Notes to Accounts of Gallantt Ispat Ltd.(old)

Mar 31, 2018

Note -01 General information

1 General corporate information

Gallantt Ispat Limited (‘the Company’ / ‘GIL’), incorporated in the year 2005, is engaged in the business of Iron & Steel, Agro, Power and Real Estate. The Company was promoted by M/s. Gallantt Metal Limited, Mr. Chandra Prakash Agrawal, Mr. Prem Prakash Agrawal, Mr. Nitin Mahavir Prasad Kandoi and M/s. Chandra Prakash Agrawal & Sons (HUF). Company floated its capital base by coming out with Initial Public Offerings of Equity Shares in the year 2010. Company is listed on both the premier stock exchanges viz. Bombay Stock Exchange Limited and National Stock Exchange of India Limited.The Company is engaged in manufacturing of Steel and Steel products and having its manufacturing unit at GIDA, Sahajanwa, Dist Gorakhpur in the State of Uttar Pradesh.

2 First time adoption of Ind AS

These financial statement have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention(except for certain financial instruments that are measured at fair values at the end of each reporting period) on accural basis to comply in all material aspects with the Indian Accounting Standards (herein after referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companis Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment rules, 2016.

These financial statements for the year ended March 31, 2018 has been prepared under Ind AS first time for the Company . For all periods upto and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with the accounting standards notified under the Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as ‘Previous GAAP’) used for its statutory reporting requirement in India immediately before adopting Ind AS. The financial statements for the year ended March 31, 2017 and the opening Balance Sheet as at April 01, 2016 have been restated in accordance with Ind AS for comparative information.

The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at April 01, 2016 being the ‘date of transition to Ind AS’. All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or noncurrent classification of assets and liabilities.

The financial statements for the year ended March 31, 2018 were approved by the Board of Directors and authorised for issue on May 21, 2018.

3 Basis of measurement

These financial statements are prepared under the historical cost convention otherwise indicated.

4 Functional and presentation currency

The functional currency and presentation currency of the Company is Indian Rupee (“‘“) which is the currency of the primary economic environment in which the Company operate. All amounts have been rounded to the nearest lakhs, unless otherwise indicated.

5 Key estimates and assumptions

The preparation of separate financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the separate financial statements and the reported amounts of income and expense for the periods presented.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the notes.

6 Measurement of fair values

The Company’s accounting policies and disclosures require the measurement of fair values for financial instruments.

“The Company has an establishedcontrol framework with respect to the measurement of fair values. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.”

When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

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

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Rights, preferences and restrictions attached to shares Equity Shares

The company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is entitled for one vote per share held. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.

During the year company has been sanctioned and disbursed a term loan of Rs. 3000.00 lacs from HDFC Bank Ltd for plant and machineries for expansion of its capacity at GIDA, Sahjanwa, Gorakhpur.

Security:

* Primary Security : Term loan is securd by way of first pari passu charge by way of hypothecation of Plant & machineries and equipment acquired for expansion of project of the company.

* Collateral Security: Term loan is further secured by way of first pari passu charge with consortium banking arrangement member ban (SBI) by way equitable mortgage of the company’s immovable property viz; Factory Land & Building at GIDA, Sahjanwa, Gorakhpur

* Loan is further secured by personal guarantee of Directors namely Mr. Chandra Prakash Agrawal, Mr. Santosh Kumar Agrawal, Mr. Prem Prakash Agrawal and Mr. Nitin Mahavir Prasad Kandoi.

Repayment:

Term loan is repayable in 72 equal monthly installments of Rs. 53.26 lakh(including interest) starting from 07th December 2017.

1. The above working capital loan from bank( SBI & HDFC) is secured by first pari Passu charge by hypothecation over all the current assets including stocks of raw materials, Stock in process, Finished Goods and book debts-present and future.

The loan is further secured by way of hypothecation of plant & machineries and equipment of the company alongwith consortium banking arrangement member bank (SBI)

2. The above working capital loan is further secured by the personal guarantee of Sri C. P. Agrawal, Sri P.P Agarwal, Shri S.K. Agarwal and Shri Nitin Mahavir Prasad Kandoi.

7 Segment information

7.01 Products and services from which reportable segment derives their revenues

Information reported to the Chief operating decision maker (CODM) for the purpose of resource allocation and assessment of segment performance focuses based on products and services. Accordingly, directors of the Company have chosen to organise the segment based on its product and services as follows:

- Steel

- Power

- Agro

- Real Estate

The Company’s chief operating decision maker is the Chairman & Managing Director.

Revenue ad expenses directly attributable to segment are reported under each reportable segment. All other expenses which are not allocable to segments have been disclosed as Unallocable expenses.

Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as Unallocable.

The company’s financing and income taxes are managed on a company level and are not allocated to operating segment.

8 Employee Benefit plans

8.01 Defined contribution plans

Employee benefits in the form of Providend Fund is considered as defined contribution plan and the contributions to Employees providend Fund organisation established under the Employee’s Providend fund and Misc. Provision Act 1952 charges to the statement of Profit and Loss when the contribution to the respective funds are due.

8.02 Defined benefit plans Gratuity

The Company participates in the Employees’ Group Gratuity-cum-Life Assurance Scheme of SBI Life Insurance Co. Ltd., a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation / termination in terms of the provisions of the Payment of Gratuity Act, 1972 (as amended from timt to time), or as per the Company’s scheme whichever is more beneficial to the employees.

The liability for the Defined Benefit Plan is provided on the basis of a valuation, using the Projected Unit Credit Method, as at the Balance Sheet date, carried out by an independent actuary.

Assumed discount rates are used in the measurement of the present value of the obligation.

9 Capital management

The Company manages its capital to ensure that entities will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Capital structure of the Company consists of net debt (borrowings as detailed in notes [16] and [19] offset by cash and bank balances) and the total equity of the Company.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, long term-term borrowings, short-term borrowings, less cash and short-term deposits.

10 Financial risk management objectives and policies

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings and trade and other payables. The Company’s principal financial assets include loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company also holds FVTOCI investments and enter into derivative transactions. The Company is exposed to market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the board of directors, which provide written principles on foreign exchange risks, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments. The Company does not enter into or trade financial instruments including derivative financial instruments, for speculative purposes.

10.01 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company enters into derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk.

Foreign currency risk management

The Company is exposed to currency risk on account of its borrowings, Receivables for Exports and Payables for Imports in foreign currency. The functional currency of the Company is Indian Rupee. The Company manages currency exposures within prescribed limits, through use of forward exchange contracts. Foreign exchange transactions are covered with strict limits placed on the amount of uncovered exposure, if any, at any point in time.

Exposure to currency Risk

The currency profile of financial liabilities as at Balance Sheet dates are as below:

Interest rate risk management

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of change in market interest rates. The company’s exposure to the risk of changes in market interest rates relates primarily to the company’s short-term debt obligations with floating interest rates.

Interest rate sensitivity analysis

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

10.02 Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and loans and advances.

The carrying amount of following financial assets represents the maximum credit exposure:

Trade receivables and loans and advances.

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer and the geography in which it operates. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

The Company monitors each loans and advances given and makes any specific provision wherever required.

Based on prior experience and an assessment of the current economic environment, Management believes there is no credit risk provision required. Also Company does not have any significant concentration of credit risk.

10.03 Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Management monitors rolling forecasts of the Company’s liquidity position on the basis of expected cash flows. This monitoring includes financial ratios and takes into account the accessibility of cash and cash equivalents.

The Company has access to funds from debt markets through loan from banks and other Debt instrument. The Company invests its surplus funds in bank fixed deposits.

Amount shown in bracket () denotes previous year figures.

11 First Time Adoption of IND AS

11.01 Transition to IND AS

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from April 01, 2017, with a transition date of April 01, 2016. These financial statements for the year ended March 31, 2018 are the first financial statements the Company has prepared under Ind AS. For all periods upto and including the year ended March 31, 2017 , the Company prepared its financial statements in accordance with the accounting standards notified under the Section 133 of the Companies Act 2013, read together with the relevant Rules thereunder (‘Previous GAAP’).

The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and Effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for year ended March 31, 2018, together with the comparative information as at and for the year ended March 31, 2017 and the opening Ind AS Balance Sheet as at April 01, 2016, the date of transition to Ind AS.

In preparing these Ind AS financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and Previous GAAP and have been recognised directly in equity (retained earnings or another appropriate category of equity). This note explains the adjustments made by the Company in restating its financial statements prepared under previous GAAP, including the Balance Sheet as at April 01, 2016 and the financial statements as at and for the year ended March 31, 2017.

11.02 Optional Exemption Availed

(i) Deemed Cost

The Company has elected to continue with the carrying value for (wriiten down value) all of its property, plant and equipment, intangible assets and investment property as recognised in the financial statements as the deemed cost at the date of transition to Ind AS, measured as per the previous GAAP

(ii) Deemed cost for investments in Associates

The Company has elected to continue with the carrying value of its investments in associates as recognised in the financial statements as at the date of transition to Ind AS. Accordingly, the Company has measured all its investments in associates at their previous GAAP carrying value.

(iii) Business Combination

Ind AS 101 provided the option to apply Ind AS 103 prospectively from the transition date or specific date prior to the transition date. The Company has elected to apply Ind AS 103 prospectively to business combination occurring after its transition date. Business combination prior to the transition date have not been restated.

11.03 Mandatory Exceptions from retrospective application

(i) Estimates

On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.

(ii) De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

(iii) Classification and measurement of financial assets

The Company has classified and measured the financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS

12 First Time Adoption of IND AS Fair value measurements

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

The following methods and assumptions were used to estimare the fair values:

Fair value of cash and short term deposits, trade and other short term receivables, trade payables, other current liabilities, working capital loan from banks approximate their carrying amounts largely due to the short term maturities of these instruments.

