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Notes to Accounts of Hemang Resources Ltd.

Mar 31, 2015

1. "The Company has two types of shares referred to as Equity shares having a face value of R 10/- each & Preference Shares having a face value of R100/- each."

2. The Equity share holder is eligible for one voting Right per share held.

3. Preference Shares hold preferential right of Dividend at fixed rate of 2% and preferential repayment of principal amount at the time of Redemption. Due for redemption during the Financial Year 2021-22.

4. In the F.Y. 2011-12 The Company had issued 9,900,000, Fully paid up Bonus Equity Shares of R 10/- each in the ratio of 3:1.

5. Shareholder holding more than 5% of shares are :-

6. Related Party (AS- 18)

Certain transaction on account with concern / Companies of the group has taken place during the year. Details as required under Accounting Standard -18 "Related Party Disclosure" prescribed under Companies (Accounting Standard) Rules, 2006 is as under :-

Related Party Disclosures:

As per Accounting Standard 18, the disclosures of Transactions with the related parties are given below:- (i) List of Related Parties where control exists and Related Parties with whom transactions have taken place and relationships:

Sr. Name of Related Party Relationship No.

1 S. S. Bhatia

2 B. L. Kakrecha

3 M. S. Balaji Rao Key Management Personnel

4 Komal Thakkar

5 Ramandeep Kaur Bhatia

1 G S Bhatia Relatives of Key Management Personnel

1 Asian Natural Resources (India) Limited

2 Bhatia Coal Washeries Limited

3 Bhatia Coke & Energy Limited

Significant influence of KMP on other Enterprises

4 Bhatia Global Trading Limited

5 IOF Pte Limited

6 Pt. Bhatia International

b. Collector of Stamp, Khargaon (MP) raised demand u/s. 33 read with section 48(b) of the Indian Stamp Act for Stamp Duty of R 10.62 Lacs against the Sand Mine Contract allotted to the Company for Maheshwar Group by State Mining Corporation Limited, Bhopal. The Company has filed an appeal before the court of Hon'ble Revenue Board, Gwalior (MP) for setting aside the impugned order so passed by Collector of Stamp. The Management is of the opinion that no provision is required for such liability. During The year 2014-15 the company has deposited R. 5.34 lacs in high court.

c. An Appeal is pending before Joint Commissioner against the demand of R 36.67 Lacs for A.Y. 2006-07 by the Deputy Commissioner of Commercial Tax Surat. The Management is of the opinion that no provision is required for such liability.

d. The Deputy Commissioner of Sales Tax (VAT Adm.) Chandrapur has issued Penalty order of R 0.28 Lacs under section 61 (2) of MVAT Act towards late submission of VAT Audit report for the financial year 2007-08. The Company did not accept the above demand and filed an appeal before Joint Commissioner of Sales Tax (Appeal), Nagpur. The appeal is pending before the Joint Commissioner. Meanwhile, The Company has paid sum of R 0.10 Lacs, being part payment towards pending demand, which is pending for decision.

e. The Assistant Commissioner of Sales Tax, has passed Assessment order on dated 31.07.2014 and issued demand notice for R 52.70 Lacs towards Sales Tax and Interest U/S 30 (3) of MVAT for F.Y 2010-11. The Company has paid sum of R 5.00 Lacs being part payment of pending demand , which is pending for decision.

f. Income Tax Department has raised a demand of R 0.11 Lacs for the assessment year 1996-97. The Company has filed an appeal before appropriate authorities against above demand. The Management is of the opinion that no provision is required for such liability.

g. The Company has received orders from Custom department for differential duty on the coal, considering the "Steam Coal" imported by Company as "Bituminous Coal" of R 182.30 Lacs. The Company has not accepted the above orders and is arranging to file appeal.

h. The Company has received Show Cause Notices (SCN) from custom department for differential duty on the coal, considering the "Steam Coal" imported by company as "Bituminous Coal" of R 52.74 Lacs. The company has filed reply for above show cause notices. i. The Customs department has passed order and demanded differential duty, Interest and penalty on the ground of fake certificate of country of origin was produced based on which benefit of exemption has taken of R 81.91 Lacs.

The Company has not accepted the above order and arranging to file appeal. The Company has already paid Bank Guarantee of R 75.00 Lacs with self-renewal clause.

7. Considering the Market scenario, In previous year Board of directors of the company has proposed for increase in the period of redemption of 2% Cumulative Preference Shares from 7 year to 14 year. Pursuant to Section 106 of the Companies Act, 1956, all (100%) preference shareholders have consented in writing vide their letter dated 15/02/2014 for increase in the redemption period from 7 years to 14 years.

8. Company has created Capital Redemption Reserve out of the retained earnings of R 457.09 Lacs (Previous year R 399.95 Lacs) for the redemption of the 2% Cumulative Redeemable Preference Share. The allocation is in proportion of the Preference Share Capital to the redemption period.

