment and other intangible assets (immovable and movable) including land and buildings both present and future other than assets located at Elavur. These debentures were allotted on March 7, 2017 and are redeemable in 16 equal quarterly instalments at the end of 9th quarter from the date of allotment. However, there is a Put and Call option available to the investor / issuer which can be exercised at the end of three years from the date of allotment and every 12 months thereafter.
69. 11% Non Convertible Debentures (privately placed) are secured by second pari-passu charge on companyâs Property, Plant and Equipment and other intangible assets (immovable and movable) including land and buildings both present and future other than assets located at Elavur. These debentures were allotted on July 5, 2013 and are redeemable at par at the end of 5th year from the date of allotment.
70. 10.75% Non Convertible Debentures (privately placed) were secured by first pari-passu charge on companyâs Property, Plant and Equipment and other intangible assets (immovable and movable) including land and buildings both present and future other than assets located at Elavur and excluding furniture and fixture, vehicles and other intangible assets. These debentures were allotted on April 11, 2012 and have been fully redeemed during the year.
71. 12.50% Non Convertible Debentures (privately placed) was secured by second pari-passu charge on companyâs Property, Plant and Equipment and other intangible assets (immovable and movable) including land and buildings both present and future other than assets located at Elavur. These debenture were fully reedemed during the year ended March 31, 2016.
72. External Commercial Borrowings of USD 77.50 million was repayable in 3 annual instalments of 33.25% in July, 2013, 33.25% in July, 2014 & 33.50% in July, 2015. The outstanding as on March 31, 2017 is NIL (March 31, 2016 : NIL and April 1, 2015 : Rs. 1,62,25.26 lakhs). External Commercial Borrowings of USD 139.00 million is repayable in 12 semi annual instalments from August 29, 2015. The outstanding as on March 31, 2017 is Rs 6,12,91.49 lakhs (March 31, 2016 : Rs. 7,17,87.18 lakhs and April 1, 2015 : Rs. 8,68,68.05 lakhs). The interest rate ranges from 6M Libor 400 to 500 basis points. External Commercial Borrowings is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur.
73. FCNR Loan of USD 16.62 million is to be secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur. FCNR Loan is repayable in 25 equal quarterly instalments starting from Dec, 2016. The interest rate ranges from 3M Libor 275 to 325 basis points. The outstanding as on March 31, 2017 is Rs. 95,47.90 lakhs (March 31, 2016 : Rs. 1,05,33.72 lakhs and April 1, 2015 : NIL).
74. Rupee Term Loan of Rs. 50,00.00 lakhs from bank is to be secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur and Vadgaon (Pune). Rupee Term Loan is repayable in 25 equal quarterly instalments starting from July, 2017. The interest rate ranges from 10.00% p.a to 11.00% p.a. The outstanding as on March 31, 2017 is Rs. 44,95.09 lakhs (March 31, 2016 : NIL and April 1, 2015 : NIL)
75. Rupee Term Loan of Rs. 2,00,00.00 lakhs from bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur. Term Loan is repayable in 28 quarterly instalments starting from June, 2015. The interest rate ranges from 12.50% p.a to 13.50% p.a. The outstanding as on March 31, 2017 is Rs. 1,91,05.01 lakhs (March 31, 2016 : Rs. 1,94,85.98 lakhs and April 1, 2015 : Rs. 1,98,68.71 lakhs)
76. Rupee Term Loan of Rs. 40,00.00 lakhs from bank is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur and Vadgaon (Pune). Rupee Term Loan is repayable in 16 equal quarterly installments starting from Dec,2015. The interest rate ranges from 10.50% p.a to 12.00% p.a. The outstanding as on March 31, 2017 is Rs. 24,56.77 lakhs (March 31, 2016 : Rs. 34,19.31 lakhs and April 1, 2015 : Rs. 40,00.00)
77. Term Loan of Rs. 50,00.00 lakhs from a financial institution is secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur. Term Loan is repayable in 24 equal quarterly installments starting from July, 2016. The interest rate ranges from 12.00% p.a to 13.00% p.a. The outstanding as on March 31, 2017 is Rs. 43,60.56 lakhs (March 31, 2016 : Rs. 49,80.28 lakhs and April 1, 2015 : Rs. 49,73.94 lakhs)
78. Term Loan of Rs. 39,54.00 lakhs from a financial institution is to be secured by way of second pari-passu charge on all movable Property, Plant and Equipment and other intangible assets and Current Assets, both present and future of the Company. The interest rate ranges from 14.00% p.a to 14.50% p.a. The outstanding as on March 31, 2017 is Nil (March 31, 2016 : Rs. 34,40.87 lakhs and April 1, 2015 : Rs. 39,26.34 lakhs). The said loan has been fully repaid during the year.
79. Term Loan of Rs. 1,00,00.00 from a financial institution was secured by way of first pari-passu charge on all immovable and movable Property, Plant and Equipment and other intangible assets, both present and future of the Company other than assets located at Elavur. The outstanding as on March 31, 2017 is NIL (March 31, 2016 : NIL and April 1, 2015 : Rs. 23,51.51 lakhs). The said loan has been fully paid during the previous year.
80. Term Loan of Rs. 41,00.00 lakhs from a financial institution is repayable in 16 quarterly instalments starting from June, 2018. The interest rate ranges from 11.00% p.a to 12.00 % p.a. The outstanding as on March 31, 2017 is 41,00.00 (March 31, 2016 : NIL and April 1, 2015 : NIL)
81. Term Loan of Rs. 33,00.00 lakhs from a financial institution is repayable in 16 quarterly instalments starting from March, 2018. The interest rate ranges from 11.00% p.a to 12.00 % p.a. The outstanding as on March 31, 2017 is Rs. 25,11.48 lakhs (March 31, 2016 : NIL and April 1, 2015 : NIL).
82. Term Loan of Rs. 42,00.00 lakhs from a financial institution has been fully repaid during the year. The interest rate ranges from 11.50% p.a to 12.25% p.a. The outstanding as on March 31, 2017 is NIL (March 31, 2016 : Rs 42,00.00 lakhs and April 1, 2015 : NIL).
83. The outstanding balances disclosed in Note no. 22.1 to 22.4 are based on the amortised cost in accordance with Ind AS 109 âFinancial Instrumentsâ.
84. Provision for Mines closure and restoration charges are made in terms of statutory obligations specified for the purpose and deposited in the Escrow account in terms of the stipulation made by Ministry of Coal, for Mines closure Plan. (Refer note 16 and 46).
85. Movement in Mine closure and Restoration Obligation provision are provided below :
86. Deferred Tax Liabilities
The following is the analysis of deferred tax (assets)/liabilities presented in the Balance Sheet :
87. Advance from Customers amounting to Rs. 2,24,60.56 lakhs (March 31, 2016 : Rs. 1,65,62.50 lakhs and April 1, 2015 : NIL (including Rs. 24,27.99 lakhs (March 31, 2016 : Rs. 17,91.76 lakhs and April 1, 2015 : NIL shown under current liabilities))) received as interest bearing advance for export of DI Pipes, Fittings and related accessories has been classified and disclosed as aforesaid as per terms of the contract.
88. Loans repayable on demand being Working Capital facilities from Banks (both fund based and non fund based) are secured by first pari passu charge by way of joint hypothecation of raw materials, finished goods, work in progress, consumable stores and spares, book debts/receivables and other current assets of the company both present and future.
89. Fixed Deposit amounting to NIL (March 31, 2016 : NIL and April 1, 2015 : Rs. 30,00.00 lakhs) are pledged with banks for availing working capital facilities.
90. Disclosure of Trade payables as required under section 22 of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, based on the confirmation and information available with the company regarding the status of suppliers.
91. Including acceptances of Rs. 24,49.58 lakhs (March 31, 2016 : Rs. 21,17.11 lakhs and April 1, 2015 : Rs. 4,71.04 lakhs).
92. The same is not due for payment to investor education and protection fund.
93. Other Provisions includes :
(a) Provision relating to indirect taxes in respect of proceeding of various excise duty matter amounting to Rs. 5,00 lakhs (March 31, 2016 : Rs. 5,00.00 lakhs and April 1, 2015 : Rs. 5,00.00 lakhs).
(b) Provision relating to disputed customer claims/rebates/demands amounting to Rs. 4,76.74 lakhs (March 31, 2016 : Rs. 2,10.00 lakhs and April 1, 2015 : Rs. 2,10.00 lakhs).
94. Movement in other provisions are provided below :
95. Includes Rs. 10,14.09 lakhs being interest received pertaining to Assessment Year 2003-04 and from Assessment Year 2005-06 to 2008-09 as the refund and the aforesaid amount has been disputed by the Income Tax Department and the matter was pending before Income Tax Appellate Tribunal (ITAT) for which adjustment pending appeal effect to be given by the Income Tax authorities will be carried on receipt of assessment order. The ITAT during the year has passed the order for these years, however the appeal effect to the aforesaid orders is yet to be given by the Income Tax Department.
96.Includes Rs.33,58.90 lakhs (March 31, 2016 : NIL) representing profit on sale of property situated at Chennai.
97. Finance costs includes Rs. 35,00.64 lakhs (March 31, 2016 : NIL) in respect of External Commercial Borrwoings pertaining to Coal mines which have been taken over and alloted to SAIL as stated in note no. 46 below.
98. During the year, the Company has incurred Rs. 1,02.06 lakhs (March 31, 2016 : Rs. 93.59 lakhs) on account of research and development expenses which has been charged to Statement of Profit and Loss.
99. During the year, the Company has incurred Rs. 2,10.00 lakhs (March 31, 2016 : Rs. 2,35.00 lakhs) on account of Corporate Social Responsibility (CSR) included under Other Miscellaneous Expenses.
100. Obligation under leases
A. Finance Lease disclosures :
The leasehold lands are located at Kashberia, Haldia, East Mednipur, West Bengal and has been classified under finance lease having lease term for a period of 90 years.
The net carrying amount of the leasehold land is Rs. 12,26.81 lakhs as at March 31, 2017 (March 31, 2016 : Rs. 12,07.16 lakhs and April 1, 2015 : Rs. 12,22.34 lakhs).
B. Operating Lease disclosures :
The Company has certain operating lease arrangements for office accommodations etc. with tenure extending upto 9 yrs. Term of certain lease arrangements include escalation clause for rent on expiry of 36 months from the commencement date of such lease and deposit / refund of security deposit etc. Expenditure incurred on account of rent during the year and recognized in the Profit and Loss account amounts to Rs. 6,09.20 lakhs (March 31, 2016 : Rs. 5,93.26 lakhs).
1. Reconciliation of Income tax expense for the year with accounting profit is as follows :
Taxable Income differs from âprofit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. Details in this respect are as follows :
2. FINANCIAL INSTRUMENTS
The accounting classification of each category of financial instrument, their carrying amount and fair value are as follows :-
Fair Valuation Techniques
The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the fair values :
The fair value of cash and cash equivalents, current trade receivables and payables, current financial liabilities and assets and borrowings approximate their carrying amount largely due to the short-term nature of these instruments. The management considers that the carrying amounts of financial assets and financial liabilities recognised at nominal cost/amortised cost in the financial statements approximate their fair values.
A substantial portion of the companyâs long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Fair value of variable interest rate borrowings approximates their carrying value subject to adjustments made for transaction cost. In respect of fixed interest rate borrowings, fair value is determined by using discount rates that reflects the present borrowing rate of the company.
Investments (other than Investments in Associates, Joint Venture and Subsidiaries) traded in active market are determined by reference to the quotes from the Stock exchanges as at the reporting date. Investments in liquid and short-term mutual funds are measured using quoted market prices at the reporting date multiplied by the quantity held. Quoted Investments for which quotations are not available have been included in the market value at the face value/paid up value, whichever is lower except in case of debentures, bonds and government securities where the net present value at current yeild to maturity have been considered. Unquoted investments in shares have been valued based on the historical net asset value as per the latest audited financial statements.
The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc. These derivatives are estimated by using the pricing models, where the inputs to those models are based on readily observable market parameters, contractual terms, period to maturity, maturity parameters and foreign exchange rates. These models do not contain a high level of subjectivity as the valuation techniques used do not require significant judgement, and inputs thereto are readily observable from market rates. The said valuation has been carried out by the counter party with whom the contract has been entered with and management has evaluated the credit and non-performance risks associated with the counterparties and believes them to be insignificant and not requiring any credit adjustments.
During the year ended March 31, 2017 and March 31, 2016, there were no transfers between Level 1, Level 2 and Level 3.
The Inputs used in fair valuation measurement are as follows :
Fair valuation of Financial assets and liabilities not within the operating cycle of the company is amortised based on the borrowing rate of the company.
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 inputs used for forward contracts are Forward foreign currency exchange rates and Interest rates to discount future cash flow.
Fair valuation of Bonds is based on the net present value at current yield to maturity from rates available from FIMMDA.
Unquoted investments in shares have been valued based on the amount available to shareholderâs as per the latest audited financial statements. There were no external unobservable inputs or assumption used in such valuation.
Derivatives financial assets and liabilities :
The Company follows established risk management policies, including the use of derivatives to hedge its exposure to foreign currency fluctuations on foreign currency assets / liabilities. The counter party in these derivative instruments is a bank and the Company considers the risks of non-performance by the counterparty as non-material.
(a) The following tables present the aggregate contracted principal amounts of the Companyâs derivative contracts outstanding :
(b) Un hedged Foreign Currency exposures are as follows : -
(c) The table below analyses the derivative financial instruments into relevant maturity groupings based on the remaining period as of the balance sheet date :
d) The company has entered into USD INR Currency Swap to hedge both the principal and interest payments of the borrowing from bank amounting to USD 16.62 Mn. The critical terms of both the hedging instrument (i.e the Full currency swap) and the hedged item (i.e the borrowing) are closely aligned, thereby establishing an economic relationship between them. The Currency Swap is hence designated as hedging instrument in cash flow hedges. As the economic relationship continues to exist, no hedge ineffectiveness arises requiring recognition through statement of profit and loss. The Currency Swap is measured at fair value through Other comprehensive income (OCI).
e) The following table provides the reconciliation of cash flow hedge reserve :
Sale of Financial Assets
In the normal course of business, the Company transfers its bill receivables to banks. Under the terms of the agreements, the Company surrenders control over the financial assets and the transfer is with recourse. Under arrangement with recourse, the company is obligated to repurchase the uncollected financial assets, subject to limits specified in the agreement with banks. Accordingly, in such cases the amount received are adjsuted against the receivables. As at March 31, 2017, March 31, 2016 and April 1, 2015, the maximum amount of recourse obligation in respect of transferred financial assets are Rs. 13,51.06 lakhs, Rs. 51,41.86 lakhs and Rs. 69,69.41 lakhs respectively.