Financial instruments other than above are carried at amortised cost except certain assets which are carried at fair value.

The company uses the following hierarchy for determining and disclosing the fair value of finnacial instruments by valuation technique

Level -1 : Quoted prices in active markets for identical assets or liabilities

Level -2 : Other techniques for which all inputs which have a significants effects on the recorded fair value are observable

Level -3 : Techniques using inputs having significant effect on the recorded fair value that are not based on observable market data.

Sub Notes:

1 The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.

2 It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgements/ decisions pending with various forums/authorities.

13 Subsequent Events

There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the balance sheet date.

14 Balances under Trade receivables, Trade Payables, Loans and Advances payable or receivable are subject to confirmation to be received from some of the parties.

15 Disclosure as per Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

The company has not received any intimation from “suppliers” regarding status under the Micro, Small and medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished.

16 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-200610 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2006 and amended from time to time, the company is eligible for Interest free loan equivalent to the amount of VAT & CST liability for 15 years and which shall be re-payable after 15 years. The company has claimed Rs. 10828.03 lacs up to 30th June 2017 (upto previous year Rs. 10373.96 Lacs) on account of Interest Free Loan from State Government of Uttar Pradesh. Out of total claim of ‘10828.03 lacs, Rs. 9255.64 lacs has not been deposited to Commercial Tax department in accordance with an order of Hon’ble High Court of Allahabad in writ petition no. 8886/2011, and order in writ petition no. 21103 dated 16.11.2016. However, Rs. 1572.39 Lacs have already been deposited upto August, 2011.

Further as the GST act has replaced the VAT and CST w.e.f. 01.07.2017, the amount of SGST paid to the Governemnt account will be eligible for interest free loan under the scheme. company has already deposited Rs. 1180.85 lacs against SGST for the period 1st July 2017 to 31st March 2018 against the quantity produced from the old unit, which is refundable as interest free loan.

17 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2006 and amended from time to time, the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment, infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. Company has claimed for Rs. 12262.00 lacs against the capital investment made upto 31st May 2012. The incentive received of Rs. 2428.00 Lacs has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs. 9834.00 lacs in the books.

18 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-200610 tax/04 dated 01st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006 10 tax/04 dated 30th November 2006 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses upto maximum of 5% of the railway freight. The total amount of freight subsidy is restrcited to 65% of the total capital investment under the scheme that comes Rs. 22775.00. Since company has already claimed Rs. 18776.84 lacs till March 2017 as such only Rs. 3998.16 lacs is available to be claimed as freight subsidy. During the year company has paid a total freight amount of Rs. 4211.71 Lacs but company has provided only Rs. 3998.16 lacs (Previous year Rs. 3223.77 lacs).This has been adjusted with freight paid on Iron Ore in Profit Loss account and shown as Advance recoverable in Balance sheet. The total amount receivable against the freight subsidy as on 31.03.2018 was Rs. 22775.00 lacs (Previous year Rs. 18776.84 Lacs).

19 During the year company has started commercial production from its new expansion project at GIDA Sahjanwa, which has been established under Industrial Development Policy 2012 of State Government of Uttar Pradesh. Under the scheme company is eligible to get refund of 80% of the SGST amount deposited in Government account. Company has commenced its commercial production of expanded capacity covered under this scheme from 01.12.2017. A total amount of Rs. 1931.61 Lacs has been paid as SGST from December 2017 to March 2018. Out of this amount Rs. 1175.85 Lacs is related to quantity produced from old unit and Rs. 755.76 Lacs is related to the quantity produced from expansion. As per scheme company is entitled for refund of 80% of the amount deposited as SGST which comes to Rs. 604.61 Lacs for this period.

20 By its order dated January 08, 2018, the Office of Regional Director (ER), Ministry of Corporate Affairs has sanctioned and approved the Scheme of Amalgamation of Shikharji Rolling Mills Private Limited, Shikharji Steel & Agro Products Private Limited, Bhavika Steel Agencies Private Limited, Shrinu Agro Private Limited, Shrinu Steel Works Private Limited, Gyanika Flour Mills Private Limited, Satlaj Ispat Private Limited and Satlaj Flour Mills Private Limited with Gallantt Ispat Limited. Pursuant to the Scheme sanctioned as above, Company has acquired four Wholly Owned Subsidiaries viz, M/s. Antarmukh Steel Manufacturer Private Limited, Bhavika Smeltors and Food Products Private Limited, Shrinu Rolls and Milling Private Limited AND Satlaj Rolls and Milling Private Limited. At their meeting held on January 24, 2018, Board of Directors of the Company has approved Scheme of Amalgamation of these four Subsidiary Companies with the Company. Company has one Associate Gallantt Metal Limited in which Company holds more than twenty percent shares.

21 In the Quarter ended on December 31, 2017 Company had made provision for exceptional income of Rs. 1,032.69 Lacs arising out of and based on the Order of Honorable Supreme Court in matter of electricity duty rebate dispute pending with Uttar Pradesh Power Corporation Limited (hereinafter referred to as the “UPPCL”). As per the Order of Honorable Supreme Court, Company is eligible to avail electricity duty rebate which comes at Rs. 1,032.69 Lacs. In compliance with order of the Hon’ble Supreme Court, Department of Energy, Govt. of UP has issued a notification dated 05.02.2018 which specifies that amount of electricity duty rebate for prior period shall be adjusted against electricity duty only after 21.01.2020. Since, the company expands the capacity of Power Plants and hence, the Company will not require purchasing electricity from Government bodies and hence, the amount of electricity duty cannot be adjusted against the electricity rebate. Therefore, the amount of Electricity duty rebate has been reversed in books which were provided as exceptional income.

22 Figures for the previous years have been regrouped / restated wherever necessary to conform to current year’s presentation.

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Mar 31, 2017

Corporate Information

Gallantt Ispat Limited (‘the Company’ / ‘GIL’), incorporated in the year 2005, is engaged in the business of Iron & Steel, Agro, Power and Real Estate. The Company was promoted by M/s. Gallantt Metal Limited, Mr. Chandra Prakash Agrawal, Mr. Prem Prakash Agrawal, Mr. Nitin M Kandoi and M/s. Chandra Prakash Agrawal & Sons (HUF). Company floated its capital base by coming out with Initial Public Offerings of Equity Shares in the year 2010. Company is listed on both the premier stock exchanges viz. Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

1.1 Disclosure regarding the Shares Issued for consideration other than cass

The Company, during the past years, undertook various Schemes including Merger of General Investment Division of Gallantt Udyog Limited and Merger of Companies with the Company. Further, the Company has concluded Bonus Issue of Equity Shares. Pursuant to the Schemes of Amalgamation and Arrangement (“the Schemes”) under Sections 391 to 394 of the Companies Act, 1956 approved by the Honourable Calcutta High Court, the Company has recorded all necessary accounting effects, along with requisite disclosure in the notes to accounts. The cumulative effects of these adjustments due to issue of Equity Shares for consideration other than cash has been disclosed hereunder.

Note 2

Impairment of Assets

Pursuant to the Accounting Standard (AS 28)- “Impairment of Assets” issued by The Institute of Chartered Accountant of India, the Company assessed its fixed assets for impairment as at March 31, 2017 and concluded that there is no significant impairment in fixed asset that needs to be recognized in the books of accounts.

Note 3

Disclosure as per Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

The company has not received any intimation from “suppliers” regarding status under the Micro, Small and medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished.

Note 4

Balance of the Sundry Debtors, Creditors, Loans and advances are subject to confirmation from respective parties.

(a) In accordance with the approval of the shareholders through postal ballot and e-voting, during the year, two flour mill units of the Company viz. Flour Mill Unit located at Gram-Mauja, Chipli, Thana-Durgavati, Kaimur, Bhabhua, Bihar (hereafter referred to as “Bihar Unit”) and Flour Mill Unit located at 60 K.M. Stone, Gorakhpur-Lucknow Highway, Sabdaiyan Kalan, Basti, Uttar Pradesh (hereinafter referred to as the “Basti Unit”) have been sold. Also, during the year, Company has sold some of the misc. assets. Exceptional Items includes adjusted profit amounting to Rs.959.60 Lacs on sale of Bihar Unit and Basti Unit and other Misc assets and profit on sale of shares in subsidiaries amounting to Rs.56.00 Lacs.

(b) In pursuance to the notification no. 308(e) dated 30.03.2017 issued by Ministry of Corporate Affairs, we hereby produce the details of SBNs (Specified Bank Notes) held and transacted during the period 08.11.2016 to 30.12.2016.

Note 5

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-200610 tax/04 dated 1^st June 2006 and which have been elaborated in Government Order No. 2941/77-6-200610 tax/04 dated 30^th November 2006 and amended from time to time, the company is eligible for Interest free loan equivalent to the amount of VAT & CST liability for 15 years and which shall be re-payable after 15 years. The company has claimed Rs.10373.96 lacs up to 31st March 2017 (upto previous year Rs.8791.40 Lacs) on account of Interest Free Loan from State Government of Uttar Pradesh. Out of total claim of Rs.10373.93 lacs, Rs.8801.58 lacs has not been deposited to Commercial Tax department in accordance with an order of Hon’ble High Court of Allahabad in writ petition no. 8886/2011, and order in writ petition no. 21103 dated 16.11.2016. However, Rs.1572.39 Lacs have already been deposited upto August, 2011.

Note 6

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-200610 tax/04 dated 1^st June 2006 and which have been elaborated in Government Order No. 2941/77-6-200610 tax/04 dated 30th November 2006 and amended from time to time, the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment, infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. Company has claimed for Rs.12262.00 lacs against the capital investment made upto 31st May 2012. The incentive received of Rs.2428.00 Lacs has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs.9834.00 lacs in the books.