9. During the year the company has booked an amount of R 844.72 Lacs in Selling & Distribution Expenses, which includes an amount of R 610.77 Lacs against rate and quality deduction which was made by customers in earlier years, but the same was disputed by the company and not accepted. However looking to the long term association and future business relation with customer, the Company has accepted those deductions and charged to profit & Loss Account.

10. The Company had allotted the Sand Mines contract for Maheshwar Group by State Mining Corporation Ltd., Bhopal for the period of 01.02.2004 to 31.01.2005. As per terms of the Contract, Company has deposited R 72.15 Lacs as Earnest Money. The company continued mining of sand till October 10, 2004. The Company had received the notice from Collector, Khargone on October 11, 2004 to stop the mining work from October 13, 2004. Due to said notice, the Company had suffered and not fulfilled the conditions of said contracts. The State Mining Corporation had forfeited the amount of Earnest money deposited by the Company. The Company had no choice except to file the case in Arbitration Tribunal. The case had filed with Arbitration Tribunal but Tribunal had issued the award in favor of State Mining Corporation Ltd., Bhopal. The Company has filed an appeal with Session Court, Bhopal for setting aside the impugned order so passed by Arbitration Tribunal, which has also rejected on August 08, 2007. The Company has filed a writ petition with Hon'ble High Court of Jabalpur on September 25, 2008 against the order of Session Court, Bhopal. The writ petition filed by the Company has been admitted and is pending for hearing.

The Management is of the opinion that no provision is required for such amount shown as Deposit with MPSMCL in the Balance Sheet. As soon as the case will be listed and argued finally, order will be in favor of the Company.

11. The Company is in process of obtaining information from its suppliers/vendors and service providers and Company has written confirmation letters to parties for disclosure as required under Micro, Small and Medium Enterprises Development Act, 2006. As per information to the extent available with the Company, there are no Micro, Small and Medium Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at 31 March, 2015.

12. During the earlier years, the Company has made sales of R 7,483.87 Lacs against 'C' Form, for which 'C' Forms amounting to R 7181.84 Lacs has been received from the customers. Based on the past experience, the management is confident to receive balance 'C' Forms from the customers till the finalization of assessment and therefore it has not been treated as Contingent Liability.

13. The balances of Sundry Debtors, other deposits and advances are subject to confirmation from respective parties. Letter seeking confirmations have been sent by the Company but some parties are still to confirm the balances. In view of confirmation not having been received from all customers, the balances under these heads have been shown as per the books of accounts and are subject to reconciliation, if any. However, in the opinion of the management, the respective assets have been shown in the Balance Sheet are according to their realizable value. The adjustment, if any on reconciliation which in the opinion of the management would not be material, would be made once the accounts are fully reconciled.

Sundry Debtors amounting to R1,346.98 Lacs are outstanding more than 180 days. The management is of the opinion that whole amount will be recovered from parties so that the company has not created any provision on such debtor.

14. The previous year figures are regrouped and rearranged wherever necessary, in order to make it comparable with current year.


Mar 31, 2014

OTHER NOTES ON FINANCIALS STATEMENTS

1.1 Prior Period Adjustments includes prior period expenses of Rs. 0.41 million (P.Y. Rs. 0.04 millions) netted off with excess provision for income tax and other expenses, made in previous year, of Rs. 0.34 million (P.Y. Rs. 0.80 Million) written off during the year.

1.2 Related Party (AS- 18)

Certain transaction on account with concern / Companies of the group has taken place during the year. Details as required under Accounting Standard -18 "Related Party Disclosure" prescribed under Companies (Accounting Standard) Rules, 2006 is as under :-

Related Party Disclosures:

As per Accounting Standard 18, the disclosures of Transactions with the related parties are given below:- (i) List of Related Parties where control exists and Related Parties with whom transactions have taken place and relationships:

S. No. Name of Related Party Relationship

1 Mr. Surinder Singh Bhatia Key Management Personnel

2 Mrs. Gurvinder kaur Bhatia

3 Mr. Harnishpal Bhatia

4 Ms. Rupal Preet Kaur Bhatia

5 Mr. Gurvinder Singh Bhatia Relatives of Key Management Personnel

6 Mr. Manjeet Singh Bhatia

7 Mr. Jaswinder Singh Bhatia

8 Mr. Kripal Singh Bhatia Ji

9 Mrs. Harbans Kaur Bhatia

10 Asian Natural Resources (India) Limited

11 Bhatia Port & Infrastructure Ltd.

12 BCC Cargo

13 BCC Enterprises (India) Limited

14 Isshar Overseas Limited

15 SSB Land Developers Private Limited

16 Bhatia Entertainment Private Limited

17 Bhatia International Pte Ltd

18 Bhatia Global Trading Limited

19 Bhatia Coke & Energy Limited Enterprises over which Key Management

20 BIL Holding Pte Ltd Personnel or Relatives of KMP are able to

21 BCC Estates Pvt Ltd exercise Significant influence

22 Bhatia OSL Washeries & Minerals limited

23 Bhatia Professional Education Institutions (Indore) Ltd

24 Bhatia Sons (India) Ltd.

25 Reliance Services and Consultants Private Limited

26 IOF Pte Ltd

27 Pt. Bhatia International, Indonesia

28 Bhatia Coal Washeries Ltd.

29 Bhatia Energy Limited

30 GSB Real Estates Pvt Ltd

2.0 Segment (AS - 17)

The Company''s operations comprises of Trading of Coal and Infrastructure/ Trading of Land. Reporting of these segments has been done as required in Accounting Standard - 17 "Segment Report" issued by Companies (Accounting Standard) Rules, 2006.

