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Notes to Accounts of Electrosteel Castings Ltd.

Mar 31, 2017

1. Corporate Information

Electrosteel Castings Limited (‘the company’) 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 Company’s 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 “Ind AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) read with Section 133 of the Companies Act, 2013 (“the Act”) 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 Company’s 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 year’s figure.

In accordance with Ind AS 101-”First Time adoption of Indian Accounting Standards” (Ind AS 101), the Company has presented (Note No. 59(a)), a reconciliation of Shareholders’ 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 ‘Statement of Cash flows’ and Ind AS 102, ‘Share - Based Payment’ which are applicable w.e.f. 1st April, 2017.

The amendment to Ind AS 7 “Statement of Cash Flows” 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 “Share Based Payment” 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 asset’s recoverable amount is estimated which is higher of asset’s 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, lessee’s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset’s 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 “deemed cost” as per the provision of Ind AS 101 “First-time Adoption of Indian Accounting Standards”- 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 company’s 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 “deemed cost” as per the provision of Ind AS 101 “First-time Adoption of Indian Accounting Standards”- refer note no. 59.

24. Right to use Wagon represents cost incurred in connection with wagons procured under “Wagon Investment Scheme” 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 Company’s 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, Company’s 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 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 interalia on various matters including for forfeiture of the Company’s 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 Company’s 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 Hon’ble High Court of Jharkhand. Pending final judgement, no provision in the respect of Company’s 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 “Disclosure of interests in other entities” :

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 “deemed cost” as per the provision of Ind AS 101 “First-time Adoption of Indian Accounting Standards”- 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 company’s 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 company’s 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 company’s 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 company’s 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 company’s 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 “Financial Instruments”.

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 ‘profit before tax’ 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 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 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 shareholder’s 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 Company’s 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 Company’s activities and 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

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 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.

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 Company’s financial statements.

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. 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 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.

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 Company’s financial statements

Other price risk

The Company’s 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 company’s 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 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, 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 Company’s objective is to maintain optimum level of liquidity to meet it’s cash and collateral requirements at all times. The company’s 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 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.

31. Post Retirement Employee Benefits

The disclosures required under Indian Accounting Standard 19 on ‘‘Employee Benefits’’ are given below :

a) Defined Contribution Plans

Contribution to Defined Contribution Plan, recognized for the year are as under :

b) Defined Benefit Plans

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 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 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 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 Hon’ble High Court at Delhi has pronounced it’s 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 Company’s 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 ‘Financial Instruments’ 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 Hon’ble 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 Company’s 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 Hon’ble High Court of Jharkhand on January 10, 2017, praying inter-alia for direction for grant of said lease in favour of the Company. The Hon’ble 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 as”Pre-operative Expenses”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 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 “First time adoption of Indian Accounting Standards”. 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 (“the Scheme”) of its wholly owned subsidiary, Mahadev Vyapaar Private Limited with the Company with effect from April 1, 2014 (“Appointed Date”). Mahadev Vyapaar Private Limited had filed an application before the Hon’ble High Court at Calcutta, which has sanctioned the said Scheme. The application filed by the Company before the Hon’ble High Court at Orissa will be taken by the National Company Law Tribunal, Kolkata Bench (“NCLT”) 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, “First Time Adoption of Indian Accounting Standards” as they are the Company’s 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 company’s 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 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 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 company’s 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 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.

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., Company’s 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 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. 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 Company’s 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 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 judgment, no provision is considered necessary in the respect of Company’s 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, “The Effects of Changes in Foreign Exchange Rates”. 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 (“the Scheme”) of its wholly owned subsidiary, Mahadev Vyapaar Private Limited with the Company with effect from April 1,2014 (“Appointed Date”). The Company has filed an application before Hon’ble High Court of Orissa at Cuttack which is pending for hearing. In respect of the application filed by Mahadev Vyapaar Private Limited before the Hon’ble High Court at Calcutta, the Hon’ble 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 Hon’ble 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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