Note 7

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-200610 tax/04 dated 01st June 2006 and which have been elaborated in Government Order No. 2941/77-6-200610 tax/04 dated 30th November 2006 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses upto maximum of 5% of the railway freight. During the year company has provided an amount of Rs.3223.77 lacs (Previous year Rs.3558.24 lacs), which has been adjusted with freight paid on Iron Ore in Profit Loss account and shown as Advance recoverable in Balance sheet. The total amount receivable against the freight subsidy as on 31.03.2017 was Rs.18776.84 lacs (Previous year Rs.15553.07 Lacs).

Note 8

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-62006-10 tax/04 dated 01st June 2006 and which have been elaborated in Government Order No. 2941/776-2006-10 tax/04 dated 30th November 2006 and amended from time to time the company is eligible for various incentives and benefits which includes Capital Investment subsidy, Infrastructure Subsidy, additional capital subsidy, Freight Subsidy and interest free loan against VAT & CST.

The State Government has disbursed part payment of Rs.24.28 crores of the subsidy on the investment made till May, 31, 2009 to the company as we were declared eligible for the subsidy and other benefits. We have further submitted our Capital subsidy claim of Rs.98.34 crores adjusting Rs.24.28 crores already received, on the investment made up to May 31, 2012 and a claim of Rs.187.77 crores as freight subsidy and refund of already deposited VAT/CST Rs.15.72 crores due up to March 2017 making a total of Rs.301.83 crores as on March 2017 which is pending for disbursement before the nodal agency (PICUP) of the scheme. As the state Government vide its order dated 18.11.2011 and 11.02.2015 refused the balance payment of subsidies, we have filed writ petition before the Hon’ble High Court of Allahabad, Lucknow Bench and Hon’ble High Court, Allahabad vide its order and judgment dated 05.11.2015 directed State Government to pay subsidies forthwith as per scheme and take a fresh decision within three months in relation to the benefits of interest free loan against VAT; and have also stayed recovery of taxes till a fresh decision is taken. State Government has filed an SLP before the Hon’ble Supreme Court challenging this order which was dismissed on 29.02.2016 resulting order of the Hon’ble High Court dated 05.11.2015 becomes final.

State Government, in its meeting held on 04.04.2016 decided to make payment of subsidies as directed by Hon’ble High Court and have further decided to seek six months time from, Hon’ble High Court and have moved an application which has been rejected by the hon’ble high Court directing the State Government to appraise the Petitioner about the decision taken not later than three weeks. Thereafter State Govt. Changed its decision dated 04.04.2016 and issued a new Govt Order Dated 30.06.2016 by which benefits of the scheme were made limited. This Govt Order limiting the benefit has been challenged before the Hon’ble High Court wide writ petition No 21103 which is pending for decision.

Note 9

Unpaid and Unclaimed Amount of Dividend and Share Application Money

Following amount of Unpaid Share Application Money and Unpaid Dividend has not been claimed and paid till 31.03.2017

Note 10

Rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares with par value of Rs.10/- per share. The equity shareholders are entitled to receive dividend as declared from time to time. The voting right of an equity shareholder on a poll (not on show of hands) are in proportion to its shares of the paid up equity capital of the Company. 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 the proportion to their shareholdings.

Note 11

Gallantt Udyog Limited (amalgamated with the Company and hereinafter referred to as “GUL”) had entered into Builder Agreement dated January 27, 2012 with M/s. SAS Hotels & Properties Private Limited (now known as Shalimar Corp Ltd), an Indian Company within the meaning of Companies Act, 1956 inter alia engaged in the business real estate. Pursuant to the Agreement, GUL had entered into real estate business with “Shalimar Corp Ltd. Pursuant to the agreement as above, GUL had offered and granted exclusive rights to Shalimar Corp Ltd. to develop residential complexes on Company’s land located at Shankerpurwa, Islabari, Lucknow, Uttar Pradesh. As a consideration for the said agreement company is receiving 13% share of the total sales realisation. Further, agreement as above states that Shalimar Corp Limited to develop the properties and to market the same for mutual benefits of the parties. As decided by the parties to the Builder Agreement, the project is being developed as residential complex in the name and style of “SHALIMAR GALLANT”.

Note 12

Company had extended Corporate Guarantee of Rs. 10,000 Lacs in favour of Punjab National Bank (PNB) against granting of Financial Accommodation by PNB to Shalimar Corp Limited. Shalimar Corp Limited has repaid Term Loan in full and loan account has been closed. Simultaneously, Corporate Guarantee extended by the Company has been released and necessary formalities have been complied with by the Company.

Note 13

During the year Company has disposed off two subsidiaries M/s. Shree Surabhi Flour Mills Private Limited (Surabhi Flour) and M/s. Shree Surabhi Wheat Products Private Limited (Surabhi Wheat). Company has acquired eight Wholly Owned Subsidiaries during the year namely M/s. Shikharji Rolling Mills Private Limited, M/s. Shikharji Steel & Agro Products Private Limited, M/s. Bhavika Steel Agencies Private Limited, M/s. Shrinu Agro Private Limited, M/s. Shrinu Steel Works Private Limited, M/s. Gyanika Flour Mills Private Limited, M/s. Satlaj Ispat Private Limited and M/s. Satlaj Flour Mills Private Limited. At their meeting held on March 23, 2017, Company has approved amalgamation of these eight subsidiaries with the Company. Appointed Date for the Scheme of Amalgamation is April 01, 2016. As per the provisions of Section 233 of the Companies Act, 2013, Scheme has been placed before the Honourable Registrar of Companies, West Bengal and Official Liquidator, Calcutta High Court for their In-principle approval.

As Company holds more than twenty percent shareholding of Gallantt Metal Limited and hence, Gallantt Metal Limited has been termed as Associate of the Company within the meaning of Section 2(6) of the Companies Act, 2013.

Note 14

Board of Directors of the Company has recommended Dividend to the shareholders of the Company Re. 0.5/-(Paise Fifty only) per Equity Share for the financial year 2016-17. Total out flow on account of Dividend is Rs.1,41,18,036/- subject to tax.

Note 15

Corporate social responsibility

As per Section 135 of the Act, a CSR committee has been formed by the Company. The funds are utilised throughout the year on the activities which are specified in Schedule VII of the Act. The utilisation is done by way of direct contribution towards aforesaid activities. Details of the CSR have been given in the Directors’ Report in the Annual Report. The Company continues to earmark a corpus every year for CSR activities. The Gallantt CSR Team under the guidance of CSR Committee is responsible for championing all philanthropy and CSR initiatives of the Company. The mission of Gallantt is committed to being participants of progress by supporting initiatives in education and child welfare to help measurably improve the lives of underprivileged children among others.

Note 16: DISCLOSURE PURSUANT TO LISTING REGULATIONS 29

There are no loans and advances in nature of loans outstanding from subsidiary for the year ended March 31, 2017

Note 17

Previous year figures have been regrouped and reclassified wherever necessary to facilitate comparison with current year figures.

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Mar 31, 2016

Note 1: Impairment of Assets

Pursuant to the Accounting Standard (AS 28)-"Impairment of Assets" issued by The Institute of Chartered Accountant of India, the Company assessed its fixed assets for impairment as at March 31, 2016 and concluded that there is no significant impairment in fixed asset that needs to be recognized in the books of accounts.

Note 2: Disclosure as per Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

The company has not received any intimation from "suppliers" regarding status under the Micro, Small and medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the yearend together with the interest paid/payable as required under the said act have not been furnished.

Note 3: Balance of the Sundry Debtors, Creditors, Loans and advances are subject to confirmation from respective parties.

Note 4:

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-200610 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-200610 tax/04 dated 30th November 2007 and amended from time to time, the company is eligible for Interest free loan equivalent to the amount of VAT & CST liability for 15 years and which shall be re-payable after 15 years. The company has claimed Rs. 8,791.40 lacs up to 31st March 2016 (up to previous year Rs. 7,164.24 Lacs) on account of Interest Free Loan from State Government of Uttar Pradesh. Out of total claim of Rs. 8,791.40 lacs, Rs. 7,219.01 lacs has not been deposited to Commercial Tax department in accordance with an order of Hon''ble High Court of Allahabad in writ petition no. 8886/2011, and order dated 05.11.2015 . However, Rs. 1,572.39 Lacs have already been deposited up to August, 2011.

Note 5:

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-200610 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-200610 tax/04 dated 30th November 2007 and amended from time to time, the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment, infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. Company has claimed for Rs. 12,262.00 lacs against the capital investment made up to 31st May 2012. The incentive received of Rs. 2,428.00 Lacs has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs. 9,834.00 lacs in the books.

Note 6:

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-200610 tax/04 dated 01st June 2006 and which have been elaborated in Government Order No. 2941/77-6-200610 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses up to maximum of 5% of the railway freight. During the year company has provided an amount of Rs. 3,558.24 lacs (Previous year Rs. 3,203.30 lacs), which has been adjusted with freight paid on Iron Ore in Profit Loss account and shown as Advance recoverable in Balance sheet. The total amount receivable against the freight subsidy as on 31.03.2016 was Rs. 15,553.07 lacs (Previous year Rs. 11,994.83. Lacs).

Note 7:

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-62006-10 tax/04 dated 01st June 2006 and which have been elaborated in Government Order No. 2941/776-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for various incentives and benefits which includes Capital Investment subsidy, Infrastructure Subsidy, additional capital subsidy, Freight Subsidy and interest free loan against VAT & CST.