FINANCIAL RISK FACTORS
The Companyâs activities and exposed to variety of financial risks. The key financial risks includes market risk, credit risk and liquidity risk. The Companyâs focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Board of Directors reviews and approves policies for managing these risks. The risks are governed by appropriate policies and procedures and accordingly financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives.
MARKET RISK
Market risk is the risk or uncertainty arising from possible market fluctuations resulting in variation in the fair value of future cash flows of a financial instrument. The major components of Market risks are currency risk, interest rate risk and other price risk. Financial instruments affected by market risk includes trade receivables, borrowings, investments and trade and other payables.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs foreign currency denominated borrowings, trade receivables and trade or other payables.
The Company has adopted a comprehensive risk management review system wherein it actively hedges its foreign exchange exposures within defined parameters through use of hedging instruments such as forward contracts, options and swaps. The Company periodically reviews its risk management initiatives and also takes experts advice on regular basis on hedging strategy.
Derivative financial assets and liabilities dealing with outstanding derivative contracts and unhedged foreign currency exposure has been detailed in earlier pars. Unhedged foreign currency exposure is primarily on account of long term foreign currency borrowings for which hedge cover is taken as per the policy followed by the company depending upon the remaining period of maturity of the installments falling due for payment.
A 5% stregthening of INR would have an equal and opposite effect on the Companyâs financial statements.
Interest rate risk
The companyâs exposure in market risk relating to change in interest rate primarily arises from floating rate borrowing with banks and financial institutions. Borrowings at fixed interest rate exposes the company to the fair value interest rate risk. The Company has entered into interest rate swap contracts in respect of certain foreign currency borrowings whereby interest at an agreed rate are to be applied on agreed upon principal amount. The company maintains a portfolio mix of fixed and floating rate borrowings. As at March 31, 2017, after taking into account interest rate swaps, approximately 60.81% (March 31, 2016: 55.68%) of the companyâs borrowings become fixed rate interest borrowing.
Further there are deposits with banks which are for short term period are exposed to interest rate risk, falling due for renewal. These deposits are however generally for trade purposes as such do not cause material implication.
With all other variables held constant, the following table demonstrates the impact of the borrowing cost on floating rate portion of loans and borrowings and excluding loans on which interest rate swaps are taken.
A decrease in 0.50 basis point in Rupee Loan and 0.25 basis point in Foreign Currency Loan would have an equal and opposite effect on the Companyâs financial statements
Other price risk
The Companyâs equity exposure in Subsidiaries, Associates and Joint Ventures are carried at cost or deemed cost and these are subject to impairment testing as per the policy followed in this respect. The companyâs current investments which are fair valued through profit and loss are not material. Accordingly, other price risk of the financial instrument to which the company is exposed is not expected to be material.
CREDIT RISK
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables). The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Major water infrastructure projects are Government funded or foreign aided and the risk involved in payment default is minimum with respect to these customers. Besides, export receivables are primarily from subsidiaries and sales made by them is covered under Credit Insurance. The Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends and ageing of accounts receivable. Individual risk limits are set accordingly and the company obtains necessary security including letter of credits and/or bank guarantee to mitigate.
The carrying amount of respective financial assets recognised in the financial statements, (net of impairment losses) represents the Companyâs maximum exposure to credit risk. The concentration of credit risk is limited due to the customer base being large and unrelated. Of the trade receivables balance at the end of the year (other than subsidiaries), there are no single customer accounted for more than 10% of the accounts receivable and 10% of revenue as at March 31, 2017 and March 31, 2016.
The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. Receivables from customers are reviewed/evaluated periodically by the management and appropriate provisions are made to the extent recovery there against has been considered to be remote.
Financial assets that are neither past due nor impaired
Cash and cash equivalents, investment and deposits with banks are neither past due nor impaired. Cash and cash equivalents with banks are held with reputed and credit worthy banking institutions.
Financial assets that are past due but not impaired
Trade receivables amounts that are past due at the end of the reporting period against which no credit losses has been expected to arise.
LIQUIDITY RISK
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Companyâs objective is to maintain optimum level of liquidity to meet itâs cash and collateral requirements at all times. The companyâs assets represented by financial instruments comprising of receivables, and those relating to Parbatpur Coal mines (refer note no. 46) are largely by borrowed funds funded against borrowed funds. The company relies on borrowings and internal accruals to meet its fund requirement. The current committed line of credit are sufficient to meet its short to medium term fund requirement.
Liquidity and interest risk tables
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows as at balance sheet date :
The company has current financial assets which will be realised in ordinary course of business. The Company ensures that it has sufficient cash on demand to meet expected operational expenses.
The company relies on mix of borrowings and operating cash flows to meet its need for funds and ensures that it does not breach any financial covenants stipulated by the lender.
Capital Management
The primary objective of the Companyâs capital management is to ensure that it maintains a healthy capital ratio in order to support its business and maximise shareholder value. The Companyâs objective when managing capital is to safeguard their ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stake holders. The Company is focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without where the risk profile of the Company.
31. Post Retirement Employee Benefits
The disclosures required under Indian Accounting Standard 19 on ââEmployee Benefitsââ are given below :
a) Defined Contribution Plans
Contribution to Defined Contribution Plan, recognized for the year are as under :
b) Defined Benefit Plans
The employeeâs gratuity fund scheme managed by Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Ltd. is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
Compensated Absences
The obligation for compensated absences is recognized in the same manner as gratuity except remeasurement benefit which is treated as part of OCI. The actuarial liability of Compensated Absences (unfunded) of accumulated privileged and sick leaves of the employees of the Company as at March 31, 2017 is given below :
Notes : i) Assumptions relating to future salary increases, attrition, interest rate for discount & overall expected rate of return on Assets have been considered based on relevant economic factors such as inflation, market growth & other factors applicable to the period over which the obligation is expected to be settled.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation recognised within the Balance Sheet.
3(a). In pursuance of the Order dated September 24, 2014 issued by the Honâble Supreme Court of India (the Order) followed by the Ordinance promulgated by the Government of India, Ministry of Law & Justice (legislative department) dated October 21, 2014 (Ordinance) for implementing the Order, allotment of Parbatpur coal block (coal block/mines) to the Company which was under advanced stage of implementation, had been cancelled w.e.f. April 01, 2015. In terms of the Ordinance, the Company was allowed to continue the operations in the said block till March 31, 2015. Accordingly, the same had been handed over to Bharat Coking Coal Limited (BCCL) as per the direction from Coal India Ltd. (CIL) with effect from April 01, 2015 and the same has been subsequently alloted to Steel Authority of India Limited (SAIL).
Following a petition filed by the Company, the Honâble High Court at Delhi has pronounced itâs judgement on March 09, 2017. Accordingly based on the said judgement, the Company has claimed Rs. 15,31.76 lakhs towards compensation against the said coal block now being alloted to SAIL, acceptance whereof is awaited. Pending acceptance of the Companyâs claim as above;
(i) Rs.12,88,84.11 lakhs incurred pertaining to the coal block till March 31, 2015 after setting off income, stocks etc. there against as per the accounting policy then followed by the company has been continued to be shown as freehold land, capital work in progress, other fixed assets and other respective head of accounts;
(ii) Interest and other finance cost for the year ended March 31, 2016 against the fund borrowed and other expenses directly attributable in this respect amounting to Rs. 95,14.74 lakhs has been considered as other recoverable under current assets; and
(iii) Compensation of Rs. 83,12.34 lakhs so far received and net realisations against sale of assets, advances etc. amounting to Rs. 6,33.83 lakhs have been adjusted.
Adjustments arising with respect to above will be given effect to on final acceptance/settlement of the claim.
4(b). Various balances pertaining to Coal Block claim and handing over the same as detailed in different heads of accounts includes :
5(c). Due to reasons stated in note no. 46(a) and pending determination of the amount of the claim, balances under various heads which otherwise would have been recognised and measured as financial instrument in accordance with Ind AS 109 âFinancial Instrumentsâ have been included under various heads as disclosed under note no. 46(b) considering the circumstances and objective of the financial statements.
6. In terms of the Honâble Supreme Court Order as referred above, North Dhadhu Coal Block, allotted in joint venture with other companies, has also been cancelled w.e.f. September 24, 2014. The Company barring initial contribution of Rs. 8,22.81 lakhs has not made any further investments in the said joint venture company . In respect of Companyâs investment in North Dhadhu Coal Block, allotted in joint venture with other companies, in view of the management, the compensation to be received in terms of the ordinance is expected to cover the cost incurred by the Joint Venture Company and thereby no impairment requiring any adjustments in value of such investment is expected to arise.
7. Due to delay in grant of forest, environment and other clearences from various authorities and execution of mining lease of an area of 192.50 ha. by the State Government of Jharkhand for iron and manganese ores at Dirsumburu in Kodilabad Reserve Forest, Saranda of West Singhbhum, Jharkhand, the validity period of letter of intent granted in this respect has expired on January 11, 2017. The Company has filed a writ petition before the Honâble High Court of Jharkhand on January 10, 2017, praying inter-alia for direction for grant of said lease in favour of the Company. The Honâble High Court in its order while observed, being not averse in granting relief with respect to cut off date, has admitted the said petition and fixed the case for further hearing and adjudication. Pending decision of the High Court, Rs. 63,33.46 lakhs so far incurred in connection with these Mines/related facilities, have been carried forward under respective heads of fixed assets, capital work in progress and advances.
8. Capital work in progress includes plant and equipments and other assets amounting to Rs. 3,28,51.74 (March 31, 2016 : Rs. 4,01,03.05 lakhs and April 1, 2015 : Rs. 4,01,68.80 lakhs) under installation and capital and other expenditure incured pending completion thereof. (refer note no. 46 and 48)
9. The expenses incurred for projects/assets during the construction/mine development period are classified asâPre-operative Expensesâpending capitalization are included under capital work in progress and will be allocated to the assets on completion of the project/assets. Consequently expenses disclosed under the respective head are net of amount classified as preoperative expenses by the Company (refer note no. 46 and 48).
10. As regards construction contracts in progress as on March 31, 2017, aggregate amount of costs incurred and recognised profit (less recognized losses) upto the year end (to the extent ascertained by the management), aggregate amount of advances received and aggregate amount of retentions are Rs. 25,00.99 lakhs, Rs. 20,59.55 lakhs and Rs. 1,14.24 lakhs respectively. (March 31, 2016 : Rs. 24,50.75 lakhs, Rs. 18,81.49 lakhs and Rs. 1,04.46 lakhs respectively and April 1, 2015 : Rs. 19,96.74 lakhs, Rs. 15,17.41 lakhs and Rs. 82.78 lakhs respectively).
11 In respect of the above parties ,there is no provision for doubtful debts as on March 31, 2017 and no amount has been written off or written back during the year in respect of debt due from/to them.
12. The above related party information is as identified by the management and relied upon by the auditor.
13. Details of Loans, Investments and Guarantees covered u/s 186(4) of the Companies Act, 2013 :
a) Details of Loans and Investments are given under the respective heads (Refer Note no. 7, 13 and 17.2).
b) Details of Corporate Guarantee/ Standby Letter of Credit given by the Company are as follows :
14. The company operates mainly in one business segment viz Pipes being primary segment and all other activities revolve around the main activity. The secondary segment is geographical, information related to which is given as under :
15. The company has opted for continuing accounting policy in respect of exchange difference arising on reporting of long term foreign currency monetary items in accordance with Ind AS 101 âFirst time adoption of Indian Accounting Standardsâ. Accordingly, during the year ended 31st March 2017 the net exchange difference of Rs. 1,24.08 lakhs (net credit) (previous year Rs. 54,58.89 lakhs) on foreign currency loans have been adjusted in the carrying amount of fixed assets / capital work in progress / claim receivable. The unamortised balance is Rs. 2,68,19.56 lakhs (March 31, 2016 : Rs. 2,71,37.17 lakhs and April 1, 2015 : Rs. 2,18,54.69 lakhs).
16. The Board of Directors of the Company, at its meeting held on August 11, 2014 had approved the Scheme of Amalgamation (âthe Schemeâ) of its wholly owned subsidiary, Mahadev Vyapaar Private Limited with the Company with effect from April 1, 2014 (âAppointed Dateâ). Mahadev Vyapaar Private Limited had filed an application before the Honâble High Court at Calcutta, which has sanctioned the said Scheme. The application filed by the Company before the Honâble High Court at Orissa will be taken by the National Company Law Tribunal, Kolkata Bench (âNCLTâ) as per Notification no.S.O. 3677(E) dated December 7, 2016 and Rule 3 of Companies (Transfer of Pending Proceedings) Rules, 2016. The said application is yet to be transferred to NCLT. No effect of the Scheme has therefore been given in these financial statements.
a) FIRST-TIME ADOPTION - Mandatory Exceptions and optional Exemptions
These financial statements are covered by Ind AS 101, âFirst Time Adoption of Indian Accounting Standardsâ as they are the Companyâs first Ind AS financial statements for the year ended March 31, 2017.
i) Overall principle :
a) The Company excepting as detailed under (b) below has prepared the opening balance sheet as per Ind AS as at April 1, 2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying certain items from Previous GAAP to Ind AS as required under the Ind AS, and applying Ind AS in the measurement of recognized assets and liabilities. The accounting policies that the Company used in its opening Ind-AS Balance Sheet may have differed from those that it used for its previous GAAP. The resulting adjustments arising from events and transactions occuring before the date of transition to Ind-AS has been recognized directly in retained earnings at the date of transition.
b) Assets and liabilities pertaining to coal mines have been carried under freehold land, capital work in progress, property, plant and equipment and other respective heads of account, pending decision of the court as on the transition date and determination of exact status of the assets and companyâs claim there against as detailed in note no. 46, have been k
Mar 31, 2016
1 The Company has only one class of shares referred to as equity shares having a par value of Re 1/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, after distribution of all preferential amounts, in proportion of their shareholding.