Segment Reporting

Segment Information:

The company has identified two reportable segments viz. Coal Trading Division and Infrastructure division reported taking into account nature of products and services, the different risks and return and the internal reporting systems. The accounting policies adopted for segment reporting are in line with following additional policies for segment reporting.

(a) Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and Expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable".

(b) Segment Assets and Segment Liabilities represent Assets and Liabilities in respective segments. Investments, Tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".

2.1 Derivative Instruments:

The Company uses forward exchange contracts and currency options to hedge its exposure in foreign currency. The information on Derivative Instruments is as follows:

2.2 Contingent Liabilities not provided for:

a. (Rs. in Millions)

S. No. Contingent Liability not provided for: 31.03.2014 31.03.2013

i. Bills Discounted with Banks. 208.56 187.39

ii. Bank Guarantees 11.55 -

b. Collector of Stamp, Khargaon (MP) raised demand u/s. 33 read with section 48(b) of the Indian Stamp Act for Stamp Duty of Rs. 1.06 Million against the Sand Mine Contract allotted to the Company for Maheshwar Group by State Mining Corporation Limited, Bhopal. The Company has filed an appeal before the court of Hon''ble Revenue Board, Gwalior (MP) for setting aside the impugned order so passed by Collector of Stamp. The Management is of the opinion that no provision is required for such liability.

c. An Appeal is pending before Joint Commissioner for the demand raised by Deputy Commissioner of Commercial Tax Surat for the F.Y. 2006-2007 of Rs. 3.67 Millions. The Management is of the opinion that no provision is required for such liability.

d. The Deputy Commissioner of Sales Tax (VAT Adm.) Chandrapur has issued Penalty order of Rs.. 0.03 Million under section 61 (2) of MVAT Act towards late submission of Audit report for the financial year 2007-08. The Company did not accept the above demand and filed an appeal before Joint Commissioner of Sales Tax (Appeal), Nagpur. The appeal is pending before the Joint Commissioner. Meanwhile, The Company has paid sum of Rs. 0.01 Million, being part payment towards pending demand, which is pending for decision.

e. The Assistant Commissioner of Sales tax Chandrapur has issued demand notice of interest & penalty of Rs. 2.22 million due to wrongly adjusted refund relating to financial year 2008-09, with VAT liability of financial year 2009-10. The company has not accepted the order and filed writ petition before high court bench of Nagpur. The appeal is pending before high court.

f. Income Tax Department has raised a demand of Rs. 0.11 Million for the assessment year 1996-97. The Company has filed an appeal before appropriate authorities against above demand. The Management is of the opinion that no provision is required for such liability.

g. Income Tax Department has raised demand of Rs. 1.26 Million for the Assessment Year 2008-09 u/s 143(3)/147. The company has not accepted the above demand and filed an appeal before CIT (Appeals) against above order which is pending for decision.

h. Demand Notice from Deputy Commissioner of Customs, Jamnagar: The Customs department has passed demand notices under section 117 of the Customs Act, 1962 towards penalty for non-submission of original documents within time limit. The Company has not accepted the above order and filed an Appeal before the Commissioner Appeals, Jamnagar. Total three orders have been received for the penalty amounting to Rs. 0.07 million. One appeal of Rs. 0.04 million is pending and company is in process of filing appeal against remaining two orders.

i. Demand Order from Customs Department on Classification of Coal (Bituminous Coal): Company has received orders from custom department for differential duty on the coal, considering the "Steam Coal" imported by company as "Bituminous Coal" of Rs. 18.23 million. The Company has not accepted the above orders and is arranging to file appeal.

j. Show Cause Notice from Customs Department on Classification of Coal (Bituminous Coal): Company has received Show Cause Notices (SCN) from custom department for differential duty on the coal, considering the "Steam Coal" imported by company as "Bituminous Coal" of Rs. 4.58 million. The company has filed reply for above show cause notices.

2.3 Considering the Market scenario, Board of directors of the company has proposed for increase in the period of redemption of 2% Cumulative Preference Shares from 7 year to 14 year. Pursuant to Section 106 of the Companies Act, 1956, all (100%) preference shareholders have consented in writing vide their letter dated 15/02/2014 for increase in the redemption period from 7 years to 14 years

2.4 Company has created Capital Redemption Reserve out of the retained earnings of Rs. 39.99 million (Previous year Rs. 68.57 million) for the redemption of the 2% Cumulative Redeemable Preference Share. The allocation is in proportion of the Preference Share Capital to the redemption period. During the year, redemption period has been increased from 7 year to 14 year therefore the amount to Capital Redemption Reserve has been re-allocated accordingly.