The State Government has disbursed part payment of Rs. 24.28 crores of the subsidy on the investment made till May, 31, 2009 to the company as we were declared eligible for the subsidy and other benefits. We have further submitted our Capital subsidy claim of Rs. 98.34 crores adjusting Rs. 24.28 crores already received, on the investment made up to May 31, 2012 and a claim of Rs. 155.53 crores as freight subsidy and refund of already deposited VAT/CST Rs. 15.72 crores due up to March 2016 making a total of Rs. 269.59 crores as on March 2016 which is pending for disbursement before the nodal agency (PICUP) of the scheme. As the state Government vide its order dated 18.11.2011 and 11.02.2015 refused the balance payment of subsidies, we have filed writ petition before the Hon''ble High Court of Allahabad, Lucknow Bench and Hon''ble High Court, Allahabad vide its order and judgment dated 05.11.2015 directed State Government to pay subsidies forthwith as per scheme and take a fresh decision within three months in relation to the benefits of interest free loan against VAT; and have also stayed recovery of taxes till a fresh decision

Note 8:

The Company has a single class of equity shares with par value of Rs. 10/- per share. The equity shareholders are entitled to receive dividend as declared from time to time. The voting right of an equity shareholder on a poll (not on show of hands) are in proportion to its shares of the paid up equity capital of the Company. 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 the proportion to their shareholdings.

Note 9:

Gallantt Udyog Limited (amalgamated with the Company and hereinafter referred to as "GUL") had entered into Builder Agreement dated January 27,2012 with M/s. SAS Hotels & Properties Private Limited (now known as Shalimar Corp Ltd), an Indian Company within the meaning of Companies Act, 1956 inter alia engaged in the business real estate. Pursuant to the Agreement, GUL had entered into real estate business is taken. State Government has filed an SLP before the Hon''ble Supreme Court challenging this order which was dismissed on 29.02.2016 resulting order of the Hon''ble High Court dated 05.11.2015 becomes final. State Government, in its meeting held on 04.04.2016 decided to make payment of subsidies as directed by Hon''ble High Court and have further decided to ask for six months time from Hon''ble High Court to complete the process of payment. On said application of the State Government, Hon''ble High Court has rejected the same and directed the State Government to appraise the Petitioner about the decision taken not later than three weeks. In these circumstances, disbursement of subsidies is expected shortly.

Note 10:

License Agreement: License Agreement entered into between the Company and Shree Surabhi Flour Mills Private Limited (Surabhi) granting Surabhi to occupy, use, run and operate the Basti Flour Mill unit of the company has been terminated as the unit has been already sold and transferred to them.

Note 11: Unpaid and Unclaimed Amount of Dividend and Share Application Money

Following amount of Unpaid Share Application Money and Unpaid Dividend has not been claimed and paid till 31.03.2016

with "Shalimar Corp Ltd. Pursuant to the agreement as above, GUL had offered and granted exclusive rights to Shalimar Corp Ltd. to develop residential complexes on Company''s land located at Shankerpurwa, Islabari, Lucknow, Uttar Pradesh. As a consideration for the said agreement GUL is receiving 13% share of the total sales realization. Further, agreement as above states that Shalimar Corp Limited to develop the properties and to market the same for mutual benefits of the parties. As decided by the parties to the Builder Agreement, the project will be developed as residential complex in the name and style of "SHALIMAR GALLANT".

Note 12: Company has acquired two subsidiaries during the year M/s. Shree Surabhi Flour Mills Private Limited (Surabhi Flour) and M/s. Shree Surabhi Wheat Products Private Limited (Surabhi Wheat). Also, Company holds more than twenty percent shareholding of Gallantt Metal Limited and hence, Gallantt Metal Limited has been termed as Associate of the Company within the meaning of Section 2(6) of the Companies Act, 2013.

Company applied for allotment of Equity Shares in Surabhi Wheat. Surabhi Wheat allotted 1,25,00,000 Equity Shares to the Company on February 15, 2016 and 75,00,000 Equity Shares on March 30, 2016.

Surabhi Flour has been acquired as subsidiary of the Company by purchase of 2,00,00,000 Equity Shares from the existing shareholders of Surabhi Flour on March 30, 2016.

Company has complied with the requisite formalities in the matter of formation of subsidiaries as above.

Note 13: In accordance with the approval of the Board of Directors and subsequent resolution passed by the shareholders of the Company through Postal Ballot and E-voting under Sections 180(1)(a) and 188 and all other applicable provisions, if any, of the Companies Act, 2013, and the relevant Rules framed there under (including any statutory modifications or re-enactment thereof, for the time being in force), Company has sold out and transferred Flour Mill Unit located at Gram-Mauja- Chipli, Thana-Durgavati, District-Kaimur (Bhabhua), Bihar to Shree Surabhi Wheat Products Private Limited on 11.05.2016 for a sale consideration of Rs. 12,70,00,000/- (Rupees Twelve Crore Seventy Lacs only). Company has received full amount of consideration.

Note 14: In accordance with the approval of the Board of Directors and subsequent resolution passed by the shareholders of the Company through Postal Ballot and E-voting under Section 180(1)(a) and all other applicable provisions, if any, of the Companies Act, 2013, and the relevant Rules framed there under (including any statutory modifications or re-enactment thereof, for the time being in force) Company has sold out and transferred Flour Mill Unit located at 60 KM Stone, Gorakhpur-Lucknow Highway, Sabdaiyan Kalan, Basti, Uttar Pradesh to Shree Surabhi Flour Mills Private Limited on 03.05.2016 for a sale consideration is Rs. 10,36,00,000/- (Rupees Ten Crore Thirty Six Lacs only). Company has received full amount of sales consideration.

Note 15: In accordance with the recommendation of the Board of Directors and subsequent approval of the shareholders of the Company through Postal

Ballot and E-voting, during the year, Company has altered Memorandum and Articles of Association of the Company so as to align it with the Companies Act, 2013 and to include the Real Estate business in its Main Object Clause. Company has complied with requisite formalities in this behalf. Registrar of Companies, West Bengal has granted its approval for the alteration in the Memorandum and Articles of Association of the Company.

Note 16: During the year, Board of Directors of the Company has declared and paid Interim Dividend to the shareholders of the Company Re. 1/- (Rupee One) per Equity Share. March 29, 2016 has been fixed as the Record Date for the purposes of determining the eligibility of the shareholders who are eligible to receive interim dividend for the financial year 2015-16. Total out flow on account of Interim Dividend was Rs. 2,82,36,072/subject to tax.

Note 17: Pursuant to the Scheme of Amalgamation of Gallantt Udyog Limited filed with the Honorable High Court at Kolkata, Honorable High Court, vide its order dated May 14, 2015 has approved amalgamation as above. As per the Scheme of Amalgamation, Board of Directors, at their meeting held on June 26, 2015, has allotted 9215159 no. of Equity Shares to the shareholders of the Transferor Company M/s. Gallantt Udyog Limited. Company has applied for listing of the said newly allotted shares with the stock exchanges. Both the Stock Exchanges viz. Bombay Stock Exchange Limited and National Stock Exchange of India Limited has granted listing and trading approval to the said shares.

Note 18: Corporate social responsibility As per Section 135 of the Act, a CSR committee has been formed by the Company. The funds are utilized throughout the year on the activities which are specified in Schedule VII of the Act. The utilization is done by way of direct contribution towards aforesaid activities. Details of the CSR have been given in the Directors'' Report in the Annual Report.

Note 19: Previous year figures have been regrouped and reclassified wherever necessary to facilitate comparison with current year figures.

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Mar 31, 2014

1) Contingent Liabilities (AS – 29) :

Contingent Liabilities are determined on the basis of available information and which are not provided for is disclosed by way of notes to the Accounts.

2. Disclosure regarding the Shares Issued for consideration other than cash

The Company, during the past years, undertook various Schemes including Merger of General Investment Division of Gallantt Udyog Limited and Merger of Companies with the Company. Further, the Company has concluded Bonus Issue of Equity Shares. Pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Honourable Calcutta High Court, the Company has recorded all necessary accounting effects, along with requisite disclosure in the notes to accounts. Further, during the financial year the company has alloted Equity Shares on account of conversion of Convertible Debentures into Equity Shares. The cumulative effets of these adjustments due to issue of Equity Shares for consideration other than cash has been disclosed hereunder.

2.1 Terms Rights attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs. 10/- share. Each holders of equity shares are entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend recommended by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

2.2 Shares reserved for Issue under option

On December 01, 2011 Company has allotted 25,00,000 Zero Coupon Fully Convertible Unsecured Debentures (the "FCDs) to the Promoter and Non-Promoters at a subscription price of Rs. 160/- each being a price higher than the price determined as per Regulation 76(1) of Securities & Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. As per the terms of issue, the Debentures have been converted into Equity Shares of Rs. 10 each on 25.05.2013.

a) Term loan secured by First pari pasu charge over all the borrower''s fixed assets (present & future), Second pari pasu charge over all the borrower''s current assets including Debtors and stock etc. and personal Guarantee of Mr. C.P. Agrawal, Mr. P.P. Agrawal and Mr. Nitin M. Kandoi.

b) Term loan includes Corporate Loan of Rs. 0.64 crores in Non Current & Rs. 11.18 crores in Current Liabilities.

c) Current Portion of Term Loans have been grouped as ''''Current maturities of long term debt'''' in Note No. 9.

d) Terms of repayment for secured borrowings are as under:

i) Term Loan from State Bank of India amounting to Rs. 70 crores sanctioned on 20.06.2008 repayable in 24 quarterly instalments of Rs. 2.92 crores each commencing from F.Y.2010-11, out of which 16 installments amounting to Rs. 46.72 crores has been paid upto 31.03.2014.

ii) Term Loan from State Bank of Patiala amounting to Rs. 30 Crores sanctioned on 23.09.2008 repayable in 24 quarterly installments of Rs. 1.25 crores each commencing from F.Y.2010-11 out of which 16 installments amounting to Rs. 20 crores has been paid upto 31.03.2014.