2 The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
3 During the year ended 31 March, 2016 the amount of per share dividend recognized as distribution to equity shareholders was Re.0.50.
4 11% Non Convertible Debentures (privately placed) are secured by second pari-passu charge on companyâs fixed assets (immovable and movable) including land and buildings both present and future other than assets located at Chennai and Elavur. These debentures were allotted on 5th July, 2013 and are redeemable at par at the end of 5th year from the date of allotment i.e on 5th July 2018. However, there is a Put and Call option available to the issuer / investor which can be exercised at the end of three years from the date of allotment i.e on 5th July 2016.
5 12.50% Non Convertible Debentures (privately placed) were secured by second pari-passu charge on companyâs fixed assets (immovable and movable) including land and buildings both present and future other than assets located at Chennai and Elavur.
6 10.75% Non Convertible Debentures (privately placed) are secured by first pari-passu charge on companyâs fixed assets (immovable and movable) including land and buildings both present and future other than assets located at Chennai and Elavur and excluding furniture and fixture, vehicles and other intangible assets. These debentures were allotted on 11th April, 2012 and are redeemable at par in three annual installments at the end of 3rd, 4th & 5th year from the date of allotment.
7 External Commercial Borrowings is secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur.
8 External Commercial Borrowings of USD 77.50 million was repayable in 3 annual installments of 33.25% in July, 2013, 33.25% in July, 2014 & 33.50% in July, 2015. The outstanding as on 31.03.2016 is NIL (previous year Rs. 1,62,25.26 lakhs). External Commercial Borrowings of USD 139.00 million is repayable in 12 semiannual installments from 29th August, 2015. The outstanding as on 31.03.2016 is Rs 7,17,87.18 lakhs (previous year Rs. 8,68,68.05 lakhs). The interest rate ranges from 6M Libor 400 to 500 basis points.
9 FCNR Loan of USD 16.16 million is to be secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur. FCNR Loan is repayable in 25 equal quarterly installments from Dec, 2016. The interest rate ranges from 3M Libor 275 to 325 basis points. The outstanding as on 31.03.2016 is Rs. 1,10,08.30 lakhs (previous year NIL).
10. Rupee Term Loan of Rs. 1,96,00.00 lakhs (Previous year Rs. 2,00,00.00 lakhs) from bank is secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur. Term Loan is repayable in 28 quarterly installments starting from June, 2015. The interest rate ranges from 12.50% p.a to 13.25% p.a.
11. Rupee Term Loan of Rs. 35,00.00 lakhs (Previous year Rs. 40,00.00 lakhs) from bank is secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai, Elavur and Vadgaon (Pune). Rupee Term Loan is repayable in 16 equal quarterly installments starting from Dec, 2015. The interest rate ranges from 10.50% p.a to 11.00% p.a.
12. Term Loan of NIL (Previous year Rs. 23,52.94 lakhs) from a financial institution was secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur.
13 Term Loan of Rs. 50,00.00 lakhs (Previous year Rs. 50,00.00 lakhs) from a financial institution is secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than assets located at Chennai and Elavur. Term Loan is repayable in 24 equal quarterly installments starting from July 1, 2016. The interest rate ranges from 12.00% p.a to 13.00% p.a.
14. Term Loan of Rs. 34,59.75 lakhs (Previous year Rs. 39,54.00 lakhs) from a financial institution is to be secured by way of second pari-passu charge on all movable Fixed Assets and Current Assets, both present and future of the Company. The loan is repayable in 54 monthly installments starting from April, 2015. The interest rate ranges from 14.00% p.a to 14.50% p.a.
15. Term Loan of Rs. 42,00.00 lakhs (Previous year NIL) from a financial institution is repayable in 16 monthly installments starting from Dec, 2017. The interest rate ranges from 11.50% p.a to 12.25% p.a.
16. Includes Rs. 10,14.09 lakhs being interest received under section 244A of the Income Tax Act, 1961 pertaining to Assessment Year 2003-04 and from Assessment Year 2005-06 to 2008-09 as the refund and the aforesaid amount has been disputed by the Income Tax Department and the matter is under appeal before Income Tax Appellate Tribunal (ITAT).
17. Other provisions include (a) provision relating to indirect taxes in respect of proceedings of various excise duty matters -carrying amount at the end of the year Rs. 5,00.00 lakhs (previous year Rs. 5,00.00 lakhs). No amount was used and reversed during the year. Outflows in these cases would depend on the final developments/outcomes; (b) Other class of provisions related to disputed customer claims/rebates/demands - carrying amount at the end of the year Rs. 2,10.00 lakhs (previous year Rs. 2,10.00 lakhs). No amount was used and reversed during the year.
Notes
18. 86,67,50,000 Equity shares of Rs 10/- each fully paid up of Electro steel Steels Limited aggregating Rs. 8,87,71.31 lakhs (previous year Rs.8,87,71.31 lakhs) held by the Company as Investment have been pledged in favour of Electro steel Steels Limited lenders for securing financial assistance to Electro steel Steels Limited.
19. Electro steel Steels Limited, an associate company is currently passing through financial stringency. Joint Lender Forum (JLF) is contemplating various restructuring and other measures which interalia include restructuring of debts, induction of new promoter etc., final outcome whereof is awaited. Pending this and assessment of change in the status and resulant valuation etc., Companyâs Investment in the said associate has been carried at cost.
20. The Company has investment of Rs. 30 Lakhs in equity shares and given advance of Rs. 7,00 Lakhs against equity to Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers). The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the Company on various matters including for forfeiture of the Companyâs investment in equity shares of the DPL. The Company had inter alia filed petition before the Honâble High Court of Jharkhand at Ranchi. The Honâble High Court of Jharkhand at Ranchi upheld the Companyâs appeal and decided that the matter would have to be referred for Arbitration, the Venturer has challenged the aforesaid judgment in the Divisional Bench of the Honâble High Court of Jharkhand at Ranchi. Further advance of Rs. 7,00 Lakhs recoverable as above has also been referred for arbitration in terms of Shareholders Agreement. Pending final outcome of the matter and since, the other Venture are not providing the financial statements of DPL, and thereby disclosures as regards to contingent liability, capital commitments, if any, aggregate amounts of the assets, liabilities, income and expenses related to the Companyâs interest in DPL has not been made in these financial statements.
21. (a) The North Dhadhu Coal Block located in the state of Jharkhand was allocated to the Company, M/s. Adhunik Alloys & Power Limited (AAP), M/s. Jharkhand
Ispat Pvt. Ltd. (JPL) and M/s. Pawanjay Steel & Power Limited (PSPL) (collectively referred to as ventures) for working through a joint venture company. Accordingly, North Dhadhu Mining Company Private Limited (NDMCPL), a company in which the Company hasjoint control (proportion of ownership interest of the Company being 48.98 %) along with other ventures was formed. The Company has investment of Rs. 8,22.81 lakhs in equity shares of NDMCPL. (refer note no. 2.33.b)
(b) The Ministry of Coal, Government of India had issued an order for de-allocation of North Dhadhu Coal Block and deduction of Bank Guarantee of Rs. 56.03 crores issued for the same. The Companyâs share in the Bank Guarantee is Rs 27.45 crores. On a writ petition filed by the Company for quashing the order, stay has been granted by the Honâble High Court of Jharkhand. Pending final judgment, no provision is considered necessary in the respect of Companyâs investment in NDMCPL and amount of Bank Guarantee. (refer note no. 2.33.b)
22. The company has opted for accounting the exchange difference arising on reporting of long term foreign currency monetary items as per Accounting Standard 11, âThe Effects of Changes in Foreign Exchange Ratesâ. During the year ended March 31, 2016 the net exchange difference of Rs. 54,58.89 lakhs (net debit) (previous year Rs. 42,90.69 lakhs) on foreign currency loans have been adjusted in the carrying amount of fixed assets / capital work in progress / claim receivable. The un-amortized balance is Rs. 2,71,37.17 lakhs (previous year Rs. 2,18,54.69 lakhs).
23. The Board of Directors of the Company in its meeting held on August 11, 2014 has approved the Scheme of Amalgamation (âthe Schemeâ) of its wholly owned subsidiary, Mahadev Vyapaar Private Limited with the Company with effect from April 1,2014 (âAppointed Dateâ). The Company has filed an application before Honâble High Court of Orissa at Cuttack which is pending for hearing. In respect of the application filed by Mahadev Vyapaar Private Limited before the Honâble High Court at Calcutta, the Honâble High Court has sanctioned the said Scheme. No effect of the Scheme has been given in the above financial statement of the Company, pending sanction by the Honâble High Court of Orissa.
24. Previous year figures have been regrouped / reclassified wherever necessary.
Mar 31, 2015
1 10.75% Non Convertible Debentures (privately placed) are secured
by first pari-passu charge on company's fixed assets (immovable and
movable) including land and buildings both present and future other
than assets located at Chennai and Elavur and excluding furniture and
fixture, vehicles and other intangible assets. These debentures were
allotted on 11th April, 2012 and are redeemable at par in three annual
installments at the end of 3rd, 4th & 5th year from the date of
allotment.
2 External Commercial Borrowings is secured by way of first
pari-passu charge on all immovable and movable Fixed Assets, both
present and future of the Company other than assets located at Chennai
and Elavur.
3 External Commercial Borrowings of USD 77.50 million is
repayable in 3 annual installments of 33.25% in July, 2013, 33.25% in
July, 2014 & 33.50% in July, 2015. The outstanding as on 31.03.2015 is
Rs. 1,62,25.26 lakhs (previous year Rs.3,09,92.19 lakhs). External
Commercial Borrowings of USD 139.00 million is repayable in 12 semi
annual installments from 29th August, 2015. The outstanding as on
31.03.2015 is Rs.8,68,68.05 lakhs (previous year Rs.8,32,74.90 lakhs).
The interest rate ranges from 6M Libor 250 to 500 basis points.
4 Rupee Term Loan from bank of Rs.2,00,00.00 lakhs (Previous year
Rs.2,00,00.00 lakhs) is secured by way of first pari¬passu charge on
all immovable and movable Fixed Assets, both present and future of the
Company other than assets located at Chennai and Elavur. Term Loan is
repayable in 28 quarterly installments starting from June, 2015. The
interest rate ranges from 13.00% p.a to 13.50% p.a.
5 Rupee Term Loan from bank of Rs.40,00.00 lakhs (Previous year
Rs. nil lakhs) is to be secured by way of first pari-passu charge on
all immovable and movable Fixed Assets, both present and future of the
Company other than assets located at Chennai, Elavur and Vadgaon
(Pune). Term Loan is repayable in 16 equal quarterly installments
starting from Dec, 2015. The interest rate ranges from 11.00% p.a to
11.50% p.a.
6 Term Loan from financial institution of Rs. Nil lakhs (Previous
year Rs.9,37.50 lakhs) was secured by way of first pari¬passu charge on
all immovable and movable Fixed Assets, both present and future of the
Company other than assets located at Chennai and Elavur.
7 Term Loan from a financial institution of Rs.23,52.94 lakhs
(Previous year Rs.4117.65 lakhs) is secured by way of first pari-passu
charge on all immovable and movable Fixed Assets, both present and
future of the Company other than assets located at Chennai and Elavur.
Term Loan is repayable in 17 equal quarterly installments starting from
30th December, 2011. The interest rate ranges from 12.00% p.a to 12.50%
p.a.
8 Term Loan from a financial institution of Rs. 50,00.00 lakhs
(Previous year Rs. nil lakhs) is secured by way of first pari¬passu
charge on all immovable and movable Fixed Assets, both present and
future of the Company other than assets located at Chennai and Elavur.
Term Loan is repayable in 24 equal quarterly installments starting from
01st July, 2016. The interest rate ranges from 12.00% p.a to 13.00%
p.a.
9 Term Loan from a financial institution of Rs.39,54.00 lakhs
(Previous year Rs.39,54.00 lakhs) is to be secured by way of second
pari-passu charge on all movable Fixed Assets and Current Assets, both
present and future of the Company. The loan is repayable in 54 monthly
installments starting from April, 2015. The interest rate ranges from
14.00% p.a to 14.50% p.a.
10 Contingent Liabilities not provided for in respect of:
Amount Rs. in lakhs
As at 31.03.2015 As at 31.03.2014
a)Various show cause notices/demands
issued/ raised, which in the
opinion of the management are not
tenable and are pending with various
forum / authorities:
i) Sales Tax 75,21.84 75,48.52
ii) Excise, Custom Duty and Service
tax [net of provision of
Rs.5,00.00 lakhs(previous year
Rs.5,00.00 lakhs)] 1,34,41.52 1,34,00.78
iii) Income Tax 1,14.48 28.45
b) Employees State Insurance Corporation
has raised demand for contribution in
respect of Gross Job Charges for the
year 2001-02, 2003-04 and March'08
to January'10. In the opinion of the
management demand is adhoc and arbitrary
and is not sustainable legally. 92.51 92.51
c) Demand of Tamilnadu Electricity Board
disputed by the Company. 8.20 8.20
d) During the year 1994 UPSEB had raised
demand for electricity charges by revising
the power tariff schedule applicable to
the Company retrospectively from Feb'86.