2.5 The Company had allotted the Sand Mines contract for Maheshwar Group by State Mining Corporation Ltd., Bhopal for the period of 01.02.2004 to 31.01.2005. As per terms of the Contract, Company has deposited Rs.7.21 million as Earnest Money. The company continued mining of sand till October 10, 2004. The Company had received the notice from Collector, Khargone on October 11, 2004 to stop the mining work from October 13, 2004. Due to said notice, the Company had suffered and not fulfilled the conditions of said contracts. The State Mining Corporation had forfeited the amount of Earnest money deposited by the Company. The Company had no choice except to file the case in Arbitration Tribunal. The case had filed with Arbitration Tribunal but Tribunal had issued the award in favor of State Mining Corporation Ltd., Bhopal. The Company has filed an appeal with Session Court, Bhopal for setting aside the impugned order so passed by Arbitration Tribunal, which has also rejected on August 08, 2007. The Company has filed a writ petition with Hon''ble High Court of Jabalpur on September 25, 2008 against the order of Session Court, Bhopal. The writ petition filed by the Company has been admitted and is pending for hearing.

The Management is of the opinion that no provision is required for such amount shown as Deposit with MPSMCL in the Balance Sheet. As soon as the case will be listed and argued finally, order will be in favor of the Company.

2.6 The Company is in process of obtaining information from its suppliers/vendors and service providers and Company has written confirmation letters to parties for disclosure as required under Micro, Small and Medium Enterprises Development Act, 2006. As per information to the extent available with the Company, there are no Micro, Small and Medium Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at 31 March, 2014.

2.7 During the earlier years, the Company has made sales of Rs. 659.80 Million against ''C'' Form, for which ''C'' Forms amounting to Rs. 639.25 Million has been received from the customers. Based on the past experience, the management is confident to receive balance ''C'' Forms from the customers till the finalization of assessment and therefore it has not been treated as Contingent Liability.

2.8 The balances of Sundry Debtors, other deposits and advances are subject to confirmation from respective parties. Letter seeking confirmations have been sent by the Company but some parties are still to confirm the balances. In view of confirmation not having been received from all customers, the balances under these heads have been shown as per the books of accounts and are subject to reconciliation, if any. However, in the opinion of the management, the respective assets have been shown in the Balance Sheet are according to their realizable value. The adjustment, if any on reconciliation which in the opinion of the management would not be material, would be made once the accounts are fully reconciled.

Debtors amounting to Rs. 45.30 million are outstanding for rover 180 days which includes one debtor of Rs. 6.90 million against whom legal proceedings for recovery have been initiated by the company. The management is of the opinion that whole amount will be recovered from such party so that the company has not created any provision on such debtor.

2.9 The previous year figures are regrouped and rearranged wherever necessary, in order to make it comparable with current year.

1. The Company has two types of shares referred to as Equity shares having a face value of Rs.10/- each & Preference Shares having a face value of Rs.100/- each.

2. The Equity share holder is eligible for one voting Right per share held.

3. Preference Shares hold preferential right of Dividend at fixed rate of 2% and preferential repayment of principal amount at the time of Redemption. Due for redemption during the Financial Year 2021-22.

4. In the F.Y. 2011-12 the Company had issued 9,900,000, Fully paid up Bonus Equity Shares of Rs.10/- each in the ratio of 3:1.

5. Shareholder holding more than 5% of shares are :-


Mar 31, 2013

1.1 Prior Period Adjustments includes prior period expenses of 7 0.04 Millions (P.Y. f 1.52 Millions) netted off with prior period Incomes 7 (0.80) Millions (P.Y. 7 (0.02) Millions), includingRs. (0.41) as excess provision for Income Tax made in Previous years, now written off.

1.2 Preliminary expenses were treated as deferred revenue expenses & were proposed to be charged to Profit & loss Account in ten equal installments.

But in the Current year the Company has entirely written off Preliminary Expenses off 0.26 Millions as per Para 56 of Accounting Standard - 26 "Intangible Asset" issued under Companies (Accounting Standard) Rules, 2006.

1.3 Additional information required under Para (viii) of Part n of Revised Schedule VI to the Companies Act, 1956, is follows:

1.4 Related Party (AS-18)

Certain transaction on account with concern / Companies of the group has taken place during the year. Details as required under Accounting Standard -18 "Related Party Disclosure" issued by Companies (Accounting Standard) Rules, 2006, is as under:-

Related Party Disclosures:

As per Accounting Standard 18, the disclosures of Transactions with the related parties are given below:-

(i) List of Related Parties where control exists and Related Parties with whom transactions have taken place and relationships:

1.5 Contingent Liabilities not provided for:

(Rs. in Millions)