iii) Term Loan from State Bank of Mysore amounting to Rs. 24 Crores sanctioned on 11.10.2008 repayable in 24 quarterly installments of Rs. 1.00 crores each commencing from F.Y. 2010-11 out of which 16 installments amounting to Rs. 16.00 crores has been paid upto 31.03.2014.

iv) Corporate Loan from State Bank of India amounting to Rs. 18 Crores sanctioned on 01.12.2011 repayable in 12 quarterly installments. First 5 of Rs. 85 lakh and remaining 7 of Rs. 1.96 crore each commencing from 01.01.2012 out of which 9 installments amounting to Rs. 12.09 crores has been paid upto 31.03.2014.

v) Corporate Loan from State Bank of Patiala amounting to Rs. 8 Crores sanctioned on 01.12.2011 repayable in 12 quaterly installments.First 5 of Rs. 37.50 lakh and remaining 7 of Rs. 87.50 lakh each commencing from 01.01.2012 out of which 9 installments amounting to Rs. 5.375 Crores has been paid upto 31.03.2014.

vi) Corporate Loan from State Bank of Mysore amounting to Rs. 6 Crores sanctioned on 11.06.2011 repayable in 12 quaterly installments.First 5 of Rs. 28.00 lakh and remaining 7 of Rs. 66.00 lakh each commencing from 01.07.2012 out of which 7 installments amounting to Rs. 2.72 Crores has been paid upto 31.03.2014.

vii As on May 23, 2014 Company has repaid in full the outstanding Term Loan & Corporate Loan from State Bank of Mysore along with interest. As on date of signing of Annual Statements, outstanding loan of State Bank of Mysore is nil.

1) Cash credit is secured by Hypothecation of entire current assets of the company (present & future) consisting of Raw Material, SIP, Finished goods, Store & Spares and Book Debts, Extension of first pari pasu charge over all the borrower''s fixed assets (present & future) and personal Guarantee of Mr. C.P. Agrawal, Mr. P.P. Agrawal and Mr. Nitin M. Kandoi.

2) No provision for interest on unsecured loan outstanding on 31.03.2014 amounting to Rs. 54 Crore taken from Gallantt Udyog Ltd. has been made as merger proceedings are under process.

3) During the financial year 2013-14, the company has allotted 25,00,000 Equity Shares of Rs. 10 each on account of conversion of 0% Fully Convertible Unsecured Debentures of Rs. 10 each into Equity Shares in the ratio of 1:1 on 25th May, 2013.

4 RELATED PARTY DISCLOSURE AS PER AS - 18 (AS IDENTIFIED BY THE MANAGEMENT)

Name of Related Party and Description of Relationship :

I. Associate Company & Firm Gallantt Udyog Ltd.

Gallantt Metal Ltd

Chandra Prakash Agrawal & Sons (HUF)

Prem Prakash Agrawal HUF

Jai Laxmi Solvents Pvt. Ltd.

Varuna Spinning Mills Pvt. Ltd.

II. Key Managerial Personnel Mr. Chandra Prakash Agrawal

Mr. Prem Prakash Agrawal Mr. Nitin M Kandoi

III. Relatives of Key Managerial Personnel Mr. Mayank Agrawal

Mr. Ashutosh Agrawal Mrs. Shyama Agrawal Mrs. Shruti Kandoi Mrs. Pallavi Agrawal Mrs. Uma Agrawal

5 SEGMENT REPORT

A Primary Segment (By Business Segment) :

The Company is engaged in the business of production of Steel Products, Wheat Products & Power. The Company has three reportable business segments i.e. Steel, Agro & Power which have been identified in line with the A.S. -17 "Segment Reporting". Information about Primary Segment is as follows :

B) Secondary Segment (By Geographical Segment):

The Secondary Segment is based on geographical demarcation i.e. India & Rest of the World. There is no reportable segment under above category

6 CONTINGENT LIABILITIES

Contingent Liabilities not provided for in respect of : 2013-14 2012-13

(i) Guarantee given by the bank on behalf of the Company to Purvanchal Vidyut Vitran 210.00 150.00 Nigam for Electricity connection.

(ii) Guarantees given by the bank on behalf of the Company to Uttar Pradesh Pollution 2.00 2.00 Control Board for NOCs.

(iii) Guarantees given by the bank on behalf of the Company to Coal India 200.00 0.00

(iv) Appeal against order of Assessing Officer: Vide its order dated 21.03.2013 Assessing 0.29 0.29 Office, Mr. V. K. Meena, Dy. C.I.T. Range-3, Kolkata has raised a tax demand worth Rs. 29,140/- (Rupees Twenty Nine Thousand One Hundred and Forty only) for the Assessment Year 2010-11 (previous year 2009-10). Based on the advice of Income Tax Consultants,Company has preferred an appeal with C.I.T.(Appeals)-I,Kolkata. The Matter is under consideration.

(v) Irrevocable Letter of Credit Issued by State Bank of India in favour of Transasia - 816.66 Pacific GGNR Pte Ltd Singapore amounting to USD 1503153.38 for Supply of Anglo South african Steam Coal. (Rate as on 31.03.2013 1USD = Rs54.33).

(vi) Irrevocable Letter of Credit Issued by StateBank of India in favour of Saraogi 500.26 - Globle Pte Ltd Singapore amounting to USD 834750 for Supply Coal. (Rate as on 31.03.2014 1USD = Rs 59.94).

Note 7: Impairment of Assets

Pursuant to the Accounting Standard (AS 28)- "Impairment of Assets" issued by The Institute of Chartered Accountant of India, the Company assessed its fixed assets for impairment as at March 31, 2014 and concluded that there is no significant impairment in fixed asset that needs to be recognized in the books of accounts.

Note 8: Disclosure as per Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

The company has not received any intimation from "suppliers" regarding status under the Micro, Small and medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished.

Note 9: Balance of the Sundry Debtors, Creditors, Loans and advances are subject to confirmation from respective parties.

Note 10:

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time, the company is eligible for Interest free loan equivalent to the amount of VAT & CST liability for 15 years and which shall be re-payable after 15 years. The company has claimed Rs. 5483.39 Lacs up to 31st March 2014 (upto previous year Rs. 3915.52 Lacs) on account of Interest Free Loan from State Government of Uttar Pradesh. Out of total claim of Rs. 5483.39 lacs, Rs. 3911.00 Lacs has not been deposited to Commercial Tax department in accordance with an order of Hon''ble High Court of Allahabad in writ petition no. 8886/2011, 12710/2011 and 2067/2012. However Rs. 1572.39 Lacs have already deposited upto 31.03.2014. State Government has vide order no E-6-534/10-2011dated 18/11/2011 has refused to consider pending applications under the schemes and company has obtained stay against payment of taxes from Hon''ble High Court Allahabad, Lucknow Bench. Accordingly, company has not deposited VAT amounting to Rs. 3911.00 lacs.

Hon''ble High Court Allahabad vide their judgement and order dated 12-08-2013 directed the State Government to take a fresh decision in the matter expeditiously and not to make any recovery of the unpaid VAT amount. Since, State Government, as they did in past, has not taken steps for disbursement of claimed amount of subsidy and is delaying the matter inordinately as the Hon''ble High Court has not fixed any time limit to take such decision, Company preferred a writ petition before Hon''ble Supreme Court. Writ so filed with Hon''ble Supreme Court is pending before them.

Note 11:

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time, the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment, infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. Company has claimed for Rs. 12262.00 Lacs against the capital investment made upto 31st May 2012. The incentive received of Rs. 2428.00 Lacs has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs. 9834.00 Lacs in the books.

Note 12:

As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses upto maximum of 5% of the railway freight. During the year company has provided an amount of Rs. 3076.94 Lacs (Previous year Rs. 3101.11 Lacs), which has been adjusted with freight paid on Iron Ore in Statement of Profit Loss and shown as Advance recoverable in Balance sheet. The total amount receivable against the freight subsidy as on 31.03.2014 was Rs. 8791.53 Lacs (Previous year Rs. 5714.59 Lacs).

Note 13:

State Govt. Vide G.O. no. 1674/77-6-11-10/(Tax) 04 T.C.-12 dated November 18, 2011,has refused to consider pending applications under the schemes stated hereinabove. Being the unconstitutional decision and injustice on the part of the State Government of Uttar Pradesh, and for getting equal protection of law of land, Company has preferred a Writ petition bearing no.12710/2011 / Misc. Bench dated 17.12.2011 at Honourable High Court of Allahabad, Lucknow Bench, Uttar Pradesh, and the Honourable High Court has restrained the Govt. from realisation of the taxes. The total operational profit is inclusive of freight subsidy amounting to Rs. 3076.94 Lacs (Previous year Rs. 3101.11 Lacs) which is receivable and subject to the decision of Honourable Court.

Note 14:

i. License Agreement : Company has entered into a License Agreement dated 30th March, 2013 with Gallantt Udyog Limited (Licensor) and pursuant to the agreement, the Company has been granted leave and license by the Licensor to occupy, use, run and operate the Flour Mill unit of the Licensor located at 60 KM Stone, Gorakhpur-Lucknow Highway, Sabdaiyan Kalan, Basti District of Uttar Pradesh with a factory and other utilities along with building structures commonly known as Basti Flour Mill of Gallantt Udyog Limited established in the year 2002 having present production capacity at 72,000 M.T. per annum (hereinafter referred to as "Basti Flour Mill"). Terms and conditions and particulars have been clearly embodied in the said agreement. Company has complied with the requisite formalities for the above license agreement.

ii. In terms of the above agreement, a sum of Rs. 1.00 Lac per annum is payable to Gallantt Udyog Ltd as License Fees. Since, the entire undertaking of the Gallantt Udyog Limited is under process of amalgamation with Gallantt Ispat Limited, Company has not made provision for License fees Payable to Gallantt Udyog Ltd.