In the opinion of the management the
revised power tariff is not applicable to
the Company and accordingly the Company
disputed the demand and the matter is
pending before Hon'ble High Court
at Allahabad. 2,61.74 2,61.74
e) Corporate guarantee issued to banks
by the Company on behalf of :
(i) Subsidiary Companies 74,71.77 1,09,07.91
(ii) Others 21,61.17 -
f) Standby Letter of Credit issued by
banks on behalf of the Company
in favour of
(i) Subsidiary Companies 1,16,38.81 2,04,13.61
g) Guarantees given by banks on behalf
of the Company 89,61.87 1,50,88.70
h) Bills Discounted with Banks. 69,69.41 67,47.88
i) The Company has disputed downward revision in the prices affected by
the purchaser subsequent to sale of certain specified materials. In the
opinion of the management and also on the merit of the case, as advised
legally no liability is likely to arise. The matter is subjudice and
pending final judgement the amount payable, if any is not ascertainable
presently.
Note: Future cash outflows, if any, in respect of (a) to (d), and (i)
above is dependent upon the outcome of judgments / decisions.
11 The company has opted for accounting the exchange difference
arising on reporting of long term foreign currency monetary items as
per Accounting Standard 11, "The Effects of Changes in Foreign Exchange
Rates". During the year ended 31st March 2015 the net exchange
difference of Rs. 4290.69 lakhs (net debit)(previous year Rs.12326.02
lakhs) on foreign currency loans have been adjusted in the carrying
amount of fixed assets / Capital work in progress. The unamortised
balance is Rs. 21854.69 lakhs (previous year Rs.17769.41 lakhs).
12 The Board of Directors of the Company has approved the Scheme of
Amalgamation (Scheme) of its wholly owned subsidiary, Mahadev Vyapaar
Private Limited with the Company with effect from April 1, 2014. No
effect of the Scheme has been given in the Financial Statements pending
receipt of necessary approvals.
13 Previous year figures have been regrouped / reclassified whereever
necessary.
Mar 31, 2014
1.1.1 The Company has only one class of shares referred to as equity
shares having a par value of Re 1/-. Each holder of equity shares is
entitled to one vote per share. In the event of liquidation, the equity
shareholders are eligible to receive the remaining assets of the
company, after distribution of all preferential amounts, in proportion
of their shareholding.
1.1.2 During the year, the Company has issued 1,70,64,617 Equity Shares
to Promoters/Promoters group of the Company on Preferential basis as
approved by the members of the Company at the Extraordinary General
Meeting held on 23.11.2013
1.1.3 The dividend propsed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
1.1.4 During the year ended March 31, 2014 the amount of per share
dividend recognized as distribution to equity shareholders was Re 0.65.
1.2.1 The Company through Qualified Institutional Placements had issued
33568312 warrant at a price of Rs. 3 each, entitling the holder to 1
(one) equity share. As per terms and conditions of the issue, the
warrant holders have an option to convert, warrant into equity at any
time on or after three years and upto five years from the date of
allotment (i.e. 08/02/2010) at exercise price of Rs. 59.58 per share.
The warrant issue price aggregating to Rs. 10,07.05 lakhs, being non
adjustable/non refundable has been credited to Capital Reserve.
1.3.1 11% Non Convertible Debentures (privately placed) are secured by
second pari-passu charge on company''s fixed assets (immovable and
movable) including land and buildings both present and future other
than assets located at Chennai and Elavur. These debentures were
allotted on 5th July, 2013 and are redeemable at par at the end of 5th
year from the date of allotment i.e 5th July, 2018. However, there is a
Put and Call option available to the issuer / investor which can be
exercised at the end of three years from the date of allotment i.e 5th
July, 2013.
1.3.2 12.50% Non Convertible Debentures (privately placed) are secured
by second pari-passu charge on company''s fixed assets (immovable and
movable) including land and buildings both present and future other
than assets located at Chennai and Elavur. These debentures were
allotted on 5th July, 2013 and are redeemable at par at the end of 5th
year from the date of allotment i.e 5th July, 2018. However, there is a
Put and Call option available to the issuer / investor which can be
exercised at the end of 30 months from the date of allotment i.e 5th
July, 2013 and every quarter thereafter.
1.3.3 10.75% Non Convertible Debentures (privately placed) are secured
by first pari-passu charge on company''s fixed assets (immovable and
movable) including land and buildings both present and future other
than assets located at Chennai and Elavur and excluding furniture and
fixture, vehicles and other intangible assets. These debentures were
allotted on 11th April, 2012 and are redeemable at par in three equal
annual installments at the end of 3rd, 4th & 5th year from the date of
allotment i.e 11th April, 2012. However, there is a Put and Call option
available to the issuer / investor which can be exercised at the end of
three years from the date of allotment i.e 11th April, 2015.
1.3.4.1 External Commercial Borrowing is secured by way of first
pari-passu charge on all immovable and movable Fixed Assets, both
present and future of the Company other than assets located at Chennai
and Elavur.
1.3.4.2 External Commercial Borrowings of USD 77.50 million is
repayable in 3 annual installments of 33.25% in July, 2013, 33.25% in
July, 2014 & 33.50% in July, 2015. The outstanding as on 31.03.2014 is
Rs. 3,09,92.19 lakhs (previous year Rs. 4,20,82.50 lakhs). External
Commercial Borrowings of USD 139.00 million is repayable in 12 semi
annual installments from 29th August, 2015. The outstanding as on
31.03.2014 is Rs. 7,54,77.00 lakhs (previous year Rs. 8,32,74.90
lakhs). The interest rate ranges from 6M Libor 250 to 500 basis
points.
1.3.5 Rupee Term Loan from bank is to be secured by way of first
pari-passu charge on all immovable and movable Fixed Assets, both
present and future of the Company other than assets located at Chennai
and Elavur. Term Loan is repayable in 28 quarterely installments
starting from June, 2015. The interest rate ranges from 13.00% p.a to
13.50% p.a.
1.3.6.1. Term loan from a financial institution of Rs. 1,50,00 lakhs
and Rs. 1,00,00 lakhs are secured by way of first pari-passu charge
over the movable fixed assets, lands and other immovable properties of
the Company both present and future other than assets located at
Chennai and Elavur.
1.3.6.2 Term loan of Rs. 1,50,00 lakhs is repayable in 16 quarterly
equal installments from 14th August, 2010. The outstanding as on
31.03.2014 is Rs. 9,37.50 lakhs (previous year Rs. 46,87.50 lakhs).
Term loan of Rs. 1,00,00 lakhs is repayable in 17 quarterly equal
installments from 30th December, 2011. The outstanding as on 31.03.2014
is Rs. 41,17.65 lakhs (previous year Rs. 64,70.59 lakhs). The interest
rate ranges from 11.00% p.a to 12.50%. p.a.
1.3.6.3 Term Loan of Rs. 39,54 lakhs is to be secured by way of second
pari-passu charge on all movable Fixed Assets and Current Assets, both
present and future of the Company. The loan is repayable in 54 monthly
installments starting from April, 2015. The interest rate ranged from
14.00% p.a to 14.50% p.a.
1.7.1 Loans repayable on demand being Working Capital facilities from
banks (both fund based and non fund based) are secured by first pari
passu charge by way of joint hypothecation of raw materials, finished
goods, work in progress, consumable stores and spares, book debts /
receivables and other current assets of the company both present and
future.
1.8.1 Including acceptances of Rs.1,49,50.56 lakhs (previous year Rs.
nil)
1.8.2 Disclosure of Trade Payables is based on the information
available with the company regarding the status of the suppliers as
defined under the " Micro, Small and Medium Enterprise Development
Act, 2006" (the Act). There are no delays in payment made to such
suppliers and there is no overdue amount outstanding as at the balance
sheet date. Based on above the relevant disclosures u/s 22 of the Act
are as follows:
1.9.1 Other provisions include (a) provision relating to indirect
taxes in respect of proceedings of various excise duty matters -
carrying amount at the end of the year Rs. 5,00.00 lakhs (previous year
Rs. 5,00.00 lakhs). No amount was used and reversed during the year.
Outflows in these cases would depend on the final
developments/outcomes; (b) Other class of provisions related to
disputed customer claims/rebates/demands - carrying amount at the end
of the year Rs.2,10.00 lakhs (previous year Rs. 15,00.00 lakhs),
Rs.15,00.00 lakhs were reversed during the year.
Notes :
1.10.1 866750000 Equity shares of Rs 10/- each fully paid up of
Electrosteel Steels Limited aggregating Rs 86675.00 lakhs held by the
Company as Investment have been pledged in favour of Electrosteel
Steels Limited lenders for securing financial assistance to
Electrosteel Steels Limited.
1.10.2 The Company''s investment in Electrosteel Steels Limited being
strategic and long term in nature, no provision has been considered
necessary with regard to diminution in market value of these
investment.
1.10.3 The Company has investment in equity shares of Domco Private
Limited (DPL), a Company incorporated in India, and has joint control
(proportion of ownership interest of the Company being 50%) over DPL
along with other venturers (the Venturers). The Venturers had filed a
petition before the Company Law Board, Principal Bench, New Delhi (CLB)
against the Company on various matters including for forfeiture of the
Company''s investment in equity shares of the DPL. The Company had
inter alia filed petition before the Hon''ble High Court of Jharkhand
at Ranchi. The Hon''ble High Court of Jharkhand at Ranchi upheld the
Company''s appeal and decided that the matter would have to be
referred for Arbitration. The Venturer has challenged the aforesaid
judgment in the Divisional Bench of the Hon''ble High Court of
Jharkhand at Ranchi. Pending final outcome of the matter and since ,
the other Venturer are not providing the financial statements of DPL,
and thereby disclosures as regards to contingent liability, capital
commitments, if any, aggregate amounts of the assets, liabilities,
income and expenses related to the Company''s interest in DPL has not
been made in these financial statements.
2.12.4 (a) The North Dhadhu Coal Block located in the state of
Jharkhand was allocated to the Company, M/s. Adhunik Alloys & Power
Limited (AAP), M/s. Jharkhand
Ispat Pvt. Ltd. (JPL) and M/s. Pawanjay Steel & Power Limited (PSPL)
(collectively referred to as venturers) for working through a joint
venture company. Accordingly, North Dhadhu Mining Company Private
Limited (NDMCPL), a company in which the Company has joint control
(proportion of ownership interest of the Company being 48.98 %) along
with other venturers was formed. The Company has investment of Rs.
8,22.81 Lakhs in equity shares of NDMCPL.
(b) The Ministry of Coal, Government of India had issued an order for
de-allocation of North Dhadhu Coal Block and deduction of Bank
Guarantee of Rs. 56.03 crores issued for the same. The Company''s
share in the Bank Guarantee is Rs 27.45 crores. On a writ petition
filed by the Company for quashing the order, stay has been granted by
the Hon''ble High Court of Jharkhand. Pending final judgement, no
provision is considered necessary in respect of Company''s investment
in NDMCPL and amount of Bank Guarantee.
2.13.1 Quoted Investments for which quotations are not available have
been included in the market value at the face value/paid up value,
whichever is lower except in case of debenture, bonds and government
securities where the net present value at current yield to maturity
have been considered.
2.13.2 Pledged with lenders against overdraft facility. (refer note no.
2.7.2)
2.14.1 Including loans and advance to employees amounting to Rs. 2.63
lakhs.
2.14.2 In the opinion of the Board of Directors, current assets and
loans and advances have the value at which these are stated in the
Balance Sheet, unless otherwise stated and adequate provisions for all
known liabilities have been made and are not in excess of the amount
reasonably required.
2.14.3 Security deposits include Rs. 5,57.50 lakhs (previous year Rs.
5,57.50 lakhs) with private limited companies in which directors are
interested as a member / director and Rs.38,22.30 lakhs (previous year
Rs.42,46.68 lakhs) with related parties.
2.14.4 Capital advances includes Rs 5.27 lakhs (previous year Rs.5.27
lakhs) paid to related party.
2.17.1 Balances of Trade Receivables including for Turnkey Contracts,
Work-in-Progress, Creditors and advances are subject to
confirmation/reconciliation and adjustments in this respect are carried
out as and when amounts thereof, if any are ascertained.
2.18.1 Fixed Deposits with Banks include Fixed Deposit of Rs. 3,39.71
lakhs (previous year Rs. 20.79 lakhs) lodged with Government
Departments, Customers and Bank.
2.18.2 Includes Fixed Deposit of Rs. 1,37,16.64 lakhs ( previous year
Rs. 2,08,75.00 lakhs) and Bank Balances of Rs. 50,00.00 lakhs (previous
year Rs. 75,00.00 lakhs ) in respect of External Commercial Borrowings
loans pending utilisation for intended use.
2.29.3 Miscellaneous expenses include Charity and Donation of Rs.
3,07.70 lakhs (previous year Rs. 2,51.97 lakhs).
2.29.4 The Company has certain operating lease arrangements for office
accommodations etc. with tenure extending upto 9 years. Term of
certain lease arrangements include escalation clause for rent on expiry
of 36 months from the commencement date of such lease and deposit /
refund of security deposit etc. Expenditure incurred on account of rent
during the year and recognized in the Statement of Profit and Loss
amounts to Rs. 4,99.57 lakhs (previous year Rs. 4,31.63 lakhs).
2.29.5 During the year, the Company has incurred Rs. 89.47 lakhs
(previous year Rs. 1,13.20 lakhs) on account of research and
development expenses which has been charged to Statement of Profit and
Loss.
2.30.1 The Company is entitled to MAT credit and accordingly based on
evidences MAT credit of Nil (previous year Rs. 1,50.35 lakhs) has been
recognised in these financial statements.
2.31 EMPLOYEEBENEFITS
The disclosures required under Accounting Standard 15 on ''''Employee
Benefits" notified in the Companies (Accounting Standards) Rules
2006, are given below:
Defined Benefit Scheme
The employee''s gratuity fund scheme managed by Life Insurance
Corporation of India and ICICI Prudential Life Insurance Company Ltd.
is a defined benefit plan. The present value of obligation is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
Compensated Absences
The obligation for compensated absences is recognized in the same
manner as gratuity. The actuarial liability of Compensated Absences
(unfunded) of accumulated privileged and sick leaves of the employees
of the Company as at 31.03.2014 is given below :
Notes :
i) Assumptions relating to future salary increases, attrition, interest
rate for discount & overall expected rate of return on Assets have been
considered based on relevant economic factors such as inflation, market
growth & other factors applicable to the period over which the
obligation is expected to be settled.
ii) The Company expects to contribute Rs. 2,00 lakhs (previous year Rs.