S. No. Contingent Liability not provided for:

31.03.2013 31.03.2012

i. Bills Discounted with Banks. 187.39 29.52

Bank Guarantees 0.00 0.00

b. Collector of Stamp, Khargaon (MP) raised demand u/s. 33 read with section 48(b) of the Indian Stamp Act for Stamp Duty ofRs. 1.06 Million against the Sand Mine Contract allotted to the Company for Maheshwar Group by State Mining Corporation Limited, Bhopal. The Company has filed an appeal before the court of Hon"ble Revenue Board, Gwalior (MP) for setting aside the impugned order so passed by Collector of Stamp. The Management is of the opinion that no provision is required for such liability.

c. An Appeal is pending before Joint Commissioner for the demand raised by Deputy Commissioner of Commercial Tax for the F. Y. 2006-2007 ofRs. 3.67 Millions. The Management is of the opinion that no provision is required for such liability.

d. The Deputy Commissioner of Sales Tax (VAT Adm.) Chandrapur has issued Penalty order ofRs. 0.03 Million under section 61 (2) of MVAT Act towards late submission of Audit report for the financial year 2007-08. The Company did not accept the above demand and filed an appeal before Joint Commissioner of Sales Tax (Appeal), Nagpur. The appeal is pending before the Joint Commissioner. Meanwhile, The Company has paid sum ofRs. 0.01 Million, being part payment towards pending demand, which is pending for decision.

e. Income Tax Department has raised a demand ofRs. 0.11 Million for the assessment year 1996-97. The Company has filed an appeal before appropriate authorities against above demand. The Management is of the opinion that no provision is required for such liability.

f. Income tax department had raised demand of Rs. 1.88 Million for the Assessment Year 2002-03,2004-05,2005-06 & 2006-07. These appeals have been decided by the Appellate Commissioner & Company has got partial relief. However, the orders giving effect to the Appellate commissioner''s orders are yet to be received; on receipt of the same, tax liability shall be provided, if necessary. The Income Tax Department had filed appeals for the Assessment Years 2005-06 & 2006-07 before the Appellate Tribunal. Meanwhile, the Income Tax Department has fully adjusted the pending demand against refund due to the Company for A.Y. 2009-10. Year wise details of pending demand, on giving effect to the orders of Appellate Commissioner.

1.6 Company transferred Rs. 11.43 Million (Previous year Rs. 11.43 Million) to Capital Redemption Reserve out of the retained earnings for the redemption of the 2% Cumulative Redeemable Preference Share, redeemable in 7 Years. The allocation is in proportion of the Preference Share Capital to the redemption period. This year being the 6th year.

1.7 The Company had allotted the Sand Mines contract for Maheshwar Group by State Mining Corporation Ltd., Bhopal for the period of 01.02.2004 to 31.01.2005. As per terms of the Contract, Company has deposited Rs. 7.21 million as Earnest Money. The company continued mining of sand till October 10,2004. The Company had received the notice from Collector, Khargone on October 11, 2004 to stop the mining work from October 13,2004. Due to said notice, the Company had suffered and not fulfilled the conditions of said contracts. The State Mining Corporation had forfeited the amount of Earnest money deposited by the Company. The Company had no choice except to file the case in Arbitration Tribunal. The case had filed with Arbitration Tribunal but Tribunal had issued the award in favor of State Mining Corporation Ltd., Bhopal. The Company has filed an appeal with Session Court, Bhopal for setting aside the impugned order so passed by Arbitration Tribunal, which has also rejected on August 08,2007. The Company has filed a writ petition with Hon''ble High Court of Jabalpur on September 25,2008 against the order of Session Court, Bhopal. The writ petition filed by the Company has been admitted and is pending for hearing.

The Management is of the opinion that no provision is required for such amount shown as Deposit with MPSMCL in the Balance Sheet. As soon as the case will be listed and argued finally, order will be in favor of the Company.

1.8 The Company is in process of obtaining information from its suppliers/vendors and service providers and Company has written confirmation letters to parties for disclosure as required under Micro, Small and Medium Enterprises Development Act, 2006. As per information to the extent available with the Company, there are no Micro, Small and Medium Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at 31 March, 2013.

1.9 During the year, the Company has made sales off 30.98 Millions against ''C Form, against which ''C Forms amounting to Rs. 15.05 Millions has been received from the customers. Based on the past experience, the management is confident to receive balance ''C Forms from the customers till the finalization of assessment and therefore it has not been treated as Contingent Liability.

1.10 Confirmation of amount due from Sundry Debtors and due to Sundry Creditors, deposits, loans & advances have been received from most of the parties and necessary adjustments, if any, have been made in the Books of Accounts.

1.11 The previous period figures are regrouped and rearranged wherever necessary, in order to make it comparable with current year.


Mar 31, 2012

1.1 Prior Period Adjustments includes Prior period Expenses of Rs. 1.52 Millions netted off with prior period Income of Rs. 0.01 Miillions.

1.2 Segment (AS - 17)

The Company's operations comprises of Trading of Coal and Trading of Land. Reporting of these segments has been done as required in Accounting Standard - 17 "Segment Report" issued by Companies (Accounting Standard) Rules, 2006. The segment report is enclosed separately.