Note 44:

Amalgamation of Gallantt Udyog Limited (Unlisted Transferor Public Limited Company) with the Company (being Transferee Company): At their meeting held on 30th March, 2013 Board of Directors of the Company has proposed to amalgamate Gallantt Udyog Limited with the Company with effect from Transfer Date 01.04.2013 whereby the identity of both Companies would be blended into one single company. Company has filed application under Clause 24f of the Listing Agreement with the Stock Exchanges for their No-Objection for the said amalgamation. Simultaneously, Company has filed the said application with the Securities and Exchange Board of India for their comment/Observation on the Scheme of Amalgamation of Gallantt Udyog Limited with the Company. Company has complied with the requisite formalities of all the applicable laws pertaining to the said amalgamation. Securities and Exchange Board of India has, vide its letter bearing no. CFD/DIL/HB/MT/14086/2014 dated May 16, 2014, issued its letter of observation/comment to the Company. Bombay Stock Exchange Limited vide its letter bearing no. DCS/AMAL/BS/24(f)/050/2014-15 dated May 20, 2014 and National Stock Exchange of India Limited vide its letter bearing no. Ref: NSE/LIST/239345-W dated May 21, 2014 have also granted their No-Objection to the said amalgamation. Amalgamation proceedings are under process.

Note 15: Unpaid and Unclaimed Amount of Dividend and Share Application Money:

Following amount of Unpaid Share Application Money and Unpaid Dividend has not been claimed and paid till 31.03.2014

Note 16 : Rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares with par value of Rs. 10/- per share. 25,00,000 Zero Coupon Fully Convertible Unsecured Debentures have been converted into Equity Shares on 25th May, 2013 in the ratio of 1:1. Accordingly, new equity shares so allotted rank pari passu in all respects including dividends and share in the Company''s residual assets. The equity shareholders are entitled to receive dividend as declared from time to time. The voting right of an equity shareholder on a poll (not on show of hands) are in proportion to its shares of the paid up equity capital of the Company. 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 the proportion to their shareholdings. During the year ended 31st March, 2014, the amount per share dividend recognized as distributions to equity shareholders was Paisa 50. The total dividend appropriation for the year ended 31st March, 2014 amounted to Rs 1,71,20,174/- including corporate dividend tax of Rs 24,86,921.

Note 17 : Previous year figures have been regrouped and reclassified wherever necessary to facilitate comparison with current year figures.

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Mar 31, 2013

1 PRIOR PERIOD EXPENSES

During the year Rs. 2217136.00 paid on account of interest on late payment of Entery Tax of FY. 2011-12'' Rs. 95530.00 paid on account of interest on Excise of FY. 2011-12 and Rs. 33475 charged for Reversal of Service Tax credit wrongly taken in Previous Year.

2 IMPAIRMENT OF ASSETS

Pursuant to Accounting Standard (AS 28)-lmpairment of Assets issued by Institute of Chartered Accountant of India'' the Company assessed its fixed assets for impairment as at March 31'' 2013 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of accounts.

3 DISCLOSURE AS PER SECTION 22 OF THE MICRO'' SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT'' 2006

"The company has not received any intimation from "suppliers" regarding status under the Micro'' Small and medium Enterprises Development Act 2006 and hence disclosures'' if any'' relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished."

4 Balance of the Sundry Debtors'' Creditors'' Loans and advances are subject to confirmation from respective parties.

5 i) As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for Interest free loan of equivalent amount of VAT & CST liability for 15 years and which shall be re-payable after 15 years. The company has claimed Rs. 3915.52 lacs up to 31st March 2013 (upto previous year Rs. 2833.36 Lacs) on account of Interest Free Loan to State Government of Uttar Pradesh. Out of total claim of Rs. 3915.52 Lacs'' Rs. 2343.14 Lacs has not been deposited to Commercial Tax department in accordance with an order of Honorable High Court of Allahabad in writ petition no. 8886/2011''12710/2011 and 2067/2012. State Government has vide order no E-6-534/10-2011dated 18/11/2011 has refused to consider pending applications under the schemes and company has obtained stay against payment of taxes from Honorable High Court Allahabad'' Lucknow Bench'' accordingly company has not deposited VAT amounting toRs. 2343.14 Lacs.

ii) During the year the company has done regrouping in its accounting treatment in respect of Interest free Loan under incentive scheme of State Govt'' of Uttar Pradesh by showing full amount of Vat Liability upto 31.03.2013 amounting to Rs. 3915.52 Lacs as other Long Term Borrowing and Rs. 1572.39 Lacs in current Assets being amount already deposited upto 31.03.2013 and recoverable from state Govt of Uttar pradesh. Till Previous year amount not deposited till 31.03.2012 amounting to Rs. 953.36 Lacs was shown as current liability.

6 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment'' infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. Company has claimed for Rs. 12262.00 Lacs against the capital investment made upto 31st May 2012. The incentive received of Rs. 2428.00 Lacs has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs. 9834.00 Lacs in the books.

7 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses upto maximum of 5% of the railway freight. During the year company has provided an amount of Rs. 3101.11 Lacs (Previous year Rs. 1753.89 Lacs)'' which has been adjusted with freight paid on Iron Ore in Statement of Profit Loss and shown as Advance recoverable in Balance sheet. The total amount receivable against the freight subsidy as on 31.03.2013 was Rs. 5714.59 Lacs (Previous year Rs. 2613.48 Lacs).

8 State Govt. Vide G.O. no. 1674/77-6-ll-10/(Tax) 04 T.C-12 dated November 18'' 2011'' has refused to consider pending applications under the schemes stated hereinabove. Being the unconstitutional decision and injustice on the part of the State Government of Uttar Pradesh'' and for getting equal protection of law of land'' Company has preferred a Writ petition bearing no.12710/2011 / Misc. Bench dated 17.12.2011 at Honorable High Court of Allahabad'' Lucknow Bench'' Uttar Pradesh'' and the Honorable High Court has restrained the Govt'' from realisation of the taxes and the case is pending for final order. The total operational profit includes Rs. 3101.11 Lacs (Previous year Rs. 1753.89 Lacs) of freight subsidy which is receivable and subject to the decision of Honorable High Court.

9 License Agreement: Company has entered into a License Agreement dated 30th March'' 2013 with Gallantt Udyog Limited (Licensor) and pursuant to the agreement'' the Company has been granted leave and license by the Licensor to occupy'' use'' run and operate the Flour Mill unit of the Licensor located at 60 KM Stone'' Gorakhpur-Lucknow Highway'' Sabdaiyan Kalan'' Basti District of Uttar Pradesh with a factory and other utilities along with building structures commonly known as Basti Flour Mill of Gallantt Udyog Limited established in the year 2002 having present production capacity at 72''000 M.T. per annum (hereinafter referred to as "Basti Flour Mill"). Terms and conditions and particulars have been clearly embodied in the said agreement. Company has complied with the requisite formalities for the above license agreement.

10 Company has purchased Steam Coal from various parties on High Sea Sale Purchase basis. Based on the specification of the coal so imported'' Company has assumed and considered coal so imported as a steam coal'' however'' vide its various letters issued'' by Directorate of Revenue Intelligence'' Kolkata (DRI) has stated to the Company that Coal purchased on HSS basis fall under the category of Bituminous Coal. Import Duty on Steam coal attracts at 1% whereas import duty on Bituminous coal is 11%. (Including Cenvatable duty 6%). As per the contention of the DRI the Company is required to pay additional customs duty amounting to Rs. 4.89 Crores. Company has made provision in the Books of Accounts for the above sum and liabilities have been created thereby. Simultaneously'' Company has also provided for credit of CENVAT in the books of accounts amounting to Rs. 2.93 Crores.

11 A proposal of Merger of Gallantt Udyog Limited with the Company : At their meeting held on 30th March'' 2013 Board of Directors of the Company has proposed to amalgamate Gallantt Udyog Limited with the Company with effect from Transfer Date 01.04.2013 whereby the identity of both Companies would be blended into one single company. However'' shape'' manner and other things shall be decided by the Board of Directors in due course.

12 Inspection under Section 209A of the Companies Act'' 1956 : Office of the Regional Director'' East'' Ministry of Corporate Affairs (hereinafter referred to as "RD Office" had initiated inspection of Books of Accounts and other statutory records of the Company pursuant to the provisions of Section 209A of the Companies Act'' 1956. Contravention of few provisions of Companies Act'' 1956 have been revealed in the inspection report of the Officer of the RD Office. Company is in the process of making good the contravention and offences are under process of compounding under Section 621A of the Companies Act'' 1956.

13 Rights'' preferences and restrictions attached to equity shares : The Company has a single class of equity shares with par value of Rs. 10/- per share. Accordingly'' all equity shares rank equally with regard to dividends and share in the Company''s residual assets. The equity shareholders are entitled to receive dividend as declared from time to time. The voting right of an equity shareholder on a poll (not on show of hands) are in proportion to its shares of the paid up equity capital of the Company. 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 the proportion to their shareholdings. During the year ended 31st March'' 2013'' the amount per share dividend recognised as distributions to equity shareholders was Paisa 50. The total dividend appropriation for the year ended 31st March'' 2013 amounted to Rs. 17''007''134/- including corporate dividend tax of Rs. 2''373''881. The above appropriation of Dividend also includes Rs. 1''250''000/- as dividend and Rs. 202''781/- as dividend tax on FCD'' converted into Equity Shares on 25.05.2013.

14 Previos year figures have been regrouped and reclaasified wherever nacessary to faciliate comparison with current year figures.

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Mar 31, 2012

1.1 Of the above 8100208 Equity share (Net) (P.Year 8100208 Equity Share) were issued as fully paid-up under Initial Public Offer.