2,00 lakhs) to Gratuity fund in 2014-15.
2.33 a. Capital work in progress includes plant and equipments and
other assets under installation and capital and other expenditure
incured pending completion thereof.
b. The expenses incurred for projects/assets during the
construction/mine development period are classified as "Pre-operative
and Development Expenses" pending capitalization and are included
under capital work in progress and will be allocated to the assets on
completion of the project/assets. Consequently expenses disclosed under
the respective head are net of amount so classified and details of
these are as follows.
2.35 As regards construction contracts in progress as on 31.03.2014,
aggregate amount of costs incurred and recognised profit (less
recognized losses) upto the year end (to the extent ascertained by the
management), aggregate amount of advances received and aggregate amount
of retentions are Rs. 72,45.48 lakhs, Rs. 4,35.91 lakhs and Rs. 6,18.23
lakhs respectively. (previous year Rs. 1,90,38.15 lakhs, Rs. 1,46.88
lakhs and Rs. 12,68.47 lakhs respectively).
2.37 Contingent Liabilities not provided for in respect of:
a) Various show cause notices/demands issued/
raised, which in the opinion of the management
are not tenable and are pending with various
forum / authorities:
i) SalesTax 75,48.52 56,95.24
ii) Excise, Custom Duty and Service tax
[net of provision of Rs. 5,00 lakhs
(previous year Rs. 5,00 lakhs) 1,34,00.78 1,02,56.29
iii) Income Tax 28.45 42.60
b) Employees State Insurance Corporation has
raised demand for contribution in respect of
Gross Job Charges for the year 2001-02, 2003-04
and March, 08 to January, 10. In the opinion of
the management demand is adhoc and arbitrary
andisnotsustainablelegally. 92.51 92.51
c) Demand of Tamilnadu Electricity Board
disputed by the Company. 8.20 8.20
d) During the year 1994 UPSEB had raised demand
for electricity charges by revising the power tariff
schedule applicable to the Company retrospectively
from Feb''86. In the opinion of the management the
revised power tariff is not applicable to the Company
and accordingly the Company disputed the demand and the
matter is pending beforeHon''bleHighCourtatAllahabad. 2,61.74 2,61.74
e) Corporate guarantee issued to banks by the
Company on behalf of:
(i) Subsidiary Companies 1,09,07.91 44,37.91
(ii) Associate Company - 4,52,00.00
f) Standby Letter of Credit issued by banks on
behalf of the company in favour of:
(i) SubsidiaryCompanies 2,04,13.61 2,37,45.04
g) Guarantees given by banks on behalf of the
Company (including Rs. 27,45.47 lakhs referred to
in note 2.12.5) 1,50,88.70 1,61,44.87
h) BillsDiscountedwithBanks. 67,47.88 80,33.11
i) The Company has disputed downward revision in
the prices affected by the purchaser subsequent to
sale of certain specified materials. In the opinion
of the management and also on the merit of the case,
as advised legally no liability is likely to arise.
The matter is subjudice and pending final judgement
the amount payable, if any is not ascertainable
presently.
Note : Future cash outflows, if any, in respect of (a) to (d), and (i)
above is dependent upon the outcome of judgments / decisions.
2.38 Related party disclosure as identified by the management in
accordance with the Accounting Standard (AS) 18 on "Related Party
Disclosures" are as follows :
A) Names of related parties and description of relationship
1) Subsidiary Company
Electrosteel Europe SA
Electrosteel Algerie SPA
Electrosteel Castings (UK) Limited
Electrosteel USA LLC
WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC)
Mahadev Vyapaar Private Limted
Electrosteel Trading S.A, Spain
Singardo International Pte Ltd.
Electrosteel Castings Gulf Fze
Electrosteel Doha for Trading (LLC)
Electrosteel Brasil Ltda. Tubos e Conexoes Duteis
2) Associate Company
Lanco Industries Ltd.
Electrosteel Steels Limited
Electrosteel Thermal Power Ltd.
3) Joint Venture
North Dhadhu Mining Company Pvt. Ltd.
Domco Private Limited
4) Key Management Personnel (KMP) and their relative
Mr. Umang Kejriwal (Managing Director)
Mr. Mayank Kejriwal (Joint Managing Director )
Mr. Uddhav Kejriwal (Wholetime Director)
Mr. Vyas Mitre Ralli (Wholetime Director)
Mr. Mahendra Kumar Jalan (Wholetime Director)
Mr. Rama Shankar Singh (Director) till 5th February, 2014 he was
Wholetime director of the company
Smt. Uma Kejriwal-mother of Mr. Umang Kejriwal-Managing Director and
Mr. Mayank Kejriwal - Joint Managing Director Umang Kejriwal (H.U.F)
5) Enterprise where KMP/Relatives of KMP have signifinant influnce
or control :
Global Exports Ltd.
G. K. & Sons Private Limited
Badrinath Industries Ltd.
Akshay Ispat & Ferro Alloys Pvt. Ltd.
Electrocast Sales India Ltd Tulsi Highrise Pvt. Ltd.
Wilcox Merchants Pvt. Ltd.
Murari Investment & Trading Company Ltd.
Electrosteel Thermal Coal Ltd.
2.44 The Company has opted for accounting the exchange difference
arising on reporting of long term foreign currency monetary items as
per Accounting Standard 11, "The Effects of Changes in Foreign
Exchange Rates". During the year ended 31st March 2014 the net
exchange difference of Rs.1,23,26.02 lakhs (net debit) on foreign
currency loans have been adjusted in the carrying amount of fixed
assets / Capital work in progress. The unamortised balance is
Rs.1,51,51.66 lakhs (previous year Rs.42,03.89 lakhs).
Mar 31, 2013
1.1.1 10.75% Non Convertible Debentures (privately placed) are secured
by first pari-passu charge on company''s fixed assets (immovable and
movable) including land and buildings both present and future other
than assets located at Chennai and Elavur and excluding furniture and
fixture, vehicles and other intangible assets. These Debentures were
allotted on 11th April, 2012 and are redeemable at par in three equal
annual installments at the end of 3rd, 4th & 5th year from the date of
allotment i.e. 11th April, 2015. However, there is a Put and Call
option available to the issuer / investor which can be exercised at the
end of three years from the date of allotment.
1.1.2 9.15% Non Convertible Debentures (privately placed) were secured
by second pari-passu charge on Company''s fixed assets (immovable and
movable) including land and buildings both present and future other
than certain property located at Chennai and Elavur. These Debentures
were allotted on 8th February, 2010 and were redeemed during the year.
1.1.1.1 Term loan from a financial institution are secured by way of
first pari-passu charge over the movable fixed assets, lands and other
immovable properties of the Company both present and future other than
assets located at Chennai and Elavur.
1.1.1.2 Term loan of Rs. 15000 lakhs is repayable in 16 quarterly equal
installments of Rs. 937.50 lakhs from 14th August 2010 and term loan of
Rs. 10000 lakhs is repayable in 17 quarterly equal installments of Rs.
588.23 lakhs from 30th December 2011. The interest rate ranges from 10%
to 13%.
1.1.2.1 External Commercial Borrowings of Rs. 42082.50 lakhs is secured
by way of first pari-passu charge on all immovable and movable Fixed
Assets, both present and future of the Company other than assets
located at Chennai and Elavur, and External Commercial Borrowings of
Rs. 75477.00 lakhs is secured by way of first pari-passu charge on all
immovable and movable Fixed Assets, both present and future of the
Company other than assets located at Chennai and Elavur.
1.1.2.2 External Commercial Borrowings of Rs. 42082.50 lakhs is
repayable in 3 annual installments of 33.25% in July''2013, 33.25% in
July''2014 & 33.50% in July''2015 and external commercial borrowings
of Rs. 75477.00 lakhs is repayable in 12 Semi annual installments from
29th August''2015. The interest rate ranges from 6M Libor 200 to 500
bps.
1.2.1 Loans repayable on demand being Working Capital facilities from
Banks (both fund based and non fund based) are secured by pari passu
charge by way of joint hypothecation of raw materials, finished goods,
work in progress, consumable stores and spares, book debts /
receivables and other current assets of the Company both present and
future.
1.3.1 Including acceptances of Rs. Nil (previous year Rs. 10562.71
lakhs)
1.3.2 Disclosure of Trade payables is based on the information
available with the company regarding the status of the suppliers as
defined under the " Micro, Small and Medium Enterprise Development
Act, 2006" (the Act). There are no delays in payment made to such
suppliers and there is no amount outstanding as at the balance sheet
date.
1.4.1 Other provisions include (a) provision relating to indirect
taxes in respect of proceedings of various excise duty matters -
carrying amount at the end of the year Rs. 500.00 lakhs (previous year
Rs. 500.00 lakhs). No amount was used and reversed during the year.
Outflows in these cases would depend on the final
developments/outcomes; (b) Other class of provisions related to
disputed customer claims/rebates/demands - carrying amount at the end
of the year Rs. 1500.00 lakhs (previous year Rs. nil).
1.5.1 500000000 Equity shares of Rs 10/- each fully paid up of
Electrosteel Steels Limited aggregating Rs. 50000.00 lakhs held by the
Company as Investment have been pledged in favour of Electrosteel
Steels Limited lenders for securing financial assistance to
Electrosteel Steels Limited.
1.5.2 The Company''s investment in Electrosteel Steels Limited being
strategic and long term in nature, no provision has been considered
necessary with regard to diminution in market value of these
investment.
1.5.3 The Company has investment in equity shares of Domco Private
Limited (DPL), a Company incorporated in India, and has joint control
(proportion of ownership interest of the Company being 50%) over DPL
along with other venturers (the Venturers). The Venturers had filed a
petition before the Company Law Board, Principal Bench, New Delhi (CLB)
against the Company on various matters including for forfeiture of the
Company''s investment in equity shares of the DPL. The Company had
inter alia filed petition before the Hon''ble High Court of Jharkhand
at Ranchi,. The Hon''ble High Court of Jharkhand at Ranchi upheld the
Company''s appeal and decided that the matter would have to be
referred for Arbitration. The Venturer has challenged the aforesaid
judgment in the Divisional Bench of the Hon''ble High Court of
Jharkhand at Ranchi. Pending final outcome of the matter and since ,
the other Venturer are not providing the financial statements of DPL,
and thereby disclosures as regards to contingent liability, capital
commitments, if any, aggregate amounts of the assets, liabilities,
income and expenses related to the Company''s interest in DPL has not
been made in these financial statements.
1.5.4 (a) The North Dhadhu Coal Block located in the state of
Jharkhand was allocated to the Company, M/s. Adhunik Alloys & Power
Limited (AAP), M/s. Jharkhand Ispat Pvt. Ltd. (JPL) and M/s. Pawanjay
Steel & Power Limited (PSPL) (collectively referred to as venturers)
for working through ajoint venture company. Accordingly, North Dhadhu
Mining Company Private Limited (NDMCPL), a company in which the Company
has joint control (proportion of ownership interest of the Company
being 48.98 %) along with other venturers was formed. The Company has
investment of Rs. 822.81 Lakhs in equity shares ofNDMCPL.
(b) During the year, the Ministry of Coal, Government of India issued
an order for de-allocation of North Dhadhu Coal block and deduction of
Bank Guarantee of Rs. 56.03 Crores issued for the same. The Company''s
share in the Bank Guarantee is Rs 27.45 crores. On a writ petition
filed by the Company for quashing the order, stay has been granted by
the Hon''ble High Court of Jharkhand. Pending final judgement, no
provision is considered necessary in respect of Company''s investment
in NDMCPL and amount of Bank Guarantee.
1.6.1 Quoted Investments for which quotations are not available have
been included in the market value at the face value/paid up value,
whichever is lower except in case of debenture, bonds and government
securities where the net present value at current yield to maturity
have been considered.
1.7.1 Includes loans and advances to employees.
1.7.2 Includes Rs. Nil (previous year Rs. 234.59 lakhs) paid towards
share application money.
1.7.3 In the opinion of the Board of Directors, current assets and
loans and advances have the value at which these are stated in the
Balance Sheet, unless otherwise stated and adequate provisions for all
known liabilities have been made and are not in excess of the amount
reasonably required.
1.7.4 Security deposits include Rs. 557.50 lakhs (previous year Rs.
557.50 lakhs) with private limited Companies in which directors are
interested as a member / director and Rs. 4246.68 lakhs (previous year
Rs. 4246.68 lakhs) with related parties.
1.8.1 Balances of Trade receivables including for Turnkey Contracts,
Work-in-progress, Creditors and advances are subject to
confirmation/reconciliation and adjustments in this respect are carried
out as and when amounts thereof, are ascertained.
1.7.2 ReferNoteNo.2.7
1.9.1 Fixed Deposits with Banks include Fixed Deposit of Rs. 20.79
lakhs (previous year Rs. 10.00 lakhs) lodged with Government
Departments, Customers and Bank.
1.9.2 Represents amount lying in Escrow account pursuant to the
stipulation made by Ministry of Coal, for Mine Closure Plan and shall
be utilised for expenses to be incurred towards closure of the mine.
1.9.3 Miscellaneous expenses include Charity and Donation of Rs. 251.97
lakhs (previous year Rs. 15.78 lakhs).
1.9.4 The Marked-to-Market losses on derivative contract for the year
stood at Rs. 96.28 lakhs (previous year Rs. 6861.35 lakhs). Even
though such losses have not been determined and accrued during the
year, keeping in view the announcement of Institute of Chartered
Accountants of India dated March 29, 2008 regarding Accounting for
Derivatives, the Company has recognized losses in the Statement of
Profit and Loss for the year or capitalised as the case may be. Such
losses crystalised during the year have been considered as revenue or
capitalised depending upon the nature thereof and resultant excess
amount of provision of Rs. 5060.16 lakhs being no longer required have
been written back in these financial statements.