1.3 Related Party (AS- 18)

Certain transaction on account with concern / Companies of the group has taken place during the year. As per details, which are elsewhere enclosed as required under Accounting Standard -18 "Related Party Disclosure" issued by Companies (Accounting Standard) Rules, 2006.

1.4 Contingent Liabilities not provided for:

( Rs. in Millions)

a.

S. No. Contingent Liability not provided for: 31.03.2012 31.03.2011

i. Bills Discounted with Banks. 29.52 51.61

ii. Bank Guarantees 7.74 -

b. Collector of Stamp, Khargaon (MP) raised demand u/s. 33 read with section 48(b) of the Indian Stamp Act for Stamp Duty of Rs. 1.06 Million against the Sand Mine Contract allotted to the Company for Maheshwari Group by State Mining Corporation Limited, Bhopal. The Company has filed an appeal before the court of Hon'ble Revenue Board, Gwalior (MP) for setting aside the impugned order so passed by Collector of Stamp. The Management is of the opinion that no provision is required for such liability.

c. Appeal pending before Joint Commissioner for the demand raised by Deputy Commissioner of Commercial Tax for the F.Y. 2006-2007 of Rs. 3.67 Millions. The Management is of the opinion that no provision is required for such liability.

d. Income Tax Department has raised a demand of Rs. 0.11 Million for the assessment year 1996-97. The Company has filed an appeal before appropriate authorities against above demand. The Management is of the opinion that no provision is required for such liability.

e. Income tax department had raised demand of Rs. 1.88 Million for the Assessment Year 2002-03, 2003-04, 2005-06 & 2006- 07. The Company had filed appeals before the appellate commissioner against above demand. During the year these appeals have been decided & Company has got partial relief. However, the orders giving effect to the Appellate commissioner orders are yet to received; on receipt of the same, tax liability shall be provided, if necessary . The company as well as the Income Tax Department have filed appeals for the Assessment Years 2005-06 & 2006-07 before the Appellate Tribunal. Meanwhile, the Income Tax Department has fully adjusted the pending demand against refund due to the Company for A.Y. 2009-10.

1.5 Company transferred Rs. 11.43 Million (Previous year Rs. 11.43 Million) to Capital Redemption Reserve out of the retained earnings for the redemption of the 2% Cumulative Redeemable Preference Share, redeemable in 7 Years. The allocation is in proportion of the Preference Share Capital to the redemption period.

1.6 The Company had allotted the Sand Mines contract for Maheshwar Group by State Mining Corporation Ltd., Bhopal for the period of 01.02.2004 to 31.01.2005. As per terms of the Contract, Company has deposited Rs. 7.21 million as Earnest Money. The company was continued in mining of sand till October 10, 2004. The Company had received the notice from Collector, Khargon on October 11.2004 to stop the mining work from October 13, 2004. Due to said notice, the Company had suffered and not fulfilled the conditions of said contracts. The State Mining Corporation had forfeited the amount of Earnest money deposited by the Company. The Company had no choice except to file the case in Arbitration Tribunal. The case had filed with Arbitration Tribunal but Tribunal had issued the award in favor of State Mining Corporation Ltd., Bhopal. The Company has filed an appeal with Session Court, Bhopal for setting aside the impugned order so passed by Arbitration Tribunal, which has also rejected on August 08, 2007. The Company has filed a writ petition with Hon'ble High Court of Jabalpur on September 25, 2008 against the order of Session Court, Bhopal. The writ petition filed by the Company had admitted. The management is of the opinion that no provision is required for such amount shown as deposit with MPSMCL in the Balance Sheet. As soon as case will be listed and argued finally, order will be in favor of the Company.

1.7 The previous period figures are regrouped and rearranged wherever necessary, in order to make it comparable with current year. Till the year ended March 31, 2011, the company was using pre-revised Schedule VI to the Companies Act 1956, for preparation & presentation of its financial statements. During the year ended March 31 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to confirm to this year's classification.


Mar 31, 2011

01. Certain transaction on account with concern / Companies of the group has taken place during the period. As per details, which are elsewhere enclosed as required under Accounting Standard -18 "Related Party Disclosure" issued by the Institute of Chartered Accountants of India. Interest paid on sundry balances has been duly accounted for in the books of accounts of the Company.

02. The Company has also entered into commercial transactions with Group Companies in which directors are interested. These transactions are entered as per approval of Central Government as per provisions of section 297 of the Companies Act, 1956, at rates and on such terms as may be prevailing in the market at the time of transaction and are not prejudicial to the interests of the Company. These transactions are disclosed in Annexure as mentioned in Para- 1 of above.

03. Fixed deposits with Banks amounting to Rs. 1406.34 Lacs (previous year Rs. 506.71 Lacs) are under lien with the various banks as margin money for the issuance of Foreign Letter of Credit / Bank Guarantees.