1.2 Disclosure regarding the Shares Issued for consideration other than cash for last five years

The Company, during the past years, undertook various Schemes including Merger of General Investment Division of Gallantt Udyog Limited and Merger of Other Seven Companies with the Company. Further, the Company has concluded Bonus Issue of Equity Shares. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon'ble Calcutta High Court, the Company, during the respective years, recorded all necessary accounting effects, along with requisite disclosure in the notes to accounts, the cumulative effects of the Schemes in case of Equity Share Capital of the Company due to allotment of equity shares as fully paid up without payment being received in cash have been disclosed herein below.

1.3 During the year the Company has allotted 2500000, 0% Fully Convertible Debentures of Rs. 10 each at a premium of Rs. 150.00 each convertible in to Equity shares within a period of 18 months from the date of allotment in the ratio of 1:1.

a) Term loan include Corporate Loan of Rs 24.68 Crores

b) Current Portion of Loan have been grouped under ''current maturity of long term debt'' (refer note 10)

c) Term of repayment for secured borrowing

i) Term Loan from State Bank of India amounting to Rs. 70 Crores sanctioned on 20.06.2008 repayable in Twenty Four quarterly installments of Rs 2.92 crores each commencing from F.Y.2011 out of which Seven installments amounting to Rs 20.44 crores has been paid upto 31.03.2012 & Installment of March Quarter 2012 of Rs 2.92 crores has been paid on 09.04.2012.

ii) Term Loan from State Bank Patiala amounting to Rs. 30 Crores sanctioned on 23.09.2008 repayable in Twenty Four quarterly installments of Rs. 1.25 crores each commencing from F.Y.2011 out of which Seven installments amounting to Rs. 8.75 crores has been paid upto 31.03.2012 & Installment of March Quarter 2012 of Rs. 1.25 crores has been paid on 25.04.2012.

iii) Term Loan from State Bank Mysore amounting to Rs. 24 Crores sanctioned on 11.10.2008 repayable in Twenty Four quarterly installments of Rs. 1.00 Crore each commencing from F.Y. 2011 out of which Seven installments amounting to Rs. 7.00 Crores has been paid upto 31.03.2012 & Installment of March Quarter 2012 of Rs 1.00 Crore has been paid on 25.04.2012.

iv) Corp Loan from State Bank of India amounting to Rs. 18 Crores sanctioned on 01.12.2011 repayable in Twelve quarterly installments. First five of Rs. 85 lakh and remaining Seven of Rs. 1.96 Crores each commencing from 01.01.2012 out of which one installment amounting to Rs. 85 lakh has been paid on 30.01.2012

v) Corp Loan from State Bank of Patiala amounting to Rs. 8.00 Crores sanctioned on 01.12.2011 repayable in Twelve quarterly installments. First Five installment of Rs. 37.50 lakh and remaining Seven installment of Rs. 87.50 lakh each commencing from 01.01.2012 out of which one installment amounting to Rs 37.50 lakh.

2.1 The company has not received any intimation from 'suppliers' regarding status under the Micro, Small and Medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the yearend together with the interest paid/payable as required under the said Act have not been furnished.

Advance from customer includes Rs 1775.00 Lakhs from 6 parties with whom neither any sales nor any written agreements for sale has been made.

** 1) In the year 2009-10 credit of govt Subsidy received from PICUP on 31.03.2010, but while calculating depreciation for the year 2009-10 credit of this in fixed assets was not considered resulting charging of excess depreciation amounting Rs 32742

2) In the year 2010-11 depreciation on plant & Machinery (Sponge Iron) a Continuous Process Plant was charged wrongly @4.75% instead of 5.28% resulting in short charging of depreciation of Rs 1386376

3) Power Plant Unit of the Company commenced its operation w.e.f 31.07.2011

3.1 Balance with bank in clues unclaimed dividend of Rs9930

3.2 Fixed Deposit with bank include deposit of Rs. 1720986 (previous year Rs. 2015607) with maturity of more than 12 months.

4.1 Other Advances includes advances to sundry creditors, subsidy receivable from PICUP of Rs. 261,347,861 and Abhijeet New India Cement Pvt ltd.of Rs 130,000,000 being receivable on account of sale of land rights.

4.1 Profit on sale of long term investment had been arrived on sale of quoted shares in F.Y. 2010-11

4.2 Commission Received from Jindal Steel & Power Limited of Rs. 49,718,000 for procurement of Material for them. And Rs. 129,580,000 from Abhijeet New India Cement Pvt Ltd, on account of profit of sale of rights on land.

5.1 As per Accounting Standard 15 "Employee Benefits" the disclosures as defined in the A.S. are given below : Defined Contribution Plans

Contribution to Defined Contribution Plans, recognized as expense for the year is as under:

Employer' contribution to Provident Fund Rs. 611,593

Employer' contribution to ESIC Rs. 475,515

Defined Benefit Plans

The Employee' gratuity fund scheme managed by a Life Insurance Corporation of India is a defined benefit Plan.

6 PRIOR PERIOD EXPENSES

i. In the year 2009-10 credit of Govt Subsidy received from PICUP. on 31.03.2010, but while calculating depreciation for the year 2009-10 credit of this in fixed assets was not considered resulting charging of excess depreciation amounting Rs. 32742

ii. In the year 2010-11 depreciation on plant & Machinery (Sponge Iron) a Continuous Process Plant was charged wrongly @4.75% instead of 5.28% resulting in short charging of depreciation of Rs 1386376

a) Contingent liabilities not provided for in respect of: Guarantee given by the bank on behalf of the Company to

Purvanchal Vidyut Vitran Nigam for Electricity Load Sanction. 292.07 150.00

Guarantees given by the bank on behalf of the Company to

Uttar Pradesh Pollution Control Board for NOCs. 2.00 12.00

b) Estimated amount of contracts remaining to be executed on capital account is Rs. 177.14 lacs.

During the year the company has paid Rs. 34,000.00 against sitting fee to the directors. The Company has not given any perquisite to its directors during the year.

(A) Primary Segment (By Business Segment):

The Company is engaged in the business of production of Iron, Steel & Wheat Products. The Company has two reportable business segments i.e. Steel and Agro which have been identified in line with the A.S. -17 on "Segment

Reporting". Information about Primary Segment is as follows :

(B) Secondary Segment (By Geographical Segment):

The Secondary Segment is based on geographical demarcation i.e. India & Rest of the World. There is no reportable segment under above category

7 Impairment of Assets :

Pursuant to Accounting Standard (AS 28)-Impairment of Assets issued by Institute of Chartered Accountant of India, the Company assessed its fixed assets for impairment as at March 31, 2012 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of accounts.

8 Disclosure as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 :

The company has not received any intimation from "suppliers" regarding status under the Micro, Small and medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished.

9 Sundry Creditors include Rs. Nil (Previous Year Rs. Nil) due to Small Scale industrial undertaking to the extent such parties have been identified from the available documents / information.

10 Balance of the Sundry Debtors, Creditors, Loans and advances are subject to confirmation from respective parties.

11 "As per Government Order of State Government of Uttar Pradesh the company is eligible for interest free loan of equivalent amount of VAT liability paid for 15 years and which shall be re-payable after 15 years. The company has claimed Rs. 2833.36 lacs up to 31st March 2012 (upto previous year Rs. 1517.55 Lacs) on account of Interest Free Loan to State Government of Uttar Pradesh. Out of total claim of Rs. 2833.36 lacs, Rs. 953.96 lacs has not been deposited to Commercial Tax department in accordance with an order of Honorable High Court of Allahabad in writ petetion no. 8886/2011, 12710/2011 and 2067/2012. State Government has vide order no E-6-534/10-2011dated 18/11/2011has refused to consider pending applications under the schemes and company has obtained stay against payment of taxes from Honorable High Court Allahabad, Luck now Bench, accordingly company has not deposited VAT amounting to Rs. 953.36 Lacs which has been shown as Current Liability in the books of accounts as on 31.03.2012 further company have to receive Rs. 1879.40 lacs from State Government on account of Interest Free Loan and this has not been provided in books."

12.1 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment, infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. Company has claimed for Rs. 11621.57 lacs against the capital investment made up to 31st July 2011. The incentive received of Rs. 2428 lacs has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs. 9193.57 lacs in the books.

12.2 As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 1st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses up to maximum of 5% of the railway freight. During the year company has provided an amount of Rs. 1753.89 lacs ( Previous year Rs. 859.59 lacs), which has been adjusted with freight paid on Iron Ore in Statement of Profit Loss and shown as Advance recoverable in Balance sheet. The total amount receivable against the freight subsidy as on 31.03.2012 was Rs. 2613.48 lacs. State Govt. Vide G.O. no. 1674/77-6-11-10/(Tax) 04 T.C.-12 dated November 18, 2011,has refused to consider pending applications under the schemes stated hereinabove. Being the unconstitutional decision and injustice on the part of the State Government of Uttar Pradesh, and for getting equal protection of law of land, our Company has preferred a Writ petition bearing no.12710/2011 / Misc. Bench dated 17.12.2011 at Honorable High Court of Allahabad, Luck now Bench, Uttar Pradesh, and the Honorable High Court has restrained the Govt. from realization of the taxes and the case is pending for final order. The total operational profit includes Rs.1753.89 Lacs (Previous year Rs. 859.59 lacs) of freight subsidy which is receivable and subject to the decision of Honorable High Court.

13 Adjustment of subsidies etc under the heading 'Fixed Assets' as on March 31, 2012 includes Rs. 2428.00 lacs received from State Government of Uttar Pradesh and Rs. 1251.97 lacs on account of duties and taxes.

14 During the year the company has transferred Rs. 6.23 lacs from administrative expenses to pre-operative expenses pending capitalization.