1.9.5 The Company has certain operating lease arrangements for office
accommodations etc. with tenure extending upto 9 years. Term of
certain lease arrangements include escalation clause for rent on expiry
of 36 months from the commencement date of such lease and deposit /
refund of security deposit etc. Expenditure incurred on account of rent
during the year and recognized in the Statement of Profit and Loss
amounts to Rs. 431.63 lakhs (previous year Rs. 561.03 lakhs).
1.9.6 During the year, the Company has incurred Rs. 113.20 lakhs
(previous year Rs 91.44 lakhs) on account of research and development
expenses which has been charged to Statement of Profit and Loss.
1.10.1 The Company is entitled to MAT credit and accordingly based on
evidences MAT credit of Rs. 150.35 lakhs (previous year Rs. 700.21) has
been recognised in these financial statements.
1.11 As regards construction contracts in progress as on 31.03.2013,
aggregate amount of costs incurred and recognised profit (less
recognized losses) upto the year end (to the extent ascertained by the
management), aggregate amount of advances received and aggregate amount
of retentions are Rs. 19038.15 lakhs, Rs. 146.88 lakhs and Rs. 1268.47
lakhs respectively. (previous year Rs. 17961.59 lakhs, Rs. 596.34
lakhs and Rs. 1010.09 lakhs respectively).
1.12 Related party disclosure as identified by the management in
accordance with the Accounting Standard (AS) 18 on "Related Party
Disclosures" are as follows :
A) Names of related parties and description of relationship
1) Subsidiary Company Electrosteel Europe SA
Electrosteel Algerie SPA Electrosteel Castings (UK) Ltd.
Electrosteel USA LLC
WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC) Mahadev
Vyapaar Private Ltd.
Electrosteel Trading S.A, Spain Singardo International Pte Ltd.
Electrosteel Castings Gulf FZE
Electrosteel Doha for Trading LLC
Electrosteel Brasil Ltda. Tubos e Conexoes Duteis
2) Associate Company Lanco Industries Ltd.
Electrosteel Steels Ltd.
Electrosteel Thermal Power Ltd.
3) Joint Venture North Dhadhu Mining Company Pvt. Ltd.
Domco Private Ltd.
4) Key Management Personnel (KMP) and their relatives
Mr. Umang Kejriwal (Managing Director)
Mr. Mayank Kejriwal (Joint Managing Director )
Mr. Uddhav Kejriwal (Wholetime Director)
Mr. Vyas Mitre Ralli (Wholetime Director)
Mr. Mahendra Kumar Jalan (Wholetime Director)
Mr. Rama Shankar Singh (Wholetime Director)
Smt. Uma Kejriwal-mother of Mr. Umang Kejriwal-Managing Director and
Mr. Mayank Kejriwal - Joint Managing Director Umang Kejriwal (H.U.F)
5) Enterprise where KMP/Relatives of KMP have signifinant influnce or
control
Global Exports Ltd.
G.K.& Sons Private Ltd.
Badrinath Industries Ltd.
Akshay Ispat & Ferro Alloys Pvt. Ltd. Electrocast Sales India Ltd.
Tulsi Highrise Pvt. Ltd.
Wilcox Merchants Pvt. Ltd.
Murari Investment & Trading Company Ltd. Electrosteel Thermal Coal
Ltd.
1.13 In accordance with the amendment to AS-11, exchange loss/gain
arising on long term foreign currency loans, is being adjusted to the
cost of fixed assets. Accordingly, such losses amounting to Rs. 4792.70
lakhs (previous year Rs. 6951.67 lakhs) have been adjusted to Capital
work in progress and Fixed assets. During the year, based on
clarification issued by Ministry of Corporate Affairs vide its circular
25/2012/09.08.12 , Rs. 534.05 lakhs charged to Statement of Profit and
Loss in the previous year has been written back under respective head
of account and adjusted to the cost of fixed assets / capital work in
progress.
1.14 Previous year figures have been regrouped / reclassified wherever
necessary.
Mar 31, 2012
1.1.1 The Company has only one class of shares referred to as equity
shares having a par value of Re 1/-. Each holder of equity shares is
entitled to one vote per share. In the event of liquidation, the equity
shareholders are eligible to receive the remaining assets of the
company, after distribution of all preferential amount, in proportion
of their shareholding.
1.1.2 The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
1.1.3 During the year ended 31 March 2012, the amount of per share
dividend recognized as distribution to equity shareholders was Re. 0.50
1.2.1 The Company through Qualified Institutional Placements had issued
33568312 warrants at a price of Rs. 3 each, entitling the holder to 1
(one) equity share. As per terms and conditions of the issue, the
warrant holders have an option to convert, warrant into equity at any
time on or after three years from the date of allotment (i.e.
08/02/2010) and upto five years from the date of allotment (i.e.
08/02/2010) at exercise price of Rs. 59.58 per share. The warrant issue
price aggregating to Rs. 1,007.05 lakhs, being non adjustable/non
refundable has been credited to Capital Reserve.
1.2.2 Premium on Zero Coupon Convertible Bond has been provided
proportionately and accordingly Rs. 519.88 lakhs (out of total
redemption premium amounting to Rs. 3,563.48 lakhs) (previous year Rs.
611.29 lakhs, out of total redemption premium amounting to Rs. 3,137.73
lakhs) on this account has been debited to Securities Premium Account.
1.3.1 11.80% Non Convertible Debentures (privately placed) are secured
by first pari-passu charge on company's fixed assets (immovable and
movable) including land and buildings both present and future other
than assets located at Chennai and Elavur. However the Company
exercised the put option during the year and re-paid the outstanding
amount.
1.3.2 9.15% Non Convertible Debentures (privately placed) are secured
by second pari-passu charge on company's fixed assets (immovable and
movable) including land and buildings both present and future other
than assets located at Chennai and Elavur. These debentures were
allotted on 8th February, 2010 and redeemable at par on 8th February,
2013.
1.3.3.1 Term loan from a financial institution are secured by way of
first pari-passu charge over the movable fixed assets, lands and other
immovable properties of the Company both present and future other than
assets located at Chennai and Elavur.
1.3.3.2 Term loan of Rs. 1,50,00 lakhs is repayable in 16 quarterly
equal Installments of Rs. 9,37.50 lakhs from 14th August 2010 and term
loan of Rs. 1,00,00 lakhs is repayable in 17 quarterly equal
installments of Rs. 5,88.23 lakhs from 30th December 2011. The interest
rate ranges from 10% to 12%.
1.3.4.1 External Commercial Borrowing of Rs. 3,94,24.25 lakhs is
secured by way of first pari-passu charge on all immovable and movable
Fixed Assets, both present and future of the Company other than assets
located at Chennai and Elavur, and External Commercial Borrowing of Rs.
3,51,00.30 lakhs is to be secured by way of first pari-passu charge on
all immovable and movable Fixed Assets, both present and future of the
Company other than assets located at Chennai and Elavur.
1.3.4.2 External Commercial Borrowings of Rs. 3,94,24.25 lakhs is
repayable in 3 annual installments of 33.25% in July'2013, 33.25% in
July'2014 & 33.50% in July'2015 and external commercial borrowings of
Rs. 3,51,00.30 lakhs is repayable in 12 Semi annual installments from
29th August'2015. The interest rate ranges from 6M Libor 200 to 500
bps.
1.4.1 Working Capital facilities from Banks (both fund based and non
fund based) are secured by pari passu charge by way of joint
hypothecation of inventories and book debts, both present and future.
1.5.1 Including acceptances of Rs. 1,05,62.71 lakhs (previous year Rs.
2,39,67.81 lakhs)
1.5.2 Disclosure of Trade payables is based on the information
available with the company regarding the status of the suppliers as
defined under the " Micro, Small and Medium Enterprise Development
Act, 2006" (the Act). There are no delays in payment made to such
suppliers and there is no overdue amount outstanding as at the balance
sheet date. Based on above the relevant disclosures u/s 22 of the Act
are as follows :
1.6.1 Other provisions include (a) provision relating to indirect
taxes in respect of proceedings of various excise duty matters -
carrying amount at the end of the year Rs. 5,00.00 lakhs and carrying
amount at the beginning of the year Rs. 5,00.00 lakhs. No amount was
used and reversed during the year. Outflows in these cases would depend
on the final developments/outcomes; (b) Other class of provisions
related to disputed customer claims/rebates/demands - carrying amount
at the end of the year Rs. nil and at the beginning of the year Rs.
28,40.00 lakhs. Amount reversed during the year was Rs. 28,40.00 lakhs.
Notes :
1.7.1. Plant and Equipments indudes Rs.8,03.021akhs (Previous year
Rs.3,40.87 lakhs) being contribution for laying the Power line, the
ownership of which does not vest with the company
1.7.2 Depreciation and amortization for the year includes Rs.11,90.62
lakhs (Previous year Rs. 10,92.69 lakhs) transferred to Pre-operative
expenses.
1.7.3 Leasehold Land of Rs.2,04.00 lakhs( Previous Year Rs.2,04.00
lakhs) is pending execution of lease agreement and registration
thereof.
1.7.4 Freehold land includes Rs. 1,31.39 lakhs (Previous year
Rs.2,05.97 lakhs) in respect of which the execution of conveyance deeds
is under process.
1.7.5 Plant and Equipments includes Rs. 24,98.72 lakhs (Previous year
Rs. 24,98.72 lakhs) being cost of wagons procured under "Wagon
Investment Scheme".
1.7.6 Other adjustment(net) includes Rs. 4,74.39 lakhs(Previous Year
17.70 lakhs) being interest capitalised during the year, Rs. 359.41
lakhs(Previous Year nil) representing foreign exchange fluctuation.
1.7.7. Railway siding includes Rs. 40,35.96 lakhs (Previous year Rs.
nil) being amount incurred for construction, the ownership of which
does not vest with the company
1.7.8 Land with factory buildings (net block Rs. 61.02 lakhs) at
Elavur plant of the Company are mortgaged in the favour of lender to
Electrosteel Steel limited, an associate of the Company
1.7.9 Refer note 2.3 and 2.7
1.8.1 500000000 Equity shares of Rs 10/- each fully paid up of
Electrosteel Steels Ltd. aggregating Rs. 5,00,00.00 lakhs held by the
Company as Investment have been pledged in favour of Electrosteel
Steels Ltd. lenders for securing financial assistance to Electrosteel
Steels Ltd.
1.8.2 The Company has investment in equity shares of Domco Private
Limited (DPL), a Company incorporated in India, and has joint control
(proportion of ownership interest of the Company being 50%) over DPL
along with other venturers (the Venturers). The Venturers had filed a
petition before the Company Law Board, Principal Bench, New Delhi (CLB)
against the Company on various matters including for forfeiture of the
Company's investment in equity shares of the DPL. The Company had
inter alia filed petition before the Hon'ble High Court of Jharkhand
at Ranchi,. The Hon'ble High Court of Jharkhand at Ranchi upheld the
Company's appeal and decided that the matter would have to be
referred for Arbitration. The Venturer has challenged the aforesaid
judgment in the Divisional Bench of the Hon'ble High Court of
Jharkhand at Ranchi. Pending final outcome of the matter and since, the
other Venturer are not providing the financial statements of DPL,
disclosures as regards contingent liability and capital commitments, if
any, aggregate amounts of each of the assets, liabilities, income and
expenses related to the Company's interest in DPL has not been made
in these financial statements.
1.8.3 The Company's investment in Electrosteel Steels Limited being
strategic and long term in nature, no provision has been considered
necessary with regard to diminution in market value of these
investment.
1.9.1 Quoted Investments for which quotations are not available have
been included in the market value at the face value/paid up value,
whichever is lower except in case of debenture, bonds and government
securities where the net present value at current yield to maturity
have been considered.
1.10.1 Includes loans and advances to employees.
1.10.2 Includes Rs. 2,34.59 lakhs (previous year Rs. 60.98 lakhs) paid
towards share application money.
1.10.3 In the opinion of the Board of Directors, current assets and
loans and advances have the value at which these are stated in the
Balance Sheet, unless otherwise stated and adequate provisions for all
known liabilities have been made and are not in excess of the amount
reasonably required.
1.10.4 Security deposits include Rs. 5,57.50 lakhs (previous year Rs.
5,57.50 lakhs) with Private Limited Companies in which directors are
interested as a member / director.
1.11.1 Balances of Trade receivables including for Turnkey Contracts,
Work-in-progress, Creditors and advances are subject to
confirmation/reconciliation and adjustments in this respect are carried
out as and when amounts thereof, if any are ascertained.
1.12.1 Fixed Deposits with Banks include Fixed Deposit of Rs. 4,96.70
lakhs (previous year Rs. 4,08.28 lakhs) lodged with Government
Departments, Customers and Banks.
1.13.1 Includes Rs. 9,97.93 lakhs (previous year Rs. nil) receivable
from banks on account of derivative settlement.
1.14.1 Miscellaneous expenses include Charity and Donation of Rs. 15.78
lakhs (previous year Rs. 63.97 lakhs), Rs. nil (previous year Rs.
3,00.00 lakhs) towards relocation of certain assets of Elavur unit.
1.14.2 The Marked-to-Market losses on derivative contract for the year
stood at Rs. 68,61.35 lakhs (previous year Rs. 18.26 lakhs). Even
though such losses have not been determined and accrued during the
year, keeping in view the announcement of Institute of Chartered
Accountants of India dated March 29, 2008 regarding Accounting for
Derivatives, the Company has recognized losses in the Statement of
Profit and Loss for the year.
1.14.3 The Company has certain operating lease arrangements for office
accommodations etc. with tenure extending upto 9 yrs. Term of certain
lease arrangements include escalation clause for rent on expiry of 36
months from the commencement date of such lease and deposit / refund of
security deposit etc. Expenditure incurred on account of rent during
the year and recognized in the Statement of Profit and Loss amounts to
Rs. 5,61.03 lakhs (previous year Rs. 5,15.86 lakhs).
1.14.4 During the year, the Company has incurred Rs. 91.44 lakhs
(previous year Rs 83.26 lakhs) on account of research and development
expenses which has been charged to Statement of Profit and Loss.
1.15.1 The Company has provided for Minimum Alternate Tax (MAT). The
Company is entitled to MAT credit and accordingly based on evidences
MAT credit of Rs. 7,00.21 lakhs (previous year Rs. Nil) has been
recognised in this financial statements.