04. Sales Tax / VAT Liability have been accounted for on the basis of sales recorded by the Company in the books of accounts and credited separately into Sales tax payable account and debited to such account at the time of deposit of Tax amount.

05. The Companys operations comprises of Trading of Coal and Trading of Land. Reporting of these segments has been done as required in Accounting Standard – 17 "Segment Report" issued by the Institute of Chartered Accountants of India.

06. The Company has purchased Land during the year, for the purpose of dealing in properties. The land purchased for said purpose has been considered as the part of Inventory. Beside this, the Company has also owned land as Fixed Assets and which are shown separately in the Balance Sheet.

07. The Interest and Financial Charges are netted off with Interest received and Interest paid under various heads including Interest accrued but not due of Rs.10.57 Lacs (previous year Rs. 2.85 Lacs) on Fixed Deposit Receipts.

08. In the opinion of the Management, the Current Assets and Loan & Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated and that the provision of known liability is adequate and not in excess of the amount necessary.

09. Company has policy to record High Seas sales on the date of agreement entered with the customers, Certain High Seas Sale have been recorded other than the date of which agreements were entered into, however it has no impact on the profit or revenue of the company.

10. The Company has policy to hedge its liabilities of foreign currency. Accordingly, the Company has hedged its liabilities but cancel on due date of its payment due to roll over through availment of Buyers Credit facilities from banks. The Gain / Loss arise on these transactions has been shown under the schedule "Administrative, Selling & Other Expenses".

11 . Confirmation of amount due from Sundry Debtors and due to Sundry Creditors, deposits, Loans and Advances have been received from most of the parties and necessary adjustments, if any, are made in the books of accounts.

12. Company has created Capital Redemption Reserve out of the retained earning for the redemption of the 2% Cumulative Redeemable Preference Share of Rs.114.29 Lacs, redeemable in 7 Years (Previous year: Rs.114.29 Lacs).The allocation is in proportion of the Preference Share Capital to the redemption period.

13. Expenditure incurred but pertaining to subsequent period has been accounted as prepaid expenses.

14. Import Purchases includes the Cost of coal, Freight expenses, Custom Duty, Port Expenses, and Interest for usance period, Foreign Exchange fluctuation, Dispatch / Demurrage and other direct expenses related to purchases. Indigenous Purchases includes the Cost of Coal and other related direct expenses.

15. The Company has availed the Buyers Credit facilities from Banks (Balance at year end Rs.18.35 Crores) and shown in Schedule- 3 "Secured Loans". Above facilities are within the sanctioned limits and provided by ear - marking the limits of Foreign Letter of Credit

16. Under Service Ta x Act & Rules, Company has availed credit of Service Tax paid on Input services to the extent of allowable credits and balance amount of service tax has been charge to relevant expenses. "Unutilized balance of service tax paid" as per Service Tax Act & Rules made there under is as under:

17. Earning Per Share

Note: Since there is no Potential Equity Shares, the basic earnings per share & diluted earning per share are the same. While calculation of EPS, the amount of Capital Redemption Reserve is not included.

18. Contingent Liabilities not provided for:

A. Bills Discounted from Banks amounting to Rs. 5, 16, 05,074/- (previous year Nil).

B. Collector of Stamp, Khargaon (MP) raised demand u/s. 33 read with section 48(b) of the Indian Stamp Act for Stamp Duty of Rs. 10.62 Lacs against the Sand Mine Contract allotted to the Company for Maheshwari Group by State Mining Corporation Limited, Bhopal. The Company has filed an appeal before the Court of Honble Revenue Board, Gwalior (MP) for setting aside the impugned order so passed by Collector of Stamp. The Management is of the opinion that no provision is required for such liability.

C. Income Tax Department has raised a demand of Rs. 1, 10,344/- for the assessment year 1996-97. The Company has filed an appeal before appropriate authorities against above demand. The Management is of the opinion that no provision is required for such liability.

Income Tax Department has raised demand of Rs. 18, 84,356/- for the assessment year 2002-03, 2004-05, 2005-06 & 2006-07. The Company has filed an appeal before the appropriate authorities against above demand. The Company has filed an application for adjustment of refund of Rs. 22, 51,710/- lying with Income Tax department for the assessment year 2009-10. As a result an amount of Rs. 3, 67,354/- will stand as refund with the department. The Management is of the opinion that no provision is required for such liability.

Disputed Income Tax demand As at 31.03.2011 As at 31.03.2010

AY 2002-03 1,96,579 1,96,579

AY 2004-05 2,49,228 2,49,228 AY 2005-06 12,60,556 12,60,556

AY 2006-07 1,77,993 1,77,993

Total 18,84,356 18,84,356

19. Micro and Medium scale business entities:

The Company is in process of obtaining information from its suppliers/vendors and service providers and Company has written confirmation letters to parties for disclosure as required under Micro, Small and Medium Enterprises Development Act, 2006. As per information to the extent available with the Company, there are no Micro, Small and Medium Enterprises to whom the Company owes dues, which are outstanding for more that 45 days as at 31 March 2011.