15 Expenses under head office building to the tune of Rs 186.143 lacs has been incurred on account of construction of office building at Purdilpur, Bank Road Gorakhpur, U.P. The said building is constructed on a piece of land admeasuring 16000 sq. feetjointly owned by Gallantt Ispat Ltd. (25% share ) and Chandra Prakash Agarwal & Sons HUF (75% Share). On the basis of Agreement between both the parties, Commercial Building comprising of Ten Floors (inclusive of ground and basement floors for common use) has been constructed and as per the Agreement between the parties Seventh and Eight Floors area is being possessed, owned and used by Gallantt Ispat Ltd.

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Mar 31, 2011

1. Contingent Liabilities:

a. Contingent liabilities not provided for in respect of:

(Rs. in Lacs)

Description 2010-2011 2009-2010

Guarantee given by the bank on behalf of the Company to Purvanchal Vidyut Vitran Nigam for Electricity Load Sanction. 150.00 150.00

Guarantees given by the bank on behalf of the Company to Uttar Pradesh Pollution Control Board for NOCs. 12.00 10.00

Guarantees given by the bank on behalf of the Company to Gorakhpur Industrial Development Authority. - 14.91

Claims not acknowledged as debts (Amount paid to Commercial Tax Department, UP) 24.82 11.14

b. Estimated amount of contracts remaining to be executed on capital account is Rs. 13780.80 lacs.

2.1.(a) Primary Securities:

i) Term Loans:

(a) First Pari pasu charge over all the borrower's fixed assets (Present & Future).

(b) Second Pari pasu charge over all the borrowers' current assets including Debtors and Stock etc.

(c)Corpoarte& Personal Guarantee

Personal Guarantee of the Sri C.P Agarwal, Sri Prem Prakash Agarwal and Sri Nitin M. Kandoi.

ii) Cash credit:

(a) Hypothecation of entire current assets of the company (present and future) consisting of raw material, Sip finished goods, store & spares and book debts.

(b) Extension of First Pari pasu charge over all the borrower's fixed assets (Present & Future).

(c)Corpoarte& Personal Guarantee

Personal Guarantee of the Sri C.P Agarwal, Sri Prem Prakash Agarwal and Sri Nitin M. Kandoi.

6. Impairment of Assets:

Pursuant to Accounting Standard (AS 28)-lmpairment of Assets issued by Institute of Chartered Accountant of India, the Company assessed its fixed assets for impairment as at March 31, 2011 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of accounts.

8. During the year the company concluded its Initial Public offering through which 81,00,208 Equity Shares (including 14,00,000 Equity Shares issued to promoters and Promoers group, contribution proceeds of which Rs. 7,00,00,000/- had been brought in before opening of the IPO) of Rs. 10/-each at a premium of Rs. 40/- each issued by the company to Qualified Institutional Buyers, Non Institutional Investors and to Retail Individual Investors which closed on 24th September, 2010. The Equity Shares of the Company has been listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited ("Stock Exchanges") and trading in Equity Shares started from 11th October, 2011.

11. Disclosure as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 :

The company has not received any intimation from "suppliers" regarding status under the Micro, Small and Medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished.

12. Sundry Creditors include Rs. Nil (Previous Year Rs. Nil) due to Small Scale industrial undertaking to the extent such parties have been identified from the available documents / information.

13. Balance of the Sundry Debtors, Creditors, Loans and advances are subject to confirmation from respective parties.

14. Other Receivable under the head Loans & Advances includes Excise duty and service tax of Rs. 576.11 Lacs and VAT receivable of RS163.35 Lacs.

15. As per Government Order of State Government of Uttar Pradesh the company is eligible for interest free loan of equivalent amount of VAT liability paid for 15 years and which shall be re-payable after 15 years. The company has claimed Rs. 1517.55 Lacs up to 31st March 2011 (upto previous year Rs. 502.76 Lacs) on account of this tax liability the amount is yet to be received. However no provision of this amount has been made in the books.

16 (a) As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 01st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives i.e. Capital investment subsidy @ 20% of fixed capital investment, infrastructure subsidy @ 10% of total fixed capital investment and 5% additional capital subsidy being the first unit in Purvanchal region. During the year the company has received Rs. 2428.00 Lacs of such incentives against the claim made by company of Rs. 7589.33 Lacs of the capital investment made upto 31st October 2010. The incentive received has been credited in fixed assets in the ratio of capital investment made. No provision has been made for the unrealized claim of Rs. 5161.33 Lacs in the books.

(b) As per incentive scheme of State Government of Uttar Pradesh vide Government Order No. 1502/77-6-2006-10 tax/04 dated 01st June 2006 and which have been elaborated in Government Order No. 2941/77-6-2006-10 tax/04 dated 30th November 2007 and amended from time to time the company is eligible for incentives including freight subsidy on Iron Ore equivalent to the freight paid to Railway and local handling expenses upto maximum of 5% of the railway freight. During the year company has provided an amount of Rs. 859.59 Lacs, which has been adjusted with freight paid on Iron Ore in Profit Loss account and shown as Advance recoverable in Balance sheet.

17. During the year the company has earned Rs. 17.34 Crore from sale of right in land. Right on land was acquired from the original sellers through negotiation and on terms and conditions as embodied in the agreements entered into with them and afterwards Company has sold the right on land so acquired.

18. Related Party Disclosures (As identified by the Management): Name of Related Parties and Description of Relationship.

I. Associate Company & Firm Gallant Udyog Ltd

Gallantt Metal Ltd

Chandra Prakash Agrawal & Sons (HUF)

Gallantt Landmark (Properitor C.P.Agrawal & Sons HUF) Prem Prakash Agrawal HUF

II. Key Managerial Personnel Mr. Chandra Prakash Agrawal

Mr. Prem Prakash Agrawal

Mr. Nitin Kandoi

III. Relatives of Key Managerial Personnel Mr. Mayank Agrawal

Mr. Ashutosh Agrawal

19. Adjustment of subsidies etc under the heading 'Fixed Assets' as on March 31, 2011 includes Rs. 2428.00 Lacs received from State Government of Uttar Pradesh and Rs. 591.96 Lacs on account of duties and taxes.

20. During the year the company has transferred Rs. 31.83 Lacs from administrative expenses to pre-operative expenses pending capitalisation.

Previous year figures have been regrouped and reclassified wherever necessary to facilitate comparison with Current year figures.

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Mar 31, 2009

1.1 Contingent liabilities:

Contingent liabilities not provided for in respect of:

(Rs. In Lacs)

Description 2008-2009 2007-2008

Guarantee given by the Company in favour 150.00 NIL

of M/s Vidyut Vitran Nigam Limited, Gorakhpur

Guarantee given by the Company in favour 14.91 14.91 of Gorakhpur Industrial Development Authority

Claims not acknowledged as debts 4.18 NIL (Amount paid to Commercial Tax Department, UP)

1.2 Securities given against Term Loan:

(a) First Pari pasu charge on all the immovable and movable properties of the Project, both present and future.

(b) Second charge on Pari- pasu basis on the current assets of the Company pertaining to the project.

(c) Personal Guarantee of the Sri C.P Agarwal, Sri Prem Praksh Agarwal, Sri Nitin M. Kandoi

1.3 Impairment of Assets:

Pursuant to Accounting Standard (AS 28)-Impairment of Assets issued by Institute of Chartered Accountant of India, the Company assessed its fixed assets for impairment as at March 31, 2009 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of accounts.

1.4 Balance of some of the Sundry Debtors, Creditors, and Loans & Advances are subject to confirmation from respective parties.

1.5 Related Party Disclosures (As identified by the Management). (A) Name of Related Parties and Description of Relationship.

I. Associate Company M/s Gallant Udyog Ltd

M/s Gallantt Metal Ltd

II. Key Managerial Personnel Mr. Chandra Prakash Agrawal

Mr. Prem Prakash Agarwal Mr. Nitin Kandoi

III. Relative of Key Managerial Person Mr. Mayank Agarwal

Mr. Ashutosh Agarwal

1.6 Disclosure as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006.

The company has not received any intimation from "suppliers" regarding status under the Micro, Small and Medium Enterprises Development Act 2006 and hence disclosures, if any, relating to amount unpaid as at the year end together with the interest paid/payable as required under the said act have not been furnished.

1.7 (a) Pursuant to the scheme of arrangement approved by the Honble High Court at Kolkata vide its order dated April 5 % 2009, the companies namely, Zircon Commercial Private Limited, D. R. Advisory Services Private Limited, Mantra Vanijya Private Limited, Dynasty Sales Private Limited, Sridhar Tie-Up Private Limited, Sanhati Trade-Link Private Limited and Mrinmoyee Sales Private Limited (all the Transferor Companies) have been amalgamated with GALLANTT ISPAT LIMITED (the Transferee Company)with effect from 1st April, 2008. The certified copy of the aforesaid order has been filed with the Registrar of Companies, West Bengal on 29th April, 2009 and thus the scheme has become operational. Accordingly all the assets and liabilities of the transferor companies as existing on 1st April, 2008 have been vested with the company at book value.

(b) Pursuant to the scheme of arrangement, 450000 equity shares shall be allotted to the equity shareholders of the erstwhile transferor companies and accordingly Rs. 45,00,000/- has been transferred to Share Capital Suspense Account (Pending Allotment) and Rs.43,56,85,082/- has been credited to Security Premium Account being excess of Assets over liabilities (including share capital suspense) taken over.

1.8 Sundry Creditors include Rs. Nil (Previous Year Rs. Nil) due to Small Scale industrial undertaking to the extent such parties have been identified from the available documents / information.

1.9 This is the first year of Company Operation. Therefore previous year figure in Profit & Loss Account has not been given.

1.10 Previous year figures have been regrouped and reclassified wherever necessary.

1.11 Schedule A to S form an integral part of Balance Sheet as at 31st march, 2009 and Profit & Loss Account for the year ended on 31 st March, 2009.