Defined Benefit Scheme
The employee's gratuity fund scheme managed by Life Insurance
Corporation of India and ICICI Prudential Life Insurance Company Ltd.
is a defined benefit plan. The present value of obligation is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
Notes :
i) Assumptions relating to future salary increases, attrition, interest
rate for discount & overall expected rate of return on Assets have been
considered based on relevant economic factors such as inflation, market
growth & other factors applicable to the period over which the
obligation is expected to be settled.
ii) The Company expects to contribute Rs 1,30.00 lakhs (previous year
Rs 1,00.00 lakhs) to Gratuity fund in 2012-13.
1.16 The expenses incurred for projects/assets during the
construction/mine development period are classified as "Pre-operative
Expenses" pending capitalization and are included under capital work
in progress and will be allocated to the assets on completion of the
project/assets. Consequently expenses disclosed under the respective
head are net of amount classified as preoperative expenses by the
Company. The details of these expenses are as follows :
1.17 As regards construction contracts in progress as on 31.03.2012,
aggregate amount of costs incurred and recognised profit (less
recognized losses) upto the year end (to the extent ascertained by the
management), aggregate amount of advances received and aggregate amount
of retentions are Rs. 1,79,61.59 lakhs, Rs. 5,96.34 lakhs and Rs.
10,10.09 lakhs respectively. (previous year Rs. 2,87,81.12 lakhs, Rs.
8,23.69 lakhs and Rs.7,90.41 lakhs respectively).
i) The Company has disputed downward revision in the prices effected by
the purchaser subsequent to sale of certain specified materials. In the
opinion of the management and also on the merit of the case, as advised
legally no liability is likely to arise. The matter is subjudice and
pending final judgement the amount payable, if any is not ascertainable
presently.
Note : Future cash outflows, if any, in respect of (a) to (d), and (i)
above is dependent upon the outcome ofjudgments / decisions.
1.18 Related party disclosure as identified by the management in
accordance with the Accounting Standard (AS) 18 on "Related Party
Disclosures" are as follows :
A) Names of related parties and description of relationship
1) Subsidiary Company Electrosteel Europe SA
Electrosteel Algeria SPA
Electrosteel Castings (UK) Limited
Electrosteel USA LLC
WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC)
Mahadev Vyapaar Private Limted
Electrosteel Trading S.A, Spain Singardo International Pte Ltd.
2) Associate Company Lanco Industries Ltd.
Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited)
Electrosteel Thermal Power Ltd.
3) Joint Venture North Dhadhu Mining Company Pvt. Ltd.
Domco Private Limited
4) (a) Key Management
Personnel (KMP)
Mr. Umang Kejriwal (Managing Director)
Mr. Mayank Kejriwal (Joint Managing Director )
Mr. Uddhav Kejriwal (Wholetime Director)
Mr. Vyas Mitre Ralli (Wholetime Director)
Mr. Mahendra Kumar Jalan (Wholetime Director)
Mr. Rama Shankar Singh (Wholetime Director)
Mr. S Y Rajagopalan (Director)
4) (b) Relatives of Key Management
Personnel (KMP)
Smt. Uma Kejriwal-mother of Mr. Umang Kejriwal-Managing Director Mr. S.
Y Ganapathy - brother of Mr. S Y Rajagopalan, Director Umang
Kejriwal(H.U.F)
5) Enterprise where KMP/Relatives of KMP have signifinant influnce or
control
Global Exports Ltd.
G. K. & Sons Private Limited
Badrinath Industries Ltd.
Akshay Ispat & Ferro Alloys Pvt. Ltd.
Electrocast Sales India Ltd
Tulsi Highrise Pvt. Ltd.
Wilcox Merchants Pvt. Ltd.
Murari Investment & Trading Company Ltd.
Electrosteel Thermal Coal Ltd.
1.19.1 The Company has given Corporate Guarantee amounting to Rs.
2,50,00.00 lakhs on behalf of Electrosteel Steels Limited. Out of the
aforesaid amount, Electrosteel Steels Limited has drawn Rs. 1,38,00.00
lakhs.
1.20 The company operates mainly in one business segment viz Pipes
being primary segment and all other activities revolve around the main
activity. The secondary segment is geographical, information related to
which is given as under :
1.21 The Ministry of Corporate Affairs (MCA) has issued the amendment
dated 29th December 2011 to AS-11. The effect of changes in foreign
exchange rates, to allow companies deferral / capitalisation of
exchange differences arising on long term foreign currency monetary
items. In accordance with the amendment to AS-11, the Company has
capitalised / decapitalised exchange loss/gain respectively arising on
long term foreign currency loans, amounting to Rs. 69,51.67 lakhs
(previous year Rs. Nil) to Capital work in progress and Fixed assets.
The Company does not have any other long term foreign currency monetary
items. Hence, the amount of exchange loss deferred in the "Foreign
Currency Monetary Item Translation Difference Account" is Rs. Nil
(previous year Rs. Nil).
1.21 Till the year ended March 31, 2011, the company was using
pre-revised Schedule VI to the Companies Act 1956, for the preparation
and presentation of its financial statements. During the year ended
March 31, 2012, the revised Schedule VI notified under the Companies
Act 1956, has become applicable to the company. The company has
reclassified previous year figures to conform to this year's
classification.
Mar 31, 2011
(Rs. in lakhs)
2010-11 2009-10
1. Contingent Liabilities not
provided for in respect of:
a) Various show cause notices/demands
issued/raised, which in the opinion of the
management are not tenable and are
pending with various
forum / authorities:
i) Sales Tax 8,12.80 4,89.74
ii) Excise, Custom Duty and Service
tax [net of provision of
Rs. 500.00 lakhs (previous year
Rs. 500.00 lakhs)] 68,51.18 60,85.79
b) Employees State Insurance Corporation
has raised demand for contribution in
respect of Gross Job Charges for the
year 2001-02, 2003-04 and March08 to
January10. In the opinion of the management
demand is adhoc and arbitrary and is not
sustainable legally. 96.11 1,13.13
c) Demand of Tamilnadu Electricity Board
disputed by the Company. 8.20 8.20
d) During the year 1994 UPSEB had raised
demand for electricity charges by revising
the power tariff schedule applicable to the
Company retrospectively from Feb86. In
the opinion of the management the revised
power tariff is not applicable to the Company
and accordingly the Company disputed the
demand and the matter is pending before
Honble High Court at Allahabad. 2,61.74 2,61.74
e) Corporate guarantee issued to banks
by the Company on behalf of:
(i) Subsidiary Companies 14,15.22 60,46.00
(ii) Associate - 21,00.00
f) Standby Letter of Credit issued by
banks on behalf of the company in
favour of
(i) Subsidiary Companies 2,08,10.53 87,95.53
g) Guarantees given by banks on
behalf of the Company 1,85,33.31 1,73,87.30
h) Bills Discounted with Banks. 88,94.72 44,36.01
i) The Company has disputed downward revision in the prices affected by
the purchaser subsequent to sale of certain specified materials. In the
opinion of the management and also on the merit of the case, as advised
legally no liability is likely to arise. The matter is subjudice and
pending final judgement the amount payable, if any is not ascertainable
presently.
Note : Future cash outflows, if any, in respect of (a) to (d), and (i)
above is dependent upon the outcome of judgments / decisions.
2. No allocation has been made in respect of stores and spare parts
and wages for repairs to Machinery and Building.
3. (a) Miscellaneous expenses include Charity and Donation of Rs.
63.97 lakhs (previous year Rs. 2,82.45 lakhs), Rs. 3,00.00 lakhs
towards relocation of certain assets of Elavur unit, Job charges
includes Rs. 33.17 lakhs (previous year Rs. 51.74 lakhs) incurred
towards insurance on Turnkey Contracts.
(b) Miscellaneous income include gain on exchange difference of Rs.
6,55.34 lakhs (previous year Rs. 42,68.18 lakhs)
4. Employee Benefits
The disclosures required under Accounting Standard 15 on "Employee
Benefits" notified in the Companies (Accounting Standards) Rules 2006,
are given below:
Defined Benefit Scheme
The employees gratuity fund scheme managed by Life Insurance
Corporation of India and ICICI Prudential Life Insurance Company Ltd.
is a defined benefit plan. The present value of obligation is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
5. In the opinion of the Board of Directors, current assets and loans
and advances have the value at which these are stated in the Balance
Sheet, unless otherwise stated and adequate provisions for all known
liabilities have been made and are not in excess of the amount
reasonably required.
6. Balance of Sundry Debtors including for Turnkey Contracts,
Work-in-progress, Creditors and advances are subject to
confirmation/reconciliation and adjustments in this respect are carried
out as and when amounts thereof, if any are ascertained.
7. Rs. 61,87.39 lakhs being net gain (previous year Rs 57,78.95 lakhs
being net gain) on account of exchange difference has been adjusted to
the respective heads of account in Profit and Loss Account.
8. Other deposits under Loans and Advances include Rs. 5,57.50 lakhs
(previous year Rs. 5,57.50 lakhs) with Private Limited companies in
which directors are interested as a member / director.
9. Based on the current Exchange Control Procedure in Algeria, as per
the Algerian Finance Law, there is a restriction in repatriating the
advance amount given by the Company to its wholly owned subsidiary at
Algeria. This is to be converted into equity, however pending outcome
on the representation made by the company through Indian Embassy at
Algeria, this advance continued to be reflected under Loans & Advances.
10. Other provisions include (a) provision relating to indirect taxes
in respect of proceedings of various excise duty matters - carrying
amount at the end of the year Rs. 500.00 lakhs and carrying amount at
the beginning of the year Rs. 500.00 lakhs. No amount was used and
reversed during the year. Outflows in these cases would depend on the
final developments/outcomes; (b) Other class of provisions related to
disputed customer claims/rebates/demands - carrying amount at the end
of the year Rs. 28,40.00 lakhs and at the the beginning of the year Rs.
28,40.00 lakhs. Amount reversed during the year and additional
provisions made during the year was Rs. 18,40.00 lakhs. Outflows in
these cases would depend on the developments/settlements.
11. Fixed Deposits with Scheduled Banks include Fixed Deposit of Rs.
4,08.28 lakhs (previous year Rs. 3,51.60 lakhs) lodged with Government
Departments, Customers and Bank.
12. Premium payable on ZCCB has been provided proportionately and
accordingly Rs. 6,11.29 lakhs (out of total redemption premium
amounting to Rs. 31,37.73 lakhs) (previous year Rs. 3,97.93 lakhs, out
of total redemption premium amounting to Rs. 31,58.84 lakhs) on this
account has been debited to Share Premium Account.
13. The Company through Qualified Institutional Placements had issued
3,35,68,312 warrant at a price of Rs. 3/- each, entitling the holder to
1 (one) equity share. As per terms and conditions of the issue, the
warrant holders have an option to convert, warrant into equity at any
time on or after three years from the date of allotment (i.e
08/02/2010) and upto five years from the date of allotment (i.e
08/02/2010) at exercise price of Rs. 59.58 per share. The warrant issue
price aggregating to Rs. 10,07.05 lakhs, being non adjustable/non
refundable has been credited to Capital Reserve account.
14. The Marked-to-Market losses on derivative contract for the year
stood at Rs. 18.26 lakhs (previous year Rs. 1,02.90 lakhs). Even
though such losses have not been determined and accrued during the
year, keeping in view the announcement of Institute of Chartered
Accountants of India dated March 29, 2008 regarding Accounting for
Derivatives, the Company has recognized losses in the profit and loss
account for the year.
15. a) The Company has investment in equity shares of Domco Private
Limited (DPL), a Company incorporated in India, and has joint control
(proportion of ownership interest of the Company being 50%) over DPL
along with other venturers (the Venturers). The Venturers had filed a
petition before the Company Law Board, Principal Bench, New Delhi (CLB)
against the Company on various matters including for forfeiture of the
Companys investment in equity shares of the DPL. The Company had inter
alia filed petition before the Honble High Court of Jharkhand at
Ranchi. The Honble High Court of Jharkhand at Ranchi upheld the
Companys appeal and decided that the matter would have to be referred
for Arbitration. The Venturer has challenged the aforesaid judgment in
the Divisional Bench of the Honble High Court of Jharkhand at Ranchi.
Pending final outcome of the matter and since , the other Venturer are
not providing the financial statements of DPL, disclosures as regards
contingent liability and capital commitments, if any, aggregate amounts
of each of the assets, liabilities, income and expenses related to the
Companys interest in DPL has not been made in these accounts.
b) During the year, the Company has invested in equity shares of Vishwa
Utilities Pvt. Ltd. (VUPL), a company incorporated in India, has joint
control over VUPL being 11% interest alongwith other venturers.
However, the Company has aquired and held this interest exclusively
with a view to its subsequent disposal in the near future and
accordingly interest in the said Joint Venture Company has been
accounted for as an investment in accordance with Accounting Standard
13 on Accounting for Investment.
16. As regards construction contracts in progress as on 31.03.2011,
aggregate amount of costs incurred and recognised profit (less
recognized losses) upto the year end (to the extent ascertained by the
management), aggregate amount of advances received and aggregate amount
of retentions are Rs. 2,87,81.12 lakhs, Rs. 8,23.69 lakhs and
Rs.7,90.41 lakhs respectively. (Previous year Rs. 4,34,45.65 lakhs,
Rs. 9,35.54 lakhs and Rs. 13,68.23 lakhs respectively).
17. The Company has certain operating lease arrangements for office
accommodations etc. with tenure extending upto 9 yrs. Term of certain
lease arrangements include escalation clause for rent on expiry of 36
months from the commencement date of such lease and deposit / refund of
security deposit etc. Expenditure incurred on account of rent during
the year and recognized in the Profit and Loss account amounts to Rs.
5,15.86 lakhs (previous year Rs. 4,50.45 lakhs).
18. During the year, the Company has incurred Rs. 83.26 lakhs
(previous year Rs 80.93 lakhs) on account of research and development
expenses which has been charged to profit and loss account.