20. Sundry Creditors does not include any amount due to Small Scale Industrial undertakings to whom the amounts are due for a period of more than 6 months, based on the information available with the company.

21. The Company had allotted the Sand Mines contract for Maheshwar Group by State Mining Corporation Ltd., Bhopal for the period of 01.02.2004 to 31.01.2005. As per terms of the Contract, Company has deposited Rs. 72, 15,440/- as Earnest Money. The company was continued in mining of sand till October 10, 2004. The Company had received the notice from Collector, Khargon on October 11.2004 to stop the mining work from October 13, 2004. Due to said notice, the Company had suffered and not fulfilled the conditions of said contracts. The State Mining Corporation had forfeited the amount of Earnest money deposited by the Company. The Company had no choice except to file the case in Arbitration Tribunal. The case had filed with Arbitration Tribunal but Tribunal had issued the award in favour of State Mining Corporation Ltd., Bhopal. The Company has filed an appeal with Session Court, Bhopal for settling aside the impugned order so passed by Arbitration Tribunal, which has also rejected on August 08, 2007. The Company has filed a writ petition with Honble High Court of Jabalpur on September 25, 2008 against the order of Session Court, Bhopal. The writ petition filed by the Company had admitted. The management is of the opinion that no provision is required for such amount shown as deposit with

in the Balance Sheet. As soon as case will be listed and argued finally, order will be in favour of the Company.

22. All due cares have been taken in respect of provisions with reference to past events & future expectations. The Company has not recognized any Contingent Liability or Contingent Assets. They are properly disclosed separately.

23. The previous period figures are regrouped and rearranged wherever necessary, in order to make it comparable with current year.


Mar 31, 2010

01. In the opinion of Management, the current assets and loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated and that the provision of known liability is adequate and not in excess of the amount necessary.

02. Claims/ Disputed/ Contingent liabilities not acknowledged as debt:

A. Collector of Stamp, Khargaon ( M.P.) raised stamp duty of Rs. 10.62 lacs u/s 33 read with rule 48(b) of the Indian Stamp Act, for the sand mines contract allotted to Company for Maheshwar Group by State Mining Corporation Ltd. , Bhopal for the period of 01.02.2004 to 31.01.2005. The Company has filed an appeal before the court of Hon’ble Revenue Board, Gwalior (M.P) for setting aside the impugned order so passed by Collector of Stamp and therefore, the Management is of the opinion that no provision is required for such liability and at present application is filed with High Court for accepting the additional document before the lower court. As soon as case will be listed and argued finally order will be positive.

B. Income Tax Department has raised a demand of Rs. 1,10,344/- for the assessment year 1996-97. The Company has prefered an appeal before higher authorities. The Board is of the opinion that no provision is required for such liability.

03. Certain transactions on current account with the concerns/ Companies of the group has taken place during the year as per the details, which are elsewhere enclosed as required under Accounting Standard – 18 “Related Party Disclosures” issued by the Institute of Chartered Accountants of India. Interest paid on sundry balances has been duly accounted for in the books of the Company.

04. Expenditure incurred but pertaining to subsequent period has been accounted as prepaid expenses.

05. During the year Fixed deposit with Bank amouting to Rs. 506.71 Lacs was under lien with the various banks as margin money for the issuance of Foreign Letter of Credit/Bank Guarantees.

06. Sales Tax / VAT liability has been accounted on the basis of sales recorded by the Company in the books of accounts and credited separately into sales tax account and debited to such account on the deposit of tax amount.

07. The Company’s operation comprise of only Trading of Coal and purchase of Land. Therefore two segments are reported as required under Accounting Standard 17 “Segment Reporting” issued by the Institute of Chartered Accountants of India.

08. The expenses shown as telephone expenses, conveyance expenses, electricity expenses, office expenses & stationery expenses includes the amount paid to Bhatia International Ltd. ( Group Company) for the common facilities used by the companies.

9 . During the year the company has purchased Land for the purpose of dealing in properties. The land purchased for this purpose has been considered as the part of the regular inventory. Besides this the company also owns land as fixed assets which is reflected in the balance sheet separately.

10. Goods in transit represent the C.I.F. value of the goods being at Foreign Port or under voyage before the last date of Financial Year & unloaded at Indian Port after that date.

11. Micro and Medium Scale Business Entities:

The Company has written confirmation letters to parties for disclosure as required under Micro, Small and Medium Enterprises Development Act, 2006. As per information to the extent available with the Company, there are no Micro, Small and Medium Enterprises to whom the Company owes dues, which are outstanding for more that 45 days as at 31st March 2010.

12. Sundry Creditors does not include any amount due to Small Scale Industrial undertakings to whom the amounts are due for a period of more than 6 months, based on the information available with the company.

13. All due cares has been taken in respect of provisions with reference to past events & future expectations. Company has not recognized any Contingent Liability or Contingent Assets.

14. The previous year figures are regrouped and rearranged wherever necessary, in order to make it comparable with current year.

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