19. Related party disclosure as identified by the management in
accordance with the Accounting Standard (AS) 18 on "Related Party
Disclosures" are as follows:
A) Names of related parties and description of relationship
1) Subsidiary Company Electrosteel Europe SA
Electrosteel Algeria SPA
Singardo International Pte Ltd.
Electrosteel Castings (UK) Limited
Electrosteel USA, LLC
WaterFab, LLC (100% subsidiary of
Electrosteel USA, LLC)
2) Associate Company Lanco Industries Ltd.
Electrosteel Steels Limited
(Formerly Electrosteel Integrated
Limited)
Electrosteel Thermal Power Ltd.
3) Joint Venture North Dhadhu Mining Company
Pvt. Ltd.
Domco Private Limited
4) Key Management Personnel (KMP)
and their relative Mr. Umang Kejriwal
(Managing Director)
Mr. Mayank Kejriwal
(Joint Managing Director)
Mr. Uddhav Kejriwal
(Wholetime Director)
Mr. Vyas Mitre Ralli
(Wholetime Director)
Mr. Mahendra Kumar Jalan
(Wholetime Director)
Mr. Rama Shankar Singh
(Wholetime Director)
Mr. S Y Rajagopalan
(Director)
Smt. Uma Kejriwal - mother of
Mr. Umang Kejriwal,
Managing Director
Mr. S.Y. Ganapathy - brother of
Mr. S.Y. Rajagopalan, Director
5) Enterprise where KMP/Relatives
of KMP have signifinant influnce
or control Global Exports Ltd
G.K.& Sons Private Limited
Badrinath Industries Ltd.
Akshay Ispat &
Ferro Alloys Pvt. Ltd.
* Acharya Multicon Pvt. Ltd.
Electrocast Sales India Ltd.
* Flora Conductions Pvt. Ltd.
**Highrise Multicon Pvt. Ltd.
** Kabir Projects Pvt. Ltd.
** New City Enclave Pvt. Ltd.
** Nilmoni Developers Pvt. Ltd.
* Nimpith Developers Pvt. Ltd.
* Paramount Tracom Pvt. Ltd.
* Stewart Agencies Pvt. Ltd.
Tulsi Highrise Pvt. Ltd.
Wilcox Merchants Pvt. Ltd.
** Royal Multicon Pvt. Ltd.
* Samar Properties Pvt. Ltd.
** Tulip Fabicon Pvt. Ltd.
Murari Investment & Trading
Company Ltd.
Electrosteel Thermal Power Ltd.
* Amalgmated into Tulsi Highrise Pvt. Ltd. as per Honble Calcutta High
Court order dated 06-10-2010
** Amalgmated into Wilcox Merchants Pvt. Ltd.
as per Honble Calcutta High Court order dated 06-10-2010
20. Previous Years Figures have been re-grouped/re- arranged wherever
neccessary.
Mar 31, 2010
(Rs. in lakhs)
Current Year Previous Year
1. Estimated amount of contracts
remaining to be executed on
Capital Account and not provided
for (net of advances): 33,00.31 35,98.99
2. Contingent Liabilities not
provided for in respect of:
a) Various show cause notices/
demands issued/raised,
which in the opinion of the
management are not tenable and are
pending with various forum / authorities:
Sales Tax [net of provision of
Rs.13.49 lakhs
(previous year Rs. 13.49 lakhs)] 4,89.74 7,41.26
ii) Excise, Custom Duty and Service tax [net of
provision of Rs. 500 00 lakhs
(previous year nil)] 60,85.79 53,94.77
b) Employees State Insurance Corporation
has raised demand for contribution in
respect of Gross Job Charges for the
year 2001-02, 2003-04 and March08 to
January10. In the opinion of the
management demand is adhoc and arbitrary
and is not sustainable legally. 1,13.13 63.55
c) Demand of Tamilnadu Electricity
Board disputed by the Company. 8.20 8.20
d) During the year 1994 UPSEB had raised
demand for electricity charges by
revising the power tariff schedule
applicable to the Company retrospectively
from Feb86. In the opinion of the
management the revised power tariff is
not applicable to the Company and
accordingly the Company disputed the
demand and the matter is pending before
Honble High Court at Allahabad. 2,61.74 2,61.74
e) Corporate guarantee issued to banks
by the Company on behalf of:
(i) Subsidiary Companies 60,46.00 89,66.00
(ii) Associate 21,00.00 48;25.00
f) Standby Letter of Credit issued by
banks on behalf of the company
in favour of
(i) Subsidiary Companies 87,95.53 --
g) Guarantees given by banks on behalf
of the Company 1,73,87.30 1,90,89.87
h) Bills Discounted with Banks. 44,36.01 18,36.62
i) The Company has disputed downward
revision in the prices affected by the
purchaser subsequent to sale of certain
specified materials. In the opinion of
[he management and also on the merit of
the case, as advised legally no liability
is likely to arise. The matter is subjudice
and pending final judgement the amount
payable, if any is not ascertainable presently
Note: Future cash outflows, if any, in respect of (a) to (d), and (i)
above is dependent upon the outcome of judgments / decisions.
3. Stores and spares consumption include pipe moulds written off
4. No allocation has been made in respect of stores and spare parts
and wages for repairs to Machinery and Building.
5. Inventories of stores and spares include the estimated net
realizable value of pipe mould (fixed assets) retired from the active
use Rs. nil (previous year Rs. 88.431akhs)
6. (a) Miscellaneous expenses include Charity and Donation of Rs.
2,82.45 lakhs (Previous Year Rs. 97.20 lakhs), Job charges includes Rs.
51.74 lakhs (previous year Rs. 47.58 lakhs) incurred towards insurance
on Turnkey Contracts, loss on exchange difference Rs. nil (previous
year Rs. 24,04.54 lakhs) (b) Miscellaneous income include gain on
exchange difference of Rs. 42,68.18 lakhs (previous year Rs. nil)
7. In the opinion of the Board of Directors, current assets and loans
and advances have the value at which these are stated in the Balance
Sheet, unless otherwise stated and adequate provisions for all known
liabilities have been made and are not in excess of the amount
reasonably required.
8. Balance of Sundry Debtors including for Turnkey Contracts,
Work-in-progress, Creditors and advances are subject to
confirmation/reconciliation and adjustments in this respect are carried
out as and when amounts thereof, if any are ascertained.
9. Rs. 57,78.95 lakhs being net gain (Previous Year Rs 1,33,06.71
lakhs being net loss) on account of exchange difference has been
adjusted to the respective heads of account in Profit and Loss Account.
10. Power and fuel consumption is net of Rs. nil lakhs (Previous Year
Rs. 97.00 lakhs ) being subsidy receivable on use of coal gas.
11. The Company has not received information from vendors regarding the
status of the suppliers as defined under the " Micro, Small and Medium
Enterprise Development Act, 2006" (the Act) and accordingly disclosure
relating to unpaid amounts at the year end together with interest paid
/payable has not been given.
12. Other deposits under Loans and Advances include Rs. 5,57.50 lakhs
(Previous year Rs. 5,57.50 lakhs) with Private Limited companies in
which directors are interested as a member / director.
13. Other provisions include (a) provision of Rs.5,00.00 lakhs made
during the year relating to indirect taxes in respect of proceedings of
various excise duty matters and is outstanding as on 31.03.2010.
Outflows in these cases would depend on the final
developments/outcomes; (b) Rs.28,40.00 lakhs provided during the year
being other class of provisions related to disputed customer
claims/rebates and is outstanding as on 31.03.2010. Outflows in these
cases would depend on the developments/settlements.
14. Fixed Deposits with Scheduled Banks include Fixed Deposit of Rs.
8.14 lakhs (Previous Year Rs. 23.55 lakhs) lodged with Government
Departments and Customers.
15 Premium payable on ZCCB has been provided proportionately and
accordingly Rs. 3,97.93 lakhs (out of total redemption premium
amounting to Rs. 31,58.84 lakhs) (Previous year Rs. 9,84.94 lakhs, out
of total redemption premium amounting to Rs. 35,69.25 lakhs) on this
account has been debited to Share Premium Account.
16. (a) During the year, the Company has raised Rs.28,98.00 lakhs
through preferential issue of equity shares being 90% of the total
amount due against conversion of 1,40,00,000 warrents (issued in
earlier year) into 140.00 lakhs equity share of face value of Re. 1
each at a price of Rs. 23.00 per share and the same have been utilized
for business purposes including working capital requirements of the
Company.
(b) During the year the Company through Qualified Institutional
Placements has issued 3,35,68,312 warrant at a price of Rs. 3 each,
entitling the holder to 1 (one) equity share. As per terms and
conditions of the issue, the warrant holders have an option to convert,
warrant into equity at any time on or after three years from the date
of allotment and upto five years from the date of allotment at exercise
price of Rs. 59.58 per share. The warrant issue price aggregating to
Rs. 10,07.05 lakhs, being non adjustable/non refundable has been
credited to Capital Reserve account.
17. The company during the financial year 2007-08, had allotted
4,08,37,146 convertible warrants to promoters and others at
predetermined conversion prices for which the option was not exercised
till last date of its conversion. Accordingly the said warrants stands
cancelled and the amount of Rs. 30,94.71 lakhs received upfront from
the warrant holders has been forfeited and credited to the Capital
Reserve during the year.
18. The Marked-to-Market losses on derivative contract as at March 31,
2010 stood at Rs. 1,02.90 lakhs (previous year Rs. 26,32.75 lakhs).
Even though such losses have not been determined and accrued during the
year, keeping in view the announcement of Institute of Chartered
Accountants of India dated March 29, 2008 regarding Accounting for
Derivatives, the Company has recognized losses in the profit and loss
account for the year.
19 a) The Company has investment in equity shares of Domco Private
Limited (DPL), a Company incorporated in India, and has joint control
(proportion of ownership interest of the Company being 50%) over DPL
along with other venturers (the Venturers). The Venturers had filed a
petition before the Company Law Board, Principal Bench, New Delhi (CLB)
against the Company on various matters including for forfeiture of the
Companys investment in equity shares of the DPL. The Company had inter
alia filed petition before the Honble High Court of Jharkhand at
Ranchi,. The Honble High Court of Jharkhand at Ranchi upheld the
Companys appeal and decided that the matter would have to be referred
for Arbitration. The Venturer has challenged the aforesaid judgment in
the Divisional Bench of the Honble High Court of Jharkhand at Ranchi.
Pending final outcome of the matter and since , the other Venturer are
not providing the financial statements of DPL, disclosures as regards
contingent liability and capital commitments, if any, aggregate amounts
of each of the assets, liabilities, income and expenses related to the
Companys interest in DPL has not been made in these accounts.
20. As regards construction contracts in progress as on 31.03.2010,
aggregate amount of costs incurred and recognised profit (less
recognized losses) upto the year end (to the extent ascertained by the
management), aggregate amount of advances received and aggregate amount
of retentions are Rs. 4,34,45.65 lakhs, Rs. 9,35.54 lakhs and
Rs.13,68.23 lakhs respectively.(Previous Year Rs. 5,64,21.66 lakhs, Rs.
22,62.41 lakhs and Rs.16,71.28 lakhs respectively).
21. The Company has certain operating lease arrangements for office
accommodations etc. with tenure extending upto 9 yrs. Term of certain
lease arrangements include escalation clause for rent on expiry of 36
months from the commencement date of such lease and deposit / refund of
security deposit etc. Expenditure incurred on account of rent during
the year and recognized in the Profit and Loss account amounts to Rs.
4,50.45 lakhs (Previous Year Rs. 4,88.76 lakhs).
22. During the year, the Company has incurred Rs. 80.93 lakhs
(previous year Rs 58.89 lakhs) on account of research and development
expenses which has been charged to profit and loss account.
23. Related party disclosure as identified by the management in
accordance with the Accounting Standard (AS) 18 on "Related Party
Disclosures" are as follows:
A) Names of related parties and description of relationship
1) Subsidiary Company
Electrosteel Europe SA
Electrosteel Algeria SPA
Singardo International Pte Ltd.
Electrosteel Castings (UK) Limited
Electrosteel USA, LLC
WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC)
2) Associate Company
Lanco Industries Ltd.
Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited)
Electrosteel Thermal Power Ltd.
3) Joint Venture
North Dhadhu Mining Company Pvt. Ltd.
Domco Private Limited
4) Key Management Personnel (KMP)
and their relative
Mr. Umang Kejriwal (Managing Director)
Mr. Mayank Kejriwal (Joint Managing Director )
Mr. Uddhav Kejriwal (Wholetime Director)
Mr. N C Bahl (Director) Resigned during the year
Mr. SYRajagopalan (Director)
Smt. Uma Kejriwal - mother of Mr. Umang Kejriwal, Managing Director
SmtUsha Bahl-wife of Mr. N.C Bahl
Mr. SY. Ganapathy - brother of Mr. SY. Rajagopalan, Director
Mr. Vyas Mitre Ralli (Wholetime Director)
Mr. Rama Shankar Singh (Wholetime Director)
Mr. Mahendra Kumar Jalan (Wholetime Director)
5) Enterprise where KMP/Relatives of KMP have signifinant influnce or
control
Global Exports Ltd.
Badrinath Industries Ltd.
Akshaylspat&Ferro Alloys Pvt. Ltd.
AcharyaMulticonPvtLtd.
Flora Constuctions Pvt. Ltd.
HighriseMulticonPvt.Ltd.
Kabir Projects Pvt. Ltd.
New City Enclave Pvt. Ltd.
Nilmoni Developers Pvt. Ltd.
Paramount Tracom Pvt. Ltd.
Stewart Agencies Pvt. Ltd.
TulsiHighrisePvtLtd.
Wilcox Merchants Pvt. Ltd.
Nimpith Developers Pvt. Ltd.
Royal Multicon Pvt. Ltd.
Samar Properties Pvt. Ltd.
Tulip Fabicon Pvt. Ltd.
Murari Investment & Trading Company Ltd.
Electrosteel Thermal Coal Ltd.
BiswaMicrofinancePvtLtd.
Elecrrocast Sales India Ltd
24. Previous Years Figures have been re-grouped/re- arranged wherever
neccessary.
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